Personal Finance Universe

For new docs, hefty IOUs tough to shake

2008-02-10T15:21:00.000-08:00

Debt-snared med grads must learn to pay now, spend later

By Ryan Bergen

"Suck it up," says finance guru Gail Vaz-Oxlade of Til Debt Do Us Part
Photo credit: Til Debt Do Us Part

Nine out of 10 residents are over $150,000 in debt when they finish their medical training, according to a 2006 survey. "That's not just debt, that's humungous debt," gasps Gail Vaz-Oxlade who's made a career of helping people with their money woes.

Her 20-plus years of experience and firm but folksy style have earned her a weekly television show, Til Debt Do Us Part - think Dr Phil for the financially wayward.

When it comes to climbing out of debt, the promise of a healthy income may be a beacon of hope, but, says Ms Vaz-Oxlade, young docs shouldn't forget the squeeze of being in the hole.

She doesn't waste time with sympathy. Med school, she says, is a choice, and with a "suck it up" — her tough lovin' refrain — at the ready, she lays out the way to mastering debt:

1 Shed student habits
Whether by habit, or a feeling of need, paid residents who are still dipping into their professional students line of credit they need to smarten up, she says. "If you can't live on $50,000 a year without accumlating debt you are going to have a tough time the rest of your life."

2 Chart your debt like a disease
If debt is a problem, then address it like one. Document income, expenses, interest rates. "If you had a patient, and every single day you went in and took that patient's temperature and blood pressure and whatever vital signs you needed and you didn't chart it, no other doctor on this earth's surface would think you were a smart kitten, would they?"

3 Plot your payment course
Create a montly budget - and follow it. It's not sexy, but it helps to keep track of the periodic expenses that can sometimes be forgotten, but must be paid.

4 Give yourself just a little credit
Treat consumer debt like the plague - avoid it. "You don't deserve [a purchase] if you can't pay for it." Credit card balances, usually the most expensive of debts, should be paid off first. More than two credit cards is too many.

5 Don't live on a prayer
Plan for the future, but live in the present. "It's one thing to say 'I am in hock up to my eyeballs to get this education, but I can ammortize that over 15 years.' It is another thing altogether to say that 'while I am a resident making 50,000 frickin' dollars I feel entitled to driving a fabulous car and eating out regularly.' You are still paying your dues, man."

6 Make like a squirrel
Remember to save a little, too. Ms Vaz-Oxlade recommends a minimum of 5% each month. "You have to have an emergency fund…the next time something happens and you have no stash of cash it pushes you back to your credit."

7 Better shop around
Apply the law of supply and demand. "It behooves [young family physicians] to find a community that wants them and negotiate the payment of their student loan as part of their compensation package. There are communities that are willing to do this."

8 Pawn it off on someone else
Consider getting a financial planner. It's their job to know the arcane but clever financial products that can put idle savings to work.

Friday's Personal Finance stories

2008-01-20T08:51:00.000-08:00

If someone handed you $600 right now, what would you do with it?

That's question on lawmakers' minds as they debate whether to inject a fiscal stimulus into the economy in the hopes that cash in consumers' hands will prime the economic engine. As one economist in our lead story today says: "Give the average consumer a check for $50 and he knows what to do with it."

Now, I'm happy as the next person to be handed a few hundred dollars. But do you ever feel as though the double standard is a bit too much to bear sometimes? Americans are exhorted to stop loading up their credit cards and berated for living beyond their means, yet once again the government appears ready to beg us to spend.

Consumers were happy to oblige in 2001, the last time the government handed out a cash stimulus. Still, some economists say consumers are less likely to embrace their inner shopaholic this time, given stagnant wages, steep credit-card debt and, for some, mortgage woes.

Read consumer writer Jennifer Waters' story today for more on what consumers are likely to do should the fiscal stimulus plan come to pass, plus see which companies and government agencies are working to recruit older workers, and find out how the IRS is reacting these days to frivolous tax arguments, all on today's Personal Finance pages.

The dispiriting fact about this stimulus plan is that it's the lowest-income people who are likely to spend the most, while higher-income people can afford to save. So, I'd like to suggest an alternative idea for fiscal stimulus. Rather than the government spending tons of money to encourage poor people to spend, let's leave the little guys, and even the middle guys, out of it. Simply ask a few hundred multi-millionaires to spend an extra grand or two in the next couple of months. Buy their Christmas presents now, maybe. They could even get a special tax deduction for making a gift to the U.S. economy. That'd likely cost our country less. And it would leave the rest of us better able to focus on being savers, rather than consumers.

Andrea Coombes, assistant personal finance editor

Quicken Online Delivers New Personal Finance Service for Internet Generation

2008-01-19T01:53:00.000-08:00

Intuit Inc. (Nasdaq: INTU) announced the availability of Quicken® Online – a new Web-based personal finance service that makes it easy for people to instantly see how much money they have coming in, how much they are spending, and what's left at the end of the month.

Quicken Online gives people access to information across all of their accounts, including checking, savings, and credit cards – regardless of their financial institution. This provides a unique and powerful view of their "real" financial picture, helping them make better decisions with their money. With Quicken Online, bank account information can be accessed wherever there is an internet connection from a PC or Web-enabled mobile device.

"With Quicken Online, Intuit continues to do what it has done for years: change the lives of millions of people by providing powerful tools to manage their dollars and cents," said Rick Jensen, senior vice president at Intuit. "We took a fresh approach to designing Quicken Online, combining the newest Web technologies with 25 years of experience to deliver a service that gives people the insight, functionality and tools they need with the security and quality they demand."

Quicken Online comes at a time when Americans are failing Personal Finance 101. A recent study by CareerBuilder.com found that 41 percent of adults in America live paycheck to paycheck. Compounding matters, debt is reaching a younger segment of the nation's population. According to the Richmond Credit Abuse Resistance Education Program, the number of 18- to 24-year-olds declaring bankruptcy has increased 96 percent in ten years. Not only that, the Project on Student Debt found that today's college students are graduating with an average of $20,000 in debt.

A New Financial Approach for a New Generation
Designed to address the basic personal finance tasks in the easiest, most time efficient and secure way possible, Quicken Online is available for a monthly subscription fee of $2.99. The goal is to provide customers with quick answers to important financial questions, such as:

How much money do I have? - Quicken Online connects to more banks and financial institutions than any other solution in the marketplace. This means users now have the chance to view their checking, savings and credit card accounts from any of the 5000+ financial institutions Intuit works with – all in one place. Gone are the days of logging in and out of numerous sites just to find out how much money has been spent, or how much is left for the rest of the month. Additionally, Quicken Online shows the RealBalance™ – a view of the current account balance plus any reoccurring deposits and manual entries to help keep people from spending beyond their means.

Where is my money going? – Quicken Online takes the work out of organizing and categorizing spending reports. Customers just login to see where their money is going. Building on the power of the Web, Quicken Online suggests the right category for transactions based on the most frequent categories selected by other users.

Quicken Online balances user-based knowledge with specific customer preferences, allowing customers to define how they want to see their information. For example, Quicken will remember if you've chosen to categorize the local Coffee Shop as "Java" instead of "Groceries."

When are my bills due? – – Doing the work for customers, Quicken Online automatically displays a list of upcoming bills on the user's homepage based on previous payment history. Going a step further, customers can be sent bill reminders via e-mail or text message to help avoid late fees and higher interest rates from credit card companies.

Added Benefits from a Trusted Brand
As part of the Intuit family, Quicken Online offers benefits no other online financial management solution can match, including:

Security – Protecting critical data is the top priority. Quicken Online is the only offering of its kind that uses multi-factor authentication – an additional step in the sign-in process – for added security. Intuit is subject to the same stringent auditing and technology requirements used by the world's major financial institutions including banks, stock exchanges and brokerage houses.

Support – Live, in-product support is available from the Quicken support team as well as other users. The Quicken Community, an online group of users, also shares personal finance tips and expert advice via podcasts, blogs, and live chats and events at www.quicken.com.

iPhone Optimization – Managing money on-the-go is even easier. Quicken Online is available on the iPhone®, making it easy to get your bank account balance and enter transactions while on-the-go.

Data Storage – Quicken Online lets users store up to five years of transactions for easy reference.

Expanding Industry Leadership
To further extend Intuit's effort to help younger consumers get off to the right start with money, Intuit has been selected as the exclusive online personal finance solution for Higher One, one of the fastest growing financial services companies in the country. The agreement will provide the hundreds of thousands of students, faculty and staff at distinguished public and private higher education institutions across the country that use Higher One with Quicken Online as the preferred solution for managing their banking services and debit cards. More information can be found at www.higherone.com.

Quicken Personal Finance Product Availability, Pricing

Quicken Online is available direct from Intuit at www.quickenonline.com for a monthly subscription fee of $2.99.

Put Your Savings in Hyperdrive, Part 4: The Expensive Coffee-Related Drink Factor

2008-01-19T01:51:00.000-08:00

I’m on a quest to determine a number of financial moves that will accelerate savings beyond the typical snail’s pace. I’ve written so far about opening a high-yield account, keeping your change creatively, and automatic your savings. These are all basic concepts that can be applied in interesting ways with a little bit of attention.

Many people disagreed with me when I railed against The Latte® Factor, David Bach’s trademark catchphrase and program which prescribes dropping your expensive morning coffee drink and depositing the value of each day’s savings into some sort of magical account that will return 10% annually after taxes and fees for forty years and end up with close to $1,000,000 more than you would have otherwise.

I’ll address my issues with David Bach’s program below. Nevertheless, a system similar to David Bach’s suggestion has merits for some people, thus I have a fourth tip for putting your savings in hyperdrive.

4. The Expensive Coffee-Related Drink Factor.

Obviously, I don’t want to call it The Latte® Factor, which is a registered trademark and a signature selling point that drives millions of dollars in books in seminars. Since I don’t drink coffee, I’ll use the therm ECRD to refer to any habit that requires a frequent expense but is easily controlled or replaced by another, less expensive habit. The savings from the elimination or switch can be accumulated and deposited into a high-yield savings account.

Problems With The ECRD Factor

It is important to remember that all of this is pointless if one doesn’t make smart decisions about the larger issues in life. You can forgo the daily coffee from Dunkin Donuts, but if you still eat two doughnuts every day, you’re spending money on something that you may pay for in health care costs later on. You can switch from premium gasoline to regular gasoline, but if you buy new cars every three years, the savings from the gasoline are ten or a hundred times lost by the unnecessary expense of buying new cars so frequently.

The scenario David Bach paints—an after-interest, after-fee, after-tax increase of almost $1,000,000 in 40 years from dropping your daily latte is an extremely unlikely scenario, both mathematically and behaviorally. Bach makes some serious assumptions that don’t have much validity in the “real world.”

You probably won’t earn 10% in an account for forty years after taxes and fees.
To invest in an account that earns even 8% over forty years, you will lose a lot of your money due to transaction fees. A $4 transaction fee, like the one charged by ShareBuilder, on a $150/month investment is a 2.7% fee right off the top. That’s not a wise investment.
Without your daily dose of caffeine, you may miss out on career opportunities while asleep at your desk. This sounds like a stretch, but if you quit cold turkey, you could see adverse effects in your productivity and you may miss an opportunity without knowing it.
It’s also quite possible that you enjoy your latte, understand the consequences and future savings you are giving up, and have decided your enjoyment is worth the potential loss.

So The ECRD Factor can have mixed results when you deal with variables in the real world. Don’t expect the kind of wonderful returns David Bach promises, but the frequent expense reduction or elimination that forms the basis of this tip can be a significant part of your saving strategy if the rest of your financial decisions are sound.

Making The ECRD Factor Work

What’s your ECRD? It’s probably best to pick something to which you do not have a physical addiction without appropriate support. While I would always suggest eliminating an addiction to heroin or alcohol, there are more immediate concerns in these cases than saving money, namely staying alive and healthy. It’s best to choose a daily expense that can be eliminated or replaced immediately without any significant withdrawal symptoms. The daily coffee-related drink might be a good candidate, particularly if you buy such drink from an expensive store like Starbucks. The good news is you won’t go through withdrawal if you simply replace the expensive drink with your own freshly brewed concoction.

And if you eliminate the drink entirely over the span of a few weeks, or replace it with water, you will get used to the change in chemicals in your brain within a few weeks.

Caffeine isn’t the only option. A coworker of mine has stopped buying lunch every day, opting to bring in a homemade sandwich instead. If not lunch, I know someone who used to eat out at an expensive steak restaurant every week. If you work in New York City, there’s the temptation to go out to the bar for happy hour with your coworkers. Do you smoke? Slowly cutting back will improve your health and save you thousands of dollars even before interest.

How about the news stand in the morning? If you pick up a newspaper on the way to the office to read on the train, consider this your ECRD. Replace the newspaper with a free news podcast if you already own an mp3 player. If you really like the newspaper, consider subscribing. You’ll save quite a bit off the newsstand price. The difference in price is your ECRD.

Apply Your Savings and Earn Positive Returns

If these are habits, cutting back (without affecting your networking experiences) and intentionally depositing the money you save will add up over the long term. It doesn’t have to be perfect. The three previous hyperdrive tips come in handy here. If you’re used to spending $4.50 in cash every morning for your latte and are ready to eliminate the drink entirely, put that $4.50 in your coin jar before you leave for work for later deposit into a high-yield savings account. Not a cash user? If you spend about $100 for your chosen ECRD a month, set up an automatic transfer from your checking to savings account for that amount. If your bank allows you to create separate goal-related accounts, like ING Direct’s subaccounts, create one specifically for your ECRD savings and transfer your monthly savings there.

Your high-yield savings account is not earning the 10% promised by David Bach. Forget about that rate and use the money saved for short-term goals. The more you save, the more you’ll also have available for long-term goals like retirement and legacy. So keep making good decisions all around—especially on the bigger expenses like real estate, vehicles, and education—and these seemingly small savings will add up over time. It starts off slowly, but compounding interest is the key to putting you savings in hyperdrive.

Put Your Savings in Hyperdrive, Part 2: Keep Your Change

2008-01-19T01:50:00.001-08:00

Whether you’re trying to establish an emergency fund or putting money away to take your dream vacation, you can reach your goal faster by putting your savings in hyperdrive. Unfortunately, scientists have not yet perfected time travel. When they do, saving for retirement might only entail traveling back to the 18th century to deposit $1,000 in a national bank and popping back to the present to reap the rewards of three hundred years of accumulated interest.

Until modern technology catches up to science fiction, savers are relegated to more traditional forms of accelerating their income from interest. Yesterday, I wrote about opening a high-yield savings account, a set-it-and-forget-it task. The next suggestion involves creating a daily habit.

2. Keep your change. At first glance, focusing on your daily pocket change may seem like a lot of effort with too little payoff. For example, I’ve seen people who are so focused on picking up pennies from the ground by keeping their eyes down that they miss the dollar bills right in front of their faces. That’s a prime example of being penny wise, pound foolish.

Nevertheless, I’ve also seen coin jars add significantly to savings. A coworker of mine emptied her jar recently and counted $500 from the past year. This type of savings may not be worthy of your retirement plan, but it can mean the difference between renting an economy car and a convertible on vacation. A mason jar may not support your children’s education, but it might pay for internet service for a year so your kids can research their assignments online. This is significant, and the beauty is in the simplicity.

The concept is simple, but the execution is not as easy as it used to be. Back when dimes were 90% silver, cash was king. Almost all everyday transactions were handled with cash. Inflation from the last 50 years hadn’t yet eroded the value of coinage, so when you dropped your coins in a jar at the end of the day, you knew it was worthwhile.

Now, fewer transactions are handled by cash, and you have less change in your pocket when you arrive home. The change you do have has decreasing purchasing value, as well. Keeping your change in the 21st century now takes more than filling a piggy bank with your coins.

That’s not to be overlooked however. The only material needed is a jar or piggy bank, and the best placement is near your front door, perhaps right next to the spot where you leave your keys when you walk in at the end of the day. It’s quite simple to make this a habit: check your pocket or purse as you put down your keys or hang up your coat. Perhaps you won’t have anything most of the time, but it’s a habit worth creating anyway.

Once a month, or more frequently if you desire, bring the coins in the jar to your bank to deposit into your savings. If your bank has a free change counting machine this process may be easier. My girlfriend enjoys rolling coins into wraps so I don’t deny her the fun. Don’t forget that this deposited accumulated change will do much more for you in a high-yield savings account than in the standard account offered by your local bank.

Unfortunately, with the decreasing use of cash, the “analog” coin jar may not be enough. In a world where debit cards and credit cards rule financial transactions, a high-tech piggy bank equivalent may make the difference. One example was corporate-sponsored. A few years ago, Bank of America created the “Keep the Change” account offering.

Every purchase you make with the debit card is rounded up to the nearest whole dollar. When the debit card is used to make a purchase, the amount deducted from your checking account is the rounded up number. For example, if at item is purchased for $15.25, $16.00 is deducted from the account.

Of that $16.00, the difference due to rounding, $0.75, is transferred directly into your Bank of America savings account, where presumably it will earn some interest. Of the remaining $15.25, Bank of America keeps about $0.25, a standard merchant transaction fee, and the merchant receives the remaining amount, approximately $15.00.

Similarly, One from American Express is a credit card that will deposit 1% of your purchases (plus a $50 bonus after your first purchase) into a high-yield savings account.

There’s no reason for this type of cumulative saving to be tied to certain debit cards, debit cards, bank accounts. While they make it easy for you, it would be worthwhile to use all of your credit and debit card accounts as well as a better-paying savings account.

If you’re ready to put your savings in hyperdrive, then you must already track your account balances and activity in software like Microsoft Money, Quicken, or any number of web-based offerings. You’ve also presumably followed yesterday’s suggestion of opening a high-yield savings account. On a weekly basis, take a look at all your debit card and credit card transactions. Round each expenditure up to the nearest dollar. Total the excess amounts and transfer the sum from your checking account to a special high-yield savings account earmarked for whichever goal on which you happen to be focusing.

This process may be too involved for daily attention. If you review your financial activity every few days, keep a spreadsheet going with the tally and transfer the sum of the remainders to your high-yield savings once a week or once a month. The idea is to create a habit at a rate that works best for you, and everyone has different preferences.

Do what’s best for you, but don’t ignore the power of doing more with your change—and letting your extra change do more for you.

Put Your Savings in Hyperdrive, Part 1: Open a High-Yield Account

2008-01-19T01:48:00.000-08:00

Hyperdrive, also known as warp speed or a number of other terms in science fiction, refers to traveling faster than light. While theoretically impossible for objects due to the special theory of relativity, moving at this incredible pace is possible for your money. While you have a savings account earning continuous interest, you are becoming slightly richer not every second, not every microsecond, but every infinitesimal portion of time. That’s fast.

If your money is earning 0.25% yearly interest in a standard brick-and-mortar savings account, you are not making the most of your money. For no more risk you can be earning up to 20 times as much. Savings, whether in a high-yield account or not, is among the safest of all investments. Here is the first tip for putting savings into hyperdrive. Keep in mind that the terms “savings account” and “money market account” (not “money market fund”) are interchangeable.

1. Open a high-yield savings account. Many banks are getting away with murder. They know that most customers are fine letting their money sit without looking for better alternatives. Comfortability plays a role.

If you’ve been with a bank for 15 years, you feel comfortable with them and are less inclined to feel the need to shop around. This is acceptable behavior as long as you understand that you could be missing out on significant interest income. Take a look at this list of high-yield savings accounts or look for the lists on BankRate.com.

Many of the banks that pay the highest interest do not have brick-and-mortar branches. These branches are expensive to run. Without having to manage branches, banks can theoretically save more income and pass that savings onto account holders in the form of interest.

There is no reason to feel nervous about opening an account with a bank that only exists online. As long as they are insured by the FDIC—and all the banks listed here are—you have the same protections you have with a traditional bank. Also, you’re safer sending your information over a secure, encrypted internet connection than you are traveling to a branch with your money.

Opening a high-yield savings account is a no-brainer. With a $10,000 balance at the beginning of the year and no further deposits, a savings account with an annual percentage yield (APY) of 4.5% earns $450 in interest, $425 more than the typical savings account offering 0.25% APY.

Put Your Savings in Hyperdrive, Part 3: Automate Your Savings

2008-01-19T01:47:00.000-08:00

If you’ve ever run from one point to another, you’re probably aware that there is a limit to your speed. With “analog” equipment like the bones, muscles, joints and tendons in your legs and feet, there are physical limitations that prevent you from going too fast. Don’t worry. Thanks to recent inventions, it’s quite easy to get around this problem. Bicycles and cars allow your muscles to exert much less effort while resulting in faster movement. Sometimes machines and computers are required to break through limitations.

As you might imagine, saving money follows the same concepts. Picking up your paycheck from your mailbox, endorsing the back, and bringing it to your bank is like walking from one point to another. (Even if you drive to the bank, for the purpose of this metaphor, you’re a walker.) Once the teller confirms your identity and the validity of the check, he or she might give you the sum of the check in cash. Perhaps you cash only a portion of your check—the money you’ll need for the upcoming week—and deposit the rest into your checking or savings account at the bank. Congratulations, you’re now moving at 25 miles per hour.

You’ll still need better equipment to make the jump to hyperspace.

3. Automate Your Savings. With your savings on autopilot, you have less to worry about. While you’re not looking, money is transferred to your bank account—a high-yield savings account is best but a checking account may be a necessary intermediary—and begins earning interest. There is no need to waste gasoline on trips to the bank. There are several parts to automating your savings.

Direct Deposit

Direct Deposit is one of the most positive developments in saving. Rather than cashing your pay check and depositing only what is left over, you can instruct your employer to transfer your after tax salary each payday directly into your checking or savings account. Large companies usually make this an option when you first accept the job. Otherwise, you may need to get in touch with your human resources department. Smaller companies may not offer this feature, but it wouldn’t hurt to suggest to those whose make these decision that the company implement the service.

There are a number of benefits. Most immediately, you don’t have to worry about finding time for traveling to your bank. You reduce the risk of losing your paycheck in transit. In most cases when you receive your funds via Direct Deposit, the money is made available to you on the date the check is deposited rather than being subject to a holding period as you would be for other deposits. Direct Deposit also allows you to split your paycheck among a number of accounts, so you can immediately designate a portion for savings and begin earning interest on the day of deposit.

What are the drawbacks of Direct Deposit? If you still use cash for transactions throughout the week, you’ll need a way to get the cash out of the bank. These withdrawals should be done from checking accounts rather than savings accounts. Savings accounts are limited to six withdrawals or outgoing transfers per month—so most of your transactions should take place in a checking account. You can use an ATM card to get the cash you need. You should be the last entity to touch your money—let the interbank technology take care of as much of these transactions as possible.

