Finding Ways to Save for Retirement

ways to save for retirement, DuPage County Estate Planning AttorneyAccording to the several financial studies, between 40 to 60 percent of Americans live paycheck to paycheck, meaning that they earn just enough to get by. For many, the thought of an early retirement—or any retirement—is not a current achievable goal because there are no funds left over each week to put into retirement savings.

Financial advisors have discovered ways that can free debt committed paycheck funds and can therefore be redirected into a retirement savings nest egg. For example, only one in three households in this country prepare and follow a monthly budget as a way to track their spending. This can lead to a lot of wasteful spending. By following the trail of where those paycheck funds go, you may be surprised at how much is actually coming in and going out.  

Families can also take a look at eliminating expenses that may be unnecessary and divert those funds into savings. Some of the biggest potential expenses include cable and satellite television packages. How many of those 450 channels does your family actually watch? If your family is also big take-out consumers, consider cooking more meals at home. There is often a large price difference in the per plate cost for a meal you prepare compared to the per plate cost of that meal from a restaurant. Magazine subscriptions and gym memberships are also areas that may be able to be cut or downsized.

Although several purchased items are necessary—such as groceries—there are ways to cut down how much you are spending each month. Check grocery store sale flyers and stock up on the items you frequently use. Compare buying items in bulk as opposed to single packages. Make a list before you go shopping and stick to it, resisting those impulse buys.

When it comes to the vehicle you drive, eliminating a car payment can free up on the average $450 per month. Once your vehicle is paid off, resist the urge to go out and buy a new and "better" model. Take the amount you would have spent on a new vehicle payment and instead deposit it in a retirement account. Also, shop around for the best prices on car insurance each year.

If you receive a pay raise, instead of incorporating those funds into your household budget, put them into your retirement account instead. Do the same for any unexpected funds, such as a tax refund or job bonus.

Following these tips can begin the process of retirement planning. Additionally, make plans to contact an experienced DuPage County estate planning attorney to discuss other areas that you should address, such as wills, guardians or trusts. Call Stock, Carlson & Duff LLC at 630-665-2500 to schedule your consultation today.


Tips for Purchasing Your First Home

purchasing your first home, DuPage County Real Estate AttorneyOne of the most exciting experiences for a person or for a couple is the purchase of a first home. After years of working hard and saving towards that down payment, it can feel very rewarding to actually sign on the dotted line and become a homeowner. However, the process is not without the occasional hiccup—and headaches. Therefore, following a few tips can help the purchase go smoother.

What is Your Credit Score?

One of the first steps a potential home buyer should take is to check his or her credit. Financial institutions put a heavy weight on a person's credit score when it comes to deciding how much—or if—they will approve a mortgage.

To begin, request a copy of your credit report from the three major credit reporting agencies and look over these reports carefully. Examine your credit reports for any errors. Look for any unpaid accounts or accounts sent to collections. It is not uncommon for a person to apply for a mortgage and then discover that they have an unpaid credit card or utility bill from years ago. You may have forgotten the debt, but the mortgage company will look at those types of entries unfavorably.

If you do find unpaid debt, then make sure you pay it off immediately. Additionally, keep a record to show the bank or mortgage company that you made the payment.

Track Your Cash Flow

Purchasing a home and all the extras—both planned and unplanned—is expensive. It is important to know where the money you earn every month is going to and how much you should have left over at the end of the month. Keep track of exactly where and what you are spending it on.

For potential home buyers who are self-employed or contract employees, keep in mind that lenders will want to see at least two years' worth of concrete earnings before they will consider approving a mortgage.

Have Required Documentation Ready

When you apply for a mortgage, the majority of lending institutions will want to see your two most recent paycheck stubs, the last two months of all your bank statements (including blank pages), past two years' income tax returns, as well as any and all W-2 forms.

Figure Out How Much You Can Afford

It is critical to calculate what your debt-to-income ratio is in order to see just how much you can afford for a mortgage and how much of a down payment you will need to put on the home you choose. Financial advisors say a person should be spending no more than 28 percent of their gross monthly income towards housing expenses.

Once you find your home and qualify for the mortgage, there are still multiple legal issues which may need to be addressed during the home buying process. That is why it is important to have an experienced DuPage County real estate attorney representing you though this process. Call us today to schedule your appointment.


Are Intra-Family Loans a Smart Choice?

intra-family loans, DuPage County Estate Planning AttorneyIt is not uncommon for parents to provide financial assistance to their adult children for major purchases, such as the purchase of a new home. Moreover, the amount lent to an adult child may be dependent on his or her financial circumstances. However, one option that many families are considering is intra-family loans.

The rising popularity of these loans may come from the lack of higher-interest bearing savings accounts that most financial institutions offer. For parents whose money would be sitting in an account that is only earning approximately 1.5 percent interest, the lending of funds to be used as a mortgage to their adult child, and the earning of 4 percent interest, is a much more attractive proposition.

For an adult child, an intra-family loan can offer lower interest rates than what the lending institutions offer. Utilizing an intra-family loans can also help to avoid the often large down payments that lending institutions additionally require before they approve a mortgage. An adult child is still able to claim the interest he or she is paying to their parents on their income tax, as well. In addition, this interest "stays in the family"—either spent by the parents or it is eventually inherited by the adult child. None of it goes to a bank or mortgage company like traditional mortgage interest does.

Intra-family loans are also being used to pay for college tuition instead of traditional student loans. Interest rates on federal student loans can average between 5 and 7 percent. Student loans from private lending institutions have interest rates almost double the federal loans. However, grandparents can offer intra-family loans at an approximately 2 percent interest rate—again, a win-win situation for everyone.

There are issues to consider regarding whether or not an intra-family loan should be utilized—it is important that the loan does not create any financial hardship for either parents or adult child. Still, whatever the terms that may be decided, it is a wise idea to have an attorney involved in the intra-family loan process, especially since it may affect other aspects of one’s estate. Please contact an experienced DuPage County estate planning attorney today for more information.