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October 30, 2009

Watch for vote this week on tax credit for home buyers

First-time home buyers can waive their $8,000 tax credit around for a little while longer but they aren’t that special.Max%20Baucus.jpeg

A whole lot of people would get a tax credit for buying a house, under the proposal now in the Senate. Not just first-time buyers.

Bloomberg reports:

The lawmakers want to extend the credit until April 30. Their proposal would also expand it to allow higher-income Americans and some who already own homes to qualify for the break.
Homebuyers who have lived in their prior residences for at least five years may receive a credit of $6,500 under the plan, said Senate Finance Committee Chairman Max Baucus, D-Mont..

Also, couples earning as much as $225,000 and individuals as much as $125,000 would qualify for the extended break, Baucus said. That’s up from a $75,000 limit for individuals and $150,000 for couples.

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October 28, 2009

Now there's Cash For.......Candy

A growing list of local dentists and orthodontists are using a capitalist’s tool to combat cavities.
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They’ll pay your kids to turn over their Halloween candy.

Your tykes get $1 a pound. The candy is shipped to our troops overseas. And the dental professionals are so glad to have all that sugar off the streets.

You can check who in your neighborhood is trading cash for candy by going to
HalloweenCandyBuyBack.com.

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October 27, 2009

Homebuyer tax credit extension likely

Bloomberg reported yesterday:

Senate leaders are negotiating to extend and gradually reduce an $8,000 tax credit for first-time homebuyers through 2010, Senator Bill Nelson said.

Senate Majority Leader Harry Reid of Nevada and Senate Finance Committee Chairman Max Baucus of Montana, both Democrats, may seek to add the extension to legislation extending unemployment benefits that may be debated as early as this week, according to Regan Lachapelle, an aide to Reid.

"We should be able to extend that later this week," Nelson told reporters traveling with President Barack Obama on Air Force One to a speech in Jacksonville, Florida.

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Bank stocks: Ignoring failures and roaring ahead

On the one hand, we've got the highest number of bank failures in years.

And in the other, we've got the stocks of Big Banks soaring.

How does that add up?
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It doesn't.

It's a lesson in how you can't always relate stocks' performance to what's going on in plain sight.

And, there's a huge division between Too-Big-to-Fail banks and smaller ones.

This divide has been unfolding for the last five months.

If, on the day the stock market hit its recent bottom March 9, you had picked up a bundle of those Too-Big-To-Fail banks, oh how smart you'd look now.

You may have thought, "What more pain could there be?" Back in March, the market had taken trillions out of the nation’s collective portfolios. The banks had tottered and the government had bailed them out.

So you thought that since they were Too Big To Fail, they might just be a good bet.

In the stock market, you would have been correct.

But back in the real world, the shakiness of the banking industry was really just beginning to be widespread.

In fact, of the 99 bank failures by Thursday Oct. 22 -- the highest annual number since the S&L crisis -- 83 of them happened since the market bottomed out in March.

This cascade of bank failures has not been among the ranks of the big-name banks. They have for the most part been smaller, more local banks that were closely tied to poor housing markets.

Week after week, the FDIC has been announcing the closings of banks from Calabasas to Chicago late on Fridays, with the institutions reopening the following Monday under new ownership.

But let's say you ignored all that and you boldly chose your stocks, from the 19 stress-tested, too-big-to-fail list..

Say you bought JP Morgan Chase. Between March 9 and last Thursday, Oct. 22, you saw it go up 187 percent. Wells Fargo, up 203 percent. Bank of America, up 341 percent.

Or you chose Citigroup and you’re ahead 325 percent.

(In South Florida, there's Bank Atlantic, which has shot from 30 cents on March 9 to $2.00 by last week, a 565 percent streak.)

Why were these such good performers?

Relief, for one thing. “They were coming from such a distressed level. In March, we thought the government was going to nationalize them,” said Morningstar Senior Equity Analyst Jaime Peters. The thought was that if one of these giants failed, they’d all come tumbling down.

Fundamental improvements in their financial position, courtesy to a large extent from the government bailouts, are another reason the market picked up on big bank shares. And many of those who were stress-tested were required to raise more capital, so they are in a better position now. Some have seen profits go up since March as credit markets have recovered and they've gone back to profiting from old-fashioned things like bond trading.