Automatic Transfers

In most cases, your paycheck is best deposited into a checking account, and from there, you can set up automatic transfers into savings and cash withdrawals. The best high-yield savings accounts can be linked to your checking account. This will let you transfer money directly within the same bank or from one bank to another without writing checks. For example, if you choose to open accounts at ING Direct, you could set up a link to your local checking account into which your paycheck is Directly Deposited.

You can then create automatic savings plans, instructions to periodically transfer money from your checking account to the high-interest savings account. Set it and forget it. While I am citing ING Direct as an example, they are not the only bank that allows customers to create automatic periodic deposits. Find a bank you like and review the options they offer.

With all your money moving behind the scenes, from your employer to your checking account to your savings, you are earning interest without knowing it. When the money is not passing through your hands, there’s less temptation to spend it right away. More money ends up in your savings, accruing interest for the future. Effectively, each time you feel you need cash, there is an obstacle of going to the bank or ATM. Some may decide that the expense is not worth the hassle and simply leave the money in savings.

Automation allows more of your money to find its way to your savings account quicker and remain there, earning interest.

Survey shows changing personal finance trends

2008-01-19T01:45:00.000-08:00

NUMBERS: The percentage of people holding mutual funds increased from 32 percent to 41.4 percent, while those with stocks fell from 42.1 percent to 31.2 percent

By Angelica Oung

STAFF REPORTER
Wednesday, Jan 16, 2008, Page 4

A survey of 4,017 workers by the Council of Labor Affairs (CLA) found that workers have changed the way they manage their assets in the past five years.

Compared to a similar survey conducted in 2002, the percentage of those putting money into properties, savings accounts, individual stocks and through "mutual aid societies" (標會) are all down, according to data released at yesterday's CLA news conference. Meanwhile, there have been an increase in those investing in mutual funds and buying insurance.

The survey was conducted to gauge the readiness of workers in this country to face retirement, said Lin Lee-jen (林麗貞), the director of the statistics department of the CLA. However, the survey did not ask workers how much they are putting away in various forms of savings or investments.

"Our savings rate in this country is still quite high, in excess of 20 percent," Lin said. "However, whether or not those savings can give us a comfortable life depends on how they are managed."

The decrease in those using mutual aid societies is the most dramatic.

While 38.7 percent of surveyed workers participated in such societies in 2001, only 10.3 percent did so last year, a drop finance experts credit to the increasing number of firms offering financial planning services in this country.

Mutual aid societies are a traditional way for individuals to obtain credit from a group of peers. One member receives dues collected from the rest of the members every month.

The member who needs the money the most submits the highest bid for the pot. Those who are not in immediate need of the money do not bid and in return receive the pot when it comes to their turn to collect.

Investment in real estate is also down as property prices have risen out of reach for many. Those who saved through investing in real estate fell from 42.7 to 17.8 percent. Those investing in stocks fell from 42.1 percent to 31.2 percent.

In the face of low interest rates in savings accounts, those using them as an investment also fell from 72.2 to 56.6 percent.

The percentage of those investing in mutual funds increased from 32 percent to 41.4 percent while the percentage of those who bought insurance rose from 48.9 percent to 57.1 percent.

Hsin Ping-lung (辛柄龍), an associate professor the Graduate Institute of National Development at National Taiwan University said that the survey would yield more useful information if it included more detail.

"So we know a greater percentage of people are buying insurance, but we don't know what kind of insurance they are buying or how much," Hsin said.

The savvy or lack thereof of individual investors could determine to what extent labor retirement benefits could be privatized, Hsin said.

Don't You Wish You Have An Emergency Fund Right Now?

2008-01-19T01:43:00.000-08:00

Doesn’t it seem much more important to have an emergency fund now that people are talking about the US going into recession? Something that’s often neglected as a benefit of having an emergency fund is actually the piece of mind of knowing that our standard of living won’t be jeopardized if we lose our jobs.

Having an emergency fund will also give us freedom to look for another job if we unfortunately get fired. Imagine someone who lives paycheck to paycheck getting fired. How will he or she keep up? It wouldn’t matter what the former lifestyle is because there is no way he/she can pay another bill. This means that the person is forced to find a job immediately and the chances of finding a good one diminishes drastically.

Some might feel that emergency funds are not important because they’ve never used it. Actually, the fund is never meant to be used. It is just a safeguard just in case something happens and cash is needed quickly. The fact that the fund has never been withdrawn shows how lucky the person is because they never needed that cash.

With a stock market that seems to go lower daily, the emergency fund also acts as a form of diversification of our assets because emergency funds are supposed to be kept in safe investments like money market funds or even online saving accounts. Actually, I bet many people wishes much more of their assets are in their online savings account instead of being in the stock market!

So how many of us actually have emergency funds already? If not, what are you waiting for? There’s no perfect moment to start so now is a better time than any!

2008 Roth IRA: Lump Sum or Dollar Cost Average?

2008-01-01T04:23:00.000-08:00

By Flexo on Saturday, December 22nd, 2007 in Investing

The last contribution to my 2007 Roth IRA was invested last Monday. Ever since my first Roth IRA several years ago, I’ve been maximizing the contribution each year by automatically investing equal amounts twice each month. One reason for using that technique, usually known as “dollar cost averaging” was to reduce risk. With the market going up and down throughout the year, sometimes money is invested at a good prices while other times the prices are not as good.

The other option (although it certainly is possible to mix the two strategies) is to invest the entire $5,000—the maximum for 2008—in one lump sum. That would give me the benefit of having the entire year for the full amount to grow. That is, if the stock market grows next year, the full amount will grow. If the market is shaky, then I will have put my entire faith in one date in the year.

Another reason I used the dollar cost average strategy each year is it wouldn’t damage my cash flow. I didn’t always have enough savings ready to be invested, and slow, regular investments allowed me to spread out the contribution over twelve months. While I’d like to keep a large amount of cash on hand for when I eventually make a down payment on a house, if I needed to, I could withdraw Roth IRA contributions without penalty for that purpose.

On a side note, I called to stop my 2007 Roth IRA contribution at TIAA-Cref, and I intend on investing my 2008 Roth IRA with Vanguard.

Mjrz.net Personal Finance Manager R1.0.26

2008-01-01T04:22:00.000-08:00

About:
Personal Finance Manager is a finance and expense tracking tool for those with limited or no accounting experience. You can use it to manage expenses and track account balances, generate reports, create and save complex filters to search the transaction history, create charts and graphs for assets, liabilities, and daily net worth tracking, view stock prices/quotes, store contacts, email, and phone numbers, and import OFX data for banks and credit cards. It supports the latest Quicken format, and also supports downloading current statement for bank and credit card accounts.

Release focus: Minor feature enhancements

Changes:
A transaction details panel was added. Now the user will be able to see all TX details without having to pop up a new dialog. A bug where the portfolio timer was not restarting was fixed.

Finance Gets Personal

2008-01-01T04:21:00.000-08:00

By SHELLY BANJO
December 23, 2007

Money: It's a subject most twentysomethings are wrestling with as they try to control their finances. But it remains a completely taboo topic in most social settings.

Then there's the world of personal-finance blogs, or online journals. In what's called an open wallet atmosphere, dozens of twentysomethings display their debts, savings, incomes and spending habits for everyone to see -- and learn from.

Blogging Out of Confusion

Moneyspeak can seem as foreign as Aramaic to recent college graduates who can navigate their way through Africa but struggle to manage a bank account. Wading through acronyms like IRAs and HSAs can be overwhelming, as can attempts to decipher tax laws. Still, a number of bloggers are trying to take control of their finances -- and are inviting you to watch and chime in.

When Eric, a 26-year-old writer, moved to New York, he was overwhelmed by nearly $40,000 in student-loan and credit-card debt. "I found myself living in an incredibly expensive place trying to make ends meet and my friends just didn't understand or worry about it," he says.

So in September he created a blog called The Captain is Out to Lunch (captainfinance.blogspot.com), where he tracks his debts, investments and net worth with clever graphs and discusses his daily financial follies and successes.

After a month or so, he noted that for the first time he saved more than he spent.

Eric, like most personal-finance bloggers, won't disclose his full name because of the personal information he posts and because friends and family do not know about the blog.

Twentysomethings can find inspiration in blogs. They can watch Mollie's progress toward financial independence at An English Major's Money (englishmajormoney.blogspot.com) or watch Krystal, author of Give Me Back My Five Bucks (at krystalatwork.blogspot.com) save $25,000 for a condo down payment.

For "Beachgirl," who has the blog beachgirlsbudgetblog.blogspot.com, reading other blogs helps her "learn from others' mistakes but also commiserate in the fact that you're not alone in making them."

She recalls a hectic move from North Carolina to Washington D.C. when she forgot to pay her credit-card bill. After reading others' experiences, she called her credit-card company and got the fees waived.

Juicy Diaries

Many bloggers, such as Nicole at Budgeting Babe (budgetingbabe.blogspot.com) and "Wanda" at Well-Heeled With a Mission (wellheeled.wordpress.com), weave personal finance through stories of their lives, making the blogs read like juicy diary entries or casual emails.

"We put the 'personal' back in 'personal finance', " says Krystal.

Comments posted by other readers can be equally helpful.

"If they see me making missteps they will chime in," says Eric from The Captain is Out to Lunch. For example, when he mentioned he didn't qualify for his temp agency's 401(k) plan because he didn't work enough hours, a fellow blogger suggested he ask about exceptions for new hires. Eric says the responses he receives "keep me in check."

For a roundup of personal-finance blogs and information about how you can start your own, visit PFBlogs.org.

Write to Shelly Banjo at shelly.banjo@wsj.com

Where to get answers on long-term-care coverage

2008-01-01T04:19:00.000-08:00

By Chuck Jaffe

Syndicated columnist

A key issue facing many consumers is whether to pursue long-term-care protection. Frequently, consumers are dealing with this issue in connection with their parents, but at a time when they are also reaching an age where they can buy coverage cheaply.

Most experts suggest that long-term-care coverage is right for a certain niche of the population — those with sufficient assets to avoid Medicaid but not enough money to simply pay for care on their own.

But they note that terms and conditions and circumstances vary from one person to the next.

With that in mind, Kiplinger's Personal Finance magazine has created the "Long-Term Care Center" — a comprehensive, independent information site that does a good job answering virtually all questions associated with care coverage, from costs to Medicaid planning and more.

You can get to the site at kiplinger.com/yourretirement/longterm.

Personal Finance by Kathy Kristof

2008-01-01T04:16:00.000-08:00

Personal Finance by Kathy Kristof

Tucson, Arizona | Published: 12.23.2007

Want to save on your 2007 taxes? Quick, buy a water heater!

At this time of year, tax experts usually suggest a few moves that, if you make them by New Year's Eve, will save you some money when you file your '07 tax return. But this year's recommendations are a bit quirky, due to recent and pending changes in the tax law.

"The tax code has gotten really wacky," said Barbara Kogen, a Beverly Hills, Calif., tax accountant. "You get all these little short-term provisions, and you have to be on top of them."

For instance, a 2005 law designed to promote energy conservation ushered in a half-dozen tax credits for buying energy-efficient materials and equipment for your household. But the law authorized these credits for only two years, which means they expire when the ball drops on 2007.

Consequently, if you're planning to buy a new air conditioner or water heater, waiting until January could cost you as much as $300 in tax credits. A tax credit is particularly valuable because it reduces your tax by the amount of the credit. A deduction is less valuable because it just reduces that amount of income that's subject to tax.

Do you need to act fast to take advantage of tax breaks that might expire at the stroke of midnight Dec. 31? If you're a homeowner, teacher or generous retiree or have kids in college, you just might. Here's a look at what's expiring and what some experts suggest you do about it.

Energy credits

If you're making improvements to your home to boost energy efficiency, you may qualify for one or more tax credits. Specifically, you can get:

● Up to $500 for adding insulation materials, new doors or roofs with pigmented coating.

● Up to $200 for replacing exterior windows and skylights.

● $300 for buying a qualifying water heater or heat pump.

● $300 for buying a qualifying air conditioner.

● $150 for buying a qualifying furnace or boiler.

● $50 for adding a qualifying furnace fan.

A vendor should know whether its product qualifies for the credit. But don't buy anything you wouldn't get otherwise.

"It has to make economic sense," Kogen said. "The tax tail shouldn't wag the dog."

Educator expenses

This deduction is aimed at defraying the costs that teachers incur by spending their own money to equip their classrooms. It allows educators to deduct as much as $250 spent this year. The break is slated to expire in 2008.

Hybrid-vehicle credits

One of the most complex tax breaks ever written applies to hybrid vehicles. It's based on the vehicle's estimated fuel savings over its lifetime compared with an index, which means the credit varies by make, model and year. In addition, after a manufacturer sells 60,000 cars eligible for the credit, the value of the credit ratchets down and then expires completely after a year.

That means you can't get a tax credit at all for buying a hybrid Toyota because too many people popped for Priuses in previous years. And you have only a few weeks to get a full credit for buying a Honda hybrid. For example, if you buy a Honda Accord Hybrid AT this month, you get a $1,300 credit on your 2007 return. Buy it in January and the credit drops to $650. Buy in July and the credit is worth just $325. In 2009, the credit is gone.

But if you've got your eye on a Chevy, Mercury, Nissan, Mazda or Ford hybrid, you have time. The phase-out hasn't hit these manufacturers yet.

The expanding childhood

The government has been tinkering with the so-called kiddie tax, too. It used to be that any child younger than 14 who had more than a certain amount of investment income would have to pay taxes at his or her parents' higher rates. But the kiddie tax age is moving up. For your 2007 taxes, you need to worry about potential kiddie taxes for any children who are younger than 18. In 2008, your college student is going to be at risk, too.

The advice from the experts: If you are giving your college student money for school, you might want to give him or her appreciated long-term stock holdings now so he or she can sell them before the end of the month. Why? The child would get the benefit of his or her capital gains rate, which is likely to be 5 percent, this year. In January, the gain would be taxed at your 15 percent rate.

Donated IRA funds

Another break that expires New Year's Eve allows those who are age 70 1/2 to donate up to $100,000 directly from an Individual Retirement Account to a public charity. The donation itself isn't tax-deductible when made this way, but the withdrawal from the IRA isn't taxable the way it normally would be.

Deductible tuition

The deduction for higher-education expenses also expires at year-end, although it's popular enough that there's serious talk that Congress still might extend the tax break, said Mark Luscombe, principal tax analyst with CCH Inc., a Riverwoods, Ill., tax research and information firm.

Until that extension comes through, you might want to pay for any eligible spring 2008 tuition by the end of 2007. Individual taxpayers who earn less than $65,000, and couples who earn less than $130,000, can deduct as much as $4,000 in qualified tuition and related expenses paid for the taxpayer — or the taxpayer's spouse or dependents.

The maximum deduction starts phasing out after those income thresholds are exceeded. Partial deductions are available to individuals with income up to $80,000 and couples with income up to $160,000.

Pass the kettle

A tax-law change makes it more difficult to deduct charitable contributions made in cash. Unless you get a receipt, you aren't allowed to deduct the $20 bill you gave a Christmas bell ringer.

Personal Finance

KathyKristof

● Contact Kathy Kristof by e-mail at kathy.kristof@latimes.com or by mail at Kathy Kristof, c/o The Los Angeles Times, 202 W. First St., Los Angeles, CA 90012.

Your Personal Finance Resolutions for 2008

2008-01-01T04:13:00.000-08:00

by Martin Bamford

It's that time of year again - the time when people up and down the country are making resolutions for the year ahead. With so many people likely to be thinking about sorting out their personal finances in 2008, here are some top personal finance resolutions for you to consider from personal finance author and Chartered Financial Planner Martin Bamford.

Work out your budget

It still amazes me how many people I meet with who simply don't know how much money they spend each month (and what it goes on!). Working out (and sticking to) a monthly budget is all about spending less than you earn. If you achieve this, month on month, you will be in a better financial position at the end of 2008 than you were at the start.

If you reach every pay day with an overdraft or credit card debt to clear from the previous month you are starting the new month on the back foot. Make it your personal finance resolution for 2008 to never spend as much as you earn each month. If you really want to buy something shiny and new but find yourself reaching for that credit card or store card, stop, think - do you really need it now or would you feel much happier if you bought it in a few months time with cash rather than debt?

Get out of the red

If you have short term debt (credit cards, store cards, overdrafts, etc) you will know that debt is a drag. It's a drag on your ability to save for future objectives. It's also an emotional drag on your attitude towards money and personal finances. Make clearing your short-term debt a priority before embarking on strategies to save for short-, medium- and long-term plans.

I still meet people with some very funny attitudes towards debt. There are people who prefer to have savings running alongside debt even when they are often getting charged much higher interest rates on the debt than they will ever receive on the savings. Whilst there is a certain comfort factor in knowing you have some savings behind you, it is counterproductive if your short-term debt is holding you back.

Don't forget that the interest you get on your savings is taxed (10%, 20% or 40% depending on your income tax rate). When you compare your debt and savings interest rates always look at the net (after tax) interest rate you get on your savings to make a fair comparison.

Make a plan.

This ties in closely with your monthly budgeting exercise. When you are working out what you are going to spend your money on each month ensure you prioritise debt over savings. Stop taking on more short-term debt. Mark a debt-freedom day on your calendar and stick to it. Celebrate your personal debt-freedom day; it's something to be proud of.

Look to the future

Starting a pension is likely to be a big priority for many people in 2008. We recently saw the biggest shake-up of pension rules in many years but this brought a great deal of retirement planning opportunities with it. It is now generally possible to make much larger pension contributions than under the old pre-April 2006 rules. These large pension contributions will still be able to attract tax relief at your highest rate of income tax.

Once you have made contributions to a pension plan you can choose how the money will be invested. Seek professional advice to ensure that your retirement plans are invested in a way that is in line with your attitude towards investment risk, reward and volatility. You can choose from a wide range of investment options within modern personal pensions so there is no need to take unnecessary risk that you feel uncomfortable with.

Pay less Tax

No-one enjoys paying tax but many of us fail to take the simple steps that enable us to pay less tax. Each and every year we waste an average of £132 per taxpayer because we don't take some simple planning steps and maximise our tax allowances.

There are some very easy tax-saving strategies you can use in 2008 to pay less tax.

If you are a higher rate taxpayer and your spouse is a non-, lower- or basic-rate taxpayer then consider transferring savings into their name. If you have £20,000 in savings in a joint account where one of you is a higher rate taxpayer and the other is a non-taxpayer (assuming a 5% gross interest rate) you can save £200 a year in income tax by switching from a joint account to a savings account in your spouse's name.

Make sure you use your Individual Savings Account (ISA) allowances for this tax year and the next tax year. You have until April to maximise contributions into an ISA for the 2007/08 tax year. Every adult in the UK can contribute up to £3,000 into a cash mini-ISA (£3,600 from 6th April 2008) and up to £4,000 into a stocks & shares mini ISA each tax-year, or up to £7,000 into a maxi ISA (£7,200 from 6th April 2008). The returns within your ISA are tax-free (with the exception of the 10% tax credit on UK dividend income which can no longer be reclaimed on UK equity income).

Review your mortgage

Now is a good time to consider reviewing your mortgage. If your mortgage is on your lender's standard variable rate (SVR) you are likely to be able to make a reasonable monthly saving by switching to a more competitive interest rate or product. There are costs associated with re-mortgaging and it makes sense to seek impartial expert advice. This will also save you the time of trawling the high street to locate the best offers. Because mortgages are a dynamic market the rates available are subject to change on a regular basis and some deals will only be available through an independent adviser.

Sort out your financial affairs

If you don't have a Will, get one. You can write your own Will but there are some major risks involved with this DIY approach. Getting something wrong when writing your own Will could lead to significant legal fees to sort things out after your death. Find a professional to write your Will from the Society of Trust and Estate Practitioners (www.step.org). If you die without a Will, your estate will be distributed according to laws created in 1925. It is no surprise that these laws probably do not reflect modern thinking on inheritance! Don't risk dying 'Intestate'.

Whilst we are on this rather morbid subject you should also think about family protection. Run through a number of scenarios. What would happen to your family financially if you were to die? What would happen if you were to suffer a serious illness? What if you suffered an accident or illness and were unable to work for a long-term? Re-run these scenarios but apply them to your spouse as well. The impact of a house person dying or contracting a serious illness can often be as serious (or more so) than if this happens to the main bread-winner.

Check out your existing arrangements to ensure that they remain competitive. The cost of life assurance has generally fallen in the past five years. There are potential savings to be made here. Again, use an independent expert to review the entire market for you and ensure that the cover you are putting in place is suitable for your circumstances and objectives. At the same time make sure that your life assurance is written in trust. Writing these policies in trust can ensure that the proceeds are paid out quickly, to the right person or people and without liability to tax.

Meet with an Independent Financial Adviser

Make 2008 the year that you carry out a comprehensive review of your personal finances and financial objectives with an impartial professional who has access to the tools and knowledge needed to improve your current and future position. Most IFA's offer a free initial consultation with no obligation they can identify areas that they can help you with and you can grill them about their qualifications, experiences and charges.

Ask lots of questions to ensure that you have found the right IFA for you. Make sure that they hold the appropriate qualifications to deal with your situation. The entry-level qualification for a financial adviser is the Certificate in Financial Planning (also referred to as the Financial Planning Certificate). This level of qualification is really only suitable if you are only seeking basic financial advice. If the advice you require is more complex then look for an adviser who is a Chartered Financial Planner or Certified Financial Planner certificant. These are more stringent tests of knowledge and competence to provide financial advice.

Also, check that the adviser is truly independent. In June 2005 there were a number of changes to the way that the financial services profession works. An adviser can now choose to be tied, multi-tied, whole of market or independent. A whole of market adviser can offer products from every provider but they do not offer the option to pay for their advice with a fee. An Independent Financial Adviser offers a fee charging option and this can sometimes offer greater impartiality that paying for services through commission. In any case, remember that you as the client are paying for financial advice - either through product charges and commissions or an explicit fee. Ensure that you are getting value for money.

Martin Bamford BA (Hons) CFP APFS
Chartered Financial Planner at Informed Choice IFA and Personal Finance Author

Do You Have the Proper Holiday Tipping Etiquette?

2008-01-01T04:10:00.000-08:00

BY DONALD JAY KORN

One of the important parts of good personal finance planning is giving to others. This includes charitable giving, of course, but it also means showing generosity to those who perform services for you. Proper holiday tipping etiquette can show that you care about a person, and that you appreciate what he or she has done for you throughout the year.

Over at a Sedona real estate blog, a handy list of the people you should consider in your holiday tipping is made. I urge you to head over and check it out.

Also, remember that even if you don't have regular providers for things like haircuts, you can still be generous in your holiday tipping. Give an extra $5 or more to the server when you go out to eat. If you go to a discount salon (like dollar cuts) and don't have a regular hair stylist, do the same. Show a little extra appreciation. Such generosity has a way of returning to you.

Carnival of Indian Personal Finance Blogs #2

2008-01-01T04:09:00.001-08:00

This is the second edition of the carnival of Indian Personal Finance Blogs. The first edition- though a humble effort, got a great response and the entire effort is moving towards the desired direction. Let us continue the journey.

