ACCI Advisor Newsletter

Reclaim the American Dream!

December 2014

In This Issue

Back on the Path to Financial Responsibility

Give Yourself Credit

Last minute TAX savings

10 ways to stretch your Paycheck

Doable Money Resolutions

Living with Health Care Reform

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All of us at ACCI wish you and your entire family Happy and Safe Holidays. May 2015 be your most prosperous year ever!

15 Tips to Help You Get Back on the Path to Financial Responsibility

If you're mired in debt and unable to save a cent, you're well acquainted with stress, worry, and shame. But the thought of digging out is so overwhelming that, frankly, you'd rather push it away and drown your woes in (yet another) $5 latte. Taking control of your finances is far more rewarding than sticking with the (unsustainable) status quo says Donna Skeels Cygan.

"Action empowers and energizes," she says. "When you start taking the first steps toward smart money management-once you start living mindfully and deliberately rather than trudging ahead on consumer autopilot-you'll be surprised by how good it feels."

Here, Cygan shares 15 suggestions to help you build a more financially secure future:

First, get clear on what you're spending now. Most people have no idea where their money goes each month. So Step One in your financial recovery plan is to track your spending. How much are you spending on eating at restaurants? On entertainment? On car payments? How much are you charging? (And how much are-or aren't-you saving?)

Identify weak points in your current budget. Getting a clear picture of your current budget will show you where changes can, and should, be made. Are constant car payments keeping you from contributing to your 401(k)? Is your family paying for extra cable channels and smartphone services despite the fact that your emergency fund is nonexistent? Is that new outfit you're wearing paid for...or will you get the credit card bill for it in a few weeks? Asking yourself questions like these will be uncomfortable, but they'll lead to positive changes.

Get serious about paying down debt. Debt is the root of most, if not all, of your financial stress-and getting rid of it is an important step toward financial security. So stop procrastinating, get out your calendar and bank statements, and make a plan. If you're not sure where to start, it's generally a good idea to focus on debt that carries the highest interest rate-perhaps a car loan or credit card debt.

"Where there's a will, there's usually a way," Cygan notes. "Most families can cut expenses somewhere and put those funds toward debt. And if your budget is already trimmed down to the essentials, consider getting a second part-time job, just a few hours a week, and putting that money toward debt reduction."

Commit to saving today. (If you don't, it won't happen.) Of course, your ultimate goal is not just reducing what you owe but building up a surplus in your savings account and investment portfolio. But first you must make a conscious effort to start saving. Don't just make a mental commitment. Say it out loud. In fact, write it down. Do it now. What gets prioritized gets done.

"People tend to think of saving in vague terms," she adds. "They have this half-formed idea that they'll save 'someday' when the kids are out of daycare or the car is paid for-but that magical someday never comes. There's always something else to buy if you aren't committed to saving."

Hold a family meeting to set some long-term financial goals. (And get specific with your strategy.) Maybe you'd like to save more for retirement, set up college savings accounts for your kids, and beef up your emergency fund. To make sure your long-term financial goals actually happen, you and your family need to sit down and figure out how you're going to get from here to there. Specifically, how much money do you want to put into your Roth IRA each month? What other expenditures will you need to adjust to ensure that happens?

At the same time, consider what really, truly brings you joy. How we spend our money says a lot about our values and priorities, Cygan points out. Take some time and think about what's really important to you and your family, and embrace the (possibly liberating!) responsibility of reordering your life. With your values in mind, it may be less difficult than you thought to get rid of unnecessary and unwanted items, obligations, and self-imposed responsibilities.

"This will free up literal and figurative space for you to make new and wonderful changes, which will probably involve spending more time with the people you love," Cygan says. "Don't forget: Psychology research shows that improving our relationships with others is the number-one way to increase our happiness."

Rethink what you're calling "necessities." For example, do you really need the expensive cable package with all the movie channels, or would you be able to get by with basic cable? Does your 12-year-old really need a cell phone with a data plan? In fact, extreme as it may seem, do you truly need the big house you're living in, or would downsizing to a more modest home work just as well for your family-and far better for your budget?

