Tuesday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: The most important number in your financial life. Also in the news: How to get the most from a balance transfer credit card, how to build up your emergency fund, and how to audit your financial products.

The 5 Most Important Numbers in Your Financial Life
The numbers you need to know.

7 Ways to Get the Most From a Balance Transfer Credit Card
Tips to keep mind.

5 Tips to Build Up an Emergency Fund This Year
Easy tricks to fill up your emergency fund.

How to Audit Your Financial Products
Making sure your financial products are truly working for you.

One Absolute Must For Everyone Who Has An Aging Parent With Memory Problems
Protecting your parents from financial disaster.

Thursday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: Money moves that could kill your retirement. Also in the news: How to stress test your budget, how to build long-term wealth while renting, and how to prepare your parents for financing their long-term care.

9 Money Moves That Could Kill Your Retirement
Avoid these at all costs.

Stress-Test Your Budget with a “Financial Fire Drill”
Putting your emergency plan to the test.

How Renters Can Build Long-Term Wealth, Too
Investment alternatives can help.

Steps to Prepare Your Parents for Financing Long-Term Care
How to have a difficult conversation.

Wednesday’s need-to-know money news

how_to_build_an_emergency_fundToday’s top story: How to boost your emergency fund. Also in the news: What you need to worry about for retirement besides money, why you should worry about medical identity theft, and deciding when it’s time to dump your credit card.

11 Ways to Boost Your Emergency Fund
How to prepare for unexpected expenses.

5 Things to Worry About Besides Money for Retirement
There’s more to retirement planning than just money.

Medical identity theft: Why you should worry
And you thought credit theft was bad…

6 Signs You Should Dump Your Credit Card
Deciding when to cut the card.

This Simple 6-Step Routine Could Save You $30 Per Week on Groceries
An extra $1500 a year would be nice!

Tuesday’s need-to-know money news

321562-data-breachesToday’s top story: Yet another data breach hits a major retailer. Also in the news: Five costly Social Security mistakes, which tax breaks will be making a comeback in 2015, and why you should still save money even if you’re in debt.

The Kmart Data Breach: What You Need to Do
Here we go again.

Five Costly Social Security Mistakes
Avoid these at all costs.

Will Your Favorite Tax Break Be Restored?
The clock is ticking on restoration for 2015.

Why You Should Still Save When in Debt
Emergency funds are essential no matter how much you owe.

Tips for Giving Money to Needy Family Members
Making the difficult decision to say yes or no.

Thursday’s need-to-know money news

seniorslaptopToday’s top story: Personal finance tips from big data companies. Also in the news: Why more seniors are being duped out of their money, the right amount to have in your emergency savings and ten ways to best spend $1000.

Three Personal Finance Tips From Big Data
Analyzing your spending habits.

More Seniors Getting Swindled Out of Money
Preying on some of our most vulnerable

How Much Is in Your Emergency Fund?
What is your emergency sweet spot?”

We asked a palm reader and a financial adviser how to handle our money
Who came out on top?

10 Smart Ways to Spend $1,000
And possibly double your money.

Why you want an emergency fund

Dear Liz: I regularly read about people in your column who don’t feel the need for an emergency fund, or think they only need a small one. This is one of the many issues that makes me glad that my husband takes care of the finances. We are both professionals with graduate degrees who, for different reasons, were once unemployed for three months at the same time. Because we had a healthy emergency fund, we kept up with our bills with only minimal belt-tightening. If I had been in charge we would have had to flee the country to escape our creditors! That’s an exaggeration, but you get my point.

Answer: Kudos to your husband for being prudent, and to you for cooperating with him.

For most families, growing a fat emergency fund necessarily must take a back seat to more important priorities, such as saving for retirement and paying off toxic debt, including credit cards. As soon as they’re able to add to their emergency savings, though, they should do so. The average duration of unemployment stretched over five months after the recent recession. Although you may be able to live off credit cards and lines of credit, using cash is obviously better — and having that fat emergency fund can help you sleep better at night.

Don’t invest emergency cash

Dear Liz: I always hear you talking about having an emergency savings fund. Most people that I’ve heard talk about this recommend keeping it in cash. I just couldn’t stand watching that money languish in a low-interest savings account, so I recently moved it over to my brokerage account and purchased a few exchange-traded funds. My wife and I are under 30 and we both have very stable jobs. We have adequate insurance (including a home warranty). We also have a $20,000 signature line of credit through our credit union in case of an emergency, in addition to multiple credit cards with high limits and no revolving balances. I feel that we are covered in case of an emergency with the credit line alone. Does all of this sound reasonable to you or should I go back to keeping my emergency fund in cash?

Answer: Lines of credit can be a reasonable substitute for an emergency fund for people who have more pressing financial goals, such as saving for retirement and paying off debt.

But there’s really nothing like cash in the bank for meeting life’s inevitable financial setbacks. Even seemingly stable jobs can be lost, and lines of credit can get used up fairly quickly. If these personal setbacks happen at the same time as a stock market downturn, your emergency fund could dwindle dramatically.

