Juggle—Stop—and Slide Expenses

Juggle—Stop—and Slide your personal expenses throughthis COVID-19 global pandemic using tools, actions and strategies to protect your family.

Juggle– Put money you would have normally spent for things (e.g., personal care, commuting costs and child care) toward other essential bills. Rework your budget and reallocate money you are not currently spending.  We shifted money not spent on gas and eating out. Those dollars are now budgeted for extra costs for an unplanned internet upgrade. Consider online budget tools like this one from the University of Wisconsin.

Stop- Take immediate action to stop all excess spending. Ask: “How can we reduce spending?”

  • Substitute a less costly item
  • Conserve resources and avoid waste
  • Cooperate with others by trading or sharing resources
  • Save money if we do it ourselves
  • Do without

These ideas and more are available at the University of Minnesota’s “Strategies for Spending Less” page. You’ll find other resources on ISU Extension’s Finding Answers Now page

Slide- Take advantage of Covid19 Special offers and slide a portion of the bill forward.

Our mobile phone carrier will not charge a late fee or terminate service through June 30. To qualify due to hardship a short online form is required.   Iowa utility providers (i.e. energy and water) may provide relief payment options, assistance programs, and low-cost steps for customers according to the Iowa Utility Board.  https://coronavirus.iowa.gov/pages/faqs#Utilities

Free and confidential consultations with ISU Extension financial educators are available to all Iowa residents. We can provide tools and information to help you revise budgets, prioritize spending and link to community resources. 

Find your local Extension educator or contact Iowa Concern 800-447-1985 for information. Consider our free booklet: “Planning to $tay Ahead”  English and Spanish https://store.extension.iastate.edu/Product/5523

Carol Ehlers

Guest Blogger: Carol Ehlers,
Human Sciences Specialist in Family Finance

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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An Ounce of Prevention

I shouldn’t be surprised by the increased number of bogus offerings, threats and scare-tactics arriving in my inbox, mailbox and phone. Scammers are offering everything from face masks to toilet paper and expedited deposits of the stimulus payments. Identity theft and related scams often spike during times of crisis. So…desperate times require extra diligence on our part, to protect our identity and our hard earned money.

The three national credit-reporting companies, Experian, Equifax and TransUnion, are offering free weekly online credit reports through April 2021. By requesting a free credit report at https://www.annualcreditreport.com/index.action, an individual will get a report from all three companies with the single application.

By establishing a “myEquifax” account at equifax.com/personal/credit-report-services/free-credit-reports  or by calling 866.349.5191, individuals can receive six free credit reports every twelve months from Equifax, through December 2026…that is in addition to the one free report that can be obtained each year from all credit reporting companies at AnnualCreditReport.com.

While checking your credit report is an important habit, there are other things individuals can do to protect their identity and improve their score.

  1. Pay all your bills on time if possible. It may get difficult with layoffs and furloughs, but try to make at least your minimum debt payments by their due date every month to avoid hurting your credit score.
  2. Contact your lenders for help and ask about hardship options as soon as possible—ideally before you miss a payment. Lenders may be able to temporarily lower your interest rate or payment amount, or pause your payments for a period of time. Lenders may also be able to place your loans in deferment or forbearance, which would eliminate payments for a time; as a result, there would be no late payments to report to the credit bureaus. Under the CARES Act, when a consumer contacts their creditor before falling behind in payments, and reaches an agreement with the creditor to a modified payment plan (reduced payments or forbearance), then the creditor may not report late or missed payments to the credit reporting company as long as the consumer follows the agreement. That protection for the consumer lasts until the later of July 26, 2020 OR 120 days after the COVID-19 national emergency declaration ends.
  3. Check your credit regularly and make sure the information is accurate. You can identify any potentially fraudulent activity and respond to it before it damages your credit.
  4. Dispute inaccurate information immediately. Remember that disputes need to be made with each credit bureau where the disputed information appears.
  5. Contact your service providers. If you do not think you can pay your utility, cell phone, cable or other monthly bills, reach out to your providers to see if they offer flexible payment options during this time.
  6. Be extra vigilant about protecting your identity. If you fear identity theft may occur or has occurred in your name, you can also place a free security freeze on your credit file so lenders cannot gain access to it. This prevents people from applying for credit in your name. You can lift the freeze at any time, for free.
  7. Seek financial management help. The Iowa Concern Hotline (800.447.1985) can put you in touch with a financial consultant who will provide confidential information and discussion, free of charge.
  8. For those with investment or retirement accounts, U.S. market fluctuations could cause significant concern. Before you make any rushed decisions with your investments, consult a reputable investment professional who can look at the details of your situation and provide personalized financial guidance on what actions, if any, you should consider at this time. Not sure where to start? The professionals at the firm holding your investments or with your employer’s retirement plan can be a first contact for analysis of your situation.
  9. Make a budget and plan ahead. If you think current conditions may affect your income or finances, consider tightening your budget to help make sure you have enough funds to cover your expenses.

