Some Things Never Change

I have three grown children: each with two kids of their own. They once shared (with an eyeroll) how they always knew when mom was learning a new parenting curriculum because I would implement the strategies and techniques on them. It is now a privilege and a joy to watch my kids as parents and occasionally I will see one of those strategies from their past emerge in their home.

I really liked those parenting programs and the lessons that they reinforced in my kids (showing love while setting limits, using natural consequences, Savings/Spending/Credit, etc.). But as you would expect, there is now an app for SOME of that.  One that caught my eye allows a parent to pay their child an allowance or for extra chores. The money accumulates on a debit card which they can use to purchase the things they want or need.

The latest app being used with a couple of my grandkids is quite amazing. It teaches the Time Value of Money, Smart Spending through Rewards and the power of delayed gratification using Savings Goals.  The free version allows you to assign points to chores the child can earn and points for rewards the child can save for. For example…if a child wants a sleep over, the child will need to earn 1000 points.  Cleaning the toy room (a weekly chore) may be worth 5 points while emptying the dishwasher (a daily chore) may be worth only 1 point. The points can be assigned a dollar value as well.  So, if the child wants a $5 stuffed animal and it takes 10 points to equal $1, the child will need 50 points to buy the stuffed animal….I think there is also a math lesson in there.

What keeps it interesting is the fact that no two kids are alike, so what works for one child may not work for the next. I see that with my grandkids: one is highly motivated by rewards and has a long list of wants, while the other just loves to help and has no wish list.

By searching for “Child Chore Apps” on the web, you will find lists of apps that could be useful to parents trying to raise responsible young people and provide kids an opportunity to experience, practice and apply life skills, including money management.

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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Savings Strategies

Note: this post builds on yesterday’s post about having a meaningful reason to save.

Once you have a reason why you want to save, or save more, the next step is to “find” money to save. That generally means either increasing income or reducing expenses, which means something will need to change. Change can be hard, but most of us can succeed if we have a good enough reason.

To reduce expenses, you can make several small changes; for example, eat out one less time per week, drink one less can of pop each day, or stop buying magazines and read them at the library instead. OR, you could make one big change that saves money; for example, you could find a roommate to share housing expenses or move to a smaller (less expensive) apartment. To increase income, you could ask for more hours at work, get an extra part-time job, collect cans and bottles for the 5-cent deposit, or have a garage sale.

Once you have “found” some money by reducing expenses, increasing income, or both, the next key is to MOVE that money to a savings account or to some location where you are unlikely to touch it.

This seems like an obvious step, but it can be overlooked.

Imagine a scenario where you exercised self-discipline by skipping your morning coffee shop stop, bringing your lunch to work, and stuck to a limit at the grocery store! You’re proud of yourself! But if you don’t actually MOVE the money to your savings account, it will just end up getting spent on something else.

To make sure the money gets moved to savings, one helpful strategy is to treat savings like a bill you pay each month. If you’ve decided you can save $50/month by making some changes in spending, then “pay” that saving bill just like you pay your utility bill and your car payment. That approach increases your chance to be successful with saving. Even if you are saving small amounts, building the habit of saving each month is a way to reach your goals, whatever they may be.

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Death of a Spouse: Finances amid grief

Nearly 1.5 million Americans faced the death of a their spouse in 2019 – that figure likely increased dramatically in 2020 and 2021 due to COVID-19. The majority of those surviving spouses faced genuine financial challenges, while also dealing with grief and loss. For those who were over age 60 (about 1.2 million in 2019), recently widowed older adults face higher poverty rates, greater housing cost burdens, as well as other critical financial challenges. 

A new guide, “Help for Surviving Spouses,” available from the Consumer Financial Protection Bureau, alerts newly-widowed individuals to key steps that will help them find a new financial equilibrium. The 24-page guide provides user-friendly information, checklists, and places to make notes, serving as the all-purpose workbook that can get the new widow(er) through the financial tasks and adjustments that are needed.

The first weeks and months after a death are often overwhelming, with grief making it difficult to stay organized or even remember what needs to be done. Having a workbook can help individuals keep track of what has been done and what remains to be done. If you know a new widow(er) or frequently come in contact with people in this situation, consider printing the workbook for them; if you can, offer to help them get started.

