America Saves Week: Join in!

Starting February 24^th, the Kentucky Cooperative Extension Service and other organizations around the country will participate in America Saves Week. This annual event was started by the nonprofit America Saves, which works to raise awareness of how best to save money. The theme for this year’s event is Set a goal. Make a plan. Save automatically. We hope that those who participate in the learning activities provided by America Saves Week will develop the habit of saving automatically for their financial goals.

This year, America Saves Week encourages you to set aside an emergency fund to protect you from unexpected expenses. Saving as little as $500 can help rescue you from the brink of financial disaster. The America Saves organization provides helpful tips for how make savings a habit, so reaching that $500 mark will happen sooner than you realize.

To reach your savings goals quickly, try placing some of your income automatically into a savings account. Try saving ten percent of your paycheck as soon as you are paid. By saving before you spend, you can prevent casual expenses from reducing what you are able to put into your savings account. To increase your savings success, try making short-term savings goals rather than long-term. People tend to find it much easier to save $50 a month than to pressure themselves to save $600 a year, and it amounts to the same thing. Planning a budget to meet a series of short-term goals is also much easier than spreading a plan out over the span of a year or more. Even saving your spare change can help you build an emergency fund. Saving only 50 cents a day will net you over $180 a year! So make it a habit to put your pocket change in a jar, and deposit the jar’s contents regularly.

Don’t forget: One of the best ways to save money is to make your savings accumulate interest. Consider putting your money into a mutual fund or a savings bond. Both of these options reward you just for saving and are great choices for new investors.

READERS, what do you think?

How do you make saving a habit?

Do events like America Saves Week encourage you to become more involved in your finances?

References:

America Saves. (2013). 54 Ways to Save Money. Retrieved from http://americasaves.org/for-savers/make-a-plan-how-to-save-money/54-ways-to-save-money.

America Saves. (n.d.). America Saves Week: February 24 – March 1, 2014. Retrieved from http://www.americasavesweek.org/home-2.

How To Know When You Have Too Much Debt

Many people who use credit do not realize they have a debt problem until it is too late. For young credit users, it may be even more difficult to recognize debt trouble because borrowing is still new to them.

You may be on the road to a debt problem if you have to borrow money to meet your basic needs. Unfortunately, it is not uncommon today for people to use credit cards to pay for groceries because their monthly income is not enough to cover their basic needs. This will lead to a debt problem.

Credit card debt is likely to become a burden if you see yourself applying for a new credit card every few months. While you may still be in good standing with all your lenders, it is never a good sign when you have to make only minimum payments to some just so you can pay down the debt from another. It is even worse if you are using borrowed money to pay off other debts.

You likely have too much debt if you can only manage minimum payments to your creditors. Although minimum payments keep your credit accounts in good standing, the interest on your debt will continue to rack up and increase the total amount that you will have to pay. It may soon become impossible to pay off the debt.

By knowing how to spot a growing debt problem, you will be able to make spending changes to get yourself back on track. You may try debt-management strategies such as cutting down on nonessential spending, paying more than the minimum payment each month, and using cash instead of credit for convenience purchases. (Debit cards may be a problem because consumer protections are not as good for them as for credit cards, but that is another story.) If all else fails to alleviate your substantial debt burden, you may be able to work with your creditors to negotiate a new payment plan or a lower interest rate. Nonprofit consumer credit counseling services can also work with you and your creditors and help you set up a payment plan to pay off your debts.

READERS, what do you think?

Is it likely that many people do not notice they have a debt problem? If so, why?

If you thought a friend had a debt problem, how would you tell them?

Reference:

Editors of Kiplinger’s Personal Finance magazine. (2014, January). Warning signs of too much debt. Kiplinger. Retrieved February 7, 2014, from http://www.kiplinger.com/article/credit/T025-C000-S001-warning-signs-of-too-much-debt.html.

New Financial Education Legislation Proposed in Kentucky

The Commonwealth of Kentucky’s House of Representatives have recently introduced two bills related to financial education within high schools. Both of the proposed bills would add a new section to the Kentucky Revised Statutes regarding the conduct of schools (KRS 158), and require the creation of the Kentucky Financial Literacy Program that all high school students would be required to complete before graduating.

Currently, Kentucky mandates that some financial education be incorporated into the existing curriculum, and schools have used a variety of programs to meet this mandate. Without a uniform program for financial instruction or an established means for assessing students’ performance, Kentucky has a “C” grade from Champlain College’s Center for Financial Literacy for our financial education efforts. Fortunately, this newly proposed legislation provides the opportunity to improve the state’s financial literacy. Both of these House bills would create a standard program to be used by all high schools, and might lead Kentucky to a ranking among the top states for financial education.

The first House bill introduced was HB 76, which would require the Department of Education to develop the Kentucky Financial Literacy Program. This program would then be used to teach a half-credit course that all 11^th or 12^th grade students would be required to pass before graduation.

The second House bill introduced was HB 77, which would require the Department of Education to develop the Kentucky Financial Literacy Program. The program would tend to integrated into existing courses that must be completed before graduation.

The two House bills sound very similar, but they actually have very different implications. If passed, HB 76 would create a statute requiring the creation of a new class. It would be mandatory course worth a half-credit toward a high school diploma. The course would be taught to 11^th or 12^th grade students using the Kentucky Financial Literacy Program. While HB 77 also would mandate the creation and teaching of the Kentucky Financial Literacy Program, passing this bill would not create a new mandatory financial literacy course. Instead, HB 77 would lead to 11^th or 12^th grade students having a financial literacy unit incorporated into an existing class. The unit would consist of an equivalent of 12 hours of financial literacy instruction during the duration of the existing course.

If you are concerned about financial education in your local schools, feel free to contact your district’s representative about these House bills. Whether you voice support for HB 76 or HB 77, it is up to you. Either way, the state legislature should know that you think that improving financial literacy is important to the citizens of Kentucky.

READERS, what do you think?

Which of these House bills do you think is the best idea? Why?

References:

Pelletier, J. (2013, Summer). National Report Card on State Efforts to Improve Financial Literacy in High Schools. The Center for Financial Literacy. Champlain College. Retrieved from http://www.champlain.edu/Documents/Centers-of-Excellence/Center-for-Financial-Literacy/Champlain-College-Center-for-Financial-Literacy-State-Report-Card_.pdf.

HB 76. (2014). Kentucky Legislature. 2014 Regular Session. Retrieved from

http://www.lrc.ky.gov/record/14RS/HB76.htm.

HB 77. (2014). Kentucky Legislature. 2014 Regular Session. Retrieved from

http://www.lrc.ky.gov/record/14RS/HB77.htm.