Financial Assessment
So I go on to you people all the time about my finances, I thought I’d throw this out here.
I’ve talked a little bit about how I’m doing budgeting, cutting expenses, working on improving my credit.
In the past month, I’ve made some gains. I reworked my budget, I opened up a savings account, I got renters insurance. I opened an IRA with $20. (I’ll have one hell of a retirement with my $20!!) I got two erroneous things to come off my credit report.
My bank offers a free financial assessment tool where you answer some questions and they spit out what you should do. I thought I’d put it here as a reference as I go along, in addition to my comments.
Then you all can feel free to tell me what your financial goals are and all that and we’ll have a nice chat.
So here’s what it says about me:
1. Obtain disability coverage that provides at least $25,800.00 yearly.
Hmm. I probably won’t do this anytime soon. I’m already disabled, for starters.
2. Work with an attorney to draw up durable powers of attorney, living wills, and HIPAA authorizations.
Ok this I definitely need to do. I had these things, but they gave all the power to Kenny, which considering we don’t speak, seems ill-advised.
3. Work with an attorney to draft a will and name guardians for your children.
Yes..I really need to do this. I’ve been putting this off way too long. This is a priority.
4. You should buy an extra $301,000.00 of life insurance.
Yeah, I need to. I have no life insurance. If Geo I dies, I get some money, but if I die, everyone is SOL.
5. After paying monthly bills, save until your emergency fund equals $10,200.00.
Hmm. Building an emergency fund is one of my definite goals. I’m not sure I will save to $10,000 though.
6. You should save an additional $517.43 or 14.44% per month towards your retirement.
I think they are mocking my $20 IRA fund. $500 a month towards my IRA would be tough. What I’m planning on doing is splitting my extra money 1/2 into the IRA and 1/2 into the emergency fund until I get the emergency fund built, and then dumping the rest into the IRA. Of course, that doesn’t account for…
7. Save monthly to an education savings account.
Ugh. This is one of my nightmares. Of course, I didn’t have an education savings account and I’m not sure I feel that I should pay for my kid’s education. But I’d like to be able to contribute something.
8. Review all your insurance every two years to make sure you are still fully protected
Ok, I can do that.
9.Check at least every three years to see if your legal documents need updating.
Ok!
10. Rebalance your investments at least annually to stay on target and adjust for risk
Sounds good.
11. Check your credit report at least annually for errors or identity theft.
Ha. I check mine every day.
Right now, it says I’ve got a score of 45 out of 100. Well, that’s something.
How about you? Do you do these things? What are your goals?
September 19th, 2007 at 12:56 pm
Deffinitely get an emergency fund. Hubby and I had one at about the 10K mark and it’s kept us solvent for the past year through a 1500 mile move, joblessness, major illness, schooling, underemployment, etc. We weren’t living just on the emergency fund but having a stash that will cover that extra couple hundred you need to make ends meet is priceless.
I keep mine (what’s left of it) at ING
September 19th, 2007 at 1:11 pm
For #2, if you already have these documents, you know the wording is correct, you just need to re-type them and change the names. And sign them have them notorized or whatever. You do not need an attorney for that, don’t pay one for something you already have.
If I can, I’d like to recommend a book to you about finances and saving and stuff like that. It’s called “Smart Women Finish Rich” by David Bach. It’s an easy read, and gave me so much insight into what I was doing. He has a whole series, but that’s the only one I read. I didn’t do the worksheets in it either, but just reading it helped me tremendously. That and my budget system, which is a story for another time.
September 19th, 2007 at 1:23 pm
baggage–some of those things seem really smart. if you want to avoid hefty lawyer fees you can buy (or get from the library) nolo press books. they tell you how to set up a will and the other power of attorney kind of papers. there’s also cheap-ish (cheap for legal) at places like ‘we the people’ type services.
as for the emergency fund, make sure to put it into something fairly liquid, but interest-bearing, like a liquid cd or moneymarket fund. check into FDIC coverage if you think that might make you sleep easier–some things are FDIC insured, others, not so much.
good for you for all your work on this!
and $20 is no joke–any amount is good. sure, you’ll want to add more, but even if you added $20 a YEAR for the next 30 years and it was getting about 8% interest compounded once yearly (which would, historically, be like putting it in the stock market), you’d end up with 2,648.17. And if you did $20/month at the same rate you’d end up with almost $30,000. (29,564.26 to be exact.)
September 19th, 2007 at 2:25 pm
Wow, go you! My goal for now is pretty simple: finish grad school without amassing any credit card debt (I will have significant student loan debt). My goal after that is to start making an income and to educate myself about money so I can use it wisely! And to pay off that loan debt. I might be in school for another 7 years or so, though (I’m applying for a Ph.D), so maybe I should start educating myself in the meantime.
September 19th, 2007 at 3:16 pm
I will read your post as soon as my head stops whirling around in fear. We have the life insurance and the wills, but with me going to school it feels like it’s a real effort to save. I’ll read it, just not right now.
And because you didn’t do the last one, I have TAGGED YOU AGAIN!! Poor you.
http://www.speckblog.net/2007/09/19/a-photo-a-noto-and-a-meme/
September 19th, 2007 at 4:38 pm
Ugh… I don’t do ANY of those things! Right now I am really excited because I transferred $100 of my paycheck into my savings account. Woohoo!
September 19th, 2007 at 6:06 pm
Re: Saving for education. I would think that your kids would probably qualify for grants and scholarships fairly easily.
I have a good friend (who is not wealthy) she has 4 kids, and the first two have gone to really good schools. Her key - apply to small, private colleges who normally have a lot of foundation money to give to kids who need it. It actually costs her much less to send her child to a decent private school than the instate public university.
September 19th, 2007 at 8:21 pm
My FIL became a financial advisor after retiring from the post office….so luckily we’ve had someone guiding us as we’ve begun all of these items. One of his best pieces of advice was opening Coverdell accounts for the kiddos. It is an education savings account that you can use for almost any educational expense including extra tutoring during middle and high school, private or parochial schools and even funds trade schools as well as traditional universities or colleges.
With SN kids I don’t know if they will be able to succeed in a traditional educational path. The Coverdell fund is flexible enough that I can use it for whatever they need.
September 19th, 2007 at 9:33 pm
I don’t do any of those things. Right now we are focusing on paying off out HUGE debt, then we are going to work on savings, college funds, etc.
September 20th, 2007 at 6:41 am
Did someone say “HUGE debt”? Yep… That would be us too. It’s hard to save when you can’t even pay your bills. And although both my son and I should qualify for disability benefits, they won’t give us any because my husband’s income is to high. Go figure!
September 20th, 2007 at 12:09 pm
Suggestion for education. This is what we are doing for Mikey for college. We have a 529 savings plan
http://www.savingforcollege.com/intro_to_529s/
We opened it with $25 and put that much, sometimes more when we can afford it, each month. It is tax deductible and you can also link your bank card/credit card up to it (if you shop in certain stores like when you buy gas or shop at something like Borders they add to the acct) and your store savings cards (CVS/Pathmark/RiteAid/Walgreens etc.) and they will add $ too when you shop there.
Check it out. It’s an inexpensive way to save for college.
September 20th, 2007 at 9:16 pm
I have a 401K to which, I contribute, like, 1% of my income. And I have life and disability insurance through my employer. That’s about it. I have way too much debt to even think about saving right now — I’m on about a 10-year plan to pay it off. I do need to do some of the stuff that doesn’t cost a lot, like the power of attorney and the guardianship.