Extension Educator, Consumer Economics
Extension Specialist, Consumer Economics
Extension Educator, Consumer Economics
February 21, 2012
February 20, 2012
The stock market has been going gang-busters so far this year. But many people are still shell-shocked from the investment roller coaster of the last decade. Wouldn't it be a relief to have something guaranteed for a change?
Here's one of the few sure things around: if your employer matches your contributions to a 401(k) or 403(b) plan, that's a guaranteed return. Maybe your employer matches 50 cents for every dollar you contribute to your retirement plan, up to some limit such as 3% of your salary. That's no-risk 50% return on those contributions. If the employer matches dollar-for-dollar, that's a 100% return.
That leads us to the first rule to getting the most out of an employer retirement plan: Contribute enough to get all the matching dollars available to you.
If you aren't contributing to your employer plan or you're not contributing enough to get all the matching dollars available, go right now to your employer's benefits website or call your HR department and get that taken care of. If you don't know what investment to choose, you don't have to make that decision. There will be a default option. By law, that default investment must be "appropriate as a single investment capable of meeting a worker's long-term retirement savings needs" (Department of Labor).
February 13, 2012
Stop by my favorite coffee shop on the way to work: swipe, debit card pays for the purchase painlessly and quickly. Quick run through the store on the way home for one item, end up with seven things in my cart: swipe, debit card pays for the purchase – no signature or counting out cash required. Where does my money go?
Debit cards are wonderful for their convenience, and typically safer than carrying a lot of cash. But, research suggests that we may spend money more easily when we swipe that electronic card!
If you feel like money is slipping through your fingers, perhaps you'd like to try one of these strategies to change how you think (and act) when spending money.
First, consider using cash for expenses you'd like to regain control of. For example, perhaps you'd like to take control of your spending for food eaten away from your home.
Don't want to carry cash? You can modify this envelope budgeting strategy.
There are free phone apps, such as "Easy Envelope Budget Aid (EEBA)" where money is taken away from virtual envelopes. This might fit your style if you're more likely to carry a smart phone than an envelope.
Whichever technique works for you, the important feature is to slow down your purchasing and to feel the "loss" when you spend money – right then, not at the end of the month.
What strategies have you used to slow down your spending in one expense category or another? I'd love to hear what's worked for you!
February 8, 2012
You probably heard it on the news: the Federal Reserve Bank says that credit card debt increased in both November and December, which is a good thing for the economy. But what does it mean for you?
January and February can be financially difficult months. If you charged gifts and other holiday purchases, the bills showed up in January. With cold weather, the gas and electric bills are higher. What do you do if you can't pay all your bills?
The long term solution is to reduce your spending. But in the short term, you may have to prioritize who to pay or contact creditors to negotiate different payment arrangements.
Think about these questions to help you decide which bills are most important.
What are my family's basic needs?
You and your family need food, water, heat, and housing. You may be able to get some assistance with these necessities. For example, you might visit a food bank. But these items will probably be your first financial priority, before other kinds of bills and debts.
What will I lose if I don't pay this bill?
If you don't pay a bill, can the lender take something from you? They can if the debt is secured. Car loans, mortgages, and other types of home loans are secured loans.
Other kinds of debt may be secured. Check your loan or credit card agreement to be sure. Rent-to-own isn't really debt, but those items can also be taken if you don't pay.
You might be thinking, "My car's a piece of junk anyway. Let them have it!" But be careful. If your car is repossessed or your home is foreclosed, you could still owe money on that debt if the car or the house is sold for less than what you owe.
How much do you still owe on the loan?
If you only owe a couple of payments on a debt, making the remaining payments may be a priority. Once that debt is paid off, you can use that monthly amount to pay toward other debts.
Do you owe child support, back taxes, or student loans?
These are debts that are not going to go away in most cases, even if you file bankruptcy. There can be serious consequences if you don't pay these debts: property could be seized or have liens placed against them, money could be taken from your paycheck, and income tax refunds could be intercepted. Consider those consequences when you're trying to decide which bills have priority.
This blog post is based on the fact sheet, Managing Your Debt, on University of Illinois Extension's Getting Through Tough Financial Times website. You may want to read the entire fact sheet for more information. You'll find a variety of fact sheets there that may help you assess your financial situation, contact creditors, and talk with other family members about your finances.
February 2, 2012