Finances

THEORIES BEHIND FINANCIAL DEPENDENCE:

When people have financial problems, they often wait until they cannot afford to make their monthly payments, their house is foreclosed on, or a vehicle is repossessed. People often live in financial denial, living far above their means and spending more than they make. As represented by research financially troubled individuals usually do not look for alternative solutions to their financial conflicts until they hit rock bottom (Paulson, 2007).

Hitting bottom often comes in the form of losing one’s job. The Continuum Center of Oakland University has identified the typical stages of grief following job loss. Those who feel stuck in one of these stages should seek professional assistance.

• Happiness or Shock and Denial. Some may feel wonderful or free because they no longer have the stress of the job. Others may feel numb. These feeling usually only last until reality hits and they accept the loss.

• Emotional Release. Some may need to vent feelings of sadness, anger or frustration.

• Depression and Physical Distress. Some become depressed, which affects physical things such as sleep or appetite.

• Panic and Guilt. Some feel responsible for their job loss, whether they had any control over it or not.

• Anger and Hostility. Some may feel anger. This can be a good thing if it motivates to improve one’s situation, but not if it causes one to respond negatively to others.

• Renewed Hope and Rebuilding. This includes moving on with life by taking constructive steps toward finding a new job. (Dislocated worker, 2009)

Losing a job usually brings with it a great deal of stress. Here are some tips for dealing with stressful situations:

• Communication with others

• Exercise is an effective way to work off tension

• Helping others is a way to raise your self esteem.

• Talk to your family members. Remember that the whole family has been laid off.

• Eat healthy and nourishing foods.

• Obtain an adequate night’s sleep

How some get into a financial mess when people get money, it is common for them to spend it on something that will provide happiness immediately, such as fast food, or a new video game. Having this mindset leads to overspending and not saving nearly enough money (Paulson, 2007). Therefore, when unexpected needs arise, sufficient funds are not available to cover the cost of
such needs, thus thrusting the individual into financial crisis. Saving, even in small amounts, can relieve a tremendous amount of an individual’s financial stress.

Credit cards, when used improperly, financial trouble. Individuals often rationalize buying something now, rather than waiting to save. Rationales may include:

• It doesn’t cost that much. The problem is that small expenditures add up.

• The monthly payment isn’t that much. Again, the monthly payments may not be that much, but with interest, over time it adds up to some big bucks.

• I can’t pass it up because it’s such a bargain. That may be true, but after you pay the interest, that item is not such a bargain.

• I deserve it. Some people feel like they have worked hard and really deserve a reward even if it means putting it on credit and eventually paying more.

• It’s an emergency. This may be true in some life or death medical situations, but often there are other ways around the “emergency.” This may require some creativity or doing without for a period of time.

Even those who have enough money at the time of purchase may find that they are unable to pay them off because of an unexpected decrease in wages, loss of health, becoming disabled, or loss of a job.

Unemployment is becoming a real issue for many individuals and families at this time. In December, all 50 states and the District of Columbia recorded over-the-month and over- the-year unemployment rate increases (Bureau of Labor Statistics). Utah was not exempt from this trouble, losing 11,500 (or 0.9 % of the jobs in the state) jobs through November 2008 (Utah economic news and data). Unfortunately, it appears that this is only the beginning; the outlook for this year is not good. About 20,400 more Utahans were out of work in January 2009 compared to January 200. Job losses are expected to accelerate to 30,000 through the first half of the year (Leong, 2009, January 21).


WHAT ARE THE WARNING SIGNS?

Early warning signs of financial difficulties are often hard to notice. Those exhibiting any of the following early warning signs of financial trouble should make financial changes to become financially solvent (Paulson, 2007):

• Not having a monthly budget for expenses.

• Having a budget but often not sticking to it.

• Living paycheck to paycheck to make bills.

• No or little emergency funds.

• Inadequate medical or health insurance.

• Not knowing one’s level of credit card debt.

• Credit cards are charged up to the maximum.

• Making only the minimum credit card payment because that’s all that is affordable.

• Frequent late-payment penalties.

• Constantly increasing credit card balances.

