Saving More Money

It seems like only yesterday that savers were docks. They kept piggy banks. They drove last year’s cars. They fished in their change purses for nickels while the superstars flashed credit cards.

Today, values have changed. The new object of veneration is not money on the hoof, but money in the bank; and the dorks have it. The more you save the freer you get because time is on the saver’s side. Compound interest floats all boats.

Like most people who make their own money, I started out living paycheck to paycheck. I could cover my bills (most of the time). But I “knew” that I could not afford to save so I did not bother. Even had I bothered, my small $20 or so a week would not have seemed worth the effort.

Some years (and many lost $20s) later, I learned I was wrong. Anyone can put money aside, at any level of income. You just have to do it. Of all of the New Era’s new virtues daily jogging, eating bran, quitting smoking; saving money is the simplest and the least demanding of your time and attention. Savers can lie in a hammock all day eating Mars Bars and still feel good about themselves. As for the value of a tiny $20 a week.

A financial plan is grounded in savings. That is how you get enough money to pay off your debts and accumulate and investment fund. How much should you save? The answer comes from ancient times. You tithe. It was learned generations ago and is still true that most people can save up to 10 percent of their incomes and hardly notice. I can’t tell you why it works, only that it does. Maybe tithing just collects the money that otherwise goes up in smoke (it’s 9 am; do you know where yesterday’s $10 is?). On a $30,000 paycheck, you can save $250 a month, $3,000 a year. On $60,000, shoot for $500a month, $6,000 a year. On $100,000, save $833 a month, $10,000 a year.

I hear you, I hear you. You say you can’t do it. Your rent is too high, your bills are too large, your needs are too great, your credit lines are too long. None of those things is actually an impediment, but it will take you awhile to see it. So start by saving only 5 percent of your income.


Kicking The Credit Card Habit

Credit Card habit

Credit Card habit

Why do you need a fistful of credit cards? They are heavy. They make your wallet bulge. They cost money.  You can’t remember how much you have charged on them. Now that even the hoi polloi carry gold cards, prestige lies in flashing a plain vanilla card. For an even bigger thrill, pay cash.

As a status symbol, the credit card is finished. It is now just a transactions workhorse and having too many of them says you are dumb. Assuming, as I do, that you want to get out of debt and build some saving, plastic ought to serve a single purpose: convenience. You put it down instead of writing a check or paying cash. At the end of the month, you pay the bill.

Not that you are perfect. You will still stretch the occasional bill over two or three months; maybe at Christmas or after a vacation. But your goal is never to charge any more than you can easily repay. For the twenty-first century, debt is out.

How to get rid of consumer debt;

It is so simple that I am almost embarrassed to mention it. Don’t borrow anymore. That is all there is to it. Say to yourself, “Today, I am not going to put down a charge card for anything.” When you buy something, pay cash or write a check.

Tomorrow, say the same thing: “I am not going to put down a charge card for anything. I am not even going to borrow $10 from a friend.” Take it slowly, one day at a time. It is like stopping smoking. You will be nervous at first; you won’t see how it is possible to live; you will suffer relapses and sneak a new debt or two. But when you get up every morning, renew your pledge. To make it easier, quit carrying credit cards.

I hear you saying, “I can’t get along without a credit card.” Of course, you can. You can pay by check or debit card. On trips, you can use traveler’s check. You may have to show a credit card to rent a car. But when you bring the car back, pay the bill by personal check or travelers check.  (If the rental agent won’t take your personal check, pay by card and immediately make out a check to the credit card issuer; pay this bill the moment it arrives.)

Naming an Executor

The executor or, in many states, personal representative sees that your will is carried out. It is tiresome, detailed, time-consuming, thankless job. You are doing no favors for the person you name. All the property has to be tracked down and assembled (no easy job if you did not keep good records). Creditors notified. Heirs dealt with tactfully. Arguments settled. Bills and taxes paid. Property appraised and distributed or sold. Life insurance claimed if it is payable to the estate. Investments managed until they can be distributed to their new owners. Final accounting to be made, to the heirs and, perhaps, to the courts.

The executor usually works with a lawyer, so you do not need an expert in estate law or high finance. You need virtues that are much harder to find. An executor has to be willing, reliable, well organized, honest, responsible about money, fair-minded, and sensitive to the worries of the heirs. The usual practice is to ask able heirs (or friend) to do the job. If you name a professional executor a bank or a lawyer include a family member as co-executor, just to keep things moving along. Get permission before putting down someone’s name. If money is misspent or errors made, the executor can be held personally responsible.

