Family Budgeting Software Comparison

Family Budget - How we hate that word! The initial thought that comes to us is one of RESTRICTION. But, those of us who have been using budgets for many years can vouch that it actually provides freedom to spend money without guilt, and know that we will be perfectly fine at the end of the month. However, the question we get asked often is if a software should be used to budget and if so, which one among the hundreds of available apps in the store. So here are our recommendations:

Should you use a software?

The first and most important step is to get started. If using a notebook is more your style, so be it. However once you have got the hang of it, we recommend that you switch to a software quickly. The family budget is never static and changes from month to month. In the long-term it will be very challenging to go back and track your progress.

Which software to use?

There are two options when it comes to software:

1) Microsoft Excel (or Apple Numbers) : If you are proficient in Excel, you can use Excel to develop your budget and track your expenses. One advantage of using Excel is that you can develop custom charts to track your progress. The biggest downside is that it can't be used by multiple people at the same time. We do not highly recommend Excel for your budgeting needs. However, if you would like a copy of an 'Excel Budget', please contact us.

2) Software applications: There are a number of software applications available in the market today. Here are four that are well accepted.

a) EveryDollar - This is the simplest and the fastest budgeting tool in the market today. The developers of this tool claim that you can build a budget in 15 minutes. Moreover, this application forces you to a Zero Dollar Budget, which is critical for your success. The added advantage is that multiple people can access the budget by sharing the username and password. The application has a basic version, which is free and an advanced version, which is $99/year. We highly recommend this tool. We recommend that you start with the free version and switch to the advanced when required. The only downside is the inability to see historical trends on a graphical format.

b) Mint - It is another free app that can be used for budgeting. The biggest advantage is that it can provide historical trends to help project expenses for the upcoming months. Mint is also flexible in changing the categories. The cons of this app are poor customer service and lack of connectivity. There have been times when accounts have actually disappeared.

c) YNAB - It is another budgeting tool, which is renowned for synchronization of accounts. It has education tools included for those who are interested in learning more. The biggest downside is that it has no free version - so it costs money to track your expenses, which is not a good idea. It was also reported that a few customers had security issues with the software, which is a big NO in the financial industry.

d) Personal Capital - We highly recommend Personal Capital for having the big picture regarding your finances. It is an excellent tool to monitor your net worth and personal holding. However, doing daily budgeting is very difficult with this tool. Please note that you will get sales call from Personal Capital once you sign up as they are interested in taking over your investments.

We hope you found this comparison useful. If you need more insight, feel free to contact us or visit our website at anytime.

Financial Coach - Who are they and how do they help?

Financial Coaches are individuals who work with clients to change behavior with respect to money. Coaches are not counselors. They do not judge you for the mistakes you made and dwell on what went wrong in the past, but, rather focus on the future. Just like most athletes, entertainers, and entrepreneurs hire coaches to improve themselves and their ventures, financial coaches can help individuals and families improve their personal financial situation through education, standard practices, guidance, and accountability. They also provide coaching on career, estate planning, insurances, mortgages and any other topics that lead to inflow or outflow of money in a household.

Here are a few ways they can help you, and also a list of what they cannot do for you.

• They help you break the paycheck to paycheck lifestyle - They educate, empower and provide accountability to stick to a proven and agreed plan for you to break the cycle. They will develop a cash flow management plan that works for your household. Remember, they work for you and your success is their success.

• They help you develop your financial number - Well, retirement is not an age anymore. It is a number. They will help you develop that number and work towards attaining the goal. They help you leave a legacy for generations.

• They help you optimize your investments - Since they do not sell any financial products, they can provide you with objective guidance, and will apprise you of the optimized path with minimized risk.

• They help you save money - They review your budgets and identify excessive/unnecessary daily expenses. They will then point out ways to save on your insurance premiums, mortgages, utilities and any other expenses.  

• They help decrease stress in your marriages - They are not marriage counselors. But, since statistics has shown that financial issues are a leading cause of increased  stress in marriages in America, their timely financial help can decrease that stress.

• They help you set up your children's college fund- They can inform you of all the available opportunities towards saving for your children's college, and provide accountability to do the same.

• They help you with career advice - They usually have a large network of recruiters and hiring managers that they can refer you to, in order to boost your career and income.

What they cannot do:

• They do not do any work for you - That is correct. They believe in teaching you how to fish rather than providing you with fish. They are not interested in short term success.

• They do not manage your investments - Remember, financial coaches cannot sell you any products, nor manage those for you. They can guide you, but you have to directly correspond with your investment manager.

• They do not make any calls for you - Again, they teach you how and what to talk to your creditors, banks, collection agencies etc. They even provide role play to boost your confidence. But, they cannot make those calls for you due to liability issues.

