Archive for October, 2011

CFPB Talk 7:30 Tonight

At 7:30p.m. tonight (Wednesday October 26) the Consumer Finance Protection Bureau (CFPB)  is hosting a town hall meeting at the Minneapolis Public Library.  Listen to a live stream of the event at http://www.consumerfinance.gov/live-from-minneapolis/.

People will be sharing their concerns and experiences with the consumer finance marketplace.

Raj Date,  Special Advisor to the Secretary of the Treasury, and a panel including local leaders will be participating.

Advertisements

Once Upon a Dollar Bill

Parents who want to teach their kids to value and handle money often give them an allowance or pay them for doing household chores.

Alternatively,  FamilyEducation.com, working with Reading is Fundamental, has compiled a list of storybooks that can be a fun way to teach young children about money.

One recommended book is Alexander, Who Used to Be Rich Last Sunday, by Judith Viorst. The story begins with Alexander, who intends to save his three dollars, but instead wastes it on frivolous things, to his sorrow.

For each book, FamilyEducation includes a study guide with questions to ask your child both before and after reading the story. Each guide also includes activities –such as word problems to practice the math in the stories—and ways to motivate kids to save.

Here are some of the storybooks suggested:

Chicken Sundays by Patricia Polacco

Sam and the Lucky Money by Karen Chin

A Day’s Work by Eve Bunting

If You Made a Million by David M. Schwartz

For more ideas, see the list of suggested titles at the end of each study guide.

Plan When You Can

Financial Literacy at the Library hosted a presentation on Estate Planning Basics by William J. Brisk at its October 19th event.

Mr. Brisk spoke on the modern approach to estate planning which emphasizes the importance of protection against difficult transitions in your life, rather than simply determining the disposition of assets upon death.

Start with an individualized value-based plan, not with legal documents.  Planning should occur while you are healthy; delays could result in fewer options and greater costs.

A good plan determines who is in control of you and your stuff while you are alive:

  • where you live
  • medical treatment/care
  • lifestyle
  • your assets

Wills are desirable, but are not a complete estate plan.  A will:

  • names who gets what
  • names who is in charge (Executor)
  • must go through Probate (a timely, costly process that delays beneficiaries receipt of assets)
  • becomes Public Record

Assets that designate a beneficiary or are jointly owned are not subject to Probate.

Do not worry about the Gift Tax – Massachusetts has none and the Federal Gift Tax has a $5 million exemption.

Paying for long-term care is a real concern and can run as high as $14,000 month.  24/7 stay-at-home care is no less expensive than nursing home care and is not covered by government benefits.  Available government benefits for long-term care in assisted living include  VAHUD and PACE.  Medicaid offers assistance for nursing home care.

Remember to keep your estate plan current and to focus more on maintaining a desired lifestyle while you are still around rather than on saving taxes upon your death.

Investing Truths

The picture is gloomy:  Investments of all kinds have fallen in the last several years, and few experts are predicting any near-term improvement in the global economy.  So how do we rationally manage our investments when our emotions tell us to bolt?

For a useful perspective, see Vanguard Investment’s section on Investing Truths.

“Having a plan and the willingness to stick to it can serve you better in the long run than reacting to Wall Street noise, your emotions, or trying to time the market,” says Vanguard.

Useful interactive charts illustrate what happens when an investor pulls out during a down market and then re-enters later.

Try inserting your assumptions in the graph, How your emotions can affect a $10,000 investment.  It will show you the resulting stock market return for any time span between 1988 and 2009.

You can adapt the scenario by selecting at which point you would abandon the market and at which point you would re-enter. See how well you would have done compared to simply holding the investment.

Can you guess which approach almost always generates the superior return?

Another resource to understand better the effects of emotional investing is the article, Don’t let fear disrupt your investing at Fidelity.com.

Your Personal Cheerleader for Becoming Debt Free

Want to get rid of your credit card debt?  You can use several types of services:  debt consolidation services, debt management services, and debt settlement services.  But they may put you in a worse situation.

Instead, how about a cheerleader who can help you organize your debt and encourage you to keep to your payment schedule? That’s what the new website ReadyForZero.com claims to offer.

To use the online service, you must enter financial information, but not your credit card numbers or social security number.  You are then walked through the process of setting up a personalized pay-off plan.  Once underway, you have an easy way to check on your progress, while getting frequent tips on ways to meet your financial goals.

For more help with debt recovery, see Six New Tools to Help You Get Out of Debt  at CNNMoney.

Checking Accounts: Lower Interest Rates, Higher Fees

Checking account fees of all kinds are rising rapidly, according to a new survey by BankRate.com.  With interest rates at nearly 0% on most checking accounts, it is often not possible to earn more than a fraction on the funds you keep for check writing, cash withdrawal, and debit card use.

Why have interest rates dropped so much?  It’s a result of the government lowering its interest rates as it tries to stimulate the economy.  For the fifth year in a row, the interest a customer receives from a checking account has fallen, down to .08 percent.

Nowadays it is best to treat your checking account as a needed service.  Rather than looking for ways to earn money on your checking account, concentrate on avoiding at least some of the new and higher fees that banks are rapidly imposing.

If you have a non-interest account, for example, you may no longer be able to avoid monthly fees by signing up for direct deposit (usually of your pay check).  You may also need to maintain a higher minimum balance than previously.  The average required balance is now $5,587, according to the survey.

On the other hand, if you have an interest-bearing account, the rising monthly fees on the account – averaging $14.05 – likely will exceed any interest earned.

ATM fees have also risen.  In Massachusetts, they now average $2.35 for each withdrawal.  One way to lower your ATM use is to keep more cash stowed away until needed.

The charge for non-sufficient funds has jumped to an average of $32.00 per occurrence in Massachusetts. You can escape this fee by opting out of the service now. Then, if you don’t have enough funds for a purchase, your debit card will be declined and you can either use a credit card or your emergency cash or buy the item later.

Finally, some banks have even started charging for debit card use.  Bank of America recently announced that it will begin charging its debit card customers a $5.00 monthly fee.  Credit cards are an option,  if you use discipline by not spending money you don’t have.

For more details on banks in Massachusetts,  click here.