Thursday, February 28, 2013

Winter Storms

With the recent snowstorms that have been sweeping across the United States it is wise for each of us to think about our own preparation for a major storm. The following suggestions are some things you can do to prepare for a storm and how to stay safe during and after a storm.

Be Prepared for a Storm:

Before Mother Nature strikes, be prepared for a major storm. Everyone should have some basic supplies on hand to survive for at least three days in the event of an extended power outage. Following are suggested items to keep on hand and easily accessible, although everyone should consider the unique needs of their own family in order to create an emergency kit that will provide for your needs.

  • Water: at least one gallon per person, per day for drinking and sanitation. If you have pets, have extra available.
  • Food: at least a three-day supply of non-perishable food, focusing on items that can be eaten without being cooked. Don’t forget a hand-operated can opener.
  • Flashlights and a supply of fresh batteries.
  • A corded telephone. Cordless phones will not work when your power is out.
  • A battery-powered radio and/or television. Midwest Energy Cooperative works with regional news media to provide regular updates about major power outages.
  • A battery-powered or wind-up clock.
  • A first-aid kit and hand sanitizer. Be sure to fill prescriptions and have any needed medical supplies on hand.
  • Extra blankets.
  • Candles and matches.
  • Moist towelettes, garbage bags and plastic ties for personal sanitation.
  • Wrench or pliers to turn off utilities.
  • Rock salt or other product to melt ice on walkways.
  • Sand to improve traction.
  • Snow shovels and other snow removal equipment.
  • Sufficient heating fuel. You may become isolated in your home and regular fuel sources may be cut off. Store a good supply of dry, seasoned wood for your fireplace or wood-burning stove.
  • Adequate clothing to keep you warm.

Safety Tips During and After a Storm:

  • Pay attention to Winter Storm Watches and Warnings, Winter Weather Advisories and Travel Restrictions. See additional resources below for definitions of the various warnings.
  • Stay indoors during the storm.
  • Walk carefully on snowy or icy walkways.
  • Avoid overexertion when shoveling snow.
  • Keep dry. Change wet clothing frequently to prevent a loss of body heat.
  • Watch for signs of frostbite. These include loss of feeling and white or pale appearance in fingers, toes, ear lobes and the tip of the nose. If symptoms are detected, get medical help immediately.
  • Watch for signs of hypothermia. These include uncontrollable shivering, memory loss, disorientation, incoherence, slurred speech, drowsiness and apparent exhaustion. If symptoms of hypothermia are detected get the victim to a warm location, remove wet clothing, warm the center of the body and give warm, non-alcoholic beverages if the victim is conscious. Get medical help as soon as possible.
  • Drive only if it is absolutely necessary. If you must drive, travel in the day, don’t travel alone and keep others informed of your schedule.
  • To prevent water pipes from freezing, keep faucets turned on slightly so that water drips from the tap. Know how to shut off water valves in case a pipe bursts.
  • If your pipes freeze, remove any insulation of layers of newspapers and wrap pipes in rags. Completely open all faucets and pour hot water over the pipes, starting where they were most exposed to the cold.
  • Conserve fuel, if necessary, by keeping your residence cooler than normal.
  • If you will be going away during cold weather, leave the heat on in your home set to a temperature no lower than 55°F.
  • Stay away from downed power lines. A power line does not need to be sparking or arcing to be energized. Lines that appear to be “dead” can become energized as crews work to restore power. Assume all low and downed lines are energized and dangerous.
  • Never drive over a downed line as snagging a line could pull down a pole or other equipment and cause other hazards.
  • Be careful approaching intersections where traffic lights may be out.

