Filled Under: Financial
Sheila Aleman is a senior financial analyst for Simonds International in Fitchburg by day, and co-owner of All That Events wedding disc jockey and event services on nights and weekends. She also serves on the Worcester County Commission on the Status of Women, where she volunteers to provide financial education. Ms. Aleman speaks to womens groups and individuals about budgeting and gaining control of their personal finances. She recently led a workshop for International Womens Day at the YWCA of Central Massachusetts in Worcester.
What is the biggest thing that people dont know that they should about managing their money?
I think the number one thing is their credit score. They dont even know what their credit score is; they dont know what it means if they do know what it is.
How does that affect them?
I was actually showing the ladies in that group that we did at the Y the difference in a mortgage and a car loan between, lets say, an average credit score, a very good credit score or a poor credit score. I took an average of a $150,000 or $200,000 house; it literally was $500,000 or $600,000 difference (in mortgage interest) between the very good score and the very poor score.
If someones score isnt so great, what do you tell them to do to improve it?
The first thing is to get their credit reports from all three bureaus and just look at inaccuracies. I think something like 78 percent of credit reports have errors. You can raise your score almost immediately by correcting some of the errors.
Youre entitled to a free credit report once a year. The government has a website (http://www.annualcreditreport.com/) where you go onto that website and get all three together, at no charge.
Are there common traps that people fall into?
Today I think the big trap is that credit card companies almost prey on college students, and I really think it should be outlawed that theyre even allowed on college campuses.
Theyll go and set up tables on college campuses with applications. These kids have no income and its contributing to the suicide factor too because they have these $30,000, $40,000 worth of credit card bills, they dont know how to tell their parents and they end up committing suicide. Ive seen that several times.
The other trap is Christmas. Poor planning or something goes on during the year and then all the credit offers come out at Christmastime. They dont want to disappoint the kids, they dont want to disappoint family, so they get in over their head.
If they are in over their head, whats the safest way to build a foundation back?
If theyre in over their head and theyre not able to pay their bills, they should contact their creditor first. But theres also the nonprofit Consumer Credit Counseling Service; every county has one. They all have a bureau that doesnt charge you any money; its all volunteer.
The ones that charge money I would tend to stay away from. Theyre going to negotiate the same way you would with your creditor for a lower bill, theyre going to pay that bill and then theyre still going to have you pay them a higher amount, so its just a trap to get you to think they have better leverage than you do. Theyre getting the saving but theyre not passing it on to the consumer.
In the old days, women would often let their husbands handle the money and then theyd find themselves widowed or divorced and helpless. Do you find that women now are as empowered or knowledgeable about money as they should be?
Theres still a traditional structure that you see with people, but you see nowadays women more and more are the ones paying the bills.
For women facing domestic violence, is their financial situation one of the things that traps them in a dangerous relationship?
Its statistical. Some of them are stay-at-home, or some of them have a lesser job so they feel they have no way out
Also too, a lot of women that arent involved in the family budgeting can get themselves into a financial mess that their husband made for them and theyre still financially obligated because theyre married to them.
I encourage women to not distrust your husband but be aware and be involved.
Why do you think people arent as knowledgeable about their money as they should be?
They dont have home ec in high school anymore, so thats a really important thing that kids are missing out on right from the beginning.
Secondarily: Out of sight, out of mind. If they dont have to think about it its not real yet. Once they put pen on paper, black on white, then the monster is out of the closet.
By putting the budget to paper, a lot of times they have more than they think they do. And sometimes it comes out the other way where its a little short; but then its defined, its not this huge thing. You know, Im only $10 short. Ill get a part-time job, not stop for Dunkin Donuts on the way to work. Theres lifestyle adjustments that can be made to accommodate that.
You cant tackle the problem until you know what the problem is.
What got you interested in doing this volunteer service?
Ive always volunteered. Im a conservative person, a conservative Republican and I dont see a lot of us volunteering. I think we volunteer in churches and things like that, but I really think we need to get involved in the communities that are disadvantaged.
A lot of time we say to people, If youre in this situation you just need to pull yourself up by your bootstraps and fix it. But the problem is, if they werent raised in a household that budgeted, that knew how to take care of money, its just like a language. They need to learn that language. So they need to be taught that language just like anything else you need to be taught.
Theres a lot to be said about people budgeting and starting to be responsible for their finances. It really reverberates throughout their life and it also contributes to their self-confidence.
Also we know, too, finances are a huge strain on relationships. Theyre a huge factor in domestic violence issues. A very large percentage of why theyre arguing is about money.
It really is a foundation to your life and it really affects a lot of things.
Anything else people should know about managing their money?
