Fix your finances
BANKING:
Put your savings on autopilot – There is less to think about when you transfer cash automatically to savings and investing accounts.
Ingredients:
• Internet access.
• A bank account for receiving your paycheck.
• A savings account or money market fund, a brokerage or mutual fund account, and routing numbers.
Instructions:
• Sign in to your bank account, and click on “transfers.”
• Set up a recurring transfer to a savings account or money fund for your emergency cash.
• Set up another to your brokerage or mutual fund account to build your investments.
Total time: three minutes.
Set up credit card payment alerts
Those $39 late fees add up. In 2009, banks collected more than $19 billion from procrastinating cardholders.
Ingredients:
• Internet access.
• A user ID and password.
Instructions:
• At the American Express website, for example, log in, and then choose “See Account Management Options.”
• Click on “Update Account Alerts,” and check “Payment Reminder.” The reminder can be from one to 10 days before the due date. (The process is similar at other card websites.)
Total time: seven minutes, including registering the accounts.
Stop bouncing checks and paying nuisance fees
Charges can be as high as $38 for each time you overdraw your account. Banks raked in $38 billion from such fees in 2009.
Ingredients:
• Internet access.
• Social Security number.
• Bank account number.
• Other personal information.
Instructions:
• Go to your bank’s website and select “overdraft protection.
• Click to link to a savings or money market account. That prevents you from bouncing a check and costs less.
Most banks also let you sign up for an alert that warns you when your balance approaches a specified level.
If you need to open the account you’re linking to, a bank representative may call later.
Total time: 11 minutes to sign up for both the alert and the linked account.
IDENTITY THEFT AND CREDIT MONITORING:
Get your credit scores
Good scores and a good credit history can get you a great loan rate. A bad record could keep you from getting one at all.
Ingredients:
• Internet access.
• Social Security number.
• Date of birth.
• Address.
Instructions:
• Go to AnnualCreditReport.com, select your state, click on “Request Report” and provide the information requested.
• You’ll be guided to each of the three major credit bureaus’ sites to answer a few more questions.
Each bureau gives you the option to get a credit score (for $7.95) with each report (free every 12 months).
Total time: 13 minutes.
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Family shocked by $18,000 phone bills
Verizon says the rules were clear, but the FCC is looking into the ‘unpleasant surprises’ that customers sometimes face. When the St. Germains of Massachusetts got their cell phone bill, they thought surely there had been a mistake. The bill that month for the family, normally about $100, was more than $12,000. When Bob St. Germain called Verizon Wireless to inquire, he was told that the next month’s bill would be nearly $6,000.
Verizon explained that when the family had renewed its two-year contract, a free data download promotion had ended. Not realizing the service had changed, Bryan St. Germain, then a college student, downloaded 816,000 kilobytes of data the first month and 375,000 the second. Thus, their total bill for two months was nearly $18,000.
I downloaded 1.19 million kilobytes last month. It cost $29.99. That’s Verizon’s monthly charge for an unlimited data plan for my smart phone. Two months would be $59.98.
We don’t know what a data plan cost in 2006, but if it was free for two years, it must not have cost the company $12,000 a month. Even if the St. Germains were 100% at fault, should making a mistake with your cell phone plan cost more than a new car?
Verizon argues that the charges were clearly spelled out in the family’s contract. “We go to great lengths to educate our customers on their products and services so that they avoid any unintended bills,” two Verizon spokesmen wrote in an e-mailed statement to the Globe.
After the story was published, Howard Waterman, the executive director of public relations for Verizon Wireless Northeast Area, wrote to The Globe: “This story paints an inaccurate picture about the clear disclosure of calling plan information we provide and neglects to include any of the many tools available to our customers to help manage their accounts.”
The Federal Communications Commission isn’t sure that’s enough. Partly in response to the Globe report, the FCC launched an initiative on “bill shock” this week, asking for public comment.
The St. Germains’ situation is not the first case of a wireless costumer unwittingly running up an enormous bill, with Verizon and competing carriers. One man reported being charged $62,000 for downloading a movie while traveling in Mexico. Many families have stories of unexpected bills in the hundreds of dollars for in some way going outside the parameters of their plans.
