Money Management Tips

Here you will find tips for financial management that are relevant and valuable any time, any place. These gems can save you time and money when making important financial decisions.

Bring Your Debt into Focus
DebtInFocus.org is a free, anonymous source to help you assess your financial situation. You'll be asked several questions about your income and debt. In return, you'll receive a financial analysis including strategies to keep your finances moving forward. This is available to credit union members courtesy of Filene Research Institute. Check it out! 

Single parent money shuffle

Single parents sometimes have a hard time building a solid financial future for themselves and their children. Here are some suggestions from CNN/Money Staff Writer Leslie Haggin Geary:

• Set up a budget and stick to it. Don't spend money on your kids out of guilt or in competition with your ex-spouse.
   
• Look for "freebies," like camp scholarships, free cultural events, church programs, and community help.
    
• Start saving to have a prudent reserve: three to six months worth of living expenses. This is in case of emergency and should not be used for anything else.

• Be sure you have disability insurance and life insurance, but don't get coerced into buying more than you need. Term insurance is considerably cheaper and provides a death benefit to your heirs if you die while your policy is active. Put your insurance in a trust for the children and name a trustee to handle the money who is different than the guardian.
   
• Plan ahead. There are no scholarships for retirement. Experts say to plan on 70%-100% of your current annual income per year. Figure you'll live to age 95. Do research and talk to people about your options.
   
• Use tax breaks like the child tax credit or Earned Income Tax credit.
   
• Write your will. Be sure to name a guardian, even though your ex could likely end up in that position. Name just one person in a married couple in case they end up divorced.

Don't panic. Financial planning is a long-term process, but it helps to just get started. Ask questions. Libraries are a good place to start. So is the Internet. It may take time to see the benefits, but have faith and ask for help if you need it.

  Time for a New Car?

What do we do about the car? You need a reliable vehicle in Minnesota, no doubt. Do we get another car for next winter or do we fix it?

Americans live and die by their vehicles. Without them, our well-worn route between home, work, school, and soccer practice becomes more obstacle course than commute. So when the family car starts showing signs of age, the situation calls for more than a collective holding of the breath.

It's decision time. Do you keep the car or retire it from service?

The save-or-scrap, repair-or-replace dilemma is not easy to solve. But consider your car's value and condition and examine your maintenance and driving habits, and you'll be better able to decide which vehicle should be parked in, your garage.

Value judgement
As car prices push higher and higher, it's no wonder car owners are keeping their vehicles longer than ever. According to Art Spinella of CNW Marketing/Research, an automotive industry research firm in Bandon, Ore., the median age of cars on the road today is about eight years. Thanks to an engineering design revolution that took place eight to ten years ago, those cars are more reliable and better equipped -- and therefore have higher values, than their predecessors. We also have a lot less rust than we had ten years ago on each car with the use of more plastic and better dip galvanizing processes in manufacturing.

"A combination of safety features and accessories were added to vehicles that draw a line as far as value of the cars," says Charlie Vogelheim, editor of Kelley Blue Book. Government mandates required airbags in all cars. Comfort and convenience features such as power windows and locks, tilt wheels, and cruise control became standard equipment. New fuel injection systems, anticorrosion coating, and uni-body construction cut down on repairs and wear and tear. As a result, cars made just one or two years before this shift are worth less than their souped-up counterparts.

However, a vehicle's value rides on more than its options package. Its mileage can rev up the value or send it crashing down. The accepted standard is 15,000 miles per year. Drive fewer miles, and your car retains more value. If you log more miles than average, the sooner you'll hit certain milestones that guarantee a drop in value.

"There are three big steps," says Vogelheim. "The first is when the warranty expires, between 36,000 and 60,000 miles. Then around 80,000 miles, you're at a point when you seem to have more problems. At 100,000 miles, you fill up all the odometer slots. The value hits a flat line."

Several books and Web sites, such as the National Auto Dealers Association's car guides, can help you determine your vehicle's value. A South Metro Federal Credit Union loan staff member can use pricing tools to help you determine value, too. The dollar figure can help you determine what your car would net as a trade-in or in outright sale and if it's worth sinking a significant amount of money into repairs.

Conditional approval
Unlike stock market claims, past performance is a reliable indicator of how your car will fare in the future. "How did you service the vehicle the first 80,000 to 100,000 miles?" asks Phil Linck, manager the AAA Diagnostic Car Clinic in St. Louis. "If you did a good job, you won't have a problem holding on to the vehicle."

If you've been less than faithful in maintaining your vehicle, you may want to trade it in as the warranty expires. That lets you avoid being on the hook for repairs to come as the car reaches the 60,000 to 80,000 mile range. "Around 70,000 miles, the repair and maintenance costs start to take a steep increase," Spinella says.

Another option is to size up potential repairs-in-waiting by scheduling your car for a full inspection. The Car Care Council of America, a non-profit organization for motorists based in Port Clinton, Ohio, and AAA offer unbiased, detailed inspections at affiliated garages. Otherwise, take your car to an ASE-certified mechanic that you trust and ask him or her to put your car to the test.

A thorough inspection clearly identifies your vehicle's potential problems areas and how much those repairs would cost. It can spare you the dreaded domino effect -- you make one major repair only to have a series of problems sprout up afterward. For example, some items, like transmissions, are high-dollar repairs on their own. If you must also replace the brakes and repair the radiator, the total repair cost could surpass the car's value. At that point, repairs usually are not worth making.

"Come up with a list," Linck says. "Then ask, 'What is it going to cost to fix it? What is the expected life of my car once I get it fixed? Can I get $1,400 in repairs out of it?'"

To help answer those questions, examine your driving habits. They show how you'll likely use your vehicle over the next few years. Do you have car pooling duties? Will you be taking a lot of trips? Will this be your second car or your primary means of transportation? What demands will you be making of your car?

Also, check out your vehicle's reliability ratings in Consumer Report's annual used car issue and at www.Edmunds.com. Compare your particular model with others and gauge your confidence accordingly.

"People don't want to deal with the cost of $300 here and $400 there for repairs," Vogelheim says. "But you have to ask: What will a new car payment be? If that $400 is your total cost of repairs for the year, it works out pretty well."

Of course, you perhaps can postpone that decision and reduce repair bills taking care of your vehicle. "Change your oil, check your fluids, watch your tire pressure, all those good basic things recommended by that least-read book called the owner's manual," says Donna Wagner, president of Car Care Council. "If you find a good mechanic who can send you reminders on these regular maintenance items, he can save you money in the long run."

Riding in comfort
As you run the cost-benefit analysis of keeping your clunker vs. getting a new vehicle, consider not just the financial bottom line but your comfort factor as well. If you're never sure your car will get you where you're going, you may place a premium on the reliability a new car offers. If you value your familiarity with how your vehicle handles and drives, your car may be worth repairing and keeping.

"Your decision to keep the car or trade it in may have nothing to do with the mechanical quality of the vehicle." Wagner says. "Do you have the financial resources to to replace it, or can you continue to own and take care of it? Does the car still fit your needs? Do you still like it?"

As the one in the driver's seat, only you can make that decision. By weighing all the factors -- value, finances, and comfort -- you can ensure your decision is a well-informed one.

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