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May 27, 2009

Bank buyouts ahead?

Why should you care about the failure of Bank United, even if you don't have an account there?


Because, an interesting story published today on The Big Money says, the acquisition of the largest bank based in Florida by a group of private equity investors could just be the beginning. Of a round of other, smaller banks changing hands across the state.


I remember another such round. I forget who came up with this line originally, but it was so true: Florida became the shopping mall for big banks from elsewhere.

It was 1997 when Barnett, then Florida’s biggest bank, was swallowed up by NationsBank, which was swallowed up by Bank of America three years later.

Here's the article:

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May 26, 2009

Floridians feeling more confident about the economy

By Harriet Johnson Brackey
Staff Writer

Consumer confidence nationwide shot up in April, for the second consecutive month. But Floridians are still pessimistic about their personal finances, even though their outlook on the economy is improving.

Nationwide, the Conference Board said Tuesday that its consumer confidence index soared to 54.9. The Associated Press reports that is far above the 42.3 figure that economists were expecting.

It is also the best reading in eight months and close to year-ago levels.

Florida’s consumer confidence dropped one point in May to 71, the University of Florida said Tuesday.

For both the short and the long-term, the Florida consumer confidence survey indicated consumers are becoming more optimistic about the prospects for the U.S. economy over the next year and the next five years.

But, their feeling about their own financial situation is still weak.

“Floridians are saying they don’t have the money now to buy, but they expect to within a year,” Chris McCarty, director of UF's Survey Research Center at the Bureau of Economic and Business Research, said in a statement.

The part of the survey that relates to personal finances fell four points in May to a reading of 40, which is just above its all-time low of 39 in December 2008.

The overall Florida consumer confidence index reached its lowest point on record in June 2008 at 59.

“While confidence is still weak by historical standards, as far as consumers are concerned, the worst is now behind us,” economist Lynn Franco at The Conference Board said.

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South Florida charities hit hard by Madoff, Bienes downfall

Here's a link my latest Madoff story, in case you missed it over the holiday weekend.


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May 21, 2009

Can your finances beat back trouble?

My idea of a personal finance stress test seems to be taking hold.


The concept is to compare your situation now against the worst possible case – a major

illness, a cut in pay, the loss of your job.

That would give you a sense of where you need to get to work – save more, reduce your risks or set up emergency lines of credit, for example.

In my column, I’ve suggested some questions you should ask yourself.

Here are a few other ideas from a reader who calls herself Catwoman. If you have some questions for a personal finance stress test, I’d love to hear ‘em.

She says to ask yourself:

1. Do you know how much you spend on restaurants, fast food, snacks, and other non-necessities?

2. If your home finances were opened up to your parents, would you be embarrassed? How about your children?

3. Are you saving 10% off the top for your retirement?

4. If a company was run the way your personal finances are being run, would the CEO be arrested for embezzlement?

5. How many other people are relying on your income? If you die, do you have a plan in place for those people?

Here are the four most important question I'd ask -- and the answers:

Here's my column on a personal finance stress test:,0,1621410.column

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May 19, 2009

Love that new credit card bill

My favorite part of the credit card legislation passed by the Senate yesterday: If the bill is due on a Sunday or a holiday, no more late fees because your payment arrives the next day.

My last credit card payment was due on both. A Sunday and a holiday. Easter Sunday.

I was mailing it close to the due date and that's when I realized it was impossible to get this bill paid on time. I then took out my old bills. The previous month, the due date was also a Sunday.

So of course I was late. More on that story later.

Here's a sense of how hard it was to get credit card reform moving into law.

“I’ve been in Washington twenty years. For the first 19 we couldn’t even get a committee vote on credit card reform," Ed Mierzwinski, consumer program director of U.S. Public Interest Research Group, said in an email.

I'll write more about the details after this legislation goes back through the House. It looks like it has plenty of good news for consumers.

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May 18, 2009

Recession Lessons

This economic downturn is different.