With the launching of CIBIL in India, lenders will now have better idea about the credit worthiness of the borrowers. Prince John at Making Money Spending Money, tells us about the new credit score and credit rating system in India jointly launched by CIBIL and TransUnion. Discussing various parameters, which these agencies will use to arrive on a credit score, he tells us about a similar credit rating system, which exists in the US.

The Post Office Monthly Income Scheme (MIS) was loosing its popularity after the removal of 10% bonus on maturity clause. On 8 Dec, 2007 Government restored the maturity bonus though at a lower rate of 5% and has made 5-year Post Office Term Deposits and Senior Citizen Savings Scheme eligible for 1-lac deduction benefit under Section 80C. But the bigger issue before the investors is whether to invest in Post Office MIS or in fixed deposit, PPF and other small saving schemes offered by the banks – Anurag tells us some facts to consider before taking a decision.

Something needs to be done to avoid the worsening of PSU bank's problems. While improvement may be hard to make, but at least lets not make things worse. Ajay Shah says that privatization of PSU banks may not be possible because majority of MP’s won’t support the requisite amendment of the Bank Nationalization Act.

Chawanni raises the issue of the safety of our deposits in Citibank. Would you like to keep your life time savings or precious items in a bank that cannot take care of its own assets? Citibank has been in financial crisis from time to time and now Citibank is in big trouble with sub-prime bubble bursting. Who will rescue Citibank this time?

Jithu from The Finance Blog is talking about 500% increase in complaints against banks according to Reserve Bank of India in 12 months between July 2006 and June 2007. Leading the pack are SBI, ICICI bank and Citibank. Jithu is hoping that, "This would make the banks think a bit more about serving their customers in a customer-friendly manner."

Edward Hugh from India Economy Watch presents the risk element involved in banking sector, political and at economic stage in India.

Please feel free to add your comments, suggestions and resources.

Carnival of Indian Personal Finance Blogs #3

2008-01-01T04:07:00.000-08:00

After the successful release of Carnival of Indian Personal Finance Blogs editions 1 and 2, we gathered a relatively large number of entries for this third edition. New bloggers like Varun, Alok Verma and Megha Pathak joined forces with stalwarts like Ajay Shah and Edward Hugh. Adhering to Greg Anderson's philosophy "Focus on the journey, not the destination. Joy is found not in finishing an activity but in doing it,” let us move forward.

Identity theft, though a relatively new incident on the Indian horizon has pestered banks in western countries for the last decade. How safe are we from identity theft when we use our credit cards, debit cards or bank accounts for that matter? Varun takes a look and suggests some proven ways to protect oneself from identity theft.

Recently RBI has put on its website the guidelines for bank recovery agents and warned them of a strict action and even banning such agents if they didn't behave. But, it looks like the thick skinned banks had little effect and their recovery agents are still with their old ways. Alok Verma takes a look how the recovery agents of a private sector bank, ill-treated J S Kalra a Delhi College of Engineering Professor, who had missed out on few loan installments.

Real estate market has reached to dizzy heights here in India. A Man from India has listed some reasons why real estate market is on boom in India with changes in the Macro economic environment.

As the financial year is coming to an end, more and more people are finding tax planning in their priority list. Personal finance blog presents the advantages of planning tax investment in advance. Investment benefits can be availed throughout the year if you manage to plan your tax investment in advance and the burden of huge investments or tax cuts at year end is definitely relieved.

Ajay Shah has a checklist of things to be done in Asian financial sector policy.

In case you require financial support for your small needs like buying gifts, going for a vacation or decorating your home for this holiday season, then a personal loan will be the best option. Kaushil takes a look at why the Personal loans are the best option for small personal finance requirements and what to do if your money requirements are big.

Megha Pathak in her blog takes a look at fixed deposits and points that any investor should not miss before making investment in fixed deposits.

SBI is the largest Indian Bank and second largest issuer of credit cards but with its huge customer base, looks like it has to improve a lot because SBI has topped the list of credit card complaints 2654 complaints and the largest issuer of credit cards, ICICI bank is a close second with 1452 complaints.

With the Indian Government's plan to take over the interest rate burden on education loan during the 'moratorium period', students will definitely feel a lot better. This will make the education loan more affordable for students belonging to middle class whose family income is less than Rs. 2.5 lakh.

Edward Hugh on his India Economy Watch blog takes an incisive look at last week decision by RBI of curbing bank loans to mutual funds by mandating that all of such amounts will be considered as the lender's direct investment in stock and bond markets.

Carnival of Indian Personal Finance Blogs #1

2007-12-08T18:11:00.000-08:00

By Ankit Sharma

Blogs have given a new dimension to personal expression and is growing popular day by day. From now onwards Rupeetimes will keep an eye on established and emerging Indian personal finance blogs and their musings. A concise review of all the latest posts published on these blogs will be aggregated in a Carnival of Indian Personal Finance Blogs. Since we are just starting the this list might not be exhaustive, but we expect to cover every major blog on this topic in this carnival. If you find any blog that we should cover or we've missed please feel free to contact us.

The most important terms and conditions matter the most and banks insist you to read them before signing your application form. But Vinay at GEO 12.97°N 77.56°E is worried whether there are any least important terms and conditions, which the bank is hiding?

Unit Linked Insurance Plans or ULIPs as they are better know provide higher returns at lower risks, but they surely are different than regular insurance products. However, little it may be but ULIPs do have an element of risk associated with them and so are numerous charges. Personal finance 201 has a nice comparison chart covering the charges of a ULIP.

With CIBIL starting to track credit worthiness of every individual in India and assign a credit score, J. R. Varma's in his Financial Markets Blog is worried when a relatively developed and powerful authority like UK government can loose vital data of 25 million people, how can the governments be trusted with financial information on a large scale.

Ajay Shah has a working paper in which he highlights the aspects where the Indian economy has changed substantially when compared with a decade ago. Suggesting directions for institutional reforms he presents his thoughts about what the fiscal and monetary policy in India should be doing today.

Neelakantan raises his concerns over the Sakarma scheme by BBMP, which provides regularization of illegally constructed properties, with more than 25 banks stepping in to provide loans for such activities.

Bloggers - please contact the team at RupeeTimes for any queries or feedback or just to say Hi!

Turn $3,333 into $39 million

2007-12-04T04:11:00.000-08:00

BY Dennise Williams williamsd@jamaicaobserver.com
Sunday, December 02, 2007

Let's be honest - $3,333 isn't an earth-shattering amount of money. Twenty-year-old Cory Jones told Sunday Finance that he spends $3,333 in a night hanging out with friends.

Tim Benson, a 30-year-old graphic artist snapped his fingers when we asked how quickly he could spend $3,333. So, if we can spend this sum in a blink of an eye, then it shouldn't be so hard to save it.

Let us say that you decide to do just that - save $3,333 per month. Not a lot, but depending on how old you are, it can add up to a significant sum of money. For a 25-year-old who saves $3,333 per month in a tax-free instrument paying at least 12 per cent per annum, he will have $39.2 million by the time he is 65.

A 35-year-old who saves the same amount in the same tax-free instrument will have $11.6 million in 30 years. A 45-year-old will have $3.2 million and a 55-year-old will have $767,000. Obviously, the younger you start the more you will have. However, several things have to happen first.

First, you have to make the monthly commitment. Second, you have to find a tax-free investment - and in this case we suggest that you consult your friendly mutual fund or unit trust broker. Third, you can't take out the money because your car broke down or something like that.

You have to let the funds compound. And to the naysayers out there that snicker and point out that the quoted sums won't be worth anything in 40 years because of this and that in Jamaica - who says you only have to save just $3,333? Save more and you will have more.

These calculations are courtesy of the new book by Oran Hall and W St Elmo Whyte. In their book, The Handbook of Personal Financial Planning, the two tackle the topic of personal financial planning in the Jamaican context in a straightforward manner that is ideal for someone serious about planning out their financial life.

Throughout the 202 pages, practical tips and advice are offered with a view to strengthen the readers net worth. And this an important book because as personal finance aficionados know that when you are looking for information, you have to look to North American writers such as Suze Orman or websites like MSN.com. This book tackles the reality of investing in Jamaica from your first job to estate planning.

However, it is not until the end of the book, in the Appendix section that the real action takes place. Under the heading The Power of Compounding, the authors offer an eye opening array of returns that investors can receive by retirement if they invest small amounts on a consistent basis. The authors also show the power of tax free investing.

We have illustrated one above. Another interesting scenario is the chart that shows how much you have to save in a tax-free instrument paying 12 per cent per year to achieve $30 million by age 65. For example, if you are 25 years old then the figure would be $2,525 but if you wait until 55 that monthly savings jumps to $129,000. It is the power of compounding that makes the difference in what returns individuals can receive.

The Carnival of Personal Finance #129 - World Currencies Edition

2007-12-04T04:08:00.000-08:00

By Patrick on Dec 3, 2007 in Personal Finance

Hello everyone, and welcome to the 129th Edition of the Carnival of Personal Finance! This edition of the Carnival of Personal Finance contains 80 wonderful entries to help you learn about personal finance issues, investing, saving, budgeting, and many other great topics. This week’s theme - world currencies. I hope you enjoy this great list of articles, and fun trivia.

The United States Dollar was officially adopted on July 6, 1785 - 9 years after the American declaration of Independence, and 8 years before the British surrendered control of the colonies to the American population. Even with an official currency, silver Spanish coins were legal tender in the US from 1791-1857.*

Editor’s Choice Awards:

Steve from Brip Blap presents Making Overseas Experience Count. I spent a good bit of time overseas while I was in the USAF and the experience has been invaluable to me. Steve writes, “Just because you spent time overseas in a non-business role doesn’t mean you have to gloss over it on your resume. These experiences can still be powerful resume-boosters if you present them in the right way.” I agree 100%.
Rob from Two Wise Acres presents 5 Lessons Monopoly Can Teach Us About Real Estate Investing. Anyone can learn real estate investing principles from this classic game.
Generation X Finance presents A Visual History of the Stock Market: 1996 - 2007. Does the current market situation concern you? Take a look at some historical charts, and you will see it’s all one big cycle.
Pinyo from Moolanomy presents Using Pareto Principle to Improve Personal Finance. The 80/20 rule is a popular and tested business principle for focusing on the most important factors that deliver the most results. Pinyo uses this principle to provide more insight about his personal finances and spending habits.
Kay from Don’t Mess With Taxes presents Are credit cards appropriate ‘toys’ for kids?. Wow, this article is an eye-opener. Many toys this holiday season include fake charge and debit cards. I never thought about toy companies making games with credit cards in them - conquering the next set of customers (victims?) before they can even ride a bike. I only add the word victims because children should not learn how to use a credit card from “Material Girl Barbie.”
Mighty Bargain Hunter presents Invest in yourself by learning things of value, and says, “You can learn how to play Guitar Hero or you can learn how to play the guitar. The choice is yours!”
Money Walks presents Homeless Guy on Roller Skates Inspires a New Name Brand. I couldn’t figure out how to categorize this entry, then I realized it should be an Editor’s Choice. It touches on career, economics, and self-fulfillment, and is an interesting read.
paidtwice from I’ve Paid For This Twice Already… presents Budgeting and Time Management: Two Surprisingly Interrelated Skills. There are quite a few correlations between budgeting and time management, and I agree with the biggest difference - you can make more money, but you can’t make more time!
The Baglady presents When Did the American Dream Become Debt? I wish more people felt this way. Consumerism and consumption is not a dream for me.

There are at least 26 countries that use the term “dollar” to represent their national currency. Some of these include the United States, Canada, Australia, New Zealand, Singapore, and Fiji.

Budgeting:

Climbing Out of Debt presents Avoiding Holiday Overspending.
Elizabeth from Suburban Wife’s Daily Dollar Diary presents Something Extra to be Thankful For, and says, “It hadn’t occurred to me how much a week’s worth of vacation from school and activities would save us in gasoline and benefit our monthly budget.”
Grace from GRACEful Retirement presents Miscellaneous?, and says, “Grace wrestles with “what’s in a name” when it comes to budgeting”
Chief Family Officer presents My 2008 Financial Goal: Pay Cash for a New Car.

The coin as a monetary unit was invented between 643 and 630 BC in Lydia. These first coins were made of electrum, a naturally occurring pale yellow mixture of gold and silver. However, because these coins were a mixture of gold and silver, their value was often hard to determine. As refining processes improved, pure gold and silver coins became more common.

Career:

Money $ Liberty presents Know how your company makes money. Solid info for anyone looking to advance in their career.
American Entrepreneurship presents Make Money on Your Lazy-Boy by Becoming an At Home Customer Service Agent.
Golbguru from Money, Matter, and More Musings presents Lessons From My Job Hunting Expedition.

The Scottish pound is legal tender only in Scotland, and not the rest of the United Kingdom. They are, however, fungible (exact equivalent value) with the British Sterling Pound, and are accepted in most places in the UK on good faith. However, the Bank of Scotland produces the only One Pound Note in the UK, and it is sometimes refused as a form of payment in Wales and England. The rest of the UK uses One Pound Coins.

Credit:

The Better Credit Blog presents, How to Remove a Chapter 7 Bankruptcy From Your Credit Report, and says, Removing a chapter 7 bankruptcy from your credit report can be a very painful process (as you would imagine), but it is possible to do if you follow these steps.
The Truth About Credit Cards presents If You Want a Lower Interest Rate, Just Ask, and says, “Credit card issuers aren’t in the business of losing customers, and if they feel the threat of you leaving them, they’ll do whatever they can to keep you onboard.”
Amanda from Me vs. Debt presents November Cashback Rewards: 2.8%, and says, “Using a two card approach I was able to get 2.8% cash back in credit card rewards. I think this is pretty good for low spenders like me.” That’s a pretty good return in my book.
Jim from Blueprint for Financial Prosperity presents Credit Cards with 0% Interest on Purchases. Jim presents holiday Christmas shoppers with an excuse to SPEND MORE MONEY!!! After all, you won’t have to pay interest, right?
Property Innovators presents Which is better - Great Credit or Money Savvy? Should you buy your next car with a traditional loan or a 0% credit card offer?

Australian notes are printed entirely out of polymer plastic. This helps with counterfeit prevention and ensures the bills last longer in hot, humid climates. The first Australian polymer notes were printed in1988, and were rolled into production to replace old notes in the following years. Mexico, Singapore, and Malaysia have also adopted polymer notes in some fashion.

Debt:

4EvaYoung presents Should You Get Rid Of High-Interest Debt Before You Start Saving? When it comes to debt elimination, it is often easier to face the problem by trying to dig yourself out of debt instead of facing your reasons why you are in debt to begin with. But taking the easy route can mean missing a vital opportunity to face your current causes of why you get yourself into these kind of predicaments to begin with.
Gather Little by Little presents Financial Problems - It’s a Slow Fade.
One Girl’s Quest… presents Getting serious about debt reduction.

Many coins have serrated ridges on the edges because long ago, coins had an intrinsic value based on their metallic content (usually gold, silver, or copper). Thieves would clip small portions of the metal from the coins, then melt that into a larger amount for later resale. The old coin weighed less than it was supposed to, and it’s value decreased. This started the first use of the phrase, “A dollar doesn’t go as far as it used to.” OK… I made that last part up.

Economy:

Debt Free presents Collateralized Debt Obligations - What the Heck Are They, How Do They Affect You, and Why (The He…) Should You Care?
plonkee money presents How do interest rates affect inflation?
BEIT from Building Equity in Toronto presents A note on sub-prime debt and derivatives.

Some countries peg their currency against that of another country at a fixed exchange rate. This is called a currency board. Sometimes the countries issue their own currency at a 1:1 exchange rate, other times they use the actual bills and coins in place of their own currency. Some examples include Panama, Ecuador, and El Salvador which use the US Dollar as the basis for their currency, and many Arabian countries peg their currency to the dollar as world oil prices are measured in US dollars.

Frugality:

Comp Gifts presents 5 “Cheap” Date Ideas to Keep Your Date and Money Happy. Five great and inexpensive date ideas - and if your prospective date doesn’t like these things, find someone else! (that’s my opinion, anyway! )
Monroe on a budget presents Christmas cards on a budget. That reminds me… I need to get started on my Christmas card list. These tips may just help out!
How I Will Be Rich presents How to Make Up For The Rising Price of Gas, and says, “Here are some tips that I’ve learned to offset the fact that gas prices keep going up.” Solid tips in my opinion.
FMF from Free Money Finance presents The 10 Most-Hated Money Saving Tips. These are solid tips, but as mentioned, many people don’t like doing them!
One Frugal Girl presents Clutter Free Christmas Gifts. I love this idea. I strongly dislike giving or receiving gifts that don’t have a practical use, or just take up space!
Me, My Kid and Life presents Being Frugal in France: Buying Cheap Theatre, Opera and Dance Tickets.

Paper money has been used in China since the Tang Dynasty (618-907), the Medieval Islamic world adopted it around the same time 700-1200 AD, and it was not adopted in Europe until the mid-1600s.

Investing:

The Dividend Guy shares his story The Metamorphosis From Mutual Fund Investor to Dividend Investor. Personally, I have made the step away from mutual funds and into index funds. My next step is learning to invest in individual stocks.
MoneyNing from Personal Finance Blog with Money Ning presents What Should Individual Investors Do with All the Fear in the Stock Market Right Now, and says, “Advices catered for different types of investors!”
Personal Development shares What Is The P/E Ratio And What The Price Earnings Ratio Means.
Invest with Dax presents 8 Reasons Why the Dollar Will Continue to Fall.
Mariam from Money Relations presents News flash: Buying what Buffett buys makes you money, and says, “Stating the obvious - investing in what Buffett buys makes you money but there’s now proof.”
The Investor’s Journal presents How Much Should I Invest In The Stock Market? Many investing rules are too vague for anyone to go by. This article can show you what’s important when it comes to deciding how much money you should invest in the stock market.
Fathersez presents Keeping accurate investment records and its impact on investment “luck”, and says, “For many people, keeping detailed records of investment activities is often considered a painful chore. With some thinking, simple and very effective systems can be set up for this record keeping. This is the story of my system.”
BoozWatt shares How to Make Money Off Interest Free Credit Card Offers. This is an article about how to do credit card arbitrage - earn interest from 0% credit card offers.
Free From Broke presents We Will Retire…Millionaires!!
My Dollar Plan presents Roth 401k: What Is It?
The Wild 1 from The Wild Investor presents Over 40% in under 6 months!, and relates how he made a 40% return in the stock market in 5 months.
Stock Trading To Go presents Ultra ETFs Explained, Strategies Revealed.
Dividends4Life presents The Most Important Financial Statement. Why cash flow is important when evaluating investments.
The Best Stock Trading in the World presents Why A Guy Who Never Wants To Buy A Bank Is Thinking About Buying A Bank.
Mrs. Micah presents Gold is only valuable because… This is more of an open ended question. The comments section is the “gold” of this article.
George from Fat Pitch Financials presents Questions About Tender Offers, and says, “Learn the ins and outs of stock tender offers from this response to a list of questions from one of the readers of Fat Pitch Financials.

In Europe paper money was first introduced in Sweden in 1661. Sweden was rich in copper, which had a low value compared to other coins such as gold or silver. Because of this, extraordinarily large coins (often weighing several kilograms) had to be made. Because the coin was so big, it was more convenient to carry a note stating your possession of such a coin than to carry the coin itself.

Money Management:

Silicon Valley Blogger from The Digerati Life presents 3 Great Money Lessons From My Old Man.
Mr. B from Interesting Money presents Just In Case - How to Make Sure Your Spouse Knows Your Financial Passwords, and says, “Options for a contingency plan - if something happens to you, how can you ensure that your spouse (or loved ones) can access the necessary information?”
I Will Change Your Life presents Banking Mistakes That Cost You Money. Solid tips for banking.
KCLau’s Money Tips shares Top 21 List of Financial Software and Application for Efficient Money.
Coddleshell presents Top 9 - Organizing your finances, and says, “I give 9 easy tips to save you time and get your finances in order.”
Journey To Financial Freedom presents Do you know where you are now financially, and says, “This is an article that is talking about the financial self assessment that will let you know where you are financially. This is the most basic step for our giant financial goal. So let’s see how we can do it.”
Monevator shares Taking stock: How to Set out Your Statement of Affairs.
American Consumer News presents Gift Cards are the Worst Possible Present to Buy Someone This Christmas.
Melissa from Queercents presents Unmarried Finances, and says, “Financial maturity is only for the grown ups! Don’t wait until you’re in your mid-thirties, look around, and discover that nothing in your life has forced you to get your finances in order so you might as well do it yourself.”
My Wealth Builder presents Our Journey To Financial Freedom #9 - The Professionals We Used.
Money Blue Book presents Get Organized and More Efficient By Going Paperless.
NCN from No Credit Needed presents Making A Break With The Past - Changing Habits And Thinking Long Term About Personal Finances. Long title - great message.

Where’s George is a popular website used to track US currency locations. The serial numbers on US Dollars are entered into the website and the bill is stamped with a logo or written on to entice other people to participate. Owners then enter the serial number of the dollar and their zip code into the website, and the dollar’s location and travels can be tracked. This website has spawned several imitators in multiple countries including Canada, the UK, Russia, Norway, countries that use the Euro, Japan, South Africa, China, India, and others.

Real Estate:

Searchlight Crusade presents Lender Paid Mortgage Insurance or Regular PMI? This is a great article about how to get PMI removed.
Mr. Cheap from Quest for Four Pillars presents Real Estate Agents - The Other Side of the Coin.
Everything Finance shares Mortgage Escrow: To Do Or Not To Do.
Millionaire Mommy Next Door presents Considering a move? Would it be better to rent out or sell your house? This simple calculator gives a quick read on the economic viability of renting out, rather than selling your house.
A Penny Closer presents Why I Bought My First House.
Dan from Money Myths presents presents Buying a House From a Relative?, and says, “A few things you might not think about when buying a house from family.

One of the first forms of counterfeit money was a fourrée - a coin, that is made from a base metal core that has been plated with a precious metal to look like its solid metal counter part. The US Penny from 1982 and later is an example of a fourrée since it is zinc which has been plated with copper in a manner to deceive. These pennies are much cheaper to produce than pure copper pennies.

Saving:

Junger from Online Savings Blog presents The Reality Of Saving For a Home.
Living Almost Large presents Have I saved enough? Be sure to check out the calculator linked in this article.

Wikipedia lists 194 current official or de facto circulating currencies of the 192 United Nations member states, one UN observer state, three partially recognized sovereign states, six unrecognized countries, and 32 dependencies.

Taxes:

David from My Two Dollars presents Tax Law Changes In Store For 2008.
Building Millionaire Money Habits presents Reducing Your Taxes: Part 2 of 3 - Common, Everyday Tax Deductions.This post discusses some common, everyday expenses that can be itemized in order to reduce the taxes you have to pay.

