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REACH YOUR GOALS
New Year's Resolutions for Your Money
While some of us still resolve to hit the gym every New Year, most of us go for better money management. Research found that over 50% of us plan to set new money goals for 2025.
No matter what you decide, it's still helpful to take stock of your finances now. It can help you get a jump start on resolutions to improve your financial fitness.
Start with creating an inventory of your take-home pay, essential expenses, and non-essential buys like entertainment and gift shopping. Be sure to include estimates for big-ticket items you're anticipating, like upcoming home repairs or tuition. Once you have a clear picture of how much you earn and where your money is going, you'll be able to create goals.
Live below your means during 2025. This may sound like a cliche, but it has merit, especially as almost 30% of us feel we overspend on luxuries. Although lifestyle changes may be difficult at first, you'll cheer up when your savings grow. Some sneaky ways to save:
- Cut down on your streaming subscriptions and go for the free options. Ditto with drive-through snacks and drinks; these can wait until you're home.
- Never go shopping without a list. This helps prevent impulse buys. Also, paying with cash helps you resist overspending.
- Reduce your car or truck payment. You may be able to refinance your payment and also find cheaper insurance.
- This brings us to a true path to happiness: life without debt. We have a free budget planner available for download - feel free to take a look.
Still have questions on how to get to your goals? Connect with an APM Loan Advisor near you! We have several long-term strategies that can assist you.
Source: empower.com
MORTGAGE IQ
Is Your DTI Ready for Home Ownership?
The latest round of inflation contributed to consumers' putting more purchases on credit cards during 2022-2024, increasing national debt levels to over $1 trillion this year. It also increased the average credit card balance to over $8,000.
And if this wasn't bad enough, these higher debt levels were also the main reason why mortgage applications were denied this year.
If you've been considering applying for a mortgage, you may already know how debt affects your application. Lenders compare your debts to your pre-tax income to ensure you can truly afford monthly mortgage payments. This is called debt-to-income, or DTI.
Here's how to calculate your own DTI equation:
- Add up your total monthly debt payments.
- Divide that sum by your gross monthly income.
- Multiply the result by 100 to see your DTI as a percentage of your monthly budget.
- The lower your DTI, the better off you'll be when applying for home financing.
- A DTI around 35% or lower is considered very good, although some mortgage programs will accept a higher one.
If you'd like assistance with your own DTI calculations, or have questions, feel free to contact an APM Loan Advisor for an informal conversation.
Source: cnbc.com
FINANCIAL NEWS
Why Grocery Stores Don't Share Our Inflation Pain
Since the latest bout of inflation appeared in 2021, food shoppers have been experiencing some serious sticker shock. However, if you've assumed that grocery chains share your suffering and are experiencing lower profits, you may be in for an unpleasant surprise.
Earlier this year, the Federal Trade Commission found that many food retailers' profit margins exceeded the costs they passed along to consumers, both during and after the pandemic. These bumped-up rates couldn't be blamed on supply-chain disruptions or wage increases. Instead, grocery chain profits spiked 11% between 2021 and 2022.
Even retailers popular with bargain shoppers, like Costco, saw its profit margins increase from 12.2% in 2022 to 12.3% in 2023. Since 2019, the company's revenue has grown by more than 66% while its net income increased by nearly 96%.
While some grocery companies continue to transfer blame for higher prices to labor costs and supply chain problems, one recently admitted to price-gouging. A Kroger executive admitted that the company had raised prices for food staples like eggs and milk after the FTC presented an internal email that stated that "retail inflation has been significantly higher than cost inflation" for those items. Kroger operates in 35 states and is currently the nation's largest supermarket operator.
Source: money.com
DID YOU KNOW?
How AI Chatbots Make Holiday Shopping Easier
Chances are, you've been using Google to help you find gifts for the last few holiday seasons. Sometimes it's as simple as searching for a popular item; however, others may be more challenging, like relatives or friends who can't think of any potential gift suggestions. This is where AI chatbots can go considerably further than search engines.
For example, you can describe at length what you're looking for, even if you don't know exactly what you want. You can tell the chatbot about the person you're shopping for, including their work, hobbies, even their favorite types of music.
Here's an example. When asked to suggest gifts for an English teacher who's fond of her cats, Anthropic's Claude chatbot responded with:
- A custom pet portrait of her two cats (many artists on Etsy offer this).
- A decorative cat-themed throw pillow with literary quotes.
- A cat-shaped tea infuser with some premium teas.
After you've decided on one or two items to pursue, you can ask a chatbot to help you do price comparisons or suggest more items if you're not able to find your first picks.
You can also chat with some chatbots that are offered by retailers, such as Amazon's Rufus, but they'll limit your results to what they're selling.
Once you get the perfect gift, all that's left is deciding whether to tell the recipient that ChatGPT helped you...or that it was your own, brilliant idea.
Source: money.com
PERSONAL FINANCES
Leave Your IRA to Your Heirs, Not a Tax Bill
Naming beneficiaries of your Individual Retirement Account (IRA) balance can seem like a generous gesture, but it can also create a big tax bill for them. Here are ways to help stop this from happening.
First things first: taxes will always be due for traditional IRAs. It's easy to forget that your beneficiaries will be taxed within their tax bracket, not yours. This can make a pretty big dent in the inheritance you wanted to leave, especially if you're retired and they're working.
For example, the lowest tax bracket in 2024 is 10%, while a working beneficiary earning $115,000 a year will be paying a 24% tax rate. Furthermore, beneficiaries will probably only have 10 years to draw down the account because of the IRS' current 10-year rule.
Fortunately, you have several options for minimizing your heirs' tax bills. One is to convert your traditional IRA to a Roth IRA, which means you're effectively paying the taxes for your heirs. Another strategy is to leave more of your IRA to heirs in lower tax brackets, or to leave other accounts (like a money market account) to your heirs in higher tax brackets.
You may also simplify matters by drawing money from your IRA upon retirement, choosing it over other retirement-related income sources. This reduces taxable inheritances and may also minimize your own tax bill.
As always, be sure to bring up these and other questions with your financial or investment advisor.
Source: kiplinger.com
FOOD
Pennsylvania Dutch Apple Pie
If you're a fan of traditional apple pie but would like to bake a more festive version this month, consider a Pennsylvania Dutch Apple Pie. The filling gets a boost from raisins and cinnamon, and the buttery topping will remind your guests of bakery streusel.
AROUND THE HOUSE
Ways to Make This Holiday Season Memorable Without Breaking Your Budget
The festive season is upon us! Unfortunately, it's also the time of year when many of us find ourselves buried in credit card debt. While we all want to capture the perfect Instagram-worthy moments with family and friends, overspending can quickly dampen our holiday spirit.
The good news is that you can enjoy the magic of the season without maxing out your credit card or draining your emergency fund. In fact, some of the most cherished gifts don't cost a dime. Here are some great ways to save money during the holiday season while making it truly memorable and meaningful.
The best part? Most of these tips apply whether you acknowledge Christmas, the Jewish holiday of Hanukkah, or the African American celebration of Kwanzaa.
Read on for more.
