Give Yourself a Raise?

From MSU Extension


Most people would give themselves a raise if they could. Yet, some Montanans are missing the opportunity to do just that. More than 60 percent of American workers have access to an employer-based retirement plan, but those who don’t take advantage of it are leaving money on the table, according to Joel Schumacher, associate specialist with Montana State University Extension.
Schumacher said there are several ways workers can increase their income by participating. Many plans are defined contribution plans which typically have a formula that determines the matching contribution an employee is entitled to receive from his or her employer. For example, a company may contribute $1 for every $2 the employee contributes. The formula may limit the matching contribution to a percentage of the employee’s salary, such as the first six percent. In this case, a person who contributed six percent of his or her salary receives an additional three percent for the same work. For someone making $35,000 per year, this is worth more than $1,000.
Contributing to a retirement plan also lets the employee take advantage of tax benefits. Contributions to defined contribution plans are a pretax deduction. According to Schumacher, an employee earning $3,000 per month who does not contribute to the retirement plan will take home approximately $2,290 (total deductions vary depending on tax withholding status, tax brackets and other factors.) If this same employee contributed $150 (five percent) to the defined contribution retirement plan, the take home pay would be reduced by $115. The payroll tax savings would be $35. If the employer also matched 50 percent of the contribution, the employee would receive $225 in the retirement plan, at a personal cost of $115. This amounts to an additional $1,320 annually.
Schumacher recommends that employees who are not certain of the benefit package offered by their employer should first talk to the employer’s payroll or human resources office for guidance. Understanding and maximizing employer benefit packages may be the easiest way to get a raise, he said.
MSU Extension offers consumer economics education throughout the year.

Solid Finances

When I was growing up, my mom used to say, “It’s just as easy to love a rich man as a poor one.”   I don’t really know whether or not that is true.   While it may be just as easy to love a rich man, in the dating years of my life it wasn’t just as easy to find one.  My husband was told growing up that you can “Marry more money in twenty minutes than you can make in a lifetime.” Apparently there wasn’t a line of wealthy women waiting to date him. Rest assured, we both married for love. 

I suppose those oft repeated quotes are well-meaning.  Parents advising their children often equate wealth with security.  As well, money is one of the top reasons for discord in a marriage.  Any time a resource is limited, it can be a source of conflict.  Rather than marrying money, it might be better if we advised young people how to equip themselves with the skills to earn and manage their own money.

I’ve read that if you want to improve your skills in any area, you have to study or practice daily.  A financial advisor coached that you should read, learn or do something about money each day. I’ve heard it said, “Where your attention goes, your energy flows.”  If you are interested in improving your skills in the area of finances, MSU Extension and Extension partners in South Dakota and Idaho have devised a way for you to learn about finances from the comfort of your computer.

The Solid Finances series, taught by webinar, starts October 7.  The series covers Managing Your Money with topics on plugging spending leaks, emergency savings, home buying and organizing records; Retirement Planning with the top ten need-to-know items, getting started late, and a retirement question and answer session;  Investor Protection and Student Loans with topics from predatory lenders, identity theft, applying for federal student aid and student loan consolidation; and Montana-specific classes including estate planning and your rights over your remains.   You can listen and interact with these sessions live or listen to recorded sessions.

The Solid Finances webinar information can be found at www.msuextension.org/solidfinances. The website contains information on how to register for the free classes.  Be sure to check out past recordings and resources from previous years of Solid Finances classes as another free resource to become educated about money. 

There could be better advice given than to marry for money.  We could start using this adage instead, “Make your own money and manage it well.”  Besides, I’ve heard that people who marry for money earn every penny!

Protect Yourself from a Gold Digger -- Thursday, May 22 at 9:30 a.m.

The MSU Teton County Extension Office will be showing the video, Gold Diggers: Investment Fraud in the Treasure State on Thursday, May 22 at 9:30 a.m. at the Choteau Baptist Church.  The showing of the video on investment fraud is free to the public.  While no registration is required, a courtesy call is appreciated to plan seating.  The documentary, Gold Diggers: Investment Fraud in the Treasure State, produced by the Montana Commissioner of Securities, tells the story of two of Montana's most infamous investment scams.

"More than two hundred years ago, prospectors flocked to what we now call the Treasure State in search of fortunes," said Lindeen.  "Though Montana's prospector days are long behind us, we have a new brand of gold diggers who would rather prey on our trust than dig for gold.  Modern day gold diggers are scammers and con-artists who can steal a life savings in the blink of an eye."

Narrated by award-winning actor Bill Pullman, Gold Diggers tracks two recent cases of investment fraud in Montana: the Arthur Heffelfinger case in Helena and the Anne Marie Schlenker case in Bozeman.  In total, the two scams robbed dozens of Montana investors of more than $3 million, leaving victims in financial ruin.  The film features interviews with victims, securities experts, and the regulators and attorneys who investigated and prosecuted the two scams.

"Education is the silver bullet when it comes to fighting fraud," said Lindeen.  "The more Montanans know about their rights and where they can turn for help, the better they can protect themselves from modern day gold diggers."

