How is My Credit Score Calculated?

When it comes to getting approved for a loan, nothing is more important than your credit score; a number which indicates how likely you are to pay back your debts. A good credit score will generate more loan opportunities (at better interest rates) than a poor credit score will.

How is your credit score calculated?

The most common credit score, FICO, is calculated by the Fair Isaac Corporation. It can range from 300 to 850, with higher numbers indicating a better score. Generally, anything over 740 is considered “excellent”.

Your credit score is calculated based on five major components of your credit history, each weighted with varying importance:

Payment History – 35%

Your payment history is the most important factor of your credit score. Paying all of your bills on time, and in full, is the best way to keep this number high.

Amount Owed – 30%

Also known as your utilization ratio, this number looks at how much of your total available credit you are actually using. For best results, never borrow more than 30% of your maximum credit limit.

Length of Credit History – 15%

Determined by the average age of your credit accounts, as well as the amount of time since the account’s most recent transaction.

New Credit – 10%

Opening several new credit accounts in a short period of time signifies financial trouble, and could scare away potential lenders.

Credit Mix – 10%

This considers the different types of credit in your account: such as credit cards, student loans, car payments, mortgages, etc. Research shows that borrowers with a good mix of credit are more trustworthy to lenders.

Have questions about improving your credit score? The financial advisors at American Investment Planners, LLC are happy to assist. To schedule an appointment with one of our professional consultants, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

How to Shop Smart for Your Next Car

Besides your home, your automobile is likely the biggest purchase you will make in your lifetime. Like anything else in life, there is a right way to shop for a new car, and a wrong way.

Follow these tips from American Investment Planners, LLC to shop the smart way, and save thousands of dollars doing it:

• Determine your budget. Before you embark on your car shopping journey, you need to figure out how much you can afford to pay. Our online car affordability calculator is an easy-to-use, interactive tool that can help determine your ideal price point in just a few seconds.

• Explore your options. Don’t mentally commit yourself to anything too early in the buying process. Get the most out of your money by exploring your options. Compare different car makes and models, dealerships in your area, new vs. pre-owned, etc.

• Secure the loan before the car. The dealership isn’t the only option you have for a loan. In fact, many times it is the worst option. Shop around various banks, credit unions, and other financial institutions and get pre-approved for a car loan before heading to the dealership. Bring this information to the salesperson and see if they can match (or exceed) your other financing offers.

• Know the final price tag, and what it includes. One of the trickiest parts of car shopping is the extra charges and fees added throughout the process. What looks to be an affordable car can quickly exceed your budget after taxes, dealership fees, and the like. It is important to know not only the final price, but what the price includes. Some dealers will include perks such as an extended warranty, roadside assistance, or free oil changes for a year.

• Strike while the sales are hot. If you can afford to wait, don’t shop until the end of the model year – which typically starts around September. Dealerships need to make space for their incoming inventory, which translates into big time savings for the buyer. The holiday season (Black Friday through New Year’s) is also a good time to shop.

Budgeting for a new car can be difficult, but it’s not impossible. The financial consultants at American Investment Planners, LLC have decades of experience helping individuals and families just like you plan for life’s biggest expenses.

To schedule an appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

Why Millennials Will Need to Save More Than Their Parents Did

You know it’s important to save money for your future, but if you’re a millennial, we’ve got a bit of bad news: you’re probably going to need to save even more than you originally thought.

How much more? According to Dan Kadlec from Time.com, up to twice as much as the baby boomer generation.

Why is this? Ever since the internet bubble popped at the turn of the century, we have been living in a low-return economic environment. People planning for retirement can no longer depend on the market to do the heavy lifting for them.

Since 1978, the average annual return on a portfolio consisting of 60% stocks and 40% bonds has been 6.3% – a very robust number. Going forward, it is estimated that this return will be closer to 2.9%. It may not sound like much of a difference, but over a 40-year time period, it translates to a 60% smaller retirement fund.

The old rule of thumb was to set aside 10% to 15% of every paycheck. Unfortunately, that will no longer allow you to live comfortably. If you want the same result as baby boomers, you will need to save about 25% of your paycheck for 40 years.

That’s a lot, especially for millennials. Between outsized housing costs and student loan debt, Time estimates that young workers are only saving about 6% of their current pay – about 76% less than recommended.

