Archive for April 30, 2016

Compromise needed on long-term road funding

The April 21 Free Press devoted much of the opinion page to the need in our region for long-term transportation funding. I couldn’t agree more. Indeed, it’s not only our region, but all of Minnesota that needs a comprehensive approach for improving our transportation with new long-term funding that we can count on for the next 10 years.

Gov. Dayton has laid out a plan that would address our burgeoning transportation needs over the next decade, including completing four lanes on Highway 14 from New Ulm to Rochester. The Minnesota Senate has adopted a similar approach in the transportation bill that they passed last session. Both the governor and the Senate focus on using constitutionally-dedicated funding for roads and bridges and funding transit in the seven county metro area by adding either 1 or ½ cent to local sales taxes in those counties.

Minnesotans elected a new House of Representatives in 2014, with most incumbents and newly elected representatives promising to support a long-term solution for transportation. The GOP-led House passed a transportation bill that relied on borrowing and using existing funds to pay for new roads and bridges. Their proposal diverts money from the general fund and provides no new constitutionally-dedicated funding.

Heights OKs payday lending ordinance

HARKER HEIGHTS — The City Council on Tuesday evening passed an ordinance setting forth registration requirements and credit extension guidelines for payday loan or credit access businesses.

The ordinance also includes a penalty clause plus providing for publication and a date it would go into effect.

About 13 states have banned payday lending, and 50 Texas Municipal League cities have started regulating the businesses.

Killeen recently passed a similar ordinance.

The practices of some of these credit access businesses cause members of the community to become trapped in a cycle of short-term high interest loans, resulting in large debt and huge payments.

The key regulations based on the Texas Municipal League model ordinance states that the business must be registered yearly with the city and must maintain complete records including transactions, quarterly reports and applicant information for three years.

In addition, cash advances may not exceed 20 percent of the applicant’s gross monthly income, motor vehicle title loans may not exceed 3 percent of gross annual income or 70 percent of the retail value of the vehicle and no lump sum financing can be refinanced or renewed more than three times.

The ordinance further stipulates all agreements must be in the language choice of the applicant, all applicants must be given information for consumer credit counseling and all businesses must post language from the Military Lending Act.

“The deadline for compliance with the regulations is Oct. 4, 2016,” according to City Manager David Mitchell.

Existing businesses must be in compliance by Aug 1.

According to research done by Planning and Development Director Joseph Molis, seven-day loans from some of these credit businesses for example in Austin yield up to a 570 annual percentage rate, or borrowers spend $22.37 in interest for a two-week term for every $100 borrowed.

The ordinance also states that certain payday loan businesses engage in abusive and predatory lending practices, offering easy money to members in the community who are in a tight spot.

A chapter in the ordinance titled “Credit Access Businesses Regulation” also stated that the action passed is to protect the welfare of the citizens of Harker Heights by monitoring credit access businesses in an effort to reduce those abusive practices.

Concerning those in the military, a visible notice will be posted and state that in accordance with the military lending act, a creditor may not impose an annual percentage of interest greater than 36 percent with respect to the consumer credit extended to a covered military member.

Molis said in a recent council workshop, “The problem is a lot of people who get these loans tend to not be able to pay them back so they extend the terms and that adds up to mounds of interest.”

AutoPayPlus Launches New Service That Blends Mortgage Loan Acceleration and Financial Planning Tools

ORLANDO, Fla.–(BUSINESS WIRE)–A new and enhanced mortgage
debt acceleration option is now available for many of the 64 percent
of Americans who currently own their home as well as the nearly 6
million people forecasted to buy a new or existing home in 2016*. AutoPayPlus
announced today it has expanded its automated loan payment service to
the mortgage marketplace to help homeowners reach their financial goals

AutoPayPlus is a personal financial management service offering the
convenience of automated loan payments plus personal equity
building, credit monitoring and protection, and financial planning
tools. Since 2003, the company has provided automated loan acceleration
services to more than 155,000 consumers nationwide, primarily
car-buyers, helping them shorten the terms of their loans while reducing
interest charges and accelerating equity.

MortgagePayPlus offers homeowners a number of accelerated mortgage
payment options including weekly, biweekly and bimonthly debit
withdrawals. “The most popular payment plan is biweekly because that’s
how most people are paid,” explained CEO Robert Steenbergh. “It works
using simple math.”

