Credit cards: “Angel” or “Devil”

credit card angel or devil

In 2008, credit card delinquency rates in the United States hit a four-year high, according to Equifax, a credit card analysis firm. In times of economic softness, people are often tempted to use their credit cards to see them through. Here we go over some of the major advantages and drawbacks of credit cards and show you how to use yours wisely.

There are plenty of great reasons to use credit cards. Credit cards eliminate the need to carry large amounts of cash, and many of them offer excellent rewards programs, enabling card users to earn airline miles, cruise ship rewards and other perks by purchasing everyday items like gasoline and groceries. Credit cards are also great in helping you build up your credit history, which can affect you in various areas. For example, your employers or landlords may check your credit history.

However, make sure you avoid the disadvantages of credit cards. For example, overuse. Revolving credit makes it easy to spend beyond your means. We highly recommend you to use your credit card like your debit card. Before you slide your credit card, check your bank account to make sure you have enough money to pay your debt back. Other disadvantages are credit card agreements. Credit card agreements are notorious for their copious fine print. If you want to avoid being taken for a ride by your next credit card, be sure to have your reading glasses handy. Pay attention to these things: annual fees, late fees, interest rates, minimum payments, over-the-limit fees and bounced check fees, etc.

Credit cards themselves don’t put people in debt. After all, a credit card is just a tool, and tools are only as dangerous as the people who use them. To minimize the dangers to your financial health, choose your cards wisely and think twice before using them. There are lots of places around you where you can learn personal finance. Knowing how to manage your money will be really helpful for your credit card use and even your whole life.

Reference: http://www.investopedia.com/articles/pf/06/controlcreditcards.asp#ixzz3rxP8PHOd

Resource Spotlight: Feed U Pantry

As it gets closer to the Holiday season, it is common to begin feeling financial pressure. We all know what it feels like to pull out the winter clothes, deciding if we really need to buy a new pair of mittens, while the looming hole in the index finger is getting bigger by the day. With all the holiday celebrations and the expenses that come with them, it’s easy to understand why so many of us are having trouble sleeping at night. The stress and anxiety of financial and educational matters always seem to pile up at the end of the year and sometimes unexpected expenses can leave us wondering how we are going to pay our heating bill, let alone how we are going to fill our grumbling bellies.

cold person

Everyone needs help sometimes. The best thing to do if you are ever struggling as a student, faculty, or staff member is explore resources on campus. One amazing, yet underutilized resource here on campus is the Feed U Pantry. This resource provides tasty and nutritious food for students, staff, faculty, and their families, free of cost. All you need do to is bring your valid U card to the food pantry and you can receive ‘easy to make’ meals for you and your family, no questions asked (just remember your Ucard).

canned food

Many students don’t know this resource exists, possibly due to the location of the pantry, or due to the discreet nature of the resource. The pantry is located on the second floor of the University Campus Store, right next to where students pick up their books for the semester. It is open on Monday and Wednesday, from 11 to 3pm.

If you are worried about people knowing that you are going to the pantry, don’t be. It’s tucked away discreetly on the second floor and the staff are great and professional. Everyone has hard times, that’s why the resource is there (especially at the end of the month, before pay day). No one should have to go hungry, and the Feed U Pantry aims to make that goal a reality.

Feed U

Preparing for Black Friday

Black Friday can be a double edged sword- it can help consumers save money on holiday purchases. However, Black Friday can also cause consumers to blow their budgets, and buy items they cannot afford. Here are some tips for staying within your budget on Black Friday:

