Personal Finance Blog

Tips And Stories To Help You With Managing Money

Get Sensible With Credit Card Usage

By

use wisely
Credit Card Usage Has Lessened Since 2008
Americans seem to have learned something from the Great Recession that began in 2008. Before that landmark crises, they were going mad with credit cards, racking up personal debt that left them hamstrung when the economy went bonkers. Afterward, they became more frugal, financial experts noted. And now, with the crises apparently over, they are using their cards again, but in a less exuberant way.

Recently released Federal Reserve data showed a 9.7 annual percent increase in the amount of credit extended to customers. Revolving credit – bank-issued credit cards and retail store cards – showed an annual rate increase of 7.4 percent. Those numbers were almost three times higher than the 2.5 percent hike recorded in June. And for all of last year, the increase was only 1.3 percent. Even that was an improvement over 2009 and 2010, when growth was flat – as in most sectors of the economy.

The outlook for future growth is promising. CardHub, a website for consumers looking for the best deals in cards and rates, is looking for a $41.9 billion net increase in credit card debt this year. That’s 8 percent more than in 2013 and 14 percent over 2012.

But the growth shows a more cautious use of credit cards, according to Theodore Iacobuzio, vice president of global insights for MasterCard. He believes the unfettered love affair that kept people using their credit cards freely before the recession is over. “They’re not going back to how they used them before,” he said.

Pre-crisis, average American households had about seven credit cards, not counting debit and store cards. Now, they’re using the cards as tools to pay off debt and they’re paying off that debt faster than before.

Wish fulfillment has taken a backseat to the use of cards to help manage the new economic realities in many families. That’s reflected in the record low numbers of those who are delinquent in payments. Two factors are at play here, the first being the fact that many Americans have gone to great lengths to cut their credit card debt and are not replacing it with new debt. The second effect is from a greater number of consumers who defaulted during the economic crisis and cannot replace their credit cards. From April through June this year, only 2.25 percent of credit card accounts were in arrears. That’s the lowest since the Federal Reserve began tracking the figure in 1991.

Many consumers are playing it safe with prepaid cards from outlets such as WalMart and Green Dot. They have the advantage of being able to check their balances online or via text messages and avoid the fees often associated with cards issued by banks.

That option helped many Americans through the recession, especially those who were having a tough go in the job market.

Although the difficulties the recession created were a headache for many American families and came on too fast for pre-planning, they may have forced a more reasonable approach to debt. Consumers who got burned are being more careful of the flames and thinking twice before they blithely take their credit cards out of their pockets.

.

Save For Self-Fulfillment

By

Budget For Enjoyable Vacations
Budget For Enjoyable Vacations
There are people, believe it or not, who save with enjoyment in mind, rather than serious objectives such as major purchases or retirement. They consider personal growth and fulfillment worthy objectives for their savings. Their goals could be as diverse as donating to a charity pursuing a hobby, traveling or doing things that make life more enjoyable.

Ohio State University did a study to see if there was a correlation between Maslow’s Hierarchy of Needs and people’s saving habits. Maslow’s Hierarchy of Needs? That’s an old established psychological tool that looks at human needs and ranks them from absolutely necessary (food and shelter) to more lofty objectives (fulfilling one’s potential, etc.) The vast majority of individuals have to cover the basics before moving on to more abstract requirements for a happy life. Most savings objectives follow that same pattern. Retirement, security, emergencies/safety and family needs are what inspire most people to save. Only a few reach that state of perceived well being that they will devote savings to those “lofty” goals. But, the researchers found, there is a higher likelihood that they will actually do the saving.

In fact, the researchers learned, the self-fulfillment goals may be more important to this particular segment of the population than the “necessity-based” objectives are to their compatriots. Desires for self-fulfillment are “incredibly powerful motivators for actual savings behavior,” they concluded.

