Why Financial Capability Matters in 2014

Last year, the White House declared April Financial Capability Month, proclaiming that “all Americans deserve the chance to turn their hard work into a decent living for their families and a bright future for their children. Seizing that opportunity takes more than drive and initiative -- it also requires smart financial planning. During National Financial Capability Month, we recommit to empowering individuals and families with the knowledge and tools they need to get ahead in today's economy.”

With the unemployment rate in South Carolina steadily decreasing from 8.1 percent in February 2013 to 6.4 percent as of February 2014, it’s crucial that those gaining employment use practical money management skills. That’s where financial education comes in. Financial education is a means to help alleviate and prevent poverty. Although the unemployment rate is down in South Carolina, the number of those in poverty is up. Currently 1 in 5 South Carolinians live in poverty compared to 1 in 6 in 2000. That’s nearly 300,000 more residents.

Image via Pearson Foundation

Regardless of your economy or your household income, it’s important to realize that financial education matters. Those individuals who receive it are more likely to make the right financial decisions for themselves and their families that will help them build and maintain assets. When people are buying houses, maintaining a home or steady residence, and are paying on their debts, it positively affects the local economy.

Financial education is more than just gaining a budgeting tip here and a saving strategy there. This knowledge converts into skills, which convert attitudes, and those attitudes affect behavior. What you’re left with is healthy financial habits. Those that take charge of their personal finance and choose to become informed consumers avoid scams, predatory lending and other deceptive practices, and can effectively address their needs versus wants.

Family Services, Inc. (FSI), as a charter member of NeighborWorks America, aligns itself with the initiative to help end poverty and raise better awareness for financial education. Their staff of licensed professionals is dedicated to highlighting the importance of financial capability and helping those in the community establish and maintain healthy financial habits. Through its programs and services, FSI advocates, counsels, and educates for clients so they can make the most of what they have.

Written by: Sarah Cornwall, Marketing Resources, at Family Services, Inc.

Bargains for a Happy Halloween

Halloween is expensive and although it is over, the immediate week after is perfect for taking advantage of steep discounts. Decorations and all other overpriced Halloween accessories are priced for cheap; which usually reflects the quality of Halloween-themed products.

Think about stocking up for the following year. With decorations and costumes already purchased you will have more time and money next Halloween for carving pumpkins and enjoying hayrides.

If you miss the window for after-Halloween sales, there are plenty of other ways to save big. Purchase candy after other big holidays such as Easter or Valentine’s Day. Make the decorations yourself—this pairs as a great Halloween activity for kids.

Shop online to price compare and be sure to check reviews. Many reviews will not be great, but if it’s a cheap price, then you’re getting the expected value.

Avoid those Halloween-themed retailers that appear every October. Their items are almost always over-priced.

There are many ways to save money on costumes, which, once purchased for the whole family, can add up to a hefty price. Try to reuse or repurpose costumes from previous years. Swap costumes with friends or relatives. More and more funny costumes tend to be the simple but clever ones.

For more ideas, check out this list of easy, cheap, and humorous costumes: http://www.essortment.com/halloween-costume-ideas-50-funny-ideas-52248.html

Trick or treat!

Written by: Sarah Cornwall, Marketing Resources, at Family Services, Inc.

How to Save Big on Healthcare

You have probably heard that big changes are coming to healthcare this month, but you might not be sure how it affects you. Here's what you need to know to save big on healthcare this year.

The Affordable Care Act caused state healthcare exchanges to open on October 1. A healthcare exchange is a kind of marketplace where insurance companies offer different plans to consumers.

However, just because these plans are available to you does not mean that you should automatically drop your employer's insurance. This is because, under your company's insurance, your employer is actually paying for some of your coverage. 

On the other hand, there are specific circumstances that may make shopping the healthcare exchange worth your while. If you fall into one or more of the categories listed below, you should consider shopping the exchange for a better deal on your healthcare coverage:

• More than 9.5% of your household income goes to health insurance. Even if you have your company's healthcare insurance, you may be paying a significant portion of the cost. If so, you can drop your company plan and find assistance in the state healthcare exchange. 

• Your employer pays for less than 60% of your healthcare costs. This is another indicator the government uses to identify inadequate coverage. It usually applies to high-deductible plans. 

• You work for a company with less than 100 employees. The Affordable Care Act only requires companies with more than 100 employees to provide health insurance. If  your employer offers no or minimal coverage, you might be able to find a better plan at the exchange. 

• You earn less than 400% of the poverty level. If you qualify for a government subsidy, shopping the healthcare exchange is a good idea. To qualify for a subsidy, you must earn between 133 and 400% of the poverty level. If you fall below the 133% mark, you qualify for Medicaid. If your income is above the cutoff point, you can still use the exchange to shop for health insurance. However, you will not receive a tax break. 

Whether or not you are enrolling in the healthcare exchange, there are other ways that you can save on your medical expenses. One way is to have a healthcare savings account. It could save you money on taxes as well as provide free money for medical bills. Here are THREE types of healthcare savings accounts to consider:

• FSA - A Flexible Savings Account is set up through your employer and puts pretax dollars aside for medical expenses. FSAs are especially helpful for expenses that you know are coming, such as paying for children's braces. In order to be reimbursed, you must turn in your receipts. When using a FSA, it is important to budget carefully since the money must be spent within the calendar year or it returns to the company. 

• HSA - The money in a Health Savings Account can be invested, so it could earn more for you than if it was just sitting in savings account. The earnings are rolled over every year, and you can withdraw all of it when you turn 65. These accounts are available through employers and banks, and many of them come with fees. To sign up, you have to a high-deductible insurance policy.You must also be careful not to use the funds for a non-qualified medical expense before you turn 65. If you do, the IRS will add an extra 20% to your federal taxes. 

