In Age of Financial Uncertainty, Personal Finance Decisions Matter

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Bills.com offers guidelines for making critical economic choices.

Today, perhaps more than ever, individuals' financial decisions -- not just those decisions made on Wall Street -- will have significant effects on their futures, according to Bills.com president Ethan Ewing.

Ewing, president of the free online consumer portal Bills.com, has compiled this list of common decisions and their possible outcomes:

1.    Not attending college: For some high school graduates, college looks expensive and challenging. Some would-be students may be thinking of foregoing college given its expense. True enough; the average four-year college education today costs nearly $100,000 for a private institution and up to $36,000 for a public school. Yet a college graduate will earn $2.1 million over a lifetime, compared to $1.2 million for a high school graduate. "Think about it," Ewing suggested. "Is four years worth an extra $900,000 to you?"

2.    Delaying retirement savings: Don't do it (delay, that is). If a 22-year-old earning $30,000 per year begins putting 8 percent of her income into retirement savings and continues to do so until retirement at age 67, she will have more than $2.1 million at retirement -- enough to sustain herself for 30 years, even without Social Security income, and leave a legacy. In contrast, if she waits until age 45 to begin contributing 8 percent of her $50,000 salary, she will have less than $400,000 -- only enough to last her until age 73, even with Social Security included.

3.    Buying residential property at a young age: Think carefully about this decision. A homeowner who can save a $20,000 down payment to purchase a $100,000 condo or home at age 25 would have monthly payments of $750. After seven years - after which many time homeowners move -- the home's value could be $120,000 to $134,000 (based on a 3 percent to 5 percent annual gain). "But do not buy a home at the expense of paying off debts, saving for retirement or upkeep on the property," Ewing cautioned. "Many real estate pros estimate annual maintenance costs at 1 percent of the purchase price."

4.    Declaring bankruptcy: Beware. While it is true that we can start over in life at any age, a serious financial decision such as declaring bankruptcy has lasting repercussions. A bankruptcy judgment can remain on a credit record for seven years. Imagine being unable to purchase a home, needing to buy with a high-rate loan, or even being downgraded for jobs, insurance or rental property because of a poor credit history. "Whenever possible, seek other means of resolving financial issues, such as debt resolution help," Ewing said. For more information, visit Bills.com's bankruptcy center at http://www.bills.com/bankruptcy/.

5.    Living together instead of marrying: Couples who opt to cohabitate instead of marry should not underestimate the complications that can arise if their arrangement goes sour. Many experts recommend signing a cohabitation agreement that spells out how to handle expenses, how to divide a home or apartment in a breakup, and how personal property will be divided if the arrangement fails. In addition, those who forego marriage might sacrifice spousal rights such as access to job benefits. Look into legal help, such as power of attorney, to secure some of these rights. Couples with children should consult an attorney to craft an enforceable agreement.

6.    Staying home from work to raise a family: Today, more mothers and fathers are choosing to stay home to raise a family. With some economists estimating that stay-at-home parents may sacrifice $1 million in earnings (depending on number of years at home, and type of job they held), consider carefully how to handle the financial ramifications before making this decision. "No matter what the decision is on working or staying home, each person needs to make sure to plan for retirement, be sure they are covered in the event of a spouse's death and understand how they would be compensated in the unfortunate circumstance of a divorce," said Ewing.

"Regardless of how and when the nation's current financial crisis is resolved, the decisions you make today about saving, retirement, housing and career will have a lasting effect on the shape of your life," Ewing added. "Think carefully before making these important decisions."

About Bills.com (http://www.bills.com)
Based in San Mateo, Calif., Bills.com is a free one-stop portal where consumers can educate themselves about complex personal finance issues and comparison shop for products and services including credit cards, debt relief assistance, insurance, mortgages and other loans. As the online portal to Freedom Financial Network, LLC, the company has served more than 40,000 customers nationwide since 2002 while managing more than $1 billion in consumer debt. Its RSS feed is available at http://www.bills.com/news_releases/.

Bills.com holds the No. 257 spot on the Inc. 500 list for 2008, and the No. 3 spot on Entrepreneur Magazine's Hot 100 list of the fastest-growing U.S. companies. Bills.com also was named a finalist as "most innovative company" in the American Business Awards in 2008. Company co-founders and co-CEOs Andrew Housser and Brad Stroh were named to the Silicon Valley/San Jose Business Journal's "40 Under 40" list in 2008, and are recipients of the Northern California Ernst & Young 2008 Entrepreneur of the Year Award.

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Aimee Bennett

Ethan Ewing
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