July 2005 Newsletter
July 13: Retirement Planning with USU Extension Specialist Barbara Rowe
Financial Planning for Retirement Workbook (Purdue Extension)
This is a 25 page workbook. I regret that I do not have the funds to make copies for everyone so please print a copy off the website and bring it with you because Dr. Rowe will be referring to it during her presentation. Even if you don't have the workbook with you, you can benefit from the presentation.
FPW meets 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).
August 10: Voluntary Simplicity with Marianne Christian
September 14: Start Your Own Money Club. A money club is not an investment club; it is a support group to help members manage their money more wisely or achieve specific goals, either financial or educational (related to finances).
October 12: Insurance: Basic principles that can be applied to all categories of insurance plus specific tips on property insurance.
Remember those free credit reports? Well, it's time to order another one. You can get a free copy once a year from each of the 3 credit bureaus. When this option became available in December I suggested that you space your requests throughout the year rather than order all 3 at once. So, now it's time to order from one of the other bureaus. DO NOT use any web site other than: http://www.annualcreditreport.com/ You may be charged a fee at other sites. Call 1-877-322-8228 to request your credit report by phone.
Tip of the month: Negotiate!!
You've probably all heard that you can negotiate lower rates with your credit card company by calling and asking (essentially threatening to move your business to another card with a better offer). There is so much competition in the market that it is cheaper for the card issuer to offer you a lower rate than to attract a new customer. Well, I put this concept to work in renewing my subscription for Money magazine. Recently my husband received an offer to subscribe to Money for $10/year so I subscribed for him and use his copy to give away each month at FPW. I just received my renewal notice for my subscription with the rate of $39.95/year or $89.95 for 3 years! As a long time subscriber I resent being charged such a high rate! So I called the 800 # and politely asked why I should renew at these rates when my husband paid only $10/year. Immediately the sales rep offered to renew my subscription at the $10 rate! So I signed up for 3 years for a total cost of $29.85!
Website of the month: http://www.usu.edu/fpw/
The FPW website has been updated! Webmaster Tiffany Smith, a USU Family Finance student, is updating the website each month and adding lots of useful links. Check us out at: http://www.usu.edu/fpw/
Please forward our website address to a friend and invite her to attend with you.
Book of the month:
Financial Planning for Retirement Workbook (Purdue Extension)
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, some of them end up in bankruptcy court because of poor decisions at the time of divorce or in the aftermath. To order the book: 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 newly issued Series EE bonds. Inflation-adjusted Series I bonds are not affected. Interest rates on previously-issued U.S. savings bonds will continue to change every six months on May 1 and November 1. Instead of changing interest rates every six months to reflect current interest rates, the rate on new Series EE bonds will be fixed for the life of the bond. This is NOT a good deal when interest rates are low but rising (the current conditions) because you will be locking in a low rate for the life of the bonds. 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. If you cash them before 5 years you will lose 3 months of interest. Series I bonds continue to be a good choice for long term savings (part of your emergency fund). Remember the difference between saving and investing. Invest for growth; save to meet short term needs and to have funds to invest.
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 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. You need to pay more than the minimum to reduce your debt.
Financial Planning for Children with Special Needs
MetLife offers an internet tool to assist in financial planning for disabled children
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; firstname.lastname@example.org