We Americans love our cell phones, but we hate our cell phone companies. The complexity of plans, the ever-changing nature of the rules and technology and what passes for customer service seem to make us all victims of the worst of “gotcha” capitalism.
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How insurers know if you’re lying
After many decades of being on the receiving end of customer scams, the insurance industry is on to you. And now that the sagging economy is leading to more attempts to score free money with fraudulent insurance claims, insurers are becoming more vigilant. A well established list of red flags, known to insurance insiders as “suspicious loss indicators” help the industry zero in on potentially bogus claims.
Why care if your neighbor is scheming?
Insurance fraud is big business in the United States. Fraud exceeds $40 billion a year, according to FBI statistics. You pay that price in the form of higher insurance premiums, which cost the average family $400 to $700 annually. Fraud bureaus around the country reported a spike in the number of fraud cases in 2009 compared with the previous year, according the Coalition against Insurance Fraud.
That’s suspicious!
Since its creation in 1992, the crime bureau has developed 23 “suspicious loss indicators.” In 2009, the bureau’s 1,000 member organizations which include insurance companies, self-insured organizations and transportation-related businesses, including car rental companies, made about 143,000 requests to the bureau for help assessing suspicious claims.
• High debt or financial distress on the part of a claimant, detected by insurance company investigators through forensic accounting.
• Adding or increasing home insurance or business insurance coverage shortly before damage or theft occurs.
• Lack of police reports.
• Damage or theft of old, obsolete items or inventory, or of multiple family heirlooms for which it’s difficult or impossible to establish accurate value.
• A history of losses and previous claims.
• A claimant who’s unusually calm after a major loss.
• Suspicious-looking or handwritten receipts for repairs or replacement of covered property.
Arson alert
The National Fire Protection Association estimates that 300,000 intentional fires occur in the United States each year, causing 400 to 500 deaths and $1 billion in property damage. But only 5% to 7% of arson offenses result in convictions, according to the FBI. The U.S. Fire Administration says these are signals that a fire should be further investigated:
• It occurred during a renovation or to a structurally damaged building.
• Valuable or sentimental property, personal items, important papers or pets were removed from the premises.
• There are no accidental or natural causes at the point of origin.
• There’s an unusual presence of combustible materials or multiple separate fires.
• The fire started immediately after a family argument or shortly after family members left the premises.
• The fire spread unnaturally or caused excessive damage.
• Firefighters’ access was blocked by vehicles or by contents pushed up against entry doors.
• The homeowner’s movements are unaccounted for.
• The value of damaged items seems improbable, given the policyholder’s income.
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5 tax myths that can cost you money
Our culture is full of myths. And our tax system is full of myths, half-truths and untruths that can cost you big bucks if you don’t understand the rules.
So let’s have a look at some of the bigger myths about taxes.
Myth 1: Students are exempt Lots of people believe there’s an exemption for students that excludes them from tax. There’s no special tax status afforded to students. They are subject to tax on all their income, regardless of how many credits they’re taking or whether or not they’re fully matriculated. Students do get special tax credits, the Lifetime Learning Credit and the new American Opportunity Credit, which has replaced the Hope Credit for 2009 and 2010.
Myth 2: My child is working, so I can’t claim him as my dependent
As long as you provide more than half that child’s support and meet other qualifications such as citizenship and relationship, the child qualifies as your dependent, and you can deduct, for example, all the medical costs you paid for that child. Remember, support is what’s spent, not what’s earned.
Myth 3: I’m over age 55, so I can sell my house tax-free
Wrong again, graybeard! You’re thinking old law.
It used to be that if you were older than 55, you could exclude as much as $125,000 in gains from taxes, but only once. Now the rules are even better.
Under current law, age no longer matters. If the property sold was your principal residence for at least two out of the last five years, you can exclude from tax as much as $250,000 in gain and $500,000 in gain on a joint return.
Your age is irrelevant, and you can take the gain exclusion every two years if you qualify.
