In addition to the fantastic financial advice Valerie provides on this blog, this week I’m excited to share a podcast interview I recently conducted with Manisha Thakor, financial literacy expert and co-author of two great books on personal finance, On My Own Two Feet and Get Financially Naked.

In this 15-minute segment, Manisha answers the questions on the minds of today’s college students and recent grads, such as:

- What are the most important financial steps to take in your 20s?

- What are the biggest mistakes to avoid in your 20s?

- How can college students make good decisions about how much student loan debt to take on?

- What are the best ways to save money and live on a budget?

- What are the important financial steps to take when starting a new job?

Don’t miss this essential information for you and your wallet! Listen to the podcast now.

TAGS: 20 to 29 year old women and money, Generation Y, Money Basics

Debit cards are great as long as you do the math – regularly.   

When it comes to debit cards – it’s important to stay in check.  By that I mean be disciplined and always record in your check register the amount you just spent from your checking account.  The concept is basic but many people find themselves in a debit dilemma because they forget to do that. 

It’s a good mindset/discipline to always think of debit cards this way:  you’re paying now – unlike with credit cards where you’re paying later.  To use your debit card means you have to have money in the bank right now to cover your purchase.

In the event your debit card is lost or stolen, the Federal Reserve (http://www.frbsf.org/publications/consumer/plastic.html) – says:

• Your liability is limited to $50 if you notify the financial institution within two business days of discovering the loss or theft. 
• However, you could lose as much as $500 if you delay. 
• And if, within 60 days after receiving your statement on which the unauthorized charge appears, you don’t report it, you risk unlimited loss – meaning you could lose all the money in your account (plus anything in your maximum overdraft line of credit.)

Debit cards can share some of the same features and protections of credit cards:

• Zero liability:  (as mentioned above) you’re generally not liable for unauthorized purchases as long as you notify the lender immediately. 
• Fraud protection:  the law requires financial institutions to replace funds within ten business days of notification (though sometimes sooner) for losses resulting from fraudulent card use. 
• Disputes:  you may have dispute resolution options if an issue arises from a debit card purchase. 

Debit cards are hugely popular these days.  But given the potential risk due to the direct access to your checking account, here are some suggestions on how to wisely and mindfully use yours:

• Protect your ATM/debit card as you would cash.
• If your card’s lost, stolen or you suspect it is being used fraudulently, report it immediately to your bank.
• Save your debit transaction receipts for better oversight of your account and be sure to always shred them when disposing of old receipts.
• Choose and memorize a safe PIN which means avoiding obvious numbers such as your birthday or address and share it with no one.
• Always know how much money you have in your account, and review bank statements carefully.
• Remember – your debit card may allow you to access money that you have set aside to cover a check that has not yet cleared your bank.

It’s a good idea to always notify your financial institution before traveling out-of-state (and certainly when out of the country) if you plan to use your debit card.  Some banks will even send you alerts when your card is being used outside of its normal usage area – which is an attempt to prevent suspected fraud or theft.

And finally, know your card’s limits.  Your debit card will have a “purchase limit” and also a “withdrawal (such as via your ATM) limit”. Usually they are not the same amount. If you don’t know what those limits are – find out!  It’s your money, so take it personally.  Mind over your money matters because mind over money – matters. 

Here’s to your health and wealth.

TAGS: Debit cards, features, liability, protections

Thanksgiving has always been my favorite holiday.  I was born Thanksgiving week and as a child relished the fact that there were birthday parties for me – everywhere!  My Dad planted that seed to counteract the sting of my older cousin’s annual taunt:  “Happy birthday, turkey!”  

This Thanksgiving 2009, I’m thankful that we are closer (though still a long way to go) to the end of this brutal recession and that I’ve had the opportunity to provide you some tools/information with which to rebalance your financial lives going forward. 

