Monday, April 28, 2014

Celebrate Financial Literacy Month in April

Many employees have a greater need to educate themselves about how to effectively manage their finances because many employers are eliminating retirement plans and offering 401K’s, 457 or 403b as an alternative.   Those who are unemployed or retired also need adequate skills to properly manage their finances and stretch their dollar.  In addition, financial products and services are more complex and perplexing.  April is Financial Literacy Month which stresses the importance of financial literacy.

Without adequate knowledge about basic financial literacy concepts, consumers can make devastating mistakes that can take years to recover from.  Regularly practicing good money management habits eliminate the needs for dependency on credit cards, payday loans or title loans and cash advances.

The financial stability of families is directly linked to economic growth in America. The economy is stronger when more Americans have jobs, increases in income and an accumulation of wealth.

Financially strong families tend to have better money management skills and are more willing to make major purchases that help advance our economy.  Financially successful people save more and are more able to get approval for credit cards and loans.

The average American believes all they need to do is go to work everyday and pay their bills on time.  However, being a responsible consumer requires much more.  Consumers need to be able to make informed decisions about how to earn, spend and grow their money.

This is where the importance of financial literacy plays a key role.  The lack of financial literacy education and effective money management skills result in mounds of debt, low credit scores, denial for approval of credit and loans, increased foreclosures and bankruptcies.  These factors ultimately slow economic growth.

Financial literacy increases the awareness of the benefits and risks of consumer credit and the consequences of poor money management skills.  Financial literacy benefits include:  accumulating wealth, planning for retirement, planning for children’s college education, starting a business, ability to make large purchases, maintain good credit and achieve financial goals. Financially literate consumers help the banking industry by purchasing products and services which results in stable banks, better customer service, lower fees, and increases in money available for lending.

The primary benefit of financial literacy is providing an improved standard of living for students, individuals and families.   Financial literacy helps individuals and families accumulate wealth and live a financially stable life.  Families are also able to pass knowledge on to their children and future generations.

This month make at least one change to your spending habits to help pay down debt, create a savings account or start planning for your retirement.  Make a promise to yourself and your family that starting in April you will do at least one of the following to improve your financial life. 

  1. Create a budget or spending plan and track spending daily, weekly or monthly.
  2. Verify financial statements each month.
  3. Pay bills on time or before the due date.
  4. Get current on any late bills by negotiating with creditors or setup payment plans.
  5. Don't buy something if you don't have the cash to pay for it.
  6. Avoid using risky options such as payday loans, cash advance or title loans.
  7. Use credit cards for emergencies only.
  8. Get overdraft protection to reduce bounced check fees and find banks with little to no monthly fees.
  9. Order a copy of your credit report and dispute any errors.
  10. Pay off at least one credit card this year.
  11. Create an emergency fund to cover bills and monthly expenses for 9-12 months.
  12. Reduce monthly spending by 30-50%.
  13. Buy more of items you need instead of items you want.
  14. Plan for your future by performing estate planning.
  15. Avoid filing for bankruptcy.

Monday, April 07, 2014

Guest Post - Take the worry about buying a home!

A knowledgeable REALTOR® can help take some of the stress out of the home buying process.  Now let’s see what you can do to take some pressure off of yourself.

Say that you and your significant other have spent several evenings looking at homes over the last several months, or you allocate Sundays to view Open Houses.  One of two things will likely happen and they both will cause you some anxious moments: 1.)  You looked at twenty homes and didn’t find exactly what you were looking for; or 2.) You found the ideal home only to find out that someone has already put a contract on it.  In markets where there is very little inventory and lots of buyers, the speed in which you have to make an offer can be nerve racking.

Purchasing a home is perhaps the most important financial decision you will ever make, let’s face it, it's the largest part of that quality of life that you envision for your family.  If you are experiencing anxiety, it might help if you pinpoint where this uneasiness comes from.

What determines our comfort in any given situation; is our perception that we have things under control.  There are so many moving parts in the home buying process, that it would be impossible to control every outcome; trying to do so would only lead to more stress.  When anxiety sneaks in, try and take a step back and refocus on the 'big picture'.  You already know why you're buying a home!  Psychologist Sue Murrin urges homebuyers to adjust how they think about the process in order to combat stress.  According to Murrin, "we have to tackle our own thoughts as much as taking action on any aspect of the buying/ selling stages.” (article: House Buying Stressful or Fun by Sue Murrin)

Before you identify a home that will be right for you, it is important to try and understand whether you are stressed by the process, or about internal feelings that are within your control.  You can take away some of the stress by addressing some of the unknowns.  Money Are you worried about spending too much to maintain a healthy budget?  If so, talk to your agent about showing you homes that may be a little less expensive.  Career Is your employment situation likely to change?  If so, deciding to wait until you are sure that your job is stable or salary remains constant, may be a viable option.  Market ― Do you fear that the price of the home may go down in value?  Home prices do fluctuate that we know, but one thing you can do to mitigate this is to make sure you take pride in the appearance of your home, and think of it as an investment for the long-term.

Make sure you’ve done your homework, and once the hard part of searching and buying a house is over, you can now finally enjoy a lifetime of making it yours.
Jason Wrenn
Long and Foster