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.

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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!

Tips on Improving your Credit Score

Want some quick advice on how to keep your credit score in the favorable zone?

Listen to this one minute podcast on Quick Credit Score Fixes from Practical Money Skills.

Suggestions include:

  • Set up automatic payments for recurring bills
  • Don’t close older, unused credit card accounts (15 percent of your score is based on length of credit history)
  • Sign up for text or email alerts for when your bank balance drops too low

For more ideas on improving your credit score and how to recover from a financial setback, come to the Newton Free Library on Wednesday June 20th for our final Money Smart presentation on Financial Recovery.

Refreshments provided by Whole Foods Market will be served!

What is your Scam IQ

How clever do you think you are at spotting scam emails?

Check out this list from mint.com on frequently used subject lines in scam emails.  Some like:

Congratulation!!! You have just won $USD 1,000,000

are blatantly suspicious, but others such as

Postal Notification

can be tougher to recognize.

One way to avoid a Facebook-related scam is to turn off your email notification option.

See the article  here.

What is hiding in your 401k?

New rules from the labor department require employers to tell you exactly how much your 401K plan is costing you in fees over and beyond the costs for investment management.

Until now, even employers as plan sponsors have found it difficult to know how much they are charged for administrative services by investment providers, often mutual fund companies. These fees – legal, accounting, recordkeeping – are usually paid for with employees’ funds.

Most employees aren’t even aware of these costs, but they range from .28% to 1.38% annually, according to a survey by Deloitte/Investment Company Institute cited in the New York Times article, The Curtain Opens on 401k Fees.

With such information readily available, employers can now try to renegotiate their401K contracts, and employees can select the lowest cost investment choices.

The drip-drip-drip of fees adds up. According to the U.S. News and World Report article, How to Take Advantage of 401k Fee Disclosures:

“A Towers Watson analysis of target-date funds, the most common default 401K investment, found that most target date fund owners lose 30 percent or more of their potential retirement income to fees.  That works out to be between five and 15 years’ worth of retirement income that is deducted from a 401k account over a worker’s lifetime.”

Frugal Living Advice

These economic times have spawned a host of websites with ideas for saving money.

Do a word search on “frugal living” to sample the many ingenious suggestions for scrappy and thoughtful people.

At frugalliving.about.com, view the many videos on saving money such as How to Slash your Grocery Store Bill to How to Negotiate a Car Price to tips on holding your first yard sale.

At Wisebread’s frugal living section  there’s an article on How to Get into a Theatre and Watch Movies for Free – legitimately.  Among the many cooking tips is, 15 Ultra-quick Homemade desserts.

At MoneyNing.com, read Saying Yes to Up-Sell is Saying No to Being Frugal to understand how to arm yourself against subtle selling.

Lastly, read  Libraries Are Better Than You Think  to be reminded of the many free pleasures available at local public libraries.