Just not to be shameful about it. More people would rather reveal what their weight is than what their FICO score is.
The only way that something can get fixed is by pulling it out of the closet, looking at it, fixing it. Its not going to get fixed by kicking the can down the road.
And everybody has struggles. If people seek help, thats the most important thing. Then you dont have that monkey on your shoulder thinking about it every day.
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Of the 72 projects offered to youth, only 10 deal with animals. In the past five years, 4-H programs have touched an estimated 3,500 youth in the city and county. Programs are expanded yearly, which include technology, and many are showcased at the annual 4-H Fair in the summer.
It all sounds great, and encouraging, but there is one problem, or two depending on how you look at it.
The 4-H Fairgrounds along Green Valley Road in New Albany is in need of a facelift, and the 4-H Fair Board could use some financial help from county government.
Neither seem to be a sure thing this year or in the immediate future.
Recently, board members, 4-H kids and Melissa Meridia, 4-H educator and county extension director, gave a presentation to the Floyd County Council, just like in past years. However, there is one difference. The $10,000 they asked for was not given a favorable vote. They were told to come back at a later date, and if the council had the money, it would give it to them.
But that will be a stretch. The council already must cut $1.2 million from its general fund budget, so 2015 looks lean, with very little extra money lying around.
The 4-H board uses the financial gift from the county each year to pay for insurance on the 4-H property. Last year, the county also declined providing the money, and this year it looks like the 4-H will once again have to try and raise the funds unless a donor steps forward or a grant is secured.
“We don’t have the money, we just don’t have it,” said County Council President Matt Oakley.
Oakley said the county has been “very” supportive of the 4-H in the past, including leasing the fairgrounds property for $1 a year.
“I think the 4-H is a great organization, and do a whole lot of good for the kids in the county,” he said. “Unfortunately, there are a lot of great organizations in Floyd County and the county council is not in position to be making donations this year.”
Last year, 4-H held fundraisers and used the money paid to rent Newlin Hall to pay the insurance and utility bills. Oakley told the group to “raise as much money as possible” again this year since the board will likely have to foot the insurance bill again.
Not only does the county lease the land to the 4-H for $1 a year, it also helps with mowing the grass.
Floyd County Commissioner Chuck Freiberger said he has always supported helping the 4-H financially, and still does. He is not happy the council said no to the 4-H board’s request.
“I have voted to make sure funding was appropriated to the 4-H for their programs,” he said.
Meridia said while Newlin Hall is rented throughout the year, the annual fair is the 4-H’s biggest fundraiser of the year. And crowds have been lacking in recent years. This year, the fair will be held a week earlier than normal, June 28 through July 4.
“The fair for many years has struggled with participation, but we are trying to build the fair back up,” Meridia said. “We want to make it a strong community event. But it takes money to make money.”
Meridia said since there is no charge to attend the fair, there are usually anywhere from 1,500 to 4,000 a day who visit the exhibits, barns and midway. She said Wednesday through Saturday are usually the bigger days attendance wise.
Meridia also said thanks to the Horseshoe Foundation of Floyd County, new bleaches were installed at the fairgrounds. But there are many needs, she added.
She said the restrooms and kitchen at Newlin Hall need to be renovated, and the barns on the grounds are aging.
“We have had a lot of discussions about what can we do to make [Newlin] the hall more attractive,” Meridia said. “There are a lot of needs there.”
Meridia said it cost about $120 a day to operate the 4-H Fairgrounds, and most of that is electricity which operates security lights on the grounds, on top of the liability insurance.
“It’s important that it is a safe area. A lot of people walk or jog through there or walk their dogs,” she said. “It is at the rear of Community Park. We want it to be safe.”
Meridia said the 4-H board plans on having a rodeo at this year’s fair as well as demolition derby.
“We are not only in need of money for the fairgrounds, but we want everyone to embrace the fair again,” Meridia said. “We want to build it up so people will keep coming back.”
While there has been some talk of looking for a new location for the fairgrounds, Meridia said she likes the Green Valley Road spot. She said it is easily accessible and surrounded by neighborhoods.
Commissioners Steve Bush, whose daughter has been involved in 4-H projects, said he as always been “passionate” about what 4-H offers the youth of the city and county. He said he would like to see the county get “even more involved with the fair and fairgrounds.”
The Lawrence Public Library will again offer the Financial Wellness Clinic, a free financial literacy series, in partnership with Housing and Credit Counseling Services, Inc.
The clinic will consist of a five-part series of workshops, which will provide basic money management and investing information. Each workshop will take place from 7 to 8:30 pm in the Lawrence Public Library auditorium every other Tuesday, starting April 7 and ending June 2.
