Are You Guilty of Financial Infidelity?

Financial infidelity is keeping money secrets from your partner.  It might include having a secret bank account or credit card or not admitting to how much money you make.  Is this dangerous in a relationship?  It can be.  How would you feel to suddenly discover that your partner had a credit card with $5000.00 of charges?  You might feel differently if you found out your partner had a $5000.00 savings account and was planning a surprise for your anniversary with the money.

It’s important for couples to have open and honest discussions about their finances and even more important that they set financial goals.  I often recommend that a couple begin by evaluating their financial situation with a net worth statement.   A net worth statement adds up all of their assets (home, savings, retirement funds, household goods, auto, collectibles etc.) and from that total subtracts their liabilities (student loans, mortgage, auto loans, medical bills, credit card debt, etc.).   This figure is their net worth and a number to grow by paying down debt and increasing savings.  By looking at this assessment, the couple can determine their financial goals for the next 6 months, five years and beyond.

I know that money is stressful for many people and discussions about money can often turn into arguments.  It’s important to focus on your financial situation as it is now and how you would like it to be in the future.  Using energy to develop solutions is much more productive than blaming each other.  The other important factor is to schedule the time to talk about finances.  Most of us have busy lives and by the time the house is settled in the evening, no one really feels like talking about their finances.  Do a pick a time for a “money date” with just the two of you and no interruptions.  Plan an hour or two to see how you are doing, tweaking your budget and checking on the progress of your goals.

If you find it difficult to get started or need help with your budget or debt; contact us at 1-888-799-2227 or www.creditcounselingwi.org.

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Do You Really Want to Work Forever?

Are you financially prepared to retire or at least saving money to get there?  According to the Federal Government’s 2014 Survey of Household Economics and Decision Making, 31% of non-retirees have no retirement savings or pension.  Of that group, nearly 25% are older than 45. Of the 5,800 people who were surveyed 38% have either no plan to retire or will keep on working as long as they possibly can.

Since most companies are moving away from a pension plan that pays retirees a monthly income based on their earning and years of service; it is important for everyone who wants to retire to make contributions to a retirement plan.  If your employer makes a matching contribution to the money you put into your account, then you need to contribute at least what is necessary to get your employer’s full match.  So, if your employer adds a $1.00 for every $1.00 you add up to 6%, than you need to be contributing 6% of your income to get the full match.

When is the best time to begin saving for retirement?  When you get your first job because then you will get in the habit of having the money deducted and adjust your expenses to match your take home income.  Otherwise, start making a contribution or increase your current contribution when you get a raise.  You are used to making ends meet on what you are bringing home, so putting your raise into your retirement account shouldn’t cause a financial hardship.

The sooner you can start contributing to a retirement account, the better.  However, if you are older, it is not too late.  There are provisions for older adults to add more money into their retirement account.  Check with your financial planner or accountant to determine how much you can put aside.

If you are in need of a financial planner to assist you in your retirement planning, remember there are two types of financial planners.  There are fee for service financial planners who charge you for their advice.  They will complete a thorough assessment of your current financial situation, evaluate your risk tolerance and give you advice on how to invest.  There are also financial planners who sell products and earn their income by selling products.  You can always check with family and friends for a recommendation of someone they have consulted with.  You just need to take that first step and start saving.

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Survey Says …

Do you have a budget?  Do you pay your bills on time?  Do you carry credit card debt from month to month?  Are you saving enough for retirement?  These are questions that were asked in the 2015 Consumer Financial Literacy Survey conducted online by Harris Poll on behalf of the National Foundation for Credit Counseling (NFC).  Here are some of the responses:

  • 60% of consumers do not have a budget. If you don’t have a budget, you may just be a bill payer.  You get paid, you pay bills and hope there is enough left over to put food on the table and gas in the car.
  • Almost 25% are not paying their bills on time. Since paying bills on time accounts for about one third of your credit score, this is an important step to having and maintaining a good credit score.
  • 33% carry credit card debt from month-to-month rather than paying their charges in full.
  • More than half of the consumers were not very confident or not confident at all that they were saving enough for retirement.

Perhaps the most interesting statistic is that 3 in 4 adults agree that that they could benefit from advice and answers to everyday financial questions from a professional. So where do you go when you have a question about your personal finances?

The Center for Financial Wellness is a department within Aurora Family Service.  Certified credit counselors and case managers can often answer those every day questions with a phone call.  If you have questions about budgeting, credit, savings, identity theft and benefits for older adults, give us a call at 888-799-2227 toll free or visit our website at www.creditcounselingwil.org to leave us a message.  If you need to make an appointment, we can do that too.  If you are an Aurora Health Care caregiver, you are entitled to a free confidential assessment of your financial situation.  Now that you know we are here, give us a call.

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Helping Your Children Financially

Do you have adult children that you help out financially?  If yes, do you help them by giving them an allowance or paying some of their bills directly?  Does helping your adult children put your retirement at risk?  In an article by Carol Hymowitz in the Bloomberg Businessweek, she talks about some parents who are doing just that.  Let’s look at the issues of helping an adult child.

