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Invest in Things? Or Experiences?

December 18th, 2014

girl-flower - smMy parents are trying to reduce the amount of “stuff” they have, knowing they will soon want to move off their acreage into a smaller home in town.  As I see how challenging this is, I can’t help but be aware of all the things I’ve accumulated, too.

Most Americans have a healthy supply of “stuff” . Having more than we need is not a bad thing; but having more than we can use, enjoy or appreciate? That may be the definition of wasteful. 

Frequently, we will enrich our lives (or the lives of our children or others) more if we  invest in experiences rather than in things.  Experiences will never sit and gather dust in a closet; the memory and the learning will always be vital.  In many cases the best gift is not another sweater or another household item, but instead an experience.

What kind of experience?  There are so many options: a meal at a unique ethnic restaurant; attending a play;  piano or guitar lessons; building something with others; a day at the museum.  Experiences don’t need to cost money either: consider volunteering, offering to teach someone a skill;  planning a regular walk with a neighbor or friend.

If the holiday season causes you to reflect on your priorities and you wish to focus your energy and resources where they will really matter, I encourage you to pay attention to how you balance experiences with things.

NOTE: I don’t want to suggest that experiences are right and things are wrong.  All things are not wasteful, certainly; some are needed, some bring lasting enjoyment, and some (such as board games or building blocks) create beneficial experiences.  Likewise, some experiences have little or no value.  But if we are conscious of maintaining an appropriate balance between things and experiences, we’ll be more satisfied, and also less wasteful.  ~Barb

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Countering Commercialism

December 16th, 2014

excess - smThere is a lot of commercial excess in the world around us, and it’s especially evident at this time of year.  The messages of “Buy, Buy, Buy” and “I want, I want” are SO dominant at holiday time.  On top of that, we may observe our friends and neighbors and feel tempted to “keep up with the Joneses.”

It is a challenge to be a responsible consumer!  How do we remain firmly committed to our own priorities in the midst of messages of excess?

I don’t have a magic answer, of course, and I won’t pretend I never give in to messages that pull me away from my priorities.  But I can point to some key financial principles that can help us.

  1. It’s all about goals.  If we clearly identify our goals, articulate why they’re important to us, and post them where we’ll see them, then we are better able to say “no” to distracting options.
  2. Limits are helpful.  Life is rarely “all or nothing.” Most of us want to spend some money beyond our minimum needs; we just don’t want to spend too much.  To be in control of our money, we can make a plan that includes limits for each type of spending.  Then choose a method for sticking to that limit.  One method is to use cash.  Give yourself so much cash for the week or for the spending category, and when it’s gone, it’s gone.
  3. We always have a choice.  Even though there is excess around us, it only enters our lives when we choose to let it in. When we see an option that wasn’t in our plan, the best thing we can do is to stop and decide: if I spend money here, then what part of my planned spending will I give up in exchange?  We may want to blame the store displays or our friends, but our decisions are ours alone.

How will you focus on your priorities during the holiday season and beyond?

~Barb

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Halloween Spending – 2014

October 30th, 2014

Tomorrow is Halloween. It is one of the more affordable holidayshalloween-11101702. It is estimated that 162 million people will celebrate this holiday.  You may see  costumes from Frozen to Super Heroes – the options are numerous.  Many people will purchase a costume, some will make them and others will visit the local Goodwill store to create their costume.  Don’t forget your pets – it is estimated that 23 million pets will be dressing up for 10-31-14.  Costume sales will total 2.8 billion dollars – with 1.7 billion for adult costumes.

The average young adult will spend $87 on Halloween festivities.   If you are planning on visiting the local Haunted House – you are one in 33 million.  Two billion dollars will be spent on decorations for this holiday.*

Let’s not forget the candy, as 2.2 billion dollars will be spent this year. What are you handing out?

Susan

*Statistics are from the National Retail Federation.

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Good Debt vs. Bad Debt

October 28th, 2014

It makes sense to borrow… but on the other hand, lots of times it doesn’t.  download

As we head into holiday shopping season, remember…

We would all love to live debt-free but there are several types of purchases – like our home, vehicle, or our children’s college education - for which we may incur debt. The key issue is to make sure our debt does not get out of hand.

Experts recommend that total monthly long-term debt payments, including mortgage and credit cards should not exceed 36% of your gross monthly income. This is a tool that mortgage bankers consider when assessing the creditworthiness of a potential borrower.

Credit cards make it easy to pay, but they also make it easy to overspend. The average U.S. household with at least one credit card with a balance carries nearly $8,200 balance according to Experian survey March 2013.

