Jill Russo Foster

How to Prepare for a Summer Power Outage

It’s summer – hurray! But with summer comes the possibility of storms and power outages. This has been a year of unpredictable weather. Are you prepared for whatever comes next?

These are things we have to think about.

Batteries: Needed for flashlights and/or lanterns, battery operated radio, etc.
Water: If you have well water, have water stored in containers (both drinking and for washing). Your pump will not work without electricity.
Non-perishable food: We all have some canned food, but could you make a meal with it? Do you have a manual can opener to use when the power is out?

The difference between winter and summer storms is the outside temperature. With this being summer, you have to think about preserving and using the food in your refrigerator and freezer.

How long will it last?
Do you have grill supplies handy to grill the food if necessary?
Do you own a cooler to store food if need be?

If you hear of a possible storm coming, take precautionary steps before it strikes.

Turn up the temperature in the fridge and freezer (food will last longer).
Fill up the gas tank on your car (gas stations can’t pump gas without electricity).
Get cash (if there are stores open they may not be able to accept credit cards).
Charge your electronics
Get bottled water if needed and be prepared to live without life’s conveniences.

The more you do to prepare, the better you will be able to weather the storm in your own home.

Why Financial Envy is a Waste of Time

Budget-bride You see this happen all the time. You are in a situation with other people and someone mentions his nice vacation plans. What is the first thing that pops into your head? Are you genuinely happy for him or do you automatically think about how much he’s spending (that includes jealous thoughts of the “he must be making more money than me” kind). You know what I mean.

But in the past few years, I have learned to stop comparing my financial situation with friends and family (I am getting better about this). I have come to realize that I am projecting my values and beliefs onto other people. What I think or believe about another person’s finances has no basis in reality. I am not in their shoes and don’t know what their situation is.

People spend money on things that are important to them. I know that some people may think I travel a lot. When one vacation ends, I am already planning the next. I personally always want to have a trip to look forward to. You might be thinking thoughts like “how can she afford it?” or “where does she get the money to travel?” You may even be envious. But you won’t know exactly how I make my little dreams come true because personal finances are just that – personal.

The other side of comparing your finances is the presumption that you are somehow morally better or worse than others. Grim tales of credit card debt are all over the news, often mixed with stories of foreclosure and homelessness. You may feel good about yourself because your debt is lower, but do you know why the person on the news has the debt? Was it really insane overspending, or was it a medical emergency or a layoff. Maybe the credit cards were used as a last resort to pay bills?

I have heard it said that “to compare is to despair.” This thought process of judging others is detrimental to you. You have no idea whether another household spends more money than they have, is in debt to their eyeballs, or has planned ahead to achieve their desires. You don’t know how much they earn or how much they give to charity. It is much easier to judge someone else than look inward at your own spending habits.

In the budgeting process, people track their daily expenses to see how much they spend and in what category. This can be a great exercise. Once you see where your money is going, you can make life-changing decisions. Where do you want to spend? What do you want to save for?

There are no right or wrong answers. There are only personal choices. Maybe you choose electronics over vacations. Maybe you choose decorating and entertaining over both. Maybe you choose to give your children spectacular holidays or birthdays over everything else. These are the kind of choices your neighbors, friends and family members made when they did something that impressed you and made you envious. They simply chose to spend their money in a different way than you.

So the next time you see someone order an expensive meal at a five star restaurant, purchasing the latest greatest electronics, or buying a designer outfit, don’t judge them. Not only is the thought process destructive, but it is a total waste of your time.

CT increases taxes and fees on July 1, 2011

The new CT budget will take effect on July 1 and will be taking more money out of our already tight wallets. Some of the new changes include:

Sales tax will increase from 6% to 6.35%. You will no longer have the exemption for clothing under $50. (It seems as if there still will be a tax-free week coming up later in the summer on clothing.) Sales tax will increase on alcohol, cigarettes and hotel rooms. You will now pay sales tax on items that you did not before, such as manicures / pedicures, non-prescription drugs , vitamins and more.

