Last week I got an e-mail from a frustrated student. She was ruining her paper shredder destroying all of the credit offers she was inundated with on a daily basis and she was fed up. Probably a familiar cry -- over 6 billion offers entered U.S. households last year alone. Her query – how do I stop them? She referenced the helpful tip on opting out of solicitations, which provided information on stopping unwanted phone solicitations (via state and national ‘do not call’ registries).
Stopping the MADNESS!
Under the Fair Credit Reporting Act (FCRA), credit reporting agencies are permitted to include your name on lists used by creditors or insurers to make firm offers of credit or insurance. What you may not have known is that the FCRA also enables you to “Opt-Out,” which prevents the credit reporting agencies from providing the information contained in your credit file to others [unsolicited offers]. NOTE. This does not keep you from obtaining additional credit, it merely keeps you from receiving pre-approved, unsolicited, and otherwise unwanted offers. If you’re wondering what the benefit(s) of receiving unsolicited offers, you can view the credit reporting agencies report to Congress (pp. 32-40).
How to do it.
There are two good ways to stop the offers [or at least slow them down]:
(1) Go to www.OptOutPrescreen.com (or call 888-5-optout). These are the credit reporting agencies opt in/opt out resources which will stop the agencies from selling your information to direct marketers. You can opt out for a five-year period of permanently. You can always opt back in if you miss the mail. If you use the website provided, you can fill out a brief, simple form to opt out. It will provide a screen with the information you provided that you will need to print, sign, and mail to the address provided in order to permanently opt out. If you don’t do that last step (print, sign, and mail), it will opt you out for the 5 year period instead.
(2) Add your name to the Direct Marketing Associations (DMA) Do Not Mail file. You can access this online – this process costs $1. You can also send a letter or postcard with your name, address and signature to: Mail Preference Service; Direct Marketing Association; PO Box 643; Carmel, NY 10512. The ‘mail method’ also costs $1 [+ postage]. Your name stays on the list for 5 years, and you can re-register at the end of that period.
Credit card companies get consumer information from other sources in addition to those mentioned above, so, while these two methods will considerably slow down credit card offers, the offers won't necessarily stop completely. SORRY.
ADDITIONAL RESOURCES.
Direct Marketing Association FAQ
FCRA Summary
Opt Out/Opt in Online Form
Opt Out FAQ
Schedule a Financial Session with the OFS
The Financial Tip of the Week is a service of:
University of Missouri-Columbia
College of Human Environmental Sciences
Department of Personal Financial Planning
Office for Financial Success
Dr. Mark Oleson - OFS Director
Kamis, 28 September 2006
Kamis, 21 September 2006
Emergency Funds
“Pay off your debt.” “Max out a Roth IRA.” “Buy a house.” Personal finance professionals bombard us with a litany of things we ought to do in order to achieve financial independence. All of the things that need to be done can become extremely overwhelming. Where’s a person to start? Most tend to agree that the first thing you should do — after meeting basic needs, and while reducing spending — is to start an emergency fund.
What is an emergency fund?
An emergency fund is an easily accessible source of money for use only in case of emergency. Emergencies do not include a new car, a PlayStation, a vacation … [I think you get the idea]. It is for use only in the case of an emergency.
Why do you need an emergency fund?
- A golf ball smashed your windshield.
- Mole problems.
- Job layoff.
- Health problems.
- Because “life” happens.
Insurance is purchased protection to assist with many of life’s emergencies. It won’t, however, cover everything – in addition, there will normally be a required deductible or co-pay as part of the insurance coverage.
People with an emergency fund tend to be in better shape than those without one. Studies show that those without emergency savings are more likely to accumulate debt. It may feel like you can’t afford to have one, but the truth is you can’t afford not to have one. Emergency funds are essential, even for college students. Why? There is a tendency for people that don’t have an emergency fund to turn to credit cards, payday loans [and other forms of debt] to cover the emergency if they don’t have the savings otherwise.
How much is enough?
Though personal finance experts agree emergency funds are necessary, there’s no consensus on how much is enough. Some say you need to save a year’s salary. Others believe $1000 is sufficient. Most advice tends to fall someplace in the middle. My recommendation is to do what will suit you. There is not one right answer. Examine your situation — your income and your needs — to decide how much you should save. I would look at an emergency fund in a vastly different way if I were a tenured professor than if I were self-employed.
What do the “experts” say?
