They may not be hopeful that the U.S. economy will rebound any time soon, but most Americans are optimistic about the future of their own personal finances. A newly released national survey conducted by KRC Research for the Certified Financial Planner (CFP) Board of Standards, Inc. finds that 83 percent of the 1,011 adults polled said their personal financial situation would remain the same or improve during the upcoming year. The first step in getting their finances together is getting a report of their credit scores. The best way to get your credit report, including your actual FICO score, is by visiting this link.
The poll, conducted in June, further reveals that consumers who have a personal finance plan are more likely to contribute to the economy. They are more optimistic about the economic outlook and more likely to make home improvements, splurge on a personal item, buy a new car, invest in the stock market, or search for a new job. “While our country continues to grapple with sustained unemployment and other economic headwinds, Americans have a more positive outlook on their own personal finances. And those people who have a financial plan believe that their own financial situation will improve over the next year and are willing to contribute to the economy by spending more,” says Charles A. Moran, chair of CFP’s Board of Directors.
The majority of Americans polled were negatively impacted by the recession, causing 45 percent to dip into their savings and 53 percent to delay making a big purchase. Because of the weak economy, the majority of respondents did not have an official, written financial plan (such as the debt rollover plan) in place even though 58 percent said they would feel better about their financial outlook if they did. Rather, 46 percent said they had a plan in their head and 11 percent said they had some ideas written down. But when presented with the statement, “Everyone should have a financial plan. Even if you have very little money it is good to know in advance how you will spend it and the best means of growing what you have,” 86 percent agreed with it. “Creating and following through with a financial plan can be overwhelming for many people,” explains Eleanor Blayney, the CFP Board’s consumer advocate. “The survey shows the importance of our efforts to educate consumers about the value of financial planning. There are many different sources of advice, and consumers need to be aware of the breadth of options to identify the resource that best suits their individual needs. For many, turning to a certified financial planner professional can help them develop and manage an actionable strategy for meeting their financial goals.”
A significant reason behind the lack of having a formal personal finance plan is the public’s perception of financial advisors. According to the survey, most consumers are less trusting of financial planners, mainly because of revelations during the recent financial crisis. On the other hand, the majority of respondents, if given the opportunity, would take advantage of an hour with a financial planner to review their budget and retirement planning. The survey’s findings, Moran points out, suggest “a gap between how Americans view financial plans and knowing the best way to build and maintain one. They clearly understand the importance of a financial plan, but too many Americans are not taking the necessary steps to formalize it in a concrete, comprehensive way.”
The Federal Trade Commission recently warned consumers to watch out for products that claim to shield cell phone users from the radiation that the devices emit.
It always seems like the scammers are one step ahead of the rest of us, doesn’t it? For years, there have been anecdotal claims of cell phone use linked to cancer, but the World Health Organization gave those rumors credibility when it announced last month that cell phones might be a “possible cause of brain cancer.” Yikes! Almost immediately, companies sprang up, selling products purported to shield cell phone users from radiation and protecting them from cancer. Sadly, those products have no proven protection for users.
The FTC says that there’s no scientific proof that these products significantly reduce exposure to cell phone emissions. Because the entire phone emits electromagnetic waves, a product that purports to block radiation from a specific part of the phone, such as the earpiece, is useless.
So are we all doomed? Despite the WHO’s announcement in May, the jury is still out regarding a link between cell phones and cancer. Numerous studies conducted over the last several years have failed to prove conclusively that the devices we use to call friends, surf the Internet, send text messages, and pay for our purchases are bad for us. Well, “bad for us” as in causing cancer, anyway.
Besides, we all know that smoking causes cancer, and eating fatty foods can cause heart disease, but people still smoke, and still eat pizza. It’s unlikely the WHO’s announcement is going to result in an en masse disconnect of our wireless devices.
Still, if you’re freaked out about your cell phone and a potential cancer risk, the FTC offers the following tips:
Avoid using your phone when the signal is weak. A weak signal causes your phone to work harder and emit more radiation.
Use text messaging instead of calling.
Use an earpiece, or use your speakerphone (never mind that you will annoy everyone around you).
Keep calls short.
Tilt the phone away from your head when you’re talking. (Yes, they really suggested this.)
You can also research the amount of radiation your phone emits by checking out its SAR, or Specific Absorption Rate. The SAR tells you how much radiation your body absorbs from your phone. In the United States, a cell phone’s SAR can’t exceed 1.6 watts per kilogram. You can check the Federal Communications Commission’s website to find the SAR of your cell phone and any prospective cell phone you wish to buy. An Internet search can also yield the brand and model names of low radiation emitting phones, too. Meanwhile, the National Cancer Institute has published a fact sheet called “Cell Phones and Cancer Risk” where you can find more information on this topic.
Just to put things in perspective, the Centers for Disease Control lists heart disease as the number one cause of death, followed by cancer. Accidents come in fifth, followed by Alzheimer’s disease, diabetes, and – believe it or not – the flu and pneumonia.
Conclusion. Eventually, we will all face “the big one.” Something is going to get you. Even if you give up your cell phone, will you give up your car? Cigarettes? Pizza? Skydiving?
Reports indicating a stumbling economy have prompted a whirlwind of talk from Republicans, economists and President Obama on just how to right the economy once and for all. According to Labor Department figures, May payrolls grew at the slowest pace in eight months. Further government data indicates that the economic recovery is slowing. In responding to the latest state of the economy, President Obama voiced concern over the slowdown but dismissed talk about a second recession. “I am concerned about the fact that the recovery that we’re on is not producing jobs as quickly as I want it to happen,” the president said. “We don’t yet know whether this is a one-month episode or a longer trend.”
With Republican presidential candidate Mitt Romney – who leads the latest USA Today/Gallup Poll for the GOP nomination – on his heels, President Obama has cause for concern. The economy could be the main factor that causes him to lose his bid for a second term. With the exception of Ronald Reagan, no U.S. president since World War II has been reelected when the jobless rate was above 6 percent. The latest poll reveals Obama’s worst marks as yet on the economy, with 59 percent of those surveyed disapproving his handling of the economy. The Washington Post-ABC News poll also found that 89 percent of those surveyed felt the economy is in bad shape, 57 percent believe economic recovery has yet to begin and two-thirds say the country is on the wrong track. Certainly not the numbers President Obama wants to see, particularly when Republican presidential candidates are putting the economy front and center on their campaign platform. “We can fix our economy,” said Republican presidential candidate Tim Pawlenty, who recently introduced his “A Better Deal” economic recovery plan. “Our people are ready to get back to work. We just need to give them tools to get there. And get the government out of the way.”
