Traveling on a Budget

More Americans are planning to stay put during the summer travel season due to financial concerns.

Only 42% of Americans plan to spend their time and money on a vacation this summer, compared with 49% who planned to travel in 2005. A third have already cancelled at least one trip because of squeezed budgets (LATimes.com May 19).

Despite the pressure on purse strings during tough economic times, there are ways to have frugal fun in the sun without burning a hole in your wallet (Readers Digest June):

• Budget basics. Identify how much you have to spend on your excursion. Consider expenditures on meals, souvenirs, transportation, lodging and entertainment. Be sure to include funds for unexpected expenses, and take into account any membership or organizational discounts such as AAA.
• Flight control. If possible, check flights and cost information at 12:01 a.m. Wednesday in the time zone where the airline is based. You also can track the price of flights before, and after, you book them. Websites like yapta.com will notify you if the rate drops, enabling you to contact the airline for a refund of the price difference.
• Wheels and lodging deals. Use bargain travel sites like Hotwire.com to search for low rates on rooms and rental cars. When renting a vehicle, choose a location close to your hotel or airport to avoid airport convenience fees. Use Hotels.com when searching for lodging. The site offers discounted rates on rooms and a price match guarantee.
• Travel insurance. This relatively inexpensive "extra" may save you a lot of hassle and expense even if your trip costs only a few hundred dollars. Basic travel insurance will cover things like delays, lost baggage and emergency medical expenses. Use insuremytrip.com to compare plans.
• Last minute planning. When you have little time to plan, use lastminute.com to find travel packages that include transportation and lodging. Other sites, like airfarewatchdog.com, list reduced prices for last-minute air travel.

Moving Home

More people are living under the same roof with their parents or adult children to ride out recessionary pressures associated with job loss, the foreclosure crisis and the credit crunch. The trend toward multigenerational homes is expected to increase.

Besides the financial challenges, these long-term family "guests" can pose a remodeling challenge as families carve out space to accommodate either their aging parents or adult "boomerang" children (SmartMoney.com May 8).

Research from The Network on Transitions to Adulthood indicates that since the 1970s, the number of 20-somethings living with their parents increased by 50% (washingtonpost.com April 26). AARP Bulletin's Multigenerational Housing survey, released in March, revealed that 33% of respondents age 18 to 49 live with their parents or in-laws, 11% of people age 35 to 44 live with their parents or in-laws, and 11% of people age 50 and older live with their grandchildren or parents (PRNewswire-USNewswire March 3).

Boomerang children used to mean young adults moving back home with parents, but the economy is forcing people in their 30s and 40s - and their children - to live with mom and dad again.

Lisa Orrell, author of Millennials Incorporated, cites the pros and cons of these new living arrangements on her Generation Relations blog. For some, there may be a space issue. For others, the help around the house or with babysitting can make a big difference in quality of life.

If you are considering a multigenerational living situation--or are forced into one--make it a workable living situation (time.com Feb. 19):

• Discuss expectations up front. You can't guarantee how long it will take to find a job, but you can set some goals for getting out of debt. How long is the new living situation expected to last? What are other options if it doesn't work out?
• Share expenses and chores. Parents who have lost equity in their homes may be pinching pennies themselves and welcome financial and household assistance. Agree on a rental charge or amount contributed to bills. Will these amounts change as the adult child's financial situation improves? Determine who will do certain chores like cleaning, lawn mowing and making meals. Some parents find help around the house more valuable than payment.
• Decide whose rules to follow. There may be differences of opinion when it comes to child-rearing. Discuss details like what young children can and can't play with and who will handle disciplining. Adults may need to agree on guidelines for guests, use of personal items, menu choices, and how much to spend on groceries and entertainment.
• Set up private space. If possible, designate some space as private even if only on a limited daily basis. Parents may like being empty nesters and their children have learned to live alone. Decide on how much togetherness works for your family.
• Don't drain mom and dad's retirement funds. Financial planners warn parents about making financial sacrifices for their adult children. If they use retirement savings to help a child, they may need to turn to their children for financial help later in life. Parents need to be clear about expectations on the money front. Is it a loan or a gift? If it's a loan, consider a contract that spells out terms of repayment.