The closest thing there ever was to a “world currency” was the Spanish Dollar, or Pieces of Eight. From the 17th-19th centuries, the Spanish dollar was accepted as legal tender throughout Spain, France, Italy, the US, all of Central and South America (excluding Brazil), Canada, most of the Pacific Island nations including the Philippines and Guam, and later in China and other Southeast Asian countries.

Other:

Million Dollar Journey presents Ask the Readers: What is Your Tipping Policy? There are some great reader comments on this article.
DR from The Dough Roller presents How to Earn a Second Income in Your ‘Second Life’, and says, “Second Life has already crowned its first real life millionaire. Here’s how people are making real money in the virtual world.”
The Happy Rock presents The Cost Of Having Children. I’ll give you a hint - this is not an article about not having kids just so you can save money. This is a beautiful look at how priorities change in a good way.
Smart Money Daily presents 3 Bizarre Banking Stories. Trillion dollar overdrafts, million dollar bills and houses sold with the dead owner still inside! Interesting!
Broke Grad Student presents 9 Great Gift Ideas For A Broke College Student, and says, “9 great gifts that will put a smile on every broke grad student’s face. The list may surprise you.” If there was a category for humor, this one might go there.
Dividend Money presents Practical Life Lessons From My Dog, and says, “An intriguing story outlining what my dog taught me about money, life, and personal finance.”
Smarty from Growing Money presents House Cleaning - Turning Trash to Cash. This is a great way to clear the clutter and make some nice money - something I need to do a little more of!
retirehappy from My Retirement Blog presents When Should You Start Taking Social Security Benefits?

Most “money” is based on a fiat currency, and has no intrinsic value - only the value of the backing from the government that issues it. The US Dollar for example is not pegged to anything other than the US government’s word. Though the US holds billions of dollars worth of gold reserves, the amount of printed money far exceeds the reserves.

Thanks for all the wonderful articles everyone! I’ve enjoyed learning and giving back to the on-line personal finance community.

If your article was not included in this week’s Carnival of Personal Finance, it is most likely because it had previously been entered into another carnival or did not meet some other entry guideline. Next week’s host is Money Smart Life. Be sure to check back!

*all facts sourced via Wikipedia.

Business Credit Cards With Cash Back and No Annual Fee

2007-11-24T07:35:00.001-08:00

By Flexo on Wednesday, December 27th, 2006 in Credit Cards
Bookmark: del.icio.us | reddit | digg

In 2007, I plan on creating an official business entity (LLC) to handle any income not coming to me from my day-job employer. As I do more work online, I’m dealing with more expenses, so I’m going to look into getting a business credit card. Having a card with no annual fee is important to me, while interest rate is not. My business expenses should remain well below income, but as a Type B credit card user, I make the most of the grace period. So here are my best options:

Discover Business Card
APR: 12.99%
Introductory APR: 0% for 12 months
Annual Fee: $0

This card offers 5% cash back on office supplies, 2% back on gas, and 1% back on everything else. This is probably my first choice card.

American Express Blue Cash for Business
APR: 11.24%
Introductory APR: 0% for 6 months
Annual Fee: $0

This American Express card also offers up to 5% cash back. Purchases in AmEx’s “Open Savings” plan qualify for 5% cash back, but all other purchases receive 2.5% cash back. They do lower the cash back rate once you’ve charged over $15,000 during the year, but this is still significant. This card is a good second choice, but I don’t know if I’d be making purchases in the “Open Savings” program.

American Express Platinum Business FreedomPass
APR: 14.24%
Introductory APR: 0% for 12 months
Annual Fee: $0

This card isn’t for me, but for small businesses that require a lot of travel, this might be a good choice. For every dollar charged to the card for purchases, the holder gains 1 point, which never expire. The rewards are good for use on any flight (regardless of airline), hotels, car rentals, and cruises. They’ll start you off with 5,000 bonus points after your first purchase.

American Express SimplyCash Business Card
APR: 8.25%
Introductory APR: 0% for 12 months on purchases
Annual Fee: $0

American Express seems to lead the market in cash back business cards. This one offers 5% cash back on gas, office supplies, and wireless services, as well as 1% cash back on everything else. There is no need to make purchases through any network of retailers in order to qualify for the highest cash back amount, so this might be a great choice for small businesses. What’s convenient is the cash back is automatically credited to the account; there’s no need to request a check.

Here’s one more card to round out the collection.

Chase Business Rebate Visa Card
APR: 14.24%
Introductory APR: 0% for 12 months on purchases and balance transfers
Annual Fee: $0

If you entertain clients, which I do not, this may be a good choice for your small business. Here you get 3% cash back on purchases at restaurants, gas stations, office supply stores, building supply stores, and hardware and home improvement stores. Everywhere else, the card offers 1% cash back.

In some cases, the best solution may be a combination of cards. For example, I might use the Chase card when paying for dining out and filling up the tank, the Discover Card for office supplies, and either for everyday purchases.

When the levee breaks

2007-11-24T07:30:00.000-08:00

Even average homeowners feel rising mortgage floodwaters

By Chuck Jaffe, MarketWatch

Last Update: 4:21 PM ET Nov 22, 2007

BOSTON (MarketWatch) -- While the headlines have been full of stories on the credit crunch, subprime mortgage mess and the real estate bubble, a lot of ordinary homeowners have figured they were immune from the problems.

Ensconced in a home with a prime mortgage, they have watched the news and figured they're safe. And all the while, the water has been rising.

With property values dropping in many areas of the country, a growing number of homeowners -- particularly those who bought their house in the last five years -- are looking at the prospect of being "underwater" on the mortgage. That's when the value of the home is less than the amount remaining on the loan used to buy it.

So while the nation has been focused on a record-high rate of foreclosures, the tide has been rising on a lot of people who simply had bad timing. Zillow.com, an online real estate community, reported Tuesday that home values nationally are down more than 5.5% compared with a year ago, with many markets being hit much harder.

As a result, according to Zillow, more than 15% of homeowners nationwide who bought their home in the last year are now underwater. The number is slightly worse for consumers who bought their home two years ago. By comparison, the study showed that just under 2% of people who purchased a home five years ago have seen their equity go negative.

"We are so used to the fantasy that real estate is a great investment and that it always goes up in value that we're surprised when it doesn't," says Marc Eisenson of Good Advice Press, author of the 1980s classic "The Banker's Secret," the book which first taught Americans the value of prepaying mortgages and auto loans.

"This is a scary place to be, and a lot of people who never expected to get here are watching the waters rising -- particularly if they have adjustable-rate mortgages -- and their home values sinking."

Being underwater on a loan -- and it's increasingly common on auto loans in this country too -- is not really a function of interest rates and payments. The problem that adjustable-rate mortgages pose in this market is more psychological, in that the borrower's payments are likely to rise while the asset they are paying for is depreciating. The amount owed is the same before or after the adjustment, but the higher payments simply make the situation feel more helpless.

Riding it out

Thankfully, most experts suggest that negative home equity is not something that should cause a panic, assuming the homeowner can afford the current mortgage payment and has no reason to move.

"It could take five years or longer before this thing swings around, but as long as cash flow is positive -- so that you're making the payments and living life without worrying where the equity stands in your home -- you can ride this out," says Paul Richard, director of education at the Institute for Consumer Financial Education. "The question is whether you will want to hold on to your investment if you have lost 10% or 15% or more and don't see it turning around. ... You wouldn't want to do that with most mutual funds, but you will have to decide if you will do it with your house."

For most homeowners, selling the home doesn't necessarily solve the problem. After all, if they are underwater on the mortgage, they will need to bring cash to the closing. And while they may be able to buy the next home for a lot less -- due to the drop in home prices -- there is no guarantee they will get a good mortgage rate to make the deal happen.

Renting and waiting out the decline and the real estate cycle is an option, but more for the prospective home buyer rather than the person who is up to their neck on the mortgage.

"If you can afford the payments and bought in a market that you believe will go up, then the way out of this is to drive through it, keep making the payments and plan to hold on long enough so that it pays off," says Greg McBride, senior financial analyst for BankRate.com. "It's only a real problem if you're going to have to sell the house in these conditions, or if you can't make the payment."

Watch your dollars

That said, most experts also believe that when the waters are coming closer to your personal shore, you might want to change a few behaviors, even if you plan to stay in the house and ride it out.

For starters, put off significant investments in the home. While real estate agents frequently say that certain home improvements "pay for themselves" when the home is sold, that's not the case in a market where home prices are shrinking and mortgages are underwater. Instead, you're simply adding more water.

Says Eisenson: "If you want a new bathroom while your house is underwater, you need to be really confident that you can ride things out. ... Right now, you're making the situation worse by putting more into the home at a time when you possibly won't make it back."

Next, bolster the emergency fund, just in case. It's not just financial problems making headlines, but economic ones; if the economy hits home in the form of job loss, at a time when the home is underwater, the choices you're facing are ugly. A bigger cash cushion will keep options open.

Experts disagree on whether you should pay off the mortgage faster when it's underwater; paying additional principal drops the water level, but that money is not coming back if you have to move and sell the house before the market rebounds. Paying down other debts, or putting excess cash into investments that will be positive while real estate is in the doldrums may do more to improve a homeowner's overall financial position.

Says Eisenson: "This situation is going to get worse before it gets better, so think about what you would do now. You'll probably decide to try to push through it, but if you're unprepared and you wake up one day to find out you're underwater, you're going to be scared."

Chuck Jaffe is a senior MarketWatch columnist. His work appears in dozens of U.S. newspapers.

How to Turn $500 Into $7 The Hard Way

2007-11-22T03:27:00.000-08:00

By Flexo on Wednesday, November 21st, 2007 in Spending

This is a guest post from J.D. Roth, who writes about personal finance and related topics at Get Rich Slowly.

Back in our young and foolish days, my wife and I bought a set of encyclopedias from a door-to-door salesman. This was in 1995, at the very cusp of the digital age. We had been on the internet for about a year, but we had no way to know that one day very soon the World Wide Web might make printed encyclopedias obsolete.

So we bought an encyclopedia set. Naturally I charged the $500 to my credit card.

We used the encyclopedia for several years. Then in 1999 we discovered Google. The encyclopedias began to gather dust.

Even so, when we moved to a new house in 2004, we took the books with us. We installed them prominently in the living room, but we never used them. Eventually we moved them to storage. For the past two years, we’ve tried to sell them at our neighborhood garage sale. The first year, we priced them at $50. This year we priced them at $20. Nobody wanted them.

On the last day of this year’s sale, a man stopped by and sorted through our book collection. He was rather particular about his selections, so I struck up a conversation with him. (Bibliophiles are happy to meet kindred souls.) He told me he owned a used book store. “You’ve got some good stuff here,” he said, patting his stack of books.

“Thanks,” I said.

He turned to leave, but then paused. “You know,” he said. “These encyclopedias are worthless. I have a dozen sets in my store. They used to sell pretty regularly, but nowadays I can’t even give them away.” He waved good-bye and left.

It hurt to think that our $500 set of encyclopedias was worthless, but I had to admit it was true. I put them up for free on Craigslist.

The next day a man stopped by to pick them up. He was ecstatic to find them. “We don’t have a computer,” he said. “And my daughter is in the fifth grade. She loves to learn. She’ll use these all the time. Thank you.”

I helped him load the books into his car, a mid-80s Honda Accord. The rear of the vehicle sagged beneath the weight. Before he left, he fished out his wallet. “Do you have a Blockbuster Video around here?” he asked. I said that we did. “Here,” he said, handing me a Blockbuster gift card. “Take this. I mean it. You don’t know how much I appreciate this.” I thanked him and took the card, which I tucked in my wallet and then forgot.

A few weeks ago, I found the Blockbuster gift card. “I wonder how much credit is on this?” I said to myself, scanning the fine print. I tried to call the toll-free number, and to check the web site, but neither would give me the balance. To obtain the balance on a Blockbuster card, you have to actually go to the store. So I did.

The card had $16.50 on it. I thought maybe I could pay for part of a game for my Nintendo Wii, but nothing looked appealing. I scoured the DVDs, but couldn’t find anything I wanted. At last I spied The Godfather. Aha! Hadn’t I been wanting to purchase that for a long time? It’s been three or four years since I last watched it. I bought The Godfather and a pack of Red Vines and headed home.

But when I went to put the DVD away, I was dismayed to find that I already owned a copy. When did I buy it? Why hadn’t I remembered purchasing it? I considered giving the new copy as a gift to somebody, but then I recalled Cady’s guest entry at Get Rich Slowly about how to use the Amazon Marketplace for fun and profit. Taking inspiration, I listed the movie for sale.

The Godfather sold last night for $7.02. After fees are settled, I will have netted $7.16.

And that, my friends, is how I managed to turn $500 worth of encyclopedias into $7.16 in Amazon credit. That is personal finance at its finest.

There’s no real moral to this story. Each of us makes the best financial choices we can. But sometimes our information is imperfect. Sometimes we don’t know what the future holds, and sometimes what we think is smart (charging encyclopedias to a credit card) is actually pretty darn stupid.

Customizing Cookie-Cutter Funds

2007-11-22T03:23:00.000-08:00

By Eleanor Laise, The Wall Street Journal

Last Update: 9:38 PM ET Nov 20, 2007

Target-date mutual funds have soared in popularity because they make saving for retirement simpler. Now a growing number of people and some employers are battling the funds' one-size-fits-all approach by souping them up.

Target-date funds are meant to be the only investment a person needs to save for retirement. The funds, already popular, recently got a big boost from new Labor Department regulations. They typically hold a mix of stocks and bonds and grow more conservative as they approach the target date, which generally matches investors' expected retirement date. Some people complain that everyone retiring in the same year gets the same treatment -- people who expect to retire in 2020, for instance, will mostly all get placed into the same holdings with similar amounts of stocks, bonds and other investments.

Moving Target

More individuals and employers are custom tailoring their target-date funds.

•

Off-the-shelf products don't suit everyone's savings goals and risk tolerance.

•

Some people want a more aggressive investment allocation to "catch up" on retirement savings.

•

A customized target-date fund risks losing one of its prime advantages -- simplicity.

The problem is that not everyone with the same target retirement date shares the same level of risk tolerance or investment goals. In recognition of this, some companies, including Intel (INTC

Wallets Go Digital

2007-11-22T03:20:00.000-08:00

By Charles Passy
Special to TheStreet.com
11/21/2007 1:56 PM EST
Click here for more stories by Charles Passy

A wallet ranks right up there among the most mundane of gifts.

But here's a way to beat the stodginess rap: Go for a digital wallet.

After all, who's got room for pictures when there's so much other important stuff to store in your wallet -- credit cards, dry-cleaning receipts, a business card from a sales contact you met a decade ago.

Keeping a few family photos in your wallet, of course, is a requisite of parenthood. But it's also a duty that requires a degree of organization, as in remembering to swap out pics as the kids grow older.To say nothing of the fact that those prints start to look fairly shabby over time. Isn't that the reason the world has embraced digital photography in the first place?

Hence, gadget innovator and retailer Brookstone has introduced its Men's Digital Photo Wallet ($50) -- the high-tech way to keep your brood in your pocket.

The pitch: Brookstone makes storage the big issue. "Does your wallet look like George Costanza's overstuffed billfold?" the retailer asks, recalling a famous Seinfeld episode.

The company points out that up to 55 images can be stored on the "sleek, removable 1.4-inch screen" and that the gizmo is simple to use, since the device is rechargeable ("never needs batteries") and "connects to computer via USB ... for easy downloading."

The reality: The product is indeed user-friendly. I had no problems recharging the unit, transferring pictures or even doing some basic editing (pictures can be rotated, for example).

But the real issue is that the images look awfully small and somewhat blurry on that near postage stamp-size screen. By contrast, the photos I normally carry in my wallet are, well, wallet-size. And there's no denying that the unit, which can easily be removed from its own slot within the wallet, is bulkier than a bunch of snapshots, so what problem is it really solving?

That said, if you're comfortable with digital photography this does make for a fun, handy way to keep your mini-album's worth of pics up to date. (If you're like me, you're always waiting for the next year's crop of school photos that can be ordered in wallet-size.)

As for the bifold wallet, the "black Nappa leather" may be as soft as advertised, but the lack of key features, such as snaps or a license display window, made it a tough sell for me -- and Brookstone doesn't offer a choice of men's wallet styles or even colors. Oddly enough, Brookstone's version of this same wallet for women (also priced at $50) has the license display window.

Competing products: Among prominent retailers, Brookstone appears to have the digital photo wallet category all to itself at this point. But there are plenty of other products on the market that work in a similar fashion, such as digital photo keychains (Brookstone has one for $40). Another option worth considering: WalletPix ($40), a credit card-size digital photo album that's designed to fit in a wallet -- the wallet of your choice, that is.

Bottom line: It's a clever idea, but not quite the answer to all your photos-on-the-go problems. Still, it could be a good gift for a digital-photography buff.

Presenting The Carnival Of Personal Finance #125

2007-11-09T03:11:00.000-08:00

Welcome to the 125th Carnival of Personal Finance. This week we have 74 articles for your reading pleasure and I have divided them up into a few categories. I could have made more of them, but then each of the other categories would have only had 1 post in each section. The ones that I could not fit into the categories I decided on are included in the General Money section. I picked out 5 of the articles that really struck a chord with me for one reason or another and listed them below under Editor’s Choice. Enjoy, and if you took part in this week’s Carnival, please be sure to promote it on your own site!

Diverting your money from a retirement fund to purchase a home would require much larger retirement contributions in the future to achieve the same nest egg. Lets use some real numbers to see what I mean (at The BagLady).

It goes without saying that credit cards aren’t for everyone - in fact, I think they should only be used by people who pay their balance off each month. If you fit that category, though, you should pay for as many things as you can with your card. Here’s why…(at Chief Family Officer).
I believe that if the parents are paying for the education, they have every right to set some ground rules. Unless the parents inherited the money themselves, they must be able to have some influence over what and how their hard-earned money gets spent (at Grad Money Matters).

Now that I’ve defined my goals, I need to work out next actions to be associated with pushing each one forward. That’ll require some brainstorming (at Plonkee).

This year is actually the first time I have really started work on planning for my future. As I have mentioned before, my old ways were to live for the now and worry about the future if I was around in the future.

I incorrectly thought that planning for the future meant that I could not have any fun now (at One Snarky Chica with Issues).
Notorious Practices of Payday Loan Companies (at ZooLaw Legal Blog).
Planning for your future (at CareOne Debt Management).
Those Folks Are Crazy (at Debt Sucks).
How To Buy On Ebay And Get the Best Deal (at Money Blue Book).
What a Weak Dollar Means for U.S. Shoppers (at The Authentic Bartender Blog).
Real Value Vs. Perceived Value (at Rather-Be-Shopping).
How To Get Insider Pricing (at How I Will Be Rich).
Change Our Car Buying Behaviors and Save Tons of Money (at MoneyNing).
Landlording and Screening Tenants (at Million Dollar Journey).
Real Estate: Know What Can Be Fixed and What Can’t, What’s Profitable and What Isn’t (at Searchlight Crusade).
Do you know who owns your mortgage? You probably don’t… (at WhereDoesAllMyMoneyGo)
What to Do When You’re Short on Rent (at Money Under 30).
Billion Dollar House - Ultimate Luxury or Living Hell? (at Smart Money Daily).
Determining the Minimum Acceptable Bid for a HUD Home (at Two Wise Acres).
Can We Really Afford To ‘Move Up’? (at A Penny Closer).
Moving from one tax paradise to another one (at Stock Web).
Flexible spending account : which income earner should contribute? (at Index Town).
Ten Qualities a Good Money Manager Needs Most (at Watch My Money Maker).
How I Involve My Family in Investing (at The Dividend Guy Blog).
How to Build a CD Ladder (at Cash Money Life).
Does investing in socially responsible funds cost more and is it justified? (at Money Relations.)
Afraid Of Investing In The Stock Market? (at My Wealth Builder).
How Investing Changes Your View Of The World (at Queercents).
Dow Index Drops 362.14, 2.6% - Now What!? (at My Retirement Blog).
January Effect and October Effect, Are They Real? (at Moolanomy).
Timing (at Financial Reference).
Best Advice: Gary Belsky (at Free Money Finance).
Bernanke Cuts Another Quarter (at The Agonist).
The Scale of the Federal Deficit (at Exjackly).
Enough Wealth: Financial Armageddon (Again) (at Enough Wealth).
Things You Should Know About Percentage Traps (at Money, Matter, and More Musings).
Early Retirement – Illusion or Reality (at Smart Investing & Money Management).
HSA as a Retirement Account? (at I’ve Paid For This Twice Already…).
A Free Haircut is Always a “Super” Cut (at jlogged).
Get Yourself A Frugal Education (at Frugal Journey).
My Cheaper Alternative to Starbucks (at Single Guy Money).
Do You Get What You Pay For? (at Debt Dieter).
How to Make the Best Beer in the World for Under a Buck a Bottle (at Saving Advice).
Don’t Waste $$ On Your Next Hotel Room (at Life Lessons of a Military Wife).
Keep Yourself Safe by Creating a Winter Kit for Your Car (at FinanceIsPersonal)
1 Paycheck Away (at BasenjiMom).
The decision of having a housecleaning lady (at The Financial Blogger).
Your Relationship With Money (at Journey To Financial Freedom).
Are Pennies Beneath Us? (at Blunt Money).
Seven Wonders of the Personal Finance World (at Blueprint for Financial Prosperity).
Goosing Emergency Fund Earnings (at Advanced Personal Finance).
When you stretch and stretch and the ends don’t meet (at Wise Bread).
Consolidating NewlyWed’s Finances (at 2million My Journey to Financial Freedom).
Old Habits Sure Do Die Hard (at Gather Little By Little).
It hit me like a ton of bricks (at Being Frugal).
Budget Cuts:Medical Insurance (at Real World Finance)
Rule #18: Alone and Together (at My Open Wallet).
When Money Isn’t Everything (at College of Cash).
The High Cost of Eating Healthy in the US (at Philby’s Finance)
8 steps to a six figure career (at brip blap).
She Makes More Than Me (at Money and Such).
Achieving Financial Freedom is Simple, But Not Easy (at Dough Roller).
College Admission Consulting (at Ask Dong).
Do You Have a Financial Confidant? (at One Frugal Girl).
Why Are Some People So Ignorant About Money? (at Money Smart Life).
Prosper.com: 6 Months in and Still Exceeding Expectations (at Everyday Finance).
My Silicon Valley Job History (at Silicon Valley Blogger).
Great Thought on Personal Finance (at Frugal Dollar).
What is a Secured Credit Card ? (at Ask Mr Credit Card).
Check to see if the government is holding some of your money! (at The Happy Rock).
Marriage And Money (at My Good Cents).
Adoption on the Cheap (at Graceful Retirement).
Single Page List Of Monthly Expenses - No Credit Needed Notebook Pg 2 (at No Credit Needed).

