Some Final Words

The Village Family Service Center
www.HelpWithMoney.org

The Village Financial Counselors who worked with each of the Forum Financial Fix-up families had a few final words they wanted to share.

Joshua Huffman, financial counselor for Annette and John Graves
Annette and John fully invested themselves in this process. After fully tracking their expenses for 30 days, we reviewed their budget using the newly tracked figures. It was an eye-opening experience for them to identify their actual monthly expenses. They are fully committed to making changes wherever necessary and have made great progress already. I think this experience was a valuable one, and I am confident they will continue to improve their situation. Congratulations John and Annette!

Tracy McFarlane, financial counselor for Steve and Meghan Dockter
I want to thank all three of our featured families for their willingness to share the details of their personal finances with our readers. Through this process you have encouraged others to reflect on their personal situations; and through your blog posts you have introduced some of the invaluable basic budgeting skills and tools that promote positive change.

The Dockter’s were not able to meet with me after their initial appointment because of their hectic schedules, but I look forward to meeting with them in the future. I wish them success in their journey and encourage them to continue to schedule time each week to sit down with each other to discuss their finances.

Morgan Almer, financial counselor for Nathan and Brenda Richman
I believe the Richman’s will be very successful in their financial future going forward. The goals they set were what I consider SMART goals. Goals that are Specific, Measurable, Attainable, Realistic, and Timely. To some degree, the financial counseling sessions did more to affirm the financial decisions and lifestyle changes they had already made, than to offer new ideas. If they follow the advice provided by the financial planners at State Bank and Trust, they will be well on their way to achieving their long-term goals of retirement planning and saving.

Thank you to Sherri Richards and The Forum for inviting The Village to participate in this worthwhile series, and to each of the families for opening up their financial lives to the Forum and blog readers. That is not an easy thing to do.

If you have questions about your own financial situation, contact The Village at 701-235-3328, 1-800-450-4019 or www.HelpWithMoney.org.

Couple works to shore up saving, retirement funds

Nathan and Brenda Richman meet with financial consultant Morgan Almer as they review their finances at Village Family Service Center in Fargo. Photo by Dave Wallis / The Forum

This is the fourth in a series of stories following three families through a Financial Fix-up. It appeared in The Forum Jan. 19, 2011.  

For every worksheet financial counselor Morgan Almer suggested Nathan and Brenda Richman fill out to fine-tune their finances, Brenda showed him a similar one in her file, already completed.

The Moorhead couple is one of three families taking part in The Forum’s Financial Fix-Up. They’d started looking at their finances more closely last summer after a career change four years ago by Nathan, now an addictions counselor, depleted their savings. The Richmans, both in their 40s, say they had strayed from their financial values.

So by the time they met with Almer at the Village Family Service Center, they’d already tracked their weekly and periodic expenses, the first thing Village financial counselors suggest. They’d also stopped using their credit cards and now operate on a cash envelope system, another suggestion by the Village to rein in spending. The Richmans’ current financial goals are to pay off a car loan, save a three- to six-month emergency fund, and invest 15 percent of their income for retirement.

They’re in great financial shape, Almer said. “None of the debt you have is what we call ‘toxic’ debt,” he said, noting they had no credit card debt. They’d recently refinanced their home to a 4.375 percent rate.

According to the Richmans’ figures, they bring home $5,510 each month, with monthly expenses of $5,165, leaving a $345 surplus. “An ideal, good goal for the time being would be to take that surplus and plow it into that car loan,” Almer said. “In less than six months that car loan would be gone.” Then they’d have a monthly surplus of $655 that they could use to pay down the mortgage or save. He showed them some different calculations using www.powerpay.org. The free website shows how quickly debt can be paid off – or money saved – by “snowballing” payments.

Almer also helped Nathan and Brenda, parents of two teens, think about their financial priorities in the face of upcoming college bills and eventual weddings. “You’ve got to think about it this way, too … You can borrow to go to college, but you can’t borrow to retire,” Almer said. “You want to do what’s best for your kids. But we should make sure the retirement is going to be where you want it to be when you need it.”

The Richmans have several retirement accounts floating around, which Nathan said can be confusing. “It would be a lot easier to have it consolidated into one,” Almer agreed. One way would be to “roll over” old 401(k) accounts into a traditional IRA. This provides more control and investment options. They also could then choose to convert to a Roth IRA, which allows the investments to grow tax-free. “Anytime you separate from an employer it’s almost always advised to roll it over,” Almer said.

Almer suggested the Richmans meet with a financial adviser at a bank to review their retirement investments and risk tolerance. “I had never before felt the need to meet with somebody to look over our retirement,” Brenda said after the session. “That really would be a good idea to get a professional opinion and consolidate our things that are all over the place.”

 On Monday, Nathan and Brenda met with Tyler Stedman and Paul Jarvis, financial planners at State Bank and Trust in Fargo, who will review their current investments and provide projections to answer the Richmans’ lingering question: How much will we need to retire?

Readers can reach Forum reporter Sherri Richards at (701) 241-5556

The Impact of Money on Relationships

How often are your arguments with your spouse about money? Probably, pretty often.

