Here we are, well into January now. Have you already fallen off the wagon with your resolve to stop eating so much or get more exercise? Don’t give up for the year! Even if those resolutions didn’t stick, there’s no law that says you have to wait until January 1, 2016 to try another one. A
s our regular readers know, our bloggers are financial counselors by day. We are in the trenches with debt and budget issues day after day. And, we have some valuable advice to offer. This piece of advice will make a good Anytime of the Year resolution:
Schedule a regular date to visit your finances at least monthly, but preferably bi-monthly or weekly.
A common theme we observe in our offices is hectic, busy lives leading to disorganization, overspending, and expensive debt. (That expensive debt can mean hundreds of dollars spent each month on credit card interest charges, on overdraft fees, on revolving payday loans, or on any other devious ways that suck us dry.) And the reality is, there is no substitute for devoting space in your life to your finances to gain control.
Pick a time when you can have peace and quiet, even if only for 20 minutes. Some time is better than no time. Put it on your calendar as a recurring date. For your date, have a nice cup of tea or cool drink, depending on the season. Make sure the kids are distracted or locked away. Now that you are settled in, what do you do on this date with your finances? Oh! There are so many ideas!
- Check your balance in your bank account.
- Review your debit card transactions.
- Look at your credit card statements—the full statement—and force yourself to look at your interest rates and monthly interest charges along with all the transactions.
- List your fixed monthly bills (rent, phone, electricity, student loan payment, etc.) with due dates.
- Calculate your net income.
- Set a savings goal, and then set up an automatic transfer or direct deposit to savings.
- Plan out your paychecks—when will you pay which expense?
- Do the math—after fixed expenses and savings, what is left for everything else?
- Schedule an appointment with a financial counselor to develop a debt repayment plan.
The list can go on, and get into deeper areas. Are you and your partner on the same page? What are your long-term goals? What steps do you need to take to get there? Don’t try to cover everything on each date. The routine maintenance checks listed above will become easier and faster, leaving time for the other financial issues. The point is to just start. It is a small commitment. Not like having to exercise an hour a day. Who wouldn’t fall off that one in the middle of January?! The payoff for the small commitment is huge—control, peace of mind, success!
Need some professional guidance to get you started? Visit our website at www.ConquerYourDebt.org. Here’s to a Prosperous New Year everybody!
Author Mary Ellen Kaluza is a Certified Financial Counselor at LSS Financial Counseling. Give us a call at 888.577.2227 to learn how to start Conquering Your Debt!
I’ve had several identity theft victims in my office in recently. They all said they didn’t know where to start to deal with it. So, here it is:
Where to Start
Identity theft is the most frequent complaint filed with the Federal Trade Commission (the agency created in 1914 to protect the public against unfair commerce practices, later charged with much greater consumer protection duties.) I always encourage clients to file an identity theft complaint with the FTC. They publish an annual report of complaints, cited by everyone else as the barometer of consumer issues. The more data the FTC has, the better the statistics and allocation of resources.
FYI: One statistic I found very valuable is that young people (20 -29) are the most frequent victims of identity theft. You can be sure I will be quoting that to my 23 year old daughter!
Let me start by saying that the Federal Trade Commission (FTC) is my go-to source on identity theft. Bookmark this website: http://www.consumer.ftc.gov/features/feature-0014-identity-theft.
Preventing identity theft is, of course, preferred over being victimized. See our blog 7 Tips to Protect Yourself from Identity Theft . Unfortunately, we see people after they have been victimized.
Know the Signs
- Withdrawals from your bank account you don’t recognize.
- Bills or other mail don’t arrive.
- Your checks are refused.
- Debt collection calls about debts that aren’t yours.
- Unknown accounts, inquiries or addresses on your credit report.
- Medical bills for services you didn’t have.
- IRS notice that a tax return has already been filed in your name.
- Notice that your information was compromised by a data breach.
First Steps (The sooner you take action, the less damage to repair)
- Get a notebook and folder to record and save all action such as phone calls, letters, etc.
- Place a fraud alert on your credit reports. The fraud alert is good for 90 days.
- Contact one of the 3 major credit bureaus as they are required to pass on the information to the others:
- Experian 1-888-397-3742
- TransUnion 1-800-680-7289
- Equifax 1-800-525-6285
- Mark your calendar to renew the fraud alert at the end of the 90 days.
- Consider putting a credit freeze on your credit reports. This prevents new creditors from accessing your reports instead of requiring them to verify your identity as with the fraud alert. Credit freezes may cost money, depending on your state laws. (They take time to unfreeze so you must plan ahead if you are intending to apply for credit.)
