Alicia Kellebrew, certified financial professional with The Village Family Service Center, talks about Family Finances, on North Dakota Today.
Morgan Almer, certified financial professional at The Village Family Service Center, was on North Dakota Today talking about Student Loan Debt.
Think back to a time when having an extra $1,000 would have made a major difference in the circumstance you were facing. How would the situation have played out differently if you had $1,000 to draw upon? Could you have avoided using a credit card and paying interest, taking out a payday loan, or having to borrow from family or friends? Whatever the situation, when you need to borrow money for unplanned expenses, it usually costs you in more ways than one.
The standard recommendation is to have a liquid savings account containing three to six months of your monthly expenses. Determine this amount by tracking what you spend. Don’t forget about your periodic expenses-the expenses that occur throughout the year, but not necessarily on a monthly basis. Periodic expenses include auto/home maintenance, gift buying, traveling, propane, medical deductibles, etc.
Three to six months of expenses in savings can feel like a very lofty goal for most families. However, having this amount in savings will protect your household from a tailspin if faced with periods of unexpected unemployment, seasonal income shortages, medical expenses, and major repairs.
Adequate savings provides you with a stable financial foundation. Just as a house is only as stable as the foundation it is built on, so are your finances.
Electronic Couponing and Deals
You can save money using the Internet through a variety of websites and mobile apps. Here are some of our favorites.
All of the websites listed here are also available as apps.
• Freebies2deals.com – Created by a mom from Utah with established connections to the best freebies and deals each day. She gives great advice and also matches up store coupons with manufacturers for you. This is a great time-saver for people who want to get the deals of a crazy couponer without spending the time.
• Zulily.com – Deals on clothing for babies and kids
• 1saleaday.com – Various products on sale
• Woot.com – Daily deals
• Retailmenot.com – Coupon codes and deals
• eBates.com – Just about every online retailer is on this site. Once you have an account, you can search by product or retailer, find discount codes, and receive cash back on all your purchases. You get a free $10 gift card to the place of your choice just for signing up!
• GeoQpon – Coupons you can scan at the register
• Shopkick – Find coupons and earn points toward gift cards
• Smartphonemate – Earn credit at Amazon.com just by having the app open on your phone ($3/month) or tablet ($5/month)
• Gasbuddy – Lists all gas stations in the area, along with prices. You can update the prices as well and earn entries for a free gift card
A recent poll on the National Foundation for Credit Counseling (NFCC) website revealed that 57 percent of respondents misunderstand the purpose of a budget, viewing it as a restriction on their spending, when in fact, just the opposite is true.
“A budget actually provides the structure through which a person can be in charge of his or her spending, directing the dollars to their best use,” said Gail Cunningham, spokesperson for the NFCC. “Spending should be a reflection of a person’s priorities, but without a plan, the priorities often get pushed aside in favor of the tyranny of the urgent.”
The reluctance to construct a budget suggests that people may be afraid to face the financial facts, choosing instead to allow the most pressing need or want of the moment to make the decision for them. Instead, the NFCC reminds consumers that a spending plan includes the following benefits:
• Creates a thoughtful awareness of spending;
• Relieves financial stress;
• Increases financial security;
• Helps structure a plan for the future;
• Allows planning for large purchases;
• Assists in meeting financial goals;
• Frees up money to designate for savings;
• Uncovers money available to invest;
• Allows preparation for emergencies;
• Avoids late payments through scheduling timely payments;
• Finds hidden money for debt repayment, and
• Potentially raises the credit score.
Instead of being restrictive, a budget often creates more money due to smart spending choices. If financial freedom is the goal, a spending plan is the tool that starts the process. “It’s a shame that budgeting has a negative connotation. Everyone needs a spending plan, but when times are tough, a budget is even more critical,” continued Cunningham. “When every penny counts, it’s important to count every penny.”
