Twelve-Steps to Financial Success in 2012

The following tips were provided by the National Foundation for Credit Counseling:

1. Review your credit report – Much of your financial future depends on the contents of your credit report. Therefore, your first step should be to obtain your report, review it for accuracy and dispute any errors.  Since you can access your credit report free of charge, there is no reason to neglect this important piece of your financial life.  Consumers are allowed one free report from each of the three major bureaus once every twelve months.  You can get all three at once, which is a good idea if a major purchase is on the horizon, or stagger your requests to check for identity theft.  Access your report from www.annualcreditreport.com.
2. Obtain your credit score – The three digits that comprise your credit score are a major dictator of whether or not the lender will extend credit, and at what interest rate.  It is likely that you’ll have to pay to purchase your score, but it will be money well-spent.  Be sure to understand the range within which your score falls, as each score has its own scale.  Further, take the necessary steps to improve your score.  Remember, a high score equals a low interest rate, saving you significant money over time.
3. Reduce debt – If you’ve dug a deep financial hole, stop digging.  Piling new debt on top of old is a red flag that you are living beyond your means. Lock up the credit cards until they’re paid in full, and meanwhile, reach out for help from a legitimate credit counseling agency sooner rather than later.  Delaying only makes the problem worse.
4. Commit to save – Americans are great spenders and lousy savers.  Without a well-funded savings account, you are on a very slippery slope, one that becomes treacherous with the next unplanned expense.  Put 10 percent of each take-home check into a savings account.  Find extra money to dedicate to saving by putting all raises, bonuses, birthday checks, and any other windfall monies into savings. This will create a cushion that should see you through most short-term emergencies.
5. Get financially organized – Create your own personal financial center where you can instantly put your hands on your family’s financial records.  Your center doesn’t have to be a fancy home office.  It could be an accordion folder.  The point is that you know where everything is.  Place original documents such as a will or your mortgage in a safe deposit box, and keep a copy at home.
6. Avoid incurring late fees – Pay your bills the day you receive them. This way you’ll never risk the creditor receiving your payment after the due date. Delaying could result in you being charged a late fee, a ding to your credit report and a lower credit score.  The risk of delay is simply too great.  If you travel for work or are a procrastinator, consider setting up online bill pay with payments large enough to cover at least the minimum amount due.
7. Avoid paying overdraft fees – A receipt stuffed into your car visor isn’t simply being unorganized.  It can cost you. Many an account has been overdrawn due to neglecting to notate an ATM withdrawal or debit purchase.  Get into the habit of recording each transaction into your check register on the spot.  Also take the time to balance your checkbook each week, and reconcile your bank statement each month.
8. Track your spending for 30 days – Have everyone in the household who spends money participate in this exercise.  Write down every cent that is spent, as it’s the small, miscellaneous expenses that often wreck the best of plans. At the end of the month, come together to review the spending.   This is the only way you can truly know where your hard-earned money is going.
9. Create a spending plan you can live with – Once you’ve tracked your spending, you can then make conscious decisions as to how you want to allocate the money.  Continue tracking with the new plan in place.  Keep doing so until you find a plan that is right for your family.  Make it too strict, and no one will stay on board.  Make it too lenient and you won’t be accomplishing anything.
10. Take advantage of free money – Contribute the maximum amount to your retirement plan at work, or at the very least, meet the matched amount or you’re throwing away free money.  Also inquire about the availability of Flexible Spending Accounts or Health Savings Accounts.  All of the above can lower your taxable income.
11. Have an annual insurance check-up – No one wants to be over-insured.  Nor do you want to be under-insured resulting in an unpleasant surprise when making a claim.   Make an appointment with your provider and confirm that your coverage is exactly what you thought you were paying for.  Inquire about ways to lower your premiums, and ask about any discounts for loyalty, good driving and the bundling of multiple polices.
12. Investigate refinancing your mortgage – Even though rates of late have been rising, they are still very low, potentially saving you significant money over the life of your loan.  There are multiple online calculators that can help you evaluate the options.  Do not extend the term of your loan, however, in order to get a lower monthly payment unless this is absolutely necessary to stay afloat.