Auto Refinancing Can Free Up Some Dough

These days, any extra money can come in handy. If you're trying to cut costs wherever possible, refinancing your car loan can free up some cash. Compare ...

Finance a new car at a bank in May 2007

New car amount financed $20,000
Average commercial bank new-car rate 8%
Term (years) 5
Monthly payment $405.53

Refinance your loan at your credit union in May 2009

Amount refinanced $12,941
LifeWay Credit Union used-car rate 3.75%
Term (years) 3
Payment $380.63

Monthly savings $24.90
Savings over life of loan $896.40

In this example, by refinancing you'll save almost $300 a year. That's money you can put toward paying down other debt or stashing away in an emergency savings fund.

Stage Your Home for a Fast Sale

Today's real estate market is crowded with inventory, so if you want to sell your home, it has to stand out. Staging, or making it appeal to the broadest possible group of people, is one way to do just that.

That means depersonalizing your home so buyers can visualize themselves living in it. Basic staging steps include:

* Neutralize—Put away family photos, religious items, collections.
* De-clutter—Pack up knick-knacks, clear off countertops, remove up to half your furniture. Consider renting a storage locker until your home sells.
* Rearrange—Arrange furniture so buyers can move smoothly through the home. Highlight rooms' focal points, such as fireplaces, with furniture groupings.
* Let it shine—Clean or replace carpets, wash or paint walls, pressure-wash siding and decks, and scrub, scrub, scrub—especially in bathrooms and kitchens. Turn on all lights and open drapes for showings.
* Landscape—Mow and edge the lawn, trim the hedges, plant flowers. If your yard doesn't look well-maintained, buyers will assume your home isn't and drive on by.

If your funds are limited, spend money where it shows. Buyers form first impressions from your front door and foyer, so make sure they sparkle. Is the doorknob wobbly? The doorbell broken? The doormat shabby? If you're debating replacing carpeting in the entryway or a back hallway, choose the entryway.

Be sure your changes make economic sense, though. Do normal maintenance, such as replacing stained, chipped countertops, but don't install an expensive hot tub.

Consider hiring a professional stager. Realtors can recommend stagers, or you can consult the International Association of Home Staging Professionals' Web site at iahsp.com. Costs vary, but the NAR reports that spending 1% to 3% of your home's asking price will generally yield an 8% to 10% return.

Whether you're fixing up your home for resale, or looking to buy a new home yourself, LifeWay Credit Union can help. Stop by or call today.

Unemployment, Foreclosures Fuel Internet Scams

The recession is feeding a wave of cybercrime estimated to cost consumers $8 billion as crooks capitalize on online job searches, desperate homeowners seeking to avoid foreclosure, the soaring popularity of social networking sites, and poorly protected computers (ConsumerReports.org June 2009).

One of five online consumers fell victim to Web crime in the past two years. Crooks snagged almost two million online shoppers' identities; other IDs were compromised via hacked computers, e-mail scams and financial transactions. And about seven million consumers dished out sensitive information to online phishing attacks.

The Federal Bureau of Investigation's Internet Crime Complaint Center's latest report also revealed that online crime hit a record high in 2008. As vulnerable consumers repeatedly fall victim, scam artists continue to find new, seemingly legitimate ways to take advantage.

Despite the grim news, protect yourself by taking precautions:

• Thwart online thefts. The Internet is full of useful software. Try download.com for firewall, antivirus, antispam and antispyware protection--many downloads are free, but some come at a cost.
• Use proper security settings on social networking sites. Don't use birth dates, addresses, phone numbers and any other personal information that could make you vulnerable to identity theft.
• Don't click on links within messages. If you do, you could be phished. Beware of scams on social networking sites; you are more likely to be caught off guard by phishing messages from your networked friends. Don't provide personal information or follow links in suspicious messages.
• Shop cautiously online. Crooks can set up fake e-commerce sites in a few hours. However, even a legitimate site may not be secure because a criminal still can hack in to sensitive data. Always look for a closed padlock in your browser frame and "https" in the URL. Also, check the legitimacy of the business with the Better Business Bureau (bbb.org).
• Back it up. Regularly back up important data to prevent a virus from wiping it out and leaving you in the lurch.

source - cuna.org

Geat Real With Your Retirement

The majority of workers remain confident they will be able to live comfortably in retirement, despite abundant evidence to the contrary, says the latest research.

