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The Money Minute - June 2014

In this Issue


 
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Declare Your Financial Independence

Independence, the freedom from control; the control from other people, organizations or other states. Yes, even the freedom from the control of money. Money dictates many aspects of our lives– where we live, what kind of car we drive, and even where we shop. Often times, without realizing how it happened, the decision of where we spend our money could jeopardize our financial dreams. So, as our nation celebrates its independence, it’s time to declare our financial independence.

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 African American senior couple

Retirement Ready?

Most of us dream about retiring from our job and living out the rest of our days doing whatever we want. However, as lovely as that sounds, most of us don’t have a plan on how to make that a reality. A recent survey by the Employee Benefit Research Institute (EBRI) reported that over half of respondents said they and/or their spouse have not calculated how much they need to have saved up in order to live comfortably during retirement. The same survey indicated that 57% of Americans have less than $25,000 in savings and investments.

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Poll Shows Many Reluctant to Assume Risk of a Mortgage

In recognition of June as Homeownership Month, the National Foundation for Credit Counseling® (NFCC), of which Apprisen is a member, released the results of a recent poll revealing that close to one in five respondents do not believe that taking on a mortgage is worth the risk. This attitude is consistent with the U.S. Census Bureau’s current report highlighting the declining rate of homeownership.

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Typical Consumer Seeking Financial Counseling

Mid-year is often a time when many evaluate where they stand financially. To help consumers measure their financial health, the National Foundation for Credit Counseling® (NFCC), of which Apprisen is a member, has provided a picture of the typical consumer who came to an NFCC member agency for financial counseling in 2013, and encourages consumers to use this information as a financial check-up tool, benchmarking their situation against those who self-identified as being in need of financial guidance. 

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Financial Education – Now Available Online

Would you like to take a financial education workshop but can never find the time that will fit your needs? Apprisen can help. We now offer online financial education webinars ready to download whenever you have the time. So, take a few minutes to learn something new that will help you get and stay on track with your money. 

Read the entire article




Declare Your Financial Independence

Independence, the freedom from control; the control from other people, organizations or other states. Yes, even the freedom from the control of money. Money dictates many aspects of our lives– where we live, what kind of car we drive, and even where we shop. Often times, without realizing how it happened, the decision of where we spend our money could jeopardize our financial dreams. So, as our nation celebrates its independence, it’s time to declare our financial independence. Here are some ways to get started: 

  • Set financial goals. You’re never going to get what you want unless you know what it is. Establish short, mid, and long-term goals so that you have something to work towards. Write them down and refer to them often. If your goal is something you want to do or purchase, like go on a vacation or buy a car, put a picture of it in your wallet or place it where you are consistently looking at it. That will help you in staying focused on reaching that goal.
  • Pay more than the minimum payment. Many people are surprised to learn that by paying even a little bit more than the minimum payment on their credit card, how much it could save them in time and interest. Use Apprisen’s online calculator to figure out how much you need to add to your payments to pay those cards off more quickly.
  • Spend less than you earn. Sounds simple, but is often very difficult to accomplish. Create a monthly spending plan where you have a listing of all monies going in and out. Then, make a plan to pay yourself first. Have a set amount taken directly from your paycheck and deposited into a savings account, using the remaining amount to pay your monthly obligations. Be realistic when determining how much you are going to save so that you are not withdrawing it before the next paycheck. When you receive your next raise, you can increase that amount. 
  • Know where you stand financially. Add up all of your assets and liabilities and find out what your net worth is. Often times, seeing how much debt you have can be an “ah ha” moment that will motivate you to make a plan to pay it off.
  • Stop trying to keep up with the Jones’. Sure, you would like to have a new car every three years and go on exotic yearly vacations like it seems everyone else doing, but at what cost? Savvy consumers know how to set goals and work towards them, knowing the greatest reward is financial security. 
  • Educate your children about money. It is natural for a child to have many wants. But teaching them at an early age that sometimes you have to wait to get what they you want, is a valuable life lesson. Let children have control over their money and decide what to spend it on. In doing so, they will learn to prioritize, set goals and learn financial independence at any early age. 

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    Retirement Ready? 

    Most of us dream about retiring from our job and living out the rest of our days doing whatever we want. However, as lovely as that sounds, most of us don’t have a plan on how to make that a reality. A recent survey by the Employee Benefit Research Institute (EBRI) reported that over half of respondents said they and/or their spouse have not calculated how much they need to have saved up in order to live comfortably during retirement. The same survey indicated that 57% of Americans have less than $25,000 in savings and investments.