For more information about free help and guidance during these difficult times, check out https://www.extension.iastate.edu/iowaconcern/.

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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If You Don’t Need It, Don’t Buy It

As we experience consumers’ hoarding of a few items like toilet paper we might be under the impression that we’ve fallen on “Tough Times.”  Powerful memories exist for my senior parents who lived during World War II, when rationing meant you couldn’t always buy a wide range of the things you wanted. Like many Americans they learned and practiced “If you don’t need it, DON’T BUY IT.”

It might sound like the advice of frugal parents, “If you don’t need it, DON’T BUY IT,” but to meet the needs of US soldiers during World War II, commodities in short supply had to be rationed.  So in 1942 Americans back home were given numbered ration books with stamps inside to control people’s consumption of things like coffee, fuel and shoes and provide equal distribution of scarce goods.

A person could not buy a rationed item without also giving the store the right ration stamp.  Once a person’s monthly ration stamps were used up, they couldn’t buy any more of that type of product. It was like being on an allowance.  

This meant planning carefully, being creative, not wasting and self-control. My father’s ration book represents just one way in which World War II changed the spending behaviors of families.

So, what of these valuable consumer behaviors can we practice today? Do I have a list and know what is already on hand at home before shopping? Can the “If you don’t need it, DON’T BUY IT” ideal give me confidence to wait during a temporary product shortage? How might my kids, family, friends be encouraged by a different perspective than what they are seeing happen?

My grandparents and parents, like many American households, learned and practiced modest family living, to do without and to sacrifice for the common good because “If you don’t need it, DON’T BUY IT.”

Being guided by the rule “If you don’t need it, DON’T BUY IT” printed on American’s WWII ration book covers could prove to be a life lesson for the historical event that impacts us all these days.  The ration book of my 82-year-old father, a Soil Conservation Contractor and Southeast Kansas farmer, re-appeared this week as he continues to live by the motto “If you don’t need it, DON’T BUY IT.”

Guest Blogger: Carol Ehlers, Human Sciences Finance Field Specialist, Iowa State University Extension and Outreach.

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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How student loan borrowers can benefit from COVID-19 relief

The CARES Act suspends payments on federal student loans. Consumers hit hard by the effects of the COVID-19 pandemic can find some help, thanks to new legislation passed by Congress. Those who can benefit include some student loan borrowers.

The federal CARES (Coronavirus Aid, Relief, and Economic Security) Act suspends payments on federal student loans until Sept. 30. The Iowa Attorney General’s Office and Iowa College Aid are spreading the word about benefits for borrowers. “The economic pain caused by this pandemic is devastating for many,” Attorney General Tom Miller said. “I want to ensure borrowers and employers are aware of these benefits.” Miller also urges private lenders and creditors not part of the CARES Act to provide a reprieve for distressed borrowers.   “We’re all in this together,” Miller said. “Let’s reach out, be compassionate and treat each other right.”

If you are paying off student loans, here’s what you need to know: Not all loans qualify. The suspension mandated in the CARES Act is only for loans held by the U.S. Department of Education. It does not cover FFELP (Federal Family Education Loan Program) loans or Perkins loans held by private lenders, nor does it cover private loans. However, some private lenders might provide these benefits on a voluntary basis. If you’re not sure whether you qualify, contact your loan servicer. If you don’t know who your loan servicer is, you can look it up at Federal Student Aid, studentaid.gov/fsa-id/sign-in/landing.

