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June 27, 2008

How I survived my first recession


It ended the year before I my college graduation. There was an overhang that was difficult.
Unemployment in Florida that year peaked at 9.7 percent.

In addition, everyone wanted to be a journalist. The inspiration of Watergate and Woodward & Bernstein hadn't yet worn off.

So off I went. Driving around Louisiana. Because in my hometown of New Orleans, the newspaper wouldn't hire beginners.

I drove from one town to the other. I handed my resume to receptionists. I drove back to New Orleans at night and mailed out job-hunting letters. Then I'd show up at the newspaper and ask to speak to the publisher. And I'd hear how they had hundreds of resumes for reporters' jobs.

Eventually, I talked my way into a job. In a town so small that it didn't even have a hotel for me to stay in. I got a room over a friend's grandfather's garage.

I went to work every day at 7 a.m., stayed until the politicians stopped yammering at night meetings, and got two Saturdays off a month.

Today, unemployment is far lower, at 5.5 percent in Florida.

Inflation is far lower (It was on its way to double digits back then.)

And I guess a web site and a video are more essential job-hunting tools than a Volkswagon and a stack of paper resumes in the back seat.

I remember it was work, finding a job. I just don't remember that as anything unusual. I'd never done it before, so I didn't expect it to be easy.

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June 26, 2008

Florida's consumer confidence is now the lowest on record

Which gives rise to some recession thoughts:
There have been five recessions in the last three decades.
They lasted on average 10 months.
That's short, compared to the growth cycles in between the recessions. Those lasted almost five years each on average in recent times.
The last recession did not begin because of September 11.
No matter what the airlines said, they were losing money long before the terrorists struck.
The recession that year actually began in March 2001 and ended in November 2001. An eight-month quickie.
This one seems to have begun sometime last year. It probably won't fit the standard definition of six months of economic decline. This one, it seems, is a recession created by consumers and marked by a dismal outlook. It may not actually drag growth down, but it's a drag all the same.


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June 25, 2008

One in Four Get a No

Long-term care insurance, which covers expenses for those with long-term disabilities, is a smart thing to buy. But when? One strategy has been to wait until retirement. That may be a bad plan, according to new research from the American Association for Long-Term Care Insurance. The group looked at the records of major insurance companies and 250,000 consumers. It found that 22.9 percent of those age 60 to 69 get turned down for a policy. A better chance: In your 50s, only 14 percent are rejected. Of course, you’ll be paying for the policy for more years. But at least you’ll have one.

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June 24, 2008

Fighting with your credit card company isn't easy


If your have a dispute with your credit card company, what can you do?

You need to know the ropes, if you're going to try to fight.

I say try, because in 0.16 percent of the cases handled by the National Arbitration Forum between Jan. 2003 and March 2007, consumers prevailed over the credit card companies. That is, credit cards 18,075 wins vs. consumers, just 30 wins.

The figures come from a lawsuit that the city of San Francisco filed against the arbitration company, claiming it almost always sides with the card company. The National Arbitration Forum, according to an article in BusinessWeek, is the dominant arbtration firm in credit card disputes.

What can you do? When you take out a card, you could try to opt out of mandatory arbitration, says Gerri Detweiler, author of The Ultimate Credit Handbook. If you are given the choice. Or, you could stuff a notice in the envelope with your payment saying you don't agree to arbitration.

But it's not clear to me that this will work. Any lawyers out there care to tell me what they think?

Best idea: Look for a card that won't force you into arbitration. Cards from credit unions might be a good choice.

For more, go to www.givemebackmyrights.org


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June 23, 2008

I'm tired of credit cards behaving badly

If you saw me on television last week -- watch the video at www.sun-sentinel.com/helpteam -- you know I was encouraging you to write to the Federal Reserve and tell them what you think of their plans to reign in credit card companies and bank overdraft charges The rules they propose are good. Not strong enough in my view. But they will help consumers somewhat.

Ohio's state Treasurer Richard Cordray is doing the same thing. He hopes to get thousands of people in his state to write about their credit-card horror stories.

Some of the things the new regulations would do:
-Force credit card companies to give you a reasonable amount of time to pay, after the bill arrives.
-End the practice of hiking rates on your balance. In essence, you buy something knowing you'll pay a certain rate only to learn months later that your rate went up.

You can read more about it at www.creditbloggers.com.

To view the proposed rules, go to:
http://www.federalreserve.gov/generalinfo/foia/proposedregs.cfm.
Look for Regulation AA - Unfair or Deceptive Acts or Practices [R-1314])

If you want to comment, here's how:

Send an e-mail to regs.comments@federalreserve.gov. Include Docket No. R-1314 in the subject line.
or,
Send a letter to Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Ave, NW, Washington DC 20551. Identify your comment by including Docket No. R-1314 on the top of your letter.
·

POSTED IN: Credit and Debit (14)

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June 20, 2008

Audit the IRS

My friend Mark has a pretty radical idea: Audit the IRS. He says I should assemble a panel of respected accountants. They should go over this whole rebate situation and figure out if people are getting paid what they should be paid. I can tell from my readers that there's plenty of confusion. And people are still waiting for their checks. But Mark says the IRS charges us interest when we're late with a payment. They should play by the same rules. Pay us interest when the rebates don't arrive on time.