It has been written: “You can’t change the direction of the wind but you can reset your sails”.  That’s my Thanksgiving wish for each of you.  I think “resetting your sails” speaks to the importance of life long learning when it comes to personal money because with every major life change, we must readjust/reset how we handle and allocate our money resources.  We use money every day but new information about money and how it impacts the lives of every day people isn’t talked about regularly or consistently until there’s a financial crisis.  That’s when the topic gets everyone’s attention. 

I strongly believe in the concept of “mind over money matters” – the process of identifying what you want and why, when you want it, and what it takes to achieve it.  Those disciplines work in good times and in bad.    

There are new tools and rules of engagement regarding re-calculating your relationship with money – the most important of which is:  before you decide what to do with your money, first know how you feel about your money.  For example, if you find a dollar, do you say “what can I do with this dollar?” or “what can this dollar do for me?”  A wealth building mindset will embrace the latter. 

In 2008, everything and everyone changed regarding the modern world and money.  I see that as an opportunity – a new rule of engagement – that says everyone can benefit from ongoing, continuing education regarding basic money knowledge and responsibilities.  “Mind over money – matters” and the concept can be taught as early as the age of 3 by teaching children the difference between wants and needs – a money lesson that many adults never learned and as a consequence have made ongoing, poor money choices and suffered the consequences.  

What we’re going to face economically in the months and years ahead is a social phenomenon of slow job creation as a consequence of the systematic transfer of manufacturing and production abilities abroad.  Those jobs won’t come back overnight and those nations to which we’ve transferred skill and knowledge have now transferred those skills to their respective work forces and will be our competitors as we try to rebuild our manufacturing and production base here at home.  What heretofore were underprivileged countries are now emerging economies. 

This is happening in the midst of a domestic and world economy that has all sorts of electronic components:  social networks, day trading, and investment clubs on line – which further supports and emphasizes the importance of life long learning when it comes to personal money.  Our new, post-recession economy will require everyday people of all ages to be life long learners about money, economics and most importantly – our system of commerce and finance called capitalism.  This recession has proved that the average American is a poor capitalist.  Many don’t know how it works.  Those who do – don’t know how you grow it and make it work for them rather than against them.   

Finding a new relationship with your money has never been easier.  That’s the recession’s silver lining.  While money decisions have always had consequences, this recession got everybody’s attention.  The consequences are now clearer and more important to every member of the family. The new money rules of engagement and responsibility will require families to practice a form of “cooperative economics” since this financial dilemma has caused a boomerang effect of adult children (and often elders who can no longer afford retirement communities) returning home.  This has created a new and challenging financial dynamic for Baby Boomers who were poised for retirement and now can’t because of their own huge losses which are compounded by the money needs of the generation above (aging parents) and the one below (their adult children). 

Those are the reasons why this Thanksgiving 2009, I hope you and your family will embrace a collective mindset:  to make financial decisions based on what you want and why you want it, when you want it and what it takes to achieve it.  That kind of money discipline will work for you in good times and in bad. 

Here’s to your health and wealth.

TAGS: life long learning and money, Money mindset, personal money management, Relationship with money

We either toss them out or put them in a “to read” stack that never gets touched. 

I’m talking about those bulk mail, bar code addressed, multi-folded, innocuous-looking pieces of correspondence  from your bank.  My bank highlights these flyer-like items with a bright red stripe above which is typed:  “Important change in terms notice enclosed – please read”.

Do you know what not reading those “important change in terms” from your bank can cost you? 

I always open them.  I usually scan the topic of the notice that’s across the top in bold capitol letters and then put it in my ever growing “to-do” file to (eventually) read on some flight somewhere when I have time to take the few minutes to actually read all the fine print.

I opened the most recent one.  I scanned the topic:  “Important notice regarding changes to your account and your right to cancel your account”.  The words changes to your account got my attention.  Instead of filing it – I  immediately sat down and read the 6 narrow, printed panels of mostly miniscule font because the words changes to your account have new meaning these days as banks and other financial institutions are trying to make money and fatten badly depleted bottom lines.

