Personal Finance Blog

Tips And Stories To Help You With Managing Money

Credit Cards Help Build Your Credit

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Younger people need to understand how having a few credit cards can serve them well.
Younger people need to understand how having a few credit cards can serve them well.
More people are opting not to have a credit card. Studies show that 63 percent of those is the Millennial group (ages 18-29) don’t have a card. Thirty-five percent of those over 30 ditto, according to Bankrate.com.

Lacking plastic can, in fact, simplify your finances, but it also can cause complications in your financial dealings. Such things as renting cars or checking into hotels these days are based on credit cards. One leading hotel chain has put a $700 hold on a customer’s debit card if he can’t produce a credit card.

While it’s possible to build credit without one, it’s easier with one. Especially young people who don’t yet have mortgages and car loans can find it tough to build credit. That can make it difficult when it comes time to secure a loan. If the only thing on your credit history is a student loan, you may find slow sailing.

Credit scores are based on five categories: payment history (35 percent); amounts owed (30 percent); mix of accounts (10 percent); new credit (10 percent); and length of credit history (15 percent.) A credit card can impact the first three of these categories, affecting 75 percent of your overall score. At least one active account that has been reported for six months or more is necessary to generate a report at all.

A credit card does not inevitably mean interest payments. And you needn’t pay hefty fees. A secured credit card allows you to put down a deposit, which will be returned when the account is closed. Transactions of these cards are reported to the credit bureaus the same as with standard cards.

Paying off a card each month or in the “grace period for purchases” avoids interest and fees. The credit card companies make their money on those who carry balances, especially very large balances.

Capitol One, Wells Fargo and Bank of America are among those institutions that offer secure cards. Inquire at your own bank or credit union to see if you can take advantage of that option.

If you dislike the idea of any amount of debt, use your credit card for a minimal purchase, such as lunch, just once a month. Then pay it off and you reap the benefit of a good credit rating. If you use the card to purchase an item for which you could have paid cash, the same benefit applies. But you’ll notice the difference when it comes time to make a major purchase.

Coke Fans Now Pay More For Less

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Smaller sized Coca Cola containers mean larger prices per ounce.
Smaller sized Coca Cola containers mean larger prices per ounce.
Amid growing health concerns about the effects of popular soda pops, many Americans are cutting back on the number of refreshing sips they allow themselves daily. And some of the producers of such products are paying attention.

Both Coke and Pepsi, the largest of the carbonated drinks purveyors, now offer smaller cans and bottles of product – and charge more for them. The smaller containers have fewer calories, hence less guilt for the guzzlers. But the price is steep. You won’t be saving any money by purchasing the mini cans.The smaller containers can cost twice as much per ounce as standard cans and bottles.

The 7.5-ounce mini-cans and 8-ounce or 8.5-ounce bottles have been around for awhile, but the soda giants are hyping them to ride the health-concern crest. Last year, Coke reported sales of a million mini-cans.

The shift is an about-face for the producers, who have in the past measured the volume of product sold. But they see an opportunity to give the soda drinkers alternatives while health officials are blaming their products for a role in the national epidemic of obesity, especially among children.

When soda sales reached their peak in 1998, the average American was drinking the equivalent of 576 cans a year. By 2013, that average had slipped to 450 cans a year. The smaller containers appeared to the producers a good alternative to seeing sales continue to slip. It fits into the current philosophy of smaller portions of all edibles.

So while the cans get smaller, the price tag gets larger. A regular 12-ounce can of Coke sells, on average, for 31 cents. The 7.5-ounce mini-can one shelf over carries a price of 40 cents each. That means the purchaser is paying 2.6 cents per ounce for the larger version, 5.3 cents per ounce for the cute little can. The result is increased revenue for the producers. Sales indicate that many soda fans are willing to pay the difference. The company’s sales for the smaller versions were up 9 percent through last October, while the old standard sizes only saw an 0.1 percent hike.

Still, the old standbys dominate the industry and nobody knows how long the yen for smaller servings will last.

Coke is hedging its bets with other products that cater to more health-conscious Americans, such as a reduced-calorie drink sweetened with a mix of sugar and stevia, a sugar substitute.

The whole “smaller is better” scenario is a direct about-face after years of increasing the size of soda pop servings. Until 1955, the standard 6.5-ounce bottle was the most frequently sold serving. Then came larger and larger containers, up to and including the three-liter plastic bottle. At the fountain, the availability of 32- and even 64-ounce cups fed the craze.

When it became apparent that all those big gulps of soda were contributing to poor health habits, officialdom began taking steps. In Berkeley, Calif., voters approved a per-ounce tax on the drinks. It seemed prudent for the Coke and Pepsi people to join the crusade for fewer calories. Last fall, the two producers were joined by Dr. Pepper in supporting an initiative to reduce the calories in their drinks by 20 percent over the next decade. Smaller-sized servings will be part of that campaign.

Budget Is The Key To Personal Finances

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Budgets help you to meet your financial goals.
Budgets help you to meet your financial goals.
Whatever steps you are taking to make yourself financially secure, the word that is at the bottom of it all is “budget.” Without having a clear understanding of what resources you have coming in and what you have going out, everything else is just guesswork.

The process can be intimidating, but it lays the foundation for whatever moves you make. And it doesn’t have to be an awful experience. Get your family together now and get started. Here’s how:

Identify your goals. Your objectives will be guided by your own circumstances, which are likely vastly different from those of others. For instance, if you are retired, your financial map will look considerably different from that of a young married couple anticipating parenthood. Distinguish between short-term goals (getting rid of credit card debt, for instance) and long-term goals such as retirement. Once you have discussed your goals, compromising where necessary, begin creating a budget that will help you achieve these goals.

