August Financial Check-In: What You Should Know About Your Money This Month

Julia Chang
Posted

wallstbullRight about now you’re probably trying to savor the dog days of summer, whether that’s kicking back with some fresh lemonade your last weekend at the shore or hiking in the countryside before the weather gets cool.

You know, basically taking the time to relax and unplug before life picks up again at full pace come fall—which means you may have missed some of the big headlines over the past month.

But fear not, we’ve got you covered! We’re keeping you informed about everything from rising student loan interest rates to bullish stock market rallies, so you don’t need to go digging through those newspapers that have piled up on your front porch.

News flash #1: The bulls are on the loose …
The bull markets, that is. In July, both the S&P 500 and the Dow Jones Industrial Average surpassed their previous record highs. The S&P flew well past its 1900 benchmark to a high of 1987, while the Dow reached 17,000.

But are these bulls in a china shop? Some professionals believe this summer’s stock rallies just mean we’re due for a “correction” (read: drop)—but are unsure how serious that correction could be. Whatever the case, don’t panic. Remember that you’re probably investing for the long run, so try not to make rash decisions based purely on market volatility.

News flash #2: Are you getting zapped with secret cell phone charges? 
It could be because of that weird mobile ad you accidentally clicked on. The FTC recently filed a lawsuit against cell phone service provider T-Mobile for “cramming,” or charging customers for services they never wanted.

This usually happens when consumers are browsing the web on their smartphones and accidentally agree to some sort of text-message service for something like celebrity gossip or weather reports. The charges then appear listed under vague terms like “service fee” or “membership.”

Last month T-Mobile’s C.E.O. published what was effectively a mea culpa on the matter. But other major phone carriers (AT&T, Sprint and Verizon) have also been accused of cramming—so review your next bill with a fine-tooth comb to help make sure you aren’t paying a premium for the latest about Kim Kardashian’s love life.

News flash #3: Here’s some student debt news that may “interest” you.
On July 1, interest rates for undergraduate student loans increased to 4.66% (from 3.86%) for new loans taken out for the 2014–2015 school year. But the hike isn’t necessarily a cause for concern; if you have, say, about $29,000 in loans, you’ll probably pay only about $10 more a month.

Still, interest rates could continue to increase in the future. Why? Last summer Congress abandoned fixed rates for subsidized loans, which were kept low due to the financial crisis. But the new legislation now bases student-loan interest on a fixed rate, plus the yield on a 10-year Treasury. The rates do have caps that depend on the type of loan you have.

If you’re worried about making your monthly payments, there may be ways to cope. Remember that Obama recently extended the Pay As You Earn program, which caps borrowers’ repayments of their federal loans at 10% of their income.

News flash #4: Americans may be doing a better job of saving for retirement … sort of.
First, the good news! Recently released data from Vanguard revealed that the average worker’s 401(k) balance reached $101,650 last year. Not only is that a record high, but it’s the first time that the average has surpassed the six-figure mark. The bad news? The median balance was only $31,396, which means half of the population has less than that in their nest egg.

Complicating the situation is evidence that Millennials prefer cash over investing in the markets when it comes to saving for long-term goals like retirement. According to the survey, about 39% of younger savers view cash as king for goals 10 or more years away, compared with a quarter of all respondents.

Why the aversion to investing? Some researchers say Millennials, who grew up with stock market volatility, are the most fiscally conservative generation since those who lived during the Great Depression. Still, it doesn’t change the fact that young savers who stay out of the market may be missing out on the power of compound growth.

Last but not least, here are some headline-grabbing stats from the last month to mull over:

• Congress is proposing a 12-cent gas tax hike to be phased in over the next two years. See how it may affect you at the pump using this state-by-state map and gas-tax calculator—then check out a few ways to help keep gas costs down.
One third of consumers have never even taken a peek at their credit report, which may be why Credit Karma is now offering consumers free access to theirs, along with tips on how to work on improving their credit scores.
• You’d need $122,175 in order to live a happy life in Hawaii—at least according to this new analysis, which crunched happiness salary benchmarks for all 50 states.

LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. LearnVest Planning Services and any third parties listed in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.