Month: September 2008


REWARDING THOSE WHO SERVE …


It seems pointless to opine about the current Wall Street woes, bailout, and other issues that have yet to finish “unwinding” … I'll definitely spend some time exploring these issues when a specific direction has been decided upon. I thought this week it would be nice to focus on something much more positive (not a lot of positive financial news out there) …

On June 22, 1944, FDR signed into law what has since been heralded as one of the most significant pieces of legislation ever produced because of its far-reaching social, economic, and political impacts – the GI Bill. By the time the original GI Bill ended in 1956, nearly half of the 16 million World War II veterans had participated in an education or training program.

In 1984, Senator Montgomery revamped the bill which has since been known as the “Montgomery GI Bill” ensuring education programs for our newest generation of combat veterans. This year (2008), the GI Bill was updated once again. The new law gives veterans with active duty service on, or after, 9/11/2001, enhanced educational benefits that cover more educational expenses, provide a living allowance, money for books, and the ability to transfer unused educational benefits to a spouse or children.

Facts About Post- 9/11 GI Bill:
– Benefits take effect on August 1, 2009
– Benefit-eligible for up to 15 years (instead of 10)
– Provides a stipend of up to $1,000 for books and supplies
– Provides up to 100% of tuition costs
– Provides monthly housing stipend
– Transferable benefits (see additional links below for details)
– Unlike prior GI Bills, benefits extend to activated Guard & Reservists

Eligibility Requirements:
If you have served a total of at least 90 consecutive days on active duty in the Armed Forces since Sept. 11, 2001, you’re eligible. The actual benefits you receive under this program are determined by the amount of accumulated post 9/11 service provided. To be eligible for the full benefit, you must have three years of active duty service after 9/11 or have been discharged due to a service-connected disability.

Benefits Based Upon Service:
* 100% – 36 or more total months
* 100% – 30 or more consecutive days with disability-related discharge
* 90% – 30 total months
* 80% – 24 total months
* 70% – 18 total months
* 60% – 12 total months
* 50% – six total months
* 40% – 90 or more days

Additional Links:
About GI Bill 2008
Calculate Benefits
GI Bill Fact Sheet
GI Bill Home Page
New GI Bill Overview

IS YOUR MONEY SAFE?


The turmoil surrounding the financial markets in the past weeks has been unsettling to say the least. Bank failures, Fannie/Freddie, Lehman bankruptcy, AIG … the list of problems is a pretty long one. The surfacing question for most – 'Is My Money Safe?' …

Should I worry about the safety of my bank accounts?
In most instances, your money is FDIC insured (up to a limit of $100,000 at each bank – twice that amount for joint accounts). Insured accounts include checking, savings, and certificates of deposit (CDs).

Is coverage provided on my retirement-savings accounts?
Yes, certain types of retirement accounts are covered by FDIC insurance (Traditional, Roth, and SEP IRAs and Keogh Plans); deposits in these accounts are added together and insured up to $250,000 per person. This does not insure against the loss of value in your account by taking investment risk

What if I bank at a credit union?
The National Credit Union Share Insurance Fund was established by Congress to insure individual accounts up to $100,000 — similar to FDIC insurance. Credit Union retirement accounts are also insured at comparable levels to “regular” bank retirement savings accounts.

If my bank gets taken over (like IndyMac), how long will it take for me to have access to my money?
IndyMac customers had continuous access to their deposits through ATM and debit cards. After the bank was seized on a Friday by federal regulators, some customers did not have online or phone access for the weekend, but everyone had full access to all their insured money by Monday morning.

How can I check to see if all my money is insured?
Both the FDIC and NCUA websites have calculators that will allow you to plug in your account info and deposit amounts to find out whether any of your money is uninsured. Go to — http://www.fdic.gov/edie and http://webapps.ncua.gov/ins.

What if the firm where I have a brokerage account goes bankrupt (i.e., Lehman)?
Firms must follow strict rules about segregating customers' investments from the firm's money – so your account should remain intact even if the brokerages goes under and another firm takes over its business. For example, stocks, bonds, and mutual funds are physically held by an independent depository, not the brokerage firm.

What if my mortgage lender or servicer goes belly up? The problem is the lender's, not yours. Continue paying your mortgage; during the bankruptcy process your loan file will be transferred to a new owner or servicer and you will be notified by both parties. Your loan terms will remain unchanged even if the institution fails.

SOURCE Kiplinger's Personal Finance (10/2008).

ADDITIONAL RESOURCES.
FDIC — Deposit Insurance Awareness Campaign
Is My Bank Sound?
List of Failed Banks
Your Insured Deposits: FDIC's Guide to Deposit Insurance Coverage

SAVE MORE EACH MONTH …


During these difficult economic times, all of us are looking for ways to make a dollar go further. Recently, BusinessWeek asked financial experts for their recommendations for reducing expenses and saving more. They provided 25 suggestions for consideration …

1. Track every expense – it's tough to argue the fact that the best way to curb spending is to know exactly where your money is going.

2. Vacation in the off-season

3. Cut out investment charges and fees – Commissions and high cost mutual funds eat at ones returns; low-cost mutual funds and index funds can help you easiliy avoid unnecessary costs.

4. Cut back on eating out

5. Downsize your car – Too much car payment? Gas guzzler? …

6. Cut utility bills, especially electricity – Energy efficient light bulbs, turn thermostat down, unplug/turn off unused appliances.

7. Make sure you don't have too much insurance – Assess your needs and then shop from time to time to make sure you are getting a fair price.