• Frequent use of credit cards for cash advances.

• Taking out loans to pay off other debts.

• Getting turned down or denied for a loan or credit application.

• Writing checks before money is present to cover them.

• Bouncing checks.

• Receiving frequent calls from debt collectors.

• Paying utility bills only after receiving a disconnection notice.

• Spending a lot after payday then trying to stretch what’s left until the next salary period.

• Frequently telling other people that you need to start saving money but you don’t.

• Belief that money is the root of all evil.

• Lack of concrete long-term financial goals.

• Gambling or betting on the lottery not for entertainment but because of financial desperation.

• Buying impulsively and often purchasing unneeded items.

• Frequent shopping while depressed.

• Losing sleep due to worrying about money.

• Sleeping too much to avoid thinking about finances.

• Hiding the true cost of your expensive purchases from friends and loved ones.

• Thinking of doing something illegal just to earn money.

• Frequently depending on parents or relatives to pay bills and expenses.

• Frequent financial arguments with spouse or love ones.

(Ready to be Rich, 2008; SallieMae, 2009)


COMMON MYTHS AND FACTS ABOUT FINANCES

• Age, I’m too young for life insurance/too young to worry about retirement

You are not immortal, even though you may be young. As soon as someone depends on you financially you should get life insurance, and because you are young and closer to immortal than an older person, for the time being, you get the added benefit of low cost short term life insurance if you can’t afford more. For example, a non-smoking adult male 30 years old or younger can get $250,000 worth of coverage ranging from $12 to $18/ month (Farmers Insurance Company 2009).

The sooner you start to save the longer your money has to grow, like a tree. Do save (rule of 72: divide whatever interest you’re making on your money into 72 and that is how many years it will take for your money to double. For example if you’ve invested money that you are making 10% interest on, it will take 7.2 years to double.) The longer your money works for you the more you will have at retirement.

The younger you are when you save the better off financially you’ll be when retirement arrives and if unforeseen problems arrive, which they will (Dunleavey, 2009; Amat Corporation 2009).

• I don’t make enough money to save or get out of debt.

Making more money doesn’t necessarily make you more wealthy. In fact with poor money management skills making more money can lead to greater debt! The secret to financial freedom is to spend less than you make and strive to save at least 10% of what you make.

Start using interest in your favor—Become your own bank with a 401k, employee stock purchase plan, or a savings account. Also the sooner children are taught to save by their parents, they will better understand how to control their money and be better off (Tyrell & Dolan 2007; Poduska 1995).

• Interest-only mortgages make homes more affordable.

There are a couple problems with this. First, the interest rate on interest only loans is flexible and changes whenever the Feds decide the interest rates should be changed. In 2007–08 interest rates doubled and many found themselves paying twice the amount on
their home mortgage, yet never paying anything toward the principle.

A second problem to interest only loans is that you can end up owing more for your house than it’s worth. That is if your house decreases in value. And in this market we’ve seen that happen.

We all know credit card debt is a bad thing, think of interest only/sub prime loans as a huge credit card that you’ve maxed out. It’s these types of loans that paid a huge role in the collapse of the financial market. Nowadays, the best plan is to switch to a repayment mortgage as soon as possible and if you can’t afford to do so, you can’t afford the property. It’s as simple as that (Tyrell & Dolan, 2007)

• I have a savings account so I am saving money

You are only saving money if you aren’t paying on higher interest debt. For example, in a typical savings account you’d be lucky to get 4% interest, but a typical credit card ranges from 10% to 20%. So whatever you may be “saving” may actually be wasted if you don’t pay off your debt and soon (Tyrell & Dolan 2007; Vonwinkle 2007).

However, an emergency fund is definitely worth working toward, and after paying off debt longer-term savings is worth saving for. Try investing to put money to work for you, remember the Rule of 72. (Dunleavey, 2008; Dunleavey, 2009; Amat Corportation, 2009)

• I have to be out of work to qualify for government assistance programs.

