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Date: Thursday, 18 Feb 2010 23:06

It’s important to be alert to the fees you’re being charged for retirement accounts products such as IRAs and 401ks. Just a few tenths of a percentage point in fees can mean a difference of tens of thousands of dollars in retirement. You can test out other scenarios using our rollover calculator.

401k fees are notoriously difficult to find out and understand, because many of them are rolled into ‘program administration costs’. There’s talk of legislation that will require these fees to be more transparent.

The fees for your IRA account are easier to find out about, though no less complex.

There are two main categories of fees – fees charged by the IRA provider and fees charged by the funds/products you buy within the IRA. Remember, an IRA is like a shield. You can buy a mutual fund in an IRA, or in a regular taxable investment account, but the things you put within it have special tax status. So you’ll usually pay some fees for the shield (the IRA) and some fees for the investements themselves.

1) Fees charged by the IRA provider

Opening fees – The fee to open the IRA. Most discount brokerages don’t charge anything for this – after all, they want your business. If you’re opening an account at a brick and mortar institution, watch out for this one.

Annual fees - This is a fee for each year you have the account open. It might be 0, and if not it’s usually waived once your balance gets high enough – check with your provider.

Closing fees – If you move your IRA to a different provider, you’ll be charged a closing fee. Most brokers charge this – but check with your new provider, because they might reimburse you for the cost.

2) Fees charged for the funds within the IRA

Trade commissions – this is the charge to buy and sell things traded on a stock exchange. within the account. You’ll pay this each time you buy shares of a stock or exchange traded fund, but then you won’t have any ongoing charges. Some brokerages have different fees for different fund types.

Fund Load - this is the upfront cost of buying a mutual fund – like a sales commission. You can avoid this cost, which can be as high as 5%, by looking for ‘no load’ mutual funds.

Expense ratio - this is the annual cost of owning a particular mutual fund, expressed as a percentage. So a 1% expense ratio means that 1% of the fund assets are used for expenses. This cost is charged every year and can have a huge affect on your earnings, so try to keep it as low as possible – look for expense ratios of 0.5% or below.

Author: "Stephanie Raill Jayanandhan, Support Specialist" Tags: "Consumer Protection, 401(K), IRA fees, R..."
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Date: Monday, 18 Jan 2010 14:16

The idea seemed smart at first – lose the land line for a cellular phone.

For years, I used my mobile phone for all my telephone needs, insisting it was a simple budgeting trick that would save me a few bucks. After all, nearly everyone else I knew was doing this. And then my bill started to climb higher and higher, well above what I would have paid for a monthly land line.

Recently, I began actually reading my cell phone bill and researching ways I could trim those costs. I realized that monthly statements are occasionally wrong when you read them line-by-line, that cell-phone companies often will negotiate charges on the bill, that I was paying for more coverage and add-ons than I needed and that I could make small changes in my usage to bring that bill even lower.

Some creative ways to help you trim your phone bill:

1. The three-month rule: Compare the minutes and texts you use with those you buy for three months. This will give you a good idea of whether you need to increase or decrease your allotted minutes and texts.

2. Keep it in the family: Signing up family plans is always a better deal than going it alone, but if you don’t have a close friend or family member to split the bill with, consider a mobile-to-mobile plan that makes calls between the same provider free. Chose a carrier that most of your family and most-talkative friends use.

3. Sign up for OverMyMinutes.com, which is a free service that sends you an e-mail when you come close to going over your minutes or texts. This is a nice, lazy way of keeping within your means.

4. Avoid toll-free calls: These are not free from your cell phone and you will inevitably be put on hold, which drains your minutes. I found this out the hard way when I moved across the country and had to deal with employment and utility calls. Save all toll-free calling for when you have access to a land line.

5. Don’t call information: Dialing 4-1-1 means extra charges. Instead, try 1-800-Free-411.

6. Trim the fat: Ditch the insurance, road-side assistance, ring-tone downloads, games and video streaming. Web access is one thing, but all the other extras services and applications add up quickly. Separate those wants from needs.

7. Consider the prepaid option: If you are not one of those people who use their phones all the time, prepaid phone plans make a lot of sense. Research different services online – some can cost less than $10 per month.

8. Smart ways to get rid of the phone: When you decide to get a new phone, sell your old one. You might not think it’s worth anything, but somebody else will, so remove your personal data and list it for sale. If you don’t get any takers, donate it to the woman’s shelter in your area – many shelters take old cell phones that aren’t good for anything except dialing 9-1-1.

Author: "Anna Sowa, Contributing Writer" Tags: "Uncategorized, budgeting, cell phones, p..."
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Date: Monday, 11 Jan 2010 15:07

Happy 2010!

Did you know that gaining control of finances consistently ranks right next to “lose weight” on surveys of the most common New Year’s resolutions?

Something else weight loss goals and financial-health goals have in common: almost no one keeps them because reaching toward them sucks. It takes energy and commitment. monay

But, good news! There’s a simple, and dare I say it, almost fun way to create and stick to a budget. Envelope budgeting has presumably been around since the Great Depression , but it’s gained recent buzz as one of Dave Ramsey’s budgeting methods.

Here’s envelope budgeting at it’s simplest:

  1. See how much you spend Keep a receipt or recording of every penny you spend for at least a month. Several months is better, because your numbers will be closer to average, and if you have a finance management account from Thrive or another service, you’ll really only need receipts for cash purchases as your card/check purchases can be tracked online. Add them all up (averaging if you have more than one month represented) and see if you’re spending more or less than you’re earning each month.
  2. Decide on spending categories Once you’ve got at least a month of purchases recorded, lay them all out on the floor or table. If it’s easier for you visually, take a sheet of paper and write the name of the purchase and a dollar amount, instead of messing with receipts that might have multiple categories on them.  Start sorting your purchases into categories. Be as general as you want with these categories–if you want separate “eating out” and “groceries” categories, that’s fine. Or you can simply have “food.” Total up your spending by category. Don’t forget a “paying off debt” category, or non-monthly bills like insurance which you’ll average out into a monthly amount.
  3. Whittle out the extras At the end of step 1 you learned whether you were spending more than you make. If you’ve been overspending, figure out how much you’re going over. Eventually you’ll cut back even more to build up savings, but start small if you need to at first: simply go through each of your spending categories and find places to cut back until you even out; but don’t cut back on the “paying off debt” amount. These are your new totals for each category.
  4. Pick an “envelope” The perk of using tangible, paper envelopes and cash is that you’re less likely to overspend than with cards. If you like the tactile/visual stuff, grab enough envelopes (a coupon filing book with labels also works) for your categories and cash your paycheck. Divide the cash as you decided among the categories, and dedicate the remainder to savings or debt-payment only. More on this in a minute. If the basic cash-in-envelopes method bothers you–perhaps because you don’t want to pay for gas with cash when it’s pouring rain, or you may be unwilling to carry around several envelopes full of your hard-earned cash all the time–more good news! You can create a hybrid system by making a “checking account/credit card” envelope. When you purchase a shirt, for example, on your debit card you save the receipt and move the cash from the “clothing” envelope to your “checking/credit card” one. Also, there are cool, simple downloads that keep the envelope concept in mind for you. Click here for a description of some popular options.
  5. Don’t cheat The key to making this work is that once an envelope is empty, you have to decide not to buy anything else in that category. Also, when you have cash left over at the end of the month–put it directly toward savings or debt-payment, and nothing else. Did I mention it’s OK to have a “fun” envelope? See? Budgets can be your friend, but they’re only as good as your determination to stick to them!
  6. Reevaluate Are you consistently emptying out “food” early on, even though you’re doing everything you can to eat cheap? Or is your “entertainment” envelope usually full at the end of the month? It’s good to step back and reallocate your money periodically; but remember that the goal is to beef up savings and slash debt by consistently spending less in the other areas. You should be aiming to consistently whittle back wherever you can so you get in the habit of spending less and saving more.

It’s wise to try out envelope budgeting for four months or so before you drop it. It takes time to get used to any new system of money management; and consistency is important even if you’re planning to switch budgeting plans, because you’ll have all your records in order to transfer to another system rather than going over step 1 all over again! Have you tried envelope budgeting? Tell us about your experience b

Author: "Stephanie Cuellar Butler, Contributing Writer" Tags: "Better Spending Habits, Debt be gone, St..."
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Date: Monday, 21 Dec 2009 15:00

What if Tiny Tim was actually a perfectly healthy and mobile child, but his parents pimped him out as an endearing charity case?

