Finance

Career Planning Tips

March 11, 2016 By Sherry Tingley

The statistics leave little doubt that post secondary education is the best way to improve your earning power. But simply going on to college is not the best way to approach such education. Target your post-high school learning to specific goals, a publication of the U.S. Department of Education suggests.

Schooling that meets your goals.

There are many types of universities, colleges and other training opportunities. Picking the one that meets your goals can save you time and money. If a one-year certificate will get you the job you want, don’t head to a four-year degree institution. For some students, the one- or two-year qualification may set you up to earn enough to finance further education, if that’s what you want.

Stackable credentials.

It is sometimes possible to combine work experiences and training at the same time. “Stackable credentials” may be available and could move you toward additional education while working to pay for it.

Campus size and experience.

Consider what size campus and student population makes you most comfortable. It can have a telling effect on the quality of your education. Consider extracurricular opportunities and social aspects of the experience if those things are important to you, but always work toward the short-term goals. Do you want to be near home or in an entirely new location?

Best programs for chosen field.

If you are already determined to pursue a particular career objective, choose an institution that will get you there without a lot of side trips. Research the academic departments in several schools to determine if they have strong programs in your chosen field. Network with people already working in your chosen career path. Their advice could be valuable.

Choosing a career.

If you are not set on a career, an academically balanced school will give you the opportunity for exposure to a variety of options.

Explore financial opportunities.

College costs are going up and you should explore any an all opportunities for scholarships, grants, work-study options and loans to prepare to meet the financial challenge. Search online to see where you can get the best education for the money expended. Be acutely aware of how much debt you want to acquire. Education debt has become a drain on future earnings for many college graduates.

Prepare while in high school.

While you are still in high school is the best time to prepare to meet the requirements of the post-secondary institution of choice. Some colleges and universities have admissions policies that require you to apply six or eight months before you expect to attend classes. Others accept new students year round. Many have minimal GPA or SAT scores.

Look into retention rates.

Dropping out of a higher education program is costly and time consuming and leaves you years away from the goals you set. Don’t stop short of the goal if you can help it. Look at the retention rates of the school you want to attend. They may give you clues as to how much the school will be willing to do to hold onto you as a student.

Check Up On Your Personal Finance Planning

March 11, 2016 By Twila Van Leer

The Great Recession that plagued personal finances from 1993 to 2008 had a significant impact on the amount of money Americans were saving. Savings figures for the period were at the lowest levels in recent history.

But by May of 2009, the household savings rate had climbed to 6.9 percent, the highest level since 1993. It took a major financial jolt to get people back on the right track. The effect of the recession, coming on the heels of a period of high borrowing, was a disaster for many. Bankruptcy filings had nearly doubled by the end of 2008.
If you have lingering concerns about the state of your own finances, check your data against these indicators. Make adjustments if necessary.

5 Steps To Financial Health

Credit Scores

1. Check your credit score. In a range of 300 to 850, the higher your score, the better your financial health. Lenders use this score to determine if they want to do business with you. To get a credit score without cost, contact one of the three primary credit bureaus, TransUnion, Equifax or Experian. If your score is below 600, try to improve it by paying down debt, satisfying outstanding judgments or curb your use of credit cards.

Savings

2. If you are saving less than 5 percent of your income, it isn’t enough. In 1993, the rate, at 7 percent, was the highest it had been. Since then, too many earners began dipping into savings to see them through the recession, rather than adding to their savings cushion. The trend now is up and if you haven’t joined the savers, now is the time. Don’t look at it as an immediate thing, but as part of the retirement you hope to have. If your savings backup is niggardly, it may disappear entirely in the event of a medical emergency or any other of the many financial challenges that can bite when you aren’t prepared. Make savings of 10 percent of income a goal.

Credit Cards

3. You can be pretty sure you are in over your head if you carry credit card balances from month to month or if you are paying only a small amount to the principal. This is a major cause of financial stress for many people. Ideally, you use a credit card only in emergencies, or charge only what you can pay off in a month. Then you start whittling away at the total, paying whatever you can over the expected monthly payment. Only $5,000 in credit card debt requires a minimum $200 a month and can ultimately cost $8,000, taking up to 13 years to pay off.

Mortgages

4. If housing consumes more than 28 percent of your income, you are in trouble. Almost certainly you will have to cut back in other areas of your budget to handle that load. When the housing market was thriving, the mortgage lenders were allowing people to buy homes that absorbed up to 35 percent of their income, but with the country just coming out of the housing slump, they are edging back to the 28 percent figure. Give some serious thought to downsizing if possible.

Cut Back

5. If your non-housing bills are going crazy, you can assume you need to do something to restore balance. Succumbing to the temptation to buy items on time, you end up paying what seem to be relatively small amounts on a dozen or more products or services. Then relative small quickly becomes over-large and you’re suddenly in the category in which the required outgo is larger than the income. Assess your situation by putting all the bills on the table and seriously discussing them. Identify what you can trim or do without and then do without it. Just one for-instance: Do you really need a 500-channel cable TV package if you are using only a few of the channels? Do you really need a land line if you have cell phones? Etc. etc. etc. An honest look may help your family regain control of its resources without any really painful sacrifices.

Do what you can to avoid become part of the dismal foreclosure and bankruptcy statistics. Keep tabs on your finances and move toward a better distribution of what you have for the sake of the future as well as the present.

Investment Trends For Personal Finance In 2016

March 7, 2016 By Twila Van Leer

What’s happening in the world matters to your personal finances. The larger socioeconomic trends filter down to your own pocketbook whether or not you want them to. Following are current trends that may affect your finances over the next five years, according to the experts:

Interest income will continue to be dismal.