Myth 4: I can deduct my sales taxes
This one was once up there with the Loch Ness monster, but the deduction has made a comeback of sorts.
Starting in 2004 and renewed through the 2009 tax year, you can deduct either your personal sales taxes or your state income taxes from your federal income return, but not both.
Myth 5: I’m married, so I have to file a joint return
Again, not true. If you’re married, you can always file “married filing separately.” That normally results in you having to pay more in taxes. But in some situations, it can be to your advantage.
For example, if one spouse has substantial medical or miscellaneous deductions, those deductions are subject to the 7.5% and 2% floors, respectively.
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The Total Money Makeover by Dave Ramsey
This book is absolutely essential for those who want to get started on the path to financial freedom. If you are up to your neck in credit card debt and struggling with pay check to paycheck living, this easy to read book by famed radio and TV talk show host Dave Ramsey was written for you. In this book, he talks about the importance of taking baby steps through his system of working hard, paying what you owe, and staying out of debt. Ramsey is an anti-credit preacher and is constantly imploring his readers to use cash for everything. If you are struggling with debt, you will want to take a look at the Dave Ramsey snowball debt payoff method. The snowball debt repayment method is not the most mathematically logical way to pay off debt, but it harnesses the power of human behavior and personal motivation to accomplish its debt free ends.
The book is sprinkled with many of Dave Ramsey’s own personal and devout Christian morals and practices, but even those who are not overtly religious can still appreciate his advice and recommendations such as adopting a “gazelle intensity” behavioral system to stay ahead of the financial game. The Total Money Makeover is very inspirational and not technical, definitely an easy read.
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HELP! I’m drowning in Debt
Finally, we have to ask you the obvious. Have you tried to cut your expenses? Why not track your spending for a few months, then see what you can eliminate. This is probably the quickest avenue to debt reduction.
Choosing a Debt Counselor
Finding a good credit-counseling program can be a bit tricky. After all, it’s not something you’d want to bring up with colleagues around the company water cooler. That means you’ll have to do the legwork on your own. But there are a few things to keep in mind to make the task easier and less fraught with disappointment.
First, look for a nonprofit firm. You’ve spent too much already, why pay more now? Nonprofits get most of their funding from creditors, not you. Privacy isn’t usually an issue, but it’s wise to check what the agency’s policy is. Make sure they don’t sell your information. Also, check the enrollment and monthly fees. According to the Association of Independent Consumer Credit Counseling Agencies (AICCCA), many ask for only a nominal fee to enroll, capped at $75, and a monthly fee of up to $50. In the past, a few unscrupulous agencies were known to charge the full amount of your monthly debt payment, plus an additional 10% each month, according to the AICCCA. Neither the AICCCA nor NFCC groups charge the latter. Such excessive charges have been largely wiped out by IRS regulations and updated state laws.
Second, find out upfront exactly what services you’ll receive, such as counseling, a debt-repayment plan and budgeting advice. The more services, the better. You might want to have them put it all in writing and send you the information before you proceed.
And ask if the organization belongs to any professional groups, such as the NFCC or the Better Business Bureau. Have them explain how they’re audited and if your funds are protected. After all, you’re sending them your money.
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Knee Deep in Debt
Myth: I can get quick debt help over the phone or Internet.
Truth: True debt help is not quick or easy. It starts in the mirror with you.
Most people don’t know that financial planners make almost all of their money by selling you a product such as life insurance or mutual funds, instead of spending time counseling you. They’re not evil; they just don’t get paid to help you get out of debt.
You are the problem with your money. The financial channel or some tape sets aren’t your answer; you are. You are the king of your future.
Developing a Budget:
The first step toward taking control of your financial situation is to do a realistic assessment of how much money you take in and how much money you spend. Start by listing your income from all sources. Then, list your “fixed” expenses — those that are the same each month — like mortgage payments or rent, car payments, and insurance premiums. Next, list the expenses that vary — like entertainment, recreation, and clothing. Writing down all your expenses, even those that seem insignificant, is a helpful way to track your spending patterns, identify necessary expenses, and prioritize the rest. The goal is to make sure you can make ends meet on the basics: housing, food, health care, insurance, and education.
