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February 26, 2010

A primer on how to make overseas investing work for you

My Sunday Column......u17269392.jpg

If you’ve heard about the turmoil in overseas markets -- the demonstrations in Greece, the Federal Reserve Board’s investigation of Wall Street’s role in hiding the debt crisis there and talk of a possible default -- then I’m guessing you’re a tad worried about what all this might do to your investments.

But here’s the thing: In investing, you can’t shut the world out. And you really don’t want to.

Because, despite turmoil, the world is where the growth is.

And it’s much larger than we are. The U.S. today remains the world’s largest economy, but it is only about 25 percent of the world’s economic ouptput.

Even if you wanted to keep your money invested only in U.S. companies, you’d be exposed to overseas markets. The largest U.S. firms have been increasing their sales outside the U.S. to almost 48 percent of total revenue, says Standard & Poor’s. More firms are shifting “labor, capital and resources to foreign countries, where a growing worldwide middle-class is emerging,” said S&P’s Howard Silverblatt, senior analyst.

It’s hard to believe anybody can outspend us, but, J.P. Morgan estimates that consumers in emerging-market countries - such as China, Brazil and Mexico -- will be responsible for 34 percent of worldwide consumption this year. That compares to 27 percent for U.S. consumers.

And step back a bit and look at it this way: We’re coming off the first year since World War II when the world’s economies, as a group, declined. At the same time, emerging market stocks last year were on a tear, with markets in Brazil, Russia and India each gaining more than 100 percent.

So where can investors go at this point? As growth begins, the rest of the world, not the U.S., will take the lead. The International Monetary Fund expects the U.S. economy to grow by 2.7 percent this year. But China’s growth rate will be 10 percent, India 7.7 percent, Brazil 4.7 percent, Mexico 4 percent, Russia 3.6 percent.

“You want to start having exposure to them as they are emerging, but you also want to be remembering bubbles,” said Certified Financial Planner Laura Walsh of Lifespan Financial Strategies in Weston.

Walsh’s suggestion: If you don’t want to spend your life monitoring country-by-country situations, set a fixed percentage of assets to allocate to world markets and stick to it. If you stick to it, you’ll be forced to sell when a market makes a strong move up. That’ll make it far less painful when one region makes a strong move down.

You do have to prepare yourself for more volatility than in U.S. markets. Because while you might have enjoyed that 113 percent return on Latin American mutual funds last year, the two-year return in that same sector was a 7.4 percent loss.

The actual percentage you send to world markets is up to you and your comfort level. Walsh says a decade ago, Wall Street firms probably would have limited international exposure to 8 percent or 12 percent of your stock portfolio, but today, 20 percent to 30 percent is common. “Typically, it’s between 20 and 40 percent of your equities,” said Fran Kinniry, a principal at Vanguard and a senior member of its investment strategy group.

And spread it around, from developed economies to emerging markets. Vanguard tends to match the proportions of world markets, so developing countries make up 85 percent of those foreign investments and emerging markets, the other 15 percent.

Almost all 401(k) plans today have international choices, so it’s not too difficult for investors to find suitable funds.

But how do you avoid the problems in Greece or debt issues spreading to other shaky European nations? You can’t, if you invest broadly in world markets. But keep in mind: The U.S. has its own debt problems and many, in politics, would argue our situation is far worse.

As Kinniry pointed out: “If you put the two together in a diversified portfolio of U.S. stocks and international stocks, you will actually lower your risk than if you just had one or the other.”

POSTED IN: Your Money (256)

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Mortgage modification mash up

5325486.thl.jpgMy latest story, about thousands of borrowers seeking loan modifictions at a mega-event in West Palm Beach, is here.

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This is going on all weekend, Mortgage Help

Chase is holing a Homeownership Assistance Event in Fort Lauderdale, through Monday, March 1, 8 a.m. through 8 p.m., for struggling homeowners to meet and discuss their options with loan advisors.

Chase spokeswoman Nancy Norris says the bank has notified more than 16,500 South Florida homeowners with a Chase or EMC mortgage who are either behind, have started the loan modification process or who have a trial loan modification but have not entered the permanent phase.

The event takes place at the Embassy Suites Hotel, 1100 SE 17th St., Fort Lauderdale.


The Neighborhood Assistance Corp. of America Save The Dream Tour at the West Palm Beach Convention Center also continues through Monday, 9 a.m. until 10 p.m. and by phone at other hours. The round-the-clock event designed to help borrowers negotiate loan modifications is open to all and free. It is at the Palm Beach Convention Center at 65 Okeechobee Road in West Palm Beach.

Homeowners must have a copy of their mortgage statement (and second mortgage statement, if there is one), property tax statement. homeowner's insurance declaration page, HOA document for condos, pay stub from the last 30 days or six months of bank statements for the self-employed.