The April 7 workshop is “Money You: Let’s Get Started”; the April 21 workshop is “The Good — the Bad — and Ugly in Your Credit Report”; the May 5 workshop is “Is it Better to Rent or Buy?”; the May 19 workshop is “Teaching Your Kids About Money”; and the June 2 workshop is “Basics of Investing.”
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That time of year is upon us. Yes, it’s tax season! We always seem shocked by the fact that tax-time has crept up on us so unexpectedly. Nevertheless, Benjamin Franklin once reminded us that, “In this world nothing is sure but death and taxes.”
Paying taxes is real and it is the law, according to the US Constitution. Therefore, if you don’t pay, the Internal Revenue Service (IRS) has right to go after you or your estate to get what is owed… plus penalties… forever. Paying taxes is also a practice and, frankly, a habit that has to be built into any budget. It is never too early to start that discussion with the next generation, because if you don’t, they may get the wrong impression and feel that they are the victims, as if paying taxes is an injustice. We grumble about taxes this time of year and we need to be conscious of the affect that attitude has on our young children.
I remember some years ago, when I was on Oprah’s show and the topic of teaching kids about taxes was raised. I told Oprah that, if we didn’t teach kids what taxes were, they would grow up with misconceptions based on the feelings we inadvertently convey about taxes. I challenged her to choose a kid from the audience and ask them, “Are taxes good or bad?” We did, and a young 10-year-old child leapt to his feet and proudly declared, “Bad.” The lack of understanding probably followed this youth into adulthood, suffering from what I call, “paycheck shock,” just as I did early in my career. I gasped at my first real paystub exclaiming, “Who is FICA and why is he taking money out of my paycheck?” Obviously, I didn’t get the tax lesson from my parents. Avoid this pain for your kids and grandkids.
Start by discussing a simple definition of taxes: It is the money we must give the government, so that it can pay for things like schools, hospitals, sewers, bridges, sidewalks, firefighters, and police. All countries need money to pay for services all people use.
Learning about money is learning about values, and one of those values is citizenship. Taxes help a country to pay its bills for the services that even rich people could not pay for on their own. Taxes may be too high or too low, but that is not the purpose of this exercise.
The next step is to explain that there are different kinds of taxes; personal taxes on the money you earn, taxes on the interest you earn from your investments, taxes on your property, and taxes on certain things you buy, etc.
Now for the practice of paying taxes… Hopefully, your kids and grandkids have been doing chores and earning some of their own money via my allowance system. I have the kids divide their earned money into “Jars” to make their budget more visible. One jar is for “Charity,” one for “Quick Cash” or instant gratification, another is for “Medium Term” savings (pushing off instant gratification and learning to save for something larger), and “Long Term” savings (eg college). It’s now time to introduce the Tax Jar. I give them a break and put them into a 15% tax bracket. So, for every $1.00 they earn, they have to put 15 pennies into the Tax Jar.
What do they do with this money? (One of my cynical friends said to teach them to flush it down the toilet.) Tell your young kids and grandkids that they are going to think of their family like it is a small village, which gets to vote on how to spend some tax money for the good of the community. Don’t let them select a very expensive option, because there won’t be that much money. Maybe the “community” can buy some energy-saving light bulbs to save even more money for the family? Or maybe they can buy some house plants for the whole family to enjoy? Let the kids or grandkids come up with some ideas.
I agree. I think there is a lot of collusion. For example the government colluded with the banking system in financial deregulation. For example they repealed Glass-Steagall. They expressed this absurd claim that financial markets are self regulating. They turned the financial system into a gambling casino where the bets are covered by the taxpayer and central bank.
The Eurogroup has reached an agreement with Greece to extend the financial assistance by four months. The agreement will come with its set of commitments that are aimed at ensuring sustainable growth and increased job opportunities in the country.
Greece had applied for a financial aid extension for six months on Thursday. The Eurogroup has stated in a press release that an agreement for the extension has been reached and this agreement will allow the country some time to finalise a new arrangement with its creditors.
There will be a final review of the reform measures taken by Greece, based on the current arrangement, on Monday. The outstanding tranche of funds under the current arrangement will be given to the country after the successful completion of this review meeting.
The final list of reform measures and other conditions to be undertaken by Greece for the financial aid extension will be reached by April. Greek officials will make a formal presentation on Monday to the creditors on the economic reforms the government has undertaken so far. The creditors will determine whether the reforms undertaken by the government are comprehensive enough to be the starting point for the review to be concluded by April.