That’s it for this week’s Carnival of Personal Finance! These ought to keep you busy enough until next week’s edition over at Million Dollar Journey. If you didn’t see your post included, it was either submitted after the cut off time or it was not relevant to the Carnival. For more information about the Carnival itself and how you can host a future edition, check out the Carnival of Personal Finance homepage.

12 Ways to Save on Insurance

2007-11-09T03:09:00.000-08:00

Insurance is a funny thing. You’re paying for something you hope you’ll never use to replace things you already have. In some cases, insurance is required. But these days you can buy insurance for everything from autos to vacations. How do you know what to insure and how much to spend? Here are 12 tips to help you get the coverage you need without spending a fortune:

* Question yourself. Before buying insurance, ask yourself the following questions: Why am I insuring this? Out of fear or necessity? What is the replacement value? Is the cost of insurance greater than the value? Your answers will bring you back to the purpose of insurance, to pay for something you cannot afford to replace otherwise, and keep you from paying for anything else.

* Shop around. Review information offered by your state’s insurance division, then call around to several companies for their rates. Every time you get a premium notice, contact at least two other insurance companies to ask for competitive quotes.

* Get discounts. Ask your insurance agent about discounts. Most policies give discounts for safety features, for example anti-lock brakes and air bags in cars and alarm systems and smoke detectors for homes/apartments. Some insurance companies offer discounts for nonsmokers, good drivers – even non-drinkers. If you park your vehicle in a closed garage instead of a carport or driveway or drive a limited number of miles, you might qualify for a discount.

* Raise deductibles. A higher deductible leads to a lower premium. Keep in mind, the purpose for insurance is to make sure you have coverage for a disaster. Fender benders on your car or slight damage to your house can be paid out-of-pocket.

* Reduce claims. Only make a claim when the cost/damage is substantial. Minor repairs should be funded out of your emergency fund. Insurers are notorious for increasing the premiums of those who have cashed in on even low cost claims come renewal time.

* Don’t overinsure. Drop collision or comprehensive coverage on older cars. Determine how much your car is worth using the Kelly Blue Book. If it’s less than one thousand dollars, you may end up paying more for coverage than you would be able to collect on a claim. For life insurance, only insure for the amount needed to replace the income of the one being insured – not so the family of the deceased becomes suddenly wealthy.

* Avoid insurance coupled with investments. There are several life insurance products that mingle insurance and investments (they develop a cash value). Usually, these are very expensive insurance policies and not as good of performers as other options. It’s better to buy term life insurance and invest your extra money elsewhere.

* Don’t forget disability insurance. It’s much more likely that you’ll be disabled than it is that you’ll die during your working years. Yet many Americans only consider life insurance. Be sure you have a solid disability policy in place – especially for the primary bread winner in your household.

* Buy smart. Purchase a car with a good repair record and low theft rate. Insurance will generally be less expensive. Also buy reliable brands of electronics and appliances and forego the extra insurance at the register.

* Check the price. Double check your insurance policy after you receive it and make sure you’re getting the price you were quoted.

* Combine policies. If you own a home, consider a combined premium option, where you get insurance on both the home and your cars from the same insurance company. You can typically reduce your premium costs by 10 percent or so by simply having both policies with the same insurer.

* Pay annually. Pay your premiums once a year, rather than quarterly. That way you avoid the typical $5 to $10 “service fee” you get stuck paying each time you send in a payment every few months.

Use these tips to spend only what you have to on insurance. Keep in mind the purpose of insurance, for protection rather than provision, and you’ll be sure that every cent you spend on insurance is well worth the cost.

Personal Finance: Preparing for hard times

2007-11-09T03:07:00.000-08:00

(Linda Stern is a freelance writer. Any opinions in the column are solely those of Ms. Stern. You can e-mail her at lindastern(at)aol.com.)

By Linda Stern

WASHINGTON, Nov 7 (Reuters) - The Fed is a little bit worried. The index of leading economic indicators is so-so, housing's still off, the stock market's skittish, and oil is flirting with the three-digit barrel. The last U.S. recession ended six years ago, so this expansion's a little bit old. It's all pointing to the specter of a recession in the not too distant future.

Maybe it won't get that bad. Many economists are suggesting the recession predictions are overly pessimistic. Instead, they say we're in for slow growth or stagnation. That's not much better, is it? Here's how to protect your family, yourself and your portfolio from the blahs.

-- Diversify your ability to earn money, to protect yourself from job loss. Take that Web design class, or set up that eBay biz you've been thinking about. Make a list, just for your own peace of mind, of ways you could earn extra money if you really had to.

-- Buy some CDs. The banks need cash and are continuing to prop up rates on certificates of deposit even though the Federal Reserve has been cutting short-term rates. Don't put all of your long-term money in the bank, but a few CDs, salted away and earning 5 percent or better for the next year or so, will do nicely.

-- Invest in toilet paper and the other necessities of life. Sure, this is conventional wisdom, but it works. Companies that produce items that people buy in good times and bad will reward investors who own their stocks, according to research firm Briefing.com. Some industries that have delivered 20 percent-plus returns during recessions include tobacco, health care, personal products, pharmaceuticals, paper packaging and footwear.

-- Buy dividends, too. If the economy stays weak or continues to falter, you might have to wait a while for your growth stock picks to pay off. Get paid to wait by choosing companies that pay decent dividends. You can screen for stocks yielding better than 3 percent, or buy an exchange traded fund that focuses on stocks that pay solid dividends.

-- Manage your debt. Do what it takes to kill the balance on your credit cards, even if it hurts. Rates on home equity lines and other variable-rate loans may falter, or at least stay relatively low, if the economy is weak, so use that opportunity to pay bigger chunks of principal. If you have a variable-rate mortgage and would like to swap it for a fixed-rate loan, you'll get your best opportunity in a downturn. Be prepared to jump on a new loan when rates fall to a level that's good for you.

-- Don't move. If you are renting and haven't bought a home, it won't hurt you to wait a little bit longer. Most housing analysts think the downturn in home prices hasn't finished. If you already own your home, it's not going to be a good time to sell. Stay put if you can.

-- Spend less and save more -- a time-honored tradition during troubled times, and with good reason. The less you spend and borrow, and the more you sock away, the less stressed your own personal economy will be. Make little changes, like using library books and videos instead of spending money at the movies and bookstores. Brew your own coffee and pour your own beers. Cook more of your own food. Send all that you save to the bank, or to vanquishing credit card debt.

-- Focus on cutting your energy and utility spending. Most people could significantly improve their household budgets if they limited the amount they paid to the cable, water, electric, gas and telecom companies. Wear sweaters and turn down the thermostat. Use your cell phone all the time and give up your landline. Say goodbye to HMO. Squeeze those monthly expenses now; you can always add more later.

-- Prepare for the better times. Downturns are followed by expansions that bring rising stock prices, home prices, job offers, salaries and the like. All of the careful planning you do now will get you ready to jump in when the economy recovers. Watch for early signs; election years are often good times for investors. Remember, you're not giving up gratification, you're just deferring it. (Editing by John Wallace)

Ask Mint | In Ulips, the insured assumes investment risk

2007-11-05T03:41:00.000-08:00

The customer decides whether he wants to invest his money in equity, debt or money markets, but the sum assured is guaranteed on death only

On Insurance | Rajesh Relan

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The insurance business in India isn’t just growing, but also becoming more sophisticated in terms of product offerings. To help readers keep ahead of developments in this business, Mint features a Q&A on insurance every Monday.

What is a traditional insurance plan and is it better than Ulip?

Rajesh Relan, managing director, MetLife

The traditional insurance plan is called traditional because it has been around for many years.

Ulip means a unit-linked insurance plan. It was introduced in the Indian market at the turn of the millennium. In a Ulip, the customer decides whether he wants to invest his money in equity, debt or money markets; in traditional plans, the money is invested in a predetermined manner as decided by the insurer within the guidelines laid down by the regulator. A traditional insurance plan, by and large, has some inbuilt guarantees which assure you a certain sum, both in the event of death and maturity. Many traditional plans also have guaranteed returns over and above this sum assured. Hence, the sum assured plus the returns are guaranteed.

In Ulip, usually the sum assured is guaranteed on death only. Also, in Ulip, you will assume the investment risk and participate in possibly higher returns as well.

I am 39 and earn Rs20,000 per month. I have five life insurance (endowment) policies worth Rs5.6 lakh, with an annual premium of Rs32,000. Please advise me whether the existing policies will cover my insurance requirements.

The human life value (HLV) of a person at your age should be around 10-12 times the annual earnings. This is a thumb rule. The sum insured should be equal to an amount which, if invested, should fetch a regular income for the dependants of the insured. In case there are any liabilities, these should be added to the amount of insurance required.

The life insurance plans taken by you are of an endowment type (that is, a mix of savings and protection). I would recommend you take a pure term policy which will cost you around Rs8,500 per annum and will give you a cover of close to Rs15 lakh for 25 years. This will also depend on your health parameters. If you have children, you also need to invest in a plan with a greater savings component.

Readers are welcome to write in with their queries to askmint@livemint.com. The questions will be answered by senior executives from leading insurance firms.

This week’s expert is Rajesh Relan, managing director, MetLife.

The 6 Top Credit Cards for 0% APR on Purchases

2007-11-05T03:38:00.000-08:00

By Flexo on Sunday, November 4th, 2007 in Credit Cards |
Bookmark: del.icio.us | reddit | digg

If you manage your money well and can afford to do so, there’s nothing wrong with using 0% offers to make larger purchases. Taking this approach gives you two advantages: you can leave more of your money in savings earning interest and use inflation to your advantage. (Your $100 final payment has less purchasing power than the $100 of your first payment, so even if your absolute dollars stay constant during repayment, you are paying with less real value as time goes on.)

Of course, if you do not make a payment on time then you will owe previous interest accrued at the default rate. The issuers may even try to trick you into missing payments by delaying statements. You must be on the ball to make use of these deals.

Good 0% APR offers are getting harder to find thanks to the credit card companies tightening their belts, coinciding with the recent decreases in Fed rates. Here are some of the best offers available as of November 4, 2007.

Capital One® No Hassle Cash^SM Rewards and Capital One® No Hassle Miles^SM Rewards
0% APR on purchases until July 2008

These cards offers no annual fee but is only available to customers with excellent credit. Each purchase on the cash rewards card earns you 1% cash back and you’ll be granted a 25% cash back bonus each year. With the miles rewards card, you receive 1.25 miles for each dollar in addition to the same 25% annual bonus. I used to be a critic of Capital One, but they’ve recently changed their practices for the benefit of the consumer.

American Express Platinum Business FreedomPass Card
0% APR on purchases for 12 months

This card offers no annual fee and a standard APR of 11.74% on purchases. The current 0% offer makes this card worthwhile. You will receive 5,000 bonus points after your first purchase, which once accumulated can be traded in for savings on any flight, hotel, car rental or cruise, with no restrictions or blackout dates.

American Express Blue Cash for Business Card
0% APR on purchases for 6 months

The Blue Cash for Business Card is the one I recently opened to pay for my business expenses, but I opened the card before this 0% APR special offer was available. There is no annual fee and you can earn up to a 5% rebate. The full rebate is a little difficult to achieve thanks to minimum spending requirements and is limited to vendors within AmEx’s OPEN Savings partners.

American Express Platinum Business Card
0% APR on purchases for 12 months

This no-fee credit card allows you to earn 1 point for every dollar spent with no upper limit. Those points are redeemable for airfare as well as many other expenses, all through the American Express Membership Rewards program. The standard APR is 10.74%, but with an introductory rate of 0% APR for a year, you won’t be paying interest for a while.

American Express SimplyCash Business Card
0% APR on purchases for 12 months

The AmEx SimplyCash Business Card is similar to the Platinum Business Card. Both cards offer 0$ APR for 12 months but rather than points, the SimplyCash card offers 5% cash back on gas, office supplies, and wireless services, and 1% cash back on virtually all other purchases.

Advanta Platinum BusinessCard
0% APR on purchases and balance transfers for 12 months

This is a basic credit card that doesn’t offer much in the way of rewards. There is no annual fee, however, and you may be able to make good use of the 0% balance transfer offer. Watch out for the balance transfer fee of 3% with a maximum of $50. That maximum could make larger balance transfers worthwhile.

As always, if you choose to use credit, do so responsibly. Obviously with 0% offers, you don’t want to pay your entire balance off until the last possible moment, but you must play by the credit card company’s rules and don’t fall into any of the traps.

Is Your Portfolio Protected Against Inflation?

2007-11-04T13:02:00.001-08:00

The economy is going through a strange phase right now. It’s almost like everyone is holding their breath to see what happens next. While for the most part the economy is doing reasonably well, a key segment of it, namely the housing market is going through turmoil.

This has caused a chain of events that has led us to where we are today. Weakness in the housing market has caused severe problems in the sub prime mortgage industry, which then caused instability in the rest of the financial sector. This has in turn forced the Federal Reserve to cut short term interest rates, twice now in the past few months, as well as pump in almost $41 Billion in funds in an attempt to add liquidity to the system. All of this has raised a mounting fear of inflation in the marketplace.

Are your investments hedged against inflation? Most normal investors will hold a mix of stocks and bonds in their portfolios. But how well will they do in times of high inflation? Typically not so well. Stocks will tend to fall in anticipation of higher interest rates to combat rising inflation. The price of long term bonds will fall as investors will demand higher yields in an inflationary environment.

So what does well during high inflationary periods? Well, I’ve already mention in some of my previous articles how food and energy prices have been skyrocketing lately, which are the main reasons why most people are afraid of inflation now. Might it not be wise to invest in those markets? I am of course talking about the commodities market. Now usually this market is for the most sophisticated of investors, those that are familiar with futures and options. However there are some mutual funds that invest in these markets so anyone can get in on the action.

Other areas that tend to do well are precious metals and foreign investments. Precious metals will usually keep pace with inflation. As for foreign investments well, if our country has a higher inflation relative to another country, our currency would grow weaker against that other nation’s currency. However, that just means that when you finally do convert those investments back into dollars, you would have more dollars from the foreign investment than you would if you had gone with a similar domestic investment with the same rate of return.

Now we come full circle. The final area that usually does well in a high inflationary period is none other than the real estate market. So while these lower interest rates may eventually fix the sagging housing market, they may wreck the rest of the economy to do it. Isn’t if funny how these thing turn out?

Carnival of Personal Finance #124

2007-11-04T12:58:00.000-08:00

Carnival of Personal Finance #124

Written by Flexo on October 29, 2007 | Carnivals

The Millionaire Mommy Next Door has posted the latest edition of the Carnival of Personal Finance, the “Trick or Treat Edition.” The concept this week is interactive. Mommy is looking for all readers to vote for their favorites in each category. The winners will receive one of five excellent prize selections.

Here are the Editor’s Picks, which include a number of new bloggers to me:

Please check out all 92 submissions and vote for your favorites!

Should I prepay my home mortgage or stretch out the deduction?

2007-11-04T12:55:00.000-08:00

Prepaying can save you a substantial amount over the life of your mortgage by reducing the total interest owed. However, by doing so you also shorten the amount of time you can claim a mortgage interest deduction on your federal tax return. Let members of the Financial Planning Association of Greater Indiana help you decide what to do. Visit the group's Web site at www.fpagrindiana.org.

Nancy Cooper Pitt

Financial Partners Group

It depends. There are financial considerations, circumstances and personal values.

Financial:

• How much money will you save by prepaying the mortgage?

• What else would you do with the money you would use to prepay?

Prepaying your mortgage can result in a significant reduction in the amount of interest you would otherwise have to pay over the life of the loan.

Would you pay off other debts, such as credit-card debt, with a higher interest rate than your mortgage? Would you invest the money? You may be able to invest it in something that could generate a higher return than the interest you would save by prepaying. For many people, it might be wise to invest this money in a tax-deferred retirement plan.

Circumstances:

• What is your age? (Are you retired or close to retirement?)

• What is your income and do you expect it to increase or decrease?

• Is your investment perspective short-term or long-term?

• Do you have an adequate emergency fund?

Personal values:

Would prepayment bring you greater peace of mind?

Some people sleep better knowing they don't owe money to others. Some with low tolerance for risk would prefer to take the sure savings from prepayment rather than the risk of return associated with an investment.

Michael D. Fields

Comprehensive Retirement Solutions

Square one in deciding whether to prepay a mortgage is to understand the cost of the money you are borrowing -- the interest rate on the mortgage.

If the rate you are paying is lower than the rate of interest or gain you expect to receive in an alternate investment, then you should invest your extra money, rather than prepay your mortgage. Naturally, there are several other issues to consider as you approach this issue:

• Are you able to use your tax deductions? A home mortgage interest deduction typically allows taxpayers to itemize their deductions, rather than take the standard deduction. However, as you approach the end of your mortgage, the majority of your payments are toward principal, and your home interest may not be contributing as much as you expect.

• Are you comfortable with the risk you must assume in the alternative investment? All investments carry risk, and if you are unwilling to live through an uncertain market to reach higher returns, this might not be a good strategy for you.

• Is the interest rate on your mortgage variable? If so, you will have to evaluate this question each time your rate adjusts.

• Do you owe more on your mortgage than your house is worth? If so, then it is usually better to pay down the mortgage until it is less than the value of your home before considering alternative investments. Also, it is a good idea to seek the advice of a tax adviser about deductibility of interest.

Michael E. Wright

Edward Jones

The answer is a resounding "maybe."

Doing a financial comparison between prepaying a mortgage or using the extra money to invest in stocks or mutual funds is a good starting point. As a general rule, the return on prepaying a mortgage is the interest rate on that mortgage. So the prepayment decision would be based on the return you could get for other investments.

For example, assume you had a 6 percent mortgage and were earning a 9 percent return from a diversified portfolio. You might continue putting money in these investments rather than prepaying your mortgage. However, if you were thinking of buying a certificate of deposit that pays 4 percent, you might be better off using this money to pay down your mortgage.

For most people, the decision to prepay is rarely purely financial, so you will want to look at other advantages and disadvantages.

Advantages:

• You might feel better having a mortgage paid off sooner.

• Prepaying a mortgage shortens the loan term, saving you thousands of dollars in interest expense.

• Ability to focus on other financial goals once home is paid off.

Disadvantages:

• Loss of tax deductions you receive from the interest payments.

• Lack of liquidity to reach other financial goals.

To determine the best course of action, I would suggest a review with a financial adviser to fully evaluate your options.

• Michael F. Wright is a certified financial planning professional.

Free Personal Finance Software

2007-11-04T12:53:00.000-08:00

Top 3 Free Online Personal Finance Software

Nov 1, 2007

Take a look at the top three free online personal finance software options and see how you can manage your money and save money with free financial software.

Online Personal Finance Software Benefits

Online personal finance software is very convenient because you can use it where ever there is an Internet connection. And, these free top three online personal finance software choices offer security features for your personal finance data. With online software, you never have to install anything on your hard drive and software updates are done for you on the software company's servers.

Each of the top three online personal finance titles have a different feature focus, so look them all over and visit the web sites for more details. And remember that when you use online personal finance software on a public computer, you must log out and close the browser window before leaving the computer.

How is This Personal Finance Software Free?

ClearCheckbook is completely free but accepts free-will donations. Mint and MySpendingPlan are also completely free but each gets a cut on any of the money-saving offers presented to you. The offers on Mint.com are hidden unless you click on a tab to view them. MySpendingPlan offers are more upfront and in-your-face.

ClearCheckbook

ClearCheckbook is free online personal finance software that is far from bare-bones free software. ClearCheckbook has many features to manage personal finances.

ClearCheckbook Features:

See all transactions, overall balances, reminders and notices on one page in ClearCheckbook.
Supports account transfers and split transactions.
ClearCheckbook spending limits provide a way to create a personal budget.
Search transactions by date, keyword, account or category.
Track your spending in ClearCheckbook with charts, graphs and spending vs. saving for all accounts.
Security: you do not enter your account numbers into ClearCheckbook.
Reconcile accounts and use time-saving recurring transactions.
Personal finance alerts and reminders arrive by email.
Use CheckBot to update your account while on-the-go with AIM, ICQ, MSN / Windows Live, Google Talk and Yahoo! Messaging services.

Get ClearCheckbook free personal finance software at ClearCheckbook.com.

Mint

Mint is free online personal finance software that offers something truly different: Mint tells you how you can save money, and it has some nice automated features.

Mint Features:

Mint automatically updates your banking and credit card transactions, eliminating the possibility of forgetting to enter transactions.
Mint automatically categorizes transactions as they are downloaded.
Label transactions to be able to quickly identify expenses that are related to work, hobbies, meals out, etc.
View all banking and credit card transactions and account balances side-by-side.
Mint works with 3,000 U.S. banks and credit card companies.
Compares cash and debt for quick overall financial reporting, and Mint offers spending histories.
Email and SMS alert let you know about low balances, large purchases and other financial activities in your accounts.
Security: firewalls, encryption and authentication procedures protect your personal finance data.
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Making the most of your flexible spending account

2007-11-04T12:48:00.000-08:00

Making the most of your flexible spending account

By Margarette Burnette • Bankrate.com

The final few months of the year mark the open-enrollment season for benefits at many companies. This is the perfect time to consider opening a flexible spending account

flexible spending account (FSA)
A plan to which you contribute money each pay period to cover additional medical insurance coverage or child care. Under this plan, you then receive medical insurance and child care tax-free., or FSA, a workplace benefit that helps you pay certain bills while reaping big tax savings.

Health care and dependent care FSAs allow employees to set aside money to pay for qualified expenses. Each pay period, your company deducts an agreed-upon amount from your check on a pretax basis and deposits it into the flexible spending account.

After incurring a qualified expense, you can be reimbursed with tax-free withdrawals from the FSA.

Flexible spending accounts can be great money-savers, but they come with a catch -- they are use-it-or-lose-it accounts. If you don't claim all of your money for the plan year, you forfeit the remaining funds.

"I think when people hear about FSAs, they're reluctant to sign up when they find out they can lose the money," says Natalie Kaufman, a human resources manager with Altier Credit Union in Tempe, Ariz. "But if you take the time to look at them, each of us can come up with opportunities to save taxes on those accounts."

1. Review the past year's costs
At the beginning of each plan year, you decide how much money to put into your flexible spending account. To avoid leaving money in your flexible spending account at year's end, estimate how much you'll spend next year for qualified out-of-pocket medical or dependent-care expenses.

Typically, health care FSAs can be used to pay for most expenses not covered by your health insurance plan, including co-payments, deductibles and prescriptions. Meanwhile, dependent-care FSAs cover qualified child care and elder care expenses.

A good way to predict future spending is to look at past costs.