It’s much longer than the average, which was 10 months for all the previous recessions since World War II.Hoffman.JPG

It may turn out to be deeper, too, in terms of just how much the economy will contract.

But what will be its result? Will there be lasting changes in the economy that we’ll say began at this point?

I put that question to Stuart G. Hoffman, chief economist at PNC Financial Services Group.

His predictions:

-When this recession is over, we will save more. He pointed out that up until the mid-1980s, people regularly put away five cents of every dollar earned. But then something happened. Our houses went up in value so rapidly in recent years that many people relied on that as a source of funds for future spending. Now that we’re going through the worst downturn in generations, Hoffman predicts we’ll begin again to put money away and refrain from spending it all.

-We’ll have four years of very active government involvement in the economy. And we’ll end up with the deficit to prove it.

-Globally, the U.S. will become more intertwined with the world and particularly China. As other countries have to buy our debt.

He expects the recession to begin to end as this year closes. Recovery will come in 2010 and 2011. But it’ll feel more like convalescence than a bouncing out of the sick bed.

Florida will lag the U.S. and the global recovery, in his view.

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May 15, 2009

Goodbye Inflation

Consumer prices in South Florida fell by the largest amount in 31 years in April.

Inflation declined at a 0.3 percent annual rate in the Miami-Fort Lauderdale metro area for the year ending in April the Bureau of Labor Statistics reported Friday. The decline was the largest ever in the history of the local consumer price index, which was first released in November, 1978.

The only other time prices in South Florida went down, the BLS said, was in 1986, at an annual rate of 0.1 percent.

Nationwide, consumer prices were essentially flat in April. Over the last year, the consumer price index has fallen 0.7 percent, the largest one-year decline since June, 1957. Nationwide, the annual inflation rate has been negative for two consecutive months, the first such trend since the 1950s.

Inflation essentially has disappeared from South Florida’s economy, in contrast to last year, when prices were growing at annual rates of 4.9 percent to 5.8 percent. South Florida’s annual inflation rate’s recent peak was a 6.1 percent at the start of 2006.

Driving prices down were declining gasoline prices. “Transportation costs, year-over-year, fell by 12.2 percent,” said BLS Economist Stephen Rondone.

But not all prices went down. The category of “other goods and services” in Miami was up 5 percent, primarily because of rising tobacco prices and the cost of other personal care products and services.

Other cities saw even greater declines in consumer prices. The BLS said its measure of inflation fell 3.5 percent on an annual basis in Atlanta, 2.2 percent in Chicago and 1.3 percent in Los Angeles.

The BLS reports a national inflation figure every month. Six times a year, it reports a local figure for the Miami metro area and nine other major cities. The BLS does not measure consumer prices in Palm Beach County.

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May 14, 2009

And the next industry under investigation....Debt Settlement

For years, I've cringed when I hear those offers to "Wipe out your debt" or "Repair your credit."

Now, New York Attorney General Andrew Cuomo has launched a nationwide investigation of the debt settlement industry.

It's about time. I don't know why people have insisted that the way to fix their debt problems is to pay someone to fix them. But they do.

"In the end, most consumers who turn to debt settlement firms for help wind up worse off than before -- with higher debts and lower credit scores than when they first asked for help," Susan C. Keating, president of the National Foundation for Credit Counseling, said in a recent statement.

I've heard the stories. The consumer stops paying his debt on the advice of the debt settlement company. The fees start piling up. The creditor sues the consumer. Even if the debt eventually is reduced, the fees for getting this done were high, debt forgiveness can trigger additional federal income tax, and the experience was very rough.

Cuomo announced he's looking into the business practices of 14 firms and one law firm.

He issued subpoenas to:
American Debt Foundation, Inc.; American Financial Service; Consumer Debt Solutions; Credit Answers, LLC; Debt Remedy Solutions, LLC; Debt Settlement America; Debt Settlement USA; Debtmerica Relief; DMB Financial, LLC; Freedom Debt Relief; New Era Debt Solutions; New Horizons Debt Relief Inc.; Preferred Financial Services, Inc.; U.S. Financial Management Inc. (also knowns as My Debt Negotiation) and the Allegro Law Firm.