The single-spaced fine print  first paragraph of the notice said there would be changes to my account in response to market conditions, new federal laws and regulations, and our increasing costs.  OK.  If the bank is openly declaring it’s going to charge me more for services (in order to cover their costs) – I need to know the specifics.  So do you.

I read on.  My notice switched to tiny font bold to make it clear(er):  “Please read below about your right to choose not to accept certain changes by cancelling your account.”  Did you know that?  You can say “yes” to the bank’s new rules or say “no” and close your account.  Somehow I didn’t feel like I’d been given a choice – as much as the lesser of two evils. 

These days, it’s about really reading the fine print.

A somewhat pleasant surprise from my other credit card company regarding “important account price change notification”.   First it was in absolutely readable font size.  The notice was to inform me that they were :

•  raising the Annual Percentage Rate (APR) on cash advances (to the prime rate plus 21.99%)
• raising the APR on any balances that have a penalty rate because of a late payment (to 27.24%) and
• increasing the late fee (to $19 for previous balances of less than $250 and to $39 if the previous balance is $250 or more)

The somewhat pleasant surprise in the notice – a giveback!  Well, at least it made me feel a little love from my plastic:  “We are pleased to let you know that we will not charge you a fee if you go over your credit limit.”

That’s not really a gift or giveback, I know.  Credit card issuers are making changes to accommodate the fact that people are accessing and needing money in different ways these days.  Dropping one of the  many  fees they charge us isn’t as much the point to me as that they added a basic but often forgotten reminder:  “Don’t forget, it’s still important to keep your balance under your credit limit.” 

I consider that, the somewhat ”pleasant surprise”.  Lenders in a recession recovery environment acting in the spirit of educating customers.

Here’s to your health and wealth!

TAGS: APR, bank change notifications, Bank notices

Paying with a credit card is definitely handy – just be sure you don’t pay an unnecessary price for the convenience.  By that I mean, don’t let credit card fees get out of control. 

There are ways that this can happen without you easily knowing of it.

First and foremost are late fees.  They can be exorbitant!  Miss a payment due date and you can get hit with a penalty ranging from $15-$39. 

Not only is this all-important due date not always crystal clear but credit card companies have the right to change this due date deadline with very little notice.  In fact, they can even specify an exact time of day that your payment is due!

And since a late fee increases the balance you’re carrying, if you’re at or near your spending limit, this fee could push you over the limit which could then result in an over-the-limit charge of another $15-$39.

Another potential way your credit card fees can get out of control:  if you’re late with a payment or go over your spending limit. 

If either of these situations happen, the credit card company can increase your annual percentage rate of interest (APR) into double digits.  Many credit card companies will do this even if you’re late on any of your bills – even those not charged to that particular card.  This is a tough but good lesson in reminding us how inter-connected credit history is and the potential consequences of any credit delinquencies.

So what to do if you are hit with a late fee or over-the-limit fee? 

• Contact the credit card company.  Ask them to wave the charge for you as a one time courtesy.  Some will.
• Request a lower APR and if the company says “no” consider transferring to another credit card company offering a lower rate.

If you do consider switching to another credit card company – one caveat:  if you have a long-standing history with that credit card issuer, closing that account could hurt your credit score. 

So I suggest that you keep the credit card with which you have the longest credit history – even if the APR is a bit steep.  Use it just a couple of times a year so there’s activity on it but only charging what you can pay off in full when the bill comes due.  However, shop for a credit card that has a low rate and use that one consistently and responsibly.

Plastic protocols are important to know and knowing them keeps your credit – worthy.

Here’s to your health and wealth.

TAGS: APR, credit card fees, credit cards, late fees, over-the-limit fees, payment due date

Knowing the score – my credit score that is – has always been important to me.  It was one of the silver linings I found many years ago in the dark cloud of post divorce in a community property state.  Having been a young married woman in the early 70s, my idea of good money habits was:  “What’s mine is his.  What’s his is mine.  And we and our money would live happily ever after.”

