Monthly Archives: January 2014

Book Review: The Smart Woman’s Guide To Planning For Retirement

maryAccording to a 2012 survey, 92 percent of women in the United States admitted that they aren’t financially prepared for retirement because they haven’t planned and saved for it. Many women may be procrastinators when they think about planning for retirement, while others may not want to think about it because they’re afraid to face the fact that they don’t know how to prepare for it. However, in today’s unpredictable economy, a woman must be smart about her finances. For today’s smart woman, it’s never too late to take steps now in order to face retirement with confidence and hope for the future.

In “The Smart Woman’s Guide To Planning For Retirement,” author Mary Hunt of nearly 20 books on personal finances, and Debt Proof Living, advises today’s smart woman to take charge of her financial life so that she will be financially prepared for retirement. Mary’s book is based on her own personal learning experiences of making financial mistakes that she regrets from her past. However, Mary believes that financial mistakes in the past can always be turned around to use as learning opportunities for the future. By following the steps in her book, every woman can start today to take steps to be ready for retirement. Even though the content of this book contains general advice for both men and women, Mary’s target reading market is directed toward women.

Mary lists six specific strategies that women can take now in order to create a retirement savings plan: (1) Develop a money management system using a checking and savings account; (2) Build an emergency fund; (3) Get out of debt; (4) Maximize retirement accounts; (5) Own a home outright; and (6) Build up a personal investment portfolio. Each of these six strategies is discussed in detail, with practical illustrations and application woven throughout.

Often women say they don’t know how much money they need to retire. Mary addresses this issue by listing specific ways to calculate the amount through the educated guess approach, the rule of thumb approach, the rough estimate approach, and the focus on expenses approach. Any one or a combination of these methods will give the reader a target or goal for her six strategies.

In Chapter 14, Mary lists specific action plans for women by age groups — in their twenties, in their thirties, in their forties, in their fifties, and in their sixties. For example, women in their thirties who may be married and starting a family should start putting more serious effort into planning for their retirement. Mary recommends that they should be funding their 401(k) and Roth IRA, saying no to debt except for mortgage debt, saving for their children’s education, purchasing life insurance, and building their contingency fund to get out of debt. A reader can review this information and see where she is and what more she should be doing as she progresses toward retirement.

In the process of planning for retirement, a woman may need the services of a competent, unbiased financial planner for advice and guidance. Mary explains what a financial planner is, what a financial planner does, the benefits of using a financial planner, and how a financial planner is paid; she then lists six questions to ask a potential financial planner. Mary gives her personal advice as to what type of financial professional she uses and the reason for her choice.

Mary’s advice relating to managing money responsibly is based on her fundamental seven money rules for life, as described in detail in her recent book “7 Money Rules For Life.” These include: (1) Spend less than you earn; (2) Save for the future; (3) Give some away to others who are in need; (4) Anticipate irregular expenses; (5) Tell your money where to go; (6) Manage your credit; and (7) Borrow only what you know that you can repay. When a woman follows these money rules, she will be building a solid foundation for personal money management in order to be able to prepare financially for retirement.

As a Christian believer, Mary believes that the Bible is the guidebook for all financial advice. In Scripture, principles have been given to help a woman learn to get out of debt, how to stay out of debt, how to become financially stable, how to save, how to invest, how to spend, how to prosper, how not to waste money, and how to make the most out of money. Without obedience to His laws, human efforts to manage money will be in vain. Since God is the source of everything (including money), everything that a woman owns has been given to her by God. God expects her to use and invest her money responsibly, as the Biblical parable of the three servants clearly illustrates. God desires that every woman be a wise steward of the money that He has entrusted to her in order to honor Him with her finances.

Mary appeals to every smart woman to become financially independent. A woman can do this by: (1) Maintaining good financial records; (2) Having her name on all joint bank accounts; (3) Managing her own credit in her name by having her own credit card; (4) Assessing her insurance needs and buying enough to protect herself from risk; (5) Creating wills for both herself and her spouse, if married; and (6) Saving by putting money in her own personal savings account and Individual Retirement Account.

In the final chapter, Mary urges all women to heed the wake-up call and to start preparing for retirement today. Smart women are doers and can face the future with confidence. Three steps that should be taken immediately are: (1) Have a talk with a spouse or close friend about the need to plan for retirement in order to establish accountability; (2) Make a list of the things that you would like to do in the future if you had more time to do them, and then start to prepare for the transition into retirement; and (3) Create a plan using the six planning strategies, and use a projected timetable for achieving the plan.

