Money Management

Plan Ahead For Holiday Travel

November 11, 2015 By Twila Van Leer

If travel is part of your holiday plans, the time to act is now. The cheapest, most convenient travel plans begin early. Prices already are starting to climb and if past experience holds, the demand for airline seats will become pricey as Thanksgiving gets onto the holiday radar.

If you have expectations to travel between Thanksgiving and New Year, here are things to consider:

Santa can offer a bit of good news. Airline fares this fall/winter are a little lower than last year. This August, the last month for which data is available, the average domestic fare was down 6.8 percent compared with the year before. Experts predict that the trend will continue.

Tickets already are going fast for the peak travel days around Christmas and they also are lower – by 3 percent – than last year. You might find even bigger savings on the discount carrier routes, such as Spirit and Frontier airlines. The larger carriers are keeping an eye on the discount fares and the could be good news for travelers across the board.

Both Christmas and New Years days fall on Friday, so many travelers making the return trip will hope to be aboard flights on either Saturday or Sunday. Fares could be higher for those days, although still a bit lower than last year, according to experts with CheapAir.com.

Keep an eye on fees that will increase your travel costs, particularly the fees charged for checking luggage and for changing tickets. Southwest still does not charge baggage fees on the first two prices of luggage. If you can, cut down on the amount of luggage you have to pay for by shipping gifts ahead of time. Postage is likely less expensive than baggage fees. Or buy gift cards that provide the recipient with his or her choice of gifts without adding bulk to your packing.

Try to minimize your baggage by getting what you need into a carry-on that will fit under your seat. If fees are unavoidable, pay them before the fact. They are higher at the airport.

Expect your flights to be crowded. Home for the holidays is an aspiration of millions of Americans. The most-used airlines are now filling 80 percent of their flights, even the less popular early-morning and late-night options. More people are opting to pay the price for elite travel – larger seats, better leg room – somewhat limiting the availability for families. The larger the group, the sooner you need to get plans gelled.

Whatever particular needs or desires you want to include in your travel plans, the first advice is still the best. Do it now and travel with less hassle and more comfort. And do your part to minimize stress by planning now to exercise holiday cheer despite lines, glitches and general tension that are part of the seasonal travel.

How Wise Are Lengthy Auto Loans?

October 24, 2015 By Twila Van Leer

When you buy a new car with terms stretching five years or even more, what are the financial consequences?

Obviously, you’ll pay more interest. But in the meantime, your earnings likely will grow and the monthly payments will be more affordable. You might be able to increase your payments, erasing the effects of the interest.

Car buyers are increasingly using this tactic to pay for vehicles, which are becoming more expensive all the time. Experian Automotive reports that 30 percent of all new vehicles purchased in the first three months of this year were financed over six to seven years. Sixteen percent of used vehicles, ditto.

Lower interest rates, more extensive manufacturer warranties and the better durability of today’s vehicles make the longer pay-off periods acceptable to many buyers. People today tend to keep a vehicle longer as well, on average about eight years, according to automotive sources.

Before diving into a long-term loan for a car, consider these factors:

Look at overall costs, not just the monthly payment. The salesman on the lot will try to focus your attention on monthly element, but consider total price, down-playing sticker total and interest. Keep in mind that the interest on an auto, unlike mortgage interest, is not tax deductible.

If you can come to the lot with a preapproved financial guarantee in hand, you can negotiate based on total cost and consider the details later. Compare the preapproved amount with the dealer’s offer and then make a decision. An Edmund’s interest rate calculator will provide an honest appraisal of how much you will pay over the term of a six or seven year loan. The calculator can be accessed at http://www.edmunds.com/calculators/simplified-pricing.html

How long do you estimate you will have the vehicle? If you expect that you will have it for some time after it is paid off, you can look forward to a period free of car payments. The trade-off may be more costs for car repairs and upkeep. The amount you can expect for trade-in value also will have declined.