What to Do If the Power is Out:

  • If you plan to use a generator, know how to operate it safely.
  • Turn off all appliances, including your furnace, air conditioner, water heater and water pump so you avoid a circuit overload when power is restored. Leave on one lamp to know when power has been restored.
  • Keep freezer and refrigerator doors closed. Food will stay frozen for 36 to 48 hours in a fully loaded freezer if you keep the door closed. A half-full freezer will generally keep food frozen for 24 hours. If it looks like the power outage will be prolonged, prepare a cooler with ice for your freezer items.
  • Keep candles away from furniture, curtains or any other flammable material. Never leave children alone in a room with a burning candle or open flame.
  • Never use gas stoves, charcoal or briquette grills or camp stoves to cook or heat within your home.
  • Make sure cell phones and laptop computers are charged ahead of time. Consider using them only to update family and friends on conditions, and to check the weather or road conditions.
  • If you can’t stay warm go to a designated public shelter. Text SHELTER + your ZIP code to 43362 (4FEMA) to find the nearest shelter in your area (example: shelter 65203).

Additional Resources:


Information for this article was compiled from Midwest Energy Cooperative ( and (

Ryan H. Law, M.S., CFP®, AFC®


Personal Financial Planning Department

Office for Financial Success Director

University of Missouri Center on Economic Education Director


162 Stanley Hall

University of Missouri

Columbia, MO 65211


573.882.9211 (office)

573.884.8389 (fax)


Thursday, February 21, 2013

College Savings Tips

While many of our readers are students, tips on how to save/pay for college are the keys to one's financial success.  I have been known to say that the most important asset in everyone's portfolio is one's self, for it is one's self who works to earn the income it takes to have a fruitful financial plan.  It is well documented that education is highly correlated with earnings and, thus, understanding how to save for the investments we make in ourselves, or our loved ones, is essential to total portfolio management.  Besides, for our younger readers, it is important to consider the costs of a child, before you decide you want to have one.   

Saving for college is overwhelming for many, the realization that one's children or loved ones cannot succeed in college due to financial constraints can be quite depressing.  Yes, the loved one can and, perhaps, should work to help pay for college.  When average costs for tuition and fees, room, board, books, supplies, personal expenses, and transportation are included, it is estimated by the Scholarship Workshop to annually cost $27,210, at a public, in-state university, and $58,640, at a private university, for academic year 2013-14.  This high price tag makes working to cover the entire cost of a higher education difficult.  As a result, many choose the expensive alternative of student loans.  Loans can help and much has been written about their use and misuse in the education marketplace, however, that is not the focus of a tip on college savings.   So, let's build some education capital!

The most important thing you can do for your child, beginning prior to conception, is to create a healthy environment in which to rear the child.  Good nutrition and exercise is important for the mother, as it will be for her progeny.  Importantly, work with the child to develop a love of learning.  Read to the child, prior to their entering school, in an effort to put them at or above their grade-level.  Academic success is the easiest way to receive financial help for university attendance.

If you intend to help the child with their college expenses, begin shortly after they are born, in order to have the benefit of time and compounding on your savings.  Start small with what you can manage or do a finely-tuned calculation utilizing an expected future cost of four years of college and what it would take on a periodic deposit to help reach the goal, at an assumed rate of return and time period.  Do NOT sacrifice your retirement savings for your child's college expenses.  You need to be on track for saving for your retirement.  Your child is not your retirement plan and they can always borrow the money they need, if they have no other option. 

There are several ways to save for college. 


*       * State-sponsored 529 plans are very popular as they offer federal and, sometimes, state tax benefits.  These include tax-free withdrawals for qualified educational expenditures.  Missouri's 529 plan is called the MOST plan and more about it can be found here: .  Besides being tax-free, other tax advantages include:

    • Investment earnings grow tax-deferred.
    • While your contributions are not tax deductible on your federal taxes, they are likely deductible at the state level.
    • If you make non-qualified withdrawals, both taxes and penalties will be charged.
    • Should a child not use their entire 529 account, a tax-free transfer of the account can be made to a sibling, cousin or another family member. If this person uses the money for qualified education expenses, the withdrawals are tax free.