"For every medical procedure that you've had done, you should receive an explanation of benefits (from your health insurer) that tells you what the actual cost of your procedure was, what the negotiated rate was and what you paid out of pocket," says Mark Woody, a human resources project specialist at Ent Federal Credit Union in Colorado Springs, Colo. "If you're good at holding on to those forms, you can get a good idea of what you're spending in medical expenses."

Don't forget to include recurring expenses when figuring out your planned FSA contribution for next year. For a health care FSA, these may include purchasing prescription drugs, over-the-counter medicines and contact-lens supplies. For a dependent care FSA, these may include adult day care or child care.

Even if you have misplaced the paperwork or receipts related to these expenses, there are other ways to find this information.

"Many insurance companies today have personalized Web sites where you can look up your past history and explanation of benefits," Woody says.

Credit card statements also can be good sources of information about spending on FSA-eligible expenses.

"There are some credit card companies that will give you an annual breakdown of your spending by category," Kaufman says. "So if you use the same card for your co-pay and deductible, you could get a report of your spending at the end of the year."

And while you're searching for those forms and receipts, make a vow to keep better records next year. Using personal finance software such as Quicken or Microsoft Money is an excellent way to track medical or dependent care spending, says Lyn Dippel, a vice president with the financial planning and investment firm Financial Advantage in Columbia, Md.

2. Set aside money for major work
Flexible spending accounts can be handy for more than small out-of-pocket expenses.

"FSAs are especially useful when you anticipate having a large medical procedure," says Michael Kresh, president of the Financial Planning Association, of Long Island, N.Y.

If you're considering laser eye surgery or purchasing prescription glasses, an flexible spending account could be a tax-free way to pay.

"It's a lot easier to put away $50 or $75 a week into your FSA, instead of paying $1,500 a year at one time (for a major out-of-pocket procedure)," Kresh says.

There are other tax remedies for people with extreme medical circumstances, but the medical bills must generally reach a certain limit.

"Taxpayers don't usually get a medical deduction unless their expenses exceed 7.5 percent of their adjusted gross income," Kresh says. "For example, if you make $50,000 a year, you get no deduction until you pay over $3,700 in out-of-pocket expenses."

By taking advantage of FSAs, you don't have to overcome that high barrier. Check with your tax adviser for more details.

Flexible spending accounts have another advantage over a standard tax deduction -- quicker reimbursement.

"People may not know this, but if you have a large medical expense at the beginning of the year, you can still submit the reimbursement, even though your account balance isn't high enough yet," says Dippel.

This benefit is available to those with health care FSAs. By contrast, you cannot ask for reimbursement from a dependent care FSA until your contribution has actually been placed in the account.

3. Save all receipts
Always keep written proof of your expenses. Many companies now offer debit cards that can be used to pay for flexible spending account expenses, reducing the need to prepare claims paperwork. Although debit cards can be convenient, be sure to keep the receipts just in case your administrator has future questions about a particular expense.

"Have a system in place to store receipts, even if it's just a box on your dresser," Woody says. "My receipts go in my briefcase. At the end of the plan year, which for us is June, I can pull all those receipts together and make a claim. For me, 20 minutes of work per year generates a good deal of savings."

If you've been less organized than Woody, remember that employees now have a "grace period" of two and a half months after the end of the plan year to file claims. So, there is time to track down receipts if they're stuffed in the back of your desk drawer.

4. Know the rules
Sometimes a little detective work can keep you from wasting FSA funds. Many qualified expenses might not seem obvious, so it may be wise to contact your human resources specialist for a comprehensive list.

"Counseling, mental health services and eye care expenses (are qualified)," Dippel says. "Also, people don't tend to think about dental costs, but that's a big category."

Remember that you can apply for reimbursement of these expenses at any time before the deadline, even if the expense was incurred months earlier.

Knowing other rules can also save you money. For example, if you leave a job sometime during the year, don't assume that you need to say goodbye to the money accrued in your flexible spending account.

"If you leave a company, and you have a balance in your FSA account, you can still send in claims as long as they were incurred prior to the date of termination," Kaufman says.

5. Buy medicines with leftover funds
No matter how carefully you plan, it is possible to have funds remaining in your account as the reimbursement deadline draws near. If you get toward the end of your plan period and still have money left in your health care FSA, consider your over-the-counter requirements.

"Get your medicine cabinet in gear for the next year," says Dippel. "Consider getting cold medicines, ibuprofen, Band-Aids -- it's a good time to stock up on those things anyway."

Many drugs that were formerly prescription-only -- like loratadine (sold under the brand name Claritin) -- are now available as OTC medicines. If you do stock up, be sure to check the expiration dates on your products to make sure they are current.

6. Don't be afraid to 'lose' it
The biggest potential drawback of opening a flexible spending account is the risk that you will have to forfeit funds at the end of the plan year. But this fear can be misguided.

"One of the big hesitations people have about FSAs is they're worried about losing the money in their account if they don't spend it in time," says Dippel. "But even if you don't use it -- say you only spend 80 percent of what's in the account -- you're still coming out ahead because of the tax savings."

Consider this illustration: You anticipate paying for a $100 procedure next year. If you make $100 in gross pay, you'll probably receive around $75 in net pay, after taxes. So, to pay for the $100 procedure with taxable funds, you'd have to earn closer to $125 in gross pay to cover your cost.

On the other hand, let's say you put $115 into an FSA account and pay for the procedure with these tax-free funds. Even if you don't spend the remaining $15 before the end of the plan year and "lose" the money, you still come out ahead because you're spending less than the $125 you'd have to earn in taxable funds to pay for the procedure.

The savings are even greater for more expensive procedures.

It's easy to feel like you're rolling the dice when deciding how much money to put into a flexible spending account. Allocate too little and you don't reap as big of a tax savings as you deserve. Allocate too much and you could lose some of the money. Using these tips can help you make smart decisions about flexible spending accounts while potentially saving you a lot of money on your taxes.

How Much Do Compact Fluorescent Bulbs Really Cost?

2007-11-04T12:44:00.000-08:00

Valerie writes: “Someone in our family recently suggested that compact fluourescents weren’t worth it due to their high initial cost compared to incandescent light bulbs. We’ve switched all our lights to CFL, so my husband looked into the actual costs. I thought you might like the results” In this guest post, she lays out the numbers.

It makes good economic sense to switch from Incandescents to compact fluorescents (CFLs) — it’s not just a bunch of hype. Let me use our very conservative electrical bill to demonstrate how making the switch can save you money.

Our total consumption for July and August was 1195 kilowatt hours (kWh). This equates to 19 kWh/Day — far below the U.S. average of 29 kWh/Day. Part of this low consumption is because we’ve already replaced most of our incandescents with CFLs. But let’s say we haven’t, and assume that our electrical bill with incandescents is the same as it is now.

According to the American Lighting Association, lights account for 25 percent of a homeowner’s electric bill. But let’s assume they’re exaggerating, and put this to 20 percent.

Since we don’t use a lot of electricity in our household, 98% of all our electricity is charged at the lowest rate: $0.053 per kWh. About two percent is charged at $0.062 per kWh. For simplicity’s sake, we’ll just assume we get all of our electricity at the lowest rate.

Here’s the math:

20% of our total electricity consumption for 2 months: 1195 * 20% = 229 kWh for lighting
229 kWh charged at $0.053: 229 * $0.053 = $12.67 for lighting
In our area, we also have the delivery, regulatory and debt retirement charges totaling $0.038 per kWh: 229 * $0.038 = $7.74 for lighting

If instead of using 60-watt incandescent bulbs we use 13-watt CFLs, we’ll be using 21.67% as much energy (13 watts divided by 60 watts is 0.2167). Applying this fraction to the cost of lighting, we now pay $2.75/month instead of $12.67, which saves us $9.92. Applying the other miscellaneous charges, we now pay $1.68 instead of $7.74, saving us $6.06. Using these numbers, we’re saving $15.98 per billing period.

It’s true that CFLs cost a lot more than incandescents, but their prices are dropping every day. Also, you can always get them on sale and/or use special coupons to get discounts. We replaced most of our incandescents in our house for around $85. (J.D.’s note: When we bought this house, we had a free home energy audit from Energy Trust of Oregon. They gave us six or seven CFLs for free!)

Even if, for the sake of illustration, we put the cost of incandescents at $0, CFLs will pay themselves off in just a few months. It’s been over a year now since we installed ours, and none have burned out. CFLs are rated for about seven years, which means that for the next six years, they’re saving us money. Even after stacking the cards against us, with the low electricity bill, paying the lowest rate, and assuming incandescents cost nothing, CFLs make sense.

Given that the bulbs should last seven years, we can expect to save at least $575.28, which isn’t bad for a couple of hours of work.

Michael Bluejay has an extensive page describing how to save electricity on lighting. Also, I sometimes see people worry at other sites that CFLs are not safe. Turns out this is mostly an urban myth.) Photo courtesy David Hobby of Strobist.

Addendum: One commenter pointed to this video that explains CFLs in plain English. Though CFLs contain less only 1% of the mercury found in the average home thermometer, they must be disposed of safely. For the best information about how to do this, contact your local solid waste department. You can take CFLs to any IKEA store to dispose of them. In the U.S., you can learn more about disposing CFLs at the EPA’s bulb-recycling web site.

Marketers Use Trickery to Evade No-Call Lists

2007-10-27T14:22:00.000-07:00

Older Americans around the country are getting duped by a seemingly innocuous tactic that can expose them to hard-sell pitches from the insurance industry.

The technique is centered on a marketing tool called the lead card, and it became popular after the federal government created its Do Not Call Registry in 2003 to shield consumers from unwanted solicitors. Sent through the mail, the lead card invites the recipient to mail off an enclosed reply for free information about, say, estate planning.

But the cards fail to warn that by sending off replies, recipients are giving up their right to avoid telephone solicitations from the sender -- even if their phone numbers are on the Do Not Call list.

"It's a huge loophole," says Pam Dixon, executive director of the World Privacy Forum, a San Diego nonprofit researcher of privacy issues including commercial use of personal information.

The technique is prompting legal action from states across the country. Because the loophole itself violates no law in most states, prosecutors are focusing their cases on other lead-card deceptions. The cards often falsely imply an affiliation with the federal government or with advocacy groups such as AARP, for instance. Many of the cards also fail to mention that replies will be turned over to insurance salespeople.

When Naomi and Horace Williams got a postcard warning that estates of older Americans could be wiped out by taxes unless they moved quickly, they believed it came from AARP, the Washington-based lobbying group for older Americans, since it said that "AARP found" probate taxes were hurting seniors.

So the Williamses filled out a reply card that promised more information and mailed it to a post-office box in Washington, D.C. Soon after came a phone call from a man saying he wanted to drop by their North Carolina home to deliver the information they'd requested. It never occurred to the Williamses -- who had registered on the Federal Trade Commission's Do Not Call Registry -- that the caller was a marketer. They assumed he was affiliated with AARP, they say.

As it turned out, the actual sender of the card had been America's Recommended Mailers Inc., a company housed in a Lewisville, Texas, strip mall that provides leads to insurance agents nationwide.

Soon after they mailed the reply, a living-trust marketer, and then an insurance agent, showed up at the couple's Morganton, N.C., home, Mr. Williams said in an affidavit filed in state Superior Court in Raleigh. Mr. Williams, an 83-year-old retired factory worker, says the agent talked him into transferring much of the couple's $179,000 nest egg into annuities that barred them from tapping the bulk of their money, unless they paid high penalties, until Mr. Williams was nearly 90. The commission on such products is typically 9.5%.

The marketer and the insurance agent worked for American Family Prepaid Legal Corp., an Irvine, Calif., living-trust provider, and its related insurance marketing company, which filed an affidavit generally denying wrongdoing as well as an affidavit from the living-trust salesman denying the Williamses' claim.

The agent received his lead from the postcard reply, according to North Carolina court filings. Meanwhile, the Texas attorney general is suing America's Recommended Mailers for alleged misrepresentations in its pitches. The company disputes the allegation, saying it merely quoted AARP. Nonetheless, it says it is revising its cards. After hiring a lawyer and complaining, the Williamses obtained the return of their nest egg.

Since the FTC created the Do Not Call Registry four years ago, Americans have registered 145 million phone numbers on the list, theoretically shielding themselves from phone solicitations.

But that measure gave new purpose to a growing breed of marketers known as lead generators. "Overnight," says a Web site run by Kaleidico LLC, a Flat Rock, Mich., company that sells software to the lead industry, the Do Not Call Registry made obsolete traditional methods of "prospecting for business" such as "auto-dialing." As a result, Kaleidico says, the new postcard niche has emerged -- a "marketing medium" that is geared toward prompting consumers to "raise their hand to be called."

Some cards gush about sweepstakes prizes, and returns may be used by marketers in any number of industries. But state regulators say the most ubiquitous type of card is delivered to seniors on behalf of insurers. Often plastered with American flags, such cards may cite "changes in your Medicare benefits" or mention "new legislation" passed by Congress that will "affect you and your heirs" -- along with references to research by federal agencies or AARP on how to handle such changes.

The research is offered free to those who send back contact information. Then the companies, some owned by large insurers, sell the names and contact information they compile to insurance agents and other salespeople.

The postcards often don't identify the mailers, using return addresses with oblique names such as "Central Processing Center." And they often ask for the respondent's signature, considered by some insurers as further consent to be contacted. "You have that hand-signed card with their phone number on it, and you sell tons," says Gary Brown, a salesman in Minneapolis until April for American Family, which buys leads from America's Recommended Mailers.

The Do Not Call law allows companies to bypass the registry and call people on the list if they have "provided express agreement in writing" to receive calls. But Eileen Harrington, deputy director of the FTC's Bureau of Consumer Protection, says the commission's view is that "you cannot use ruses" to get consumers to provide that agreement. Such mailers could be considered deceptive and violate the law, she says. Although the FTC has not yet gone after lead-card companies, she says the agency has some "nonpublic matters pending."

Attorneys general in Illinois, Pennsylvania and Texas have taken legal actions against a total of seven lead generators, charging them with falsely suggesting endorsements by the government or AARP. Regulators in about 20 states have opened fraud investigations into lead generators, according to a court filing by the Texas attorney general's office in one of the cases.

State regulators say insurers are using the cards to peddle investments unsuitable for seniors, including so-called living trusts that may provide no benefit and annuities that come with steep surrender charges and lengthy payout deferrals.

A case in point is Jeanne Blom, an 81-year-old widow in Minneapolis. A retired office-building cleaner, Mrs. Blom years ago transferred the deed of her house, worth $135,000, to her son, placed his name on her checking account and made him the owner of her 1990 Buick LeSabre. The rest of her assets were valued at far less than $20,000, which under Minnesota law would allow her son to collect them without probate, according to Charles Roach, her attorney. In any case, the probate fee in her county is only $250.

Mrs. Blom, who is registered on the Do Not Call list, received a postcard offering free information on estate planning, and she sent it back. Soon, an American Family saleswoman named Deborah Kimball called and set up an appointment to discuss a legal plan. When Mrs. Blom explained the steps she'd already taken, Ms. Kimball insisted that "I needed more than that," recalls Mrs. Blom.

American Family "sounded like they knew what they were talking about," says Mrs. Blom. So she purchased a living trust -- designed to save her the costs of probate -- for $2,295, about a third of her cash savings.

Mrs. Blom's case was one of many that prompted Minnesota Attorney General Lori Swanson to file suit against American Family in March, accusing it of selling living trusts and annuities that are unsuitable for older adults with modest savings. Attorneys general in North Carolina and Pennsylvania have filed similar suits against American Family, which has 10 offices around the country.

American Family denied the attorney general's allegations but in July agreed to shut down in Minnesota. Mrs. Blom, who lives on a Social Security payment of $900 a month, has been unable to get her money back. Her lawyer, Charles Roach, says that American Family's headquarters, after initially telling him it would look into Mrs. Blom's request for a refund, hasn't been returning his calls.

Ms. Kimball didn't return several phone calls seeking comment. Jeffrey Norman, the chief executive of American Family, declined to discuss a specific case but said, "We've had thousands and thousands of clients and hardly any problems."

Four of the country's largest lead generators are clustered around Fort Worth, Texas, and Attorney General Greg Abbott has sued them all in an Austin state court, accusing them of false and misleading practices.

In another lead-generator case, the Illinois attorney general, Lisa Madigan, has sued Senior Benefit Services Inc. and American Investors Life Insurance Co., two Kansas-based units of London-based Aviva PLC, one of the world's largest insurers. The suit, brought in state court in Springfield, alleges that Senior Benefit mailed postcards offering free advice that resulted in sales pitches for American Investors products. The complaint says that 393 Illinois residents over age 65 who returned lead cards bought 512 annuities worth $29 million between 2002 and 2005, resulting in commissions of $1.5 million to $2.9 million. The annuities were largely unsuitable for older investors, the claim alleges, because they barred access to the money put into the annuities for years without stiff penalties.

An Aviva spokeswoman says that the company disputes the Illinois allegations.

Mary Menges, a 70-year-old retired nurse in Collinsville, Ill., had signed onto the federal Do Not Call list. But in 2004 she replied to a Senior Benefit postcard that offered estate-planning information because she believed the card came from the government, Mrs. Menges said in an interview. Senior Benefit postcards filed as exhibits in the case don't say they came from an insurance marketer. In fine print -- about half the size of the regular print on the postcards -- is a disclaimer: "Not affiliated with any government agencies."

After returning the card, Mrs. Menges got a phone call from a Senior Benefit telemarketer, followed by a visitor who told her he was paid by the "program" that sent the card, and presented a business card with the title "senior estate advisor."

"I didn't know this was an insurance agent at all," she says.

During their meeting, she recalls, he "asked me what I had in stocks and bonds" and convinced her to move her $170,000 IRA, invested in mutual funds, to an American Investors deferred annuity. She says she only realized later that she was limited to withdrawing 10% a year. Any withdrawals beyond that sum were subject to a penalty as high as 17% in some cases, the state complaint says. After Mrs. Menges, with her son's help, made several phone calls to the insurer, wrote a letter of complaint and was declined in writing twice, she complained to the state.

Informal mediation through the state failed, so the attorney general's office started an investigation. Shortly after that, the company returned her money.

Michael Vaughan, an attorney representing the Aviva units, says the company has seen "no evidence" that Mrs. Menges's claims represent a "broad-based issue."

AARP has also been upset with lead generators. In April 2006 it won a permanent injunction in U.S. District Court in Jacksonville, Fla., prohibiting a company owned by ChoicePoint Inc., a big Alpharetta, Ga., seller of personal data, from referring to AARP on its lead cards and from using a Washington, D.C., return address unless it had an office there. In a settlement, ChoicePoint also agreed to destroy lead cards violating the injunction and paid an undisclosed sum to AARP.

ChoicePoint internal emails used as evidence in the case showed it was mailing more than a million lead cards a year and charged insurers as much as $35,000 per order for the mass mailings, including one in 2003 alerting older adults to a "new" AARP study on probate taxes. The study was then actually 14 years old, was done before a change in federal probate laws and, according to AARP, no longer represented its views. In internal emails, ChoicePoint employees attributed the cards' success in generating responses to their "fear factor" and described response rates that "tumbled" when AARP's name was temporarily removed from mailings.

ChoicePoint's spokesman says the "business practice" described in the settlement began before ChoicePoint bought its lead-generator unit in 2003, and that ChoicePoint stopped using AARP references after last year's settlement.

AARP has a similar complaint pending against America's Recommended Mailers and American Family Prepaid in U.S. District Court in Durham, N.C. AARP alleges that America's Recommended Mailers uses cards that appear to come from AARP to generate leads sold to American Family and others. America's Recommended Mailers has denied the claim. American Family said in a court filing that it bought lead cards on "good faith" belief that the cards didn't violate laws.

North Carolina court filings against American Family say "deceptive" mailers enabled the company's agents to visit 2,000 North Carolina residents over age 65 in their homes in 2004 and 2005. The state says they bought $4.2 million in living trusts and millions of dollars in equity-indexed annuities that were unnecessary and unsuitable.

Write to Jennifer Levitz at jennifer.levitz@wsj.com and Kelly Greene at kelly.greene@wsj.com

On a need-to-know-everything basis

2007-10-27T14:18:00.000-07:00

Work gets personal when you enter the online world of social networking

By Andrea Coombes, MarketWatch

Last Update: 1:06 PM ET Oct 26, 2007

SAN FRANCISCO (MarketWatch) -- If you've never poked a colleague or been bitten by a co-worker's zombie, you're probably not on Facebook. If you are, you're probably "friends" -- or the online equivalent of such -- with dozens, if not hundreds, of co-workers, business associates, family members and real-life pals.

People can read your profile, see your photos, learn about your musical tastes, religious beliefs and political affiliations, or any other of a variety of likes and dislikes that in the past would have stayed relatively private. The same can be said of MySpace and other social-networking sites.

You can write public comments on a person's "wall" or send silly messages -- such as Facebook's "you've been poked" or "my zombie bit your zombie," complete with monster image -- all in the name of pointless fun.

Perhaps more startling: You're likely to discover more than you really wanted to know about, say, a business acquaintance's sexual proclivities.

Whatever your take is on Facebook, MySpace and the like -- a time-sucking ego trip or a welcome daily addiction -- there's no denying they represent a new level of information-sharing.

"Social networking is having more of your self out there at a professional level. It's drawing that line between what's professional and what's personal," said Charlene Li, an analyst with Forrester Research.

"There's a very fine line to walk in terms of how personal you want to get," she said. "Some people draw it more to the professional, some more to the personal."

There are a slew of social-networking sites, but some say the up-and-coming online water cooler for midcareer professionals is Facebook. LinkedIn is relentlessly focused on professional networking, but doesn't offer an opportunity to share your favorite book or your weekend plans.

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2007-10-27T14:16:00.000-07:00

Ten ways to supercharge your cash flow and avoid credit woes

By Chris Pummer

Last Update: 7:39 PM ET Oct 25, 2007

SAN FRANCISCO, Calif. (MarketWatch) -- So your mortgage payment just ratcheted upward or an unforeseen event has shot the heart out of your finances. Don't succumb to money melancholy just yet.

In the grand scheme, you may have serious credit problems you need to reconcile with due haste. More immediately, what you have is what high-finance types call a cash-flow problem -- not enough income and reserves to cover your monthly expenses.

Before unloading your house on the cheap to avoid foreclosure or hitting your doctor up for a Prozac prescription, consider that many Americans have tens of thousands of dollars in assets and $1,000 or more in potential monthly income and savings they often don't realize are readily available to them.

"There are many steps you can take to improve your cash flow," says David Yeske, past president of the Financial Planning Association and a principal with the San Francisco-based firm Yeske Buie. "You just need to take a hard look at your options."

What follows are 10 ways to raise significant sums to overcome a sudden shortfall. Some involve sacrificing your future financial security. Others require eating a bit of humble pie -- but at least you'll be able consume it in your own home's dining room.