    That’s not a very good start to help make retirement dreams come true. Most experts agree that you will need at least 70% of your income to retire comfortably. That money needs to come from social security (which covers approximately 40% today), pensions and savings. With the average age of retirement being 62 and typically lasts 18 years, you can do the math as to how much you would need to save. But it’s never too late, regardless of your age. Apprisen offers these tips to help you get started:

    • Determine your retirement lifestyle. Where do you see yourself living? What about travel or hobbies? Do you envision yourself working part time? Do preliminary research on estimated costs for housing, possible medical needs, entertainment, etc.
    • Cut down on your expenses. Learn how to do without today so you can live comfortably tomorrow. Create a monthly spending plan and put any additional dollars in an IRA or Roth retirement account. Verify how much you can deposit into that type of account based on your age, marital status and income. However, since you don’t know what challenges life may deal you, make sure you have an emergency account established first with a least 3 months of income saved.
    • Enroll in employer sponsored plans. If your employer offers a 401k plan, take full advantage. Many offer match savings up to a certain amount of your contribution. By failing to participate, you could be losing out on money. If you are unable to start adding to the account today, on your next pay raise take at least one percent and begin saving. Increase your contributions annually thereafter with each increase of income.
    • Consider postponing retirement. Working longer means extra years of saving for retirement and a larger Social Security payment. According to the Social Security Administration, for every year you wait after your full retirement age, your Social Security increases by 8%.
    • Consult a financial planner. A financial planner will be able to map out a strategy to help you meet your retirement goals. However, make sure the person you are working with has your best interests in mind and has experience in retirement investing. Consult the Certified Financial Planner’s website, www.cfp.net, for information on finding a planner in your area or ask family or friends for recommendations.
    • Estimate your monthly retirement income. How much monthly income will you need during your retirement years? To begin, find out how much in Social Security you will be receiving. Go to the Social Security office website, www.ssa.gov, and create an account to receive an estimate of your retirement, disability and survivor benefits. Then you can use an online calculator, like the one on the AARP website, that will help you figure out how much more you need to save in order to reach your goal.

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    NFCC Poll Reveals Many Reluctant to Assume Risk of a Mortgage

    Renting may be the right answer for some, at least temporarily

    In recognition of June as Homeownership Month, the National Foundation for Credit Counseling® (NFCC), of which Apprisen is a member, released the results of a recent poll revealing that close to one in five respondents do not believe that taking on a mortgage is worth the risk. This attitude is consistent with the U.S. Census Bureau’s current report highlighting the declining rate of homeownership. The present rate of 64.8 percent representing the first quarter 2014 is the lowest homeownership rate in almost 19 years.

    The housing crisis, recession and continued economic instability appear to have shaken the confidence of many Americans, particularly when it comes to big-ticket items such as a house. However, the unwillingness to take on a mortgage loan may be a smart decision for some, as many borrowers have learned the hard way that homeownership does not come with a guarantee of continually increasing equity.

    Although the benefits of owning a home are many, until a person is fully prepared to assume responsibilities such as a mortgage payment, home and lawn maintenance, improvements, and taxes and insurance, renting may be right for them. Homeownership is about much more than buying a home. Renting until they are in a position to buy can help a person avoid a costly mistake, including the negative ramifications of foreclosure. 

    Consider some of the benefits that renting provides:

    • Allows time to prepare for homeownership, which can pay off. Saving money for a downpayment can decrease the amount of monthly mortgage payments, and building a stellar credit report and score can result in a lower interest rate on the loan.
    • Mobility. A 12-month lease is a fraction of time compared to a 30-year mortgage. If it becomes necessary to move for any reason, a renter is not shackled to their home until they sell it. 
    • Less money required up front. Security deposits are much less than broker’s fees and closing costs.
    • Avoids costly purchases such as appliances, some of which are often included with the rental.
    • Renters insurance is less expensive than homeowners insurance.
    • Money is not tied up in the home, making it more readily available for emergencies or other needs and opportunities. 
    • Luxuries that may not be affordable independently such as a swimming pool, tennis courts, gym and party room are extras often available through apartment complexes. 
    • Avoids costly maintenance and repairs. Upkeep of a home takes both time and money, whereas expenses associated with repairs are typically included in the cost of the rent.
    • No Homeowners Association fees. Maintenance of the grounds and common areas is usually included as part of the rent.
    • Utility bills are sometimes included in the rental payment, making budgeting much easier.

