New Year's Resolution? Financial Fitness

2016 is just around the corner, and while you are thinking of your New Year’s resolution of a better diet, more exercise, spending more family time, etc.,don’t forget about your financial fitness.  It’s time to take a break from the holiday shopping and eating out, and get your finances in order before the New Year.  I’ve always found this time of year a great opportunity to review my portfolio, understand where my spending is going (or NOT), and give my finances a little love.  Just like diet, exercise, and physical fitness, financial fitness is something we should do more than once a year.  Without reviewing your financial discipline and rigor to understand where you are, it’s difficult to improve and build wealth over time.  It won’t happen in one year, but if you keep chipping away at it, month-by-month, year-by-year, you’ll be amazed at what you can accomplish. As I’ve said before, ‘You Can’t Own Everything’, but ‘You Can Own Anything’, if you have a plan and the discipline to stick to it.  

Here’s a quick little financial fitness checklist I thought I’d share before the New Year:

7. Evaluate Your Spending

Reviewing a year’s worth of spending all at once can be an eye-opening exercise, but it’s the best way to cut back on all of those little unnecessary purchases that add up throughout the year. If you’re not using a personal finance app, there are quite a few available and most are free.  Here’s a link to a useful blog post from our friends at MoneyUnder30.com.  Most of these apps come in handy to not just track your spending, but to monitor your investments and calculate your entire net worth.  

6. Check Your Credit Score

If you’re ever going to want a mortgage, apartment, house, or car, having good credit is crucial. Your credit score can also be used to determine the price you pay for insurance, affect future job offers, etc. Keeping tabs on your credit should be a regular priority, and it’s easy to do through any of the top three credit reporting agencies.  The Fair Credit Reporting Act (FCRA) requires each of the nationwide credit reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months.  Again, it’s free, just takes a little time and discipline on your part to make it happen!

5. Make Charitable Contributions

December 31 is the deadline for contributing to a charitable organization and still being able to deduct it from your taxes, so there is no better time to give back. And remember, contributions don’t have to be cash. You can donate cars, clothing, food, household goods, and even shares of stock. Donating highly appreciated shares of stock from a taxable brokerage account has a triple benefit. It helps your charity, it can provide you a deduction on the full amount if the charity is qualified, and it can avoid capital gains tax on profits.  If you don’t have a favorite charity yet, but want to see how effectively a charity uses your donation, check out Charity Navigator.

4. Start Or Fund Your Child’s 529

529 plans are the college savings vehicle of choice for most parents. That’s because they allow contributions to grow free of federal taxes and, in some cases, provide for a state tax deduction, too. In most states, December 31 is the cutoff for annual 529 contributions to be counted in that tax year, so contribute what you can.  My wife and I opened up our kids 529 plans the month they were born and have been contributing to them monthly ever since.  Our son is now 17, daughter 14, and still not sure if we have enough saved, but 529’s provide a tax savings benefit while establishing a solid foundation for your children’s education over time.

3. Estimate Your 2015 Taxes

You don’t have to file your tax return until April 15, but it’s good to have an idea of what it will amount to by the time the deadline comes around. Try a service like Turbo Tax to estimate your tax, and you’ll be prepared in case you end up owing money to the IRS.  It’s better to know now and have 90+ days to prepare if you owe Uncle Sam!

2. Max Out 401k / IRA Contributions

Maxing out your 401k is one of the best ways to reduce your taxes and save more money for your future self. Funds you contribute to a 401k account are pre-tax dollars, meaning they’re taken out of your paycheck before you pay taxes on them. The benefit is that you lower the overall amount of income that you have to pay tax on now, and the money in your 401k can grow tax deferred until retirement.  The maximum you can contribute to a 401k account in 2015 and 2016 is $18,000. You can contribute up to $24,000 if you’re 50 or over.  If you are in an employer matched 401k, it’s ideal to contribute the maximum amount your employer will match since that’s basically FREE money!  If you don’t have an employer sponsored 401k, but have an IRA, hitting the contribution limits on your retirement account goes a long way toward your financial fitness later in life. The limit on both traditional and Roth IRA contributions for 2015 is $5,500 ($6,500 if you’re 50 or older). If you haven’t hit those amounts yet, now is a good time to make a little push to get there. The IRS is actually your friend in this area because you have until April 15, 2016, to make your 2015 contributions, so make a plan now. Again, this is all about financial fitness for life!