"Often we think we need things just because everyone else seems to have them," says Cygan. "But this is nothing more than peer pressure. There really are very few true needs. The rest are just wants. And when we really think about what brings us joy, we usually realize we don't want our 'wants' as much as we thought we did."

Make sustainable short-term changes. If you were somewhat surprised (or shocked, or horrified) by the state of your monthly budget, you might be inspired to make changes. But Cygan cautions you to start small. In other words, don't cancel your cable subscription and video streaming service in a fit of frugality. Your willpower might last a few days, but you're not likely to live long-term with no TV. Instead, start by cutting out your premium channels, for instance. Or cancel your cable altogether and start tackling the Netflix watch list you've been building up.

"The idea is to make smart adjustments in your lifestyle, not to turn your life upside down overnight," Cygan comments. "Small is sustainable-and baby steps in your budget do add up!"

Start paying attention. A lot of our spending tends to happen while we're asleep at the wheel, so to speak. We sign up for expenses like cell phone plans, insurance policies, and Internet services...and then forget about them. (If payments are set up for autodraft, we may completely forget about them.) Take a closer look at these regular expenses. Is there a more affordable option out there? Are you paying for features you don't use? No, spending an evening researching insurance policies and cable-phone-Internet bundles might not be fun, but it might just save you a few hundred-or even a few thousand-dollars a year.

"Other ways to pay attention include watching sales circulars and using coupons," says Cygan. "Buy what's on sale instead of what catches your eye. Eat what's in your freezer instead of ordering a pizza. Dig through your closet the next time you have a wedding to attend instead of rushing out to buy a new dress-something in there will surely work just fine."

Pay in cash whenever you can. Research has shown that we spend roughly 15 percent more when we pay with a credit card as opposed to using cash. If you have to reach into your wallet and count out bills in order to pay for a meal, a new shirt, or the latest gaming system, you might just decide that it isn't worth the money after all.

Spend some time thinking about value. Does paying for a pair of big-name shoes make you happier than wearing look-alike knock-offs? Can you really taste the difference between name-brand and store-brand? It may turn out that paying more for the best of everything is making you miserable when the bills come in. If you can shave some cents off price tags, you might just end up with a lot more peace of mind.

Avoid seasonal entitlement traps. We work (really) hard throughout the year, so it's easy to convince ourselves that we "deserve" a lavish vacation each summer and a no-holds-barred holiday celebration. But the truth is, you don't need to spend a fortune to relax, have fun, and make great memories with your family.

"You might find that a more financially sane approach lets you focus more on each other-and that your former traditions were cash drains that never really lived up to the hype," says Cygan.

Focus more on experiences and less on things. From eating at expensive restaurants to making sure our homes are decked out with flat-screen TVs and sound systems, most of us don't mind pulling out our wallets in the name of enjoyment. (And often, we don't worry about the price tag until it's too late.) But psychology shows that experiences are always more impactful on our happiness than things. Do some soul searching before you get out the credit cards. For instance, cooking a meal together as a family might bring all of you more joy than piling into the car and ordering from yet another overpriced menu.

Get real about kids' needs. Stylish tween fashion. Electronic gadgets and all their upgrades. Summer camps. Traveling sports teams. Music, dance, and gymnastics lessons. Be honest: Is an alarming percentage of your budget going toward your kids' activities and desires? And how much enrichment are your children really receiving? The truth is, well-meant expenditures that were supposed to make your kids happy and fulfilled add up quickly and often leave kids themselves feeling overstressed and overscheduled (not to mention entitled).

Don't hesitate to call in the professionals. If you're not sure where to start, which budget changes would be most effective, or how best to begin paying down debt, talk to a financial advisor. Many brokerage firms provide helpful information on their websites, but it is usually more helpful to sit down with a live person. Surf on websites for a financial advisor near you. These will lead you to fee-only financial advisors who won't be trying to sell you something. In addition, some of the advisors will work on an hourly basis, which may be a good fit for your needs. "Your financial advisor can help you make sound financial decisions now and in the future," Cygan notes. "And remember, the more honest you are about your current situation and your financial goals, the more helpful your advisor can be."