  • Some children are moving back home after college because they have low paying jobs or no employment and are struggling with student loan debt.  Or they may be older and coming off of a divorce.  When a child moves back home, you need to set expectations in regards to household responsibilities, costs and a time limit to get on their feet.  This conversation needs to happen at the beginning and reviewed as needed.
  • If helping a child requires you to withdraw from your retirement or interrupt contributions to it; you may need to think about how much help you can afford to give. Taking money out of your retirement and using it for something other than retirement is never a great idea.  Delaying or limiting contributions to your retirement will only extend your retirement date.
  • Your child has years ahead of him/her to earn an income; as a parent your years are significantly less.  Unless you want to work forever, think before you withdraw.
  • With baby boomers living into their 80’s and 90’s, more money needs to be set aside for retirement.  Check with a financial planner or use a retirement calculator to determine how much money you will need to put aside to live comfortably during your retirement years.
  • Decide in advance how much money you can use to help them and when it’s gone it’s gone.  Let your children know this at the start.  You are not an ATM machine.
  • You may need to sit down with them and view their budget and spending habits.  They may need to make sacrifices as well if they aren’t already doing so.  Paying their bills so they can continue to purchase a latte before work, trips to the salon, expensive cell phone plans and a closet full of clothes won’t do either of you any good.

Unfortunately I have seen situations where parents have helped their children to the point of draining all savings and they were left with little more than social security income.  If you are in this situation or find yourself in this situation, take a long, serious look at what you can reasonably afford to do and go from there.

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Money and Stress

Are you stressed out about money?  Does a discussion about money in your home cause a fight?  Apparently we are still stressed out in this country and mostly over money.  In an article in the Los Angeles Times Melissa Healy reports that more than one in four Americans feel stressed over money most or all of the time.  Most people said that their stress over money was about the same as last year or gotten worse.

In a survey by the American Psychological Association, Americans ranked their stress factors in the following order: money, work, family responsibilities and health concerns.  Lower income respondents reported they lived a less healthful lifestyle.  Included in their answers were skipping or considered skipping a needed trip to the doctor out of financial concerns.

Over the years I have met with many clients who suffer from anxiety, depression and stress because of their financial situation.  So what are the answers to stress and money?  Because most of us are secretive about how much we make and how much we owe, there isn’t a lot of conversation about options that may be available to help someone struggling financially each month.  Money management is a skill and like any skill it has to be learned and practiced to build sufficiency.

Since 1972 Aurora Family Service has been home to Consumer Credit Counseling Service.  This service is available to anyone in Wisconsin who needs help with their budget, improving their credit or getting out of debt.  Counselors do a confidential, thorough financial assessment with the client and together they develop action steps and goals.  When appropriate we can make new arrangements with many credit card companies to lower interest rates and payments to help our clients get out of debt faster.  If you don’t live in Wisconsin, you can contact the National Foundation for Consumer Credit (NFCC) for a nonprofit credit counseling agency near you.

The important thing is to take steps to evaluate your spending and develop a plan that works for your family and can alleviate stress.

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What Financially Successful People Know That You Might Not

Do you feel that you are successful with your money?  If so, you may be practicing the habits of financially successful people.  Clark Howard recently ran an article on this topic and I would like to share his thoughts as well as my own.

1. You have a good relationship with money.  To be successful with your money, you need to know your financial situation.  You track your expenses so you know where your money is going.  You use this information to develop a budget.  If a money problem comes up, you deal with it rather than ignoring it.

2. You live frugally.  Simply stated – you live below your means so that you have money to invest.  When money is invested wisely, you will create wealth.  Stuff is just stuff whereas wealth secures your future.

3. You understand what your values are.  Values should guide your money decisions.  If you share money decisions with a partner, it is important that your values are discussed and you both are moving in the same direction.  For example if a good education for your children is an important value, you will look for schools that will provide them with a good education.  That may mean living close to good schools or paying tuition.

4. You look for the positives and learn from the failures.  If you think negatively about your money situation, it makes it difficult to develop creative ideas to fix your problem.  Financially successful people not only think positively, they tend to surround themselves with positive thinkers.

5. You need to create your own opportunities.  Sitting around and thinking you will win the lottery is just a waste of time.  Take a class, get a part time job – have a career plan that will help you to earn more money.

6. You must set goals.  Goals are a way of making wishes comes true, so you need to set goals and achieve them.

7. Ask questions to grow your knowledge base about finances.  Community education classes or books by successful people can help you learn more and be more financially successful.  What you don’t know can hurt you.

Hopefully, you are doing some or all of these things already.  If not – there’s your first goal.

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Many People Are Still Struggling Financially. Are You?

Are you just getting by financially?  Are you comfortable with the amount of debt you currently owe?  Do you believe that the middle class is shrinking and the gap between the top earners and those below the poverty level is greater than it has ever been?  I thought a survey by the Federal Reserve that was done last year and surveyed 4,100 households had some interesting findings.

Kathryn Crumpton

Kathryn Crumpton is the manager of the Aurora Center for Financial Wellness.

  • 24% of those surveyed said that they are just getting by financially
  • 13% said they are struggling to get by
  • 34% said they were somewhat worse off or more worse off than before the recession hit hard in 2008
  • 33% of those who had applied for credit in the past three months were either denied credit or were given less credit than they requested
  • 24% had some type of education debt
  • 31% who aren’t retired said that they had no retirement savings or a pension – this figure includes those between the ages of 55 and 64
  • 50% aren’t actively thinking about retirement planning and 25% said they have done no planning at all

Some factors that seem to hold Americans back from feeling better off:

  • Income hasn’t rebounded
  • Millions are working part time although they would prefer full time work
  • It’s taking longer for many to even find a job
  • Some are struggling with mortgage debt
  • Most don’t feel as free to spend money as they once did

If you find that you are struggling financially, don’t hesitate to reach out to our office if you live in the state of Wisconsin.  If you are out of state, contact the www.nfc.org for the nearest credit counseling office.  We can help you: develop a budget, improve your credit score and/or work out a debt repayment plan.  Our website is www.creditcounselingwi.org or toll free at 888-799-CCCS.

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