Standard mortgage loans require one payment every month. Biweekly loan
payments divide this payment in half and pay that amount every two
weeks. Because there are 52 weeks in a year, the borrower makes 26
biweekly payments over the course of a year (the equivalent of 13
monthly payments) with the extra payments applied to the principal. On a
monthly basis, the payment amount is the same. However, an extra month’s
payment a year can reduce interest and shorten the term of the loan.

More than just a biweekly mortgage program, MortgagePayPlus also
provides customers with access to a free financial planning toolkit to
help them automate other bill payments, organize their finances, monitor
their credit, and create a budget and savings plan for the future. The
resources available include monthly VantageScore® 3.0 credit score with
trending from TransUnion®, and credit monitoring and instant alerts from
TransUnion® to help prevent identity theft.

AutoPayPlus is a personal financial management service offering loan
payment and personal equity building, credit monitoring and protection,
and financial planning tools. Founded in 2003, the company is an
industry leader in early loan payoff services with an A+ rating from the
Better Business Bureau and is fully compliant with all regulatory issues
relevant to the marketplace. For more information visit

* Based on February 2016 data from the National Association of Realtors’
existing-homes sales forecast of 5.38 million and the US Census
Bureau’s seasonally adjusted annual rate of 512,000 for sales of new
single-family houses.

5 Tips for Raising Money-Smart Kids

April is Financial Literacy Month, which makes it an opportune time to shine a spotlight on the importance of economic and financial education for your kids. A recent study from the National Foundation for Credit Counseling found that 40 percent of adults gave themselves a grade of C, D, or F on their knowledge of personal finance, and 78 percent agree that they could benefit from additional advice and answers to everyday financial questions. Given that financial literacy is the basis of successful retirement planning and long-term security, these statistics paint a bleak picture for many Americans.

One of the key ways to reverse the trend with adults is to arm young people with the tools to make smart financial decisions. Research shows that lack of knowledge on personal financial matters can plague youth well into the future. Fortunately, many schools recognize the value of providing students with a strong foundation in financial literacy. According to Working in Support of Education (w!se), a Voya Financial partner, schools in 43 states participate in their financial literacy program and are teaching these skills alongside their core curriculum.

While teaching financial literacy in our schools is a great step toward preparing future generations to take control of their finances, its never too early for parents and caregivers to teach kids about money and set them up for financial success. A report issued by the University of Cambridge revealed that kids money habits are formed by age 7. Adults have a great opportunity to shift the paradigm by introducing kids early to financial basics. Here are several ways to teach kids financial fundamentals that will put them on a path for future success:

1. Lead by example

You have a great deal of influence on your children, and they tend to mimic your actions. Instill good money habits by limiting the amount of shopping trips as leisure activities, using coupons at the grocery store and comparing similar products to demonstrate how cost factors into your decision process. Show your child that, because you saved, you can purchase something special that you would not have been able to purchase otherwise, or save it for an ever bigger purchase in the future.

2. Teach saving, giving and spending wisely

Children should learn at an early age that all money should not go into one big spending pot. Use three labeled mason jars to separate money–one for saving, one for spending and one for donating. Any time your child earns money by doing chores or receives a cash gift, encourage him to divide the cash equally among the jars. Hell learn how to manage his money as well as the value of giving back.

3. Take it to the bank

Many banks allow you to open a savings account with low minimum deposits. A study by the University of Kansas found that children who have early access to savings accounts accumulate more assets–an average of $2,000 compared to $100 for those who did not have a savings account as a child–and are four times more likely to invest in stocks as adults. Opening a savings account for your child also will teach her that money can earn interest, and those earnings, in turn, generate more interest.

4. Test the stock market waters

Dont start off by trying to explain complicated Wall Street concepts, but let your child know that investing is about attempting to make money grow to meet long-term financial goals, like buying a car or house, paying for college or preparing for retirement. Your child can select two or three stocks and track their performance, without you even having to put money on the line. Or, if your child wants to put some skin in the game, help her select and purchase stock in a company she likes or admires. Tracking stock performance will give your child a sense of the ups and downs of the market. While she may not make a fortune, the experience of gaining and losing money is just as important. (Its also important to remember that investments are not guaranteed and are subject to investment risk, including the possible loss of principal. The investment return and principal value of the security will fluctuate so that when redeemed, may be worth more or less than the original investment. Generally, the greater an investments possible reward over time, the greater its level of price volatility, or risk.)