Donna Skeels Cygan, is the Author of The Joy of Financial Security: The art and science of becoming happier, managing your money wisely, and creating a secure financial future.

Give Yourself Credit

Every lender has its own method for evaluating your financial health. By understanding the factors that most lenders look at, you can be better prepared to improve your credit and achieve your financial goals.

Typically, Lenders pay the most attention to:

-Payment History - Do you pay your bills on time?

-Current Debt - Can you take on more obligations?

-Collections - Do you have any accounts in collections?

-Public records - Have you had any bankruptcies or liens?

-Types of credit - What kind of accounts have you managed? (Credit card, auto loans, etc.)

-Credit history - How long is your credit history?

-Recent activity - How many new credit inquires have you had?

-Credit score - Are you a good candidate for credit?

Any one or a combination of these important items can influence a lender's decision to extend credit to a new customer or change the terms of an existing account.

Giving yourself Credit is your legal right!

Get your three credit reports for free each year by visiting www.annualcreditreport.com. Or, call toll free 1-877-322-8228.

Last-minute moves to save big on your 2014 taxes

These five end-of-the-year tips from a licensed tax professional will help lessen Uncle Sam's grip on April 15.

No one wants to pay more taxes than they have to. Sarah Deierlein, an enrolled agent with the Tax Defense Network (www.taxdefensenetwork.com), shares some tips on what taxpayers can do before the end of the year to lessen the grip Uncle Sam has on your wallet come April 15:

Contribute to a retirement plan - Deierlein says there is nothing like socking away tax-free money. If that gets you one step closer to retiring to a tropical island at 55, why not do it?

Give to a charity - Gifts to charities are tax deductible and you get the satisfaction of helping your fellow man, Deierlein says. Don't just donate money during the holidays - time and goods are also deductible!

Dig up records of state, local and personal property taxes - Believe it or not, those annoying taxes, fees, etc. are deductible at the end of every year, Deierlein points out. So keep track year-round!

Take advantage of tax credits - There are credits for child care, adoption, education, energy efficiency home improvements and more, Deierlein says. Did you know that simply buying a hybrid vehicle could be a tax credit? If you need a new car anyway, why not get a credit for saving on gas and saving the planet?

Invest in your child's future - If you have children, saving for their education, or even giving investments to your children are ways you can reduce your taxable footprint, and you help your kids secure their future!

"Even if you haven't been thinking about your taxes all year long, these last-minute moves can have huge payoffs," Deierlein says.

The Tax Defense Network's nationwide network of tax professionals provides financial advice on a variety of subjects including payroll taxes and tax debt resolution.

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Want to pay off your debt more quickly?

If you have the desire and the ability to make extra payments towards your DMP, contact ACCI Customer Service to coordinate making the extra payment. Since your DMP is set up to pay a certain amount each month changes must be handled properly to make sure you do not get removed from the Creditors DMP.

ACCI Customer Service 1-800-708-1335.

10 Ways to Stretch Your Paycheck and boost your 401(k)

By Andrea Woroch

401(k) account owners received a boost last week when the IRS announced contribution limit increases to the popular retirement savings plan. Account holders can now potentially put $18,000 to their 401(k) in 2015 (depending on company caps), up from $17,500 in 2013. Consumers who are 50 or older can even add an additional $500 toward their catch-up contribution, allowing for up to $24,000 in annual savings starting next year.

While it would be wonderful to take advantage of this, it's unrealistic for many Americans to contribute anywhere close to the max allotment. If you're struggling to stretch your paycheck and save for retirement, it's time to reevaluate and trim your expenses so you can put the excess toward your future.

Cutting back isn't easy, so here are 10 simple ways to stretch your paycheck so you can contribute more to your 401(k).

1. Avoid unnecessary fees. It was recently reported by FeeX, a website that tracks consumer fees, that the average American spends $155,000 in useless fees over a lifetime. While some fees are tough to avoid, others simply require a little effort and forward-thinking. ATM fees, for example, are easily ditched when you request cash back after a debit card transaction.