  1. Make a list Make a list of items you have had your eye on that you have been waiting to buy, or items that you would like to buy as gifts. Your kids can also make a list prior to Black Friday. If your kids give you a list before Black Friday, you will have time to comparison shop and get the best deals on items. Having a list of items you would like to purchase can also help you stay within your budget- for example, if you budget $300 to spend on Black Friday, and all of your listed items add up to $500 even with the best sales, you will have to prioritize the items that you really want to purchase, and items you are willing to wait for.
  2. Comparison shop: After you have made a list of the items you would like to purchase, write down the price as you comparison shop. When you see a better price, write down that price and where it came from. Comparison shopping can be done in many ways: online, in-store, Black Friday apps, and from Black Friday newspaper ads, etc.
  3. Always stay in budget! Black Friday is filled with temptation to spend, spend, spend. Staying within a budget will help you prioritize what you want most, and help you stay on track to reach your financial goals. Budgeting methods that can be especially helpful to use on black Friday include the cash envelope method, and checkbook register method. These two budgeting methods allow you to immediately see the effects of your purchases.
  4. If you are tempted to sign up for a store credit card, read the fine print. All credit card applications are required to have a Schumer box. This is a box that contains clearly stated information about terms of the credit card. The Annual Percentage Rate (APR), penalty APR, minimum interest charge, annual fee, and transaction fees will be listed in the Schumer box. Remember: never sign up for a credit card unless you have a plan to pay it off in full.

Why You Should Pay Attention to Investment Fees

investment

Investing can be a great way to provide future income and grow your savings. When you begin investing, you may run into common mantras like invest young, diversify, buy low sell high. But one thing you may not have considered are the fees associated with your investment account. Fees can end up eating hundreds of thousands of dollars of your investment including retirement portfolios. A study done by Personal Capital took eleven companies and compared the cost of fees over 30 years. Merrill Lynch ranked #1 for the most fees costing investors $936,390 over 30 years. To compare, another well known brokerage, Fidelity, cost consumers $642,111-nearly 2/3 the price of Merrill Lynch. See below.

cost of feescost in fees

When you save for retirement, invest your savings or play around in the stock market, you will pay fees to the managers of your accounts. Those fees can be applied in a number of ways like a percentage of your total portfolio, front end charges (when you buy), back end (when you sell) or a yearly percentage of the value of your investment. The yearly percentage method of charging fees (also know as an expense ratio) can be one of the most costly because you will still pay even if your portfolio has a negative return for the year. Based on a Deloitte Study for the Investment Company Institute (ICI), the median expense ratio of surveyed plans was .78%. Use this measure when evaluating the fees on your investment.

Even if your investment is a fraction of a percent higher than another account, you will really pay for it later. If the capital currently lost to fees remained invested in retirement, savings could increase by an equally significant amount. At 1.98% for overall fees, Merrill Lynch was the worst offender in costs related to fees on retirement savings investments. At 1.06% in average total fee percentage, USAA had the lowest overall average total fee percentage of the eleven selected brokerages but still higher than the ICI study.

Pay attention before buying any investment product. Do your research and compare several brokers before you commit. As you can see from the graph, the company you choose can affect your return. The devil is in the fees.

Car Insurance 101

carinsurance1

Getting car insurance for the first time can be intimidating. It’s easy to feel like a small fish in a big ocean swimming your way through jargon, rhetoric, options, expenses, rules, and on and on. How are you ever going to make heads or tails of it all and find the best car insurance for your situation? As unpleasant as it may seem, auto insurance is required by law and it can save your butt (and your bank account) when it comes to accidents and the unexpected. Because let’s be honest, when it comes down to it, paying the full cost of an unexpected accident by yourself is a whole lot more unpleasant than only paying for part of it.

So where to begin? First, it’s important to understand the five basic kinds of insurance that all insurance companies offer.

Check out this video for help understanding the types of auto insurance coverage: https://www.youtube.com/watch?v=-Zr63hTicTU