1. Rebalance Your Portfolio

Some people know what mix of investments they have when they create their portfolio, but that mix can change over time based on the performance of each type of investment and how subsequent contributions are invested. At the end of the year, see what your investment mix looks like and make any necessary adjustments to better reflect your investment goals and risk tolerance.  If you are using a personal finance app that I mention in #8 above, these will usually give you a view of your portfolio mix.

How will you use the end of the year to improve your financial fitness? Do you have financial to-do’s to add to my seven?  If so, I’d love to hear them!

MORTGAGE APPLICANTS: School up on the new forms for 2016

If you're among the lucky few who will pay all cash for your home, you can stop reading right now! If you are among the many who will be taking out a mortgage loan, however, and who may have read home buying articles that stated the required forms included a HUD-1 Settlement Statement, a Good Faith Estimate, and a Truth-in-Lending disclosure form, keep reading.

These forms will no longer be used for borrowers who submit a mortgage application on or after October 3, 2015 (this date was extended from August 1, 2015). Hopefully, the change will be for the better. It's a move meant to simplify matters for consumers, consolidating the information conveyed and highlighting the significance of important loan terms.

The replacement forms will include  a "Loan Estimate" and a "Closing Disclosure." They were created by the Consumer Financial Protection Bureau,  after a long process of several years gathering input from consumers and real-estate industry groups.

• The Loan Estimate: This form will be provided to consumers within three business days after they submit a loan application. It replaces the early Truth in Lending statement and the Good Faith Estimate, and provides a summary of the key loan terms and estimated loan and closing costs. Consumers can use this new form to compare the costs and features of different loans.

The second form, the "Closing Disclosure," will come your way three business days before your close of escrow. Its purpose is to provide a more final accounting of the transaction, covering the same terms, but with exact statements of costs and required cash.

• The Closing Disclosure: Consumers will receive this form three business days before closing on a loan. It replaces the final Truth in Lending statement and the HUD-1 settlement statement, and provides a detailed accounting of the transaction.

It’s still early as we’re only a few months into the new process and forms used by mortgage lenders.  However, if you are going to obtain a mortgage to purchase a home, it’s a good idea to review the new Loan Estimate and Closing Disclosure forms as you will see these for any mortgage in 2016 and the foreseeable future.

Your Home is Too Bright - 10 Reasons Your Home is Not Selling

My wife and I sold our second home in 2005.  Given we were ‘experienced’ home sellers, I attempted to sell our home on my own.  We prepped our home to what we thought was PERFECT, listed it online on a Thursday and put out Open House signs that Saturday.  We did multiple Open Houses where I spent Saturday and Sunday sitting in the home waiting for buyers/agents to come through.  We did get some traffic, but no offers.  After 3 months, my wife and I were frustrated and decided to hire one of the top real estate agents in our area.  The first thing our agent did was coach us on how to eliminate buyer turn-offs and make our home appealing to the masses, not the perfect buyer.  Homebuyers are a notorious picky bunch.

What’s keeping your perfect home from selling? As the homeowner, you may be overlooking some obvious buyer turn-offs such as these:

1. Pet water bowls in sight

Your house might not smell of dog, but if a potential buyer spots Fido’sbowl, you might ending up feeling sick as a dog when you lose the sale. Even a hint of a canine resident can send fraidy-cats running.

2. Hot tub time machine

Although you might think that groovy backyard hot tub will impress, potential buyers might view it as a huge hassle — just think about the expense and aggravation of removing it to expand the deck!

3. Too much light

No one wants to live in a cave, but the flip side also can be true: sometimes a room is just too bright.  When a buyer walks into your home, you don’t want them to say, “Wow … too much light. I feel like I’m on display.”

4. Dated hardware

The hardware and fixtures you installed in the ’90s might be off your radar, but potential buyers may find them dated.  A quick and easy fix is to switch the brass lighting, cabinet hardware, and door hardware to brushed nickel.

5. Visible signs of mold or mildew

You already know this one isn’t good, but having mold and mildew in the house is even worse than you might think. Buyers see it and imagine spacesuits, masks, and thousands upon thousands of dollars in repairs running out of their bank accounts.

6. Personal artifacts

You might cherish those years of enjoyment gazing at your child’s artwork, the prize fish you caught, or your creepy-cute doll collection, but those are all turnoffs to buyers.

