Between celebrating Mom, the many graduation parties, and the Memorial Day barbecues, make some time this month to take care of your financial to-dos, too. That way, you’ll be ready to relax this summer, knowing that your finances are on track. If your home’s value has risen since you purchased it, you may be able to eliminate costly private mortgage insurance. This is also a good time of year to contribute to college savings accounts and apply for a travel credit card that you can use to save on summer travel.
Here’s your May financial to-do list.
Stop Paying PMI. If you bought your home for less than 20 percent down, you’ve probably been paying private mortgage insurance (PMI) on your home loan, typically an extra 1 percent of the purchase price. However, the rise in home prices over the last few years has meant a rise in equity for homeowners with a mortgage. If your equity position is now at least 20 percent of the original purchase price, you may not have to pay mortgage insurance anymore. You may have to pay a few hundred dollars for a new appraisal, but you could save thousands per year. For example, PMI on a $300,000 home is about $3,000 per year.
Take Advantage of ‘529 Day’. The college savings industry has embraced May 29th as “529 Day,” an opportunity to remind parents of future college students of the benefits to saving in a tax-advantaged 529 college savings account. Money put into a 529 plan grows tax-free, and you won’t pay any taxes on withdrawals used to pay for college. If this seems like a lot, just simply opening a savings account to help your child with college expenses is a step in the right direction. Want to learn more about 529 accounts? Watch our brief video.
Review Recurring Charges. Small charges can slip through unnoticed, especially if they’re recurring fees for a service you keep meaning to cancel. But these small fees add up quickly. Look at your most recent credit card statement and highlight any charges you could eliminate, like the gym you never visit, XM Radio subscription you never listen to, or even those monthly mailing subscriptions you haven’t been pleased with. Contact the companies to cancel your subscription—and try your luck at requesting a refund for previous charges as well.
Budget for Home Improvement Projects. May is a great time to find deep discounts on materials for the home improvement projects you plan to tackle this summer. Whether you want to install a new deck or update the siding on your home, you’ll save money if you make these purchases now, rather than in the middle of the summer. Saving money on the materials can go a long way toward stretching your budget.
So, sit back and enjoy sipping on some lemonade in your backyard knowing that you’ve done all you can to make sure you are on track with your money in May.
Relax and enjoy,