July 2007 Newsletter

July 11:  The five timeless principles of investing. Jeff Salisbury, fee-only investment advisor.
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. For further information: (435) 797- 1569; lown@cc.usu.edu ; http://www.usu.edu/fpw/
Bring a female friend or colleague with you who is attending FPW for the first time and you will receive a thank you gift. Please speak up at the meeting and let us know.
Upcoming FPW programs:
August 8:  Choosing and working with a financial advisor, Allen Marler, CFP
Financial Planning Basics: http://www.CFP.net/learn/resources.asp
Introducing: The 10% Solution TM
[ Logan , UT , June 22, 2007 ] - The 10% Solution takes the math out of saving.  And, it makes good financial sense. To figure out how much you have to save, simply take your gross pay each period and "drop" the last digit.  If monthly gross income is $2,000 per month, save $200.  If family income is $60,000 each year save $6,000 per year or $500 each month.  The Association for Financial Counseling and Planning Education® and its 800 members are announcing today the start of the 10% Solution - a five-year campaign designed to increase the savings rate of Americans to 10%.  The percent of income saved by Americans dipped into negative territory in 2005 where it remains today. Simply put, Americans spend more than they earn, financing their spending by depleting savings funds and increasing credit obligations.What can saving do for you? 
Saving relieves personal stress and improves relationships. Many studies suggest that disagreement over finances is a major reason for marital strife and divorce.  And for the unmarried, financial distress is a major factor in general dissatisfaction and unhappiness.  Studies show that financial stress is not necessarily due to a lack of income but instead is due to unsustainable spending, saving and investing patterns. Saving reduces reliance on credit and can save thousands of dollars in interest. The percentage of disposable income used to pay debts is still near record highs.  The American Bankers Association reported in 2005 that 43 percent of consumers carry balances each month on their credit cards.  M any Americans owe $2,000 or more on their credit card debt resulting in $45 in interest each and every month at 15%.   Saving helps fund a comfortable retirement yet most Americans are not putting enough away for retirement.  As employers continue to decrease or eliminate pension benefits, private saving is the only remedy for this malady.  Social Security benefits will not - nor were they designed to -- provide enough income for a sustainable retirement.
Saving increases confidence and the likelihood of getting out of poverty.  Persons with even small amounts of savings are more likely to continue saving - even after depleting their savings to zero to meet an emergency. 
Saving is habit forming.  If 10% is too daunting, start with 5%. Or 3%.  Follow the formulas below for allocating your savings into retirement, emergency and future spending "funds."  Small amounts of saving quickly add up.  Begin today.Where should this saving go? Consider putting one-half into a retirement plan - 401(k) or (403(b) plan at work, or an individual IRA or Roth IRA.  Save one-third (or $67 or $167 in the examples above) for emergencies - in a savings or money market account.  These funds can help pay for unexpected household or auto repairs, medical deductibles, or other unplanned expenditures.  Place the remainder in a savings account to fund future goals such as a vacation, roof repairs, or college education. 
AFCPE members across the nation, including Financial Planning for Women, are dedicated to improving the financial stability and security of all Americans.  Members assist consumers with financial decision making through education and one-to-one counseling.  You may contact Jean Lown at 435-797-1569 or lown@cc.usu.edu or visit the Financial Planning for Women website at: http://www.usu.edu/fpwNews & Resources to enhance life-long learning:
The Federal Reserve Board launched our new mortgage comparison calculator for consumers:
https://www.federalreserve.gov/apps/mortcalc
"Our goals for this project are to help consumers compare across different mortgage types, to help them think beyond the initial payment to future payments, and to help them understand the equity-building features of different mortgages they are considering.  There is an extensive help file that provides supplemental information to the screen info."
Wi$e Up - Financial Planning for Generations X and Y
http://wiseupwomen.tamu.edu/
Wi$e Up is a financial education program that targets women aged 22-35. The program is available to individuals as an online course and to local organizations that offer the program as a workshop series. Wi$e Up also features national, interactive teleconference calls with financial experts. The goal is to promote financial security through online education and to encourage responsible saving habits for future retirement.
2 cent tips newsletter is produced monthly by two USU family Finance graduates who are Extension educators in Idaho . To receive this free newsletter (written with a sense of humor) by email, contact: erickson@uidaho.edu
The Institute for Consumer Financial Education < http://icfe.info > is a reliable source for information. You can subscribe to the ICFE e-newsletter by clicking on subscribe at the top.
The LDS church's website: http://providentliving.org/media/training/peaceheart/main.html
was recommended by an FPW participant. There's an online financial course covering budgeting, savings and debt, accompanied by quotes from LDS church leaders on avoiding debt, reducing consumption, choosing a modest home, etc.