·        * Gift money to the child.  Money gifted to the child is counted more heavily against their eligibility for financial aid, if one might qualify for financial aid.  These periodic gifts, under the control of the parent, are a great way to save and to visibly state that you believe in your child's future and are willing to put your money where your mouth is – toward their future.


           * Life insurance may have a cash value which can accumulate through premium payments and can be borrowed from the policy later, in order to be used for college expenses.  These withdrawals do not need to be repaid, as they will simply reduce the death benefits to your beneficiaries, should the inevitable occur sooner than planned.  Before you choose this option, make sure you need the life insurance and, if you do, that you have enough life insurance.  It is often the case that savings-type life insurance policies are too costly for many young families to purchase and to still provide adequate life insurance coverage.  Buying term life insurance and saving the difference in premiums is still a very effective plan.


           * Accumulate equity in your home and then refinance, through a home-equity loan or a new first mortgage, to provide liquidity to meet college obligations.  Accumulating more debt, as one gets older, is not the best way for parents to get ready for retirement.  Moreover, this debt is the parents' debt, not the debt of the child.  The investment, however, is being made in the child and the child will be the one who primarily benefits from the investment. I'd let my child borrow the money.  If I want to help, I'll send her a check.

Regardless of your plan, make sure your asset mix is appropriate.  Take greater risks when the child is young by utilizing more equity investments and, perhaps, riskier equity investments.  As the child approaches college, reduce the risks by reallocating to relatively more cash and bonds.  If you have trouble managing your investments, invest in one or more age-based college savings plans.  Most 529 plans have this option, as well as many mutual fund companies have target date funds.  Whatever your chosen investment vehicle, keep the costs of your investments low.  Make sure you remain well-diversified across asset categories, as well as within categories and don't panic with market fluctuations.  Fluctuations are a fact of life and, unfortunately, the biggest losers are those who take their money out, when they can't stand the declining market anymore, and those who put it in, after the market has already appreciated.  Buying high and selling low is not the way to invest.  

One last comment.  If you have a child and want to save money for his education, please begin today.  It is easier to stick to a plan than it is to start a plan.  So, get started.

Wednesday, February 13, 2013

No More Paper Checks for Federal Benefits

By Brenda Procter, Extension Associate Professor, Personal Financial Planning


If you like to hold a paper check in your hand, you will soon be out of luck if you receive federal benefits.  By March 1, 2013, you will be required to switch to electronic payments of benefits for:


·         Social Security

·         Supplemental Security Income

·         Veterans Affairs

·         Railroad Retirement Board

·         Office of Personnel Management

·         Department of Labor (Black Lung)


Paper checks are no longer an option for anyone after March 1.  You can either have your government check direct deposited into a bank or credit union account or ask the U.S. Treasury to deposit benefits onto a prepaid debit card if you don’t have or don’t want a bank account. 


Your benefit will always be deposited on your payment date. If you have the prepaid debit card, you can sign up to get free text, phone or email alerts when your money goes into your card account.


Direct Deposit

To sign up for Direct Deposit, you can:


·         Enroll online

·         Talk to your bank or credit union

·         Call (800) 333-1795 (Mon-Fri, 8am-8pm ET)

·         Contact the local office of the agency providing your federal benefits (e.g., Social Security or Veterans Affairs office)

·         Enroll by mail


Prepaid Debit Card

To request a Prepaid Debit Card for federal benefits, call (800)333-1795.  If you use the prepaid card, Direct Express® Debit MasterCard®, exercise caution.  It is possible to use the Direct Express card for free by buying things at stores that accept Debit MasterCard® and getting cash back from the cashier when make the purchase.  You can check your balance at ATMs or online at no charge. But be careful, because there are some fees for optional services. Visit or call the Go Direct Helpline at (800) 333-1795 for a list of card fees and features.  The Go Direct Helpline can answer any other questions, as well.