Dealing with a deceased spouse’s debts. One key tip for surviving spouses is to be cautious about paying debts belonging to your loved one. In many cases, survivors are not legally responsible for debts belonging solely to a deceased individual. Learn more, and consider seeking professional guidance if you are unsure. Even if you feel a moral obligation to pay the debt, consider first how that will impact your financial situation going forward. If paying that debt leaves you in a financially precarious situation, it may not actually be “the right thing to do.”

Another reason for caution, with debt collection and all other mail, phone calls, and emails, is that families of newly-deceased individuals can be easy targets for fraud. Before even considering any debt, ask for evidence to prove it is a legitimate debt that has not already been paid.

Take advantage of available resources. When one spouse dies, household income typically drops; as a result the surviving spouse may be newly-eligible for various forms of assistance that can make a real difference in their financial well-being.

  • In Iowa, Lifelong Links, a resource provided by the Iowa Department on Aging and the Area Agencies on Aging, is an excellent first stop for those who want to learn about available options. You can search online or call 866-468-7887; if you call, you will be connected with representatives in your part of the state.
  • BenefitsCheckUp.org is a nationwide search tool that can also help you screen for resources that could be of help to you; it is provided by the National Council on Aging.

Source: Consumer Financial Protection Bureau, which also provides more data about recently widowed adults.

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Summer Money Crunch

Summer can cause a financial crunch for families with children. Children who are home all day need to eat, and they want things to do; if they go to day care, the cost of full-day care instead of after school care can really stretch the wallet. This summer, with inflation already straining budgets, may be even worse than normal.

There is, of course, no magic wand that will “uncrunch” summer finances. But there are steps that can help! Not all these ideas work for everyone, but see if some of them fit your situation:

  • Take control of food costs, starting with tools from “Spend Smart. Eat Smart.” You’ll find a grocery budget calculator, meal planning tools (and a video), shopping strategies, and a whole slew of recipes that are easy, low-cost, healthy and tasty – some with video instructions. There is even an app for your phone so you can have tools available while you’re at the grocery store!
  • Ask about discounts for summer pool passes or summer recreation programs. Many communities and rec centers offer discounted rates; in some communities the Community Action Agency can provide help here, as well. 
  • When special events come around (fairs, festivals, etc), decide in advance what your spending limit will be, and stick to that limit. It’s easy to get carried away in the midst of the fun if you don’t set limits in advance. Before the events, do some research (ask around) to identify free or low-cost activities that you and your family will enjoy.
  • If your children’s wants and wishes seem never-ending, parents often get tired of saying no, which means they start saying yes too often and end up spending more than they want to.
    One way to ease that pressure is to give your children a weekly or monthly allowance, be clear about what it is for, and not “give in” when they ask you for more money after their allowance is gone. This puts the kids in control, and when they run out of money it’s because of their own choices (and NOT because you are a “mean parent”).
    Several years ago I shared my own experiences with an allowance for my children. The University of Minnesota offers a helpful fact sheet about allowances (scroll down to find it).

What tips can YOU share for tackling the summer financial crunch?

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Is Your Spending Plan Working?

A spending plan (aka “budget”) is a key to taking control of your money. But it’s not enough to make a spending plan. To get results, you need to go the next step and work your plan.

Think about it: you could make a plan that works out perfectly on paper — all your bills are paid, you have enough money for needs like groceries and gas and also some fun, AND you also put some money toward your longer-term financial goals. However, if your plan calls for spending $500 a month on groceries, and you actually spend $700 on groceries, then your plan is wrecked. You’ll end up with unpaid bills, unmet needs, and/or zero progress toward your goals. Even a “perfect” plan is no good if you don’t follow it.

Following a spending plan doesn’t have to be difficult, but it does take some attention: you’ll need a strategy to help you stay within the spending limits of your plan. In other words, you’ll need some method of tracking or monitoring your spending.

