Category Archives: Personal Finance

Are You Getting the Home Tax Deductions You’re Entitled To?

“Do you know all the deductions you can get with your home? You might be surprised at some of the ways you can use your home to save on your taxes.”

Denise Buck & Ed Johnson – DC Metro Realty Team

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Copyright 2017 NATIONAL ASSOCIATION OF REALTORS®

Light up Your House for the Holidays, Not Your Energy Bill

“When it’s time to decorate, or replace some of your old lights, consider these for your new lighting ideas.”

Denise Buck & Ed Johnson – DC Metro Realty Team

These energy-conscious lighting tips will help you save some money on your energy bill this holiday season, leaving you with more funds to spend on loved ones.

The holidays are a fun, but often expensive, time of year. It’s easy to blow budgets on gifts for loved ones and on electric bills by making the season bright. Fortunately, saving money during the holiday season can be just as simple with a few energy-conscious lighting tips.

Look on the bright side

Substituting new LED holiday lights for run-of-the-mill incandescent holiday lights can give you big savings and make a big statement. LED (or light emitting diode) lights are brighter than traditional lights, and they last longer while using far less energy. In fact, LED light strings can use 90% less energy than regular incandescent lights and last about ten times longer. When you shop, just make sure you’re getting what you pay for. Look for government and industry-approved energy-saving logos.

No matter what you choose, buying holiday lights can be expensive. So keep your eye out for manufacturer rebates and coupons, and be sure to check with your local utility provider to see if they offer any special rebates for LED decorations.

Besides being energy efficient, LED holiday lights offer other important advantages. They’re cooler than incandescent lights (which can help reduce fires), have no filament or glass to break and can help prevent overloading sockets when you string them end-to-end. And believe it or not, using energy-efficient holiday lights like these can even help reduce carbon dioxide emissions.

Remember, you don’t have to limit your energy savings to just around the holidays. Using LED bulbs is a smart, energy efficient choice any time of the year for lighting inside and outside your home.

Christmas Decorations

Timing is everything

You can further reduce your holiday electric bill by limiting your light display to “primetime” hours. Extension cords with built-in timers can easily be found in most hardware stores. Make sure they’re suitable for outdoor use. Then, simply plug in your lights and set timers to turn on when it gets dark and switch off at bedtime. No sense lighting your home when few people are around to enjoy it. The same holds true at other times of the year with your standard outdoor lights. Instead of a timer, you can even use a motion sensor. That way, your outdoor lights will only go on when triggered.

Christmas Decorations

Consider solar

Depending on how much sun exposure you get, solar-powered lights can be a great energy-saving solution. Even in winter, these lights can soak up enough sun to light up an outdoor tree without relying on electricity.

Christmas Decorations

Get more bang for your buck

Here’s a smart tip to pump up the light without bursting your electric bill: Strategically place reflective ornaments or tinsel to bounce light in multiple directions. This will create a dazzling shimmery effect that tricks the eye into seeing more lights than are actually there.

Colored Christmas Lights

A little can go a long way

Here’s another efficient way to create lots of visual drama without having to add tons of additional lighting. Simply, use colored flood light bulbs in place of standard outdoor floods. You can find a variety of festive colors such as red, green and blue. Then, position the lights so they bathe your home’s exterior in a warm, cheery glow.

You can achieve a lot with dramatic up-lighting. Focus them on your home or seasonal planters positioned along a walkway. Try flanking your front door for an added effect.

If that’s a little too much for your taste, just substitute colored light bulbs in a few of your exterior fixtures, such as on your porch, above your front door or outside your garage. You’ll get pops of festive color with a more subtle effect.

Paper bag outdoor lights

Light the night with luminarias

During the holidays, you’ll often see these glowing lanterns in rows along a sidewalk or leading up a walkway to a front door. Luminarias are often made from brown paper bags that are weighted down with sand and lit from within by candles. A safer energy-efficient solution would be battery-powered LED luminarias. They’ll still create a classic, warm and welcoming feel, just in a modern and eco-friendly way.

Lights in window

Create a warm glow

Speaking of battery-powered candles or candlesticks, using them in your front windows can also add light with limited energy use and cost. Look for scented varieties to add another layer of cheer. Create a warm glow throughout your home with holiday-themed votive holders illuminated with actual votive or battery-operated tea-lights. Many of these flameless options are made to mimic the flickering of a real candle, so you can enjoy all the atmosphere without any of the worry that comes with a real flame.

With so many wonderful options available today, you can be energy-conscious AND festive without having to compromise. Follow these energy conservation tips this holiday and, perhaps, you’ll be able to splurge on an extra gift just for yourself.