Meanwhile, there are more than $10 billion in losses for the 11 regional banks in the Standard & Poor's 500 this year, says an estimate from Thomson Reuters. Treasury Secretary Timothy Geithner this week said that small regional banks "were still struggling," according to The New York Times.

And the long-term investors in Big Bank stocks?

Theirs is a very different story.

“Those who owned Citi at the beginning of the year only own 24 percent of the company now,” Peters aid. “The government owns 33 percent.”

JP Morgan Chase for the five years ended Oct. 22 was up a princely amount of 10.3 percent. It is the leader in this select group.

It had a better performance than Wells Fargo ( which is down 5.5 percent, about the same as the Standard & Poor’s 500 record), Bank of America (down 61 percent) and Citi.

Citi, over five years, is down 89 percent.

Back in early 2000, Citi was trading near $60. Today it's under $5. Peters says the $50 and up days aren't coming back. "It will not recover to the levels it previously was," she said.

Okay, I’m not a trader. I'm one of those investors who still believe in long-term investing. Call me deluded.

But I recognize when the traders win.

With the Too-Big-To-Fail bank stocks, they did win, big time.

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October 26, 2009

TV: Here's my latest appearance


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October 23, 2009

Go ahead, cut Wall Street's pay.

Here’s the thing about the mandatory Wall Street pay cuts: Changing salaries won’t stop what’s really wrong there.VOLCKER%20FED.jpg

What’s wrong is that they are handling our money in an unsafe way.

They’ve taken a huge slice of the economy, set our financial system at risk and basically, we can’t make them pay us for what they’ve done.

All this talk about how the brains will exit the business if pay is capped, well, would that be a bad thing?

Like maybe we could take some of those smart people and set them to tasks that might actually help rather than hurt us in the long run, hurt us like toppling our banks and crashing our retirement portfolios? (They're estimating Americans' net worth dropped in this crisis by about $15 trillion.)

I mean, would it be all that bad if Wall Street shrank?

Earlier this week, former Fed chairman and Obama economic advisor Paul Volcker spoke of "structural imbalances" that threaten the economy, still. And need to be cured before a recovery can become a true recovery.

''We have to regain our ability to produce goods," he said at Harvard's Kennedy School of Government. "Moving money around does not necessarily provide dinner on the table. You can't run an economy where the financial sector is making 40 percent of the profits."

That's a thought.

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October 22, 2009

Unretirement

Uh-oh, another recession lesson.4100459.thl.jpg

It seems that 65 percent of workers say they’ll have to work past their retirement age. Sun Life Financial says its “Unretirement Index” has jumped 11 percent this year.

Well, you know what?

At least they’re planning ahead.

And recognizing that most people have not saved enough and aren’t prepared for the unexpected.

Yeah, it’s bad, the picture now. But it’s good that we see it. And do better.

Another survey out today – this one from Met Life – shows that despite the recession, 60% of Americans have paid down debt and 35% are still making contributions to their 401(k) plans.

That's good. Our confidence is shaken, but at least we're not just sitting there. People really are getting their finances in shape. Getting those ducks in a row.

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October 21, 2009

Watch me

You want to know why consumer confidence is as low as it is?

I think it has to do with the conventional wisdom breaking down. The conventional wisdom on how your personal finances should be, how they should improve over time. And how they haven’t.

My opinion. Tonight. In my monthly commentary on The Nightly Business Report, broadcast nationwide on Public Broadcasting Service stations.

For South Floridians, the show airs at 7 p.m. on WPBT, Channel 2.

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October 20, 2009

Cost of going to college rises -- again

Florida schools are still a bargain, even though tuition at some state schools rose 15 percent this year.3663423.thl.jpg

With in-state tuition running around $4,000, Florida schools fall below the four-year public college cost national average of $7,020. Throw in room and board and the nationwide average cost of a year at a state-supported college is $15,213.

The current school year’s tuition nationwide is 6.5 percent higher than in 2008-2009, according to the College Board’s annual study of college costs and financial aid, released Tuesday.

Increasing college costs continue to far outrun inflation. The price of all consumer goods and services actually fell during the last school year by 2.1 percent.

Two-thirds of college students borrow to meet these expenses. Borrowers graduate with a median debt of $20,000.

The financial pressure on students and their family is clear. Federal and state grants are growing at about 3 percent a year – less than half the rate of growth of college costs.

