RSS Feed

Archives

  • 2017 (8)
  • 2016 (16)
  • 2015 (15)
  • 2014 (14)
  • 2013 (16)
  • 2012 (17)
  • 2011 (20)
  • 2010 (20)
  • 2009 (29)
  • 2008 (78)
  • 2007 (6)
  • Categories

  • Archive for February, 2014

    Putting America Saves Week Into Action– Step 2: Paying off high-interest debt

    Tuesday, February 25th, 2014

    ASWGraphicBefore I begin talking about what I did to deal with debt, I wanted to share an inspiring story with you about one of my co-worker’s friends. We’ll call her Sarah.

    Sarah was a single mother whose first marriage ended very poorly. She received no financial help from her ex-husband, so she began to accumulate credit cards, and thus debt. It certainly was not ideal. When she met her current husband, he also had some financial concerns. He was carrying an interest-only mortgage on his house, which he had bought from his first wife. In Sarah’s own words, “it was a financial mess.”

    Sarah and her second husband made it a priority to get debt-free. They converted his mortgage to a conventional one so they could refinance it and begin making payments on the principle. They focused on paying off higher interest loans first, used annual bonuses to pay off credit cards, and paid more frequently (every two weeks). Now, five years later, they are debt-free and down to one credit card, on which they make sure they pay three or four times the minimum payment every month. Sarah and her husband also contribute the maximum amounts to their 401(K)s to get the corporate match. She says that the big thing that helped was agreeing to a policy of not using a credit card unless it was an emergency (like unexpected car or house repairs). Focusing on getting her debt under control has made her and her family’s finances more secure for today and for the future.

    My story is different from Sarah’s, but it still involves taking a closer look at how I manage my credit and debt.  Today, I took a look at my credit cards. I personally am a fan of company or store cards – Macy’s, Target, etc. While shopping, these offer some great ways to save. The downside: many company specific credit cards have high interest rates. Some are 24%. I always pay more than the minimum, which is a BIG WISER basic, but I usually pay attention to the total amount on the card, not the interest rate when deciding how much to allocate to each card.

    piggy bankIn honor of America Saves Week, I took a second look at my interest rates, and then I put my cards in order based on interest rates from highest to lowest. I wrote this list down and saved it to my computer. Now, each month when I go to pay my cards, I can apportion my money based on the interest rates of my cards.

    I also took a second look at the “offers” that come with these company cards. If they have such huge interest rates, am I really saving that much along the way?  Target, for example, offers 5% discount at the counter, but then a 22.9% APR will cost me in the long run if I am unable to pay off the total amount each month. Instead of canceling it, I am inspired by Sarah’s idea of implementing a self-regulating policy. I will only use my company credit cards if I am able to pay the entire amount of my purchase. Basically, if I do not have money in my bank account to cover it, I won’t use the credit card. This way I can pay with my credit card and get the discount, but I will not have to worry about the awful interest rate when the bill comes due. I will also think twice about opening up any additional credit cards, since the more credit I have available, the more likely I may be to use it.

    The truth is most of us have some type of debt that we need to pay off. While each story is different, we can all work towards a better outcome like Sarah. Your story may be different, but you can still take the same steps to fight your debt.

    What is the highest rate of interest you’ve seen on a credit card? How do you curb the temptation to charge a “splurge” purchase to your credit card that you don’t have the money to pay off right away? Let me know in the comments!

     

    Putting America Saves Week Into Action– Step 1: Cutting costs to save for emergencies

    Monday, February 24th, 2014

    ASWGraphicAmerican Saves Week is a chance each year for everyone to assess their spending and saving habits and to take actions to save more. According to America Saves, only 54% of Americans have a savings plan with specific goals. We know from our own research that women in particular are not saving enough with retirement in mind. On average, women receive significantly less than men in retirement income, and they grow poorer as they grow older. By age 75, 13.3% of women live in poverty, compared to only 6.7% of men.

    America Saves Week is a great opportunity to take little steps and begin to save or increase savings you may already have. Each day has a theme to help you along the way.