The funds that are meant to be transferred to Greece under the Hellenic Financial Stability Fund (HFSF) will be held under the European Financial Stability Fund (EFSF) with no “third party rights” for the duration of the financial aid extension. The funds will only be released when the European Central Bank (ECB) files a request.
The Eurogroup highlighted the fact that the ECB is an independent body and also said that the International Monetary Fund will continue to play its role. The Eurogroup welcomed the “commitment by the Greek authorities to work in close agreement with European and international institutions and partners.” The Greek authorities have reportedly reiterated to the Eurogroup their commitment to honour their debts to its creditors “fully and timely.”
The “broader and deeper” structural reforms that Greece will undertake will include reforms to check corruption and tax evasion and improve efficiency of the public sector. The reforms will also aim to ensure “stability and resilience of the financial sector” and ensure “social fairness.”
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Social media management company Hearsay Social has released a new platform it says could keep the financial advisor from going the way of the dodo — or the travel agent.
The service, which launched on Thursday, is called Hearsay Socials Predictive Social Suite. It will allow the company to move beyond collecting data from the social media feeds of its clients customers and start to perform analysis of how people engage with financial services providers websites. The idea is fairly simple: if financial advisors know a bit more about how their customers are using their websites, they might have a better idea of what they are looking for and what they should offer them.
San Francisco-based Hearsay works with several clients in the financial advisory world, which is currently facing increasingly stiff competition from a growing wave of digital financial advisors offering cheaper services to customers. Typically, these so-called robo-advice websites use questionnaires to create a personalized investment strategy for each customers after gauging such factors as their stated investment goals and appetite for risk. To respond to the automated onslaught, some of Hearsay Socials finance clients approached the company to find a better way to compete.
In response, Hearsays new platform predicts customer behavior by monitoring activity on clients websites as well as their social media networks. That way, Hearsay CEO Clara Shih told Fortune, financial advisors can both take advantage of the improved efficiency provided by automation and algorithms while still being able to add their unique human value, the human touch.
To Shih, the financial services industry is one of the key battlegrounds in the debate over automation and its effect on the workforce. She draws a comparison to travel agents, an industry hit hard since the introduction of online booking websites, starting with Travelocity, which is now owned by Expedia.
Hearsay Socials financial advisor clients — which include AXA US, Raymond James Financial
, and Vanguard — use the companys existing platform to cull through all of the social media content posted by their online connections to find useful bits of customer information. If you were my financial advisor and you were using Hearsay, you might pick up through your Hearsay Social signals that I just changed jobs. In which case, you’d probably want to talk to me about a 401k rollover, Shih said.
However, no matter how many major life events end up being shared online, Hearsay Socials clients felt they could not effectively compete with the automated advisor services by relying on information from social media alone. With the companys new platform, Shih said, Hearsays clients can continue to access data from social media but they will also be alerted when visitors arrive on their websites and which products or services they seem most interested in based on their how they engage with the site. The information will help these companies advisors and relationship managers know when and how to reach out to customers and offer their services.
Shih, who also sits on the board of directors at Starbucks
, cofounded Hearsay in 2009. The company has since raised $51 million from investors including venture capital firm Sequoia Capital over three funding rounds.
Digital financial advice websites have grown in popularity in recent years by offering the average consumer a more affordable, accessible way of obtaining investment advice. Robo-advice services like Betterment, Wealthfront, and Personal Capital raised a total of $290 million in venture capital funding last year, with Betterment adding $60 million from a group led by private equity firm Francisco Partners just this week.
Meanwhile, big financial institutions are also getting in on the act. Charles Schwab is set to launch its own robo-advice platform, Schwab Intelligent Portfolios, early this year. A robo-advice platform operated by Charles Schwab, or other traditional advisors, is likely to help those banks reach younger customers looking for less expensive investment advice, which is most likely the same demographic Hearsay Socials platform would help its clients target, Morningstar analyst Michael Wong tells Fortune.
But while Hearsay Social might help its clients target a new customer base, that doesnt necessarily help these traditional players compete against the upstarts on cost. It does nothing to quell any type of concerns about whether younger audiences, and more tech-savvy audiences, will find value in paying a lower fee for a very basic and straightforward asset allocation plan of certain robo-advisors, Wong says.
For her part, Shih argues that consumers will be willing to pay a premium for more personal service.
When it comes to financial advice, and someone who really understands your situation I would submit that the vast majority of investors, not just the wealthy ones would rather have better advice than to go with the lowest-cost provider every time, Shih said.
Does Moving to the Suburbs Make Financial Sense?
