I have the chance to meet with people from all walks of life on a daily basis to discuss retirement plans. Having worked with people that are just starting out all the way to those already enjoying their golden years has given me a very clear picture of all the different problems that can occur when trying to build a nest egg.
There is one glaring oversight that 90% of everyone I meet makes – failure to factor in the ramifications of taxes on their retirement money!
A story to illustrate what I mean:
I met with a couple of clients over the weekend. They are both about 30, each of them makes about $45,000 per year. The wife is putting 10% of her income into her company’s 401K plan with no matching contribution from her employer. The husband is putting 6% of his income into a 401K that is fully matched by his employer.
If she stays the course and keeps contributing 10% of her income for the rest of the time she works AND averages a 5% interest rate on her money she will have $452,827 in her 401K when she retires at 65. She will have put in $162,000 of her own money.
If he stays the course he’s on and get the same rate of return he will have $543,392 at 65 and will have put in $97,200 of his own money.
Between the two of them, they will have $996,219 at retirement. Not bad!
Here’s the problem. Because this money is part of a 401K, all of that money is going to be taxed when they start making withdrawals from the accounts.
So what? They got a tax break on the contributions they made! Plus they are going to be at a lower tax bracket when they retire!
Let’s do the math. Currently they are in the 25% tax bracket. Between the two of them, they will put a total of $259,200 into these accounts during their working years. If they were not getting a tax break, they would pay $64,800 in taxes on that money.
Assuming they are at the lowest tax bracket during retirement, (which is 15%) they are going to pay $149,432 (15% of $996,219) in taxes in retirement! That’s more than twice the amount of taxes! And remember that is also assuming they remain in the current lowest tax bracket.
As you can see, that’s a significant difference!
What is the remedy to this situation?
Instead of relying on your 401K as your only retirement account, open a Roth IRA. With a Roth, you do NOT get a tax break for your contributions, but you also do NOT pay taxes when you make withdrawals from the accounts.
For these particular clients, we took and redirected the money she was placing in her 401K and used that to fund her Roth. We did this because she is not getting a matching contribution. This will allow them to have nearly half of their retirement income be tax free during retirement. It will save them tens of thousands of dollars in taxes.
There are many strategies available to reposition assets to avoid taxes during retirement.
If you want to avoid this costly mistake, give me a call to set up a free, no-obligation consultation.
Jason Hornung-The Net Worth Doctor
5760 E Broadway Blvd
Tucson, AZ 85711
Toll Free: 1-866-514-8884
Southern Arizona Local: 520-514-8884
Jason@thenetworthdoctor.com
Monday, April 6, 2009
Wednesday, March 18, 2009
The Most Important Car Insurance Coverage in the World
This is probably the most important article you’ve ever read about your family’s insurance protection.
How can I say that?
I’ve been in the insurance business for years. I’ve seen way too many people come to me with their lives torn apart in frustration, anger, and tears when they’ve had an accident, fire or claim that their previous insurance policy won’t cover.
You’ll learn some quick tips to make sure you are covered properly, and get the best value for your money.
Some people hate the insurance companies for not paying the claims, but the reality is that many times, is not the insurance companies fault, it’s the way the policy was set up in the first place. That can be the agents fault, could be the customers fault for going cheap at all costs, and it can be because some people just don’t know better.
15 minutes could save you 15% and Cost you everything you own…
Some commercials con you into believing that all you need is 15 minutes with a box of microchips (computer) and an internet connection to get your FAMILIES ENTIRE PROTECTION set up properly.
This is exactly the reason why so many people discover too late they don’t have the right coverage. They don’t have an expert there to make sure they get a great price, and get the coverage they need.
That’s why I decided to write this article. So innocent consumers don’t have some of the tragic experiences I’ve seen in the past.
Let’s get started…
The most important coverage you have is your auto insurance.
It’s the most important because accidents happen very frequently, and they are often very severe. There are over 6.5 Million auto accidents in the USA each year.
