Jodee Brydges

Fall Finance

October 11, 2018 by Jodee Brydges Leave a Comment

Fall is definitely in the air! The mornings are greeting us with crisp, cool air; the leaves are displaying vivid bright colors, and the days are getting shorter. As we settle in and adjust to the final quarter of 2018, retailers are changing their displays, decking their isles, and preparing for their busiest time of the year. And, this preparation just keeps getting earlier and earlier.

This year, Starbucks introduced their Pumpkin Spice Latte in August (its earliest official launch date ever) and in September, a stroll through Costco, Target and many other retailers, leaves you wondering if you should be shopping for Halloween, Thanksgiving, or Christmas. All these fun and festive holiday displays are making consumers feel the stress of holiday shopping and we are only in October!

The reality is, we have entered the most expensive quarter of the year and retailers are ready to rake in the profits. Take a look at these facts:

According to the National Retail Federation, in 2017, Americans were expected to spend 9.1 billion or an average of $87 per household on Halloween loot, and a whopping $691.9 billion or an average of $967 per household on Holiday Shopping. These figures have been steadily increasing over the past few years. Trick or Treat, I think the retailers have trained us how to deck the halls. So, how do you get through the most wonderful quarter of the year stress and debt free? Here are a few tips.

Set a budget: Determine the maximum amount you are willing to spend on each holiday. Set a budget for Halloween, Thanksgiving, and Christmas/Hanukkah. For Halloween , this figure should include costumes, candy, and décor/parties. Thanksgiving should include meals, beverages, and travel. And, Christmas/Hanukkah should include gifts, parties, holiday cards, décor, travel, and food.

Make a list and check it twice: Make a detailed list now of everyone that you have to shop for and determine the maximum amount you can spend on each person. Once you have the list created, total the amount and see if the amount matches your budget for gifts. If it is too high, adjust the amount for each gift until the total matches the figure you set in your budget. If your family pulls names, pull names now and set the spending limit.

Shop early and shop smart: Once you know how much you want to spend on each individual, determine what you want to purchase and shop early. An early start will allow you to wait for sales, comparison shop online, and take advantage of cyber deals.

Stick to your list: When you go into a store to purchase a gift, stick to your list and avoid the temptation of purchasing more than you intended. When retailers offer deep discounts, it is easy to shop for one gift and leave with several items. Most of the time, these extra items are not on the list. Stick to your list to avoid overspending and exceeding your budget.

Rather than walk into retailers and feel stressed about getting your holiday shopping done now, relax, and use this time to prepare your holiday spending guide. Taking the time to do this simple planning task now will allow time to put money away for each holiday, shop at a relaxed pace, take advantage of sales, stick to your budget, and ring in the New Year without a holiday spending hangover.

Be sure to pick up next month’s copy of Alive Magazine to learn how to entertain on a budget!

For these and many more financial tips and money saving strategies, look for my new book “Digging Out” that will be available for purchase this fall (it makes a great Holiday gift). Follow me on Facebook, Instagram, and LinkedIn for launch dates, worksheets, and more!

$eptember $avings

September 3, 2018 by Jodee Brydges Leave a Comment

September always brings wonderful memories of a new school year; the excitement of fresh new beginnings, new teachers, and new adventures. It is the time of year where routines and schedules fall back into place, homework begins, and new calendars get cracked open and marked up with goals, commitments, and to-dos in the year ahead. The start of a school year is not just for students, it also provides an excellent opportunity for adults to purchase new annual calendars, sync family schedules, and set new goals, months in advance of the traditional New Year.

While your children are hitting the books, take the time to set your own goals for the year and think of September as “Savings September.” Jumpstart your goals by making a phone call to each of the following service providers and perform an annual review with each. Doing so, will put money back into your pocket. Let’s get started:

Cell phone service: Cell phone providers have been forced to reduce their monthly charges to their subscribers to keep up with the competitive marketplace. Call and review your cell phone statement with your provider. During the review, you may discover that you can obtain the same plan at a lower rate or even a better plan with an additional usage allowance (great for family plans). Reviewing your bill with your provider may also uncover costly overage charges that you may be incurring if you or a family member is exceeding the monthly allowable minutes or data usage.