By extrapolation, they suggest that thinking about one’s self-growth might be impetus for more effective savings. They say that those motivations can be built into an individual’s approach to saving for the future.

While the practical needs of a family are likely to take precedence in making decisions about savings, not all human needs are covered by that kind of thinking. There should be room in the analysis for such things as dreams of becoming an entrepreneur, taking classes in a favorite subject, traveling, donating to charities that are near and dear to one or any other objective that doesn’t fall into the “necessary” category.

Based on their analysis, the researchers suggested that someone with a desire to set aside money for self-fulfillment should start with an analysis of what they really want to save for. Then begin by putting spare change, if that’s the most you have available, in a designated jar. Or open a separate auto-debit savings account for any amount of money that is reasonable for your own budget. The amount is not as important as the commitment. Then avoid the temptation to dip into this special savings account. You’ll be joining an elite group that sees the fulfillment of life’s “wants” as being as important as providing for the “must-haves.”

Internships Can Build Your Resume

By

Internships Can Help You Establish Important Relationships
Internships Can Help You Establish Important Relationships
The kind of practical experience you get from an internship is a valuable asset when you begin listing your qualifications for a job. You’ll have a little competitive edge when you begin job-shopping if the HR person can see that you’ve been exposed to the real world of employment.

An internship also may be very valuable in helping you to decide if a certain career path is right for you. You may decide to rethink your ultimate goals after having some solid hands-on time in the field.

Some suggestions for hunting out good internship opportunities:

Don’t wait until you are an upperclassman to scope out the possibilities. Although most internships are designed for juniors and seniors, there may be opportunities earlier. If you don’t find what you’d like, at least you have the experience of seeing what is available while learning the ropes for the future. You’ll be that much ahead of the competition. Knowing where internships may be had could guide you in tailoring courses so you’ll be ready when the applications become serious.

The career placement center in your college or university is a valuable resource. They are current on the challenges of today’s employment realities. They know where the jobs are and which fields are most crowded. The experts in the center can guide you in seeking job-exposure opportunities. Practice your future job-seeking skills by dressing appropriately for your interview with the career center advisor. Bring a resume. Knowing you are serious may give you an advantage over other students as the competition begins in earnest.

Call on the resources you have at hand. Your family and friends are fair game for requests for information about internships available at the companies where they work. Take advantage of any inside information they may have. Look at your institution’s lists of alumni who might want to give someone from their alma mater the opportunity to share in their success.

Whatever it takes. The rewards for seeking out internship opportunities could be great if they give your resume that extra touch employers are looking for.

Know the Rules About 401(k) and IRA Withdrawals

By

401-retirementFor millions of Americans, 401(K) and/or IRA accounts figure largely in their retirement plans. But the two methods of saving are regulated by different rules and knowing those rules is important when you are ready to take money out of the accounts.

A 401(k) may be involved in your employment compensation package and many employees want to take money from that savings when they leave the company.

The Internal Revenue Service imposes a 10 percent penalty for early withdrawal of IRA savings if you are under the age of 59.5, but the rule does not apply for 401(k) plans. For the latter, the rule does not apply if you are over 55 years of age, so you don’t have to wait until you have passed your 59.5 mark to take out the money.

However, if you do withdraw from your 401(k), you will have to pay taxes on whatever amount you take.

There are several categories of employment that qualify 401(k) holders to avoid the early withdrawal fee as early as 50 years of age. These include public safety employees such as policemen and firefighters, and emergency medical service providers for states or municipalities who leave the service in or after the year they turned 50.

There are publications that will help you determine how best to manage your retirement accounts. IRS Publication 575, titled Pension and Annuity Income, is one of these. It is online at www.irs.gov. It contains sections on separation from service and other specific elements of how to manage income from the retirement plans.

IRAS have different qualifying rules. You face an early withdrawal penalty if you take money from your IRA before you are 59.5. Any money you take out before then is subject to a 10 percent penalty and also is taxable. An exception may be possible under Section 72(t) of the Internal Revenue Code, but that requires that you commit to a series of substantially equal periodic payments.

