Affordability still weighs on prospective homeowners.

Access to social housing in SA has always been a hot-button issue that predates even the dawn of the democratic dispensation in 1994.

But since then, quality housing has been at the forefront of election promises, yet the government has had a difficult task of reducing the country’s housing backlog.

SA’s housing backlog has ballooned from 1.2 million units in 1994 to 2.1 million in over two decades – indicative of the sheer demand for quality and affordable housing.

Some strides have been made in addressing the housing backlog.  Since 1994, the government has delivered 3.7 million subsidised housing opportunities to the benefit of approximately 12.5 million people, latest figures from the Department of Human Settlements show. 

Home ownership over the years has been partly helped by government’s Finance Linked Individual Subsidy Programme (Flisp) which came into effect in 2012. The programme offers housing subsidies to the  so-called “gap market” – individuals who are considered to be too rich to qualify for an RDP subsidy but earn little to qualify for home loans.

Individuals with a monthly income of between R3 501 to R15 000 qualify for the Flisp programme – which offers housing subsidies of between R20 000 to R87 000 for first time home owners.  For example, an individual earning a monthly income of R6 000 (assuming the individual has no debt) is eligible for a Flisp subsidy of about R73 000 and qualifies for a bank mortgage of R143 000. 

The subsidy can be used to decrease the mortgage bond or purchase a higher valued property. On the latter, with the subsidy in place, an individual can purchase a property valued at R216 000 instead of R143 000.  But realistically it’s difficult to find a housing unit that is worth below R350 000.

Property economist Francois Viruly says only about 30% of South Africans do not need housing subsidies from the government, but 70% are in the social and RDP housing system.

Flisp’s minimal impact

The 2015 annual report by state-owned National Housing Finance Corporation (NHFC), which administers the delivery and access to Flisp, indicates that it has forked out R29 million in subsidies during the period to some 749 beneficiaries.

But NHFC CEO Samson Moraba says Flisp has had its fair share of stumbling blocks in delivering grants at the scale and rate needed.  This is due to protected negotiations with external role players such as banks and provincial government departments.    

“Flisp continues to be an enigma, despite our best efforts to have a new approach adopted in the year under review. There has been no significant progress made with Flisp and we continued to service only four of the nine provinces, with Gauteng being the leader of the pack,” Moraba explains in the report.

More challenges

The problem is also largely three-fold: consumer affordability; constrained supply of houses; and a shortage of moderately priced housing units.

CEO of FNB Housing Finance Lee Mhlongo says many individuals still find it difficult to enter the housing market, as they are still not at a point where their income is enough to even purchase a new entry-level property.

The value of new entry-level units – typically valued above R250 000 and not more than 80 square metres in size – are rapidly rising.

A report by the Centre for Affordable Housing Finance in Africa (CAHF) notes that since 2009, properties valued at less than R300 000 have posted a cool capital appreciation of 40%, trumping properties valued at over R600 000 that are increasing  in value by almost 30%.

Other figures show a similar trend.  According to FNB, former townships (the nub of affordable housing) saw a house price growth of 11.6% for the first quarter of 2015, compared with major metropolitan areas which showed a growth rate of 7.3%.

But this stellar house price growth is further exacerbating affordability challenges. As Viruly puts it: “It’s nice to say we’ve got a market growing at 11%, but the affordability issue really starts hitting home because most people’s salaries don’t go up by 8% or 9%, or at the same level as house price inflation.”

Another issue is the creditworthiness for home loans given that some consumers have non-housing related credit like unsecured loans and store accounts, putting a strain on their disposable incomes, says Mhlongo. “And it is that reason that we find the majority of them would not be approved for home loans,” he says. 

Supply of units faltering

Property developers are also seemingly on the fence about supplying the much-needed housing units. High costs in developing units, delays in the approval of building plans and costs of municipal service infrastructure now borne by developers, are some of the reasons putting developers off.

On the shortage of housing units, Mhlongo refers to the fact that a few years back about 130 000 to 150 000 units were supplied a year to the market. But following the 2008/9 global financial crisis the supply never again reached those historical levels. “We are now probably sitting at a level of close to 100 000 units a year,” he says. 