Cash and savings accounts are being affected by global debt, aging populations and low energy prices. Countries have lowered interest rates they pay on short-term notes, in some cases paying negative interest rates. That means the lenders have to pay a fee to own debt securities. The results trickle down to the individual. To offset, the experts advise that you modestly increase your allocation to global stocks and real estate.

Too much information can swamp you.

Technology makes an excess of data available through blogs, social media and emails. With so many options and relatively easy access to competitive products, analysis paralysis can cloud decisions. Turn off the “cookies” feature in your browser and avoid an overabundance of ads.

The costs of investing will continue to drop.

In the investing world, where so many factors are beyond the control of individuals, it is smart to lower expenses in hopes of increasing returns. But cost isn’t the only factor. Consistent savings, investment diversification and comfort with volatility are also to be considered. The experts say that instead of focusing solely on low fees, you should create an investment strategy that aligns with your goals.

Life insurance costs are going up.

Insurance companies earning less on their portfolios may opt for premium increases for whole and term life policies. The companies make their money on premium income and investment performance and they share the pain with customers when things are not going well for them. To counter, you might consider buying term insurance for the longest time span that makes sense to you. Term life, unlike whole life and other so-called permanent policies, has no cash component and usually expires after a set number of years, so it usually is cheaper. If you want permanent life insurance, look at a variably policy from a lower-cost but reliable provider. You then take a moderate risk over a longer time and grow the policy’s investment.

An Expert Shares Money Management Secrets

March 4, 2016 By Twila Van Leer

Anna Sergunina of Nerd Wallet has learned how to manage money effectively and she is willing to share. Here are her tips on how to keep a tight control on your personal finances:

Managing Money

Many people accumulate debt because they want things they can’t really afford. But debt also happens when we don’t understand the flow of our income and expenses. We can’t accurately estimate how much money we have available to spend. Sergunina developed a “money flow” system to help her family track spending. Here’s how it works:

Set up two free checking accounts.

One to pay fixes expenses such as mortgage or rent, car payments, utility bills, etc., and one to pay variable expenses such as groceries, gas, clothing, etc.

Create a high-yield online savings account.

This is your emergency fund to handle life’s curve balls such as medical bills, loss of job or other income reduction, major repairs and so forth.

Plan ahead for big-ticket purchases.

The Serguninas agreed to use their one joint credit card for such things as airline tickets and hotel stays. They still have separate credit cards, an essential in maintaining a good credit score. Closing cards could hurt your credit rating.

Create a budget.

To determine how much you will need in your “fixed expenses” checking account be sure to include all the items that come around regularly, including ongoing household expenses, insurances, health care premiums, cable, Internet and phones, membership fees, debt payment, and savings. (Making savings part of the “must pays” helps you avoid putting it off.)

List the variables.

Such as groceries and eating out, gas, clothing, personal services, medical co-pays, entertainment.

When your paychecks arrive, divide the money into the two accounts.

Have the savings deposited automatically. Most fixed-cost bills can be paid automatically as well. That eliminates the need for a debit card. A cushion of several hundred dollars can be maintained to take care of the unexpected expenses or bills that arrive before the paycheck does. With the second account, take care of the variables, remembering to stop when the money is gone. No new shoes if the tank is empty.

Link your “curve ball” savings.

Link to both checking accounts so you can make a quick withdrawal if necessary.

This systematic approach to money management makes tracking less cumbersome, Sergunina says. It eliminates the need for constantly checking account balances and gives you a better “big picture” view of your spending.

Debt-Free People Have Positive Attributes

February 25, 2016 By Twila Van Leer

The bondage of living in debt adds more stress to our lives.

You probably have noticed it among your friends and acquaintances: Some families can pay off $40,000 in debt in two years while others who have much larger incomes can’t seem to make a dent in their indebtedness.

What makes the obvious difference is how they spend their money. They have different priorities.

People who make a conscious decision to corral their personal finances and keep them under control have some characteristics that others do not, financial experts say. They list seven of these traits as:

Being wise.

Those who decide they are through with debt, approach the problem as if it’s a pernicious skin disease that they must get rid of. Now. They make it a priority.

Being patient.

They can walk past sales and other temptations without a qualm because they know that in the long run, they will be better off. Impulse buying is the impatient downfall that defeats debt eradication.

Being confident.

People who are getting out of debt don’t pay attention to friends or relatives who comment on the lifestyle changes they are making. Start out the process with this in mind and stay confident in your decision to stick it out. You’ll achieve the financial peace of mind you are seeking.

Being goal-driven.

Determining to get out of debt is a goal in itself. But it requires more, short-term goals that will aid the process. Proceeding without definite plans could lead to frustration and stymie your objectives. Choose which of your debts you plan to attack first and stick with the agenda.

Being responsible.

Becoming financially mature doesn’t depend on the calendar. If you continue at age 50 to treat money as you did at age 20, you may never get out of debt. Responsibility means getting out of debt as quickly as possible and avoiding it in the future. Being out of debt doesn’t mean you can now spend foolishly. It means putting your debt-free money into saving for huge expenses such as college and assuring your retirement by investing your money wisely.

Refusing to be materialistic.

Attitudes toward money matter immensely. How much importance you put on STUFF will guide your use of money whether you have a lot or a little. There’s an old saying: “You can’t take it with you” that has become such an old, old saying because it is true.

Being willing to make sacrifices.

Eating out and paying big prices for entertainment might have to go by the board while you get out of debt. But these drastic budget cuts are temporary. When debt is in the past, you can start adding these items back into the budget. You may find you can cut back, however, and not miss them. Bottom line: If you are determined to be debt-free you will make the necessary sacrifices. You’ll take the actions that lead to financial peace.