June 2005 Newsletter
June 8: Teaching Kids about Money
The June FPW will be taught by Katrina Nye, a Master's degree student at Utah State University and a financial educator for USU Community Credit Union. She is also a mother of two young
children and loves to teach her children about saving for the future. She will be sharing some ideas that she personally uses and has collected about teaching children about money. Please come with your own suggestions and helpful tips that you use in your own family.
July 13: Retirement Planning with USU Extension Specialist Barbara Rowe
August 10: Voluntary Simplicity with Marianne Christian
Please respond to our email request for input on future programs! You'll be hearing from my graduate assistant Camille Pedersen. We value your input.
Websites of the month:
Money Smart Kids http://www.kiplinger.com/columns/
Read a compilation of Janet Bodnar's columns, send her an email question or sign up for a weekly email tip.
Money Management for Young Adults
The latest FDIC Consumer News helps young adults (including those just beginning a career or family and others still in school) learn how to save and manage money. Information includes common mistakes young adults make with money and how to avoid them. These errors include buying unnecessary items, failing to consider the cost of interest charges and other fees, getting too deeply in debt, paying bills late or otherwise tarnishing their credit record, having too many credit cards, and not saving enough for the future (including retirement). The guide offers ideas young people can consider during high school, during college, when starting a career, and when starting a family.
Other topics include ways to protect against identity theft and other fraud, five things to know about credit cards and checking accounts, electronic banking services that young people might find attractive, the right way to fix a problem with a financial institution (including why to put a complaint in writing and to act as soon as possible), and basic information about FDIC insurance coverage. "Taking Control of Your Finances: A Special Guide for Young Adults," has been posted to the FDIC Web site at: http://www.fdic.gov/consumers/consumer/news/cnspr05/index.html
What would happen if everybody you care about...
- Spent less money than they earned?
- Kept a low financial blood pressure?
- Maintained a good credit score?
- Never wasted money on late fees or penalties?
- Had emergency savings?
Check out your financial vital signs at the Globous Financial Relief, an organization run by one of the graduates of USU's Family Finance program: http://www.financialvitalsigns.org
FICO Credit Score Estimator http://www.bankrate.com/kip/fico/calc.asp
Resource of the month: The Sunday Salt Lake Tribune Business Section
Each Sunday the SLT includes in its Business section The Wall Street Journal Sunday , a collection of articles on timely personal finance topics.
Personal Finance Action Plan: buy the Sunday SLT each week and read the Business Section. Then discuss the articles with a friend or family member.
Books of the month:
Dollars and Sense for Kids: What they need to know about money and how to tell them by Janet Bodnar. http://www.kiplinger.com/books/
Divorce and Money
If you know someone who is contemplating divorce, encourage them to buy the book Divorce and Money. Too many people wait until after the divorce is final to come to grips with the financial aspect of the split. Unfortunately, too many of them end up in bankruptcy court because of poor decisions at the time of divorce or in the aftermath. Go to the Nolo Press website at http://www.nolo.com/ Click on family law and then divorce and child custody. Learn about divorce mediation and child custody as well as finances.
EE U.S. Savings Bond Change
A major change to U.S. savings bonds, effective May 1, 2005, affects only Series EE bonds. Inflation-adjusted Series I bonds are not affected. Instead of changing every six months to reflect current market interest rates, the interest rate on new Series EE bonds will be fixed for the life of the bond. Interest rates on previously-issued U.S. savings bonds will continue to change every six months on May 1 and November 1. Interest on U.S. savings bonds can accrue federally tax-deferred (as well as state income tax-free) for as long as 30 years or until a bond is redeemed. Series EE bonds, as well as Series I bonds, must be held one year before being eligible for redemption.
Getting Out From Under Credit Card Debt
Want to know how much of your credit card payment will go toward reducing the principal balance? For many credit cards that calculate payments based on average daily balance, the formula is similar.
Begin by determining your balance at the close of the billing cycle. If you don't know it, your billing statement should show the amount.
Multiply this number by .02, or 2 percent. In many cases, the result will be the minimum payment established by the credit card company. Some department stores use 3 percent for this calculation.
If your end-of-month balance is $2,000, this formula would put your minimum payment at $40.
Divide the annual percentage rate applied to your card by 12 (the number of months in a year). If your card carries an 18 percent rate, for example, the answer would be 1.5 percent for a month.
Next, determine your average daily balance. If you've made purchases during the month, an easy way to get this number is to check your monthly statement.
Multiply your average daily balance by the monthly rate. (Remember, this is the 1.5 percent, or 0.015, if your APR is 18 percent.) The result will reveal the amount paid in interest for the month.
Multiply $2,000 by 0.015, for example and you'll get $30. So, if your minimum payment is only $40, you will have paid only $10 toward the Principal.
Then the process begins again, with next month's balance still a hefty $1,990.
The USU Family Life Center, 797-7224, 493 N 700 East (bottom of Old Main Hill), provides free financial counseling and occasional workshops. This is the best source for basic money management and getting out of debt. They offer the PowerPay computer debt analysis for free.
Financial Planning for Women (FPW) is a monthly educational seminar that meets the second Wednesday of each month at two times: 12:30-1:30 p.m. in Family Life room 318 on the USU campus. Bring your lunch. The same program is repeated in the evening: 7-8:30 p.m. at the Family Life Center, 493 North 700 East, Logan (at bottom of Old Main Hill). The longer evening time slot allows for more discussion. Programs are free and registration is not required. Bring a friend! For further information: (435) 797-1569; email@example.com