What I’ve Been Up To

This Week In Your Wallet: Saving For The Long Haul

Would you get an “IRS” tattoo in exchange for a tax-free future? I gotta admit, I’m pretty anti-ink (as far as my own body is concerned), but even I started thinking: Where could I put this where no one would see it? So, I wasn’t surprised that 27% of Americans said count me in, according to a survey from WalletHub. Unfortunately, like so many intriguing surveys lately, this one’s just blue-skying it. So, if you’ve been procrastinating: It’s time to get cracking on your taxes.

As of today, last-minute tax filers have about two and a half weeks left. If you’re expecting a refund — the average size of which is around $3,000 this year — the IRS says you can start tracking it 72 hours after e-filing, and in 9 out of 10 cases, you’ll have your funds by direct deposit within 21 days. So what are you going to do with that windfall?

While it might be tempting to indulge in a spontaneous splurge, Credit.com has four smart things to do with it for better long-term returns.

Think boosting your savings, which should include an emergency fund of anywhere from $2,000 to three to six months’ worth of income. Paying off debt is another option (the higher the interest rate, the greater the return on your money).  Finally, if this is yet another in a string of annual refunds, consider adjusting your withholding so that you get more money in every paycheck rather than continuing to give Uncle Sam an interest-free loan. Then — immediately — increase your automatic contribution to your 401(k) or another savings vehicle. Because if you don’t see it, and you don’t touch it, you won’t spend it.

Millennial Money

While we’re on the subject of saving, the much-maligned millennials are kicking our proverbial you-know-whats. A new survey from Bankrate shows 29% of millennials are saving more than 10% of their income. That’s more than any other age group — and it’s an admirable savings rate. Although, they’ve still got a ways to go. Nearly half say they couldn’t come up with $2,000 if they needed it in a jam. The one thing that’s holding many of them back? Student loans. Which gives me another chance to point out — you may be able to do something about that. There are opportunities to refinance federal student loans (and PLUS loans, btw) that didn’t exist even a few years ago. Compare the interest rate you have today with refi rates available on the open market. You can find a list here.

It’s Not Over ‘Til It’s Over

Speaking of debt: In any three months, one in five people pays a late fee on a credit card, reports Forbes. But did you know you may be able to wiggle out of it like it was just another traffic ticket? (You don’t even have to turn on the tears!) Almost nine out of 10 people (89%) who called and asked credit card issuers to waive a late fee were successful, according to a CreditCards.com survey. Despite those encouraging prospects, only one in five credit card customers has requested a late fee reversal. It’s always a good idea to call about this if you had a legitimate reason for being late, but these results show it’s worth a call even if you just forgot. Happy saving.

The Final Countdown

Some people think of 10 years as a long time, but it can go by pretty fast — especially when it comes to personal finance. Exhibit A? Your kid’s college tuition. Experts often say starting to save when the child is born is optimal, but don’t panic if that’s not the case for you — it’s not too late. Money has six things to do now if you want to send your kid to college in 10 years. Among them:

Set a savings goal: Use an online calculator (Money recommends this one) to gauge how much to save each month, and aim to save at least one-third of the cost of college. Current cash flow while the child is in college could help with one-third, and borrowing may be able to cover another.

Open a 529 account: A 529 could help you catch up on savings while letting your money grow tax-free. Plus, compound interest is your friend. Automate savings every month for best results.

Enlist the grandparents: They’ll probably be happy to help, and if they have the means to make a large contribution right off the bat, it’ll make a big difference in your results because the base you’ll have to grow will be bigger.

Have a great week,

Jean