Income, Poverty and Health Insurance Coverage in the United States: 2009

The U.S. Census Bureau announced that real median household income in the United States in 2009 was $49,777, not statistically different from the 2008 median.

The nation’s official poverty rate in 2009 was 14.3 percent, up from 13.2 percent in 2008 — the second statistically significant annual increase in the poverty rate since 2004. There were 43.6 million people in poverty in 2009, up from 39.8 million in 2008 — the third consecutive annual increase.

Meanwhile, the number of people without health insurance coverage rose from 46.3 million in 2008 to 50.7 million in 2009, while the percentage increased from 15.4 percent to 16.7 percent over the same period.

These findings are contained in the report Income, Poverty, and Health Insurance Coverage in the United States: 2009. The following results for the nation were compiled from information collected in the 2010 Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC):

Income

Race and Hispanic Origin (Race data refer to people reporting a single race only. Hispanics can be of any race.)

• Among race groups, Asian households had the highest median income in 2009. Real median income declined between 2008 and 2009 for non-Hispanic white and black households, while the changes for Asian and Hispanic-origin households were not statistically different.

Regions

• In 2009, households in the West and Northeast had the highest median household incomes. (The apparent difference between the two regions was not statistically significant.) Real median income declined between 2008 and 2009 in the Midwest and West; the changes for the Northeast and South were not statistically significant.

Nativity

• In 2009, households maintained by naturalized citizens had the highest median income. Native-born households and those maintained by noncitizens experienced income declines from 2008 to 2009, in real terms. The changes in the median income of all foreign-born households and households maintained by a naturalized citizen were not statistically significant. (See Table A [PDF].)

Earnings

• In 2009, the earnings of women who worked full time, year-round were 77 percent of that for corresponding men, not statistically different from the 2008 ratio.
• The real median earnings of men who worked full time, year-round rose by 2.0 percent between 2008 and 2009, from $46,191 to $47,127. For women, the corresponding increase was 1.9 percent, from $35,609 to $36,278. (The difference between the 2.0 and 1.9 percent increases was not statistically significant.)

Income Inequality

• The change in income inequality between 2008 and 2009 was not statistically significant, as measured by shares of aggregate household income by quintiles and the Gini index. The Gini index was 0.468 in 2009. (The Gini index is a measure of household income inequality; 0 represents perfect income equality and 1 perfect inequality.)

Poverty

• The poverty rate in 2009 was the highest since 1994, but was 8.1 percentage points lower than the poverty rate in 1959, the first year for which poverty estimates are available. The number of people in poverty in 2009 is the largest number in the 51 years for which poverty estimates are available.
• In 2009, the family poverty rate and the number of families in poverty were 11.1 percent and 8.8 million, respectively, up from 10.3 percent and 8.1 million in 2008.
• The poverty rate and the number in poverty increased across all types of families: married-couple families (5.8 percent and 3.4 million in 2009 from 5.5 percent and 3.3 million in 2008); female-householder-with-no-husband-present families (29.9 percent and 4.4 million in 2009 from 28.7 percent and 4.2 million in 2008) and for male-householder-no-wife-present families (16.9 percent and 942,000 in 2009 from 13.8 percent and 723,000 in 2008).

Health Care Reform and Other Insurance Issues Focus of July 26 Economic Perspectives

Audrey Selden will discuss the latest trends and changes in insurance for consumers including the new federal health care reform law on the July 26 edition of Economic Perspectives, 5:30 p.m. – 6 p.m. on KAZI 88.7 FM.  Selden is the Senior Associate Commissioner for Consumer Protection at the Texas Department of Insurance (TDI).  Listen live online at kazifm.org.

Audrey Selden

Some of the issues that will be discussed in the interview include:

• TDI resources available to assist consumers on the web and by phone
• Timeline for implementation of federal health care reform
• Medicare’s prescription rebate program
• Eligibility requirements for the Pre-Existing Condition Insurance Plan

Selden oversees the TDI division that assists consumers with questions and disputes about insurance.  She chairs the Texas State Disaster Coalition and leads the agency’s disaster response efforts.  She is a graduate of Leadership Texas, a board member of the Foundation for Women’s Resources, and Board Development Committee member of the Girl Scouts of Central Texas Council.