Itߦs April 15th! Today used to be tax day, in a pre-COVID-19 world, but hopefully you know filers have until July 15th, 2022 to file their 2022 returns. I wanted to get the word out that the IRS has launched a new portal that you can use to check on your stimulus payment and see if the agency has your direct deposit information. Be aware that the system may be slow or bogged down at times, so trying multiple times is advisable. Try not to get frustrated.
Screen shot from irs.gov ߦ Get your stimulus payment
First, you will want to navigate to THIS PAGE and look for the blue, ߦGet My Paymentߦ button, a picture shown to the right.
You will need your 2022 tax return info, such as your adjusted gross income and refund or tax due amount. If you didnߦt file a return in 2022, then you will need your 2022 information. If you didnߦt file at all, you can also find a link to sign up for an economic impact payment at this same page. Look for the button to the right of the first one, shown below.
From irs.gov ߦ Information for those that do not have to file tax returns
Once you get through these pages you will be prompted with a warning page telling you that this site is for official use only and that you shouldnߦt be using other peopleߦs information. Understand this information and click on the button. This will bring you to the ߦGet My Paymentߦ page, which is where you will enter your social security number, date of birth, street address (no city, state) and ZIP code. NOTE: Use dashes in your social security number (e.g 123-45-2022) or else it will fail. I tried without the first time and with the second and it worked the second time. It may prompt you for more information on the next screen. This is where I had to enter my 2022 AGI and refund amount. Once I got this far, the page said they didnߦt have my direct deposit information and prompted for bank routing and account information. Iߦm not sure why this information wasnߦt in the system, as I received my recent tax refund via direct deposit, but whatever helps my payment reach me sooner, the better!
If your information is all set, the website will show the message below, which means your payment is in process.
Confirmation page from irs.gov
Some other COVID-19 facts on IRS operations:
-The IRS is not processing paper returns due to the service centers being shut down.
-No paper forms requests are being filled. Try to print them off online.
-Mail correspondence is not being opened either.
-If you need to do something, try to do it electronically, or wait. This is why the deadline is not July 15th, 2022.
I hope this was informational for those waiting for for thier COVID-19 windfall.
What do you plan to do with your payment? Leave a comment and let me know. Iߦm interested!
Last week, in my post Lessons Learned: Financing My First Home, I wrote about buying my first home and the financing process behind obtaining it. I mentioned briefly that you should do a break-even analysis anytime you are thinking of refinancing. This could be a mortgage loan refinance which Loan Remedy in Utah offers the best, or something else like student loans or an auto loan. What’s the best way to go about figuring out if the refinance is viable and the best choice?
As an accountant, I like to do this in a spreadsheet. I have added the Excel file shown within this post to my new Templates page, where I intend to share my tools that you can use to become savvier.
There are different scenarios to look at when doing a break-even analysis. First, in a refinance, you shouldn’t consider “sunk costs” or money you have already spent on interest. That’s because you have spent it and will not save anything in the future. Let’s imagine you were thinking about refinancing from a 30 to a 15 year mortgage with the objective of paying less interest and owning your home free and clear, sooner. Imagine the interest rate you have on your 30 year is 3.625% and the new rate would be 3.125% on a 15 year. Also, let’s say you are three years (36 months) into paying your 30 year mortgage, so all the interest you have paid at the higher rate is a sunk cost. According to my spreadsheet, you have paid interest of $27,804 (note: for this exercise, I am rounding to the nearest dollar). This point is important because you will want to start at your current ending balance for the refinance, or $247,625.
Loan amortization schedule snapshots by W. Vance
Next, copy the tab and use your current ending balance for the refinance, or $247,625, as the loan amount. If your loan officer tells you there is no “out-of-pocket” costs, you will need to add in the closing costs from your good faith estimate. Let’s assume the costs to refinance come to $3,500. This will need to be added in as your loan balance will increase, for a new loan balance of $251,125. Change the interest rate to 3.125% and the term to 15 years.
Loan amortization schedule snapshots by W. Vance
You can already see you would save BIG by making this move if you take the total interest of the 30 year loan, less interest already paid, less interest that would be paid on the 15 year, less closing costs ($142,486-$27,804-$43,170-$3,500=$68,012). This savings is if you assume you stay in the home for the next 15 years and would have paid the minimums on the 30 year mortgage.