The actual poll question and answer results are below:
I consider a monthly budget to be…
A. A restriction on how I choose to spend my money = 57%
B. A freedom allowing me to spend my money as I have chosen = 43%
With Fathers Day approaching, what better place to look for fatherly financial advice than from dads who also happen to be executives at the National Foundation for Credit Counseling (NFCC) Member Agencies?
“If father knows best, then the dads who lead the NFCC agencies are the perfect ones to provide financial tips to the young men of America,” said Gail Cunningham, spokesperson for the NFCC. “These leaders direct over 2,000 NFCC Certified Counselors who deliver expert advice and provide solutions to the more than two million consumers who reach out to an NFCC Member Agency for help each year.”
Below are excerpts from the experts:
• Mike Robards, Credit Counseling of Arkansas – “My one piece of financial advice this Father’s Day to the young men of America is to be wary of stuff. I doubt that apple Eve ate was any more enticing than the stuff we men are attracted to today: season tickets to our favorite team’s events, golfing, hunting and fishing equipment, nice trips with friends and family, picking up the tab at the café and the list goes on. None of these, other than the apple, are bad. The key is to count the cost, and take the time to get past the initial lure. Speaking of lures, think about fishing and how that fish on the hook flops around in the boat. That shiny lure must have looked pretty good at one time, but the fish might want to rethink the decision to go after it. Again, enjoy the wonderful material products available in a country as wealthy as ours. But think through each purchasing decision and look beyond the shining lure to the end game that could result in financial and marital stress; or with a sound, mature decision, the result could be enjoyment with peace. I’ll take peace of mind over a piece of stuff every time.”
• Paul Atkinson, Consumer Credit Counseling Service of Buffalo – “Value your credit reputation as you would value a friend. They will both serve you well through all economic times.”
• Joe Schenkel, FinancialHope Counseling and Education – “My advice draws back on conversations with my father who passed away back in 1989. He grew up in tough times living through the Depression and wars. He taught me that nothing can take away your education. From him I learned the long term value of acquiring knowledge and a solid education. He also had a saying about work – that it is easier to push a pencil that to push a shovel.”
• Jay Seaton, Apprisen – “The three tips I’ve given our 20 year old college son are to understand credit reports and scores; understand the pros and cons of credit and be very cautious about incurring debt, including student loan and credit card debt; understand the time value of money and that by starting at a young age, wealth can be built steadily over time.”
• Steve Piotrowski, Advantage Credit Counseling Service – “If it sounds too good to be true, it probably is. Young people sometimes do not understand that the zero interest for two years on a major purchase has a caveat with it. If you are late on one payment in that two year period, all the interest will likely be added to the account balance from the date of purchase, and will continue until the account balance is paid in full. And this doesn’t even count the potential late payments and fees. Be smart by reading the fine print before you take that great deal.”
• Ken King, Consumer Credit Counseling Service of Sheboygan – “It is always easier to borrow money than it is to pay it back. If you think you really need something, first try living without it for a week. There are two ways of getting everything you want: keep accumulating, or desire less. To me, the second way is personally the most satisfying.”
• Joe Allen Stokes, Consumer Credit Counseling Service of Springfield – “Avoid purchasing those ‘big-boy toys’ such as a boat or new car, unless the payments can be made without causing a cash-flow issue.”
• John Jackson, Consumer Credit Counseling Service of the Mid-Ohio Valley – “It’s never too early to start thinking about, planning and saving for retirement. Many fathers get serious about retirement planning when they start a family, but the earlier retirement savings is worked into a budget, the more rewarding those “Golden Years” can be.”
• Joshua Huffman, The Village Family Service Center – “Never make a financial decision thoughtlessly, no matter how minor a decision it may be. Make sure your values and goals are reflected in your money choices.”
“Taken collectively, this advice is a formula for financial success,” continued Cunningham. “Even if a person only embraces one of these tips, they’ll be in a better place than they were last Fathers Day.”
