Tag Archives: Raquel

It’s a Family Affair

Financial Literacy is a family affairFinances are one of the leading causes of friction in family households.

Money can cause divorce.

It ruins the lives of your children (just ask any teenager who is denied money by a responsible parent).

It even causes jealousy with friends and neighbors, because we are all trying to keep up with the Joneses (who, by the way, are broke.)

This is where you can turn it around. Make money a regular conversation in your house, and not a fight. Your kids need to know what is going on. And don’t worry, your friends and neighbors don’t care what you do or don’t have. They just care that you’ll offer them a slice of pizza and a beer when you ask them to move that massive TV that you really shouldn’t have bought in the first place.

In our last post, we reported that adults aren’t making the grade in their financial knowledge. Don’t let this trickle down to your kids, or their kids, and their kid’s kids. Studies have shown the skills and habits you learn as a child, stick with you into adulthood. Don’t let debt be a habit in your family.

Sit down and really talk about your budget. Show your kids what amount is coming in, and what must go out. Kids need to learn now that they can’t always get what they want…and neither can you.

Lisa and Bryan showed their teenagers that more was going out than was coming in. They talked about the difference between needs and wants.

Their kids are fully on board. Even keeping Lisa and Bryan in check when they are out and about.

“Do you really need that purse, mom? Or do you just want it?”

Raquel’s family didn’t realize why she needed those payday loans. After a good discussion, they are helping with the budget and making sure everyone knows where the money is going.

Fredica already told us her children were looking out for her. As self-described impulse buyer, her kids were already on her. “Just because you have a coupon, doesn’t mean you buy it.”

But how can we teach our kids and families about money management, when many of us are struggling ourselves?

  • Make financial literacy a priority in your household, and take it seriously.
  • Prepare a budget and stick to it.
  • Determine where you are a wasteful spender and Shut. It. Down.
  • Talk honestly about needs and wants and respect your children and other family member’s opinions too. Let them each choose a splurge item, unless it’s a trip to Hollywood for them and their five friends to celebrate turning sweet 16. Giving your children and others the power to choose will help keep them on board.
  • We’ve said it before. GET HELP! Many financial institutions like credit unions offer financial literacy assistance. Just watch this nifty interview with one of our super cool Kansas credit union financial counselors. And if your children are old enough, bring them with you! It will improve your household financial knowledge and may even strengthen your relationship with your kids.

Your financial knowledge helps you no matter where you are in life. It can help you live better and healthier, and ensure your children have a better, healthier future too.

The Payday Loan Trap

The Payday loan trapDid you know there are more payday loan establishments in the United States than McDonald’s and Burger King fast food restaurants COMBINED? Welcome to America, where we swipe our cards, spend our money and stuff our faces.

12 million Americans take out payday loans each year. That’s a lot, but it’s less than half of the 27 million Americans who eat McDonalds EVERY DAY! That’s a lot of burgers.

Raquel, our young mother, admits she stepped into the payday loan trap.

Payday loans are meant to be a quick fix, but consumers are finding these loans (or cash advances) are causing debt to become the next four-letter word. These loans are typically $500 or less and carry hefty fees. The problem is, most consumers, 80 percent of you, can’t pay off the first loan, so its rolled over or renewed within two weeks, turning that initial $500 into $1,500 before you can even say “super size it!”

Don’t despair. Try these alternatives to get you by in a pinch.

Credit unions.
Credit unions put people before profit, and as not-for-profit financial cooperatives (read: not-for-profit bank) they can offer low or no fees on some of their services. The credit union philosophy is “people helping people” so you can be sure that they won’t pull a fast one on you. Credit unions promote financial literacy too, and many have a financial counselor on staff that can help you re-evaluate your finances and put you on a path to smart money management skills. Many also conduct money management workshops for their members, free of charge.

You have to become a member first, which is easier than understanding what is said through a drive-thru speaker. Find a credit union near you at asmarterchoice.org.

Credit counseling help.
A financial counselor can’t help you if you need cash NOW, (kinda like an apple won’t satisfy that craving for chocolate), but if you are using payday loans, it’s probably a good idea to seek help with your financial situation, and eliminate the need for future payday loans. So join the crowd of roughly two million people who sought the help of a financial counselor last year.

A non-profit agency like Consumer Credit Counseling Service usually offers free money management help such as budget counseling, debt management planning, and mortgage default or rent delinquency counseling. In fact, our Money Possible participants are all meeting with a counselor from the Consumer Credit Counseling Service of Wichita.

Reduce spending in other areas.
If you stop hitting the McDonald’s drive-thru, wait until that epic movie is on pay-per-view and hold off buying that new iPhone, you might be able to take that quick cash place off speed dial. Don’t be fooled…it’s hard work, just like eating a salad instead of a Big Mac. But you’ll soon find that some of your “needs” are actually “wants” and you can go without them.

Negotiating your bills.
Talk to your credit card companies. Beg your utility company. Negotiate a payment plan. Most would rather keep you as a customer than lose you, and are willing to work with you. At least it’s worth a try.

Cash advance from a credit card.
We usually don’t condone using your credit card for cash, but the 25 to 30 percent interest rate you’ll be charged is far less than the fees and 300 percent to 500 percent interest on a payday loan. Yup…pay day loan places charge 300 to 500 percent interest plus fees!

Think on that for a minute. It’s not uncommon for a consumer to be charged $10 or $20 on every $100 borrowed. So, if you borrow $300, and the fee is $20 per $100, you’ll actually owe $360. Then, if you can’t pay that loan in two weeks, you’ll roll it over and pay another $60. So now you’ve paid $120 in fees to borrow $300. That equals 520 percent interest rate!

Budgeting: Not as hard as it looks!

Budgeting: Not as hard as it looksWhy is it that the right thing to do is always the hardest? Like not eating that double fudge chocolate brownie warm from the oven. Like breaking up with that person whose laugh drives you insane and you know it just won’t work out with. But when it comes to budgeting, you can’t use the old ‘it’s me, not you’ excuse.

So why don’t we do it? Is it because we don’t like to see the hard reality staring back at us? Or that it takes a little thought and planning? Whatever the reason, we promise you that making and sticking to a budget isn’t as hard as it looks. (Check out the ‘Basic Money Management’ section of our Money Possible Workbook)

Our participants are well on their way to destroying their debt. But guess what? They all started by making a budget. While some were budget newbies, others had tried before.

Lisa and Bryan said, “We did have a budget before. However, it was hard to stick to when unexpected things would show up.” We know, how can you plan for the unexpected? Having a little cushion in your budget will help keep you on track for the long haul.

Fredica and Raquel never had a structured budget.

Fredica, “just mapped out what was owed and the due date.” That’s a good start, but planning for the future requires long term budgeting and goals.

Raquel’s method was, “to pay with what you have and pay the most important things, rent, utilities, medicines, daycare, etc.  I think the hardest part is trying to find and figure out EVERYTHING that you owe, and what to start with first.” Getting everything down on paper (or the computer) makes your budget tangible. From there, you can begin determining what next steps to take to destroy your debt.

So here are three easy steps to get you started:

  1. Identify how you’re spending your money now.
  2. Evaluate your current spending and set long-term financial goals.
  3. Track your spending monthly and adjust if necessary.

Join our participants and follow along – you, too, can be on your way to destroying your debt. As for your relationship woes, just do it already! It really isn’t you, we promise.

View the television segments.

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