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August 31, 2010

NACA: 17,000 homeowners sought loan modifications

Neighborhood Assistance Corp. of American Chief Executive Officer Bruce Marks said late Tuesday that more than 17,000 people had been through the doors at its marathon mortgage modification event in West Palm Beach.

That was a smaller number than he originally expected, “But we’ve been here for five days straight, 24-hours a day and people are still coming in.” Marks had said he expected more than 20,000 borrowers.

NACA isn’t entirely going away after the doors close at 8 p.m. Marks promised that the organization, which acts as a not-for-profit mortgage broker, will open a South Florida office shortly. There are 38 other offices and two call centers.

NACA says it has modified thousands of mortgages for South Floridians, at three events here since last year.

But its events can be tiring, and not just for the hundreds of NACA loan counselors and lenders who attend.

"I spent a lot of hours there,” said Barry Dubinsky, a homeowner from Delray Beach who said he was there for a couple of days. They had all the lenders there at one time, everybody you need to see.”

Dubinsky said the modification reduces his monthly mortgage payment by one-third.

Borrowers facing foreclosure or seeking loan modifications can still get counseling and information on mortgage modifications at Naca.com.

They can also turn to the Homeowners Hope hotline, 1-888-995-HOPE, to find counseling and assistance.

In South Florida, the Urban League of Palm Beach County also is a Department of Housing and Urban Development-certified foreclosure mitigation counseling agency. The service is free.

“We have a dedicated staff that worked with more than 450 families last year who were facing foreclosure and with good results,” said Patrick J. Franklin, president and chief executive officer.

Counselors are available Monday through Friday 9 am to 5 pm at 561.833.1461 ext 3000.

Forms and paperwork needed for the service are available at www.ULPBC.org.

The Broward County Housing Authority also offers foreclosure counseling at 954-739-1114, or www.bchafl.org.


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Textbooks, finding the bargains

This time of year, there’s always the question of how to afford college textbooks.rtr0015.jpg

Students have taken on this issue and found ways that don't subtract too much from their wallets. But, it's gotten more complicated. There are lots of ways to get a "book."

In one sense, it also has gotten easier, because a new federal law, that took effect July 1, requires colleges and universities to post information about textbooks (which makes it easier to shop around) and to let professors, who decide which books to use, know what the books cost.

For students, the best way to get started on the book hunt is to always know exactly what book you’re looking for. Sounds simple, but with updates and versions for international markets, this is not as easy as it seems.

Many students skip the bookstore entirely and buy books online for other sellers and re-sellers, but that's not always where you'll find the best deals. College bookstores are in the game, too, with plenty of web sites.

Check, too, to see if your school or state school systems offers free downloadable versions of any required books.

And then there are textbook rentals. A popular site for this is Chegg.com. CourseSmart.com sells subscriptions to digital copies of textbooks. TextbookMedia.com allows textbook downloads (some are free, with advertisements inserted, or you can decide to pay for other versions).

A recently launched website based in Jupiter, TextbookRentals.com, allows you to check one option against another.

TextbookRentals.com, offers a way to comparison shop , with a breakdown of rental costs across stores and a comparison to new and used prices for the book. The site's founder David Batchelor says rentals may not always be the best deal.

Here's another new option: Amazon's Kindle claims there are 200,000 electronic textbooks available on its reading device.

It's really up to you to decide which of these many options is the best fit.

If you'd like to know about the new law requiring schools to post textbook info, you can read a story about it here.

And here are some other sites where you can continue the hunt:

TextbookX.com
TextbooksRus.com
Ecampus.com
Buy.com
Amazon.com
BarnesandNoble.com
BestBookBuys.com

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August 30, 2010

Your Money Q&A: Can we deduct sales taxes this year?

Need help with a money problem? Columnist Harriet Johnson Brackey is working with certified financial planners to get answers. Submit your questions at SunSentinel.com/moneyquestion or call 954-356-4628. To see previous questions, visit SunSentinel.com/PersonalFinanceQandA
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Do you think we will be able to deduct state sales taxes in 2010 on our federal income taxes? – Andre

This is an important one to Floridians, who for the last few years have been able to take an itemized deduction for sales taxes. About one out of four returns filed from Florida took this deduction for 2008.

