finance tips

5 Financial Areas That May Need Some Spring Cleaning

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Forbes

With the first day of spring right around the corner, this is often a time for much needed spring cleaning. That goes for your finances too! Here are some areas in your financial life that might need some cleaning up:

paperwork1) Your credit report.

It’s been estimated that 70% of credit reports have errors on them. It’s bad enough to suffer from your own mistakes. You don’t want to suffer from someone else’s too. Every 12 months, you can order free copies of each of your three credit reports at AnnualCreditReport.com (be sure to use this official site because there are a lot of copy cats out there that aren’t actually free) and dispute any incorrect items you may find that could be hurting your score.

There are a couple of other strategies you can use to remove delinquent debts from your credit report as well. One is a “pay for delete,” in which you try to settle the debt in exchange for them removing it from your credit report. If the debt was already paid or settled, you can ask for a goodwill deletion, which is pretty much what it sounds like. Also be aware that unpaid or delinquent accounts will automatically fall off of your credit report afterabout 7 years so you might just be able to wait some of them out.

Repairing your credit is one of the fastest ways to boost your credit score, which can reduce your interest rates and insurance premiums and even improve your chances of landing a new job. You can look for other ways to increase your score for free on sites like Credit Karmaand Credit Sesame. Both sites also offer free credit monitoring so you’ll be alerted in case anything happens to your credit in the future.

2) Your spending.

If you’ve never tracked your spending, you may be shocked to discover where your money has been going. You can start by looking at the last 3 months of your bank and credit card statements and recording your expenses on a worksheet like this. The only problem is that you won’t be able to see where your cash went so for each cash transaction going forward, you might want to keep the receipt or write it down. You can also decide to only use cash for one type of expense like eating out or just make cash spending it’s own miscellaneous category.

Once you know your expenses, you can look for opportunities to save money. Some may be easy like getting rid of subscriptions to magazines you don’t read or switching to lower cost insurance policies or cell phone plans. (You may be surprised to see how even small savings like bringing coffee or lunch to work can add up over time.) Others may require making some sacrifices to free up money towards expenses or goalsthat are more important to you. The important thing is to make sure that your spending matches your priorities.

3) Your retirement accounts.

Do you still have money at retirement plans from previous jobs? If so, it could be a good idea to consolidate them in an IRA or your current employer’s plan. Rolling them into an IRA could provide you more options in how you invest the money and even how you use it since IRAs can be used penalty-free for things like education expenses and up to $10k for a first-time home purchase. Rolling them into your current employer’s plan can make it easier to manage, especially if your plan provides free investment help or guidance, and can allow you to borrow from it if necessary.

That being said, there are a few reasons why you might not want to roll over the money. One is if your former plan offers a unique investment option that you’d like to invest in but can’t otherwise access. For example, some plans offer discounted mutual funds or stable value funds with relatively high interest rates. Another is if you have appreciated company stock since you can pay a lower taxon the gain by transferring the shares directly out of the plan when you retire. But other than these fairly rare situations, it may make sense to just roll the money over.

4) Your investments.

Even if all of your money is in one account, it could be haphazardly spread out in multiple investments. While this may look “diversified” the disorganization can actually mask problems like having too much or too little of your portfolio in certain types of investments or paying too much in fees. I’ve seen people with multiple overlapping funds that all invest in the same thing.

To keep things as simple as possible, you can put everything in an “asset allocation fund” like a balanced fund or a target date fund that gradually becomes more conservative as you get closer to retirement. Because these funds are fully diversified with a mix of stocks, bonds, and perhaps other investments, they can be a “ one stop shop.” Just make sure the fund matches your risk toleranceand doesn’t charge excessive fees.

If you want a more customized portfolio, see if your account has access to investment tools like Financial Engine’s Personal Online Advisor, which is offered at no additional cost in many employees’ retirement plans. There are also a whole host of “robo-advisors” that can manage your investments at a much lower cost than a traditional financial advisor. Some like Wisebanyanand Charles Schwab's new Intelligent Portfolios™ program don’t even charge a fee at all.

If you prefer a human touch or have a more complex situation, you might want to hire an investment advisor. To avoid conflicts of interest, look for a fee-only advisor that doesn’t sell investments for a commission. In particular, you can find independent advisors that charge hourly fees at the Garrett Planning Network, monthly fees at the XY Planning Network (they specialize in Gen X and Gen Y clients), and annual retainers at the Alliance of Comprehensive Planners(most will also do your taxes).

5) Your legal documents.

Many people are afraid to get rid of old tax documents but according to the IRS, the longest you may ever need to keep tax documents is 7 years. (Yes, you can finally clean out that old filing cabinet.) Just be sure to get those documents shredded or you may find yourself back to cleaning up your credit report again.