With the U.S. Congress in a stalemate over cutting government spending and raising the federal debt ceiling, President Obama is relying on the business community for support. Recently, he assembled his Council on Jobs and Competitiveness at the headquarters of Cree, Inc., a manufacturer of energy efficient lighting based in Durham, North Carolina. Obama hopes to convince company leaders that his policies are sound, despite the slowing economy, and to seek ideas on how to get the economy back on track. “We want to be for any policies that are going to help incentivize and stand up the private sector to drive the recovery,” explains Austan Goolsbee, chairman of the White House Council of Economic Advisers. Previously, Obama called on businesses to take the lead in stimulating sound economic recovery by investing in hiring and capital. He plans to promote the same message to voters with stops in North Carolina and Florida, two states with high unemployment rates that also happen to be critical to his reelection bid. “The administration has put themselves in a box,” notes Gus Faucher, director of macroeconomics at Moody’s Analytics in West Chester, Pennsylvania. “The most important thing for deficit reduction is to get the economy growing again.”
Federal Reserve Chairman Ben Bernanke blamed high gas prices and the March earthquake and tsunami in Japan for the economic slowdown and expects economic growth and job creation to rebound over the next few months. “Overall, the economic recovery appears to be continuing at a moderate pace, Bernanke said, adding, “albeit at a rate that is both uneven across sectors and frustratingly slow from the perspective of millions of unemployed and underemployed workers.”
The Obama administration is looking for solutions that would appeal to businesses and Republicans, who want reduced taxes, not more government spending. Among the things being considered are a temporary cut in the employer contribution to payroll taxes, a one-year reduction of payroll taxes paid by workers and allowing businesses to immediately write-off 100 percent of certain capital investments.
Some years ago, I held a garage sale to get rid of excess junk. After spending an entire day in the heat, watching strangers paw through, make fun of, and attempt to steal the items up for sale, and making only thirty dollars in the process, I decided I would never host another garage sale.
So how can you get rid of stuff you don’t need without inviting the masses to your home?
Give It Away
The easiest way to get rid of your clutter is to give it to a charitable organization. Goodwill Industries and The Salvation Army are legitimate charitable organizations who will take your used stuff and sell it in their thrift stores. Since they’re nationwide, there is probably a location near you. They will take just about anything that isn’t stained or damaged. If you have lots of stuff to donate, or large items, they will also arrange for free pickup. If these organizations aren’t an option, check your phone book for other charitable organizations in your area who will be happy to accept your castoffs. You won’t get any cash for your stuff, but if it’s in decent condition and you’re giving it to a legitimate organization, you can take a tax deduction.
Also, think about other organizations who might want your stuff. Got lots of old books and magazines? Ask a local library or nursing home if they’re interested. Lots of old clothes? Check with your local community theatre – chances are, they always need costumes. You get the idea.
Sell It Online
You can use the cloud to find buyers for your excess stuff. An internet search for online auction sites will reveal dozens of hits, but eBay is, by far, the most popular. You can list your belongings for a nominal fee and attempt to find a buyer. Make sure that you’re honest about the condition your items are in, however, or buyers may trash you online. Also, make sure to get good estimates for shipping costs; if you underestimate these costs, you may wind up paying more to ship your items to the buyer than you collected on the sale.
Another popular site is Craigslist.com, which allows you to post a classified ad free for thirty days. You can also check your local newspaper; although classified ads usually cost money, your local paper may let you advertise a low dollar value item free of charge.
If you have good quality, gently used items for sale, consider your local consignment shop. These folks will take your castaways and sell them, turning over a portion of the profits to you. Just keep in mind that consignment shops usually want items that are in very good condition, and may want only seasonal items (no summer clothess in December, for example).
Got some old electronics to sell, like printers, digital cameras, or cell phones? Kodak – the maker of cameras and film – has just introduced a website where you can offer up your old electronics (any brand) for sale. If there’s resale value, Kodak will give you a shipping label and will send you a check when it gets the items. If there’s no resale value, they’ll suggest options for recycling.
Think Before You Buy
Once you’ve de-junked your life, make sure that you don’t wind up in the same situation again. Think long and hard before you buy something new. Do I really want this? Will I use it? Do I already have something like this? Preventing the impulse buy will keep your home clutter-free.
Inevitably, we all wind up with stuff we don’t need or want. But there are plenty of ways to get rid of excess belongings. Once you’ve cleared the clutter, learn from your past mistakes and don’t let it build up again.
It looks like banks and other mortgage lenders are in a forgiving mood. A study by the consumer credit reporting agency TransUnion finds that lenders are extending credit to homeowners who previously defaulted on their mortgages. “There appears to be a pocket of opportunity among mortgage-only defaulters that is not the result of excess liquidity, but rather the unique circumstances of the recent recession,” says Steve Chaouki, group vice president in TransUnion’s financial services business unit. The excess liquidity theory surmises that consumers who default on their home mortgages have a short-term increase in cash flow that enables them to repay their other debts and achieve a better overall credit score. However, the TransUnion study finds that factors caused by the recession, including unemployment and home value depreciation, caused the mortgage foreclosures.
“Defaulting on a mortgage causes temporary excess liquidity. This excess liquidity masks the true risk of the consumer as he goes through the foreclosure process. Certain consumers who defaulted on a mortgage in the recent recession only did so because of the recession. They are otherwise good credit risks,” the report states. It goes on to conclude that, “the ability to identify ‘life event’ mortgage defaulters versus chronic defaulters can open up profitable, low-competition target segments.”
The study, entitled “Life After Foreclosure and Hidden Opportunities,” tracked 129,000 consumers over a 12 to 17 month period. It shows that nearly 40% of the home owners who defaulted on their mortgages between February 2009 and August 2010 obtained car loans, personal loans, or lines of credit, and the majority secured credit cards. The TransUnion report further reveals that mortgage defaulters perform the same, if not better, on certain lending accounts when they open them further along in the foreclosure process. “This new market segment that the recession created is an important one for lenders to understand. They have the potential, today, to be stronger and more reliable customers.”