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Homebuyers tax credit may be extended

Three of the biggest housing lobby groups around want the $8,000 tax credit for first-time homebuyers to not end, as scheduled, on Nov. 30.

“Although we are seeing some improvement in the housing market, it is essential that the favorable impact of the first-time homebuyer credit be sustained beyond the upcoming expiration date,” the trio of trade groups wrote Monday to Treasury Secretary Tim Geithner, HUD secretary Shaun Donovan and National Economic Council Chair Lawrence Summers.

The powerful coalition of the National Association of Home Builders, National Association of Realtors and Mortgage Bankers Association want another year of the tax break “to ensure we do not jolt today’s very fragile housing market.”

Sounds to me with backing like that, this one will steamroll right through Congress.

A few months ago, the Realtors weren’t too crazy about this possibility getting widespread attention. Because they want to sell homes now, not next year.

But extending it makes sense. The question is, will Congress leave it at that? Or will it apply to a broader group, like maybe all homebuyers?

Once Congress starts tinkering with tax law, anything can happen.

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October 16, 2009

A new place for cash with good yields

Guest Blogger John Carrig John%20Carrig.JPG is answering a question today. John, who is a certified financial planner, is the head of Gold Coast Financial Planning in Boca Raton.

With CD rates so low, what other insured alternatives do investors have?

Many individuals have placed funds in low yielding insured money market or checking accounts.

They want safe, secure, insured places to put their money.

There's a new option for those who put safety first with their money.

Some financial institutions are marketing a hybrid checking account that offers expanded benefits along with safety features. Sometimes called a rewards checking account, these can offer higher-than-usual rates, low or no fees and complete liquidity. But they also come with some restrictions.

Who offers them? Mostly community financial institutions (banks and credit unions) that want to attract new accounts.

Are they really safe? The majority of community banks and credit unions are not only stable, but they are still lending and fully insured by the FDIC or the National Credit Union Administration.

The hybrid checking account comes with strings attached. Keep reading to see the pros and cons:

Pros:
Better rates than standard bank accounts. As of October 14, 2009, rates were as high as high as 6.01% - Average 3.5% to 4.5%
Same federal insurance offered on other accounts, up to $250,000.
100% liquidity, no fees for early withdrawal.
No monthly service charges.
Electronic banking and statement.
Debit card comes with account.
Free on-line banking.

Cons:
May require a monthly ACH (automatic) deposit.
Possible minimum number of debit card transactions required, usually 10 per month.
May require a minimum number of bill payment online transactions.
High interest rate may apply to deposits up to a certain level, say $25,000 or $50,000. Above that amount the normal interest rate (around 1.4 percent) hat type of account will be paid.
Possible limits. May be available to only individuals living in a certain geographic area, typically states in which the financial institution has branch offices,
Need to monitor rates because these attractive offers change frequently.

To learn more about financial institutions offering this new type of checking account visit

http://www.money-rates.com/rewardschecking.htm

and

https://www.checkingfinder.com/.

Still worried?

Even though the deposits are federally insured, the unknown banks might be of concern. The safety ratings can be found on the Bank Rate Monitor website:

http://http://www.bankrate.com/rates/safe-sound/bank-ratings-search.aspx

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October 15, 2009

Inflation's gone and it's not all bad.

No matter what the 50 million Social Security recipients say, there’s really an upside to prices going down.1242801883349649038Phon_gotique3.svg.thumb.png
You see the news, Thursday, that the cost of living declined 2.1 percent between the third quarter of 2008 and the third quarter of 2009 means Social Security beneficiaries won’t get a cost of living adjustment next year.

Congress set it up that way. If inflation goes up, those checks keep pace. If prices go down, the checks stay the same.

Retirees don’t like that, of course. They’ll note that this is the first time they haven’t gotten an inflation-boost since the cost-of-living adjustments began in 1975.

But last year, they got a big raise, a 5.8 percent increase. Their checks went up a lot and they’re staying there, while prices go down.

Another plus: President Barrack Obama has proposed giving Social Security beneficiaries a $250 check next year. It would be a second stimulus.

CCH points out that this works out to equal a 1.8 percent increase in the average monthly retirement check.

If Obama prevails, retirees’ income goes up anyway, even though prices did not.

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Mortgage rates: Going which way?

