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YOUR CREDIT CARD BILLS ARE ABOUT TO
DOUBLE.
HERE'S WHAT TO DO ABOUT IT!
If you’ve
just been scraping by, paying the minimum on your credit-card bills
from month to month, your bills may be about to double from 2 to 4
percent of the balance due. Complying with Federal guidelines, this
summer five of the top 10 card issues (Bank
of America, Chase, Citibank, Discover and Providian) have
already made the change, according to Cardweb.com. By the early part
of next year, nearly all of the credit-card issuers are expected to
follow suit.
The good news,
of course, is that this enforced higher payment will give you a shot
at paying off your debt eventually. Paying a mere 2 percent hardly
covers charges and fees and won’t make a dent in your principal.
However, the minimum-payment increase, combined with other
factors—such as shorter grace periods, higher interest rates and
late-payment fees, and a new, less forgiving bankruptcy law—adds up
to more reasons to get your debt under control. Here are seven steps
to take to help you do just that.
1. Make
a list of your cards, noting the balances on each, placing the ones
with the highest interest rates at the top of the list.
2.
Call
the card issuer of each and try to negotiate a lower rate. If you
don’t succeed, transfer your high-interest debt to the lowest-rate
card you can obtain. Read the fine print on the offers you’re
considering to be sure that low rate will hold for at least six
months, and be aware that if you make even one payment late, once
you accept the card, the rate may convert to a higher one.
3.
Now,
make a Superwoman’s effort to pay off the cards, one at a time,
starting with the one with the highest rate. Do this by paying as
much over the minimum as you can afford each month. Increase the
amounts you pay on the remaining cards as well. Take the time to
write down how you spend every penny for a week, and you’ll probably
find numerous ways to economize so that you have the extra cash to
put towards the debt.
4.
Even at 4 percent,
NEVER pay
just the minimum.
5.
If you have enough
money in a savings account or mutual fund to cover your credit- card
debt, consider using it, or part of it, to pay down your debt. The
interest it’s earning is likely to be far less than the interest
you’re being charged by the card issuer, so you’ll really be saving
money in the end. Once the debt is paid off, keep making
payments—back into your savings accounts.
6.
Borrow from
yourself; many 401(k) plans allow you to borrow a percentage of your
savings at a rate a few points above prime, and the interest you pay
goes back into your account. Or if you have life insurance policies
that have a cash value, consider borrowing against them.
7.
Own a home? Another option is taking out a home
equity loan, whose interest rate should be lower than the
credit-card interest you’re paying—and it's tax-deductible! |
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STUDENT LOAN HELP FOR DOCTORS
The situation of pediatric HIV/AIDS in Africa is dire. An
international AIDS charity,
www.Avert.org, reports that 1.9
million children are living with HIV/AIDS in sub-Saharan Africa. But
the circumstance just got a little brighter. Baylor College of
Medicine, in conjunction with the Bristol-Myers Squibb Foundation,
launched a program to send 250 pediatricians to the continent over
the next five years. It’s a win-win situation: the children will
receive much-needed medical attention and any doctor who stays for
at least a year receives up to $40,000 per year to pay off student
loans. To learn more, visit
www.bayloraids.org and click on
Pediatric Aids Corps.
—Danielle Bullen
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A WEB SITE THAT GETS YOU TO WORK ON TIME
It’s one of working women’s (and men’s) biggest annoyances: commuter
gridlock. Now you don’t have to sit through that bottleneck on the
expressway, wondering if you’ll be late for the 9 o’clock meeting. A
Pennsylvania company,
www.Traffic.com, installed digital
roadside sensors in 23 cities. By selecting the My Traffic service,
you can customize your daily route and receive free e-mail updates
containing the latest driving news. For $4.99 a month, the
information can even be sent to your cell phone or PDA, allowing you
to decide whether it’s time to zip off the freeway early and take
the back roads, instead.
—Danielle Bullen
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LESS THAN TWO WEEKS TO GO TO CONSOLIDATE
YOUR COLLEGE LOANS!
A Partnership for
Public Service survey of college seniors reports that students are
far more worried about debt (32.4%) and unemployment (31.2%) than
terrorism (13.4%). On the debt front, there’s some good news for
recent graduates, though. By consolidating Federal loans, students
can take advantage of interest rates as low as 2.88%. Applicants
must have a minimum of $7,500 in Federal loans to be eligible.
Nellie Mae offers a 1% interest-rate deduction for making the first
36 payments on time. The deadline for consolidation is July 1,
2005. For more information, visit
www.nelliemae.com/consolidation.html or
www.scholarships.com (and click on Federal Consolidation Loans).
