A few financial rules

This was originally published on Monday, April 24, 2017, in the Pacific Daily News.  Click here to subscribe to the PDN.

As April comes to a close, so does Financial Literacy Month. In these times of economic uncertainty, money management is a necessary life skill. Many of us are not taught how to handle money or prepare ourselves for the future.

Most of the time, we learn as we make mistakes. Sometimes we bounce back, but sometimes it is a life of continuous hardship. Being prepared makes a huge difference when dealing with money management.

Here are a few rules:

Plan. You can’t go through life not having financial goals. The only bad plan is a plan not followed. You must plan for your future. Plan for all your major expenses like home ownership, a car, schooling and periodic expenses.

Goals. What are your short-term (less than one year), mid-term (one to five years) and long-term (more than five years) goals. Make sure your goals are specific and reasonable.

Develop a budget. Determine your living expenses, periodic expenses and monthly debt. Create a budget that can be realistically followed. Follow your budget as closely as possible and evaluate it at least twice a year.

Keep your expenses under control. Try to spend only the money you make and not use your credit cards. Do not incur other debt until you are able to manage the debt you have now. Know where your money goes by keeping a log of all your purchases.

Save. Save up for major purchases such as cars, homes, vacations and major appliances. Experts say that saving 10 percent of your paycheck will add up to a nice savings account. Create an emergency fund with about three to five months of your expenses. Start saving for retirement — the sooner the better.

Need vs. want. Sometimes we have a hard time distinguishing between the two. Needs are must-haves to survive and wants are things we crave. We may need a new car, but we may want a car that is beyond our financial means. Determine your financial priorities to guide your spending choices. Take care of your needs first. Then, if you have some money left over, you can use it for your wants.

Credit. If you must use credit, do so wisely. Use credit for planned purchases only. Determine what amount you can afford to purchase on credit. A golden rule is not to allow your payments to exceed 15 percent of your net income. Do not use one form of credit to pay another and repay the credit back as soon as possible.

Treat yourself. What good is working if you can’t enjoy your money? Even if it’s a little treat like ice cream or a dinner out, enjoy the fruits of your labor, or it will become very hard to follow a budget or stick to your goals.

Don’t get consumed by material things. Trying to keep up with the Joneses will only lead you to financial ruin. Live an enjoyable life but within your means. A 70- inch flat screen television is nice, but so is living debt free.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com


Planning helps you get the most savings out of vacation

This was originally published on Monday, September 9, 2013, in the Pacific Daily News.  Click here to subscribe to the PDN.

Family vacations are a great way to relax and create lasting memories.

They can carry a hefty price tag, but that dream vacation is not out of reach, even if you are on a tight budget. Once you have saved money, you want to make sure you get the most bang for your buck.

• Sooner the better. Book airlines, hotels, car rentals and amusement parks in advance, play around online with different dates to see how much you can save.

• Off-peak traveling. Most of us feel that summer is the time to travel, but you can pay much more during these busy travel months. Think about the week of spring break, the four days of Thanksgiving, or a few weeks before or after summer break. Talk to your children’s school. Schools are willing to work with you by giving your children’s schoolwork in advance or staying connected via emails. Schoolwork is a great way to keep kids busy on an airplane. The day of the week that you travel or stay also can affect your budget. Be flexible.

• Use your privileges. Use the discounts offered to you through your credit cards, airline or hotel memberships. Many vacation services and destinations partner up and offer discounts. If you belong to an organization such as American Association of Retired Persons (AARP), make sure you contact them for vacation offers and discounts.

If you are a military member or retiree, ask for discounts while you are traveling. You may be surprised how many locations offer military discounts to thank you for your service. Check with your recreation services on discounted tickets to amusement parks or museums. Many services offer lodging worldwide (http://www.dodlodging.net), and some even offer great destinations such as Kauai or Naples. If you are really flexible and would like an adventure, try flying space available (MAC Flights). You earn these privileges, so take advantage of them.

• Lodging. Hotels are expensive, but there are some other options. The most inexpensive option is staying with family or friends. You can satisfy the obligatory visit and save on lodging.

If you are staying in a location for a while, find an extended trip hotel that offers suites you can rent by the week or month. They are usually cheaper than hotels and offer all the amenities of a home, including a fully functioning kitchen.

You also could look for a hostel, a budget-oriented dorm room usually with shared amenities.

You also may try camping in our nation’s parks like the Grand Canyon or renting a home or condominium. Also, look for kid-friendly hotels that offer free lodging for children under a certain age.

