4 Considerations Before Buying into an HOA

Tali Wee HeadshotBy Tali Wee

Homebuyers are inundated with countless property assessments and inspections during their buying processes, but many overlook thorough evaluation of homeowners associations (HOA).

In certain communities, homeowners are required to join HOAs and pay monthly fees as membership. Typically, community members govern their HOAs, setting community guidelines, managing disturbances, solving safety concerns, and creating new rules to maintain satisfactory curb appeal for all properties within the community. HOAs hold regular meetings to collaborate, educate, and vote on upcoming changes.

Savvy home shoppers complete their due diligence prior to making offers on homes. Review these four considerations before buying into HOAs.

  1. Lifestyles and Rules

The first step to understanding HOAs is gathering the associated documents. Homebuyers pay fees to attain HOA documents, and sometimes skip the step to avoid seemingly unnecessary costs. Plus, access occurs later in the escrow process when buyers are emotionally committed to their purchases. It’s difficult to walk away from properties after all the financing, bidding, and negotiating is complete. Some sellers provide HOA documents to buyers to help them make informed decisions earlier. Regardless, wise shoppers buy and carefully evaluate the lengthy documents detailing community rules.

Standard HOA guidelines include restrictions on property paint colors, style of curtains displayed in windows, appropriate number of cars in driveways, quiet hours for the community, and acceptable property upgrades. Standard homeowner do-it-yourself projects are drastically limited by HOAs. Buyers should evaluate the lifestyles they currently lead, and contemplate whether their personalities fit their prospective HOA rules.

  1. Monthly Dues

Homebuyers are budgeting for the most expensive purchases of their lifetimes, so each fee needs evaluation. Initial charges include the down payment and closing costs followed by numerous monthly charges. HOA fees are monthly costs homeowners should calculate into their total mortgage payments along with homeowners insurance, property taxes, principal, interest, and private mortgage insurance when down payments are less than 20 percent of the total sale price.

Before closing, review HOA financial statements to ensure property bills are paid and significant fees are allocated to the reserve fund for future property repairs.

  1. HOA-Required Property Renovations

Beyond mortgages, maintenance is the most costly aspect of homeownership. HOAs govern when properties are due for upgrades and charge members additional fees to fund improvements. Property assessments may surprise HOA members, potentially doubling their monthly housing bills for extended periods.

Thorough buyers read through the HOA meeting minutes to gather more information about upcoming improvements, and reference the reserve study to confirm whether costs are accumulated or slated as upcoming levies.

  1. Long-Term Homeownership Goals

Although many buyers purchase homes as primary residences, many first-time buyers plan to rent their starter homes in the future. HOAs commonly restrict the total number of owners eligible to rent their condo units, sometimes at 20 percent or less. The purpose of controlling owner-occupancy rates is to ensure future buyers have access to common loan programs. Conventional and Federal Housing Administration (FHA) loan standards limit the total owner-occupancy rates, only granting loans to borrowers in qualified condo developments. FHA loans require 51 percent owner occupancy and conventional loans necessitate 70 percent. Therefore, HOAs can restrict owners from leasing their properties for passive income to maintain the widest pool of future buyers.

Home shoppers should evaluate the disadvantages of buying into HOAs before purchasing properties. Whether the cost of monthly fees and future assessments deter buyers, or the lifestyle restrictions of keeping lawns mowed and living onsite for the next 30 years seems impractical, buyers should weigh these considerations thoughtfully for satisfactory investments.

Tali Wee is a Marketing Content Specialist at Zillow.com. She writes about personal finances, mortgages, and home improvements for the Zillow Blog and other Zillow partners.

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.

Share and Enjoy:
  • Print
  • Digg
  • StumbleUpon
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks
  • email
  • Google Buzz
  • Reddit


 Consumer Reporting Agencies Follow Your Moves

alderman_color_1By Jason Alderman

By now, you’ve probably heard about the Big Three credit bureaus (Equifax, Experian and TransUnion), which monitor your financial history and issue credit reports and credit scores to potential lenders. But did you know that there are dozens of other specialty consumer reporting agencies that track your history for activities that may not appear on your regular credit reports – things like bounced checks, late utility payments, insurance claims, and prescription orders?

