How will you fund your emergency fund?

In Be prepared for the unexpected with an emergency fund I discuss why you need an emergency fund and the benefits of having one if your looking to simplify your finances.  The questions now is how will you fund your emergency fund?

I believe you need to have a cash emergency fund instead of relying on credit cards or home equity lines of credit.

Here are reasons why credit card and lines of credit are not reliable sources of emergency fund:

Credit Card Issuers: Buy Something or Else! – credit card companies are cutting credit card limits as well as closing credit cards that because of non-use.  So if you have a credit card for emergency purposes and you have not used it recently it may be at risk closing.  This can have significant impact on your personal finances.

Can’t borrow from home equity line of credit – Some financial institution may block you from borrowing from your line of credit. Make sure you read your loan documents to see if this can happen to you.

Credit Card holders are being squeezed – So that means it is possible that your credit card company has cut your credit limit in half thus reducing your available funds for emergency.

More lowering of credit card limits – Hope I get my point across. Relying on your credit card to get you through an emergency may not be the wise thing to do.

Homeowners losing equity lines – Home equity lines of credit are not what they used to be.

Home equity lines of credit next – Why you do not want to rely on home equity to fund your emergency.

Lenders cut lines off – Its not just home equity lines of credit. If you have a personal line of credit you want to make sure its still available to be used.

BOA No credit for you – One more story to think about. This could be you.

Here are more articles discussing ways to funded your emergency fund:

Emergency Fund Math -How much have you saved in your emergency fund and how did you come up with that number?

21 strategies for creating emergency fund – I am sure you can implement one of these strategies to fund your emergency fund.

Figuring the size of emergency fund – Wisebread explains how to size up your emergency fund.

Steps to build you emergency fund – Five simple step to build your cash emergency fund.

How much cash do I need for E-Fund – Money Under Thirty shows you how to calculate you emergency fund as well as provides a free spreadsheet to help.

Hope these articles makes you rethink how you will fund your emergency fund and why the prefer funding method is cash.  So take action and begin to fund your emergency fund with cash in a high yielding savings account.

Who else wants to simplify their bill paying?

Are you tired of seeing those late charges on your credit card statement or other monthly statement?  Why not review your bill paying system to help you avoid those unsightly late fees.  Establishing a good billing system will not only help you avoid paying those late fees it will also help you simplify your personal finances.

Here are five steps to help you simplify your bill paying system which will eliminate those late fees and help you develop a simple personal financial lifestyle:

Keep bills in one location – When you check your mail immediately sort the mail to separate your bills from your other mail.  Then place your bills in one central location.  You want to place your bills in one location so you do not miss place your bills and spend unnecessary time looking for them when it is time to pay them.  You may want to place them in a desk draw, file cabinet, or separate file folder.  Some place where you will not forget about them.

Select a bill paying day – Choose a specific day per week or day every other week to pay all of your bills.  You decide what works best for you.  You probably will want to pay all of your bills close to your payday.  By selecting a day you have committed yourself to get this done, it will help you not forget about your bills because they are all in one place so you know what you need to pay.  By paying once or twice per month you will not have to keep checking to see if you have money in your account for each bill because you paying the bills all at one time.  You may want to consider changing the date when the bill is due so its close to the time when you plan to pay your bills. You want to make your bill paying process as convenient as possible for you.

Record your payment – Recording your payment in your checkbook will help you keep accurate records of you account balances so you can avoid overdrawing your account.  It also helps you remember if the bill was if you keep a copy of bill or bill stub with date that the bill was paid.  You should do this when you pay the bill because if you don’t you may forget when you paid the bill and how much the check was written for.

File payment – Once your bills have been paid and recorded in your check register.  You should file your bills in their respective files for future reference.  You want to have a file for each bill that you pay so you can retrieve it quickly if needed and you do not have to sort through several other bills to find the specific bills your looking for.

Use financial management software – You should use financial management to help with your bill pay process.  Financial software you can easily set up reminders when a bill is coming due especially for those bills you pay semi-annually or just annually so you can remember to pay them.  It also enables you to track your spending and help you create a budget.  Financial software will help streamline the manual bill paying process.

These five steps will help you save time, money, and reduce stress when it comes time to pay your bills because you will be better organized.  So take action by reviewing your current bill paying system and begin to implement these steps to help you simplify your personal finances.

How do you simplify your billing process?

Six ways to knockout those pesky non-bank ATM fees to help simplify your personal finances

Do you dread seeing those non-bank ATM fees on your bank statement?  Do you wish you could eliminate those fees?  Well today is your lucky day.  Here are six ways to help you eliminate those pesky non-bank ATM fees while simplifying your personal finances at the same time:

Know your cash needs – Many times the reason we are charged those non-ATM fees is because we do not plan ahead.  Knowing your daily cash needs will help you avoid using the non-bank ATM.  Creating a budget or spending plan will help you determine your daily cash needs.  By having budget you will know what your cash needs are so you will not have to visit that non-bank ATM and incur those dreaded ATM fees.

Limit your ATM transaction - Try to limit your ATM use to once per week when you know you will be able to use your bank’s ATM.  I will assume your bank is either close to your home or job.  Decide what day of the week is most convenient for you to make your weekly withdrawal so you’re not spending unnecessary time searching for your bank’s ATM or being charge unnecessary fees because you did not plan ahead.  If you only go to your bank’s ATM once a week it also helps you control your spending because if your out of cash you know you have gone over your weekly budget.