- Order your credit reports from each credit bureau at the numbers above. Explain you have placed a fraud alert on your reports. This entitles you to a free report. Review the reports carefully for any suspicious information. Meet with a financial counselor if the reports make your head spin. (link to counseling here?)
- Create an Identity Theft Report (aka Affidavit) through the FTC. This helps you gather the information you need to file a police report, provides important statistical information to the FTC, and is useful when dealing with companies who want you to pay for fraudulent activity.
- File a police report with your local police department and get a copy or report number. Here in Minneapolis, it can be done through our one-stop city service resource called 311 Minneapolis. Maybe your city offers a similar service.
- Call your credit card companies to alert them to the identity theft.
The Next Step: Clean Up
Write the credit bureaus. Specifically request the fraudulent activity be removed. Send certified mail.
- List of fraudulent information from your credit reports.
- Copies of credit reports showing the fraudulent activity.
- Copies of the affidavit and police report.
- Copy of your identification.
- Call the companies of your existing accounts if you have fraudulent charges.
Let them know you are a victim of identity theft and ask what they need from you. Make sure to send the needed information certified mail and log your phone calls with notes from the conversation, dates letters were mailed; and keep copies of everything sent. The FTC has very detailed instructions and sample letters: http://www.consumer.ftc.gov/articles/pdf-0009-taking-charge_0.pdf
It is a lot of work dealing with identity theft. It can take months, even years to fully recover, depending on the extent of the damage. So, take the old Ben Franklin quote to heart: “An ounce of prevention is worth a pound of cure.”
Author Mary Ellen Kaluza is a Financial Counselor at LSS Financial Counseling. Give us a call at 888-577-2227 or visit our website at www.ConquerYourDebt.org to learn more about LSS.
Charging more each month that you make in payments.
Paying only the minimum amount due on your credit cards.
Using credit and cash advances for items that used to be purchased with cash, like gas and groceries.
Having a total credit balance that rarely decreases.
Being at or near your credit limit and applying for new cards.
Needing a consolidation loan to pay existing debt.
Not knowing the total amount you owe.
Never opening your mail or answering the phone in fear of debt collectors contacting you.
Making late payments consistently.
Experiencing feeling of anxiety and stress whenever you use your credit cards.
Do any of these sound like you? We’ve all had moments of financial chaos. I get that. But if debt starts to affect you more often than not…give us a call at 888.577.2227 or visit our website at www.ConquerYourDebt.org. We can help. A financial counselor can help look at your debt picture and make a plan to move forward.
It’s been a good garden year for me. I’ve supplied my household, friends, family, passersby, and the local food shelf with a variety of beautiful, fresh, organic produce. I couldn’t even begin to calculate the dollars saved. (Add in the physical and environmental benefits of gardening and the economic payback rises significantly.)
It is early October and the first frost has yet to hit the Twin Cities in Minnesota. I’m still harvesting summer squash, tomatoes, greens, herbs, peppers, and more. When frost is finally in the forecast (any time now!) you will find me in the garden that evening frantically picking the remaining green tomatoes by flashlight.
- My counters will be full of green tomatoes, as they are every year. Green tomatoes extend the delicious bounty of summer long into the short chilly days of fall.
- Green tomatoes are quite nutritious providing vitamin C, several B vitamins, vitamins A and K, calcium, and various minerals, protein, fiber, and more.
Keep some to continue ripening. I put them in a single layer in a box and cover, checking them periodically. You can have red ripe tomatoes on your Thanksgiving salad!
What else can you do with green tomatoes?
- Fried Green Tomatoes, of course, are a well-loved dish. (Like good fried chicken, though, they require skill and practice.)
- Add chopped green tomatoes to stir-fries, soups and stews for a delicious and nutritious tang. No skill required.
- Freeze to use in the dead of winter. So easy—just chop up and pack into containers.
- Pickle them to put on sandwiches, burgers, salads. Or to eat right out of the jar. Pickled green tomatoes are my favorite pickle.
- Make salsas and relishes.
- Bake cakes, sweet breads, or pies with green tomatoes. The first time I made my grandmother’s Green Tomato Pie for some friends, they were very skeptical. Now, each fall they ask me when I’m making another pie.
- Find dozens of recipes and other ideas online.
So, if you are one of the growing multitudes of home or community gardeners, keep your eye on the forecast and pick those green tomatoes to continue reaping the innumerable benefits of growing your own food!