This book can be highly recommended to women of all ages. Mary’s warm, humorous, and personalized writing style makes this book easy to read and enjoyable. Once the reader starts reading it, she’ll find that she can’t put the book down but will find herself highlighting specific information and taking notes on action items to pursue. Mary’s advice is practical, relevant, and timely for today’s busy woman. Her message is powerful and urgent — it’s not too late to take action to start planning for your retirement today.

How to Prevent Theft of Your Credit Card Information

Eleven things to do to help make sure no one steals your credit and debit card information:

  1. Use cash more often for such things as buying fast food and gasoline. Some thieves attach little card readers to gas-pump card terminals.
  2. Cover your hand when entering your PIN in the public credit card terminal.
  3. Cover your card when you remove it from your wallet. Thieves have been known to take pictures of your card.
  4. Use a credit card, not your debit card, for online purchases. Both are equally protected financially for theft, but the theft of a debit card number can cause more hassle, such as bounced checks and late payments.
  5. Be careful; try to use your card only in good establishments.  The only two times credit card information theft has happened in our family were to our children’s debit accounts when they used them on a college campus at a local establishment.
  6. Shred all mail and documents before you throw them away if they have any personal information about you on them. Buy a good $100 price range shredder that can cross-shred cards, computer disks, and several pages of paper at a time.
  7. Balance your checking account every month, and pay off all credit card balances.
  8. Password protect your computer and smart phone in case they are stolen.
  9. Make online purchases at home, on your private password protected internet connection; do not use a public WIFI in places like the coffee shop or library.
  10. Don’t share your personal information with anyone that shouldn’t have it; beware of phone calls and emails that try to obtain your birth date, social security number, and credit card information.
  11. Last but not least: pray over all the things you own, investments, personal property, and information. Pray for protection and wisdom, and pray that you may be a good steward over all your possessions. Scripture reference Ezra 8:21.

What to Do If A Victim of the Target Breach

Target and several other retailers recently were victims of data breaches over the holidays. What should you do?

  1. If you used plastic at any of them, especially at Target, monitor your account daily by logging in online to check out if there any unauthorized charges on your cards.
  2. Accept the credit monitoring service your card offers, but only if it is a legitimate offer; be careful with emails that could be trolling for personal information. Through various breaches my wife and I have had over the years, we have had the monitoring service free, but we’ve never had an unauthorized use or an ID theft.
  3. Notify your bank and tell them what is going on; they may issue you a new card.
  4. Change your personal identification number (PIN).
  5. If you are sure your account has been compromised, you may want to freeze the account for 90 days.
  6. If your credit card information has been stolen, such as at a local retailer or from your purse or wallet, call the police and file a report. This may be necessary to get your money back from your bank.

What should you do to protect yourself from credit card information theft? See the next article.

 

They Are Like Good Samaritans Clubs for Automobiles

Are Auto Club’s roadside assistance to replace Christians lending a hand to stranded travelers?

Isn’t it a terrible feeling when you car breaks down away from home? Have you ever been stranded on the side of the road, and someone stopped to help you replace a flat tire, or given you a ride to the next rest stop? Maybe you assisted someone else?  In Luke 10:25-37, we see the story of a Samaritan helping someone who was robbed, naked, and left bleeding nearly dead. Modern Bible expositors believe that not only did the Samaritan have the expense of lodging, bandages and clothing,  but inconvenience that occurred between people that looked down on each other.  Maybe in these days of Cell phones and auto clubs, and concern for personal safety, I would recommend my children and spouse to practice extreme caution and spiritual discernment in such situations.

However, several times over my life, I have helped someone with a short ride to the next exit, asked if they needed a jump-start or other assistance — but I was cautious, aware and prayerful. It is a great opportunity to bless other people. Likewise, I have been a benefactor too. In light of this I think there is solid merit for people to join Auto clubs like AAAMCA and Better World Club; they offer very useful benefits, such as roadside assistance and towing. Many of them today are offering much more, including car repairs.

In addition to clubs, other competitors have entered that market place, including credit-card issuers, insurance companies, car manufacturers, and oil companies. So before you buy, first check to see what benefits your auto insurance company and car manufacturer provide.

What I like about firms like AAA is the convenience during emergency situations. The last time my car broke down, I was in Michigan between Grand Rapids and East Lansing, on a business trip in the middle of nowhere. I had a company car and I am embarrassed to say I ran out of gas. It was very difficult to locate a towing or roadside assistance company, for I was not sure which small town I was near that might have such a firm. Secondly, a bad winter storm had just gone through the previous day, and I was low priority for the towing companies, since most with good-sized fleets were taking care of club customers. It is never convenient to need someone to bring you gas, tow your car to the closest good repair shop, give you a jump-start, or unlock your doors if you locked your keys inside. Club membership can help you avoid disaster on a pleasure or a business trip, and it can of save you many hours of trying to get help (and then perhaps getting it from someone who may not be reliable). Clubs have strict standards, so that added confidence helps a lot.

