March 2002 Newsletter
Financial Planning for Women
http://www.usu.edu/fpw/
March 2002 Newsletter
A monthly educational seminar designed to empower women, "Financial Planning for Women" is offered the second Wednesday of each month at 12:30-1:30 p.m. (USU Family Life building Rm 318) and 7-8:30 p.m. at the Family Life Center (493 N 700 E).
Facilitator: Dr. Jean Lown, lown@cc.usu.edu; 797-1569
March 13: The Financial Checkup
Get out your TFC, copy those forms and start filling them in. This session will be presented with the assistance of USU Family Finance students as a fund raiser for them to attend the annual conference of the Association for Financial Counseling and Planning Education in November. Suggested donation: $5. (We will not turn anyone away; a basket will be available for your donations.)
We will break into small groups for working sessions and Q&A regarding financial ratios, savings, retirement, taxes (how to adjust your W-4 withholding), insurance, goals, and budgeting. The best preparation is to come with copies of your worksheets filled out. The student counselors will work with small groups to answer questions, explain financial terms and concepts. Jean will circulate among the groups to help answer questions. To ensure that the students and I are prepared to answer your questions, email lown@cc.usu.edu ahead of time.
Upcoming:
April 10 Money Market Mutual Funds
What is a mmmf and why should everyone use one? How do you select a fund and open an account? Money funds are NOT the same as money market accounts at your local financial institution. Mmmfs offer consistently higher interest rates. Find out which fund is best for your needs.
Contents of newsletter:
Quote of the Month
Book of the Month
Higher Retirement Savings Levels for 2002
No-load Versus Load (Commission-based) Mutual Funds
Sound Money Schedule
Take Charge of Your Money! A Series of Six Workshops on Money Management
Items of Interest
Free Financial Counseling
Quote of the Month
Daniel Kahneman, an economist working in the field of economic psychology says many people are on a "satisfaction treadmill." The more they earn, the more they want. According to Kahneman, "People find the their demands from life keep pace with their increases in income." In other words, as they earn more money, they demand more elaborate goods and services and become unhappy when they don't get them. Or, as a quote attributed to Buddha says: "Human desires are endless. It is like the thirst of a man who drinks salt water; he gets no satisfaction
and his thirst is only increased." How satisfied are you with your financial situation? Even though Americans are getting wealthier every decade, surveys reveal that they are not any more content with their financial lot in life. Sometimes we need a reminder of how well off we are; perhaps we need to compare our lives to the billions of people throughout the world who don't have enough to eat rather than our indebted neighbors with the new super-sized vehicles in the multi-car garages of their McMansions on the hill who borrowed from their 401(k) plans and are carrying an awesome debt load. Utahns rank #2 in the nation in bankruptcy filings in part due to living in the largest houses and owning more vehicles per household compared to the rest of Americans.
Book of the Month
Luxury Fever; Why Money Fails to Satisfy in an Era of Excess, by Robert H. Frank, (1999).
Economist Frank provides a thoughtful look at the growing economic trend of Americans spending less on necessities and more on luxuries in an attempt to gain social status through possessions. He explains how the spending patterns of the wealthy minority influence the entire population. He points out many faults and irrational spending habits of Americans as a whole and suggests ways that they may be remedied. He also demonstrates through numerous studies how wealth in itself does not bring satisfaction in life.
Available: USU Merrill Library HC110.W4 F7 Logan Library 305.5Fra C.1
Higher Retirement Savings Levels for 2002
Fully fund your IRA to the new higher limits. At the February FPW attendees learned the new IRA limits are $3,000/year for workers under 50 and $3,500 for workers age 50 and older. Also, there is a new tax credit of as much as $1,000 for contributions to IRAs or qualified retirement plans such as 401(k)s for single filers earning $25,000 or less and married couples earning $50,000 or less.
Many income tax filers are making a mistake on the new line "rate reduction credit." Remember the $300 and $600 tax rebate checks? If you paid taxes for 2001 but did not receive a rebate check or received less than the full amount, you may be eligible for a tax credit. Use the worksheet included with your tax return to determine if you are eligible.
Just because Congress has increased the amount that workers can invest in their 401(k) plans to $11,000 (extra $500 for workers 50 and older) doesn't make it automatic where you work. Each company must adopt the higher limits; ask your employee benefits manager if your company has adopted the higher limits.