Village Financial Counselors Advise Couples to Talk Before They Walk
The recent poll hosted on the National Foundation for Credit Counseling (NFCC) website revealed that 68 percent of respondents held negative attitudes toward discussing money with their fiancé, with five percent indicating the discussion would cause them to call off the wedding.
“It is telling that two people who intend to spend the rest of their lives together would see a conversation about money as so disconcerting,” said Gail Cunningham, spokesperson for the NFCC. “The ability to have open and honest discussions is key to a successful marriage. With many brides and grooms walking down the aisle in June, regardless of how difficult it may be, the conversation about personal finances is one that should be neither ignored nor postponed. As a matter of fact, to increase the odds of making ‘happily ever-after’ a reality, the discussion should take place before the ‘I do,’ not after.”
Financial counselors at The Village Family Service Center recommend the following Do’s and Don’ts for that much-needed financial conversation:
- Don’t spring the conversation on the other party. Instead, set a time to talk that is convenient for each.
- Do make it a casual conversation about a serious subject, respecting the fact that each person has valid opinions and concerns.
- Do be honest about the current financial situation. If the courtship phase of the relationship has painted a financially unrealistic picture, it’s time to be honest about what the long-term lifestyle will look like.
- Do probe to understand long-held financial attitudes, often present since childhood and likely ingrained by observing how parents addressed money issues.
- Do acknowledge that one may be a saver and one a spender, understanding that there are benefits to both approaches and agreeing to learn from each other’s tendencies.
- Don’t hide income or debt. This is known as financial infidelity. Instead, in the spirit of openness, bring financial documents, including a recent credit report, pay stubs, bank statements, insurance policies, existing debt obligations and investments to the table.
- Don’t point the finger of blame. That’s a real conversation stopper.
- Do make a plan in advance to deal with any skeletons that come out of the financial closet. Such surprises can potentially compromise access to future credit. Now is the time to deal with surprises.
- Do construct a budget that includes savings. When just getting started, money is often tight, making it tempting to delay beginning to save. However, when every cent counts, it is even more important to have a financial safety net in the form of savings.
- Do decide which person will be responsible for paying the monthly bills. It is likely that one spouse will be a good fit for this task, while the other finds it burdensome.
- Do allow each person to have independence by setting aside money to be spent at his or her discretion.
- Do decide upon short-term and long-term goals. It’s appropriate to have individual goals, but having family goals is important, too.
- Do talk about loaning money to family members and friends. Decide if it’s something each is comfortable with, or should be avoided.
- Do talk about caring for aging parents, and how to appropriately plan for their financial needs, if necessary.
The fact of the matter is that people bring financial baggage into a relationship, but often don’t deal with it until problems arise. Baggage can come in the form of a poor credit rating, significant debt, or no experience managing money. Regardless of the issue, the time to address money differences is up front, before the financial bottom falls out. Court records show that financial stress is one of the main causes of divorce. Taking action now could prevent a disaster later,” continued Cunningham.
For professional assistance bringing two incomes, two lifestyles and two financial attitudes together, talk to a financial counselor at The Village. Go to HelpWithMoney.org or call 1-800-450-4019.
A broken bone, mental health therapy, a long-term illness, a car accident, a premature baby. All of these situations—and so many more unexpected ones—can land a family in medical debt. And you can’t comparison shop for a needed surgery or delay treatment for cancer until you have the money to pay for it in full.
When most people think of medical debt, they think of a person or family with no health insurance at all, yet a large percentage of Americans who have incurred medical debt actually do possess health insurance (also known as the “underinsured”). According to an article by Eileen Ambrose in the Baltimore Sun online, “It’s not just uninsured patients who rack up steep medical bills. Even if you have insurance, you might not realize that your coverage is inadequate until you’re sick and overwhelmed by co-payments and other health costs.”
If you find yourself facing medical debt, here are some steps and options to consider.
- Make sure the amounts you are being billed are correct. Doctors, nurses, medical billers and other staff can make mistakes in billing, so make sure you are being charged for services you actually received. If you have insurance, call your insurance company to confirm that all itemized amounts have been written off correctly in accordance with your policy.