Estimates put the number of cars on the road in the US at 62 million. Most accidents involve 2 cars (some more than that) this means an estimated 13 million cars per year are in accidents. That means statistically each car will be in an accident at least once every 4.7 years.
Here’s the deal, unfortunately it’s not a matter of IF, but only a matter of WHEN we will be involved in a car crash. So when that time comes, here’s what you need to know:
The Most IMPORTANT Coverage You Don’t Have
The most important coverage on your auto policy is one that most people know nothing about it. It’s called Uninsured and Under-insured motorist coverage.
In a nutshell, this is so important because it RESTORES and PROTECTS YOU. When (not if) you get hit by someone who doesn’t have insurance, or doesn’t have enough insurance to cover the damage…your policy has to pay the bill.
A $300,000.00 MISTAKE
My friend Gina was nearly killed. She was smashed into by a driver without insurance in the middle of an intersection. Gina’s agent never took the time to explain this MOST IMPORTANT coverage. Because of this error, they only had minimum policy limits of $15,000 on their uninsured motorist coverage.
Gina ended up in critical condition in the hospital for months, and rehab for even longer. In the end, the bill was over $300,000.00, and guess who had to pay it? That’s right, Gina.
They ended up setting up a 20 YEAR PAYMENT PLAN. That’s right. In addition to nearly getting killed, losing her job, spending months in the hospital and rehab, on top of all of it, they had to pay back the $300,000.00 medical bills over the next 20 years. It was devastating.
It’s not fair!
You’re right, it’s not. But that’s the way it goes. There is NO ONE ELSE to pay the claim. The driver had no assets, no job, no coverage. Her policy only had a limit of $15,000 so they paid that much, but the coverage ends there.
In this case, their own car insurance policy was nothing more than an expensive stack of meaningless legal ramblings. The thousands she’d paid for insurance over the past years didn’t do her any good. It wasn’t the insurance companies fault either. They help up their end of the contract, it was her agent who failed them.
Make Sure You Don’t Fall Prey
This is a VERY CHEAP coverage. All you need to do is increase your Uninsured Motorist Coverage to the regular policy limit…and it usually costs just a few dollars per month. (Usually policies have a “Liability Limit” Of $300,000, $500,000 or $1 Million. This pays for OTHER people’s cars and health care if you hit them. Who’s looking out for you? Uninsured and underinsured covers YOU! )
15 Seconds or 15 Minutes Could Cost You $300,000.00
It only takes about 15 seconds for an agent to increase the coverage from the regular minimum limits (usually $15,000) to the policy limits at $300,000.
Imagine Gina’s agent not taking 15 seconds, (15 seconds!) to talk to her and increase her coverage accordingly. It’s a crime. (If your agent hasn’t talked to you about this, you may want to give us a call. We will make sure there are no other holes in your policy as well 520-514-8884)
I hate to see people pay for insurance year after year, then when they need it most, get left holding the bag because their policy wasn’t done properly.
I hope this report has helped you understand how to make sure your assets and family are covered properly. There are many more of these “little things” that make a huge difference in whether or not you have your claims paid.
Trying to get insurance coverage online, talking to a call center employee, or dealing with an agent who doesn’t take time to make sure you are covered properly can be a disaster.
Give me a call if you have any questions or if you want to make sure you don’t get caught without coverage.
Jason Hornung – The Net Worth Doctor
1-866-514-8884 Toll Free
520-514-8884 Southern Arizona Local
www.thenetworthdoctor.com
Jason@thenetworthdoctor.com
How can I say that?
I’ve been in the insurance business for years. I’ve seen way too many people come to me with their lives torn apart in frustration, anger, and tears when they’ve had an accident, fire or claim that their previous insurance policy won’t cover.
You’ll learn some quick tips to make sure you are covered properly, and get the best value for your money.