State Income tax will increase and there will be changes to the current tax brackets (retroactive to January 1, 2011). The new income tax rates are 3%; 5%; 5.5%; 6.0%; 6.5% and 6.7% (see your accountant for information on your new tax bracket.)

Motor vehicle fees (driver’s licenses and car registrations) will be increased.

What can you do about this? Adjust your your spending.

As I tell my coaching clients, start by writing out your monthly budget. I know this is painful, but you have to know where you stand if you hope to make changes.

Don’ t forget all those expenses that you pay that aren’t monthly – license and registrations, activity fees for your children, classes, gifts etc.
If you still feel like something is missing, track your cash spending with a daily log. You will see where the cash in your wallet goes.

Once you have an accurate picture of your spending, you can look at the big picture and make the changes necessary to meet the additional costs of the new state budget.

Who handles the finances in your relationship?

I met a woman who asked me some questions when she found out what I do for a living. This subject is one that all of you should be aware of. You wouldn’t believe how many people this affects.

Are you married or in a relationship with joint finances? Even when couples share accounts, living space, or property, it’s typically one person who handles the finances in a relationship – paying the bills, savings, investing, etc. But, the other person shouldn’t be left in the dark.

Because this is your joint future, both should know what is going on and how to access the information at any time. The definition of the word joint is defined by Merriman-Webster as “united, joined, or sharing with others”.

Both of you should be making decisions together, understanding where you are today with your money and where you want to go for the future. You should both know the names of your banks and investments and how to access these accounts if you use an online account. Think of it this way, if the person handling the finances is not able to do it – what would happen? Could you put food on the table? Would the utilities be on?

Remember, too, that your children can see how the money is handled in your relationship. What you do, and don’t do, shows them just as much as what you tell them.

I also believe that each person needs to establish credit in their own name and if you are listed as a co-owner on the assets you should also be listed as a co-owner on the liabilities. What that means is that if you own a home (your name is on the deed) you should also be on the mortgage.

Many partners are left out of the finances. If that’s you, and something happens to the person who handles everything, you are going to have a difficult time. You may find that the bank accounts that you thought were joint are not. You may find that you thought you owned the home you live in, but you don’t. You may find that you need to open a credit card or take out a loan and you have no credit in your name.

All this happens more times than I can count. If this describes you, then you need to have a conversation today with your partner. You need to what know what assets you have, what liabilities you owe and have a plan for moving forward to achieve your goals. The first step is having this conversation.

3 Things You Should Teach Your Child About Money

What do your children learn about money from watching you? I recently saw the movie Confessions of a Shopaholic. It starts off with a young girl in a shoe store, unhappy with her new, practical, sale-priced, boring, brown shoes. She remembers looking into other stores and seeing “A world where grown-up girls got what they wanted…They didn’t even need any money, they had magic cards.” The magic cards are credit cards, and when she grows up, she fulfills her dream by getting 12 of them. She soon finds out the cards aren’t so magical when she maxes them out and has to deal with the consequences.

Do your children think credit cards are the magic solution to their wants? If this is the message that is received, then they are on the path to being a slave to financial debt. There are three things that I believe children need to learn about money and credit at an early age.

1. Children need to learn how to spend less than they earn. In simple terms, a person making $100 a week needs to spend less than $100 per week. You can teach your children with their allowance or chore money and by using age-appropriate money lessons. Discuss the cost of an item in relation to their income, not yours. Talk about all the purchase options: buying full-price, waiting for a sale, buying used, borrowing, or renting from the library.

2. Children need to learn how to save for their wants. They need to learn how to plan and wait for the items they want. A great habit to get them into is taking a percentage of their money and saving it.

a. Talk about where to store their saved money. When they are small, use separate containers for saving and spending so they can see their money grow or disappear as they save and spend. When they are older, have them open a bank account to earn interest.

b. Use age-related items to start the savings conversations. Think about all the things they ask you for: iPods, game systems, their first car, or their career dreams (i.e. college). Don’t forget to discuss all the extras that go with their purchases. iPods need songs. Game systems need games. Cars need insurance, gas and maintenance. College expenses involve more than tuition. Instilling the habit of saving and planning will benefit them for a lifetime.