Your public library and bookstores have information about budgeting and money management techniques. In addition, computer software programs can be useful tools for developing and maintaining a budget, balancing your checkbook, and creating plans to save money and pay down your debt.
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Maintaining as a MIlitary Family- Managing a Move
This is a new series of the blog titled “Maintaining as a Military Family”. A little about me…I go by codename Di and have joined the ranks of the fab bloggers for debthelper.com. My goal is to add some insight into what a Military Family does to “get by” and SAVE!!
Military life can be excruciatingly painful on the wallet. My husband joined the Army in the lowly (but highly respectful) rank of Private 14 years ago. We had children young (not uncommon within our Military communities) and therefore money was TIGHT. Relying on one income was almost unbearable. One of the biggest expenses is when there is a Permanent Change of Station (PCS or what normal people call relocating). Most Military Families have traveled and spent time overseas. This was the beginning of our journey, but not before I had to stay behind with our daughter while he went away to “Army school”. We could have rented an apt near his school and collected minimal Basic Allowance for Housing (BAH), extra pay based on location, rank and years in service. However, this was never enough to cover all the expenses (utilities, incidentals, etc). So, we did what would save us the most money and I moved in with my mother for 3 months. While this is not ideal…it allowed us to actually earn money (Basic Allowance for Housing is a benefit no matter where you live). The way to manipulate this situation in order for everyone to be happy is pay your Family or friend, with whom you shack up with, a portion of what you receive and stash the rest for your upcoming move (there always an upcoming move in the Military).
Moving is quite expensive and the Military does a pretty good job of covering all the basic expenses…AFTER you get to your new location. Reimbursements are always a killer for young people starting out in their career because it requires you to come out of pocket ahead of time. The best way to tackle this problem is to plan your move. MilitaryOneSource.com has up to the minute info on all things Military…preparation and planning is their purpose. Once a person is aware of the upcoming expenses, the bottom line doesn’t seem as scary. If flying overseas is how you will relocate, there isn’t much to control or decide as far as actual travel. Hotels stays before & after the flight, rental cars and food costs are the main expenses of a move that are controllable. I always use coupons and ask what kind of discounts there are…there’s usually always a coupon online or a discount offer at hotels, just ask.
Here are some sites I use when traveling (during a move or not):
http://www.retailmenot.com
http://www.hotels.com
http://www.destination360.com
http://www.roomsaver.com/
http://www.hotelcoupons.com/
http://www.valpak.com
http://www.savings.com/c-Restaurant-coupons.html
The obvious Orbitz, Travelocity, and Expedia are first choices for airfare, rental cars and hotels, but my personal fave is Hotwire. They have the best prices and package deals, plus they are fair when it comes to disputes and customer service. (I once booked a sport utility vehicle for a week and when I showed up there were only vans, which would have sufficed. I did call Customer Service to ask them about the difference in pricing and they refunded me HALF of my fee for the week.) Asking for a discount makes a big difference sometimes.
Moving also requires you to go through all that “junk” lying around in the garage or attic. One of the benefits for me when it comes to moving is that I am motivated to purge….my old stuff that is. There are several things you can do with that old jewelry box or winter coat…all WHILE earning money.
Have a yard sale without even leaving your home
Rent a booth at a flea market and sell your heiny off (beware of hagglers)
Find your nearest consignment shop and let them sell your stuff (my fave)
Donate to the thrift store or Goodwill (and get a tax deduction)
Someone is bound to love that wicker basket you are sick of.
Overall, my best advice is to begin saving the MINUTE you join the Military (more on that later). Moving is just one of the many expenses you will incur in a lifetime. Don’t even get me started on the surcharge for kids.
We’ll save that for next time…
Latest in Financial News
Keeping up with the latest in financial news can be a hassle. It is important if you want to keep a step ahead of debt or other financial troubles but it can often seem like too big of a task to manage on your own. If you are the type of person who reads multiple newspapers every day, then the good news is that you should be reasonably up to speed on things. If you don’t read the newspaper daily and just rely upon word of mouth, though, then chances are that you may be falling behind on things.
