April 23, 2001
Howard hands out helpful tips
By Eric Rangus firstname.lastname@example.org
According to Atlanta-based consumer advocate Clark Howard, what should be the first priority for your personal finances?
A childs education? No, thats way down at number four.
Save it for a rainy day? Closer, but thats only the number two
The best use of money, Howard told a crowd April 17 in WHSCAB Auditorium,
is saving for retirement.
Once youve started saving for retirement, only then do you
worry about a rainy day, he said. If you always figure out
a way to spend money today, youll never save it for tomorrow.
That was just one of the nuggets of advice offered by Howard, who spoke
for 35 minutes, thenappropriately enough, for someone who hosts
a radio call-in showanswered half an hour of questions from those
in attendance, as well as a handful from Crawford Long, which was receiving
a webcast of the event.
It made for a fast-paced evening, as the upbeat Howard remained in the
middle of the stage throughout. The stage-left podium served only as the
place where he stored the soda he came in with.
A nationally known consumer advocate, Howards Atlanta-based radio
show airs on nearly 140 stations. He writes a weekly column for The
Atlanta Journal-Constitution, appears occasionally on WSB-TV, and
his recently published fourth book, Get Clark Smart, has outsold
all three of its predecessors combined. Howard is heard locally weekdays
on WSB 750 AM from 16 p.m.
Blue-blazered members of Emorys benefits department served as ushers
for the evening, so perhaps Howards plug for retirement savings
was a bit convenient. But he backed it up with a great deal of information.
He lauded Emorys 401K plan, which doubles employee contributions
up to 2 percent and provides 6 percent of an employees salary regardless
of individual contribution, as an ideal way to save for retirement
You have to take advantage of saving at work. If you dont
ever have the money, you wont spend it, Howard said, noting
the psychological effect of having money deducted from a paycheck on a
The goal, Howard added, is to put away 10 percent of your salary a month,
if possible. Since Emorys plan provides a 12 percent investment
(with just a 2 percent employee contribution), it is excellent, he said.
While Howard hammered home the importance of saving, he was even more
adamant about the necessity of a specific kind of spending.
Before you can talk about saving, Howard said, you
have to rethink if you want to live a debt lifestyle. Specifically,
credit card debt.
Over and above every other bill, Howard said, consumers should attempt
to eliminate their credit card debt. And he quoted a few alarming statistics
to make his case. For instance, 20 percent of Americans are carrying so
much debt that they cannot pay the interest every month.
Thats scary, said Howard, who proudly declared that
he carries no debtcredit card, mortgage, loans, nothing.
So he offered some hints to pay down that credit card debt. Perhaps the
most intriguing was what he called the 14-day plan. It entails
paying the half of the minimum balance on a credit card every 14 days,
rather than the entire minimum every month.
This serves several purposes. First, since interest is calculated daily,
a payment midway through the billing cycle lowers the balance and eliminates
the interest that wouldve otherwise accrued over those 14 days.
Second, a total of 26 payments means an equivalent of 13 monthly payments
are made each year. Third, when minimum monthlies go down with a lower
principal, consumers should keep their payment steady since they will
have learned how to live without the money.
If this plan is followed, Howard said, a credit card debt that would
require 20 years to be paid off could be eliminated in five.
Howard offered other hints regarding a likely drop in real estate prices
in the Atlanta area, making it a good long-term investment (These
are not the best of times, but if you dont lose your nerve, there
will be some opportunities.); the importance of contributing to
a 401K even in tough times (Im staying the course, and I strongly
encourage you to do so, too); the growing irrelevance of banks (statistically,
they only hold 12 percent of the average familys assets; its
just a place to park your money); and touched on travel savings,
Roth IRAs and overseas investing during his wide-ranging discussion
By the way, the third priority for personal savings?
Spending for today.