This afternoon we'll get the weekly report on mortgage interest rates, which have been close to the lowest level ever recorded for the last couple of weeks.

Unfortunately, the prediction is that rates will soon start heading up.

Here's what Bankrate.com had to say:

http://www.bankrate.com/finance/mortgages/mortgage-rate-trend-index8-133450.aspx

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October 13, 2009

Don't punch a hole in your 401(k)

You really want to wreck your retirement? It's easy.5247793.thl.jpgAll you have to do is put a hole in your 401(k).

They call it leakage. That's when you borrow or take a hardship withdrawal or, the worst, just cash the whole thing in when you change jobs.

The Government Accountability Office says that one in seven people are doing this.

We'll be poor when we're old, certainly, if we don't plug the leaks in our retirement buckets.

Next week, the Senate Special Committee on Aging will hold hearings on the 401(k) system. Is it adequate to fund retirement?

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Spend less, it's normal

Gallup poll out Tuesday says consumer spending is running 33 percent below the level of a year ago. This is the "new normal."

Remember, last year at this time, the financial crisis had just begun to unfold. Caution was a new thing. Now, it's normal.

Does it mean Christmas sales will be even weaker than last year? Can the economy thrive while consumers spend less?

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October 12, 2009

The recession is over? It is?

I don't know, but the National Association of Business Economists' declaration Monday "The Great Recession is over" did not bring on much cheering.
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With close to 11 percent unemployment in Florida, a still deeply troubled housing market and consumers still scared to spend, it doesn't feel like the end, does it?

While the economy works through those, the good news, I suppose, is that the forecasters who had suggested we would get a double-dip recession are quiet now. We really don't want to go back down to the bottom twice.

The one part of the scene that seems to be throwing a party is the stock market. The NABE forecast supports that. The economists expect corporate profits to shoot up by 11 percent next year. And stocks to continue to rebound.

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Here's today's story on loan modifications

South Florida banks and borrowers struggle with loan modifications
Sides have sharply different understanding of what it means to modify a mortgage

By Harriet Johnson Brackey

South Florida Sun Sentinel

October 12, 2009


Weston attorney Kraig Weiss and his wife, Ana, are living what they call a "loan modification horror story."

Earlier this year, the Weisses agreed to a loan modification with Bank of America, only to have the bank take the offer back. The Weisses sued. Now the bank is moving toward foreclosure, even though the Weisses are making mortgage payments.

"The truth is, they don't care. They feel they are above it all and they don't have to answer to us," Kraig Weiss said.

A new federal report shows lenders are restructuring home loans for troubled borrowers, but stories like the Weisses' abound across South Florida and the nation.

On one side are borrowers. They want better mortgage terms, like the Weisses, to stave off foreclosure. In Broward and Palm Beach counties, more than 14,000 homeowners were in some stage of foreclosure as of August, the most recent month for which data were available.

On the other side, lenders say they're doing the best they can to deal with millions of troubled borrowers.

The Weisses' suit, filed in June, accuses the bank of breach of contract. They've also said that bank representatives traipsed onto their property to take pictures of their house during Yom Kippur, frightening Ana Weiss' 76-year-old mother when she looked outside.

Bank of America declined to comment on the case.

The Treasury Department announced last week that lenders have modified almost 500,000 mortgages in the eight months since the federal government announced its Making Home Affordable program, a plan to encourage — even pay — for loan modifications. Lenders hit that number one month earlier than expected.

Still, only 16 percent of eligible home loans have been modified, out of 3.1 million delinquent mortgages in September. The treasury has said the program's aim is to help as many as 4 million homeowners through 2012.

The Congressional Oversight Panel reported last week that the federal program may not reach its long-term goal and urged the treasury to improve the program or create new ones to meet an expected rise in foreclosures fed by increased unemployment.

"It isn't clear that 500,000 modifications will be enough to put a serious dent in the foreclosure crisis or to dampen the impact of foreclosure on the broader economy," said Elizabeth Warren, chairwoman of the oversight panel charged with assessing last year's $700 billion financial rescue fund.

Foreclosures, the report said, are now stalking families who took out conventional, fixed-rate mortgages and put down payments of 10 percent to 20 percent on homes that would have been within their means in a normal market.