Most people never hear about these companies until they’re suddenly turned down for an apartment, checking account, insurance policy, or even a job or promotion. But you need to know that potential landlords, banks, insurance companies, and employers are very likely ordering specialty reports to help them assess the risk of doing business with you. That’s fine if you’ve got a squeaky-clean track record. But what if their files contain mistakes; or worse, what if someone has hijacked your identity and is poisoning your record with their own bad behavior?

Fortunately, you do have recourse. The same federal Fair Credit Reporting Act that guarantees you the right to access and correct your credit reports also regulates specialty consumer reporting agencies. This means that you can request a copy of your report once a year from each agency, generally for free. You’re also entitled to a free copy upon request whenever an “adverse action” is taken against you because of something in the report. For example, if you’re turned down for a checking account, the bank must share the name and contact information of the agency from which it got the derogatory report.

With credit reports, you’re entitled to one free copy per year for each of the Big Three bureaus if you order them through the government-authorized AnnualCreditReport.com. (There’s a fee if you order directly from the bureaus.) Unfortunately, specialty agencies have no such central clearinghouse, so you need to contact each one individually.

However, the Consumer Financial Protection Bureau (CFPB) has taken some of the legwork out by compiling a list of the most commonly used agencies, along with instructions and contact information for ordering your reports. (Another great resource is the Privacy Rights Clearinghouse’s fact sheet on specialty reports.)

Specialty consumer reporting agencies operate similarly to the credit bureaus. They collect information about you from various sources and share it with creditors and other businesses, including:

  • Public records of criminal and civil cases.
  • Your credit history.
  • Bankruptcy filings.
  • Companies with which you have an existing or prior relationship.
  • Your medical information.
  • Driving records.

Typical inquiries that might be made about you (and common specialty agencies gathering the information) include:

A few additional facts about consumer reporting agencies:

  • Not every agency will have records on you, particularly if no previous inquiries have been made.
  • As with credit bureaus, specialty agencies don’t themselves make decisions about whether to hire or insure you or rent you an apartment – that’s up to the company or individual reviewing your background.
  • When you dispute information in your reports, agencies are legally obligated to investigate and correct any inaccurate or outdated information. (For tips on how to dispute errors, see this CFPB article and my previous blog, Fixing Errors on Your Credit Report.)
  • Agencies must give you, when asked, an update on the status of your request to view your report. However, there is no time limit on when your request must be processed – another shortcoming in the regulations.

Even though you’re entitled to dozens of free specialty reports each year, ordering them can be a very time-consuming process. Section 14 of this Privacy Clearinghouse fact sheet highlights circumstances when you might want to proactively order them – for example, if you’re shopping for new homeowners or automobile insurance.

If you haven’t had any adverse actions taken against you but are curious to see what information is out there, you might want to order your LexisNexis Full File Disclosure. It’s one of the more comprehensive databases out there, containing all the information LexisNexis gathers to create its various reports about you. And, like credit reports, you can order one free copy per year.

Bottom line: You might not realize there’s false or potentially damaging information being reported about you until you get turned down for a job or insurance. So get in the habit of occasionally ordering specialty consumer reports along with your credit reports.

To Follow Jason Alderman on Twitter: www.twitter.com/PracticalMoney

Jason Alderman is Senior Director, Global Financial Education, with Visa, Inc.

This article is intended to provide general information and should not be considered legal, tax, or financial advice. It’s always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.

Share and Enjoy:
  • Print
  • Digg
  • StumbleUpon
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks
  • email
  • Google Buzz
  • Reddit


 Parents: You Have to Talk Money Before You can Teach Money

NealeGodfreyBy Neale Godrey

President Obama proclaimed this past April to be National Financial Capability Month, commonly referred to as National Financial Literacy Month and said “…we renew our drive to give all Americans the tools to navigate the financial world and gain the economic freedom to pursue their own measure of happiness.”

This goal may be hindered because many of us were brought up with the idea that there were two topics to be avoided: politics and religion. And, according to a recent study from Wells Fargo, Americans have an even harder time discussing their personal finance. Nearly half of the 1004 adults surveyed, 44 percent responded that the most difficult topic to discuss with others is personal finances. Politics came in at 35 percent and religion at 32 percent.