For more information, go to or call 1-888-499-6222.


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February 25, 2010

Billboard on 95

Just above Sample Road:

Wanna Retire?
Try next exit

It's an ad for the Seminole Casino

I'll tell you my reaction if you tell me yours. Hint: Mine's not good.

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February 24, 2010

Mortgage help for unemployed and more

Home loans, home values, that's all there is.

On the borrower side:
Today, the Mortgage Bankers Association says it has a concept for helping borrowers who have lost their jobs. Lenders could offer them nine months of forbearance on their mortgages. The lender would assume the borrower would by then get another job, but at 75 percent of the borrower's previous salary. From that point, the loan would be considered for a modification under the Obama Administration's Home Affordable Modification Program.

On the homeowner side:
If you're tracking the value of your greatest asset, consider this:
The Standard & Poor's/Case-Shiller Home Price Index now shows that the home values in Miami metro area, which includes Broward and Palm Beach, fell 47.1 percent between the recent peak in December 2006 and December 2009.
The peak-to-trough decline nationwide was 29.4 percent, The nationwide peak was a little earlier, in July 2006.

We went up longer and we fell so much farther.

Nationwide, home prices are beginning to stabilize, falling just 2.5 percent in the fourth quarter last year. That compares to a 19 percent decline in the first quarter of last year and somewhat smaller declines as the year went on.

Locally, we're still falling significantly. There was a 9.9 percent decline in Miami metro prices over the last year according to S&P/Case-Shiller. Las Vegas, Detroit and Tampa had even sharper declines.

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February 23, 2010

Tax Q&A: Appliance rebates in April, Roth IRAs and losses

Do you know if Florida plans to participate in the Cash For Appliance clunkers program? If so, would the Energy Star diswasher I just bought be eligible?
Len Sanginario, Fort Lauderdale

Florida is participating, but you’re a couple of months too early, said said Joey Epstein, a director at RSM McGladrey.

The rebates will be available for purchases April 16 through 25.

Florida received almost $17.6 million to conduct the rebate program, which will offer 20 percent rebates, on a first-come-first serve basis, to homeowners who purchase Energy Star refrigerators, freezers, washing machines, dishwashers, room air conditioners or gas tank-less hot water heaters.

Also, residents can get $75 for recycling an older appliance.

The rebate is capped at $1,500 per household.

For more information, go to

On Roth IRA rollovers, if the rollover creates income and you’l owe tax on that, can you use capital losses to offset the tax due? And is it the income that you can spread over two years, 2011 and 2012, or is it the tax that you owe?

Capital losses must first be used to offset capital gains. If you have losses beyond the amount of your gains, you can use up to $3,000 a year to offset ordinary income. The income from your rollover is ordinary income.

What you can spread over two years is the income created by this rollover, not the tax. And of course, we can't be sure whether tax rates will be the same next year and two years from now.

We did not take a distribution in 2009 from one of our Individual Retirement Accounts. Is there a penalty from the IRS?
Al, Delray Beach

Usually, there is a stiff penalty, but Epstein points out that there was a one-year exemption for 2009 to the requirement that people age 70 and a half take a distribution every year from their IRAs. So you’re fine.

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New card rules won't protect you from overdrafts online

Do you pay your bills online?2837011.thl.jpg

If you do, you'll want to watch out for overdrafts.

You could be on the hook for expensive overdraft fees, whether you want it or not.

The Federal Reserve, in an online bulletin published Monday, points out that although there are new rules that allow you to control overdraft protection for your debit card, the rules don't cover checks or automatic bill payments.

If you've been burned by overdraft fees in the past - those $5 mistakes that turn into $35 when an overdraft fee is added - you should be aware that your bank can decide to automatically add overdraft protection to your bill-paying transactions.

The means, your bill payment won't be turned down, even if you don't have enough money in your account. You have no choice but to pay an overdraft fee, in that situation.

If you don't want your bank's overdraft service for bill-paying transactions, the Fed says, "You may or may not have the option to cancel."

Talk to your bank is the Fed's advice. But if they aren't letting you set the limits on our account in the first place, I'm not sure talking's going to get you very far.

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Cancelled: Your Money Bus Tour

I hear that this event has been cancelled for today. Don't know much more about it.

The National Association of Personal Financial Advisors’ Consumer Education Foundation, TD Ameritrade, Kiplinger’s Personal Finance magazine and are collaborating on the Your Money Bus Tour. Which means Certified Financial Planners will answer your questions, for free, at two upcoming events in Palm Beach county. You can meet with a planner: Monday, Feb. 22, Palm Beach County Main Library, 1 to 3:30 p.m. The library is located at 3650 Summit Blvd., West Palm Beach. Tuesday, Feb. 23, Palm Beach State College at Florida Atlantic University Campus, 10 a.m. to 3 p.m. This is located in the Humanities and Technology Building, 3000 Saint Lucie Ave., Room HT-103 in Boca Raton. To learn more, go to for up-to-date schedule information.