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June 19, 2008

Debit Cards for Everything

Both the state of Florida and the federal government are getting into the business of issuing benefits loaded on a debit card, rather than by a paper check or an electronic deposit into your account. The government saves millions. Comerica Bank, which will issue Social Security debit cards, makes money. But for Social SecurityDisability benefit recipients, there are fees and difficulties. Its 90 cents if you want to make more than one withdrawal a month. Go to an ATM
that’s not part of Comerica and you may pay surcharges. And how do you use the money to
pay the electric bill? I don’t see the “win” for consumers here.

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June 18, 2008

A lower outlook

You might think this is a downcast statement, but at this point, I don't. If stocks can just make it through the year in any sort of stable position, that would be good.

Standard & Poors’ Investment Policy Committee now thinks the Standard & Poors 500 will advance a bit more than 1 percent this year. In view of rising oil prices and inflation, the committee slashed its previous expectation, which was for a 6 percent annual gain.

The S&P 500 closed at just above 1468 in 2007. Previously, S&P analysts had predicted it would finish 2008 at 1560. Now, they’re settling for a target of 1490.

Which would mean, after all the downs we’ve had this year, we’ll end up about even.

I don’t put much faith in stock market price targets. It's the direction and the strength that’s important to note when looking at such forecasts. Direction is good, strength is weak.

According to The Outlook, an S&P publication, the expectation for earnings this year has also been slashed. The analysts there expect an 8 percent increase in earnings, down from a 16 percent gain expected as the year began.

On a positive note: No shrinkage in the economy. S&P is looking for some growth in Gross Domestic Product throughout this year.


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June 17, 2008

See Me on TV

Wednesday night I'll be doing a commentary on the Nightly Business Report on PBS.

I'll be talking about overdraft charges and credit card rules, some very anti-consumer practices that I dislike.

This summer, you have a chance to have a voice in changing the way these things work. The Federal Reserve -- along with the Office of Thrift Supervision and the National Credit Union Administration -- have proposed some rules. Find out how you can have an impact.

Catch the Money File on the Nightly Business Report at 7 p.m. on WPBT Channel 2 Wednesday June 18.

POSTED IN: Credit and Debit (14)

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June 16, 2008

Do-It-Yourself Credit Monitoring

A lot of people are selling security these days. Not for your home, but for your credit report. The question is, do you need this service?

Maybe not.

Yes, I know identity theft is rampant and that it snared more than 8 million people last year. But that’s a business opportunity for, guess who? The very credit bureaus that have a lot of the information you want to protect.

The credit bureaus and several outside competitors sell a credit-monitoring service that will alert you to any big events involving your credit report. Such as someone applying for credit in your name.

Useful? Sure. But at prices that can top $100 a year, I wonder what price you should pay to allay your fears.

Here’s my much cheaper (free, actually) do-it-yourself way to keep a close eye on your credit report:

If you have a reason to suspect identity theft, put a fraud alert on your account. This is supposed to get you the same kind of instant notice when someone pries into your report. I say “supposed to” because it’s not a perfect system. Every request for credit should set off the alarm, but you may not get the message right away (Say you’re on vacation). And, an alert is after the fact. You can know somebody’s nosing around in your report, but it doesn’t stop them from trying. You have to renew fraud alerts, because they expire periodically.

If you are certain that the thieves have arrived, put a freeze on your credit report. This will absolutely lock down your credit and prevent anyone from using it. Many states allow this for a nominal fee or offer it free to senior citizens.

Sure, if you want to take out new credit, you’ll have to unfreeze your account and that might take a few days. But you can’t plan ahead?

I fear that if you fork over the money for someone else to watch over your credit report, you’ll think you’ve done it all. You won’t continue to do what you need to do. That is, watch your bills for any wacky activity. Shred those credit card offers. Get suspicious if any regular bill doesn’t arrive when you expect it. File a police report when you loose your wallet.

All are cost-free precautions.

All require some effort on your part. But I think attention is really part of the cure to the identity theft problem.


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June 13, 2008

Blog reading that's on the money

An editor asked what my favorite blogs are.

They're the ones by my favorite writers, of course.

And some by people I never heard of, don't even know their names.

In the mainstream of personal finance, the writers I like to read who blog include:

Tom Petruno at the L.A. Times (A former editor of mine). He's got the Money & Co. blog.

Floyd Norris at the New York Times: Notions on High and Low Finance.

Liz Pullam Weston from MSN Money


Then you have to go out of the loop a little bit. I read The Big Picture for the macro perspective.

And, My Open Wallet. It's some anonymous young New Yorker shares her money obsession. It's a far-off world to me, with a touch of fanaticism. Many days, it's interesting.

Also in the out-there division, Freakonomics is usually interesting. Economics with a twist, based on the best-selling book of the same name.