What if Tiny Tim was actually a perfectly healthy and mobile child, but his pascroogeMcduckrents pimped him out as an endearing charity case suffering from … I don’t know what (but here are some ideas)? No one could blame Ebenezer Scrooge for holding onto his money if he couldn’t even trust ol’ Bob!

Misuse of charitable funds isn’t the stuff of classics, but unfortunately it occasionally happens among the throngs of organizations collecting donations this season. It’s important to find out who you can trust when it comes to charities, because your time and money can make a difference in the right hands.

Here are some tips for making the most of your giving:

  • Remember that only charitable gifts given by Dec. 31 qualify for tax deductions for this calendar year
  • Human services charities, which serve people in need (whereas many charities are for organizations like museums), lose the most donors during tough economic times. They also see the biggest increase in need during hard times; so consider giving to  a reputable HS charity
  • Research and be comfortable with how programs work. Don’t assume. There’s been some recent discord concerning Kiva, a micro-lending organization, after they made it clear that donors are not lending directly to entrepreneurs in developing countries, but rather paying back Kiva for lending to the entrepreneurs. Details like this may matter to you, and they may not! The important thing is that you understand and agree with a charity’s policies.  Here Beau from Walletpop.com explains why he still supports Kiva
  • Review charities on CharityNavigator.com or American Institute of Philanthropy’s Charity Watch. Here you can check out where donations go, as well as find tell-tale information like the salary each organization’s director.
  1. Can the charity clearly communicate who they are and what they do?
  2. Can the charity define their long-term and short-term goals?
  3. Can the charity tell you the progress it has made (or is making) toward its goal?
  4. Does the charity’s program make sense to you?
  5. Can you trust the charity?
  6. Are you willing to make a long-term commitment to the charity?

Some unconventional ways to give:

  • Does the growing national debt upset you? Do something about it. Click here to read more. You can actually send the government a check to help cover national debt!
  • In some cities you can now donate to the Salvation Army by credit card . Crazy, right? Expect to card readers next to the red buckets in a city near you soon, as the plastic option has increased giving in test cities
  • Of course you can give even when you’re broke. Look out for local blood drives, or volunteer your time at a church, shelter or other non-profit organization

Do you have  a favorite charity? What makes you trust them? Or maybe you’ve run across some shady practices. Post your recommendations and comments below!

Author: "Stephanie Cuellar Butler, Contributing Writer" Tags: "Uncategorized, charity, scam"
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Date: Monday, 14 Dec 2009 11:00

Do word problems and on-the-spot equations make you queasy? Maybe you’re otherwise very intelligent, but can’t seem to figure out whether it’s cheaper to buy two ½ gallons of milk or one whole gallon this week. My friends in education have told me that most students who hate math findxaren’t actually bad at it; they’re just visual learners.

Visual learners work best with concrete, tangible problems, so they have the hardest time with abstract concepts—making math pretty loathsome. I’m visually-oriented, and while other analytical feats come easily to me, my equations are usually frighteningly off due to the merciless journey they make through the cogs and shredders of the math-processing centers of my brain.

Luckily, no matter your reason for hating math, you only need some basic math skills and tools to have a full, healthy financial life. And, you can thank the math-people for making technological and software advances that make math-lite life possible! There’s no excuse for losing control of your finances now.

Look, don’t assume

  • Bulk isn’t always better—Rules of thumb can help you avoid math at the grocery store, but get rid of the assumption that buying a bigger package (or the product with the lowest shelf price) of anything is cheaper. The only way to know for sure is to compare unit pricing. Unit pricing is usually a small number on the left side of the shelf price-sticker. It has the price per ounce, unit, pound, etc. No equations necessary— just a little “greater than or less than,” and that was fun in school
  • Look at the big picture— Saving money can be counterintuitive. A $50 programmable thermostat (that isn’t necessary to heat your house) seems like an unnecessary expense, unless you take a minute to do some simple multiplication. As Trent from The Simple Dollar explains, this “unnecessary” expense can save you $60 a year in energy costs. Multiply that by the number of years you plan to live in your home, and you’ve got a truly frugal purchase

Identify your tools

  • Cell phone calculator—If working equations in your head gets messy, never feel bad about busting out your phone. It’s better to humbly accept help with some simple calculations than to pay too much or blow your budget
  • Math-savvy friend—Some people love crunching numbers. Find out if one of your friends gets all excited about setting up budgets and graphs, and trade one of your skills for their help
  • Personal Finance services—You can buy PF software for about $30, or use a free online service that pulls information (securely) from all of your accounts to help you manage everything in one place. Thrive’s personal finance management service is exceptional because it offers adaptive advice for making the most of your unique situation in savings and budgeting. Math-savvy or not, finance management is so much easier with a good service. For the organizationally-challenged and the visual-learners it’s hard to beat the charts and graphs a PF service provides
  • Pen and paper—One of the main reasons people feel like they can’t do math is that it seems abstract. Carry a little notebook and pen so you can “see” the steps of your addition, subtraction, multiplication and division.

Brush up your skills and boost your confidence

  • Do a couple online math exercises—The Mira Costa Community College has free exercises in pdf form. The answers are on the bottom, so you can brush up your skills on your own
  • Round up If decimals, cents and fractions throw you for a loop, just round to the nearest whole. I knew a woman who drove her husband crazy by always rounding when she balanced the check book. After a year or so they compared the actual and rounded final sums and found only pennies of difference
  • Look up financial lingo Obscure financial terms are just as abstract as numbers for us visual people! I use Investorwords.com for simple explanations and definitions of things like “amortization,” “divestiture” and “arbitrage.”

Math should be the last thing between you and well-managed money. Whether or not math and abstract thinking come easily to you, someone gets them—and luckily those someones made it easy for you! Go revel in your right-brain thinking and budget at the same time.

Author: "Stephanie Cuellar Butler, Contributing Writer" Tags: "Consumer Protection, Other, Thrive, Unca..."
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Date: Monday, 07 Dec 2009 11:00

Did you know that Retail Therapy and Comfort Food have a lovechild?

Sign in Ozark, AR

Women have a reputation for using “retail therapy” after a hard day (or week, or year), and both sexes are known to use high-fat comfort foods to soothe the soul; but did you know that Retail Therapy and Comfort Food have a lovechild?

His name is Recession Obesity.

Recession Obesity is a phenomenon born of both the gratification and convenience of a new purchase, and of the quick mood-boost offered by fatty and sugary foods. Though many people blame their declining diet standards on healthy food becoming more expensive, Time Magazine and The Wall Street Journal have been documenting America’s changing purchasing habits, and waistlines, over the past year. Their findings are that junk food sales aren’t up primarily because they’re cheap, but because they feel good.

The recession has done some good things for our health (bike riding is up 14 percent from 2007); but they don’t outweigh (pun intended) the bad. McDonald’s sales, as well as those of  chips, donuts, beer and microwaveable meals rising.

It’s all a matter of perception. We perceive that the unhealthy food is the better option because we know it will make us feel satisfied and comforted when we need a boost; and it seems cheaper than healthy food. Heck–it’s hard to turn your nose up at a dollar menu. We know that it will make us feel worse in the long run, but the carrot (or, you know, french fry) of  instant gratification dangling in front of us wins. The trick to avoiding Recession Obesity is to call him what he is: a fun friend who makes you forget your problems, but leaves you feeling like crap.