• Eating. Food is one of the biggest expenses while traveling. If you booked lodging with a microwave and refrigerator or kitchen, prepare your meals in your room. Going to the grocery store can be just as exciting as trying products that you can’t find on island. I am always amazed at the availability and choices of fresh fruit and vegetables when I shop in the US. Some grocery stores even offer a deli with full meal choices. Look for a farmers’ market and get fresh produce.

• Remember the small stuff. Tips, fees and taxes all add up. Bring your children’s entertainment with you.

Don’t use the small stores in hotels or amusement destinations as they cost much more.

Travel light as baggage fees can be very costly.

You will gain clothes, toys and much more during your travels. It can be much less costly to mail them home.

Look for areas with free WiFi.

Also remember that if you take your cellphone, you may incur some hefty roaming charges. If you want to take your phone, have your data services suspended before you leave.

You also may want to consider purchasing a prepaid phone that you can purchase at any large chain retail store. Using the phone in a hotel can create a much larger bill.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at http://www.moneymattersguam.wordpress.com/

Early planning can help you keep a holiday budget

This was originally published on Monday, August 19, 2013, in the Pacific Daily News.  Click here to subscribe to the PDN.

‘Tis the season to be jolly?

Believe it or not, the year is more than halfway through and the holidays are just a few months away. What better time to talk about saving and budgeting for the holidays.

Have you noticed that summer brings some great deals? Memorial Day, Christmas in July and Labor Day sales are ways that stores purge most of their older stock to make room for their upcoming new items. So what does that mean to you? Great savings! Start thinking about who is on your list.

• Shop early. Give yourself time to compare prices; don’t wait till the last minute. Being in a crowded store on a last-minute shopping spree is tiring. If you feel exhausted, you are tempted to just buy anything regardless of the cost, which ultimately will break your budget.

• Don’t be tempted. Have you ever walked into a store around the holidays with your list in hand saying, “This year it is going to be different; I’m staying on budget no matter what.” But then you get seduced by the fancy décor and jolly music, plus the added pressure that the holidays are only so many days away. Soon, that list does not seem so significant. Don’t get tempted. One of the best things about shopping off-season is that the seduction and pressure is not a factor. Think twice before you buy.

• Have a spending plan. Create your “nice” list by separating the list into three parts. The first part is the top tier. The people in this tier are your parents, siblings, spouse or kids. Those in this tier are the ones you plan on spending more on.

Beside their names, put a dollar amount as to how much you want to spend on them. The second tier is your close friends, your kid’s best friends, and so forth. The people in these tiers are the ones you plan on spending for a gift, but not as much as those in your top tier. Put a dollar amount beside their names. In the last tier are those that are not as close to you like co-workers, the mailman or your kid’s bus driver.

Think about giving those in the last tier a homemade gift such as cookies, cupcakes or homemade jelly. Put a total amount on how much you plan on spending for those in this last tier. Actually, you don’t have to “BUY” gifts for everyone. Be creative! The best gifts are those that are thoughtful and not necessarily bought.

• Keep your shopping list with you. Carry it in your purse, wallet or even smartphone. If you know what you want, you can breeze through the store without going off budget.

• Be creative. There are many websites that are dedicated to making useful homemade gifts for almost nothing. Take the time and browse these easy-to-make crafts. Start making them before the busy schedule of the holidays kick in. Store-bought gifts are great, but many people appreciate the time, energy and thought put into a homemade gift much more.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog atwww.moneymattersguam.wordpress.com

Do retirement goals match your current situation?

Because your life and your plans will change, a checkup at least annually will keep your retirement plans on track.

Retirement Plan

Review your most recent list of retirement needs and plans. Do you still envision the same retirement lifestyle as your original plan? Talk your plans over with your spouse and your family, and revise your estimates as needed. You can talk to a professional financial planner or use retirement calculators online to help you with your projections.

Retirement Savings

Your income may change from year to year, with raises, promotions, and changes in your job situation. Your projections for your retirement needs may also change, which could alter the amount you should contribute every month or year. Keep your contributions up-to-date by reviewing them at least once a year.

Measure your progress. Pull out your statements from your 401(k), traditional or Roth IRA, or any other retirement accounts to which you make contributions for the year. Total your contributions so far for 2012, starting from January 1, 2012. Hold on to those totals—you will refer to them for both 2012 and 2013 planning.