So, where is the break-even in all this?
This part is where the Excel spreadsheet makes it easy to spot about when you will hit that magical point in time where you are profitable in your refinance. To do this, I went back to the original, 30 year tab and added columns for the cumulative interest from the refi-point (December 01, 2022 in this case) and linked the cell for cumulative interest from the 15 year tab. Then, I added in a difference tab (30 year cumulative interest, minus 15 year cumulative interest), and followed the total down until it was close to $3,500 in closing costs. In this case, in month 31, or two years and seven months into the schedule, I would break-even on my refinance.
Loan amortization schedule snapshots by W. Vance
So, this seems like a lot of numbers and does it really matter? I mean, a lower rate is always better, right?
Not always! Let’s say you started paying your 30 year like a 15 year. Then your break-even would be much further down the road. In this case, by not refinancing, you save the $3,500, but pay your old, slightly higher rate. This means it takes even longer to break-even, which is at month 41, or about three and a half years.
Loan amortization schedule snapshots by W. Vance
Let’s imagine that I wanted to move to a new home and sell this one within the next three years. Then it would be a bad move to refinance, because I wouldn’t recoup my closing costs with interest savings. Doing nothing is better in this scenario.
Other Considerations besides savings and break-even points
Sometimes saving on interest looks good on paper, but may be more difficult to execute in real-life. If you have seen a good increase in income since purchasing your home, and other goals are complete or well underway, then refinancing to save interest over the years may be a great move. However, if you still need to build up emergency cash, kid’s college savings, or have consumer debt, you should hold steady and divert extra cash to those goals. Also be careful that a higher mortgage payment doesn’t drive you into debt in other areas such as using credit cards to make up for the cash being spent on the house. This defeats the whole purpose of a refinance and likely has you paying more interest because of the credit cards. Only refinance if it saves you a considerable amount of interest and beware the temptation to fall for those ads to refinance and take cash out or lower your payment by resetting the amortization clock on your loan. If you have 20 years left, and find rates have dropped, make sure you request a 20 year term and not a 30. No one wants to be paying for their home long after their retirement, or worse yet, can’t retire because they took out a 30 year mortgage at age 55!
Did I completely overwhelm you with all these calculations? Don’t feel discouraged! I’m an accountant and sometimes get carried away. Send me a comment on your situation and I’m willing to help!
I can’t believe it has been 13 years since I started the process of buying my first, and current home. I was intimidated. I didn’t know a lot about the process and I was mostly scared of rejection. For a long time, I didn’t think I would ever qualify. My then significant other and I would drive around, looking at homes with for sale signs in the yard and talk about what we like or didn’t like, but we would always be taken back by the prices.
Then, in April 2022, I found a new home development in the suburbs that seemed like it was in our price range. We went and looked on a Saturday afternoon and liked what we saw. The sales person happened to have attended high school with my significant other, which helped make us feel at ease. In hindsight, we probably should have sought the help of a realtor, but we were naive and only in our mid-twenties.
We went back the next day, Easter Sunday, and decided to take the big leap and go into contract. I wanted to be a homeowner so bad. I rationalized everything, and took the only lot available with the floorplan we could afford. In hindsight, I wish we would have waited for a bigger lot. The next week, we went to the affiliate mortgage company and applied for financing. In order to keep the house under contract, it was required we get approved for financing. An important part of getting a mortgage is to have a property picked out. Without it, you can only get pre-approved, which is a good way to see how much home you qualify for, but is not that same thing.
We didn’t know much about the types of mortgages available, so we went with what the loan officer said was the best for us. In hindsight, a 7/1 adjustable rate mortgage was not the best pick. Payments were interest only for seven years, with an adjustable rate, then reset at regular payments for the remaining 23 years. Five percent of the home price would be our down payment and 15% would be from a home equity line of credit (HELOC). Prior to the 2022 financial meltdown, people could avoid private mortgage insurance (PMI) by financing this way, because the first mortgage was only 80% of the value.