3. Children need to understand credit. Not just what credit is, but how it affects all their finances. You know that credit plays a major part in everyone’s lives, from employment to buying a car, from the credit terms you are offered to whether or not you will need a security deposit for your utilities. But, how do you explain that to a child?

a. Show him something he wants and ask, “Would you rather have it right now and pay $20 for it? Or would you rather wait 2 months, pay only $5 for it, and have more money to spend on other things you want.” Tell him that is what it’s like when you use credit. Credit always costs more. You get what you want right now, but you end up spending more and having less money.

b.You can also explain that when someone buys too many things with a credit card (and doesn’t have the money to pay it back), other people think less of that person and won’t give him a job or a place to live. Those are the consequences of bad credit in the simplest terms possible.

Don’t let your children learn the hard way. Being in tremendous debt is a terrible inheritance to pass on. Teach your children now so they can make proactive, informed choices throughout their lives. If you don’t know where to begin, get your copy of Cash, Credit and Your Finances: The Teen Years and read it along with your child.

What is the difference between a secured credit card and a pre-paid credit card?

Secured versus pre-paid credit – do you know what you’re getting? When I am giving a talk, I can see that many people don’t know the difference between them. Let me tell you the facts:

Secured Credit

With Secured Credit, the bank has placed a set amount of your own money in a special savings account that it controls. If you default on your debt, the bank can use the savings account to recover its losses. Your credit limit is always equal to the amount in the special savings account. Just like a traditional credit card, you will pay interest and receive a monthly bill.

A secured credit card is for someone who can’t get a traditional credit card. If you have bad credit or no credit at all, secured cards are a great way to establish your history. If you still don’t understand what a secured card is, think of it as a security deposit on a rental. The landlord holds that deposit and can keep it if you don’t pay.

As with any financial transaction, read the fine print before moving forward and make sure that the lender reports your information to the credit reporting agencies. Watch out for fees and make sure you understand them fully.

Pre-Paid Cards

With pre-paid credit cards, you simply load the card with money and use the card to make purchases. There are no bills or interest rates on purchases. The spending limit is always the current deposit balance on the card. In that sense, it works like a debit card, yet it has all the consumer protections of a credit card.

Pre-paid cards are often used as gifts and by people who want to avoid spending beyond their budget. You might use one on your next vacation or as a gift for your favorite college student. The consumer protections and the built-in spending limit make this card ideal for those two scenarios.

The fees can be expensive! Credit card companies make their money with the fees – activation fees, monthly fees, reload fees, etc. You might want to consider other alternatives for every day use.

Now you know the difference between them. Make sure you understand them and pick the right choice for you.

Cut spending: know what you have and what you don’t need

Do you want to cut your spending? Organize your belongings and stop to think before you buy. How does that help? Read below

Organize your belongings

Have you ever made a purchase only to find out you have the exact same thing at home? If you are organized – knowing what you have and where to find it – you will save time and money. Buying duplicates of things you already own is a waste of money. I am talking about the items in your clothing closet, your food pantry, your linen closet, and your garage.

Stop to think: Do you really need it?

A great price doesn’t necessarily mean a great buy. Check your supplies at home before you buy. The same is true for coupons – don’t buy just because you have a coupon: make sure you need it, want it, and will use it in the immediate future.

Don’t panic about missing a great price. Chances are it will go on sale again in the future.

Be careful in warehouse clubs. If you only need 1 of something, then just buy the one, and not the 12-pack. If you aren’t going to use all 12 right away, you will have to find a spot to store the extras. Will you know where you stored them in a year, or will you be at the store buying another 12?

Stop to think: Are you buying for “someday” or for right now?

Be careful about buying for future fantasies. If you have a dream of doing craft projects with your children, don’t buy the items now when you don’t have kids. This someday-buying will make you spend more and cause you to have items that need to stored. Buy things only when you need them. Even buying too far ahead for the holidays can be an issue.