The big scores

Many of us are sitting on ten of thousands of dollars in retirement and college savings that we can access with minimal or no tax consequences or early-withdrawal penalties. Past Congresses made these allowances to help middle-income Americans get through hard times. These are sound ways to tap your long-term savings:

Roth IRAs. Because these accounts are funded with after-tax dollars, all contributions can be withdrawn freely at any time. Contributions made by converting a traditional IRA to a Roth can be withdrawn if held in the account five or more years. Conversion contributions less than five years old will be subject to a modest 10% tax for early withdrawal. Avoid pulling out earnings because they're subject to both income tax and the 10% levy. That hit could approach 50% of the withdrawal, depending on your tax bracket and state and local income-tax rates.
529 College Savings Plans. You can withdraw funds you contributed with after-tax dollars to these accounts with potentially minimal tax consequences. The withdrawn money will be reported to the IRS on a proportional basis, as principal and earnings, depending on the account's performance. For instance, if your contributions produced a 25% return and you take out $10,000, then $8,000 will be tax-free and the $2,000 representing the gain will be taxable. At worst, you may owe up to $1,000 on that amount, so you reap $9,000 or more from your $10,000 withdrawal. If the account's earnings are much greater, this is a less attractive source to tap. You should not take out any contributions made by others such as relatives. And 529 accounts set up under the Uniform Gift to Minors Act are not accessible.
Halt contributions to 401(k) and 403(b) plans. Many people overlook the fact they can suspend contributions to these employer-sponsored retirement accounts with their very next paycheck, Yeske says. Get yourself to HR and cancel these set-asides for the future -- but restart them as soon as you can after your crisis has passed.
401(k) and 403(b) loans. Many employers allow general-purpose loans from these savings plans. Such loans typically must be repaid within five years. The upside is the interest you pay on the loan goes into your account, along with your replenished funds. Just be sure to deploy the money strategically to get through your cash crisis and not fritter it away.

If you're really strapped and must withdraw money from your 401(k), 403(b) or tax-deductible IRAs be prepared to face that severe tax bite of up to 50% come filing time. If you hold off until this Jan. 1, you at least won't have to square up with the IRS until April 2009.

If you don't see your financial situation improving in the coming year, this move is strongly ill-advised unless you put aside the taxman's due in a lock box.

Monthly boosts

If you're sure it's impossible to get your income and expenses in line, think again. Many people can add $1,000 or more to their monthly income with minimal sacrifice. And since that's after-tax money, it represents about $1,500 or more you can put toward your mortgage, since your higher interest cost is tax deductible.

Adjust your payroll-tax withholding to account for an increased mortgage payment. If your payment jumps $600 a month due to an interest-rate hike, that's all deductible and will give you an additional $7,200 tax write-off for a full year. That's a roughly $1,800 to $3,000 annual tax break -- depending on your bracket and state and local income taxes -- which means you could safely reduce your withholding $150 to $250 a month and boost your take-home pay that amount.
Adjust your tax withholding to stop overpaying if you typically get a filing refund. The IRS reported in April that refunds issued this year averaged $2,394. So taxpayers on average give the feds an interest-free loan of $200 cash a month. Since our tax exposure changes from year to year, Brian Pon, a tax adviser with Berkeley, Calif.-based Financial Connections Group, recommends consulting your tax preparer to determine how to bring your withholding in line with your anticipated liability.
Take a second job and send teenagers out to work. It seems like an obvious move, but many people under severe money stress freeze up like a deer caught in headlights and get run down financially. With the U.S. unemployment rate still below 5%, part-time positions are plentiful in most all job markets. The pay may be modest, but the added income could prove invaluable to your financial survival.
Sell your late-model car and buy a reliable older one. If you have an auto loan costing $350 a month (or worse yet, two loans), you could apply the difference in the price you get for your car and the balance you owe to the purchase of an older vehicle, many of which now still look good and perform well with 100,000-plus miles. Not only will you eliminate the monthly payment (which could cover a $500 jump in your mortgage payment due to the tax deduction), you also could drop collision and comprehensive insurance required by auto lenders if you can bear that risk, saving perhaps $50 a month more. If you own your late-model car outright, bank the money you raise after buying an older one and draw off it to steer through your cash-flow squeeze.
Get rid of your cell phones, high-speed Internet access and cable or satellite TV service. There was a time not long ago when we lived without these pricey nonessentials, for which many Americans pay $250 a month or more. If you're locked into a cell-phone contract, don't renew if it's soon to expire. If not, bite the bullet and pay the early-termination penalties. As for an Internet connection, default to a $9.95 a month dial-up plan until your fortunes improve.
Increase your insurance deductibles. Many auto lenders allow borrowers to maintain collision and comp deductibles of up to $1,000. And many mortgage lenders permit deductibles of $3,000 to $5,000 on homeowners insurance. You assume greater out-of-pocket risk, but you could save $100 a month or more by raising your deductibles.

Of course, the most immediate boost to your cash flow will come from curtailing your spending. Due to our vast use of hastily grabbed credit and debit cards to make purchases these days, Yeske says, many of us don't realize how large a percentage of our spending is a matter of choice and not absolute need.

"Few human beings are mentally and emotionally wired for budgeting because it requires a high level of concentration to track expenses, dollar-by-dollar, on a daily basis," Yeske says. "But just keeping a sustained focus on your spending can do your cash flow a world of good."

Chris Pummer is a former senior editor for MarketWatch and Bloomberg News and a former reporter for such papers as the Los Angeles Times and San Jose Mercury News.

NBC Teaches Personal Finance Lessons On "30 Rock"

2007-10-27T13:50:00.000-07:00

NBC is taking the "workplace comedy" concept to new levels of realism, by including a couple of scenes about a major character's lack of a savings plan in this week's "30 Rock" episode. After being awarded a $10,000 "GE Followship Award" for being such a great follower, Tina Fey's character stuns her boss by revealing she doesn't have a 401(k)—or, apparently, even a savings account.

Jack: So Liz, what are you going to do with all that money? Put it in your 401(k)?

Liz: Yeah, um... I gotta get one of those.

Jack: Where do you invest your money?

Liz: I've got 12 grand in checking.

Jack: Are you an immigrant?

At the end of the episode, she asks Jack to teach her to "do that thing that rich people do where they take money and turn it into more money."

There's one other great life lesson from the same episode, when Jack says, "Never follow a hippie to a second location."

The 123rd Carnival of Personal Finance (The Boo! edition)

2007-10-26T06:05:00.000-07:00

Welcome to the 123rd Carnival of Personal Finance (The Boo! edition). October is a scary month. Not only is it home to All Hallows’ Eve, it is also home to some of the scariest stock market crashes in our history. For this edition of the CoPF, I’ll trace the history of some of the largest single-day market plunges that occurred in the month of October. To comfort us during these frightening times, I’ve also included some beautiful photographs taken by a good friend of mine (and used by his express permission). The pictures will help remind us that while personal finance is important, there are some things in life that money just can’t buy. So with that, let’s get on with the carnival. Each submission is organized by category, and I’ll begin with my selection of the best articles of the week.
Editor’s Picks

My Impulse Buy Savings Plan (@ Caustic Musings): “One of my unspoken personal vows to myself this year (call it an early New Year’s resolution) was to stop buying so much crap on impulse.”

How China Could Crash the US Dollar on a Whim (@ Currency Trading): “This article will go beyond forex reserves and discuss several other facets of China’s economy. From US house prices to global commodity prices, from interest rates to inflation rates, we will explore how China could cripple the US economy, both willfully and unintentionally, if so desired.”

Use Halloween to Teach Kids Money Lessons (@ Grad Money Matters): “How can one thing mean two totally different things to different people? Take Halloween treats for example. Kids are delighted by it. Parents, not so much. Candies filled with high fructose corn syrup and food coloring, and kids that are hyper-active with so much sugar intake that they literally bounce off the walls. It’s every parent’s nightmare and the perfect scary ending to the Halloween holiday! But here’s a trick that will sound more like a treat – this unsavory situation can easily be turned into a money lesson for kids!”

36 Important Money Saving Tips (@ Frugal Journey): “Over the past year, I’ve written 100’s of money saving tips, on a wide range of topics. Today, I’ve gathered all my favorites into one source. Now, the best of the best, is available right at your fingertips.”

Change Your Child’s Genetics By Giving Up The BMW (@ The Happy Rock): “We recently talked about financially changing your family tree as financial motivation, but for those of us needed some more convincing here is evidence that our decisions about money go much deeper than just dollars and cents.”

Why The Rich Get Richer: An Entirely Different Perspective (@ The Digerati Life): “It’s an age old question: how do the rich get richer? Here are some reasons that may explain this economic phenomenon.”

List of money related forums and discussion boards (@ Might Bargain Hunter): “Discussion boards are a great resource and a good place to exchange ideas with like-minded people or, at least, people with interests similar to yours. Anyway, I hope you find this list of money-related forums useful; maybe you’ll find a new favorite.”

the myth of the parent that NEEDS to work (@ brip blap): “Many couples claim to be “forced” to work two jobs to make ends meet, but is it really “making ends meet” when you don’t live a frugal lifestyle?”

I’m Responsible For One Of The Worst Interviews Ever (@ A Penny Closer): “After a few months at my new job an old work acquaintance (let’s call him David) contacted me to see how I was doing. I explained that I liked the new position with this smaller company and he asked if I could get him an interview.” And that’s when the trouble began.

BofA shakes up investment unit

2007-10-25T09:47:00.000-07:00

After a poor showing last week, the bank will reshuffle managers and cut jobs in its Global Corporate and Investment Banking unit.

October 25 2007: 8:44 AM EDT

NEW YORK (CNNMoney.com) -- Bank of America announced Wednesday that it will restructure its investment banking unit, starting with that unit's president.

The bank said that Gene Taylor, president of the bank's Global Corporate and Investment Banking unit, will retire and be replaced by Brian Moynihan, current head of the bank's Global Wealth and Investment Management unit.

The bank also said it will eliminate about 3,000 jobs, most of which will be in the Global Corporate and Investment Banking unit, but other units will also be affected by the layoffs.

The changes come after losses in the unit's account totaled more than $1.45 billion, triggering a 32% decline in net income for the bank, compared with the same quarter a year earlier.

"While some of these changes are a direct result of our underperformance, others have been contemplated for a number of months as we looked at how we could operate more effectively," Bank of America's (Charts, Fortune 500) CEO Kenneth Lewis said in a prepared statement.

"We recognize that there are areas where we need to improve and are moving decisively toward that goal," Lewis added.

Bank of America's earnings fall 32%

Sree Advice: Sites For New Personal Finance Tools

2007-10-23T07:46:00.000-07:00

NEW YORK -- A whole new generation of online personal finance tools is attracting a lot of attention these days. They help you track your money and save better, too. Some go as far as allowing you to selectively share your data with others, so they can advice you on how to save money, make money and more. It's a new world in the money business folks, now that Web 2.0 has arrived. Here are some to take a look at. Of course, you should experiment first till you achieve a level of comfort.

VIDEO: Sree Advice

Expensr.com: This site's tagline: "Where did all my money go?" That's the question it hopes to help you answer by helping you track your expenses and much more.

Wesabe.com: This site's tagline: "Get to know your money." It helps you do that by connecting you with your various accounts and selectively giving tips and advice from other users.

Mint.com:This site's tagline: "Refreshing money management." It provides ways to track your expenses and your assets and examines your data to provide alternatives that might save you money or get you better rates.

Some other resources:

YourCreditAdvisor.com's Top 25 Web 2.0 tools for Money, Finance & Investment

Wall Street Journal.com

LifeHacker on "Is Mint Ready for Your Money?"

GetRichSlowly.org's Budgeting for Non-budgeters

What do you think? Tell us by using this form.

Best Frugality Posts from the Festival of Frugality #96

2007-10-22T05:00:00.000-07:00

I’m a few days late on this one, but I was pretty busy this past week with closing the pool, a mid-term exam, work, our wedding anniversary, etc. But here it is! My highlights from the Festival of Frugality, hosted by Fire Finance:

Here at Clever Dude, I wrote about how my coworkers make fun of my coupons, but they use them anyway.
Encouraging Coach talks about simplifying Halloween. Twenty years ago, I used pillowcases to carry the candy and my mom made my costumes.
Opinion Mom touts the idea of “play clothes” to extend the life of your wardrobe. I also have work clothes, dress clothes and social clothes. For my work clothes, I use old tees, shorts and jeans. When I come home from work, I immediately change out of my dress clothes (and hang them up) and into my lounge-wear. I get MANY more wears out of my business clothes before sending to the dry cleaner this way.
Paid Twice is faced with a dilemma over getting her daughter stuff for her birthday “just because”. I can sympathize, from a receiving end. I have outright told my parents, Stacie’s parents, my grandma and even Stacie that I want no gifts for my birthday. However, grandma still gives me a small present, even on her fixed income. This year, it was a pink Ralpha Lauren polo shirt. Hmm, wrong color, and how did she afford RL? Sigh.
Money Blue Book tells of a secret way to get free coupons: ASK! Stacie gets crates of food because she’s a dietitian and simply asks. Unfortunately, they’re cases of Fiber One cereal and oyster crackers. Why can’t we get a case of Oreos???
And lastly, Saving Advice discusses the problem of “Social Obligation Expenses” (i.e. all your friends, family and coworkers pushing you to spend when you can’t or don’t want to).

And now it’s time to take a nap! Have a great weekend!

Authors help women advance

2007-10-22T04:57:00.000-07:00

By SARAH PACHTER McClatchy Newspapers
Published Saturday, October 20, 2007

Happiness for women no longer is determined by whether they marry Mr. Right and raise 2.5 beautiful children. Women today expect to have successful careers and need to be financially independent. Two books offer advice on how to attain both.

“Through the Labyrinth”
by Alice H. Eagly
and Linda L. Carli
(Harvard Business School Press,
273 pages, $29.95)

“On My Own Two Feet”
by Manisha Thakor and Sharon Kedar
(Adams Media, 185 pages, $12.95)

Do people resist women leaders? Do family responsibilities hold women back? Do women lead differently than men do?

These questions and more are addressed in "Through the Labyrinth: The Truth About How Women Become Leaders." Authors Alice Eagly and Linda Carli assert that the mythical "glass ceiling" preventing women from obtaining leadership positions is gone, as more women are becoming CEOs and top government officials. The labyrinth - a maze with dead ends at every turn - is a more appropriate metaphor, they say, so they explore the twisted paths women must traverse to achieve power in the 21st century.

Each chapter raises a question, which is then answered with psychological, statistical and anecdotal references. Although it is evident from the writing style that this text was authored by college professors, it also will appeal to nonacademics with its intelligent and clear-cut structure. The use of charts and graphs, as well as meticulous notes and reference sections, also makes this book a valuable resource for students, human resource professionals and executives.

Most of the book focuses on the reasons more women are not in higher leadership positions. The authors also suggest strategies women, men and organizations can implement to improve the environment for women who have leadership aspirations. Techniques they propose that women employ include establishing competence, taking credit for accomplishments, negotiating and networking.

They also stress the idea that men need to take more active roles in both their marriages and families so that women have the time and energy to succeed in business. Statistics show women still are the primary caregivers to their children and the main homemakers, even if both spouses work full time.

Women do have a much more difficult path to leadership than men, but this book proves this is not because they are less capable. Society, families and institutions each play large roles in the creation of the labyrinth. Changes in external factors and in women’s focus will help remove many barriers and create opportunities for more inclusive leadership.

The authors of "On My Own Two Feet: A Modern Girl’s Guide to Personal Finance" ask: "Have you been searching for a personal finance book that is short, inviting and easy to read? If so, your search is over."

This statement by Manisha Thakor and Sharon Kedar sums up the enticing qualities of this book. As the daughter of a business book guru, I have read many personal finance books, especially those geared toward women, but this one had the highest information-to-page ratio. In addition to chapters on the usual topics such as credit cards, credit scores, saving and investing, the authors include chapters on insurance, buying a home and car, and mixing love and money. Especially helpful was the chapter on priorities, in which readers are assured they can’t follow all of the book’s advice at once.

The only area in which I found it lacking was student loans, an important issue for young women (and men). Each chapter contained the requisite bullet points, tables, stories, statistics and summaries. Appendices added more specifics and references for further reading. This was not only a quick cover-to-cover read but also a handy reference guide worth keeping. As a first personal finance book for women, I recommend this book because of its brevity as well as its abundance of information.

Sarah Pachter is the daughter of Miami Herald business books columnist Richard Pachter and occasionally writes reviews for the newspaper. She can be reached at misspbc@gmail.com.

Carnival of Personal Finance #121 - Columbus Day Edition

2007-10-19T17:09:00.000-07:00

Carnival of Personal Finance #121 - Columbus Day Edition

Mr Credit Card : Welcome to the Carnival of Personal Finance #121 - Columbus Day Edition. Today’s event is a Q&A session with our leading presidential candidates. As the presidential candidates from both parties continue their campaign, the carnival of personal finance is pleased to announce that Senator Obama, Senator Clinton, Ex-Governor Guliani and Senator McCain have agreed to appear before personal finance bloggers for a question and answer session with regards to their policy platform. Please give our guest a round of applause.

Let us now begin.

Everyday Finance : I would like to direct this question to all of you. I am concerned about the weak dollar and how much it has depreciated against other currencies. The question I have is is the weak dollar driving US companies into the arms of foreigners? And are any of you concerned about this?

Senator McCain : We have to let the market forces determine the level of the US Dollar. But having said that, I am concerned about the dollar but I also think that once we get the war under control and our budget deficits under control, we will start to see a turnaround of the dollar.

Senator Clinton : In the 90’s, the United States had a strong dollar policy. Having said that, we were in a much better shape than the present. Right now, we have a massive deficit and an administration whose sole concern is the war and the dollar is suffering from this benign neglect.

Exjackly : This question is addressed to the two democrat candidates. I am a business owner and I am concerned about the democrats inclining to raise taxes. Since you took over congress, you have raised the minimum wage and it has affected many small businesses including mine. My business hires mainly students and simply cannot see why students should be benefiting from this bill!

Senator Clinton : As a society, those of us who are much better off cannot afford to overlook those at the bottom of the rung. But I would say that it is not just your business that will be affected, but even your competitors will be affected. I believe that in starting a business, all you need is momentum

Bewildement from the audience.

Mayor Guliani : As a republican, I really believe in letting the market forces determine what should be the appropriate wage. I fully understand the position of business owners like yourself. In fact, I can even show you how to live on minimum wage?.

Finance is Personal : The senate finance committee has recently questioned certain practices by credit card companies and as a result, we have practices like the universal default clause not being practiced anymore. I would like to ask all of you if you have any thoughts as to how we can change America to become a nation of savers rather than being a nation of debtors? Also, do you think will consumers warm up to credit freezes? since we have to pay for these services?

Senator McCain : All of us want Americans to be a nation of savers. Unfortunately, we are also a free country and that means that consumers should be able to choose whether to use credit and businesses are able to extend consumers credit. What I think is important is that perhaps we improve the means where consumers can get better educated on issues like how much credit is optimal?, or even how to fight back against debt collectors.

Senator Obama : I have to agree with Senator McCain on this issue. I think what the Senate Committee of Banking and Finance have done with regards to the credit card industry is very good. We have to ensure that credit card and finance companies provide more disclosure, eliminate fine prints and ensure they adhere to honest advertising. Consumers ultimately have to be responsible in how they use credit. When I was in college, I read brochures about tips for using credit cards. I can even tell you how we chose our credit card!

Home Finance Freedom : This question I have is this : Do anyone of you think that the mortgage tax deduction that we Americans have is distorting the housing market? Is this encouraging Americans to buys homes when they shouldn’t? Why should we get this tax break at all? This to me is an entitlement. In fact, because of the mortgage tax deductions, most Americans fall into what I call the debt free deception - housing myth. Most of us would be better off to pay off your mortgage and lose your tax deductions. For many people, buying is for suckers and why renting is the way to go.

Senator Clinton : The mortgage interest tax deduction has been around for a long time and the premise behind that is that we want to encourage home ownership among Americans. Home ownership is very much part of the American dream.

Mayor Guliani : Bear in mind that about 39% of Americans rent. Hence, I do not think the mortgage interest tax deduction distorts home prices.

Phil For Humanity : What are your thoughts on the recent sub-prime mess? What should regulators do to prevent such incidents again? Look at how Netbank has closed down. And what happens to property taxes of customers with bankrupt lenders?

Mayor Guliani : I honestly think in this situation, it is a new experience for every central bank and regulator. I’m pretty sure that regulators will look more closely at how banks mark to market their structured investments and also at sales practices by mortgage brokers. However, we have to let the market correct itself from any excesses. In fact, now may be the best time to purchase bank foreclosure properties.

Senator Obama : I can also show you a visual guide to finding HUD foreclosures

To laughter from the audience.

Flexo : One of the things that really alarm me is our budget deficit. Yes, we do have a war and I am really disappointed in Republicans who have not really kept an eye on spending. Yet, I am so concerned about the democrats love for social programs and the potential higher taxes that await us? This is probably a sweeping statement from me, but how would all of you respond to the huge budget deficit?

Senator McCain : I really think we have to go back to basics. I think the next administration and congress really need a budget you can stick to. And that means fiscal discipline. Yet there is the balancing act of making sure the economy grows.

Mayor Guliani : I always remember what my dad taught me about money, which is to never spend more than you earn. And I think we politicians have to get back to basics and all of you have to make us keep feeling guilty to spend money on anything. The budget deficit is simply unsustainable.

Senator Obama : I agree that we have to seriously figure out how to get out of debt?. The fiscal situation has gotten out of control. A big reason is obviously the war in Iraq. While we cannot rush a total troop withdrawal, we have to be extremely conscious about the fiscal situation.

Gather Little by Little : I would like to address this to the two Democrat Senators. Both of you mention about fiscal responsibility, but yet at the same time, both of you are proposing univeral health care. Who is going to pay for it? Wouldn’t that be already adding to our fiscal problems? Or is this an easy pitch to get elected?

Senator Clinton : The fact remains that 48 million Americans have no insurance and for such a great nation like ours, this is simply unacceptable. If the Canadians and Europeans can do it, shouldn’t we be able to provide health care for everyone?

Senator Obama : Our current system is broken and heath care inflation is running out of control. We have to make health care affordable again.

Mayor Guliani : I think we have to be very careful when we are talking about health care. There are no easy fix. But I suspect that every party has to accept certain changes to make our health care more affordable. I think incrememtal steps are needed in this area rather than a large sweeping move taking us into the unknown. It is also a question of uncovering the truths about needs and wants of the American people with regards to health care. I do not think we are willing to accept the sacrifices and consequences of a universal health care system.

Senator McCain : I’ll give you a few tips for getting low cost health insurance after this is over! But seriously, the proposals from the democrats fail to explore the shortcomings of the Universal system. Americans I think, do not have the patients to wait for their treatment as most patients in the Universal Health Care system do. Many of the 48 million also choose not to have insurance because costs are too high.