    1. Monday February 24: Save for Emergencies
    2. Tuesday February 25: Pay Off High-Interest Debt
    3. Wednesday February 26: Save Automatically
    4. Thursday February 27: Save for Retirement
    5. Friday February 28: Save at Tax Time
    6. Saturday March 1: Assess Your Savings

    This year, WISER’s own Laura Patch will participate in each of these steps and blog about her experience. Follow along with her and comment about your own experiences!

    This weekend, I started by taking the American Saves Week’s pledge. I thought it was a good place to begin so that I have a specific goal in mind for the rest of the week. You can choose from many categories for your savings goal. I was torn between education and retirement, but ultimately chose retirement because while I am still paying student loans, I feel I need to prepare more for retirement. I personally am a very long-term planner, so it suits me to plan ahead. You may have other goals that are important to focus on this year, and that’s okay! Saving for retirement still has its own step this week. Even if it’s not your priority over the next few days, you’ll still have an opportunity to consider it.

    My next step was to take a detailed look at my budget. I used WISER’s budget worksheet to help with this task. Normally we suggest that you track your spending for a month, but since I was just looking for areas to cut costs, I used my expenses from January. I starred items that were absolute necessities which I cannot immediately cut down on (rent, utilities, insurance payments, etc.). Next I circled items that are necessities, but could bear looking at more closely. I made a detailed list of expenses in these circled categories.

    Two big areas where I feel I can cut spending are food and gifts for family and friends.

    Sweetgreen Two days a week I leave my house at 8am and do not get back until after 9:30pm! On these days I will bring one meal, usually dinner, and go out for the other. Even if all I buy is a salad, my meal can cost me $10 or more each time. If a buy a salad from a grocery store when I do my regular shopping, it costs less than $5! In just over ONE month, that can save me $40. It’s worth carrying around an extra meal for two days.

    I also noticed during the holiday season that I splurged on last minute gifts for friends and family, paying the heavy cost of buying anything to get my shopping done because I did not plan ahead. It was clear I was still paying for it in January when I lacked funds. I kept that in mind when I went to Eastern Market this past weekend. I came across some items that were on sale and perfect for some birthdays coming in a few months. So I bought them now instead of waiting to buy them closer to the birthday dates when I might be inclined to spend more to find a last minute gift. They are the perfect gifts, and due to the sale, cost only $10 per person! I normally spend around $40, so I saved a great amount!

    I calculated how much I would normally spend on the food and gift items, and transferred that amount to my savings account. It’s a small amount for an emergency fund, but we have to start somewhere, right?

    pink piggy and handI also started using a tip from America Saves. Their very first tip on 54 Ways to Save is to save spare change. I’ve started a jar for coins. I am also researching the best way to exchange change for bills. Coinstar machines, which are popular in grocery stores, charge you for every dollar. If you sort and roll the coins yourself, many banks will not charge you for the exchange, or will do so but at a smaller cost than Coinstar. If you have a suggestion though, let me know in the comments!

    See you tomorrow for looking at paying off debt!

    How to Address Your Finances like an Olympian

    Friday, February 14th, 2014

    OlympicRingsEvery two years the world gathers to watch the world’s top athletes compete. Whether they are winter or summer participants, all competitors train extensively to attain that golden dream. Here are ways you can use that Olympic inspiration to reach your financial goals:

    1. Assess where you stand currently

    The first step to a successful training program for any athlete is to know what your current abilities are. You can’t know what you need to do to make it to the Olympics if you are unaware of your weaknesses and strengths. The key is to know yourself so you can develop ways to address your flaws and build upon your accomplishments.

    When dealing with finances, you also must start by measuring where you are currently. As you may have guessed, this means it’s time to track your spending and figure out your budget. WISER suggests carrying around a notebook or making notes in your smartphone for a month, writing down everything you buy or spend. Expenses big and small should all be included. Then compare this with your income. Take a look at our “Keep Track of Your Spending” worksheet for additional help.

    You also need to take a long-term view when assessing your finances. First, know what your credit score is. Every year you are eligible for one free credit report from each credit agency. Get your report today. Also don’t forget to estimate how much Social Security you will receive. Your can sign up to receive your statement electronically on the Social Security website. Finally, check to see if you’re on track for your own retirement. You can use our retirement calculator to help understand how interest will help you save.

