Twila Van Leer

Let A Good Budget Be Your Guide

February 27, 2015 By Twila Van Leer

Dave Ramsey recommends having an emergency fund of three to six months of expenses in place.

A budget is not the enemy. It is a road map that can keep you from crashing into the roadblocks that cause economic strain for many Americans, according to a set of “Your Life, Your Money” interviews. Without one, you’re flying blind.

Rule Number One of personal finance is a simple one: You can’t spend more than you have coming in without consequences. Rule Number Two is also simple: Save something from every pay check and you’ll build security and the ability to make necessary purchases without stress down the road.

One of the common flaws with budgeting is that people write into the budget what they know, things such as rent, food, utilities, insurance, transportation costs, tuition payments, etc. What breaks the budget are the things that don’t get written down, such as what you spend for cabs, coffee breaks, newspapers and all the little “pick-up” items that seem necessary at the moment. Write it down, whether it is an $800 computer or a $2 magazine. When you have a clear picture of the usual amount of spontaneous spending you are doing, allow yourself a certain amount for un-budgeted items and don’t go over the allowance.

Keep a spending diary that lists every item you buy for a period of time. It may help you discover how come the end of the pay period too often finds you without funds.

A simple way to analyze your spending habits is to download your banking transactions for a period of a year. Import the data into Excel. Sort the payees to help you categorize transactions. You can easily total the amounts your are spending at Starbucks or your favorite restaurant. Get totals on your utilities, housing and other fixed payments as well as your leisure spending. When you get this bird’s eye view of your spending, then you can make new decisions to help you create a workable budget that cuts unnecessary spending.

Don’t spend without thinking about it first. Impulse buying gets you into trouble. If it isn’t in the budget, you can do without. And give serious thought to what is really necessary and what simply sounds attractive at the moment. A little bit of sacrifice now may buy you a lot of security as time goes by and you gain control of your income and put it to work for you.

What Would $40 Do For You?

February 26, 2015 By Twila Van Leer

If Congress doesn’t extend the payroll tax cut, it will mean a typical family earning $50,000 annually will lose about $40 per pay period to Uncle Sam. In this day and age, is $40 even worth quibbling about?

A White House open survey of American households indicates that $40 can, in fact, mean a lot in some households. Responders to the White House site offered these perspectives on what the loss would mean to them:

To an individual in Oregon, “Forty dollars means the difference to me in buying gas or paying my electric bill. I am disabled and so I am on a very extremely tight monthly income.”

“The $40 means that my kinds can continue to wear decent clothes and I can afford to give them opportunity to participate in school programs that are not funded through the state and federal funding,” said a Minnesota parent.

A Massachusetts response indicated that the individual would be unable to help a brother in serious need. “The $40 I would lose is money I send to help my brother. He has had a myriad of health problems over the past two years and has only been able to work intermittently. He recently was diagnosed with inoperable cancer and has no health insurance. Some say it isn’t a lot of money, but my brother wouldn’t have food in his refrigerator without it.”

”Forty dollars less per pay check means I will have to pick between my insulin and the water bill. It means never being able to see my doctor, even though I have insurance,” wrote a New Mexico resident.

From Texas came a similar response: “Forty dollars per paycheck allows me to continue to pay co-pays to doctors for necessary medical treatment needed to control debilitating disease.”

For her family of five, the $40 means a home-cooked meal or new clothing for two of her children, explained a writer from Alaska.

The amount is HUGE, according to a California resident. “I am supporting my adult daughter and her four children.”

“This is nearly what a typical electric bill costs me each month,” wrote a Floridian. “Mine usually runs $40-$50, even though I can’t afford heat or air.

The forty dollars per paycheck is what “allows my son to have hot lunches at school,” said a responder in Hawaii.

For many many Americans just a small amount makes a difference to the quality of their lives.

Liability Shift In Credit Card Fraud

February 25, 2015 By Twila Van Leer

Smart-card-based credit card payment systems improve security. — About half the world’s credit card fraud happens in America. This new processing terminal uses technology that reads the latest EMV chip embedded credit card.

Due to massive losses that have occurred through large-scale credit card data breaches, there will be a change in credit card liability. Beginning on October 1, 2015, a shift in liability places the responsibility for fraudulent credit card charges on the merchant and/or banks that don’t use new technology to accommodate chip-based credit cards. The changes, the first major alterations in decades, will make credit card fraud more difficult.

The traditional magnetic strip credit cards now in wide use will be replaced with cards that have embedded chips and PINS. Fraudsters will find themselves stymied as more users turn to these cards, dubbed EMV cards, an abbreviated form of Europay, MasterCard and Visa.

The Losers

The losers will be the merchants who are not EMV ready and banks who don’t issue cards with the new technology. Historically, card issuers have eaten the loss due to counterfeit cards. Now the responsibility will shift to the merchant who processed the card without the new technology or the bank that issued the card without EMV technology. Magnetic card swipes are easily counterfeited, and now account for billions of dollars in fraud losses every year – an estimated 7 billion in the United States alone.

Start Dates

On Oct.1, when the rules change, merchants who have not installed EMV terminals will be burdened with the costs of fraudulent transactions, but those who offer EMV protected services will be off the hook. When the new technology was developed, the card networks decided that improving point of sale devices and the design of the credit card itself would be the best way to go.

It will take time for the new technology to settle in. Experts estimate that by the Oct. 1 start date about 35 percent of merchants will have the technology to process EMV sales. And only 15 percent to 25 percent of cards issued will have the chips to facilitate the secure purchases. By the end of the year, the expectations are that 70 percent of credit cards, 41 percent of debit cards and 59 percent of terminals will be ready for the new technology.

