financial lives of
cents at a time!
Balance the Equation
ITCT contact info: You’ve done it! You did what your par-
ents, grandparents, aunts, uncles,
Editor: Luke Erickson—Rexburg teachers and even the neighbor’s dog
told you to do, and you’ve completed a
college degree. You’ve learned all the
Marilyn Bischoff intricacies of your selected major, and
firstname.lastname@example.org you’ve been tested on them so many
times you now
Pat Cook—Assistant ask for multiple
email@example.com choice options at
the fast-food drive-thru.
But why did everyone want you to get
this education anyway? For one, an edu-
cation often includes a certain lifestyle
that will inherently come with the poten-
tial career option associated with your
degree. But really, education is probably
one of the most sure predictors of an
above average income. The rapper, Nelly,
probably summed it up best by saying, “Must be the Money!” Or
-Set Goals maybe he was just speaking to art graduates and was really say-
ing, “Must be the Monet.” I guess we’ll never know for sure.
-Attain education and
income When it is all said and done you will have spent 4+ years getting
your degree in hopes of a boosted income, and with it the chance
-Budget for greater financial success. Statistics say that average lifetime
-Plan for emergencies earnings will increase by $900,000 as a result of a 4-year college
debt But if given the ultimatum to either give-up your college degree
OR all of your financial management skills which would you
-Invest for retirement choose? In other words, which type of education is most impor-
tant to you? If you had zero financial know-how, all that hard
-Teach kids about earned money could be squandered away without much real im-
pact on reaching your life goals, or what really matters to you.
-Own your home This happens all the time in the real world. Just think of all the
athletes, movies stars, lottery winners who have eventually gone
-Plan your estate bankrupt.
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Extension professionals work with the people of Idaho to ad-
dress youth, community, family, environmental, natural resource
and agricultural issues.
Without a college degree, it would likely be more difficult to earn
an income. But with knowledge of money management, you
would still be able to budget the income you do have, organize a
budget, save for emergencies, stay debt free,
invest a little wealth for the future, and buy
modestly and even retire without too much
worry. You could even become a millionaire
on such an income. Many people have done
this, see the Millionaire Next Door, by Wil-
liam Danko and Thomas Stanley.
Obviously the best approach is a balanced
one. Yes, you should educate yourself
Last Chance!! enough so that you can get a good job and
earn a decent income, but next you should
also educate yourself in the area of financial management. This
If you haven’t already taken type of education is all too often neglected in our society. We
the chance to tell us what you need to be wise stewards over what we earn and what we are
think of the Idaho’s Two Cent
Tips newsletter, do it now!
University of Idaho statistics say that
We’re excited to receive your an average four-year degree including
feedback and with your sugges- tuition, room and board, transporta-
tions we plan to make our tion and other miscellaneous costs will
be about $74,000. Not to mention giv-
newsletter even more useful
ing up four years of time you could
than it already is!
have potentially spent working. That’s
“How could this newsletter pos- a lot of sacrifice for a college degree.
sibly get any better?” you may Are you willing to sacrifice as much for
be asking yourself. an informal education in money man-
agement? If not, then how much are
Or maybe you’re really think- you willing to do to balance the finan-
ing, “It’s about time, I’d like to cial success equation?
give these characters a piece of
my mind.” The good news is that you probably
don’t need to set aside $74,000 or four
Either way, we’d like to hear it. years for money management educa-
The survey is short and anony- tion. But you NEED TO DO SOMETHING. A great place to
mous. Just follow this link: start is your local Extension office. Out of our Rexburg office,
for example, we offer financial counseling and free seminars.
http://www.surveymonkey.com But probably the most useful and underutilized resource is the
/s.aspx?sm=xvUlxpqBN5vwDfx local public library. Just by investing a little bit of time, say by
reading a book a month on some aspect of money management,
vRTPaiQ_3d_3d you will boost the money management side of your equation,
ultimately improving your financial situation by leaps and
University of Idaho Extension is your source for unbiased financial Information.
