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By Tara-Nicholle Nelson | Broker in San Francisco, CA

An 8-Point Financial Health Day Checklist

Who among us hasn’t needed a mental health day at some point in our lives? In the vernacular, this just suggests a day where we take the day off from our work and household obligations to do nothing but relax. And relaxation isn’t the only reason we take little time-outs from our daily lives: we call in sick to take care of our medical issues and we leave work early to watch our kids’ sporting activities.

But most of us don’t set aside the time we should to manage our personal finances - and managing them effectively definitely requires some time and attention. 

Next time you get a personal day off or are on vacation, consider declaring it your ‘Financial Health Day’ and spending at least half the day tending to your money matters with laser beam focus. Ideally, do it on a weekday (and not a holiday), when the various financial institutions and vendors you may need to contact will be reachable via phone. 

When you’re ready to take your Financial Health Day, get organized by listing the things you’ll want to handle that day line by line – don’t forget to include the following:

       Check your bank account statements. It’s very easy to set subscription services and bill payments up for automatic deduction from our checking accounts, then just forget them entirely – hence the phrase, “set it and forget it!” That’s actually the point, you might think. Financial Health Day is the day to take a half hour and just review your checking account statements from the last couple of months, line by line, looking for any subscriptions you no longer want or need. Then cancel them! Common ones include cable, app and magazine subscriptions. 

Also, watch for auto-paid bills that have increased without your noticing, and give the providers a call to figure out why they went up and/or otherwise decide how you want to get them under control. Common offenders include home and auto insurance, cell phone bills, utility bills and the like.

One more thing – if you are so inclined, consider setting your checking accounts up on a service like Mint or Manilla – these free services not only allow you to manage multiple accounts in one place, they also offer instant charts and graphs that surface where your actual spending patterns may not jive with what you say your priorities are. For example, you might tell the service that your food bill should be 10% of your monthly spending or less; the service may tell you, in turn, that you’re actually spending 15% of your cash out on food. Auditing your accounts for spending that is out of whack in this way can supercharge your cost-cutting goals.

2.       Check your mortgage interest rate. The going rate for a 30-year home loan this week is 3.57 percent, according to Bankrate; 15 year mortgages are running at 2.97 percent.  (These are prime interest rates, which take A-list credit scores and ample home equity to obtain.) But that doesn’t necessarily mean that every homeowner with a mortgage rate over 4 percent should refinance!  Refinancing your home loan can cost money, and it definitely extends the life of your mortgage (unless you make an intentional, strict plan to pay it off early). Talk with your financial planner and mortgage professional to do the math and see whether you should consider refinancing your home loan.  (Hint: set your FHD to-do list up in advance, so you can make appointments with these and other professionals for that day.)

Additionally, keep one important thing in mind: your mortgage interest is the basis for the largest tax advantage of homeownership. If you refinance your home loan for one with a dramatically lower mortgage interest rate, you need to account for the possible increase in income tax liability that may result – it may offset some of the monthly savings you realize.  Again, your financial planner and CPA should be able to help you calculate and plan for this, before you make any moves.

3.       Check your PMI.  If you put less than a 20 percent down payment into your home when you bought it, you were likely required by your lender to have a Private Mortgage Insurance (PMI) policy.  PMI – insurance that protects your lender in the event you default on your mortgage – is not cheap. It can add hundreds of dollars to your monthly mortgage payment. FHA loans have their own version of PMI called a mortgage insurance premium, or MIP, which can run even more than PMI!

Fortunately, when the combination of paying the balance down and increases in its fair market value results in you having at least 20% equity in your home, you might be eligible to have the PMI removed from your mortgage loan, so you can stop paying for it.  Even more fortunately, home values have been on the rise in many areas at a much faster rate than at any time since the recession. Your Fiscal Health Day is the perfect time to talk with your mortgage professional and your lender about what it will take to get the PMI removed from your home loan  - you might even get a truly pleasant surprise and find that you’re eligible right now!

(Side Note: FHA loans with less than 20 percent down are required to have MIP for the first five years of the loan, regardless of how much the home’s value increases.)

4.       Check your insurance.  Gather up your homeowner’s and other insurance statements, or call your agent(s) up and ask for a review.  What you want to do is make sure that (a) you’re appropriately insured for your exposure, and (b) you aren’t paying more than you need to.  Things like dogs, household staff, pools, your roof materials and your travel habits all may impact what amounts and types of insurance policies you’ll need.  Talk with your insurance agent and your financial planner, if you have one, to sort these matters out, and don’t be afraid to shop around.

