“Dave Ramsey: Personal Finance - State Journal-Register” plus 2 more

Dave Ramsey: Personal Finance - State Journal-Register
Personal Finance: Conquer college bills with four simple tips - Philadelphia Daily News
Personal Finance: Challenges of long-term joblessness on the rise - Sacramento Bee

Dave Ramsey: Personal Finance - State Journal-Register

Posted: 12 Aug 2010 09:14 PM PDT

Dear Dave: What's the best way to respond to a sibling who continually makes poor choices with money and often asks to borrow money? I don't want to be heartless, but they're out of control asking for money anytime they want. I'm currently on Baby Step 2 of your plan, and I'm six months away from being debt-free. Do you have any suggestions? — Jen

Dear Jen: You should just tell them the truth. You're trying to get out of debt, so you don't have extra money sitting around. Let this sibling know that you're working hard to change the way you handle your money. Let them know, too, that part of that is you've decided debt is dumb, so you don't borrow or loan money anymore.

Make sure you do this with a kind spirit, Jen. You could even let them know you might consider giving them some money as a gift if you had any extra lying around and you knew they were in control financially. But you're not really helping someone who's incompetent with money when you give them cash or loan them money.

You've got to look at the big picture in situations like this. You're not helping someone if you participate in their misbehavior with them. Sometimes you have to love somebody enough to tell them the truth, and that can mean saying "no" and telling them to straighten up. — Dave

Dear Dave: I want to keep one of our credit cards open and use the bill-pay option for utilities and other monthly bills. I want to do this so we can continue earning rewards points, and the way I look at it, we'd just be re-routing the money and paying it off every month. My husband doesn't like this idea and thinks we should get rid of them all. Am I just asking for trouble by wanting to keep the rewards card open? — Cheryl

Dear Cheryl: Yes, you are. Life never works out exactly the way you think it will. You can make all the well-reasoned and best-intentioned plans you want, but sooner or later that snake is going to bite you.

The only thing I'd consider in a situation like this is a debit card that has a rewards system attached. Lots of debit card programs offer the same kinds of rewards programs offered by credit card companies, with one big exception — you don't have to go into debt.

You need to stop chasing these stupid brownie points. According to Consumer Reports, 78 percent of credit card airline miles are never redeemed. Studies also show that people spend more when using credit cards as opposed to cash. That extra money you spent is money you could have been saving. So, where's the reward? It's a myth. It's like trying to catch a unicorn.

Cut up the card and close the account, Cheryl. You don't build wealth by using credit cards! — Dave

For more financial help, please visit daveramsey.com.

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Personal Finance: Conquer college bills with four simple tips - Philadelphia Daily News

Posted: 15 Aug 2010 05:25 AM PDT

Posted on Sun, Aug. 15, 2010

It's a bill like no other, frightfully huge, with perhaps $20,000 that has to be paid almost instantly.

If your child is getting ready to start college and you have just received one of these bills, you're probably among the parents fixated on that price tag while trying to count sheep at bedtime.

But it might not be as bad as you first think.

Break it down. If you had to sit down today and write a check for a year of groceries, that number would be disconcerting, too - probably more than $5,000 and hardly an expense you could handle on a moment's notice.

But because people pay for groceries weekly, they don't feel as though they are spending thousands.

You can treat college the same way. Instead of writing a check for the full semester, put yourself on a payment plan and break your bill into more palatable monthly payments. Many colleges can link you with a firm that provides payments to them. There should be no interest or finance charge, although you will probably pay an annual fee of about $100 for the service.

Although colleges generally refuse to let students sign up for fall classes until they pay for the first half of the year, enrolling in a payment plan will usually be sufficient. Call the college billing office, or, to find a firm on your own, go to http://go.philly.com/finaid.

Find more financial aid. Although most college financial aid has been awarded, students can sometimes find leftover money. Just before classes start, some students change their minds and go elsewhere. That can leave colleges with scholarship money that was previously assigned.

Call the director of financial aid or the head of the department your student plans to major in. Contact them again in September and October to see whether there are leftovers. If you have lost a job or encountered a financial hardship since applying for aid, go back to the financial-aid director and ask to be reconsidered.

Money under sofa cushions. Most people think they don't have a penny more to spend on household needs. But many can find thousands of hidden dollars.

Analyze household expenses, especially those related to the student who will be leaving, said Frank Palmasani, a college counselor and founder of ManagingCollegeCost.com.

Instead of spending all new money, you will merely shift some, cutting back on food, lessons, gasoline, car insurance, electricity, and water at home.

Mick Endersbe, founder of College Planning University, said many families discover they can devote about $4,000 to college that way. In addition, if your income is under $180,000, you could get a $2,500 education-tax credit for each year of college.

Parents also might be able to reroute thousands of dollars toward college if they temporarily cut back on retirement saving in 401(k) plans. But Palmasani suggests still investing enough to qualify for an employer's match.

Before cutting back on the 401(k), make sure you will be OK in retirement. Check the "ballpark estimate" calculator at choosetosave.org.

Borrow right. At the college financial-aid office, request federal student loans. You can count on at least $5,500 for the first year of college in Stafford loans. By the junior year, you can borrow $7,500. If your child is among the moderate-income students, you might also get a low-interest federal Perkins loan. At colleges attended by many wealthy students, even fairly affluent families might qualify.

Also, for students from families with incomes around $40,000 or less, ask about federal Pell grants. In the state where you live or attend college, contact the state's higher education department to find low-interest state loans or grants.

Parents with a lot of home equity might be able to get home-equity loans, perhaps through credit unions. But beware: Borrowing on your home and saving the money for future college expenses could reduce aid.

Gail MarksJarvis is a personal-finance columnist for the Chicago Tribune. E-mail her at gmarksjarvistribune.com.