The University of Idaho Extension System does not sell, promote or endorse any financial product or institution. Our programs are strictly educational. Seek professional advice
from your accountant or financial advisor for specific product information. The University of Idaho provides equal opportunity in education and employment on the basis of race,
color, national origin, religion, sex, sexual orientation, age, disability, or status as a disabled veteran or Vietnam-era veteran, as required by state and federal laws.
Electronic copies of this newsletter are available at http://extension.ag.uidaho.edu/madison
Some may choose to simply hire a financial 1946—say they already have all the possessions
planner or some other professional to tell they need, up from 34 percent reported in the
them what to do. This strategy can some- first study. Four in ten Americans are even feel-
times work, but keep in mind that someone ing “buyers’ remorse” about past purchases—
else’s financial advice is no substitute for wishing they had spent less and saved more
your own know-how. Go to others for ad- over the years. Freed from pressures today to
vice, but always take it with a grain of salt. “keep up with the Joneses,” some Americans
Understand that no one will ever be more may have seen the economic crisis as
qualified than you are to develop and main- “permission” to change their behavior. Today,
tain your financial plan. for many Americans, keeping up with the
Joneses has been replaced broadly by an
acutely felt need to keep up with the mortgage
payment, the car loan, and credit card pay-
The American Dream is ments.
In response to economic conditions—and in
Marilyn Bischoff light of the dream’s shifting definition and
greatly reduced consumerism—Americans re-
Have American be- port that they are eating at home more often,
haviors and values shopping more at big box discount stores,
shifted in the past spending less on movies and moving away from
year as a result of brand-name products to generics. While some
the recession? The of these adjustments may be short-lived, others
third annual Met- may have lasting effects, signaling a long-term
Life Study of the change in both consumption and the dream.
set out to deter- On a personal level, roughly two-thirds of
mine American At- Americans sur-
titudes and per- veyed for the
ceptions in light of study feel more
our current eco- stress about
nomic situation their own finan-
and the ongoing erosion of traditional corpo- cial situation
rate and social safety nets. The study sur- than they did
veyed a cross-section of U.S. adults, in all one year ago.
generations and ethnic groups, to find out Now, 55 percent
how lives have changed—and how the Ameri- believe their fi-
can dream itself has changed—in the past nances are
year. The results show an American dream heading in the
that has been revised, not reversed. Ameri- right direction,
cans are resetting their priorities, and the down from 61
dream is now buoyed by pragmatism rather percent in November 2006. Unlike previous
than consumerism. downturns, no one—no social, political, genera-
tional, economic or racial group—is immune.
An inaugural MetLife study conducted in No- While some differences in concern exist among
vember 2006 revealed that there was an in- generational cohorts, ethnic groups and income
satiable hunger for—and a persistent pres- levels, what is most notable about the current
sure to buy—more and better material pos- financial crisis is its scale and scope. Even the
sessions. The bar for “basic necessities” was mass affluent (defined in this study as those
continually rising. But this year, for the first making $100,000+ in income per year) are feel-
time, there is evidence that the bar is hold- ing the squeeze. More than half of mass afflu-
ing steady. Nearly half (47%) of all consum- ent Americans are worried about losing their job
ers—and 66 percent of those born before over the next 12 months—and 53 percent say
Email “subscribe” to firstname.lastname@example.org
they are concerned about having to file for
bankruptcy in the event of a job loss.
Do You Need Identity Theft
Despite consumer behavioral and attitudinal
shifts Americans remain precariously close to
the financial edge. With the erosion of public
safety nets, tightening credit and declining
Identity theft is a com-
home values, more than half (56%) are con-
mon occurrence these
cerned about losing their job in the next year
days. It’s the fastest
as a result of the current economic situation.