Originally published by American Homeshield

5 Ways to Cut Your Heating Costs

“The colder weather is starting to show up and it’s time to consider how you will control your heating bills.”

Denise Buck & Ed Johnson – DC Metro Realty Team

Winter doesn’t have to mean higher heating bills. Here are a few simple home improvement tips you can use to help keep your house warm and your bills under control.

home mattersPhoto by: iStock

Following these easy tips and tricks can help keep your bill from skyrocketing as temperatures plummet.

1. It’s the mantra of dads worldwide – don’t turn up the heat, put on a sweater. By maintaining a steady air temperature and changing your body temperature, you’ll nix bill spikes. For every degree you lower your heat in the 60 – 70 degree range, you can save up to 5% on heating costs.

2. Installing plastic film over your windows is an extremely affordable do-it-yourself project. Cutting down on the drafts from windows can save you about 14% on your monthly bill.

3. Another source of drafts is your front door. A simple door sweep will keep the heat in and cold out while likely costing you less than $10 at a home or hardware store.

4. Opening shades on west- and south-facing windows will allow sunlight in during the day. Conversely, closing these shades at night will help keep your heat in.

5. Make sure that you don’t have furniture blocking your heating vents. If you have a bed or sofa in front of a vent, your HVAC will work harder than necessary to maintain your desired room temperature.

These five tips should be a simple way to help out with your heating costs.

Originally appearing on AmericanHomeShield.com

Shave Up to 15% Off Your Heating Bill with This Simple Tip

Thermostat

“So you think you know how to save money on your heating and cooling bills?  Not everything we’ve been taught is correct.”

Denise Buck & Ed Johnson – DC Metro Realty Team

Originally published on Houselogic

By: Deirdre Sullivan

Think you’re saving on your heating bill by keeping it at a constant 68 degrees? You’re not, and here’s why.

It’s easy to imagine your energy bill going sky-high when you hear your furnace fire up.  That’s the reason so many people believe keeping a steady temperature of 68 degrees is the key to energy savings. But that’s a myth.

In fact, the lower the temperature, the slower your house loses the heat, according to energy.gov. And that keeps your hard-earned money from floating out the door.

So if you truly want to see your heating bill drop, you need to turn down the temperature another 10 or 15 degrees for eight-hour stretches on a regular basis — like when you’re at work, sleeping, or out of town.

When you return, turn it back up to 68 degrees. Or better yet, take advantage of what a programmable thermostat can do.

In the summer, just flip the strategy:

  • Set your AC to 78 degrees when you’re home.
  • When you leave, turn the AC off or set your thermostat to a much warmer temperature.

Here are some other misconceptions about and tips for reducing your heating and cooling costs.

Resist the Urge to Crank Up the Thermostat

Turning up the thermostat past your desired setting won’t speed heating. Your furnace works at the same pace regardless of temperature settings. That also applies to your AC; setting the thermostat to its coolest temperature won’t chill your home any faster.

A Programmable Thermostat Doesn’t Automatically Reduce Energy Use

Installing a programmable thermostat with factory settings isn’t going to do you much good. You can only reduce the amount of power your home consumes if you create a personalized heating and cooling program that makes the most of your own energy-saving opportunities.

Programmable thermostats come in four different pre-set schedule styles, so it’s important to pick one that’s in sync with your household’s scheduling needs:

  • 7-day programming offers the most flexibility. It allows you to set a different heating and cooling schedule for each day of the week.
  • 5-1-1 programming is a good choice if you have a predictable weekday schedule. It lets you set an identical heating and cooling plan Monday through Friday, and a different plan for Saturday and Sunday.
  • 5-2 programming is similar to the 5-1-1 programming, except you can only program one heating and cooling schedule for both Saturday and Sunday.
  • 1-week programming is a good choice if you stick to the same schedule every day of the week. It allows you to create a single heating and cooling plan that repeats daily.

Bonus tip: When daylight savings comes around, remember to adjust your settings so your heating and cooling program isn’t off by an hour.

Some Smart Thermostats are a Lot Smarter Than Others; Choose Wisely

Smart thermostats aren’t all the same. Sure, all offer Internet connectivity for remote management using your mobile device. But each thermostat brand uses a different proprietary self-programming technology.

For example, Google’s Nest relies on sensors and a learning algorithm to manage your heating and cooling preferences. Honeywell’s Lyric uses GPS technology to trigger heating and cooling automatically via your smartphone.

But here’s the kicker: Just like manual or programmable thermostats, it’s up to the user to set preferences that enable energy savings. And for those of you who still believe a smart thermostat can shave 30% of your utility bills, here’s a reality check: A study conducted by Nest revealed its users can only save up to 12% on heating costs.