Some people hate the insurance companies for not paying the claims, but the reality is that many times, is not the insurance companies fault, it’s the way the policy was set up in the first place. That can be the agents fault, could be the customers fault for going cheap at all costs, and it can be because some people just don’t know better.
15 minutes could save you 15% and Cost you everything you own…
Some commercials con you into believing that all you need is 15 minutes with a box of microchips (computer) and an internet connection to get your FAMILIES ENTIRE PROTECTION set up properly.
This is exactly the reason why so many people discover too late they don’t have the right coverage. They don’t have an expert there to make sure they get a great price, and get the coverage they need.
That’s why I decided to write this article. So innocent consumers don’t have some of the tragic experiences I’ve seen in the past.
Let’s get started…
The most important coverage you have is your auto insurance.
It’s the most important because accidents happen very frequently, and they are often very severe. There are over 6.5 Million auto accidents in the USA each year.
Estimates put the number of cars on the road in the US at 62 million. Most accidents involve 2 cars (some more than that) this means an estimated 13 million cars per year are in accidents. That means statistically each car will be in an accident at least once every 4.7 years.
Here’s the deal, unfortunately it’s not a matter of IF, but only a matter of WHEN we will be involved in a car crash. So when that time comes, here’s what you need to know:
The Most IMPORTANT Coverage You Don’t Have
The most important coverage on your auto policy is one that most people know nothing about it. It’s called Uninsured and Under-insured motorist coverage.
In a nutshell, this is so important because it RESTORES and PROTECTS YOU. When (not if) you get hit by someone who doesn’t have insurance, or doesn’t have enough insurance to cover the damage…your policy has to pay the bill.
A $300,000.00 MISTAKE
My friend Gina was nearly killed. She was smashed into by a driver without insurance in the middle of an intersection. Gina’s agent never took the time to explain this MOST IMPORTANT coverage. Because of this error, they only had minimum policy limits of $15,000 on their uninsured motorist coverage.
Gina ended up in critical condition in the hospital for months, and rehab for even longer. In the end, the bill was over $300,000.00, and guess who had to pay it? That’s right, Gina.
They ended up setting up a 20 YEAR PAYMENT PLAN. That’s right. In addition to nearly getting killed, losing her job, spending months in the hospital and rehab, on top of all of it, they had to pay back the $300,000.00 medical bills over the next 20 years. It was devastating.
It’s not fair!
You’re right, it’s not. But that’s the way it goes. There is NO ONE ELSE to pay the claim. The driver had no assets, no job, no coverage. Her policy only had a limit of $15,000 so they paid that much, but the coverage ends there.
In this case, their own car insurance policy was nothing more than an expensive stack of meaningless legal ramblings. The thousands she’d paid for insurance over the past years didn’t do her any good. It wasn’t the insurance companies fault either. They help up their end of the contract, it was her agent who failed them.
Make Sure You Don’t Fall Prey
This is a VERY CHEAP coverage. All you need to do is increase your Uninsured Motorist Coverage to the regular policy limit…and it usually costs just a few dollars per month. (Usually policies have a “Liability Limit” Of $300,000, $500,000 or $1 Million. This pays for OTHER people’s cars and health care if you hit them. Who’s looking out for you? Uninsured and underinsured covers YOU! )
15 Seconds or 15 Minutes Could Cost You $300,000.00
It only takes about 15 seconds for an agent to increase the coverage from the regular minimum limits (usually $15,000) to the policy limits at $300,000.
Imagine Gina’s agent not taking 15 seconds, (15 seconds!) to talk to her and increase her coverage accordingly. It’s a crime. (If your agent hasn’t talked to you about this, you may want to give us a call. We will make sure there are no other holes in your policy as well 520-514-8884)
I hate to see people pay for insurance year after year, then when they need it most, get left holding the bag because their policy wasn’t done properly.
I hope this report has helped you understand how to make sure your assets and family are covered properly. There are many more of these “little things” that make a huge difference in whether or not you have your claims paid.