The Wall Street Journal’s Complete Personal Finance Guidebook says: “How much is enough? The answer is different for different people in different situations. For those in careers with a large, ongoing demand or who have relatively strong job security, three months’ worth of expenses is probably enough of a cushion. Those with bigger career demands, such as higher-paid managers and executives or couples who work in the same industry or at the same company, might want nine months to a year’s worth of expenses in the bank.
In You Don’t Have to Be Rich, Jean Chatzky recommends three to six months of living expenses. Your Money or Your Life recommends six months of living expenses, but only once you’ve achieved financial independence.
In Dave Ramsey’s The Total Money Makeover, Ramsey’s very first step is to save $1000 in an emergency fund. Then he advocates eliminating debt; then he recommends building a three- to six-month cushion.
How do you get started?
Starting an emergency fund can be as simple as depositing a little money into a savings account. I think it’s wise to keep your emergency money someplace that’s not too easy to access. In other words, I wouldn’t advise that your funds be kept in your checking account or a savings account that you use regularly. Put it somewhere where the money is easily accessible, but not a regularly used expense account. Many experts suggest money market accounts as the best place to park emergency fund money. I’m a big fan of the high-yield online savings accounts – ones that are FDIC insured with no fees and no minimums. HSBC (hsbcdirect.com), ING (ingdirect.com), and Emigrant Direct (emigrantdirect.com) are all good examples that are currently paying above 5% in some instances. (SOURCE – Get Rich Quick Slowly).
Last Weeks Tip: Vesting
Schedule a Financial Counseling/Planning Session
The Financial Tip of the Week is a service of:
University of Missouri-Columbia
College of Human Environmental Sciences
Department of Personal Financial Planning
Office for Financial Success
Dr. Mark Oleson - OFS Director
What is an emergency fund?
An emergency fund is an easily accessible source of money for use only in case of emergency. Emergencies do not include a new car, a PlayStation, a vacation … [I think you get the idea]. It is for use only in the case of an emergency.
Why do you need an emergency fund?
- A golf ball smashed your windshield.
- Mole problems.
- Job layoff.
- Health problems.
- Because “life” happens.
Insurance is purchased protection to assist with many of life’s emergencies. It won’t, however, cover everything – in addition, there will normally be a required deductible or co-pay as part of the insurance coverage.
People with an emergency fund tend to be in better shape than those without one. Studies show that those without emergency savings are more likely to accumulate debt. It may feel like you can’t afford to have one, but the truth is you can’t afford not to have one. Emergency funds are essential, even for college students. Why? There is a tendency for people that don’t have an emergency fund to turn to credit cards, payday loans [and other forms of debt] to cover the emergency if they don’t have the savings otherwise.
How much is enough?
Though personal finance experts agree emergency funds are necessary, there’s no consensus on how much is enough. Some say you need to save a year’s salary. Others believe $1000 is sufficient. Most advice tends to fall someplace in the middle. My recommendation is to do what will suit you. There is not one right answer. Examine your situation — your income and your needs — to decide how much you should save. I would look at an emergency fund in a vastly different way if I were a tenured professor than if I were self-employed.
What do the “experts” say?
The Wall Street Journal’s Complete Personal Finance Guidebook says: “How much is enough? The answer is different for different people in different situations. For those in careers with a large, ongoing demand or who have relatively strong job security, three months’ worth of expenses is probably enough of a cushion. Those with bigger career demands, such as higher-paid managers and executives or couples who work in the same industry or at the same company, might want nine months to a year’s worth of expenses in the bank.
In You Don’t Have to Be Rich, Jean Chatzky recommends three to six months of living expenses. Your Money or Your Life recommends six months of living expenses, but only once you’ve achieved financial independence.
In Dave Ramsey’s The Total Money Makeover, Ramsey’s very first step is to save $1000 in an emergency fund. Then he advocates eliminating debt; then he recommends building a three- to six-month cushion.
How do you get started?
Starting an emergency fund can be as simple as depositing a little money into a savings account. I think it’s wise to keep your emergency money someplace that’s not too easy to access. In other words, I wouldn’t advise that your funds be kept in your checking account or a savings account that you use regularly. Put it somewhere where the money is easily accessible, but not a regularly used expense account. Many experts suggest money market accounts as the best place to park emergency fund money. I’m a big fan of the high-yield online savings accounts – ones that are FDIC insured with no fees and no minimums. HSBC (hsbcdirect.com), ING (ingdirect.com), and Emigrant Direct (emigrantdirect.com) are all good examples that are currently paying above 5% in some instances. (SOURCE – Get Rich Quick Slowly).