• They cannot perform miracles.- If your goal is to have a quick and easy fix, financial coaching is not for you. What they do is change behavior and help you attain financial success in the long term. They believe in changing your family tree forever.

There are countless success stories of those who have gone through financial coaching with us. If you need help, please contact us.

6 Steps to Avoid Credit Report Errors

A credit report is a detailed report of a person's credit history. There are 3 credit bureaus in United States - namely Experian, Equifax and Transunion. These agencies collect information from a variety of sources, to create a report, and assign a numerical value called Credit Score based on their analysis. This report  and the score is critical, if you are planning to borrow money, as lenders rely on the details in the report to determine the applicant's credit-worthiness. 

Credit report mistakes are more common than you think. The Federal Trade Commission's 2013 study revealed that one in 4 (25%) consumers identified errors on their credit report.  It is your responsibility to ensure that your credit report is accurate in every category. If not, you may either have become a victim of an identity theft, or a recipient of a bad loan costing you hundreds of thousands of dollars.

Here are the 5 steps to avoid costly mistakes:

1) Obtain a free copy of your credit report

As a consumer, you are entitled to a free copy of your credit report from all 3 bureaus on a yearly basis through AnnualCreditReport.com. This is the only authorized government website from where to obtain free copies of your credit report and scores.

2) Educate yourselves on various aspects of Credit Reports and Scores

Credit reports and scores are packed with information and you need to learn how to review a report. You also need to educate yourself on how hard and soft inquiries affect your score. This is a service that Mayanah offers to all their clients as part of our coaching.

3) Check for Identity Errors

Identity errors are those that are related to your identity. Common errors are:

• Ones with regard to personal information such as name, address, social security number, phone number, spouse's details etc.
• Additional accounts that third parties might have created as a result of identity theft.
• Mixed accounts, Duplicated accounts or Incorrect accounts - These need to be reviewed very carefully.

4) Check for Reporting Errors

Reporting errors are very common and some of them are:

• Accounts that incorrectly show as late or delinquent
• Accounts shown as open, when they were actually closed
• Same accounts listed multiple times
• Incorrect date of last payment, opened date or delinquent date
• An error in the type of account

5) Check for Balance Errors

These are errors with incorrect credit limits or balance amounts.

6) Take Steps to Fix Error

Ignoring any mistake in the credit report is catastrophic and you need to dispute it ASAP. The best option is to dispute it online.

• Experian Disputes
• Equifax Disputes
• TransUnion Disputes

You can learn more about online disputing at Lendedu.com.

Mayanah Financial Coaching encourages to review your credit report at least annually and fix any errors that might harm you in the future. However, we do not support borrowing to boost the credit score. We are against debt and we empower our clients to live a debt-free life. Contact us to learn more.

12 Steps to Buying Auto Insurance

The purpose of buying insurance is to transfer the risk from us (the consumer) to the insuring agency. In case of auto insurance, it is quite tricky, as it’s a balance between being adequately covered vs. paying a high premium. Here are 12 steps to follow to buy auto insurance:

     1) Learn the terms associated with an auto policy

An auto policy contains several terms critical to your coverage and monthly premium. As a consumer, it is critical to understand those. A synopsis of all the terms can befound at Mayanah Financial Coaching’s Blog.

            2) Identify what influences your rates

For a given coverage, insurance premiums can vary wildly depending on the following 13 factors:

·         Geographic location

·         Gender

·         Age

·         Marital Status

·         Driving Records

·         Driving Experience

·         Vehicle Type

·         Vehicle Use

·         Annual Miles Driven

·         Coverage and Deductibles

·         Claims History

·         Credit History

·         Length of previous insurance coverage

            3) Control the controllable

Based on the above list, some factors like age and location cannot be controlled. However, factors like claims, credit history and coverages can be controlled. Following are the steps to obtain favorable rates

·         Pull your credit report to eliminate scams and incorrect information. You are entitled to a yearly free credit report.

·         Create a list of both at-fault and not-at-fault claims before starting the process. The more the number of at-fault claims, the riskier the provider considers you as a consumer.

·         Continued coverage is critical for favorable rates. If in case, there is a lapse in coverage, please be prepared with the dates and the reason for the lapse.

            4) Check Driving Records

Your driving record defines how safe you are as a driver which affects the rates widely. It is important that your driving records are clean. If you have a major violation like DUI, then your rates can go up 100% or more in some cases. You can also consider the possibility of defensive driving courses to clean up driving records. You can retrieve your driving records at the Department of Public Safety.

            5) Identify the required coverage for you and your family

Required Coverage has two parts – one is mandated by the state and varies from state to state. The second part is based on personal preferences. If coverage is not sufficient in an accident, it can cost you an arm and a leg, and you may also face legal charges if your liability portion is not sufficient to cover the expenses. On the other hand, the best coverage will lead to a huge premium every month. To resolve this challenge, we recommend third party reviews by experts like Mayanah Coaches.