Because the rules differ and are complex, financial experts advise that you involve an accountant at the outset. When you finally are serious about withdrawing IRA funds before you have reached the required age, you may need advice, because once you have chosen a formula, you are required to keep the same method.

A distribution form will ask you to choose among several formulas for receiving payments and whether or not it qualifies for an exception from the IRS penalty. Your chosen accountant or IRA custodian probably will have information, including a pamphlet that sets out the IRS requirements. The tax form that you may have to file in the process – Form 5329 – also outlines the guidelines for exclusions. Another resource is “Retirement Topics, Exceptions to Tax on Early Distributions” an IRS chart that shows exceptions to the 10 percent penalty. In addition, the IRS Publication 590 delves into individual retirement arrangements. It is free by calling 1-800—TAX-FORM.

Again, a word to the wise. Get expert help. Tax issues are not the category on which you want to do the do-it-yourself thing.

10 Jobs That Don’t Require Higher Education

By

Truck driving requires no college education.
Truck driving requires no college education.
So much is said of the benefits of getting post-high school education when it comes to job-hunting that many very good jobs may be overlooked by newcomers to the job market. Those just coming out of high school need to know that there are good-paying opportunities that don’t require a college degree or prior experience.

Check these out:

Delivery Drivers

– are always wanted by national, regional and local companies. You need a good driving record, a current license. You may find a job in this field offers the flexibility to accommodate additional schooling. Annual salary range, $21,903 to $47,898.

Garbage Collection Jobs

– are for those not adverse to rising early. They offer most holidays off and may include good benefits. Exercise on the job is a side benefit. You must be physically fit and able to lift heavy items. Look at Waste Management’s career site for details. Salary range, $19,920 to $59,922.

Bill Collectors

– have a choice of jobs as the number of positions is expected to expand by 19 percent in the next 10 years. Requirements include the ability to communicate by phone and having good customer service qualities. Salary range, $21,903 to $47,898.

Security Guards

– have a wide choice, including mall policing, sentry positions at embassies and other secure facilities, Homeland Security officers at airports, and secure cash transport for financial institutions. A high school diploma is all that’s needed for most of these jobs. You may be asked to submit to periodic drug testing, have a clean criminal record and obtain a firearms license. Salary range, $18,161 to $38,999.

Bar Tenders

– need no formal education, but would benefit from a bar tending course. The work can be difficult as you work with people from many different backgrounds and walks of life. In some places, laws hold bartenders responsible for not allowing patrons to drink to excess. The ABC Bar Tending School site lists bar tending school locations around the country. Salary range, $13,085 to $47,298.

School Bus Drivers

– must have clean driving and criminal records. The work is primarily morning and late afternoon. Most employers offer the same holidays and days off that teachers get and the same benefits. Salary range, $16,404 to $39,883.

Real estate brokers

– usually spend several years generating a clientele and the expertise to make big money, although the potential for a large income is there. You need an agent license to join a real estate firm. The license involves a 60-hour course of study and there are additional courses to become a full- fledged broker. Salary range, $30,303 to $227,211.

Oil Field Workers

– at entry level, need nothing more than a high school diploma. Oil companies provide on-the-job training in specific assignments. Some oil field work involves travel around the world. The work is outdoors and offers good pay and benefits. Salary range, $19,000 to $45,000.

Cable TV installers

– learn on the job. An ability to interact well with many types of people is an asset. Contact your local cable company for details. Salary range, $21,584 to $51,855.

Truck Driver

– To drive an 18-wheel truck, you would be away from home much of the time, but the jobs offer good pay and benefits and require minimal training. Many trucking companies pay for training and assist in obtaining a Commercial Driver’s License. Medical exams and background checks may be required, depending on what you would be hauling. Salary range, $27,528 to $67,393.