Talk is Vital
25 percent of married or partnered adults say that money worries have had an impact on their relationships. 33 percent have difficulty discussing money with their partner, and for a large portion, the subject is the source of arguments. Conversation and transparency are cornerstones in my championing of the need for financial literacy. This study points out that 71 percent of adults learned about saving from their parents, and yet only 36 percent of current parents say that they regularly talk to their kids about saving money. Over 60 percent admitted that they talk to their kids about money less than once a week or not at all.

It’s On Your Mind
People find it difficult, uncomfortable, or even impossible to talk about money, but that doesn’t mean they’re not thinking about it. 39 percent say that money is their biggest stress. The same number say that the stress has increased in the past year. A full third lose sleep worrying about their finances.

A Do-Over
What if you could go back a few years? What would you change? Nearly half answered that saving and spending habits are the top regrets – above taking better care of their physical health, relationship choices, and working toward a better career.

The Importance of Financial Education
Lack of financial understanding is a major road block to a healthier financial life. 35 percent acknowledge that the hardest part is “knowing the best approach” and “sticking to a plan.” When it comes to getting into physical shape and exercising, the hardest part is “motivating themselves to begin.” Only 9 percent said that motivation was the problem when it comes to financial health. A comfortable majority feel that they are in good or great financial shape when it comes to paying their monthly bills and being able to live within their means. But, only 40 percent feel the same way about their discretionary spending and “rainy day” savings. When it comes to their ability to retire comfortably, the number drops to a third.

38 percent of men and 50 percent of women find it difficult to talk to others about personal finances. 42 percent of men and 29 percent of women were confident they knew where to invest in today’s market. A majority of men give themselves a financial literacy grade of “B” or higher, while nearly half of women give themselves a grade of “C” or lower. It’s time to break the taboo, and start the dialogue on personal finance. Bringing the subject out of the shadows may change your future, and help your children to become money savvy. Currently, 20 percent more American adults are more likely to have their car serviced than review their finances. People consider themselves to be in poor or average financial health are twice as likely to update their Facebook profile than review their finances. One quarter of adults would rather pay for a personal trainer than a financial adviser.

Neale Godfrey is the New York Times #1 Best Selling author of 27 books, and financial literacy curricula for kids and parents. She created the topic of “kids and money” while President of The First Women’s Bank when she opened up The First Children’s Bank, and an Institute for Youth Entrepreneurship in Harlem in 1988.

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.

Share and Enjoy:
  • Print
  • Digg
  • StumbleUpon
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks
  • email
  • Google Buzz
  • Reddit


 What Does a Working Kitchen Need?

donna freedman photo (smaller)By Donna Freedman

A blog post over at Get Rich Slowly asks readers which cooking utensils/equipment they couldn’t live without. “In the kitchen: When less is more” posits that plenty of the things marketed as necessities end up as just so much culinary clutter.

“How much do you need to have a working kitchen?” asks writer Lisa Aberle.

Good question.

My comment on the post became pretty lengthy – so lengthy, in fact, that I realized I feel pretty strongly about the subject. While I understand that foodies and gadgeteers love their avocado slicers and their cheese straighteners, I’d like to point out that:

  • More isn’t necessarily better, and
  • Specialization is the last refuge of marketers.

Let me be clear: While I don’t quite understand the need for super-specific kitchenware, I will defend to the death your right to acquire it – but only if you do it intentionally.

A friend whose marriage was ending found all sorts of left-behind doodads: special knives, a garlic press, numerous graters, an all-in-one measuring spoon, a wine bottle re-capper and other stuff I can’t recall. His wife didn’t care enough to pack them up when she left, even though some of them probably cost a bundle. (Think: Friends with Pampered Chef parties.)

Were these implements ever implemented? Some, maybe. Some was still unopened.

Needs vs. Wants

While some home cooks swear by the need for numerous specialized knives and cookware, some professional chefs say that a couple of good-quality blades and a few basic pots will do the job. Housewares catalogs are like porn for foodies. I get it. But do you need everything you have? Do you use everything you have?