Auto Clubs offer this peace of mind, which is especially helpful with our 3-car family, with one at college. The mileage readings on our three well maintained vehicles are 298,000, 175,000, and 160,000, combined to more than 600,000 miles. This means a higher possibility of needing roadside assistance. I understand that we are not the exception. Avoiding car payments and owning cars is the way to go for those trying to be financially savvy.

Lastly, the local AAA Club in Columbus Ohio is offering something very intriguing right now for their auto service centers—a year-long discount program for maintenance. I was pretty much impressed with their program. For $100 members can get the following services within a year: 4 oil changes, a 39-point inspection with each oil change, 4 battery and starting/charging system checks, 2 tire rotations with balance, 1 air filter, 1 set of front wiper blades, 1 headlamp replacement, 1 A/C pressure check, and 12 monthly tire pressure checks. This would save the regular person about $300, or the partial do-it-yourselfer and deal finder about $200, I’d guess (probably paying for or exceeding the cost of the membership).  Peace of mind on maintenance and roadside assistance are nice things, especially valuable to those with older cars, lack of family close enough to call for help, or fear of being stranded in a dark place waiting for help to arrive.

In conclusion: I think we need to be wise with our auto insurance and maintenance budgets, while giving room to receive blessings from others, and to be a blessing to people too; therefore this is not an ‘either or’, but a ‘both and’ situation.

Also, rest assured I derived no financial benefit from highlighting these firms, and I don’t prefer them over others. If you are a club or a car repair firm and have an idea for an article and would like a mention, please contact me.

A ‘Both And’ Approach to Money and Possessions: Luke12:35-48

This week’s money and stewardship devotional from the four Gospels* is from Luke 12:35-48, Jesus talking to us about the importance and eternal significance of being good stewards and laborers at all times. These verses fly right in the face of people who might believe in false Biblical perspectives when it comes to money and possessions. More on that in a moment; first, read this passage and make note of the highlighted areas.

“Be dressed ready for service and keep your lamps burning, 36 like servants waiting for their master to return from a wedding banquet, so that when he comes and knocks they can immediately open the door for him. 37 It will be good for those servants whose master finds them watching when he comes. Truly I tell you, he will dress himself to serve, will have them recline at the table and will come and wait on them. 38 It will be good for those servants whose master finds them ready, even if he comes in the middle of the night or toward daybreak. 39 But understand this: If the owner of the house had known at what hour the thief was coming, he would not have let his house be broken into. 40 You also must be ready, because the Son of Man will come at an hour when you do not expect him.”  41 Peter asked, “Lord, are you telling this parable to us, or to everyone?”  42 The Lord answered, “Who then is the faithful and wise manager, whom the master puts in charge of his servants to give them their food allowance at the proper time? 43 It will be good for that servant whom the master finds doing so when he returns. 44 Truly I tell you, he will put him in charge of all his possessions. 45 But suppose the servant says to himself, ‘My master is taking a long time in coming,’ and he then begins to beat the other servants, both men and women, and to eat and drink and get drunk. 46 The master of that servant will come on a day when he does not expect him and at an hour he is not aware of. He will cut him to pieces and assign him a place with the unbelievers.  47 “The servant who knows the master’s will and does not get ready or does not do what the master wants will be beaten with many blows. 48 But the one who does not know and does things deserving punishment will be beaten with few blows. From everyone who has been given much, much will be demanded; and from the one who has been entrusted with much, much more will be asked.

What are the various ways people look at money, possessions, management, comfort, community and labor (I’ll call this MPMCCL) in this age? 1) self oriented: God equipped us to tackle life with gusto, and to grab as much from it as we can, for our own use and enjoyment.  2) outward oriented: we should take care of others, the poor and the environment, and in so doing God will provide our needs.  3) prosperity: God wants us to be very well off financially, he promises us that in his word, and we just need to act out in faith, name it and claim the blessings he has prepared for us in this life.  4) only the spiritual matters: since everything ultimately will be burned up in the fire, it doesn’t really matter that much how we deal with MPMCCL.   5) personal performance doesn’t matter, since Jesus is our ticket to salvation, so performance or works today have little value in eternity.