Floridians pay no state income tax – which is an itemized deduction for those who live in states that do have income tax. The sales tax deduction came about to give Floridians and residents of other no-tax states a similar write-off.

But, the sales tax deduction has always had an expiration date. Under current law, it ended last year.

That is “very likely” to change, said Jamie Summers, a partner at Deloitte Tax in Miami. “The sales tax deduction is included in the tax ‘extenders’ bill which has been passed by the House but it hasn’t gone all the way through yet,” he said.

In all about 60 expiring tax provisions are in this bill. “The fight in Congress is mostly over how to pay for the extension, and that has been holding things up,” said Mark Luscombe, a principal analyst at CCH, a Wolters Kluwer business that provides tax analysis and information.

Luscombe, too, said the expectation is that the issue will come up again before the year ends.
And that the sales tax deduction will continue.

You can take the deduction by using the IRS tables of average sales tax expenditures. Or you can use your actual expenses. You can also add the sales tax on a few major purchases, such as a car or a boat, to the average from the tables.

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Have you checked your broker's background?

It's not all that hard. In case you missed it, here's my column on checking out stockbrokers and financial advisors...

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August 27, 2010

New troubled loans slip, foreclosures still rise

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Fewer Florida homeowners are falling behind on their mortgages than at the start of the year, but one in four remain behind on their loan payments or are in foreclosure.

The number of troubled mortgages in Florida edged down during the second quarter by a slight 11,500 according to figures released Thursday by the Mortgage Bankers Association of America.

In the second quarter,10.97 percent of mortgages on one-to-four unit properties in Florida was delinquent, meaning payments were past due by 30 days or more. That figure is down from 11.32 percent in the first quarter and 12.66 percent in the fourth quarter of last year.

In addition to delinquent mortgages, 14.04 percent of Florida’s mortgages are in foreclosure, the association said. That figure has been rising steadily since the third quarter of last year, when it stood at 12.74 percent.

Nationwide, one in 10 mortgages are either delinquent or in foreclosure, according to the Mortgage Bankers Association.

“We are not out of the woods at all,” said Mike Copley, executive vice president of TD Bank, which has 37 offices in Broward, Miami-Dade and Palm Beach County.

An estimated 849,003 Florida mortgages were delinquent or in foreclosure between April and June, down from 860,576 in the first quarter. The state has 3.4 million mortgages in the survey.

A handful of other states have it worse than Florida when it comes to new borrowers falling behind on their loan payments.

Among states, Florida’s delinquency rate was fifth highest, behind Mississippi, with13.66 percent, Nevada 13.23 percent, Georgia 12.39 percent and Michigan 11.41 percent.

The numbers:
Florida delinquent loans:

10.97 percent second quarter 2010

11.32 percent first quarter 2010

12.66 percent fourth quarter 2009

12.18 percent third quarter 2009

Inventory of Florida loans in foreclosure

14.04 percent second quarter 2010

13.97 percent first quarter 2010

13.44 percent fourth quarter 2009

12.74 percent third quarter 2009

Number of Mortgages

3,394,654 second quarter 2010

3,402,832 first quarter 2010


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August 26, 2010

AC cash for clunkers: How tax credit works -- or doesn't

If there was ever a time to buy an air conditioning unit, this is it. With a $1,500 state tax rebate and a $1,500 federal income tax credit, it makes an old AC unit a lot easier to replace.

But don’t make one mistake as you plan your budget.

The federal government is not going to send you a $1,500 check.

You may not realize it, unless you pay close attention. That’s what happened to Virginia Blanchard, who lives part of the year in Delray Beach.

She was very surprised to learn that when she filed her taxes earlier this year, seeking the $1,500 credit for the AC unit she had installed in 2009, that she wasn’t going to get any money back in a federal income tax refund.

The reason: The federal tax credit for installing energy-efficient air conditioners is not refundable.

That means, if you owe taxes, the $1,500 tax credit can be subtracted from what you owe. But if you owe less than the credit, you won’t get anything back.