The CAHF suggests two areas that can address the shortage of affordable units: supply quality rental housing costing between R875 and R3 750 per month and the resale of RDP houses after the eight-year pre-emptive clause barring the sale these properties in the open market lapses.

Moody’s assigns provisional ratings to eight classes of notes to be issued by Arbour CLO III Limited

Frankfurt am Main, January 18, 2016 — Moodys Investors Service announced that it has assigned the following
provisional ratings to notes to be issued by Arbour CLO III Limited (the
Issuer or Arbour CLO III):

….EUR 230,000,000 Class A-1
Senior Secured Floating Rate Notes due 2029, Assigned (P)Aaa (sf)

….EUR 10,000,000 Class A-2
Senior Secured Fixed Rate Notes due 2029, Assigned (P)Aaa (sf)

….EUR 19,000,000 Class B-1
Senior Secured Floating Rate Notes due 2029, Assigned (P)Aa2 (sf)

….EUR 25,000,000 Class B-2
Senior Secured Fixed Rate Notes due 2029, Assigned (P)Aa2 (sf)

….EUR 23,000,000 Class C Senior
Secured Deferrable Floating Rate Notes due 2029, Assigned (P)A2
(sf)

….EUR 23,500,000 Class D Senior
Secured Deferrable Floating Rate Notes due 2029, Assigned (P)Baa2
(sf)

….EUR 27,500,000 Class E Senior
Secured Deferrable Floating Rate Notes due 2029, Assigned (P)Ba2
(sf)

….EUR 11,750,000 Class F Senior
Secured Deferrable Floating Rate Notes due 2029, Assigned (P)B2
(sf)

Moodys issues provisional ratings in advance of the final sale of financial
instruments, but these ratings only represent Moodys preliminary
credit opinions. Upon a conclusive review of a transaction and
associated documentation, Moodys will endeavor to assign definitive
ratings. A definitive rating (if any) may differ from a provisional
rating.

RATINGS RATIONALE

Moodys provisional rating of the rated notes addresses the expected loss
posed to noteholders by the legal final maturity of the notes in 2029.
The provisional ratings reflect the risks due to defaults on the underlying
portfolio of loans given the characteristics and eligibility criteria
of the constituent assets, the relevant portfolio tests and covenants
as well as the transactions capital and legal structure. Furthermore,
Moodys is of the opinion that the collateral manager, Oaktree Capital
Management (UK) LLP/Oaktree Capital Management (Europe) LLP (Oaktree),
has sufficient experience and operational capacity and is capable of managing
this CLO.

Arbour CLO III is a managed cash flow CLO. At least 90%
of the portfolio must consist of senior secured loans and senior secured
floating rate notes and up to 10% of the portfolio may consist
of unsecured loans, second-lien loans, mezzanine obligations
and high yield bonds. The bond bucket gives the flexibility to
Arbour CLO III to hold bonds. The portfolio is expected to be 70%
ramped up as of the closing date and to be comprised predominantly of
corporate loans to obligors domiciled in Western Europe.

Oaktree will manage the CLO. It will direct the selection,
acquisition and disposition of collateral on behalf of the Issuer and
may engage in trading activity, including discretionary trading,
during the transactions four-year reinvestment period.
Thereafter, purchases are permitted using principal proceeds from
unscheduled principal payments and proceeds from sales of credit risk
and credit improved obligations, and are subject to certain restrictions.

In addition to the eight classes of notes rated by Moodys, the
Issuer will issue EUR44.6m of subordinated notes, which will
not be rated.

The transaction incorporates interest and par coverage tests which,
if triggered, divert interest and principal proceeds to pay down
the notes in order of seniority.

Factors that would lead to an upgrade or downgrade of the ratings:

The rated notes performance is subject to uncertainty. The notes
performance is sensitive to the performance of the underlying portfolio,
which in turn depends on economic and credit conditions that may change.
Oaktrees investment decisions and management of the transaction
will also affect the notes performance.

Loss and Cash Flow Analysis:

Moodys modeled the transaction using CDOEdge, a cash flow model
based on the Binomial Expansion Technique, as described in Section
2.3 of the Moodys Global Approach to Rating Collateralized Loan
Obligations rating methodology published in December 2015. The
cash flow model evaluates all default scenarios that are then weighted
considering the probabilities of the binomial distribution assumed for
the portfolio default rate. In each default scenario, the
corresponding loss for each class of notes is calculated given the incoming
cash flows from the assets and the outgoing payments to third parties
and noteholders. Therefore, the expected loss or EL for each
tranche is the sum product of (i) the probability of occurrence of each
default scenario and (ii) the loss derived from the cash flow model in
each default scenario for each tranche. As such, Moodys
encompasses the assessment of stressed scenarios.

