If you’ve taken even a quick glance at the news over the past few days, you are sure to have heard about Hurricane Irene bearing down on the East Coast of the United States. The (currently) Category 3 storm is the first major hurricane anticipated to make landfall on the continental US in several years. Some localized evacuations are already underway, and people are preparing to ride out the storm in a wide variety of ways: boarding up homes, stocking up on water and gasoline, battening the hatches.
CHECK your insurance policy. Verify that you are covered for the impending disaster; if not, consider looking in to getting coverage if at all possible (there are often delays or waiting periods to prevent people from buying insurance a week before a hurricane). Make sure that you have your policy information in a safe and accessible place in case it is needed – claims phone number and policy numbers are certainly a good place to start! Don’t depend on a number stored in your phone or a piece of paper lying in a shoebox somewhere.
CONSOLIDATE important documents. The shoebox method won’t work if your roof springs a leak and all of your papers get drenched. Gather your important files – wills, insurance, deeds, titles, birth certificates, etc – and make sure they are in a secure and waterproof location that you will be able to access. Keep copies in another spot of a different type – remember, safety deposit boxes aren’t always immediately accessible!
ENSURE that you have cash available. Surviving a disaster means you’re around for cleanup, helping people out, and a myriad of other things. Electricity may be days in coming. In the meantime, you are still going to need food, water, shelter… The list goes on. Hurricanes have led to long ATM lines and cash shortages while plastic methods were unavailable. I recommend keeping at least four days’ worth of expenses (again in a waterproof and secure location!) accessible when you see the possibility of a storm.
PAY your bills, or ensure that they have automatic payments set up. If you are hit with a natural disaster, the last thing on your mind is going to be paying bills. People displaced by Hurricane Irene probably aren’t going to be thinking about their car payment, or cell phone bill; however in order to avoid penalties and even more headaches, it is a good idea to have all of these things taken care of ahead of time.
Reverse mortgages have been all over the news in recent months. Though not an ideal option for everyone, with increasing numbers of seniors needing a dependable source of income – especially given the status of the economy – reverse mortgages can be effectively used to solve many problems faced by people today. There are several types, with different goals – one to get you cash based on the equity in your home, one with flexible credit lines, and even one to help finance the purchase of a new primary residence (try out this reverse mortgage for purchase calculator).
Reverse mortgages currently allow more than half a million senior (sixty-two or older) homeowners to access a portion of the equity that has been built up in their home. This money is tax-free and allows you to get money, similar to how a loan would, without the need to make monthly payments. Gaining access to this can allow people concerned about their financial future to gain certainty and stability that might otherwise be unattainable.
It’s worth taking a look to see how much you can save. One of this site’s sponsors has provided a free reverse loan mortgage calculator which you can use to see how you can benefit from this program!
The reverse mortgage has several advantages over other cash-generating options. It is a legal construct of the federal government; the oldest of these national programs was signed into law in 1988 in the form of the Home Equity Conversion Mortgage (HECM – and here’s an HECM saver calculator). Unlike some things that should virtually never be touched – payday loans, credit card advances, and such – reverse mortgages are backed by the government in the form of the Federal Housing Administration (FHA), which is a part of the Department of Housing and Urban Development (HUD). Because of this, not just anyone is eligible to participate in the reverse mortgage program. To qualify, homeowners must meet several requirements:
- You must be at least 62 years old,
- The home must be your primary residence, and a single family, one- to four-unit owner-occupied, townhouse, condominium, or manufactured home-type property,
- Have a sufficient amount of equity in your home,
- Have the ability to pay any existing mortgage on the home,
- You must continue to maintain the home and pay property taxes and homeowners insurance (just as you would with a mortgage), and
- You must attend a HUD-approved counseling session
If you meet these requirements, it may be beneficial to take a look and to see what’s out there. The vast majority of reverse mortgages are of this HECM variety. Users will have the option to take out the funding as a line of credit to draw against, a lump sum, or a monthly payment – different people will have different needs, so there is a lot of flexibility in these mortgages. If your home is particularly valuable (over $500,000) you may be able to take part in the Private Cash account reverse mortgage, which offers even more exciting options! There are many places, types, and options available for those interested in the reverse mortgage and similar products – do some exploring, a little research, and you never know what you may find!