  1. Liability Coverage (or Bodily Injury Coverage): This is definitely the most common kind of coverage mostly just because most states require a certain amount of it. It’s simple, liability coverage pays for the damages you are liable for or which you are responsible for in an accident. That means damage to another person’s vehicle and/or their medical expenses as well. The cool thing is that if you are in an accident that is not your fault, the other person’s liability coverage will cover any damages to your car or for any injuries you received from the accident.
  2. Collision Coverage: This kind of coverage pays for any kind of crash related damages to your car (even when you’re at fault). This can mean a collision with another car or other things like light poles, trees etc.
  3. Comprehensive Coverage: This coverage is kind of like collision coverage but it covers things that are out of your control like natural disasters, fire, hitting an animal, theft or vandalism. These are things that there’s no way you could have controlled or predicted, hence comprehensive coverage- or coverage good for a variety of and a comprehensive set of situations. It’s usually a pretty good choice for new or expensive cars.
  4. Personal Injury Protection or “No-Fault” Coverage: In some states this coverage is sometimes required along with liability coverage. It pays for  your medical expenses even if the accident was your fault. That’s why it’s sometimes called “No-Fault” coverage- because it doesn’t matter who was at fault, it will still cover you.
  5. Uninsured/Underinsured Coverage: This coverage protects you from the risk of being in an accident with someone who doesn’t have insurance or who doesn’t have enough to pay for the expenses of the accident. So say you were in an accident with someone, it was their fault, but you find out that they don’t have any insurance- no liability coverage to take care of the damage to your car and/or your injuries. Uninsured coverage would take of that for you. Or, say you were in a similar accident but the cost of damages were so much that the other person’s insurance couldn’t cover it. That’s when your Underinsured Coverage would kick in and take care of it.

carinsurance2

Alright, so you understand that there are different kinds of coverage you can choose from- sweet! So now what can you expect insurance companies to ask for in return? What are you going to have to pay for these coverages?

Ever heard of “premiums” or “deductibles”? Let’s make it simple. A premium is the amount you have to pay for a specific kind of coverage for a specific amount of time. In easy language, it’s just how much you pay usually on a monthly basis for your insurance.

A deductible is the amount you agree to pay before your insurance company will begin paying for the costs of an accident.  So for example, if your deductible is $500 and you are in an accident that costs $4500, you will have to pay your $500 deductible before your insurance company will pay the remaining $4000.

Now, there’s good news and there’s bad news. Premiums and deductibles are related, that’s the good news. But sometimes the way they affect each other can be complicated and confusing. Usually if you decide to pay a higher deductible, your premium rates will be lower. But, you’ll have to pay more out of your pocket if you do end up having an accident. If you go with a lower deductible, then your premiums will end up being higher, but in the case of an accident your insurance company will pay for more of the cost.

So what about you? What kind of coverage should you get and how are you going to know? This is a great question and one that can be answered with those two detestable words…. it depends. There are a lot of things that can go into deciding what kind of auto insurance is best for you. For example, you should take into consideration the kind of car you have- is it an old beater or is it a collectible inherited from your rich Uncle Bob? If your car is very valuable, you’ll probably want some coverage that allows you to protect it from unpredictable risks like theft (e.g. Comprehensive Coverage). You should also think about what you will be using your car for– is it essential to your morning commute and daily routine or will you use it mostly for fun? If you plan on using your car a lot it’s good to know that the higher your mileage is the higher your premium rates can be too. Another good thing to remember is that the more you use your car, the more chance you have of getting into an accident. Because your risk of an accident goes up, you might want to consider more kinds of coverage to cover the various kinds of risk (think Collision Coverage and even Uninsured/Underinsured Coverage). In short, taking an assessment of your car and the ways you use your car can help you decide the kind of auto insurance to go with. Remember, insurance is there to protect you from the risk of accidents, so trying to plan and prepare for potential accidents you could have as well as the kind of expenses you want to avoid is a good way to guide your insurance selection.

carinsurance3

Last but not least, it’s probably a good idea to find out what other people are doing for their auto insurance. What are the most popular auto insurance companies out there? Here’s what the Wall Street Journal has to say about finding car insurance companies:

“Once you’ve decided how much car insurance you need, it’s time to begin shopping. Auto insurance policies vary widely depending on your car, your driving record and your credit, so it’s wise to do some research.