2. Adopt savvy shopping skills. Being a smart shopper doesn't mean you have to spend hours clipping coupons or scouring the Internet for deals. Paying full retail price for everything from clothes to electronics to home goods is unnecessary with tools like CouponSherpa.com, which offers free and easy access to online, printable and even mobile deals.

3. Cut cable costs. With HBO's recent announcement that non-cable subscribers will be able to access their content in 2015 via online streaming, it's possible the movement toward a la carte TV is picking up momentum. The average cable bill is over $100 per month, with researchers from NPD Group suggesting that will increase to $200 by 2020. The many streaming alternatives available to you via Netflix, Hulu and even Redbox can help you keep up with your favorite shows without sacrificing retirement savings.

4. Switch to prepaid. Close to half (46 percent) of cell phone users pay $100 or more per month for their mobile plans, with overall monthly costs increasing over 30 percent since 2009. Consumers are increasingly irritated by these exorbitant costs, which is why prepaid plans are growing in popularity. If you haven't looked into these alternatives, now is the time. Sprint users should check out Ting; their average user pays just $21 per device for a plan that uses Sprint's network. Verizon users can look into PagePlus, which offers unlimited talk and text plus 1 GB of data for less than $40 per month.

5. Be a student for cheaper services. Pricey services like hair care and massages can be fetched for a much better price when you're willing to be a student. Students training to be a professional hair stylist or masseuse need people on which to practice their skills. Training sessions are supervised and are either offered at a major discount or completely free. Look for schools in your area and contact them for more details.

6. Check clothing care labels. The cost of dry cleaning varies by garment and region, but one article suggests the service can cost up to $1,500 per year. This is an expense that can be completely avoided by reading clothing care labels before buying. You have to factor in the cost of care when evaluating any purchase, and clothing is no exception. If your workplace requires formal attire, consider an at-home dry cleaning kit like those provided by Dry-el and Woolite. Otherwise, always use coupons for cleaning, making sure to check daily deal sites like Groupon for available vouchers.

7. Dine out less. The average American household spent $2,625 on dining out last year, according to the Bureau of Labor Statistics. Removing takeout, restaurants and your weekly latte altogether would make for a sad existence. However, cutting that amount by a third is doable, and allows for an additional retirement contribution of over $70 per month.

8. Stop smoking. According to a study conducted in 2011, spending on tobacco accounts for 0.8 percent of the average American household budget. While this may not seem like much, it represents a larger chunk that spending on milk and fresh fruit combined. The study goes on to say that a pack-a-day smoker living in New York spends $4,000 per year on tobacco and related products. Quitting this habit not only saves your health, but could make a significant impact on your retirement savings.

9. Eat the food you buy. The National Resources Defense Council calculates Americans waste an average of $529 worth of food each year,

or close to $45 per month. Cultivate smart grocery shopping habits by using weekly circulars to plan shopping lists. Oh, and embrace leftovers -- bringing last night's dinner to the office for lunch will help you cut down on your fast food habit, which apparently cost Americans $117 billion in 2013.

10. Don't get "brandwashed." Consumers often associate cheaper prices with inferior quality, which is why many of us reach for pricier name brands displayed in pretty packaging. However, private labels have come a long way over the years and many stand up in quality to the big brands while saving you 30 to 60 percent. From prescriptions to groceries to household cleaners, consider switching to the generic ore store brand to reduce overall spending.

Andrea Woroch is a nationally-recognized consumer and money-saving expert for Kinoli Inc.

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Do you have a friend or relative considering bankruptcy? Remind them that it's a short-term solution with long-term consequences. Have them call ACCI for some debt relief advice from a certified counselor.

1-877-969-3328.

Doable Money Resolutions For Every Budget in 2015

Aren't you SICK AND TIRED of money experts telling you to just save, save, save?

You may be thinking, "I'll never really stick to a monthly budget and I certainly won't put 30% of my paycheck toward retirement."