For many Americans,
crime in the United
a job loss could have
States with over 9 million
victims a year. It is esti-
since they have little
mated that victims of re-
ported crimes spend an
to survive a job loss.
average of 175 hours try-
A startling 50 percent
ing to repair the damage caused by identity theft
of Americans surveyed
and lose $1,500 in the form of direct and indi-
say they could only
rect losses. According to trends it is estimated
meet their financial
that 1 in 4 will be a victim of identity theft
obligations for one
sometime in their life-time.
month if they were to
lose their job, and the majority believe they are
These facts should make
already working as hard or harder than ever
you very afraid. In fact it is
just to get by.
rumored that Lord Valde-
mort wasn’t really trying to
With concern about job loss affecting the
be scary when he asked
masses, Americans are putting a high pre-
people to call him “He-Who
mium on protection and stability—signaling a
major change in the way that Americans think
was just really really wor-
about creating and protecting their financial
ried about ID theft. This is
future. Across generations, 81 percent say
also the rumor with Prince,
having a personal safety net will be more im-
but choosing instead to be
portant this year than last. They believe that a
safety net should include a mix of protection
–Known-as-Prince,” didn’t really have the de-
and savings products. Those who report that
sired effect for some reason.
they have a safety net say that it includes not
only cash on hand, but also products such as
health and life insurance, auto and homeown- If you’re not the type to resort to eccentric ali-
ases, rest assured, there are other ways to pro-
ers’ insurance, and retirement savings. But
tect yourself from ID theft including Identity
for the majority without a safety net, nearly
two-thirds say they first need to build up a
cash reserve. They are also craving stable in-
ID theft insurance isn’t really insurance in the
vestments and savings products with predict-
classic sense of the word. It does provide mone-
able returns. Eight in ten Americans say they
tary coverage to help cover losses, but it is also
are now more concerned with guarantees and
a preventative service. In other words, not only
stability than they are with returns.
does ID theft insurance help if you are a victim,
Source: MetLife, March 2009, The 2009 MetLife but it also helps reduce the likelihood of your
Study of the American Dream. Retrieved 5/27/09 ever becoming a victim in the first place.
studies/09010229_09AmDreamStudy_WEB.pdf. Sounds great, but as you might have guessed
this saintly service is not for free. There are at
least a dozen major companies offering ID theft
insurance and their services range in costs waived or greatly reduced
from $5 a month to over $20 a month. And by credit card companies
like so many products, not all ID theft insur- and banks.
ance is created equal. Each company will
offer different preventative services and offer I’m not going to say that
different forms and amounts of insurance ID theft insurance should
coverage. never be purchased, but
unless you’re the Fresh
Now you know what it is, so it’s time for the Prince of Bel-Air, (yet an-
real question, do you need it? Or, probably a other ID theft alias) you’d
more appropriate question would be, is ID probably be better off saving your cash and do-
theft insurance a good buy? The answer is, ing your ID butling yourself.
it really depends.
For example, nobody really
needs a butler, except proba-
bly Batman, and yet there Want to share articles from
are countless butlers out ITCT?
there butling as we speak. There are several easy ways to do this:
And yes that is indeed what 1) Forward, or email a link to our newsletter or
the service is called that but- archives.
lers provide. Google told me 2) Print hard copies and distribute them in
so. Ah, the wonders of the your office.
internet. 3) Reprint a specific article in your own news-
ID theft insurance is more or less a butler for
your identity. All the stuff he does, or -You don’t need to ask our permission be-
should I say all the butling he does, you can cause we’re giving it now! All we ask is 1) that
probably do for yourself if you would just get you cite UI Extension and the author, and 2)
off your butling and do it. To clarify I’m re- send an email with a count or estimate of your
ferring to the service not what you were distribution numbers, if it’s more than just a
probably thinking of. Good gracious. few. Send to email@example.com.
Some of the specific butling services pro- Thanks in advance for helping us change finan-
vided include the ordering and monitoring of cial lives, two cents at a time.
your credit reports, removal of your name
from junk mail lists, and from telemarketers
lists. But you can do all this for yourself.
Credit reports can be accessed for free on
your own from annualcreditreport.com.
Fraud alerts can be set up and renewed on
your own through each of the three major
credit bureaus. You can easily remove your
name from mailing and telemarketing lists
through optoutprescreen.com, and donot-
Consumer Reports states that because of
limits, exclusions and loopholes, ID theft in-
surance is not a great buy. Prevention ser-
vices offered can be done by consumers for
free, and the monetary protection they offer
is generally unnecessary. Most consumer
losses rarely exceed $5,000, and are often