Gram’s Green Tomato Pie
4 Tablespoons four
2 Tablespoons sugar
Pastry for a 2 crust pie
Combine flour and sugar, sprinkle ½ over the bottom crust. Reserve the rest.
5 cups thin sliced green tomatoes
1 teaspoon salt
1 cup sugar
1 teaspoon each cinnamon and nutmeg
Put into pie shell, sprinkle with 1 Tablespoon lemon juice, sprinkle reserve flour and sugar mixture, dot with butter. Cover with top crust and seal. Brush with milk and sprinkle sugar over. Bake 10 minutes at 450°, then reduce to 350° and bake for 1 ½ hours.
Author Mary Ellen Kaluza is a Financial Counselor at LSS Financial Counseling. LSS specializes in helping people conquer their debt. Visit our website at www.ConquerYourDebt.org to learn more.
A while back, I wrote a blog called “Avoiding Beneficiary Horror Stories.” At that time I discussed many potential problems that may arise when you don’t review your forms periodically to ensure they’re accurate. Since then, I have come across a few other scenarios I wanted to share so you can avoid these unfortunate blunders.
Just like we were all born into this life, we will also pass away from this life. Although not much fun to think about, it will happen sooner or later. Since we have no idea when that may be, it’s always best to be prepared. One way to do that is to make sure you have current beneficiary designations for all of your financial accounts from retirement funds to checking and savings accounts.
Tips for beneficiary forms:
1. Never name a minor as a beneficiary:
Under the law, minors are not allowed to inherit money or assets directly. In many states the age of majority is 18 but check the law where you live to find out for sure.
Further, unless a guardian has been appointed, funds cannot be distributed to minors. Since the guardian will take control over the assets, it should be someone you trust with the minor’s best intentions at heart.
Since minors typically inherit the assets once they become legal adults, ask yourself if it’s best for this child to inherit a large sum of money at such a tender age. While some young adults will do just fine, others will have one big party until all the money’s gone. If you have any doubts, consider other options.
2. Never name a beneficiary that receives government assistance:
Rules for receiving government help are pretty restrictive about how many assets or cash a recipient can own and still qualify for help. The last thing you want to do is inadvertently pass on an inheritance that would cause someone to lose their government benefits.
If you have a family member with special needs, it’s often better to set up a special needs trust that can help financially over the beneficiary’s lifetime without jeopardizing their eligibility for government assistance. Speak to an estate planning attorney for more information on this topic.
3. Beneficiary designations trump a will or trust:
Many people mistakenly believe their will or trust will direct how assets should be distributed or utilized when they die. Although that may be generally true, if your beneficiary designation conflicts with your will or trust, the beneficiary form will control. Countless court cases have been fought over this very argument and typically the beneficiary designation comes out on top.
4. Never name just 1 beneficiary:
Some folks name just 1 beneficiary with the belief they will share the spoils evenly with all the other heirs. But legally the sole beneficiary has no obligation to do so and could easily keep all the money for him or herself. Rather than assuming your beneficiary will do the “right thing,” you should make your intentions clear up front.
5. Always name a back-up beneficiary:
It’s always best to name a contingent beneficiary in case something happens to your original beneficiary. Life happens and sometimes so quickly, we don’t have time to catch up.
You can also name multiple beneficiaries by designating a percentage of how much each should receive upon your death. Just make sure your numbers add up to 100%.
6. Never put your beneficiary designation forms on auto-pilot:
The last thing any of us wants to do is disinherit a loved one because we didn’t review our beneficiary designations following a major life event. Review your beneficiary designations if you’ve had any of the following changes to your family’s circumstances:
- A change in your marital status
- A birth of a child or grandchild
- A death in the family
- New job or promotion
- Problems with your health
Although there are many laws and other considerations to think about with your estate plan, you can keep absolute control over any funds you want to go directly to specific heirs by using beneficiary designations. Just be sure to review them occasionally to make sure they are up to date and will convey your legacy to loved ones as you intended.
Have questions? Give us a call at 888.577.2227 or visit our website at www.ConquerYourDebt.org for more information. There is never a better time to Take Charge of your Life Again.
Author Barbara Miller is a Financial Counselor at LSS Financial Counseling.
A growing number of adult children are turning to the Bank of Mom and Dad and Grandparents. Many families have the impulse to be generous as they watch their young-adult children struggle with a tough job market and challenging economy, so they lend their children money to help pay for basics like rent, debts owed, transportation … or, let adult children move back home. Parent’s want their children to be successful and ultimately not struggle.