Trying to get insurance coverage online, talking to a call center employee, or dealing with an agent who doesn’t take time to make sure you are covered properly can be a disaster.
Give me a call if you have any questions or if you want to make sure you don’t get caught without coverage.
Jason Hornung – The Net Worth Doctor
1-866-514-8884 Toll Free
520-514-8884 Southern Arizona Local
www.thenetworthdoctor.com
Jason@thenetworthdoctor.com
Tuesday, March 10, 2009
Punk'd - The Scam Life Insurance Companies Pray You Never Learn!
For those of you that have ever had the “pleasure” of sitting down with an insurance agent, you may have fallen victim already (don’t get scared, you can fix your situation still). Those that have NOT, heed this warning!
Now that I have your attention, I want to share with you my background. You see, I’m an insurance agent myself, and I’m going to let you in on an industry secret.
Insurance agents are told by their home offices that they need to sell life insurance and tons of it, or they can kiss their careers goodbye.
Out of this fear mongering most agents will “sell” the cheapest policy they can to their clients, which up front, is always term insurance. The home offices love this because of the following information…
In the spring of 1993, Penn State University completed a study regarding the fate of term life insurance policies. The study includes over 20,000 term policies with an aggregate face amount of $4,000,000,000. It includes 1-5 year, 10 year, 20 year, and term to age to age 65 contracts which contained renewal and/or conversion features.
Here are some interesting results of the study:
1. More than 90% of all policies are terminated or converted.
2. 45% of all policies are terminated or converted in the first year.
3. 72% of all policies are terminated or converted within the first 3 years.
4. The average duration before termination or conversion is 2 years.
5. Less than 1 policy in 10 survives the period for which it was written.
6. After 15-20 years exposure, less than 1% of all term life policies are still in force.
7. Only 1% of all term insurance resulted in death claims.
Considering the above findings, the odds are 100 to 1 against term insurance ever being a death claim!
So what should you make of this study? Term Insurance is about as close to a guarantee of 100% profit to the insurance company as possible!
Does this mean that I don’t believe in term insurance? Absolutely NOT! Term insurance definitely has appropriate uses such as covering a mortgage or paying off debts and should be purchased if that is all your budget permits. It is always better to have something than nothing.
When evaluating your needs for life insurance, permanent insurance should be considered.
A sad fact is that many insurance agents don’t fully understand the benefits of permanent insurance, which is the other kind of life insurance. I’ll admit that I was one of them my first few years in this business!
Permanent insurance comes in a few different varieties, the kind you choose depends on your goals and risk tolerances. All permanent policies build up cash value with interest (and tax deferred growth), can be used as collateral on a loan, cannot be raided by creditors in a lawsuit, and passes tax free to your heirs. Some policies will even pay dividends!
What about buy term and invest the difference?
That philosophy can work if you are disciplined enough to consistently invest each month. The problem is most of us will choose to spend that money on a new car, vacation, or a Nintendo Wii instead of depositing it into an investment account. And even if you are the disciplined type, market returns are never guaranteed…the returns in a cash value life policy are guaranteed!
Permanent insurance should be the fixed asset that is part of an overall financial plan including other investment options.
What about the cost of permanent insurance?
Permanent insurance may be more expensive up front as compared with term insurance, but when you compare the long term costs along with the effect on your net worth, term is the worst option.
There are also ways to “find” money by repositioning spending and making changes to current budgetary items. I routinely help people to free up anywhere from $50 - $500 per month without making a single sacrifice to their current lifestyle or asking them to spend any extra out of pocket.
What do you do if you have already purchased a term policy?
Check to see if it has what is known as a conversion privilege with your insurance company. This feature will allow you to “convert” all or part of your term policy into a permanent policy without having to go through another exam or prove that you can qualify for coverage. Many companies will also give you a credit of your term premiums toward the new permanent policy.