—Danielle Bullen |
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SEE ABOUT THIS FREE VISION CARE FOR YOUR
BABY FACE
“One in every 10 children is at risk from undiagnosed eye and vision
problems,” according to the American Optometric Association (AOA),
“yet only 13 percent of mothers with children younger than 2 years
of age said they had taken their babies to see an eye and vision
care professional…” Now, thanks to InfantSEE, a national program
created by AOA, in conjunction with the Vision Care Institute of
Johnson & Johnson Vision Care, Inc., parents of babies ages 6 months
to a year can schedule a free appointment with an optometrist for
their child. The optometrist will check your infant for possible
lazy eye, nearsightedness, and retinoblastoma. Retinoblastoma is a
type of cancer that has a very high cure rate, as long as it is
detected early and treated. (For more information, to find an
optometrist in your area, or to make an appointment, visit the
program's Web site at
www.infantsee.org or call 888-396-3937.)
—Emily Shebak |
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HOOSIER EMPLOYERS OFFER JOB PERK TOO GOOD
TO REFUSE
The “brain drain,” bright college graduates fleeing
to greener pastures en masse, is a problem for many towns and
cities. Fort Wayne, Indiana, has implemented a creative solution to
this problem. Dr. John Crawford, a city councilman, started a
“brain gain” fund earlier this year. Here’s the deal: College
graduates work one year in Allen County, Indiana, in the fields of
computer information technology, advanced manufacturing or
biotechnology, and they can apply for up to $10,000 towards repaying
their student loans. Anyone working in those industries in Allen
County, regardless of college attended or state of residence, is
eligible. For more information, contact the Fort Wayne Educational
Foundation at 260-481-6256.
—Danielle Bullen |
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FRIENDSTER & THE BOSS
Sites such as
Friendster.com,
MySpace.com, and
Tribe.com, which create instant social networks among the
18-to-35 set, have rocketed in popularity recently. Members browse
profiles of their friends and those friends’ acquaintances. With
the click of a mouse, you can become reacquainted with an old friend
or meet someone new. Yet not all visitors to those sites are
interested in socializing. According to The Wall Street Journal,
employers can research prospective job seekers by accessing their
profiles and get an understanding of applicants’ true personalities
through the interests, pictures and messages posted online. The
article says that such searching is legal and cautions against
including potentially negative or highly personal information in
your profiles.
—Danielle Bullen |
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FEDERAL COLLEGE AID JUST GOT A LITTLE
SCARCER:
What
You Can Do About It.
If
your child is currently enrolled in college, or is planning to
attend college some time down the road, be prepared to receive less
Federal financial aid. This fall, many families will struggle while
trying to qualify their college-aged child for financial aid. Some
will even be required to give thousands of dollars more toward
tuition costs as a result of changes being made to the Standard
Needs Analysis Formula, which calculates the Expected Family
Contribution (EFC.) According to the U.S. Department of Education’s
Free Application for Federal Student Aid Web site (www.fafsa.ed.gov),
“The Expected Family Contribution (EFC) measures your family’s
financial strength and is used to determine your eligibility for
Federal student aid during one school year.” This extremely detailed
formula looks at various factors, including family income and the
age of the parents.
Expect the formula
to change again in the future, but for now, there are a few small
actions that families and students can take to help decrease the
amount of money owed next year for college expenses. For starters,
research student loans at the Collegiate Funding Services Web site,
www.cfsloans.com or
www.collegeboard.com. Scholarships are offered throughout the
year for students, so stay in constant contact with the
financial-aid department at your school and stay up-to-date on
scholarship applications and upcoming deadlines. Also, virtually
all campuses and college towns have numerous opportunities for
part-time work for students. If you just can’t come up with the
additional money this semester, consider temporarily transferring to
a cheaper school.
Families with
younger children have more time to save. The first line of defense
is to start setting money aside in a Coverdell IRA, says financial
planner Eve Kaplan of Kaplan Financial Advisors: “Coverdell IRA’s
are purely a way of sheltering growth and income.” The next line of
defense is to look into a 529 Plan. No matter what your EFC is,
“investing and saving money for your child’s education ahead of time
makes for a smoother drive ahead,” says Kaplan. For more tips on
saving for college, visit
www.kaplanfinancialadvisors.com.
The bottom
line: There’s no need to let this latest decrease in financial aid
crimp your ability to send yourself or your kids to college. Loans
and scholarships are available for those who are willing to hunt
them down. It has often been said that the two best kinds of debt
are loans to pay for a college education and a house. Think of this
“good debt” as an investment in your future.
—Emily Shebak |
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DON’T BLINK! BOTOX JUST GOT MORE EXPENSIVE
IN NEW JERSEY!
New Jersey recently
passed a law levying a 6 percent tax on several cosmetic surgery
procedures, including hair transplants, chemical peels and
liposuction, says The Wall Street Journal. For
example, a $376 Botox injection now costs $399. The revenue
collected will go toward hospital care for the uninsured.