Cable / Internet Package: Similar to cell phone providers, cable, Internet, and phone companies have also had to lower their monthly charges to subscribers to remain competitive. Research a bundle package that combines your home phone, Internet, cable, and security system. Having a bundle package provides discounts that reduce your overall monthly bill. Additionally, evaluate whether or not you really need a landline and make certain that all of the channels that you are paying for, you are watching. With the increased use of cell phones and streaming TV, landlines can be eliminated along with loads of extra channels that may be watched via a cell phone or a computer.

Gym memberships: Fitness is extremely important on so many levels, but it can become very costly depending on the gym that you join. If your fitness goal is to jump on an elliptical, run on a treadmill, or pump a few weights, you can join any gym at a relatively low membership rate and obtain your fitness goal. If your goal is to train with a trainer, attend a spin class, or stretch and relax at a Yoga studio, take the time to track how many days per month you actually go and make certain that the monthly fee is worth it. You may find that you can adjust your workout by walking or running outdoor (for free) and supplement spin classes, yoga classes, or strength training by purchasing a punch card. Punch cards can cost significantly less than monthly dues. Additionally, check your benefits package with your employer as many large corporations are paying portions of gym dues as part of their wellness programs.

Homeowner’s / Auto Policy: Have your agent(s) review your policies annually. You may find that your mileage allowance on your car is too high, your deductible can be adjusted, or just combining home and auto policies with one provider can make a significant difference to the overall amount you pay annually.

Mortgage: If you have a mortgage loan, equity line of credit, or both, be sure to take the time to review annually. There are several things to consider with an annual review. First of all, if interest rates are lower, refinancing to a lower rate can save you money on a monthly basis as well as save interest over the life of the loan. Secondly, if you have a first mortgage and an equity line of credit, credit card debt, or student loans, consolidating these loans could provide a lower overall interest rate and allow for substantial monthly savings. Thirdly, if you purchased a home and put less than twenty percent down, you likely have mortgage insurance. With home values increasing in the Bay Area, this may be an ideal time to review your mortgage, eliminate costly mortgage insurance, and save a substantial amount on your monthly payment. For a complimentary mortgage review, feel free to contact me at the number below.

Let’s face it, the majority of your service providers are rarely going to pick up the phone, call you, and suggest that you obtain a new and improved plan at a lower rate. Being proactive and taking the time to review each plan can create substantial savings over a year. Make this annual update plan part of your September goals and start saving money today!

For these and many more financial tips and money saving strategies, look for my new book Digging Out, published by ALIVE Book Publishing, that will be available for purchase this fall.

Understanding Adjustable Rate Mortgages when Rates are Rising

August 5, 2018 by Jodee Brydges Leave a Comment

The Federal Reserve has raised interest rates five times in the past two years. Hearing that additional rate hikes are on the horizon, consumers with Adjustable Rate Mortgages (ARMs) are feeling anxious about how the rate hikes will impact their monthly payment once the initial low interest rate reaches the end of the term.

Whether you currently have an ARM, or are considering an ARM, understanding the components and terminology of an adjustable rate mortgage will help you decide if an ARM is the best loan product to meet your long-term financial goals. Let’s breakdown the essentials:

Start Rate/Initial Fixed Period: The start rate is the interest rate that is fixed for a specific period of time. That time period may be three, five, seven, ten, or even fifteen years, depending on the mortgage product. Loans with initial fixed terms are commonly known as 5/1, 7/1, 10/1 or 15/1 ARMs. After the initial period, the rate will then convert from a fixed to an adjustable, and the rate and payment will be adjusted annually by adding the index plus margin. The annual increase will be limited by the caps specified in the note (see below).

Index: The index is the volatile component of an ARM loan. An index rises and falls based on economic fluctuations and is the cost the lender pays to borrow the funds in the credit markets. Banks use a variety of indices, the most common being the LIBOR (London Inter-Bank Offer Rate).

