2016 - Page 4 of 7 - Best Money Moves

College Costs Are Outpacing Most People’s Income Growth – by a Lot

by Emily Pfund | Sep 26, 2016 | Blog

College costs a lot. In fact, today’s college students are taking on unprecedented amounts of debt to pay for an education – they hope – will lead to better career prospects down the road.

Watching Millennials struggle under this load of student debt can be confusing for older generations who could put themselves through school by working summer jobs. But it’s not that today’s students are lazy or unwilling to work; they just have to pay more for college. A lot more.

A recent study by ProPublica took a state-by-state look at median income and yearly tuition at public four-year colleges and universities, including the District of Columbia. It found that while the national median income fell about 7 percent between 2000 and 2014, the cost of college tuition rose by 80 percent!

Every single state saw a bump in tuition costs. Median incomes increased in 19 states, but none of these increases came close to offsetting the college costs in those states.

Arizona had the highest tuition increase of any state, at 202 percent, with a 10 percent drop in the state’s median income. In contrast, Wyoming had the smallest tuition hike. The cost of higher education in that state rose just 12 percent from 2000 to 2014 and the state’s median income rose 2 percent.

With numbers like that, it’s no wonder students turn to loans to fund their education and struggle to pay off their hefty tuition bills for years afterward.

Luckily, there are some things parents and students can do now to help pay for education and reduce stress in the future:

Save early. In an ideal world, you would start saving for your kids’ education as soon as they’re born. This is difficult to do in the real world, especially with the increased expenses that come with a new child. Still, as early as you can start putting money into a 529 account. Those funds will grow tax free in the plan as long as you use the funds for approved college expenses.
Search out scholarships and grants. While your child’s school of choice may offer them some scholarships to defray their attendance costs, look for outside sources as well. There are innumerable organizations offering scholarships to students fitting their criteria. There are scholarships for kids who attended a certain high school, children of people in certain professions (like the military, law enforcement and others) and children whose parents have certain illnesses or disabilities. A little bit of online digging could uncover a wealth of resources to help pay for school.
Start your degree at a community college. Most states have a community college program that feeds into top state universities. Investigate the community college system near your home. It’s possible you’ll be able to spend your first two years of college paying a few hundred dollars per semester and then transfer your credits and collect your degree from the big name university. That play would allow you to get your degree for roughly half price.
If you get offered a scholarship, take it. You’d think that with college costs as high as they are, students would jump at the chance for a scholarship. But the “brand name” college experience has been, well, branded into our brains as being something so much better that it’s worth taking on piles of debt over essentially a free or half-price education at a smaller college or university. Balderdash! It’s a far smarter move to take the scholarship and get out of college with little or no debt than it is to get that Ivy League degree. Ten years after graduation, you’ll be really happy not to have an extra $100,000 of student debt weighing you down.

3 Simple Budget Saves That Will Lower Your Financial Stress

by Ilyce Glink | Sep 21, 2016 | Blog

Financial stress is overwhelming – and more so when every little thing seems to pile on top of each other.

With so many financial issues for you to tackle, sometimes it seems like a miracle is the only possible way forward.

Not so. While financial stress can be overwhelming, small budget saves can help you re-float your boat, save and pay off debt. In short, small changes actually can make a huge difference over a relatively small period of time.

You’ve got to keep it simple. Much like paying off a smaller debt first to gain a sense of victory and motivation, your employees can revise their financial strategies in small ways to make things easier for themselves.

Here are three budget saves you can put into place today that will put you on the path to financial success. They won’t alter everyone’s money situation overnight, but give them some time, and keep working at it, and the benefits will show up.

1. Switch to a cash budget. When someone can’t get their spending under control, they end up compounding their problems by piling up credit card debt and high-interest charges. Switching to a cash budget removes these risks by giving them a limited amount to spend that they know they can afford. Here’s how it works: Decide how much you’re going to spend each week, then take out that cash from the bank or ATM and commit to not spending any more until the next week. It’ll take time to get used to having cash in your wallet (we’ve all become so used to the cashless society) and you’ll need to adjust to new spending habits and plan around what you can and cannot afford. Even if you blow your budget for the first few weeks, just stick with it. You’ll soon see positive changes. One study by the Urban Institute showed that those who were reminded throughout the month to choose cash over credit were able to lower their credit card debt. And, that’s key.