Jerry Buechler, a firefighter who lives in a rental home in Plantation, tried to get the loan on his Port St. Lucie home modified. Then he pursued a short sale. Both efforts failed. Now, he rents the Port St. Lucie home, but he's not paying the mortgage.

Buechler said he can't charge enough rent to cover the cost of the house because the neighborhood is pocked with foreclosed homes that banks are renting for a pittance. His plans to retire to the house in a few years are on hold.

Bankers don't seem to be happy about this situation, either.

"Nobody has the loan modification approval process nailed down," said Guy Cecala, publisher of Inside Mortgage Finance.

There are no statistics available on how many have applied for or received a loan modification in South Florida.

Underwriter Terri Schmitz, a mortgage broker at AmeriFirst Funding in Fort Lauderdale, estimated that more than three of every four recent borrowers are going to need new deals because of the tough economy, lost jobs, reduced work hours or major changes in circumstances, such as illness.

A loan modification is essentially a new loan in which the lender agrees to reduce the interest rate or extend the length of the mortgage. Getting one can take months. Borrowers complain that banks drag their feet, lose paperwork, even tell qualified borrowers that they don't qualify.

Bankers point out that not all borrowers qualify. Someone who loses a job won't meet the income requirements, for example. The terms of some loans, particularly those later sold to investors, won't allow changes.

Lenders can modify a loan through the Making Home Affordable program, or they can do it on their own.

Wells Fargo, the bank that absorbed Wachovia, says it has 12,000 employees devoted to homeowners. None of those employees are in South Florida, among the nation's hardest-hit housing markets.

The combined Wells Fargo/Wachovia has modified 17 percent of eligible loans, or almost 65,000 loans under the treasury program.

Overall, Wells Fargo says it has modified almost nine times as many, or 304,000 loans. "A lot of loan servicers have not [been] as aggressive as we have with borrowers," spokeswoman Teri Schrettenbrunner said. Bank of America's record: 11 percent of eligible loans modified under the Making Home Affordable program. The bank says it has helped a total of 615,000 customers in six months.

Cecala says one reason the loan modification process has bogged down is that lenders don't think it works. Many borrowers tend to get in trouble afterward — and then banks foreclose, according to a report from the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

"[Lenders] still want to be paid back, and they don't want to give [borrowers] much slack," Cecala said.

J.P. Morgan Chase has one of the highest rates of modifications. It has offered modifications to 27 percent of eligible borrowers through the federal program.

The bank, which absorbed Washington Mutual, set up centers devoted to homeowners in February, including one in Aventura.

"We understand this is a very emotional time for borrowers," said Ertha Brathwaite, manager of the Chase Homeownership Center in Aventura. "We really try to explain the process and why it might take so long."

A common misperception, she said, is that borrowers expect to get a loan modification because they are "underwater," or owe more than the house is now worth. Almost a third of all mortgages in South Florida were underwater as of June.

"It's what you borrowed," Brathwaite said. "You wouldn't share in the gain [if you sold your home at a profit]. Why should the bank share in the loss?"

Another misunderstood notion: Banks will reduce what you owe. Cecala said he hasn't heard of any bank reducing principal. Instead, they cut rates and lengthen the term. Weiss says he felt lucky when he first got the deal, which cut his mortgage payment by $1,000 month.

"Here I have an agreement, and they're fighting me on it," he said.

Information from The Associated Press was used in this report.

Harriet Johnson Brackey can be reached at hjbrackey@sunsentinel.com
Copyright © 2009, South Florida Sun-Sentinel


http://www.sun-sentinel.com/business/custom/consumer/sfl-loan-mods-101209sboct12,0,7916282.story

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October 8, 2009

Borrower's Remorse

The saddest comment during the Your Money Helpline Tuesday:2837011.thl.jpg

One caller said her husband had a graduate degree from an Ivy League college, $150,000 in student loans, only four classmates have jobs in their chosen fields and the offers he's seen so far are paying $38,000.

The degree, the caller said, wasn't worth it.

For more issues, questions and answers from the Helpline, look at the next item below in this blog. Or go here: http://blogs.trb.com/business/columnists/brackey/blog/2009/10/live_chat_your_money_helpline_2.html

And Sunday, read my column. More from the experts.

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October 7, 2009

LIVE CHAT: Your Money Helpline

On Tuesday, eight certified financial planners, all volunteers from the Financial Planning Association of Broward County, answered readers' questions during a midday live chat.Below is the online Q&A.