If your policy does not have the conversion privilege, check to see how old your policy is. Depending on the age of the policy, it might make sense to completely replace it with permanent or simply supplement your term policy with permanent coverage.
Before you make any changes to your current coverage, you need to re-evaluate your wants and needs with a trusted, knowledgeable professional!
For a free, no-obligation consultation contact The Net Worth Doctor.
Jason Hornung – The Net Worth Doctor
www.thenetworthdoctor.com
Jason@thenetworthdoctor.com
1-866-514-8884 Toll Free
520-514-8884 Southern Arizona Local
Now that I have your attention, I want to share with you my background. You see, I’m an insurance agent myself, and I’m going to let you in on an industry secret.
Insurance agents are told by their home offices that they need to sell life insurance and tons of it, or they can kiss their careers goodbye.
Out of this fear mongering most agents will “sell” the cheapest policy they can to their clients, which up front, is always term insurance. The home offices love this because of the following information…
In the spring of 1993, Penn State University completed a study regarding the fate of term life insurance policies. The study includes over 20,000 term policies with an aggregate face amount of $4,000,000,000. It includes 1-5 year, 10 year, 20 year, and term to age to age 65 contracts which contained renewal and/or conversion features.
Here are some interesting results of the study:
1. More than 90% of all policies are terminated or converted.
2. 45% of all policies are terminated or converted in the first year.
3. 72% of all policies are terminated or converted within the first 3 years.
4. The average duration before termination or conversion is 2 years.
5. Less than 1 policy in 10 survives the period for which it was written.
6. After 15-20 years exposure, less than 1% of all term life policies are still in force.
7. Only 1% of all term insurance resulted in death claims.
Considering the above findings, the odds are 100 to 1 against term insurance ever being a death claim!
So what should you make of this study? Term Insurance is about as close to a guarantee of 100% profit to the insurance company as possible!
Does this mean that I don’t believe in term insurance? Absolutely NOT! Term insurance definitely has appropriate uses such as covering a mortgage or paying off debts and should be purchased if that is all your budget permits. It is always better to have something than nothing.
When evaluating your needs for life insurance, permanent insurance should be considered.
A sad fact is that many insurance agents don’t fully understand the benefits of permanent insurance, which is the other kind of life insurance. I’ll admit that I was one of them my first few years in this business!
Permanent insurance comes in a few different varieties, the kind you choose depends on your goals and risk tolerances. All permanent policies build up cash value with interest (and tax deferred growth), can be used as collateral on a loan, cannot be raided by creditors in a lawsuit, and passes tax free to your heirs. Some policies will even pay dividends!
What about buy term and invest the difference?
That philosophy can work if you are disciplined enough to consistently invest each month. The problem is most of us will choose to spend that money on a new car, vacation, or a Nintendo Wii instead of depositing it into an investment account. And even if you are the disciplined type, market returns are never guaranteed…the returns in a cash value life policy are guaranteed!
Permanent insurance should be the fixed asset that is part of an overall financial plan including other investment options.
What about the cost of permanent insurance?
Permanent insurance may be more expensive up front as compared with term insurance, but when you compare the long term costs along with the effect on your net worth, term is the worst option.
There are also ways to “find” money by repositioning spending and making changes to current budgetary items. I routinely help people to free up anywhere from $50 - $500 per month without making a single sacrifice to their current lifestyle or asking them to spend any extra out of pocket.
What do you do if you have already purchased a term policy?
Check to see if it has what is known as a conversion privilege with your insurance company. This feature will allow you to “convert” all or part of your term policy into a permanent policy without having to go through another exam or prove that you can qualify for coverage. Many companies will also give you a credit of your term premiums toward the new permanent policy.
If your policy does not have the conversion privilege, check to see how old your policy is. Depending on the age of the policy, it might make sense to completely replace it with permanent or simply supplement your term policy with permanent coverage.
Before you make any changes to your current coverage, you need to re-evaluate your wants and needs with a trusted, knowledgeable professional!