5.       Check your phone, cable and internet bills.  I had the same home telephone service provider my whole adult life until a couple of months ago. I decided I no longer needed a land line, but wanted to continue my internet service. Boy did I get the run-around when I called to make that change! So I hung up and called the number for a competing service provider about which I had heard rave reviews from my friends. After less than 20 minutes on the phone, I ended up switching services entirely and got home phone service, internet service and cable – including premium channels – for about 50 percent of what I had been paying for cable alone!

Don’t let brand loyalty or inertia cost you hundreds of dollars a year. Reevaluate your phone, cable and internet services at least every other year – you might be surprised at how increased competition among vendors and the practice of “bundling” these services has brought prices down, and service levels up. My internet is twice as fast as it was before, and I haven’t had one day down since I made the switch.  One caveat – do watch for discounted introductory rates that increase substantially six months or a year into the relationship.

6.       Check your savings.  Do you have an automatic savings plan in place?  If not, Financial Health Day is a great day to set that up with your bank.  If you do, it’s the right time to do a gut check: would it kill you to save an extra $50, $100 or $200 a month?  If you can afford to, tweak your savings on Financial Health Day.

7.       Check your credit.  Pull your own credit reports from all three bureaus via AnnualCreditReport.com. Scan the reports for any inaccuracies and any delinquencies that should have aged off your report but have not (7 years for most, 10 years for bankruptcies). Then, initiate disputes for any of these things you find. This can take some time, but Financial Health Day is the perfect opportunity to assertively manage your credit before you’re in refinance or home buying crunch-time.

8.       Check your debt.  Monitor all of your debt – from your mortgage, to your consumer debt to your student and auto loans – and put a plan in place for getting rid of as much of it as you can, as soon as you can.  Can you afford to make an extra payment toward your mortgage?  Can you pay that credit card off?  As you’ve worked through the rest of your finances, you have likely ‘found’ money, which you’ll now be saving and can redirect toward the very worthy aim of debt elimination. So, do!  Maybe you’ll find enough to pay something off outright – if not, perhaps you can use your Financial Health Day to set up a recurring extra payment or modify your existing auto-payments to increase them by even a small bit. But if all you can do is make a modest extra payment toward these things on your actual Financial Health Day itself, you’ll still end the day a little further ahead than you were when you got started.

And that’s not all!  There are plenty of other financial matters that make sense to allocate time and energy toward on Financial Health Day, from your estate planning to your investments. New York Times writer Ron Lieber has put together a resource-rich set of materials, including videos and a customizable checklist, for what he calls a Financial Tuneup – use them to round out the rest of your Financial Health Day or, if you’re like me, to set your agenda for Financial Health Day #2!

P.S. - You should follow Trulia and Tara on Facebook!


By Nancy Wallace,  Thu Aug 2 2012, 11:10
good advice,,,thanks
By Marie,  Thu Aug 2 2012, 12:36
I was reading your financial daily checklist and it is great, but how about spending a bit more efforts and time on the reality of the current state of affairs for a big majority of current home owners & buyers. Most are so upside down that they can't get rid of their PMI Insurance, and for new buyers every reasonable priced home , ( especially in Southern California), has been bought at auction , rehabbed and put back out there in less than 60 days,at 30% or more mark up, so it's hard for someone to purchase one of these homes since it won't appraise at the new higher price , so a regular buyer who needs to get a loan can't do it. Here in California, it has been so "dead " for months that now we see real estate agents that are taking multiple offers on properties , just to "jack" the prices up. So many of the realtors don't even have the courtesy to call back and tell you current status on some homes. It's not pretty out there, and we have seen many unprofessional agents taking advantage for higher commisions! It is a bit of a frenzy right now, with homes selling in the first 3 to 4 hrs on the market! WIth minimal inventory they are calling the shots!!

This is from 3 buyers trying to buy homes, 2 who need to finance ,and one with all cash. Prequalified , all ready to go. We are learning STANDARD sale is the only way to go, and even those sellers and agents have been getting greedy lately!!

We are committed to finding homes we can all be happy with, we know they are out there.

By Rlb3240,  Thu Aug 2 2012, 12:50
How about sharing the name and contact info where you got your phone, internet service and cable, I would like to try that/

By Chris Carter, MORTGAGE LENDER,  Thu Aug 2 2012, 14:06
Re: PMI....the borrower can ask for PMI removal at 80% LTV on ORIGINAL value, new appraisal not needed. BY federal law, PMI must be removed at 78%. Important note...this applies to conventional (non government insured) mortgages only!