7. Dirty laundry

You’ve probably heard the expression “Don’t air your dirty laundry in public.” (If not? Bless your heart. It means don’t discuss private issues in public.)

But in the case of showing your home, you can take the phrase literally. If buyers see your dirty laundry, they’ll flee before they look at the rest of the house.

8. Odd use of space

Buyers want to visualize themselves living in the home. Why make things difficult for them by showing your space in an unconventional way?  When buyers see four tables in the same room or a loveseat in the dining room, it can be quite confusing.

9. Dirty windows

We know it’s a pain to clean the windows (inside and out), but it can make a world of difference to buyers when they can actually see the world around them.

10. Unfriendly reading material

Any object in the home can make an impression on a potential buyer. I remember an attorney’s condo that was filled with books on litigation.  Yikes. The last thing a buyer wants to think about is getting sued by a seller.

At the end of the day, as you prep your home for sale, put yourself in the shoes of the mass buyer.  As the seller, your goal is to appeal to most buyers as possible so in many cases, the more neutral the colors, the pictures, the magazines on the coffee table, etc, the better your chances of capturing the most buyers.  These recommendations are not that expensive, but do take a little bit of time and thought to put yourself in the shoes of the mass buyer.

What are some of your experiences with buyer turnoffs, either as the seller or the buyer? We would love to hear about them!

15 Ways to Prep your Home on a Budget

When my wife and I sold our first home in 2000, we didn’t know where to start to get top dollar for our home.  We were still in our 20’s and didn’t have a lot of money to sink into our home to get it ready to sell.  We’ve now sold multiple homes and wanted to share some of our learnings and recommendations.  

Sinking a bunch of money into home improvements probably isn’t high on the priority list for you. But inexpensive upgrades are crucial for curb appeal and to leave a strong first impression to buyers.  The good news is that it doesn’t cost a lot to stage your home to sell and make a big impression. Here are a few easy ways to upgrade on the cheap.

1. Kick up your kitchen a notch

Changing the knobs on your cabinets is an easy fix. If your appliances don’t match, order new doors or face panels for them to create a uniform look.

2. Buy new “jewelry” for your sink

Swap out the faucet set in your kitchen for a spiffier version. It costs a few hundred dollars and will draw attention away from, say, an outdated dishwasher.

3. Spruce up that bath

Replace old or broken toilet seats with new ones and consider re-grouting your shower or floor tiles if they look dingy or outdated. Clean grout says “new bathroom” — or at least one that hasn’t been showered in a thousand times.

4. Ditch those hoarder tendencies

Declutter! If you must, rent storage space for a couple of months and remove any unnecessary items (including furniture) from your home. The more uncluttered your home, the larger it will look.

5. Decor your front door

Install a new handle and lock and give your door a coat of fresh paint. If budget allows, add a new light fixture too.

6. Sell it with flowers

Add plants or flowers along the walkway that potential buyers will use to enter your home.

7. Make it sparkle

Power-wash your front walkway or porch. It’s the first thing buyers will see, so it should look bright and clean.

8. Scrub, scrub, scrub

Wash all of your windows (inside and out) and replace heavy drapes with sheer curtains, which will let in more light.

9. Invest in a few bags of mulch

It’s inexpensive and can instantly tidy up flower beds or line walkways, giving the feel of professional landscaping.

10. Really clean your floors

Really, really clean them (as in more than just doing a once-over with the vacuum). Rent a steam machine to give your carpets a deep scrub. If you have hardwood floors, have them buffed and polished.

11. Switch out your switch plates

If your outlets and switches are mismatched or look grimy, replace them with new ones. Stick with white and opt for a contemporary style.

12. Hang a pendant light in your kitchen

Doing so instantly adds a modern edge to the space and creates a focal point.

13. Increase the wattage in your light fixtures

It’s a subtle change, but new, brighter bulbs make small spaces feel larger.

14. Undo the unsightly

Is your storm door on the decline? Remove it. Carpeting looks worse for the wear? Rip it out. The less “unclean” your home looks, the newer it will feel to a buyer.

15. Give your guest room a purpose

If the guest room is currently the catchall for everything you don’t know what to do with, clean it out and repurpose it as an office or make it a real space for guests.

Did you know we can help? Our Real Estate Concierges Handyman services can take care of these low budget items for you, saving you time and stress! Let us help stage your home for a successful resell. Give us a call @ 855-REC-6700 or email at concierge@reconcierges.com.