Most families that make around the average median income, depending on the amount of children they have, usually qualify for some financial assistance. For example, HEAT, Weatherization, Medicaid, Chip, Food Stamps, WIC, TANIF. (State of Utah, 2009)


TOP 10 TIPS TO FINANCIAL SUCCESS

• 1. Get paid what you’re worth and spend less than you earn

• 2. Stick to a budget—how else would we know what we’re spending on?

• 3. Pay off credit card debt—Sounds familiar?

• 4. Contribute to a retirement plan—Never too early or late to start

• 5. Have a savings plan—Are we naturally savers?

• 6. Invest!—Protect your wealth. Start investing!

• 7. Maximize your employment benefits—Taking advantage of benefits could save you $$$ substantially

• 8. Review your insurance coverage—How do we know if have too little or too much?

• 9. Update Your Will—Protect your loved ones. Write a will no matter how much or little you own.

• 10. Keep good records—If you don’t keep good records, you’re probably not claiming all your allowable income tax deductions and credits.


TEN FINANCIAL PRINCIPLES

1. Financial problems are usually behavior problems rather than money problems.(people think they deserve a certain standard of living. “if I could just make a little more money I can be out of debt.”)

2. If you continue doing what you have been doing, you will continue getting what you have been getting.

3. Nothing (NO THING) is worth risking the relationship for.

4. Money spent on things you value usually leads to a feeling of satisfaction and accomplishment. Money spent on things you do not value leads to a feeling of frustration and futility.

5. We know the price of everything and the value of nothing.

6. You can never get enough of what you don’t need, because what you don’t need can ever satisfy you.

7. Financial freedom is more often the result of decreased spending than of increased income.

8. Be grateful for what you have.

9. The best things in life are free. (Use them often)

10. The value of an individual should never be equated with the individual’s net worth. (Each individual is unique, special, and irreplaceable).


WHAT CAN CLERGY DO?

During this time of economic hardship, many will need help with financial issues and financial planning. Foreclosures and unemployment are rising. People without jobs often lose their insurance and sometimes their homes. Such crucial losses create a very stressful time for families. With the loss of employment often come the loss of self-worth and the feeling of uselessness. Some of this stress can be alleviated through access to resources for the family’s basic needs while it attempts to get back on its feet. Due to the stress of their current situation, individuals may not be able to approach their troubles rationally, and may need a calming/stabilizing presence to help them gain control. There are many government and charity programs that may be helpful to families at this time. Having a reasonable understanding of available programs, and being able to link those in need with appropriate resources can significantly reduce this stress.


SUGGESTIONS FOR HELPING THOSE EXPERIENCING JOB-LOSS GRIEF:

• Remember that grief takes time. The grief process may take longer than one expects.

• Encourage the individual to talk, and listen openly and actively. This shows caring and is therapeutic. This may provide the individual a much needed outlet for feelings and emotions, in hopes of eventually accepting reality in order to move forward.

• Avoid pat answers and clichés. Such “helpful” comments as “some things are just meant to be,” or “every cloud has a silver lining” may be more frustrating than helpful. Even offering advice about possible job alternatives with statements such as, “Hey, I bet you’d be good at  . . .” may be better unsaid unless they really reflect the person’s abilities or interests.

• Be available. People have as much trouble knowing what to say to someone who has just lost their job as to one who has had a death in their family. Just being there is important. This can help them overcome the fear of what others think of them due to their job loss.

• Help them to “grieve.” It’s usually easy for them to dwell on the shortcomings of the former job, but remembering the achievements and the fun times is also important. Doing this can better prepare the individual to interview for new jobs.

• Practical day-to-day help, such as helping with chores or errands, is important. Offer to do things you know need to be done. This eliminates the tendency to avoid asking for help for fear of imposing. Also, particularly in the early stages of job-loss grief, individuals may even be unaware that some tasks are not being done, or may simply be too overwhelmed to care.

• Being part of a job search network can be very helpful. Networking is the most effective way of finding a new job. However, be careful not to appear that you are trying to take over the job search.