Blanchard didn’t owe taxes last year. So while she was thinking she was going to get a nice $1,500 check, she got nothing. “If a taxpayer is diligent with deductions, there is no $1,500 silver lining for them,” she wrote in an email.

“A nonrefundable tax credit allows taxpayers to lower their tax liability to zero, but not below zero,” is the official way the IRS phrases it on its website.

“Nonrefundable” sounds like jargon to people. But it’s important. The check is not in the mail.

Oh, but there’s this: Blanchard says she has no regrets. The new AC unit is efficient, has lowered her bills and she got the FPL rebate that also helped her cover the cost.

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August 25, 2010

Facing foreclosure: Another loan modification event comes to South Florida

Friday, 9 a.m., is the official opening for the Neighborhood Assistance Corp. of America major mortgage modification event in West Palm Beach.3661839.thl.jpg

But I know people will be lined up overnight, waiting for the Save The Dream Tour to open.

Things will probably start getting busy Thursday. At 1 p.m. West Palm Beach Mayor Lois Frankel plans to hold a press conference with NACA Chief Executive Officer Bruce Marks to announce the event.

These events are mobbed. Anxious borrowers camp out, line up, bring their chairs and wait for the chance to see a loan counselor in person. NACA staffs the events with hundreds of counselors. It arms them with agreements with many of the nation’s largest lenders to make modifications. For some, the modification happens on the spot.

Borrowers who qualify can get very low, fixed-rate mortgages for 30 years – sometimes, the lenders even cut the principal amount owed. The savings can run hundreds of dollars a month.

But the greatest relief to borrowers I’ve talked to is that they have saved their homes from foreclosure.

When NACA was last in West Palm Beach, its counselors worked on 24,000 loans and modified 16,097 of them.


If you go: NACA’s Save The Dream Tour, open 24 hours, from 9 a.m. Friday Aug. 27 until doors close at 8 p.m. Tuesday Aug. 31 (counselors will continue to work with borrowers until midnight), Palm Beach County Convention Center, 650 Okeechobee Blvd., West Palm Beach.

NACA works with owners who live in their homes, not investors. It also focuses on first
mortgages, not home equity lines of credit.

To learn what documents you should bring and register for the event, go to NACA.com

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August 23, 2010

Credit card reforms - the bad side of the story

Credit card reform, good for consumers. But tough at the same time.

I have two lists for you, now that credit card reform has taken full effect. The first list of the problems that has caused for consumers, according to one credit card research and information site. The other, a list of possible ways around the problems for consumers.

Let me know what you think of the ideas.

Here is Billshrink.com's list of rather nasty consequences that are hitting credit card holders now:
Credit card interest rates still on the rise. Over the last six months, nearly 20% of card issuers have raised interest rates over 25%.
• Annual fees are up. Bank of America has added annual card fees that can range from $29 to $99 for a limited group of cardholders based on risk and profitability. Similarly, in April 2010, Citigroup added a $60 annual fee to some credit card accounts when the cardholder has annual purchases under $2400.
• Cash advance rates remain at a lofty average of 21.65%.
• Balance transfer rates have increased by 10% across the board since February
• Foreign transaction fees are also on the rise. Fees applied to purchases made outside the US (including online shopping transactions) now average 2-3%, up from 1%.
• Issuers are getting stricter about credit rating requirements. Wells Fargo Platinum Card, Wells Fargo Cash Back Platinum Card, and Wells Fargo Home Rebate Card previously required “Fair” credit, but now require “Good.” Chase Freedom used to require “Good” credit, but now requires “Excellent.”
• ATM fees now average $3.50 per transaction. ATM fees rose 13% this last year, and banks are generated more than a $10 billion a year in revenue from people who use their ATM cards in other bank’s ATM machines.
• The end of free checking? Bank of America and Wells Fargo are two banks that have started to charge a monthly maintenance fee on checking accounts. By January 2011, it is predicted that fees on checking accounts will be the norm.

And here is (my shortened version of) Bills.com's suggestions for how to limit the negative impacts of credit card reform.