2. Make savings – and payments – automatic. Staying on top of multiple monthly payments, from utilities and rent to credit cards and student loans, can be difficult and barely leaves room for you to think about savings. Switching to automatic payments and savings, however, gives you a chance to avoid late charges and increase your savings without thinking about it. Often, employers will allow employees to set up recurring deposits from their paycheck to a savings account each payday to build up emergency or retirement savings without any additional steps. They can pick an amount that’s affordable and realistic, even $20 per month, and over time they may be surprised by how that amount grows. Using automatic payments for recurring monthly expenses can do the same, streamlining payment processes and giving your employees more time to focus on lowering their stress in other ways.

3. Cut out or reduce one expense each month. If you’re in serious money trouble, nothing dashes your hopes for a solid financial future faster than believing that you’re powerless to change it. One way you can take back control is to identify and reduce – or cut out entirely – one expense each month. This could be your cable or cell phone package, commuting costs, money spent dining out or even a morning coffee. Encourage your family (if you have one) to find ways to lower their monthly bills, whether it’s avoiding a splurge or calling the relevant company to ask about other options. Not only will you lower your overall expenses it will help you reduce your financial stress because you’re in much more control of your cash.

Your Best Money Moves: If your employees are struggling with their finances, gaining some knowledge and feeling support from their workplace can make a big difference in their stress levels, if only by letting them know they’re not alone. You can start by sharing small changes like these and encouraging and celebrating the efforts of your workers. Even when the solution is simple, the work behind it can be difficult and your employees will appreciate your support when it comes to their financial stress.

More Employees Are Making Their Best Money Moves

by Emily Pfund | Sep 16, 2016 | Blog

This week we launched another customer into the Best Money Moves program: the Kenneth Young Center, a nonprofit organization offering community mental health and senior services in Chicago’s northwest suburbs.

We’re thrilled to have them on board and excited to work together to help their employees reduce stress and build a strong financial foundation for the future.

While we were at Kenneth Young Center introducing them to the program (and handing out our new Best Money Moves swag!), we asked the crowd how many of them were experiencing some kind of financial stress. Unsurprisingly, almost every hand went up.

Employees told us about the financial stresses they’re facing, from newly-graduated social workers staring down a seemingly insurmountable pile of student debt to a single mother of two who sits awake at night wondering how she’ll make ends meet for the month.

Within hours of the launch, about one-fifth of Kenneth Young Center’s employees had signed in to their Best Money Moves accounts to start exploring the program, identifying the areas of their finances that stressed them out the most and learning how to dial back their financial stress.

The best part? Employees don’t have to pay for it. This resource, along with our accredited Money Coaches they can call day or night with their questions, is provided to them by their employer as part of the organization’s benefit plan.

And we’ve got more companies lining up to join the Best Money Moves movement! Next week we’ll launch a Washington, D.C.-based real estate company.

Want to join us? Email us at info@bestmoneymoves.com for a free trial. You can build your budget, read our growing library of articles, use our cool tools (like the Stressometer) and understand why we believe Best Money Moves is the right move to help your employees dial down their level of financial stress.

Why 50% of Americans Can’t Understand Their Credit Cards

by Ilyce Glink | Sep 14, 2016 | Blog

Remember life before credit cards?

Best Money Moves Founder/CEO Ilyce Glink remembers her grandfather carrying around a wad of fresh $20 bills, peeling them off one by one to pay for dinner.

Credit cards changed the way we pay for everything. Credit card companies made them easy to use – too easy. That’s why so many of us are carrying around so much credit card debt.

To responsibly use a credit card you have to understand its terms. Unfortunately, many credit cards don’t make their terms and conditions easy for customers to read.