• Offer to be a job coach. Offer to listen to ideas, help with mock interviews or forming job search strategies, and help find areas where changes might be helpful. (Davis)


RESOURCES: READINGS AND AGENCIES

Employment — In the current financial climate, many have lost jobs, or are at risk for losing jobs. It is important for individuals to put forth as much effort as they can to seek a job for themselves. However, sometimes, this effort is not enough and assistance is needed. A number of programs are available to aid individuals in finding new jobs, and also to provide temporary assistance/support while between jobs.

Dislocated Worker Program — A dislocated worker is someone who has been permanently laid off, has received a notice of termination, or has been laid off from employment and may qualify for federal, state, and local career services.

Department of Workforce Services Employment Centers — provide three types of reemployment services that are potentially available to a dislocated worker: core, intensive and training. All job seekers are eligible for core services. Intensive and training services have eligibility and case management requirements. Workers who may qualify for these services are:

     • Laid-off workers with outdated skills

     • Workers who lost jobs due outsourcing to another country

     • Formerly self-employed individuals unemployed as a result of economic conditions

     • Workers dislocated by a mass layoff and/or plant closure

     • Workers profiled when filing for Unemployment Insurance as likely to exhaust their benefits. (Dislocated worker, 2009).

Alternative Trade Adjustment Assistance (ATAA) Services and Benefits — Participation in 68 at a lower wage and receive a wage subsidy. Certified workers who apply for ATAA may be eligible for the following:

Rapid Response Assistance — Provided by the Dislocated Worker Unit in the state where workers are laid off. Rapid Response staff make employees aware of the different services available to workers. Rapid Response will include information on the process of petitioning for ATAA certification.

Reemployment Services — can assist individuals with the following: Employment counseling, Resume writing and Interview skills workshops, Career assessment, Job development, Job search programs and Job referrals

Relocation Allowances — May reimburse approved expenses when certified workers must move to a new area of employment outside their normal commuting area.

Wage Subsidy — Eligible workers 50 or older who obtain new, full-time employment at wages of less than $50,000 within 26 weeks of their separation may receive a wage subsidy of 50% of the difference between the old and new wages, up to $10,000 paid over a period of up to two years.

Health Coverage Tax Credit (HCTC) — Workers may be eligible to receive tax credits or an advance payment (available in Utah) for 65% of the monthly health insurance premium they pay. Qualifying insurance coverage includes COBRA, continuing individual coverage, or other state-qualified plans. (Dislocated worker, 2009)

Insurance — The number of uninsured children in Utah is on the rise. There was an average of 107,000 children (which ranks Utah #10 in the country in uninsured children)—about one in eight—without health insurance in the state between 2005 and 2007, according to a new report from Families USA. This represents an increase of 18,500 uninsured children over that two years period (Stryker, 2008).

Health Insurance Services: COBRA Health Plan — This service provides workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.

Medicaid — Provides healthcare for low-income families, especially children, pregnant women, and disabled adults. Qualifications are ever changing in the current economic climate, but applications can be completed at the Department of Workforce Services, or at www.utahclicks.gov. The primary qualifications are low income and at-risk populations (as listed above).

Health Insurance Portability and Accountability Act (HIPAA) — Though HIPAA primarily deals with rights and protections in regards to patient information and confidentiality, HIPAA may also give the right to purchase individual coverage if one has no group health plan coverage available and has exhausted COBRA or other continuation coverage.

Children’s Health Insurance Program (CHIP) — This service offers medical insurance for uninsured children who do not fit into a Medicaid program.

Primary Care Network (PCN) — A program designed to provide health insurance coverage for low-income individuals unable to afford a private health plan. PCN covers:

     • Adults age 19–64 years old who have not had health care coverage for at least six months and do not qualify for Medicaid
     
     • Adults who are residents of Utah

      • Adults who are U.S. Citizens or have certain types of permanent residence status

     • Adults whose annual income is within the PCN Guidelines.

     • Community Health Centers (CHC)—CHC provides primary health care services to insured and uninsured people on a sliding fee        scale.

Women, Infants and Children (WIC) — WIC provides certain nutritious foods for growing families, information on healthy eating, help for breastfeeding moms and babies and referrals to health care. To qualify for WIC, you must live in Utah (you do not have to be a US citizen) and have a family income less than WIC guidelines (within 150% of the national poverty line). A person receiving Medicaid, the Family Employment Program (TANF) or Food Stamps already meets the income eligibility requirements.

