A note from Charlie – July 10

July 10th, 2014 Charlie Funk
Charlie Funk

This month, it is a little bit about a lot of things …

Whether it’s retirement or  a college education or for something else, many Americans have a tough time saving for significant future events. If your employer offers a 401k and matches a portion of your contribution, do everything you can to save at least the percentage of your salary necessary to receive your employer’s match.  If you are still having trouble doing that, the next time you receive an increase in compensation, try funneling the entire increase into your retirement plan. It may be a few years before you appreciate the discipline it takes to increase your saving, but you will almost certainly be glad you did.

Along the same lines, a recent study by TIAA-CREF shows that about 1/3 of its plan participants have borrowed against their plans. Only do this as a last resort!  This is your future financial security and if you are forced to borrow against your retirement plan, do everything you can to repay the loan in a quick manner.

Did you see the recently released final numbers for first quarter Gross Domestic Product (GDP)?  It was down 2.9 percent! While the poor winter weather we experienced deserves some blame, this economic weakness is more than weather related.

Here is this writer’s theory:  the reams and reams of increasing regulation that all sectors of our economy are absorbing is contributing to this economic malaise. Whether it is increased health care regulation, financial services regulation, EPA regulation, or many other examples, this comes at a cost. This writer acknowledges the need for sensible regulation and we should all agree that some of the regulations now on the books are nonsensical. In our industry, the American Bankers Association estimates that the cost of regulation is 15 percent of revenues for the average bank. This definitely has an effect  on employment levels as well as the price consumers pay for loans and receive on deposits. Think about that for a minute.

Going on vacation this summer? If you are traveling far from home, you might wish to tell your credit card provider and your bank where you are going. Why? As you may know, fraud is everywhere these days and so are efforts from credit and debit card providers to prevent it. If a charge in a “strange” location suddenly appears, there is a chance your access could be shut off as a precautionary measure.  That’s why a call to your friendly banker may be a good idea before you leave home. Also be sure that you have some cash on hand for emergency situations when your bank card may not work.

Recent studies indicate an increasing number of grandparents are helping with their grandchildren’s college education. If you are doing this, consider giving appreciated stock rather than cash to help pay for “Junior’s” college education. You might receive a large tax benefit by doing this. As you always should, please check with your tax accountant before doing this to assure that you are doing the right thing for your situation.

And, finally, CNN Money reports that 70 percent of married couples argue about money. The top five reasons for disagreement are (in order) frivolous purchases, household budgeting, credit card debt, insufficient emergency savings, and insufficient retirement savings. If you are having difficulty with any of these issues, your talented and friendly community bankers stands ready to assist. Remember, we see a wide variety of situations and we can likely provide positive and worthwhile suggestions to help you build a better financial foundation.

Charlie Funk

About the author

Charlie Funk is President and CEO of MidWestOne Bank. He works with the MidWestOne team to oversee the daily operation of the bank.

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