August 2001 Newsletter

August 8 Module 6: Employer Sponsored Retirement Plans
understanding the difference between defined benefit and defined contribution plans
How 401(k) and 403(b) plans work and how to decide on investment choices
Please note that this program will address issues of interest to young women just beginning their careers as well as those who are closer to retirement. The investment choices you make at the beginning of your work life are vitally important to your financial security in retirement.

Bring a friend to FPW and get a free financial planning book (while they last).
If you think you are too young to start planning for retirement, the earlier you start, the easier it is to reach your goal.
If retirement is not your main financial concern don't forget some of the excellent web resources to learn about other aspects of credit, money management, and investing:
http://www.money.com/money/101/lessons/

September 12 FPW: module 7: Are You (or your spouse) Self-Employed &/or Responsible for Your Own Retirement? If you or your spouse is self-employed (or plan to be) or if your employer does not provide a retirement plan, don't miss this session. For small business owners, too!
New comers: You can review previous modules at: <http://www.ces.purdue.edu/retirement>

Other news items:
The FPW Advisory Board is looking for a few new members. The role of the Advisory Board is to help plan future programs (for 2002), to suggest changes and improvements in FPW, and to help promote attendance. The board meets once or twice a year. There is no monetary compensation. Here is your chance to help influence the future of FPW. To apply: email your name and address to Jean at: lown@cc.usu.edu. Please tell me briefly why you are interested in serving as a board member, your approximate age (i.e., in 30s or 40s, etc.) and employment status (to get broad representation of women of different ages and employment status).

Five Steps to Building Wealth
According to a study by the Consumer Federation of America (CFA) and Providian Financial, the majority of Americans underestimate the wealth that individual Americans have; 4.6 million (4%) U.S. families have at least a million dollars, and while Americans believe that only 36 percent of households have at least $100,000 in assets, in actuality 42% do. It is also not widely understood the importance that home ownership has in contributing to this wealth.
In fact, home ownership is the greatest source of wealth for Americans. One fourth of U.S. households earning $10,000 - $25,000 have over $100,000 in assets, demonstrating that income level is not as important a factor as is home ownership. Home ownership comprises up to 43% of their wealth, verses 17% in retirement accounts and 6% in stocks, bonds, and mutual funds. Stephen Brobeck, CFA's Executive Director, indicated that "contrary to the belief of many, those with modest incomes can, over time, build wealth…The easiest way to do so is to buy a home, faithfully make the mortgage payments, and be cautious about borrowing the accumulating home equity."
The America Saves campaign promotes 5 steps to building wealth:
1) Pay off high-cost debt (see next item below)
2) Buy a home and pay off the mortgage before you retire.
3) Participate in a work-related retirement program.
4) Outside of work, save monthly through an automatic transfer from checking to savings.
5). Earn over 5 percent on savings in CDs or U.S. Savings Bonds.

How to get out of debt. (from Kiplinger's Personal Finance Magazine web site)
http://www.kiplinger.com/managing/cash/budget/budget3.html

The New Tax Law: Resist Squandering Your Tax Savings
By Frank C. Armstrong, CFP
We're all about to receive some serious tax relief. And the temptation to spend those savings frivolously could be strong. We are going to suggest ways to invest those savings. It might not be as much fun as going on a spending spree today, but it will pay off for you in the long run.
First, here's a quick review of how we'll be getting some of that "found money" thanks to the new Bush tax law:
• Marginal tax rates are being lowered
• A 10% tax bracket has been created from the 15% bracket
• Child credits have been increased
• The marriage penalty has been reduced
• The limitations on certain deductions for high-income taxpayers are being reduced and in some cases eliminated
• Earned income tax credits for low-income taxpayers are being increased
These changes occur automatically when you prepare your taxes. And we think the best thing to do with the money you'll save on your taxes over the years is invest it for your financial goals, such as retirement.
Here are some of the savings you can expect immediately:
Rebates. People who filed their year 2000 income taxes will start getting rebate checks this month ($300 for single filers, $500 for heads of household and $600 for married couples).
Withholdings. Employers are required to reduce withholdings on your earnings starting July 1. This year, the reduction is one-half percent for anyone in the 28%, 31%, 36% and 39.6% tax brackets. There's no change, though, for those in the 15% bracket. Initially, these reductions in withholding will be minimal. For instance, according to H&R Block, a single taxpayer who is paid $1,300 twice a month will receive about $2 more in each paycheck. A person paid $2,500 twice monthly will get about $13 more in each check.
Yes, we know $2 seems a pittance. But over the life of this new tax law, your savings will accumulate more than you might think, and as rates continue to fall, your savings could be substantial. Again, consider this money as a source for badly needed savings; don't spend it foolishly.
What can you do with the money?
• Increase your contributions to your 401(k) or IRA contributions by the amount of your tax reduction.
Since you're not used to having this money now, you shouldn't miss it.
Source: directadvice.com weekly email newsletter (edited and shortened).

Sound Money call in radio program (Sat. 9-10 am 89.5 or 91.5 FM) is hosted by Debra Baer 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. Featured topics in the month of August are:
August 4, 2001 Small Business Start-Ups, with Peri Pakroo
If you're longing to leave your job behind and become your own boss, don't miss this edition of Sound Money. Peri Pakroo is an attorney who has started more than one business herself, and she knows the hurdles that must be overcome. What type of organization should you choose? What should your business plan include? How can you be sure you file the right forms in the right places? All of this is covered in her book, The Small Business Start-Up Kit (Nolo.com, 2000), and she'll join Debra Baer and Chris Farrell for this edition of Sound Money.
August 11, 2001 Your Money Manager, with Erica Whittlinger
If managing your money isn't your idea of a good time, but you know you really ought to get serious about putting some order into your personal finances, Erica Whittlinger can help.
August 18, 2001 Back-To-School Money Management, with Ellen Braitman
Heading off to college is a big step. For most students, it means moving away from home for the first time. Living in a dorm, getting along with roommates, adjusting to cafeteria food, and balancing homework with a social life can all catch the unprepared student unawares. Perhaps the biggest challenge of all is managing money. Whether subsidized by generous parents or eking out a living with part-time jobs and student loans, college students need to master the fundamentals of living on a budget and managing debt. Ellen Braitman is the author of Dollars and Sense for College Students: Or How Not to Run Out of Money by Mid-Terms, and she'll join Debra Baer and Chris Farrell for this edition of Sound Money.
August 25, 2001 Student Loan Repayment, with Jeff Hanson
The recent decrease in interest rates on student loans makes loan consolidation very attractive for many borrowers. The rates on Stafford loans are now at their lowest point in more than 20 years, according to Jeff Hanson, director of debt management services at The Access Group. However, not everyone understands the choices available to them when it comes to repaying student loans. On this edition of Sound Money Hanson will join Debra Baer and Chris Farrell to define terms such as forbearance, deferment, and consolidation, and explain how to find a comfortable payment schedule.
September 1, 2001 Managing a Mutual Fund Portfolio

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/