Procedures to correct birth defects or disfigurement from accidents
or diseases are exempt from the tax. While New Jersey’s law is the
first in the nation, at least six other states have introduced
similar bills.
—Danielle Bullen |
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BEST DEALS ON BOOKS ONLINE
Not only does
shopping online save you from the hassle of waiting in line, it’s
good for your wallet, too. If you’re in search of a hot summer
read, visit
www.borders.com. “4th of July,” James Patterson’s
latest bestseller, for instance, is $16.79 online, but costs $19.56
in stores. And if you spend $25 or more at Borders.com, there is
no shipping charge. Barnes & Noble (www.barnesandnoble.com)
offers the same deal for shipping, plus the opportunity to save an
extra 10 percent on all purchases, both in store and online, with
the purchase of a $25 annual membership.
—Danielle Bullen |
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BETTER THAN ‘THE APPRENTICE’?
Visit the Web site of the Forte Foundation (www.fortefoundation.org/scholarships.html),
a consortium of major corporations, top business schools and
nonprofits dedicated to steering talented women toward leadership
roles in business, to download an excel file listing scholarships
available to women around the country. The Forte Foundation
offers its own scholarship to women who are pursuing an MBA at
participating business schools and holds frequent forums around the
country for those interested in pursuing an MBA and a career in
business. |
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CHECK OUT CHECK 21
Have you ever dropped a check in the mail—say, to pay your phone
bill or the electric company—without having enough quite money in
your account to cover it, knowing that, by the time the check
gets cashed, your next paycheck will have been deposited in your
account and the funds will be there? Well, you’d better check
that habit.
On October 28, a new Federal law, “Check 21,” takes effect that
will change the way your bank processes the checks you write.
Whereas once it could take days for a check to make its way from one
bank to another and clear, now transactions can be done
electronically, moving funds from one account to another in a matter
of minutes. There will be no lag time between deposit and
withdrawal.
As a result, your bank may also eliminate canceled checks. If you
request a paper copy for your records (and you should), you could
now receive a photocopy of the original. Consumer experts warn that,
with duplicates and originals floating around, there is a danger
that some checks might end up being cashed twice by mistake. Notify
your bank immediately, if this happens and your account will be
credited. |
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Check Those Check Charges
When you order checks, save money by buying them from
private companies, instead of directly from your bank. Don’t worry;
they will meet all national standards. Be sure to double-check your
account number, name and address when you receive them, just as you
would if your own bank produced them for you. Even Wal-Mart (www.walmartchecks.com)
sells checks now. You can find companies that sell checks by doing
an “order checks” search online. |
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DID YOU KNOW . . .
. . .
that just by choosing low-test instead of premium gas, you can save
as much as 40 cents per gallon, or $8 to $12 a fill-up? Multiply
that by four weeks (assuming you fill your tank only once a
week), and you’ve saved $32 to $48 a month. That’s a lot of extra
mileage in your savings account.
. . .
that your Social Security number appears on your payroll stubs? Be
careful how you dispose of them when you get your checks from your
employer. Letting your S.S. number get into the wrong hands is the
quickest way to have your identity stolen. |
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No Interest Payments Till 2005?
Sound Too Good to Be True?
Promotional deals
like this are designed to get you to sign on the dotted line for
big-ticket items like furniture, rugs or major appliances. They
sound great until you read the fine print. (You’ll probably need a
magnifying glass!) The catch? Generally, if the purchase is not paid
in full by the indicated date, finance charges will be assessed on
the purchase price from the transaction date. And the
interest rate charged could be as high as 20 percent. Again, read
the fine print, so you know what the deal really is.
You can make these
promotional offers work for you, but it takes discipline. To avoid
being hit by finance charges at the end of the promotion period,
don’t just pay the minimum amount on the bill they’ll send you each
month. Divide the total bill by 11and pay that amount each month.
That way you’ll get the item paid off a month in advance and there’s
no chance you’ll trigger an interest charge just because you missed
the final payment date by a day.
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Honk If You Have Trouble Making Your
Car Payments
The solution may be
a longer-term loan. Some banks, credit unions and car manufacturers
(Isuzu, for one) are now offering seven- and eight-year loans,
allowing car purchasers to stretch their payments over a greater
time period. Interest rates can be as high as eight or nine
percent—and you’ll end up paying thousands more in interest over the
life of the loan—but you could end up cutting as much as $100 off
your monthly payments. Tip: If you opt for one of these loans, try
to pay it off as quickly as possible. |
Health Insurance Band-Aids
Many college
graduates go uninsured until they can land a job that offers health
benefits.
According to the
U.S. Census Bureau, approximately 8.1 million 18- to 24-year-olds
are without coverage, and that number is on the rise. Close to 30
percent of the 43.6 million uninsured Americans now fall into that
age group.