If your loan does qualify, you don’t need to do anything. Your payments will automatically stop from March 13 through Sept. 30. Interest is suspended, too. No interest will accrue on your loan until Sept. 30, so your outstanding loan balance won’t grow while your payments are suspended. So is collection on defaulted loans.

If you’re in default, your wages will not be garnished until Sept. 30. You can still pay if you want to. If you choose to continue paying off your loans during the suspension, your monthly payments will be the same as before the suspension. You won’t lose eligibility for loan forgiveness.

If you’re in a public service loan forgiveness program or an income-driven plan that requires a certain number of consecutive payments, this period of suspension will not count as an interruption. You will still be responsible for your loan. After Sept. 30, you will be responsible for paying on your loan once again. The amount will not be reduced. If you’re an employer, you can contribute up to $5,250 toward each worker’s student debt through Dec. 31 on a tax-free basis.

Keep in mind that guidance on student loan suspension is subject to change. You can find recent news and current updates at Federal Student Aid, studentaid.gov/announcements-events/coronavirus.
Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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Managing Personal Finances in Tough Times

Audio Blog

Concerned about your finances during these uncertain times, but not sure where to start? ISU Extension and Outreach invites you to get in touch with one of our Human Sciences financial educators. They can help walk through ideas and options to revise a budget, prioritize bills, pay down debt, connect with community resources to stretch reduced incomes, and other personal finance topics—totally free of charge.

Our 11 financial educators are listed below with the counties they serve and are available to talk with anyone in Iowa. Because Extension and Outreach staff are currently working from home, please send an email. They will get back to you during regular business hours within 48 hours. You also can leave a phone message at Extension and Outreach’s toll-free Iowa Concern Hotline (800-447-1985) to have someone get back to you.

Contact an ISU Extension and Outreach Financial Educator

Central Iowa – Kalyn Cody  [Dallas, Madison, Polk, Warren]

North Central Iowa – Barb Wollan  [Boone, Hamilton, Hardin, Humboldt, Marshall, Story, Webster, Wright]

Northern Iowa – Brenda Schmitt  [Cerro Gordo, Emmet, Floyd, Franklin, Hancock, Kossuth, Mitchell, Palo Alto, Winnebago, Worth]

Northwest Iowa – Jan Monahan   [Clay, Dickinson, Lyon, Monona, O’Brien, Osceola, Plymouth, Sioux, Woodbury]

West Central Iowa – Carol Ehlers  [Audubon, Buena Vista, Calhoun, Carroll, Cherokee, Crawford, Greene, Guthrie, Ida, Pocahontas, Sac, Shelby]

Southwest Iowa – Sandra McKinnon  [Adams, Adair, Cass, Clarke, Decatur, Fremont, Harrison, Mills, Montgomery, Page, Pottawattamie, Ringgold, Taylor, Union]

Southern Iowa – Joyce Lash  [Appanoose, Davis, Jasper, Jefferson, Lucas, Mahaska, Marion, Monroe, Poweshiek, Van Buren, Wapello, Wayne]

Southeast Iowa – Mary Weinand  [Des Moines, Henry, Iowa, Johnson, Keokuk, Lee, Louisa, Washington]

East Central Iowa – Phyllis Zalenski  [Benton, Delaware, Dubuque, Jackson, Jones, Linn]

Eastern Iowa – Casey Codner  [Cedar, Clinton, Muscatine, Scott]

Northeast Iowa – Jeannette Mukayisire  [Allamakee, Black Hawk, Bremer, Buchanan, Butler, Chickasaw, Clayton, Fayette, Grundy, Howard, Tama, Winneshiek]

The information provided is educational in nature to help you make your own informed decisions and is not intended to substitute for professional advice or serve as an endorsement of any financial product or service.  Consult with licensed professionals prior to implementing any of the information provided to determine the course of action is best for you.

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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COVID-19 and Unemployment Insurance Benefits

This is a stressful time for individuals and communities across Iowa and we are dealing with many unknowns. Communities are impacted by the temporary closure of businesses, schools and other public facilities or events, and in some cases, quarantines. While these actions are necessary steps to help reduce exposures, it may bring financial uncertainty for many people who could experience a loss of income due to illness or workplace closures.