1. Monitor your communications from your credit card issuer.
2. Maintain prompt payment status with your credit card company.
3. Pay down high balances to improve your credit score and minimize the chances that your interest rate will be hiked or your credit limit lowered.
4. Keep using your cards. You can avoid inactivity fees.
5. Avoid over-limit fees through responsible spending habits. Credit card issuers have begun to charge fees for opt-in over-limit coverage. By remaining aware of credit limits and balances, consumers can avoid a need for this service and these fees altogether.
6. Remember that the new regulations do not apply to corporate or small business cards. This means some small business owners might consider using personal cards for business expenses because of fee and rate limitations.

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Your Money Q&A: I own a condo. How do I get a home equity line?

Need help with a money problem? Columnist Harriet Johnson Brackey is working with certified financial planners to get answers. Submit your questions at SunSentinel.com/moneyquestion or call 954-356-4628. To see previous questions, visit SunSentinel.com/PersonalFinanceQandA
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PuppetI would like to pay off some high interest credit card debt by taking out a home equity loan on the condo where I live part of the year. I own it free and clear. But I can’t get a lender to give me loan. What can I do? – Maurice, Lighthouse Point

You're in a tough spot and it may not be because of your own credit worthiness. “It may not be the borrower at all, it may be the condo project,” said Dave Seleski, president and chief executive officer of Fort Lauderdale-based Stonegate Bank. He says if many of the neighbors' units have fallen into foreclosure, lenders probably won’t make a home equity loan on your unit. Another problem, he says, is that few lenders are making home equity loans anymore because they have suffered huge losses on them during the recession.

You are not alone in trying to find some alternatives for paying off high interest credit card debt, said Certified Financial Planner Michael E. Mader of Veritas Wealth Advisors in Plantation.

He suggests that you first ask the credit card issuer to lower your interest rate. At the same time, shop around for other credit cards where you might be able to transfer your balance to one with a better rate.

If you have a 401(k), perhaps you can take out a loan from it. Ask your plan's sponsor if that's allowed. If you have a Roth IRA, you can take out any money you contributed without a penalty, Mader said.

Home equity isn't the only option that's unavailable. Other options are closed off, due to your age. You told us you are 55, which means you’re too young to take money from a traditional IRA without paying a tax penalty. And you’d have to be 62 to qualify for a reverse mortgage on your property.

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August 20, 2010

Free financial planning for South Floridians

Just a quick note for your calendar: Saturday, Oct. 2 is Miami Financial Planning Day. 4509224_thl.jpg

This will be a free event for the public (and not just folks from Miami, to anyone) at the Knight Center. Certified Financial Planners and other financial advisors from across South Florida will offer counseling and personalized advice (and no conflicts because they're not selling anything) to the public.

The advisors will focus on seven topics: Basics of investing, credit counseling, estate planning, financial literacy for children, mortgages, retirement planning and planning your future.

Last year, hundreds attended the event. This time around, with more than a million Floridians still unemployed, the crowd could be even bigger.

The event is a joint effort of the City of Miami, Certified Financial Planner Board of Standards, the Financial Planning Association, Foundation for Financial Planning and the U.S. Conference of Mayors.

To learn more and to register for the Miami Financial Planning Day, go to http://www.financialplanningdays.org.

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August 18, 2010

New $100 bill, virtually

Oh Benjamin, you’re changing your look!

Next February, the redesigned $100 bill goes into circulation. The colorful, high-tech C-note will have a three-dimensional security ribbon and other features that are supposed to thwart counterfeiting, which is on the rise.

Overseas, the U.S. Secret Service says, the $100 bill is counterfeiters’ favorite, while $20s are the top fake bills in the U.S. In South Florida, where local Secret Service agents say they’re taking around $120,000 a week of fake currency out of circulation, both bills are popular fakes.

You may only have small change in your pocket, but you’ll be able to virtually play with these $100s online. The government this summer is rolling out interactive tools and videos to introduce the color-changing $100s to the public. You can tilt, turn over and shine a light on the new bill online. The point is to increase its acceptance when it arrives Feb. 10, 2011.

Get your hands on the money right here, in this interactive graphic.

Here are some things you probably don’t know about those hundreds:

There are more $100s around than $20s nationwide. In June there were around 6.7 billion $100 bills in circulation worldwide – most of them in use overseas. By comparison, there were 9.6 billion $1 bills in circulation and 6.4 billion $20s. In total, there was more than $904 billion in U.S. paper currency floating around.