Margin: The margin is the fixed percentage that is added to the index to determine the rate, once the start rate/initial fixed period has ended. The margin is the lender’s profit.

Caps: The caps limit the amount that a rate can increase or decrease once the introductory period is over, annually, and over the life of the loan. Caps are made up of three figures and can be displayed as 2/2/5. The first “2” represents the most the interest rate can increase after the initial fixed period ends; the second “2” represents the most the rate can increase each year thereafter; and the “5” represents the maximum the rate can increase over the life of the loan.

For example, if a borrower locks in a 5/1 ARM with a start rate/initial fixed period at 2.50% and caps of 2/2/5, the loan payment would be fixed for five years at an interest rate of 2.50%. At the end of the five-year term, the lender would then add the index plus the margin to determine the current interest rate. In this example, the adjustment is capped to either index plus margin, or 2% — whichever is the least between the two. Knowing the caps, once the start rate ends, is essential.

So, what happens after the term ends? Using the current 1-year LIBOR index value of 2.79% and adding a margin of 2.50%, the market rate would be 5.29%. However, the rate cannot increase more than 2% the first year which would limit the increase to 4.50% for one year (2.50% start rate + 2% cap). The payment would be fixed at 4.50% for one year. Each year thereafter, the lender would adjust the payment.

If the following year the 1-year LIBOR value is 3.79% plus the margin of 2.50%, the market rate would be 6.29%. Because the index plus margin is lower than the 2% annual increase cap, the payment would be fixed for another year at an interest rate of 6.375% (most lenders will round this figure to the nearest .125%).

Lastly, if the following year the 1-year LIBOR value is 5.25% plus the margin of 2.50%, the market rate would be 7.75%. Even though the index plus margin is less than a 2% increase from the previous year, the maximum the rate can increase is 7.50% (2.50% start rate + 5% cap) over the life of the loan. Being that the lifetime cap has been reached, the payment would be fixed at 7.50% for the remainder of the loan term or until rates decline.

Another common cap combination in the marketplace is a 5/2/5 cap. With this combination, when the start/initial rate ends, the first interest rate adjustment cap is set at the same level as the lifetime adjustment cap, meaning that the initial rate could potentially increase 5%. If the start/initial rate is 2.50% and the first adjustment raises the rate to 7.50%, borrowers will experience significant payment shock that could create a major financial hardship.

ARM loan products can serve as great alternatives to 30-year fixed rate mortgages. Lower initial start rates have helped borrowers save hundreds of dollars in monthly payments. But, knowing the components of an ARM are essential to understanding how a rising interest rate market can impact your monthly payment. Knowledge is the key to protecting your monthly cashflow and your home!

If you currently have an ARM, now would be the perfect time to review your loan before additional rate hikes occur and explore alternative products that better meet your financial goals. For a complimentary review of your mortgage loan, please feel free to either phone me at 925-552-3863 or email me at jbrydges@rpm-mtg.com.

Back to School Shopping

July 9, 2018 by Jodee Brydges Leave a Comment

A Valuable Opportunity to Teach Your Children Smart Spending Habits

It may seem too soon to broach the topic of back-to-school shopping, but believe it or not, it is right around the corner. Just as families are getting settled into their summer schedules and are enjoying the relaxed pace of flexible schedules, retailers are gearing up their advertising campaigns and bombarding us with TV commercials, valuable coupons in our inboxes, pop-ups on our social media feeds, and print ads in our mail boxes. Offers range from the latest back-to-school fashions to stocking up on school supplies and from decorating lockers to dorms. You name it, retailers have you covered.

And although you may want to avoid it like the plague, taking the time to plan in advance can not only save you time and money, it can also provide a financial learning platform for your children. Whether your children are heading to grade, middle, high school or college, the below steps can be worked through together:

Step One – Take Inventory

Schedule a day for you and your child/children to go through their closet(s) and take inventory of what they really need (versus want) for back-to-school. Clothes that still fit stay, clothes that are too small, donate or sell. If your child rolls their eyes at the thought of having to try on their clothes and purge, make it a money-making game. As they sort through, they can create a pile to consign their gently used clothing and the income generated from the sale of the clothes can be their money to spend. Or, pay your child an allowance to go through their closets and drawers and purge. There are many great consignment stores and websites. For example, Snickerdoodles in Danville or online websites such as ThredUP, eBay, or Next Door. The sites are endless.

