Archive for May, 2011

Know Before You Owe

This week’s Color of Money column in the Boston Globe alerted us to the proposed revamping of  mortgage loan disclosure forms.

The current law mandates that lenders provide two documents to mortgage customers:

  1. The Truth in Lending Act Disclosure Statement
  2. Real Estate Settlement Procedures Act (RESPA) Good Faith Estimate

Since the collapse of the mortgage market, these documents are getting a long overdue review. Neither one satisfactorily fulfills its purpose of providing borrowers with a clear, easy to understand description of loan costs and repayment obligations.

The new Consumer Finance Bureau under the initiative, Know Before You Owe,  recommends replacing  the existing documents with a single, two-sided form that clearly states loan terms.

Is the new form an improvement?  The Consumer Finance Bureau is soliciting feedback from citizens.  Take some time to review the exisitng forms, then compare them to the proposed replacement. Let Uncle Sam know which you think  is better by submitting your opinions on the Know Before You Owe page.

Confused by some of the language?  Look up definitions of unfamiliar mortgage banking terms in the Housing and Urban Development (HUD) Glossary.


Low-Stress Budgeting

Does the thought of following a budget stress you out?  Do you liken it to a crash diet?

Julie Soforenko, American Consumer Credit Counseling (ACCC), offered several tips at our last Financial Literacy at the Library event on how to track your money without pain.  If you missed Julie’s presentation, see the video here.

Treat your budget like a companion; it should feel comfortable and grow with you.  Julie recommends getting started by tracking your spending for a week.  It is important to include the weekend and to write everything down.  If you aren’t able to complete a whole week of tracking, do not give up.  Congratulate yourself for what you did accomplish and try, try again.

Track your spending by using the tool that works best for you:

Be accurate and include everything.  Write down all your expenses and look for the “holes”.  Holes may be small items such as pocket money for the kids,  cups of coffee or impulse purchases at the register.  Add up those items and you may be surprised.  Now do the same for your income.  Include everything:  salary, alimony, food stamps, rent money from relatives living with you.  For guidance, download the Budgeting Basics Survival Pack from the ACCC website.

How to save money by lowering your spending?  Some suggestions from Julie and audience members:

  • Couponing – use websites such as or  Remember to use coupons only on items you normally buy, otherwise it is not saving.
  • Pharmacy Drug Plans – may be a good alternative to supplemental insurance company plans and should be checked out.
  • Insurance Brokers – can do the research on the lowest premium/best coverage insurance at no cost to you.  Review your insurance plan annually.
  • Cable Plans – should be reviewed annually.  Call your provider and ask about deals and sales.  Chat with them  on the phone as they look up offers, and they may find you a better deal.  If you don’t feel helped by the first person you reach, call Customer Service again and you will probably be routed to a different agent.

Remember that overspending, and the fear of overspending causes stress.  The best way to reduce the stress is by taking control.

Bank Shopping Advice

The FDIC has just released the Spring issue of Consumer News, the online consumer newsletter.  This Special Edition, Shop and Save…at the Bank, is a Buyer’s Guide to Finding the Right Loan, Credit Card or Deposit Account.

Have you wondered whether your savings are deposited in an insured account?  Learn the questions to ask to find out.  Is “credit protection” or “identity theft protection” a worthwhile investment?  See what the FDIC has written about Cross-Selling offers.

Read among the dozen articles with expert tips on Home Equity Loans, Escrow Accounts, Prepaid  Cards and more.  Make sure to review the Basic To-Do list.

To subscribe to FDIC Consumer News, enter your email addresshere.

The Check is in the Mail

Have you wondered what to do with those unsolicited personalized blank checks you receive  in the mail  from credit card companies?  Are they a good deal?

According to Mitch Lipka’s May 8, 2011  Consumer Alert column, they may not be.

Barbara Anthony from the Massachusetts Office of Consumer Affairs warns  “these ‘checks’ are generally bad news for consumers, whether through very high interest rates or theft of account information”.

Not all blank checks are the same.  Many are actually lines of credit that carry a high interest rate.  Often the ones sent by credit card companies begin accruing interest from the moment they are cashed.

If you would like to stop receiving them, Lipka suggests contacting the Direct Marketing Association  to get removed from the mailing list.

Read the full article here.

Medicare Guide

The April 2011 AARP Bulletin published a practical Medicare Starter Kit with lots of helpful clarifications on:

  • what Medicare covers
  • the difference between Parts A, B, C and D
  • how and when to apply
  • how much does it cost
  • lots more!

It is easy to get confused by the requirements and benefits of this complex government-funded health insurance program.  Here are some useful tips:

  • Enroll at age 65 (unless you are working and covered under your employer’s plan).
  • You will not be notified unless you are already receiving Social Security.  The onus is on you.
  • Medicare is not free unless you qualify for a low-income program.
  • Coverage cannot be denied due to current or past health issues.
  • Mind the gaps: Medicare does not cover everything. Know where your loop holes lie.
  • Seniors only.  Family members/dependents are not eligible for coverage other than due to a disability.

For more information read the full article or contact  SHINE (Serving the Health Needs of Elders)  at 1-800-243-4636. For non-native English speakers, contact the Massachusetts Medicare/Medicaid Outreach and Education Program (MORE) at 978-683-7747.