If you are saving closer to the 6% mark, don’t panic. The 25% number is not set in stone, and is an overly-aggressive estimate based on the assumption that Social Security will no longer be available (which may not be the case). Still, the point remains. Young adults will need to save significantly more money to produce the same results as past generations.

Are you worried about saving for retirement? Having a professional advisor by your side can help ease your stress. The financial consultants at American Investment Planners, LLC have decades of experience helping people just like you plan for retirement.

To schedule an appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

Starting an Emergency Fund: What You Need to Know

We can never be certain what the future holds, so it’s always best to be prepared. Financially, this means building an emergency fund in case of, well, an emergency. If you don’t have an emergency fund yet, don’t worry. The financial advisors at American Investment Planners, LLC will tell you everything you need to know to build one.

What is an emergency fund?

An emergency fund is just what it sounds like – a separate account set aside specifically to cover unexpected expenses that may pop up.

Why everyone should have an emergency fund

You never know what life is going to throw at you. An emergency fund will help cover your financial shortcomings in the event of monetary emergencies such as:

• Losing your job
• Automobile breakdown
• Home repairs
• Major medical expenses
• Unanticipated travel
• Loss of a family member

How to build your emergency fund

• Open a new account. First things first. If you don’t already have an emergency fund established, head over to your bank and open a new account. You should always keep your emergency fund separate from the rest of your money. Skip the ATM card, too – the less convenient it is for you to access this money, the better.
• Set a realistic target number. Eventually, your emergency fund should be able to cover six months of expenses. This may seem like an overwhelming number, so start with something more manageable: such as $1,000. If you can set aside just $20 each week, you will have $1,000 in your emergency fund in a year.
• Automate the process. Once you have determined how much money you will be setting aside each month, enroll in automatic deposits. This way, you will never forget to transfer your emergency fund money, nor will you be tempted to spend it on something else.
• Track your progress and look for more ways to save. Keep close tabs on your deposits every month. Are you on track to meet your goal? Even if you are, there is still room for improvement. Look over your budget and try to find more ways to save. Just 28 extra cents per day can add up to $100 over the course of a year.

American Investment Planners, LLC offers professional financial planning services to individuals and families across the country. Whether you need help building an emergency fund, planning for retirement, or anything in between, our financial advisors are here to help.

To schedule an appointment with one of our consultants, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

How to Save Money on Your Next Home Improvement

Does the new year have you dreaming of home improvement? Before you jump into your next project, read through these money-saving tips from American Investment Planners, LLC. They’ll help you achieve the look you want without breaking the bank:

Focus on upgrading efficiency, not space.

Considering knocking down a few walls to expand your space? Maybe you should reconsider, as these are among the mostly costly types of renovations. Instead of adding more space, focus on maximizing the space you already have. Some space-saving cabinetry for your kitchen is less than half the cost of an expansion and delivers the same results.

Consider Resale Value

Even if you aren’t planning on selling your home anytime soon, you should always consider how a renovation will impact resale value. Remodeling Magazine’s Cost vs. Value Report will help you determine which projects are worth taking on, so you can recoup costs in the event you do sell your home.

Be Cost-Conscious

Know when to splurge and when to save. Here are a few tricks to help minimize your cost of materials:

• Broaden your horizons. Take a look at outlets such as Lumber Liquidators instead of traditional big box hardware stores.
• Shop the sales. Even the aforementioned big box stores have clearance sales; use them to your advantage. The best time to look is during the fall and spring, when retailers are making room for their new inventories.
• Opt for stock sizes. Stock-sized cabinetry can be up to 80% cheaper than their custom-made counterparts.
• Imitation is the sincerest form of flattery. Similar to stock sizes, imitations can save you an immense amount on your remodel without sacrificing much quality.

Know when to DIY.

Don’t be afraid to roll up your sleeves and get a little dirty. Labor costs can account for up to 30% of your renovation – trim these expenses by taking on tasks that you can do yourself. However, it is important to know your limits, and avoid biting off more than you can chew. Which brings us to our last point...

Don’t skimp on contractor costs.

There are many places you can cut costs on your home improvement project, but the contractor isn’t one of them. Your project will only turn out as good as the contractor who installs it. For this reason, we highly recommend seeking out an experienced contractor – getting the job done right the first time will help you avoid additional expenses down the road.

American Investment Planners, LLC offers financial planning services to individuals and families across the country. Whether you are saving for your first home or looking to renovate it, we can help you create a financial plan that meets the needs of you and your family.