Know your limits. Make sure that your contributions for the year fall below the set limits of your plan or account. The general 401(k) limit provided by the IRS for employee contributions is $17,000 for 2012. The IRS also permits an additional $5,500 contribution for employees age 50 and over. However, limits for your specific 401(k) plan may differ, so check with your employer.

The general 2012 limits for traditional and Roth IRA accounts combined are $5,000 for those under 50 years of age and $6,000 for contributors age 50 and older. There are additional income requirements for the Roth IRA, and other requirements that you must fulfill to take the tax deduction on traditional IRA contributions. You can find more information by visiting the IRS website or talking to a tax professional about your specific situation.

Contribute more to your 2012 retirement savings. If you have not met the limits above, you can bulk up your retirement account by contributing more savings before the deadlines close for your plan or account.

Contributions to the 401(k) and the traditional IRA can also give you tax benefits for the year if you meet requirements; taxes on these contributions are deferred until they are withdrawn in retirement. Because those savings are not counted as taxable income in 2012, you pay less in taxes for the year.

For your 401(k), you should make any additional contributions by December 31, 2012. If you have a Roth or traditional IRA, you can make 2012 contributions until the year’s tax deadline, which is April 15, 2013.

Plan your contributions for 2013. A financial planner or retirement calculator can help you decide whether to increase or decrease your monthly retirement contribution for 2013, in line with your revised retirement plan. You should also take a look back at your 2012 contributions. Did they fit comfortably in your budget? Did your income change in the past year?

Once you revise the amount, notify your employer or schedule automatic transfers to your IRA from your checking account starting in 2013.


A financial adviser can help you review your retirement investments and make changes to rebalance your portfolio. If you review investments on your own, consider the amount of time you have left before retirement and your tolerance for risk as you choose between growth, income, and balanced investments.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years experience in retail banking and with financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com

Life insurance helps dependents

When you have a family that depends on your income, life insurance becomes an important part of your financial plan. This insurance gives your family a way to replace the income that you would have earned over several years, if you were to suddenly pass away.

The simplest form of life insurance, term life insurance, gives you a fixed monthly or yearly premium for a set “term” of your choosing, such as 10, 20, or 30 years. If you were to pass away during that term, your beneficiaries would receive the death benefit from your life insurance policy.

This benefit would allow your family to continue paying off the mortgage and car loans, take care of childcare expenses, settle funeral expenses, care for elderly parents, and take care of any other obligations that you had planned to fulfill with earned income. In all, life insurance can protect your family from financial hardship during a very difficult time.

Do you need life insurance? You should only buy life insurance coverage when you need it. If you’re not married, don’t have children, and don’t expect to provide financially for your elderly parents, then you probably don’t need life insurance at this point in time.

Also ask yourself if it would cause financial hardship for the people close to you if you were to pass away. For example, do you have enough in assets to cover funeral expenses, and if you don’t, would it cause financial hardship for your family members to cover those costs?

How long will you need life insurance? As a form of income replacement for your family, you only need life insurance for as long as your family is financially dependent on you. Your children will grow into adults, and will start financial lives of their own, separate from you. While they’re growing, you and your spouse will pay off your mortgage, and build up your own assets and retirement savings.

Think carefully about the point at which your children, and others, will be financially independent from you. You should also consider the amount of time that remains to pay off your mortgage in full.

How much life insurance do you need? You should only buy the amount of life insurance you need. To calculate this amount, work together with your spouse to come up with a list of basic financial needs, over the period of time that you wish to be insured.

Consider your contributions to the mortgage payments, and if you share a vehicle, your part in the car payments. How much do you spend annually on each child’s food, clothing, and entertainment? If one spouse stays home to look after the children, will you need to pay new caregiver expenses or can a relative care for the children? Do you and your spouse have any shared debts or expenses that you need life insurance to cover? Will you have educational expenses for the children, and have you included funeral costs? Do you have any assets that will help with these expenses, aside from life insurance?

Having the conversation with your family about life insurance, and thinking through your needs, is a good start. Next week, we’ll continue the conversation on life insurance in your personal finances.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years experience in retail banking and with financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com.

Tips to help beat the high cost of gas

On Guam, gasoline often plays a big role in our lives and our wallets, and there’s no way to predict how the cost of fuel will rise in the next few years. Here are a few tips for getting the most out of your money and lowering expenses in the Auto & Gas category on your budget.

Consolidate your trips. It makes sense to run several errands at a time and save gas, rather than making multiple trips to and from your home. It just takes some smart organization: keep a notebook nearby or start a list on your phone, and keep track of the errands that you need to run as they come up. This can also be a good reason start using a day planner, or to search for software that can help you organize your life.

