Sunday, March 21, 2010

“Personal-finance guru updates advice for the recovery - San Jose Mercury News” plus 3 more

“Personal-finance guru updates advice for the recovery - San Jose Mercury News” plus 3 more

Personal-finance guru updates advice for the recovery - San Jose Mercury News

Posted: 21 Mar 2010 08:27 AM PDT

The first time I read Jane Bryant Quinn's book "Making the Most of Your Money," it struck me as the personal-finance equivalent of "The Joy of Cooking." Everything you ever wanted to know was somewhere in those pages. But with more than 1,000 pages, the thought of sitting down to read the book cover to cover was daunting.

I skipped and skimmed, using the index to find the topics I needed to know when I needed to know them. It was the top reference book on my shelf until this year, when Quinn sent me her updated version, "Making the Most of Your Money Now."

Quinn, the renowned Newsweek columnist who has been writing on personal-finance topics for more than 30 years, focuses this rewrite on many of the top issues of today, such as recovering when you've been savaged by the economy. She talked with me recently about how Americans can deal with today's tough market.

What is the most important thing for consumers to do now?

You need to get organized and see where you are economically. If you have been knocked back by the economy, you basically need to begin again, and you can't get on top of your finances until you know what you have.

Create piles — credit card debt, other debt, cash savings, college savings, retirement investments. How much are you saving and how much are you spending? Where do you stand with your retirement savings and emergency savings?

That could be depressing. There are numbers indicating

that people have built their 401(k) plans back up to where they were at the end of 2007, but it's now 2010 and we're three years closer to retirement. How should consumers deal with three lost years?

You are going to have to save more money. You can pretend that you don't have to. But the reality is that your house and the stock market aren't going to make you rich, so you'll have to do it the old-fashioned way — by putting money away yourself.

The easiest way to save is by making it automatic. Have, say, 5 percent of your income taken out of your paycheck every month. Even if you are living paycheck to paycheck, you usually don't miss that 5 percent. If that works, then raise it to 10 percent or even higher.

The thing is, if you lose your job when you are 55, that's it. At that point, whatever you have managed to save is going to dictate your standard of living for the rest of your life. The people who have thought about it in advance and have done some preparation can make it work. If you haven't done anything and you get to that point, you've blown it.

If someone has to choose between saving and paying off debt, what is best?

Financially speaking, you'd say to pay down your credit card debt because you're likely to get a better return on that money. But I think that any interruption in the habit of saving is dangerous. You could pay off your consumer debt and then get into more debt because you are not in the habit of saving.

So if you are talking about paying down credit card debt and saving in your 401(k), I think you have to do those simultaneously. I think you should be splitting your money between those two.

What should people do if they have some money in retirement plans and savings? How should they invest it? Can the stock market be trusted with long-term money anymore?

People had this terrible thing happen to their investments at the end of 2008 and they reacted to it by putting their money in certificates of deposit, rather than stocks. But the people who did that missed out on the near-70 percent gain that started in March 2009. And they still aren't in stocks.

You need bond funds as a safety net for when the stock market goes awry, but part of your 401(k) and other savings should be back in the market — permanently. I use the rule of thumb that you should subtract your age from 110. The result is the percentage of your assets that you should have in stocks. So, if you're 50, that's 60 percent.

What about individual stocks?

No. Don't buy individual stocks. You and I are not analysts and we can never know with certainty what's going on inside a company — how are the profit margins; is it using or developing the right technology; what's the competition doing; and what are the problems they face and what is management doing about them. If you don't know those things, you don't have the basis for a decision to buy, hold or sell. And one bad pick can eliminate the benefit of years of patient savings.

Instead of individual stocks, buy stock mutual funds, especially index funds that follow the market as a whole. Tons of research shows that mutual fund managers don't beat the market over time. You won't either. But you'll beat the fancy managers by investing in the entire market through index funds.

Any closing advice?

Don't look back. Don't kick yourself. What happened happened. Now you need to figure what you are going to do about it. Your best strategy is now to spend less, save more and diversify. Forget remorse. The only thing to do is look forward.

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Personal Finance: Overlooked tax credit for savers - Philadelphia Daily News

Posted: 21 Mar 2010 08:20 AM PDT

If you can barely scrounge up enough cash to pay the bills, saving for retirement might be relegated to your good-intentions list.

But with the nation deeply in debt and concerns mounting about Social Security and Medicare, Americans are going to need more than good intentions to secure their future. And your tax return, of all places, might help you get there.

Buried deep within the tax forms is a treat for those who think they cannot afford to save. It is called the Saver's Credit and provides up to $1,000 from the government to put in an IRA or Roth IRA for those who qualify.

If your income is low enough, and you put any money into a 401(k), 403(b), or other retirement-savings plan at work in 2009, you might qualify. Use IRS Form 8880.