If you do experience unemployment, remember there are supports in place for you and your family. Iowa unemployment benefits are available to individuals who are unemployed through no fault of their own. If your employer needed to shut down operations and no work is available, you would be eligible to for unemployment benefits. Unemployment claims that are filed as a result of COVID-19 will not be charged to employers.

Many people wonder if they can receive unemployment benefits if they need to stay home from work to care for a dependent, family member or if their child has school cancellations. The answer is, “It depends”. A good approach is to contact your employer regarding potential telecommuting, sick leave, PTO, FMLA, Disability and other options they may be offering.  If those options are not available, you may file for unemployment insurance benefits to determine your eligibility.

Also note, an employer can require an employee to stay at home for the fourteen day isolation period if they have traveled out of state or had contact with someone who visited an area affected by COVID -19. Your employer should attempt to provide paid leave but if that is not available, employees might be eligible for unemployment insurance benefits.

To learn more about filing an unemployment claim, contact your local Iowa Workforce Development Center or apply online at:  https://www.iowaworkforcedevelopment.gov/file-claimunemployment-insurance-benefits.

Mary Weinand

Guest Blogger: Mary Weinand, Iowa State University Extension Family Finance Field Specialist.

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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Financial Cause and Effect

As a site coordinator and quality reviewer at a local Volunteer Tax Assistance site, I am able to see hundreds of real-life examples of “cause and effect”. 

  • What EFFECT will cashing out my 401k have on my taxable income? It may CAUSE a portion of your Social Security taxable.
  • What EFFECT will $24,000 of income (with no withholdings) have on a 19 year-old full-time student living at home? The EFFECT will be felt by the student who will owe taxes and by the parents who will not be able to claim the child as a dependent.

The most recent unpleasant EFFECT was CAUSED by gambling winnings.  A very lucky woman in her 70’s received a W-G from a local casino, indicating she won $20,800 worth of winnings with NO taxes withheld. The fact that no taxes were withheld did not bother her because she also had documentation showing her losses, which far exceeded her winnings. She knew that her losses could be deducted from her winnings. What she did not understand was…

  • She could only write-off the losses that were equal to her winnings…meaning…of the 25,000 of losses she had incurred trying to win the $20,800, she could only write off 20,800.
  • What she also did not know was…The losses are reported on a schedule A, while the winnings are counted as income. Once the winnings were added to her pension income and the $26,418 of social security income, she discovered that, not only had the winnings pushed her into a higher tax bracket, her income now was high enough that $13,661 of her Social Security was now taxable. Last year, with no gambling winnings, none of her Social Security was taxed.
  • It was only after her total income was calculated that she could subtract her itemized deductions (which included her gambling losses). 

The combination of increased income (due to gambling winnings), plus the increased tax bracket, plus the increase in the taxable portion of her social security, and the fact that there were no tax withholding on the gambling winnings; this woman owed more than $2000 for her federal tax return…something she had not anticipated.

Before doing anything different with your money, it is important to stop and consider what effect it will have on your tax return.

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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The Point of Pause: How Many Hours Will It Cost You?

Audio Blog

I realize that I still have unopened boxes from when I moved into the house 5 years ago. My closets and rooms are full. My rule is if something is coming in, something is going to have to go out. Every time I think about buying something for the house, like a recliner, even a kitchen gadget, I ask myself, “What will need to be taken out to give room for this new item?” It’s all about balance.

Traditionally, as a personal finance educator, I teach budgeting by focusing on balancing money coming in and going out of the household. For example, if we have $3500 in monthly income, then we only have $3500 to spend, save and share. Saving includes goals we are working toward, like retirement, children’s education, a vacation or a kitchen remodel.

How much do we really spend? Tracking where our money goes for a month or two helps give us real numbers to work with in a budget. Many times people do not actually know where that $20 bill in their pocket went. Spending also includes all the out-of-pocket expenditures like eating out or the quick stop before work for a cup of coffee.