For a free, no-obligation consultation contact The Net Worth Doctor.
Jason Hornung – The Net Worth Doctor
www.thenetworthdoctor.com
Jason@thenetworthdoctor.com
1-866-514-8884 Toll Free
520-514-8884 Southern Arizona Local
Monday, March 2, 2009
How to Make Sure Your Property Insurance Deductible Doesn't End Up Being Significantly More Than Your Agent Told You it Would Be
Remember when you last purchased homeowner’s or any other type of property insurance? I’m sure a good amount of your time was spent talking about what deductible (the portion of a claim you are responsible for) option you were comfortable with. This is an important conversation to have because we all want to know if we are actually going to need our insurance, how much we will have to pay.
I’ve learned over the years that very rarely do any agents inform their clients about a provision within property insurance policies that can cause a deductible to increase exponentially during a claim.
What I’m talking about here is called co-insurance, which is a familiar term if you have ever owned an individual health policy, but this type of co-insurance is different. It has to do completely with the value that is used to insure a home or any other property.
Let’s say you are buying a home this month and you call your insurance agent to get a quote. He or she will have several ways of determining the value that your home is insured at. If a copy of a recent appraisal is available, that can be used. If a recent appraisal is not available the agent can enter details of the property into a software program that can calculate the replacement cost of the home.
For illustration purposes your home was appraised at $250,000 and that is how much you insure your home for with a $1,000 deductible. You set up your homeowner’s insurance to be billed to your escrow account with your property taxes and don’t think about it again.
Fast forward 10 years… a big storm rolls through your neighborhood and your home is hit by lightning. Your roof starts on fire! You and your family get out of the house and run to the neighbors. You quickly call the fire department, they arrive in time to put out the flames before your home is completely destroyed.
Devastated, you call your insurance company to file a claim. A friendly voice on the other end of the phone assures you that everything will be taken care of. A claim adjuster will be out in the morning to assess the damage.
The next day you meet the adjuster and he walks through the charred remains of your biggest asset. He recommends a few contractors and restoration companies for you to call to start cleaning up the mess. He writes you a check for $1,000 toward extra expenses. Before he leaves, he says he will call in a couple of days to let you know the total amount of the damage and he hands you a packet of information.
Two days later you get one of the worst calls of your life. The adjuster informs you that the total damage from the fire to your home is $100,000. Only there is an issue…the replacement value of your home is now $320,000 but your coverage has not been updated since you first took out your policy 10 years ago, so the insurance company is going to evoke the co-insurance clause of your policy since you are not in compliance.
Here is how you are affected: the co-insurance clause states that your property at all times needs to be insured to a minimum of 80% the total replacement value. Since you were carrying $250,000 in coverage on your home, you were at 78%.
This clause was devised by insurance companies to make sure that people were insuring their homes to value. Otherwise the company would not be collecting the appropriate premium to be able to pay claims. Co-insurance is basically a penalty that is applied to a claim to help the insurance company recoup money it should have collected in premiums.
See why agents don’t get into this conversation?
Back to our example. There is a simple formula that is used to apply the co-insurance penalty. It is:
The amount of coverage you DID have on your home
The amount of coverage you SHOULD have had on your home X The amount of claim – Your Deductible
$250,000
$320,000 X $100,000 - $1,000 = $77,125
Your insurance company is only going to pay $77,125 of your $100,000 claim! Your deductible just jumped exponentially from $1,000 to $22,875!
All of this could have been avoided by an annual review of your insurance coverage. A good agent will re-evaluate your homeowner’s policy on a regular basis and recalculate your replacement value. The amount of premium to have $320,000 of coverage vs. $250,000 would have been at most $100 per year, which is far less than the co-insurance penalty.
If you have an agent that has been offering a review appointment with you and you have been too busy to accept that offer, I highly recommend that you make that appointment as soon as possible.