Money and fights about money are a major cause of divorce. On the other hand, mental health, addiction and relationship issues can lead to money problems. If you suffer from depression and can’t work, your finances will suffer due to loss of income. If every time you fight with your spouse, you deal with the stress by going on a shopping spree, you’ll probably end up in another fight—this time about how much you spent. If you or your spouse is dealing with an addiction, your addiction is probably making a big dent in your checkbook.

The Village Financial Resource Center started because of this tie between relationships and money. In the early 70s, family and individual counselors at The Village started noting that many of their clients’ relationship issues were created or exacerbated by money problems. A little research found the National Foundation for Consumer Credit, Inc., an organization of credit counseling agencies who paved the way for the many credit counseling agencies today (not all of them helpful!).

If you and your spouse are fighting about money, call us. We’ll not only work with you on your finances, but if appropriate, can hook you up with a counselor who can help with other issues; relationship, mental health, addiction, etc.

Don’t let your financial issues negatively impact the relationships you have with your spouse and kids.

Twelve Steps to Financial Success in 2011

A new year typically brings with it a renewed commitment to become more financially stable. Toward that end, financial counselors at The Village Family Service Center offer consumers the following 12-step formula to financial success:

· Review your credit report – Much of your financial future depends on the contents of your credit report. Therefore, your first step should be to obtain your report, review it for accuracy and dispute any errors. Since you can access your credit report free of charge, there is no reason to neglect this important piece of your financial life. Consumers are allowed one free report from each of the three major bureaus once every twelve months. You can get all three at once, which is a good idea if a major purchase is on the horizon, or stagger your requests to check for identity theft. Access your report from www.annualcreditreport.com.

· Obtain your credit score – The three digits that comprise your credit score are a major dictator of whether or not the lender will extend credit, and at what interest rate. It is likely that you’ll have to pay to purchase your score, but it will be money well-spent. Be sure to understand the range within which your score falls, as each score has its own scale. Further, take the necessary steps to improve your score. Remember, a high score equals a low interest rate, saving you significant money over time.

· Reduce debt – If you’ve dug a deep financial hole, stop digging. Piling new debt on top of old is a red flag that you are living beyond your means. Lock up the credit cards until they’re paid in full, and meanwhile, reach out for help from a legitimate credit counseling agency sooner rather than later. Delaying only makes the problem worse.

· Commit to save – Americans are great spenders and lousy savers. Without a well-funded savings account, you are on a very slippery slope, one that becomes treacherous with the next unplanned expense. Put 10 percent of each take-home check into a savings account. Find extra money to dedicate to saving by putting all raises, bonuses, birthday checks, and any other windfall monies into savings. This will create a cushion that should see you through most short-term emergencies.

· Get financially organized – Create your own personal financial center where you can instantly put your hands on your family’s financial records. Your center doesn’t have to be a fancy home office. It could be an accordion folder. The point is that you know where everything is. Place original documents such as a will or your mortgage in a safe deposit box, and keep a copy at home.

· Avoid incurring late fees – Pay your bills the day you receive them. This way you’ll never risk the creditor receiving your payment after the due date. Delaying could result in you being charged a late fee, a ding to your credit report and a lower credit score. The risk of delay is simply too great. If you travel for work or are a procrastinator, consider setting up online bill pay with payments large enough to cover at least the minimum amount due.

· Avoid paying overdraft fees – A receipt stuffed into your car visor isn’t simply being unorganized. It can cost you. Many an account has been overdrawn due to neglecting to notate an ATM withdrawal or debit purchase. Get into the habit of recording each transaction into your check register on the spot. Also take the time to balance your checkbook each week, and reconcile your bank statement each month.

· Track your spending for 30 days – Have everyone in the household who spends money participate in this exercise. Write down every cent that is spent, as it’s the small, miscellaneous expenses that often wreck the best of plans. At the end of the month, come together to review the spending. This is the only way you can truly know where your hard-earned money is going.

· Create a spending plan you can live with – Once you’ve tracked your spending, you can then make conscious decisions as to how you want to allocate the money. Continue tracking with the new plan in place. Keep doing so until you find a plan that is right for your family. Make it too strict, and no one will stay on board. Make it too lenient and you won’t be accomplishing anything.

· Take advantage of free money – Contribute the maximum amount to your retirement plan at work, or at the very least, meet the matched amount or you’re throwing away free money. Also inquire about the availability of Flexible Spending Accounts or Health Savings Accounts. All of the above can lower your taxable income.

· Have an annual insurance check-up – No one wants to be over-insured. Nor do you want to be under-insured resulting in an unpleasant surprise when making a claim. Make an appointment with your provider and confirm that your coverage is exactly what you thought you were paying for. Inquire about ways to lower your premiums, and ask about any discounts for loyalty, good driving and the bundling of multiple polices.

· Investigate refinancing your mortgage – Even though rates of late have been rising, they are still very low, potentially saving you significant money over the life of your loan. There are multiple online calculators that can help you evaluate the options. Do not extend the term of your loan, however, in order to get a lower monthly payment unless this is absolutely necessary to stay afloat.