Here are some easy, recession friendly ways to satisfy your need for health, as well as comfort food:

Think happy, vegetable-y thoughts

  • Getting fresh, whole foods into your body will boost your mood and energy in the long run. Veggies don’t have to be expensive. Most are seasonal, so stock up on your favorites when they’re cheapest
  • Wash and chop all your veggies after purchase, to save time when you’re cooking. Store them in bags in the fridge
  • Take sliced veggies with you for snacks. You’ll feel better about yourself and save money if you can avoid the vending machine
  • Carrot sticks not your snack-style? Try sliced zucchini, or get a little crazy with a handful of peanuts. They’re cheaper per serving (about 12 cents) than chips if you buy the big 3 lb. can

Make cheap, healthy comfort food at home

  • Pizza Using this easy pizza crust recipe and this marinara sauce recipe, plus a little cheese and some chopped veggies, you can have two low-fat, high vitamin pizzas (easily enough for two people) for about $0.75. All told it takes about 30 minutes to make them. To save time in the future, make a couple extra crusts. I save them (uncooked) between sheets of cooking-sprayed wax paper, and then in a large zip bag in the freezer
  • Oatmeal Buy the big canister, not the instant packages. You’ll save money and calories by adding your own brown sugar, and some raisins or cut up fruit. As with veggies, look for seasonal fruit to get the best deals.
  • Ice Cream Gena, of choosingraw.com has the most amazing ice cream alternative: freeze peeled bananas and throw them in a food processor. They get all light and rich like softserve; and I swear they taste like a Wendy’s Frosty if you add cocoa powder and a little sugar

Plan ahead

  • Decide what meals you want for the week, and make a list before you hit the grocery store. You’ll save money if you know what you want
  • Make large meals and store portion-sized leftovers in the fridge and freezer. You’ll cut out the preservatives, fat and cost of store-bought microwaveable meals

Ultimately, Recession Obesity is largely the result of an emotional need, not frugality. If you take the time to plan ahead,  and occasionally reason past the instant gratification and fatty-goodness of fast food and processed snacks, you’ll have little trouble getting through hard times with a rockin’ body

Author: "Stephanie Cuellar Butler, Contributing Writer" Tags: "Better Spending Habits, Cheap Living Tip..."
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Date: Monday, 30 Nov 2009 11:00

If you even suspect you’re a victim of identity theft, it’s vital to go with your gut and start the investigation process today.Why the rush? Because cleaning up after an ID thief is, unfortunately, never a quick process and the amount of money you’re responsible for can grow if you delay.

Avg. cleanup time for ID theft: 81 hours

Avg. cleanup time for ID theft: 81 hours

According to a survey by Nationwide Mutual Insurance in 2005, even after an average of 81 hours of fighting about 16 percent of victims end up being held responsible for some or all of the thief’s fraudulent charges, which average $4,000.

If you suspect identity theft

You may have been tipped off by a creditor calling you about an account you didn’t open, or received a card you didn’t apply for in the mail. Whatever made you suspicious, it’s important to keep a record of it.

  1. Hang on the suspicious mail, or try to remember any details you can about a creditor’s call. Call back for details if you can. Access the most recent statements for all of your credit and bank accounts and check for unauthorized charges.
  2. This step is important: Get your credit report. If you saw fraudulent charges on one of your statements, the report will be free when you contact a credit reporting agency (click here for contact info) to place a fraud alert on your report. If you didn’t see anything unusual in your statements, access your credit report anyway (click here if you don’t have evidence of theft)  and scour it for any accounts you didn’t open, debt you didn’t accrue and accounts with the wrong address or SSN, or initials. If everything is normal, breathe easy and consider a security freeze to help protect you in the future.

If you know your identity was stolen

A moment of panicked rage is allowed here; but once you pull yourself back together, it’s time to work the phones.

  1. Grab a notebook or a folder to take notes on every conversation from here on out. Get names, numbers, dates and times from all the people you talk with, and keep copies of any correspondence.
  2. Place a fraud alert with one of the big three credit reporting agencies with the contact info link above. The one you contact will notify the other two.
  3. Close out compromised accounts. If your bank account was ripped off, you’ll need a source of money while you wait for your new accounts to be opened. Ask a representative at your bank if they advise you to withdraw a store of cash before closing the account. Notify your employer of the account closing if you have direct-deposit payment. Card and account closings can be initiated over the phone, but you will need to send the companies copies of fraud evidence. The FTC recommends sending everything through certified mail, and requesting a return receipt, so you can document when they receive your letters. Ask each company for forms to dispute fraudulent charges and accounts.
  4. Fill out an ID theft complaint form with the FTC (click here, or call 1-877-ID-THEFT) and keep it, along with the cover letter, to take to the local police.
  5. File a police report. Don’t take no for an answer if your jurisdiction won’t file the report. You may need it to prove to creditors that there was a crime, and it will assure you a free security freeze (highly recommended to stop new fraudulent accounts) in any state. If your jurisdiction won’t file it, try your state police. It is best to fill it out in person, and not over the phone or internet. Ask the officer helping you to incorporate the FTC theft complaint form into the report. Make copies for companies that ask for your identity theft report.
  6. Get back in touch with the credit reporting agencies (Experian, TransUnion, and Equifax) in order to get the thief’s activity removed from your credit report. Mail your identity theft report (steps 4 and 5) to the fraud department of each agency, along with a letter like this and any supporting documents you have to prove the charges and accounts are not yours.

These steps will get you well on your way to cleaning up your name and credit score. Be aware that if your bank card was used fraudulently you may be liable for up to $50 of the thief’s charges if you report it within two days, but that number jumps to $500 between three and 60 days, and there may be no limit to what you have to pay after 60 days. Act immediately if you suspect someone has your bank ATM card, or card numbers.

Here are some helpful resources:

http://www.ftc.gov/bcp/edu/microsites/idtheft/consumers/index.html

http://www.ssa.gov/pubs/10064.html#using (if your SSN was stolen)

Author: "Stephanie Cuellar Butler, Contributing Writer" Tags: "Consumer Protection, credit report, disp..."
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Date: Monday, 23 Nov 2009 11:00

Sale!My friends and I joke that holiday shopping is more about buying fabulous presents for ourselves than buying for others. Sure, we set out with lists and budgets, but being so deep in the holiday sales makes it easy to stray.

Recession or no recession, impulse purchases are the bane of the financially frugal, especially when sleigh bells start jingling.

Impulse purchases represent what you want, while your shopping list or your budget represents what you need. Even when you budget your groceries for just a few items, extras manage to sneak into the cart.

To get avoid impulse-shopping, you must trick yourself. Here are 10 easy tactics:

  1. The 10-minute rule – One of many great family budgeting tools. When you feel the urge to buy something that you weren’t intending to buy, think about it for 10 minutes before placing it in your shopping cart – if you don’t have 10 minutes to spare, put the item back.
  2. The limit – Set an amount you will allow for an impulse purchase – whether it is $10 or $50 – and don’t even consider something above that limit.
  3. The list – Keep a small note card in your purse or wallet. When you find an item that you want, but haven’t budgeted for, write it down. Now, wait 30 days. If it is still available and you have budgeted for it at that time, treat yourself. They key here is to save for goals, a method of debt management, removing the thrill of buying something on the spot. You only get one item on your list at a time.
  4. Sales – Only buy a sale item if you would have paid the full price. If not, it’s not really a good deal.
  5. Leave the plastic at home – If you are limited to just enough cash to get you through your budgeted shopping list, you won’t go overboard.
  6. Don’t shop for the sake of shopping – How often do you go shopping “just to look” and end up buying something? You know yourself, so avoid those “danger” places altogether (mine is Target).
  7. Shop in a bad mood – I find that I buy less when I’m not feeling tip-top. When I feel and look great, I want to celebrate by showering myself with purchases. Plus, I’ll think that everything I try on looks fabulous! My advice: shop frumpy and grumpy.
  8. Get offline – Unsubscribe from mailing lists and don’t keep your credit-card information saved on retail sites. This will make purchasing a chore. Again, it’s all about taking the ease and thrill out of impulse buying.
  9. Inspire yourself – Use something visual to remind you not to impulse-spend. For example, put a sticky note with your savings goal or a warning (“Danger: Do Not Use!”) on your credit or debit cards. Seeing that note every time you open your wallet will help you respect the budget.
  10. Wear uncomfortable footwear when shopping – If shopping is physically painful, you will just want to get in and get out ; no time for impulse-spending.

The holidays are when most people rack up debt they’ll be paying off the rest of the year. Nobody wants to start the New Year with credit-card payments looming – avoiding impulse spending is just one way to survive the holidays, debt free.

Remember, the holidays will still be full of cheer if you spend less money than last year.

Author: "Anna Sowa, Contributing Writer" Tags: "Better Spending Habits, impulse spending..."
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Date: Monday, 16 Nov 2009 13:45

Did you know Facebook, cell phones and new operating systems could all be used to steal your personal information?