For those of you who only hear from your agent when he needs to sell something else or your bill is late, contact my office for a free, no-obligation consultation.
Jason Hornung – The Net Worth Doctor
www.thenetworthdoctor.com
Jason@thenetworthdoctor.com
1-866-514-8884 Toll Free
520-514-8884 Southern Arizona Local
Monday, February 23, 2009
7 Biggest Budgeting Mistakes and How to Avoid Them Like the Plague
We all have heard the term “There’s too much month at the end of my money!” and that is the case for many people now more than ever. So what do we do to hunker down during tough financial times without having to sacrifice lifestyle too much? Don’t fall victim to the following seven items!
1) Buying name brands for everyday items
We have been conditioned by clever advertising to prefer the big brand names. If you pay close attention, you’ll notice a significant difference in price on items such as toilet paper, paper towels, and soap. Aspirin, Ibuprofen, and other off the shelf medicine generics all have the same ingredients as the well known brands – all at a much lower cost. Generic cereals and boxed goods can generate nice savings as well.
2) Failure to pay yourself first
Everyone knows they need to save more. The problem is the thinking behind it…usually people try to save after they have paid all their bills. What happens is the money that could be saved gets spent on lattes, movie rentals, baseball tickets, etc. Many people feel they need to save a large amount of money as well. Just having $50 automatically withdrawn from your checking account on the 1st of each month for 30 years into a Roth IRA will turn into $50,476.88 of tax free income during retirement (assuming 6% interest).
3) Not knowing exactly how much you spend on food
Try this exercise – add up the cost of every item you buy at a gas station, Starbucks, your lunches at work, for one week. You will be totally surprised by how fast those items accumulate. You can significantly reduce these costs by making your own coffee (a bag of Starbucks ground or whole bean is $7), buying gum and snacks in bulk and carrying them with you, and packing your lunch for work.
4) Paying the minimum balance on credit cards
Did you know…a credit card balance of $19,000 with 15.15% interest generates $2,878.50 of interest PER YEAR? How long do you think it will take to pay off that balance by making $150/month installments? What could you do with that money you are paying to the banks?
5) Spending your tax returns
It is very tempting to use our returns to go out and buy that flat screen T.V. or take a family vacation. If you are carrying any debt load, use this money to pay down that debt first. You have to consider the long term ramifications of compounding interest. No debts? Use part or all of your return to make a deposit into your retirement account!
6) Infrequent checkbook balancing and using your debit card too much
Automatic drafts, online banking, and debit cards are wonderful things if used properly. What has happened is many people don’t have a paper ledger and reconcile it to their statement anymore. If you use your debit card at the gas pump, it shows up as $1 for several days, then turns into the actual amount – forget one of those a month and suddenly you are down $40! Quite a few of us (myself included) don’t carry cash anymore and have no problem putting $5 on the debit card – forget a few of these each month and your balance is off by another $20. Give yourself a $20 bill at the beginning of each month for your small expenses. Once it’s gone, don’t use the debit card! Start keeping the paper ledger in your checkbook, even if you are not writing checks. This will keep you accountable to every penny, plus you will always know exactly how much you have!
7) Failure to prioritize spending
This could be the most costly error. Make sure that you put the necessities first, and by the way, satellite T.V. is not a necessity! Once you know exactly how much the rent or mortgage, car payment, food, gas, electric, phone, and debt bills are, then make room convenience and fun stuff!
Follow these rules and you’ll be amazed at how much you can make your income stretch. You will also be setting yourself up to be prepared in case of an emergency and enjoy a more comfortable future.
There are also additional ways to free up income out of your current budget to pay down debts, pay less taxes, and put away for retirement.
For a free, no-obligation consultation contact The Net Worth Doctor.
Jason Hornung – The Net Worth Doctor
http://www.thenetworthdoctor.com/
Jason@thenetworthdoctor.com
1-866-514-8884 Toll Free
520-514-8884 Southern Arizona Local
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