Lindeen's office produced Gold Diggers with a grant from the Investor Protection Trust, a nationally-recognized, independent organization that helps consumers make informed investment decisions.  All funding for the Trust comes from voluntary and court-ordered contributions from criminals who commit investment fraud.

Press release from:

Better Late Than Never

I’m running a little late, which my friends and family will tell you isn’t that unusual.  I don’t try to be late.  I just always think I can get one more thing done.  My most famously late time was probably when I arrived to a wedding an hour after it was scheduled to start.  The problem was, the wedding was mine.  So, what can you expect from someone who was an hour late to her own wedding?  You can expect that I’m not going to be on time for everything.  What I’m late for now is America Saves Week, which is February 24-March 1.  But, better late than never.  Which, if you think about it, is an adage that applies to saving money, too. 

Hopefully we have all heard about the time value of money. If you save when you are young, you’ll accrue more interest -- thereby having to save less overall, but ending up with more saved.  For example, Jack deposits $2000 into savings for 10 years between the ages of 25-34 and leaves it there, contributing nothing

more to his savings between ages of 35-65.  Jill, on the other hand, waits until age 35 and starts depositing $2000 per year for 31 years (ages 35-65).  Jack put a grand total of $20,000 away and Jill put $60,000 in savings.  In the end, due to the time value of money and compound interest, Jack has $545,344 at age 65 and Jill has $352,427.  By starting when he was younger, Jack is almost $200,000 wealthier.  But what if you no longer qualify as young?

What I’m afraid happens to people is they hear that they should have started saving before they were in their 30’s and, since they got a late start, feel hopeless.  But, guess what?  Jill still has $350,000 and change in savings.  Truly, better late than never.  Even though I’m not great at math or time, I know that $350,000 is a lot more than zero.  If you get a late start, so be it.  Just be sure you get started. 

One way to get started it to go to www.AmericaSaves.org and set a savings goal.  It doesn’t matter how big or small the goal is, just get started.  It also doesn’t matter if you do it after the big America Saves Week.  In the end, what matters is that you save some money.

Stephen Brobeck, Executive Director of the Consumer Federation of America and a founder of America Saves, noted: “Only about one-third of Americans are living within their means and think they are prepared for the long term financial future. One-third are living within their means but are often not prepared for this long term future. And one-third are struggling to live within their means.” If you are in the two-thirds of Americans who are not prepared for the financial future, now is the time to start preparing. 

One great financial tip is to automate savings.  Even if it is $40 per month, getting that habit automated can really make a difference.  If you have automatic deposit on your paycheck, set up a savings account and automate a portion to the savings.  Some people spend whatever they have, or can see in their checking account, so getting a portion automatically out to savings can be an important move.  If you get a tax refund, put that in your savings.  You might be surprised that the financial security you feel as you start to build savings will be more important to you than consumer purchases.  You can get used to living on less.

There are twenty-five other great strategies in the book, Small Steps to Health and Wealth by Rutgers Extension.  We have twelve copies of the first edition of the book available for free at the MSU Teton County Extension Office, because it is never too late to get your finances in order.

What if, all those years ago, I had decided because I was running a little late, I shouldn’t even bother?  With savings, and weddings, as it turns out, it’s great to be on time, but it is also better late than never! 

Resources for Saving:

Thanks to Barbara O'Neill, Ph.D., CFP, CRPC, AFC, CHC, CFEd, CFCS

Extension Specialist in Financial Resource Management, Distinguished Professor,Rutgers Cooperative Extension for the list of resources below.

Cooperative Extension Investment Resources

When it comes to investing, it always helps to have background information, financial calculators, and other planning tools. The Cooperative Extension System offers a wide array of online resources through its online eXtension portal and through various land-grant universities. Below is a list of publication titles and Web site addresses:

eXtension Personal Finance Web site: http://www.extension.org/personal_finance

eXtension Investing for Your Future 11-module home study course:

http://www.extension.org/pages/10984/investing-for-your-future#.UwN5fk2YaM8

eXtension Investing for Farm Families home study course:

http://www.extension.org/pages/23204/investing-for-farm-families#.UwN5sk2YaM8

eXtension Saving and Investing Web page:

http://www.extension.org/pages/8634/financial-security:-saving-and-investing#.UwOCFk2YaM8

eXtension Saving and Investing Research Briefs:

http://www.extension.org/pages/18217/saving-and-investing-research-briefs#.UwOCk02YaM8

Illinois- Plan Well, Retire Well Blog: http://web.extension.illinois.edu/cfiv/eb141/index.cfm

Indiana – Planning for a Secure Retirement (online 10-module retirement planning course with dozens of links): https://ag.purdue.edu/programs/areyouprepared/secureretirement/Pages/default.aspx

Iowa- Family Finances Web Site: http://www.extension.iastate.edu/humansciences/family-finances-families

Iowa- Invest Wisely (news articles and audio files): http://www.extension.iastate.edu/investwisely/