To schedule an appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

How to Create an Annual Budget in 6 Simple Steps

With the New Year in full swing, many Americans are focused on tightening up their personal finances. One of the best ways to do this is by creating an annual budget. An annual budget can help you prepare for expenses that might go unnoticed in a weekly or monthly budget, such as property taxes, car maintenance, or holiday shopping.

If you have never created a budget before, don’t worry. Follow these six simple steps from American Investment Planners, LLC and you will be well on your way to a solid financial plan.

Step 1: Gather your supplies.

There are plenty of resources you can use to help create your annual budget. Many people utilize electronic spreadsheets or free online tools, while others still prefer the old-fashioned pen and paper. Whatever your method, gather the appropriate tools. Some things you will need include:

• Pen/pencil
• Several sheets of paper
• Calculator
• Electronic budgeting tool (optional)
• Past financial statements including pay stubs, utility bills, credit card statements, etc.

Step 2: Project your annual income.

After you have gathered your supplies, you’ll need to estimate your annual income. This should incorporate all sources of money, including your salary, tips, bonuses, interest, dividends, social security, retirement salaries, tax returns, etc. Once you have determined this number, write it down in big numbers so it is easy to refer back to.

Step 3: Project your yearly expenses.

Now it is time to estimate your expenses for the year. Use last year’s documents for reference, and divide your expenses into fixed and variable costs:

• Fixed expenses stay the same every month. Examples of fixed costs include mortgages, car payments, and insurance premiums.
• Variable expenses differ from month to month. These can include things such as groceries, utility bills, and medical expenses.

If you are unsure of where your money should be going, we recommend using the 50/30/20 rule:

• 50% of your after-tax income should go to needs.
• 30%  of your after-tax income should go to wants.
• 20% of your after-tax income should go to savings and debt repayment.

Step 4: Balance your budget.

Subtract your annual expenses from your income. What are you left with? If you have a negative number, that means you plan on spending more than you make. If this is the case, you will need to cut back on expenses (or find a new source of income) until you are left with a surplus. You can then determine how to spend, or save, your leftover money.

Step 5: Break your annual budget down by month.

Once you have a balanced yearly budget, you can then create monthly budgets to provide a more comprehensive view of your finances. The easiest way to do this is by dividing your total income and expenses by 12, then adjusting for time-sensitive transactions such as taxes or special occasions.

Step 6: Track your cash flow and adjust as needed.

Now that you have created a budget, it’s time to go to work. Keep close tabs on your income and expenses, and refer back to your budget at the end of every month. If there are any major discrepancies, make the necessary adjustments to stay on track for your goals.

If you are still having trouble creating or sticking to an annual budget, consider consulting with a financial planner. The professional advisors at American Investment Planners, LLC have decades of experience helping people just like you achieve their financial goals.

To schedule an appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

Why Should You Work With American Investment Planners, LLC in 2018?

Now is the time of the year when people focus on self-improvement. The most common way of doing this is by making New Year’s resolutions. If you’ve resolved to take control of your finances – whether that means saving more money, paying off debt, or planning for retirement – a professional financial planner can help you meet your goals.

While there are many financial advisement firms to choose from, there is only one clear option: American Investment Planners, LLC.

Here are three reasons why you should work with us in 2018:

We have decades of experience.

Our president and founder, Lee Rosenberg, has been advising clients since 1983. Over the past 30+ years, he has become one of the most respected names in the industry, and American Investment Planners has grown to manage hundreds of millions of dollars in assets each year. Our team has more than 100 combined years of experience, and many of us have gone through the same financial struggles as our clients.

We believe in individualized attention.

American Investment Planners, LLC offers the resources and experience of a large corporation, with the personalized service of a boutique firm. No one wants to feel neglected, especially by their financial advisor. That’s why we offer families the individual attention they want, along with the investment products and services they need. We don’t take shortcuts – we believe that frequent communication and customized portfolios is the only way to help our clients meet their goals.

We focus on your entire family.

We don’t just help with your finances; we strive to assist your entire family, so that your children and their children have the means they need to succeed. From college savings to retirement planning, we’ve helped individuals across all generations achieve their financial goals. Trust us to be your family’s financial planner!

Ready to schedule an appointment with one of our advisors? Give us a call at (516) 932-5130, or email info@americaninvestmentplanners.com.