- Contact your medical provider. One of the biggest mistakes people make is to ignore their medical bills. Bob Dahlseng, Certified Financial Counselor at The Village Family Service Center, advises people to contact their medical provider right away if they are going to have a difficult time paying a bill.
- Ask about community care or charity care. Dahlseng encourages people to ask about community care or charity care. “Most medical providers will have a process by which they will look at reducing or forgiving a medical bill.”
- Work out a payment arrangement with the provider. If you aren’t able to work out a payment arrangement, the provider will most likely turn the debt over to a collection agency. Dahlseng says, “Medical providers just do not hang onto their receivables for any length of time without an agreed-upon arrangement.”
- If your debt is turned over to a collection agency, don’t panic. The idea of a collection agency may be a bit scary, but Dahlseng says, “It’s not the end of the world and some can be very cooperative.” On the other hand, others are not so cooperative and will use the threat of judgment or garnishment to get you to pay off the debt. The key is to stay calm and try to work with them.
- Stick to your payment arrangements the best you can. If you find yourself unable to pay during a given month, call the provider instead of simply not sending the money. They are more apt to work with you if you keep up the lines of communication.
- Use money from a savings account or other source to make a down payment. Sometimes you can negotiate a lower final payment if you are able to pay a large enough down payment.
- Consider carefully before borrowing on an IRA (individual retirement account) to pay medical bills. You may be able to borrow on your IRA tax-free for medical purposes, but Dahlseng doesn’t recommend it. “IRA’s are meant for retirement, not for paying off medical debt,” he says.
- Be wary of suggestions to put your medical debt on a credit card. It may be tempting to use your credit card to get the collector off your back, but unless it’s just a couple thousand dollars, Dahlseng doesn’t think it’s a good idea. Even a credit card with a low interest rate is probably going to charge higher interest than the medical provider, and “if you can’t handle a payment arrangement with your provider, what makes you think you can handle the credit card payment,” he says.
By Kerrie McLoughlin for The Village Family Service Center. McLoughlin is a seasoned mom of five who blogs at TheKerrieShow.com.
Millions of Americans celebrate receiving an income tax refund each year. Many of these same people live each month under the burden of financial hardship, struggling to make ends meet, often falling behind on living expenses and debt obligations.
The February poll hosted on the National Foundation for Credit Counseling (NFCC) website revealed that a significant majority of respondents, 58 percent, intentionally plan to always receive an income tax refund, unnecessarily allowing Uncle Sam the use of their hard-earned money, only to have it returned to them without benefit of interest.
“Not only is the American taxpayer self-inflicting financial pain, they are doing so with intentionality,” said Gail Cunningham, spokesperson for the NFCC. “It boils down to a simple choice of determining if it’s more important to have extra money in their pocket each month or once per year.”
The average income tax refund in recent years has been in the $3,000 range, or approximately $250 per month. For many people, that amount can mean the difference between financial solvency and financial distress, yet they continue to have too much money deducted from their paycheck month after month. Further, although well-meaning, many who receive the refund don’t spend it wisely, and even for those who do, once the money is gone, the cycle of struggling to responsibly pay monthly bills begins all over again.
Many consumers argue in favor of an income tax refund saying that it is a forced savings. That is correct, but there is a better way to save. The NFCC advises consumers to implement the following three-step program when they receive this year’s refund:
1. Put this year’s refund into an interest bearing savings account. Upon receipt of the refund, seize the opportunity to establish an emergency savings account. This will protect against the financial unknown and create a position of financial stability.
2. Adjust W-4 withholding allowances. Although receiving a refund is not a good idea, no one wants to end up owing the government, either. To determine the correct number of withholding allowances, use the worksheet at www.IRS.gov, then submit the revised form to your employer. Know that changes such as the birth of a child, a death, or divorce may impact the number of necessary deductions, thus requiring further revisions. An adjusted form may be submitted at any time during the year.
