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By Nancy L. Anderson, Ph.D., CFA

Published in the Mississippi Business Journal, June 26, 2011

What keeps you up at night? For many of us, sleepless nights are the result of financial worries.

A new Gallup poll asked Americans to rate those financial woes. At the bottom of the list is the worry about paying our credit card bill. Since 2008 many have cut down and cut up credit cards, reigning in those balances. In the last few months, average credit balances have begun to creep back up. I am always preaching the evils of consumer debt.

Based on this poll, I don’t think anyone is listening. Hey, as long as we can make the minimum payment, what is the problem?

We’re also not worried about covering our mortgage. All I hear on the news is foreclosure, foreclosure, foreclosure, but most people are managing just fine. We’re a bit more worried about paying our regular monthly bills. In fact, we’re more worried about that than covering Junior’s college education. I guess that’s because the light bill has to be paid in 10 days, while Junior won’t head to college for another 10 years.

So what are the top three financial worries for Americans? The first is not having enough money for retirement. Based on average contribution rates of about 8 percent (including employer match), we should be worried! Anything less than 20 percent is probably not going to cut it. Next on our list of worries is concern about paying for a healthcare crisis. Given our declining benefits and rising costs, this is a legitimate worry.

Below this, at number three on the list, above regular bills and our children’s education, is the worry that we won’t be able to maintain our standard of living. What!?! We’re more concerned about keeping up with the Jones than with paying our bills and preparing for college for our children.

It seems to me that if we could move this worry to the bottom of the list, everything else would take care of itself. Forget the fancy cars, the brand name fashions and the outrageous trips. Choose to live at a lower standard, and voila! No more sleepless nights!

Nancy Lottridge Anderson, Ph.D., CFA, is president of New Perspectives Inc. in Ridgeland, (601) 991-3158.  She is also an assistant professor of finance at Mississippi College. Her e-mail address is nanderson@newper.com, and her web site is www.newper.com.

Paying a Fair Share of Taxes only Fair.

By Nancy Anderson, CFA

Published in the Mississippi Business Journal, June 12, 2011

So, I heard that 45 percent of tax filers pay no federal income tax. NONE! 45 percent!

Now, that makes me mad. After all, I pay a boat load of taxes every year. I don’t mind paying my fair share. I just want to make sure everyone else is anteing up, too.

So, I began a search to find out who these people are and how they manage to get away scot-free. I would find them and root out the freeloaders!

Turns out that about a third of the 45 percent are teenagers and college students with part-time or summer jobs. They only have one foot in the job market, so they are not making enough to pay taxes. About another third is composed of retired people living on a modest, fixed income. Both feet are totally out of the workforce. The final third is represented by families with full-time workers. Typically, a family of four with a household income under $50,000 qualifies.

Suddenly, my righteous indignation turns to mush. I really don’t mind that teenagers and retirees aren’t paying taxes. For the teenagers, their day will come, and for the retirees, they’ve paid their dues. As for the folks in the middle, I think anyone trying to get by on $50,000 with two kids needs a break. In fact, over 40 percent of the 45 percent of non-taxpayers are under the age of 35. For the most part, these are young families just getting started.

And even among the total 45 percent, two-thirds are still paying Social Security and Medicare. Only retirees truly get off scot-free. Like I said before, they’ve paid their dues.

After my research, I just found myself grateful that I’m in the 55 percent taxpaying category. After all, if I’m paying taxes, I’m making money. In these tough times, that’s quite an accomplishment!

Nancy Lottridge Anderson, Ph.D., CFA, is President of New Perspectives, Inc., in Ridgeland, 601-991-3158.  She is also an Assistant Professor of Finance at Mississippi College . Her e-mail address is nanderson@newper.com, and her website is www.newper.com.

Time to Figure Out Your Retirement?

By Nancy Anderson, CFA

Published in the Mississippi Business Journal, May 15, 2011

Do you know how much is in your 401(k)? What about your spouse’s balance? What is your contribution rate? How much is your spouse contributing? Clueless on all counts?

You’re not alone. Fidelity surveyed 401(k) participants and found that half didn’t know what was in their very own retirement account. Only 37percent of husbands know what’s in their wives’ accounts, and 21 percent of wives know what’s in their husbands’ accounts. C’mon ladies!

I know you’re busy. You’re both working. The kids have soccer games on the weekend. Schoolwork and dinner suck up your evenings. But this is important! Your biggest asset is probably your retirement account. Can’t you at least give this asset an hour of your attention one time a year?

Schedule a meeting with your spouse. Before you meet, each should do some homework. Print out the latest statement on your 401(k). Find out your percentage contribution rate from the Personnel Department. Ask what the employer match is.

Sit down and play show-and-tell with your plans. One person could set up a spreadsheet listing all the family assets and liabilities. Fill in the blank with your plan numbers. Stare at the total a LONG time, and ask the very serious question, “Is this enough?”

If you need help calculating a savings rate, you can turn to an online retirement calculator. You can also schedule an appointment with a fee-only financial advisor. This person can help with a savings plan and can make recommendations on fund choices within each retirement plan. It’s money well-spent.

And while you’re at it, go online to socialsecurity.gov and get a benefits calculation for each partner. You’ll get hard numbers and hard dates to use as you plan for the total picture.

School’s almost out. Maybe things will slow down. Make a date with your spouse. Light a few candles. Pop a cork. It’s show-and-tell time!

New Perspectives, Inc.

A fee-only financial advisor.

1.00% of assets or $200 per hour. 

Nancy Lottridge Anderson, Ph. D., CFA
601-991-3158