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Thursday, September 24, 2020

Financial Education During COVID-19: 16 Resources to Get Money Smart


Financial literacy is a lifelong pursuit. Research studies have shown that many people get smarter about personal finance through financial experiences (e.g., investing) and life events (e.g., home-buying). In addition to formal financial education programs in schools and at workplaces, people also learn about personal finance through self-directed learning.

Each weekend, I encourage my Twitter followers to learn one new thing about personal finance every day. Even during a pandemic, with limitations on travel and group meetings, there are many free or low-cost resources available for informal financial education. Listed below are 16 types of financial education resources to help you learn more about personal finance:

¨       Blogs- There are hundreds, maybe thousands, of personal finance blogs. Each year, the top financial blogs in various categories get recognized with Plutus awards. Search “personal finance blogs” online to find curated lists for “best personal finance blogs.” Subscribe for free to blogs that are of interest.

¨       Books- There are thousands of personal finance books. I know because I recently wrote one (Flipping a Switch) and regularly check its Amazon rankings. Search “personal finance books” and to find curated lists for “best personal finance books.” Free copies to borrow may be available at your local library.

¨       E-Learning Courses- Again, search online for curated lists of online personal finance courses such as Hands on Banking® (Wells Fargo), Investing for Your Future (Cooperative Extension), Personal Finance 101 (Udemy), Smart about Money (NEFE), and courses on the Coursera platform and from Khan Academy.

¨       Financial Advisors- Contact current or potential advisors with questions within their area of expertise. Some advisors provide free community programs at libraries (without a sales pitch!) or free initial consultations.

¨       Government Resources- Federal and state government agencies have high-quality financial education materials. A good place to start looking is www.MyMoney.gov, the website of the Financial Literacy and Education Commission. Resources are organized around five key topics called the “MyMoney Five.”

¨       Internet Key Word Searches- Sometimes, the best way to find the information that you need is to simply search key words and see what you find. Websites that are not useful may ultimately lead to those that are.

¨       Investment Clubs- These are formal groups of people who learn about investments together and pool their money to purchase a portfolio of stock. Many clubs have been meeting virtually during the pandemic.

¨       Magazines- Personal finance magazines include Barron’s, Business Week, The Economist, Kiplinger’s Personal Finance, Forbes, and Money (available in digital format). Free copies to borrow may be available at your local library. Investment companies also produce magazines and the AARP magazine includes personal finance content.

¨       Newspapers- The Wall Street Journal is America’s leading personal finance newspaper. Large city newspapers also include significant personal finance content. Links to key stories are typically posted on social media.

¨       Online Quizzes and Calculators- Hundreds, if not thousands, of financial quizzes (see sample) and calculators are available to test financial knowledge and  “personalize” financial information (e.g., calculate potential savings).

¨       Podcasts- There are more than 550,000 podcasts available to download. Search “personal finance podcasts” online to find curated lists for “best personal finance podcasts.” Subscribe for free to podcasts that are of interest.

¨       Software and Apps- Search “personal finance software” (or apps) to find curated lists with recommended options. Since there are so many tools to choose from, curated lists are usually organized by category (e.g., budgeting and taxes).

¨       Talk Radio- Personal finance topics are covered on National Public Radio (NPR) and on individual radio station shows that feature both nationally known speakers (e.g., Clark Howard and Ric Edelman) and local financial experts.

¨       Television Shows- Search “personal finance television shows” to find curated lists with recommended options. Examples include Squawk Box  and The Profit (CNBC), Your Money (CNN), and Money Matters (RLTV).

¨       Twitter Chats- Engage in a synchronous “conversation” with others about a financial topic using a common hash tag (e.g., Experian’s #creditchat on Wednesday afternoons from 3 to 4 pm ET).

¨       Webinars- Find free personal finance webinars via the websites and/or social media posts of webinar sponsors. Many public libraries, such as the New York Public Library (NYPL), have been offering free webinars and archiving them.

Thursday, September 17, 2020

Personal Finance Trends in the Age of COVID-19 (Part 2)


In a previous post three weeks ago, I described 11 recent personal finance trends, most of which were informed by the pandemic. This post continues this analysis with a description of nine more financial current events. 