Though the full $1,000 credit is available to single people with income of $16,500 or less who contribute at least $2,000 to a retirement-savings account, singles making up to $33,000 can obtain smaller credits. You do not need to save $2,000, but the largest credit comes if you do.

The credit for married couples disappears when they make more than $55,501, and the maximum is available with income of $33,000 or less. If each spouse saves $2,000 in an IRA or 401(k), they can get up to $2,000.

 

Some savvy planning

Through deductions and funding IRAs, individuals can lower their income to within the technical "adjusted gross income" requirement and qualify for the credit. Financial planners who are savvy with the Saver's Credit will often have people submit their tax return, say they are opening an IRA or Roth, and then fund it with their refund that includes the credit, if they get their refund and deposit it in the IRA by April 15.

If you use Tax Act or Turbo Tax, which are available free at www.irs.gov, the software will do the calculations so you can see what credit amount is possible. Also, free tax clinics are available through the IRS Volunteer Income Tax Assistance Program (1-800-829-1040) or AARP (1-888-227-7669).

Make sure any tax preparer you use knows about the Saver's Credit. And do not pay any preparer to get your refund early.

The credit was established to provide incentives to save, because Americans typically fall far short of saving what they will need for retirement. Half of Americans between 55 and 65 have saved less than $80,000. Yet, Social Security pays less than $1,200 a month, on average.

As individuals have lost jobs, or worried they might, they have been less inclined to save for retirement. Only 49 percent of workers are saving through 401(k)-type plans, down from 55 percent in 2008, according to the American Savings Education Council.

 

Concerned over savings

But people are concerned about their lack of saving. In a recent survey, the council found that 77 percent of low-income and 54 percent of moderate-income households said they were not saving enough for retirement and knew their standard of living would suffer in retirement.

People who fear losing access to their money can use the credit to fund a Roth IRA, from which they can make withdrawals at any time and for any reason without being penalized. So the funds deposited, but not the earnings, are available if they lose their job or have a household emergency.

IRAs and 401(k) accounts do not provide such flexibility. Still, given that it takes years of saving to accumulate what is needed for retirement, it is best not to tap any retirement savings early.

The federal government says that many eligible people do not use the Saver's Credit because it is complicated.

The Obama administration is proposing rules to make it easier to calculate. In addition, people currently cannot qualify for the credit if they do not owe any taxes, but the Obama proposal would change that. It also would raise the income eligibility.

 

Gail MarksJarvis is a personal-finance columnist for the Chicago Tribune. E-mail her at gmarksjarvis@tribune.com.

 

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Personal Finance: As ID theft grows, be on guard online - Sacramento Bee

Posted: 21 Mar 2010 01:03 AM PDT

Sitting at the computer to pay your bills, go shopping or do your banking is common. It's quick, convenient and oh-so-green.

But it's not without risks. And while most transactions go through seamlessly, you can unwittingly fall victim to full-blown identity theft, or just a subtle trickle of money from an account.

For Marika Rose, a Sacramento communications consultant, it happened so stealthily that it took years before she noticed.

In January, she spotted a couple of puzzling charges on her debit card statement. The amounts were small – $24.95 – and she'd seen them before, but always assumed they were for purchases she or her husband had made. Curious, she started looking back through old statements and found dozens of similar charges. When she called the company listed on the statement, Rose was told the monthly charges – which had been quietly increasing since 2007 – were for a "shopping membership" that she unknowingly signed up for while making an online purchase.

Digging deeper, she discovered her "membership" had sucked more than $1,100 out of her account in the last three years.

"I was shocked that in little increments, a company could siphon off so much from my checking account," Rose said. She assumes the membership fee got started from a pop-up window that she didn't opt out of.

Ultimately, the company reversed all the charges and she canceled her debit card. She also filed a dispute report with her financial institution.

Technically, Rose's experience isn't identity theft, which is the illegal use of personal financial information to commit fraud.

In 2009, identity theft jumped 12 percent, hitting 11.1 million U.S. consumers, according to an annual survey released last month by Pleasanton-based Javelin Strategy & Research.

In California, an estimated 1 million adults got nabbed by identity theft last year, according to Joanne McNabb, chief of the state Office of Privacy Protection.

"It doesn't seem to be going away and it's getting more sophisticated and more organized by criminal rings," said McNabb.

On the heels of the Javelin findings, the Federal Deposit Insurance Corp. recently reminded consumers to take precautions. It even posted its own YouTube video, "Don't Be an Online Victim."

"Online fraud is an ongoing game of cat and mouse," fraud specialist David Nelson said in the FDIC's warning. "Crooks continuously hunt for security holes, banks and merchants plug those holes, and then the criminals find new ones to slink through."

Consumers can keep the bad guys at bay, he says, by taking precautions and remaining vigilant.

Among the FDIC's tips:

• If you bank online, frequently check your accounts to spot errors or fraudulent transactions. The sooner you detect a problem, the easier it can be to fix.

