Happy New Year!
Two things that are usually on people’s New Year’s resolution lists have to do with money and fitness.
So here are some tips on both to help you start the new year off right. Whether you stick with these is another story, but hopefully you can!
In a December poll on the website of the National Foundation for Credit Counseling (NFCC), more than half of the respondents, or 56 percent, predicted they would be in a better place financially at this time next year.
This response rate tripled the next highest category where 18 percent of respondents indicated their situation would remain about the same.
“Financial optimism is a healthy sign, but it’s going to take more than hope, more than a New Year’s resolution, to make financial success a reality,” said Gail Cunningham, spokesperson for the NFCC. “People need to guard against financial amnesia, the affliction of too quickly forgetting the financial mistakes and pain of the past. One way to do that is by having a financial plan. Although the future can’t be predicted, consumers can protect themselves from financial unknowns by making smart money decisions today.”
Cunningham said control starts with awareness. New Year’s resolutions typically involve getting out of debt, but the basic step of creating a spending plan is rarely discussed.
Ignoring spending patterns can prevent a person from identifying and addressing the reason debt reduction is not achieved.
The first step toward debt reduction is by building a 2014 financial plan.
One way is finding an accredited credit counselor. You can go through the NFCC by searching its Sharpen Your Financial Focus website, www.SharpenToday.org, or call toll-free at 855-374-2773. The association can help you find an accredited local agency. In our area, they will likely connect you to Apprisen, the former Consumer Credit Counseling of Northeastern Ohio, which has partnered with the Beacon Journal for our annual financial call-in programs and other projects. A free 1½-hour counseling session locally can be arranged by calling 800-355-2227.
Here are some other NFCC suggestions:
• The unexpected. It’s usually not the daily routine expenses that wreck people’s budgets, but the emergencies. Put away 10 percent of each paycheck into a rainy day fund. At the end of a year, it will total more than one month’s income.
• Long-term savings. Protect against setbacks such as a job loss. Even though the unemployment numbers are improving, no one is immune. Money will be needed to manage daily expenses and debt. People frequently resort to living off credit cards. Experts recommend having a minimum of six months income as a cushion.
• Known expenses. Birthdays, anniversaries, holidays, vehicle tags, and quarterly insurance premiums are examples of bills that come at the same time each year.
• Household and vehicle maintenance. Without a plan to cover these expenses, people are left with poor choices: take money from a higher priority such as the rent or mortgage, thus compromising that category; charge the expense and add to an already burdensome debt load; or borrow from family or friends, which can be awkward and can put a relationship at risk.
• Travel. Whether it is a family vacation, an out-of-town funeral or wedding, or sporting events for the kids, traveling costs money. Try to anticipate events and make a budget.
• Major purchases. Buying a home, purchasing a vehicle, remodeling the house or that long-awaited state-of-the-art entertainment system are examples of expenses that need to be considered and planned for.
• Charitable giving. Review previous giving patterns to estimate 2014 donations.
• Health insurance choices. Recent changes could have a major impact on a spending plan. In addition to medical insurance, account for anticipated dental and prescription drug needs.
• Investing. Time is money’s best friend, particularly for those with a long horizon. This is critical to long-term wealth building.
• Debt reduction. Instead of allocating minimum monthly payments into the budget, set a date by which all current credit card debt will be eliminated. This step will free up money to go toward satisfying goals such as saving or investing.
Gym membership tips
Ohio Attorney General Mike DeWine issued the following tips as consumers look at buying fitness memberships.
“Read a contract carefully before signing it and make sure you understand the cancellation policy,” DeWine said.
In 2013, the Ohio Attorney General’s Consumer Protection Section received about 125 complaints involving fitness centers.
The most commonly reported problem involved cancellations.
Under Ohio’s Prepaid Entertainment Contracts Act, consumers generally have three business days to cancel contracts for gym memberships. If a new facility has not yet opened for business, the consumer’s right to cancel extends to seven days after the first service is available.
Cancellations must be in writing and must be postmarked by midnight of the third business day after the first service is available. Consumers should send the cancellation notice via certified mail, with a return receipt requested, to receive proof the business received the notice.
• Search for complaints about a facility with the Ohio Attorney General’s Office and Better Business Bureau.
• Make sure oral agreements are included in writing.
• Determine the total cost, including any extra fees for fitness classes or personal training.
• Find out if payments will be withdrawn or charged automatically.
• Understand whether your contract will renew automatically.
• A contract should not exceed three years.
• Keep a copy of the contract, cancellation notice, and other correspondence.
For information or to file a complaint, go online to www.OhioAttorneyGeneral.gov or call 800-282-0515.