Here’s what we use most often:

  • Cast-iron frying pan. Found it in the “free” box at a yard sale (all it needed was a little steel wool and some seasoning). My boyfriend also has several of these, in different sizes.
  • Strainer. I inherited this from my daughter, who got it at a dollar store. Useful for gravy, soup stock, lentils, yogurt or whatever else needs straining.
  • Warming tray. My boyfriend has no idea how he got this thing and can’t remember ever plugging it in. Now we use it all the time, to culture yogurt and proof bread dough.
  • Iced tea pitcher. It’s a plastic thing that I got from my sister when she moved in with her fiance more than 30 years ago.
  • Slow cooker. My boyfriend gets all the use because it’s a larger model suitable for roasting meat. We also use it for making stew, chili, and soup stock. My much smaller slow cooker was a hand-me-down from my daughter, who received a nicer model as a wedding gift.
  • Stainless steel cookware. I bought a set from Macy’s back in 2004, on sale and with a discounted gift card. The pans will probably outlive us both.
  • Cookie sheets. The kind with air in between the two layers – we use them not just for cookies but also for homemade breads and rolls. These came from a yard sale for a quarter apiece.
  • Pressure canner. We canned some salmon caught by my nephews, a bunch of on-sale chickens and the carrots that we grew last summer. This was actually bought new and cost more than $100, but we’re interested in preserving some shelf-stable protein and home-grown produce in case there’s a disruption in the food supply.
  • Canning jars. For jam, for carrots, for chicken and turkey – I got a couple of dozen quart-sized jars from the Freecycle Network and more than 100 pints and half-pints plus a bunch of jar centers for $10 at a yard sale. Since I give away jam at Christmas, I scout thrift stores for replacements.

Kitchen stuff doesn’t have to cost a lot. Check thrift stores, yard sales and, yes, Freecycle. Join the Swagbucks rewards program and earn Amazon gift cards; that’s how I “bought” my candy thermometer, which gets used every week for yogurt-making.

The money you save in such ways could be saved for the purchase of some specialized tool that you can’t find in a cheaper venue. But don’t just buy and buy and buy, thinking that surely the next gadget is the one that will fix your life. That’s how we end up with drawers full of stuff that rarely if ever gets used.

How Often Will You Use that Crème Brulee Torch?

If a friend has a device you think you want, ask if you can borrow it or if you can come over and do some cooking with her. You might find that the food processor is a pain in the neck to clean and thus you’d just as soon chop onions by hand. During a long-ago visit my mother saw me using a fork to cut shortening into flour for a pie crust. That’s how she’d taught me to make pie. Yet she offered to buy me a pastry blender because she said she’d found the tool easier to use than a fork.

I declined, with thanks. Years later I found one in the free box at a yard sale and took it home. However, I found it a bit clunky to use and a real trial to wash (all that shortening gets jammed between the blades). So I donated it to a thrift store and have been using a fork on my pie crusts ever since.

Again: It’s your money, and if you want to spend it all on nutmeg graters and crème brulee torches then that’s your privilege. Just don’t let a housewares store – or a friend who’s selling Pampered Chef – decide for you what you absolutely need. That would be like asking the barber if you need a trim.

This article originally appeared at DonnaFreedman.com.

Donna Freedman won regional and national prizes during an 18-year newspaper career and earned a college degree in midlife without taking out student loans. She now writes the Frugal Nation website for MSN Money, blogs at DonnaFreedman.com, and freelances for national magazines.

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.

Share and Enjoy:
  • Print
  • Digg
  • StumbleUpon
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks
  • email
  • Google Buzz
  • Reddit


 NFCC Honors Clients of the Year at Annual Leaders Conference

GailCunninghamBy Gail Cunningham

Not many people would say that accumulating $38,000 in credit card debt was one of the best things that ever happened to them. Nonetheless, that’s how the NFCC’s 2014 PACE Clients of the Year, Jonathan and Hope Unverzagt, sum up their experience. The Unverzagts were honored with the prestigious award during the NFCC’s recent conference in Seattle, WA.

It was a happy ending with a rocky beginning. The Unverzagt’s story is not unlike many other American families in that they had no savings, could not pay their existing debt, and were not on the same page regarding how they should manage their money. A scenario shared by many – with one exception – the Unverzagts have 11 children.

Years earlier when they began obtaining credit cards they vowed that the cards would only be used for emergencies. They quickly learned that even little incidents were labeled as emergencies when there are no savings, and the negative spiral began.