As the popular saying goes, “knowledge is power.” Knowing what is happening in the world of personal finance can help you make better financial decisions, seek out resources (if needed), anticipate future changes, and reduce stress during this very uncertain time.

Below are brief summaries of recent events affecting different aspects of personal finance:

¨       OASDI Tax-Deferral Plan- The plan to defer 6.2% OASDI (Social Security) payroll taxes from September-December 2020 to January-April 2021 is seeing mixed results in different workplace settings. While it is being implemented for federal government workers and service members, many large companies are not changing their workers’ tax withholding. A major reason, in addition to administrative hassles, is uncertainty about whether deferred taxes would be eventually forgiven by Congress and concerns about collecting double OASDI tax from workers in early 2021.

¨       Bifurcated COVID-19 Impacts- Existing income and asset disparities among Americans have widened as a result of COVID-19. As I explained in a recent webinar for Rutgers Cooperative Extension, there are people who are worried about finding food, paying bills, and being evicted. There are also those with secure incomes or pensions who have been saving more because there are fewer opportunities to spend money, including work-related expenses such as commuting and eating out. A Wall Street Journal article described this trend as follows: “For Workers, Downturn Bares Deep Rifts.”

¨       End of Airline Change Fees- In an attempt to lure back wary customers and eliminate a barrier to making advance travel plans during the pandemic, the “big three” U.S. airlines (United, American, and Delta) announced that they were removing flight change fees on most U.S. domestic flights. American has also dropped fees for many international flights and Delta said that it continues to block middle seat assignments to promote social distancing. Major airline workforce reductions are expected on October 1 after federal government payroll support ends.

¨       Coupon Clipping vs. Digital Coupons- For the first time ever, the use of digital coupons surpassed the redemption of paper coupons in the U.S. In July 2020, 31% of coupons were redeemed digitally and 26% from newspaper inserts (vs. 23% and 31% , respectively, in 2019). COVID-19 accelerated the shift to “digital deals” as more people shopped online. Companies now view digital coupons as providing a better return on investment and a way to nimbly respond to pandemic-induced consumer demand. Inserts and circulars, on the other hand, require months of advance planning.

¨       Business Interruption Insurance Rulings- Court rulings have upheld rejections of business interruption insurance claims by insurance companies. Most business owners with policies purchased to cover the risk of having to close down their business have not been able to successfully make claims. The insurance industry has maintained that these policies were intended to cover events, such as fires, where rebuilding can occur and that pandemics are not a covered risk.  In addition, insurance companies cannot operate profitably when so many people experience losses at the same time.

¨       Young Adults Living with Parents- For the first time ever, more than half (52%) of 18 to 34-year old young adults are living with their parents, up from 47% in February. According to the Pew Research Center, “we are now at levels last seen during the Great Depression” (48% in 1940). This statistic includes jobless college graduates, undergraduates taking online classes at home, and those taking a gap year. Parents’ finances are impacted as a result (e.g., food, utilities, car insurance, computer software, and faster wifi service), which reduces income available for retirement savings.

¨       Money Market Fund Fee Waivers- In the wake of COVID-19 induced interest rate reductions, money market fund yields have gotten so low that some investment firms have had to waive management fees in order to prevent their account owners from experiencing negative returns. Companies reported to have done this include Blackrock, Inc., Fidelity Investments, and J.P. Morgan Asset Management. Money market fund account owners should carefully review shareholder reports and compare available options for holding cash equivalent assets.

¨       Low Mortgage Rates- In August 2020, the average interest rate on a 30-year mortgage fell to 2.88%, its lowest level in almost 50 years. In early September, the rate rose slightly to 3.05%, still a bargain vs. 2019. Home values have remained strong as many homeowners delayed putting their houses on the market as a result of the pandemic, thereby reducing the number of homes available for sale to buyers looking to make a move while interest rates are historically low.

¨       Fewer Purchase Options- Retailers and restaurants have been “slimming down” consumer choices as a result of supply chain bottlenecks, production slowdowns, lower sales volumes on less profitable products, and concerns about product preparation safety. Examples include fewer unique items on supermarket shelves, fewer items on restaurant menus, and reduced or delayed shipments of “big ticket” items including motorcycles and cars.