You should also check the beneficiary designations on any retirement accounts or life insurance policies you have because those designations trump any subsequent documents you may have created. That means if your ex-spouse is listed as the beneficiary on your IRA but your will leaves everything to your current spouse, your ex is still getting that IRA when you pass away. These beneficiary designations also allow you to avoid the time and cost of probate. Fortunately, you can generally add beneficiaries to bank accounts by asking for a POD (payable on death) form and to brokerage accounts with a TOD (transfer on death) form. Some states will even let you add beneficiaries to real estate and vehicles.

Finally, check to make sure that youhave an updated will, durable power of attorney, advance health care directive, and possibly a trust. If not, see if your employer has a benefit that lets you draft these documents for free or at a discount. In any case, you can create and store a health care directive at MyDirectives.comat no cost.

None of these areas may feel as urgent as a dirty toilet or a kitchen floor that needs scrubbing so they can be even easier to procrastinate, but the impact of neglecting them can be much greater. That’s exactly why we need to set a date to take care of them. After all, isn’t that what spring cleaning is all about?

Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.

How to Resolve a Consumer Complaint

 Scarsdale CPA Paul Herman has all the answers to your personal finance questions! In the business world, consumer complaints are inevitable. However, approaching the complaint using these steps is your guaranteed way to solve the issue at hand, leaving both you and your customer satisfied! 

How to Handle Complaints from Scarsdale Accountant

Nobody likes to deal with a complaint. Luckily, these steps will help your business handle them with ease!

You should first approach the seller of the item. Then, get in touch with the relevant consumer agency. If neither of the previous provides adequate results, a lawsuit can be filed or you may use arbitration.

 

Approach the Seller

  1. Compile all necessary evidence such as canceled checks, receipt, photographs showing the issue, a warranty, bill of sale or contract.
  2. Determine your goal. Would you like the product replaced? Would you like a refund? Are you just looking for an apology?
  3. Schedule a meeting with the manager, customer service representative or other appropriate person by calling the store or service provider. In this meeting with the individual, describe as clearly as possible the nature of the issue and what your goal is. If you can only speak by phone, write a letter as follow-up and keep detailed notes of the dates and with whom you spoke with. It is important to note that if there is a valid warranty for the product, it is best to follow-up with the manufacturer and not the merchant.
  4. Take the issue to a higher level, if this doesn’t find a solution. This could be the corporate president or supervisor. At this point, you should put your complaint in writing if you have yet to do so. This letter should detail your name, phone numbers, address, and account number (if applicable). Include the date and place of purchase as well as the model and serial number if a product is involved. Concisely describe the issue at hand and the process you have gone through so far to reach a solution. Lastly, you should include what outcome you want and state a deadline for this outcome. Keep a copy of the letter for yourself and include relevant copies of documents. Make sure you keep the originals and retain copies of any correspondence you receive from the company.

Get in touch with an agency

If your desired goal has yet to be reached, you will want to look in the phone for a consumer complaint agency, such as the county, city or state consumer protection office or the Better Business Bureau.

Another option is to go with the trade association method. There are industry trade associations that will offer to aid in mediating issues with regards to their members.

You may want to get in touch with the appropriate state-banking regulator if your issue deals with a bank. If an insurer is involved, you will want to get in touch the state insurance regulator, for a securities problem contact the securities regular or for utilities problems contact the public utilities commission.

Call the state-licensing department if you the issue deals with a state-licensed trade, such as a plumber.

Research the lemon laws of your state, unless you reside in Arkansas or South Dakota, by getting in touch with your state consumer protections agency in the event that you purchased a bad used car.

Get in contact with your area postal inspector, whose information can be located in the U.S. government section of the telephone book, for issues that pertain to mail order or mail fraud.

Look into finding a local television news program hotline for resolving consumer complaints.

Filing a lawsuit

When there are no more options, you will want to file a court case in either small claims court, if the amount is small (usually less than $5000) or if not, a regular lawsuit.

More than likely speaking with an attorney and having them draft a letter to the merchant or service provider giving the details about the lawsuit will resolve the issue.

You probably won’t need to hire a lawyer if a small claims case is involved. If the case is bigger than small claims, you will want to hire a lawyer.

Scarsdale  accountant Paul Herman is here to help you with all your personal finance needs. Please contact us for all inquiries and to receive your free personal finance consultation!

Herman and Company CPA’s proudly serves Larchmont NY, Scarsdale NY, Rye NY, Purchase NY, Bedford NY, Katonah NY, White Plains NY and beyond.

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Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.