Money Lessons

It is never too early to learn about money.

If you expect your children to receive gift cards or other types of monetary gifts this holiday season, you may want to use the occasion as a teaching tool.

The American Library Association has created a list of children’s books on the topic of money.

“This list was developed in May 2012 by the Quicklists Consulting Committee of the Association for Library Service to Children, a division of the American Library Association, in support of the Money as You Grow website, developed by the President’s Advisory Council on Financial Capability which provides essential and age-appropriate financial lessons that kids need to know.”

The Money as You Grow book list offers age-appropriate reading for years 3-13.  Many of the titles such as the How Economics Works series and Money Madness by David Adler are available at the Newton Free Library.

Volunteers Needed

The AARP Foundation is looking for volunteers to help with its annual tax aid program.

AARP Tax-Aide is the largest free tax preparation assistance program in the U.S.

You do not need to be a tax expert to be of help.  Whether you are good with numbers, people, computers or speak a foreign language, your service is welcome. Training classes are available.

For more information and to register, go to aarp.org/taxaide.

Guide to Giving

The December 2012 issue of Real Simple magazine includes a helpful guide with 5 tips on charitable giving.  It recommends doing some research on the charity of your choice before making a donation. Familiarize yourself with the organization:

1. Understand the mission: should be clearly stated on the charity’s website with specifics.
2. Verify the group’s non-profit status: its 501(c)(3) IRS status can be checked out at Guidestar.org. Without the designation, your contribution may not be tax-deductible.
3. Know the charity’s spending ratio (the percentage of the budget that is spent on programs and services): go to CharityNavigator.org to view a financial analysis including spending ratios. A ballpark figure of 75% or higher is desired.
4. Accountability and transparency practices: the governing board should include at least 5 members independent of the charity.  Go to the Better Business Bureau Wise Giving Alliance at give.org to find out.
5. Ask about results: most mid to large charities conduct self or third-party assessments and should be forthcoming in sharing the findings.

Outside of the websites listed above, you may want to ask a representative from the charity the same types of questions and for a copy of the annual report.

Popular Passwords

Popularity may be welcome, but make sure it does not apply to your online passwords.

Splashdata has released its annual list of the most commonly used passwords and the top three remained unchanged from 2011.

What was number one on the list of the Worst Passwords of 2012?

“PASSWORD” followed by “123456,” and “12345678”.

“SplashData’s top 25 list was compiled from files containing millions of stolen passwords posted online by hackers. The company advises consumers or businesses using any of the passwords on the list to change them immediately.”

It advises using passwords with eight or more mixed-up characters.  Include numbers, underscores and punctuation marks.  It also recommends creating a new password for each website and more importantly do not use the same user name/password combination for your online financial transactions that you do for social media sites.

“How To” Videos from FINRA

The FINRA Investor Education Foundation has developed a series of short “how-to” videos on subjects ranging from budgeting to credit to learning how to spot investment scams.

How To Build a Budget shows you how to establish spending priorities so you can create and maintain a workable budget.

How to Control your Credit teaches some simple ways to control your spending and pay down your balances.

How to Spot Investment Scams in 6 Simple Steps identifies the red flags of investment fraud and instructs on how to check the legitimacy of an investment product or professional.

More videos are in the works and are coming soon.

Know your Cards

Consumer-Action.org has introduced a new website to help consumers understand the current laws that regulate all forms of plastic payment such as credit, debit, prepaid and gift cards.

KnowYourCard.org “presents key payment card changes, explains how they could affect cardholders and offers tips to help consumers make the right moves”.

The At-a-Glance Card Rulebook provides more detailed information and an overview of changes for each type of payment card.

Explore the database of Q&As. Use the search box, browse by category, or send your  question to Consumer Action via a form on the site. Feedback is appreciated, so let them know about your experience with the website and how it can be improved.

Jobs in the New Economy

Come and join executive, leadership and career development coach Danila Székely tomorrow night, Tuesday, October 23 at 7:00 pm at the Newton Free Library for a program titled Reinventing Yourself in Today’s Economy. This program is for people who are considering a career transition, currently engaged in a job search or are interested in re-defining their career.

The interactive session will include tools, suggestions and exercises to help participants take the next step in their careers. Be prepared to share your questions, challenges and successful approaches that have worked for you.

This is the second presentation in the ongoing Job Seekers, Career and Professional Development Series.

Telecommuting Tips

Contemplating a switch to work-from-home status to save on commuting costs?

While it sounds like a no-brainer, Women & Co. offers some worthwhile tips to follow to avoid potential pitfalls.

1. Be on time – a few minutes late to a virtual conference will have your colleagues thinking you just rolled out of bed or are nursing a hangover.  Maintaining professionalism is crucial.
2. Hire a sitter – Don’t attempt to multi-task with childcare.  Either have the children cared for outside the house or have a designated provider during business hours.
3. Let the dishes sit – Same as above.  Household chores can wait. Clients may become suspicious if they hear running water and clattering china in the background during a phone call.
4. Set boundaries – being at home does not make you the go-to person for friends and neighbors needing someone to receive packages or meet the cable guy.
5. Set a schedule – it is important to establish a work schedule and more importantly a quitting time.  Don’t become a workaholic and spend evenings and weekends on job-related tasks.  Your homelife is a priority.  Remember why you chose to work from home in the first place.