    2. Assemble a team

    Olympians have an entire support system in place years before they step into that international spot light. They work with coaches, nutritionists, physical therapists, medical professionals, and psychologists. Their families not only cheer them on, but discuss training plans with them, help them eat right, and transport them to practices and appointments. No athlete makes it to the Olympics alone. Why should you be any different when trying to reach your goals?

    Start by involving your significant other. Look at what you both spend each month, make sure you are aware of each other’s employee-sponsored or other retirement plans and assets, review your insurance needs, and create an organized file with your important documents. Exchange credit reports so you know where you are financially as a couple. Agree to talk about finances at least once a month. Taking this step will make sure that you are both involved in your financial decisions.

    Look for outside sources as well. If it’s not in your budget to hire a financial advisors or tax consultants, you can use WISER resources as your guiding force. If you do want to consider a financial planner, check out WISER’s resources so you know what to look for and what questions to ask.

    3. Set a goal

    GoldMedalEvery Olympian dreams of winning the gold medal, but even those who acknowledge that their chances are slim have their own goals in mind when they embark on their training. It might be learning a new trick, hitting a new score, or reaching a new time. Goals can, and should be, individualized.

    Before you take any more steps, decide what your goals are. Have one “reach” goal and one “reasonable”. A reach goal should be something you are always striving for, that gold medal, but acknowledge that you have a long way to go before you can achieve it. A reasonable goal is one that you can achieve in a certain time limit (which you decide!). Do you want to save for retirement? How much do you need  by the time you retire? Are there benchmark goals you can hit in one year, five years, 10 years toward that goal? Having a specific number can help you with planning how to reach it. Your financial goals do not have to be just about retirement, though. If you are in debt, have student loans, want to buy a house, etc., these can also be great financial goals.

    4. Make a long-term plan.

    Being Olympic ready does not happen overnight. Neither does reaching financial goals. Athletes train for years leading up to the Olympics. It’s not just about developing skills, but the ability to adapt to changes. Decide on mini goals along the way so you know that you are improving. Always emphasize your long-term goals first. Yes, having money saved for the holidays sounds great, but if you’re putting money in that fund instead of your retirement account(s), how will you ever achieve that gold medal of a secure retirement?

    5. Start small, end big

    Everyone has to start somewhere.  You don’t start with the triple axel in ice skating. You start with the basics and work your way up, in increments. The same is true for your finances. Say you currently save 3% of your income for retirement. Bump it up to 5% this year. Then slowly grow it by 1% each year and by year 6, you’ll be contributing 10% of your income to your retirement! You could be saving $50 a month, only $1.66 a day. Start adding an extra $5 each month. At the end of 12 months, you’ll be saving over $100 dollars a month! Think of how much you’ll be saving, then!

    6. Be prepared for pain.

    And my money goes to...

    Olympians make sacrifices. They miss time with their families, put their bodies through physical strain, and many struggle to find time to both work and train.  In the end, it’s all worth it when they pull on that US uniform and go for their dreams.

    Saving for that golden retirement is also going to require some sacrifices on your part. You will have to prioritize your long-term goal, and that means not always buying what you want. That shoe might make you feel fierce, but how much more awesome would you feel when you’re debt free, or have a large sum of money in your savings account? Saving money means a reduction in your overall spending, but an increase in your overall financial security. You may feel deprived in the short-term, but it will be worth it in the long run.

    7. Don’t forget to celebrate!

    Olympians get podiums and medals, with flags and fans to support them. Create your own reward system. Did you hit your first goal? Share it with your team and involve them in the celebration. Achieved that second goal? Great! Ask your spouse or get a sitter to watch the kids tonight and take a moment to yourself; watch a marathon of your favorite show or read a book. For each mini step, have a reward already set up to keep you motivated to continue. And don’t forget, that end goal of a golden retirement may be years away, but when it comes you can celebrate for the rest of your life!

    WISER

    About Us

    WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

    Read More