I believe these types of loan packages are a thing of the past (thankfully!). I recommend a 15 or 30 year, fixed rate mortgage, with no points, unless someone else is paying those for you. Points are prepaid interest that lets you buy down the rate so your payment is lower over the life of the loan. Always do a break-even analysis with any type of refinance and see how long it will take to recoup the savings versus the higher rate. If you are not planning on staying in your home longer than the breakeven point, then don’t spend the extra money and refinance or pay points. To understand more about the different types of mortgage programs, visit this Bankrate page.
Once approved, we didn’t have a locked interest rate because our home was not slated to be completed for over four months. Eventually, in June, we were able to lock our rate and know better what our monthly payment looked like. At the same time, we were saving for our down payment, which back in 2022, was allowed to be stated, and not verified, as long as you had that amount by the time you closed. Of course we made it and bought the house, rode the value down and in 2022 was able to refinance to a fixed-rate, 30 year loan, at 1/3 less interest. This was made possible by the HARP program, which allowed people to refinance underwater mortgages that were at a higher rate or part of a sub-prime loan such as the one we were sold.
The lesson I learned is to always do your homework by understanding the different options available. If you don’t qualify for a financing option you want, make sure you understand the reason. If you feel uncomfortable with a mortgage officer, or company, then step away and call some other companies. Also, remember that you are the customer and they want to sell you a loan because if not, they don’t get paid. If you don’t qualify, or don’t feel good about the deal, chances are you will regret it. Speak up and be your own advocate, and if you have an elder family member or friend who has been through the experience, don’t be afraid to ask them to sit with you, or at least look over the deal. You can buy your first home, but make sure it is planned out well, or your home might own you and limit your life outside of making your monthly payment.
Do you have any home financing nightmares to share? Leave a comment!
Personal finance bloggers give a lot of advice on what to do to save money or how to set up a budget, but it is a well-known fact that personal finance success is mostly reliant on your behaviors and patterns. We all know that we should be saving some money for retirement and that a “rainy day” is coming sooner or later, but how can we put mind over matter?
Start small. You may be gung-ho on getting your financial life turned around, but it often isn’t realistic to implement your plan in one day, one week, or even one month. Instead of planning to do it all from the start, incrementally work your way towards success. For example, if you eat out for lunch every day, start bringing your lunch one or two days a week. If you spend substantially less than when you eat out, such as bringing a $3.00 frozen meal instead of spending $10.00, transfer $7.00 to your savings, or allocate that amount to your debts. If you equate your behavior to actual money in the bank, you are likely to keep it up as you see your progress.
Track your progress. How many times have you made a perfect budget only to get so busy that you don’t track what you spent money on? Let’s face it; not all of us are accountants with a love to tracking every cent that comes in and out. Automate by using Mint or Everydollar, which sync bank and card accounts using a phone app and a web login. Couples can stay in sync on income and spending by merging finances. If a couple can get on the same page with money, you likely can conquer most other marital spats that come up over the years.
Personally, I love tracking changes in my net worth over time. If you have software that lets you download your finances, you can do this in Excel or run a report. I use Quicken, but I am a dinosaur and now have to pay for Quicken, and I will give a crash course in a post later this month! An alternative is to list all your assets on the top of a page or spreadsheet and list all your debts below. Add up both assets and liabilities, and then take the difference of the two. This is your net worth. Hopefully your assets are more than your liabilities, but I too once had a negative net worth. It takes time and focus, so don’t let this number stop you before you start.
Net worth Report from Quicken Desktop 2022
Set attainable goals. Instead of only making one big, fat, hairy goal, break it down into baby steps. We all want to have a net worth of one million dollars when we are just getting started, but it takes years of good behaviors. If you set out to save a million dollars for retirement, work backwards to figure out how much you will need to contribute at a historical rate of return that matches your investment risk levels. Most retirement fund websites have calculators that you can plug in the number of years you have to work and the amount you want to retire with. If you are paying off debt, list them out and make a game plan. When you pay one off, celebrate a little and look forward to the next win!