Although banks wouldn’t openly admit it, James Chessen, chief economist at the American Bankers Association, says mortgage defaulters are viewed as attractive customers for new loans as long as they are current on all other debts. For example, a Wells Fargo spokeswoman says the bank would consider lending to someone who defaulted on their home mortgage if the default is an isolated incident and the borrower is willing and able to repay the loan. One-time mortgage defaulters are viewed as a safe risk compared to borrowers who miss payments on multiple loans. Mortgage-only defaulters, says Chaouki, “are less risky than they appear. Lenders will want to lend to these people in the future.”
Marcus Stanley, policy director at the public interest advocacy group Americans for Financial Reform, says lenders are taking into consideration the housing bubble and bust that caused responsible borrowers to default on their mortgages. According to market researcher RealtyTrac, since 2006 nearly 4 million homes in the U.S. faced foreclosure, with many of them being “strategic defaults” where homeowners who could afford to pay their mortgage walked away because the value of their homes were substantially less than what they paid for them.
However, the lending environment for mortgage defaulters isn’t all rosy. Loans and credit cards come with high interest rates. According to John Ulzheimer, president of consumer education at the credit-monitoring site SmartCredit.com, mortgage defaulters can expect car loan rates as high as 19% from the average 4.7% and credit card interest rates between 20% and 25% from the average 15%.
Massive flooding and tornadoes throughout the United States this spring have destroyed thousands of homes. Hopefully, you’ll never be affected by a natural disaster, but there are a few things you can do to protect yourself financially from the unexpected.
Check Your Insurance
If a natural disaster should destroy your home, will your insurance cover it? To make sure, review your insurance policies at least annually to see what’s covered – and what isn’t. For example, most homeowners’ policies don’t cover flood damage, so if you live in a flood-prone area, you’ll need a separate policy. Also, most homeowners’ policies are based on “replacement value” of the home, so you should figure whether the amount of your policy enough to cover the cost of rebuilding your home from scratch. To find out, you could call a local contractor for an estimate of what it would cost to build your home. If that’s not in the cards for you, try an online service that can estimate the total amount. An Internet search for “replacement cost estimator” will yield several websites that can calculate this for you. There will be a nominal fee for the service, but it could be well worth it if you find you need a lot more insurance.
Keep Documents Safe
Unfortunately, most of us have only one copy of important documents, such as insurance policies, birth certificates, contracts, or other important papers. If your home is destroyed, locating these documents could be crucial to filing for insurance claims or government assistance. You can create a “go-box” that contains your important papers in one box or file that you can grab on your way out the door. However, if your home is on fire, you may not even have time to grab that one file, so consider a safety deposit box away from home that can house your important papers.
Another option is to create an electronic copy of your most important papers. A number of online services offer you a place to save electronic copies of your documents that are accessible from anywhere in the world. Consider this for saving insurance policies, tax returns, bank statements, or anything else that you might need.
Evidence Your Valuables
If your home and contents are destroyed, you’ll need to prove what you had in order to get it replaced. Take photos or video of your home so the pre-disaster condition of your house is documented. Also take pictures of the interior, to show the contents. Especially important is documenting the value of high-ticket items, such as jewelry. Save receipts and other proof of expensive purchases in a safe place in case you need them later. The Internal Revenue Service’s Publication 584 has a worksheet designed to help you with this process.
File Your Claim Fast
If something should happen to you, don’t delay in filing a claim with both your homeowners’ insurance and with FEMA. When a series of hurricanes ripped through Florida in 2004, FEMA was quick to pay initial claims to help those who’d suffered damage. After media reports surfaced claiming that FEMA had paid undeserving homeowners, however, the agency knee-jerked into reverse, denying many claims outright for fear of further embarrassment. If a disaster strikes, make your claims early, when memories of the disaster are fresh and sympathies are generous.
There are some common-sense steps you can take to minimize the financial sting if a disaster should strike your home. Freshen up your insurance, and document your belongings, and don’t let fear and frustration delay your claims for the assistance you deserve.
“This came forth as one issue that we can make a big impact on,” says Gary E. Knell, president and CEO of Sesame Workshop, the creators of Sesame Street. If the program can help youngsters understand the basics of how to handle money, they’ll take those concepts into adolescence and adulthood. We think this is right in the wheelhouse of what Sesame Street is all about.” The move reflects a growing desire to teach personal finance in a wide variety of settings.
Starting in September, the Sesame Street television show plans to feature segments that highlight portions of the “For Me, for You, for Later” project. It is the first time Sesame Street has addressed the fundamentals of personal finance beyond counting and identifying money. The financial literacy initiative, which is funded by PNC Bank, also includes kits containing printed materials and DVDs which are available at the bank’s branches or on the Sesame Street website.
The project explores the concept of earning money and explains the personal finance topics of spending, saving and sharing in a manner that young children can understand. For example, in one segment, Elmo earns a dollar and is deciding whether to spend it on an ice cream cone, flowers, or a “Stupendous Ball” that lights up and plays music when it bounces. He decides on the ball, but discovers it costs $5. Elmo learns that he has to earn the remainder of the money and save as he earns until he reaches his $5 goal. Other segments explore trying to save when other spending opportunities present themselves and sharing money to help others. “Introducing topics while kids are forming behaviors and attitudes is a good building block,” explains Laura Levine, executive director of JumpStart Foundation for Financial Literacy and an adviser to the Sesame Street project. “We’re not teaching them to balance their portfolios.”
Besides introducing the topic of personal finance to preschoolers, the initiative is also expected to help parents who watch Sesame Street with their children. Previous studies have shown that adults make mistakes with personal finance issues because they lack a firm understanding of financial concepts, which are often taught by their parents, such as the consequences of running up credit card balances or not saving enough for emergencies. “When it comes to money issues, people are hesitant to teach their kids about something they feel insecure about,” says Beth Kobliner, a personal finance expert and an adviser to the project who also appears in some of the videos. The printed materials and videos were purposely developed to enhance the financial literacy of parents along with their children. “That’s one of the key benefits,” notes Jim Rohr, CEO of PNC Financial Group. “When the children are learning, frequently there is an adult right there with them. It’s a way to get financial education into the marketplace.”