Read the online article here.

Frank Talk

Financial Literacy at the Library concluded its Speaker series on July 16 with a standing- room only crowd gathered to hear Congressman Barney Frank discuss Financial Reform and the Economy.

Congressman Frank highlighted the consumer protection laws that have been enacted under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act)  such as the creation of the Consumer Financial Protection Bureau (CFPB).

Under the current leadership of  Richard Cordray, the CFPB was established to “ensure American consumers get the clear, accurate information they need to shop for mortgages, credit cards, and other financial products, and protect them from hidden fees, abusive terms, and deceptive practices.”

As part of Dodd-Frank, the CFPB  oversees mortgage settlement rules and enforces compliance under the Real Estate Settlement Procedures Act (RESPA).   It is now simpler for consumers  to compare mortgage fees and closing costs before committing to a lender and settlement day surprises are far less likely.  It also prohibits institutions from providing a mortgage that the  borrower cannot repay.

Frank offered some history on the causes of the financial crisis.  He cited two primary sources: securitization and information technology.

Securitization refers to the conversion of mortgages into bundled  securities (mortgage-backed securities or MBS) which are then sold on the secondary market.  With securitization, banks no longer keep mortgage loans, but sell them shortly after creation.  Consequently, they become less concerned with the ability of the borrower to repay the loan. Loan quality suffered and the subsequent mass defaults led to a crisis in the financial markets which had been gobbling up the “low risk” mortgage-backed securities.

Reform under the new law requires that the securitizer (packager) retain a portion of the investment risk as an incentive to produce a higher quality MBS.

Information Technology made securitization possible by enabling the expeditious packaging of  thousands of loans to create and market as attractive investments.

For a good summary of the Dodd-Frank act, click here.

To see a video of Congressman Frank’s talk, please visit the Newton Free Library YouTube page or check our catalog for the DVD.

Financial Literacy at the Library is grateful to all those who participated in our monthly Speaker series, as audience members,  staff and consultants.  We would like to express a particular thank you to Roberto Mighty and Michael Yip of Celestial Media whose expert filming of our events extended our ability to provide financial education outside the walls of the Newton Free Library to the virtual world.

Financial Recovery

Financial Literacy at the Library concluded its presentation of the FDIC Money Smart series on Wednesday June 20.   Julie Soforenko from American Consumer Credit Counseling led a discussion on Financial Recovery after a Setback.

Participants who braved the hot temperatures to learn how to develop and implement a financial recovery plan were rewarded with snacks and sweets courtesy of Whole Foods Market.

Julie introduced us to the 4 basic steps in financial recovery:

1. Evaluate Your Current Financial Situation
2. Develop a Financial Recovery Plan
3. Implement Your Plan
4. Evaluate and Adjust Your Plan

To evaluate your current situation, keep count of all your incoming and outgoing items.  To achieve an accurate picture, Julie recommends you track your spending for at least one week and include everything, no matter how small.  Morning cups of coffee, donuts and loans to friends add up over the course of a month.

When developing your recovery plan, first prioritize your bills.  Student loans, rent, utilities and food should be paid before credit card debt.

Cut back on expenses where you can: double up on errands, rent a DVD rather than going out to the movies, enjoy pot luck dinners with friends rather than going to a restaurant. Never go food shopping while hungry or without a list. Review your insurance policies and cable/telephone service plans  annually and shop around for better rates.  If you have been on time with your credit card payments, ask the card issuer for a lower rate. Find cheaper substitutes on entertainment, but do not cut out fun things altogether. Recognize the benefit you experience from an expense, then find a less expensive substitute.

Establish SMART Financial Goals (Specific, Measurable, Attainable/Achievable, Realistic, Timely).

To start rebuilding credit, first order a free copy of your credit report at www.annualcreditreport.com. You may request one copy from each of the three credit bureaus (Equifax, TransUnion and Experian) once a year. Mark your calendar to order one every 4 months.  Check the report for errors and if you find one immediately contact the reporting bureau.  Contact the creditor in writing to dispute the item. Errors on a credit report can be removed but accurate negative histories will remain on the report for seven years.  Bankruptcy will remain on the report for 10 years.  For more information on correcting errors in credit reports including a sample dispute form visit the Federal Trade Commission at  ftc.gov.

Consumers may apply for debt settlement (reduction in total amount due) directly with a creditor.  Julie warned against using a debt settlement company as they are often a cover for scams. For bills that are 3 months overdue or more, call the company yourself and speak with the billing department.  If a debt settlement plan  is negotiated, remember that the amount forgiven will be considered income by the IRS and will be subject to income tax.  Further, it will appear on your credit report as a debt not paid.

Your budget should be dynamic and adjust to changes in circumstance such as:

•   a change in income or expense
•   after accomplishing a financial goal
•   when transitioning to a new life stage

Financial Literacy at the Library would like to acknowledge the contribution of Julie Soforenko whose clear voice and thoughtful explanations over the past two years brought the  FDIC Money Smart curriculum to life for our auditorium and online audience.  Thank you, Julie!