Money Talks Blog by Oxford Planning Group

Many life events can create a need to downsize your home. As families grow older and children move out of the house or area, parents often want to live in a smaller home or a home closer to their children and grandchildren. No matter the reason, downsizing has the potential to provide a simpler and lower-maintenance lifestyle. As you think about downsizing your home, consider these benefits:

Financial – If downsizing your home pre-retirement, lowering your mortgage payment by purchasing a smaller home could increase the funds that you save toward retirement or pay toward outstanding debt. Also, by selling your home and downsizing, you may be able to put down a large down payment or purchase a smaller home with cash, thus reducing or eliminating your mortgage payment.

Utility Savings – Downsizing not only has the potential to lower your mortgage payment; it can also lower home expenses. By purchasing a smaller home, you will likely use less electricity, resulting in a lower power bill. Additionally, purchasing a home with a smaller yard, or a condo with no yard, can save on the expenses of landscape maintenance and pest control. 

Less upkeep – In addition to lower energy bills, a smaller home means a smaller area to clean and furnish. With less property, you will most likely have less yard work as well as fewer repairs and renovations. This will hopefully provide you with more time for your family and the things you love.

While downsizing your home has many benefits, make sure to run the numbers. Look at costs associated with selling the primary home, which may include preparing the house for sale, the real estate agent’s commission, moving costs and the cost of the new home. Also, while moving into a smaller home usually means a smaller mortgage payment, location and cost of living can have an effect.

This blog provided courtesy of David Koonce NMLS# 480428 of Fairway Independent Mortgage Corporation.  Feel free to reach out to David if you have any mortgage needs or questions.  Email: This email address is being protected from spambots. You need JavaScript enabled to view it.  or Call: 410-220-0205or 301-332-3234. 

With summer winding down, now is the time to revisit your long term financial plan and to review them for any necessary adjustments. Touch base with your financial advisor and make sure you’re on the right track to meeting your financial goals.

1.      Re-evaluate income and cash flow.  Raises, job changes and unexpected home costs are just a few of the factors that impact your income and cash flow.  Re-evaluate current income to plan monthly expenses and savings as well as making the most advantageous retirement savings decisions. Monitor your spending patterns and current budgeting practices within the scope of your long- term savings strategy.

2.      Family Security.  This is one of the most important decisions you can make to invest in your family’s financial security.  Examples may include proper insurance coverage and polices in place to reduce or eliminate financial risks when faced with sudden or unexpected loss.  Security may also include starting or re-evaluating college savings plans (planning ahead for your kid’s futures relieves some of the financial burdens and gives them a head start entering college or the workforce.) 

3.       Proactive tax planning.  With the Tax Cuts and Jobs Act of 2017, you may need to adjust your tax projections.  By remaining proactive about your tax planning, you will determine how much money you’ll need for upcoming tax payments.  Taxes are such a significant annual expense, it’s important to understand the best strategies to reduce your taxes and avoid expensive mistakes that could cost you.  Effective tax planning allows you to make smarter financial investments, helping save you money in the long run. 

Financial planning is ongoing, and we’re here to help!  

Like many college graduates, you may now have student loans that are becoming due.

Knowing how to prioritize your payments and other savings can make a big difference to future success. 

It’s not unusual that there are many demands for the money you may have available.  Building emergency reserves, disability insurance, savings for future home purchase, saving for a wedding and funding retirement plans are just a few of the items that commonly compete for dollars as graduates consider how to pay down their student loans. 

Hopefully the student loan is the only debt that you have as you graduate.  If that’s not the case, all your debts should be reviewed collectively. 

We generally recommend putting any extra loan payments towards the loan with the highest interest rate.  But there may be reasons for a different plan of action depending on your individual circumstances. 

So, if you’re just getting started (or you have a child who is just getting started), there’s a lot to think about.

First, know your budget and stick to it.  Basically, live within your paycheck so that you can make better progress toward your goals.  Once you have a solid budget, what’s left?  This is the money you can use to build emergency savings, to fund disability insurance, to take advantage of company retirement plans and to pay off loans.

Now you must figure out how to prioritize.  Disability Insurance should be considered to protect your income.  Outside of this everyone should have emergency reserves to cover unexpected expenses or to cover brief periods of lost pay between jobs or if laid off.  Historically it was common to recommend 4 – 6 months of expenses as a good nest egg to cover the unexpected.  I think this is good initially when you are starting from scratch, but in the future, it may be important to increase this amount.  The economic and market events of 2008 put a strain on many people’s cash reserves and in many cases 4-6 months proved inadequate. 

It’s not uncommon for individuals to consider putting off retirement savings in lieu of reducing debt and building cash reserves.  There are several reasons this should be reconsidered.  First, saving something even if a small amount builds momentum and discipline towards retirement savings.  This can be very important to long term success.  Second, if the employer offers a match, this is free money - and can be an incredible immediate return on any money you save.  If possible, try to contribute enough to get your maximum employer match.  If that’s not possible, do your best and or use future raises to increase your contributions to gain that benefit in the future.

We recognize your first priority is to make your minimum required payment on your student loan.  After that, what’s left?  This is where some percent should go to disability insurance, building emergency savings (maybe more initially) and some percent should take advantage of company retirement plans.  The exact amount to each is a personal choice but always try to make sure you have enough or are building emergency reserves.  Know what your back up plan is if an unexpected event occurs.

We hope you find this info helpful.  If you or a family member would like further information, please contact us.  We are focused on your success and are “Focused on Your Tomorrows”.

When handed 401(k) information from an employer, many participants are overwhelmed with the information they are provided.  Ideally, each participant would allocate across a diversified portfolio that best represents their risk tolerance and timeframe until retirement.  Unfortunately, the information provided is often too complicated to make easy decisions. 

This is where a Certified Financial Planner ® can add value.  Trained in retirement planning (and other areas of financial planning), investments, risk management, estate planning and taxes, CFP® practitioners are best qualified to review your overall situation.

Your investment goals for your 401k should be coordinated with any other investments you may hold outside of your 401(k).  If your employer offers matching dollars in your 401(k), you should strive to ensure that you can maximize this benefit.  After all, this is free money and immediately adds to your investment performance before even entering into your investments. 

Personal finance is just that – personal.  Your specific set of facts will often be unique to you.  You may be saving for a home, providing funds for children’s education, reviewing debt consolidation, have unusual medical expenses or any other set of unique circumstances.    

What Should You Be Considering?

What are your long-term goals?

Do you have shorter term goals that need to be coordinated with long term goals?

Have you reviewed your 401(k) plans’ “Summary Plan Document” to make sure you are maximizing your benefit?

Do you understand your risk tolerance and if you are married, does your spouse have a similar or different risk tolerance? 

Do you understand the investments in your retirement account?

Is someone offering to review these investments with you at least annually?

Too often, retirement plan education is full of industry jargon and difficult to understand.  If you have a great understanding of the above questions, you are ahead of the game and probably have a good start to head in the right direction for your retirement planning.  If not, consider consulting a Certified Financial Planner ® who can best provide you with important information to steer you in the right direction. 

Remember, it’s your future! 

From all of us at Oxford Planning Group, we hope you have a safe and wonderful holiday. 

We are blessed to live in such a wonderful country.