Step Two – Set a Budget

Once the inventory is complete, have your child make a list of their wants and needs for back-to-school and set a budget. Wants and needs should include clothing items, shoes, backpack, supplies, locker décor, or dorm necessities. Review the list with your child and separate the absolute needs from the wants. From there, set a budget with your child and divide the budget into categories. For example, category one: backpack and school supplies; category two: clothing; category three: shoes; and category four: locker décor or dorm décor. Assign amounts to each category and make it a challenge to have your child stay within the budget. If your child stays within the budget, offer a reward—maybe an item from their want list, lunch, or a fun gift card. It is amazing how creative kids can get!

Step 3 – Calendar Shopping Days

Schedule a couple of shopping days to avoid trying to cram it all into one day. One day shop for a backpack and school supplies, another day shop for shoes and clothing, and another day shop for locker or dorm décor. Breaking the shopping into smaller, manageable trips will avoid burnout and impulse shopping, and will keep your child focused on which items need to be purchased each day. It can be overwhelming when trying to shop for multiple categories in one day which can lead to deviating from the plan and overspending.

Step 4 – Coupons and Sale Days

Be sure to take the time to print the offers and discounts that arrive in your inbox or mailbox and calendar the shopping days when stores are promoting deep discounts and sales. Retailers are continuously sending discounts and promoting sales, so teach your children to use these to their advantage as discounts lead to savings which can equate to another item on their list or savings for you!

A little advance planning will help your family stick with the plan, avoid impulse shopping, save you money by syncing shopping days with sale days, and most of all, provide the opportunity to teach your child smart money management and budgeting skills.

There is plenty of time left to shop. Plan well and you will save well.

Summer Spending

June 9, 2018 by Jodee Brydges Leave a Comment

Oh, the joys of summer are fast approaching; longer days, warmer weather, the kids are out of school or back home from college. The lazy days of summer are jam packed with grads, Dad’s Day, camps for kids,vacations, and outdoor entertaining. It is a fantastic season to get outside, attend celebrations, connect with family and friends, and travel to new and exciting places. But, summer can be a very costly season that can leave you with the summertime blues if you do not stick with a budget.

According to the National Retail Federation, consumers will spend $5.6 Billion on graduation gifts, $15.5 Billion on Father’s Day, and $7.1 Billion on the Fourth of July holiday. Add to that, the cost of summer camps for kids and a vacation, and summer is sizzling with spending that could melt your budget quickly. To keep your budget in check, try the following:

Write down which celebrations you will be attending each month this summer, which parties or holidays you will be hosting, dates your children need to attend camps, where you would like to go on vacation and the cost associated with each. Use the following chart as an example to help you plan:

SUMMER SPENDING BUDGET
Examples:
June Graduation: $100
June / July Camps for Kids: (6 @ $350 each) $2,100
August Vacation $4,000

Total $6200

Next, review the figures and determine if the total amount is in line with the amount you had in mind to spend. If you have to go into debt to fund your fun, take the time to cut, trim and find alternative ways to accomplish the same goals. A little planning can save you a lot of money. Let’s take a look:

Summer Camps: Go online and research camps that are being offered through your school district, your city, or community college. Schools, cities and colleges typically offer a wide variety of camps that are both cost effective and fun for children. Additionally, staying local allows your children to attend camps with school friends and the opportunity to support your individual school.

Vacations: Whether you drive or fly this summer, vacations come with a costly price tag. In a study done by the financial planning company, Learnvest, nearly three quarters of Americans go into debt on vacation. On average, a family of four spends $4,800 per year on vacation. If you charge that amount, make the minimum payment (with a rate of 12%), it will take 253 months to pay off the initial debt not to mention the $4,244 in additional interest. That much needed vacation will set you back instead of helping you relax and recharge.