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February 22, 2010

Credit card reform: New fees, higher rates

And now, credit card news as bright as today's South Florida weather, for day one of life under credit card reform. this morning reports that credit card rates on average have risen 16 percent since the credit card reform law passed last May. And that includes a big handful of 20 to 30 percent increases.

And then there's this from Bill Hardekopf, CEO at
Many Citi (credit) cardholders are receiving letters about a $60 annual fee that is being added to their account effective April 1, 2010. If consumers make $2,400 in purchases during the year, then the annual fee will be credited back to their account.

So, this is me talking again, if you are willing to charge $200 a month, they won't charge you a fee? But if you are willing to charge $200 a month, many people won't be able to pay that off, so they get a balance and voila, they get their fee plus interest.

Annual fees weren't common in recent years. Looks like they're making a big ugly comeback.

I guess we should just declare credit card companies the winner in their battle with their customers.

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February 19, 2010

Florida foreclosures soar

The news is not that Florida leads the nation in foreclosures, even though it does. The story now is by how much. And how bad it's gotten.

Here goes: The number of home loans in foreclosure in Florida at the end of last year was 44 percent higher than at the end of 2008.

The figures, from the Mortgage Bankers Association of America quarterly survey released Friday, show that the dismal housing story in Florida runs counter to the nation, where the mortgage picture is beginning to show a bit of improvement.

Nationwide, the percentage of borrowers who have missed a mortgage payment actually declined at the end of last year. The figure fell to 3.6 percent from 3.8 percent in the third quarter of 2009.

Florida went up, not down. The Florida figure for those with one late payment was 12.66 percent, up from 12.18 percent in the third quarter of 2009.

And it gets worse.

Nationwide, 4.58 percent of mortgages were in foreclosure at the end of last year, compared to 13.44 percent in Florida.

That is far ahead of second-ranked Nevada, with 9.76 percent of loans in foreclosure.

Here are Florida’s numbers for the fourth quarter of 2009, compared to the third quarter as well as the fourth quarter of 2008:

Mortgage loans past due by at least 30 days in Florida
Fourth Quarter 2009: 434,690
Third Quarter 2009: 422,037
Fourth Quarter 2008: 396,904
Percent change from last quarter: +3 percent
Percent change from year ago: +9.5 percent

Mortgage loans in foreclosure in Florida:
Fourth Quarter 2009: 461,472
Third Quarter: 2009: 441,441
Fourth Quarter 2008: 320,315
Percent change from last quarter: +4.5 percent
Percent change from year ago: +44 percent

The Mortgage Bankers survey, which represents 85 percent of the mortgage market, is for homes of one to four units.

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More foreclosure help

These things are multiplying….

Chase announces today a Homeownership Assistance Event in Fort Lauderdale, Thursday Feb. 25 through Monday March 1, 8 a.m. through 8 p.m., for struggling homeowners to meet and discuss their options with loan advisors.

Chase spokeswoman Nancy Norris says the bank has notified more than 16,500 South Florida homeowners with a Chase or EMC mortgage who are either behind, have started the loan modification process or who have a trial loan modification but have not entered the permanent phase.

The event takes place at the Embassy Suites Hotel, 1100 SE 17th St., Fort Lauderdale.

For information on another homeownership counseling event in Palm Beach during the same time period, look here.

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February 17, 2010

Loan modifications: Latest numbers

Some interesting numbers from the Treasury Wednesday about loan modifications.

Of the 5.6 million mortgages in this country that are currently 60 days delinquent – and this number just keeps going up. It was 3 million not long ago – not all of them would be eligible for a loan modification under the President’s program. The Obama Administration’s Making Home Affordable Program provides incentives to lenders to modify mortgages.

The Treasury says only 1.7 million of those loans would be eligible for a restructuring under the Administration’s program. The rest wouldn’t qualify because they are not owner occupied, they’re vacant, they are financed by the FHA or VA , they are jumbo loans and a host of other reasons.

The administration launched the program saying 3 to 4 million borrowers would be helped. But that seems to have fallen by the wayside.

As for South Florida, we’re a huge part of this.

The Treasury report indicates that 4.7 percent of all the Making Home Affordable loan modification activity nationwide is taking place in the Miami-Fort Lauderdale-Pompano Beach metro area. Another 2 percent in Orlando and 1.6 percent in Tampa-St. Pete. Combined, that gives the Orlando and South Florida area more heft in this than New York, Los Angeles or Chicago.