Before spending money, focusing solely on the dollars, what if we think in terms of hours worked? Would it give us pause before spending? Would budgeting our hours worked make more sense? Would it help us look at our spending differently? For example, when finding a recliner, we would ask ourselves, “Is it worth it? Do I work enough hours to buy this item?” Here’s a scenario to illustrate the point of pause – Ben clears $20 an hour and works full-time. Ben’s rent is $750, so he has to work 37.5 hours to pay rent. That’s almost a week’s work! He tracked his food expenses and discovered he has to work 11.5 hours each month. He rarely goes out to eat. So how many hours does Ben have left to pay for utilities, goals, clothing, car maintenance, etc.? Can he buy the recliner he has been eyeing?

Guest Blogger: Sandra McKinnon

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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Lending Money in Tough Times

Man handing out money.

Times are tough when money is tight. When you are in need of money NOW, you may find banks unwilling to loan money, especially if your credit score is poor. For some, the only option is to borrow from family or friends, especially if you need the money fast.

If you are the lender, it will be hard to say no. You want to help a friend in need and if you say no, you will feel guilty if they lose everything. If you lend the money and they still lose everything, there may be hard feelings because the debt goes unpaid. If the loan is made to a family member, family gatherings will be uncomfortable. The lender may make mental inventories of anything purchased (while the debt is unpaid) especially if purchases are viewed as WANTS instead of a NEEDS.

When making the decision to lend money, it is important to keep emotions out of it. You should not lend money that you can’t afford to lose. If you do expect it to be paid back, don’t expect it to be paid back quickly. You may want to consider the money as a gift instead of thinking of it as a loan.  Then if you get the money back, it will be a pleasant surprise…instead of a disappointment when it isn’t paid back.

Another thing I have done in the past is to buy groceries or to offer to fill up the gas tank for a friend or family member.  This would free up money for the emergency that would have been set aside for gas or groceries. I have also offered to pay for a service, like painting a bedroom which helped the family member make ends meet, without having to ask for a loan. Make sure your spouse is in on the decision to lend money.

As of the 2019 tax year, the IRS has a $15,000 gift tax rule. A small loan will not make a difference, but if you do not charge interest on a loan of that amount or more, it may be considered a gift. If you do not charge interest, the IRS can say the interest you should have charged was a gift . In that case, the interest money goes toward your annual gift giving limit of $15,000 per individual. If you give more than $15,000 to one individual, you are required to file a gift tax form.  The rate of interest on the loan must be at least as high as the minimum interest rates set by the IRS.

These are tough times, especially for the farming community. Be sure to share information, phone numbers and links from the Iowa Concern Hotline.

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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To Reconcile or Not

Bank Check
Bank Check

Reconciling a checking account, comparing the bank’s records of checking account activity with your own records, is one of those things I learned when I opened my first account at the age of 16. There is something very satisfying when it matches to the penny AND it ensure that my checking account balance is correct.

It is a challenging to teach tech-savvy individuals to value and adopt the practice of reconciling their bank accounts. Many just rely on a phone app to ensure there is enough money in their account before writing a check. The flaw in this strategy is this: what if there are outstanding checks that have not yet cleared, so there is actually less money in the account than there appears to be on the banking app on your phone?

This week I learned an alarming new reason for reconciling your bank accounts. Over a period of several months, my daughter had purchased supplies for a group she volunteered for. She electronically deposited the reimbursement checks into her account by taking a picture of the checks with her phone. She put the deposited checks in a neat stack on her desk so she would remember to file or destroy them later. Weeks later, her husband found and deposited the checks not knowing they were waiting to be destroyed. He encountered no red flags or warnings, and the checks were deposited a second time. The error was not discovered until the group for whom she volunteered reconciled their account. Had they NOT reconciled their account, the error might never have been discovered.

I find this alarming. There was a period of time where I wrote checks at a large chain store; they scanned my check and handed it back to me. What if a dishonest clerk would have scanned it twice and pocketed the cash from the register? Her register would have balanced at the end of the day. What if I had lost the check and someone deposited it? What if…?

What measures are you going to take to protect yourself from this potential problem? For information about reconciling a bank account, check out How To Reconcile A Bank Account.

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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