During the regular clean-up we should all be doing for our finances, you are sure to come across a lot of documents that you’re unsure of the status of. Many of us have been a situation where a vital document gets thrown away – receipts, tax returns lost, copies of bills – and it is never a fun occasion. What should be kept, and what should be thrown away?
Forever – Keep these in a safety deposit box or some similar secure location.
- Marriage Certificates
- Birth Certificates/Adoption Papers
- Death Certificates
- Wills and Trust Documents
- Mortgage Satisfaction and Deed Documents
One Month – A standard filing cabinet will do for most documents. I do recommend a lock though!
- ATM Receipts and Bank Deposit Statements. When you balance your checkbook (which you should be doing at LEAST monthly) you can dispose of these.
- Credit Card Receipts. If these aren’t being used for tax reasons/deductions.
- Utility Bills. Also if not being used for tax reasons/deductions (for example, if you deduct a home office).
- Canceled Checks.
- Quarterly Investment Statements. But keep your annual reports!
- Income Tax Statements and Returns. You can be audited at any time for any reason for up to three years after a tax return has been filed. There are two exceptions: if you omit 25% or more of your income, that is six years, and if you don’t file at all, this can happen at any time during your life. So file!
- Tax Supporting Documents. This includes records of selling real estate and stocks, utility bills, all your receipts, and so on.
- Property Tax Statements and Analysis.
- Home Improvement Records. These will generally be tax-supporting documentation, but keep them anyway.
- Stock Records and Annual Investment Statements. This is at a minimum – many people prefer to keep them longer.
- Medical Bills and Insurance Documents. This includes canceled policies.
- Loan Documents. This is for any type of loan (except mortgage) – HELOC, student, and so on – all documentation should be kept for at least seven years from the date of loan satisfaction.
- Contract Documents.
- Pension and Retirement Documentation. These records should be held for as long as the accounts are active.
- Bank Statements.
- Disputed Bills. Keep these until the dispute is resolved plus one year.
Obviously, each of these is subject to individual circumstances. However, this should provide a good basic guideline to what you are able to get rid of!
Spring cleaning is a concept all of us are sure to be familiar with. The annual drive to clean out, de-clutter, and prepare one’s home for the upcoming year is something we can all relate to on some level. However, one aspect that many people forget to consider during this cleanup is their finances – dollars and cents need to be maintained as much as floors and rugs!
And why should we limit ourselves to spring? A house needs constant maintenance, and it’s a good idea to do a thorough scrub more than once a year – hence the fall cleanup. The same applies to your finances – getting your financial house in order is just as (if not more) important than sweeping the floors. Consider taking a look at your finances as the holidays approach to be sure you are prepared!
1) Organize. Having a system in place will help prevent clutter from forming in the first place. Figure out a way to organize everything and ensure that it is something you can maintain and will use. There are many online tools and options that you can use if you like; others prefer old-fashioned paper records and filing systems. Regardless, find something that works for you!
2) Review. Check your accounts – all of them. Bank accounts, retirement accounts, insurance policies – the whole nine yards. Ensure that your accounts are paying you the best interest rates, and move idle money around to somewhere that it can do you more good. This works both ways – ensure that you are paying the lowest rates you can, and earning the highest. Update mailing addresses and contact information if needed, and verify that they have all of your correct personal information. You may find that it is difficult to remember some of your various accounts across institutions; this can be a sign that you need to consolidate a few!
3) Check. Get a credit report. You’re entitled to a free one every year from www.annualcreditreport.com, which takes just a few minutes. You can then use this opportunity to verify that everything is correct, which will help detect and prevent errors and even identity theft! Note: This won’t provide your score, just the report.
4) Adjust. Take a look at your goals, savings, spending, and resolutions. This is a perfect chance to ensure that the goals you set for yourself are still in line with what you truly desire and need. Has your spending been on items that you needed? Are you saving as much as you wanted? Ensure that you are reaching for and obtaining the right goals for you.
5) Purge. Unbury all of the paperwork and documents that you’ve saved over the last year or so. You’ll find bills, paystubs, statements, and probably plenty of other things. Do you still need all of them? Organize and store the important ones, but get rid of the rest – decluttering is one of the best things you can do during the fall cleanup.
Obviously, these are only a few of the many tasks you could add to this list. You could take a look at wills, trust funds, and a wide variety of other things. Share your thoughts in the comments- the best ones will be added to the spring article!