Even so, only 14,598 loans in Florida have received a permanent modification. Which is a pittance, compared to the more than more than 800,000 mortgages in the state that are either in foreclosure or delinquent.

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Foreclosure help in Palm Beach this week

Bulletin Board time:

-Chase is opening a new Homeownership Center at 555 N. Congress Ave., Suite 206, Boynton Beach,. Alone among major banks in South Florida – which next to Nevada is at the epicenter of the foreclosure crisis – Chase has set up these offices so that struggling homeowners can meet face-to-face with an advisor. The centers are open late and on weekends. The latest one joins other Chase homeownership centers in Palm Beach Gardens, Aventura and Miami. The lender has announced plans to open two more shortly in Hialeah, and Sunrise. For hours and information, call 866-550-5705.

-Foreclosure help Thursday. A free event sponsored by the Realtors Association of the Palm Beaches and the City of West Palm Beach. Foreclosure 911 will offer discussion of the situation and one-on-one counseling to troubled borrowers. “Residents are invited to bring their documents to be reviewed with personal attention,” the announcement says. It will be held at 6 p.m., Thursday, Feb. 18, West Palm Beach City Hall, Commission Chambers, 401 Clematis St.

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February 16, 2010

Tax Q&A: Will the Roth IRA Income Limit Change Again Next Year?

Last year, you had to have adjusted gross income of less than $100,000 to be able to convert an Individual Retirement Account to a Roth IRA. That limit went away in 2010. My question: Does this $100,000 limit become effective again in 2011?
Bob, Fort Lauderdale

No, said Debbie Friefeld Bachenheimer, a partner with Goldstein Schechter Koch, a South Florida certified public accounting firm.

For any tax year beginning after 2009, you can make a qualified rollover contribution to a Roth IRA regardless of the amount of your modified AGI.

But the important thing to note is that there’s a special benefit if you make a Roth IRA conversion this year. If you do, you have the option of including any income that results from the conversion in two tax years – half in 2011 and the other half in 2012. This option is only available for conversions done in 2010.
A special note about exemptions for adult dependents: Many extended families have asked how to take an exemption for an adult relative who is a dependent. This is complicated, said Bachenheimer. here are three main tests: First, the person has to be a member of your household or your qualified relative – which includes children, brothers, sisters, aunts, uncles, parents, grandparents – for the entire year. Second, the person can only have gross income of up to $3,650 (and that does not include any tax-exempt income). Third, the taxpayer has to be providing half the support of that person. And, in many cases, to be claimed as a dependent, a person must also be unmarried.


If I file as a single person and don't itemize, am I allowed to take a
deduction for general sales taxes in the state of Florida, even if I
didn't purchase a new automobile in 2009?

M.Jenkins, Fort Lauderdale

No,the only additions to the standard deduction are:

Real estate taxes you paid that would be deductible if you were itemizing deductions, up to $500 ($1000 if married filing jointly).

A net disaster loss attributable to a federally declared disaster (luckily none in our area in 2009)

Sales or excise tax on the purchase of a motor vehicle purchased after Feb. 16th, 2009.

These taxes increase your standard deduction and are claimed on a new form, Schedule L.

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February 15, 2010

Looking for....some good reviews

Here’s my offer:k0693244.jpg

I have some interesting books on personal finance, investing, the economy and spending.

But I don’t have time to read them all.

So who wants to become a Business Book Reviewer?

If you’re in South Florida and you’d like to write a short review that I’d publish here on the blog – along with your name and city – I’ll send you the book.

My only demand: That the reviews be interesting and knowledgeable.

Here are the books I have on hand. Send me an email if you are interested at

Common Sense on Mutual Funds, fully updated 10th anniversary edition, by John C. Bogle
30-minute Money Solutions by Christine Benz
Life or Debt 2010, A new path to financial Freedom, by Stacy W. Johnson
Live It Love It Earn It, A woman’s guide to financial freedom, by Marianna Olszewski
Wealth Watchers, A simple program to help you spend less and save more, by Alice Wood
I.O.U., Why everyone owes everyone and no one can pay, by John Lanchester
Your Money Ratio$, 8 simple tools for financial security, by Charles Farrell
The Quants, How a new breed of math whizzes conquered Wall Street and nearly destroyed it, by Scott Patterson
Spend til The End, Raising your living standard in today’s economy and when you retire, by Laurence J. Kotlikoff and Scott Burns
Money 911, Your most pressing money questions answered, your money emergencies solved by Jean Chatzky
One year to an organized financial life, by Regina LeedsMaking the Most of Your Money Now, by Jane Bryan Quinn

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Your money and love: The best tool, good questions

In case you missed it, my column from Sunday on Love and Money is here.

And the quiz is in the next blog item.