Use only your bank’s ATM – The easiest way to eliminate those ugly ATM fees is to only use your bank’s ATM.  If you find yourself constantly using the same non-bank ATM, why not consider either opening an account at that bank or moving your entire banking relationship to that bank.  See Things to consider when opening a bank account.

Use debit card instead of cash – Stop using cash will eliminate your ATM usage.  How can I stop using cash?  Begin to use a debit card for all of your purchases instead of cash.  Most places will accept debit cards.  Not only will using a debit card eliminate the need to withdraw cash it will also help you manage your spending.  Every time you use your debit card it will be shown in your account activity on your bank statement or shown online.  Many times we forget how much we spend when we use cash unless you keep track of your cash receipts.  With a debit card you do not have to keep track of your spending it will automatically be tracked ever time you use your card.  This will help simplify your personal finances.

Use credit card instead of cash – Similar to using a debit card you can use a credit card for your usual cash purchases.  Using a credit card will also enable you to track your spending.  Using a credit card you may benefit if you use a rewards card.  I would only recommend using a credit card if you pay off your account balance at the end of each month.  DO NOT USE A CREDIT CARD if you carry a balance on your card every month.

Get cash without using an ATM – The old fashion way to withdraw money is to go to your local bank teller and request a withdrawal from your account.  This is probably not the most convenient way but it still can be done.  Another way to get cash without using an ATM so you can avoid non-bank ATM fees is to receive cash back when you use your debit card for purchases while shopping at your local grocery store or local drug store.

Take action to eliminate those non bank ATM fees by reviewing your ATM usage for the week.  Think about how many times you used the ATM and how many times you were charged.  Now determine how you will change your ATM usage to simplify your personal financial lifestyle.  Let me know how you have eliminated or reduced your ATM usage to avoid those pesky non-bank ATM fees.

What you need to know before you choose your financial professional to help simplify your financial lifestyle

Selecting the right financial professional is essential to helping you simplify your financial lifestyle.  Hiring the RIGHT financial professional will save you time, help you reach your goals, and help you make important financial decisions. Financial delegation will lead to financial simplification to find out why you should delegate your financial task to a financial professional.

You agree you should delegate your financial task to a financial professional.  NOW WHAT.  Now you must research financial professionals to help.  Just hiring anyone who says they are a financial professional is not the way to go.  You may get lucky and find a good one or you could end up with a bad one which will create more problems and stress than you need.  You will end up making your financial life more complicated if you hire someone who is not qualified or does not have the experience necessary to handle your financial task.

So take the time to find the right person to help you with your financial task.  Yes this may be time consuming in the beginning but if you have the right person it will save you time and money in the long-term as well as simplify your financial lifestyle, which is your goal.

Here are some tips to help you find the right financial professional to simplify your personal finances:

WHAT ARE YOUR NEEDS
– Determine what you want to delegate to your financial professional.  Do you just need your tax return prepared or do you want some to provide you with tax advice?  Do you want a financial planner to prepare a full financial plan or do you just want someone to execute stock trades.  You must determine your financial professionals role because all financial professionals provide different levels of service.  Know what you want before you begin your search.

WHAT ARE THEIR QUALIFICATIONS – You want to check what qualifications this individual has.  The more certification an individual has is a good indication the individual has extensive knowledge but you do not want to just look at the certification.  You also want to know what these certifications means by knowing the meaning behind the certification helps you determine the individual expertise.  Some of the more popular financial designations include CPA, CFP, CFA, and ChFC.  You also want to know how much experience this individual has handling individuals in similar to your situation.  For example if this individual usually works with individuals with simple estates or simple tax situations, if you have a more complicated estate and complex taxes will this individual know how to handle the issues that larger estates and more complex tax returns require its possible but its something you want to consider.

HOW ARE THEY COMPENSATED – You want to know how your financial professional is compensated for their work.  Is their compensation based on the products they sell or they compensated by the hour, or is it a flat fee for their services.  You want to know this upfront prior to engaging their services.  For example when your looking for an estate planning attorney you want to know if you will be charged by the hour or will you be charged a flat rate for the drafting of the will and estate plan documents.  You also want to know if you are charged by the hour.  What is the hourly rate and how many hours will it take to complete the estate plan?

AVAILABILITY OF ADVISOR – How available will this individual be? Is this person looking to build a relationship with you. Will they be available to meet with you regularly to review your tax return, estate plan, or financial plan and willing to answer your questions?  You want someone you can rely on to handle your finances as if they were there own always looking out for your best interest.  So when your interviewing your financial professional ask some questions about how they work with their clients even asking for some client references to ask existing clients their experience with that advisor.

Yes, I know this seems like a lot of information to simply hire a financial professional but its important you engage the right advisor because your looking for a long-term relationship with this individual.  The more research you do up front the better chance of finding the right financial professional to fit your personal financial needs.

So take action by gathering names of financial professionals you want to interview for your financial tasks. Finding the right financial professional to handle your finances will lead to a simplified financial lifestyle.  Let me know some of your experiences hiring a financial professional.

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