This poses a huge dilemma for a parent or grandparent. You want to help your children succeed but in doing so you can jeopardize your own retirement, and their own autonomy. It’s important to ask yourself two basic questions.
Ask yourself these two questions:
- How much if any can you really afford to give your adult child?
- What steps is your adult child taking so they won’t always need financial help?
Sometimes it is important to let our loved ones find their way into hard choices that will let them grow confident in themselves. If your adult children could benefit from creating a budget and a plan, send them to a nonprofit financial counselor. LSS Financial Counseling offers free budget and debt counseling, with 8 offices in MN. Call LSS at 888-577-2227 or visit our website at www.ConquerYourDebt.org.
Portrait of a student girl studying at libraryOne of my blog teammates recently wrote a post called “Should I Co-Sign For a Loan?” I was very impressed and wanted to piggyback on his insights by further discussing the very real and sometimes bizarre dangers of co-signing private student loans.
Private student loans are fraught with perils and pitfalls that many borrowers and co-signers alike are unaware of until it’s too late. Although many of these dangers are spelled out in the loan contract, either people don’t read the full document, don’t understand all the provisions, or may think “this will never happen to me.” I won’t go so far as to say everything is clearly spelled out because I have my doubts. But my first recommendation: always read the full contract and ask questions to clarify any confusion you may have so you understand what you’re getting into.
Real Life Examples:
I recently spoke with a parent who co-signed a private student loan for her son with a large national bank. It turns out she had also done her banking at this financial institution for many years and had always been happy with their service. Then her son stopped making the loan payments.
My client began receiving letters about the defaulted student loan that she co-signed. She wrote back informing the bank of her son’s mailing address and phone number so he could be contacted directly. But that wasn’t good enough for the bank.
Without warning, it cleared out her checking account of at least $1000 toward the loan balance. When she discovered this “offset,” she contacted the bank and was told that when she signed the paperwork for her bank accounts years earlier, it was clearly stated that balances owed to the bank could be taken from a borrower’s account without notice. You should all know this is a very common industry practice but no one seems to believe it until it happens to them!
When she asked if the bank had tried contacting her son about the loan, she was told that information was confidential and could not be disclosed. Not only was my client financially inconvenienced but was understandably frustrated with how this collection process was playing out.
She has since changed banks but still runs the risk of being sued over the debt and having her wages garnished if either she or her son do not make regular payments on this private student loan.
This instance is a bit extreme but is absolutely true. Believe me when I say I don’t have nearly enough imagination to make this up. It clearly shows just how quickly things can go wrong for the primary borrower if something happens to the student loan co-signer.
A young man called LSS one day with a question about his private student loan. I had some free time so I called him right back. It turns out he had borrowed a private student loan from a national bank but was current on his payments and had always made them on time.
The problem was his co-signer had passed away recently so according to the loan contract, the balance (which was several thousand dollars) was immediately due in full.
Huh, you might be asking? The only reason I wasn’t completely taken aback by this situation is that a few weeks earlier, our student loan team was advised about the potential for this very thing to happen. The caller acknowledged that he had seen this clause in the loan contract, but that surely didn’t change the fact that he was now facing a huge financial burden – a burden that was entirely beyond his control.
Fortunately for him, the co-signer’s estate paid off the defaulted student loan and would allow him to continue making affordable payments to the estate until paid in full. But others encountering this situation may not be so fortunate!
Food For Thought:
If you are faced with co-signing private student loans for your child, you may want to look at some other less potentially expensive alternatives. Even better, answer some basic questions to figure out if this is really a viable option.
- Student-Loan-Calculator…Ask yourself if you can afford to make the loan payments after college if your child can’t.
- Ask yourself (and your child) if he or she is ready to pursue higher education at this point. It can be a real waste of time and money when kids go to school with no real direction or idea what they hope to get out of a college degree. Or, if your child is not mature enough to take their studies seriously and would prefer to party, you may want to postpone college indefinitely until it’s a realistic goal for the student.
- Is your child better suited to learning a skilled trade with hands-on training rather than slaving over textbooks for four years? Many trades pay very good wages and may lead to the potential to start one’s own business in the future. A college degree is not for everyone!
- Has your child looked into the potential job market for his or her desired career? Knowing that good jobs are available can be a real motivator in finishing a college degree on time. It can also lead to internships and opportunities to shadow those in the business to make sure this is the right choice for one’s future.
- Is it a better idea to have your child work awhile to save some money for school rather than relying solely on student loans to fund an education?