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February 14, 2010

Love & money quiz

Stuart Ritter, who is a certified financial planner and an assistant vice president at T. Rowe Price,87573669.jpg/>
came up with this quiz to help couples set their own priorities with money.

Both partners should answer the questions separately and then trade answers with each other. Together, see if you can agree on your goals and choices.

The trick here: You can have up to 15 points total for all the choices. You'll probably have to make trade-offs to keep your score that low. That's the point. Since you and your partner can't have everything you want, you'll need to learn how to prioritize and how to make financial decisions together.

Do you want to live a life that you'd describe as:

Pretty Nice (new minivan, week at the beach, brand-name clothes) Four points
Okay (Smaller used car, weekend at Grandma's, clothes from Target) Two points
Behind the Joneses (Keep driving current clunker, rent some DVDs,
clothes from a thrift store) One point
Your choice and score:


You'd like to:

Maintain current lifestyle Five points
Live a slightly lower lifestyle Four points
Live a significantly lower lifestyle Three points
Rely on your children to care for you One point
Your choice and score:


You want:

A five bedroom, new single-family home Five points
Four-bedroom, older single-family home Four points
Three bedroom townhouse Two points
Rent a two-bedroom apartment One point
Move in with your in-laws Zero points
Your choice and score:

Caring for your child during the day

Do you want to:

Full -time, stay-at-home parent, live on one income Cost: Five points
Full-time daycare Four points
Work part-time, A relative provides care part-time Three points
A relative provides care full-time One point
Your choice and score:

Saving for college

Do you want to save:

The full coast of a public school Four points
half the cost of a private school Three points
Half the cost of public school Two points
The child pays the entire cost Zero points
Your choice and score:

Total: (Remember, it can't be more than 15 points)

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February 12, 2010

IRS: Weekend hours and now appointments

The Internal Revenue Service is working weekends.k1653372.jpg

And now, you don’t have to just show up and wait for someone to help you. For the first time, you can make appointments to get help filling out your return.

One qualifcation: Your income has to be $49,000 or less to qualify for free tax preparation.

Anyone, of course, can ask questions or seek help at an IRS office. The South Florida Taxpayer Assistance Centers in Plantation at 7850 SW 6th Court and Miami at 51 S.W. First Ave. will be open Saturday from 9 a.m. to 2 p.m.

To make appointments, go to or call 954-423-7300, press 3, for Plantation or 305-982-5077, press 3, for Miami.

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Mutual Funds: International's hot

What do investors love?

In January, it was international stock funds.

Morningstar reports that investors pumped more than $8.1 billion into international stock funds - the largest monthly inflow since Dec. 2007.

That's roughly triple what they put into domestic stock funds.

Investors are chasing the hot thing. Last year, China, Pacific Basin funds outside of Japan, even European stock funds beat U.S. stock funds.

More on that soon. I'm working on a column about international investing.

I'm not scared off the topic by the crisis in Europe and I would hope you would not be.

So for fun, I'll give a (virtual) high five to anyone who can tell me the level of debt in Greece vs. GDP. A second high five if you can do the same numbers for the U.S.

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February 11, 2010

Mortgages: Hand over the keys?


We don’t like our underwater mortgages. But solutions for the problem are few. 3661839.thl.jpg

You can read the comments from yesterday’s post. Borrowers are fed up.

A few frustrated bankers are, too. Said one to me,

“You borrowed the money, you have to repay it. When you sell your home for more than you paid, you don't share your profit with the bank. So why should the bank take a loss for your underwater mortgage?”

Well, if you prefer to just get out of the whole thing, the bank will usually just let you hand over the keys.

Citi today says it has a new program for that with a “foreclosure alternative” spin to it.

The program won't help many - an estimated 1,000 borrowers - but CitiMortgage Spokesman Mark Rodgers said the lender hopes it can be expanded and perhaps adopted by others in the industry.

It is a pilot program that would allow distressed borrowers in Florida (and Illinois, Michigan, New Jersey and Ohio) to sign over their homes to CitiMortgage, avoid foreclosure, stay in the home for six months. At the end of that period, CitiMortgage owns the house. The borrower would get some relocation assistance for moving out.

The benefit for the borrower would have to leave as soon as the bank takes the home over.

The benefit for the bank: Borrowers must maintain the home during those six months. In many cases following foreclosure, houses and the properties fall into disrepair - or worse - and the bank has to spend money and time getting it ready to put up for sale.


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February 10, 2010

Tax Q&A: Taking care of parents

One more interesting tax question:

I am an American citizen who was born in Jamaica. I take care of my mother who still lives there. Can I take anything off my taxes for the money I pay for her to live in a facility there?
-Marilyn, Plantation

Sorry, but you won't be able to do that.