Wednesday, September 9, 2020

Entrepreneurship in a Pandemic: Five Lessons Learned


Monday (September 7) was the first Labor Day in over 40 years (!) that I was not on someone’s payroll to receive a paid holiday. Since I work for myself now and manage my time to complete client projects, I can take “holidays” any day that I want. After eight full months of entrepreneurship (all but 10 weeks amid COVID-19), I offer five “Barbservations” on factors that have helped me expand Money Talk and could help you achieve success:

Be Visible on Social Media- “Work Out Loud,” as the book by John Stepper advises, and post information (including links and photos) about your work projects in a way that is helpful to others. In addition to frequent tweets, I paid attention this year to posting regular LinkedIn content for the first time ever in my career. This resulted in dozens of “people are watching you” notifications, inquiries about my work, and three new clients. I use Hootsuite to schedule tweets that drive traffic to this blog and create graphics with Canva, Microsoft Paint, or by converting PowerPoint slides to jpeg images. I also very intentionally incorporated the words “Money Talk” when establishing my Twitter account, blog, and e-mail address, all to build brand identity.

Do Some Pro-Bono Work- Consider doing some high-impact and/or high-profile work projects for free if you are in a financial position to do so. The experience will leverage resources (e.g., podcasting equipment) provided by partners, build your brand visibility, and provide the satisfaction of helping others (e.g., people needing COVID-19 resources). So far, I’ve done pro bono webinars for AFCPE, the NY Public Library, eXtension, and Rutgers Cooperative Extension and podcasts for the Military Money Show, Money Mammals, and Wine and Dime, all of which were a win-win-win for program hosts, their listeners, and me.

Get a Video-Conferencing License- Connect with clients and potential clients face to face. The $149 annual fee that I paid for a Zoom Pro account has paid for itself 20 times over in helping to land client projects at a time when professional conferences and meet-ups in hotel hallways are out of the question. A video-conference platform (Zoom, Go to Meeting, Adobe Connect, Webex, etc.) is also useful to host your own meetings and webinars (instead of depending on others) and for long-distance family get togethers. Another great resource for me is The Wall Street Journal, which costs less than $1 a week with my Rutgers professor emerita “dot edu” e-mail address.

Say “No” to “Bad Fit” Assignments- Define your “wheelhouse” (i.e., what you do well and what you do not) and passions (i.e., what you really enjoy doing, such as me writing weekly Money Talk blog posts). Then, as the saying goes, “stay in your lane.” In the past year, I said no to six potential projects for the following reasons:
¨      Online University Teaching- Steep technology learning curve and an indeterminable amount of work time.
¨      Company with Vague Deliverable Plans- Anticipated frustration and indeterminable amount of work time.
¨      A Professor Wanting a “Ghostwriter” for Research Papers to Get Tenure- No, for obvious ethical reasons.
¨      A Commercial Financial Content Web Site- The company wanted ongoing free labor (a.k.a. “guest posts”).
¨      A Topic Requiring Lots of Research- Too much data searching and an indeterminable amount of work time.
¨      A Non-Profit Research Study- Research is not something I choose to do now or have available resources for.

With the last two inquiries, I made referrals to colleagues who had “wheelhouses” that fit these projects. In the case of the research study request, I pitched the client another project that was in my wheelhouse and was hired to do that work instead. COVID-19 has spurred several projects that enhance digital content for online teaching.

Chart a New Path- Build bridges as you cross them. I had no role models for transitioning from academia to financial education entrepreneurship. Older colleagues simply stepped away from the labor force when their long-term careers ended. Many of them also dropped their memberships in work-related professional associations. COVID-19 travel challenges have made it easy and affordable to attend virtual conferences, webinars, and other meet ups this year to stay connected and visible. Launching my new book, Flipping a Switch, has also helped keep my name "out there." Fewer people now make the mistake of thinking that I have “retired” than those who did in January.

I hope that these personal insights and observations are useful to anyone else thinking about starting a business, especially as a “second act” in later life. Feel free to reach out @moneytalk1 if you have additional suggestions to share with new or aspiring entrepreneurs.

Thursday, September 3, 2020

COVID-19 Financial Tips for the “Financially Unscathed”


Americans have lived with COVID-19 for seven months. Many have experienced a loss or reduction of income and related impacts such as food insecurity, depletion of savings, and outstanding payments for rent, utilities, loans, and other expenses. Conversely, there are those who have seen little or no negative financial effects related to the pandemic. They have jobs or pensions and their investments have “bounced back” from March-April losses.