Moodys used the following base-case modeling assumptions:

Par amount: EUR 400,000,000

Diversity Score: 35

Weighted Average Rating Factor (WARF): 2750

Weighted Average Spread (WAS): 3.9%

Weighted Average Recovery Rate (WARR): 42%

Weighted Average Life (WAL): 8 years.

Moodys has analysed the potential impact associated with sovereign related
risk of peripheral European countries. As part of the base case,
Moodys has addressed the potential exposure to obligors domiciled in
countries with local currency country risk ceiling of A1 or below.
Following the effective date, and given the portfolio constraints
and the current sovereign ratings in Europe, such exposure may not
exceed 10% of the total portfolio. As a result and in conjunction
with the current foreign government bond ratings of the eligible countries,
as a worst case scenario, a maximum 10% of the pool would
be domiciled in countries with A3 local currency country ceiling.
The remainder of the pool will be domiciled in countries which currently
have a local or foreign currency country ceiling of Aaa or Aa1 to Aa3.

Stress Scenarios:

Together with the set of modeling assumptions above, Moodys conducted
additional sensitivity analysis, which was an important component
in determining the provisional rating assigned to the rated notes.
This sensitivity analysis includes increased default probability relative
to the base case. Below is a summary of the impact of an increase
in default probability (expressed in terms of WARF level) on each of the
rated notes (shown in terms of the number of notch difference versus the
current model output, whereby a negative difference corresponds
to higher expected losses), holding all other factors equal:

Percentage Change in WARF: WARF + 15% (to 3163 from
2750)

Ratings Impact in Rating Notches:

Class A-1 Senior Secured Floating Rate Notes: 0

Class A-2 Senior Secured Fixed Rate Notes: 0

Class B-1 Senior Secured Floating Rate Notes: -2

Class B-2 Senior Secured Fixed Rate Notes: -2

Class C Senior Secured Deferrable Floating Rate Notes: -2

Class D Senior Secured Deferrable Floating Rate Notes: -2

Class E Senior Secured Deferrable Floating Rate Notes: -1

Class F Senior Secured Deferrable Floating Rate Notes: -1

Percentage Change in WARF: WARF +30% (to 3575 from 2750)

Class A-1 Senior Secured Floating Rate Notes: -1

Class A-2 Senior Secured Fixed Rate Notes: -1

Class B-1 Senior Secured Floating Rate Notes: -3

Class B-2 Senior Secured Fixed Rate Notes: -3

Class C Senior Secured Deferrable Floating Rate Notes: -3

Class D Senior Secured Deferrable Floating Rate Notes: -2

Class E Senior Secured Deferrable Floating Rate Notes: -2

Class F Senior Secured Deferrable Floating Rate Notes: -3

Given that the transaction allows for corporate rescue loans which do
not bear a Moodys rating or Credit Estimate, Moodys
has also tested the sensitivity of the ratings of the notes to changes
in the recovery rate assumption for corporate rescue loans within the
portfolio (up to 5% in aggregate). This analysis includes
haircuts to the 50% base recovery rate which we assume for corporate
rescue loans if they satisfy certain criteria, including having
a Moodys rating or Credit Estimate.

Further details regarding Moodys analysis of this transaction may be
found in the upcoming pre-sale report, available soon on
Moodys.com.

Methodology Underlying the Rating Action:

The principal methodology used in these ratings was Moodys Global Approach
to Rating Collateralized Loan Obligations published in December 2015.
Please see the Credit Policy page on www.moodys.com for
a copy of this methodology.

REGULATORY DISCLOSURES

For further specification of Moodys key rating assumptions and sensitivity
analysis, see the sections Methodology Assumptions and Sensitivity
to Assumptions of the disclosure form.

Further information on the representations and warranties and enforcement
mechanisms available to investors are available on

http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF423061.

Moodys describes its loss and cash flow analysis in the section
Ratings Rationale of this press release.