Identify all sources of income and make a list of monthly expenses and outstanding debts. The living expenses are usually pretty consistent and can’t be waived for other objectives. Then concentrate on debt elimination, even before working on retirement savings. Getting rid of the debt gives you more to stow away for the future. Go over your figures with a fine-toothed comb to see if there are ways to live more frugally so your leeway will be enhanced.

With all the ducks in a row and barring unexpected financial disasters, you are ready to put your plan (budget) into action. You will have a certain amount of money each pay period to pay down debt. Then the trick becomes to avoid the temptation to digress. You may have to adjust (see financial disasters, above) but stick with the budget unless there are compelling reasons to do otherwise.

Even with a budget in place, you need to reassess on a regular basis to be certain you are on track. Monitor spending carefully. It may have been frivolous spending that landed you in debt to begin with. Don’t let it happen again. Look continuously for ways to spend less.

Budgets are vital, but not set in concrete. Flexibility is essential as changing financial facts come into play. Talk about your budget monthly and look honestly at what is working and what is not. Readjust as necessary without throwing in the towel on your basic goals. Too much water under the bridge can wash away your good intentions and delay the progress for which you are reaching.

Retirement Planning For Women

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Plan carefully for your retirement.
Women, Money & Prosperity: A Sister’s Perspective On How To Retire Well, Written By Donna Phelan
Concerns about having enough savings to finance a worry-free retirement plague many women. According to Donna Phelan, 62, who has guided many women through the process as she has worked with several large Wall Street investment firms. She has even written a book on the topic, “Women, Money & Prosperity: A Sister’s Perspective On How To Retire Well.”

Women tend to earn less than their male counterparts. They save less toward retirement. Many of them take a break from work to rear children and they spend more time taking care of the elderly. All these factors have an effect, Phelan says.

Her response has an acronym, Stackable Income Streams to Empower Retirement Security – SISTERS. The objective is to “stack” as many sources of retirement income as possible. For instance, if a woman has five sources of income, each paying just $12,000 per year, the total for a year is $60,000. Possible sources for this income are Social Security, investments and savings, retirement plans such as 401ks or IRAs, part-time work, inheritance, annuities, home-based or small business, rental property, life insurance and home equity.

She suggests that women get together and pool their information. In some cases, there will be opportunity for collaboration that would improve the retirement outlook for more than one of the parties.

Her tips for building a healthy retirement:

Research your own circumstances. Consider how much in resources you will reasonably have, what kind of lifestyle you would like, whether there are potential sources of income you have overlooked.

Delay retirement as long as reasonably possible. Talk with a professional finance planner and look at alternatives. It may well be necessary to continue generating income past usual retirement age. Working part-time actually can be a good alternative. It keeps you active and healthy. It gives you more time to prepare mentally for retirement.

Pool assets with like-minded women to create a small business. Varied work experiences, say marketing, artistic talent and accounting, might add up to a viable business. Make it home-based if that seems reasonable. Crafts and hobbies can be made into money-making undertakings.

Consider renting out rooms if your home has become larger than you need. Get a roommate or downsize to a less expensive home. Phelan points to the experience of a woman who rented rooms to local art students, using the money to invest in ways that generated more income.

Become financially literate. A professional financial planner may seem a heady step for many women, but the advice can be well worth moving a little out of your comfort zone.

Understand Social Security issues. The longer you delay retirement, the more money you will receive each month. Each year you wait increases your benefit by 8 percent, up to age 70.

Pay off debt as quickly as possible, particularly credit card debt, and create a realistic budget that avoids any further debt.

In a word, become responsible for your own retirement planning. The sooner you begin, the fewer problems you are likely to encounter when the time comes.

Not Too Late To Make Personal Finance Resolutions

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Paying bills online is the easiest way to pay your bills on time.
Paying bills online is the easiest way to pay your bills on time.
By now, most of the resolutions made on Jan. 1 are in the wastepaper basket. Experience shows that most of them don’t last into the second week of the new year. But if you’re willing to take a second shot at it, here are some ways you can improve your financial standing in 2015:

Analyze how you pay your bills. Many, if not most, utilities, credit card issuers and merchants, give you the option of paying online. If you decide that is a good approach, give some thought to whether you will direct your payments to the creditor’s online payment center, or utilize your bank’s bill pay program. Either will allow you to make payments directly from your checking account and in some instances, automatic withdrawal is available.

These payment options have benefits. They save you having to keep track of payment due dates. The bank’s online bill pay keeps all your payment data in one site. It can save you time for more productive things.

If you prefer paper payments, get a system for storing all bills and receipts correlated to your banking. Set a time to review each month and balance your checking account. Having all your bank accounts – checking, savings and primary credit card all at one institution streamlines accounting.

Track spending. Knowing how your money comes in and goes out is critical to good management. Monitor accounts weekly. Watch for unexpected fees or unauthorized activities. Be sure to note ATM withdrawals as you go. Keep a spending log, either on paper or electronically, documenting every transaction and purchase. Trim if you need to.

Build a budget. Knowing up front where your money needs to go lets you make more confidant decisions about spending and investing. It is the foundation for your personal finances, a plan in concrete that keeps bills paid and allows for working toward the “rewards” of your labor – vacations and travel, further education and retirement.

A session or two with a qualified financial planner may be useful, especially as you embark on this resolution to make you money work for you. It can be done. Just do it.