The Miami branch of the Federal Reserve Bank says during the year ending in July, in an average month there were $35 million dollar bills circulated in this area, 20.6 million $20 bills and 2.2 million $100s.

The new $100s look different from different angles. The new security features include: Next to Benjamin Franklin on the new bill will be a representation of the Liberty Bell that changes color, from copper to green and back, as it seems to appear and almost disappear inside an inkwell. Woven into the note is a three-dimensional security ribbon with bells and 100s that show up when you tilt the bill this way and that.

They last. An individual $100 bill can be passed around for more than seven years. The Federal Reserve Bank of Atlanta says the average lifespan of a $100 is 89 months.That compares to just 16 months for a $5 bill. A $20 stays around for 24 months.

Counterfeiting is on the rise. The U.S. Secret Service says more than $69 million in counterfeit bills were used in the United States in the 12 months ending last September, in the most recent figures. That’s up from $64 million in the previous year. Overseas, the volume of counterfeit bills more than tripled. The Secret Service made almost 4,000 arrests on counterfeiting charges in the U.S. during that year.

Local officials say the Miami office nabs about $70,000 a week, the West Palm Beach office around $30,000 and the Orlando field office around $20,000 to $30,000. Agents say tourism brings in the fake cash to Central Florida, while in Southern Florida, much of the fake money comes from presses in Latin America.

“We are a target-rich environment,” said James glendinning, assistant special agent in charge of the Orlando office. “The way our entire economy is structured is to cater to tourism and there are plenty of businesses here looking to take cash.”

The $100 is the last to get a new look. The colorful redesigns began in 2003 with the $20, the $50 in 2004, the $10 in 2006 and the $5 in 2008. A spokesowman for the U.S. Department of Treasury’s Bureau of Engraving and Printing said there are no plans to redesign the $1 and $2 bills.

When the $20s first arrived, consumers initially said they looked like “play money.” The Treasury, which unveiled the new $100 design in April, is rolling out an extensive training package, in dozens of languages, to smooth the way for Benjamin’s new look.

For more information, visit newmoney.gov.

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888-5-OPTOUT can stop credit card offers

The credit market seems to be rising from the dead. But that means the return of those irritating calls and offers that come out of the blue to get you to sign up for a new credit card. Just wanted to point out that you don't have to put up with all that.

You can tell the credit bureaus not to allow the credit card companies to have access to its information on you.

Here's how: Go to www.optoutprescreen.com or call 1-888-Optout (888-567-8688.)

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Financial fraud: No jail time usually

A former Merrill Lynch financial advisor was sentenced to seven years in prison for defrauding his clients. That’s unusual. It just doesn’t happen often, no matter how hard some defrauded South Florida investors wish for it. Here in what often seems like the fraud capital of the universe, there is a constant stream of stories of people getting bilked by brokers, advisors, insurance agents. What attracted me to this story in New Jersey: The guy went to prison. Most don’t (Madoff is an exception, too.) Most securities law violators are told not to do it again – the official-sounding “agreed to refrain from violating securities laws in the future.” Many pay some sort of penalty or fine or just give back the money they stole. But few have to cool their heels in prison. Why? If they come under fire from the Securities and Exchange Commission, the SEC doesn’t have the authority to seek criminal penalties. It can work with U.S. attorneys who can seek jail time, but those cases are few. Even now.

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August 17, 2010

Education stocks - including parent of South Florida's Kaplan University -- hit hard

It's not a great start, for investors in for-profit universities, to this back-to-school season. That group includes a large South Florida employer, Kaplan University. The shares of its parent company, Washington Post Co., fell 8 percent Monday.

First it was government investigators and now it's Wall Street taking a cold, hard look at the issues surrounding private universities and their students' debt and promises of future employment.

One of the largest is Kaplan, based in Fort Lauderdale.

Monday, Yahoo Finance carried this Associated Press story about the shares of Kaplan University's parent losing a quarter of their value since Washington Post Co. (Stock symbol WPO) warned investors that new federal rules on enrollment and student debt could impact the company. WPO shares fell $27.83 to $315.65.