    It is critical to remember that buying a home represents a large financial obligation extending over a long period of time and is usually a person’s largest investment. Consumers should consider homeownership only after careful deliberation and when the timing is right for their unique situation. 

    The NFCC poll question and answers are below:
    Which of the following best represents your attitude toward owning a home?

    A.    Owning a home remains a critical part of wealth building = 82%
    B.    A mortgage is a risk I’m not willing to assume – 18%

     

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      Typical Consumer Seeking Financial Counseling

      Mid-year is often a time when many evaluate where they stand financially. To help consumers measure their financial health, the National Foundation for Credit Counseling® (NFCC), of which Apprisen is a member, has provided a picture of the typical consumer who came to an NFCC member agency for financial counseling in 2013, and encourages consumers to use this information as a financial check-up tool, benchmarking their situation against those who self-identified as being in need of financial guidance. 

      More than 1.5 million consumers reached out to an NFCC member agency last year for answers and solutions to their financial concerns around debt, housing, budgeting and bankruptcy. Examining their financial profile can provide guidance for others, helping them determine their own level financial wellness.  

      Consider some of the red flag characteristics of consumers who sought financial counseling from an NFCC member agency in 2013:

      • The number one reason to seek counseling was “poor money management,” eclipsing “reduced income” which had held the top spot since 2009. Why a red flag: An improving economy may put more money in people’s pockets, but if not managed properly, it can still result in financial distress.
      • The age of the majority of consumers was fairly evenly divided between 25-54, with young adults in the 25-34 age group leading the way (24%), followed by the 35-44 range (23%), and the 45-54 group (21%). Why a red flag: Financial problems can occur at any stage in a person’s adult life which, if left unaddressed, can begin a negative spiral from which it can be difficult to recover.
      • The average household take-home income was $35,081, with an unsecured debt of $17,548, resulting in an unsecured debt to income ratio .50. Why a red flag: Owing too much relative to your income resulting in a  high debt-to-income ratio not only makes it harder to meet all debt obligations, but can hinder future borrowing.
      • Consumers seeking help carried an average of 5.7 credit cards. Why a red flag: The number of credit cards a person has is not as important as how they manage them. Whatever the number of cards, maxing out the lines of credit will likely harm a person’s credit score.

      Consumers need to contact a trusted organization for financial help. However, don’t make the mistake of waiting too long to reach out for assistance. Delaying taking action allows the problem to escalate, often causing financial damage that could have been prevented. Consumers who recognize similarities between their situation and those who sought assistance from an NFCC member agency should follow their lead and take action now. Call Apprisen today (800) 355-2227 to set up a free appointment with a certified financial counselor who can help you get back on track with your money.



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    Financial Education- Now Available Online

    Would you like to take a financial education workshop but can never find the time that will fit your needs? Apprisen can help. We now offer online financial education webinars ready to download whenever you have the time. So, take a few minutes to learn something new that will help you get and stay on track with your money. 

    Addressing the Needs of Your Senior
    In this webinar, learn how to have the "money talk" with your aging parents, how to recognize f the warning signs of senior scams, and the legal paperwork needed to ensure your parents' wishes are known and followed.

    Make the Most of Your Income
    In this webinar, learn how to make the most of your income; covering topics such as your money personality, elements of a spending plan, savings tips and what to do when things don't balance. (Time 42:40)

    Car Buying Considerations
    In this webinar, learn the advantages and disadvantages of leasing vs. buying, considerations when buying a car and how to maintain your vehicle.

    Credit Reports and Scores
    In this webinar, learn ways that credit issues can impact many areas of your life, how to access your free credit report, how to dispute information, how to recognize the factors that make up your credit score and ways to improve your credit score.

    Financial Foundations 101
    In this webinar, learn the strategies to reduce debt, elements of a spending plan, and the importance of knowing what's on your credit report.

    ID Theft Prevention
    In this webinar, learn how ID theft occurs, how identity thieves use your information, what precautions should you take to prevent ID theft, what should you do if your ID has been stolen, and tips to protect you and your children's identity.

    Preparing for the Holidays
    In this webinar, learn how to set priorities, limit your holiday spending, and holiday saving tips.

    To view our Educational Videos, click here.

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