A commercial currently showing on television features a man at a gas pump who puts his wallet into a suction tube in order to pay for his fuel. With gas prices running, on average, one dollar more per gallon than a year ago, many people are feeling the pressure on their budgets.
There are some ways that you can use less fuel, however, and save a few bucks.
It seems obvious, but all of those extra trips you make add up. Try to consolidate errands into as few destinations as possible. Make a shopping list so that you don’t have to run back out to the store for the item you forgot. Consider carpooling with coworkers for your daily commute, or using public transportation if it’s available where you live.
Extra weight in your vehicle causes it to work harder and use more gas. So, empty out the back seat and the trunk.
Skip the Premiums
Unless you’re driving a luxury or high-performance vehicle that must use a premium-grade fuel, regular fuel is good enough for most vehicles. By using the lower grade gas, you can save about five to ten cents per gallon.
Take it Easy
The U.S. Department of Energy says that speeding, aggressive driving, jackrabbit starts and sudden stops can reduce your gas mileage anywhere from 5 to 33%. So slow down, avoid excessive idling, drive more smoothly, and don’t drive with your foot on the brake. Not only will this save on gas, but it might save you a few traffic tickets, too.
Where you buy gas also makes a difference in the amount you spend. Big-name gas stations are usually contractually required to buy a particular type of gas, meaning that they may have to pay more – and pass that cost on to you. Try to fill up at smaller, independently-run gas stations in your neighborhood.
Yup – there’s an app for that. The Cheap Gas app available at iTunes, or Gasbuddy.com’s free app let you use your smartphone to find the cheapest prices in town.
Stay in Shape
Keeping your car well maintained can also put a dent in your gas budget. If your gas cap is broken or missing, replace it. Keep your engine properly tuned and replace filters regularly. Check your tires, too; the U. S. Department of Energy says that properly inflated tires can improve your gas mileage by 3.3%, saving you ten cents per gallon on average. If you’re not sure of the proper tire pressure, consult your owner’s manual.
What About Hybrids?
All-the-rage hybrid cars tout their fuel efficiency. A hybrid, however, costs an average of $6,500 more than a non-hybrid car. If you plan to own it for five years, you’d have to save $1,300 per year on fuel to make up the extra cost. The U.S. Department of Energy’s fueleconomy.gov website contains a “Find and Compare Cars” section that can help you calculate whether the fuel savings of your dream hybrid will justify the higher purchase price.
You don’t have to give up your car to save money on gas. Simple, common-sense changes can have an impact on the amount you spend. Drive less, drive defensively, shop around, and keep your car in good health, and you’ll feel less pain at the pump.
Just about everyone has an opinion on how to jump start the stagnant U.S. economy, including presidential hopefuls and big business CEOs. While unemployment and the housing market continue to bring down a healing economy, you can now add gas prices to the mix. So what’s the solution in getting back on track? Depending on whom you listen to, there are many. Here’s a look at what some financial experts and top business leaders have to say.
An optimistic outlook comes from Edward Rapp, chief financial officer for Caterpillar Inc., the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. He says the U.S. economy is poised for strong growth. “There’s a pent-up demand waiting to happen, but it’s going to take more robust growth in the U.S. to make that happen,” said Rapp. He adds that businesses need a clearer picture on where government policy is heading in terms of taxes and trade.
Charles Evans, president of the Federal Reserve Bank of Chicago, cautiously shares that optimism. He points out that although the economy is slowly rebounding, there’s still a long way to go for the Fed to adjust its monetary policy. “Despite recent improvements to the outlook, we are not yet at that point,” Evans points out. “Following a deep and lengthy recession, the U.S. economy is now on firmer footing. There are many reasons to be optimistic.” However, he adds, “ Despite these clear signs of progress, the roughly 3.75 percent growth we anticipate for the next couple years is too low to generate swift relief in the labor market.”
Perhaps the strongest warning comes from Jamie Dimon, CEO and chairman of JPMorgan Chase & Co., one of the largest banks in the country. He cautions that federal tax rates on corporate profits put the U.S. at a disadvantage in competing with other countries and is forcing jobs and capital overseas. Dimon also warned that unless the federal government reigns in spending, there will be considerable financial consequences, not the least of which is the United States significantly diminishing its role as a world economic leader.
Another consideration that can thwart economic growth is the continuation of high gasoline prices. Dallas Federal Reserve Bank President Richard Fisher says high gas prices are already slowing the nation’s economic recovery. “It already seems to me that gasoline prices have had a retarding effect on the economy. It’s pretty clear that it is not helpful,” says Fisher.
Former Massachusetts governor Mitt Romney, a 2012 Republican presidential candidate, says the economy will be his strategy for stopping President Obama from being a two-term president. “That is my wheelhouse,“ says Romney. “That is what I know and what I do. I’ve had experience in turning things around that are going in the wrong direction. I will get America on the right track again.”
But former U.S. Treasury Secretary Paul O’Neill, who served during the George W. Bush administration, says the U.S. economy is on track. “The economy is creeping along, but companies that I know a lot about are having record quarters in revenues and profits,” says O’Neill. “I think the reports about new job creation are legit and we likely will see more reports in the range of 200,000 people getting jobs every month. I think the economy is getting better.”
James Bullard, president of the Federal Reserve Bank of St. Louis expects a strong economy in the second half of this year. “I think the economy will be reasonably robust in the second quarter and the second half of the year,” he said.
Unfortunately, scam artists always seem to be on top of every trend. The recent recession has left millions of Americans out of work and looking for a new job, so scammers are there, trying to make a quick buck on their misfortune. If you’re on the hunt for employment, watch out for these signs of scams. If you’re looking to make a little extra cash, there’s a legit paid survey program that can help you make some money while you watch TV or watch the kids.
Online jobs are great because in the online world nobody cares where you work so it’s fairly easy to find employment that will let you work out of your house and in your free time. Writing jobs are pretty huge online. If you’re an average writer or above, try these guys.
Watch out for any “placement agency,” “employment agency,” or “job placement service” that guarantees to find employment for you. No agency can make that sort of promise.
Plenty of false employment agencies will ask you to pay a hefty price up front for their “exclusive” or “undisclosed” list of employment opportunities. Typically, these types of agencies will take your money and guide you to job websites that you could have found on your own. Even if they give you a contract promising a refund if they fail to find you a job, read the fine print carefully. There may be plenty of conditions and escape clauses that will prevent them from having to pay you back, even if you don’t get a job.
