Personalized Credit Cards - Friend or foe?

You have seen the commercials. Get a credit card that is customized for you. Choose your picture, choose your options, choose your rewards. Great deal! Finally the credit card companies are doing things the way we want, right? Well think again.

Most credit card companies are making the beeline to create more custom features on their cards. Why? Because if you have a card the "fits" you and your lifestyle you are more likely to use it, less likely to cut it up and have a personal tie to the plastic that never existed before "Spaghetti Jimmy" showed up.

Those personal touches are the foundation of good customer service and creating a brand that you can relate to in such a personal way that you will never leave. This is a very dangerous thing for families who already are having a hard time creating boundaries in their spending decisions and need to get increased control. These cards may be working against your efforts to break your own personal cycle of broke by encouraging you to pull out the plastic and subsidize your spending plan with a thin layer of debt.

Here is what might work to break the tie...cancel the card and keep the Spaghetti Jimmy picture in your wallet. Get back to what is real and build Jimmy's education fund rather than spending his inheritance on credit card debt before he turns 10. For more great help to get started on saving, visit Virginia Saves and check out all the great events, calculators, webinars and free advice ready at your fingertips!

Some Things are Better Bigger

Less is more may be a great motto for things like credit card debt, fat and dust bunnies, but there are some things that are just better bigger like your savings account.

Having a little nest egg (or a bigger nest egg) to sustain you through the tough times can be just the ticket to keep you out of financial crisis and prepared for the challenges that come with our economy.

Financial advisors recommend four different kinds of savings:

  1. Savings for irregular expenses: vacations, weddings, birthdays and holidays don't happen every month, but we know they are coming. Here are some ideas for saving for those special events: a. know how much you are going to spend in advance. Many times these expenses can throw our budget into a death spiral because we didn't plan in advance. For example: earmark savings for vacation to be say $500. That seems like a lot of money, but if you save throughouth the year it translates into $41.67 per month. Some banks and credit unions offer special accounts like Christmas clubs and special savings accounts to keep you on track with your savings plan. These can also be used to be collateral for a small loan as you are building your credit (another topic).
  2. Savings for unexpected costs: this is what is known as an emergency fund or a contingency fund. On average every family experiences about $2,000 in unexpected costs each year whether it is an appliance failure, car repair, acts of God like weather, or an accident we all have unexpected expenses...expect them. If we save an extra $166 per month for those expenses, you will never have to go to the credit card or the bank to borrow money. You will borrow from yourself and feel all the more secure knowing you were able to meet those unexpected expenses on your own.
  3. Savings for large purchases: lets face it, if you drive a car eventually it will need to be replaced. Children will hopefully pursue education to secure better income potential like college or trade school. Furniture, appliances and maybe even some recreational items can be costly. The biggest purchase of all we will likely make is purchase of a home. Savings can be all important to allow you to get the things you need and want without jeopardizing the monthly budget and going into debt.
  4. Savings for retirement: Your retirement cash flow will likely come from three potential sources: a. Social Security (if you read your Social Security statement you receive each year you will see a special disclaimer: "In 2016 we will begin paying more in benefits than we collect in taxes. Without changes, by 2037 the Social Security Trust Fund will be exhausted* and there will be enough money to pay only about 76 cents for each dollar of scheduled benefits." At best Social Security will likely replace less than 40% of your current income b. Employer Pension: some employers still offer a pension or a regular monthly annuity after retirement. The size of the annuity varies, but is usually significantly less than your current paycheck. c. Your Savings: your savings is going to be the best provision you have to enjoy retirement years without having to continue working to subsidize the costs of living. Your savings will be the funds you will use to take trips, spoil grandchildren and to provide for any additional expenses related to declining health (I hope you never experience).

Earmarks may be the death nell of congressional legislation, but earmarking savings for special purposes in your life can be just the ticket you need to make sure you reach your intended goals and separate your budget from the economic rollercoaster.

Big savings is great, but every little bit counts, so start small and think big. Penny pinching can yield tremendous future benefits. Don't be ashamed to be a pincher, pinch and watch your savings grow!

