budget

Check Up On Your Personal Finance Planning

March 11, 2016 By Twila VanLeer

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.

What Would $40 Do For You?

February 26, 2015 By Twila VanLeer

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.

Not Too Late To Make Personal Finance Resolutions

January 17, 2015 By Twila VanLeer

Paying bills online is the easiest way to pay your bills on time.

By now, most of the resolutions made on Jan. 1 are in the wastepaper basket. Experience shows that most of them don’t last into the second week of the new year. But if you’re willing to take a second shot at it, here are some ways you can improve your financial standing in 2015:

Analyze how you pay your bills. Many, if not most, utilities, credit card issuers and merchants, give you the option of paying online. If you decide that is a good approach, give some thought to whether you will direct your payments to the creditor’s online payment center, or utilize your bank’s bill pay program. Either will allow you to make payments directly from your checking account and in some instances, automatic withdrawal is available.

These payment options have benefits. They save you having to keep track of payment due dates. The bank’s online bill pay keeps all your payment data in one site. It can save you time for more productive things.

If you prefer paper payments, get a system for storing all bills and receipts correlated to your banking. Set a time to review each month and balance your checking account. Having all your bank accounts – checking, savings and primary credit card all at one institution streamlines accounting.

Track spending. Knowing how your money comes in and goes out is critical to good management. Monitor accounts weekly. Watch for unexpected fees or unauthorized activities. Be sure to note ATM withdrawals as you go. Keep a spending log, either on paper or electronically, documenting every transaction and purchase. Trim if you need to.

Build a budget. Knowing up front where your money needs to go lets you make more confidant decisions about spending and investing. It is the foundation for your personal finances, a plan in concrete that keeps bills paid and allows for working toward the “rewards” of your labor – vacations and travel, further education and retirement.

A session or two with a qualified financial planner may be useful, especially as you embark on this resolution to make you money work for you. It can be done. Just do it.

Gas Prices To Remain Low In 2015

January 14, 2015 By Twila VanLeer

Major airline companies are saving billions of dollars in monthly fuel bills.

For the last three months in 2014, average gas prices dropped almost daily in the United States and the Energy Department predicts that American drivers will continue to see prices in the same range as the new year begins.

The department is forecasting a price of $2.60 per gallon. That would be 23 percent lower than the predicted average for 2014, the lowest since 2009. What that means to consumers is more money to spend for other things and a boost to the overall economy as the costs of transportation and shipping goods drop.

The average per-gallon cost of $2.66 registered in the last week of December is 61 cents less than a year ago, the agency reported.

At the root of the rapid decline is a drop in crude oil supplies worldwide. Global prices were down to $66 per barrel after hitting a high of $115 per barrel last June. Rising production in the U.S. contributed to high supplies around the globe. At the same time, slow economic growth in Europe and Asia has lessened demand.

Oil companies are trimming production plans for the coming year. U.S. crude oil production is expected to rise by 300,000 per day to a total of 9.3 million barrels. Before the precipitous drop in prices, the EIA had forecast a 400,000-barrel per day increase in production.

Home heating costs will fall this winter, according to the agency’s predictions. Weather forecasts do not predict a long period of low temperatures and prices for propane and heating oils are much lower.

The average savings to U.S. households for 2014 was $115. If prices stay low, as expected, the 2015 aggregate savings could be $75 billion. Gas prices are closely associated with consumer confidence, which is at its highest since the recession. The reduction in oil and gas prices contributed to better-than-expected holiday spending, according to Goldman Sachs.

South Carolina has had the cheapest gas for the past three years, at an average $3.10 per gallon. Missouri, Mississippi, Tennessee and Arkansas were next in line. Hawaii had the highest prices at $4.16 per gallon, followed by Alaska, California, Connecticut and New York.

The 2015 prices are expected to bottom out after the midpoint of the year and begin rising again.

Impulse Buyers Becoming Extinct?

December 19, 2014 By Sherry Tingley

It is happening more and more. Today’s shoppers come to the store with something in mind, they pick it up and they leave without adding to the cart. The trend is likely to change the way the retailers approach sales.

The sellers often offer loss-leaders and deep discounts because they depend on shoppers to expand the list once they are inside the doors. They put milk at the back of the store and line the aisles and ends of aisles with tempting items. If the shoppers ignore these come-ons, the merchants lose.

Impulse buying is a psychological phenomenon, analysts say. Resisting it can be hard, according to Kit Yarrow, a professor at Golden Gate University, whose specialty is consumer psychology. She is quoted in a Wall Street Journal article.

Most everyone succumbs to impulse buying at times, Yarrow says. The best solution is to avoid situations in which you are tempted. Eating a piece of chocolate before going shopping may help. The glucose supports self-control. Giving yourself limited shopping time gives less time for temptation. If you make it an all-day excursion, the chances are great you’ll snatch something off the shelves that you hadn’t planned.

Online shopping has had an effect on impulse buying, Simply the use of technology has changed shopper psychology. People think and relate to others differently, Yarrow says. In most instances, these changes tend to take the thrill out of random shopping.

The online shopper has changed the whole process. Many shoppers want a more streamlined experience.

The recent recession had an effect on shoppers as well. When money got tighter, people were more careful about spending. They were less tempted to make unplanned purchases, despite the allure. They made fewer subconscious choices.

Impulse buying is triggered by one of two factors: An attractive price or an exciting purchase. Today’s buyer, faced with a glut of products, tends to look first to the pocketbook effect. Those who finally submit to their impulses often are emotionally drained because of family and/or work demands, Yarrow said. Or there are the newcomers to the shopping milieu whose resistance to impulse buying is lower. People who are angry in general may make shopping an outlet for unexpressed emotion.

To avoid the temptation to add to your shopping cart, follow a few simple rules:

Wait 20 minutes before making the purchase. That is the usual time it takes to cool the urge.

Think about what the purchase may cost you, not just the price of the item, but your decreased ability to buy what you might want more. Remind yourself how good a zero balance on your credit card feels. Or how you could be moving closer to a long-range financial goal such as a new car or a vacation. Remember how long you have to work to fund the purchase you are considering. Stalling is a good tactic in financial planning.

Delay shopping if you are tired, hungry or thirsty. Those physical demands may confuse your thinking about what you need. Avoid paying with apps or credit cards if possible. If you use cash, it is easier to see money leaving your hands.