Identity thieves are increasingly creative as changing technology allows them new tools to pilfer; but with a little awareness and some creativity of your own you can keep your private information out of sticky fingers.

New ID theft tacticswillsmith

TMI on social networking sites Did you know that information posted on fan-sites helped a man steal Will Smith’s identity back in 2005? The sites had seemingly innocuous tidbits like his legal name and date of birth.

What you can do Learn from Big Willie: tidbits like nicknames and pets’ names (if you use them as part of your passwords), addresses, phone numbers and your date-of-birth shouldn’t be public on your Facebook or Myspace page. It’ll be hard going a whole birthday without practical strangers wishing you a good one, but it’s a small price to pay to reduce your risk of ID theft.

Zero Day attacks Commonly written “0-day,” these babies are hackers’ ways of showing the big software companies how much more awesome they are, even without girlfriends. What happens is new software (like an operating system) falls into to hands of a hacker with something to prove, and he or she finds and exploits vulnerabilities to wreak havoc— and sometimes steal information from users’ files. Older Web browsers also occasionally fall prey to 0-day type attacks.

What you can do Keeping your Web browser (Internet Explorer, Firefox, etc.) updated is helpful, as some of the browser-based attacks are launched in countries like China, where the newest versions are not common. It is also best to wait a few months to purchase a recently released operating system, such as the new Windows 7—which hasn’t had any reported 0-day attacks as of this writing. Why wait? Because when an attack reveals a weak spot, software engineers develop a patch to fix it, giving you a stronger product.

Cell phone camera snooping Those hi-def little cameras aren’t only handy for taking pouty profile pictures (more on Facebook later). Some identity thieves are using them to record credit card numbers and pin-pad action at restaurants and stores.

What you can do Get in the habit of leaving your card upside-down on the table when you’re waiting for the waiter to pick it up. At stores keep the numbers concealed as much as possible while you swipe, and do a quick glance around or cover the PIN pad while entering your PIN number.

Older ID theft tactics

Dumpster diving Tried and true, this method is still an effective way for thieves to find your private info. Why? Because many people have a mountain of documents and letters ready for shredding, but they never buy or use a shredder. Eventually it gets thrown in the garbage intact.

What you can do Use a shredder! You can find a crosscutter online for as little as $35. Or use my husband’s guy-friendly alternative: take out all the plastic cards and incinerate the paper on the grill. What needs to be destroyed? Any documents with your SSN or PIN numbers, account numbers, credit card offers, billing and account statements and ATM receipts.

Intercepting your mail/opening new accounts If someone intercepts a “pre-approved” credit offer or a paycheck from your mailbox, it’s fairly easy for them to follow through and accept the credit offer (often changing the address so you won’t receive statements) or cash the check.

What you can do Opt out of pre-approved offers. You can do this here or by calling 888-5OPTOUT. If they never get in your mail, they can’t be picked up by mail thieves. Freezing your credit score is also smart because even if someone has your SSN they won’t be able to obtain credit from most lenders. Check out this article to see if a security freeze is right for you.

You can cut more mail-theft risks by asking your employer to pay you through direct-deposit, so your checks never get “lost” in the mail.

Ten million Americans can’t be wrong (the number of US ID theft victims in 2008). Identity theft is big business; but with a little knowledge and caution it’s easy to keep your information safe. Shred away, my friend.

Author: "Stephanie Cuellar Butler, Contributing Writer" Tags: "Consumer Protection, credit cards, credi..."
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Date: Wednesday, 11 Nov 2009 15:11

Susa Economics: Join a Susa Club and Save Money the Old School WayMy husband, born in Kerala, India and raised in Dubai, remembers his parents participating in ‘kuri‘ clubs.

All the participants – mostly members of his extended family – would get together for a celebratory dinner.

During the evening, everyone would give their kuri contribution to the oldest brother, and a name would be drawn from all the contributors.

The winner of the draw received all the money contributed that week – they could pay off an interest-bearing loan, invest in their fledgling business, celebrate a wedding, or help pay their children’s school fees.

Then the next month it would happen all over again. Previous winners were removed from the drawing so everyone was guaranteed a share of the money at least once. And the whole group could make future plans, knowing a larger sum of money was headed their way in just a few months.

Groups like this exist all over the world. In Africa and the Caribbean they’re often called ’susu funds’. In spanish speaking communities they might be known as ’sociedads’. In other parts of India, they can be called ‘chits’. These groups, which are collectively described as “Rotating Savings and Credit Associations” (ROSCAS), have a centuries-long history in Kerala and elsewhere. Women in the world’s poorest households use this strategy by each contributing a handful of rice from the week’s allotment, which can be pooled and sold to create a much-needed source of cash money.

For communities without dependable banks, it makes sense for everyone to pool and quickly use large amounts of savings, rather risk having money stolen from home. Such clubs also continue to form and function in ‘global North’ countries where people have access to interest-bearing savings accounts and bank loans.

Kuris, susus and other ROSCAs don’t pay out interest, and in some groups it’s expected that the organizer will take a small cut of the total pool in return for her time. But what ROSCAs offer instead of interest is peer pressure to keep contributing and saving on a regular basis, in order to keep up with your obligation to the group and avoid having to explain to your friends why you can’t give your share.

This kind of peer pressure and obligation to keep up your good name is called social capital, and it’s what makes ROSCAs successful. By making sure you don’t miss a payment, it’s possible for you to come out ahead of saving in a traditional savings account. How? Well, if you put $200 in a savings account each month for a year, you’d earn about $22 in interest over the year, leaving you with $2422. But if you miss even one monthly contribution, you’ll be left with $2220 at most (the exact amount depends on which month you miss).

On the other hand, you won’t earn any interest from the ROSCA but your family and friends will be there to help and hassle you, keeping you accountable to make the payment. So you’re likely to contribute – and receive – the entire $2400.

It’s up to you to decide whether you can stay accountable to yourself to make regular deposits to a traditional bank, earning interest all the while, or if you’d benefit from the support and social experience a ROSCA can provide.

If you decide to participate in a ROSCA, check out the excellent tips in this article on Susus from Black Voices: And be aware that some people can claim they’re running a ROSCA but really be setting up a scam – it’s always best to participate in a group with people you know and trust.

Author: "Stephanie Raill Jayanandhan, Support Specialist" Tags: "Start Saving, Kuri, susu"
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Date: Friday, 06 Nov 2009 15:29


Manisha ThakorThis is a guest post from financial expert Manisha Thakor.  Manisha is a rising voice in the area of women & money. If you want to get inspired about money management, make sure to visit Manisha’s website where you can sign up for her “Manisha’s Money Musings” blog.  She welcomes reader questions, so don’t hesitate to reach out to her.

Tough economic times have tested the vast majority of Americans – and that includes celebrities.  Lately there have been several high profile individuals from the worlds of sports, entertainment, and the arts who have seen their financial woes hit the front pages.

A money meltdown is right up there with death and divorce as one of life’s most stressful experiences. So let me say straight up that my intent in highlighting these experiences is not to poke fun or make light of their situations.  Rather it is to help others by highlighting common financial pitfall that all of us (myself included) can learn from.

NBA Star Antoine Walker – Broke & In Big Trouble: During a successful career spanning 12 years, Antoine earned over $110 million. Now it’s gone. At age 33, Antoine has creditors chasing after him and is facing felony check fraud charges.  Much has been made of his bling (the cars, watches, entourage).  However, he was also by many accounts extremely generous with friends, family and those in need.  Antoine’s problem was that he spent as if his peak earnings years would repeat every year. He’s not alone. Many people with variable incomes (commission-based sales people, entrepreneurs, etc.) fall into this trap. What we all can learn is if you have a volatile income stream, you should spend based on your average, or even trough, earnings to avoid a cash crunch when leaner times appear.

Bestselling Mystery Novelist Patricia Cornwell – Looking for $40 Million: This prolific, smart, and highly popular writer has suffered losses estimated in the range of $40 million.  She’s suing the money management firm that handled her money, arguing they didn’t heed her instructions to “invest conservatively” and even cut checks for gifts given to people she didn’t know.  Patricia’s problem was that she handed over complete control of her finances to her advisors.  As it frequently takes single-minded devotion to one’s craft to excel, the need for some delegation is understandable.  What we all can learn is when it comes to your money, your motto (to quote President Regan) should be “Trust, but verify.”  Remember, no one will ever care about your money as much as you do. So you must stay involved, even if you have an advisor.