5. Let them make mistakes

Do you give your children an allowance or allow them to earn money for extra chores around the house? Giving them small amounts of money provides them with a great opportunity to manage it. If they make the wrong choice, theyll experience the negative consequences of their mistake and will learn to make smarter financial decisions in the future.

Talking with your kids now and implementing these techniques at a young age will set them up for a brighter financial future. At the same time, as you share these lessons, you might find yourself becoming better educated on these topics and then able to give yourself an A or B on your knowledge of personal finance.

Angela Harrell is head of Voya Foundation and the Office of Corporate Responsibility at Voya Financial. Voya Financial invests heavily in education initiatives, and financial literacy is a cornerstone of those efforts. Learn more about Voyas commitment to financial literacy and corporate responsibility here.

(Working in Support of Education (w!se) is a separate entity and not a corporate affiliate of Voya Financial®. This material is provided for general and educational purposes only; it is not intended to provide legal, tax or investment advice. All investments are subject to risk. We recommend that you consult an independent legal or financial advisor for specific advice about your individual situation. Neither Voya ® nor its affiliated companies or representatives provide tax or legal advice. Please consult a tax adviser or attorney before making a tax-related investment/insurance decision.)

Strapped for Cash? 18 Smart Ways You Can Save Money

If you are among the nearly 50 percent of Americans living paycheck to paycheck, you probably know that saving for retirement and unexpected expenses is critical, but you might not think you have the ability to do so, new research finds.

A study by Fifth Third Bank found that even though more than half of Americans know that an emergency fund should contain six months’ worth of living expenses, two-thirds don’t have that much set aside. In fact, a little under one third don’t have anything saved.

Related: Here’s Why Millennials Are Money-Saving Champs

And even though more than eight in 10 know how to plan for retirement, only 50 percent of them actually contribute to a retirement plan, like a 401(k) or IRA. In addition, just half of Americans know how much money they have saved for retirement — if they have any at all.

Jeff Witherspoon, executive director of the Consumer Credit Counseling Service, advises people to have an emergency fund that equates to at least three to four months in typical living expenses. “A lot of people say they can’t do that, but it’s like eating an elephant. You’ll get there over time.”

A credit counselor for American Financial Solutions, Donna Loitz, recommends avoiding the big picture when you’re just beginning to save so you won’t be   overwhelmed. “Look at what you have and take it from there. Focus on your current situation and then work towards your goal,” Loitz says. 

In terms of retirement, Witherspoon suggests coming up with a savings goal that’s based on your age, comfort level and how much you’ve currently got set aside. He says that online financial calculators, like ones from Bankrate or AARP, are useful if you can’t afford a financial planner.

Although it might not seem feasible for people who live paycheck to paycheck to set aside money, even the most cash-strapped households can cut expenses. Witherspoon and Loitz offer 18 ways to eke out savings:

Instead of buying a new car, try to purchase one with low mileage that’s about two or three years old. Cars today are typically made well and can last a really long time. But before actually buying the car, make sure to do your research and know the history of the vehicle, like whether it’s been a crash. The website is handy for that.

Try to go with the car insurance plan with highest deductible you can afford. A lot of times that will lower your premium. In addition, after taking into account your driving record, other factors, such as your credit score, influence your premium, so try to maintain the highest score possible.

Make sure to perform regular maintenance on your car, like checking your tire pressure and changing your oil. Not only will this allow you to keep your car longer but you’ll save money on future repairs and have a smoother ride.

Cell phones
Avoid purchasing the latest models of any phone. For example, the iPhone 6 costs around $500, but you can find a brand-new iPhone 4 for less on sites like Amazon. “If you’re willing to buy an older model, that’ll help save you a lot,” Witherspoon says.

Consider purchasing a refurbished cell phone if you want the latest model but don’t want to pay full price. 

Related: 7 Ways to Spring Clean Your Finances for Savings

Since data is the most expensive part of having a cell phone, get a plan without a data component. Even though it might be an inconvenience to use your phone for data when only Wi-Fi is available, you can save around $240 a year, depending on the plan you choose.

If you have children, think about how they will actually use their phone and purchase a plan accordingly. Since so many kids prefer texting over calling, it might be a good idea to get one that offers only a limited number of minutes but unlimited texting.