If your mother were a U.S. citizen or a resident for tax purposes, Randi Grant, who is director of taxation and personal financial planning at Berkowitz Dick Pollack & Brant Certified Public Accountants & Consultants, said you could claim her as a dependent if she meets some other requirements.

She would have to be unmarried, have gross income of less than $3,650 and you must be providing more than half her support in order to claim her as a dependent.

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Mortgages: Drowning in the underwater debate

The discussion, this morning, reminds me of a one-up contest for how bad things can be.

My colleague Paul Owers reported that four in ten single family homeowners with a mortgage in South Florida owe more than the property is worth.

And Broward Country Property Appraiser Lori Parrish said on CBS4 this morning to Michael Williams, “Over 50 percent and maybe over 70 percent of families in Broward are upside down on their mortgages.”

The discussion I’d like to have is what we’re going to do about this.

No more descriptions of what’s wrong. No more who-is-to-blame back and forth. I’d like to hear someone proposing a way to resolve it.

Treasury officials said last week that they are working on the issue.

But there’s little else. Frankly, I’m not hearing anything about resolving the issue from major lenders.

What ideas do you have?

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February 9, 2010

Tax Q&A: No W2, Haiti relief

It’s tax Tuesday. 87590222.jpg
I heard that if you don’t itemize you can still deduct money you have given to Haiti relief. l was wondering on what line do you put that amount on the 1040?
-Tom Roman, Lake Worth

Sorry, but that’s not possible, sais Randi Grant, director of taxation and personal financial planning at Berkowitz Dick Pollack & Brant.

Only itemizers can deduct their contributions. But one benefit of a law President Obama signed Jan. 21, is that you can take this deduction on your 2009 return.

My daughter worked for an establishment that went out of business last year. She has not received her W2 form. What does she do if the company fails to send it and nobody can be reached at her former employer.
Abe Raphael, Sunrise.

She should complete form 4852, which is a substitute for a W2. It is available on the IRS website, and look under forms and publications.

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More free money help

The National Association of Personal Financial Advisors’ Consumer Education Foundation, TD Ameritrade, Kiplinger’s Personal Finance magazine and are collaborating on the Your Money Bus Tour.

Which means Certified Financial Planners will answer your questions, for free, at two upcoming events in Palm Beach county.

You can meet with a planner:

Monday, Feb. 22, Palm Beach County Main Library, 1 to 3:30 p.m. The library is located at 3650 Summit Blvd., West Palm Beach.

Tuesday, Feb. 23, Palm Beach State College at Florida Atlantic University Campus, 10 a.m. to 3 p.m. This is located in the Humanities and Technology Building, 3000 Saint Lucie Ave., Room HT-103 in Boca Raton.

To learn more, go to for up-to-date schedule information.

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February 8, 2010

Money Expo in West Palm

The Palm Beach County Cooperative Extension Service and its community partners are hosting a day of free personal financial education and consultation.

You can get a free credit report, fill out a form to search for unclaimed money, shred your financial documents, learn about preventing foreclosure or how to deal with identity theft, educate money-smart kids and more.

There will also be free tax preparation for the first ten people who register for this service.

In the afternoon, the winners of the Piggy Bank Beauty Pageant will be announced. The contest is open to children 12 years old and under.

Participants will also be able to have brief consultations with certified financial planners.
The MoneyWi$e Expo takes place Saturday, Feb. 20, from 10 a.m. to 2:30 p.m.

It will be held at the Clayton Hutcheson Agricultural Services Center, 559 North Military Trail in West Palm Beach

For event details, to register for free tax preparation and/or a financial planning session or to receive a Piggy Bank Beauty Pageant entry form, call the Cooperative Extension at 561-233-1742 or go to

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February 5, 2010

Hello DC: Where's financial reform now?

What happened to the bandwagon? The one that started rolling for reform of Wall Street, banks and credit cards.

Today’s online New York Times and Wall Street Journal both report that Sen. Christopher Dodd, D-Conn., said talks with Republicans have broken down over the subject of financial industry reforms.

The consumer side of the debate has been engaged in a full-court press to save at least one important provision: That all financial advisors, brokers and anyone else, be required to be fiduciaries.

That means they must put their customers’ interests ahead of their own.

This week, consumer advocates pushed and pleaded.

What’s on the table from the House on this issue is so weak, exempts huge swaths of the consumer lending industry and won’t help much.

What the Senate was looking at was better.

And now, a new bill is being drafted.

Meanwhile, credit card reform can’t get here soon enough (Most provisions of the bill kick in at the end of February).

And rules to rein in bank overdraft fees still allow banks to charge you thousands of dollars every month if you mess up with your checking account.

Where’d the momentum go?

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February 3, 2010

Tell me your love and money stories

...I want to feature them in my next column.