No-load Versus Load (Commission-based) Mutual Funds
Annual mutual fund rates of return DO NOT include the impact of loads (commissions paid to brokers who sell the funds). Kiplinger's Personal Finance Magazine (Nov. 1997, pp. 77-80) reports on their comparison of load and no-load funds. "Is a fund for which you pay a sales fee– a load– somehow superior to a no-load fund bought directly from the fund company? The answer is no. We studied the data from every possible perspective and found no conclusive difference between the investment results of load and no-load funds" (pp. 77-78). The load you pay is a commission to the broker who sold the fund; there is no connection between paying a commission and the performance of the fund. However, you do hope the broker sold you the "best" fund for your needs, and not the one that would win her a trip to Hawaii. "But while the investment results of similar load and no-load
funds may collectively be indistinguishable, your investment results will definitely be affected by the decision you make when buying shares." Because the load reduces the amount you have invested, one would have to earn consistently higher rates of return on a load fund to equal the
return on a no-load fund. KPFM concluded: "In almost every investment category over the past one, three, five, and ten years, the average no-load fund beat its load-fund counterpart on a load-adjusted basis" (p. 78).
Sound Money <http://www.soundmoney.org> is a call-in radio program (Sat. 9-10 am 89.5 or 91.5 FM) hosted by Stephanie Curtis and Chris Farrell and features weekly appearances by Minneapolis money manager Erica Whittlinger, president of Whittlinger Capital Management. Each program contains several interviews with special guests who address a wide variety of topics of interest to individual investors and consumers. Upcoming topics:Scams
March 9, 2002
On this edition of Sound Money, we take a look at financial scams. You may find them in your mailbox or e-mail inbox. How are they different from old-fashioned pyramid schemes? Also on the program: Is there ever a time when you should choose managed funds over index funds? We find out. Erica Whittlinger answers listener questions, and technology commentator Larry Magid stops by.
Tax Special
March 16, 2002
This week, Sound Money's annual tax special. Get those questions ready, taxpayers, because we're devoting most of the program to you! Also on the show, Erica Whittlinger tells us how to plan for next year's taxes, and Chris Farrell shares his top five tax tips that will save you money.
2002 Car Buying Guide
March 23, 2002
Jack Gillis, author of the yearly updated 2002 The Ultimate Car Book buyers guide joins Chris Farrell and Stephanie Curtis to talk about the year's best and worst vehicles. Certified financial planner and Sound Money favorite Ross Levin stops by with some ideas for "spring cleaning" your portfolio.
Time to Retire
March 30, 2002
So, you've been diligently adding money to that 401(k) all these years, and now it's finally time to retire. How do you start using your savings? We talk about it on this week's Sound Money. Plus-an interview on long-term care insurance.
Take Charge of Your Money! A Series of Six Workshops on Money Management
Plan now to join us for this popular and informative, six week series of personal and family financial management workshops! Each week there will be a presentation by a guest speaker followed by a question and answer session. Classroom space is limited. Applications will be accepted on a first-come, first-serve basis.
Cost: $25.00 per person for the entire series, including workshop materials, a binder, handouts, and light refreshments. Spouse or partner may attend free but only one set of printed materials will be given.
Schedule of Workshops:
April 10: Getting Organized
April 17: How Does Your Cash Flow? Reducing Expenses at Home
April 24: Banking, Cash, and Credit
May 1: Insurance & Estate Planning
May 8: Investing for Retirement
May 15: Deciding What If . . . Expert Panel
Classes will be held on the dates specified at:
Lifetime Learning Center, 55 North Main, Suite 101 (Downstairs in the Coppermill Building)
Wednesday Evenings, April 10 - May 15 , 2002, 7:00 - 9:00 p.m
For more information, contact Adrie Roberts, USU Extension Agent, (435) 752-6263.
Items of Interest
Taxes: Eight Easy Steps to Get My 2001 Earned Income Tax Credit
http://www.arfamilies.org/money/yourmoney and click on Earned Income Tax Credit.
Child Tax Credit - 2001
http://www.arfamilies.org/money/yourmoney and click on Child Tax Credit
A Consumer Guide to Handling Disputes with Your Private or Employer Health Plan
http://www.kff.org/consumerguide/
Consumers Union and the Kaiser Family Foundation offer a web site to help consumers with health care disputes
The U.S.U. Family Life Center, 493 North 700 East in Logan offers free financial and housing counseling. If you want help getting out of debt or simply organizing your finances and developing a realistic budget (or know someone who can use this help), call 797-7224 for an appointment. The FLC offers first-time homebuyer workshops the last Saturday of each month.
Funding for Financial Planning for Women (copying cost, postage, book purchases, etc.) is made possible by a grant from the Foundation for Financial Planning. www.foundation-finplan.org/
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