So let’s fix that. Down below is a list of current hot button financial issues and decisions currently being debated. Whether it is debt, student loans, or car recalls no information is too small to be overlooked by the savvy and smart consumer.
Toyota: The media coverage which the company has been under for the past month has been overwhelming. By now, most Americans know that Toyota cars have dangerous problems with them (uncontrollable acceleration being the biggest concern) and their faith in the automotive giant has been shaken.
But are you also aware that now is the best time to buy a Toyota vehicle from a financial point of view? Toyota is currently offering the highest discounts on its vehicles in its entire history. If you think that Toyota has fixed the problems with its vehicles or you are just a person looking for a good deal, then check Toyota’s offer out. Toyota vehicles get great gas mileage, something which should help you save even more money in the long run should you choose to purchase one (barring accidents, of course). And before this current crisis, the Toyota brand was thought to be one of the safest on the road.
Student Loans: Student loans and governmental grants may be in for a big change. Congress is currently contemplating legislature that would allow it to cut out the “middlemen”, or contractors, who usually dole out the governments allocated student education money. They hope that by doing so more students will receive the funds that they need in order to attend college.
Good News: If you are a college student or are currently supporting a student’s education, then there is a good chance that you will be able to save money. The government getting directly involved will mean more money for you and less for the people that you talk to in order to get it. Bad News: If you work for a company that used to be in the business of giving out government grants, then you are looking at tough times. Local economies in places like Nebraska (where many of these companies are located) will also be hit by this. And finally, because the federal government is getting involved, be prepared for more forms – not fewer.
A final bit of news is that Congressional Democrats are trying to merge the student financial aid bill with the Health Care Bill. Because the financial aid bill is a popular congressional motion that many senators and representatives do not want to vote against, the Democrats believe that merging the two will gain the Health Care Bill the votes that a Reconciliation move (which is a way for Congress to forcibly pass a bill through in such a way as to make it impossible to filibuster or delay) would require.
Debt: What about it? Debt is the same as always. People get into financial trouble, find themselves with no credit left, and think themselves to be powerless to change things. But that is not true. Thanks to the current economic crisis, companies and experts on debt management have sprung up right and left. Debt, credit, and financial aid groups have advertised like never before in order to get you to use their services. Many of these groups are good at what they do, but there is always one or two that just want to take your money.
But don’t let this stop you. If you are in trouble financially and are thinking about declaring bankruptcy, experts are nearly a must have. They can keep the creditors off of your back and help you to get yourself financially stable again. While you might be able to do it on your own, it is incredibly difficult to do; you will have to learn a massive amount of new information while at the same time cutting back on things and/or earning more money.
If you are in debt, need a reverse mortgage settlement, or require some other form of financial advice then please, seek help immediately! Reliable groups such as debthelper.com (a non-profit debt help organization) are around because of debt related problems. It is quite literally their job to help people at the end of their rope.
The Economy: Is the economy improving, getting worse, or doing neither? Well, in a nutshell it is doing all of the above. Major sectors of the economy (such as retail) have seen recent improvements, but signs are indicating that these improvements are temporary. According to a Reuter’s article, experts claim that the current economic recovery will slow down this summer, with job losses also slowing down by that time.
Good News: Currently, the U.S. economy is doing better. Businesses are choosing to not fire employees in fear of continuing problems. And companies are hiring temporary workers, allowing people who are currently unemployed the chance to jump back into the job market.
Bad News: While it has slowed, the loss of full time jobs is still continuing. Additionally, with things unlikely to get dramatically better anytime soon, companies are cautious about hiring new full-time workers. We may have hit and begun to climb up from rock bottom, but we are still a long way off from the top of the mountain.
If you read this post and found it useful, then feel free to leave a comment. Advice, questions and criticism are both appreciated and encouraged. Speak up and let your fellow readers know what’s going on!
Additional Links:
Reuters Economic News Article
Reuters Report on Toyota Discounts Article
New York Times Economic News Article
New York Times Student Load/Health Care Bill Article
Blog Post on Student Loans: Linked Here
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