Reward thy self. If you set savings or debt reduction goals, and you meet them, be sure to splurge a little on one night out or a new clothing item. You should set a limit for yourself, say $50, for a monthly treat, or maybe as much as a few thousand when you meet a major goal such as saving up three months of expenses or paying off all your consumer debt. Of course, don’t go into debt or reduce your emergency fund to have fun, make sure you earmark new cash for this purpose. Just as you sacrifice to complete a degree or get your kids through school, changing money behaviors is just as much of an accomplishment. Change your behaviors slowly and they will become habit, which will show in the long run.
What’s your worst money habit? Leave me a comment on my blog page!
For many people, saving money in a bank account is a real struggle. Everyone knows they should save, but many are confused on techniques to be successful. Questions such as “should I save for retirement or an emergency fund?” or “how can I save in my already strained budget?” are common. I will touch on a few roadmaps and strategies I have used to become successful at saving money.
The first technique I use seems pretty simple. I just use my workplace 401(k) plan to scrape my retirement savings off the top before I even see my net pay. Think of this like a tax payable to you at some point in the future. While Social Security is somewhat of a safety net, it likely won’t provide enough for a comfortable retirement, especially with the rising costs of healthcare. Saving something, especially in your younger years, will pay off big because the money has more time to grow. If you start saving later, then you will likely end up having to more to retirement, with less time to let your investments compound.
There is no hard and fast rule about how much you should allocate to this, but the more the better. Dave Ramsey’s retirement page suggests 15% of your gross household income, not including any company match. While 15% is a great number to shoot for, this may be difficult for those just starting out in their field or those that have student loans weighing them down. In addition to Dave Ramsey’s site, Fidelity also has a great set of calculators you can use for free to get an idea of what you need to save. If your company has a match, contribute at least the minimum to receive the match because this is “free” money, or at least extra compensation that can grow and can be worth much more down the road. If you are up to your ears in debt, then I would recommend stopping any retirement saving and putting every extra cent into paying down high-interest debt. Another tip, don’t turn down your savings so that you can “afford” a new car with a high payment or a house that is too expensive. The older you, at age 65 will thank you for having self-control!
Image courtesy: https://www.everydollar.com/
The second technique is using a zero-based budget that includes a line item for saving. Now that your retirement fund(s) are automatically accumulating, you don’t need to have a line item unless you have separate accounts that pull from your net paycheck or net income, if you are self-employed. Start with your expected monthly net take-home pay and list out your expenses.
You should have some room built in for savings. I typically plan out my expenses for each paycheck and there is something left over. Sometimes it is a small amount, other times it can be a good chunk of money. Maybe you can’t save on some paydays but can save more on some others? Either way, you should have savings for an emergency fund, then savings for other goals such as a new car, house down payments, college tuition, and so forth. If you don’t have anything special to save for, really evaluate your future needs for big-ticket items and plan for something to need replacement. There is always something that you can be saving for to avoid going into debt in the future.
If you don’t have enough money for savings or extra debt payoff, you need to think about what you can cut to get more money in your budget. If you have cut to bare-bones and are still coming up short, think about how you can grow your income. Side hustles, or second jobs, are a good way to plug your budget holes, especially if the cash flow crunch is temporary due to paying off debt. If the shortage is permanent, think about what you can do to increase your income permanently, whether applying for better paying jobs, or re-training for a more lucrative career.
My last tip is to always be looking for “found” money, or windfalls. These can be great ways to build up your savings faster than planned. Income tax refunds, credit card cash back checks, birthday gifts, or refunds are all common and can boost savings quickly. Also look around the house for items you no longer use and try to sell them on Craigslist, LetGo, NextDoor, or FaceBook Marketplace. Social media makes it so much easier to sell things quickly while decluttering our homes.
Be sure to sock that money away in a safe, FDIC insured, high-yield savings account. Some online banks are offering accounts with yields between 1.5% and 1.75% APR. This is far better than the standard .05% paid by many large national banks. You can visit NerdWallet.com for a review of the best savings accounts, plus ones with one-time bonuses for depositing larger amounts.
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Veteran’s day weekend was pretty eventful around my house. It wasn’t planned that way, but things aligned and became interesting and a little exciting. As you recall from part 1, I was begrudgingly watching Bolin, my friend’s Great Dane, while my two females were in heat. I justified it in my head by telling myself that the dogs had all be together in the past while in heat and nothing happened, so maybe they just weren’t interested since they were all like siblings. I was wrong!
