This Week in Your Wallet: A is for ACA and B is for Bake Sales
A confession: I have not always reacted well when told by one of my teenagers that they promised to bake for the next day’s fundraising bake sale. This announcement usually comes at 10 at night and is often followed by a plaintive look asking me to do it, so they could do their homework. I wish I could say I’ve typically told them to do it themselves. I didn’t. I caved and broke out the chocolate chips.
So you’d think the potential demise of school bake sales wouldn’t bother me. As I wrote for Fortune.com last week, it does. Here’s the deal:
“Thanks to the U.S. Department of Agriculture’s Smart Snacks In School standards, which go into effect July 1. Snack foods sold in schools now must be a whole-grain-rich product; have a first ingredient that’s a fruit, veggie, dairy product, or protein; or be a combo food that contains at least ¼ cup of fruit or veg. There are also caps on calories, sodium, sugar, and fat. Tried-and-true bake sale favorites–like brownies, Toll House cookies, and cupcakes–clearly miss the mark.
“There is a little wiggle room here. According to the USDA: “Each state will have the flexibility to set a certain number of fundraisers that can sell foods or beverages that do not meet the nutrition standards.” My state, New York, has set the number of exemptions at zero. They can, of course, sell healthy items — or, sell not-so-healthy ones, after school hours.
From a health perspective, I understand the government’s impulse. Childhood obesity is a big problem in this country. But I’m concerned for another reason: Bake sales and other school fundraisers teach a real-life financial literacy lesson. Kids are put in the position of having to figure out pricing, marketing, inventory management, not to mention how to make change.” Other financial literacy advocates from Jack Kosakowski, CEO of Junior Achievement USA to Mitch Rochelle, who runs the $60 million financial education effort at PriceWaterhouseCoopers, seem to agree. Best-selling author Dan Pink asked: “What’s next? Lemonade stands? Girl Scout cookies?”
I’d be interested to hear what you think. Tweet me @jeanchatzky or drop me a line at jean@jeanchatzky.com. And now for the other news of the week.
To close, or not to close?
There certainly isn’t a shortage of credit card options on the market today. In fact, experts in choosing would probably say there are far too many. And in this land of (plastic) plenty, it’s easy to fill every slot in your wallet. But how do you slim that wallet down without damaging your credit score? DailyFinance offers a list of factors to consider before you make cuts. Among them?
First, know how it will impact your credit score. The act of cancelling a card is more likely to hurt it than help it. This is primarily due to what’s called your credit card utilization rate. (This is your total available credit card balance divided by your total credit card limits.) You see, when you close a card, you also reduce your overall available credit. Unless you reel in your spending beforehand, cutting a credit line (particularly if it’s a large one) will raise your utilization rate, which is one of the most significant factors that goes into calculating your credit score. The lower your utilization rate, the better (in general you want to keep it under 30%). That’s why it’s sometimes better to keep a card open even if you don’t use it anymore. (If it has an annual fee and you want to close it for that reason, pay down debt before you pick up the phone.)
Second, if you do decide to cancel a card, do cancel it three times. Sounds a bit overkill, but nowadays it’s important to not only cancel it via phone or online, but also through a certified letter (to the bank’s customer service) that asks for a confirmation letter in return. Then, once confirmed, it’s good to cut the card. This lessens the likelihood of miscommunication that could wind up with a line left open for someone other than you to use. For more tips, see the full story.
What if you can’t get credit in the first place?
I spent the weekend talking to my husband about the right credit card for his daughter. She’s in her early 20s, in her first job, and – like many millennials – has what’s called a “thin” credit file. She doesn’t have much of a credit history at all. This is very common today, thanks in part to the CARD Act which largely stopped card issuers from handing out cards to college kids without an income.
The solution we hit upon? A secured credit card. Essentially, you deposit a sum of money with the issuing bank. That becomes the collateral that “secures” future purchases. As long as users pay their bills on time and don’t go over their limits, within a couple of years they should be able to qualify for plain vanilla – i.e. regular – credit cards and larger credit limits. To see which secured card is my favorite these days check out yesterday’s Mailbag Monday.
Save on healthcare
A new Gallup poll says two-thirds of Americans are currently satisfied with healthcare in this country. I’m wondering if sentiments will change as people are forced to pay more out of pocket at the doctor’s office – that’s the direction we’re heading in. Whether you have insurance through your work, state or buy it on your own, both premiums and deductibles are on the rise. Many insurers have also switched from fixed-dollar co-payments to coinsurance, which is based on a percentage of your bill. So what can you do about it? You can practice these preventative measures from Kiplinger so that you’re not coughing up more money than you need to.
For instance, save time and money on minor conditions by calling your doctor instead of going in. It’s called Telemedicine, and some health plans are offering it as a low-cost alternative (an average consult costs $40-$50). For non-emergency conditions, you just dial into one of the 24-hour help lines, manned by both doctors and nurses. They have the power to prescribe medication (if necessary), too. A more common tip, but worth noting, is switching to the generic version of your medication – pending your doctor’s approval, of course. Generics can cost as much as 80% less than your brand-name medications. For over 30 tips, head here.
For budgeting, think daily
Making a budget is difficult to do, and sticking to one is even harder. As Reuters reports, Mint, the money management program/app, found that only 20% of Americans will take the time to calculate their expenses. Thankfully, technology continues to offer fast and efficient options that calculate them for us. As the brains behind these budgeting technologies are finding, the best way to get us more engaged (in our finances) is by asking very little of us. A younger app to the market, Level, crunches budgeting down to one number: the discretionary money you have to spend daily. Even though it’s geared towards millennials, it’s a good method for making your budget work.
Have a great week,
Jean