In fact, the entire industry was hit hard Monday. Many for-profit education stocks took a dive, CNNMoney reported Monday. The story pointed out that new data showing low rates of repayment on student loans may mean that students at for-profit colleges can will longer have access to federal loans.

In June, my colleague Marcia Heroux Pounds reported that, even in the dismal job market in South Florida, private educators were hiring and Kaplan was leading the way. She wrote:

The largest driver of private education job growth in Broward County has been Kaplan University, which bases its higher education business in Fort Lauderdale. The company, owned by The Washington Post, hired more than 2,800 employees in Florida in 2009. Almost 1,000 of those were in Broward.
And this year, Kaplan continues to expand. It recently opened a "learning center" where remote students can take some classes and find guidance in Delray Beach; a new center is under construction in Plantation.
Of the 900 whom Kaplan has hired so far this year, 350 were for positions in Broward County, said Suzanne Calfee, vice president for human resources for Kaplan University.
Kaplan doesn't disclose turnover numbers, but its hiring has been fueled by growth, Calfee said. Of the 180 jobs now open in higher education, 115 are new jobs.
"We have been hiring in all areas of the university to support that growth: admissions, career services, academic advising and faculty, as well as human resources, finance, and project management," Calfee said.

But things started to get tough at Kaplan earlier this month. On Aug. 6, my colleague Scott Travis revealed that:

In an unprecedented move for the for-profit higher education industry, Kaplan College in Pembroke Pines has stopped enrolling new students after federal investigators uncovered incidents of high pressure and potentially fraudulent and misleading sales tactics.
A second Kaplan campus in Riverside, Calif., also put new admissions on hold, pending the results of an internal investigation.
.

You can read the rest of Scott's story here.

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August 16, 2010

Personal Finance Q&A: How do I get my credit card rate lowered?

Need help with a money problem? Columnist Harriet Johnson Brackey is working with certified financial planners to get answers. Submit your questions at SunSentinel.com/moneyquestion or call 954-356-4628. To see previous questions, visit SunSentinel.com/PersonalFinanceQandA
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My credit card statement says the Annual Percentage Rate is 24 percent. Is there anything I can do to bring that down? Can you give me some suggestions?
-Emily

Go ahead and ask for a lower APR, suggests Certified Financial Planner Howard Kramer of Plantation.

Call customer service and talk about your unhappiness, try to build rapport with the customer service representative and hopefully you will get an initial offer. Then try to get to a manager who will inevitably do better. If the first offer to lower the rate is not significant, keep pressing the case, he said.

If you have a good history with the credit card company, with no or few late payments, you have a better shot at a lower rate.

It is always helpful, too, to mention any balance transfer offers from other credit card companies if you have them.

Ultimately, you have to be friendly, persistent and determined to get a lower rate.

In general, credit card companies place a lot of emphasis on credit scores, so you should brush up on what goes into them.

The most important factor in calculating a credit score, according to www.myfico.com, is timely payment of your bills and not having any negative marks on your record, such as a delinquency. Next comes the balances in relation to the credit lines.

Those two factors you can control. First take a look at your credit report, which you can get for free at annualcreditreport.com, to make sure there are no errors that are lowering your score.

Then, do all you can to bring your balances down. To get the best credit score, your goal should be to use no more than 30 to 50 percent of your available credit.

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August 12, 2010

Send my your personal finance questions

I'll be back in the office next week. In the meantime, send me your questions.

Need help with a money problem? Columnist Harriet Johnson Brackey is working with certified financial planners to get answers. Submit your questions at SunSentinel.com/moneyquestion or call 954-356-4628. To see previous questions, visit SunSentinel.com/PersonalFinanceQandA
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August 11, 2010

Who do you trust for financial advice?

Even with the financial crisis that we've all lived through, people still seem to trust their financial advisors. But that doesn't mean just anyone. The most trusted category? Read this story to find out.

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August 10, 2010

Credit improvement seminar Saturday

From Sun Sentinel Staff Writer Doreen Hemlock:

A new for-profit group called Credit Seminars of America is organizing its first-ever event this Saturday, Aug. 14 at the Palm Beach County Convention Center aimed to help people improve their credit and finances.

