Ready for a midyear financial review? Look for these hazards

Mid-year is often a good time to review your financial prospects and conduct.

This is especially true now as the economy shifts from pandemic lockdowns to a more normal business environment. Change is underway, bringing new tax wrinkles, expiring federal funding programs and shifting budgetary pressures with it.

Here are some important current financial trends and developments that you should consider.

Keep an eye out for updates on Child Tax Credit

If you are one of the 36 million families who may be eligible for child tax breaks, look for a letter from the Internal Revenue Service telling you how the program has changed. New features for 2021 only include an expanded loan amount and monthly prepayments starting in July.

The letters are sent to families who may be eligible based on information they provided on their 2019 or 2020 federal income tax returns or who signed up for a stimulus payment. Most recipients do not need to do anything.

Half of the credits will be paid out in advance this year. The rest must be claimed in the 2021 tax return. Eligible families will receive prepayments, either by bank transfer or check, beginning in July and will continue to run for the remaining five months of 2021.

The American Rescue Plan increased the maximum tax credit for 2021 to $ 3,600 per eligible child under six and to $ 3,000 for those ages six to 17.) Prepayments, starting in July, are up to $ 300 $ 250 per month for each Eligible Child under the age of six and up to $ 250 per month for children 6-17 years of age.

The maximum amount is available to individuals with an income of $ 75,000 or less (single), $ 112,500 (head of household), or $ 150,000 (married couples filing together).

Beware of bumper sticker shock

This has become an expensive year to buy a car or truck. Vehicle inventories have declined, in part due to supply chain disruptions that have shut down automobile factories. The result is a market where sellers have less incentive to bargain.

“The rule of thumb that nobody pays the ‘sticker price’ for a new car has fallen by the wayside as dealers stick to the manufacturer’s suggested retail price,” said Jack Gillis, executive director of the Consumer Federation of America, in a Die dealers even charge above the badge for certain popular vehicles that are in short supply, he added.

His main suggestion to consumers is to wait for price pressures to subside if possible, possibly later in the year. Other tips include avoiding fancy upgrades and skipping extras like floor mats, luggage racks, and fabric treatments that can often be bought later for less money.

Gillis also recommends looking for credit ahead of time and turning down extended warranties or service contracts that may not be needed and are often not worth the cost.

Check online shopping habits

Shopping online is more common than ever, thanks in part to store closures and transportation difficulties for some due to the COVID-19 outbreak. Despite the many benefits of buying with a computer or cell phone, now may be a good time to review your spending habits.

According to a survey by the American Institute of CPAs, about two in five Americans said shopping online made it harder to stay on a budget, and more than half said they had increased their spending since the pandemic began.

Among the advice from the accounting firm, consumers should try to shop out of boredom and beware of impulse buying. Instead, follow a “cool-down” period by placing a selection in an online shopping cart for maybe a day before finalizing a transaction, the group suggests.

While you’re at it, make regular online password changes and consider deleting merchant accounts that you no longer use. Account hacks and retail security breaches remain dangerous when criminals gain access to your personal information.

Prepare for a squeeze on bill payment

Most consumers have recently stayed out of serious financial trouble thanks to stimulus payments, credit deferral programs, and other facilities. But many of these measures have expired or will expire in the coming months.

The federal extended unemployment benefits will end in September (and already in about half of all states), and so will deferral programs for student loans and mortgages, said Kate Bulger of Money Management International. Eviction moratoriums will expire in late July after being extended for another month, but around one in five tenants is in arrears on rent, she added.

Detailed: The pandemic evictions have been halted, but Metro Phoenix landlords are still filing nearly 30,000

Meanwhile, many people have borrowed by credit cards and other means. The typical stressed out consumer at Money Management International, a nonprofit financial advisory and education group, now owes about $ 7,000 more than it did before the pandemic broke out. “The payment shock is coming,” said Bulger in a recent webinar.

When faced with financial stress, it is important to recognize that government support programs are running out and seek help when needed. Michael Sullivan, a financial advisor at Take Charge America, a nonprofit credit counseling and debt management agency in Phoenix, suggests prioritizing your bills if you can’t pay everything at once. He suggests making rent or mortgage payments first and then using extra cash to pay bills for auto loans, utilities, insurance premiums, and finally credit cards.

Consider buying a new bank

Separating from a bank is not easy. Chances are that your current institution has set up payment options for bills, or automatically depositing paychecks, social security benefits, or other income. You may also have a mortgage, credit card, car, or other loan with the company. All of this can take some time, but it is still a good idea to look around for better deals on interest rates, returns, and fees every now and then.

According to a MagnifyMoney study, consumers paid bank fees of $ 345.1 billion between 2011 and 2020 and earned $ 231 billion in interest. That’s an average fee of $ 53.79 per account last year, compared to just $ 44.48 in interest income.

Fees, interest rates, and returns are generally competitive, but sometimes better deals turn out. For example, on June 2, Ally Bank said it was cutting all overdraft fees without restrictions. Others could follow suit.

“More than 80% of overdraft fees are paid by consumers living from paycheck to paycheck or with consistently low balances,” said Jeffrey Brown, CEO of Ally, in a prepared statement. These fees disproportionately affect African American and Latin American customers.

While you’re at it, you might also want to compare other financial services like homeowners and auto insurance. Also, check that you have adequate insurance to repair or remodel a home if necessary, as the prices of lumber and other materials have risen recently.

You can reach Wiles at russ.wiles@arizonarepublic.com.

source https://collegeeducationnewsllc.com/ready-for-a-midyear-financial-review-look-for-these-hazards/