            6) Review your current insurance policy

Identify current coverage and premiums as this will be your baseline in shopping for new rates. If you do not have the policy handy, call the provider and request them to mail you a copy.

            7) Gather quotes from at least 3 providers

Since providers obtain statistical information from different sources, we recommend obtaining quotes from at least 3 providers. If the quotes are not comparable, we recommend to increase the number of quotes. Usually direct sellers like Geico may be cheaper than agency based providers like State Farm or Allstate

            8) Conduct normalized comparison

Since most insurance policies do not use the same coverage criteria, it is important to look at them carefully. We recommend normalizing the data to compare the rates. Mayanah coaches can help you with that.

            9) Identify available discounts

Available discounts vary from provider to provider. However, the best way to identify those is to call them and ask for the applicable discounts. The Department ofMotor Vehicles can provide you a list of common discounts in your area.

            10) Research on providers’ records

           Remember that the purpose of taking an insurance is to have adequate coverage in cases of undesirable events/circumstances. Hence, availability, responsiveness and credibility of insurance companies is very critical. The National Association of Insurance Commissioners can provide details on insurance providers and their records.

             11) Cancel Old policy

Once your new policy is confirmed and in effect, cancel the old one. You need to make sure the coverage of the new one starts before the expiry of the current policy. It is better to pay a day or two of coverage to both providers instead of having a gap in coverage.

            12) Retain and Communicate

Many states require drivers to retain a copy of their insurance in their automobiles. It is also important to send a copy to your lienholder, if you have a lien on your automobile.

We recognize that this process is challenging and we are here to help you at any stage. Please contact Mayanah Coaches at (281) 435-1888 or visit us at www.themayanah.com

Basics of Buying Auto Insurance

Recently we were with a client who was unhappy about the prohibitive cost of auto insurance. 87.4% of US drivers have auto insurance, and most of them share the same sentiments. It is a payment that we make month after month, and it can get frustrating if we have not filed a claim, are a first time auto-owner, or a new driver. Is it worth it? More importantly, many people have no idea what they are buying as coverage.

An insurance is nothing but a transfer of risk. Auto insurance is a contract between you and the insurance company where you pay a fixed amount (called premium), and they cover you for losses as agreed by terms and conditions (called policy). Nerd Wallet reports that the averagedriver overpays by $368 every year. Financial Advisor Magazine reports that Americans overpaid by more than $100B for car insurance in 2016. Are you one of them? If so, you need to know what to include and what not to. 

Here are some terms to become familiar with before shopping for car insurance:

Actual Cash Value: The fair market value of your automobile at the time it was damaged, stolen or destroyed.

Bodily Injury Liability Coverage: Coverage that the insurance pays for automobile accidents that result in bodily injuries to other drivers or pedestrians for which you are legally at fault. This also covers legal defense if you are sued after the accident.

Claim: Formal request made by the insured to the insurance company to cover an incurred loss.

Collision Coverage: Amount paid for damage to your car caused by an impact with another vehicle, or object, or a rollover, after the deductible has been met.

Comprehensive Coverage: Amount paid for damage to your car, after deductible is met, that is caused by hazards other than collision, such as fire, theft, explosion, windstorm, hail, water or contact with an animal.

Deductible: Amount that must be paid out of pocket by the insured, for covered losses, before the insurance company pays a claim.

Depreciation: Financial calculation that insurance companies use to identify the Actual Cash Value of the asset, in the event it is determined to be a total loss.

Exclusions: Items that are specifically denied coverage (ex: normal wear and tear) under the terms of an insurance policy.

Medical Payments Coverage: It is the total amount that the insurance company will pay to cover medical expenses and funeral bills, incurred by you and your passengers, in the event of an accident, regardless of who is at fault.

Personal Injury Protection: It is coverage where your own insurance company pays you and your passengers for medical and funeral expenses in the event of an accident, regardless of who's at fault.

Property Damage Liability Coverage: The amount that covers you, up to the policy limit, for losses that result when you damage or destroy someone else's personal property. This is mandatory for many states.

Uninsured and Underinsured Motorist Coverage: The coverage for injuries you and others suffer when you're involved in an accident with an uninsured driver, or a driver without adequate insurance.

Please refer to Auto Insurance Glossary for more details. It is critical that you understand these terms and conditions to be adequately insured, and to not pay for coverage you don’t need.

Please watch out for the next blog on how and where to buy car insurance.