Tell me if you've found any other good ones.

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June 11, 2008

How to make it through this economy: DNAYG

Let’s call it the Do Nothing and You’re Good strategy. It’s one way to make it through this economy, I think.

If you didn’t buy a house at the peak price and you don’t have to sell it now at the bottom, you’re good.

If you didn’t borrow when credit was easy and have to repay now that it’s hard to get, you’re good.

If you don’t need to cash in your stocks and you can pick up some at bargain prices today, you’re good.

Remember, it’s not a loss until you sell it. Do nothing and you may find, down the road, that it's not a loss at all.

Sitting still is smart, in this economy, for some major financial choices. It’s more than sufficient.

DNAYG are the initials for this strategy. Pronounced, DE-Nag.

Stop nagging yourself with worry. People are so concerned. But the economy’s not ending. It’s turning down. It calls for endurance.

Are you good? What’s your best idea for making it through?


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June 10, 2008

Advisors may have to open up more

A good idea out of Washington? Lo and behold. I’m talking about new and better disclosures about financial advisors that the Securities and Exchange Commission is considering.

If adopted, these rules make sure you will know, for example, whether the advisory firm that wants to handle your money has been through a bankruptcy in the last decade.

Overall, the SEC proposal is for a “plain English” brochure to be given to each new client.You’d be told about conflicts of interest (“I picked this portfolio manager. I have to tell you, he works for my firm, too.”) and about what it took for your advisor to earn his or her professional designation (What is a “Certified Senior Advisor” or a “Registered Life Planner”?).

What I like the most is your advisor would have to tell you of any run-ins with regulators. Right now, you have to hunt around a bit for this information, if you know how to find it.

The easier it is to find out about the background and credentials of who’s got their mitts on your money, the better.

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June 9, 2008

Free credit scores and credit monitoring

Many consumers will soon be able to learn their credit score, at no cost, and to have their credit report monitored, also for free.

But consumer advocates say the deal, which results from a stack of privacy lawsuits filed over the last decade, may not be as good as it seems.

TransUnion, one of the nation’s three major credit bureaus, will open the doors for an estimated 150 million Americans on Monday, June 16, Anyone who has had a credit card or loan at any time since Jan. 1, 1987, can get credit monitoring for free for up to nine months, according to a preliminary court settlement.

The catch: The credit monitoring is only for your TransUnion credit report, not from the three major credit reporting bureaus. And the credit score you're going to get is not the FICO score, which is the one most lenders rely on.

It's important to know about your credit score, especially if you have a big purchase coming up, says Linda Sherry, spokesperson for Consumer Action. But don't put too much faith into this score from TransUnion. "Some people call them Fake-O scores," she said.

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June 5, 2008

Strategies: How do you pick?

It was funny Tuesday. A few hundred certified financial planners had taken time off to come to the Hyatt Regency Bonaventure in Weston for a retreat.

The session I found funny had top money manager Ron Muhlenkamp facing off with well-regarded certified financial planner Harold Evensky, from Coral Gables firm Evensky & Katz, and David Yeske, a San Francisco CFP whose firm is Yeske Buie.

In the simplest terms, Muhlenkamp thinks he can pick outstanding companies and beat the market. Yeske uses many studies to show that no one beats the market for long and so he favors index investments. Evensky’s in the middle, putting the bulk of his clients’ money into an index-like investment, yet playing around the edges with active stock or bond picking, hoping to goose up the overall return of the portfolio.

Each position has its strong points. After a couple of hours of debate, it was clear no one was convincing anyone to change position. But it was amusing. Because the debate never gets resolved. Everyone knew that from the start.

I have to wonder about the clients of all those many advisers at the retreat. How do they pick an investment style? How do they decide who to trust? A few powerpoints, and now you decide?

It’s not a good system. Confusion is everywhere.

POSTED IN: Investments (11)

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About the author
You've got the job of managing your money. No one in school taught you how. But you and I, we can teach each other, how to handle it, how to save for retirement, how to make money last, how to educate the kids, how to make a budget work. The conversations I have with my readers are fun. Money's important, but discussing it does not have to be boring.

Harriet Johnson Brackey Harriet Johnson Brackey, the personal finance columnist for the Sun Sentinel, is an award-winning business reporter. Her columns for 2008 were named "The Best in the Business," a national award chosen by her colleagues at the Society of American Business Editors and Writers.

Brackey has worked at Business Week magazine and at USA TODAY, where she was a founder and part of the original staff of the Money section at the country's first national newspaper. After nearly 11 years there - spent covering the 1980s bull market, the insider trading scandals, the 1987 crash - Brackey left Washington, D.C., and came to The Miami Herald. She spent the next decade writing a column about personal finance that chronicled the stock market's Internet boom and bust, as well as the popular Money Makeover features.

Brackey also has done commentaries for Marketplace Money, which airs on National Public Radio and The Nightly Business Report which is broadcast on more than 250 PBS television stations nationwide. She also has been a radio guest on WLRN’s Miami Herald News.
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