Personal Finance: Challenges of long-term joblessness on the rise - Sacramento Bee

Posted: 14 Aug 2010 11:56 PM PDT

Editor's Note: For the long-term unemployed, staying afloat – financially and emotionally – is daunting. To help those on the road to recovery, the Bee brought together a long-time job seeker with a financial planner to offer advice on saving money while hunting for work.

When he lost his job in April 2009, Robert Mathis wasn't worried. With 23 years at AAA, most recently as a "quality analyst" driving to auto club offices in three Western states, he was confident of quickly finding work.

Fast-forward to August 2010.

These days, it's hard to rev up much optimism. The 48-year-old feels he's riding on fumes. He's burned through his severance and nearly tapped out his 401(k) fund. Despite numerous applications, his job search has netted just three in-person interviews. Worse, his health care premiums just tripled – to $586 a month – while his unemployment benefits will expire early next year.

Prior to his layoff, Mathis already was feeling some financial strain following a home foreclosure and subsequent divorce. Now, he's getting desperate, even contemplating a move from his Placerville rental to his mother's home more than 300 miles away in Northern California.

"When you first get laid off, you think: 'I'm smart, I can do this. I'll get another job in six months,' " said a weary-sounding Mathis. But after nearly 16 months he's discovered that "finding a job is the hardest job you can do."

Especially when he's got so much company. By U.S. Department of Labor standards, anyone who's been jobless more than six months (27 weeks or more) is considered "long-term unemployed." Nationally, about 6.6 million people were in that category as of July, nearly quadruple the number in July 2008. In California, 43 percent of the state's 2.2 million unemployed in June had been out of work for 27 weeks or more, according to the state Employment Development Department.

"These are the highest figures we've seen in 62 years – not only the sheer numbers but the percentage of the work force who are long-term unemployed," said Amar Mann, an economist with the U.S. Bureau of Labor Statistics in San Francisco. During the previous worst recession in June 1983, Mann said, 2.6 percent of the work force was long-term unemployed; today, it's 4.3 percent.

To help Mathis and other long-term unemployed, we asked Debbie Grose, a certified financial planner with Lighthouse Financial Planning LLC in Folsom, to map out plans for cutting costs and finding work.

On a recent morning, spreading out Mathis' financial paperwork on her firm's conference table, Grose quickly summed up the obvious: Facing the loss of his unemployment benefits and a tripling of his health insurance premiums, Mathis "needs to readjust pretty quickly."

For someone accustomed to a $64,000 salary and meals/mileage paid for by his employer, Mathis already lives frugally. He rents a small, one-bedroom home in Placerville. He doesn't eat out. He pays PG&E a discounted bill for electricity.

"There's not a lot of wiggle room in this budget," she told him, "but the more proactive you are, the better off you'll be in the long run."

While some of Grose's recommendations are specific to Mathis, many are applicable to anyone who's been unemployed long term. Here's her advice:

For saving money

• Continue to be frugal in order to build up a savings reserve.

• Settle up with the IRS and state Franchise Tax Board, to which he owes a total of $13,700. Grose suggested contacting the IRS about its economic hardship program, which helps the unemployed deal with delinquent tax bills.

• Consider selling his 2009 Toyota Camry – purchased four months before his unexpected layoff – and getting a less-expensive used car. If it pencils out, he could earn a few hundred dollars on the trade, plus save on his auto insurance.

• Switch to a lower-cost health plan. "It'll be bare bones but it'll cover you in case something major happens."

• Consider switching to a pre-paid cell phone that doesn't require a monthly service plan. Don't switch, however, if penalties will incur.

• Look into cheaper housing: taking a roommate; renting a room, rather than a house; offering to mow lawns or do maintenance in exchange for reduced rent.

• Call utility companies to ask about hardship reductions. "Especially if there are late payment fees or penalties, it can't hurt to ask," said Grose.

• Consider withholding taxes from alternating unemployment checks to ensure there's enough to cover an estimated $1,000 federal and state tax bill. "Pay attention to the amount taken out. You can do the math to see if it's enough to cover that tax bill by the end of the year."

For job hunting

Mathis, who has significantly lowered his professional expectations, took some recent steps to amp up his job search.

Worried that his 23 years at AAA might make him sound old, he's adding a photo to his LinkedIn.com profile to make it obvious that he's still in his 40s.

Several weeks ago, Mathis posted his résumé on Facebook to get feedback from friends/colleagues. He's already gotten some useful critiques, he says.

This month, he applied for three jobs: at Marshall Hospital, for a Verizon customer sales job and for a school custodial job in Placerville. He got rejections from each.

"It's like I've lost a piece of who I am because I don't have a job," said Mathis. "People ask what you do for a living and I don't have an answer anymore."

Grose's recommendations:

• Fine-tune your résumé. If it hasn't been updated recently, get professional advice to be sure it's current and lists specific job skills, such as training, instructing and claims analysis.

• Return to a career center to evaluate new retraining programs.

• Sign up with a temporary staffing agency.

• Volunteer. It's good for the soul to help a good cause. And it adds to the résumé.

• Find things that make you happy, whether it's cooking a meal or spending time with friends or family.

Above all, she urged him to stay hopeful. As someone in career transition herself a few years ago, Grose said she understands the intense feelings of discouragement. "I know it's hard. It's difficult hearing 'no' after 'no' for over a year."

Leaning across the table, the financial planner reminded him: "You've got some great skills and talents. You are not this situation. Honor that."

For more resources and tips for the unemployed, see accompanying story at right.

Have a personal finance question? Contact The Bee's Claudia Buck at (916) 321-1968.

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Personal Finance

Sunday, August 15, 2010