While Jonathan enjoyed the freedom to spend using the family’s credit cards, Hope was tasked with paying the bills and knew something had to change. She asked Jonathan to review the family’s financial situation with her, and for the first time in 20 years of marriage they were finally on the same financial page.

Jonathan confided in a friend and asked his advice on what to do next. He was directed to Consumer Credit Counseling Service in Sheboygan, WI, an NFCC member agency, and made the first step toward freedom from the bondage of debt. The financial counselor provided them with a customized debt management plan and ongoing counseling that changed their relationship with money and resulted in a healthier and happier family that could now work as a team.

They now had a goal, a plan of how to meet the goal, and a reward waiting for them at the finish line. The Unverzagts prove that meaningful incentives don’t have to be extravagant. One of the family’s favorite dishes is jambalaya, but to save money they began substituting kielbasa for the usual shrimp. They vowed that they wouldn’t have shrimp jambalaya until their debt was paid in full.

Since part of their spending problem was due to a lack of savings, they made creating a savings account a priority. Times were tight, though. “We picked up a little extra income here and there,” said Hope. “My husband refereed basketball games; I scored essays online and did some writing. We learned to be happy eating beans and rice on occasion, making our own laundry detergent and shopping at Goodwill—all things we had done before, but which now had become a regular part of our routine in order for us to maintain our tight budget.”

When each child reached an appropriate age, the Unverzagts would sit them down for “the talk,” although they admit it probably wasn’t the same talk most parents have with their children. The topic of their conversation was around principal and interest.

“Our children thanked us for it later when they encountered college classmates who didn’t have any financial skills, and had accumulated mountains of debt, not fully understanding how it all worked. We were so pleased when our older children bought cars with cash, and the teens learned how to do the family grocery shopping while staying within budget,” Hope continued.

Jonathan noted that because they simply couldn’t afford to spend a lot on extras for the kids, the children learned to become financially responsible. As soon as they were old enough to work, the teens paid for their own gas, clothing, and activities, and contributed to their car insurance and cell phone bills. They know how to budget and save and are surprised when they hear some of their friends asking their parents for money.

Then one day, several months earlier than expected, the Unverzagts received the good news that their final payment had been made. They were debt free. There was much rejoicing in the Unverzagt household, especially when they ate shrimp in the jambalaya that night.

The Unverzagts agree that their marriage is now stronger, they are better money managers, and their children have learned valuable lessons firsthand. “We are so thankful for the part CCCS has played in bringing us to this place in our lives and for providing us with a wonderful success story,” said Jonathan.

“I can only imagine the creativity and motivational skills the Unverzagt’s possess that allowed them to keep themselves and eleven children focused on becoming debt free,” said Ken King, executive director of Consumer Credit Counseling Service. “The real reward isn’t paying off of all of the debt, but the gift of money management and financial discipline they have given their children.”

For answers to your financial concerns, reach out to an NFCC member agency and inquire about the Sharpen Your Financial Focus program which offers three steps to financial freedom. To be automatically connected to the agency closest to you, dial (855) 374-2773, or to learn more about the program online, visit www.SharpenToday.org or www.agudicehoy.com.

Gail Cunningham manages Media Relations for the National Foundation for Credit Counseling.

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.

Share and Enjoy:
  • Print
  • Digg
  • StumbleUpon
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks
  • email
  • Google Buzz
  • Reddit


 The Ins and Outs of 529 College Savings Plans

alderman_color_1By Jason Alderman

For many people, their biggest expenses in life are funding retirement, buying a home, and paying for their children’s college education – or a portion of it, anyway. Setting aside money for these and other financial goals is difficult, especially when you’re trying to save for them all simultaneously and from a young age.

Let’s tackle saving for college. As with any long-term savings goal, the earlier you can start, the better. Two of the most popular savings vehicles are Coverdell Education Savings Accounts and 529 College Savings Plans. Both allow the earnings on your contributions to accumulate tax-free; and distributions used for qualified expenses also aren’t taxed.

One advantage to Coverdell accounts is that they may be used for qualified elementary and secondary school expenses in addition to college. However, their contribution limits are much lower – only $2,000 per year, per beneficiary. Also, you must stop contributing when your child turns 18, and the account must be liquidated when the child reaches age 30 or it will be subject to income tax as well as a 10 percent penalty tax.