8. Find cheaper beverages to drink – They refer to this as “fancy” coffee and drinks. I think you get the idea.

9. Examine your phone service – Examine your bill; unnecessary services?

10. Stop paying for premium cable – Some people will cut altogether to save money; others will 'downsize' to basic cable.

11. Drive less; consolidate trips – Public transportation, walk, bike – when driving, do errands for one trip.

12. Use warehouse stores wisely – Shop from a list; buy what you need. A good deal isn't so good if you wind up throwing half of it away.

13. Lay down the law with your free-spending friends – Inform them of your interest in spending less. You'll find most will be supportive.

14. Find free entertainment

15. Consider alternatives to a gym membership – Only worthwhile if you go regularly; consider working out at home, park facilities, or individual classes.

16. Cut your own lawn

17. Be smart with credit cards – Pay your balance in full to avoid interest and finance charges. Some advise consumers to go to a cash-based system to avoid impulse purchases.

18. Annualize your expenses – Putting an annual cost to items (i.e., $X for pizza, $Y for soda pop, etc.) can help put purchases into perspective.

19. Force yourself to save – Recommendation is to “trick yourself;” automatically transfer money to a savings or investment account; you won't be tempted to spend money that isn't there.

20. Institute a waiting period for major purchases – By waiting to make a major purchase (48 hours or so) you eliminate the strong urge to make emotional purchases. You can always make the purchase if you still want it.

21. Pay bills online – Most bill-pay services are free; save yourself the cost of stamps and potential late fees.

22. Make sure you're deducting all business expenses – Avoid the mistake of mixing business and personal expenses.

23. Buy generic drugs and groceries – Store-brand products in grocery stores are often made by the same manufacturers as the brand-name items.

24. Buy used – Cars, books, furniture, etc. can be purchased used for a fraction of the original price.

25. Shop smart – Coupons, comparison shopping, shop online, and then buy what is needed; when an item is 20% off, we often waste $8 to save $2.

If you're still looking for more ways to save, you can peruse the popular 66 Ways to Save Money publication.

NO MORE FREE LUNCH …


We're all familiar with the saying “There is no such thing as a free lunch.” Often, what appears to be 'free' comes at a heavy cost … ask a lot of college students about their “free T-shirt” or “free pizza.” For quite some time, retirement seminars held by financial service companies have commonly offered a free lunch as an incentive to participants while floating their sales pitches. Unfortunately, when national and state regulators examined these “free lunch” seminars in 2006 and 2007, they found that 57% used misleading or exaggerated advertising and sales materials. Guarantees of high returns, risk-free rewards, and confusing products …

Just as college students become targets of financial predators, so to do seniors. Microtargeting — a practice that has grown in popularity during the past decade — uses data gathered from public records, financial and other commercial transactions, and credit reports to identify individuals [that meet their desired target audience] for all types of promotions (i.e., phone, mail, and e-mail). In this case, a list of people that are elderly, living in a single-person household, having a history of opportunity seeking, become a perfect target as they are much more vulnerable to fraudulent marketing ploys.

Free investment seminars are widespread. According to a recent survey by the FINRA Investor Education Foundation, 78% of those polled got at least one invitation to a free investment seminar in the past three years; and nearly 60% got six or more offers. Nearly 25% of all those investors said that they went to at least one seminar during those three years.

Be aware that many very common financial designations – Financial Analyst, Financial Advisor, Financial Consultant, Financial Planner, Investment Consultant or Wealth Manager – are often just generic terms or job titles and may be used by investment professionals who may not hold any “real” designation! Know what the designations mean (see: http://apps.finra.org/DataDirectory/1/prodesignations.aspx). Some states, (go to: http://www.sos.mo.gov/securities/news.asp?nID=694) such as Missouri, have established rules to stop securities brokers and investment advisers from using misleading credentials targeted at senior investors. Unfortunately, this list of states is very small (only four – MA, MO, NE, and NH).

ADDITIONAL RESOURCES.
2007 “Free Lunch” Investment Seminars (Missouri Report)
Are you Vulerable? Play the Scam Game
Avoiding the Heartburn from the Free Lunch
Check the Background of the Investment Professional
File an Investor Complaint
Top 10 Threats for Investors: 2008

CREDIT/SECURITY FREEZE


I started writing about the issue of a credit freeze (sometimes referred to as a security freeze) a couple of years ago when they first surfaced. This past week there was [finally] some refreshing information coming from the State of Missouri, one of only five states that had yet to pass credit freeze legislation.

Credit Freeze Refresher
Each year, more than 8 million people fall victim to identity theft in the U.S. People fall prey for numerous reasons: mismanagement of personal information, fraud and financial scams, compromised data, dumpster diving, oftentimes for reasons beyond ones own control. The credit freeze was developed as a way to allow a consumer to protect their personal information/credit by “freezing” their credit file. With a credit freeze, no one (including you) can open any form of credit in your name until your credit file is “thawed.” This has become a very streamlined process which can now be taken care of completely online.

Nearly a year ago (11/1/07), the credit bureaus voluntarily offered to allow credit freezes to be available to everyone (a 'benefit' that had prior only been avaialable to residents of states that had passed credit freeze legislation). Last week, the Missouri legislature passed a state credit freeze law also lowering the cost of a credit freeze to $5 ($10 is average — it is also the max charged). The Governor has already signed the bill and it took effect last week (August 28).

Credit Freeze Instructions
Instructions for freezing ones credit can be found on the website of the individual credit reporting agencies:
Equifax
Experian
TransUnion (FREE Online)

* Click here for a comprehensive list of State Credit Freeze Requirements and Fees.




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