• HRA - The only type of account that employers completely fund is a Healthcare Reimbursement Account. The money in this account will stay there from year to year, and it covers nearly everything that a FSA or HSA would. While some require you to file a claim, others simply give you a check card to use for your health expenses. However, you do not keep the money once you leave that job, so keep that in mind if you are preparing to retire or change careers. 

With these tips in mind, you should be well prepared for the coming healthcare changes. If you have any other ideas on how to save money on medical expenses, please share them in the comments below!

Written by: Meg Thompson, Marketing Resources, at Family Services, Inc.

Quick tips to get you on the path to homeownership

Owning a home is a great way to build an investment and see return on all the “rent” you’re already paying month to month. Right now, interest rates are STILL at an all-time low. If you’re mortgage ready, take advantage of this and get yourself a good deal!

1.   Look at your budget and determine how a house fits into it. Fannie Mae recommends that buyers spend no more than 28 percent of their income on housing costs. If you pay more than 30 percent of your gross monthly income to put a roof over your head, you are living ABOVE your means. The term “HOUSE POOR” will have real meaning.

Keep in mind: Owning a home is not like renting – you are the landlord. When it breaks, you fix it. EXPECT unexpected costs. When new appliances, roof repairs and plumbing problems pop up; these costs can drain your bank account.

2.   Go to a bank or lender to get pre-qualified. This initial step allows you to assess any goals or needs you may have regarding your mortgage with your lender. From here, you can learn about your various mortgage options and the type that might be best suited to your situation.

Keep in mind: Being pre-qualified is NOT the same as pre-approved. It is strongly advised that those seeking homeownership do not house hunt until they are pre-approved, which is much more extensive.

3.   Find a realtor once you are pre-approved and set on what you can afford. Meet with a few agents, to find one you feel confident with. An agent who is a member of the National Association of Realtors is a good sign as they adhere to a strict ethics code.

Keep in mind:  A good real estate agent can help guard against any pitfalls you may encounter during the process, so choose wisely.

4.   Know and understand the various mortgage products available to you. Factor in closing costs you can afford. This will help you choose the best mortgage program for you. As a first time homebuyer, options may be available to you, such as low interest programs and down payment assistance.

Keep in mind: If you plan to move within five to 10 years, an adjustable-rate mortgage (AMR) could be beneficial. However, if plans change and you stay in your home for longer, you may be stuck with payments you can’t afford.

5.   Try to hold off on big purchases or any decisions that could affect your credit once you’ve signed a contract and a closing date is set. Typically, lenders pull credit right before closing to make sure nothing has changed with your financial situation.

Keep in mind: If you feel over-stressed, lost, or uncomfortable with the homebuying process or any part of it, don’t be afraid to ask for help. The Homeownership Resource Center, a division of Family Services, Inc., not only offers help and guidance, but piece of mind.

To learn more about the workshops and individual appointments we provide with our licensed homebuyer coaches, contact us at 843.735.7862 or info@fsisc.org.

Written by: Revena Dawson, Home Purchase/Credit Advisor, & Sarah Cornwall, Marketing Rescources, at Family Services, Inc.

4 ways to use your tax refund to strengthen your overall financial situation

If you are anything like me, you’ll be more than tempted to use your tax refund for that flat screen you’ve wanted, or maybe that weekend vacation you keep putting off. It feels good to finally get those material things you’ve “needed”. However, like most material indulgences, the charm wears thin and quick…especially when an emergency comes up, or reality hits that you should invest more in your future.

I asked our experts here at Family Services, Inc. for different ways to use a refund that will leave you feeling secure, and confident about your financial situation.

 1.       Pay off/down debt: This encompasses a lot. Who doesn’t have debt these days? Pay off a credit card balance. Double up on a mortgage payment. Doing this once a year can shorten your overall payment period (provided it's allowed under the terms of your loan). If you’re not a homeowner, apply this trick used for mortgages to your student loan debt. Paying down debt, whether it’s a credit card, car loan, mortgage, student loan, or any other kind, is usually a guaranteed return equal to the interest you would have otherwise paid.

2.       Make an emergency fund: If you have your debts under control, and don’t feel it’s necessary to make an extra payment, then your tax refund might be an excellent starting point for building an emergency fund. Personally, my refund will be put away as “emergency funds”. The other day I left work to find that I had a flat tire. Needless to say, I had NO money to pay for this unexpected expense and was forced to charge it, maxing out my credit card!

3.       Invest: If you have no debt and a healthy emergency fund (kudos to you), then you can always look to the future. A tax refund can be used to put a down payment on a house, buy a car, or help pay for an education for you, or the little ones (look to ESA plans and 529 plans). Try one of these: 401(k), 403(b), Roth IRA, Traditional IRA, SEPs. Have questions? One of our licensed financial coaches can help! The purpose and the time frame will help you decide the kind of investment you should be looking at.

              

4.       A savings account: Instead of a regular savings that would perhaps hold your emergency fund, try a Christmas club account. Christmas is the same time every year, but it still catches the majority of people off guard. Even better, invest in a Certificate of Deposit account, similar to a savings account but with higher interest for your benefit.

Go to www.fsisc.org or call 843-735-5522 for information or assistance.

Written by: Sarah Cornwall, Marketing Resources Assistant at Family Services, Inc.

Its Official!

2012 Youth Financial Literacy Summit. Check it out!