Avoiding debt at any cost may also be a mistake if it means depleting your cash reserves for emergencies. Clearly then, decisions about borrowing require skill.  We all need to learn how to judge which debt makes sense and which does not, and then to wisely managing the money we do borrow.

Good debt includes anything you truly need, but can’t afford to pay for up front without wiping out cash reserves. Even then, debt only makes sense if you can realistically afford the monthly payments.

Bad debt includes debt you’ve taken on for things you don’t need and can’t afford.  Credit-card debt is generally considered the worst form of debt,  since it usually carries the highest interest rates.

Now, as the holiday season approaches, is a good time to stop and think; avoiding bad debt during the holidays will make the new year much happier.

~Susan

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Health Insurance Auto-Pilot?

October 21st, 2014

health costsIf you bought health insurance in the new Marketplace last year, you will automatically be reenrolled for the same coverage if you don’t log in to your account at www.healthcare.gov and make a change.  That may seem like the easiest route, but it could backfire.  Here are some reasons for avoiding the “automatic pilot” option:

  • Insurance policies can and do change from year to year.  Deductibles, co-payments and premiums can change, along with specific coverage details such as the list of preferred medications, the coverage of specific procedures, or whether you must meet the deductible before the plan will pay for particular services.   If you automatically renew, there is a chance that you may be caught by surprise.
  • Your health needs may have changed since last year.  Perhaps you chose a bronze plan last year because you didn’t expect many health expenses, but next year looks different because you may need surgery or some other kind of treatment or care.
  • Your income and family composition may have changed since last year.  If you do not log into your account and make adjustments in your profile, then the amount of your advance premium tax credit may be far off-target, causing financial hardship.

Now is the time to start thinking about your coverage options for next year.  If your current plan sends you information about changes in your policy for next year, be sure to study the changes planned.  In addition, think about your family’s health care needs — do you expect next year to be about the same as this year?

The Health Insurance Marketplace opens November 15.  It will remain open until February 15, 2015, but if you want to make changes or enroll in coverage that will be effective on January 1, you will need to log in and select your plan by December 15.

~Barb

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Couples and Money

August 29th, 2014

YMYF-CoupleBankFormThis week I saw a report from a respected source which found that within couples, dishonesty about money is surprisingly common.  A third of those who manage money jointly admitted to hiding financial information from their partner – even hiding bank accounts!

Money management is a central element in any household.  Being straightforward and cooperative with your partner on money management brings at least three benefits:

  • Stronger finances and more progress toward financial goals.
  • Stronger, healthier relationship.
  • Children in the household will learn healthier money attitudes and develop stronger money skills.

Both partners in any couple need to be very aware of the household’s finances, including: how much money do you have, how much do you owe, what are the monthly bills, what insurance coverage you have and why, and where are important papers kept.  This is true even if one partner actually takes care of most financial tasks.  Why?

  • Survival – if something happened to one partner, the other needs to be able to find information and take care of business.
  • Shared power – any time all or most of the power (including power over finances) rests with one partner, the relationship is at risk.

Some strategies that can help you build joint money management and awareness include:

  • Shared financial goals, discussed and written down, then reviewed periodically.
  • Regular meetings (weekly, bi-weekly, or monthly) to plan for upcoming financial decisions and needs.
  • Equal access to account information (printed statements or on-line account access) – for bank and investment accounts and also for credit and debt accounts.

Sometimes people resist sharing all information because one partner gets irritated by certain small spending habits of the other (such as regular coffee purchases, or picking up magazines).  In addition, it can be tedious to keep track and report ever purchase of an ice cream cone or a new pair of socks.  When you think about it, It would be difficult to purchase gifts for each other if all spending must be disclosed!

A nice way to allow each partner some freedom for independent spending is for each to have an allowance.  (did you think allowances were just for kids?  Nope! They can be great for adults too!)  Then each partner has some autonomy, and some financial privacy within limits.

If you manage money with a partner, what can you do to make sure your financial relationship is cooperative and straightforward?

~Barb

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Skills to Pay The Bills

August 5th, 2014

Skills to Pay the bills

The unemployment rate is finally going down.  But you may still be looking for a job.  The U.S. Department of Labor has developed a curriculum with six short videos called Skills to Pay the Bills.

This curriculum was created for youth development professionals to use with youth ages 14 to 21.  It offers an introduction to workplace interpersonal and professional skills, and can be useful in both in-school and out-of-school environments. It can also be helpful to adults of any age.

The program is comprised of modular, hands-on, engaging activities that focus on six key skill areas: communication, enthusiasm and attitude, teamwork, networking, problem solving and critical thinking, and professionalism.  Each skill area provides a short video that captures the topic.  The videos are on YouTube and average around 2 ½ minutes long.  The videos can be accessed by anyone, whether or not they are participating in a structured program.