That’s why it’s best to keep emergency cash safe and accessible in an FDIC-insured bank account. You can squeeze a little extra return from the money by opting for one of the online banks that’s paying close to 1%. Trying to squeeze much more, though, increases the odds that it won’t be there when you need it the most.

Something to be proud of

As you may know by now, I won’t be writing for MSN after Sept. 30, when the site pulls the plug on original content. (Translated: instead of paying writers, MSN will be getting its articles for free from other sites.)

I don’t know what’s next, but I’m kind of excited by the possibilities that are presenting themselves. Expanding this site, doing more on the radio, writing for long-admired outlets that are doing great work, delving deeper into the worlds of sustainability, alternate consumerism and zero waste….mmmmm. Tasty, tasty possibilities.

I feel incredibly grateful that our family is in good financial shape (although as one friend said, “If YOU aren’t in a good position to handle this, what hope do the REST of us have?”). Hubby is gainfully employed and his sideline business is taking off. We have a fat emergency fund. We’ve had to cancel the remodel of our 1980s kitchen (stifled sob), but honestly, everything works and looks fine and I’m embarrassed I even care, given what so many families are up against these days.

Before I can move on to other things, though, I have to finish my last columns for MSN. A friend and I were laughing about how ridiculously hard it is to make yourself sit down and write when you know it doesn’t matter.

I’m having a flashback to the last time I was laid off, which was more than 20 years ago. Our leaders at the Anchorage Times informed us in an early-afternoon meeting that the last press run would be that night, and that venerable paper would be no more.

Everybody else filed their last stories and headed off for the bar. But my beat was the city, and there was a city council meeting that night (up there it’s known as the “municipal assembly”). So while my colleagues and friends were drowning their sorrows, I had to try to pay attention to this motion and that notice. As the meeting dragged on, I got more and more sullen, desperate for it to just end already so I could join my shell-shocked buddies at the bar.

Then Mark Begich, who was the youngest Assembly member at the time (and who’s now a U.S. Senator), brought up the news that the Times was closing. I half expected him to lead a cheer, as he was a pretty progressive lawmaker and the Times’ editorial stance was decidedly conservative. Instead, he asked the chamber to join him in a round of applause–for me. I forget exactly what he said, but I remember it was flattering, and had something to do with being fair and maintaining high standards. The whole Assembly, which included a few members who were not always happy with my nosy (and sometimes stupid) questions, joined in.

I filed my story. I tried to make it as good as I could. The editors and copyeditors and pressmen who also had to stay late did their jobs as well as they could, too. Everyone who was at the bar streamed back to watch that final press run, and thought about how, for a while there, we’d created something to be proud of. Then we scattered into the night and into the rest of our lives.

So please watch for my last couple of MSN columns. I’ll make them as good as I can. The editors and copy editors who are still there will do their jobs as well as they can, too. For a while, we created something to be proud of. And now we’ll scatter into what’s next.

“Permanent” employment? No such animal

Dear Liz: My spouse has tenure at a university. Given that one of us will always be employed, should we change the way we look at the amount of money we keep in an emergency fund or our risk tolerance for investments?

Answer: Even tenured professors can get fired or laid off. Tenure was designed to protect academic freedom, but professors can lose their jobs because of serious misconduct, incompetence or economic cutbacks, such as when a department is eliminated or a whole university is closed. About 2% of tenured faculty are dismissed in a typical year, according to the National Education Assn.’s Higher Education Department.

That’s more job security than in most occupations, of course. Your spouse also may have access to a defined benefit pension, which would give him or her a guaranteed income stream in retirement. Those factors mean you reasonably can take more risk with your other investments.

As for your emergency fund, you may be fine with savings equal to three months of expenses. But consider that if your spouse were to be dismissed, he or she probably would have a tough time finding an equivalent position. If the institution starts having financial difficulties or if there is any reason to suspect that he or she could be dismissed, a fatter fund could come in handy.

How much cash should you keep on hand?

Dear Liz: A few years ago I finished paying off my debt and now am in the very low-risk credit category. I have savings equal to about three months’ worth of bills and am working to get that to six months’ worth. I’m wondering, though, about an emergency that may require me to pay in cash (such as a major power outage that disables debit or credit card systems, or the more likely event that I forget the ATM or credit card at home). How much cash should a person have on hand? Is there a magic number?

Answer: There’s no magic number. You’ll have to weigh the likelihood you’ll need the green, and the consequences of not having it when you need it, against the risk of loss or theft.

Many people find it’s a good idea to tuck a spare $20 into their wallet for emergencies, and perhaps another $20 in their cars if they’re in the habit of forgetting their wallets or their plastic.

Cash for a disaster is another matter. Power could go out for a week or more, or you may need to evacuate and pay for transportation and shelter at a time when card processing systems are disabled. A few hundred bucks in cash probably would be the minimum prudent reserve you’d want to keep in a secure place in your home. You may decide that you need more.