According to a news release from his office, the subpoenas are for information about the companies’ fee structures, how many people have benefitted from the companies’ services and what kind of relief the companies are actually providing.

Cuomo's office also said it is also investigating Nationwide Asset Services, Inc.and Credit Solutions of America.

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May 12, 2009

Stress test for your finances: some answers

Four questions for your Personal Finance Stress Test

Ask yourself:

Ignoring your mortgage for the moment, does more than 10 percent of your monthly take home pay go to debt payments – credit cards, home equity loans, student loans?

If it does, that’s high. Work to reduce it.

Now add you mortgage payment to that debt payment. Is the total more than 36 percent of your take-home pay?

That’s when the bells begin to go off. If you have stretched above that number a bit, because your income isn't all that great and home prices are high, your goal should be to get back down below that limit.

If you lost your job, how many months would you be able to live off your savings?

If you answer is, why didn’t you say weeks, this is an issue. Your goal should be to build up an emergency fund that would cover at least three months’ worth of expenses. Or more.

If your pay is cut by 10 percent or if you were forced to go on unpaid leave for a short time, would you still be able to cover your monthly bills?

If you answer is no, then it is clear you are not living on less than you make. And the people who win the savings game do. No matter what your income is, you should not be spending it all.

Do you have some questions of your own you think would fit on this list? Send them to me.

I'm writing a column about everyone doing a stress test on their own balance sheets. Should be interesting.

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May 11, 2009

Are your finances really stressed out? Take this test

Four questions for your Personal Finance Stress Test

Ask yourself:

Ignoring your mortgage for the moment, does more than 10 percent of your monthly take home pay go to debt payments – credit cards, home equity loans, student loans?

Now add you mortgage payment to that debt payment. Is the total more than 36 percent of your take-home pay?

If you lost your job, how many months would you be able to live off your savings?

If your pay is cut by 10 percent or if you were forced to go on unpaid leave for a short time, would you still be able to cover your monthly bills?

Tomorrow: I'll answer the questions.

Tell me how you do on this test.

And send me your suggestions for other questions. I'm writing a column about everyone doing a stress test on their own finances Should be interesting.

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May 8, 2009

Breaking the debt habit

Another piece of good news:22P0113.jpg
Consumers borrowing dropped in March, by the largest amount in 18 years.

Are we getting smart or what? No longer adding to our debt, but actually paying it down?

The Federal Reserve report on consumer credit showed that the amount of debt on credit cards dropped 6.8 percent in March, after falling 12.1 percent in February.

Menwhiile, a survey from Mintel, a market research firm, said more than two in five adults say they're using debit cards more offten and credit cards less. They're spending money they actually have..


I think spending is beginning to come back, but I hope it will do so slowly, on a more solid foundation than borrowing.


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May 7, 2009

Don't rush to refinance your mortgage

Clark Howard, on Headline News, had a good suggestion. He pointed out that lots of people are trying to refinance their mortgages but lenders are simply not responding. His idea: Try again later. Because interest rates aren't going up.

I completely agree. These low rates are here to stay for a few months, at least. The Treasury wants them to be low and there's almost no inflation at the moment. Rates have ticked up from the very bottom. But they're still good.

If you want to watch Clark's Video Tip of the Day, have a look

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May 1, 2009

Rally was real in April, Can May be as good?

April was a very good month for small stocks -- and most all stocks.3662033.thl.jpg

The Russell 20000 index, which measures the performance of smaller public companies, closed up 15.3 percent for the month.
That beat the Dow by a long shot. The Dow gained only 8.78 percent for the month.

And it was the second-best performance for the Russell 2000 in 30 years. The best: A 16.5 percent one-month gain back in 1979.

Wall Street's rally last month touched just about everything. The Wilshire 5000 Total Stock Market index reported a 10.5 percent rise, its best month since 1991.

Didn't realize it, did you? The bad economic news persisted, but the market was so over it.

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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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