Uber-talented photographer Annie Leibovitz – Fighting to Keep Her Home: This American icon has taken some of the most famous photos… ever.  From John Lennon & Yoko Ono (hours before he was shot) to a very pregnant (and very bare) Demi Moore, that was Annie’s work.  In the go-go years Annie’s day rate was rumored to be $250,000. Today she is $24 million in debt and is a single mom of three young children fighting to keep her home. Annie’s problem was spending liberally and borrowing aggressively against the equity in her home to make up the difference. When the credit markets seized up, she found herself in a cash flow crunch, and resorted to putting up her homes and copyrights to her lifetime work up as collateral for a loan.  Now, that collateral may be called in. What we all can learn is that debt really is a four-letter word.  Borrow at your own risk and understand that there will be consequences if you can’t pay it back.

Famed actor Nicholas Cage – Owes over $6 Million in Back Taxes: This super talented actor owes the IRS.  Big time.  Uncle Sam wants over $6 million in back taxes from Nicholas Cage.  The vast majority stems from the $12 million-ish in income he earned in 2007 that apparently he did not pay taxes on.  Nicholas’s problem is that he appears to be cash strapped when it comes to paying those takes. What we all can learn is that if you are self-employed, as so many more of us are these days, it’s vital to set aside money for taxes at the time you earn that income.

Author: "elisa cundiff, outreach coordinator" Tags: "Finance News, celebrity debt, Debt"
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Date: Friday, 30 Oct 2009 14:07

Walt Disney

Q: What do Walt Disney and credit reports have in common?

A: Both of them may be frozen! One hidden under “The Pirates of the Caribbean,”” and the other with each of the top credit reporting agencies.

OK, Walt Disney probably isn’t frozen, but did you know you can protect yourself from identity theft by freezing your credit report?

Since 2007 consumers in 48 states have slowly but surely earned the right to initiate a security freeze that bars new lenders from seeing their credit history without permission.

A frozen credit report makes it nearly impossible for identity thieves to open new accounts, since most lenders will check it before issuing credit.

It’s a pretty straightforward process in theory: You contact each of the top three credit reporting agencies (TransUnion, Experian and Equifax) and pay a one-time, state regulated fee to make your credit report inaccessible to anyone who tries to view it without your PIN numbers.

When you want to open a new account or apply for credit, you simply “thaw” your report so the agency or business can see it.

Here’s a breakdown of the real-life pros and cons of freezing your credit report:

Pros

  • The service could save you the stress and time it takes to clean up a credit mess if your identity is ever stolen
  • If you are already a victim of identity theft, the service is free for you in every state. Without a security freeze you’re much more likely to be a repeat victim
  • It is also great if you tend to take out credit impulsively. There’s waiting period between requesting a freeze-lift and a new lender gaining access to your report. Most states require the lift to take no longer than 3 or 5 days.  In some states however, this waiting period is required to take less than 15 minutes
  • Freezing doesn’t have any effect on your credit score and you can still access your own report
  • For two of the three agencies, you can initiate a freeze online (click here for TransUnion and here for Experian). Experian makes you take a little test to confirm your identity, so be on your toes to answer questions about previous credit and loans
  • Unlike fraud alerts security freezing doesn’t expire after 90 days. The service lasts until you cancel it
  • In some states the fees (for placing and removing  freezes) are as low as $3. In South Carolina they are both free.

Cons

  • If an emergency comes up and you need credit fast (and your state doesn’t have a 15-minute freeze lifting law), you may have to wait several days to get approved. On the other hand, if you apply for credit with someone you currently do business with they can access your credit report. It is only hidden to new lenders.
  • In order to have effective protection from ID theft, you must have a freeze with all three agencies. That means three times the fees
  • Equifax  has a reputation for making a security freeze initiation difficult. It may be best to go the snail-mail route with them. This site has helpful letter templates for each state, under the “Instructions” link
  • The credit score freeze won’t do much to stop “pre-approved credit” offers. You have to go here to do that, or call 888-5OPTOUT
  • If you’re applying for a job you’ll need to lift your freeze so the potential employer can check your credit. It’s perfectly acceptable to ask which credit reporting agency they use, so you only have to lift one freeze and pay one fee
  • There’s debate about whether the risks involved in sending all of your sensitive information (SSN, account numbers) through the mail to initiate or lift a freeze is worth the security of having the freeze in place

Should you freeze your credit report? If you apply for credit often, or are in the midst of job interviews or major purchases, a security freeze may be more hassle than it’s worth. If you don’t think you’ll need to lift it often, and your sensitive information may have been compromised (through things like mail theft or phishy online business), a security freeze is important. For most people it’s a reasonable, affordable precaution–enough to make Ol’ Walt proud.

Author: "Stephanie Cuellar Butler, Contributing Writer" Tags: "Consumer Protection, Debt be gone, Finan..."
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Date: Monday, 26 Oct 2009 14:09

I used to think that unemployment benefits weren’t for someone like me – someone who voluntarily left a full-time job to move across the country for a significant other’s graduate school. I hadn’t been laid off, so I figured I was ineligible. My mistake.

The Department of Labor reported last week that new unemployment insurance claims increased by 11,000 – more than analysts expected – to a total of 531,000 new claims. Those numbers suggest that economic times remain difficult, and many people are navigating the unemployment insurance maze for the first time. Help is out there, if you know where to look. A good place to start is at the Department of Labor Web site, which can direct you to your state employment office.

I called my local employment office and after spending 20 minutes on hold, I spoke with a representative who informed me that I could apply for benefits online. I went to the employment department’s Web site and found it simple and straightforward – I entered my personal information, submitted an electronic form and waited for a claims specialist to get back to me.

While I waited, I visited my new county’s Department of Social Services office, where I applied for food stamps (I was unemployed, after all) and a Medicaid program that covers family-planning related care. Again, something I never thought I would do in life, but there comes a time to lose that pride.

Newly unemployed workers should also consider applying for COBRA, which gives workers and their families who lose health benefits the opportunity to continue receiving benefits, with a few stipulations. For more information, find it here.

The Department of Labor says your claim will probably take three weeks to process – some states require a one-week waiting period for claims. A week after I filed my employment claim, a “claims specialist” called me and asked me questions about my job status. I explained that I was not fired, that I moved for my boyfriend’s education and that I was actively looking for work. She told me to keep a log of where I apply for jobs. A few days later, I received a letter informing me that I had been approved and could continue to apply for benefits online each week. I just had to continue looking for ward and keep track of my applications (contacting temp agencies counts).

My experience showed me the wide availability of support programs out there when life throws you a curve ball. The Department of Labor says that unemployment insurance is available to workers who lose their jobs “by no fault of their own,” and meet other criteria.

Another surprise: you can still collect unemployment insurance if you are working part-time. After a month looking for work, I found a few temp jobs through a personnel agency. The employment department Web site explained that I could still receive benefits if my wages were below a certain amount, so I noted them on my next claim. Happily, it didn’t affect my benefits because I was earning well below the threshold. This is true for freelancers as well, but individuals need to check with their state for its rules.

If anything goes wrong with your claim, you’ll hear from the employment department promptly. If they deny your claim, you have the option to appeal.

Most states try to put as much information available online as possible because they are so overwhelmed with phone calls. If you must call, avoid Mondays and Tuesdays – mornings and around lunch time are busy, too.

And remember, being unemployed is not the time to be too proud to ask for government aid – especially ones you have been paying taxes for.

Author: "Anna Sowa, Contributing Writer" Tags: "Consumer Protection, Employment Help, un..."
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Date: Friday, 23 Oct 2009 11:00

Note to self: Don't borrow money from a giraffeMake no mistake: Borrowing from friends and family is tricky business.

At first glance it seems like the perfect situation: They love you. They’re more likely to sympathize with your need than a bank; and you’ll definitely pay the money back.

But imagine a trip to the mailbox. You mindlessly open the door and pull out a single piece of mail. Shocking you awake, the telltale uniformity of the white and blue business envelope  screams, “You owe me money!”—which is the last thing you need screamed at you today.