Every one of these various approaches has some truth in it; however, following just one of them is not the way Christ would have us go. There are two reasons we may believe in only one of these approaches.  The first reason is that Westerners are accustomed to believing about things only one way.  For example, when we approach a political solution, many of us feel the only way people can get out of poverty is through opportunity and pulling one’s self up by the boot straps.  Some with this approach believe in a trickle down economy, so the only solution is through business and education, and absolutely not entitlement programs.  In the opposite camp are those who believe the only way to help those in poverty is to take money from wealthy people and business and give it to those who need it. Some in this camp believe the rich and business are the enemies of the poor. In reality, the only way to help people out of poverty is ‘both and’ and not ‘either or.’ It is only through a ‘both and’ approach of balancing social programs and supporting business that we can truly help people out of poverty, and that both political parties can work together.

The second reason we take only one viewpoint about money, possessions, management, comfort, community and labor (MPMCCL) is that humans tend to do what makes them most comfortable. We may have inclinations to help the community, but at the end of the day, most of us mainly want what will make us personally happy. However, I think we should consider having a ‘both and’ approach to our beliefs about MPMCCL.

So what is God’s plan for MPMCCL? Looking at the verses from Luke 12:35-48, we will find some of the answers. The first obvious thing we see is that we need to be good managers all the time, throughout our lives, no matter how much or how little money we have. If we manage or steward well, it is not only good for our fellow servants, but Christ says he will put us in charge of many things in eternity.  Here we see a ‘both and’ approach; what we do today matters today and for eternity, even though it is material and will be burned up. We also see that some may prosper more than others; in this we know from verse 48 that prosperity is in store for some people. Whether we become extremely rich or not, we all are called to be good managers and to look at ourselves as humble servants and temporary stewards. Servants caring for others’ resources are not so much self oriented, but are God and community oriented. These strongly worded verses about management and work remind me of both Proverbs 1:7 and Genesis 2:15.

In summary, a good ‘both and’ belief about money, possessions, management, comfort, community and labor should first start with an eternity Kingdom and stewardship perspective. It should also balance providing for oneself and others, a life that includes prosperity (verse 48), and work, not a life that ultimately results in endless leisure (v. 45); “Be dressed for service and keep your lamps burning.”

*A chronological examination of any verse that involves money and stewardship, attempting to see the new light that Jesus shines on money in His ‘for-us’ but selfless, grace filled, Holy Spirit empowered, and Kingdom oriented positions. This is the forty-third post in this series.

News Flash: 2014 Flexible Spending Accounts Have Option for $500 Rollover

Do you have a special tax-advantaged savings account for health care expenses? There are several types of them to which the federal government permits employees and employers to contribute: Flexible Spending Accounts (FSA), Health Savings Accounts (HSA), Medical Savings Accounts (MSA), and Health Reimbursement Arrangements (HRA).

HSAs are required to be offered in conjunction with High Deductible Heath Insurance Plans (HDHP); they can be funded by either/both, employer/employee contributions. For 2013, if you have self-only HDHP coverage, you can contribute pre-tax up to $3,300. If you have family HDHP coverage you can contribute up to $6,550. Contributions accumulate in an account at interest and the interest is not taxed. This double tax preference (pre-tax contributions and non-taxed growth or interest) allows participants to pay some qualifying health care expenses in a tax preferred manner. As we all know, with high deductible and high co-insurance amounts, and health insurance just not normally covering as much as it used to, accumulating funds for qualifying expenses is a great way to plan for unplanned expenses. Funds from HSAs can be used not only in the current year, but also in future years. Lastly, when the funds are used for qualified expenses (see IRS document 969 and 502), the funds are not taxed; however , if they are not used for those expenses, there are taxes and possibly penalties, so be careful.

FSAs seem to be more common with large employers, and they are funded by pre-tax contributions from the employee’s paycheck. One drawback or common complaint of FSA’s is that the funds must be used in the current year (“use it, or lose it”). This makes it difficult to plan if you don’t know what expenses are in store for you in the future! At one time, the benefit plan from my previous employer provided an FSA, and it was nice when we knew exactly how much our two children’s orthodontia costs were going to be; our FSA really helped us plan and afford orthodontia costs.

Good news–after a considerable amount of lobbying from the health insurance industry, Notice 2013-71 has been introduced to remedy the “Use-it-or-Lose-it” regulation, allowing up to $500 of unused balances to be paid or reimbursed to participants as long as their plans do not incorporate the “grace period” rule.