Send your suggestions for the newsletter to: lown@cc.usu.edu
Nearly Half of Americans Worried about Household Debt
"Almost half of all Americans (48 percent) are uncomfortable with the total amount of household debt that they carry, according to a nationwide survey released yesterday by LendingTree. Furthermore, the survey discovered that 54 percent do not have a financial plan. The survey, which polled 1,499 consumers nationwide, examined Americans' relationship with debt by asking more than 65 questions to participants in categories such as financial planning, loans and borrowing, and credit card debt. Young families, ages 19-34 with children, had the highest debt-to-income ratio (59 percent spend half or more of their gross income on total debt expense) and were the most uncomfortable with their total household debt (68 percent) and least financially prepared to handle an emergency expense (59 percent did not have savings available for an emergency). Not including mortgage debt, the survey revealed that 74 percent of Americans envision themselves being completely debt free at some point in their lives. Click here to read
LendingTree's Smart Borrower. www.lendingtree.com/debtsurvey"
Lending Tree Guide to Smart Borrowing
http://www.lendingtree.com/debtsurvey/LendingTreeGuidetoSmartBorrowing.pdf
Household Debt Rises on Mortgage and Credit Expenses
"Mortgage and consumer credit debt combined to create total household debt in the United States that reached nearly $13 trillion last year, an increase of 8.6 percent over 2005, according to the May edition of the Nilson Report. This amounted to an average of $112,027 for each of the country's 114.4 million residences. This figure covers debt that households incurred directly and does not include any allocated taxpayer responsibility for the federal, state and local government debt of nearly $9 trillion in 2006. If total government debt outstanding were added to mortgage debt and consumer credit, debt would be $187,902 per residence. Household debt overtook disposable personal income five years ago when it reached nearly $8 trillion. Since that time, DPI has grown by 27.2 percent while household debt has increased by 67.5 percent. Over the last 10
years, household debt has grown from 91.6 percent of disposable personal income to 134.6 percent." From: June 12, 2007 American Bankruptcy Institute newsletter
Growing Debit Card Use Sparks Warnings
Despite the growing popularity of debit cards, many consumer groups recommend limiting their use -- or not using them at all - - because they may not have the same liability protections as credit cards, the Wall Street Journal reported today. "More and more consumers are using debit cards over cash and checks because it is convenient," says Nancy Krattli, vice president of consumer debit products at Visa International's Visa USA. In 2006, she says, $459 billion was spent on Visa consumer debit cards, 11.9 percent more than in 2005. The cards are particularly popular with people aged 18 to 25; an April poll from Visa found that 76 percent of this age group "never leaves home without a payment card, and one-third rarely carries cash." With a debit card, the liability varies. The loss could be limited to $50 if a cardholder notifies the financial institution within two business days after learning of the loss or the theft of the card or PIN number. Beyond the 48 hours, the cardholder could lose as much as $500. The loss could be even higher if the cardholder doesn't report it within 60 days after receiving a financial statement listing the fraudulent transactions." (Quoted from American Bankruptcy Institute newsletter)
New Schemes Prey on Desperate Homeowners
"With the housing market in decline, financial predators are finding different ways to take advantage of people who fall behind on their payments, the New York Times reported today. The schemes take various forms and often involve promises to distressed homeowners of cash up-front, free monthly rent and a chance to retain their houses in the long run. But in the process, someone else takes over the deed, borrows as much as possible against the value of the house and pockets the cash while the homeowners still end up losing their homes. There are no nationwide
numbers on this common fraud, known as equity stripping, but it has turned up in almost every state. Seven states have passed laws to try to stop it. Still, with foreclosure rates rising rapidly, it will be a growing problem, consumer advocates say. "Conditions now are perfect for these scams," said Lauren K. Saunders, managing attorney at the National Consumer Law Center in Washington, D.C . "We are at the end of a period of rising real estate prices, so a lot of people have equity in their homes. But we also have a foreclosure crisis." Victims are becoming more
plentiful as homeowners fall behind on payments and find that they cannot refinance, with mortgage rates rising. The Mortgage Bankers Association recently disclosed that nearly 19 percent of all loans to less-creditworthy consumers, or 1.1 million mortgages, were either delinquent by more than 30 days or in foreclosure. This is up from 17.9 percent last year." (Quoted from American Bankruptcy Institute newsletter). Know someone who needs help to keep their home? Refer them to USU' Family Life Center for counseling: 797-7224.
View USU's Dr. Phil Swensen's Retirement Seminar videos (6 sessions) online at: http://www.usu.edu/hr/retirementseminars2.cfm
View Extension's Retirement Planning presentations online at:
http://extension.usu.edu/retirement/htm/presentations
Read The Wall Street Journal Sunday in the Sunday Salt Lake Tribune and Deseret Morning News Business Section or read it online: http://online.wsj.com/public/page/sundayjournal.html
Housing and Financial Counseling (USU Family Life Center) workshops:
Saturday July 14 Homeownership workshop 8:30-4:30 Registration required: 435-797-7430 .
Smart Money education series for teenagers 14-18 years and their parents.
Wed. July 18 at 6:30 p.m. USU Charter Credit Union , 198 N. Main , Logan . In downstairs conference room (enter at rear of building). Workshops are free. To register: 753-4080, ext 3400 or moneyteacher@usuccu.org
Planning Ahead: Utah Retirement Systems Pre-Retirement Seminar comes to Logan on Thursday September 20, 9 a.m.-4 p.m. This seminar is designed for URS participants within 5 years of retirement. Free for members and spouses. Seminars fill quickly so register now: 800-753-7750.
The USU Family Life Center , 797-7224, 493 N 700 East (bottom of Old Main Hill), provides individual financial counseling. This is the best source for basic money management and getting out of debt. They offer the PowerPay computer debt analysis. Counseling sessions cost $5 for first session with sliding scale charges based on family income and family size for subsequent counseling sessions.