Representatives of local businesses will offer information at two similar sessions at 10am and at 2pm on such topics as credit repair, mortgages, bankruptcy, autos, real estate and insurance, according to organizers from the months-old Palm Beach Gardens seminars company.

Entry is $15 per person for the seminar at the downtown West Palm Beach convention center. Parking is $5.

For more information, call organizer James MacDonald at 561-880-7242 or e-mail: creditseminarsofamerica@gmail.com.

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Excessive overdraft charges stop

Freedom from excessive overdrafts starts Sunday, Aug. 15.

What I’m talking about as excessive (for consumers) is this: When a $3 cup of coffee for which you have insufficient funds in your account turns into a $39 cup of coffee because you paid for it with your debit card and you incurred a $36 overdraft fee. (That’s what SunTrust charges.)

These charges were great for banks, which raked in $23.7 billion in overdraft fees a year, according to the Center for Responsible Lending. The Federal Reserve found that 41 percent of overdraft fees came from one-time purchases with a debit card.

The Fed also surveyed consumers a few years ago and found large numbers were unaware that their debit cards would not be declined if they were overdrawing their accounts.

After a hotly debated rule-making process that included more than 20,000 comments from consumers and banks and others, the regulations came out late last year.

They’re going into full force now.

Starting Aug. 15, a financial institution cannot slap you with any sort of fee for paying an overdraft on a transaction at an ATM or a one-time debit-card transaction – unless the institution has your permission to do so.

This means an end to “automatic overdraft protection.”

Automatic overdraft protection meant your debit card was never refused when you made a purchase, but you would get slapped with those big fees if you overdraw the account. Now, you have to say to the bank that you want this protection.

If you don’t say that, the bank will start refusing debit card transactions for which you don’t have the funds.

You can still get protection and not have your debit card refused if you take some action.

Say your debit card is attached to a checking account. Most banks will allow you to link that checking account to a savings account. If you overdraw, money is taken from savings to cover it.

Usually, linking accounts is cheaper than paying overdraft fees, which are somewhere north of $30 at many major banks. For linked accounts, Bank of America charges only $10 for this transfer of funds to cover the overdraft.

Check with your bank and find out the options. Otherwise, it’ll be back to Stupid Overdraft Charges.

Oh, and those billions that banks collected in overdraft charges? Many analysts have started to say that without those funds and with the expense of going to new rules for overdrafts, banks are going to have to start charging customers new fees. Such as, fees for a checking account that used to be free.

If you hear of such things, let me know. I’ll write about it.

Read my previous column about bank overdraft charges here.

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August 9, 2010

Personal Finance Q&A: Savings advice?

Need help with a money problem? Columnist Harriet Johnson Brackey is working with certified financial planners to get answers. Submit your questions at SunSentinel.com/moneyquestion or call 954-356-4628. To see previous questions, visit SunSentinel.com/PersonalFinanceQandA
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What savings advice would you give for a one-income family? Our children each have small savings accounts they make regular small despots into. But the accounts earn only a few cents a year. Any advice for them?
Dora

With three children, one income and no emergency fund or retirement savings, it has to be tough to stretch those dollars. "I think it is noble that you are implementing a savings plan to the best of your situation," said Irwin Gross, wealth coach at Family Wealth Partners in Weston.

The best option for small amounts is certificates of deposit. You'll make a little bit more on them than "pennies." But overall interest rates are low at the moment, so it won't be much more.

As your accounts build in value perhaps you can consider other options.

If the money is for your emergency fund, we want to be sure it doesn't fluctuate in value. So you may end up staying in CDs or money market mutual funds.

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August 6, 2010

Small overdrafts: Banks stop the fees!

One of the benefits for consumers that has come about since the Federal Reserve put out new rules on overdraft fees: Big banks, those that operate in Florida and nationwide, have decided to stop charging ridiculous fees for tiny overdrafts.

You should check with your bank and see if has a new policy. Most of the big Florida banks do.