Let’s stick with the grocery example above. Perhaps we go to the grocery store 6-8 times during a month. If we want to make sure we keep our grocery spending below $500, we’re going to need some type of on-going record of what we’re spending. Maybe we just keep a list of grocery spending. Maybe we use a paper ledger form, an excel spreadsheet or a purchased software program. Maybe we use an app on our phone designed for that purpose. We could even put $500 cash in an envelope and only buy groceries using that cash — that way we would be unable to spend more than we planned.

A note of realism: unexpected events can interfere with our plans. A grocery example: suppose relatives decide to come visit you for a weekend. Suddenly your original grocery allotment of $500 might no longer be sufficient. Your plan will need to change. It’s your plan – you are free to change it if you need or want to change it! And here’s the good news – that change doesn’t have to wreck your plan! By keeping track and being aware that you are spending extra on groceries, you will know that you need to reduce your spending in some other area to compensate for your extra grocery spending. You will adjust your overall plan intentionally to accommodate the change.

Finding the right tool. There are multiple tools and strategies available to help with following your plan; different tools suit different people, so consider what will be most workable for you. The ISU Extension publication “Tracking Your Spending” provides a helpful overview of basic methods. Because no publication can keep up with the ever-changing landscape of software and mobile applications, some online research will be needed if you want to explore and compare those options.

For Iowans who would like help with making and following a spending plan, Extension specialists are available for one-on-one consultations, either in person or via phone or zoom. Don’t hesitate to contact us!

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Inflation: Choose Your Changes

Someone asked me a couple weeks ago whether I had written a blog post yet on inflation, which has certainly been in the news lately. My first thought was “Well no – there’s nothing we can do about inflation, and we can’t foresee the future… so what could I write?” It dawned on me later that in fact there ARE some points I can share to help us all deal with higher prices.

If prices go up and our income doesn’t increase enough to keep pace, it’s a lot like getting a pay cut. Our normal patterns of spending and saving no longer work – something has to change. For some people the change involves minor sacrifice – perhaps eating out fewer times a week, or at less-expensive restaurants. For other people, higher prices may mean much more challenging changes.  The good news is that at least YOU are the one who gets to decide what changes to make. Ideas for making the changes less painful:

  1. You may be able to use non-monetary resources to meet some of your needs. For example, if you usually buy birthday cakes for your family, perhaps you can make them instead. OR perhaps you have a friend who could make the cake in exchange for you watching her children one Saturday.  Think about ways in which you can use your own time and energy and skills to accomplish things that you usually pay for. And remember that your friends also have skills they may be willing to share. Common examples include: cooking from scratch rather than using convenience foods, shoveling your own snow instead of paying someone else, learning to cut family members’ hair to avoid the cost of regular haircuts, giving gift certificates for your time and talent (I’ll bake you a pie!) in place of purchased gifts.
  2. Make use of community resources that are available. Even if you have never before applied for energy assistance or used the free tax preparation available in your community, when times are tight, using these services and others can make a big difference.
  3. Careful shopping can make limited funds stretch further. Even with increased prices, retailers still have sales, and generics are still less expensive than brand names. Sometimes changing where we shop and what brand we buy makes it possible to save money even without severely cutting back our shopping list.
  4. When the reality is that we are going to need to “do without” something, we can consider our priorities and choose what to keep and what to give up. One person might “give up” their morning stop at a coffee shop, so they could continue to pay for their streaming services or premium cable; another person might make the opposite choice.
    Recognizing that we have a choice can help our attitude: we don’t “have to” give up anything; instead, we choose what to give up. For example, instead of feeling deprived about not going out for lunch every day, we can feel proud about bringing lunch to work so that we can continue to use funds for something more important.

This short list is only a starting point. We would love to have you share your strategies for dealing with inflation! Please share in the comments!

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Thanks Giving: Give Wisely and Deduct

The Thanksgiving holiday is a time to stop and really notice how much we have to be thankful for. Many people take that gratitude a step further by sharing from what we have; they take their “thanks” and turn it toward “giving” to worthy charities this time of year. The arrival of “Giving Tuesday” next week also prompts people to give.

An article from the Iowa Attorney General’s office this week (see item 5 in the article) reminds us of steps to ensure we give wisely. Careless gifts may end up in the hands of criminals OR of organizations that do not use funds wisely. One way to make sure your money is used well for the cause you care about is to give to a local organization that has a good reputation. When giving to national organizations, you can make sure they are well-managed by checking one or more of these reputable charity rating sites: BBB Wise Giving AllianceCharity NavigatorCharityWatch, and GuideStar. The article offers more suggestions as well.