What You’ll Need to Sign Up

To have federal benefit payments paid by direct deposit to your checking or savings account, you'll need your:


·         Social Security number or claim number

·         12-digit federal benefit check number

·         Amount of most recent federal benefit check

·         Financial institution's routing transit number*

·         Account number* and type - checking or savings



*This information is often on personal checks.


If you want to get your benefit payments through the Direct Express® card, you'll need your:

·         12-digit federal benefit check number

·         Amount of most recent federal benefit check


Thursday, February 7, 2013

Are You Ready to Rotate?

Much has been in the press lately, especially last weekend, about the "Great Rotation" on Wall Street.  The story line is that small investors are creating a "great rotation" out of bonds (safety) and toward equities (risk).  They tell us that this shift will add momentum to the current bull market and take the indices to new highs.  


OH BOY! This sounds good, doesn't it?  Yet, an increasing inflow of capital to the stock market in January is not a new phenomenon, albeit true that the Standard and Poor's 500 did increase by 5% last month.  Investors put $20.7 billion in new money into stocks during the first four weeks of 2013.  While this is great news, it is a very small number when we compare it to $410 billion that has been taken from the market since the start of 2008.  Nor is this number that unique.  In 2011, investors moved $23.9 billion into stock funds and another $28.6 billion in 2006.  The year 2011, ended the year relatively flat (-.05%).  In 2006, the market did gain 13.62% for the year.  To add to our confusion, in January, the market issued $111.725 billion of US high-quality debt and MIZZOU alumnus, Bill Gross, who runs the Pimco Total Return Fund ($285 billion), commented that, "January inflows at Pimco show few signs of bond/stock rotation."


I don't want to be Debbie-downer and I am not saying that stocks are not a good place to invest in 2013.  There are many reasons for investors to be optimistic.  We avoided going over the "fiscal cliff" at the end of 2012, Europe's problems seem to be more manageable than they were perceived two years ago, and China seems to be stabilizing.  (We even avoided the Mayan End of the World on 21 December 2012!) The World Bank, however, comments that developing countries will continue to have growth 1-2 percentage points below what it was before the Great Recession.  They also caution those countries to focus their efforts on productivity enhancements, rather than demand stimuli.  (Hmm, this sounds familiar.)  While the World Bank is cautious, they see that the risks to the world's economies have diminished compared to last year and that any foreseen impacts from those risks will be less than a year ago.  They agree that surprises still await us, behind the doors of Europe, the Middle-East, US fiscal policy[i], and, as always, a black-swan could be lurking overhead.


So, are you ready to rotate?  My "tip" for financial success is simple and it is the same as I've advocated for years to my friends, clients, students, and readers.  Stick to your plan, if you have one.  If you don't have a plan, get one.  Then, stick to your plan.  Always maintain a well diversified portfolio of investments, employing mutual funds, ETFs, and index funds with exposure to small-, mid-, and large capitalized corporations.  Make sure that you not only invest in the United States but take advantage of the opportunities to further diversify by investing overseas in other regions of the world.  Don't shy away from bonds because they are too boring, as they will greatly reduce the volatility of your portfolio.  At the same time, don't be afraid of stocks, because they are too risky.  Learn to manage the risks of investing that you cannot control: market risk, inflation, interest rates, and exchange rate risk by investing in each of them.  Sure, one will outperform the others and one will be the dog, but you don't know which one will "win" and which will "bark", until after it no longer really matters.  What does matter is whether you can take care of yourself and your financial goals.  If you have a plan, the only rotating you need to do is while you sleep and you will sleep well, knowing you are on course to reach your goals.


For more reading, check out our webpage: , where we have assembled a variety of links to investment education materials that we believe to be useful.


[1] March 1, 2013 is the date that the "meat cleaver" approach to reducing expenditures, known as sequestering, occurs.  This is when all federal expenditures are cut, regardless of outcome.  I'm sure there are scalpels in Washington, DC, if our elected officials would start looking and work together toward a compromise.


-          Robert O. Weagley, Ph.D., CFP(r)