Is your spouse or partner irresponsible with money?

Is he or she a tightwad?

What’s the most irresponsible thing you’ve done with your money…and what was your partner’s response?

Money matters are often a difficult subject for couples. Tell me what's gone wrong or how you make it work.

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Great investing book, but will online money management catch on?

joel%20greenblatt.jpg Joel Greenblatt has made it easy to figure out how he invests.

The hedge fund manager, adjunct business professor at Columbia and best-selling investment author wrote a delightfully simple book about it five years ago.

The Little Book That Beats the Market lays out his value investing formula, why it works, and its past track record.

Since then, if you wanted to know which stocks he’d pick, you can, for free, check out his web site MagicFormulaInvesting, where, once your register, you can get a list of stocks that currently meet his criteria.

And now, if you want more guidance and hand-holding, Greenblatt is offering online professional money management.

Since last fall, Greenblatt, who is the managing partner of Gotham Capital, and K. Blake Darcey, who pioneered online brokerage services at DLJ Direct, have been managing money according to Greenblatt’s principles through They have amassed $65 million under management since getting started last October. The minimum investment is $25,000.

I chatted with Greenblatt during his recent visit to Miami.

My main question: Since you’ve told everyone how to invest and sold so many books doing so, why does anyone really need you to do it for them?

His answer boils down to: This is not as easy as it looks.

And, to me, it seems the trick his new firm will have to perform is holding on to investors for the long-term. He says this formula is suited only to investors willing to stay with it for three to five years. And for anybody, these have been a tough few years. Their business model hasn't yet lived through a lengthy or severe downturn like the one investors have experience in the last two years.

His strategy, he said, “works over time but it doesn’t always work, so it’s tough to go about it in a disciplined way.” That is, the formula does not do as well as the market in one out of every four years noted in the book. For individual investors, holding on for those not-great years is tough.

Plus, the stocks he picks are out of favor, which calls for a pretty strong belief in the key reasons for why he selects them. If you stuck to the surface, “If you had a little knowledge, if your read the headlines, you wouldn’t want to be in them,” he said.

The way Greenblatt picks stocks is to measure those that have both a high earnings yield – which is a ratio of earnings to the current stock price – and a high return on capital.

Formula Investing’s proposition: For an annual fee of 1 percent, FormulaInvesting will screen the market’s top 20 to 30 stocks according to a combination of those two measures. You can either select investments from that list or Formula Investing will handle the money management for you in a concentrated portfolio.

The industry publication Registered Rep in January reported that critics say his fee is too high, that investors want a face-to-face relationship and historical results don’t predict the future.

And of course, competition is growing online for both investment management advice and portfolio-sharing.

So for the moment, they are counting on the numbers – and Greenblatt’s celebrity-- to bring in the investors. They're also working on rolling out new portfolios for inernational investing this year.

In the ten years ended last Sept. 30, the site claims that its model portfolio – which was focused on the top 20 percent of stocks by the size of their market capitalization -- would have produced an average annual return of 14.5 percent. That was during a period when major market indexes were flat to down slightly.

No doubt we’ll be hearing more about that, as he says he is revising The Little Book That Beats the Market, to reflect these recent turbulent years for stocks.

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Haiti: Text messages add up

Now this is impressive: Ask a few million people to do something small and it adds up..whe0047.jpg

Almost 2.5 million people texted $10 pledges for Haitian relief to the American Red Cross in seven days, the largest number ever to take action for a mobile giving campaign, according to the group Mobile Accord,

With a few keystrokes, $25 million goes to where it is so badly needed.

Remember, you can use your phone bill as proof of the donation for tax purposes. Donations for Haiti relief can be deducted on your 2009 returns, the one due April 15, according to a law signed by President Obama last week.

You can find out more at

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February 1, 2010

Super Bowl: Who needs the calculator?

Does anyone really need an “Entertainment Planner” to figure out how much it will cost you to have friends over to watch the Super Bowl?

Like it takes a lot of planning to put out the salsa and chips? I thought a trip to the 7-11 would take care of it.

The Entertainment Planner is a “tool” that Visa is offering up in its attempt to tap into Super Bowl frenzy.

I tried it out to see what a money management “tool” from a credit card issuer might produce.u17697866.jpg

It was less than impressive. It's just a calculator. And it told me my budget, $125, is less than the average of $144.

Hmmph. Have you tasted my jambalaya? You know how many my recipe feeds? I’m here to say I’m not a cheapskate and I don’t let my guests go home hungry.

But back to Visa, which at every opportunity is congratulating Saints Quarterback Drew Brees, who promotes Visa's financial education program.

