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AARP Expert Martin Booker Should you accelerate debt payoff? During the uncertainty of COVID-19, many people are concerned about their finances or continuing to pay off their current debt. One thing to consider when it comes to debt during these uncertain times is should you accelerate debt payoff. Right now, there is uncertainty about the future of jobs and companies across America.   As you consider how to manage your money right now, one important thing to prioritize is liquid savings. If you have not saved an emergency fund (3 months of your expenses if you’re in a double income household or 6 months of your expenses if you’re in a single income household), then you may want to take measures to increase your savings now. Here are some ways to do so:   Reach out to your financial planner to discuss where you can make changes to increase your liquid savings Contact your mortgage lender or leasing office to discuss options for payment deferral Take advantage of the Student loan payment deferral Pay only the minimum balances on debt and move excess money to savings Reach out to companies where you make payments and ask about COVID-19 relief Save money from expenses that have been lowered such as transportation cost   When asking for a deferral or deciding to defer in order to save money, be sure to understand the terms of your deferral before you make a decision. Ask the following questions when contacting a representative:   When will payments begin again? What are my options for payback after the deferment? Will you report missed payments to the credit bureau during this deferral? What will happen to any interest that I owe during a payment deferral? Be as informed as possible so that you in a better situation after we make it through these uncertain times. For more information on managing your budget and debt, check out this recent expert series.  
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AARP Expert Martin Booker What are the three most important numbers to know when budgeting? AARP Expert Martin Booker offers the following tips:   Income: List all of your income from all sources. Be sure to include sporadic and variable income as well when you budget. When creating your budget, it is better to round down on your variable income in order to prevent a deficit. For example, if your take-home pay is between $489 and $515 a week, you may want to set your projected income at $480 and adjust the income line on payday. Your income is what you will use to fund your current lifestyle and reach your goals.   Expenses: Include all expenses in your budget. It is easy to forget about spending related to self-care or gratuity but as much as you can estimate these expenses, the more accurate your budget will become. It’s important to round up on your expenses if it is a variable expense. By doing so, you can prevent a deficit in your budget when you make payments. For example, if a utility can range between $40 and $55, you may want to set it in your budget at $60 and adjust your budget when you make the payment.   The difference: This is the balance remaining after subtracting your expenses from your income. The difference is the amount of money that you are able to use, for example, to pay off more debt, give to charity or increase your savings. The more that you can increase your income and/or lower expenses the larger the difference. When you determine how you will use the difference, you can determine how soon you can reach that goal by knowing your difference. Any time that there is a deficit when subtracting your expenses from your income, you have two choices. You can either increase your income or decrease your expenses in order to break even or have excess.   After creating your budget, become familiar with your numbers. If you have a significant difference between your income and your expenses, create some important goals to reach such as increasing retirement savings, paying off debt, or saving money for a child’s college. When you know these three numbers, you will be more aware of your finances which can lead to better money management.
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  Question Living on a budget? What are your top tips or tricks for tracking expenses and creating a budget? Share your top ideas below! Answer   Here are some community generated tips for living on a budget:    Helps if you’re cheap and only buy when given a great deal. That keeps me from going to Disneyland or overpaying at restaurants or anywhere else.   "Don't spend money when you do not have to." I have always remembered what I was told years ago – reminds me to look at other options.   My mantra has always been: Do I need it, or do I want it? I grew up on skid row, south of San Francisco, next to the railroad tracks. As a child we sometimes didn't have food to eat for 1 or 2 days, but we didn't know we were poor, even with holes in our clothes and shoes. Those days taught me to be frugal. And if I need it and can't afford it, I don't make the purchase. But we were happy and I didn't know until I was older that we were poor. I am still a very happy soul and give to others when I can. Our mother taught us to give not because we had a lot, but because we knew what it was like to have nothing. You would be surprised how much you can give to others "when you have nothing."   See a quarter - pick it up! Another way I save is to pick up coins from the ground when I spot them.  Cash my coins in and get a gift card or buy a meal out that I would not do if I were not spending my change.   One of my best savings tricks is to pay bills early in the month, leave $100 in checking for things, and moving the rest of any money to savings. Once in a while I have to pull some back as I overlooked an annual bill or had an unexpected car repair.  This discipline has allowed me to save several thousand dollars by the end of a year.  Plus, savings usually has a higher interest rate!  Retired at 51 1/2, was fortunate to have a pension that I could survive on.  Able to live this way until I could withdraw annually from 401K account.  And, this year I am able to claim my full SS benefits.  Will continue with my savings scheme, as it has allowed me to travel and open education savings for the "great" niece/nephew generation.   Self-evaluation. I don't have a budget, per se. What I did most of my life, was to re-evaluate the day, each evening and morning, as to what things were done or still needs tending to. Therefore, I had a new "budget' each morning. As long as I didn't waste my money, and lived within my means, everything always worked out (more or less).   