Last Weeks Tip: Vesting
Schedule a Financial Counseling/Planning Session
The Financial Tip of the Week is a service of:
University of Missouri-Columbia
College of Human Environmental Sciences
Department of Personal Financial Planning
Office for Financial Success
Dr. Mark Oleson - OFS Director
Kamis, 14 September 2006
Vesting ...
When beginning a job, there are many nuances and intricacies related to the benefits offered through your new employer (elements that should be part of your analysis when evaluating job offers). Among these is the vesting schedule of your retirement plan. What is vesting? Good question …
VESTING is your right of ownership to retirement plan benefits. Your employer determines the vesting schedule for the basic retirement plan, which can be either immediate or delayed. Vesting schedules apply only to employer contributions and earnings on employer contributions. Your contributions (as well as any earnings attributable to your contributions) are always immediately vested, meaning that if you were to leave the company tomorrow, those funds could leave with you.
Immediate Vesting. After you begin your retirement plan, all contributions and earnings vest automatically if it is an immediate vesting plan. The maximum participation requirements for eligibility for a plan with immediate vesting are two years of service and the attainment of age 21, or, for educational institutions, one year of service and the attainment of age 26.
Delayed Vesting. Individuals in delayed vesting plans don't have ownership rights to the contributions (and any earnings on those contributions) made by the employer on their behalf until they meet the vesting requirements. There are two objectives to Delayed Vesting: (1) Reward employees with longer service; and (2) Reduce the cost of providing benefits to employees who leave after only a few years of service.
There are two types of delayed vesting. (1) Cliff Vesting - you work several years and then the employer contribution vests fully at a threshold date. In three-year cliff vesting, for example, none of the client's accumulation would vest during the first two years of participation. But at the end of the third year, the employee's entire accumulation would be 100 percent vested. Under (2) Graded Vesting, in contrast, ownership of retirement benefits accrues in stages -- for example, 20 percent after two years, 40 percent after three years, and so on, until the entire accumulation is completely vested. For employer matching plans, contributions must vest by the end of the third year. To find out more about your vesting schedule, contact your employers benefits department.
(SOURCE – TIAA-CREF)
Schedule a Financial Counseling/Planning Session
The Financial Tip of the Week is a service of:
University of Missouri-Columbia
College of Human Environmental Sciences
Department of Personal Financial Planning
Office for Financial Success
Dr. Mark Oleson - OFS Director
VESTING is your right of ownership to retirement plan benefits. Your employer determines the vesting schedule for the basic retirement plan, which can be either immediate or delayed. Vesting schedules apply only to employer contributions and earnings on employer contributions. Your contributions (as well as any earnings attributable to your contributions) are always immediately vested, meaning that if you were to leave the company tomorrow, those funds could leave with you.
Immediate Vesting. After you begin your retirement plan, all contributions and earnings vest automatically if it is an immediate vesting plan. The maximum participation requirements for eligibility for a plan with immediate vesting are two years of service and the attainment of age 21, or, for educational institutions, one year of service and the attainment of age 26.
Delayed Vesting. Individuals in delayed vesting plans don't have ownership rights to the contributions (and any earnings on those contributions) made by the employer on their behalf until they meet the vesting requirements. There are two objectives to Delayed Vesting: (1) Reward employees with longer service; and (2) Reduce the cost of providing benefits to employees who leave after only a few years of service.
There are two types of delayed vesting. (1) Cliff Vesting - you work several years and then the employer contribution vests fully at a threshold date. In three-year cliff vesting, for example, none of the client's accumulation would vest during the first two years of participation. But at the end of the third year, the employee's entire accumulation would be 100 percent vested. Under (2) Graded Vesting, in contrast, ownership of retirement benefits accrues in stages -- for example, 20 percent after two years, 40 percent after three years, and so on, until the entire accumulation is completely vested. For employer matching plans, contributions must vest by the end of the third year. To find out more about your vesting schedule, contact your employers benefits department.
(SOURCE – TIAA-CREF)
Schedule a Financial Counseling/Planning Session
The Financial Tip of the Week is a service of:
University of Missouri-Columbia
College of Human Environmental Sciences
Department of Personal Financial Planning
Office for Financial Success
Dr. Mark Oleson - OFS Director
Kamis, 07 September 2006
Record Keeping - (What do I keep? How long?)
The following are some general suggestions/guidelines about how long you should keep personal finance and investment records on file (Source - Bankrate.com) ...
Tax Information. Keep returns, canceled checks/receipts, charitable contributions, mortgage interest and other information for 7 years. Why so long? The IRS has 3 years from your filing date to audit your return if it suspects good faith errors. They have 6 years to challenge your return if it thinks you underreported your gross income by 25% or more. There is no time limit if you failed to file or filed a fraudulent return.
