Arkansas
Association of
Family and Consumer
Sciences

Arkansas Association of Family & Consumer Sciences Annual Conference

Henderson State University, Arkadelphia
March 8-9, 2012

Contact Connie Phelops for further details at (870) 230-5262

CONFERENCE REGISTRATION PACKET (.pdf)
HENDERSON STATE UNIVERSITY CAMPUS MAP (.pdf)

There is no doubt that the economy has given many families real reason for concern. Although the unemployment rate is down from the 10 percent high in December 2009, it is still a concern for 13.9 million unemployed Americans (Bureau of Labor Statistics, 2011). Housing foreclosures also remain high. In June 2011, there was a foreclosure for every 583 housing units in the United States. Arkansas averaged a little better with only one in every 669 housing units going into foreclosure (Realtytrac, 2011). And chances are that even if you are not in either of these two troublesome dilemmas, you still have concerns for your family.

As reported by the Pew Research Center (2010, p. 1), “Of the 13 recessions that the American public has endured since the Great Depression of 1929-33, none has presented a more punishing combination of length, breadth and depth than this one.” This “Great Recession” has presented major difficulties to businesses and families alike. We are experiencing a slow and steady recovery, but there are new concerns on the horizon. Many are concerned about the current amount of government deficit and the reaction to a downgrade in the US debt rating.

There is enough on the news to make families fearful, but that fear should not render you helpless. What you do personally may not change the larger economic picture, but it can change your own economic outlook. Much of the advice that your grandmother would give you about finances still rings true today. But today, you have access to tools that grandmother never even thought of to help you.

It is most important to know where you are financially and to have some goals in mind that will help you make a plan. You must know where you stand financially. For many families this can be painful, but well worth the work. Start by listing all your debts, the amount outstanding, the payment amount, and the interest rate. You also want to list all your assets (anything you own that has financial value). This will allow you to determine your net worth and will serve as the “you are here” dot on your personal financial map. To determine your net worth, you simply add up everything you own – your assets – and subtract everything you owe – your liabilities. When you know your net worth for a given point in time, you can then truly know whether you are making progress financially. It is not uncommon for families to not “feel” any better about their finances, even when they are making good progress. It can be very rewarding to see your net worth grow over time as you pay down debt and increase savings.

After you determine where you are financially, you need to know where you want to go. In other words, what are your goals? Your goals can be short-term, that is able to be accomplished in a year or less, or they can be long-term, which would require more than a year to accomplish. Writing down your goals and sharing them with others can make you more likely to achieve them…so share away! Share with your family and anyone else who is likely to be your support! Rarely can a person achieve every goal simultaneously, so you will likely need to evaluate what is truly most important to you and focus on accomplishing those few goals. Two goals likely to be on most family’s lists would be to increase savings and decrease debt.

It is extremely important for families to have access to savings. Without savings, a minor emergency can send you into a major financial tailspin. Savings is a must! The problem is that it is always easier (and often more fun) to spend than to save, but the truth is having a savings is a great investment in your family’s peace of mind. Families must develop some discipline to save. Fortunately, there are ways to make it easier. Knowing why you are saving and how much you need helps you measure your progress. Financial experts recommend three to six times the amount of your monthly savings for an emergency fund. For most families it takes a great deal of time to accomplish this goal, so if it seems overwhelming to accumulate three months, set your goal as one month. It isn’t the ideal ending point, but a great starting point. Enroll in an automatic savings plan if you can. If your employer offers access to a credit union, take advantage of it. Every pay check gets an amount of your choosing that will be removed and deposited directly into a savings for you. You might also try having a “cheap week” where you live as cheaply as possible and deposit the money you didn’t spend into a savings. You might consider an account at a bank different from where you have your checking so that it isn’t so easy to transfer money. Also pay attention to what your money is earning. You work hard to earn your money, help yourself out by having your money work for you. Accounts vary from paying one-tenth of one percent (that is really close to nothing) to over three percent. You will likely not get rich off of a three percent return, but you will have more to show for your money than the less than one percent account, and it all adds up over time. One last savings tip is to convert some of your other assets to cash. Can you take unused clothing to a consignment store or sell something in a garage sale, on Ebay or Craig’s list? If so, there is money for your savings!

Decreasing debt is the second big item on the table. We tend to think that if someone is willing to loan us the money to buy something and we want it that we should get it. That isn’t always in your family’s best interest, and in general you should avoid debt if at all possible. Some ways to do this are to save and pay cash, rent or borrow instead of buying, and to do without some wanted-but-not-necessarily-needed items. Assuming you are like most Americans and have already accumulated some debt, what can you do now? There are a number of considerations. What interest rate are you paying? At your current rate of repayment, how long will you be in debt? Is there a way make the debt less expensive?

In general, the interest rate you are paying on loans is greatly influenced by the economy and your credit rating. While the controlling the economy lies out of your reach, controlling your credit rating does not. You first need to know what creditors know about you. Get a free copy of your credit report. You are allowed one free report from each of the three credit bureaus per year. The website for accessing your free report is www.annualcreditreport.com, or you can call 1-877-322-8228. Please note: the word free does not appear in this website. Many “free” credit report offers are actually signing you up for a service where the first report is free but all that follow are at a charge to you. You do not need to access your report each month. Once per year (or three times per year if you order from each of the three bureaus at different times) is fine. You will get your report only; if you want to purchase your score you can, but it isn’t necessary. Once you know what your creditors know, you can get to work at improving your record.

Your credit score is based on how much you owe and how well you pay. The most recent information is the most important. If you haven’t done well in the past at paying your bills…start now and do well in the future. No late payments is the best thing you can do to improve your credit score and lower the interest you are required to pay. You also want to limit your credit. Owing payments to ten creditors (or more) certainly isn’t going to get you the best credit score. You also do not want to have credit cards maxed out. Ideally you want to owe no more than 50% of the available credit limit. Errors happen, so check over your report carefully to make sure your information is correct. If it isn’t, follow the instructions for filing a dispute. Your credit score can affect everything from credit card and mortgage rates to insurance costs and job interviews. It is very important that it is accurate.

Next, we want a plan to get out of debt. First, check to see how long you will be paying on your debt at your current repayment schedule. This will likely surprise you. You can look at your credit card statements for this information, it is now required by law to be disclosed. You can also go to online financial calculators, such as those available at many bank websites or at www.bankrate.com/calculators.aspx. Sort your debts either by the amount due, the payoff date or by the interest rate paid and plan an attack. Paying off the highest interest rate first will save you the most money, but seeing debt disappear may give you the best incentive to continue. For help in developing a plan the Utah State Extension Service offers the program Power Pay online at www.powerpay.org. If your credit report is all positive and you have been a good customer in the past, don’t be afraid to contact your credit card companies and ask for your interest rate to be reduced. Competition is stiff for good customers and they will likely lower your rate. The worst thing that they can do is say no, and that doesn’t hurt too badly. It will help if you are polite, have a competitor’s offer handy, and if the first person says they are not authorized to make such changes ask to speak to someone who is.

Once your savings starts growing and your debts start disappearing, make sure you don’t put yourself in the same predicament again. Utilize debt very sparingly. Don’t spend more than you make. Organize your bills so that you are not paying late fees (many creditors will allow you to choose your due date). If you are going to have problems with paying your bills, contact the creditors while you are still a good customer (before you miss a payment) and they are often willing to work with you. Make it a habit to save something from each of your paychecks. Although these things sound simple, we all know they are difficult to live by. If you practice these habits, you will be better prepared for future financial difficulties and will certainly sleep better at night!