Summer 2009 Tampa Bay Saves Newsletter Update
Topics:
Managing in Tough Economic Times
Frequently Asked Questions:
I have lost my job and am wondering what will happen if I withdraw
money from my qualified
retirement plan or IRA?
Community
Resources
Upcoming
Financial Management Classes
Family Communication
Managing in Tough Economic Times
Many people are dealing with reduced income and uncertainty. This time of challenge can be an opportunity to gain better control of your finances by communicating with family members and setting spending priorities.
It is important to develop a spending plan based on your current income. If your household income is reduced you will either need to cut back on expenses or find a way to replace the lost income. You may have to decide whether to use savings to supplement your income, to borrow money, or use credit cards. If possible, avoid using credit cards as extra cash.
Prioritize your debts. Concentrate on items that are critical for your health & well being and your legal obligations. Legal obligations include child support, student loans, taxes, and legal judgments. Falling behind on these types of debts can have serious consequences. Stay in touch with the appropriate legal authorities or agencies and try to work out a payment plan. Once you have determined how much money needs to go for essentials and legal obligations, decide how much you can pay towards your consumer debt.
If you are unable to pay your bills at the amount dictated by your original contract or minimum payment amount, try to negotiate new terms with the lender. Understand, the lender is not under legal obligation to accept reduced payments, but it does not hurt to ask. In certain circumstances lenders have incentives under the 2009 Recovery Act to renegotiate mortgages, and creditors also may have some consideration; but this too, is at their discretion.
Be on guard against “get out of debt quick offers” and other scams; they can greatly increase your debt and cause long-term credit problems. Any solution that sounds too good to be true, probably is! There is no shortage of unscrupulous people who prey on others who are in a financial crisis and vulnerable to quick fix scams.
Tough times can serve as an opportunity to sharpen perspective about what is most important and focus resources towards necessities.
Frequently Asked Questions
Generally speaking, if you withdraw the funds before you reach the age of 59 1/2 and do not roll it over into another qualified retirement plan or Individual Retirement Account (IRA) within 60 days, that amount will be taxable income in the year in which it is withdrawn. You may also have to pay an additional 10 percent tax on early distributions.
There are special rules for computing tax on lump-sum distributions. See IRS Publication 575 (http://www.irs.gov/publications/p575) for detailed information. For more information on the tax consequences of a job loss, see IRS Publication 4218 (http://www.irs.gov/pub/irs-pdf/p4128.pdf).
Saving decisions depend on many factors. Factors such as job stability and a family's level of emergency savings and outstanding debt all need to be considered.
If someone faces uncertainty about job stability and has only a small reserve fund, it might make sense to temporarily suspend or reduce retirement plan contributions and redirect the money to increase emergency savings instead. On the other hand, workers with no/low debt and good emergency reserves might want to consider saving more in a retirement savings plan because their increased contribution will buy more securities when share prices are low. Saving/investing more now can be an especially good strategy for workers who anticipate retiring in a few years.
Finding a Job
Employ Florida Marketplace: The web site offers job search and
resume building tools. Their website is https://www.employflorida.com
or call 1- 866 – 352 - 2345.
One Stop Centers: One Stop Centers offer help finding job
placement and job training
opportunities. A list of locations can be found at http://www.floridajobs.org/onestop/onestopdir/index.htm
Food
Food Stamps: The Florida Department of Children and Families
provides a web site called “Access” that allows Florida residents to
apply to for food stamps, temporary cash assistance, and Medicaid
online at http://www.myflorida.com/accessflorida . The Customer Call
Center phone number is 1-866-762-2237
Share Florida Food Network: Share is a group food buying program that provides food packages at reduced prices. There are no income limitations. The Share web site is http://shareflorida.org or call (813) 248 – 3379.
Debt Management
When: Tuesday, August 11, 6:30 P.M.— 7:30 P.M.
Topics will include: Credit reports & scores, evaluating debt levels, and debt management options.
Money Management Strategies for Tough Economic Times
When: Tuesday, August 25, 6:30 P.M.— 7:30 P.M.
Topics will include: Developing a spending plan, prioritizing
expenses, budgeting tools, and
family communication.
Location for both classes: Seffner Mango Library, 410 N. Kingsway Rd., Seffner, FL 33584
Registration:
Pre-registration required.
Three ways to register:
1) Online: For the Aug 11 class register online at
www.debtaug11.eventbrite.com
for the Aug 25 class go to www.mymoney.eventbrite.com
2) Contact Lisa Leslie at (813) 744-5519 X143 or lesliel@hillsboroughcounty.org
3) In person at the Seffner– Mango Library.
For persons with disabilities requiring special accommodations,
please contact Lisa Leslie at
(813) 744 - 5519 x143, at least five working days prior to the
program so proper consideration may be given to your request.
Family Communication
When the family is facing tough times, family members need to lean
on each other more than usual. Talk to each other respectfully and
listen to each other’s concerns.
· Conflict and disagreements are normal, especially when family members are stressed. Give each person a chance to share his or her view of things, without interrupting or judging. Keep an open mind and listen for new information and good ideas.
· Set aside a regular time for family meetings to share information and concerns. Make sure that finances are not the only topic of discussion and consider ending the meeting with a special family activity or treat.