The blood that once flowed unnoticed through your veins abruptly invades and warms your face uncomfortably. You huff and stuff the bill away so you can forget about it for a few hours.

Do you know that feeling? It’s not exclusive to paper invoices; this feeling is also the fatal flaw in friendly-lending. What if you felt the same resentful dread every time you looked a friend, or a parent, in the eyes?

Personal loans, unless handled very carefully, have potential to cause destructive rifts and grudges. Before approaching a friend or relative for money, always investigate the alternatives.

Peer to Peer Lending

If you’re tying to avoid the high interest rates bank loans and credit cards entail, or you don’t qualify, look into peer to peer lending (click here for a past post about P2P) for a happy medium. Peer to peer Websites can offer the personal touch and low interest rate of a personal loan, without the latent tension unpaid (un)friendly debt brings to social gatherings.

With P2P lending you can get personal about why you need the loan, which doesn’t matter to a bank but may sway a peer lender to make you an offer. Some sites use your credit score to determine your interest rate, while others like Prosper.com let lenders “bid” on your loan with lower interest rates.

IOU, 401(k)

The jury is out on whether borrowing from your 401(k) is a good idea (click here to read more), but if your need is short-term (meaning you can pay it back in a year) you might consider it. One plus of borrowing from your 401(k) is that you’re essentially not paying interest on the loan. There are interest fees, but they go back into your original nest egg to restore the balance as time goes on.

Other pluses: there is no credit check (heck- you’re lending to yourself) or fees involved with 401(k) borrowing, aside from the interest that you put back into it.

The Last Resort: Personal loans

If all else fails and you have to take a personal loan, here are some ways to minimize the awkward tension when love and loans collide:

  • When you approach someone close for a loan, keep in mind that your relationship is more important than the transaction. Decide ahead of time that if your friend/relative chooses not to lend you the money, you won’t interpret the refusal as a personal snub. Likewise, if they lend you the money, show that you value the relationship by making payments a priority
  • Insist on making a written agreement, a promissory note. It’s significantly easier for you to suggest a formal contract than it is for your BFF to uncomfortably ask you for one. Consider your responsibility to find and pay for notarization
  • Make it official with a third party. Virgin Money–the same “Virgin” that puts out Ben Harper’s CD’s– is a quasi-peer-t0-peer lending Website that makes friend/family loans official, formal and structured.They manage the payment process and transfer money from your account when the payment is due. As can be expected, Virgin Money’s service entails service fees and charges for the electronic payment transactions. The biggest perk about using a service like VM is that you can have a formal agreement with your friend/family member lender, and once the agreement is made neither of you have to bring it up again because the service will manage the financial transactions. Thus you avoid payment-reminder phone calls that start with, “so how is your mom?”

Have you ever taken or given a personal loan? How did it turn out? Post your comments below

Author: "Stephanie Cuellar Butler, Contributing Writer" Tags: "Debt be gone, Psychology of Finance, bor..."
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Date: Wednesday, 21 Oct 2009 11:00

One of the first realities that you will face as a young professional entering the work force is the wall of paperwork associated with starting a new job. And if you are among the majority, you won’t know the first thing about how to fill out these documents, many of which will determine your financial future.

One of the first forms you will see is your W-4, which tells your employer how many federal income taxes to withhold from your paycheck. The Internal Revenue Service recommends filling a new one out each year as your financial situation changes.

The IRS Web site has instructions on filling out the W-4, including a “withholding calculator” that will estimate how exemptions will affect your tax return.

To get started:

  • Collect any past pay stubs or tax forms and visit www.irs.gov. Click on the link to “Check Your Withholding.” It will be in the middle section of the Web page.
  • Type in all the information they ask, making estimations where you can’t be exact. Just make sure your guesses are based on reality.
  • Once you get the calculation, read all the IRS suggestions. They may suggest that you decrease your amount of exemptions or that you must make up X-dollars before the end of the year. This is your ticket to avoiding big surprises come tax time in the spring. Heed their advice.
  • If you haven’t started your job yet, you will have made estimations based on your salary and expected taxes. Remember: you can change your withholding amount multiple times in a year; so don’t feel locked in to the exemptions that you write on your W-4.
  • Back at your company’s human-resources department, ask how many times you can change your W-4 exemptions.
  • Start on the paperwork: write in the exemptions that work best for you (for example, if you are a single 20-something and living alone with no dependents, one or zero exemptions would be typical).
  • The more exemptions you make, the fewer dollars will be withheld from your paycheck, so your paycheck will be bigger. But that also could mean you will owe money at tax time (if you do, and you don’t have that money set-aside for such a purpose, the IRS has repayment plans available). On the other side, if you make too few exemptions, you might find that you can’t live on your remaining wages.
  • After a few months of working with those exemptions, reassess your financial situation. Are you living comfortably? Use the withholding calculator again and see where you’re at.

On the road to financial security, financial experts say that making smart steps early in life will save you a lot of money and headache in the future. Understanding how taxes affect you as a professional is just one step. Now, get in the habit of saving a portion of your paycheck each month.

Author: "Anna Sowa, Contributing Writer" Tags: "Employment Help, Finance News, Start Sav..."
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Date: Monday, 19 Oct 2009 11:00

moneylaptopHave you been gathering up courage, toes at the water’s edge, to dive into the rough waters of stock market investing?

Or maybe you have to giggle when your bank savings account shows a monthly interest payment that’s less than your monthly allowance as a kid.

On the other hand maybe you need a loan but don’t want to deal with bank bureaucracy and fees, or maybe your credit isn’t established enough to get a decent interest rate.

Given the current state of our economy, those of us just starting to enter the world of responsible adult finances are in for a crazy ride. Luckily, we also have some up-and-coming alternatives to traditional bank and investment options. A hot new alternative is Web-based peer to peer lending.

Peer to peer lending is also called social lending and person to person lending (P2P). The principle behind the various forms of P2P lending is that a low-overhead Website makes a better middle-man than a bank or credit card company—allowing borrowers to get lower interest rates and better shots at receiving a loan, while everyday people can “invest” their money as loans that generally have a higher rate of return than a savings account or stock investment.

How does P2P lending work?

The details are slightly different for each company, so here’s a description and breakdown of the two most popular, Prosper.com and Lendingclub.com, as well as a new platform for peer to peer lending specifically for students borrowing to pay for school—People Capital.

Prosper.com, a San Francisco based company, is currently the leader in peer to peer lending after completing a brief “quiet period” while the SEC tried to figure out how to treat them. Prosper performs a credit check on borrowing applicants, and if the applicant has a good credit score score (640+), he or she can create a listing with the loan amount and the maximum interest they’re willing to pay. Lenders can then checkout the borrower’s general credit health and purpose of the loan to decide what interest rate they want to bid.

The really cool thing about Prosper is that lenders have the option of financing a part (as little as $25) of the loan, or many loans, instead of one full loan. This helps spread the investing lender’s risk, should the borrower default. Prosper just combines the lowest-interest lender bids into an unsecured loan (meaning no collateral is involved) that must be paid within three years. If all goes as planned, investors with Prosper see a 7 to 11 percent rate of return—better than most savings accounts.

Borrowers can benefit from the competitive bidding to lower their interest rate, but must pay a processing fee to Prosper of 1 to 3 percent of the loan when the bids are in, as well as a closing fee at the end of payments. A plus is that, unlike many bank loans, Prosper doesn’t charge prepayment fees for an early full payment, and otherwise the monthly balance is automatically deducted from the borrower’s account.

Lending Club differentiates itself by focusing on a more personal connection between lenders and borrowers. Though the identities of both are kept private (to prevent late-payment kneecap busting, no doubt) borrowers can post a great deal of personal info on their profiles. This can influence similar lenders to pick them, or be used to explain unusual circumstances surrounding the loan, which a bank would likely disregard but a living, breathing person might be more sympathetic about.

As on Prosper.com, Lending Club’s unsecured loans must be paid off in three years, and lenders can choose to only contribute part of a loan ($25+). Lending Club has a 1 percent service charge to the lender, in addition to a processing fee of 1.25 percent to 3.75 percent for the borrower. The borrower’s interest is determined by their credit score. Interest can run between 7.05 percent and 21.21 percent for borrowers. Lenders in 2008 got a pretty sweet deal, with an average investment return of 9.05 percent even after accounting for early payments (where less interest can be collected), defaults and the service charge.