Boy did I get a reality wake up call.  When I initiated divorce proceedings nearly 18 years later – figuring out the mine and the his of our money – came down to attitude.  As the obvious breadwinner (a calculation reached by an angry female judge who was herself the product of a divorced family and still dealing with her own issues of abandonment) – I got nailed.  I was to be responsible for paying all the outstanding bills, providing all the education expenses for my children and writing the checks for any other family matters yet to be named or known.

I had two choices:  I could get mad or I could get even.  I chose the latter – and I don’t mean getting even by retaliation.  Even though my ex said he didn’t care about the bills or lines of credit in our name and would do nothing to pay them off – I did.  I cared very much.  In fact, I cared so much about what creditors would say about my name that I set my sites, goals and checkbook on paying off all the family debt.  Month by month.  Chunk by chunk.  And when that I was done, I regaled in the satisfaction of never having to see his name and mine together on any bill or document that represented my new life. 

It took a few years of deliberate, consistent, always on time payments.  But finally I was at a place where I understood the importance of and the need to know the score – my very own, just me, individual, earned it myself, pristine credit score.  There is big bold numbers was my answer:  793.   I love the number.  I guard the number.  I’ve kept it there even though I’ve had to handle my share of disappointments in this crazy money time called a recession.

The new (I)deal when it comes to credit worthiness isn’t about how much money you have, it’s about how you handle what you have.

If you aim low, low is what you get. A recent survey of college graduates conducted by the National Association of College Employers revealed:

• When asked what they expect to earn in their first job, women expected to earn $10,000 less than men did.
• Women actually earned $40,000 on average, $7,500 more than they anticipated.
• Men earned $50,000 on average.

While some of the gender differences in both salary expectations and salaries earned can be explained by the fact that women tend to enter lower paying industries such as education and government where as men tend to end up in higher paying sectors such as engineering and consulting, there is still a gap in every industry.

Perhaps most interesting is that in healthcare, an industry dominated by women, the salary gap was the widest ─ over 30%.

Over a working lifetime, the gender gap in pay is estimated to cost a college educated woman over $1,000,000. That’s a lot of money. Not only does it affect your ability to support yourself and your family while you are working, but it also impacts the amount of money you will be able to save for retirement as well as donate to causes you believe in.

How can you best prepare to get what you deserve?

1. Do your homework
   Determine what the salary range is for the job you want in your geographic area and industry. There is a wealth of information available on the internet (for example, see jobsearchintelligence.com) but don’t stop there. Ask people in the industry what you should expect in terms of compensation. Be realistic yet optimistic, assessing your education and experience carefully so that you are able to explain where you fit in the salary range band and why that is the case.
   
   
2. Know what your alternatives are
   In order to negotiate effectively, you must know what alternatives you have ─ what will you do if you are unable to get a reasonable offer from this prospective employer? Do you have other offers or good prospects that may soon develop into offers? If so, you have leverage in the negotiation. If not, what can you do to improve your situation? When the other party senses that you have no alternative but to take what is offered, he or she will be tempted to give as little as possible and you will be anxious to take it. Don’t put all your eggs into one basket; as you move through the interviewing process with a company, continue to explore other possible opportunities.
3. Practice, practice, practice
   Enlist a friend you trust to play the role of the interviewer and practice. Experiment with various approaches ─ what will you say if the interviewer asks you what your salary requirements are? How will you respond if the interviewer throws out a number that is below market? Practice is precious because although it is helpful to have thought about how the conversation will go and how you will respond but it is entirely different to get the words out of your mouth in a way that is comfortable for you. You won’t be able to anticipate and practice the entire negotiation but you’ll be surprised at how much you can foresee.

Don’t be reluctant to advocate for yourself appropriately and respectfully. While you may want the job, if you are underpaid, you probably won’t be very happy.

TAGS: benchmarking salary, negotiating pay, salary, salary sites

To shred it or not to shred it?  That should never be the question when it comes to getting rid of any papers that contain  any of your personal information.   