Consider these numbers from the 2009 Retirement Confidence Survey released by the Employee Benefit Research Institute and Mathew Greenwald & Associates Inc. (April):

• Three of four workers report that they and/or their spouses have saved for retirement. About half (54%) of workers believe that they will have enough money for a comfortable retirement. A similar percentage (53%) reports retirement savings--not counting home values and defined benefit plans, if any--of less than $25,000.
• About one of three workers (31%) who have not saved for retirement is confident about a comfortable retirement.
• Three of four workers who have saved expect to need jobs in retirement to make ends meet.

Because so many pre-retirees seem to think they'll have the same standard of living in retirement with savings of less than one year's current income--or no savings at all--experts recommend that all workers make a realistic effort to become "retirement ready" by taking these first steps today:

• Track expenses, and evaluate whether those expenses will continue in retirement;
• Create a budget for your current situation;
• Determine current net worth;
• Get an estimate of pension or 401(k) income possibilities, and determine when you are eligible for retirement;
• Get an estimate of your Social Security benefits from ssa.gov or call 800-772-1213;
• Determine whom you'll be providing for in retirement, and plan for long-term care for any dependents;
• Calculate your life expectancy; and
• Set a retirement savings goal and make a plan to reach it.

Cost-Consciousness is the New Recession Luxury

The recession has many Americans re-evaluating the way they spend their hard-earned dollars. About half (53%) of respondents to a recent Gallup poll said they are spending less, and 32% predict this behavior will become the new normal pattern once the recession is over (creditfyi.com Apr. 28).

The necessity vs. luxury perception battle had been moving in the luxury direction for decades, but the looming recession has reversed the trend. A report released April 23 from the Pew Research Center Social and Demographic Trends Project revealed that many items previously perceived as "necessities" are getting booted to the luxury list.

The Pew survey showed the number of respondents who categorize common household items--microwave oven, TV, air conditioning, dishwasher, and clothes dryer--as a necessity has dropped sharply from 2006. Further, the percentage of Americans who consider a TV a necessity is the lowest it has been since the question was first asked more than 35 years ago.

Four of five survey respondents have taken at least some belt-tightening measures during the current economic crisis. Here are a few examples of scaled-back spending:

• 58% switched to less expensive brands or to discount stores;
• 24% cut back--or eliminated--their cable or satellite TV subscription; 22% followed suit with their cell phone plan;
• 21% plan to try out their green thumbs and grow veggies;
• 20% started performing home repairs or yard work they previously hired out; and
• 16% got rid of unwanted items by holding a garage sale or listing them on the Internet.

source - cuna.org

Play Catch-Up to Make Up for Nest Egg Losses

The combination of stock market losses and company cutbacks can derail your retirement savings unless you take immediate action to get back on track (ljworld.com April 29).

Companies of all sizes are slashing expenses to try to keep from laying off workers during the recession. Job benefits increasingly are targeted as a way to cut costs, and the long-term implications on your nest egg could be significant.

For example, if your employer discontinues the 50% match of your 401(k) contributions to up to 6% of your $75,000 salary, you'll lose $2,250 in savings in one year. And assuming a 7.2% average annual rate of return, that $2,250 yearly contribution would have grown to $100,000 in 20 years from compounded growth (Bankrate.com March 16).