Moodys describes the stress scenarios it has considered for this
rating action in the section Ratings Rationale of this press
release.

For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moodys
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the credit rating action on the support provider and in relation to
each particular credit rating action for securities that derive their
credit ratings from the support providers credit rating.
For provisional ratings, this announcement provides certain regulatory
disclosures in relation to the provisional rating assigned, and
in relation to a definitive rating that may be assigned subsequent to
the final issuance of the debt, in each case where the transaction
structure and terms have not changed prior to the assignment of the definitive
rating in a manner that would have affected the rating. For further
information please see the ratings tab on the issuer/entity page for the
respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.

Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moodys legal entity that has issued
the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.

Andreas Hellmut Botterbusch
Asst Vice President – Analyst
Structured Finance Group
Moodys Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Thorsten Klotz
MD – Structured Finance
Structured Finance Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Releasing Office:
Moodys Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moodys assigns provisional ratings to eight classes of notes to be issued by Arbour CLO III Limited

Turner High School students get financial advice from Travis Kelce

KANSAS CITY, Kan – It’s been written that what we sow, we will also reap.

That’s even true when it comes to money. Basic budgeting lessons were in the air at one metro high school this morning, as a Kansas City Chiefs player discussed financial literacy.

Theyve been there before. Thats why a game of Financial Football meant so much to students at Turner High School on Tuesday morning, as voices of experience lent their time to teach the basics of money management.

To play good football, it helps to have enthusiasm like Travis Kelces in the huddle. Students at Turner High – as well as NFL Football fans — know him as the starting tight end for the Kansas City Chiefs, and a popular target for recording touchdowns. However, they didnt know he could teach them about saving dollars and financial sense.

Kelce shared stories of his own financial decisions – ranging from his learning to save money at a young age, to failing to pay a cable television bill while he was in college.

“Its a little different coming from an NFL athlete than it is coming from a teacher or parent. I know how that can get kind of routine, hearing from your parents every day about keeping up with your finances,” Kelce said.

Kelce led one team in a financial-preparedness quiz against another team led by Kansas State Treasurer Ron Estes. Each time the teenagers answered a money-based question correctly, the football moved up the gridiron on a video game, which was projected onto a screen on the wall in their classroom.

“Setting a good foundation is important,” Estes told FOX 4. “You can make some financial mistakes at a very young age. It can haunt you throughout your financial career for a long time.”

The game’s points landed with the high school crowd. Turner High Students, such as senior Gustavo Martinez, said now that he knows how to save money, hes going to play the game.

“Being more aware of where your money goes, and being more aware that everything you do comes back to you, and its something that Im going to take into account now,” Martinez said.

Treasurer Estes told stories of his own high school days and taking a financial literacy class. He reminded students that without knowledge of how to take care of their money, their financial futures are doomed.

VISA, the worldwide credit company, sits at the heart of Financial Football. Company leaders said theyve introduced the literacy program to thousands of students in 47 US states.

Ask an Expert: Five tips to help couples build money management skills

Successful couples have learned to blend their money styles by being in harmony with the way they build a budget and spend money. So how do they do it?

Everyone has a money style. Many people love to save, others enjoy spending and unfortunately some just don’t want to be bothered with thinking about money, and they are the avoiders. Often spouses are opposite in their habits, which can work well; but unless they can discuss it and make a successful plan, it can lead to arguments and dissatisfaction in the relationship.

It may have been learned from parents or developed later in life, but everyone values money differently and has a preferred style for handling it. No style is right or wrong, but how it is handled is critically important. Some regard money as a security and have a desire to save and protect it. Some enjoy spending money because it makes them feel good, and still some don’t want to even open an envelope that might have a bill inside. Unless you understand how your partner values money, it can cause frustration in a relationship.

When a couple fails to communicate about how each person values money and there is not a financial plan, arguments often arise. Many unhappy marriages and divorces are a direct result of financial issues.

Couples with strong relationships have developed money management skills that work for them. For example, they set aside time each month to go over finances, talk about how they value money and set goals. Generally one of the individuals will be the money manager; however, both should discuss and look at the plans each month. Both partners must be happy with the spending arrangement. It is important to set a budget. Then set aside 10 percent for savings, since this makes the saver happy. Next, set aside 10 percent for a charity. This makes the spender feel good and also helps him or her see the real value in money. This will also direct the avoider to make a plan and know where the money is going.

