Carnival of Personal Finance #135

Last Week's Carnival of Personal Finance was hosted by Plonkee Monkey and included a number of excellent posts.

Here are a couple of my favorites:

How I taught my pre-schooler the value of a dollar- If you're a regular reader, then you know how I feel about financial education!

Preventing Child ID Theft- Can you imagine just starting out only to learn that you're ID has been stolen? I mean, it's bad enough as it is being established and having it happen...

Stop Planning: 50 Ways to Improve Your Finances Today- I especially like the idea of focusing on one thing a day instead of your entire annual plan.

How quickly it all changes...

This video is an eye opener. I watched it again this past weekend during an event I attended. This was the second time that I had seen it. The first time was a post on a blog called Vince Cordic's Marketing Tactics which I had referred to last year on this blog.

It was worth the time to watch it the first time, and the second time. I put it here for you to see, perhaps again.

No Worries, the Fed will save us!

Billions of dollars in losses from the subprime disaster. Waining consumer confidence. Personal savings at a historical low. Warnings of recession.

The news from the financial world has not been good. How can this be fixed? Surely I don't have the answer, but I do have a few observations that I find interesting and make me say 'hummm'..

The word today is that the Fed will undertake measures to spur the economy, to encourage consumer spending. The holiday season retail sales reports indicated that people actualy spent less in December than they did in November; a sure sign of recession?

With personal savings at an all time low, and more and more Americans living from paycheck to paycheck, I wonder what the government will do to create cash to spend? Or, instead of putting money in our pocket, will they merely continue to advocate for credit purchases which in many opinions have lead to the current state of our economy.

Simply put, continued debt accumulation further reduces savings, pushing the savings rate into negative numbers. Encourage more debt spending only esaserbates an already dismal economic prediction.

Hopefully, all the doom and gloom predictors are wrong. Hopefully, our new President and his\her people have an answer.

I'm not a financial scientist, but I believe the answer continues to lay in financial education. The core of this education must be to help us learn that we cannot borrow and spend. We must learn the savings discipline, and the value of earning a reward, to not get it now, but to earn it later.

Anyway, our government will be attempting a fast track fix to the economy. More to come!

Do you have an emergency fund?

In these times of economic uncertainty, it is a wise idea to have an emergency fund. Experts tell us that we should have a fund balance of at least 3 months worth of expenses. This fund is not a savings account and should be used only in extreme emergencies (unexpected bill, job loss, layoff, or other unexpected emergency). Having this set up before you might need it will afford short term protection for your credit rating and assets.

Here a few tips on setting up this fund:

1. Make sure that you have easy access to the cash. If you keep it in a high yielding online money market account, be sure that you are able to access it readily. Keep in mind that you might need this money in the event of an environmental disaster (Katrina), so you need to understand how you might be able to access the cash without internet access or electricity.
2. If you are lucky enough to have saved some money, then set aside some now to establish this fund. If not, then consider using your tax refund. Other ways to fund the account would be through the sale of things that you have but don't use anymore.
3. Find an account with a good yield, but don't let the rate be your only driver; remember that you need easy access to the funds.
4. Fund the account with an automatic savings plan

Here is a video found at Smartmoney.com that talks about these tips.

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Free Today, January 15th Jump-Start Day at Kiplinger

What a great opportunity to talk with a professional financial planner about your personal finance questions! Members of the National Association of Personal Financial Advisors (NAPFA) will be standing by to talk with you about your financial concerns and answer your questions. On January 15th and Friday, January 25th from 9 a.m. to 6 p.m. Eastern Time, these planners who are well versed in investments, taxes, insurance, estate planning, and saving for college and retirement, who normally charge clients $100 to $300 an, will be providing their expertise for free!

Just call toll-free 888-919-2345 or log on for online discussion with a knowledgeable and professional adviser!


The National Association of Personal Financial Advisors

NAPFA Code of Ethics

Objectivity: NAPFA members strive to be as unbiased as possible in providing advice to clients and NAPFA members practice on a fee-only basis.

Confidentiality: NAPFA members shall keep all client data private unless authorization is received from the client to share it. NAPFA members shall treat all documents with care and take care when disposing of them. Relations with clients shall be kept private.

Competence: NAPFA members shall strive to maintain a high level of knowledge and ability. Members shall attain continuing education at least at the minimum level required by NAPFA. Members shall not provide advice in areas where they are not capable.

Fairness & Suitability: Dealings and recommendation with clients will always be in the client’s best interests. NAPFA members put their clients first.

Integrity & Honesty: NAPFA members will endeavor to always take the high road and to be ever mindful of the potential for misunderstanding that can accrue in normal human interactions. NAPFA members will be diligent to keep actions and reactions so far above board that a thinking client, or other professional, would not doubt intentions. In all actions, NAPFA members should be mindful that in addition to serving our clients, we are about the business of building a profession and our actions should reflect this.

Regulatory Compliance: NAPFA members will strive to maintain conformity with legal regulations.

Full Disclosure: NAPFA members shall fully describe method of compensation and potential conflicts of interest to clients and also specify the total cost of investments.

Professionalism: NAPFA members shall conduct themselves in a way that would be a credit to NAPFA at all times. NAPFA membership involves integrity, honest treatment of clients, and treating people with respect.

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Removing the Burden of Debt

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If you face some crushing debt burdens, from credit cards or payday loans, you may wonder if you'll ever get out of the cycle of debt. A short-term loan like a cash advance is one way to avoid recurring debt, if used wisely. Used improperly, it can end up costing you much more than what you originally understood. This happens mostly when paycheck loans are used without understanding that they work best as short-term loans. You can decide to refinance the loan, but this will usually outweigh the benefits of taking it out in the first place and convert it from a short-term solution to a lengthier debt burden.

While debt is a fact of life in modern America, recurring debt doesn't have to be. There are times when you want to be able to get loans to finance emergencies like a broken down car or an unexpected medical bill. But, once the emergency is over the bill should be paid in full as quickly as possible. The problems can increase when a bill is not paid when it is due, and instead it is rolled over into a new loan. At that time penalties and fees may be levied for missing the original due date or the interest rate increases. This can make you end up paying two or three times the actual cost of your emergency.

If you find yourself in debt, seek to settle your accounts as quickly as possible, negotiating with your lender for a payment plan you can meet. You can reduce your risk of not meeting the due date by limiting the amount of money you withdraw. Then, if you do need more, that will be available after you pay off the first loan. In the meantime, try to put aside any small amount to start building an emergency fund. It doesn't have to be large; it can be $10/week. If at the end of two months you haven't used the money, you will have $80 in an emergency fund. This isn't much, but the psychological lift of seeing some savings is better than having no savings and feeling burdened by debt too.