But, what are some financial resolutions that you actually have a shot at keeping in 2015?

Certified Trust & Financial Adviser, Chris Carosa, M.B.A., is the author of the new book,"Hey! What's My Number? How to Improve the Odds You Will Retire in Comfort." In his book Carosa offers many tips including these:

Don't Save A Cent. Don't you just LOVE the sound of that? This one is for those who are sick and tired of being told to save, save, save. Instead, simply sit down and calculate what your retirement goal is. How much money will you need to live how you want in retirement? What's your number? Believe it or not, the majority of Americans have never done this, even the ones who are already saving. There are lots of online resources with retirement calculators to make it easy to do.

Stop Watching The Stock Market. The best strategy for long-term saving is to just let it ride. Fretting over day-to-day market volatility could actually make you lose money. Many of the people who pulled out of the market 2009 after losing 40% of their investments never made up those losses. The people who let it ride are well ahead of where they were pre-recession. Goal #2 is all about having the discipline to do nothing.

Put Yourself On Autopilot. Auto enroll into a retirement account (Roth IRAs are a great vehicle for this). I love this one because you do it in January when you're all jazzed about saving, then never think about it again. Easy as pie.

Find Your Fee. This one is almost too simple. The resolution: find out how much you're spending on investment fees for your retirement account by going online or making a phone call. Believe it or not, most people have no idea what their fees are, and shockingly, many even think saving in a Roth/401k/IRA account is free. Well it's not, and some accounts have excessive fees that can cost individuals hundreds of thousands of dollars over the course of a lifetime! Some fees are good, others, not so good. This one is all about learning the difference.

Have a money saving tip that you'd like to share? Send it to us for possible publication in this newsletter at:

education@acchelp.org

Living with Healthcare Reform

Signing Up for Health Insurance During Open Enrollment? Here's What to Expect

You may be preparing to select and purchase an individual health insurance plan during the Marketplace's open enrollment period, which began on November 15, 2014. Rick Lindquist and Paul Zane Pilzer take a step-by-step look at what to expect during the process.

The news you've been dreading has finally arrived: Your employer is canceling the group health insurance plan you've counted on for years, and by the end of 2014, you'll no longer be covered. (Insert expletive of your choice here.) You know the Health Insurance Marketplace's open enrollment period began on November 15, but shopping for a policy seems so overwhelming you keep pushing it out of your mind. When you do think about your insurance predicament, it's to fret: What if I make the wrong decision? What if I can't afford the premiums? What if I can't get the coverage I need?

You're not alone-but Rick Lindquist and Paul Zane Pilzer urge you to stop the cycle of dread and procrastination before open enrollment's February 15, 2015, deadline forces you to act.

"Like all dreaded chores, shopping for individual health insurance in the Marketplace is nowhere near as terrible as you're imagining," assures Lindquist, coauthor along with Pilzer of The End of Employer-Provided Health Insurance: Why It's Good for You, Your Family, and Your Company. "Choosing and signing up for a new policy can actually be efficient and relatively painless if you know what to expect and are prepared with the correct information.

"And remember-the sooner you act, the sooner you'll be free to enjoy the holidays without this task hanging over your head," he adds.

Here, Lindquist and Pilzer provide a step-by-step overview of what to expect as you sign up for individual coverage:

Step 1: Decide whether to DIY or use a broker. Step 1 of navigating the Health Insurance Marketplace is deciding whether you want to go it alone or use a guide. If you're confident that you know (or can research) what type of coverage you need and that you can navigate Healthcare.govon your own, there's no reason why you shouldn't take charge of shopping for and purchasing your own health insurance.

"However, if you're concerned about navigating the process and choosing the best policy-or if you'd simply like professional insight-you can choose to work with a broker, who can advise you and eventually help you enroll in coverage," says Lindquist. "The exact role of brokers, who often receive commissions from insurance companies, varies based on state and situation."

Step 2: Gather your paperwork. When you apply for or renew your individual health insurance policy during open enrollment, you'll need to provide information about your household, income, and insurance coverage.