Understanding the value each person places on money helps build respect in a relationship. Both partners should have input about where the money goes.

A strong relationship will put the value of money into what makes family members happy and content. Money will be used for meeting goals and planning ahead for the future. When you can build a financial plan, you will have the freedom to work on areas of need for your family.

Consider these tips for building a financial plan:

1. Discuss how you value money and what is important (saving, spending or not discussing it). Visit Olivia Mellan’s website if unfamiliar with money styles. Take the quiz at https://www.moneyharmony.com/moneyharmony-quiz.

2. Discuss your family goals for this year, the next five years and then for future needs and retirement.

3. Make a financial plan (a budget) where you can set aside money to save and money for charity. If things are tight, start where you can. Most financial planners will encourage you to set aside 10 percent for each of these; however, you can begin with less. Even a little can make a difference because it sets a precedence.

4. Set up a plan for your family needs and wants and review it monthly.

5. Be sure to set aside weekly activity nights for the two of you. Spending quality time together can help you discuss your financial plans in a more direct and positive way.

Relationships are fragile, and money is a major issue. It doesn’t matter how much or how little you have, but how you work as a team to plan and be content with your financial decisions.

Christie vetoes AC financial rescue bills

Gov. Chris Christie vetoed the state rescue plan for Atlantic City. Did he do the right thing?

Total Votes: 819

United Community Banks, Inc. (UCBI) Scheduled to Post Earnings on Wednesday

The firm also recently disclosed a quarterly dividend, which was paid on Monday, January 4th. Stockholders of record on Tuesday, December 15th were paid a dividend of $0.06 per share. The ex-dividend date was Friday, December 11th. This represents a $0.24 dividend on an annualized basis and a dividend yield of 1.37%.

Separately, Zacks Investment Research raised shares of United Community Banks from a sell rating to a hold rating in a research note on Wednesday, October 21st.

In other United Community Banks news, Director Nicholas B. Paumgarten sold 3,000,000 shares of United Community Banks stock in a transaction that occurred on Wednesday, November 25th. The shares were sold at an average price of $20.15, for a total value of $60,450,000.00. The transaction was disclosed in a legal filing with the Securities amp; Exchange Commission, which is available through this hyperlink.

United Community Banks, Inc. is a bank holding company. The Company’s principal business is conducted by its wholly owned subsidiary, United Community Bank (NASDAQ:UCBI). The Bank is a chartered commercial bank that serves markets throughout north Georgia, coastal Georgia, the Atlanta, Georgia MSA, the Gainesville, Georgia MSA, western North Carolina, the Greenville, South Carolina MSA, and east and central Tennessee and provides a full range of banking services. The Company conducts substantially all of its operations through a community focused operating model of separate community banks. The community banks offer a full range of retail and corporate banking services, including checking, savings and time deposit accounts, secured and unsecured loans, wire transfers, brokerage services and other financial services.

Biblical Money Management Tips for the Christian Family

Having a good sense of money management skills is an effective way to reduce misery, save marriages, improve health and reduce stress. Raising a Christian family means remembering to incorporate good morals and ethics into your structured home – engulfed in those elements should be the beliefs centered within the Christian faith. Christians live at a high standard of honesty because God is always by their side. There will be times money will cause disagreements and/or episodes of frustration however, it’s important to know that even during these times God is surrounding us. Therefore, when Christians evaluate their financial situation God should also be considered in the equation.

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Strongsville teacher in her 60’s gets rejected for Sears credit card, and worries: Money Matters

Q: I went to purchase a stove from Sears. The salesman said I could get a discount if I opened a Sears card. I provided my information. Long story short, he handed me the phone for the Sears person to say Im turned down for lack of activity on my record.

Im 64. Im a teacher, with all of everything in my name paid off. Since I didnt open the Sears account, I paid with my MasterCard instead.

I just put in a request for my free credit reports.

What will happen if I need a new car???

SO, Strongsville

A: I wouldnt worry too much.

Im a little surprised the Sears representative would be able to tell you you were rejected for lack of activity. And, usually, if you have a current credit card, you shouldnt have a thin file without enough activity.