Go to insweb.com and Insurance.com and fill out the application form. After a short time, you’ll receive comparable quotes from several insurers. There are three kinds of insurers:

Direct sellers – You’re likely familiar with these brand names, such as GEICOs and Progressive. These companies sell coverage directly to you, bypassing traditional insurance agents. Since there’s no agent, there’s no commission; theoretically the savings are passed on to you. But these insurers accept only the best drivers, so you may have trouble qualifying for coverage if you have a history of accidents or moving violations.

Large national brands Allstate and State Farm are better equipped for drivers with a bit of a blotchy past, and their rates are usually pretty good (they may even be able to match some of the offers from the direct sellers). These companies sell through local agents, but their agents are exclusive—a State Farm agent sells State Farm coverage and nothing else, so you’ll have to do your own comparison shopping.

Independent insurance agents – These sellers offer all kinds of insurance from many different companies. If you have any issues affecting your ability to get coverage (such as a patchy driving record or a teenage driver in your house) independent agents can usually find you better coverage at better prices than what you’d find on your own. Ask friends and family whether they have an insurance agent they would recommend.”

(http://guides.wsj.com/personal-finance/insurance/how-much-car-insurance-do-you-need/)

Long story short, getting car insurance might be a bit of a process but it’s worth the effort. Check out the links below for more information!!

5 factors that affect your premium rates

  1. deductible
  2. mileage
  3. kind of car (expensive etc)
  4. driving record (traffic tickets, DUI’s)
  5. personal information (gender, age, married status)

https://www.youtube.com/watch?v=5lG7RKbPbq8

Insurance coverages required in Utah:

  • bodily injury
  • physical damage liability
  • personal injury protection

http://www.cars.com/go/advice/Story.jsp?section=ins&subject=ins_req&story=state-insurance-requirements

More resources:

How To Read Your Policy Declarations: https://www.lelandwest.com/how-to-read-your-policy-declarations.cfm

MAKING THE MOST OF YOUR UCARD

By 

 Reposted from the Daily Utah Chronicle 

There are only so many Friday nights you can stay in to watch Netflix before getting restless. But with book prices, tuition and student fees draining funds from your wallet, it is difficult to find cheap and new ways to spend your free time.

But it’s not impossible. Students can take advantage of free on-campus events and venues with their university student ID, known as a UCard.

U Card.jpg

Kimberlee Briggs, a junior in sociology and theater, said she thinks students under-utilize free services at the U. She encourages freshmen to capitalize on the opportunities.

“It’s going to be more of a memory than staying in and watching Netflix is going to be,” she said. “If it sucks — no loss. The risk and reward ratio is completely in your favor.”

Briggs said she enjoys going to the Utah Museum of Fine Arts, located on lower campus, and Red Butte Garden, the botanical garden in Research Park — both of which are free for students with a valid UCard. Students can also explore a world of dinosaurs and science at the Natural History Museum of Utah, located by Red Butte, which is free as well.

U Card 2.jpg

UCards also count as an ArtsPass, meaning students can access most Film Department screenings, School of Music performances and ballet and modern dance recitals. Free tickets are available for musicals and plays in the U’s Babcock Theater, Studio 115 and the Pioneer Theater Company.

“Plays around the community can cost around $10-15,” Briggs said. “I saw ‘Avenue Q’ for free when they did it at Babcock, and it’s now one of my favorite plays.”

If plays and musicals aren’t for you, the U also hosts two free concerts: Redfest in the fall and the Grand Kerfuffle in the spring. The Union Programming Council also hosts ‘Crimson Nights,’ which is a free party for students with dancing and giveaways held a few times a semester.

ASUU, the student government on campus, and other organizations, such as the Hinckley Institute of Politics, host guest speakers, panels and discussions open for students.

“One of the most memorable free events I went to was a dialogue on police wearing body [cameras],” Briggs said. “Don’t just focus on the fun free parties — go to events that are about wanting to make a change. Plays and shows and museums are great but be sure to expand past yourself as well.”