Do you actually watch 300 channels? Do you need to be paying for cable? Consider getting rid of cable if all you ever watch is Netflix and the occasional primetime show.

Consider getting a programmable thermostat instead of a manual one. The device, which adjusts temperatures at different times of the day, can save 10 to 15 percent on your utility bill.

Wash your clothes in cold water. One of the most expensive things you’re paying for when you’re doing laundry is hot water.

When you’re washing heavy items like towels or jeans, air dry them; they take the most time in the dryer.

Look at grocery ads, either in the newspaper or online, and try to plan your week’s menu around the sales being offered.

Limit trips to the supermarket to once a week. Grocery stores go to great expense to induce you to shell out 20 to 30 percent more than you were planning to spend, so the fewer visits, the fewer opportunities to overspend.

Buy non-perishables and other items, like toilet paper and laundry detergent, when you have a coupon or when they’re on sale, even if you have plenty at home.

Always purchase off-brand products unless you have coupons for name-brand items. They’re just as good and typically cheaper.

Purchase only in-season produce. There’s more of it to sell and markets push down prices so shoppers buy before it goes bad.  

Make a grocery list before you go to the store and stick to it. Also, avoid taking your kids to the grocery store with you. That will cut down on impulse buys — theirs, not yours.

When you go out with your kids, always make sure to prepare snacks ahead of time. This will prevent them from talking you into stopping at a store or a restaurant when they’re hungry.  

Financial planning for FY17: PPF, insurance and early tax-saving moves a must

Financial planning: Money has to be set aside for long-term goals such as retirement planning. All of it may be too much for you to handle and you delay taking decisions till the last moment.

Its nearly a month into the new financial year and you still struggling with your financial plan for the year? There are immediate expenses ahead like paying your rent or EMI for your home loan or insurance instalment. Then there are other bills that would come up every month. Investment have to be made for tax planning. Money has to be set aside for long-term goals such as retirement planning. All of it may be too much for you to handle and you delay taking decisions till the last moment.

In our second article in the series on how you should plan for the finacial year, Independent financial advisors, Anil Rego, CEO amp; Founder, Right Horizons, advises to shed that lethargy and move ahead quickly to plan in advance for the entire year. He advises approaching your human resoures department at the beginning of the year with your 80C investment for the year to get the tax deductions in your salary. That would get a better take-home package throughout with less tax deducted from your monthly salary.

He also advises to resolve setting aside a quarter of your income for investment from your monthly salary to generate wealth. At least half a years salary should be in liquid-plus funds that can be accessed easily during emergencies purposes. Rego also advises that you take a relook at your insurance cover and ensure you have sufficient life, medical and personal accident insurance. In an uncertain world, these can come handy to you in case of medical emergency or to your family in case something happens to you.

Here are Regos 10-point suggestion to you to plan your finances for the year.

-Make a new (financial) year resolution to invest at least 25 per cent of your income.
-Resolve to invest every month in a systematic manner with definite goals.
-Prepare a tax savings plan to enjoy most of the benefits the government offers – and the entire Rs 2 lakhs u/s 80C. This includes Rs 50,000 into National Pension Scheme.
-Prepare your list of deductions (80C, medical insurance, rent/ home loan principal and interest) and be the first to submit the list to HR.
-Do your tax deductible 80C investments at the beginning of the year if you have the liquidity. If not make monthly deposits to complete the investments by January 2017.
-If you are eligible for tax benefit under Section 15G/H for fixed deposit, submit the forms to the company or bank.
-Open a Public Provident Fund (PPF) account for every member of the family.
-Revisit your insurance cover and ensure you have sufficient life, medical and personal accident insurance.
-If you get an increment or bonus (it is appraisal time at many companies), start a fresh Systematic Insurance Plan (SIP) in a diversified equity mutual fund.
-Keep at least 6 months household expenses in a liquid-plus mutual fund for contingencies. Start funding it now.

Where Robo Advisers Fail at Financial Planning

If you work with a financial adviser, you have probably had a discussion about your risk tolerance, your time horizon and your investment objectives. The questions advisers ask you about your annual income, the source of your funds, your net worth, etc. stem from FINRA Rule 2090, known as the know your customer rule and are the foundation for the suitability standard.

But do those questions go deep enough to reveal what your best interests are?