On Sunday, look for my column, with more issues and advice, from the experts.

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Options riches? Not easy.

One favorite question during the Your Money Helpline yesterday was from a nurse.
1195422853575736333ArtFavor_Money_Bag_Icon.svg.thumb.pngWho had gone to a seminar.

To learn how to trade options and invest in commodities.

She wanted to put $10,000 into this effort.

She wanted to earn $5,000 to $10,000 more.

And she thought she could.

(She was also considering paying $2,000 to a "coach" to guide her in this effort.)

Let me say it directly: Making 100 percent on your money isn't easy. Especially with investments you don't understand.

"Options trading is extremely speculative. Even seasoned professionals don't do that. You're going to lose your money," Certified Financial Planner Mike Lynch of Money Matters of America in Plantation told her.

Clear enough?

More questions and answers below. Look at our live chat, too.

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October 6, 2009

You got questions, we have answers

Hundreds of South Floridians, concerned about preserving their savings and investments, flooded the Sun Sentinel’s Your Money Helpline Tuesday with questions for a team of certified financial planners.

The planners, volunteers from the Financial Planning Association of Broward County, spent three hours answering questions online in a live, mid-day chat. One over-riding concern behind many callers’ questions: Fear for the safety of their money and investments.

The most common questions involved near record-low interest rates, and where to invest in the current market.

To the question of where to get a decent return, Ronald L. Myers of Associated Investor Services in Fort Lauderdale said he asked people who wanted to know what to do now with their money, “Is this your reserve funds or your scared money” that was yanked out of stocks in a panic.

Reserve funds, he said, should be in a bank certificate of deposit or a money market fund. If it was money that used to be invested, he suggested callers take a bit more risk in order to get a better return, such as in high-grade corporate bond funds.

“Is it a good time to buy I-bonds and TIPs?” one person asked online.

Inflation-indexed bonds and Treasury Inflation Protected Securities are investments designed to outpace inflation, Matt Saneholtz of Tobias Financial Advisors in Plantation, responded. “Many experts debate whether the current economic environment will create inflationary pressure. I would suggest that these inflation-protected securities should be a part of your diversified portfolio.”

The planners noted that lots of Helpline callers pulled their money out of the stock market when it was declining and haven’t returned.

The Standard & Poor’s 500 index fell 47 percent from September last year until March 9. Since then, it shot up 56 percent through the end of September.

“Compared to last year’s Helpline, when all everyone wanted was safety, now people want a return on their money along with safety,” said Blair C. Shein of Compass Financial Group in Deerfield Beach.

Mike Lynch of Money Matters of America in Plantation said investors are having to re-assess their appetite for risk, which was much higher before the stock market’s downturn.

Another hot topic was equity-indexed annuities, which many callers said they were considering buying. Examine these carefully, the planners advised. These complex contracts with insurance companies are “anything but easy to understand,” according to the Financial Industry Regulatory Authority.

Although equity-index annuities may offer a good return and a limit on losses, planners pointed out that it’s not always easy to get our money back. Some have 15-year surrender periods in which investors would have to pay penalties to cash out and other features designed to keep the money invested.

“Some even take five years to pay out to your heirs after you die,” said Steven. L. Rowe of Wells Fargo Advisors in Fort Lauderdale.

Other investors “just wanted to know are they going to be okay,” said John Carrig of Gold Coast Financial Planning in Boca Raton.

“What’s the expression? Trust but verify,” said Mari Adam of Adam Financial Associates in Boca Raton. She said it was just as important that the investor understand the nvestment as well as understand himself, to know what level of risk would make him uncomfortable.

For more questions, answers and advice from the Sun Sentinel’s Your Money Helpline, check online at Personal Finance Columnist Harriet Johnson Brackey’s blog at www.sunsentinel.coom/itsyourmoney. It's the next entry, just below this one.

Brackey will also write about the hotline in her column this Sunday.

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October 2, 2009

Monday Laundry: Happy Financial Planning week, call our hotline and more

My weekly list of things I meant to say, follow-ups, requests, all the personal finance news that need to be cleaned up and aired out.54497%2C1216250385%2C1.jpg

We've got banks hiking fees, mortgage lenders driving troubled borrowers to the brink and more. But we have one exciting piece of news.