Your Social Security number, credit card number, bank accounts and other information that uniquely identifies you – must be protected.  If not, you’re a prime target for identify theft which is now considered the largest white-collar crime in the history of the United States.

Identity theft is when someone uses your personal identifying information to commit fraud or other crimes.  Let me be clear:  identity theft can happen to you.  The Federal Trade Commission says  it will happen to 1 in 6 Americans this year alone.

So how do you protect yourself, your good name , your personal information? 

Start by buying a shredder.  You can get a basic one for under $20 ( http://electronics.pricegrabber.com/paper-shredders/p/463/) although I recommend spending a bit more to get a cross-cut shredder or my personal favorite – a confetti cut shredder.  Talk about $hredded bliss! 

Some other ways to protect your personal information:

• Safeguard your Social Security number.  It’s the ultimate key for fraudsters to successfuly access your account.
• Know when you’re required to give out your unique nine digits aka your Social Security number – and when you’re not. 
• You must list it when you do your taxes, open a new bank account, get a line of credit and get a driver’s license. 
• Medical offices and utility providers might ask for it but know that you are not required to give it to them. 
• Never give out your number if someone calls and requests it to verify your information.
• Don’t trust caller ID – fraudsters have technology to make the call look like it’s coming from a legitimate financial institution.
• Always be careful where you store your Social Security card.  Never keep it in your wallet or car glove compartment and never print it on your personal checks.
• Never send your Social Security number in an email, mobile text or on a website in order to complete a purchase.

If you’re on a secured website where you must include any personal information, make sure you are not using a public computer.  And it’s a not a good idea – when using your own computer with free Wi-Fi – to enter your information.  Sad but true, hackers have multiple ways of intercepting technology.

Some other tips to avoid falling victim to identity thieves:

• Be skeptical of charities.  I’m not being a grinch.  It’s just that scam artists will try any tactic to get your money or information.  A legitimate charity that solicits you on the phone will honor your request that they send information to you in the mail.
• Be cautious with retailers.  Many now ask for you phone number or email address when you make a purchase.  It’s usually for their database to market additional products and services to you.  But just because they ask – you don’t need to give.
• If you’re job hunting, a potential employer should only get your Social Security number if they hire you.

You can’t absolutely stop identity theft from happening to you – but you can sure make it less likely. So when it come to protecting your personal information - the rule of thumb:  when in doubt, don’t give it out.  And when getting rid of any document that has any of your personal information on it:  don’t ever toss it out, instead shred!

Here’s to your health and wealth!

TAGS: bank accounts, federal trade commission, fraud, Identity theft, paper shredders, social security number, tips to protect personal information

Women are more vulnerable financially as we age.  Why?  Because we have very unique money issues:

• lower earnings
• work patterns
• health status
• life expectancy
• marital status

We have lower earnings because we work in different and often less lucrative occupations and sectors.  Two-thirds of us earn less than $30,000 a year – a number that has been diminished even more by the ongoing downturn in the overall economy.  U.S. Labor Secretary Hilda Solis says the recession is especially hard on women because we earn less money than men for the same work.  Women earn from 78-cents to 52-cents for every dollar men receive.  (Source: The Womens’ Data Center, Institute for Women’s Policy Research,  http://www.iwpr.org/femstats/wocdata.htm - Asian 78-cents, White 73-cents, African-American 63-cents, Native American almost 60-cents and Latinas 52-cents).  The average 25-year old woman with a college degree earns $500,000 less in her lifetime than a man.  While women are in the workforce in greater numbers, we are often part-time or work for an employer offering few or no benefits. 

Women’s work patterns are different.   Women on average work 13 years less than men.  During our time away – most often to care for children or frail parents or other family members – we’re not increasing our earning power, not vesting in pensions and our lifetime earnings for Social Security income is lower.   Most defined pension plans vest at 5 years.  Women average 4.7 years in a job while men average 5.1 years.  Half of working women have no pension. 