If you experience a loss or reduction in workplace retirement benefits, consider a combination of moves to soften the blow:

• Beef up 401(k) savings. Don't let the loss of a company match--on top of rising expenses--keep you from forging ahead. Research from Hewitt Associates revealed that the average employee could bridge the gap caused by a 401(k) match suspension by increasing contributions just three percentage points a year (U.S. News & World Report April 14). Also, consider switching to a lifecycle fund, which automatically adjusts to less risky investments as you approach retirement age.
• Redirect spending leaks to personal savings. If you don't have an emergency fund, start one now, particularly if your job is in jeopardy. Keep three to six months' living expenses in a liquid, interest-bearing account in case you need the money quickly. Once you have a solid emergency fund as back-up and you're contributing as much as you can to your 401(k), consider an IRA (individual retirement account). A traditional IRA gives you an immediate tax deduction if you meet income requirements; a Roth IRA is funded with after-tax contributions and allows you to take tax-free distributions in retirement. Know the income limits for both.
• Resist the urge to cash out. Fidelity estimates that if you're in the 25% federal tax bracket, a $50,000 withdrawal before age 59 ½ will cost you $12,500 in federal taxes, $3,500 in state taxes (assuming a 7% state tax rate), and $5,000 because of a 10% early withdrawal penalty. Your $50,000 withdrawal from retirement savings shrinks to $29,000. According to Hewitt Research, 45% of employees make the costly mistake of raiding their 401(k) when they leave their job. (If you are terminated, there's an exception to the penalty if you are 55 or older in the year you're terminated.)
• Revisit your retirement goals. In light of lower balances and economic uncertainties, rerun the numbers. Use several retirement calculators to analyze your situation and determine how much more you need to save to meet your goals. Check out BallparkEstimate.org and Bankrate.com (click the Retirement tab then scroll to Calculators).

If your employer terminates your 401(k) plan due to bankruptcy, merger, or acquisition, remember that any pre-tax contributions you made--plus earnings--are yours to keep. Whether you're entitled to the employer contribution portion, though, depends on the company's vesting schedule.

Your Phone Bill May Contain Real Pocket Change

If you're looking for ways to cut costs, pull out your wireless and land-line phone bills. You may be paying for services you don't want, don't need, or didn't ask for (Post- Gazette April 19).

When Rena Crispin's phone bill spiked, she ignored it for a few months, thinking it was a pro-rated charge for changing her land-line's package plan. When the bill remained unusually high for another two months, she went online to check details. "I discovered I was paying for five monthly charges I didn't want, at $5.99 each," says Crispin, who is a managing editor at Credit Union National Association's Center for Personal Finance.

Because voice service is a fairly cheap commodity, phone service providers are pushing extra services, to the extent that they "inadvertently" can tack them on to your plan when you make changes.

In Crispin's case, when she originally called to change her package plan, her provider did as she requested and set up the new package, which cost less and didn't include the five services that were in her old plan: three-way calling, speed calling, call forwarding, automatic callback, and repeat dialing.

What the provider didn't tell her was that they continued all five of those services from her original package and billed $5.99 plus tax for each one, in addition to the new package plan. (At Crispin's request, her provider discontinued the unwanted services and refunded her in full.)

Take steps to trim your phone bill:

• Check your statement each month. Go beyond the amount due and look at all the services you're paying for to see if you still need them.
• Watch for mistakes. Small extra charges--which add up over time--may have been added to your statement by mistake.
• Check for employee discounts. Do a Google search for your carrier's name and "employee discount." AT&T, Sprint, T-Mobile and Verizon offer discounts to employees of companies that use their services.
• Review your plan at least once a year. This applies to both land-line and wireless services, no matter how long you've had them. You may have signed up for an introductory rate offered only for a limited time, and the price you're paying now isn't competitive with other plans.
• Calculate your usage. If you signed up for a flat rate of 500 minutes a month but you're only averaging 150 minutes a month in long distance calling, update your plan.
• Evaluate your needs. If you're paying 10 cents or 20 cents for each text message, depending on how frequently you send and receive them, consider an unlimited text messaging option.
• Ask questions. If you have trouble understanding the charges on your bill, call your provider and ask for an explanation of each line item.
• Have your call usage analyzed. Upload an electronic copy of your bill to billshrink.com. The free online tool compares your costs against money-saving alternatives and offers several low-cost options.