Don’t assume every smart thermostat is user friendly.  A recent study on thermostat usability by the Sacramento Municipal Utility District revealed that the ballyhooed Nest thermostat isn’t all that user friendly. The Nest was tested against a mix of 11 smart and programmable thermostats for ease of use without using a manual. It received the second-worst rating.

Which thermostat came out on top? One by a company with a century of cooling experience: the Carrier ComfortChoice Touch. The study participants also selected it as their preferred choice for purchase out of the models they tested.

Bonus tip: Avoid those wireless apps that let you control the thermostat remotely. A study on Wi-Fi enabled thermostats says that using them remotely can boost energy use. This is because they allow users to crank up the heat or AC remotely before they return home.

Related: The Warm and Cozy Home Guide

Read more: http://members.houselogic.com/articles/ways-to-save-money-on-bills/preview/#ixzz3liLjQX61
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The Perils of Retirement at 65

65 Candles

“When to retire?  It’s a question we ask ourselves, and have probably come up with several different answers over the years.   Here are some things to think about when making that decision.”

Denise Buck & Ed Johnson – DC Metro Realty Team

Age 65 is the year we traditionally associate with retirement, but this age is declining in significance. Only one major retirement benefit still kicks in at this age, and plenty of people aspire to retire at both earlier and younger ages. Here’s a look at why age 65 no longer resonates as a target retirement age:

[See: 10 Numbers Everyone Should Know About Social Security.]

You won’t qualify for full Social Security benefits. While you can begin Social Security payments as early as age 62, you won’t get the full amount you have earned unless you sign up at your full retirement age. The full retirement age used to be 65 for people born in 1937 or earlier, but has since been increased to 66 for most baby boomers and 67 for everyone born in 1960 or later. If you claim your Social Security benefit at age 65 you will get a reduced monthly payment compared to waiting until your full retirement age. For example, a worker born in 1965 will get 13.3 percent smaller monthly payments if he signs up at age 65 instead of waiting until his full retirement age of 67. Spousal benefits are also reduced if you claim them at age 65. While spouses are entitled to 50 percent of the higher earner’s benefit payment if it’s more than they can get based on their own work record, if you begin receiving spousal payments at age 65 you will get only 41.7 percent of the higher earner’s payments.

You have a small window in which to sign up for Medicare. Perhaps the most compelling reason to retire at age 65 is Medicare eligibility. Once you turn 65 you no longer need to hold on to a job for the health insurance coverage. You can sign up for Medicare beginning three months before your 65th birthday and start coverage the month you turn 65. It’s important to sign up during the seven-month window around your 65th birthday, because your Medicare Part B and D premiums can be increased if you enroll later. Beginning the month you turn 65 there is also a six-month Medigap enrollment period during which you can buy any Medigap policy sold in your state. If you don’t sign up then you could potentially be charged significantly higher premiums or even denied coverage. If you are still working at age 65 and have a group health plan through your or a spouse’s job, you should sign up for Medicare within eight months of leaving the position or health plan to avoid the higher premiums.

[See: 10 Ways to Make the Most of Medicare.]

You can start retirement account withdrawals, but aren’t forced too. At age 65 you are old enough to avoid the early withdrawal penalty on 401(k) and IRA distributions. The 10 percent penalty is typically no longer applied to retirement account withdrawals once you turn age 59 1/2. However, you will have to pay income tax on your withdrawals from traditional 401(k)s and IRAs. But 65-year-olds are not yet required to withdraw money from their traditional retirement accounts. They can continue to defer income tax on their savings and let the money grow for another five years. Distributions from traditional IRAs and 401(k)s become required after age 70 1/2, and a 50 percent penalty is applied to missed distributions.

The length of retirement. If you retire at age 65 and live until 90, you will be retired for 25 years. It can be incredibly difficult to save up enough to pay for over two decades of leisure time. You will also need to manage your money so that it will last throughout that entire period of time, which could include inflation, stock market volatility and health problems or other emergencies that require you to dip into the principal. Working even a year or two past age 65 gives you more time to save, your investments more time to grow, increases your monthly Social Security benefits due to delayed claiming and shortens the period of retirement you need to pay for.

[See: 9 Important Ages for Retirement Planning.]

If you’re working primarily for the health insurance you get through your job, retiring at age 65 when Medicare eligibility kicks in can make sense. But if you’re interested in timing your retirement closer to the year you max out your Social Security benefit or are required to take retirement account withdrawals, you’ll probably need to pick an alternative retirement age.