You can catch free movies at the Post Theater by the dorms, with films ranging from My Neighbor Totoro” to “Silence of the Lambs.” Unlike the other events, you do not need to show your UCard to enter, and you can get candy and soda on a first-come, first-serve basis.

Each student pays fees that go towards funding these events and memberships. To find out about these free events, Briggs said first-year students should pay attention to posters and signs around them.

“Talk to people,” she said. “’Like’ pages [for student organizations] on Facebook. Be in the loop — then you decide what sounds fun.”

k.ehmann@chronicle.utah.edu

@Ehmannky

Tiffany’s Marriage Guide to Money

by Tiffany Davis

I’ve been married for 4 1/2 years now and money was something that took us a long time to figure out. We have tried every budgeting technique under the sun and I can tell you what finally worked for us. I would love to help you fight less with your spouse or partner and really start making some financial progress towards your goals. Here are my tips on how to manage your money stress in your marriage and how finally to agree on a budget:

Have a financial date night. I know it’s not the most exciting thing ever but go out to dinner to some place quiet or sit in your kitchen with snacks and just talk for an hour. Maybe even have something fun after the date to look forward to (because just the sound of a finance talk can lead to a lot of eye rolling, at least with husband). Commit to just an hour, set a timer and then do something relaxing. Pick a date and schedule it on your calendar. In general, doing this every month is a great way to come back and evaluate and recommit to your financial goals as a couple, make sure you are on track, and hold each other accountable. But let’s start with just this one for now.

At your date night, I want you to review What is Your Relationship to Money. Print it off or pull it up on your phone and take turns answering the questions with each other. It can be very insightful to why you spend money the way you do and hopefully make you more understanding of each other’s needs. Then each person should fill out your own Values page and discuss what’s important to you. You might be on totally different pages on certain things but it can help you see what’s important to you. Use this to help you compromise and hopefully you won’t fight so much when it comes to the budget.

Ideally, these exercises have taught you enough to be able make some common goals. I recommend you print off the Financial Goals Worksheet and fill it out so you can refer to it regularly. Keep it in your Financial Information Binder with your budget and other financial papers. The whole point of a budget is to be able to afford the things you really want. Make a few short, midterm and long term goals that you can start putting on your budget. It doesn’t have to be something like take a vacation. It could even just be “Pay off ____ debt in ___ months”. Then put your goals as line items in your budget. Do you want to go to Hawaii? (I do!). But a dream is just a wish without a plan. If Hawaii will cost $2,000, I need to save $166 per month for the next year to get there.

Now we have to make a budget. Paper worked for us for a long time before stuff got complicated.If excel is not your thing, here is a paper budget that works great and there’s even an irregular expenses worksheet to help you plan for things like expenses like car registration, gifts, dr visits, trips, etc. What has worked best for me is this Excel Budget (Here is an example of the excel budget). Use the tabs at the bottom to help you make a budget (aka a plan) and the actuals tabs to help you evaluate at the end of the month. More questions? Just send us an email at pmmc@sa.utah.edu. When creating that budget, use this budget guideline to help you plan your spending. Another AMAZING budgeting trick we’ve used is to have multiple savings accounts that your bank/credit union can name for you to save for specific things. It’s a great way to separate out your money. This can be very useful to help you track your spending too, especially if you fall into the credit card trap. Don’t forget those monthly date nights to revue the goals and your actual spending.

If paying of debt is a goal for you, check out powerpay.org. It’s free to register and only takes a second, then it will save your information if you want to login in again and adjust it. The Powerpay tab is like the debt snowball. Here is more information on the debt snowball and It’s pretty cool. So I would encourage you to sign up for an account and put all of your debts, interest rates and payments in, then add a monthly extra payment and see how much sooner you can pay off that debt and how much interest you can save.

So this is my best advice for you. Make your goals, set your budget, and review your progress regularly. For more tips on budgeting and money management, go to our website for more resources and to make an appointment.

http://personal-money-management.utah.edu

And just for fun, here is a photo of my husband and I fighting about money (just kidding about the fighting part though because we understand each others values and we compromise).

cute