I recently presented a one-hour webinar for Rutgers Cooperative Extension called “Navigating the Two Financial Faces of COVID-19.” America is increasingly experiencing a bifurcation of impacts resulting from the pandemic. In a number of previous posts, I addressed the first face of COVID-19, where people are struggling financially. In this post, I share tips for the second face, the “financially unscathed” who are doing as good, or even better, than before.

Below are ten strategies to consider if you have been fortunate enough to be navigating COVID-19 without experiencing any major financial effects:

¨      Beef Up Your Emergency Fund- Save more, if possible, because economic conditions (both personal and global) can change. Experts are now recommending larger emergency funds equaling six to nine months expenses (or more), given the extent of COVID-19 related job losses. Save as much as you can when you can.

¨      Invest in Your Human Capital- “Upskill” yourself in case you need to eventually find a new job in a very uncertain economy. Strategies include online courses, computer technology training, and certification programs. Focus on filling gaps in your skill set and making yourself marketable to future employers.

¨      Consider Refinancing Your Mortgage- Consider replacing your current mortgage with a lower interest loan if the math makes sense (i.e., the interest rate savings for a projected loan term exceeds the closing costs). Mortgage interest rates are at currently at historic lows, which makes homeownership attractive.

¨      Make Prudent Home Improvements- Consider making home improvements that simultaneously increase the comfort of a home and provide a high return on investment (ROI) if a move becomes necessary. Examples include bathroom and kitchen remodeling, landscaping, and the addition of a deck or patio. Many people are doing this by reallocating funds that were previously budgeted for cancelled travel and entertainment plans.

¨      Get Estate Plans in Order- Review your existing estate plans and revise them, if necessary. Witnessing over 185,000 Americans dead due to COVID-19 is a powerful reminder to have key legal documents (e.g., will, living will, and durable power of attorney) in place. Expect some delays as many attorneys are swamped.

¨      Assess Investment Risk Tolerance- Accept the possibility that the stock market could be volatile for some time due to uncertainty about a COVID-19 vaccine, the 2020 election results, and other factors. Take the University of Missouri Investment Risk Tolerance Assessment to get an analysis of your risk tolerance.

¨      Rebalance Your Investment Portfolio- Develop “triggers” to rebalance your investments (e.g., the balance in a retirement plan) to their original asset class weightings (e.g., 50% stock, 30% bonds, 20% cash). Some people do this automatically on a set day each year while others rebalance when weights shift by a certain percentage.

¨      Increase Retirement Savings- Consider upping retirement savings plan contributions if COVID-19 has resulted in increased income and/or reduced expenses (e.g., commuting and eating out). Increasing savings by just 1% more of pay can result in tens of thousands of dollars of extra savings over several decades.

¨      Be Philanthropic- Reap the financial benefits of contributions to qualified 501(c)(3) organizations that can help others who are hurting due to COVID-19. For the 2020 tax year, as a result of the CARES Act, taxpayers can take an “above the line deduction” and write off up to $300 of cash donations without having to itemize.

¨      Become a “Personal Finance Student”- Learn at least one new thing every day about personal finance. Increased knowledge can foster preparedness which can build resilience. Information is available via websites, social media, radio and television shows, webinars, podcasts, and other information delivery methods.

For additional information, this article provides tips for people who are financially unscathed by the pandemic. The handout for the Rutgers Cooperative Extension webinar, referenced above, is another resource.

Wednesday, August 26, 2020

Personal Finance Trends in the Age of COVID-19


I recently attended a webinar for financial educators about Trends in Personal Finance by Next Gen Personal Finance (NGPF) founder Tim Ranzetta. The majority of the trends that were presented were informed by effects of the ongoing COVID-19 pandemic. 

Below are eleven of my key take-aways from the webinar about how the pandemic is affecting different aspects of personal finance. More trend summaries will follow in subsequent blog posts.

¨       Record Savings Rate- Americans are sitting on record cash savings amid uncertainty related to COVID-19 and the economy. The U.S. savings rate hit a record 33.5% in April and was 19% in June versus about 7.5% before the pandemic. Reasons for increased savings include reduced spending opportunities (e.g., eating out, travel, and entertainment) in a shutdown economy and precautionary savings because people do not know what the future holds.