If possible, wait to retire. My suggestion, and I realize that we all do not have the opportunity to employ this, is to not retire until such time as we can access retirement funds that are about 10% more than what we need. My belief is that there will always be the unforeseen expense that presents itself....and we better be ready for it.   Create a realistic budget, based on what you have been spending over the last year or so, then track future spending against it. Lots of free computer apps will help but paper and pencil works too. Key is to have realistic expectation and self-assess progress on a continuing basis.   I use Intuit's Quicken to track my expenses and plan out my monthly budget.     Buy in bulk. I like to buy certain items at Costco but the amount is generally too large for one person; so I have 3 friends who like some of the same things and we share the products and the cost which usually turns out then to be cheaper than in other grocery stores.   Shop for birthdays and Christmas year round - I buy at the end of the season - it takes time to go through the sale racks - department and discount stores are best. I keep a box in my closet with a list by name of everything I’ve purchased. I picked up some “dog tag” style Star Wars chain in March $1.99. It was the hit of my 10 yr.old granddaughter’s birthday in July. You will be surprised how many perfect gifts you find at 70-80% off   Eat out. It is just my husband and I at home. When we go to the store for a week at a time and plan out our meals we actually usually spend more than if we just eat out. There are always coupons for places to eat and some places have specials on certain days. Plus there is no mess to clean up afterward.   Play hardball. My local newspaper subscription jumped to $261.83 for the next 13 weeks.  I called and said, "Can't do that.  How much would you charge for the digital subscription instead?"  The response was "I can offer to extend the same print subscription to you for that same price for 6 months instead, if you'd like."  It took 3 minutes to save $261.83.  And, I was bluffing.  I prefer to read the paper.   Price comparison shopping. I can do a lot of price comparisons for an item and eventually get tired of doing it and decide to not buy it. It ends compulsive purchases. Use deal sites. Have you tried signing up for free grocery cash back programs? Try, or checkout51. You won't find all the products you’re looking for but I received $73.00 cash back since July on ibotta alone.It's worth a look.  Try Groupon for restaurants and most definitely worth trying ebates.  Received over 8.00 off my new Fitbit tracker plus 10.00 for spending over 25.00.  As long as you’re buying only what you would buy anyway and not buying just for the fun of a cashback reward.   One other tip I wanted to share is a site called "Brad's Deals" I like this site for several reasons. Almost everything is free shipping. All merchandise is from "legitimate" stores, not a website managing orders. When something is on sale, with a manufacturers rebate, store credit (Kohl's cash), etc. ALLof the forms you need to submit for rebate are right there on the site. So you don't have to go hunting around on coupon sites to locate a rebate which may or may not exist.  Example: Daughter wanted Kitchen Aid Stand Mixer (Retail $499.00) - found on Brad's deals at Kohl’s. $100.00 rebate Kitchen Aid, 30% off on sale, $75.00 in Kohl’s money NET: $121.00 for the Stainless Steel Stand Mixer.  (Purchased in Oct.)  One drawback is sometimes it can take a while depending on location - I just got some PUMA leather sneakers for $15.00 shipped from a retailer in Florida and it took 2 weeks. They give you a "market overview" as to how the price on this deal stacks up with other prices out there.          More tips from a savvy saver: I'm 70, married with no children.  Having no children definitely helps live easier during retirement.  Believe it or not, I planned my retirement at age 14.  It came to past.  During my working years, I saved as much as possible.  We did travel all over Europe and the Eastern Mediterranean but we NEVER went into debt for anything until our first home.  Too many people buy boats, RV's, motorcycles, etc.  Most of which they might use once a year.  Rent it.  It's cheaper.  When planning your retirement, decide if you want to move.  If you do, check out the income taxes, property taxes, etc.  I live in Oregon with high income taxes.  But, I do not pay any as I am not working and my retirement is exempted due to a special law that exempts a portion of or all of your military retirement if your duty covers certain years.  Otherwise I would have had to live in a state I did not want.  Pay off your mortgage before you retire.  Don't keep giving money to adult children and relatives or you will never retire.  Don't co-sign for any loans for anyone for anything.  Unless you are very wealthy, you will never retire if you have any loans.  Move to a smaller house or apartment, at least half the size of your current one.  Once retired work part-time if you want and if anyone will hire you after age 50.  Once we reached social security age, i.e. 62, we both took it.  Yes, one receives a reduced monthly payment, but, how long do you really expect to live?  I've known too many who died at age 70 through 76.  Why wait to collect SS?  Keep at least two years annual pre-retirement income in savings.  Six months savings is nothing.  Don't touch any types of IRA's until your late '60's.  Make sure you take out just enough to keep you from going into a higher tax bracket.  Save what you take out.  If you have retirement from your job and healthcare - great.  Use them.  If you do not have any retirement but have to retire on savings alone, then you need at least 1.5 million saved in order to take out only 4% a year to get $60,000 pretax dollars.  Of course this must be adjusted so that you never use your base savings amount - until you get really old.  The wage earner needs to provide income for the spouse if that person dies first.  Get insurance on yourself.  The most important thing after the above has been done - don't overspend, i.e. go into debt or spend all of your savings.  We live comfortably, buy what we want and still save.  We don't scrimp.  Hope this helps.   A fun alternative - Best way to double your money is to fold it in half and put it back in your pocket. My parents used to say that, as they were depression era. Read AARP's 6 Ways to Get Your Finances Ready for 2019 article for financial advice.    
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