By Emily Brandon, originally appearing in US News and World Report

New Homeowners – Don’t Spend Money Here

Moneydowndrain

“We love helping our buyers, but especially our first-time buyers.  We want to get them started on the right path so they get the most for their 1st big purchase. Here are some things to try and ‘NOT’ spend money on when you are a New Homeowner.”

Denise Buck & Ed Johnson – DC Metro Realty Team

 

You’ve just moved into your first home. For the first time in your life, it’s all yours – no more landlord, no more renting, no more leases.

It’s an exciting time, but it’s also a time filled with a lot of sneaky expenses new homeowners often aren’t prepared for. Add those new expenses to the expensive monthly cost of a mortgage, insurance, property taxes, homeowners association fees, and so on, and it’s not hard to see a budget pushed to the breaking point.

Here are six expenses new homeowners often face that can easily be reduced or eliminated with some smart choices.

Expensive home furnishings. Often, a person’s first home is much larger than the places they’ve lived in before. For example, my wife and I moved from a tiny two-bedroom apartment to a three-bedroom house with twice the square footage, and it seemed enormous.

That leaves a person with a lot of empty space and the tendency is to fill that space with new furnishings. Many homeowners follow their first day in a new home with a day at the local furniture store, often buying more new furniture than they can afford.

If you’re considering new furnishings, give it some time first. Buy low-end items if you really want to fill the space, and then gradually replace them as your savings allows. Don’t fill up your credit card with expenses from the local furniture store.

Private mortgage insurance. Many first-time homebuyers are saddled with this terrible expense that comes from buying a home without a 20 percent down payment. Often, this adds $100 or more to your monthly mortgage payment with nothing in return.

Get rid of this as soon as you can. The best possible time to make a few extra mortgage payments is in the first few years of the mortgage. You’ll not only get rid of that PMI early, you’ll also greatly reduce the lifetime interest you pay on your mortgage.

Appliance insurance. Many new homeowners are offered a “deal” on appliance insurance, in which they pay some insurance company a certain amount each month to “insure” their appliances against natural failure.

Why is this a bad deal? It’s far more expensive than just saving that same amount in a savings account. Rather than buying an unnecessary insurance policy, simply put an amount equal to the monthly premium into a savings account. Within a year, that savings account will cover any necessary appliance replacements.

Lawn care services. The idea of a lush lawn outside of your beautiful new house sounds appealing, and lawn care services know that. They’ll hit you hard right after you move in, showing you gorgeous images of what your lawn might look like.

In essence, they’re just charging you a lot for what you could easily do yourself with a bit of fertilizer, a bit of natural herbicide and a simple dispenser. It costs far less per year to care for your lawn yourself, and it doesn’t take much time, either.

You may decide later that you do want the service because it will serve your lawn better than what you can provide. That’s fine, but find out what you can actually do first. You’ll probably find you can handle it well on your own.

Energy inefficiency. Like it or not, energy inefficiency is a real expense for new homeowners, and it’s often one they overlook. Newly purchased homes often come with cheap, inefficient light bulbs in the sockets. They also often come with older windows and walls that offer poor insulation. On top of that, homes that aren’t air sealed allow warm air to escape in winter and cool air to escape in summer.

One of the most important things you can do to curb your future expenses as a new homeowner is to perform an energy audit on your home. There are many guides to performing do-it-yourself energy audits online, like this one from the Department of Energy. Finding areas where your home is energy inefficient, and fixing those issues sooner rather than later can save you a lot of cash.

Insurance. In the rush to buy a home, many homeowners fail to adequately shop around for homeowners insurance. Instead, they just get a policy from the group recommended by their real estate agent, who is often just helping an insurance salesperson who happens to be a friend.

As soon as you’re settled, take some time to shop around for homeowners insurance. If you spend that time effectively, you can usually knock as much as 30 percent off your insurance premium, which is a lot of cash back in your pocket.

Taking some smart steps when you first move into your home can cut your bills and minimize your expenses for the time you own that house. Make these smart moves now, and your wallet will be happy.

Originally published on Yahoo! by Trent Hamm

Pay More or Less – Is an ARM for You?

More or Less GraphicA few years ago, right before the housing bubble burst, Adjustable Rate Mortgages (ARMs) were everywhere.  The problem was they weren’t the right answer for everyone who was using them.  Due to a number of factors at the time; decreased home values, increased unemployment, just plan bad luck, a number of homeowners were negatively impacted by having an ARM.  Consequently ARMs got a bad reputation.  But if used wisely, they can be a great way to purchase a home.

Denise Buck & Ed Johnson – DC Metro Realty Team

Paying more for your house payment does not make your home more valuable. It does mean that the mortgage rate may be higher than it has to be.

