Even if you don’t plan on making any major purchases, you should keep an eye on your credit. Annual Credit Report offers free credit reports from all three credit bureaus, Experian, Equifax, and TransUnion. You get one free report from each bureau every year.
This important step will let you know if you have any major credit issues. If your report shows unfamiliar accounts, it could mean your identity was stolen. You may also find missed payments that you actually paid. Either way, you’ll want to catch and correct any problems as soon as possible.
If you think you’ve been targeted by identity thieves, you’ll want to either close or freeze any affected bank or credit card accounts. You may also want to freeze your credit, which means that no one (including you) will be able to open up any new accounts without providing the password you set up. Next, you should document the fraud by filing a report with the Federal Trade Commission and with the credit card bureau (they must report the same information to the other two bureaus, so you shouldn’t have to do this three times). You may also want to alert your local police department. These reports create a paper trail, which may help you dispute fraudulent charges.
A sweeping overhaul of the U.S. tax code took effect this year, and taxpayers will feel the changes for the first time while filing their 2018 taxes. Your taxes will likely be affected no matter which tax bracket you’re in. Take time to figure out how your taxes will change so that your tax situation won’t be a surprise in April.
This is especially important if you live in a high-tax state, pay property taxes, or make mortgage payments. The new tax law doubled the standard deduction, and many people who used to itemize may now find that it’s better to take the standard deduction. Check with a tax expert so you can be sure you’re making the best move.
Use the new year as an opportunity to re-evaluate your insurance plans. Take a look at your car, health, and home insurance plans, and make sure the coverage is both affordable and adequate. When you’re adding it all up, don’t forget about the additional charges that get tacked on to insurance services, like co-pays and deductibles.
The most powerful financial planning tool is right in your pocket. Apps like Betterment and Wealthfront can be downloaded straight to your phone, allowing you to access financial advice, investment options, and retirement accounts without getting off the couch.
There are also apps like Acorns and Wealthsimple, which focus on making investing as easy as possible. Just answer a few basic questions about your financial goals, and the apps will create a personalized investment plan.
Link a credit or debit card to these robo-investors, and the apps will round up every purchase to the nearest dollar. Those nickels and dimes add up, and they’re automatically invested according to your plan.
Financial planning apps are convenient, and they keep your costs down, but there are benefits to meeting with a financial advisor in person. If you have a question while using a financial app, you’ll have to scour the “Contact Us” page to find the right number to call. Meeting with an advisor in person gives you the opportunity to ask those questions as soon as they pop into your head.
Advisors also have a holistic sense of financial health, as opposed to apps that focus solely on investing. Financial planners are an invaluable asset for people with big financial goals and not much expertise, but the higher level of service will cost more than financial apps.
Stop telling yourself you’ll set up auto-pay for your bills this year and actually do it! Once it’s set up, you’ll never accidentally miss a payment (which helps your credit score). It also saves you time every month, which you can use to put more thought into your financial goals.
Many companies offer paperless billing, and when that’s coupled with auto-pay, your bills will become as waste-free as they are hassle-free.
If want to buy a home in 2019, you’ll need to figure out how much you can afford for the down payment. A common target is 20% of the home’s total cost, but put down as much as you’re comfortable spending. Once you figure out how much you’ll put down, set up a timetable and figure out how much you should be saving every month to reach your goal in time.
There are also often programs that offer down-payment assistance, and you can get a conventional loan for as little as 3% down. It’s a myth that you need 20% down to buy a home.
Before you make a big purchase, figure out how much debt you already have. Start off your new year by calculating your current debt-to-income ratio. To do that, just divide your monthly debt (think car and student loan payments) by your monthly income.
As a general rule of thumb, it’s a good idea to spend less than 35%—40% of your income on debt, including a potential mortgage. If you’re spending much more than that, you likely will not qualify for a mortgage. If you’re thinking of buying a home, this might be a good time to pay down some debt.
Getting pre-approved is a proactive step that homebuying hopefuls can take now. As opposed to getting pre-qualified, pre-approval gives you a more accurate idea of how much a bank is likely able to loan you—although it’s still not a commitment to lend.
Pre-approval is a boon for homebuyers, because potential sellers will have confidence in your ability to pay quickly. It also helps buyers shop within their means so they don’t get excited about a home that’s out of their price range.
Once you figure out how much banks may lend you, you’ll have to figure out how much you’re willing to borrow. This is a chance to think about how many payments you’re making every month.
Sure, there are credit card bills, maybe car payments, but you’ve also got to keep the fridge stocked. Maybe you pay for a streaming service like Hulu. Maybe you have a donation membership with a nonprofit. Add up all those odds and ends, and then figure out how much more you can roll into that budget. Remember, it’s not just the mortgage you’ll be paying for—your utilities bill may increase, and your new neighborhood could include HOA fees. And, of course, you’ll also have to factor in home maintenance and improvements.
What are your financial goals this year? Are you on the verge of a big purchase, or saving up for 2020 and beyond instead? Leave a comment below if you’d like to share any thoughts!
“CSMC Mortgage took great care of us and our home buying needs. Tony was more than we could have ever asked for, he went above and beyond for us and we couldn’t have been more grateful for all his hard work. CSMC Mortgage has a great and friendly staff, I would highly recommend them to anyone looking into buying a home.”
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“Baret Grigorian was amazing!! From start to finish Baret was there to help in every way. I never felt like I had to call him to follow up on my loan transaction and he always kept me informed. He was able to get me great financing rates, a lower payment AND money back! Thank you Baret!! I look forward to working with you again in the future!!”
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“These folks are conscience and easy to work with. The “calm” as the “storm” of home loans rolls through! I would not use anyone else. They make sure ALL your questions are answered, be that what competitors may have offered, or ads you may have heard or seen. What a pleasure to do business with. Thank you team CSMC.”
- Michael G.