Choosing to provide the rollover option will be left up to the plan sponsor (the employer), so if you  have an FSA, check with your employer for more information. Also, be sure to connect with your tax advisor and group health benefits provider for questions about any information provided here. This is just an overview of information to make you more aware, and it is not to be relied upon for tax, financial or other information. Some of this information came from Victoria McCoy, RHU at  Crown Benefits in Columbus, Ohio. For more information, also check out Use-Or-Lose New Carryover Rule.

Do These 6 Things to Achieve Goals in 2014

Most people don’t seem to be able to keep New Year’s resolutions beyond a few months, but if you do these 6 things, I know you will reach your goals in 2014. For many of us in the United States, it is too cold to go outside, so take some time to plan and set goals!

  1. Commit to Not Quit:  Whatever goals you set for the coming year, whether they be financial, weight loss, quitting smoking, or being a better spouse parent or employee, the main thing is to commit to not quit. Yes you might fail, but that is part of achieving goals. Everyone fails, but those who achieve goals are the ones that get back up, dust themselves off, and go at it again.  Life is more a long walk, not a sprint, right-foot left-foot daily consistency. The Bible is full of heroes that failed a lot, yet King David, who was “A man after God’s own heart” kept his eye on the Lord, or returned to God when he failed. Key Bible verse Philippians 1:6
  2. Cope with Failure:  Yes, you will fail at many of your attempts. So what! Many people think that if they fail, then that is the end, and they give up. Get over the thought that failure is bad–it is just a learning device. It is good and it is designed for intelligent people to determine why something didn’t work, and to recalculate their path. The difference between those who fail and those who succeed is that the successful ones take their lumps and keep going, but more wisely each time. One of the most awesome things about being a Christian is that through God’s grace we are saved for eternity. Jesus doesn’t measure performance, but he wants us to rely on Him to help guide us, and he wants to pick us up when we fail. Key Bible verse 2 Corinthians 12:9-10
  3. Set Goals, Reasonable Ones. If you need to save a bunch of money, or pay off a big debt, and you know it will take a few years, then pace yourself.  The same applies to weight loss. If you need to lose 100 pounds, shoot for 25, but give yourself as many months as your doctor tells you, probably a pound a week. After you reach that goal, then set a new one. It is kind of like when I go outside for a run; if my real goal is 3 miles (I’m a pretty weak runner), my brain and body freaks out and tells me that is impossible. However, if I just tell myself I have to run to the end of the block and I make it alive, then I will set out to run one more block. Before I know it, I’ve run 3 or 4 miles. So set a few goals for health and finances for the coming year. God wants us to be good stewards over everything he has blessed us with, and to be free of being slaves to debt and bad habits.  Key Bible verse Proverbs 16:3
  4. Set Overall Big Goals First. Know what is motivating you!. If your goal is better finances, then find out why you want that. Is it to lower stress and achieve something like a purchase? Those are big goals; write them down. Do you want to be healthier? Then what is your motivation? Feeling better overall, lower health care costs now and in the future, and just general comfort are your big goals–then write them down. Now you know why you are doing the daily tasks. After you make your list, spend some time praying about it. Ask if it is what God wants for you in the coming year, or are there other things he wants to show you? Key Bible verse Psalm 37:4  By the way, I’ve analyzed ObamaCare, individual and group coverage, and Medicare and Medicaid, so for the long-term your health insurance coverage isn’t going to be great. I’m not being political, just realistic. You will have high deductibles, co-insurances, and a lot of out-of-pocket things that aren’t covered, so good health will help with good finances.
  5. Set Measurable Goals.  If it is to spend less money, avoid debt, and save for the future, then build a budget, and watch it closely. Stay within spending parameters that you can easily measure (like using www.Mint.com). If it is exercise, get out of bed 30 minutes early 5 days a week and go for a run, drive to a fitness facility, or do a video on your TV. If you want to eat less and the right food, sign up for a calorie counting app like loseit.com (there are many options), and when you go grocery shopping, if it is junk food, don’t buy it, except for a reward at the end of the week.  Key Bible verses Luke 14:28-33
  6. Pray and Read the Bible. You need God’s strength daily, and his word in your heart to walk in his light. Commit to a least 20 minutes of Bible reading, prayer, meditation and journaling everyday. Not only is it essential to just function, it is key to having the prosperous year he has in store for you! Key Bible verses: 2 Timothy 3:16-17, Psalm 119:105, Matthew 6:9-13, and Matthew 4:4.

These things work for me, and I firmly believe that if you commit to not quit, not fear failure, set big goals first (know your main motivations), then set achievable and measurable goals, then 2014 you will do some key things to change your life for the better.