Opt for a staycation this year and spend the time exploring the Bay Area. Take a day trip to San Francisco, a hike through Muir Woods, pack a picnic and spend the day on the beach in Capitola or Santa Cruz, or explore the local museums—the options are endless. Exploring activities in your own backyard can be fun, educational, and stress free as you don’t have to contend with packing bags, long security lines, and you can return to the comfort of your home each day.

Entertaining: Backyard BBQ’s and swim parties are a must during the summer and can create fantastic memories with family and friends. But shopping, planning, and preparing can take the splash out of the fun. If you are planning on entertaining this summer, create a theme and ask your guests to bring their favorite entrée, dessert, or appetizer. Guests always enjoy pitching in and showcasing their favorite seasonal dish and you may even pick up a new recipe or two for future parties!

Whatever you choose to do this summer, taking the time to plan and budget will allow you to thoroughly enjoy the dog days of summer and not end the summer with a spending heatstroke.

Spring Cleaning (Your Finances)

May 10, 2018 by Jodee Brydges Leave a Comment

Spring is in the air—an opportunity for many to work on their spring cleaning projects. Clean out closets, do minor or major repairs around the house, spruce up the yard and get it in tip top shape for backyard fun! And with this season SPRINGing you into action to clean and organize, why not take the time to clean up and organize your financial house too?

Spring is all about new beginnings, making changes, and getting on track. And with just finishing tax season, this is the perfect time to organize your important documents, review outstanding debt, and get into a position to plant a fantastic financial plan that will blossom for years to come. Use the following steps:

Step 1: Box or shred documents from 2017.

It is recommended that you keep documents for seven years. Be sure to place 2017 documents in a large envelope or box and mark it “2017.” Documents that should be saved include: Federal and state tax returns, property tax bills, mortgage-related documents, earned interest forms from bank accounts, capital gains statements, and any credit card statements or receipts that were used as expenses on tax returns.

Step 2: Create an organized filing system for documents.

With tax season behind you, this is the perfect time to start an organized filing system. Documents can be organized in a filing cabinet using hanging folders, a filing box with hanging folders, or even an accordion file. Simply label each folder by account. For example, Mortgage/Rent; Electricity/Gas; Cell Phone; Water; Credit Cards; Medical Bills; Bank Statements; Paycheck Stubs; Auto Loan; Insurance, etc. Have a separate folder for each and every account. If you receive statements online, simply create individual separate folders in your inbox, then print and file the statements away monthly.

Having an organized filing system allows you to easily access documents when needed. You can also use the documents to prepare a budget and identify areas where expenses could be cut, debts paid down (and eventually eliminated) and savings built.

Step 3: Review credit card and student loan debt statements.

If you carry a balance on credit cards or have student loan debt, take the time to gather the monthly statements and document the total outstanding debt. Items to note include:

-Creditor Account
-Balance
-Minimum Payment
-Actual Payment
-Interest rate

Knowing the above information will help you prepare a plan to pay off debt efficiently.

Step 4: Determine if spring is a time to refinance or purchase a home.

Home prices in the Bay Area have risen over the last few years which has resulted in increased equity positions for homeowners. With interest rates still at historically low levels, now may be the perfect time to access the equity in your home and do home improvements, lock-in a fixed rate loan (if you currently have an adjustable rate mortgage), or purchase a home for the first time, to start building your equity now.

Spring offers so many great opportunities to improve your financial health. A healthy tax return can provide funds for a down payment, funds to pay off debt, or funds to build a savings account. Regardless of your goal, use this time of year to determine your unique financial path.

Jodee Brydges has been in the financial industry for over 25 years. She is an Industry Speaker and loan officer with RPM Mortgage in Alamo. She is passionate about helping clients achieve their dream of home ownership and educating individuals nationally/ locally on a variety of financial literacy topics. She is the author of the upcoming book “Digging Out” (Summer 2018). For questions or comments, you can reach Jodee at jbrydges@rpm-mtg.com or 925-552-3863.