¨       “Contactless” Credit Cards- Visa distributed 80 million contactless-enabled credit cards during the first half of 2020 in response to concerns about virus transmission. These cards allow people to make quick “tap and go” payments by tapping a card in close proximity (about 3 inches) to a contactless-enabled terminal, thereby eliminating the need for swiping a strip or dipping a chip. The front of contactless cards has an icon that looks similar to a wi-fi symbol.

¨       Lower Credit Card Limits- Banks are issuing credit cards with lower limits as they re-evaluate their lending standards in light of financial stress caused by high unemployment and other COVID-19 impacts. The average credit line fell 9% to $5,257 according the credit bureau TransUnion. Another action that many credit card companies have taken is to close inactive accounts “to avoid being a borrower’s lender of last resort” after borrowers “max out” their other credit lines.

¨       Less Credit Card Fraud- Fraud related to credit cards was down 40% during the first half of 2020 compared to the last six months of 2019. Possible reasons include less shopping traffic in physical retail stores and less information obtained through skimming (attaching a device to card readers to steal personal information, e.g., at gas station terminals) and shimming (attaching a thin microchip enabled reader into slots for chip-enabled cards) devices as people stayed home.

¨       New FICO Score- The Fair Isaac Corporation (a.k.a. FICO) introduced a new credit score called the FICO Resilience Index as an alternative measure of creditworthiness. It is intended is be a “tiebreaker” for borderline credit decisions involving borrowers with low credit scores who are still likely to repay their debt in full. Scored from 1 to 99 (1 for the most resilient borrowers), the index puts more weight on a long credit history, low credit utilization, and few credit lines.

¨       New Mortgage Refinancing Fee- With mortgage interest rates at near record lows, many homeowners are refinancing their existing mortgages. The federal agencies Fannie Mae and Freddie Mac, which hold two-thirds of all U.S. mortgages, will soon impose a 0.5% fee on refinanced loans of $125,000 or more after December 1. For example, the fee on a $300,000 refinanced mortgage will be $1,500 ($300,000 x .005), which will be added to the loan closing costs.

¨       Home Sales Spike- Sales of existing homes increased 24.7% in July from June according to the National Association of Realtors. This is a record increase. As sales increased and housing supply fell, home prices rose, with a median price of $304,100.  Reasons for the increase in home-buying include people with stable jobs gaining increased purchasing power from low interest rates and buyers relocating from cities to less densely populated suburban areas for social distancing.

¨       Surge in Online Auto Insurance Quotes- Quote requests for auto insurance increased 147% from March-August 2019 to that same time period in 2020. While people were driving less due to pandemic restrictions, they also had more time on their hands to conduct online searches and were motivated to find ways to cut household expenses.

¨       Coin Shortages- Just like toilet paper early in the pandemic, supplies of U.S. coins (all denominations) have been running low. As a result, the Federal Reserve has been forced to ration supplies to banks, which makes it difficult for banks to supply retailers to use in their cash registers. Reasons for the shortage include fewer coins produced at the U.S. mint to protect workers from COVID-19 and lockdowns at bank lobbies where coin counting machines are located.

¨       High Profile Stock Splits- Both Tesla and Apple announced upcoming stock splits in mid-August in an effort to attract a larger base of investors with a smaller amount of money to invest, by decreasing the price of their shares. Tesla’s stock split will be 5:1 and Apple’s will be 4:1 effective August 31. The value of an investor’s stock holdings remains the same after a stock split. As an example, one share of stock worth $2,000 becomes four shares worth $500 after a 4:1 split.

¨       Increased Investment Day Trading- The Robinhood investing app, which provides investors with free stock trades, experienced a record number of trades in June. It has been criticized as akin to gambling (versus long-term investing) when used by day traders who buy and sell stocks daily. Reasons for the day-trading trend include people stuck at home who are bored and/or trying to replace lost income, the stock market’s recent volatility, and a reduced number of sporting events available for online sports betting.

Financial Education During COVID-19: 16 Resources to Get Money Smart

Financial literacy is a lifelong pursuit. Research studies have shown that many people get smarter about personal finance through financia...