Youre smart to request your credit reports just to make sure there isnt anything negative on your record.

You should also look closely to make sure that everything that should be on there is actually on there. Something else to pay attention to: Do you have accounts that have only been in the name of a husband, current or past? Often times, women hurt themselves by not having joint accounts. If they get divorced or their husband dies, theyre left with a lean credit history. If youre still married and are not on some of your husbands accounts, you should make sure he adds you, assuming the accounts are in good standing.

I say I wouldnt be too worried because its generally easier to get an auto loan than a credit card. With an auto loan, you have a down payment and there is collateral that the bank can come after if you dont make your payments. Its a secured loan. For this reason, auto loans are lower risk. Credits cards are unsecured loans and its not likely the bank can come in and recover its money by selling that vacation package you just bought or even that new appliance. So credit cards are more risky for banks.

When the time comes, I would shop for a loan before you shop for a car. I would go first to your existing bank, where you have your checking and savings accounts, and get pre-qualified. Most likely, you can get approved for a car loan, even if it means a slightly higher down payment.

Q: I have added two of my children as authorized users on one of my credit cards, one that I use quite frequently, in order to help them establish a credit score. I pay offthe balance every month. My oldest child will be graduating from college in May and will likely be applying for a credit card in his name onlyafter he starts his new job. Should I remove him from my card in advance of him applying? I am concerned that the average usage on the card will be used against him from a debt perspective.

RP, Solon

A: I absolutely would not remove him as an authorized user on your card, assuming you have a good payment history (no late payments).
It sounds like this might be the only tradeline (credit account) on his credit report. You would NOT want to remove it. Then he might have no current information on his file. That would be bad, and it would hurt his chances of getting his own card.

Q: Ive read that it is a good idea to freeze your credit reports with the three agencies to prevent unauthorized access to them. Do you agree with this practice?

NC, Copley

A: Freezing your credit reports can be a very good idea for many people. There are three caveats:

1. If you plan to apply for a new credit card, loan or insurance, youll have to thaw your report. These can take a couple of days. So you cant be spontaneous.
2. It does cost $5 per report to freeze and thaw your files.
3. This is the biggest issue in my opinion: Realize that a credit report freeze doesnt protect you from everything. Credit freezes wont help prevent fraud on existing accounts, which constitutes 88 percent of identity theft.
I believe credit freezes give people a false sense of security. You still have to proactively protect your existing accounts and all of your financial information. The credit freeze is simply a strong backstop.

Murray is The Plain Dealers personal-finance writer. Because of the volume of requests, she cannot help everyone who contacts her.

To reach Murray: moneymatters@plaind.com
Previous columns online:cleveland.com/moneymatters
On Facebook: MurrayMoneyMatters
On Twitter: @teresamurray

Report: Montana ranks #1 for money management

Montanans are the best at managing their money while Marylanders are the worst, according to a CreditCards.com analysis that compares credit report data and income.

To measure money management ability, CreditCards.com compared consumers average credit scores, from the credit bureau Experian, to their median household income, per the US Census.

They then ranked the states by differences between the two:

The top states had credit scores much higher than their income. In the middle, credit scores about match income rank. Poor performers had high income, but relatively low credit scores. Differences in state job markets and the age of their population influenced their scores, but didnt explain all the variations in money management ability.

In top-ranked Montana, the $44,938 median household income is well below the national average of $51,849, putting the state at No. 41 for income. But its credit score of 686.5 is 11th best in the nation.

What do the top money-managing states have in common? A mostly rural demographic profile that lacks major cities is one obvious trait. In Montana, there is some truth to the stereotype of self-sufficient farmers who prize thrift and distrust debt, one expert on the local economy said.

We do have a population that is pretty conservative about their personal finances, said John Rogers, chief business development officer at the state Office of Economic Development. I think its a cultural thing … also probably a more rural thing.

Montanans credit card statements support this view. The average balance of $4,143 is 6 percent below the US average, showing that residents dont use credit to pump up their modest spending power. Perhaps more important, their average credit utilization rate — how much of the cards credit limit is in use — is one of the lowest in the nation, at 27 percent.

Click here to read the full article at CreditCards.com.