Most experts in the field discourage using a long-term loan to purchase a used vehicle. Suppose your choice of a used vehicle is three years old. If you are still paying on it seven years later, it is 10 years old and for many vehicles, that is approaching the end of its usefulness.

Depreciation is a factor. In the case automobiles, it begins the moment you drive it off the dealer’s lot. If you choose to sell the car in the first few years, you are looking at a loss if depreciation has outstripped the value. And the potential for accidents may enter into the picture. If you total your vehicle when it is three years old, for instance, it’s likely you still owe more on the loan than the vehicle’s current worth. That’s known in the trade as being upside down on the loan.

A long-term loan may be the answer to your desire for a newer, safer car, but don’t leap until you are sure of all the financial facts.

Education Key To Women’s Financial Savvy

September 19, 2015 By Twila Van Leer

Not all of a woman’s characteristics in life are genetically determined, especially when it comes to personal finances. All kinds of examples, some of them very bad, enter into the equation. Lack of training leaves many females floundering when it comes to money.

If it has never been an issue before, many females suddenly find themselves in adult roles with not a clue about how to manage their finances. What to do?

Basic accounting and finance education can end the cycle and put a woman on the right course. Even if a woman never leaves home to become part of the workforce, she can apply the same principles of prudent living in her own household. The likelihood of spending some time at an outside job, however, is great. Then the need for financial savvy goes beyond housekeeping, basic budgeting and child rearing.

Women need to know the fundamentals of such things as retirement plans, investing and general savings. It isn’t possible to assure that a husband will always be in the picture. Waiting for the crisis is not the ideal. Financial literacy, early and effective, will be the best cushion against the pitfalls that are part of life.

If you have somehow arrived at adulthood without that education, what do you do to remedy the lack?

Start with the resources closest to you. If there is an institution of higher education in your community, inquire about classes, seminars or other resources that are geared to fundamental finances. Most communities have resources to help women foster such skills. Start with the mayor’s office and someone will guide you.

State agencies, including employment services, often can steer you to education opportunities, many of them gratis.

You’ll be surprised as you start looking for resources just how many there are. Governments benefit from having citizens who are financially aware. They have a stake in providing opportunities for them to learn and are glad to share their resources.

It’s never too late to work on personal financial savvy. Get busy now and see how fast you can gain control of your resources. You’ll be glad you did.

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Women And Retirement Savings: Women outlive men and need a good retirement savings strategy. See what Forbes recommends.
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Bankrate.com General Personal Finance Topics: 17 Finance Blogs on Bankrate.com can help educate women and men in any area of finance.
Bloomberg’s Personal Finance: Bloomberg helps women and men with personal finance. You can learn how to make your money last until you are 103 and learn how to adjust your regular savings each month according to algorithms set up to maximize your savings.

Zero Percent Interest Rates On Car Loans

August 31, 2015 By Twila Van Leer

What could be better? Your new car and no interest to pay for 72 months. But be sure you understand the implications.

A recent J.D. Power Dealer Finance Study said that offering zero percent interest is considered to be one of the most successful motivators to get car buyers into dealerships. The catch is that to qualify for it, the buyer must have an excellent credit rating. Many people don’t qualify for the zero percent interest rate.

For those with less than stellar credit, dealerships arrange financing for your car they often add on 1-2% interest that goes directly into their profits. Although these numbers may seem small, they often add thousands of dollars to the price of your loan.

Before latching onto the no-interest deal, look around. Many car dealers are currently offering cash-back offers that could be the more financially advantageous than the interest-free option. Some car sellers actually offer a choice between a no-interest and cash-back deal. Fiat Chrysler, for instance, will sell you its 2015 Jeep Cherokee SUV for no interest or a $2,000 cash rebate. Experts say the rebate is the better bargain, reducing the loan amount from $27,213 to $25,213. At 2 percent interest, that makes the monthly payment just $440, compared with $452 per month under the zero interest terms.