On that fateful Sunday afternoon, I was vacuuming the house and I overheard a yelping sound coming from my office. I went to see what the matter was and found Spice and Bolin “locked” together. I was a bit shocked and wasn’t sure what to do. Then, I heard someone pull up in the driveway. It was my friend Evan in for a visit with little notice. I told Evan and his friend to stay outside for now and what was happening. I went back inside and they had magically unlocked and seems okay, other than a nasty smell, which I found out is normal after this type of incident. Well, I thought maybe nothing happened since it was under ten minutes. I was wrong, again!
Life went on normally and I monitored Spice for signs of pregnancy. The first indication was that she stopped bleeding from her lady parts within a day. Then, a few days after, she had morning sickness a few time and was overly affectionate and very adorable with her neediness. In mid-December, I noticed spice getting larger with her belly and teats protruding. I made an appointment with the vet for confirmation.
The next week, the vet confirmed little puppies were growing inside Spice. Cost of this quick appointment was $200. I then made the announcement via Facebook and Instagram in case anyone was interested in a puppy. Luckily, I had a few people express interest. About a week later, Christmas had almost arrived and I had plans for a family gathering on the big day. I was out with the dogs in the yard and watering the yard during our dry December, and suddenly Sugar and Spice were in a fierce fight with blood drawn. My heart raced and my first instinct was to yell. That did nothing, so I tried pulling them off each other. After about ten minutes, I managed to separate them and get Sugar in the house. She was torn up pretty bad. Spice fared a bit better but still had cuts and wounds.
Spice with her day-old puppies by W. Vance
The vet was booked, so I took Spice to an emergency vet and about $400 later she was okay. It was Christmas Eve, so I couldn’t get Sugar in as well. The day after Christmas, I got Sugar in and her wounds were starting to get infected. After $700, she was okay and on the mend. Now I had to separate them in the house. In between I took Spice to the vet and she had an x-ray to verify the number of puppies I could expect, costing a cool $200. Low and behold, January 10th, 2022 came and the pups were born. Everyone was okay for a few weeks. Then came January 31st. The pups and Spice were vomiting and had the runs. Back to the vet for another $1,100 round of treatments. I was relieved that they were okay while my credit card was feeling the pinch. Luckily Citibank offered me 0% on my card for 10 months with only minimum payments. I figured I could just pay it back with the proceeds of selling the puppies.
Fast forward to February and all was good. No fights, no sickness, just a lot of poop, puppy food and pads. At one point I had a box of puppy pads coming from Amazon every five days. All of the supplies and food ran well over $500. At the end of February, it was time for the puppies to get their first shots. That went alright, except one pup had a slight heart murmur, and she was reserved. Luckily the new owner felt a connection to her and still wanted her for the full price. I was relieved, but not after another $475 bill for the shots and exam.
Then came March 6th, 2022. My old friend Kate, from my high school days in the 2022s, came out to pick up her puppy. By this time I had reunited Sugar and Spice after testing the waters with muzzles and all seemed okay, so we seemed to be getting back to normal. My judgement was a little premature. There was a great deal of excitement when my friend arrived and the girls got into a big fight again. It was in the house this time and I tried to grab Spice by the collar and get them apart. In an instant I was bit and my hand was squirting blood. I still tried to get them apart and managed to get them in separate rooms in a couple of minutes. There was blood on the walls and all over the dogs. The puppies were okay as they were separated in a separate room.
I cleaned up my hand and thought I’d be okay, so Kate and I went to dinner. My hand began to throb more and more and the glass of wine didn’t seem to help much. I got back home and Kate went on her way with the puppy. My roommate washed up the girls and cleaned their wounds since my hand was in paid and not very usable. It was so bad I could barely type and ended up missing an assignment.
