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#68 - The Midyear Financial Review

Updated: Mar 5, 2022

This week's episode is regarding the midyear check up to see if goals are being met or there is a need to adjust them so that you are prepared for the end of the year. The approach with this topic is to break down the main sections:

Review Your Unemployment Benefits

The American Rescue Plan Act of 2021 (ARP), which was signed into law in March of this year, extends and expands many of the unemployment benefits that were part of previous pandemic-relief bills until September 6, 2021. If you are unemployed, see if any of the extended benefits apply to you. And check on your state’s expiration information, as many states have decided to extend their benefits. Knowing what options are available to you will help you maximize your benefits.

Review Your Health Insurance

The American Rescue Plan Act included a change in the COBRA subsidy for certain individuals through September 30, 2021.

If you are in a position financially to pay for insurance there is a good chance that this will save you money over COBRA. There is a special enrollment period - see if you qualify which runs through August 15, 2021

How’s Your Career? Are you considering a new job?

-The job market has plenty of open jobs and depending on the industry you may be able command a higher salary

-If you don’t like your career consider getting more schooling or training to enhance your options

-You may also be able to move into a new industry

-If you don’t like your profession, consider choosing a path that works for you. You work many hours each week and enjoying your profession has more impact on your life than people realize.

Review Your Tax Withholding

-Review your taxes from last year. Did you owe?

-If you have a CPA, he/she can guide you to make sure that you are allocating

enough money

-Keep in mind your goal is not to have a tax return

-Also review your realized and unrealized gains/losses on your investments

Review Your Budget or Make Sure That You Have One

-Budgeting is critical and we mention this on almost every episode

-If you don’t budget, the odds of succeeding are minimal

-In fact, if you don’t budget, the rest of these tips are probably null and void

Renegotiate / Remove Monthly Services That Have Flexibility

-Cable and internet

-Electric and gas, see the highs and lows and maybe get on a plan to average

these out

-Auto insurance and Homeowners Insurance (Don’t forget the bundle)

-Shop at resale shops, garage sales and estate sales

-Buy things in the offseason

-Subscriptions such as satellite radio and other streaming services

-Groceries and eating out (40% of the food bill is wasted)

Check or Establish Your Rainy Day and Emergency Fund

According to a recent study conducted by CNBC and Survey Monkey, 14% of Americans—up to 46 million people—say they wiped out their emergency savings over the course of the pandemic.

Most financial experts agree that having 3-6 months of disposable income is required. The premise is based on the time it takes an average person to find new employment which varies based on the individual. For example, people working in the service industry during the Coronavirus pandemic suffered many months without employment.

Rainy Day Fund

These are dollars set aside to pay for unexpected things breaking. There is a well-known survey that says 40% of Americans would struggle to come up with $400 for an unexpected expense.

These are items such as the dishwasher breaking or a problem with the hot water heater.

Pay Down Your Debt

Refinance all of your loans - auto loans, student loans and mortgages

-Student loans can run for several years

-Refinance your home (if you are going to stay in the house long enough). This is

the biggest misnomer by homeowners meaning, it can take years to recoup that

cost depending on the loan amount, interest and the closing costs.

They are typically 2-6% of the mortgage loan. We talked about this in our personal

finance tip #25.

From Value Penguin

For our analysis, we evaluated the average cost of refinancing a $160,000, fixed-rate 30-year mortgage, originated in 2011 at 4.45%, at a rate of 4% today. We found that refinancing today reduces your monthly payments by $35 and results in $5,885 of savings over the life of the new loan. Assuming average closing costs of $4,345, it would take a little over ten years to recoup those fees.

While it may make sense to refinance today at 4%, this may not be the case as the years go on. Also, if you were to sell your home at an intermediary date after refinancing, the savings may be partially or entirely eliminated by transaction costs.

Review Your Credit Report is a great resource to check your credit health

-You credit score allows you to borrow at cheaper rates

-Work to remove derogatory marks on your credit report and avoid late payments

Credit Card Debt and Balance Transfers

-Transfer your credit card balance to low interest rate cards if possible

-Cut back on other expenses to pay down the debt

-The best mathematical way is to pay the cards with the most interest first - debt avalanche

-For many, the most beneficial way mentally is to pay the smallest debt first to

establish some progress and the continue forward - debt snowball

-When a debt is paid off take that money and add it to the next card

-Keep in mind that if you have more interest debt than investment interest, then you are actually losing money

Review Contributions to Your Retirement Accounts

-Are you meeting your goals or have you established them?

-Have you received a raise or a bonus?

-Are you on track to receive the employer match?

Just $100 per month @ 7% for 50 years will grow to $1 million dollars. Imagine investing two, three hundred or more dollars. We talked about this in episode #67 How to Make $1 Million Dollars the Hard Way.

The Midyear Financial Review Recap

Budget - this goes without saying. If you don't budget you won't succeed.

Get rid of that credit card debt. It is toxic.

Rebuild emergency and rainy day funds if required with a progressive plan so that you can maintain a normal lifestyle.

Check your taxes so that you don’t owe.

Get the free money if it is offered from your employer and also, if you’ve been fortunate to get a raise or a bonus, try increasing the nest egg.

We like to point out that we offer statistics and viewpoints about these financial topics; however, it is up to you do your own homework when making decision with your money.

Episode Link:

Midyear personal financial review


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