The full curriculum may be accessed at:  http://www.dol.gov/odep/topics/youth/softskills/

Good luck with your job search.

-Susan

 

 

Consumer Knowledge, Saving, Smart shopping, Uncategorized

Sales Tax Holiday

July 28th, 2014

shopping cartIt’s coming right up – this coming weekend, August 1 & 2!  “It” is Iowa’s annual sales tax holiday on qualifying clothing and footwear purchases. You’ll find all the details here but the key point is that most purchases of clothing and footwear priced under $100 will be exempt from state and local sales tax during that 48-hour period.

It’s a savings of 7% – not something to sneeze at.  In addition, many retailers will advertise discounts for that weekend to increase consumers’ incentive to shop. I’m writing this post to remind readers of the event, and also to remind you to keep it in perspective.  Savings of 7% is not enough reason to buy things you don’t need and would hardly use.  If there are things you need, though, this weekend is a great time to buy them.

The tax holiday is intentionally placed during back-to-school shopping season to make it helpful to consumers.  Before shopping, especially for growing children, it’s smart to take inventory of what you have, finding out what still fits, and what has been worn out or outgrown.  That will help you make a shopping list and prioritize the items you might want to buy.  And of course as you make that list, keep your budget in mind; decide how much you can afford to spend on clothing this weekend or this month.

Here’s what could happen without a good inventory and list:  you might go shopping, make some good purchases, spend the money you had allocated, but then 2 weeks later discover that you still need two pairs of jeans!  To meet that need, you would exceed your planned spending, leaving you short on funds for something else, such as groceries or gas.

Plan ahead, so you can use the annual Sales Tax Holiday to your advantage! ~ Barb

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Visit Your Local Library and Explore Money Concepts For You and Your Child

June 12th, 2014

Now that school is out, take a trip to the local library — use a free local resource to find some children’s books that start the conversation on money for your children.  As an adult, you can pick up some money books too.

Need a few suggestions?

For your preschooler here are few books to try:

  • Curious George At The Laundromat – by Margret ReyimagesW3UIRY2R read to child
  • Just Shopping With Mom –by Mercer Mayer
  • Mrs. Pirate by Nick Sharratt
  • My First Job by Julia Allen
  • Paddy’s Pay Day by Alexandra Day
  • The Berenstain Bears & Mama’s New Job by Stan and Jan Berenstain
  • The Berenstain Bears Get the Gimmes by Jan and Stan Berenstain
  • The Berenstain Bears’ Trouble with Money by Jan and Stan Berenstain

For the beginning reader here are a few books:

  • A Bargain For Frances by Russell Hoban
  • A Job For Jenny Archer by Ellen Conford
  • Alexander, Who Used To Be Rich Last Sunday by Judith Viorst
  • Ben Goes Into Business by Marilyn Hirsch
  • Leo and Emily’s Zoo by Franz Brandenberg
  • Not So Fast Songololo by Niki Daly
  • Something Good by Robert Munsch
  • The Giving Tree by Shel Silverstein

For additional books, the University of Nevada Cooperative Extension’s “Money on the Bookshelf” has four pages of books by age level.  In addition to a list of children’s books about money, the site also offers tips for teaching about money.   The site is:

http://www.unce.unr.edu/programs/sites/moneybookshelf/

~Susan

 

Consumer Knowledge, Goals, Saving, Spending plans, Uncategorized

Kids and Allowances – Summer is a Good Time to Practice -

June 10th, 2014

kids allowancesUsing money wisely is a basic life skill that your children can learn at an early age. Even if you have little money in your home, look for ways to involve the children in deciding how to spend it. Help your children understand how money is used to pay for goods and services.

Communication is the key. If they are old enough to understand, have a family meeting and talk about your expenses and your income. Ask for their help in deciding how the money is spent.

Money skills are essential to your children’s well-being, so don’t neglect teaching your children about money. They will gain important values and skills which they will need as they grow older.

If possible, consider giving the children an allowance. With an allowance, children can learn to make spending and saving decisions. To determine an allowance for your children, follow these guidelines:

  • Give an allowance as soon as the children are old enough to realize how money is used to pay for things people need or want.
  • Decide which purchases the allowance should cover. Misunderstandings often occur when you don’t talk things out.
  • Make regular saving a part of the allowance.
  • Encourage the children to give to charity.
  • Review each child’s allowance yearly. As children grow older, you may need to increase the amount. It’s a good plan to have children account for how they have used their monthly allowance.

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