Saturday, my hand didn’t get much better. In fact, that night it got worse. Sunday morning, I got up and went straight to urgent care. After about an hour of waiting, the doctor said you need to go to the ER. I went to the ER, and they saw me. It was bad. It was infected and my hand was swelling more and more. They decided to admit me after sticking an IV with antibiotics in me. I had an MRI and went to a room where I waited while they decided what to do. About 7:30 that Sunday night, the doctor came in and said we would likely need to operate. My swelling went down a little and the paid was somewhat manageable.
My swollen hand the day I was admitted to the hospital by W. Vance
The next day I awoke and waited to hear what was happening. Around 9:00 am they came in and told me they would for sure operate. I mentally readied myself to be knocked out and have my hand cut open. At this point I just wanted to feel better. I worried about the costs, but I do have insurance, so I knew the worst it could be was my co-pay. After a successful surgery and several days of healing with IV antibiotics, they released me from the hospital.
Now that a few weeks have passed, the bills have rolled in and I will hit my out-of-pocket max of $3,500. Couple this with another $700 in vet bills to clean up the girls after that fight and I’ve managed to lose about $2,800 on having a litter of puppies when you consider my out-of-pocket medical costs. If I didn’t have insurance, the retail value of my treatment was well over $40,000, and I’m still going to physical therapy to regain full use of my left hand. I always did say I was doing this for the experience of raising puppies and not for money, and I sure did get my money’s worth, didn’t I?
Leave a comment explaining a time your gut was saying “NO” to but you said yes against your better judgement?
The health and economic ramifications of the coronavirus outbreak seem to get worse with each passing day. Despite a massive stimulus plan passed last week, retailers announced the furlough or layoff of approximately 600,000 workers. Top management at many firms are taking huge pay cuts for the time being and even corporate-level employees are getting laid off. So it seems that paying rent for so many of these people should be the last thing on their priority list, right?
Wrong.
Even if you don’t have the cash to make your April 1st, 2022 payment, on-time, whether for rent or mortgage, you should try to reach out to your landlord or mortgage servicer and let them know today, rather than in two weeks. While the ramifications of the COVID-19 outbreak aren’t your fault, they also aren’t your landlordߦs fault. Landlords, and even the large companies that own apartment complexes, depend on rental income to pay their employees and put food on the table. They are still obligated to fix your unit if something goes wrong and maintain the grounds whether that entails plowing snow or greening up the grass as spring arrives.
But I lost my job and was living paycheck-to-paycheck before all of this happened!
This situation is totally understandable, and millions of Americans are feeling the pinch. It is estimated that 78% of U.S. households live paycheck-to-paycheck. However, you should have applied for unemployment benefits and with the increase of up to $600 per week in benefits, you should be able to make good on your rent between that and your stimulus check due in about three weeks if you received your last tax refund via direct deposit. Sit down and make a budget. The first thing you need to do is eat, second, pay utilities, and third, pay rent or your house payment. If you are in a bad predicament, don’t be afraid to take advantage of food stamps or local food bank programs. It may be a hit to your pride, but help is out there if your situation is so bad that you have to choose between food, heat, or paying to keep the roof over your head.
Turn your financial life around!
If you are scared and worried about your finances and cannot make good on your obligations, this is the best time to turn your financial life around. Visit Dave Ramsey’s site to get tips on turning your finances around. Not being able to pay your rent should scare the living daylights out of you and make you want to question how things got so bad, so quickly. While it is nice that many governors and mayors have outlawed evictions, foreclosures, and late fees for the next 90 days, eventually, you will have to pay the piper. I’m sure you have heard the saying “there’s no such thing as a free lunch.” The same applies for rent.
Think about the big picture
When you don’t pay, you are contributing to the continued slowing of our economy. Believe it or not, it’s not just big shots on Wall Street who have investments. Most mortgages are securitized and managed by real estate investment trusts, or REITs, which have issued stock and are owned by little people through mutual funds in 401(k) plans. Moreover, if the Fed buys mortgage backed securities to get more cash into the economy, it’s the taxpayers (you and me) who are on the hook when people don’t pay. So do what you have to, but try to pay for your housing as soon as you can. With dedication and perseverance, our situations will improve, and hopefully your financial habits will change for the better so you can weather the next economic storm with a healthy savings account.
Leave a comment!
If you lost an income stream or have seen a decrease in pay, what are you doing to keep your bills paid?