Community Action Services and Food Bank — The Community Action Food Bank is the second largest food bank in Utah. We are the food bank for Utah, Wasatch and Summit Counties. Community Action is dedicated to fostering self-reliance in individuals, families and communities, and we do this by providing a variety of programs and solutions designed to address local needs and issues. Some of the programs are discussed below:

Utility Moratorium Protection — This service protects eligible households from winter (November 15–March 15) utility shut off once per utility per year and must meet the following criteria:

     • Be the adult residential account holder, spouse, or adult resident applying for service.

     • Live at the address of the service needing the protection of the moratorium.

     • Have a termination notice from the utility company or has been refused service if the utility is not active.

     • Have applied for HEAT.

     • Have applied for utility assistance through the American Red Cross.

     • Make a good faith effort to pay their utility bill on a consistent basis during the moratorium.

     • In addition, those seeking assistance must also meet at least one of the following:

     • Gross household income for previous month falls within HEAT guidelines.

     • Have suffered recent medical or other emergency in current or prior month.

     • Have lost employment during current or prior month.

     • 50% loss of income in current or prior month.

HEAT Program — This service provides winter utility payment assistance (generally in the form of a one time lump-sum payment to the applicant’s utility companies) to low-income households, targeting those who are truly vulnerable—the lowest-income households with the highest heating costs: the disabled, elderly, and families with preschool-age children. A family does not need to receive other public assistance to qualify for HEAT. The regular HEAT season begins in November and ends in April each year. Qualifying households must meet the following three eligibility criteria:

     • Total household income is at or below 150% of the federal poverty line.

     • The household is “vulnerable,” i.e. they are responsible (either directly or indirectly) for paying their home energy costs.        Indirectly means that a household pays rent and a landlord, trailer park, etc., uses part of that rent to help cover the cost of        utilities.

     • The household has at least one person who is a U.S. citizen or a qualified alien with acceptable United States Citizenship and        Immigration Services (USCIS) documents.

     • Utah Telephone Assistance Program (UTAP)—Provides approximately $13.50 per month for lifeline telephone service (land-lines        only) for low income households (at or below 135% of the federal poverty line), as well as up to $30 toward initial phone        connection. Households can apply for UTAP when they apply for HEAT, or can request an application directly from their phone        company.


RESOURCES

Department of Workforce Services
http://jobs.utah.gov/jobseeker/dwsdefault.asp
http://jobs.utah.gov/jobseeker/dislocatedworker/dislocated_worker.htm

American Fork Center
751 E Quality Drive Suite 100, American Fork, UT 84003
(801) 492-4500
Fax: (801) 492-4550

Provo Center
1550 N 200 W, Provo, UT 84604
(801) 342-2600
Fax: (801) 342-2727

Spanish Fork Center
1185 N Chappel Drive, Spanish Fork, UT 84660
(801) 794-6600
Fax: (801) 794-6650

Women, Infants, and Children (WIC)
Utah County http://www.utahcountywic.org/

American Fork Clinic (Also known as North County WIC Clinic)
599 S 500 E, American Fork, UT 84003
801-851-7320
Fax: 801-851-7329

Orem Clinic
1549 N. State St. #104, Orem, UT 84057
801-851-7340
Fax: 801-851-7346

Payson Clinic (Also known as South County WIC Clinic)
910 E 100 N #175, Payson, UT 84651
801-851-7360
Fax: 801-465-0911

Provo Clinic
151 S University Ave, Suite 2100, Provo, UT 84651
801-851-7300
Fax: 801-851-7303

Community Action Services and Food Bank
(Includes Food Bank, U.M.P, H.E.A.T, U.T.A.P. and other programs)
http://www.communityactionprovo.org/index.php
815 S Freedom Blvd. Suite 100, Provo, UT 84601
801-373-8200
Fax: 801-373-8228

Provident Living Website
http://www.providentliving.org/
A website dedicated to self reliance and welfare resources.