Start a hobby based at home or in your village. Sticking close to home can help you save on gas and help you rediscover playgrounds, beaches, shops, and restaurants in or near your village. You may also be able to walk or ride a bike to these spots, rather than jumping in your car and using gas.

In earlier columns we discussed learning culinary skills at home, along with gardening and landscaping, which are both enjoyable and can help you save money on food expenses. You can also go for jogs around your village, use a nearby community center, learn an instrument, take up woodworking, or explore any other hobby that both interests you and can be practiced within your community.

Remove extra weight from your car. According to the U.S. Department of Energy, heavy items in your car can reduce your car’s fuel efficiency. Try to empty your car of heavy objects unless you need them specifically for your trip, and remove the racks and objects attached to the outside of your vehicle if you don’t intend to use them. By increasing your vehicle’s fuel efficiency, you save gas and money.

Keep your tires inflated to your vehicle’s recommended tire pressure. Another tip from the Department of Energy: keeping your tires inflated properly will give you better fuel efficiency. Just as you need to work harder to pedal an under-inflated bicycle, your engine works harder to keep your car moving with under-inflated tires. Prevent this from happening by keeping your tires inflated to the recommended amount.

Buy a fuel-efficient car. The best way to save on gas is to use a car that was designed with fuel efficiency in mind. On ww.fueleconomy.gov, you can compare cars in terms of fuel efficiency, using your current gas price.

The savings are clear: comparing a 33-combined MPG (miles per gallon) vehicle to a 20-combined MPG vehicle, a driver could save $1,250 annually on gas expenses using the vehicle with the higher MPG. (This assumes 15,000 miles driven per year, with 45% highway driving and 55% city driving, and a price of $4.28 per gallon.)

You can also consider a hybrid vehicle for fuel efficiency. Compared with the previous vehicles, a 50-combined MPG hybrid vehicle under the same conditions saved $650 in annual fuel costs compared to the 33-MPG vehicle; compared with the 20-MPG vehicle, the hybrid saved $1,900. Hybrids can be more expensive than some traditional cars, but you should also factor in fuel savings when comparing your options.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years experience in retail banking and with financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com.

Planning spares financial stress of a new child

The experience of bringing new life into the world is incomparable. It also can be overwhelming, as the finances associated with a new baby catch you off guard. With some careful planning, you can make a smooth transition into a new family budget, and that will give you more time to enjoy the child in your life.

Start your financial planning as soon as you know a baby is expected. When the baby arrives, financial planning will be the last thing on your mind, so get your finances in order now. If you have a solid system in place while you’re adjusting to parenthood, you can avoid the stress that comes with forgotten bills or misplaced documents. You also will have plenty of time to make changes to your budget and your financial goals.

Set up your current household budget. Your finances are about to drastically change, but you can anticipate those changes, using your current budget as a starting point. How much do you and your family currently spend every month? How much do you save? Are you spending primarily on needs, or wants? What parts of your spending will you be able to cut back on, to make room for the costs associated with a newborn? With a clear picture of your family’s financial behavior, you can make the adjustments you need.

Plan for long-term child care. Will you or your spouse be taking time off from work to care for the baby? If you previously survived on two incomes, and one of you will be staying home to care for the baby, there are big changes ahead. Adjust your finances and discuss the changes in your lifestyle or financial habits well in advance of the baby’s birth — this can only help in the long run. You also will need to make sure that your health-care coverage remains consistent if one of you leaves work.

If you are a single parent, a solid plan for your child’s care will be all the more helpful to you. Talk to your close family members and friends about your options. If you could use their help, it’s much better to talk to them sooner rather than later, and to be as clear and specific as you can. If you need to plan for day care or caregiver expenses, adjust your budget and do your research in advance, so that you know exactly how to proceed as soon as the baby is born.

Anticipate your costs. If you haven’t had children before, talk to relatives and friends about the costs involved. Ask them about how much they typically spent in a month, and whether they spent more than they had planned for. This should give you some idea about how your spending will change, and allow you to change your budget now so that you can cover new expenses.

There’s still more you can do: Build up your emergency fund, prepare your will, investigate life insurance and ask about college savings accounts. What’s most important is that you simply get a good head start, so that you feel prepared and confident in the first moment you hold your child in your arms.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 19 years experience in retail banking and with financial institutions in Guam and Hawaii. You can email him at moneymattersguam@yahoo.com.