The 5 Financial Mistakes You Do NOT Want to Make

To err is human, right? That’s a pretty safe mindset to have when it comes to spilling milk or putting your shirt on inside out. When it comes to your finances, to err could mean years of righting your mistake and almost certainly end up costing you more.

Since tax season is basically over (except for you ACA filers), you can start to think about more “fun” financial responsibilities, like your savings and what to do with it. Or, if you’re not quite there yet, how to start saving! Whether you’re just starting out developing your financial portfolio, or you’re set and ready to retire, you’ll want to make sure you don’t make these five financial mistakes, lest you get stuck back at Square Negative One.

Borrowing From Your 401(k)
You know you shouldn’t, but it’s so tempting. But, really, you shouldn’t. Sure, you have five years to pay back your loan, but that includes interest. And that’s interest you’ll pay with after-tax dollars, only to pay taxes on those funds when retirement rolls around. Not to mention you could be short-changing your retirement account for months or years, sacrificing employer matches and missing out on investment growth, while you’re paying off your loan. When it comes to taking out a loan, look everywhere you can before going to your 401(k).

Falling for the Actually Too-Good-to-be-True Offers
Yes, this includes timeshares. In addition to the thousands you’ll pay upfront, you’re also looking at maintenance fees, travel costs, and resale prices that just aren’t worth it. And that’s the best case scenario. Worst case, it’s a scam. According to the FTC, Americans lost $765 million to scams in 2015. When it comes to your money, it’s okay to be skeptical; if something seems too good to be true, it probably is.

Only Paying the Minimum on Your Credit Card
If you’re only paying the minimum amount on your credit card each month, it could take years to pay off. Which, again, would be livable if it weren’t for that pesky interest. Consider a typical credit card scenario: a $5,000 balance on a card with a fixed rate of 12.5%. Making only minimum payments, it would take nearly ten years to pay off and cost $1,700 in interest to do so. $1.700 a lot of money to pay for paying off a loan. Imagine what you could do with that! So stop making new charges and pay more than the minimum.

Claiming Social Security Early
If you start claiming your social security at 62, the age you’re allowed to start taking benefits, your monthly check is reduced by 25% for the rest of your life. If you wait until you’re 66, the “official” retirement age, you’ll receive 100% of your benefit amount. However, if you wait until you turn 70 to claim, you’ll get an 8% boost in benefits each year for four years.

Passing Up on Advice
It takes all types to make the world go ‘round: some are good at finances, some aren’t. And that’s okay, so long as you avoid financial mistakes like these, including one of the most important: not listening to or seeking advice when you need it. There’s a reason we have experts in things like investments, retirement savings, estate planning; find one you work well with, and watch your financial decisions and know-how improve over time.

And if you need advice with your tax e-filing, that’s where we come in! You can call ExpressIRSForms Monday through Friday, 9:00 a.m. to 6:00 p.m. EDT, at (704) 684-4751. You can also send us a live chat during those hours through our site, or send us an email anytime at support@ExpressIRSForms.com!

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5 Finance Tips for New College Grads

It’s the end of April, and the population of Intern Isle - the group of desks where the interns sit at SPAN Enterprises, parent company of ExpressIRSForms - is rapidly dwindling. Graduation is just around the corner, and while we’ll miss the ones leaving us, we know they’re all going on to do great things.

As new college grads all over the nation are learning, with great opportunity comes a few new responsibilities. With more than two-thirds of new alumni in debt - about $35,000 per graduate, on average - fiscal responsibility should be a top priority for new grads. Thankfully, we live in the age of the internet, when people who have developed fiscal responsibility blog about how to get the hang of it.

Take More Than Your Salary into Account
When applying for jobs after getting that degree, it may be easiest to go for whichever one offers you the highest salary, but that’s not necessarily the best idea. While the highest salary is certainly the more preferable salary to have, there are other factors to consider: medical and retirement savings benefits, for example, as well as cost of living and taxes, which vary state to state. A high salary might not be able to afford all the Treat Yo’self Days you’re planning if your new job doesn’t help with those not-as-fun-but-still-pretty-necessary benefits.

Create a Budget You Can Stick To
We’ll give you an example of a fairly basic - but effective - budget in a moment. The main thing to remember with this point, however, is that the budget you come up with has to work for you because you are the person holding you accountable for sticking to it. Setting your budget so that you put 30% in savings each month is admirable, but it’s not going to matter if you know you won’t be able to do that. If you find yourself having trouble with your budget, adjust it. It’s better to actually save $10 each month than it is to say you’re going to save $30/month and spend it all instead.

If you need a starting point, try a 50-30-20 budget. First, figure out your monthly income; of that, put 50% toward needs (rent, utilities, groceries), 30% toward wants (shopping, entertainment, restaurants), and 20% toward savings and debt repayment. If your student loans are substantial, or you’re looking to save more, you can swap the percentages, so 20% is allotted for wants and 30% goes toward your savings/loans.

Manage Your Debt and Be Wary of Accruing More
The best way to handle your student loan debt is staying on top of it. Pay off the loans with the highest interest rates first. You can pay the minimum towards balances with the lowest interest rates, but be sure to make payments larger than that on the bigger ones. Time says the “biggest mistake you can make is paying the minimum into each loan and waiting until you ‘make more money when you’re older’ to deal with them.”

On the other side of that coin, some debt can be beneficial: a solid credit history can open the door to all sorts of benefits, like a low-interest loan on your first car or house. This is why a lot of new grads will start looking into opening up a credit card. Just make sure if you do to avoid the oh-so-slippery slope of biting off (or purchasing) more than you can chew (aka pay back). A good way to help build your credit with a card is to get one, but reserve it for purchases you know you’ll be able to pay back immediately, or at least that month, like gas.

Start Saving for Retirement, Like, Yesterday
For most college grads, retirement is at least 30-40 years away, which may seem like a lot of time to build up funds for your golden years. But with medical and societal advances happening as they are, your retirement fund may need to last as long as the years you worked. One of the biggest mistakes those new to the workforce make is declining an employer’s retirement plan offer, usually because they’re in an entry-level position they don’t anticipate being in for a worthwhile amount of time or think it’ll be more beneficial to wait for a better-paying job to start saving.

Take advantage of the retirement plans offered to you as soon as you’re in a position where they’re offered to you; most employers offer 401(k) retirement plans, and many of those offer some form of matching benefits. All of your contributions to a retirement plan are yours to keep, regardless of whether or not you become fully vested in the plan itself. And if this is the case, you may even be able to roll over your plan into a new employer’s plan or an IRA (individual retirement account).

Ask for Help
Whether it’s from your parents, someone in HR or Accounting departments at your new job, the Internet, or your friendly neighborhood e-file provider, help can be found if you need it. Don't put off asking for help either; the longer you flounder with financial issues and strains, the harder they'll be to overcome. And, hey, if you’re reading this and you’ve got some financial advice for new grads, tell us all about it in the comments below!

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