Big Retailers Comply

Predictably, the largest merchants are gearing up to lead the parade. They and others are trying to stay ahead of the curve in being prepared for the change. Widely publicized security breaches such as the devastating Target fiasco are impetus for the merchants to make themselves – and their customers – more secure. The cost of installing the new equipment is about $200 per terminal.

New Industry Created By EMV Needs

Those who produce and install the equipment are being hard-pressed to meet demand. Small merchants are at the tail-end of the parade toward EMV technology, and the demand is so great there are many competitors ahead of them.

What Banks Issue EMV Credit Cards?

Among the card issuers, large banks also are better poised to make the change, with regional banks less ready to distribute EMV-enabled cards to customers. There is no huge supply of EMV chips, and these institutions may see a lag in catching up with the technology, so they may face greater fraud losses. American Express, Bank of America, Chase, Citi and Wells Fargo banks all issue cards with the new chip technology.

Europe is ahead of the United States in implementation of EMV-protected card transactions, with experience going back to 2005. Since then, online sales have increased significantly. The experts expect the same jump in the U.S.

Looking Forwards

The shift in liability will open new doors for mobile payment processing in 2015. New technologies that process payments through mobile phones may lead to some steep learning curves by consumers, retailers and banks, but chances are the learning will be worth it in the long run.

5 Tips To Cut Housing Costs

February 23, 2015 By Twila Van Leer

If you’re a typical family, you spend about 33 percent – about $17,000 per year – of your income on housing. That doesn’t mean just the mortgage or rent payment, but all of those related costs that are the natural result of living in a home.

Here are some tricks you can call on to reduce those costs.

1. Upgrade Your Appliances

It may make sense to you to stick with your old washer and dryer and the old standby refrigerator, but they might be costing you more in the end. Often, they were not energy-efficient in the first place and to continue using them is costing you money you could save by updating. The Department of Energy says some $47 billion is wasted on energy used by refrigerators produced more than 10 years ago. Investing in an Energy Star-rated appliance might save you from $35 to $300 over the lifetime of a large appliance.

2. Stop Keeping Up With Your Neighbors

Don’t add “frills” to your home that you don’t really need. So what if the Joneses next door throw in a swimming pool. Invest your money instead on an early pay-off of your home. Things such as swimming pools and Jacuzzis tend to lose their glamor over time.

3. Minimize Utility Usage

Be aware of heating and cooling costs and try to minimize. Put on a sweater when the weather begins to cool and keep the thermostat a couple of degrees low until you really need the heat. Use a ceiling fan and don’t kick in air conditioning until it is necessary. Get a programmable thermostat an set it to adjust the temperature in the house when you are away. Dropping the water temperature in the water heater a degree or two will save money without any significant dent in your comfort. You can save as much as 1 percent in your heating bill with each degree you drop the thermostat for eight hours of the day, usually when you are asleep or at work. Cover drafty spots, add weather stripping or insulation for further savings.

4. Monitor Water Usage

Monitor water use. Turn off the tap while you brush your teeth. Use cool or cold water if hot water is not essential. Clothing that is not heavily soiled will come as clean in cool or cold water. The difference could be as much as 56 cents per load of laundry. Having a full load of laundry or dirty dishes saves money.

5. Keep Up On Repairs

Make repairs as quickly as you notice there is a problem. Don’t ignore a leaky toilet or tap. Fix a small hole in a screen to prevent it getting larger. Postponing such repairs almost always costs money. Preventative maintenance, such as emptying the lint trap on the dryer, changing furnace filters and cleaning gutters routinely prevents problems. Make seasonal inspections of your home to see what is needed, than do it.

Putting aside approximately 1 percent of your home’s value toward maintenance and repair and maintaining that reserve is a good way to sidestep the wear and tear costs that are inevitable with home ownership. This is one area where the old “ounce of prevention” rule makes good common sense.

Do Women Shy Away From Financial Advice?

February 18, 2015 By Twila Van Leer

The top 100 Financial Women Financial Advisors are listed at the Barron website

Women control two-thirds of the private wealth in America, but financial advisors can’t seem to get the females to be interested enough to seek their advice.

The experts expect private wealth in the country to rise from $14 trillion to $22 trillion over the next five years, with women in control of two thirds of that amount. But during a recent conference of financial advisors, they agreed that “We’re doing a horrible job working with women as a whole,” according to the publicly aired conference report.

In the past, males largely dominated the management of family finances, but roles have been undergoing alterations over recent decades. In 40 percent of American households today, women are the breadwinners. A lingering perception that financial advisors cater more to men has been a deterrent, the experts agreed. And studies show that the perception is based on fact, they said.

Even when couples seek financial advice, men are the primary contact in 58 percent of cases, the studies say. Many women who find themselves widowed do not continue the relationship their late husband had with a financial expert. Seventy percent of the widows no longer seek advice after the first year.

An imbalance between males and females in the ranks of financial advisors is a significant factor. Only 30 percent of those in the field are women. Most women seeking advice say they would prefer to work with a woman. Although basic goals among advisors is the same, males approach financial planning differently from women. Females tend to put more emphasis on empathy and education when they seek advice and feel more comfortable with an advisor who shares those values. One of the top 100 female financial advisors, Karen McDonald, works for Morgan Stanley and she controls $21.2 billion dollars worth of assets.

Some large financial advising companies are catching on and hiring more women to deal with their female customers. That sometimes means working around the employee’s home and family demands, said Cathy Curtis, who is a certified financial planner for a large firm. She does her job while rearing a family of four children. But when women advisors can be accommodated, there are overall benefits for the workplace, she said.

The industry is making adjustments, taking pains to let women know of opportunities in the field and then trying for balance in their staffs. With two-thirds of the private wealth in the country as incentive, they are making inroads into the problem of bringing good advice to women clients.