There are two broad categories of 529 plans:

  • Prepaid tuition plans, which let you prepay college tuition at today’s rates. Although your principal may be guaranteed by the state, you have no control over how your money is invested and you may be limited to public, in-state schools.
  • College savings plans, where you choose how your contributions are invested among the available risk-based options and can use the funds at any qualified public or private college, no matter which state.

Every state and Washington, D.C. offers at least one 529 plan option, although most offer several from which to choose. Because college savings plans are more popular, flexible and widely available, we’ll concentrate on them. (To learn more about prepaid tuition plans, read this Finaid.org article.)

Key features of 529 college savings plans include:

  • You make contributions using after-tax dollars; their investment earnings grow tax-free.
  • Withdrawals aren’t taxed if they’re used to pay for qualified higher-education expenses (e.g., tuition, room and board, fees, books, supplies and equipment).
  • If you withdraw the money for non-qualified expenses, you’ll have to pay income tax and a 10 percent penalty tax on the earnings portion of the withdrawal – plus possible state penalties, depending on where you live.
  • Many states that have a state income tax give accountholders a full or partial tax deduction for contributions made to their own state’s plan. Three states (Indiana, Utah and Vermont) also offer tax credits for contributions.
  • Contributions to other state’s plans generally are not tax-deductible in your home state; however, five states do offer tax breaks for investing in any state’s plan (Arizona, Kansas, Maine, Missouri and Pennsylvania). Note: Rules can change, so double-check plan documents before committing.
  • Each state’s plan offers different investment options, both in terms of investment style (age-based, risk-based, guaranteed, principal protection, managed funds, indexed funds) and in the actual investment performance. About two-thirds of families invest in age-based asset allocation models, which gradually lower potential risk as college approaches.
  • You can choose anyone as beneficiary – child, other relative or friend.
  • If the original beneficiary decides not to attend college or gets a scholarship, you can reallocate the account to another of his or her family members at any time.
  • You can rollover funds to a different 529 plan or change investment strategies once a year. If you want to do more than one rollover within a 12-month period, you’ll need to change the beneficiary in order to avoid taxes and penalties. (You can always change it back later.)
  • Contributions up to $14,000 a year, per recipient, are exempt from gift taxes (up to $28,000 for married couples).
  • You can also make a lump-sum contribution of up to $70,000 ($140,000 if married) per beneficiary and then average the contribution over a five-year period without triggering the gift tax – provided you make no other gifts to that beneficiary for the next five years.
  • These plans are treated as an asset of the account owner (vs. the student) when calculating the expected family contribution toward college costs, so they have a comparatively low impact on financial aid eligibility. (That’s why it’s important for parents or grandparents to maintain ownership of the account.)
  • There’s no age limitation on when the recipient must use the funds, unlike Coverdell Accounts, where they must be spent by age 30.
  • Each state sets its own limit on maximum contributions and they vary considerably.
  • If you move to another state, find out if there’s a penalty to roll over the money to a new account. If there is, it might make sense to leave the money in the existing plan and open an additional account in your new state.

Most financial experts recommend looking first at your own state’s plan to see what tax advantages, if any, are offered to residents. They may be significant enough to offset lower fees or better fund performance in other states’ plans.

Carefully examine the fee structure. Common fees include those for opening an account, annual maintenance, administration costs, and most importantly, sales commissions if you’re buying from a brokerage – which could be up to 5.75 percent of your contribution. Buying directly from the plan eliminates sales fees but puts the onus on you to research the best option for your needs.

And finally, examine the investment performance of the funds, both when you enroll and periodically thereafter. A number of independent analysts regularly review 529 plans state-by-state for performance and overall expense, including: Morningstar, College Savings Plans Network, Savingforcollege.com and Finaid.org. Warning: This can be a lengthy and complex process, which is why some people enlist a financial advisor’s assistance.

Bottom line: College is getting more expensive every year. The sooner you can start saving, the less your kids will have to rely on expensive loans down the road.

To Follow Jason Alderman on Twitter: www.twitter.com/PracticalMoney

Jason Alderman is Senior Director, Global Financial Education, with Visa, Inc.

This article is intended to provide general information and should not be considered legal, tax, or financial advice. It’s always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.

