May 16, 2023
Now that spring is here, the month of May might be a great time to give your finances a fresh look, as many important financial tasks need to be taken care of. Here are a few key items to put on your May to-do list.
Say Bye-Bye to PMI
Suppose you bought your home with less than 20 percent down. In that case, there’s a good chance you’ve been paying private mortgage insurance (aka PMI) on your loan, which is usually an extra 1 percent of what you paid. But here’s the good news: the rise in home prices over the past few years has meant one thing — a bump in your home equity. If your equity position is now at least 20 percent of the original purchase price, you might not have to keep paying your PMI. You only need to contact the company that services your mortgage and check things out. You might have to pay several hundred dollars for a new appraisal, but comparing it to the thousands you could save in a year is well worth it.
Take Advantage of 529 Day
That would be May 29, a day that has been reserved to remind parents of future college students to start saving in a tax-advantaged 529 savings account. Here’s how it works: Whatever amount you put in, it grows tax-free. And better still, you won’t pay any taxes on withdrawals used to pay for qualified college expenses. You can also use up to $10,000 tax-free for qualified K–12 expenses. How sweet is that?
Get Rid of Unnecessary Financial Documents
Do you have stacks of old tax returns, bill stubs, and old ATM and bank deposit receipts collecting dust inside your filing cabinet? If so, spring is a good time to go through and shred them. For instance, you can toss tax returns after 10 years and ATM and bank receipts after just one year. If you don’t have a shredder, check to see if and when your city holds free shredding days. And don’t forget about your computer, external drives, and mobile devices; they might also be getting full. Eraser, a free software program for PCs, is a great resource for securely deleting your personal documents.
Last but not least, clean out your phone. Take a few minutes to delete any unused apps. Digital spring cleaning is always a great idea.
Review Recurring Charges
Do you really need that magazine subscription? How about the channel you bought to watch a show but forgot to cancel? These are the kinds of small charges that can really add up — and cost you over time. Take a look at your credit card statements, give them a good once-over, highlight the ones that can go, and then start the process of canceling. If you want to help streamline this process, check out free apps like Rocket Money and Trim. It’ll feel so good when you’re finished.
Budget for Home Improvement Projects
Even if you aren’t 100 percent ready to get started, you can still measure how much decking or roofing you’ll need and take advantage of holiday sales. During May, especially Memorial Day, you can find big discounts on materials for all those projects around the house you want to dive into this summer. It’s best not to wait because prices can climb in June and July. If you’re thinking of more extensive projects like putting in a deck or repairing your roof, you might need help. That’s why buying the materials in May could help you stretch your budget when it’s time to hire people to do the work.
Whether you’re saving up, cleaning up, or clearing out, May is a great month to take stock of your finances. Who knows? It might put a little spring in your step.
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Written by Service2Client LLC