Your Quick & Painless Annual Financial Checkup: a How-to

Now that the onslaught of holiday travel, NYE parties, and resolution ruminations are a few weeks behind us, it’s time to set yourself up for a prosperous 2016 with a financial checkup. Whether you’re new to thinking about your personal finances or if you just want to streamline your approach, the three steps below are all you need.

Step 1) Review Your Budget

If you don’t have a budget, now is the time to make one. A budget that you can maintain is the foundation of personal finance. There is no single, right way to budget your money, as everyone’s income and savings goals are different, so you may need to try out a few methods. That said, LearnVest’s 50/20/30 Guideline is an extremely useful way to create a budget. Rather than divvy up your income into individual expense categories such as phone bill, entertainment, internet, groceries, etc. the 50/20/30 guideline breaks down your budget into three buckets, allowing you to looks at the big picture of your finances:

  • Fixed costs. “These are bills and expenses that don’t vary much from month to month, like rent or mortgage payments, utilities, and car payments.” You should aim that your monthly total not exceed 50% of your take home pay.
  • Financial goals. Paying down credit card debt, saving for retirement, and building an emergency fund* are common financial goals. At least 20% of your take home pay should be allocated here.

  • Flexible spending. “These are day-to-day expenses that can vary from month to month, like eating out, groceries, shopping, hobbies, entertainment, or gas.” These expenses should account for no more than 30% of your take-home pay.

*One helpful note: It’s generally agreed upon that an emergency fund should consist of three to nine months of expenses, but if the imprecision of that number leaves you feeling bewildered, check out Money Under 30’s emergency fund calculator for a more detailed estimate.

The three cornerstones of personal finance are your budget, your investments and your insurance.

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Step 2) Review Your Investments

With the proliferation of fintech companies that specialize in investments, it’s easier than ever to automate your investing. Often referred to as robo-advisors, this recent trend consists of “a digital platform that automates the investing process (such as choosing funds and rebalancing), streamlining part of the work that a traditional financial advisor would do,” according to Daily Worth’s Natasha Burton. Betterment is one such platform. All you need to do is set up your investing preferences and goals, and Betterment will invest your money for you, according to their software algorithms. Another option is Acorns, an app that rounds up everyday purchases to the nearest $1, and automatically invests that spare change into a diversified portfolio.

The ease of automated investing services has opened up a world of opportunity to consumers with little previous knowledge of the stock market. And with no minimum required balances, anyone can invest regardless of how much money that have. Even traditional companies like Vanguard and Schwab have began to offer digital investment services.

No matter where your investment portfolio is managed, you should reassess your risk tolerance annually. As you circumstances change, your risk tolerance may too, especially as you near retirement or if there is a steep decline in the market.

Step 3) Review Your Insurance

Having the right kinds of insurance coverage not only offers peace of mind, it can save your wallet from devastating blows as well. When it comes to health insurance, life insurance, homeowner and renter’s insurance, take a look at Daily Worth’s guide to what kind and how much you need. But when it comes to car insurance, you should review your policy with a few key questions in mind.

Do your coverage levels need to be updated?

As your life changes, so may your coverage needs. For instance, if you’ve upgraded to a fancy new medical plan, it could render Personal Injury Protection coverage unneccessary. Or say you’ve realized flood season is worse than you thought it’d be could be time to add in comprehensive coverage.

Having proper insurance coverage not only offers peace of mind, it protects your money in the bank.

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A few more specific instances to guide you:

  • Has your beloved-but-beaten-down car aged less than gracefully? Depending on your aversion to risk, you may want to reconsider your collision coverage.
  • Do you live somewhere with a higher rate of uninsured motorists? Oklahoma, Florida, Mississippi, New Mexico and Michigan currently top the list of the states with highest percentages of drivers without insurance, making uninsured motorist coverage a wise choice.

  • Have you undergone a major life event? From graduating to getting married to having a child leave for college, there are life events that should go hand-in-hand with a new car insurance policy no matter your age.

Are you getting the best price?

Comparing policy prices from multiple companies is the only way to know if a better deal is out there. And between frequently shifting pricing algorithms and the possibility of price optimization, chances are a better deal could be saving you serious money. By quickly comparing policies from major and local insurance companies, tailored to you, The Zebra can shine a light on the labyrinth of car insurance pricing.

Do you have any additional quick tips or finance hacks that we should know? Tell us in the comments.