A new year means another new opportunity to take charge of our well-being.
But as we resolve to eat better, exercise more and shed those extra pounds we piled on during the holidays, it might be a good idea to consider a makeover for our finances as well.
If you spent too much on holiday gifts, succumbed to the temptation of too-good-to-be-true bargains, blew the budget by picking up prepared food and goodies at the grocery store when time was short, or wore out your credit cards, now is the time to make amends.
If you’re feeling bad about your finances, take comfort in knowing that you are hardly alone and there are places to turn for help.
Experts in financial management say that people of all income levels can struggle with debt and cash flow due to poor planning, not budgeting and overspending. It is a problem that is probably most common around the holidays. Low-income people are most vulnerable, however, particularly in a crisis such as a major health problem or job loss.
“Forty percent of families don’t have enough savings to last three months in the case of a job loss of one earner,” says Sue Matkin, vice president of community development-income for United Way of Tarrant County. “Single parents living paycheck-to-paycheck for sure don’t have enough savings.”
“It’s easy to get overwhelmed and feel out-of-control.” —Sue Matkin, United Way of Tarrant County.
Despite a healthy economy and low unemployment, particularly in Texas, gaining a foothold on personal finances is challenging for many. Oftentimes, their struggle is for reasons beyond their control, says Matkin, who oversees the Earn Well Program and Financial Coaching for United Way
“Renters are suffering the most,” she says. Because rent in the Dallas-Fort Worth area is rising faster than income and affordable housing is at a premium, many renters are finding themselves devoting 50 to 60 percent of their income to rent rather than the recommended 25 percent of income or 30 percent with utilities.
“It’s easy to get overwhelmed and feel out-of-control,” she says.
People who come up short often turn to desperation remedies such as payday or auto title loans, but Matkin and others say that is the way to end up in even worse financial trouble.
The better alternative is to seek out financial help and counseling, experts say.
The quickest way to get emergency help is by dialing 211. Tarrant County 211, which is part of the statewide 211 network, served more than 160,000 in its eight-county service area during 2016, according to Vicki Mize, outreach and disaster coordinator.
More than 80 percent of the total callers were women and 67 percent were between the ages of 25 and 67.
Within Tarrant County, nearly 25,000 calls came from the Northeast Tarrant County region with the Keller area ranking seventh in calls from Northeast Tarrant region, according to the report.
Callers are connected to agencies and programs that provide services ranging from emergency assistance for rent or utility bills, to advice on finding a better job with a higher salary.
“We get a lot of calls from people seeking better paying jobs,” Mize says. “In those cases we tell them about GED programs to earn a high school diploma or ESL classes to learn English.”
Tarrant County 211 works with 729 social service agencies and 3,000 programs to help callers find the help they need, Mize says.
Financial counseling helps set up realistic budgets that include savings as part of the equation and building credit to be able to purchase a car or a home.
Callers are usually offered the opportunity for financial counseling through organizations such as Pathfinders and Center for Transforming Lives (formerly the YWCA) that partner with United Way to provide this free service.
“Financial counselors can help them figure strategies like visiting a food pantry for a month and putting that money toward rent or other bills,” Matkin says.
Financial counseling is also important to helping set up realistic budgets that include savings as part of the equation and building credit to be able to purchase a car or a home. Counselors can also connect people with free tax preparation services to maximize benefits and obtain the best refunds.
Counselors warn against auto title and payday loans because of enormous interest rates and risk of auto repossession if the loan payments are missed.
“People of all income levels use payday loans only to find out that one $300 loan could end up costing them $900 with interest,” Matkin says. “This industry is not regulated in Texas.”
An auto repossession due to missed payments or default of a title loan could mean more dire consequences. In that case, the person who took the loan could lose a job due to not having a car to get to work, experts say.
Higher income people who are better able to sidestep or repay payday-type loans often fall prey to zero-interest deals for large purchases such as appliances or electronics, according to Barbara Walker, social responsibility and community involvement director for EECU credit union.
“If you’re late on just one payment, you could end up paying 25 percent interest on the whole purchase,” Walker says. A fixed-rate loan of 7.9 percent interest would be a better option than the risk of 25 percent.
Walker also encourages people to join a credit union, which is a nonprofit financial institution that offers the same financial protections without the fees imposed by banks. A network of ATMs also make it as convenient to belong to a credit union as a bank, she says.
Good financial literacy is the best way to building a better life, experts say.
Good financial literacy is the best way to building a better life, experts say. Since so many adults learned these lessons through trial and error, schools and organizations such as EECU offer financial literacy programs to help high school students navigate the complexities of money management.
All Keller ISD high schools offer a Money Matters class that expanded this year from a semester to a full-year elective course.
The course is intended as a deep dive into topics such as budgeting, credit scores, debt, credit cards, investing, college planning, filling out a W-4 form and writing a check, says David Janeski, who teaches the course at Fossil Ridge High School.
“There is a small amount of financial literacy covered in the economics course that all seniors are required to take but Money Matters takes it a lot further,” Janeski says. “It has been very popular on all our campuses and I think the state should require it for all students.”