August 01, 2017 · Budget, Real Estate, Taxes

Financial Tasks to Tackle in August

Parents of school-aged children may have wondered why everyone can’t be on a similar schedule, with the year “beginning” in August and ending in May with a nice summer break in between. The idea may never catch on globally, but it could make sense for people whose lives are tied to a traditional academic calendar.

Even for those without school ties, August is a transitional month that starts the countdown to holiday spending. For that reason, now is a great time to perform a financial “checkup.” People who routinely evaluate their spending, savings and investments have a head start on making sure they end the calendar year in good financial shape.

To help, here are some suggested financial tasks to tackle in August:

Shop the sales
August brings a bevy of back-to-school sales that benefit all consumers – not just the parents of school kids. In addition to obvious items, like office supplies and clothes, shoppers may find end-of-summer bargains on merchandise such as air conditioners and outdoor furniture.

Paradoxically, these sales swing both ways: merchants may offer deep discounts to clear summer goods out of stores, and they may also offer sale prices on new merchandise already arriving for the upcoming winter season. Especially in climates like Georgia’s, where temperatures may remain high for months, there may be discounts on winter-season necessities such as backyard fire pits or electric generators.

Consider refinancing your home mortgage
Thanks to rising home values, homeowners who previously didn’t have enough equity to refinance a mortgage may now qualify. Also, some experts say the rate for a 30-year Fixed-Rate Mortgage (the most popular home loan) will surpass 5 percent next year. With current rates hovering at less than 4 percent for a 30-year fixed mortgage, now is a good time to consider refinancing.

For those with an Adjustable-Rate Mortgage, or ARM, now is an especially good time to lock in a fixed rate, since rates will likely not stay this low forever.

How to decide? One rule of thumb says if borrowers can shave at least a half a percentage point off their current interest rates, and if they plan to stay in their homes for at least five more years, it may make sense to refinance. Delta Community’s website offers online calculators to help determine whether refinancing makes sense. 

Review relationships with financial institutions
The idea of changing banks can seem overwhelming, but might be worth it if another financial institution offers better customer service, lower rates on loans and lower fees elsewhere. If it makes sense to switch, breaking the process down into specific steps will help it go smoothly. 
  • Cancel any automatic payments and transfers at the old bank. Don’t forget to manage subscriptions, insurance payments and other services that may be set up to automatically renew.
  • Open the new account by depositing the required minimum until funds can be transferred from the previous bank.
  • Transfer money to the new account.
  • Set up the new account to receive direct deposits of paychecks. 
  • Finally, close the old account. Call the previous institution to confirm whether it must be closed in person, and what documentation is needed.
Double-check withholdings
With tax season still months away, August provides a low-key time to double-check the amount of income that is withheld for taxes. It’s a good idea for everyone, but especially for those who have gone through a major life event such as marriage, having children or a big pay raise at work. Consider adjusting withholding amounts in order to avoid surprises when it’s time to pay 2017 taxes. You may make changes at any time throughout the year. Just ask your employer for a new W-4.

Sound money management involves time and effort throughout the entire year. And while these recommendations are labeled for August, any time is a good time to look over credit card statements, bank accounts and investments to make sure the financial picture is in line with the “big picture.”