Since last October, Bank of America stopped charging an overdraft fee if you overdraw your account by $10 or less. Previously, any tiny overdraft at Bank of America could bring on a $35-per-item overdraft charge in Florida. And there could be more fees than that, if your account remained overdrawn for a few days.

This is for overdrafts that aren’t due to debit-card transactions and for debit-card overdrafts if you've linked your card to another account. If you haven't set your account up this way, even a small overdraft will be declined on your debit card if you're trying to buy something.

JP Morgan Chase set its bar at $5 last September.

SunTrust told customers in recent checking account statements that it would not charge fees for overdrafts up to $5.

Wachovia/Wells Fargo said it, too, won't charge for overdrafts under $5 for existing customers starting Aug. 13. This policy already applies to newer customers, who opened their accounts by June 23.

Each bank has its own rules about when and how these small-overdraft policies apply. Be sure to ask, so you don't end up paying unexpected fees.

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August 5, 2010

Wall Street and financial reform, it's not over

It was fun while it lasted, this victory for consumers. Read this one from CNBC....

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August 4, 2010

Mutual funds, what do they really cost?

Just sharing something I have had in my files for a long time. If you want to know what a mutual fund really costs, here's a great calculator that will tell you, after you answer a few questions.

www.personalfund.com

There are other calculators out there, including one from the Securities and Exchange Commission. But none so easy.


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August 3, 2010

Mortgages: Florida's rich aren't paying

The rich are more willing to walk away from their mortgages than the rest of us.

That's what it looks like if you glance at CoreLogic's analysis of mortgage data for April.

A greater proportion of those with very high mortgage balances are not paying on their loans in Florida than those with smaller loan balances. Presumably, you had to be rich to qualify for a $1 million mortgage -- although a few years ago, maybe not.

The figures are:

If the original residential home mortgage balance was more than $1 million, 27.6 percent of those loans in Florida were seriously delinquent, 90 days behind or more. Nationwide, the figure's only 13 percent. And if the original loan balance is less than $1 million, the same figure is 17.3 percent in Florida.

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August 2, 2010

Personal Finance Q&A: Should I try to modify my mortgage?

Need help with a money problem? Columnist Harriet Johnson Brackey is working with certified financial planners to get answers. Submit your questions at SunSentinel.com/moneyquestion or call 954-356-4628. To see previous questions, visit SunSentinel.com/PersonalFinanceQandA
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My husband and I are in the middle of requesting a loan modification from our lender Bank of America. I've heard so many negative things. Our credit, which is excellent, will suffer. They might reduce our interest rate, for a short term, or reduce our monthly payments for a short term, but they will add back any of those reductions to what we owe at the end of the loan. We are on Social Security and don't expect any increase in our income. So how can a modification help us? Should we continue with the request or just try to pay as we go? Any advice will be welcomed.- -Danielle and Josh

As with all financial products and strategies, there are pros and cons, said Certified Financial Planner Jubin Keyvan of Profitable Financial Strategies in Coral Spring.

Modifying your mortgage generally means working with your lender to change the terms of the note you signed when you bought your home or when you refinanced.

It may be a good tool to prevent foreclosure or as an alternative to doing a short sale.

However, modifying your mortgage will most likely damage your good credit.

You should proceed with very carefully.

First, you have to factor in that you may not qualify for a loan modification. The Obama administration's Making Home Affordable program for loan modifications is for people who have had a change in their economic circumstances – for example, a job loss or an illness. Since you said you have Social Security income, your income is probably stable and the lender would not agree to your request.

But there are other programs lenders can use to modify home mortgages.

Before you proceed, consider your goals and objectives. Ask yourselves: What are you trying to accomplish? What are the pros and cons of going down this road? And are you willing to accept the down sides?

Alternatives you should consider would include just refinancing the home with a new fixed mortgage. Interest rates for qualified borrowers with good credit are very low now.

Or, if you have sufficient equity in your home and you plan to live there for the rest of your lives, a reverse mortgage may make sense. A reverse mortgage is for people who are age 62 and older who want to tap the equity in their homes.

Keyvan recommends that you consult with some qualified advisors: including a bankruptcy attorney, a real estate attorney, your tax advisor and maybe even a financial planner. You may find that you have options you didn’t even know about.

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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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