Also, be skeptical of any employment agency who claims to have “secret” leads on government employment – all government agencies must advertise job openings publicly.
Job placement agencies understand your hopes and fears about finding a job, and are quick to play upon them. Beware any agency that uses fear mongering tactics, such as asking how you’ll survive if you or a family member gets sick, or reminding you of the consequences if your debts are sent to a collections agency.
Do Your Homework
Before you sign on with any employment agency, check them out. The Better Business Bureau is a great resource for checking out any prospective placement agency. Meanwhile, sites like ripoffreport.com can also alert you to potential scammers.
Too Much Information
Scam artists love to ask for your personal information, so beware any so-called employment agency who needs a utility bill, drivers’ license, or social security number. None of these are needed in order to help you find a job, but they can be used to access your personal accounts or steal your identity. If any placement agency asks for these pieces of information, walk away.
Watch out for any service that claims your resume is outdated, incomplete, or simply not “catchy” enough for today’s job market. They will, of course, demand a huge up-front fee in order to “fix” or “re-design” your resume, but the end result won’t be any more impressive than something you could have done yourself.
That email you received today contains a job offer that sounds amazing, promising a huge income for working at home or secret shopping. As the old saying goes, if it sounds too good to be true, it probably is. Even if the sender has a slick-looking website and appears legitimate, this could all be a front for a scammer trying to steal your identity. Just like anything else, avoid giving out bank account numbers, social security numbers, or any other personal information.
It’s hard enough to be down on your luck and in need of a job. Don’t let desperation lead you to make bad decisions. Check out any potential job offers or job placement services carefully, and think twice before giving up your money or personal information.
It appears that low interest rates, refinancing and other government measures aimed at reducing mortgage debt are working. The latest report from the Bureau of Economic Analysis (BEA) finds that total U.S. home mortgage debt during the first three months of 2011 is $10.3 trillion, compared with $11 trillion in mid-2008. Even better news, Americans are taking the extra money and pumping it into the economy.
The latest fixed mortgage rates released by Freddie Mac are the lowest since last December, with 30-year loans at 4.63 percent and 15-year loans at 3.82 percent. Average interest rates have dropped for 16 straight quarters. The rates are enticing homeowners to buy new homes, as mortgage applications increased 8.2 percent, or to refinance current mortgages, with the refinance index rising 9 percent and reaching its highest level since mid-March. “Households are managing their debt down by bringing cash to the table to qualify for super-low rates,” says Michael Fratantoni, an economist with the Mortgage Bankers Association.
According to the BEA report, in the first three months of 2011, Americans cut more than $100 billion off the country’s annual mortgage bill. Interest payments alone are 11 percent less than in 2008 and fewer Americans are behind on their mortgage payments or in foreclosure. However, foreclosure figures could be skewed since lenders are taking longer to repossess homes because of paperwork delays.
A combination of low interest rates and the strong commitment of consumers to pay down principal is no doubt contributing to the decline in mortgage debt. But is it a sure sign that the economy is recovering following the 2008 housing bust? The answer depends on where you live. Across the nation, 28.4 percent of homeowners have negative equity in their homes (owing more on their mortgage than what the home is worth), an increase from 27 percent in fourth quarter 2010. “Home value declines are currently equal to those we experienced during the darkest days of the housing recession,” says Stan Humphries, chief economist for Zillow, a real estate research firm that released the mortgage report. Zillow doesn’t expect home values to rise anytime soon, although some areas in the country, including Fort Myers, Florida, Champaign, Illinois and Honolulu, Hawaii, report increases in home values for the first quarter of 2011.
“One positive sign is that housing is becoming more affordable,” says economist Sam Khater of CoreLogic, which tracks real estate trends. Another positive sign is that the economy is benefiting from lower mortgage debt. For example, Americans are borrowing more for big-ticket items like cars and appliances, while also saving more for the first time since 1998. “This is a form of economic stimulus that goes to Main Street rather than Wall Street,” says Nicholas Carroll, an authority on consumer finance and author of “Walk Away From Debt for a Better Future.”
Customers of popular arts-and-crafts retailer Michaels recently learned that they got something extra with their purchases: debit card fraud.
Authorities say that debit card readers in 80 Michaels stores in 20 states were surreptitiously outfitted with skimming devices, designed to read card and personal identification numbers, or PINs. The fraud occurred between February and early May of this year. Thieves stole card information and PINs from debit cards, then used the information to make withdrawals from shoppers’ bank accounts, usually in $500 denominations.
The Irving, Texas-based retail chain says it disabled all of the tampered devices by May 6th, and is now working to replace all 7,200 card readers in its stores nationwide as a precautionary measure. The total number of shoppers affected has not been disclosed.
To carry out the fraud, thieves must gain access to a debit or credit card reader. They install an electronic device to capture the card number from the card’s magnetic strip when it is swiped. Then, a second device, either a pinhole-sized hidden camera or a clear electronic membrane placed over the debit card reader’s keypad, reads the customer’s personal identification number, or PIN, when it is entered.
Once the thieves have your debit card number and PIN, they can fashion a new card, and start using it to make purchases or withdrawals from anywhere in the world.
Credit card skimming is not a new scam, but is growing in popularity among thieves. Gartner, a research and consulting firm, states that skimming fraud has grown fivefold over the past five years. Similar scams have been known to target ATM machines and gas station card readers – attractive to thieves because of their accessibility – but other retail chains, such as grocer ALDI, have been targeted. One consultant quoted in the Wall Street Journal called the Michaels scheme “a very audacious, coordinated attack.” It’s proof that fraudsters are becoming ever better at developing their illicit techniques.
To prevent this type of fraud from happening to you, you could stop using your debit and credit cards and shop on a cash-only basis. Since this isn’t a viable option for most people, however, there are a few things you can do to detect this type of crime if it happens and minimize your losses.
Avoid using any ATM or card reader that appears to have been tampered with.
Check your bank account activity online daily. Report any suspicious transactions to your bank immediately with a phone call, and follow up in writing.
Find out your bank’s policy for dealing with fraudulent transactions. How long do you have to report an illegal transaction? Will they credit your account for the pilfered funds? If so, how long will it be before you get your money back?