Student Loan Debt - Pay off vs Seek Loan Forgiveness

One late evening, we received a call from Mr. Booker who owes more than $200k in student loans for a degree that has a beginning pay of $55k. He recently got married and has a child who is 6 months old. He is struggling to keep up with all the payments, and listened to an "expert" suggestion to wait for 10 years and then apply for loan forgiveness. It sounded too good to be true, and so he wanted to know our perspective. This situation should sound strange, but unfortunately this is the current norm with young families. Student loan debt in this country has crossed over a trillion dollars, and is affecting the younger generation in more ways than they think. On top of that, many parents have co-signed on their children's student loans and are in danger of losing their hard-earned retirement.

A lack of understanding of debt forgiveness and repayment options are affecting many youngsters in making the right decision. Here are the guidelines that you can follow:

Step 1: Identify Student Loan Details

The first step is to identify whether the loan is issued by the Federal government or through private sources such as a bank or financial institution. If it is from a bank, the interest rates are generally lower. If it's from private sources, you're likely have high interest rates.

If your interest rates are high, we recommend you to shop around for a better rate, and refinance. There are several agents like LendEDU or Nerd Wallet. You need to know the terms and conditions (remaining amount, interest rates, payment options etc) before you start the process.

Step 2: Identify whether you qualify for Federal Student Loan Forgiveness Program

Federal Student Loan Forgiveness, Cancellation and Discharge Program is an initiative that President Obama approved while he was in office. In order to qualify for forgiveness, cancellation or discharge program, there are strict guidelines that mandate the forgiveness. Some of them are:

a) Closed School Discharge

b) Public Service Loan Forgiveness

c) Teacher Loan Forgiveness

d) Perkins Loan Cancellation and Discharge

e) Discharge Due to Death

f) Borrower Defense Discharge

There are pros and cons for each category and we recommend that you contact Mayanah Coaches ASAP for your next steps.

Step 3: Identify Repayment Options

There are several ways student loans can be repaid. Common options are:

a) Standard Repayment Plan - Best Option

b) Graduated Repayment Plan

c) Extended Repayment Plan

d) Pay As You Earn (PAYE) Repayment Plan

e) Income Based Repayment (IBR) Plan

f) Income Contingent Repayment (ICR) Plan

g) Income Sensitive Repayment Plan

At Mayanah Financial Coaching, we recommend our clients to pay off the student loan by budgeting a set amount every month. We do not recommend aiming for Student Loan Forgiveness or Cancellation as the prime path for following reasons:

1) Government can change its rules at any time and relying on them for personal finance is never a good idea.

2) 10 years is a long time and it forces you to work for government with a lower salary, thereby taking away your choice and potential to earn and save for retirement.

3) Student Loans in most cases cannot be removed via bankruptcy and so any major incident in fe will keep you a debtor forever.

Contact us and let us help you to put together a plan so that you can be debt-free and live a life of your choice.

Identity Theft - What you should know?

Recently we received a call from an 82 year old gentleman that made me cringe. He and his wife  had worked hard during their younger years, and then had retired, in their mid 60s, to lead the life of their dreams. A few months ago, he became a victim of identity theft and lost almost everything. The associated stress almost killed him, and today he is trying to recover the damage. It is no surprise that the Bureau of Justice estimates that approximately 17.6 million people, or about 7 percent of U.S. residents age 16 or older, were victims of at least one incident of identity theft in 2014. The rate of yearly increase in identity theft is alarming, and chances are that you too will be a victim at one point in your life if you do not take protection right now.

So, what is identity theft? The Department of Justice defines identity theft and identity fraud as any type of crime in which someone wrongfully obtains and uses another person's personal data in some way that involves fraud or deception, typically for economic gain.

Here are some of the common identity theft situations. You can learn more HERE

Here are some of the ways you can be proactive in preventing identity theft:

1) Review Credit Reports:

There are 3 credit report agencies in US - Experian, Transunion and Equifax. You need to review all three credit reports annually to make sure that there are no falsified information under your name and social security number. There are several companies offering you the service. But, at Mayanah, we recommend to get the reports FREE through Federal Trade Commission website.

2) Report Fraudulent Activities:

If you become a victim of identity theft, the next step is to immediately report it  and start the recovery plan. Please note that it takes an average of 200 hours and six months to recover from identity theft..

3) Prevent Identity Theft:

The best scenario is to prevent identity theft before it happens. This will save a lot of time and heart-ache for you and your family. There are several agencies such as Credit Karma that provide Credit Monitoring Services. However, at Mayanah, we recommend you availing Credit Monitoring and Restoration Services. Based on our experience, we highly recommend Zanders Insurance because of their low fees and 100% recovery success rate.

If you would like to learn more about preventing online identity theft, please visit PixelPrivacy.com.

Remember that, if your identity is stolen, you are the only one responsible to fix it without a restoration service. Please feel free to contact us for more information or if you need help in reducing your debt and building your wealth.