To fill the gap, some insurers are offering low-cost,
short-term policies; others have policies designed for people in job
transition, which provide equally good solutions for uninsured
college graduates. Two such insurers are Humana Inc. and Fortis
Health.
HumanaOne College
Graduate premiums are available for as low as $25 a month, and
coverage lasts six months at that rate, reports The Wall Street
Journal. Deductibles range from $500 to $5,000. Fortis Health’s
short-term coverage can be had for as low as $29 a month. For more
information, visit
www.humana.com and
www.etdbw.com/fh/fortishealth/index.jsp.
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A
Substitute for Subscriptions?
If
you’re a magazine junkie, you could easily spend a hundred dollars
or more on subscriptions every year. But how often do you end up
just reading one or two articles in each of those mags before you
throw them out? To save money and ease the guilt that comes from not
doing your “required reading,” try this new Web site:
www.keepmedia.com. For a $4.95 monthly fee (first month is
free), you have access to archived articles from more than 140
magazines. You’ll have to wait a month to get access to each issue,
but think of the dough you’ll save. A free seven-day media pass is
available, so give the service a try.
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Telling Telemarketers
Not to Call
Registering
for the national Do Not Call list is simple and quick. Log onto
www.ftc.gov/donotcall/ and fill out a short form, giving your
phone number and e-mail address. Do it by August 31, and you will
notice a drop off in calls by October 1, 2003. List it after August
31, and it will take effect three months later. Listing your home
and/or cell phone number prevents most but not all telemarketers
from calling you (exempt are calls from political organizations,
charities, telephone surveyors or companies with which you have an
existing business relationship). |
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With a Little Help from Your Friends
Whether you’re starting a new small business and need
working capital, or are experiencing a personal money crunch, the
solution may be closer than you think. It’s who you know that
supplies the cash for many small business startups and other
personal loans. Loans made by family, friends and colleagues amount
to $65 billion annually, according to experts.
But even
when you’re borrowing from someone you know, you need to formalize
the terms and the process. To the rescue: Circlelending.com, which
for a small fee will act as middleman to administer the loan
process. It has a “Small Business Fundraising Kit,” “Handshake Plus”
contracts and other custom-tailored loan repayment plans to
help your friends feel comfortable with the arrangement. To find out
more, visit
www.circlelending.com.
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Don’t
Let Your Car Be a Cash Guzzler
Cut the cost of driving by filling up at with the
cheapest gas in town. Visit
www.autos.msn.com, click Traffic, Gas Prices, under MY CAR, then
enter your zip code under Gas Prices, and you’ll be given a list of
stations in your area and the prices they charge. This editor found
she could save $4 per tank—or $8 a week—just by switching stations.
You’ll have to register your e-mail to enter the My Car area, but
it’s simple and it’s free, and well worth the effort.
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Rising
Credit-Card Fees Raise a Red Flag
Penalty fees are now the third-largest source of revenue for
credit-card companies, rising 10 percent in the last year for Visa
and MasterCard alone, according to the trade publication Credit Card
Management. Not only are late-payments being charged on a
sliding scale, with those who carry a higher balance paying more;
but grace periods (the time in which you have to pay the bill) are
being shortened. In the latest squeeze move, some banks are
monitoring customers’ credit reports more closely and imposing
higher interest rates on customers whose ratings decline for any
reason. Several banks have begun notifying customers that they must
pay all their creditors’ bills on time or risk having a
higher interest rate imposed by them.
If
this happens to you, switch your balance to a low Introductory-rate
card, if you can; close the high-interest account immediately, so
that it isn’t counted as an open account on your credit report, and
make every effort to pay your bills on time. |
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Where the Money Is
The top five
states for women in terms of highest median annual earnings for
full-time, year-round employment, are the District of Columbia,
Alaska and Maryland (tied for second), Connecticut, and New Jersey.
The top five states in terms of earnings ratio between women and
men—in other words, those states with the smallest wage gap—are the
District of Columbia, California, Vermont, Delaware, and Arizona.
These statistics were compiled by The Institute for Women’s Policy
Research. |
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Cutting the Military a Break
Active-duty soldiers should contact their creditors and ask for a
rate reduction. Under the Soldiers’ and Sailors’ Relief Act, they
may be eligible for an interest-rate reduction of up to 6 percent on
pre-service credit-card debt, mortgages or car loans. |
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Scam Alert
The
Federal Trade Commission reports that fraudulent notices, claiming
to be from your Internet Service Provider (ISP), are being e-mailed,
informing recipients that “your account information needs to be
updated” or that “the credit card you signed up with is invalid or
expired and information needs to be reentered to keep your account
active.” Do not respond to such e-mails without first checking with
your ISP to determine whether they are legitimate. |
Get on the IRS’s Buddy List
If you’re self-employed or a small business owner, sign up for the
IRS’s free electronic mail service, designed to keep you current on
all tax changes that apply to you, as well as provide you with
alerts regarding important upcoming tax dates, and the availability
of recently added tax forms and publications. Just log onto
http://www.irs.gov/businesses/small/page/0,,id=81399,00.html
and submit
your e-mail address. You’ll have a buddy for life.