The online version is not a bad program. It has football analogies to the max, but it's a decent set of lessons on personal finance, even on the subject of how credit cards work and how not to get into trouble. Visa says 25 states have adopted it for high schools.

You can play it for free at

But the entertainment calculator you can skip. Party planning isn't a top problem that most people need to solve.

If you can’t add up how much you’re spending on a party, I’m going to guess that means the party is already underway and you don’t care anymore.

Which is the way it is, these days, in my hometown of New Orleans.

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Tax Question (and answer) Tuesday

It's Tax Question Tuesday. Here are a few that you sent in and some answers.87457742.jpg

You can submit your tax questions online at or leave a message at 954-356-4628

I have been paying my 35-year-old son’s rent and food bills because he cannot find a job. Can I claim him as a dependent even though he does not live under my roof. I also send my grandson to college and lives with me. Can I deduct college fees?
Annetta Boer, Lantana

You can claim your unmarried son as a dependent because you provide more than half his support and he’s a qualifying relative, says Phillip Sroka, a certified public accountant and partner at Morrison, Brown, Argiz & Farra in Miami.

As for your grandson, you can deduct college fees only if you claim him as a dependent and you can only do that if no one else claims him. As long as he is under age 24 and is a student, you can claim him if you provide more than half his support.

I own a condo that I have been renting out since January 2009. Can I deduct the principal and interest on the mortgage payment? What about taxes and maintenance fees? And depreciation? Do I have to depreciate the property? I want to sell it after the market gets better.
Jennie, Hollywood

You can deduct the interest but not the principal, Sroka said. You can also deduct taxes, maintenance fees, utilities, insurance and repairs as well.

As for depreciation, you are allowed to depreciate the basis of your property – which is its original cost plus any improvements – for the building portion only, not the underlying land.

I just received in the mail form from the IRS for estimated taxes for next year. I don’t understand why they are sending me this form as I am retired and I filed a simple return last year.
Joe Hosford, Fort Lauderdale

“Just because the IRS sent him a form does not require him to fill them out,” Sroka said.
You would only need to make estimated tax payments if you expect your income tax liability to be $1,000 more than any amount you’ve had withheld from pension payments or any source you have for income.

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Fix the financial crisis by spreading the responsibility

Too Big to Fail? If all the financial reforms being considered in Washington focus only on banks, Robert Pozen, 490px-Bob_Pozen.jpg
chairman of the mutual fund firm MFS Investment Management, says we will not be targeting the true source of the financial crisis.

Pozen recently published Too Big to Save? How to Fix the U.S. Financial System.

His book looks forward and explains what caused the crisis. Former Treasury Secretary Hank Paulson’s new memoir On the Brink, which was published today, is more a look back. MFS manages more than $187.5 billion.

I spoke to Pozen last month. Some of his ideas:

-The key to preventing another mortgage mess like the one we’re in now begins with not allowing the mortgage broker or whoever originated the loan to sell the entire loan ”and have no incentive to look closely at the credit-worthiness of the borrower.”
The next step: Forcing some transparency into the mortgage-backed securities market where he says the structures of the investments are too complicated and opaque.
Third: Reform credit rating agencies so that investors can have confidence in what they say are the risks associated with financial products.

-The key to getting credit flowing again has to do with re-starting the market for pooling loans into securities.

In 2006, there were $1.2 trillion in securitized loans traded. That volume has fallen to $50 or $60 billion by last year. If lenders cannot find a market to sell off their loans, that limits their ability to make new ones.

Banks, he said, really aren’t responsible for most of the lending that takes place. Pozen points out that in 2006, before the financial crisis began, bank lending accounted for 22 percent of all credit extended. Most of the credit give out was by mortgage brokers, credit card companies, insurance companies and other non-bank lenders.

In addition, “We never required the banks that were recapitalized to lend more,” he said.

-How to dig out of the mortgage mess? “The $75 billion we’re spending on mortgage modification is not very well structured to help people,” he said.

The Obama administration Making Home Affordable program has struggled to deliver on its goal of helping 3 to 4 million troubled home borrowers get new loan terms.

Pozen zeroed in on the “underwater” loans – these borrowers who owe more than the home is worth. Nationwide, he estimated that about 30 percent of borrowers are underwater, and the proportion is probably higher in South Florida. The Administration program is not geared to dealing with underwater loans, although last week Treasury Assistant Secretary Herb Allison said the administration is looking at the issue.

Pozen’s idea: Structure a program that takes a little from everyone involved in the deal.
Banks take a reduction in the principal owed, government-backed agencies buy the mortgages at a discount from the banks and homeowners give up some part of the profit if the house is eventually sold for a gain.

“There has to be a way that the $75 billion is geared to helping people get to the position where they have some equity in their homes, “ he said. “If we don’t do that probably what we have now is really not going to be effective.”

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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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