- Has your child looked into grants and scholarships to help pay for college? These are steps that should be taken early in the process.
- What will the loan be used for? Funding tuition, books, and other school related costs is certainly appropriate for student loans. However, living on loan money is a serious mistake because it leads to over-borrowing and huge loan balances upon graduation. It’s also important for kids to work during college to be able to better structure their time, contribute to their own survival, and can be more impressive to potential employers.
Sometimes co-signing private student loans is well worth the risk. But doing so is not for every parent (or other family members). So if you plan to sign just be sure you’re prepared for the worst case scenario! Have questions? We specialize in Student Loan Counseling. Give us a call at 888.577.2227 and we can help!
Author Barbara Miller is a Certified Financial Counselor at LSS Financial Counseling specializing in Bankruptcy Education and Student Loan Counseling.
Theses days, 401K retirement plans are typically the cornerstone of every investor’s retirement plan. Gone are the days of big company pension plans, and for many of us, big company matches to an employee’s retirement funds. And relying on Social Security benefits alone will surely be a problem since those benefits are meant to supplement your other retirement savings. So, avoiding big mistakes that can cost you retirement money in the future is crucial to making the most of your 401K. (Just so you know, when I talk about 401K plans, the same principles apply to non-profit retirement plans known as 403Bs).
The best advice I can give is to find a certified financial planner (CFP) that you trust for insights and advice. Your work 401K plan should offer help from its’ own CFP so you may want to start there first.
Another resource is http://www.letsmakeaplan.org which is sponsored by the CFP Board. The Board’s’ role is to act “in the public interest by fostering professional standards in personal financial planning through its setting and enforcement of the education, examination, experience, ethics and other requirements for CFP certification.”
I have had a private CFP that I trust implicitly since 2008 and working for a non-profit, I don’t have a huge portfolio. But his help has been invaluable by putting things in perspective for me when the stock market looks a little shaky, or by devising investment strategies that I can embrace over the long term.
Mistake #1: Using investment strategies with premature target dates
We may forget that we are not only investing up to our retirement but also throughout our retirement. This means the closer that retirement gets, we often want to become more conservative across the board rather than phasing out higher risk stocks. Remember that many of us will live at least 20 more years after we retire so using your retirement date as the deadline to divest of your stock investments may harm your long term strategy.
Without additional growth to your retirement funds, there may not be enough money to see you through the long haul. This is where a certified financial planner can help you decide the best strategy that may include ongoing investment in stocks if you can stomach the risk.
Mistake #2: Leaving 401k funds with a former employer
When you leave a job, you always have the option of rolling your 401K plan into an IRA. One reason you may want to do so is 401Ks always have administrative costs and with some plans, these are overly expensive. Over time, these costs can add up reducing the overall return on your investments.
In addition, many 401K plans offer limited options in each asset category which also limits your ability to properly diversify. When your investment funds are more diversified, you can spread the risk while maximizing gains.
Mistake #3: Playing amateur stock broker
It is so important to remember that retirement investing is intended to be long term, and there are only certain factors we can control. Those who have panicked and pulled their money out of a sagging stock market often lose big time because contrary to what you may think, you cannot time the market.
Cashing out of the stock market when values plummet means you may lose potential gains when the market improves again. In addition, buying stocks when prices are high means you will pay more for less. The better approach is to buy low, sell high. This gives you the best of both worlds, and a certified financial planner can help you bridge the gap between the two.
Mistake #4: Failing to rebalance your portfolio
The closer you are to retirement, the more important it is to rebalance your portfolio every year or two. In the long run, stocks generally outperform bonds. But if you invest too heavily in stocks because the market is booming, and the market tanks just before you want to start withdrawing money, you might see your funds collapse.
Another reason to rebalance periodically is that big gains in stocks are typically re-invested right back in the same stock funds. A better approach may be to take some of those gains and move them into more conservative assets when retirement is near.
Summing it up
In conclusion, you too can avoid these common mistakes by being realistic about what you can control with your investments. Those items include asset allocation, fund diversification, and selecting funds with lower administrative costs.
If you’re closer to retirement and want to be more conservative with your money, your advisor can tell you how and whether or not this is a smart move. In the end, we all make our own decisions but sometimes we need a little help to make the best ones we can!
Learn more about LSS by visiting www.ConquerYourDebt.org. Author Barbara Miller is a Financial Counselor at LSS Financial Counseling and specializes in Bankruptcy Education and Student Loan Counseling.