New Hampshire- Saving and Investing Web site: http://extension.unh.edu/Managing-Your-Money/Saving-and-Investing

New Jersey- Investing Basics (from Rutgers Cooperative Extension book Money Talk: A Financial Guide for Women): http://njaes.rutgers.edu/money/pdfs/session-iii.pdf

New Jersey- Investing for Retirement (from Rutgers Cooperative Extension book Money Talk: A Financial Guide for Women):

http://njaes.rutgers.edu/money/pdfs/session-iv.pdf

New Jersey- Investment Risk and Return Characteristics: http://njaes.rutgers.edu/money/investmentrisk.asp

New Jersey- Rutgers Cooperative Extension Asset Allocation Spreadsheet: http://njaes.rutgers.edu/money/

New Jersey- Rutgers Cooperative Extension Personal Finance Web Site: http://njaes.rutgers.edu/money/

New Jersey- Rutgers Cooperative Extension Financial Goal-Setting Worksheet: http://njaes.rutgers.edu/money/pdfs/goalsettingworksheet.pdf

New Jersey- Rutgers Cooperative Extension Financial Planning and Investing Glossary: http://njaes.rutgers.edu/money/glossary.asp

New Jersey- Rutgers Cooperative Extension Financial Fitness Quiz:

www.rce.rutgers.edu/money/ffquiz.asp

New Jersey- Rutgers Cooperative Extension Investment Risk Tolerance Quiz: http://njaes.rutgers.edu/money/identitytheft/

New Jersey- Rutgers Cooperative Extension Tax Information Web page: http://njaes.rutgers.edu/money/taxinfo/

Virginia- Building Your Financial Team: Financial Planners

www.ext.vt.edu/pubs/agecon/448-063/448-063.html

A Goal Well Set ...

Abraham Lincoln is credited with saying, “A goal properly set is halfway reached.”  America Saves Week is February 24-March 1.  This month is a great time to properly set a goal for your personal or family savings.  Now is the time to take action and put into practice the theme of America Saves Week:  Set a Goal. Make a Plan. Save Automatically.  One easy way to get started is to log onto www.americasavesweek.org and pledge a savings goal.  Those with a savings plan are twice as likely to save for emergencies and retirement as those without a plan. When you take the pledge you can also choose to receive text message tips and reminders to help you save for your goal.

As I’ve studied different personal financial management strategies, one of the tips I’ve run across is to do something each day related to your personal finance.  In essence, keep it on your mind and keep the goal in front of you.  I signed up at America Saves and have been receiving email and text reminders, which help keep my goals in front of me.  It is easy to get sidetracked in today’s world that is always marketing some new product, service, or opportunity.  It is nice to receive reminders that keep me on track for limiting my expenses, thereby allowing me to save some money.  Even if you can only save a modest amount of $10 or so, it is developing the habit that is important.  Many of us, even on a very limited budget, can find ways to live more frugally and find a little bit of money to set aside to start reaching goals.

Last weekend as I worked on preparing our taxes, I checked our average monthly spending in several categories.  I’m convinced that we could probably “tighten the belt” in a few areas.  Actually, one of the expenses categories that surprised me was food.  I suppose we could literally tighten our belts if we bought and ate less food!

Speaking of taxes, here are a few ideas from John Gower and the America Saves website: Each year, about 75% of Americans who file tax returns receive a refund. According to the National Foundation for Credit Counseling (NFCC), more than half of those receiving refunds (58%) intentionally plan it that way. So if you are a member of the group that’s been giving Uncle Sam an interest-free loan every year, what are you going to do with that money? Spend it? The average refund is about $3,000. That’s a serious chunk of change that would be better put to use in other ways. Here are a few ways to spend your tax refund that will improve your personal finances far more than a new purchase.

Pay off credit card or other consumer debt. If you cannot pay it all off, making a substantial payment will still lower your future monthly payments considerably. If you have more than one credit card to pay, pay the one with the highest interest rate first. Or, if your credit cards are under control, plunk down a big payment on your car or your mortgage.

Build up an emergency fund. Experts recommend setting aside at minimum enough to live on for six months, or a year if you have a family. This is money that should be kept accessible, so you can tap into it if you have unanticipated big expenses for home repair, medical care, or you find yourself suddenly unemployed.  (I think that people who are barely making ends meet find it discouraging to think of putting away six-twelve months of income; but remember what I said earlier – even $10 a month is a habit worth working toward.  Eventually, you may be able to save more, especially if you start by putting your tax refund away each year into an emergency fund.  It may not be as fun as a new big screen TV, but when the furnace breaks down, you’ll be glad you did it.)

Fund your retirement.  Start or add to your IRA or 401(k). IRAs and 401k plans are opportunities to put aside money now for retirement purposes. Since these plans are tax-advantaged, they are even more valuable than a typical savings or investment account. So if you’ve been avoiding retirement contributions lately, or have not even started a retirement plan yet, you could use your tax refund to turn that around in 2014.

  Remember, a goal well set is half way met!

http://americasaves.org/

http://www.montanasaves.org/

https://www.saveyourrefund.com/home/