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When a Civilian Turns Soldier:
It Pays to
Know Your Rights!
More than 20,000 National Guard and
reserve troops were called to active military duty during the last
week of January 2003 in preparation for a possible war with Iraq.
This figure represents the largest one-week jump in troop
mobilization since the 2001 terrorist attacks. Under an order signed
by President Bush after 9-11, up to one million guard and reserve
forces could be called to active duty for a period of up to two
years, if necessary.
Many
financial issues arise when a civilian turns soldier, not least of
which is whether your life, which will be on the line, will continue
to be covered by your existing insurance. While putting financial
papers in order before shipping out, civilians called to duty should
review the provisions of the group policy under which they are
covered at work, if applicable. Those policies may contain language
that excludes coverage for disability or loss of life resulting from
military service. The Uniformed Services
Employment and Reemployment Rights Act of 1994 (USERRA), among other
laws, clarifies the rights and responsibilities of National Guard
and Reserve members, as well as their civilian employers.
Familiarize yourself with your rights by visiting
http://www.dol.gov/elaws/userra0.htm. Then make an appointment
with your human-resources representative to iron out any issues that
you may have.
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Something Old,
Something New
When you’re transferring credit-card balances to a low- or
no-interest card, don’t close out your oldest accounts. Your credit
score is partly based on the length of your credit history. So keep
at least one of your oldest accounts open, and use it occasionally,
always paying off the balance at the end of the month. It’ll do
wonders for your credit score, and the better your score the better
the rates you’ll qualify for when you apply for credit in the
future. |
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Mortgage Down
Payments Made Easy!
GMAC Mortgage has just introduced a mortgage-financing plan that
will make it easier for people to get into their first homes, by
doing away with the biggest obstacle they face: saving for a down
payment. With GMAC’s Homestretch Plan,
qualify for an FHA-insured 30-year first
mortgage loan, and you can receive a HomeStretch loan to cover the
traditional down payment and closing costs for an additional 4
percent of the mortgage amount. The loan is zero interest, no
payment and fully forgiven if you stay in the home for 10 years.
Homestretch is available nationwide, though some state restrictions
or exclusions may apply. |
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The Write Stuff for Kids
Hoping to
encourage a love of writing in elementary school students, every
week Sylvan Learning Centers will post a new Journal page on its Web
site. Go to the page (www.educate.com/activities),
and print it out for your kids. You can also download your choice of
attractive Journal covers. At the end of 13 weeks, you’ll be able
to put together a scrapbook that details your children’s wishes and
dreams, fondest memories and favorite activities, as you help to
sharpen their communication and thinking skills. It’s fun and it’s
FREE! And wouldn’t it make a lovely holiday gift for the
grandparents? |
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Free Forms
for Small Biz Owners—and
Those in the
Business of You, Inc.
A Web site “by entrepreneurs for entrepreneurs,”
www.morebusiness.com offers free business templates for such
things as business plans and press releases; and free legal forms,
including confidentiality agreements, pre-employment work
agreements, equipment leases, commercial property leases, living
wills and sales and marketing agreements. The site’s financial
calculators, including a Minimum IRA Withdrawal Calculator, Roth IRA
Conversion Calculator, Monthly Mortgage Payment Table Generator, Car
Lease Payment Calculator, Tuition Savings Calculator, Simple Savings
Calculator and Retirement Calculator, are useful even if the only
business you’re in is the business of You, Inc. |
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Two Groovy Sites for New Job Seekers:
Their Job Is Finding the Right Job for You
Just starting out in the job market? Visit
www.groovejob.com and
www.experience.com for networking, job leads and career advice.
Experience.com specializes in networking and recruiting for college
students, providing an online venue where top employers can reach
out to college students who are looking for internships or their
first big jobs.