Lending Club posts regularly updated performance statistics so you can check the company’s pulse before jumping in, or if you get antsy afterward. Investors can also choose to put their notes up for sale on the website.

People Capital is different because it exclusively matches up student-borrowers with cream-of-the-crop lenders. Since most college students haven’t had time or knowledge to build up good history, People Capital projects a Human Capital Score after dissecting and analyzing GPA’s, standardized test scores, along with the borrower’s college and major to determine their ability to pay the loan back.

Another important difference between People Capital and most other peer to peer sites is that the FDIC insures their lenders up to $25,000. Along with the safety net, lenders face tougher criteria—such as having a net worth of $1 million or annual income of $200,000— to lend on People Capital than with other companies.

Borrowers benefit from People Capital because the unsecured loans are available even if they don’t have a credit history. People Capital also has several payment options so students going in to fields with considerable startup time can have a little slack on finishing payments. Lenders may appreciate the ability to sift through applicants to “sponsor” a student at their old alma mater, or one entering their field.

Have you used peer to peer lending, either as a borrower or lender? Post your experiences below!

Author: "Stephanie Cuellar Butler, Contributing Writer" Tags: "Finance News, Start Saving, alternative ..."
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Date: Wednesday, 14 Oct 2009 11:00

Manisha ThakorThis is a guest post from financial expert Manisha Thakor.  Manisha is a rising voice in the area of women & money. If you want to get inspired about money management, make sure to visit Manisha’s website where you can sign up for her “Manisha’s Money Musings” blog.  She welcomes reader questions, so don’t hesitate to reach out to her.

In these recessionary times, millions of Americans have found themselves drowning in one of the most expensive types of debt out there – credit card debt.

Thanks to the Credit Card Act of 2009 however, relief is on its way. Come February 22, 2010 (and potentially as soon as December 1, 2009 ), there will be new consumer protections put in place.

This legislation has something for everyone…

1. ARE YOU UNDER 21? This regulation will help you save yourself from yourself, by restricting your access to credit cards. Gone are the days of free tee-shirts and pizzas in exchange for signing up for a credit card on America’s college campuses.

  • Credit card companies will no longer be able to issue credit cards to individuals under the age of 21 unless they either can provide proof that they can repay the money they are borrowing on that card or have a parent (or someone else over age 21) co-sign and agree to be responsible for that debt.
  • Right now the average college student is graduating with over $3,000 of credit card debt so having this temptation removed is huge.

2. ARE YOU TRYING TO GET ESTABLISHED?

  • This regulation restricts all interest rate hikes during the first year a card has been issued. Unless you have a card with a variable interest rate, card issuers can no longer raise your interest rate in the first year after a new account is opened.
  • The only exceptions are if the card was opened with a clearly stated promotional rate for at least 6 months or if you go more than 60 days without making your minimum monthly payment.

3. ARE YOU JUGGLING EXISTING CARDS? This regulation puts in all kinds of speed bumps you’ll like.

  • The interest rate on your existing debt can’t be raised unless, once again it’s a variable interest rate, the end of a promo period, or you are over 60 days late on your minimum payment (for any of these reasons you do not have to be notified).
  • On top of this for future debt that you may accrue on fixed rate cards, issuers have to give you 45 days notice on any rate changes. Issuers can no longer charge over-the-limit fees unless you’ve specifically asked to have your account set up to allow transactions over your credit limit.
  • Two-cycle billing is now banned.
  • And if you boo-boo and are 60 days late on a payment, after 6 months of on time payments the card issuer has to restore your prior interest rate.

4. ARE YOU DIGGING YOURSELF OUT OF DEBT?

  • This regulation requires the fair application of payments. In the old days, paying off your credit card debt was akin to eating a layer cake with your fingers while blindfolded. By that I mean you’d send in a payment – but it wasn’t always clear to you which layer of debt was being nibbled away at. More often than not, it was the lowest interest debt that got paid off first when you sent in that payment.
  • Under the new rules it will be your highest interest debt that gets paid off first.

5. ARE YOU A GIFT CARD PACK RAT? This regulation will enable you to shop till you drop.It applies to both prepaid cards as well as retailer cards. The two biggest changes are that:

  • (1) You get a full five years from time of purchase (or whenever money was last put on the gift card) to use it – so no more surprise expirations and
  • (2) As long as you’ve used the card once in the past 12 months, no “inactive” fees can be charged. (After 12 months of no activity you can be hit with 1 fee a month).

You can follow Manisha on Twitter


Author: "elisa cundiff, outreach coordinator" Tags: "Better Spending Habits, Consumer Protect..."
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Date: Monday, 12 Oct 2009 11:00

You’ve heard it said that having a baby is “the most natural thing in the world,” but I feel strongly the most natural thing in the world should be free, like sunshine or a light breeze. Both are delightfully natural, both are free.

As it turns out, the only thing free about bringing a little one into the world (aside from joy, love and other meaningful things) is getting the process started. Babies, and particularly the first born, bring along expenses you need to be aware of and budgeting for before the little bun gets to baking.

Why the rush to pee on a stick? Patience pays off

Results from a poll by babycenter.com show that 45 percent of women trying to conceive take pregnancy tests without waiting to see if their period comes (here’s another free “pregnancy test”). Why does that matter? It matters because doctors recommend using a test 5 to 10 days after a late period is due. So nearly half of the women polled paid an average of  $12 a test, risking a false negative because pregnancy hormones had so little time to build up. To save money on tests (generic Walmart and Walgreens versions are cheaper, but may give more false results) look for coupons online and fight that curiosity until at least a day after a late period is due.

The preexisting condition in your belly

Applying for coverage after getting pregnant may work against you as it’s considered a “preexisting condition.” Check your health insurance policy before you get pregnant, if possible. You may be surprised. We (I’m not pregnant, mom) were disturbed to realize our considerable coverage actually has nothing for prenatal or maternity care.

Here’s a starting place for maternity insurance and discount programs.

Ah for the days of giving birth in potato fields

Let’s backtrack from the delivery: Doctors recommend about 14 prenatal checkups-increasing in frequency as the trimesters progress- averaging $133 each (without insurance) according to the Agency for Healthcare Research and Quality. Without insurance or discount programs that’s $1,862 over nine months–$206.80 a month before the delivery, not including that awesome 3-D sonogram and bloodwork and tests. It is vital to look into getting coverage, as the costs will carry on well past infant checkups.

Without insurance deliveries range form $6,000 to $15,000 before doctors’ fees. A C-Section with complications and a longer hospital stay is the most expensive situation. Optional medical expenses that bring the price up: epidurals and circumcision for a baby boy.

Look in to purchasing insurance that has a reasonable deductible and low annual out-of-pocket cap, because many insurance companies consider your newborn on its own coverage upon birth. That means you’ll pay double  out-of-pocket-caps and deductibles (for you and the baby). You can ask the hospital you’ll deliver at what your estimated out-of-pocket costs will be when you register with them.

What happens in the hospital doesn’t stay in the hospital

It is illegal to bring your little treasure home without a carseat ($30 to $400), and that’s just first furniture baby will contact. Look to economize with a convertible carseat that will change for your growing infant, or a carseat/stroller combination. The other two primary expenses in the first year are food and diapers. Here’s a really cool cost calculator to give you an estimate of your first year expenses with a baby.

Trent from The Simple Dollar figured up that breastfeeding can save $1,733.75 versus formula in the first year. This doesn’t factor in the cost of a breast-pump (why does it feel creepy to type that?), which runs about $250, but a savings of even $1,400 in the first year makes breastfeeding look like a good idea. If breastfeeding isn’t possible in your situation, here are some moms’ breakdowns on the cost of different formulas. Their average is a little lower that Trent’s estimate, at $1,284 a year.

Once your baby is on to semi-solid foods, you can save about $4 a day over baby food jars (which can average $4.50 a day) by steaming and pureeing your own vegetables and cooked meats. Here’s a site with recipes and ideas for economical and nutritional baby foods.