Yes, even robo advisers ask you these types of questions. However, whether they have the capacity to meet the new Department of Labor fiduciary standard remains to be seen. What they already fail to provide is personal advice.

Financial planning is so much more than just risk tolerance and asset allocation. Its about informed decision-making at key life inflection points, such as whether it makes more sense to buy or rent a home. Its about projecting how much you need to save and in which type of account to achieve the goals you have for that time. Its about planning for the most tax-efficient way to transfer wealth to the next generation and knowing that your family will be secure even after you are gone. Ultimately, its about understanding what matters most to you for your financial future and having an expert to consult with when life happens.

At our firm, we strive to understand our clients emotional connection to money and the behavioral tendencies that affect their financial decisions. Too often, we hear from new clients that they are not comfortable with making choices about money. They are attempting to play a game with rules they do not understand because they think there is some right way to win at investing.

We teach them that what they really need to do is communicate to us what matters most to them and allow us to guide them with the tools they need to achieve their goals. We create a personal benchmark to measure our progress.

We begin the process with a brief, multiple-choice Investment Philosophy Questionnaire that we created for use during our on-boarding process. Some of the questions focus on how often clients check their portfolios; how they would feel if their portfolio posted a gain, but it was not as much as that posted by Standard Poors 500-stock index; how they would feel about selling positions at a loss; and whether they have faced any serious financial challenges in the past.

This exercise forces clients to think introspectively about what is really important to them as investors and helps us be better advisers. It lets us, together, set expectations and start the relationship from a shared mindset. That is what real financial planning is all about.

Do you really want a robot doing that?

See Also: 10 Financial Decisions Youll Regret Forever

Bryan Koslow, MBA, CFP®, CPA, PFS, CDFA(TM) is the President of Clarus Financial Inc., an Integrated Wealth Management firm with offices in NYC NJ.

Securities and advisory services offered through Commonwealth Financial Network®, Member /, a Registered Investment Adviser. Clarus Financial Inc., 120 Wood Ave South, Suite 600, Iselin, NJ 08830. 732-325-0456. Please review our Terms of Use.

The Biggest Problem With Outside Funding

The Entrepreneur Insiders network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “What are some tips for maintaining a successful startup?” is written by William Vanderbloemen, founder and CEO of Vanderbloemen Search Group.

While maintaining a successful startup is extremely challenging (and rare), there is good news for those entrepreneurs who have had at least some measure of success early on. The most important piece is that you have found a product or service that works well and helps the market in creative and useful ways, proof that it’s not simply left to luck.

By applying these three tips, you can strategically set your business up for lengthy and sustainable success:

  1. Beware of “shiny object syndrome”

Dont lose focus on what has brought you to where you are. Often, the very thing that makes an entrepreneur gifted enough to spot an opportunity and run with it can lead to an overextension of time, money, and resources.

A great entrepreneurial spirit has a shadow side, and I call it SOS: shiny object syndrome. Too often, businesses start out great, but try to expand offerings in a number of directions that do not align with the business’ core offering.

I experienced this firsthand in the early days of starting Vanderbloemen Search Group. Early on, we were asked to expand our offerings to include vision consulting, and because it was a fascinating opportunity, we looked into it. We were also asked to do real estate mergers for large churches, which piqued my curiosity. But thanks to some wise direction from a consultant, we drilled down on the singular focus of helping churches build great teams. Having that singular focus has acted as an anchor for us and our vision as we’ve grown.

See also: 5 Reasons Startups Fail

  1. Keep the duct tape

Dont overspend, particularly on office overhead. The beauty of startups is that everyone who helps at the start is, as I say, really good with duct tape. But once you experience a little success and that all-hands-on-deck spirit is gone, things can easily become bloated.

Even as I’m writing this, Im a little afraid of losing this “duct tape spirit” of our company because we’re moving into a new office. This is our third space (we started in an old, crowded house on the edge of Rice Universitys campus), and once again we are out of room. But going forward, every new hire will only know the nice, new office–not the days of the broom closet that we turned into a makeshift podcast recording booth. While the actual need for an all-hands-on-deck approach will shrink as your company grows, fight to keep the “duct tape spirit” alive on your team.

  1. Protect your soul

Be extremely careful when considering outside funding. Some industries, like software solutions, require a quick turnaround from startup to market. That usually only comes with outside investors. However, the moment you take money from outsiders is the moment you go from being the founder to being someone who can be fired.