Groovejob.com bills itself as “the premier job site for high school
and college-age students,” and lists a wide assortment of part-time
and full-time jobs at such companies as Taco Bell, Fed Ex, Wendy’s
and Home Depot, plus interview tips, an SAT Word of the Day, and a
nifty career-assessment tool to help you identify what sort of job
you’re cut out for, based on your personality traits. |
Look to Credit Unions for Lower
Late-Payment Fees
Have a track record of making late credit-card payments? Consider
trading in your bank-sponsored credit card for one issued by a
credit union. According to
www.bankrate.com, “generally, a credit union will accept a card
payment 10 days after a due date without penalty. And if a credit
union should charge you a late fee, it will only be $12 or $13,”
instead of the $29 or higher fee that many bank cards charge. Of
course, always read the fine print to be sure what the fee
structure is, before you sign up for any card. |
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Handy-Dandy Rule for Figuring
How Much of Your
Retirement Savings to Invest in Stocks
Words of
wisdom from Charles P. Kindleberger, the 91-year-old retired
economist who wrote the now-classic “Manias, Panics and Crashes: A
History of Financial Crises,” documenting the repeated boom and bust
cycles of the stock market, in 1978. Speaking with a
Wall Street Journal
reporter recently, he offered this simple rule of thumb for
determining how much of your retirement savings you should invest in
this volatile marketplace: “Subtract your age from 100, and
that is the percentage you should have in equities.” How’s that for
keeping it simple? |
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One Way to Cut Your
Losses in This Risky
Business Called Investing
Disgruntled, disillusioned and just plain nervous investors,
including those whose only exposure to the current bear of a stock
market is through 401(k)’s and mutual funds, are bailing out in
droves. If you’re one of those who’s decided you’d rather not wait
it out, remember that you can cut your losses to a certain extent by
reporting them as a loss on your income taxes next year. Sell
your stocks or mutual fund shares that have lost value and deduct the loss from your capital
gains.
If losses outnumber gains, you can use your net loss to offset up to
$3000 (or $1500 if married filing separately) of your income for the
year. If you change your mind and buy the stock back at a lower
price, however, you can’t deduct the original loss during the same year.
Not a
quitter? At least, take a hard look at the companies your mutual
funds are invested in. Are they diversified enough? If you’re close
to or already in retirement, consider shifting some of your money to
bonds and/or REITS, which invest in real estate holdings, for more
protection against further downturns.
Be sure to consult a financial adviser or your fund administrator
about options and consequences before you make
your move.
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Four Fab Ways to
Achieve
Financial
Independence
To celebrate the spirit of 1776,
below
we offer
four financial
principles that even the founding
“mothers" would endorse:
1. Pay yourself first.
Every pay period,
place as much as
you can afford—even if it’s just $5—into a savings account,
before you pay your bills. Stuff happens, and you’ll be glad you
have that money in an emergency.
2.
Pay more than the minimum
due on your credit cards each month, and be
sure to pay on time.
That minimum amount is calculated to pay off little more than the
interest payment, and late fees only make matters worse. You’ll never get out of debt that way!
3. Pay cash and avoid those nasty
interest
charges altogether. By charging your
purchases, you increase their cost unnecessarily. If you don’t pay
off your balance each month, that $100 sweater that you were so
proud of buying on sale for $50 will end up costing you more than
its original price. Charging is habit-forming. You can get into the
habit of not paying with plastic.
4.
Pay it forward.
Invest in a kinder, gentler planet by giving unexpected, unasked-for
gifts of money to strangers in need, or to the charities of your
choice.
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Hunting and
Pecking for Jobs on the Web
Everyone’s heard of Monster.com and HotJobs.com, employment search
engines that cater to all professions. But did you know that there
are other search engines devoted to specific employment markets? For
instance, if you’re looking for a job in the very hot
pharmaceuticals or medical sector, try
www.MedZilla.com. Looking for an editing, writing, ad sales,
marketing, or designer gig? Try
www.mediabistro.com. Another good place to look are the Web
sites of professional associations in your field. Many include job
opportunity listings. Happy hunting!
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Identity-Theft Scam Alert!
The National Association of Tax Professionals has just issued a
warning for consumers to be on the lookout for a new type of
identity theft—one of the fastest-growing types of fraud. It comes
in the form of phony tax forms in the mail, promising that, if you
fill them out, your bank will not have to withhold tax on interest
earned. They appear to be issued by a bank, complete with bank
logos, which, the Association points out, are easy to replicate from
the Internet. They look real; but don’t be fooled. If you receive a
document asking you for such personal information as bank account
numbers, mother’s maiden name, Social Security or passport number,
call your bank to check whether it really issued the form. (Also ask
a finance professional about the value—if any—of delaying
tax-withholding, given your personal circumstances.) If you’ve
already filled out such a form, play it safe and call your bank, the
IRS, and the fraud-protection department of the three credit
reporting agencies to make sure that no one has attempted to rob you
of your assets or your identity. Then call the police and let them
know about the fake form.
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Consolidate to Cut Your Interest Rates on College Loans
The
Department of Education estimates that approximately 16 million
people owe about $250 billion in student loans. Two out of every
three full-time college students borrows money to pay for their
education, according to the Lumina Foundation for Education, an
Indianapolis-based nonprofit organization working to expand
educational opportunities for students. Lumina estimates that people
graduating from college this year are on average $17,000 in debt, if
they went to a public school or university, and $19,000 in debt for
private college education.