Car buying is best in the late summer and early fall, when dealers try to clear their lots of the current year’s leftovers. The zero-interest offers are escalating, with many of the producers hoping to snag buyers to help in that process.

The secret to getting in on the best bargains is to nurture your credit rating. A credit score of 754 can probably earn you a 1 percent interest rate. The rates go up as the scores go down. Getting preapproved for a car loan through a bank or credit union enhances your bargaining stance. The dealer is anxious to have you finance through him and may be willing to dicker on the interest issue.

The important thing is to do the math before facing the decision. Factor in your credit score with the understanding that the higher it is, the more likely you will be to get a lower interest rate. There will come a point in the math at which you will find that zero interest actually can lower your payments.

Regional incentive programs, down payments and trade-in values also will affect the bottom line. Remember, too, that zero interest deals usually apply only to certain cars on the lot. If you have something very specific in mind, it may not apply. Once you reach the point at which you qualify for zero interest, the dealer may lose his tendency to haggle. Just be sure before you sign that you have made the best deal possible.

How Secure Is Social Security?

August 13, 2015 By Twila Van Leer

Social Security is 80 years old and many Americans are fearful that the old age benefit might die of old age. Surveys show that fewer than half of Americans feel confident that the program will stay equal to or become better than it is today, according to the Employee Benefit Research Institute.

But the institute’s experts assure that SS will be around to remain the retirement mainstay of those now in the work force an their children and grandchildren. If nothing else, the great majority of those now serving in Congress see it as a necessary element of the country’s personal finances, and they’re the ones who control the purse strings. And they are aware of the very strong popular support for the program.

Over the eighty years Social Security has been in effect, it has become very embedded in the retirement plans of millions of Americans. Private sources of retirement income, such as work-related pensions, have been declining in recent years, making it even more important. From the mid-1980s to 2013, the number of pension plans dropped from more than 112,000 to about 23,000.

Retirement-related saving schemes, such as 401(k)s are helpful, but do not sufficiently offset the loss in pensions. Only about half the workforce has access to a 401(k) or other retirement savings plan through their employer. And few workers are able to save sufficient amounts to cushion their retirement years. One recent survey showed that four in 10 older workers had less than $25,000 in retirement savings.

Women have relied more heavily on Social Security. They usually have less income overall than their male counterparts and they live longer. They are more likely to be single and singles often have greater financial needs than do couples. One research effort found that unmarried boomers were five times more likely to be in “poor” categories than those who were married. The numbers of single adults is increasing with each succeeding “generation,” with more Millennials in the unmarried ranks than either the boomers or Gen Xers.

All of these social statistics point to a greater need for Social Security than ever.

Concerns that SS won’t be able to handle the load are based on the assumption that the financial challenges the programs faces, with fewer workers to support larger retirement numbers, can’t be resolved.

The 2014 trustees report showed a $2.8 trillion surplus that could pay projected benefits for another 18 years. Even if Congress did not take steps to shore up the account, the anticipated revenue from payroll taxes would enable the program to pay beneficiaries 77 percent of their promised benefits.

The experts are looking for ways to ensure that the federal program continues to be active well into the future. The remedies may require increased contributions or modified benefits or a combination of these approaches. One suggestion would raise the cap at which workers no longer pay payroll taxes from the current $118,500 to $255,000, which the number crunchers say would solve one-fourth of the problem without serious harm to most workers. Other options would trim benefits for the wealthy or raise the payroll tax by 1 percent per year over several years. Raising the retirement age is another debated option, but the experts advise caution, since the gains in life expectancy have mostly benefited the segment of the population that is educated and more affluent.

The 2016 elections almost certainly will include Social Security as one of the main points of debate, with both parties hoping to prove leadership on the issue. Tough questions and the potential for trade-offs is very predictable, but those who see SS as a mainstay of America’s retirement population, the advice is that the sooner actions are taken, the more moderate the changes are likely to be.

Money Management

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