Another way to give wisely is to take the tax deduction for which you are eligible! Some people may say, “I don’t give to charity just for tax purposes – I give because I care!” That’s great. But if you take the tax deduction, and it reduces your tax bill (or increases your refund), then you have MORE money to give! Now that is wise giving!

The tax code allows us to deduct (subtract) our charitable gifts from our income before the tax is calculated. The government created that deduction to encourage us to give. By taking the deduction, and potentially having more to give, we are contributing to the valuable American habit of supporting worthwhile causes. There are two ways to deduct your charitable contributions:

  1. By “Itemizing” your deductions on Schedule A of your tax return. This is great for people who have enough deductions to be higher than the “standard” deduction allowed according to family type. For a single individual, that standard deduction is $12,550; for a married couple, it’s $25,100. Your tax preparer can help you know if this is advantageous for you.
    Good news! Even if you are better off with the standard deduction, a new law lets you deduct some 2021 giving anyway!
  2. Thanks to some of the COVID-relief legislation passed in 2020 and 2021, taxpayers can take a deduction for charitable contributions in 2021 even if they don’t itemize deductions! An individual tax filer can deduct up to $300 of monetary contributions to qualifying charities; for married couples filing jointly, that figure is $600.

In the midst of your Thanksgiving celebration, I encourage you to think about any charitable giving you might want to do, and then when you make the gift(s), be sure to keep the receipt for tax purposes! Plan now for #GivingTuesday and beyond!

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Money Smart Holiday Shopping

With the approach of the annual event known as Black Friday, guest blogger Carol Ehlers offers tips to help us all be smart about our holiday shopping!

This year, holiday shoppers are planning on spending more money, shopping earlier and trying new retailers. According to TransUnion’s 2021 Consumer Holiday Shopping Report more than 1 in 3 holiday shoppers (36%) plan on spending more this year. Last year’s average American ran up holiday spending debt to $1,381 with almost 8 in 10 unable to pay it off by the end of January. So, for every $5 spent trying to pay off credit card debt, consumers give away $1 to the credit card companies. https://www.consolidatedcredit.org/webinars-and-seminars/holiday-survival-guide-webinar/

Holiday spending is a common way for people to land themselves in debt and financial stress. Some find themselves in trouble by rationalizing big spending and incurring debt during the holidays. This leads to paying for holiday spending well into the next year. Money Smart Holiday Sending can give you confidence to manage your money and resources throughout the season and into the new year. Below are three key tips for being Money Smart during the holiday season:

  • Create a holiday budget. Figure out how much you can afford to spend this holiday season. Financial planners recommend spending less than 1.5 percent of your annual income on holiday expenses. An example: for someone with $35,000 gross income that amounts to a $525 limit for holiday spending. If you haven’t saved that much, look for ways to cut back.
  • Make a List-check it twice. Make a detailed gift list with a set amount to spend, keeping track of what is spent. Research indicates consumers reduce their food expense by 25-30% by using a shopping list and this principle applies to other holiday spending categories.
  • Use Cash-Not Credit.  One way to do this is the envelope method. Make one envelope for each person and only put in what you plan to spend. If credit is necessary, charge only the amount that you can safely repay in a few months. Limit your charges to one card with the lowest interest rate and fees. Keep all receipts.

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Health Insurance Decision Time

Once again it is time to make health insurance decisions. If you are insured through your workplace, your deadlines will be determined by your employer. If you are insured through Medicare (including Medicare Advantage plans), you have between now and December 7 to make changes; your best resource for unbiased assistance in Iowa is the Senior Health Insurance Information Program. Similar resources are available in other states, as well.