3. Responsibly allocate additional monthly income as appropriate. Now that the money that was going to the government is coming to the consumer in the form of a larger paycheck, it is his or her responsibility to make smart decisions regarding how to spend it. Make it a priority to keep living expenses, the rent or mortgage, utilities, and insurance premiums current. The next most important payment is any secured loan, for instance a vehicle payment, followed by unsecured debt such as credit cards. If the savings account has been tapped, replenish it.
This system stops the dependency on an income tax refund, establishes savings, and provides additional money each month in order to remain financially stable.
“Since worker’s paychecks are smaller this year due to the Social Security deduction having been increased to its former level, it becomes even more critical that consumers find ways to increase their disposable income. For those receiving a refund, adjusting withholding allowances is an easy and effective way to put more money into their pockets each month,” continued Cunningham.
The actual poll question and answer choices are below:
Regarding income tax refunds
A. I intentionally plan to always receive a refund each year = 58%
B. I intentionally plan to never receive a refund = 29%
C. I have not given it any thought = 13%
Sequestration is now in place, and along with it came a good amount of uncertainty, causing many Americans to wonder how they will be impacted. By some estimates, more than one million employees of federal agencies may receive furlough notices.
Some workers are not adequately prepared to deal with a loss of income, even a short-term one. For those living from paycheck to paycheck or without significant savings, any income interruption is likely to put them over the financial edge.
For example, consider the statistics below from the National Foundation for Credit Counseling (NFCC) Financial Literacy Survey:
• Thirty-three percent of respondents admit to not paying all bills on time;
• Thirty-nine percent have zero non-retirement savings;
• Thirty-nine percent carry debt over from month to month, and
• Sixteen percent have utilized overdraft protection in the last 12 months.
“Even if a person does not anticipate being impacted by sequestration, now is a good time for a comprehensive financial review,” said Gail Cunningham, spokesperson for the NFCC. “Whether due to an unplanned expense or a job loss, no one has ever regretted being financially prepared, and preparation starts with understanding where you stand today.”
The NFCC advises consumers to take the following steps to put themselves in a better financial position, regardless of what the coming months may hold:
• Assess current financial situation – The NFCC’s free financial self-assessment tool, MyMoneyCheckUp™, is a good place to start. The tool provides consumers with a means of evaluating four key areas of personal finance: budgeting and credit management, saving and investing, planning for retirement, and home equity. After answering a series of topic specific questions, a personalized assessment of the individual’s overall financial health and associated behaviors is generated. With areas of concern identified, the analysis suggests changes that consumers are encouraged to implement in order to become more financially independent. The traditional green, yellow and red traffic light colors signal whether the consumer should continue on their current money path, proceed with caution, or stop and make a change. Individuals can also complete an optional budget to further help them assess their financial health. The tool is available in English at www.MyMoneyCheckUp.org and in Spanish at https://www.miayudafinanciera.org.
• Face the financial facts – After completing the financial discovery step, consumers may find the results surprising. Don’t ignore them. Financial problems rarely resolve themselves, particularly in emergency situations. Take action sooner rather than later, as delaying only makes the problem harder to resolve.
• Take control – Admittedly, some things are beyond a person’s financial control, but some aren’t. Control what you can by doing the following:
o Review your credit report and score, both necessary to fully understand the current financial situation, and provide a framework for next steps.
o Create a cash-flow calendar listing all sources of income. Next, plug in the dates all bills are due. This will ensure that bills are paid on time and protect the credit report and score from future damage.
o Commit to paying down debt, and if necessary, suspend all charging, consistently moving toward solid financial ground.
o Reach out to a legitimate credit counseling agency for help creating a survival plan.
“If there is a quick resolution to the sequestration, nothing has been lost by implementing the above steps,” continued Cunningham. “If not, consumers will be better prepared to face whatever comes their way financially.”