Simply put, know what you have in your home and where to find it when you need it. Don’t buy more than you need right now, regardless of the great price. Living with less will mean more cash in your wallet.

Put Your Identity on Ice with a Credit Freeze

I am diligent about protecting my identity. I monitor my accounts, pay bills from my account online, shred paperwork, opt-out of mailings, and so much more. But even that may not be enough.

As a customer, I have been receiving notices that my personal information may have been compromised. I thought my identity was safe because I mostly purchase from, and use, well-known companies. But, they have not protected the databases they use to store everything they know about me. You know the companies I am talking about – Epsilon and Sony to name a few. You’ve probably been getting these warning notices yourself via email and postal mail, and you’ve probably heard more than enough from the media.

What can you do to protect yourself? You can follow my list of things to do to protect you from identity theft. If you need a refresher, visit www.jillrussofoster.com and look at past newsletter articles.

Put Your ID on Ice

If you are not planning on applying for new credit anytime soon, then the best advice is to put a credit freeze on each of your three credit reports. This will stop everyone (including you) from accessing your credit report for the purpose of obtaining new credit. Yes, there is a fee for this service, but it can be well worth it.

What if you need to apply for a loan or a new credit card within the next month? I assume you have a specific need, like a new car, home, or school loans. In that case, you should not use a credit freeze until your loan is complete. When you apply for credit, the creditor should be able to access your credit without you unfreezing your credit because you will have to pay a fee for that. However, do use a credit freeze if you’re just planning on shopping early summer sales. The freeze will not only protect your identity, it will prevent you from opening unnecessary store credit accounts at the mall.

Credit freezes are great and can prevent identity theft. They can prevent identity theft even if someone steals your wallet right out of your hands. But think before you leap, freezing and unfreezing your credit can be costly.

The Importance of Paperwork in a Life or Death Emergency

Are you prepared to handle anything life throws at you? This can include anything from an immediate crisis to a major life hurdle. Take a good look at your life and think about some of the situations I am talking about, and think about what you would need to do in your life to be prepared.

If we have to evacuate or run for cover, take this folder…

If you had to leave your home within a short amount of time (storm approaching, fire, flooding etc.) would you know what important papers to take with you? Could you gather all of them in 30 minutes or less? This should be a goal of yours, to have your papers organized and ready so you only have to grab one container (a hard drive, a file box, or a folder) – and go. In addition, what about those personal items that are irreplaceable? Could you grab those, too?

If something happens to me, you know what to do…

What if the person who handles the finances passes away? Would anyone else know where all the financial records are? Do you know where all your assets are? Do you know what liabilities you are responsible for? In many families, one person handles everything. Both people should know what is going on – just in case. That’s especially true for the paperless households who do everything online. More than one person must be able to access all of the accounts because there won’t be a file cabinet to sort through.

If you are prepared and organized ahead of time, it will make life much easier for you. Start to think about this today and make a plan that works for your situation. Being ready and knowing what you should do will save you so much time and effort if you find yourself in a bad situation.

You can vacation and still save money

Does the high price of gas have you thinking about whether or not to take your summer vacation this year? This doesn’t have to be the year of the staycation if you don’t want it to be. Here are some tips for taking your vacation and saving money too:

Look for the lowest price of gas. You can do this with many phone apps or with a little planning before you go.

Make sure your car is running in good condition.

proper tire pressure
remove any unnecessary weight / objects from your car that aren’t needed
stay at or under speed limits
avoid traffic jams (at other times than rush hours)

Comparison shop for more than the price of a night at a hotel. What else does the hotel offer?

Some will offer a shuttle service (you can forgo the rental car).
Some will offer you gas reimbursement.
Pick a central location so you can walk, take public transportation, or bicycle.

Rent your car away from the airport. This can save you money on taxes and fees. Compare the costs of an airport pick up versus another location. Even with the cab fee, it could be cheaper to rent your car away from the airport.

Remember your membership benefits. Many memberships, including AAA, AARP and more, offer discounts. All these savings can add up. Check online before you go for discount admissions to places.

A little planning can add up to taking a vacation instead of staying home.