Consider opening a second bank or credit card account with a nominal balance designed to cover your day-to-day purchases. Use this second account to make your debit card purchases. That way, if thieves get hold of your card number, they won’t have access to your main account – and all the money in it.
Conclusion. Unfortunately, fraud will never go away, and thieves will continue to improve their methods. Hopefully, it will never happen to you, but if it does, awareness is your best defense – stay on top of your financial activity, and cut your losses.
When it comes to making financial choices, it looks like we have mom to thank for how we manage money and handle our personal finances. According to a survey conducted by the polling firm GfK Roper Public Affairs & Media, parental influence, whether positive or negative, shapes our spending habits and financial discipline. In a survey involving 1,000 adults, 26 percent said their mothers were most influential in shaping their personal finance behavior, while 21 percent credited their fathers. Only one percent said both parents influenced them about personal finances, while 16 percent said they themselves were their top influencers. Another 13 percent credited their spouses for influencing their financial habits, while nine percent said no one did.
Patricia Seaman, a spokeswoman for the National Endowment for Financial Education, isn’t surprised by the survey’s results. “Moms do handle a lot of the day-to-day spending decisions, and that’s what kids see. When they’re young, they are dragged to everything with mom, for school, shopping for groceries, for clothes, to the garden center and to the ATM. Often during those trips, moms may be talking to themselves, saying things like, ‘This is on sale this week. Maybe this is a better product.’ It’s not just spending decisions. They may also be exposed to money handling habits, like using cash or credit cards or checks,” Seaman points out.
In particular, the survey found that 49 percent of 18- to 24-year olds were most influenced by their mother’s personal finance habits compared to 27 percent of respondents 50 to 64 years old and 14 percent of respondents age 65 and older. However, when it comes to day-to-day finances and big-ticket purchases, neither parent was the chief influencer. That honor goes to spouses.
And although mom may be the top dog with money matters, the poll found that dad is the go-to resource for information about investing. “Men and women are going to look to mom first for advice on finance. Traditionally, moms really did control the family finances. Men earned it and women managed it. We know that changes when you ask about investing. People are more likely to ask dad, or granddad, about investing,” says Leslie E. Linfield, executive director of the Institute for Financial Literacy in Portland, Maine. However, Linfield points out that there’s no guarantee that the financial guidance parents give their children is beneficial. She said a significant bad financial habit passed down through generations is bad money handling. “You have multiple generations where they are cashing the check at the convenience store, which is more expensive than a bank or a credit union, because that’s what mom did and that’s what grandma did. They don’t know otherwise, or they’ve been taught not to trust those institutions,” Linfield says. “The kids have learned that that’s the lender of first choice. If you need money for rent, you go and pawn grandma’s engagement ring.”
Bad financial behavior is less prevalent among children who had a strong relationship with their parents. “The stronger the relationship with the parents, the higher the sense of well-being, not only financially but in general, and the fewer risky financial behaviors young adults are likely to take, like using one credit card to pay off another one, going without health insurance to manage their cash flow or using high interest loans,” says Seaman. To ensure mothers are passing along sound financial advice, Seaman suggests that they should “think about what it is that you want your kids to know. Figure out what they are seeing you do and what they’re hearing you say and whether that’s really what you want them to see or hear.”
Here’s a new video we just did explaining Balloon mortgages. Give it a quick view, it’s very short and informative! If you prefer to read a more detailed version, you can find that at Balloon Mortgage Explained.
We all know what it’s like to overpay for something, make a bad deal, or lose money on an investment. But are you making any of these money blunders right now?
Carrying Too Much High-Interest Debt
It’s understandable to want the biggest house, the coolest car, the most fashionable clothes, and a luxury vacation every year. But too many purchases racking up interest can cost you thousands over the course of a lifetime. Commit to a debt-repayment plan. Avoid using credit cards for your expenses, and pay off any that you have. Refinance other high-interest debt if you can. Don’t buy more house than you need. And hold off on that new car for another year.
Ignoring Your Credit Report
Your credit history and credit score are crucial to getting good interest rates and loan terms. Even if you’ve diligently paid your bills and done everything right, bonehead mistakes can still land on your credit report and cost you big. Check your credit report at least annually for mistakes. You can get it free by going here. If you see anything out of place, file a dispute.
Not Paying Yourself First
It’s easy to let everyday emergencies take up all our available income and prevent us from saving for a rainy day or retirement. But stop kidding yourself. If you wait until you think you have enough money to start saving, you’ll never do it. Don’t expect some miracle windfall to take care of your expenses after you retire. While you may believe that you can’t possibly scrape together $50 or $100 per month to put in a savings or retirement account, once you commit to an automatic payroll deduction or debit to your bank account, you’ll be surprised at how easily you’ll survive without it.
Ignoring Your Bills
Throwing your bank statement or credit card bills into a corner because you’re afraid to open them does not serve you. Not only does it prevent you from coming to terms with your financial reality, but it also keeps you from finding mistakes or fraudulent charges against your accounts. Check your credit card statements for any purchases that aren’t yours, and also to keep track of the interest rate you’re being charged. Check your bank statement at least monthly (checking it online daily is best) for fraudulent transactions. If you find any errors, dispute them immediately with a phone call and follow up in writing. Depending on your bank or card issuer, you could have as little as 24 hours to do this. If you already have errors on your credit report, you can use this sample credit report dispute letter to get them removed.
How often do you lament that you’re broke and wonder how much better your life would be if only you had more money? Stop dreaming of winning the lottery or getting that big pay raise, and instead take a hard look at how you’re spending the money you do have. Is it going to lots of dinners out? Daily lattes? Vending machine snacks? Fast food? Daily treats for the kids? Look at the little ways you can save, and you can painlessly come up with extra dollars every single month.
Many of the worst financial mistakes are made little by little, every day. They can be fixed in the same way. Commit to taking charge of your finances, penny by penny.
The recent recession and housing bubble has left plenty of people in foreclosure or otherwise struggling to stay afloat financially. Anything from a missed credit card payment to a mortgage modification to losing your home altogether can be disastrous to your credit score, and it will take time to bounce back, but it can be done. Here are some ways to restore your good name.