Women spend more on out-of-pocket health care expenses than men.  The system sees our health status differently.  Men have more acute illnesses and die sooner but  their medical needs are covered under insurance and Medicare.  Women at midlife have more chronic illnesses, require specialists and leading edge medicine.  Our illnesses frequently result in the need for long term care – and other needs often not covered by many insurances or Medicare.

We live longer than men – on average about 5 years longer but a woman’s income at age 65 is half that of men.  Women must factor in longer life expectancy as they plan for retirement and should work with a  financial specialist to accurately figure out the rate at which they spend their retirement savings.

90% of women will live alone – by choice or circumstances – at some point in their life.  29% of single, older women are poor or near poor.  Widowed and divorced women are three to four times more likely to be poor than women in couples.  For many older women, Social Security is their only source of income in retirement.

Women deserve economic security.  In order to attain it, we must not allow ourselves to become the victims of this recession.  See and seize the opportunity to become better stewards of our personal money.

Here’s to your health and wealth.

TAGS: benefits, caregiving, chronic illness, earnings, health status, life expectancy, Lower earnings, marital status, pension plans, widowed and divorced women, work patterns

It works my very last nerve when I hear people say:  “I let my financial advisor figure out what to do with my money.  They’re much better at it!”  Guess what?  It’s your money, so I think there’s something a little scary about just turning your money over to someone else to manage. 

Always remember – it’s YOUR money and always take it personally. 

In order to make money grow and for you to sustain your financial independence – it’s critical for you to build a financial team – if only of one:  a financial advisor.  This is the person who can help you reach your personal money goals by working with you to create a financial plan and put it into practice.

How do you find a financial advisor?  Ask around.  Check with family, friends, attorney and accountant for referrals.  Be sure to check the financial services that your bank provides, too.  

When choosing a financial advisor, what you’re looking for is someone with whom you feel comfortable.  Someone who makes you feel that he or she is taking your money needs personally – professionally.  Look for a person who has been in the field five years or more and can tell you their code of ethics.  Make sure to check their background (www.sec.gov click on “Check Out Brokers and Advisors” for more information).  Also confirm their credentials with one of several accrediting organizations such as the National Association of Personal Financial Advisors ( http://www.napfa.org/). 

There are many professional designations out there among money specialists – but only a few deserve your consideration.

• There are CFPs – certified financial planners who are trained in risk management, investments and tax, retirement and estate planning. 
• There are PFSs – personal financial specialists who are certified financial accountants who specialize in financial planning. 
• There are chartered financial analysts (CFAs) who must pass a three level test on investment analysis, economics, portfolio theory, accounting and corporate finance. 
• There are chartered financial consultants who are insurance agents who’ve passed college courses in financial planning.

Regardless the designation of the financial specialist – be sure you know how they get paid.  There are several compensation models.  Some are strictly fee only (like the members of NAPFA).  I prefer fee only advisors since they sell no products and therefore have fewer potential conflicts of interest.  Other financial advisors are paid by commission and take a percentage of your assets plus a fee.  There are some who charge an hourly rate of $120-$300 per hour.  And still others who charge you an annual retainer.  You can find good advisors in any of these compensation models.  Then schedule what should be a free consultation with several the advisor so you can get a one-on-one sense of your comfort level with this person.

When choosing the best person to help you manage this important area of your life, what should you expect them to do?  The advisor should:

• know and focus on your risk tolerance in selecting your portfolio and provide you a performance review of at least 5 years
• work with you to set target rates of return meaning the returns you will need to achieve your objectives
• show you different models and mixes of investments that have the highest probability of achieving your goals
• write an investment policy statement for you (or you request one) that provides specific instructions such as target return, risk tolerance, time horizon, anticipated withdrawals or contributions, tax constraints and regulatory issues, if any
• rebalance your portfolio periodically and make suggested adjustments as needed
• provide you with a quarterly assessment of the portfolio’s performance and market values. 

Here’s to your health and wealth.

TAGS: brokes and advisors, consultation, fee only advisors, Financial advisors, financial independence, National Association of Personal Financial Advisors, Securities and Exchange Commission