• Don't respond to "urgent" requests. Never give out your Social Security, credit, debit card or PIN numbers in response to an unsolicited e-mail, text message or phone call. That "urgent" message purportedly from a bank, merchant or government agency (such as the IRS) could be a scam attempting to trick you into divulging personal and account information.

• Watch out for bogus text messages. Cell phone texts claiming that your bank account has been "blocked" and you must call to fix the problem can be a scam. If you make the call, you'll likely be asked for your account and PIN numbers, which can be used to create counterfeit debit cards.

• Don't open attachments or click on links in unsolicited e-mails. Your computer could become infected with "spyware" that changes your security settings and records your keystrokes. It lets online thieves silently steal your passwords, bank or credit card numbers and obtain answers to security questions, like your mother's maiden name.

In one recent example, the FDIC said, criminals sent out fake IRS e-mails warning recipients they were being investigated for unreported income and advising them to click on an attachment for more information. Doing so launched a program that allowed hackers to install spyware on personal computers, in order to access bank accounts.

For more FDIC tips, see accompanying "Avoiding Identity Theft."

McNabb said a lot of identity theft is "beyond the control of consumers to prevent," things like data theft from businesses or hospitals. But in general, she said, consumers should keep their computer well protected with security software and avoid responding to any online "phishing" for personal financial information.

If you do become a victim, it's not a pleasant aftermath. Sacramentan Rosemary Villanueva, who worked years in financial services, calls the experience "horrifying." Several years after she and her husband moved here from Monterey County, someone used her Social Security number and old address to open accounts in her name. The bills: $1,600 from PG&E, $2,000 on two AT&T accounts and $50 in late fees on a Monterey public library card.

Villanueva said she spent "hundreds of hours" closing accounts, filing police reports, writing letters, submitting documents and verifying home ownership, etc.

"It's a lot of work, a lot of time and very stressful," said Villanueva, who's now semi-retired. "You're treated as the guilty party and have to prove your innocence."

For tips on what to do if you're an identity theft victim, contact the state Office of Privacy Protection at www.privacy.ca.gov or call (866) 785-9663. For other sources, see accompanying "Identity Theft Resources."

© Copyright The Sacramento Bee. All rights reserved.

Have a personal finance question? Contact The Bee's Claudia Buck at (916) 321-1968.

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Sentinel adds new personal finance section, comics - Santa Cruz Sentinel

Posted: 21 Mar 2010 01:25 AM PDT

Dear readers,

You'll notice some changes in today's Sentinel. The good kind -- as in, more news with the Wall Street Journal Sunday and more entertainment with expanded and enhanced Sunday comics.

We're dramatically increasing the number of comics we run on Sundays, from 15 to 23. You'll likely recognize many of the 16 new Sunday strips because they are strips we now run on our daily comics page. Look for Zits, Bizarro, Pickles, Pearls Before Swine, Rhymes with Orange, Get Fuzzy and Non Sequitur to name just a few of your favorites you'll get in full color once a week.

Will everyone be happy with the changes? Favorite strips are like family members, someone with whom you share your morning cup of coffee, and the change can be jolting. We took that into consideration when deciding what strips to publish. We were guided by the same criteria we've used as we've updated our daily comics page during the past 18 months; we wanted comics that would appeal to a wide range of readers -- a mix of older strips and more contemporary ones, and we wanted strips still being drawn by their creators. And, oh yeah, they also had to be funny.

We chose the package we are unveiling today because we believe it is a great mix of classic, current and up-and-coming strips. We were able to assemble the collection by teaming up with other MediaNews papers in our region.

Let us know what you think. Send your comments to Santa Cruz Sentinel, Sunday Comics feedback,

1800 Green Hills Road, Suite 210, Scotts Valley, CA 95066, or e-mail comments to comics@santacruzsentinel.com.

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We're also reintroducing the Wall Street Journal Sunday to our Business section. The Sunday Journal, produced by America's leading business publication -- and most circulated newspaper -- features valuable family and personal finance advice, along with insight on money matters, from planning for your kids' college years to how to prepare for retirement.

We think the Sunday Journal will provide an invaluable resource for our readers in our current economy, where every dollar is counted, and where every investment decision should be carefully considered.

In addition to the Sunday Journal, the Sentinel Sunday Business section will include more local news and features, including popular business columnists and our weekly People in Business feature spotlighting the local business community. We're also beginning a weekly Technology page in the section.

Oh -- one other change is coming. Starting April 2, we're bringing back a standalone section for local Sports, Wednesdays through Sundays. As you know, the Sentinel brings you a complete roundup of local prep, college and recreational sports, in print and online. We hope you like our enhanced coverage.

Want to comment on this column or other topics? Check out Sentinel Editor Don Miller's blog at http://www.santacruzlive.com/blogs/dmillereditor. E-mail for Don Miller should be sent to dmiller@santacruzsentinel.com.




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