Share and Enjoy:
  • Print
  • Digg
  • StumbleUpon
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks
  • email
  • Google Buzz
  • Reddit


 NFCC Distributes Thousands of Free Financial Education Resource Tools

GailCunninghamBy Gail Cunningham

During the first year of NFCC’s Sharpen Your Financial Focus(TM) program, more than 18,000 12-month memberships to Experian’s freecreditscore.com product were distributed to consumers at no cost to them. Program participants are eligible to receive the free 12-month membership to the freecreditscore.com product through a generous donation from Experian in support of financial education.

The freecreditscore.com financial resource complements the skills learned through the Sharpen Your Financial Focus program. Allowing consumers to see the impact of their financial decisions on their credit report and score heightens awareness of those actions. The freecreditscore.com membership serves as an ongoing tangible reminder of the importance of responsible credit behavior.

The three-step Sharpen Your Financial Focus program is designed to help consumers increase awareness of their personal financial situation, address any issues that are identified, and achieve long-term financial stability. The three steps of the program include the following:

  1. Utilizing the online financial self-assessment tool MyMoneyCheckUp®, available at http://SharpenToday.org;
  2. A one-on-one financial review with an NFCC Certified Financial Professional to find solutions to current concerns and develop a realistic plan to meet long-term goals, and
  3. A financial education workshop designed as a “deep dive” into the major area(s) of interest to the consumer.

Freecreditscore.com is designed to increase consumers’ understanding of credit, and to provide knowledge that can be used to make educated financial decisions. Among other features, the freecreditscore.com membership includes access to:

  • The member’s Experian credit report and credit score;
  • The Score Planner™ feature, which allows consumers to see how various financial actions can impact credit scores;
  • Credit monitoring;
  • Alerts that notify members about new activity on their credit reports;
  • A mobile app enabling alerts and updates on the go, and
  • Access to fraud resolution agents if suspicious activity is found in the member’s report.

To learn more about the Sharpen Your Financial Focus program (available in English and Spanish) or to inquire about the freecreditscore.com opportunity, consumers are urged to visit www.SharpenToday.org.

Gail Cunningham manages Media Relations for the National Foundation for Credit Counseling.

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.

Share and Enjoy:
  • Print
  • Digg
  • StumbleUpon
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks
  • email
  • Google Buzz
  • Reddit


 One in Five Could Not Maintain Lifestyle
Without Credit Cards

GailCunninghamBy Gail Cunningham

The ability to put away the plastic and successfully live on a cash basis is an indicator of financial stability, as it proves a person’s lifestyle is in line with their income. However, the recent NFCC online poll revealed that one in five people could not make ends meet without the use of credit. Another twenty-two percent of respondents said that if asked to live on a cash basis they would have to make significant lifestyle changes.

Credit should be used as a convenience, not to supplement income. It is a warning sign if a person is not able to manage his or her daily lifestyle without the use of credit cards, as this is a dangerous habit that could lead to serious financial distress. To illustrate the damage that can result from the overuse of credit, consider that in 2013 the average consumer who sought financial counseling from an NFCC member agency had between five and six credit cards with a total unsecured debt equal to half of their annual household income.

To help consumers know if they are entering the financial danger zone, the NFCC offers the following red flags that debt is becoming unmanageable:

  • Paying only the minimum on credit card bills each month;
  • Credit card balances growing;
  • Skipping monthly payments, paying late, or making short payments;
  • Accounts going into collection;
  • Moving debt around through the use of balance transfers;
  • Seeking cash advances, payday loans, title loans or other non-traditional credit;
  • Arguments in the home over money;
  • Charging items that were previously paid for with cash;
  • Attempting to obtain new lines of credit since existing lines are near their limit, and
  • Considering bankruptcy or debt settlement.

People may feel as though they have no alternative to using credit to supplement their income, but that is a dangerous habit that can lead to financial ruin. No one ever intentionally digs a deep financial hole, but breaking one of the basic rules of personal finance – spending more than you make – is not likely to have a positive outcome.

The NFCC posed the identical poll question to consumers in 2012. Comparing the results only revealed one positive change: the number of people who would be able to maintain their same lifestyle without the use of credit increased four percent in the 2014 findings (27% versus 23%). There was no statistical difference between the two years in the remaining answers.