The accuracy of credit reports has been in the news lately, causing consumers to wonder how error-free their own report is. Since credit reports are the backbone of the all-important credit score, it is indeed important to fully understand what a credit report is, what consumer protections are in place, and what actions can be taken if errors are found.
“Consumers can be their own best advocate to ensure the accuracy of their credit file, but education is key,” said Gail Cunningham, spokesperson for the NFCC. “If an error is identified, it is the consumer’s responsibility to take immediate action through the proper channels in order to resolve the issue.”
The National Foundation for Credit Counseling (NFCC) offers the following Dos and Don’ts to help consumers better understand credit reports and the dispute process:
• Do understand the purpose of a credit report. A credit report is a track record that reflects an individual’s borrowing history. It also contains information about places of residency, law suits, arrests, and bankruptcies. The credit reporting agencies sell the information to those with a permissible purpose to review it, such as insurance companies, employers, lenders, and other businesses, so that they can make an informed decision. Therefore, the information contained in the report may impact loan approval, the rate at which money will need to be repaid, insurance eligibility, housing decisions, and employment.
• Do review the credit report for accuracy. At www.AnnualCreditReport.com, consumers are allowed one free report every 12 months from each of the major bureaus. Check the report for errors, confirming that all information is correct. The NFCC Financial Literacy survey revealed that in spite of it being free, 62 percent of respondents had not ordered a copy of their report.
• Do review the report often. Frequently reviewing the report allows action to be taken promptly if a problem is found, or if identity theft is suspected. Reviewing at least three months in advance of a major financial move allows time for most inaccuracies to be corrected.
• Do understand your rights. The federal Fair Credit Reporting Act (FCRA) provides consumers with protections around the accuracy and privacy of information in their credit file. The FCRA holds both the credit reporting company and the entity that provided the information to the bureau responsible for investigating and acting upon the dispute. The bureaus have dispute resolution processes in place, but it is up to the consumer to initiate the process by submitting the dispute form either online, by mail or by phone.
• Do expect a timely response. The FCRA requires credit reporting companies to investigate the items in question, usually within 30 – 45 days of the dispute being filed. The bureau receiving the dispute must forward all relevant information to the source of the information, thus beginning the investigation process on their end. After the provider’s investigation is complete, the results are sent back to the bureau. If the information provider finds the disputed information to be inaccurate, it must notify all three credit reporting companies, allowing them to each correct the information contained in their files.
• Don’t think that all errors have an equal impact. Some mistakes on reports can have a negative impact on the credit score, while others are not material. Examples of errors to address immediately are those containing information that does not belong to you, account inaccuracies, credit lines with limits listed as lower than they actually are, or negative information that has outlived the allowed reporting time.
• Do add a statement explaining the circumstances. If an entry is disputed, but the consumer disagrees with the results of the investigation, he or she is allowed to add a 100 word or less Statement of Dispute to be included with each future credit report, as well as to those who received a copy of the report in the recent past if requested.
• Don’t expect negative information to be removed. If information is negative, but true, it needs to remain on the report. Only time can remove it. A credit reporting agency is allowed to report most accurate negative information for seven years, while bankruptcies can remain for 10 years. Unpaid judgments can be reported for seven years or until the statute of limitations runs out, whichever is longer, while some information has no limit on how long it can be reported.
• Don’t use a credit repair company. There is nothing that a credit repair business can do for you that you can’t do for yourself, and do it for free. Further, many of the credit repair companies charge consumers high fees and deliver few, if any, results. And even worse, if their advice is taken, it could result in committing fraud. Although many attempt it, credit repair companies are not allowed to ask for a fee in advance of any service being delivered, as this is prohibited by the Credit Repair Organizations Act. Frivolous challenges to a report are in no one’s best interest, and consumers should steer clear of anyone offering a quick fix.
“Since the credit score is based on the information in the credit report, one of the smartest financial moves a consumer can make is to obtain his or her credit report and give it a thorough once-over,” continued Cunningham.