Make Payments on Time
It seems obvious, but having only one missed payment is better than missing a series of them. If you have trouble remembering to pay monthly bills, set up automatic payment plans that will deduct the money from your checking account when it’s due (just make sure you have enough money in your account to cover it – otherwise you’ll be slapped with an overdraft fee). You can also use a reminder service like whatbills.com to send you an email whenever a bill is due; this is great for nonrecurring or less frequent bills, such as medical bills or annual insurance premiums. If you’re strapped for cash and struggling to make all your payments, this article explains tips for what bills to pay when you’re really strapped for cash.
Use Credit Wisely
Your credit score is a gauge of how well you manage credit. Don’t run up huge balances that will cost you big in interest, but you can charge a small amount every month and pay it off in full. This will demonstrate that you pay your bills on time, which will boost your credit score. If you find it hard to get a credit card because of your bad score, check into “secured” cards that give you a credit card in exchange for a deposit you give to the issuing bank.
Shutting down credit cards can hurt your score, so leave your accounts open if you can. Just avoid the temptation to run up the balances again. Take the cards out of your wallet and tuck them away somewhere that you’ll forget them.
Keep An Eye On Your Credit Report
Even if you have pristine credit, you should get a copy of your credit report at least annually to check for, and correct, any errors. You can get a free copy of your credit report here. If you find any errors, follow the credit bureaus’ instructions to file a dispute.
Many companies advertise that they can “repair” bad credit or erase negative information from your credit report, but the Federal Trade Commission warns that these promises are usually scams. No one can remove negative information from your credit report if it is accurate. Most credit repair companies will ask for an upfront fee and won’t offer much help. If you choose to use a company or nonprofit organization to help you restructure or renegotiate your debts, check their record with the Better Business Bureau to make sure they’re legitimate and that they will actually help you. You can also follow our tips for removing collections from your credit report.
Reforming your credit history takes time and discipline, but it can be done. Your efforts will pay dividends, however, in better credit terms in the future.
Experts are weighing in on whether the death of Osama bin Laden is just what the world needs to boost economic recovery. While some economists see the al Qaeda leader’s death as a game changer for the global economy, others see it simply as having a temporary effect on the markets. “The nation finally caught a break,” says Mark Zandi, chief economist of Moody’s Analytics. “At the very least, this will lift the collective psyche and rally financial markets for a bit, and confidence is vital to any recovery.”
U.S. President Barrack Obama announced to the world in a statement late in the evening of May 1 that bin Laden was killed in a U.S.-led special forces military operation in Pakistan. The terrorist leader was the mastermind behind the September 11 attacks on the Twin Towers in New York City and the Pentagon in Washington, D.C. Almost immediately following the news, oil prices fell and stocks rose across the world, including the U.S. and Japan, where stocks reached a high not seen since March when the country suffered its devastating earthquake and tsunami. In upcoming months, more investment in Middle East countries and declining transportation costs are expected.
John Silvia, chief economist of Wells Fargo, says bin Laden’s death will lower the risk of doing business worldwide and particularly in the Middle East. “There’s a lot of positives out of this,” he said. “It lowers the risk premium of anything. It generally decreases what we would call event risk – in other words, a sudden outbreak of terrorism.” However, he cautions that an improved global economy environment will be realized only “as long as it’s perceived there’s no bin Laden junior coming along.”
While financial markets are reacting positively to the news of bin Laden, some anticipate the global economic boost to be short term. “One interpretation is that bin Laden’s death means that al Qaeda will be in disarray for some time, leading to relative calm with respect to new terrorist threats, which in turn reduces the potential for disruption in oil supply,” explains Andrew Lo, a finance professor at MIT. “Financial markets will likely react positively to this news in the short run, but the repercussions may be more complex over time as we learn how bin Laden’s death affects his organization and, consequently, the political economy of the Middle East.”
In the meantime, French Finance Minister Christine Lagarde believes bin Laden’s death is likely to boost consumer confidence and economic growth in the United States. “The U.S. economy is like the American people. It reacts very quickly either positively or negatively,” says Lagarde. “I wouldn’t be surprised if this event prompted a pick-up in confidence.” On the other hand, Yang Chia-yen, a director at the Taiwan Institute of Economic Research, sees bin Laden’s death as more of a political issue rather than an economic one. “Osama bin Laden being killed will not change anything in the global economy. It will only be a ‘one-day’ impact, if any,” he predicts. Yang adds, “The current economic problems the U.S. government is encountering came from inflation and an unstable situation in the Middle East and North Africa. It is not directly related to terrorist activities or bin Laden.” Cheng Cheng-mount, chief economist at Citigroup Taiwan concurs, noting, “The only thing that I can think of at this moment would be the military budget, that the U.S. government will be able to cut a lot and use it for domestic needs instead.”
Home prices may be at their lowest in four decades and mortgage rates continue to hover around a low of 4.5 percent, but they are not enough to encourage an influx in home ownership. Experts say the core reason is buyers are not confident a house is a safe investment. “The magnitude of the housing crash caused permanent changes in the way some people view home ownership,” explains Michael Lea, a finance professor at San Diego State University. “Even as the economy improves, there are some who will never buy a home because their confidence in real estate is gone.”
The economic crisis has a lot to do with Americans’ concerns toward home ownership. A survey that tracks home ownership finds that in December 2010 only 64 percent of people felt a house is a safe investment, compared to 83 percent in 2003, prior to the housing collapse. “If we’ve learned anything from this mess, it’s that housing is not a risk-free investment,” Michelle Meyer, a senior economist at Bank of America Merrill Lynch Global Research points out. “Everyone knows someone underwater in their mortgage or struggling to sell a home.” The U.S. Census Department finds that the home ownership rate fell to 66.5 percent in the fourth quarter of 2010, the lowest in more than a decade.
According to CoreLogic Inc., a real estate information company based in Santa Ana, California, as of December 2010, an estimated 11 million homes in the U.S. were worth less than their mortgages. Furthermore, a March 2011 report finds an additional 2.4 million borrowers had less than 5 percent equity in their homes. But real estate agents are hoping low home prices and borrowing costs will lure buyers back. Mortgage rates recently released by mortgage financier Freddie Mac puts the average mortgage rate for a 30-year fixed home loan at 4.80 percent and the 15-year average rate at 4.02 percent. “If you can jump through the hoops to get a mortgage, and there will be hoops, then this is an amazing time to purchase real estate,” notes Robert Stein, former head of the U.S. Treasury Department’s Office of Economic Policy. “There are going to be a lot of people kicking themselves a few years from now because they didn’t take advantage of the low prices and the low mortgage rates.”