If you are not yet eligible for Medicare, and do not have affordable insurance available through an employer, then the Health Care Marketplace is the place to turn for quality health insurance plans* that do not consider pre-existing conditions. The base premium for plans in the Marketplace is affected by your location, your age, and use of tobacco. That is because health care costs vary by location, and are higher for people who are older and who use tobacco. Two other factors also affect your cost:

  • Type of plan (bronze, silver, gold, platinum) you choose. All of these plans are quality* plans, but it is valuable to understand the difference. Bronze plans have the lowest premiums, because they have higher deductibles and co-payments. Premiums increase as you go up in metal value. Platinum plans have the highest premiums, but lower deductibles and co-pays. This post from 2014, when the Health Care Marketplace was new, provides more detail.
  • Your income. That’s right. Two people might pay different premiums even if they are both 30-year-old non-smokers who live in the same county and both chose a silver plan. The Marketplace is designed to provide more help in paying for health insurance to people who need it more. So when you enroll in a Marketplace plan, you will estimate what your household’s income will be for 2022. Based on that estimate, the system determines what your share of the premium for a silver plan should be, and the remaining amount will be covered by an Advance Premium Tax Credit, which is an estimate of how much help you are eligible for. All this is based on a baseline silver plan; you will get the same amount of help toward your premiums regardless of what “metal color” plan you choose. At the end of they year, your tax return will show your actual total income for the year. The actual income will be used to determine your final Premium Tax Credit amount. If you received too much or too little in advance, the difference will be taken care of on your tax return, by either increasing or decreasing your tax refund or the amount of tax you owe when you file. The Kaiser Family Foundation offers a useful tool to give you an idea of how much help you may be able to receive.

Open enrollment for 2022 health plans in the Marketplace continues through January 15, but if you want your coverage to begin as early as possible (January 1) then you need to enroll by December 15. Enrolling between December 16 and January 15 will get you coverage that begins February 1. Enroll online at www.healthcare.gov OR call 800-318-2596. A link is also available to find local help. You have the option to choose (filter) whether you wish to find an agent/broker OR would rather get help only from an assister.

*What do I mean by “quality” plans? The biggest factor is that a quality plan covers all ten essential types of health care. By contrast there are plans (sometimes referred to as “junk plans”) that purport to provide health coverage, but exclude certain categories. I’ve heard of situations where people are excited to get health insurance, but then when need arises they discover it doesn’t cover hospitalization, or it only pays $100/day toward hospital care, or has some other substantial limitation. In addition marketplace do not have annual or lifetime limits on what they will pay for an individual’s care. Another key “quality” factor is that the plans have been actuarially evaluated as providing appropriate coverage for an appropriate cost. In other words, they are not set up to make big profits for the company.

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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URGENT – Mortgage Forbearance Deadlines this Week!

We mentioned Mortgage Forbearance earlier as a helpful tool for homeowners who are having trouble with their mortgage payments. Forbearance is when your mortgage servicer or lender allows you to pause or reduce your mortgage payments for a limited time while you build back your finances. The CARES Act (passed back in April of 2020) required that when a mortgage is backed by a Federal Agency, the borrower is automatically eligible for 3-6 months of forbearance if they are experiencing financial hardship resulting (directly OR indirectly) from COVID-19. Forbearance creates a helpful reprieve for struggling families.

The deadline to apply for forbearance under the CARES Act is September 30, 2021 IF your mortgage is backed by HUD/FHA, USDA, or the VA! That means NOW is the time for action. NOTE: if your loan is backed by Fannie Mae or Freddie Mac, there is not currently a deadline for requesting an initial forbearance.

Not Sure About Your Mortgage? Contact your mortgage company and ask them about your mortgage — asked if was backed by any of the agencies listed above. It that answer is “yes,” and if you are struggling with payments and bills, apply right away: ask your mortgage company to provide the needed application materials.

What does it mean to have your mortgage “backed” by a government agency? That simply means that when you bought your home, you qualified for special terms – often a lower down payment, reduced fees, or preferential interest rate thanks to a government program. I remember that when I bought my first house it was an FHA Loan; many first-time homebuyers qualify for special terms, and others do as well. If you are not sure, there is no harm in asking!

The Consumer Financial Protection Bureau provides more information about forbearance. Financial assistance for homeowners at imminent risk of foreclosure may be available as well; the Iowa Finance Authority provides more information, about help that is currently available, and notes that more assistance, authorized under the American Rescue Plan Act, will be available within the next several months.

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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