Senator Clinton : I question if is penny pinching really the road to wealth?. We also have to address the issue of fairness and equity of those who are less well off in our society.

Laughter from audience.

Free Money Finance : This is not a question, but just a comment and request. I am absolutely sick and tired of how partisan things get when a president nominates a supreme court judge. I get my fair share of strange interview questions, but the questions and scrutiny that a supreme court judge nominee has to go through is ridiculous.

Mrs Micah : This is another comment. But I am simply disillusioned by all politicians. Every campaign promise is never really fulfilled. They are just made to simply get votes. Even if you have the best intentions, the influence of lobbyist simply results in all of you selling and sucking your soul.

Chief Family Officer : Since President Bush passed his “no child left behind” scheme, I just wanted to get a perspective on how we are progressing as a nation. Where my family is, public schools are still not up to scratch. That is why we are sending our kids to private school. And man, you would believe what we’re giving up for private school and why.

Senator McCain : I think we are making progress on that front. Studies have shown that we are behind many countries, especially in the area of math. Progress will not be uniform across the board though.

My Wealth Builder : I’ve retired in my forties, but given the amount of student debt that students carry after the graduate, I think that early retirement may not be optional for twenty somethings. I question is how can we contain the inflation in education costs?

Money Walks : I would like to ask all of you how does your portfolio look like? An d what money lessons have you learned in your personal life?

Senator McCain : Firstly, in terms of attitude and metality, I thinkit is very important for us to understand why everybody should think like a CEO when it comes to their personal finance.

As far as investments goes, I have a money market account. Stop asking yourself do I need an emergency fund? Off course you do. You should start saving and let money build right away. I would not even waste my time day trading or any of that as I think that trading is for losers. Instead, I would learn how to pick an index fund with low initial investment.

Mayor Guliani : After what happened on 9/11, I would say that the first thing you have to do is to figure out how much life insurance do you need?

Once you have taken care of your emergency fund and your insurance (your back up plans), I would then educate myself as much as I can on personal finance and invest wisely. I recomend reading A weekend with Warren Buffet and other shareholders meeting adventure and lessons from Fire Finance top 100 pf blog list. Most important of all, be patient. Remember that the 1st Million is the hardest to make and that once you cross that hurdle, everything is much easier.

Always know in your mind the 25 mutual funds every investor should know. Somrtimes, the investments I don’t have is more important than what I have. As you get more affluent, consider a Roth IRA if you think you will be in the top tax bracket when you retire. Also consider hiring a financial advisor and do some advanced portfolio building

Senator Obama : If I had a personal finance time machine, I may do things a bit differently. With the internet and the explosion of different investmtent and money magazines, I would have educated myself a lot more when I was younger. But evolution of my online personal finance regimen has gone through a lot of changes. I now do all my banking online and enroll in various automatic bill payments.

Being Frugal when you are starting out in life after graduation is very important I think. You should always buy stuff you can afford. Do not follow the example of the US government! For example, I never have a car payment. However, you definitely want to be learning how to be a gazelle intense without going crazy. You also want to watch yourself and make sure you do not have the making of a cheapskate!

Senator Clinton : One of the most important things in my opinion is that you have to do the right things for yourself and your circumstances. Let me give you a few examples.

If you are in debt, you have to ask yourself if consolidating your debt is worth it? Only you can answer this question. Or if you have to file for bankruptcy, then learn to rebuild your credit score after bankruptcy. I even know people who sell coupons to pay for diapers! Bill even recently told me about the 3000 Mile Oil Change Myth. Even things like setting up a virgin prepaid cell phone or
prepaid electricity can save you money

Where you decide to live also has huge bearings on you finances. I can tell you it is definitely cheaper to live in Arkansas than in New York. If you are living in a high cost area, and moving is going to save you a ton of money, then consider doing it.

Communications and personal finance relationships is also very important. You have to be able to communicate your finances with your spouse or partner. This became very important for me since becoming the bread winner. Strive to become debt free and pass your personal finance tips to others. Remember, we all go through ups and downs and sometimes, you have to be looking at life from a stock market perspective!

Dough Roller : I would like to ask the four of you what are your favorite personal finance books? or at least what have you read in this arena?

Senator McCain : My favourites include 30 ways to use one hour to improve your finances by the The Simple Dollar, 5 things that can appreciate in value by Finandom.

Mayor Guliani : My favorites are free your inner spender, 10 tips for dealing with a lost wallet, and the tortured lives of Mr and Mrs Jones.

Senator Obama : My favorite personal finance book is 7 steps to a smooth car sale, how convertible bond arbitrage works (laughter). Yes, it’s true, I am really facinated by the financial markets. I also think that Benjamin Franklin is the original personal finance blogger.

Senator Clinton : My favorites include my son came across a pyramid scheme and is this really what we want to teach our kids?.

Mr Credit Card : We have finally come to the end of his fantastic Q&A. I would like to thank our guest who have taken their time to come here and answer questions from the personal finance bloggers, who along with being concerned with their own financial well-being, also care a lot about our nation’s finances. Thank you to everyone for participating. Thanks also to the Carnival of Personal Finance for organizing this event.

This entry was posted on Monday, October 8th, 2007 at 8:27 am and is filed under Carnivals. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

48 Responses to “Carnival of Personal Finance #121 - Columbus Day Edition”

The 121st Carnival of Personal Finance Says:
October 8th, 2007 at 8:58 am
[…] This week’s edition is hosted at Ask Mr Credit Card and included my controversial article Is pinching pennies really the road to wealth? Three really good reasons it’s not!. […]
mariam Says:
October 8th, 2007 at 10:02 am
Loved the creativity in the round-up! I LOLed how you seguewayed into the post titles. Nicely done! Thanks for the mention
Money Matters » Blog Archive » Carnival of Personal Finance #121 - Columbus Day Edition Says:
October 8th, 2007 at 10:34 am
[…] Original post by Mr Credit Card […]
glblguy Says:
October 8th, 2007 at 11:12 am
Very creative, can’t imagine how much time that took you! Thanks for hosting such a great carnival!
Dan at EverydayFinance Says:
October 8th, 2007 at 11:50 am
Wow, this is a great edition. Unique and tons of work I’m sure. Thanks for giving me the poll position; this was a first! Great job!

Dan at EverydayFinance
J at Home Finance Freedom Says:
October 8th, 2007 at 11:52 am
Hello. Your theme is a very interesting idea although I noticed that you promoted Guliani from mayor to governor.

Thank you for hosting my article, “The “Debt-Free” Deception: Housing Myths Part 8.”
The First Million Is The Hardest | Moolanomy Says:
October 8th, 2007 at 11:54 am
[…] This article was featured in the 121th Carnival of Personal Finance hosted by ASk Mr Credit Card. For more information please visit the Carnival of Personal Finance. Tags: compound interest, compounded growth, compounding, investing, million, millionaire, savingShare This […]
shawna Says:
October 8th, 2007 at 12:36 pm
Cool carnival! Thanks for including my post!
Flexo Says:
October 8th, 2007 at 1:13 pm
Thanks for hosting! This is a very creating Carnival!
Flexo Says:
October 8th, 2007 at 1:13 pm
Thanks for hosting! This is a very *creative* Carnival!
MillionDollarJourney Says:
October 8th, 2007 at 1:14 pm
Great carnival. Thanks for putting in the extra effort and the link back.
Carnival of Personal Finance » Carnival of Personal Finance #121 Says:
October 8th, 2007 at 1:22 pm
[…] The Columbus Day Edition of the Carnival of Personal Finance has been published at Ask Mr. Credit Card’s Blog. Today’s Carnival takes the form of a discussion between the leading presidential candidates: McCain, Giuliani, Obama, and Clinton. […]
2007 News Archive | Moolanomy Says:
October 8th, 2007 at 2:37 pm
[…] 10/08 - Please visit Ask Mr Credit Card for the 121th Carnival of Personal Finance. […]
rocket finance » Blog Archive » Carnival of Personal Finance #121 Says:
October 8th, 2007 at 2:49 pm
[…] The latest installment of the Carnival of Personal Finance is up at Ask Mr. Credit Card. Mr. CC gave the carnival an election flavor - even though we are over 12 months away from the presidential election. Doesn’t it feel like we should be voting this November? […]
Matt Wolfe Says:
October 8th, 2007 at 3:52 pm
Thanks for hosting. I really like the creative way that you posted the carnival.
Exjackly Says:
October 8th, 2007 at 4:03 pm
Carnivalof Personal Finance #121…

Ask Mr Credit Card hosts the 12st Edition of the Carnival of Personal Finance this week. He does something a bit different, posing the carnival as a presidential debate, linking in personal finance blogs and posts throughout. Very creative and well…
The Financial Blogger Says:
October 8th, 2007 at 4:28 pm
Great job!
Very well done, thx for hosting!
Eric Says:
October 8th, 2007 at 5:25 pm
Really enjoyed how you put this post together. That must have been a huge amount of work! Excellent job and thanks for including our post!
Patrick Says:
October 8th, 2007 at 5:47 pm
Very nice job putting this carnival together. Had I know this week’s version would be a political one, I would have submitted the article I wrote about Hilary’s Baby Bonds being a bad idea!
Finance Spot » Archive » Late breaking news Says:
October 8th, 2007 at 6:07 pm
[…] Carnival of Personal Finance #121 - Columbus Day Edition […]
Frugal Dollar Says:
October 8th, 2007 at 6:42 pm
Wow- that was so great! Thanks for all your hard work and effort and many thanks for including my post!
FIRE Finance Says:
October 8th, 2007 at 9:22 pm
This is such a creative and beautiful presentation! Thanks for all the hard work and mentioning our post. Keep up the great job!
Cheers,
FIRE Finance
Kay @ Don't Mess With Taxes Says:
October 8th, 2007 at 11:35 pm
Very inventive and informative! Thanks for hosting.
Brip Blap Says:
October 9th, 2007 at 1:36 am
Interesting way to present the carnival! I’m glad Obama agrees with me about Ben Franklin - I was curious about his position on that. Thanks for the including me!
www.bestfinancialadvisor.info » Carnival of Personal Finance #121 - Columbus Day Edition Says:
October 9th, 2007 at 2:22 am
[…] Mr Credit Card wrote a fantastic post today on “Carnival of Personal Finance #121 - Columbus Day Edition”Here’s ONLY a quick extractI would like to thank our guest who have taken their time to come here and answer questions from the personal finance bloggers, who along with being concerned with their own financial well-being, also care a lot about our nation’s … […]
Chief Family Officer Says:
October 9th, 2007 at 3:59 am
Thanks for hosting such a fun carnival!
John Says:
October 9th, 2007 at 4:10 am
WOW. Great post and highly creative.
The Digerati Life Says:
October 9th, 2007 at 7:14 am
Very interesting as usual. I sense an interest in politics (just like the digerati spouse). Thanks for this great carnival!
» carnivals roundup brip blap: learning how to manage life, family, career, personal finance, productivity, self-improvement and health Says:
October 9th, 2007 at 9:52 am
[…] Ask Mr. Credit Card hosted the great big Carnival of Personal Finance #121. My post on Ben Franklin was included, and there were - as usual - a lot of great articles there. One Girl’s Quest post on If I Had a Personal Finance Time Machine has one really shocking number in it - I was thrown for a loop. JVW from The Good Life On A Budget has a good post on Is This Really What We Want To Teach Children? I hate to say it, but this is just the tip of the iceberg. Monopoly is bad enough, but you can throw in TV, watching mommy and daddy use the credit card, and on and on. I came across this blog via Lazy Man and Money a few days ago, and I agree with his assessment - it’s an interesting blog, and worth checking out. […]
Thrifty Penny Says:
October 9th, 2007 at 12:22 pm
Very clever presentation!
I’ll be hosting the Carnival of Personal Finance next week at Mighty Bargain Hunter Says:
October 10th, 2007 at 3:00 am
[…] The submission form is here. If you haven’t already caught this week’s carnival, it’s here. […]
Money Blue Book Says:
October 10th, 2007 at 3:44 am
I like the format! Lots of interesting articles to read.
-Raymond
Carnival of Personal Finance » Carnival of Personal Finance #121 Editor’s Choice Says:
October 10th, 2007 at 4:02 am
[…] Ask Mr. Credit Card followed up the 121st edition of the Carnival of Personal Finance with his picks for Editor’s Choice. […]
NCN Says:
October 10th, 2007 at 1:25 pm
Great job… but where’s my favorite libertarian, Ron Paul?
NCN
Property Taxes, Finance and Ethics, The Private School Debate @ The Carnivals Says:
October 10th, 2007 at 2:07 pm
[…] Property Taxes, Finance and Ethics, The Private School Debate @ The Carnivals By Silicon Valley Blogger I’ve got time for a quick roundup of great carnival articles. The Carnival of Personal Finance #121 - Columbus Day Edition was held at Ask Mr. Credit Card and was nicely presented as a Q & A segment among our leading presidential candidates. From the animated dialogue by the candidates, these stories emerged: […]
carnivals this week : plonkee money Says:
October 10th, 2007 at 8:34 pm
[…] I contributed ‘prepaid electricity and saving money‘ to the carnival of personal finance hosted in a spectacular political debate by ask mr credit card. Other great posts include: […]
Carnival Roundup: Week of October 8th at Clever Dude Personal Finance & Money Says:
October 11th, 2007 at 10:02 am
[…] First up, the Carnival of Personal Finance #121 hosted by Ask Mr. Credit Card: […]
Link love for the Carnival of Personal Finance #121 | Money Relations - Finance and investment blog. Says:
October 11th, 2007 at 11:50 am
[…] I recently participated in the Carnival of Personal Finance #121 - Columbus Day Edition hosted by Mr. Credit Card. He did a wonderfully creative job by linking all the posts in the form of a Q&A session for the US presidential candidates. My submitted post, The Tortured Lives of Mr and Mrs Jones, was named a favorite of “Ex-Mayor Rudy Giuliani”. Poor Mr. Credit Card just probably had a hard time fitting the title in […]
The Carnival Review #6 : A Penny Closer Says:
October 11th, 2007 at 4:32 pm
[…] Carnival of Personal Finance #121 was held by Ask Mr Credit Card. We are honored to have made editor’s choice this week with Eric’s article on choosing our credit card. […]
Carnivals And Festivals For The Week of October 8 2007. | My Two Dollars Says:
October 12th, 2007 at 4:30 pm
[…] Carnival of Personal Finance #121 at Ask Mr. Credit Card, where my post “Moving Is Going To Save Us A Ton Of Money And Improve Our Quality Of Life.” was included. […]
The Dough Roller Roundup (Attending 15 Year College Reunion edition) | The Dough Roller Says:
October 12th, 2007 at 8:13 pm
[…] Carnival of Personal Finance @ Ask Mr. Credit […]
Saturday LinkStuff Says:
October 13th, 2007 at 3:55 am
[…] Mr. Credit Card hosted the Carnival of Personal Finance #121 and […]
Weekly Carnival Roundup — The Baglady Says:
October 13th, 2007 at 7:14 am
[…] Carnival of Personal Finance #121 at Ask Mr. Credit Card – This carnival was written as a presidential candidate debate. It was very creatively hosted. I especially enjoyed Exjackly’s article on How to Live on Mininum Wage. I once saw a show by the same guy who documented eating McDonalds for 30 days and he tried to live on minimum wage with his girlfriend, and his conclusion was that it’s ridiculously hard. He even added his nephew into the experiment so that it seems he and his girlfriend has a child. It was kind of bizarre to watch. […]
The Financial Blogger | Financial Ramblings Says:
October 13th, 2007 at 11:06 am
[…] It was another busy week over financial carnivals. Carnivals have definitely helped my blog grow over the past months. This week, Ask Mr. Credit did an amazing job hosting the Carnival of personal finance Columbus day edition, My Retirement Blog presented The Festival of Frugality, Business Pundit took care of the Carnival of the Capitalist while Moolanomy did a great job with the Carnival of debt reduction. Here’s my top three for this week: […]
Our New Puppy / Carnivals | How I Will Be Rich Says:
October 13th, 2007 at 3:01 pm
[…] I also wanted to point out that this week we were featured in the Carnival or Personal Finance taking place over at Ask Mr. Credit Card. There are a ton of great posts from a ton of great blogs participating. Go check some of those out. […]
Millionaire Mommy Next Door Says:
October 13th, 2007 at 6:30 pm
Thanks for doing such a fabulous job of hosting! I’ve linked back to the carnival in my Grow Your Money, Grow Your Life (Weekly Roundup) at:
http://millionairemommynextdoor.blogspot.com/2007/10/grow-your-money-grow-your-life-weekly_13.html
» Carnivals - Week of 10/08/07 @ fivecentnickel.com Says:
October 14th, 2007 at 3:39 am
[…] The Carnival of Personal Finance included “Ten Tips for Dealing With a Lost Wallet.” […]
Links Sunday and Reminder For HP SD Card Reader Giveaway | Personal Finance Blog by Money Ning Says:
October 14th, 2007 at 6:46 pm
[…] Carnival of Personal Finance […]

Carnival of Personal Finance #121 - Columbus Day Edition

2007-10-09T04:57:00.000-07:00

Let us now begin.

Bewildement from the audience.

Mayor Guliani : Bear in mind that about 39% of Americans rent. Hence, I do not think the mortage interest tax deduction distorts home prices.

Phil For Humanity : What are your thoughts on the recent subprime mess? What should regulators do to prevent such occurances again? Look at how Netbank has closed down. And what happens to property taxes of customers with bankrupt lenders?

Senator Obama : I can also show you a visual guide to finding HUD foreclosures

To laughter from the audience.

Senator Obama : Our current system is broken and heath care inflation is running out of control. We have to make health care affordable again.

Senator Clinton : I question if is penny pinching really the road to wealth?. We also have to address the issue of fairness and equity of those who are less well off in our society.

Laughter from audience.

Money Walks : I would like to ask all of you how does your portfolio look like? An d what money lessons have you learned in your personal life?

Senator McCain : Firstly, in terms of attitude and metality, I thinkit is very important for us to understand why everybody should think like a CEO when it comes to their personal finance.

Mayor Guliani : After what happened on 9/11, I would say that the first thing you have to do is to figure out how much life insurance do you need?

Senator Clinton : One of the most important things in my opinion is that you have to do the right things for yourself and your circumstances. Let me give you a few examples.

Dough Roller : I would like to ask the four of you what are your favorite personal finance books? or at least what have you read in this arena?

Senator McCain : My favourites include 30 ways to use one hour to improve your finances by the The Simple Dollar, 5 things that can appreciate in value by Finandom.

Mayor Guliani : My favorites are free your inner spender, 10 tips for dealing with a lost wallet, and the tortured lives of Mr and Mrs Jones.

Senator Clinton : My favorites include my son came across a pyramid scheme and is this really what we want to teach our kids?.

Protect your home with good insurance

2007-10-09T04:55:00.001-07:00

October 7, 2007

By KAREN PAUL

There is beauty in this life. We just need to take the time to see it.

Yesterday I took a drive to see an old friend. My journey took me off Route 2, driving on dirt roads only the locals know. Surrounded by crisp hues of crimson, burnt ochre and hints of yellow reminiscent of a summer sun at dusk, I found myself cradled by Vermont's most breathtakingly scenic time of year. Amidst the lifeless leaves that embraced me with lively color, I remembered why I live in Vermont. On an overcast dreary day, I sometimes forget.

Once I arrived at my friend's home, the beauty did not end. There was more. Now we have all gone to see friends and enjoyed their homes.

This visit was different.

Two years ago, I traveled to see my good friend and what I saw when I arrived could not have been accurately understood through photos or verbal explanation. Two days before, my friend had lost his home in a fire.

Walking through a field in rural Vermont, standing before the shell of a dwelling once held dear by its owners, I felt chills advance through my body as my heart tried to fully appreciate the weighty look on my friend's face. As we gingerly trod through burnt wood and the melted metal that had been the support beam over the cook's kitchen I had often admired, I began to develop an elementary understanding of what losing everything truly means.

Perhaps you have wondered what if? What if I have a fire in my home and everything is lost? How would I fare in the event of such a loss?

Whether you have ever pondered what you would do in a disaster, there is no time like the present to evaluate your insurance coverage. If you are a homeowner, protecting what is often your most valuable asset is paramount. There are different kinds of home insurance policies. There are four types that are most common. The most basic or HO-1 policy covers what are called 11 types of "perils." They are fire, windstorm or hail, explosion, riot, aircraft, vehicles, smoke, vandalism, theft, damage by glass and volcanic eruption. (Ok, so the last one is a bit far-fetched unless you live near Mount St. Helens or in Hawaii.)

An HO-2 covers all the previous 11 perils as well as falling objects, weight of ice and snow, water damage and electrical surge damage. An HO-3 covers all that a HO-2 covers plus other perils not specified in your policy, except for flood, earthquake, war and nuclear accident. There is also a policy for older homes that covers repairs and actual cash values, not rebuilding costs. Most homes are covered by HO-2 and HO-3 policies.

When reviewing your policy, take particular note of these features:

Make sure your policy covers the replacement costs of your personal property and your home's structure and interior. Please keep in mind that market value is not usually anywhere near your replacement costs. Your personal property may decline in cash value but replacing your belongings could prove very costly.

Look for a policy with an inflation adjustment so the replacement cost keeps pace with the overall level of price advances. Never underestimate the value of inflation on the erosion of your dollar over time.

Of course, no insurance policy will cover 100 percent of your replacement loss. Unfortunately, such a policy would invite a great deal of fraud on the part of the unscrupulous. Most policies insure your possessions at 50 percent of the value of your dwelling. Thus, if you insure your home at $200,000, your possessions are insured at $100,000. Take a look around your home. Do you have antiques, gifts that are valuable, a larger than usual amount of clothes, tools or sporting equipment? It is possible to increase your content coverage to 75 percent with some limits on some property.

This weekend, while it is still fresh in your mind, take out your video camera or borrow one from a neighbor and go room-by-room and videotape the contents of your home. Talk through it about the highlights in each room, any items of particular value that may not appear to have such a value and give detail whenever possible. This should take maybe 30 minutes but it can really help.

Collect receipts of items of value and store all these records anywhere but your home.

Consider where you will live should your home be gone or unlivable. Be sure to have a "loss-of-use" provision in your policy. That coverage level can be as much as 40 percent of your home's insurance. In other words, your $200,000 would give you $80,000 in coverage which would include temporary housing. Depending on the extent of your loss, settling with the insurance company and rebuilding your home can take a year in some cases.

Over the past 18 months, I witnessed my friend's loss test the foundations and endurance of his being. Yesterday, my friend graciously and with pride showed me his new home, room by beautiful room. Fortunately, he had not only adequate insurance but receipts for many items in his original home. Having adequate insurance and doing your "home" work today can prove priceless in the event of an unfortunate tomorrow. Out of despair and doom, hope and beauty can happen.