Consumers seeking answers to their financial concerns would be well-served by reaching out to an NFCC member agency for free or low-cost financial counseling. To be automatically connected to the agency closest to you, dial (800) 388-2227, or to find an agency online, visit www.NFCC.org.

The actual 2014 poll question and responses are below, with 2012 data in parenthesis.

If asked to live on a cash basis, I

  1. Would be able to maintain my same lifestyle 27% (23)
  2. Would make some changes, but basically be fine 32% (32)
  3. Would have to make significant lifestyle changes 22% (24)
  4. Could not make ends meet without credit 20% (22)

Note: The NFCC’s August Financial Literacy Opinion Index was conducted via the homepage of the NFCC website (www.DebtAdvice.org) from August 1–31, 2014, and was answered by 1,878 individuals.

Gail Cunningham manages Media Relations for the National Foundation for Credit Counseling.

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.

Share and Enjoy:
  • Print
  • Digg
  • StumbleUpon
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks
  • email
  • Google Buzz
  • Reddit


 Create and Grow Your Emergency Fund
Safety Net

MarkFoster_CCOABy Mark Foster

Emergencies are a fact of life. A lot of things in life aren’t planned – a flat tire, an emergency room visit, or a broken air-conditioner, for example. The question isn’t whether an emergency will pop up, but whether someone is prepared for it or not. Many people are not financially ready for an emergency. In fact, 39 percent of American adults have no savings to cope with a financial emergency. Almost 60 percent of adults age 45 and under have less than $500 saved to deal with any emergencies.

Arkansans are struggling with personal finances. A CCOA website poll found 67 percent of participants state that they have absolutely nothing saved to deal with emergencies. Nothing. These people are living on the edge of financial disaster.

Families who have little or nothing saved for an emergency will face an even bigger emergency when they don’t have the savings to pay for that ruined tire, hospital bill, or broken appliance. That is a very stressful way to live, without any security.

For some security and peace of mind, people need to create an emergency fund which will be a helpful safety net if they encounter a problem. Non-profit CCOA recommends:

  • Open a savings account if you haven’t already.
  • Regularly deposit money into your account.
  • Automatic deposit is the best and easiest way to save.
  • Set a specific goal, such as $750, and write it down.
  • Post your emergency fund goal where you will see it so it will be an ongoing reminder for you to save.

Having a savings safety net will go a long way to cover the financial emergencies that will eventually happen.

Mark Foster is Director of Education with Credit Counseling of Arkansas (CCOA). CCOA is a member of the National Foundation for Credit Counseling. To schedule an appointment with a Certified Consumer Credit Counselor contact CCOA at 800.889.4916, or visit CCOA online at www.CCOAcares.com.

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.

Share and Enjoy:
  • Print
  • Digg
  • StumbleUpon
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks
  • email
  • Google Buzz
  • Reddit


 6th Annual Jump$tart Educator Conference
Now Open for Registration

DrewKesskerBy Drew Kessler

Calling all teachers! Registration is now open for the 6th Annual Jump$tart National Educator Conference, devoted to classroom educators who teach personal finance or want to incorporate money lessons into other subject matter, grades PreK-12.  Join Jump$tart November 8-10, 2014 at the Omni Hotel at California Plaza, Los Angeles, CA.

Through the generosity of Experian, Wells Fargo Foundation, and many sponsors, Jump$tart is able to offer teachers the very special price of $425, which includes conference registration; conference meals and receptions; some materials, including a print copy of the National Standards in K-12 Personal Finance Education; and two nights’ hotel accommodations. Teachers are offered optional, private sessions with financial planners. The exhibit hall is devoted to personal finance curricula and other resources. For more information, please visit their website or Facebook page or contact their conference director, Dan Hebert.

The conference web page includes links to register as sponsors and/or exhibitors.  There’s still room for more exhibitors! Conference registration for those other than sponsors, exhibitors, and licensed, PreK-12 classroom educators will launch on October 6.

Drew Kessler is Vice President of Marketing & Communications with the National Foundation for Credit Counseling.

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.

Share and Enjoy:
  • Print
  • Digg
  • StumbleUpon
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks
  • email
  • Google Buzz
  • Reddit