But first.

The Duh! Fact of the week: If the monthly mortgage payment for a troubled homeowner goes up, the borrower is in deeper trouble.

Don't know why that isn't obvious. It's one of the many complications that are at the heart of this loan modification mess.

A loan modification is what troubled borrowers try to get to hold off foreclosure. Borrowers ask for a new deal and the lenders can cut the interest rate, extend the term and (although I haven't seen a real example of this yet) even cut the principal amount owed.

So last week, the Comptroller of the Currency and Office of Thrift Supervision reported that for recent loan modifications, almost one out of four borrowers find out when they get a loan modification that their payments actually went up.

Which, really, wasn't the point was it?

If you're in trouble with a $1,000-a-month mortgage payment, exactly what lender thinks you'll not be in trouble with a $1,200-a-month mortgage payment?

Lenders are cutting the payment on 78 percent of recent modifications -- and the rest of the borrowers are supposed to somehow deal with an increase.

Oh and there was this fact tucked in the report, too: A year after the modification, 65 percent of those whose payments had gone up were in default.

More on this subject soon.

And the bright news of the week:
Mortgage rates BELOW 5 percent. Did you hear me? Below 5 percent.
It's very close to the all-time low set in Freddie Mac's weekly surveys over the last three decades. For a 30-year fixed-rate mortgage, the average last week was 4.94 percent.
If you're a buyer or looking to refinance, get going.

Rates down, fees up.

Bankrate.com released its annual survey and it showed that bounced check fees now average $29.58.

ATM fees are going up too, for using an ATM that doesn't belong to your bank. The average is now a record high of $2.22

And the average monthly service charge for an interes-beargn checking account has hit a new high of $12.55.

Banks take in billions from fees. The trend continues.

For the full Bankrate report, for your misery, look here:
http://www.bankrate.com/finance/checking/2009-checking-study.aspx

Finally, it's Financial Planning Week. Starts today.

Tomorrow, local financial planners will be answering your questions and doling out advice during a lunchtime chat, here in the office of the Sun Sentinel.

Send in your questions through this blog (The box at the right) and a planner will be answering in real time from 11:30 to 2:30 p.m. The questions and answers will be here, on the blog.

Or you can call one of our volunteer planners.

The numbers are:
305-810-5040, 561-454-6940 or 954-356-4940

And watch the paper. I'll be writing about the helpline and the top issues.

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October 1, 2009

Financial Helpline next week

What’s the best way to keep your money safe in these difficult economic times? Ask the Sun Sentinel’s Your Money Helpline. On Tuesday, a volunteer team of South Florida financial planners will be available in our newsroom to answer your questions between 11:30 a.m. and 2:30 p.m.
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They can help you with savings advice, managing your investments, taxes, how to budget, planning for college or retirement.

To talk to a planner at midday Tuesday, call 305-810-5040, 561-454-6940 or 954-356-4940.

And join us online to see the questions and answers posted live at SunSentinel.com/itsyourmoney.

For a sample of what’s ahead, Certified Financial Planner Matt Saneholtz of Tobias Financial Advisors in Plantation:

Is buying an annuity from a fraternal organization safe?
-Marilyn Galli, Delray Beach

Buying an annuity from anybody requires research before entering into the contract. You will want to make sure the organization is licensed with the state to sell annuities, research if the annuity is backed by a highly-rated insurance company and make sure the representative selling you the annuity takes the time to explain all the details of how the product works. If you don’t understand it thoroughly, don’t buy it.

I have $85,000 invested in 10 mutual funds in a Roth IRA. I want to reduce the list to five and retire in 11 years with $250,000.
-- Christopher, Hollywood

Whether you have one, five or 10 mutual funds, the goal is to be diversified. Someone 11 years from retirement might have 65 percent in stocks and 35 percent in bonds and cash, depending upon how much risk you want to take. You need to make sure the funds you pick are also diversified – not all in the same kind of stocks or bonds.

Are there any federal or state taxes on my estate that I leave to my son?
- Mark Glatt

In 2009, the federal estate tax exemption is $3.5 million. For smaller amounts, there would not be any federal or state estate taxes due in your situation. Note that Florida currently does not have an estate tax. In 2010, there is scheduled to be no federal estate tax but Congress may change this in the near future. You should watch this issue closely.

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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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