By Jon L. Ten Haagen
OK, after you have created your budget and balance sheets, you now know where your dollars and cents come from and where they go each month. You are ready for the next step toward a complete financial plan.
Write down your long-term and short-term goals. Remember a goal is a dream with a date on it. You want to buy a new suit for work and it costs $400. How long will it take for you to save that much? You will need a new car in three years. How much do I need then? College costs will start in 11 years for your 7-year-old. Have you started to save? You plan to retire in 31 years. What’s that cost you? This seems daunting and if you do not start getting serious about the future it will become more so.
You now have established a budget for the future. Become aware of debt management. Control where your money goes. If you have credit-card debts, which one should you pay down first? Write down each credit card debt you have, how much you owe and what is the rate you are charged on each card. Now put them in order from the highest interest rate to the lowest. Starts paying down the highest rate first making sure you pay at least the minimum on the other cards so you do not get penalties and late fees. Also, if one of the cards has a really small balance and you have the money to pay it off, do it.
Once you have paid a card off, put it in your file cabinet and do not plan using it again. Now go on to the next highest card and start paying it down until you are debt fee. Then you should have a little celebration, but don’t make it too expensive, and don’t put it on a credit card -- unless you plan to pay it off at the end of the month.
Do not cancel your credit card right away because you have a credit limit on each card and your credit score may be affected if you change the total credit you have all at once. Most people need two cards – one for personal and one for business. You may need an additional card if you belong to shopping companies like a Sam’s Club or Costco, which offer only one card for you to pay with other than with cash.
What is your credit score? The higher it is, the lower the credit you will be charged by the banks. Take charge of your financial life now. Make sure you get your credit reports each year from the three companies offing them: Experian, TransUnion and Equifax. There are many companies that will gladly get you a credit score for a fee. That is not necessary because it is free once a year at annualcreditreport.com. Ask for a report from each company, because they all get their information from different sources. Consider ordering from Experian then wait four months and order from TransUnion and another four months to order from Equifax. Then repeat this each year to be sure they are accurate. Write to them if their information is not correct. I was once listed as living at an address I never lived at, and my work address was incorrect.
Your credit scores will affect the rates you are offered from a bank on a mortgage, credit card approvals, apartment requests and job applications, so pay attention to it.
Huntington’s Jon L. Ten Haagen, CFP, runs Ten Haagen Financial Services, Inc., a full-service independent financial planning firm – and now, he is here to answer your questions!
In this bi-monthly column, Ten Haagen will answer your financial questions and help you with his expert financial advice. Don’t be shy – our expert is here for you, so feel free to ask away!
Email your questions to firstname.lastname@example.org today, and let our expert help you.
*Ten Haagen is an Investment Advisor Representative offering securities and advisory services offered through Royal Alliance Associates, Inc., member of FINRA/SIPC, and a registered investment advisor. He is also an active community member, serving on several nonprofit boards and as executive officer of the Greater Huntington Boating Council.
** NEW OFFICE LOCATION: Due to a fire in the office building, the offices of Ten Haagen Financial Services, Inc. are now at 12 Bayview Ave., Northport.
Disclaimer: This column is intended for informational purposes only and is not a replacement for professional services. The author and this newspaper are not responsible for the outcome of following this advice.