Many people overlook the original loan value aspect.
By Eli Pike,  Thu Aug 2 2012, 14:10
too vague - what numbers work? how much money (income and savings) needed for what size mortgage?
By Aa1ofakind,  Thu Aug 2 2012, 16:45
Hi Tara,

In the above article I read section no. 5 and I would like to know the name of the company that you chose for your "Phone/Cable/Internet Service" where you saved 50% on all 3 services. My soon-to-be fiance' and I are in the process of purchasing a 2 or 3 flat at the end of the year that we will be moving into, getting married next year (honeymoon included) and establishing non-for-profit businesses, etc. and "ANY" saving opportunities and advise is much needed! Thank you. :)
By Donna Murray,  Fri Aug 3 2012, 10:24
Great information! Thanks!
By Marvelous Mary Novak,  Sat Aug 4 2012, 16:17
great advice.
By Debbie Starnes, Realtor,  Mon Aug 6 2012, 19:30
Would love to know more about #5! Thanks for the tips!
By Todd Brittingham,  Mon Aug 6 2012, 21:05
If you're only doing this once every so often you're probably not going to be making much progress. I believe keeping accurate personal financial statements is a big key towards improving your financial health. Using a program like quicken will help you create a budget that you can track along with a personal balance sheet which will show you what your net worth is. Reviewing these statements often will help you make decisions about where your money is going and how you can make adjustments to improve your financial picture. Take things a step further and start to buy assets (like real estate) to build your net worth and someday you may be able to retire while these assets continue to put money in your pocket.
By Eva Cox Ward,  Tue Aug 7 2012, 14:27
By Trevor Curran,  Sat Aug 11 2012, 08:15

Awesome advice! You've touched on an area too often overlooked by Homeowners and potential Homebuyers, but one that is so important in today's interesting lending environment. Underwriters are looking at the overall financial picture when deciding on approving a mortgage loan these days.

I love that you mentioned checking bank statements! The technology becomes too much of a crutch and we forget to perform some basic due diligence with our finances.

Two other suggestions I give to my clients that you might add:

1. Check your paystubs! Today many employers provide e-Stubs instead of printing a hard copy paystub. I prequalified a Harvard Law Graduate who worked as counsel for a huge national company. He told me verbally his salary, but when I had him print out his most recent paystubs from online, I discovered his employer had neglected to give him an annual $12,000 raise four months earlier! He couldn't believe this until he called Human Resources the following day only to discover I was right! WOW!

2. Get a great tax professional on your team and speak with your Tax Pro in June and October to review your financial standing and the status of your payments for your Federal, State and Local tax liabilities from the money withheld from your paychecks.

The chunky refunds many folks receive on their tax returns is actually repayment of an interest-free loan they made to the Government! Your tax pro can guide you on how to take home that money instead of lending it to the Government. Thus the tax pro "check-in" in June and October. It's good, too, for fine tuning your financial standing so you never have a tax liability due on your tax returns.

Trevor Curran
NMLS #40140
By Jacoma Properties,  Mon Aug 13 2012, 11:39
It's always good to take some time for ones self.
By Mark Acantilado,  Thu Aug 16 2012, 01:30
Checking your financial health is a good practice that aids an individual in clearly and efficiently monitoring his/her financial statements and make sure that he/she knows how to control his/her finances.

In my own view, this type of checklist and process should be done at least every month or probably twice a month. First is in the middle of the month to see how was your financial statements and expenses was in the first weeks, and in the last month to know the overall expenses you had for the whole month, and if you have adjusted some during the middle of the month -checking by the end of the month would let you know if those adjustments really helped you out in controlling your finances.

For further resources, here are some articles talking about how to control your finances:

Mark Acantilado | http://www.agentcampus.com/
By Sue Smith,  Tue Sep 25 2012, 08:37
Paying extra on your home loans to help pay off your home sooner and save interest-
Payments need to be identified as to "apply to principal" only. (Otherwise the mortgage holder will apply it to interest). You don't have to make a full extra mortgage payment, just the amount of the principal. This is a way of paying yourselves. Remember that it is most often consumer credit which has the higher interest. Reining in spending and paying off credit cards may be the key to firming up financial health. If you regularly do the financial health checkup you will be more knowledgeable about our spending and saving habits. If you don't have a strong savings plan, attend to this BEFORE paying extra on your home mortgage. You need the safety net provided by your savings. Be diligent about saving. Learn how to start or increase saving and then do it for yourself. Smaller amounts per month are necessary over the long haul (20 years) to meet your goals than the amount necessary if you wait and save for 10 years.

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