If you are one of those people, take note of new lower
government student (Stafford) loan rates, taking effect on July 1,
which are expected to drop to between 4 to 4.5 percent (down from
5.9%). Experts advice that a smart move right now would be to
consolidate your higher-priced loans at this rate. You have until
July 1 of next year to take advantage of the new
lower
rate. However, since the process can take weeks, it’s recommended
that you apply several months before the deadline. Visit
www.finaid.com for more free information on student financial
aid. The site
includes a nifty, free scholarship search function. |
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Is Your Health Insurer
Paying Your Bills On Time?
Did you know that your credit report can be affected by the late
bill-paying practices of some health insurers. Though most states
have prompt-payment regulations on the books, consumer experts are
reporting an increase in the number of bills that health providers
are sending to collection agencies, because they have not been paid
on time.
Unless
you monitor your credit record, you may not be aware that this has
happened, until you apply for a loan or mortgage and are denied a
low interest rate because of the damage that’s been done to your rating.
Nip the problem in the bud by making sure, first of all, that the
information on your insurance forms is correct, particularly if you
are seeking care from an out-of-system provider. If you find that an
unpaid charge has shown up on your credit report, write to the three
credit agencies
(www.TransUnion.com
,
www.Experian.com, and
www.Equifax.com )
immediately
and ask them to attach a note to your report explaining that the
procedure was covered by your insurance and that you are looking
into the matter. Then get on the phone with your insurer and voice
some healthy outrage. |
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Fee Fi Fo Fum! One More Bank Fee
to
Contend With:
Beware
the Hidden Cost
of Paying via Credit Card Abroad
If you’re planning a trip to Europe this summer, be
aware that some banks have begun levying an additional 2 percent
surcharge on all overseas transactions charged to the credit cards
they issue. That’s on top of the already existing 1 percent fee for
overseas transactions that Visa and MasterCard charge. In many
cases, the additional fees don’t appear on your bill; they are
tacked onto the price of the item purchased—though, they were
probably disclosed in the fine print when you signed up for the
card.
“Credit cards still provide an excellent exchange rate, much better
than you'll get by changing dollars at currency-exchange houses.
Still, the extra fees can easily top $100 on a weeklong vacation,”
reports The Wall Street Journal. It’s something you should
budget for.
Alternatives? You
might apply for a credit card issued by a credit union or community
bank—they generally don’t tack on the foreign exchange fee. And MBNA
and Capital One don't hit their customers with it, either.
Other
options, apply for a Euro-denominated card from a foreign bank to
use when abroad, use your ATM card (which may also charge hefty
withdrawal fees), or cash in travelers checks or exchange dollars
for the local currency at a currency exchange or your hotel desk.
Stay
away from airport exchange houses; they may be convenient, but their
rates are among the worst deals around.
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ARE YOU ELIGIBLE FOR THIS OFTEN-OVERLOOKED
LOW-COST HEALTH COVERAGE?
Someone I know was recently laid off and didn’t have the money to
cover COBRA payments. With a serious medical condition that required
expensive prescription drugs, he was in a bind. Then someone asked
him
if
he’d ever served in the military. Turns out he had, for two years,
20-some years ago. Yet, it had never occurred to him to check into
Veteran’s Administration (VA) benefits. The good news is that he is
eligible for medical and prescription coverage. There’s only a $7
drug co-pay.
With prescription costs rising and Medicare HMO’s and employer
health plans cutting back on drug coverage, more and more veterans
are turning to the VA for their health care. The VA has added 400
clinics in the last six years, bringing the total VA facilities
around the country to 850 clinics, 163 hospitals and 137 nursing
homes.
If you or your husband served in the military, don’t overlook this
source of low-cost medical care. To be eligible, you must be an
honorably discharged veteran with at least two years of service or a
former member of the National Guard or the Reserves who was called
to active duty. The two-year minimum does not apply to those
discharged before Sept. 7, 1980. |
TAKE
IT OFF—TWO WAYS!
Have a doctor diagnose you as obese and you can deduct the expense
of weight-loss programs, as long as your health insurance doesn’t
cover them.
You can take this new deduction starting this year, on your 2001
taxes, and you can even amend your taxes to take advantage of it for
the last three years—assuming you kept your receipts for
these programs. (Fat chance of that!) Cost of weight-loss foods not
included. |
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NEW QUESTION TRIPPING UP
TAXPAYERS
If you received the maximum tax rebate
last summer ($300 for individuals; $600 for married couples filing
jointly), the correct response to the new line marked "Rate
Reduction Credit" (Line 47 on Form 1040, line 30 of Form 1040A and
Line 7 of Form 1040EZ) is to leave it blank. Many people are filling
in the amount they received, instead. This line applies only to
people who didn't receive a rebate, or received less than the full
amount. If that's you, use the worksheet in your tax-form
instruction booklet to calculate what you are owed.