"Individual health insurance applications no longer ask medical history questions, but the application will ask financial questions to qualify you for the premium tax credits," Lindquist explains. "So for many people, filling out an individual application will feel like filing income taxes. That might not be your idea of fun, but the silver lining is that it will be familiar. And like filing your taxes, gathering the necessary materials for open enrollment before the time comes will make applying for coverage quicker and easier."

Lindquist and Pilzer recommend having the following information ready:

-Home and/or mailing addresses for everyone in your household who is applying for coverage

-Social Security numbers for individuals in your household

-Documentation verifying legal immigration status, if this applies to your household

-Employer and income information for every member of your household. This may come in the form of pay stubs or W-2 forms

-Your best estimate of your household income for 2015

-Policy numbers for any current health insurance plans covering household members

-A completed "Employer Coverage Tool" for every employer-sponsored health insurance plan you or your household members are eligible for.

The form should be filled out for every employer-sponsored health insurance plan you are eligible for-not just the ones you are enrolled in. (Your employer should be able to provide you with the completed form).

If you have health coverage in 2014, notices from your current plan that include your plan ID.

It may also be helpful to have the notice you received from your employer about the Marketplace and new coverage options.

Step 3: Fill out an application. Once you have all of your information gathered, it's time to complete an application. You can do so online or in paper form. You will have to fill out only one application, and from there your eligibility for premium tax credits and cost-sharing subsidies will be determined.

"This year, to help make open enrollment 2015 go as smoothly as possible, Healthcare.govhas been working on their online enrollment process," shares Lindquist. "While all applicants will be required to answer some screening questions, about 70 percent of applicants are expected to be redirected to a shorter, updated application. The remaining 30 percent with 'more complicated household scenarios' will use the traditional Marketplace application."

Step 4: Choose your metallic level. Individual health insurance plans are categorized by "metallic tiers" of coverage: bronze, silver, gold, and platinum. These categories are designed to help you compare plans with different coverage levels. As the metal category increases in value, so does the percent of medical expenses that the plan will cover.

"At this point, you need to take a close look at how often you go to the doctor," instructs Lindquist. "In general, if you anticipate using a lot of medical services, it is more ideal to select a platinum or gold plan.

Although the premiums higher, you will pay less out-of-pocket when it comes time to receive medical care. If you do not anticipate having a lot of healthcare needs, selecting a silver or bronze plan is more ideal to save money. Although there will be higher out-of-pocket costs when and if you do need medical services, you will pay a significantly lower premium."

Step 5: Pick a plan. Now that you know what level of coverage you want, it's time to browse and pick a plan.

"With some people comparing more than 100 plans, this is often the step that takes the most time and where working with a health insurance broker can be very helpful," notes Lindquist.

Step 6: Pay the premium. Many of the Health Insurance Marketplaces are currently referring consumers to the insurance companies for payment, since each insurer can set their own deadline and payment requirement.

"Some people will get bills in the mail, while others will be able to pay their premiums over the phone or on the insurer's website," says Lindquist. "Just follow the instructions you receive."

"Hopefully, reading about these six steps has demystified the process of signing up for health insurance during the open enrollment period," concludes Lindquist. "Just remember-the earlier you begin the process, the more time you'll have to research and compare plans, and the more comfortable you'll be with the coverage you eventually purchase."

Paul Zane Pilzer is the New York Times best-selling author of 11 books, a former professor at NYU, and has served as an economist in two White House administrations.

Rick Lindquist is president of Zane Benefits, Inc., the U.S. leader in individual health insurance reimbursement for small businesses.

Questions? Call HealthCare.gov at 1-800-318-2596, 24 hours a day, 7 days a week. (TTY: 1-855-889-4325).

American Credit Counselors
Educational Workshops

As a non-profit Credit Counseling and Financial Education organization, ACCI is dedicated to reaching out to the community. ACCI provides free financial education seminars and workshops at community centers, local organizations, and companies.

Ask about customized seminars for your group, staff, congregation, team, or club! Call 1-800-708-1335 or email education@acchelp.org.