Unfortunately, identity theft is often treated more like a natural disaster that cannot be prevented, than it is as a criminal act perpetrated by an individual; it is all about preparing for the inevitable and the cleanup that takes place after it happens. The villain is often times identified as the organization that allowed such an event to happen, sort of like blaming the weatherman for bad weather. As such, organizations are required to equip you with the tools necessary to clean up and defend your identity rather than help you find the individual that is attacking you.
But when you get right down to it, you are the only one that can protect your own information. And simply balancing your checkbook once a month is not enough to ensure that your financial identity is secure. It all begins with understanding how consumer reporting agencies financial institutions and creditors see you as a consumer. You need to take the time necessary to make sure that they all know you as the consumer you think you are.
Keeping track of your various credit reports
Close accounts and update information Staying on top of your current financial status is important. Especially when it comes time for you to track down and prove that the accounts you know you have are the only accounts that should currently be listed as active. This will make tracking down fraudulent activity a much easier task.
Old addresses, unused credit card accounts, paid off loans and closed bank accounts can remain on your credit history for years. The big three credit reporting agencies that you will want to keep as up to date as possible are Experian, Equifax and TransUnion. Through each you can request a credit report to review and even dispute reported items that you feel are out of date, inaccurate, or possibly fraudulent. You will then need to follow-up with individual companies you once did business with to ensure that they each are accurately reporting your past accounts as being paid in full.
However, there is a limit to how many free copies of your credit report you can request each year. This will depend on how many legitimate disputes you have with each credit reporting agency. With each dispute, you can potentially get an updated report to prove that what you disputed has been set to rights. Each of the three services mentioned above that can help you clean up your credit report also have monthly subscription services. These services, which can cost anywhere from $15 to $30 monthly, allow you to access reported activity on an ongoing basis. Experian (Free Universal), Equifax (Free Universal) TransUnion (Free iPhone) each have mobile apps that when used in conjunction with their premium services, can be used to alert you when new accounts are created using your financial information. After you have all of your information in order, keeping it in order is a whole lot easier when using such a service.
Keep track of your existing accounts and balances
Tracking account balances Another aspect of your financial identity comes in the form of maintaining the open accounts you do have. It can become a challenge to stay on top of all of your various checking, investment, and credit accounts on a day-to-day basis. That is where apps like iBank ($9.99 iPhone, $19.99 iPad) and Intuit’s Mint (Free Universal) can help. With each service you will be able to store the credentials necessary to access each of your accounts online. Once this is done, you can use their respective apps to log on to all of your accounts at the same time and get a report of what each accounts balance is. Noticing that your cash accounts are not as high as you thought they should be, or that your credit balances are not as low as you thought they should be, can help identify when someone has gained access to one of your accounts.
Direct account access and alerts There are times when what you need is access to your account directly through the managing institution. Most financial institutions, banks and credit card companies now have their own mobile apps that allow you to access your accounts directly. These apps can be used for more than just paying your bills and depositing photos of your checks. The benefit to using such an app directly is that you can usually set up notifications with many of these apps that can assist you when it comes to monitoring your accounts. Discover is one such app (Free Universal) that you can use to set up alerts whenever there is a cash advance, a transaction occurs outside the US, there is a purchase in excess of an amount you set, or any time that Discover notices an activity on your account that is unusual.
Secure access with strong passwords
Choosing Strong Passwords As you start to monitor your credit reports and financial accounts more frequently, it is equally as important to tend to your password “garden” as well. It is always a good practice to use what is known as a strong password with each of your online accounts, and especially where your finances are concerned, choosing a different, strong password with each account is essential. The Wolfram Password Generator ($0.99 Universal) is a good first place to start when it comes to evaluating how strong your chosen password actually is. With it you can measure exactly how strong each of your passwords are. The strength of a password is generally measured by how long if would take for a computer to enumerate through enough passwords in an effort to “guess” what your password is. Even the strongest of passwords are no good if someone knows what your password is.
Managing and Changing Passwords Preventing others from accessing all of your passwords in as secure a manner as possible is the primary function of password managers. They work by keeping all of your passwords secure behind one master password. While keychain managers like iOS 8’s keychain can certainly remember your passwords, managing them is another matter entirely. Your collection of passwords should be though of more like a garden that needs to be tended to from time to time rather than just a collection of assets you need to lock away for long periods of time.
The Department of Defense recommends that passwords never be used for longer then one year, a frequency that universities like MIT also endorse. Password management apps like LastPass (Free Universal) can perform an audit of all of your passwords to see how often you repeat the same password and even test the strength of all of your existing passwords. LastPass even has the ability to auto-update your passwords for you. This can certainly save time, and ensure that you the weeds out of your passwords.
Play along with another episode of Money Match, the game show in which married couples find out just how in sync they are with their finances.