According to a recent study by Creditcards.com, the average credit card agreement is written at an 11th grade reading level and would take 20 minutes to decipher. That might seem okay (after all, most people have graduated from the 11th grade), but 50 percent of Americans read at a 9th grade level or lower, making it difficult for most people to fully understand their rights as a cardholder.

This helps explain why employees repeatedly rank paying off debt as a top source of financial stress: if they can’t understand their credit cards, they can’t use them responsibly. This results in issues with debt, late payments and confusion about how they can pay off their debt quickly.

Missed information

If you don’t read your credit card agreement, you might wind up in trouble: You won’t know the terms and details unique to this card and your usage will be driven by your general credit card knowledge, rather than the habits that work best for this specific card and financial situation.

We learn by observation: If you grow up with parents who regularly carried balances on their cards, you might think this is a perfectly normal way to manage your financial life. It’s not until you read the fine print and see how fast the interest rate charges will rack up and how long it will take you to pay off that debt that you might change how you manage your credit card relationships. This isn’t just about missing out on reward points because of a misunderstanding about how they’re earned, it’s about consumers never learning their rights and responsibilities when it comes to credit card usage, and exposing themselves to unnecessary financial risks.

According to the study, only 26 percent of those surveyed said they regularly read their credit card agreements. If you or your employees or colleagues only read one quarter of the contracts used in your office, your company would pretty quickly find itself in a load of trouble.

Financial stress at work

The study also claims that the less familiar card users are with their credit card’s terms and rules, the more they’ll end up paying to use that card over time in interest charges and fees. The more debt employees carry, the more financial stress they’re going to feel. This stress doesn’t stay confined to their finances – it also spills over into their work and their day-to-day lives. If you want to help, you have to provide your employees with assistance they can use. You can’t change how credit card companies write their contracts, but you can help boost the knowledge your workers have.

Here’s your Best Money Move: The more you know about financial stress and your options when dealing with money, credit cards and debt, the better prepared you’ll be to deal with these issues when they arise.

What’s the Biggest Source of Financial Stress in Your State?

by Ilyce Glink | Sep 9, 2016 | Blog

Are you financially stressed? Do you know what’s causing it?

A recent study by GoBankingRates.com asked Americans to identify their biggest financial stressor and then broke down the results by state. Check out the map above to see which financial issues are keeping your neighbors awake at night.

The most common stressor cited was paying off debts (including credit cards), with 20.6 percent of respondents saying this was their biggest financial concern. It topped the list in 30 states and tied with other issues as the most common stressor in another three states.

The stress of paying off debts, as we’ve discussed in earlier blog posts, can negatively impact many different aspects of your life, from your personal relationships to your job performance.

What can you do to reduce this stress? Clearly, paying down (or off) your debt will help. There are two big steps you can take to start whittling away at your debts.

Build a budget: Track all of your income and spending for one or two months straight – every single dollar that comes in and (even more importantly) everything you spend. You can use a spreadsheet, pen and paper or our Best Money Moves Budget Tool, whichever is easiest for you. Look at your expenses and decide where you can cut some of your spending, whether it’s making your coffee at home instead of paying for it at Starbucks every day or finding something to watch on Netflix instead of going to the movie theater every weekend. The more you cut, the more progress you’ll see.
Pick your payoff strategy: If you have a lot of different debts, it probably feels like you’re just throwing your money at them with no real idea of how long it will take to pay them off. Choose a strategy for making your payments, continuing to pay the minimum on each but focusing any extra you have on one of the following methods:
1. High-interest first: Concentrate on paying off the debt with the highest interest first, then moving to the next highest; or
2. The snowball strategy: Tackle the smallest debt first, then “snowball” the money you were putting toward paying off that debt into the next-smallest debt after you pay off the first, continuing upwards until you’ve paid off all of your debts.

Want to learn more about how to tackle your debts and reduce financial stress? Email us at info@bestmoneymoves.com to be included in a free trial!