Monday, July 28, 2008

Summer vacations on a budget.

Who says you can't go on a vacation without destroying your budget. I certainly don't. Although your sanity might be another matter entirely. This past weekend, my husband and I treated our nieces to an extremely cost effective (albeit labor intensive) mini vacation. For just a few dollars more than we would have spent if we had stayed at home our nieces got to enjoy a "water park", "botanic gardens", "gourmet meals" and a "meditational retreat center". Where did we go you might ask. Just up the road to Vedauwoo.

Twenty two miles from our house we pitched a tent (the "meditational retreat center") next to a natural spring (the "water park") near a meadow (the "botanic gardens") and grilled steaks, corn on the cob and banana boats (the "gourmet meal") over an open fire. The girls are still ooohing and awing over the banana boats. I'm more than happy to share the banana boat recipe, I'm just waiting for someone to request it in the comments section following this post.

For those of us living in Wyoming, we are blessed to be right smack dab in the center of a vacation destination. So, do as we did and save a bit of money by enjoying the amenities we have right in our backyard. Your children, relatives, significant other, etc. should enjoy it just as much as we did and you will sleep easy at night knowing you had fun while still able to put away a few bucks towards a rainy day.

Thursday, July 24, 2008

Psychology of spending using credit cards

I heard an interesting story on NPR the other day. According to the economics professor they were interviewing, people spend more when they make a purchase with a credit card than with cash. I can definately see how this happens, however, I find that cash burns a hole in my pocket and I can never seem to remember where it went.

One of the solutions for better management of your money that was mentioned on the program was to use your debit card instead of your credit card. That way you have to ensure that you have the money before you spend it. The program was really quick, 3 minutes and 20 seconds, so be sure and check it out yourself.

NPR Program: Why We Spend More Using Credit Versus Cash

Tuesday, July 22, 2008

Will You Outlive Your Retirement Assets?

Hopefully not, but the odds don't look good. Even if you are a long way off from retiring, you should keep reading. This might affect you sooner than you think, especially if your parents run out of money during their retirement. Also, if you don’t plan for retirement in your youth, you run the risk that you won’t have enough time to accumulate the assets you will need when you do eventually retire (Yes, I’m speaking to all of you 20 and 30 year olds).

While reading through the Wyoming Tribune Eagle today I came across an article entitled "Put more money into retirement savings." This article referenced a study by Ernst & Young that was commissioned by Americans for Secure Retirement. After reading the article I decided to go to the source and find out who Americans for Secure Retirement are and get more information on what retirees can expect financially post retirement. Right up front I want to say that I didn’t do an extensive amount of research into Americans for Secure Retirement or their coalition members. I was primarily looking to see if AARP has any involvement with them since I know that AARP is working diligently on this same issue. In looking through the list of coalition members, I found the names of some organizations that sounded familiar, but none that I am personally acquainted with. I’m giving you this information so that you can do your own due diligence before deciding whether to support the proposals of this group or not. It appears that they have quite a few members who are in the business of selling annuities and the coalition’s solution appears to be linked to more people buying annuities. This doesn’t mean they aren’t legitimate or it isn’t a good solution, it just means you should be double sure to do your homework.

Anyway, back to the quest6ion at hand. Will you outlive your retirement assets? Unfortunately, the answer is probably. According to the press release put out by Americans for Secure Retirement, “almost three out of five new middle-class retirees will outlive their financial assets if they attempt to maintain their pre-retirement standard of living.” When I checked the results for Wyoming the news got even grimmer. According to the study approximately 8 out of 10 people nearing retirement (58 to 65 years old) and 7 out of 10 people at retirement (65 years old or older) in Wyoming will outlive their retirement assets.

Pretty scary news but there are things you can do whether you are at or near retirement age or even if retirement is a long way off. The following suggestions apply whether you are twenty or twenty three times over.

  • Trim your budget. If you are a long way off from retirement this will enable you to put more into your retirement account and fund that rainy day/emergency account that you have been meaning to start. If you are close to or at retirement, trimming your expenses back will help to preserve your assets.

  • Review your financial goals. Whether your financial goals are for tomorrow or 30 years from now, reviewing your retirement savings and strategies on a regular basis is an important step to ensure that your money is working for you. As you get nearer to retirement your needs and tolerance for risk change. I’m not suggesting that you chase the market or make drastic changes on a regular basis but I am suggesting that as you get older you make prudent changes in your portfolio to reflect the fact that you are getting closer to relying on your retirement nest egg as a source of income and probably won’t be as comfortable riding the ups and downs of volatile markets as someone who has 30 years until they need the money.

  • Rethink how much money you will need in retirement. The old rule of thumb of retiring on 70% of pre-retirement income doesn’t seem to be holding true anymore. According to a financial consulting firm at an AARP conference I attended, people need to plan on having 100% of their pre-retirement income available to them at retirement in order to maintain the same standard of living post retirement as they did when they were still drawing a paycheck.

  • Plan on retiring later. By continuing to work you reduce your dependence upon your retirement savings and leave more money for those days when you can no longer draw a paycheck.
If you fear that you are going to outlive your assets and don’t know where to turn, give me a call or drop me an email and I will do my best to get you in touch with people that can help.


Friday, July 18, 2008

To buy, or to sell: that is the question!