Based on median U.S. income, property prices and mortgage rates, homeownership affordability is at its best yet. The median home price dropped 32 percent from its 2006 peak. “We expect that purchase activity will pick up slowly as the improvement in the job market eventually leads to greater willingness to buy,” the Mortgage Bankers Association anticipates. The group expects home sales to increase 4.1 percent in 2011 and 5.9 percent in 2012. The latest figures from Freddie Mac support the group’s optimism. Sales of existing homes below $100,000 increased 3.7 percent in March and mortgage applications rose 5.3 percent in the week ending April 15. “People will still aspire to own their own homes,” said Lea, the finance professor at San Diego State University. “They’ll just be a lot more practical about it.”
Like debt consolidation scams, homeowners who are struggling to stave off foreclosure have been prime targets for scams in the recent years. Now, the Better Business Bureau is warning consumers of yet another new twist on mortgage relief scams.
The BBB reported that homeowners have been receiving official-looking letters from out-of-state law firms that invites them to join a “Mass-Joinder” lawsuit that would force their lenders to reduce monthly payments, interest rates, or the balance of the mortgage, and dangled the possibility of receiving hefty punitive damages from their lenders.
To join the purported lawsuit, however, they were asked to hand over a massive upfront fee. In one case, the BBB reported that a Missouri homeowner responded to the letter and was told he could reduce his interest rate by 2 percent or cut down his mortgage balance by 80 percent – if he handed over a “retainer” of $5,000. Fortunately, the homeowner was experienced in the real estate business, realized the scam, and didn’t pay up.
In a statement, the BBB said that complaints from homeowners who have paid for mortgage help have been mounting. They said, “Few, if any, of these people got help. Many ended up worse off than before the mortgage modification companies entered their lives.”
The Federal Trade Commission recently banned the collection of upfront fees from mortgage relief companies, but exempted law firms under certain circumstances. That’s why the notices are coming from law firms.
This latest scam is a twist on the advance fee mortgage scam. In that scam, businesses purporting to help troubled homeowners get mortgage modifications charged large up-front fees in order to get their loans updated. While some homeowners did get modifications, the end result was not much better than the original loan.
This new scam has caused the California Department of Real Estate, the Attorney General for Washington State, and Denver, Colorado’s district attorney, all to issue warnings to consumers to avoid being scammed.
If you are a homeowner struggling to keep up with your house payments, the Better Business Bureau recommends following these steps:
Contact Your Lender Directly. Try talking to your lender first to obtain a modification on your mortgage before going to a third party.
Beware offers of “Help.” Beware law firms, lawyers, companies, or other groups who promise to allow you to join a “mass joinder” lawsuit against your bank or mortgage company in return for an advance fee. The BBB reports that your chances of actually getting relief from such a suit are slim.
Advance Fees Not Allowed. As of January 31, 2011, the Federal Trade Commission has banned any company from asking for an advance fee in order to help you modify your mortgage, except under certain circumstances. If any company is asking you for a huge upfront payment, ask them how they are legally permitted to charge the fee.
Watch Out for the “Forensic Loan Audit.” Yet another twist on the advance fee scam is the company who asks for an upfront payment for a “forensic loan audit.” Much like the other scams discussed above, you are throwing your money away.
Check the BBB Before You Pay. Check the Better Business Bureau’s Business Reviews at their website before you pay any company promising a mortgage modification. If there are complaints against the company, or if they’ve gotten a failing grade from the BBB, it’s likely a scam and won’t help you.
Conclusion. Unfortunately, scammers think nothing of trying to kick you while you’re down. If you’re struggling to pay your mortgage, beware any company or law firm who offers you an easy solution.
If the recession has left you struggling to make your mortgage and credit card payments, you may have seen ads from companies promising to help you out. The promise of being debt-free is tempting, but some unscrupulous companies will take your money and still leave you deep in debt. How do you know which companies can truly help you?
Know the Debt Consolidation Company
First, look to see if the consolidators you’re considering are legitimate. Check with your state’s attorney general or the Federal Trade Commission to make sure the company is real. Then, check with the Better Business Bureau to see what kind of complaints have been filed against the company. An Internet search of the company’s name might also lead you to message boards and sites where you can compare notes with other customers. Beware any company that promises to get you out of debt for free – that is certain to be a scam. Also, don’t assume that a “non-profit” or “not-for-profit” agency will get you a better deal; the Federal Trade Commission has fined companies for falsely claiming nonprofit status.
Shop Around to Avoid Debt Consolidation Scams
Don’t sign up with the first company you find. Debt consolidation companies know that you are afraid to lose your home or your car, want to get out of debt, and don’t want to go into bankruptcy. Their representatives will play upon these fears to try and get you to sign up for their services right away without comparing other companies. Resolve to stay calm and resist signing up until you have at least three competing offers.
Read the Fine Print
Get the details on every offer in writing. What kind of fees will they charge? Are they flat fees or a percentage of your debt? Can they charge you fees later on? A common complaint is that debt consolidators will sneak in additional fees after you’ve signed on with them. What kind of monthly payment can they get you? How successful have they been negotiating terms for other customers? Get all the details in writing and then compare against competing offers. You should not have to pay just to get a quote or an analysis; if a company demands that you pay up front for this, go elsewhere.
Keep Your Information Safe
A debt consolidator needs to know only the names of your creditors and the amounts you owe to each in order to give you a quote for their services. They should not ask for your Social Security Number, account numbers, or any other personal information up front.
Will Your Creditors Accept the Debt Consolidation Plan?
Before signing on with a debt consolidator, the Federal Trade Commission recommends that you check with your creditors to make sure they’ll work with the consolidator. If you do sign up for their services, make sure your creditors have accepted the consolidator’s plan before you start paying them; if not, keep making the monthly payments yourself. Check your credit card statements to make sure the debts are being paid off as promised.
You don’t have to use a consolidator – you can try renegotiating terms with your creditors on your own. A consolidator does the work for you, but will charge you for its services. If you choose to work with a debt consolidator, take care to protect yourself and make sure the consolidator is truly getting you out of debt and isn’t running debt consolidation scams.