Even though fixed rates may never again be as low as they are currently, an adjustable rate mortgage may provide the lowest cost of ownership depending on how long a borrower plans to own a home. There are different types of ARMs but the one in this example is a 30 year mortgage with the rate fixed for five years and can adjust every one year after that based on independent indexes.

Another feature of a FHA ARM is the maximum rate change in one period is 1% and the maximum lifetime cap is 5% over the initial rate.

In the example below, the payment on the adjustable is $153.48 lower for the first five years or 60 payments. Another interesting thing is that lower interest rate loans amortize faster than higher interest rate loans. In this example, the ARM has a lower unpaid balance at the end of the first five years by $4,239.

The total savings on the ARM at the end of the first period is $13,477. If a borrower felt confident they would sell the home prior to the breakeven point of 8.5 years, the ARM would produce a lower cost of housing even if the mortgage rate escalated the maximum at each adjustment period.

To help determine whether you pay more or less, consult with a trusted mortgage professional and your real estate agent to learn the advantages and disadvantages of different programs. To try your own comparison, check today’s rates at the Freddie Mac Mortgage Rate Survey and plug your numbers into an Equity Accelerator

ARM comparison2.png.jpg

Basic Legal Documents

Basic Legal Docs

 

How many Basic Legal Documents do you know of?  Probably a Will and a Living Will, but what else?  There are actually 5 that you should know about.  As you move through life, be prepared for when ‘Things Occur’.

Denise Buck & Ed Johnson – Dc Metro Realty Team  

 

 

Many times, young adults feel “bullet-proof” and don’t consider the urgency to get involved or spend the money to take care of certain legal aspects of their lives because they think they’re going to live forever. Since no one is guaranteed longevity of life, if you want to be in control of who gets what and who is in charge now based on an untimely incapacitation or death, it is important to investigate these basic legal documents.

Will – This is a legal instrument that specifies your desires to care for your minor children and to distribute your personal property after you die and who will manage the process. Anyone who has property and minor children needs a will.

Living Will – This legal instrument specifies your intentions regarding end of life decisions or to designate an individual to make those decisions on your behalf. Many times, a person who had been diagnosed with a terminal condition or who is facing a serious surgery or hospitalization might feel a sense of urgency to have this document.

Power of attorney – This document allows you to appoint someone you trust, not necessarily an attorney, to handle important legal and financial matters for you if you are unable to make decisions for yourself. The time limit can be for a specified period of time or indefinitely.

Trust – This arrangement involves an entity called a Trustee who takes control and manages property for someone else’s benefit called a beneficiary. When property is placed in a trust, the trust becomes the owner of the property. There are different types of trusts and a qualified advisor can explain and recommend which type would be best suited for your situation.

HIPPA Release Form – The Health Insurance Portability and Accountability Act, known as HIPPA, was created by Congress to protect the privacy of a person’s health information. Health care providers are prohibited from discussing any aspect of your medical information with anyone who is not directly involved in your care. To allow friends or family who do not have legal responsibility for you to have access to this information, this release form is necessary.

Most of the issues affecting these types of documents are determined by state law. Since they are legal documents, it is recommended that you seek sound financial and legal advice.

Home Too Big Now?

Kids all grown up“In every parents life comes the time when the kids have moved on to independent lives of their own.  When that happens, you may look around and decide you don’t need the same home you’ve had while raising your family.  Maybe you don’t need as many bedrooms , or the big yard, or maybe you just want ‘Less’ to maintain.  Downsizing can have many benefits as you prepare for the next stage in your life.”

Denise Buck & Ed Johnson – DC Metro Realty Team

Once the kids are grown, have careers, relationships and get a place of their own, parents find that they may not need their “big” home like they did before. Their lifestyle may have changed and the house just doesn’t “fit” anymore.

Benefits of a smaller home:

  • Easier to maintain
  • Lower utilities
  • Lower property taxes
  • Lower insurance
  • More convenient location
  • Convenience of a single level
  • Possibly more energy efficient
  • Possibly lower maintenance

Moving from a larger home frees equity from the previous home that can be invested for retirement income, purchase a second home, travel, education or just to have a nest egg for unexpected expenses. The profit on the home, in most cases, will be tax-free up to the exclusion limits set by IRS.

There will be expenses involved in selling a home as well as the purchase of a new home. These will lower the amount of net proceeds available to invest in the new home.

Like any other big change in life, it is recommended that you take your time to consider the possible alternatives and outcomes. Your real estate professional can provide information that can be valuable in the discernment process such as what your home is worth, what you will net from a sale as well as alternative properties for your next stage in life.