Preparing for Job Loss

More and more all around we are hearing news of employer layoffs and reductions in workforce. Some states are seeing double digit unemployment rates and there are talks of this being a potential double dip recession. The good news is that the best time to prepare for cutbacks is while you are still employed. Here are some of the actions you can take now to prepare for the future:

1. Know your condition: You need to know what you have to work with in order to take objective actions.

a. Take an assessment of what you have and what you owe.You can do this for free using a software tool offered by the Foundation for Financial Planning called "Money 101". For self service: use referral code 95204. If you would like someone to help you get started, just email me at and request a volunteer mentor.

b. Get your free annual credit report: Your credit report can impact your qualifications for your next position. Know what it says and correct any errors now before you go into job seeker mode. The only "free" credit report can be found at; you are entitled to one free report from each of the three credit reporting agencies. This website is your portal to get all three reports.

2. Cut back on spending now! You will need to reign in your expenses as soon as possible. You may need to live on less for a while until you can find employment again. Unemployment will not replace your income, so you will need to increase savings to help you sustain your needs.

3. Credit Cards no more: If you are using credit cards for monthly purchases, you will need to abolish that practice right now. You will need to establish the discipline of living on less for a time.

4. Involve the family: Every member of the family can be a part of your new frugality reality. Children have great creative ideas for cost cutting and with everyone involved, there is both support and accountability for spending decisions.

5. Stockpile Savings: Save as much as you can in preparation for your lean season. Even if the feared reduction doesn't happen having the savings in place can provide your family security for the future and can be redirected for larger purchases in the future (like replacing your car at the end of its life). Financial Advisors recommend having enough savings to replace your income for the anticipated time of unemployment. Historically 3 -6 months of income was the recommendation, but statistics indicate that the average unemployment period can be up to 9 months. Every bit you save will help reduce your financial stress during your job seeking time. For encouragement and help with getting started in savings join the savers club at

6. Position yourself for job search: Update your resume and familiarize yourself with the employment options available. Seek out additional training if needed to upgrade your job opportunities. You can post your resume on line at Virginia Employment Commission's website Also consider visiting a local workforce development center and brush up on the interviewing techniques you will need.

7. Pay your bills on time: A factor often overlooked is the impact of your credit score on employment options. Many candidates who would otherwise be candidates for employment may be eliminated from consideration because of negative factors on their credit report. Unemployment is not an excuse to not pay bills; but you may want to see if your credit cards or your loans have provisions in them for unemployment.

8. Stay in touch: Networking among your friends and coworkers may give leads to potential opportunities for jobs. Many jobs are not posted, but are found by word of mouth. Let your circle of friends know that you are looking and let them look for you. As jobs are made available, they will be thinking of you and let you know.

If you are faced with the prospect of cut backs, now is the time to shore up your condition and prepare yourself for the future. It is always good to have a plan "B" just in case and now is the time to build that plan to position yourself for a short recovery period and a launch into even greater future success.

Setting Goals

It may seem like an esoteric kind of activity to write down financial goals, or any goals for that matter, but goals serve a very valuable function to keep us focused on what is important. Without goals we are prone to making our spending choices based on our feelings or some other emotional response.

Goals don't have to be financial in order to have implications on our spending either. Anything that we are passionate about is going to be reflected in our spending and savings decisions. If I say that raising intelligent, well-balanced children is a goal of mine, then I can't help but see this goal impact my spending decisions.

Goals also serve the purpose of keeping us from making emotional spending choices and allow us to keep the long term vision in front of us rather than falling prey to those short term pressures. For instance, I love diet cherry limeades...I love to stop by and pick one up on a hot day. The problem is that diet cherry limeades and other spontaneous purchases can put leaks in my budget and can thwart my ability to achieve my longer term goals (like save money to purchase a replacement vehicle).

Knowing that goals are important (both short term and long term) lets take an action today. Write down one goal you would like to achieve within a year (doesn't have to be financial) and one goal you would like to achieve in 5 years. Put them on a piece of paper and place them in a location you are going to see them every day. I plan to put mine next to my mirror in my bathroom.

Keeping our goals in front of us we will have greater probability of achieving those goals. Start today!

If you haven't become a saver, stop by our website at and enroll today. This may be the day you begin to achieve your dreams!