A friend or family member usually doesn’t ask for compensation. But you should specify this in the will; otherwise, they may claim the commission allowed by law, even though you expected them to serve for nothing. (In large estates, it may be cheaper for a family member to take a commission than to take the same amount of money as an inheritance. The income tax on the commission may be lower than the death tax on the net estate.)

When banks or attorneys are executors, however, they may charge, and charge, and charge sometimes by the hour, sometimes a fixed fee, sometimes a percentage of the assets in the estate that goes to probate. Your estate will pay less if you keep the executorship at home and let your family hire a lawyer by the hour or by the job. (Executors should shop lawyers, asking more than one what they will charge; like any other business people, lawyers cut fees for jobs they want and that they know are up for bid. Your family may not even need an attorney.

More Living Trust Facts

Trust facts

Trust facts

The states have different title loans rules and taxes affecting trusts, so see a lawyer if you move. Your trust document should specifically allow for a change of state so the laws that govern the trust can change, too. Otherwise, the laws (and taxes) of your former state apply unless you get a court order allowing a change.

There’s a lot of legwork involved in transferring property into a trust. Your lawyer will prepare the new deed for your real property, as well as transfer letters for assets held by your bank, broker, and other financial connections. But you will have to follow up.

Don’t make the trust the beneficiary of your 401(k) or Individual Retirement Account. If you died, that whole sum of money would go into the trust and be taxed right away. By contrast, a spouse or other individual beneficiary can roll the 401(k) into an IRA and take payments over many years. That spreads the taxes out.

You can name the trust beneficiary of your life insurance policy. The proceeds would then go into the trust to be distributed as you directed. Before doing this, however, married people should ensure that a surviving spouse will have plenty of ready cash in case there is a delay in getting the trust paid out.

Your trust should define what it means to be disabled, requiring a successor trustee to handle your affairs. For example, “I shall be deemed to be disabled when two physicians licensed to practice medicine in my state sign a paper stating that I am disabled and unable to handle my financial affairs.” The same language can be used to determine when your disability has passed.

To change the terms of a living trust, you prepare a written amendment. Don’t scratch in the changes on the trust document; they won’t be accepted. In some states, the amendment has to be signed and, maybe, witnessed just like a will. But in most states, a notarized signature will do.

A married couple should ask an experienced estate-planning lawyer (not a lawyer or insurance agent who is hard-selling trusts) whether they need one trust or two. In community property states, it is common to have a single trust document for all the property; each spouse’s separate property interests are segregated within the trust; at the death of the first spouse, the trust divides into multiple trusts include the title loans.

Granting the Power, Durably

Everyone needs a backup, a person to act for you if you are away, if you are sick, if you get hit by a car and can’t function for a while, or if you grow senile. That means giving someone, a spouse, mate, parent adult child, or trusted friend your power of attorney. A lawyer can get an Atlanta title loan in a jiffy. . It is probably in his word processor and just needs printing out. Young people need a power of attorney as well as the old.

Limited powers of attorney grant narrow right, such as: “Christopher can write checks on my bank account to pay my bills while I am out of the country for six months.” Ordinary powers of attorney give broader powers over your finances. But both limited and ordinary powers expire if you become mentally disabled, however, which is exactly when you need the help the most.

So protect yourself against doomsday by asking a lawyer to draw up a durable power of attorney. It lets someone act for you if you are judged senile or mentally disabled, if you fall into a coma, or if illness or accident damages your brain. A durable power lasts while other powers don’t. As long as you are mentally capable, you can revoke a durable power whenever you like.

The person who holds your power of attorney could, theoretically, exercise it at any time, even if you are healthy. He or she could sell your investments and clean out your bank account. But that is not as easy as it sounds. Banks and brokers normally check on what has happened to you before accepting a power of attorney. Besides, you would not give the power to someone you did not trust.

Be sure to execute copies of the durable power maybe even 10 or more. Some institutions want an original for their files (photocopies won’t do) before they’ll cooperate with the attorney in fact. In many states, you have to execute new durable powers every 4 or 5 years to show that your intention holds. Insurance companies and financial institutions probably won’t honor an old power. A few won’t honor any durable power of attorney at all, or any power more than 6 months old, or any power not written on their own form. In my view, that is harassment, but they sometimes do it and you might be stuck with Atlanta title loan.