And a question that I can't necessarily answer for you. However, when thinking about buying or selling stocks (or mutual funds or exchange traded funds) be sure to take into account the long term outlook. It can be quite scary to think about investment choices when the market is down and doesn't look like it is going up anytime soon, but history tells us that what goes down must come up. Conversely, as we have all unfortunately learned the hard way, what goes up quite often comes down too. That being said, you should still consider the stock market when contemplating your investment choices.

Although the advice in essortment's article "Investing advice: tips for buying during a bear market" is geared towards buying individual stocks, the explanation of the psychology behind bear and bull markets still applies to mutual funds and exchange traded funds.

Read the article and let me know what you think and what your experiences have been.

Wednesday, July 16, 2008

Recession, Inflation and Bubbles … Oh My!

How the financial news affects you and strategies to succeed no matter what.

It seems that you can’t turn on the television or the radio without hearing the doom and gloom reports about our national economy. Most of the talk centers on a US recession (impending or existing depending on who you talk to), inflation and the bursting of the housing market bubble. All of this talk is enough to make even the calmest person panic. But is panic necessary? The short answer is “No”. The long answer is that some, if not all, of the economic news will affect you. However, panicking won’t do you any good but implementing some sound financial strategies will. Read on to find out what you can do to protect yourself and your family from the consequences of less than ideal economic times.

First, know the facts…
What exactly is a recession anyway? Simply put, a recession is a longer than normal decline in the economy. All economies go up and down on a regular basis. If the down period lasts longer than expected then the country is considered to be in a recession. The National Bureau of Economic Research ( is the organization that officially determines if our economy has been down enough to declare a recession. During a recession people and organizations typically buy fewer goods and services. This in turn leads businesses to slow down or halt hiring new people and in some cases forces them to lay off some of their employees.

Recessions don’t affect all areas of the country the same. In Wyoming we have seen quite a bit of growth in our economy over the last couple of years. In fact, the current forecasts indicate that employers will have a hard time finding enough employees. This is in stark contrast to other areas that are forecasting higher unemployment rates.

Second, heed the warning…
Now is the perfect time to get your finances in order. Wyoming’s economy is holding its own today, but historically we have experienced some hefty downturns. By getting your finances in order now you will be able to take advantage of the opportunities available in a good economy and will be prepared to weather any downturns that come our way.

If you haven’t already done so, start an emergency savings fund. Most financial advisors recommend having enough money in this fund to cover three months of expenses. In an economic downturn, where finding a new job can be difficult, it is wise to increase this figure to six months of expenses and up to a year for one-income families. Now is also a good time to reduce credit-card and other high-interest loans.

If you are interested in getting more information on this topic, please email me and let me know. I will put you on the Community Development mailing list and keep you posted on upcoming events. Plans are currently underway to offer financial management workshops in the Cheyenne area.

Tuesday, July 15, 2008

Pay Less Taxes and Get Free Money Too

I know, it sounds too good to be true, but in this case it is the real deal. With a little bit of work and sacrifice on your part you can reduce your taxes and increase your savings with money from Uncle Sam and your employer. Contributing to a tax deferred retirement plan earns you money in three ways.

1. Your contributions reduce your tax liability by reducing your taxable income. For every dollar that you contribute to a tax deferred retirement plan your taxable income is reduced by a dollar. As an example, if you are in the 27% tax bracket you will reduce your taxes by 27 cents for every dollar you contribute. It might not seem like much, but it adds up. If you were to contribute $1000 you would save $270 in taxes.

2. Many employers offer to match an employee’s contribution into a tax deferred retirement plan up to a certain amount. If this is the case with your employer, you are guaranteed a 100% return on your money. For example, if you earn $30,000 a year and your employer is willing to match your contributions up to 4% of your annual salary, you will earn an additional $1200 for your retirement account by contributing $1200.

3. Once invested into a retirement account your money doesn’t just sit there. By utilizing wise investment strategies your money will grow over the years. Once again, an example really illustrates the benefit of contributing to your retirement plan. If you were to invest $1200 per month for 10 years and earn a 5% rate of return you would have $15,528 in your account at the end of the 10 years. This is $3528 more than the $12,000 that you contributed over the 10 year period of time.

Unfortunately many people don’t take advantage of the benefits of a tax deferred retirement plan. Don't wait until tax time to start think about this important topic, talk to your employer today about contributing to an employer sponsored retirement plan and don't forget your IRA options. For more information on Individual Retirement Accounts (IRAs) check out this website

Monday, July 14, 2008

Welcome to Wyoming Money Talk

Welcome to the Wyoming Money Talk blog. This blog is an opportunity for me to share my thoughts on personal financial management and hopefully help you to wade through the information/mis-information that is on the web regarding this topic. I will do my absolute best to keep this blog updated with pertinent information. This is my first shot at blogging, so please bear with me as I start this process.

For my first blog I will share a bit about me. I'll do my best to keep it short and sweet so I can get to the good stuff on money management. As you can see by looking at my profile, my name is Julie and I am an educator for the University of Wyoming Cooperative Extension Service in the area of Community Development Education. I started in this position on September 5, 2007.

I am really excited about working for the University, especially the College of Agriculture since I am an alumni from the college. In 1997 I graduated from the University of Wyoming, Department of Agricultural and Applied Economics with a Master of Science in Agricultural Economics with an emphasis in Community Development. After graduating from UW I moved to Sheridan, Wyoming and worked in Economic Development for a number of years.

Okay, that is enough about me for now. Please feel free to comment on this post and tell me a bit about you.