The Flywire

+finance PROTECT YOUR FINANCES In the article "Know Your Worth" we addressed seeing where you stand by calculating net worth and creating a budget. After you figure out where you stand, now you can work on some basic goals to help build a financial safety net. Here are a few tips so you won't be caught without protection in the event of an emergency.. Manage your debt. You are spending more than you're making if you calculated a negative net worth and the main culprit is DEBT. It is important to use credit wisely. Everyone believes that credit is bad but it isn't if you use it properly. REDUCE CREDIT CARD DEBT Here are a few tips to reduce credit card debt. • Pay your high interest debt first that don't have any tax deductions because this is sucking up most of your money. • Pay down debt rather than spreading it around. • Apply for a low interest loan to use for paying off existing credit cards and consolidating multiple accounts. It is important to shop around for the best rates before submitting an application. • Pay your bills on time to eliminate any additional fees. This will also help with building a good payment history on your credit report. • Check your credit report annually from all three agencies, Experian, Transunion and Equifax. Review your report closely and dispute any fraudulent charges.Visit www.annualcreditreport.com to request a copy of your credit report. Credit reports are free but you have to pay for the score. CREATE EMERGENCY FUND Create an emergency fund. What would you do if you lost your source of income? It is important to save towards an account that has three to six months' worth of living expenses. This will help out in the event that you become ill, lose your job or any other unforeseen emergency. You don't want to gamble this money in the stock market. It is important to save this money in a conservative account such as savings or money market deposit because these types of accounts are appropriate if you need the money quick. You may want to consider having at least $1,000 in your bank account for immediate emergencies. GET INSURANCE NOW Protect what you have with appropriate insurance. It is important to protect your income by having adequate insurance such as life, medical, car, disability and renters/homeowners. This will manage risk for you and your loved ones. Insurance is not as expensive as you think and a quote won't cost a penny. Many companies provide financial security for families through insurance. Some offer high risk insurance to people who would normally be uninsurable as well as those with preexisting medical conditions. Also explore life insurance that offer many different benefits such as cash growth, memberships for fraternal groups and additional child care benefits. Additional products include key persons insurance, specialty insurance, and property and casualty that are tailored towards your needs. There are many options to consider. PLAN FOR RETIREMENT NOW Invest for Retirement by saving in your company's retirement plan or an IRA. Pension plans are slowly dying and the idea of relying on social security is a part of history. I know retirement may seem like a long time away for most of you but the earlier you start the more you can potentially have. There are many companies that offer IRA's such as your local bank, T. Rowe Price, Vanguard, Fidelity or any full-service investment firm. Retirement plans and IRA's are smart ways to grow your money and cut taxes at the same time. If your company offers a retirement plan, then you should take advantage of the opportunity to reduce your taxable income. If your company offers a company match then it would crazy not to take advantage of getting free money for doing something that is for your benefit. If your company doesn't offer a retirement plan then you can set money aside in an IRA. The contribution limit for 2012 is $5,000 if you are age 49 and under. If you are 50 or older, you can contribute an additional $1,000 to the account. If you are considering opening an IRA, then a ROTH IRA is a great option if you are eligible. FACTS ABOUT ROTH IRA Generally, you can contribute to a Roth IRA if you have taxable compensation and your modified AGI(Adjusted Gross Income) is less than: • $179,000 for married filing jointly or qualifying widow(er), • $122,000 for single, head of household, or married filing separately and you did not live with your spouse at any time during the year, and • $10,000 for married filing separately and you lived with your spouse at any time during the year. • A lot of companies are starting to offer ROTH contributions in 401k plans. A ROTH 401k and a ROTH IRA is not the same thing! • You are responsible for opening up the ROTH IRA on your own and the ROTH 401k is offered by your employer. • There are not any income limitations for contributing to a ROTH 401k. • If your company offers a ROTH contribution option in the 401k plan then you may want to consider investing in that over a ROTH IRA because most companies will still match ROTH 401k contributions. Please check with your 401k plan provider for more information. • Contributions in a ROTH IRA will not have any impact on your ability to contribute to a ROTH 401k. • ROTH IRA contributions may be eligible for a tax credit. Please consult your tax advisor for additional information. These are a few simple steps to help with creating meaningful wealth. These actions will help to make sure you are protected in the event of an emergency. The Flywire finance team will continue to provide information to increase your financial independence. Make sure you pick up a copy of the next issue. Why? Because we want your financial picture to be as fly as you!

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