Babies can go through 5-8 diaper changes a day– that’s 1,825 to 2,920 in the first year! If you use disposable diapers you can expect to pay $1,600 to $2,300 for them by the time your baby is potty-trained. According to the research I did no one has a solid fiscal argument for using disposable diapers.  In fact cloth diapers can save you big. The cost of using cloth diapers, which can range from a super-simple cloth to having more features than your minivan, is between $800 and $1,100 if you wash them yourself. Gross as it may sound right now, there are loads of helpful tips online for making cloth diapers easy, and they’ll help you save for the expenses of the next 18 years of your child’s life!

All told, your baby will be priceless. But choosing to be frugal with the necessities, and having adequate medical coverage, can make the experience that much more enjoyable.


Author: "Stephanie Cuellar Butler, Contributing Writer" Tags: "Better Spending Habits, Consumer Protect..."
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Date: Friday, 09 Oct 2009 11:00

Manisha ThakorThis is a guest post from financial expert Manisha Thakor.  Manisha is a rising voice in the area of women & money. If you want to get inspired about money management, make sure to visit Manisha’s website where you can sign up for her “Manisha’s Money Musings” blog.  She welcomes reader questions, so don’t hesitate to reach out to her.

Meet The 5 Items that Consume >50% of Your Lifetime Income

In these recessionary times, financial tips are flowing fast and furious about how to save money and stick to a budget. Facing a sea of information many people are asking, “Where do I start?”   For most of us, five areas of spending will consume over 50% of the money we earn during our lifetime, so that’s the best place to begin.  The five areas are:  Home, Car, Kids, Education, and Retirement.  Here’s what you need to know about each:

1.    Don’t bite off more HOME than you can chew.

How much house can you comfortably afford? For most people the answer is a house with a purchase price of no more than 3x their annual household income. Rationale:  the cost of a home includes much more than the monthly mortgage payment.

It’s also property tax, insurance, upkeep, etc.  Typically these costs run 2%-3% of the price of your home each year.

Assuming a 20% down payment, a 30-year fixed rate mortgage, and interests rates in the 5%-6% rate, the 3x your income rule of thumb will translate into total housing costs of roughly 30% of your gross income.

2.     Don’t let your CAR drive you to the poor house.

The same logic applies to your car. Most people can comfortably afford a car that is 1/3rd of their annual income. If you make $60,000 you can comfortably afford a car that costs $20,000.  If that seems low – now you know why so many Americans are in financial trouble.  They are driving it.

A car has many other costs than simply the monthly payment.  There’s insurance, gas, parking, maintenance, etc.  If you follow this rule of thumb,  your total transportation costs should be 10% or less of your gross income.

3. Don’t let your KIDS kick you in the wallet.

Kids are expensive.  From a purely clinical standpoint the Dept. of Agriculture estimates it will cost $220,000 to raise a child born in 2008 from diapers to age 18.

And that figure is before you add in the cost of college!  Deciding to be a parent is a major financial obligation.  Don’t make it worse by over-indulging your love bundles.

4. Don’t forget to ask “How high is too high for higher EDUCATION?”

It used to be good debt was defined as mortgage and student loan debt… and bad debt was everything else.  Not any more.  We’ve now learned that too much of a good thing can indeed be bad.

Rough rule of thumb, don’t take on more in total education debt than you think you are going to earn on average annually during your first 10 years after graduating (from college or grad school).

In plain English, if you think you’ll make $50,000 a year, don’t take out more than $50,000 in loans. The logic behind this is that if it takes you more than 10 years of paying 10% of your income a year in student loan repayments, it’s going to be tough to meet your other financial obligations.

5. Don’t underestimate the need to feed your RETIREMENT nest egg.

How much will you need to retire? A simple rule of thumb is to multiply your current income by 25.

So if you make $50,000 a year and want to maintain that standard of living in retirement, you’ll need a nest egg of at least $1,250,000.  Understanding as early on in your working life as you can what “your number” is will help you see how important it is to plan for this savings goal.

You can now follow Manisha on Twitter at:  http://www.twitter.com/ManishaThakor

Author: "elisa cundiff, outreach coordinator" Tags: "Better Spending Habits, Cheap Living Tip..."
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Date: Wednesday, 07 Oct 2009 11:00

I have a small child. My husband and I are astounded by how quickly he grows…algae. Yeah, my kid is a little turtle named Duck Puppet. I know this sounds sick, but we got him because he was super cute and tiny, and based on friends’ stories about his short-lived cousins we didn’t think expect he’d be with us very long. Surprise! Not only is he in for the long haul, but as he outgrows his little island our cute little impulse-purchase is getting expensive.

It’s easy to underestimate the costs when someone puts a soft little puppy in your arms, but pets can land you in debt if you don’t budget for them. Here’s a breakdown of what you can expect to pay for a cat or dog– still the most popular pets in the United States–in the first year, which is likely to be the most expensive. My cost averages come from Costhelper.com, the International SPCA, PetEducation.com and the friendly associates at my local pet stores.

Cat: These numbers are for adequate cat care for the first year. Nothing fancy from a breeder, just a cat from a local litter or shelter and basic expenses.

$491.25 average (first year)

$491.25 average (first year)

Expense Notes min. to max. cost
Adoption or purchase Shelters spay/neuter and give basic cat shots, so you pay more up front but may save in the end $0 to $150
Food A combination of canned and dry food $150 to $250
Spay/Neuter Males are cheaper due to an easier surgery. See if your state has inexpensive programs for low income owners $40 to $175
Litter box and dishes No frills here, just a basic set $10
Litter Tree based litters are more expensive than the traditional grey stuff, but they may have pet-health and odor benefits $100 to $150
Vaccinations Kitten shots, Distemper, Feline Leukemia, rabies. Shelter cats will have most, if not all, of these upon adoption $20 to $50
Scratching post or a few toys Depending on how cool you want your cat to be $5 to $35
Totals: Shelter cat Minimum costs and $75 adoption fee = $335
Shelter cat Maximum costs and $150 adoption fee = $595
Cat not previously fixed or vaccinated Minimum costs and free cat = $335
Cat not previously fixed or vaccinated Maximum costs and $30 cat = $700

I’ll leave out unplanned vet visits and the cost of scratched and “scented” furniture, but just so you have a ballpark those averaged about $100 for a year. Also not included–renters may have to pay a pet deposit. Count on about $100 for this.

Dog: With the huge range of dog sizes and breeds, these are average prices for a mixed-breed medium dog (click here for information on breeds-related health problems).

$696.75 average (first year)

Expense Notes min. to max. cost
Adoption or purchase Shelters spay/neuter and give basic puppy shots, so you pay more up front but may save in the end $0 to $200
Food Canned food and special diet formulas bring up the cost $170 to $500
Spay/Neuter Males are cheaper due to an easier surgery. $45 to $200
Leash, collar and tags The min. price is for a basic nylon set and PetSmart machine tags. The max is a retractable leash and fancy collar $18 to $50
Vaccinations Puppy shots, distemper, parvo and rabies. Shelter dogs will have most or all of these shots already $57 to $132
Heartworm pills This price also includes a heartworm check $52 to $102
Toys Squeakers and balls, food-treats not included $7 to $45
Dishes Basic Set for food and water $10
Totals: Shelter dog Minimum costs and $75 adoption fee = $332
Shelter dog Maximum costs and $200 adoption fee = $907
Dog not previously fixed of vaccinated Minimum costs and free dog =$359
Dog not previously fixed of vaccinated Maximum costs and $150 dog =$1189

The reason a dog seems cheap compared to a cat is that cat litter really adds up. So with these numbers it is assumed that you potty-train your dog without the help of a trainer, which would run between $75 and $350. As with cats I am leaving emergency vet visits and the cost of replacing soiled furniture, along with licensing fees which run from $5 to $50 depending on your county.

Once your finances are healthy enough and you can provide for one, adopting a rescued or shelter animal is a good option. Not only are you giving a good home for a pet that needs a little love, but all of their initial medical costs and appointments are taken care of. It’s very important to consider all the basic costs here before you get serious about adopting a pet. So go forth and budget, before you get caught up in the cuteness.

Author: "Stephanie Cuellar Butler, Contributing Writer" Tags: "Better Spending Habits, Cheap Living Tip..."
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