IRA Contributions. Keep indefinitely. If you have made a nondeductible contribution, keep the records indefinitely to prove that you already paid tax on this money when the time comes to withdraw.
Retirement/Savings Plan Statements. Keep from one year to permanently. Keep the quarterly statements from 401(k) or other plans until you receive the annual summary ... if everything matches up, you can then toss the quarterly statements. Keep the annual summaries until you retire or close the account.
Bank Records. Keep from one year to permanently. Go through your checks each year, keeping those related to taxes, business expenses, housing, and mortgage payments.
Brokerage Statements. Until you sell the securities. You need the purchase/sales slips from your brokerage or mutual fund to prove whether you have capital gains or losses at tax time.
Bills. Keep from one year to permanently. In most cases, when the canceled check from a paid bill has been returned (or cleared), you can get rid of the bill. Bills for big purchases (jewelry, appliances, cars, furniture, computers, etc.) should be kept in an insurance file for proof of their value in the event of theft/loss or damage.
Credit Card Receipts and Statements: Keep from 45 days to 7 years. Keep your original receipts until you get your monthly statement; toss the receipts if the two match up. Keep the statements for seven years if tax-related expenses are documented.
Paycheck Stubs. Keep for one year. When you receive your annual W-2 form from your employer, make sure the information matches - if it does, toss the stubs, if it doesn't, demand a corrected form.
House. Keep from 6 years to permanently. Keep all records documenting the purchase price and the cost of all permanent improvements (remodeling, additions, and installations). Keep records of expenses incurred in selling and buying the property (legal fees, real estate agents commission) for 6 years after you sell your home. Holding onto these records is important because any improvements you make on your house, as well as expenses in selling it are added to the original purchase price or cost basis. This adds up to a greater profit (capital gain) when you sell your house, thus lowering your capital gains tax.
Additional Resources.
- Recordkeeping for Individuals (IRS Pub. 552)
- Our Family Records (Univ of Wisconsin Extension) - very detailed!
- Record Keeping (Iowa State Univ Extension)
Click to Schedule a Financial Counseling/Planning Appointment
Tax Information. Keep returns, canceled checks/receipts, charitable contributions, mortgage interest and other information for 7 years. Why so long? The IRS has 3 years from your filing date to audit your return if it suspects good faith errors. They have 6 years to challenge your return if it thinks you underreported your gross income by 25% or more. There is no time limit if you failed to file or filed a fraudulent return.
IRA Contributions. Keep indefinitely. If you have made a nondeductible contribution, keep the records indefinitely to prove that you already paid tax on this money when the time comes to withdraw.
Retirement/Savings Plan Statements. Keep from one year to permanently. Keep the quarterly statements from 401(k) or other plans until you receive the annual summary ... if everything matches up, you can then toss the quarterly statements. Keep the annual summaries until you retire or close the account.
Bank Records. Keep from one year to permanently. Go through your checks each year, keeping those related to taxes, business expenses, housing, and mortgage payments.
Brokerage Statements. Until you sell the securities. You need the purchase/sales slips from your brokerage or mutual fund to prove whether you have capital gains or losses at tax time.
Bills. Keep from one year to permanently. In most cases, when the canceled check from a paid bill has been returned (or cleared), you can get rid of the bill. Bills for big purchases (jewelry, appliances, cars, furniture, computers, etc.) should be kept in an insurance file for proof of their value in the event of theft/loss or damage.
Credit Card Receipts and Statements: Keep from 45 days to 7 years. Keep your original receipts until you get your monthly statement; toss the receipts if the two match up. Keep the statements for seven years if tax-related expenses are documented.
Paycheck Stubs. Keep for one year. When you receive your annual W-2 form from your employer, make sure the information matches - if it does, toss the stubs, if it doesn't, demand a corrected form.
House. Keep from 6 years to permanently. Keep all records documenting the purchase price and the cost of all permanent improvements (remodeling, additions, and installations). Keep records of expenses incurred in selling and buying the property (legal fees, real estate agents commission) for 6 years after you sell your home. Holding onto these records is important because any improvements you make on your house, as well as expenses in selling it are added to the original purchase price or cost basis. This adds up to a greater profit (capital gain) when you sell your house, thus lowering your capital gains tax.
Additional Resources.
- Recordkeeping for Individuals (IRS Pub. 552)
- Our Family Records (Univ of Wisconsin Extension) - very detailed!
- Record Keeping (Iowa State Univ Extension)
Click to Schedule a Financial Counseling/Planning Appointment
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