Errors may result in a delayed refund.
If you've already filed your taxes and think you've made a mistake,
don't file an amended return. Uncle Sam will notify you of the
error. |
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DO THE MATH ON
YOUR
CARD BALANCES!
True Story: I currently carry a balance of $3,041.89 on a credit
card that I have had, but not used, for several years. At an Annual
Percentage Rate (APR) of 16.50 percent, the finance charge on that
amount is $44.27. The minimum payment due is $61. If I miss the due
date, I am charged a $29 late fee. That means that if I pay only
the minimum—which foolishly, I admit, I have been doing—only $16.73
goes to paying off the balance. If I’m late—which I often am—instead
of paying down my debt, I’ve just added $12.27 to my balance.
No wonder I can’t seem to get ahead!
When credit-card companies extend credit to us, they don’t give us
credit for being smart enough to figure out what a bad deal credit
can be if we don’t pay it off quickly.
Money Lesson:
ALWAYS pay more than the minimum, and, if you can, transfer the
balances you’re carrying to a lower-interest card now. The longer
you wait the more money you lose. |
DOING WELL BY
DOING GOOD
Business owners
looking for ways to ease your tax burden next year: consider the
following tax incentives for hiring the disabled. The Work
Opportunity Credit applies to businesses that hire individuals
from certain groups, including those with a physical or mental
disability.
See Publication 553, “Highlights of 2001
Tax Changes,” for more information.
The Empowerment Zone Employment Credit
applies to businesses that hire individuals who live and work in
empowerment zones in areas of New York City, Chicago, Atlanta, Los
Angeles, Philadelphia and Washington, D.C. The tax credit related to
empowerment zones is explained
in
Publication 954, “Tax Incentives for Empowerment Zones and Other
Distressed Communities.”
To
obtain both publications, log onto
www.irs.ustreas.gov/forms_pubs/pubs.html.
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PAY YOURSELF FIRST!
I’ve heard that
phrase many times in my search for smart money management advice.
But I never acted on it. Finally, after years of very irregular
saving habits—basically, putting away whatever money I happened to
have left after paying my bills and splurging on frivolities—I
decided to try something different. I opened a savings account at an
online bank and arranged to have $50 automatically transferred to
that account from my bank checking account every week. I thought I’d
miss it, but what’s happened is that because it’s out of sight at
that online bank, it’s also out of mind. To pay bills, I just work
with the money I have in my checking account. And, in a funny kind
of way, I feel like I’m earning more money, because I AM paying
myself. And I’m worth it!
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WHAT’S IN A
BRAND NAME?
This year Americans
will spend $155 billion on prescription drugs, according to the
Federal Centers for Medicare & Medicaid Services. That’s up from $51
billion in 1993! One way to keep costs down is to buy generic drugs.
The U.S. Food and Drug Administration regulates manufacture of these
drugs and ensures that they are “bioequivalent.” In other words,
they must, by law, have the same active ingredients, strength,
dosage, form, safety, quality and performance as their brand-name
counterparts. That guarantees that they will be absorbed into the
blood stream at the same rate and extent as the brand name. So,
whenever there is a generic equivalent, ask your druggist to supply
it.
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MAKE SURE YOUR
MONEY’S
WORKING AS HARD
AS IT CAN
Short-term interest rates—the rates money-market savings accounts
pay—are at record lows, as a result of the 11 rate cuts made by the
Federal Reserve Board this year. None of the nearly 800 money-market
funds tracked by iMoneyNet during a recent week topped 2 percent,
according to The New York Times.
Your Money Lesson:
If you’re keeping the bulk of your savings in a money-market
account, look for a better place to stash your cash. Your money
simply isn’t working as hard for you as it should be in them. Look
for a higher-paying savings account, or move as much of your savings
as you can afford to place out of reach into a higher-bearing
savings vehicle like a CD or a mutual fund. You won’t be able to
raid these accounts for emergencies as easily, but you’ll be in
better shape when you’re ready to retire. |
AVOID THESE PHONE-Y CREDIT-CARD OFFERS
“BAD CREDIT? NO CREDIT? NO PROBLEM! Call 900-555-0000 NOW and get
the credit you deserve!” Don’t be enticed by ads like the one above
that ask you to call a 900 number. You pay for calls with a 900
prefix—the charge could be as high as $50 if you’re kept on the line
by a smart salesman, who may do no more than take your name and
address and promise to send you a credit application, or even ask
you to call yet another 900 number. In the end, the offer may be
for a “secured” credit card—one that requires that you to deposit a
certain amount in a savings account as security for the card—with a
high fee. |
A TOOL TO MAKE TAX PREPARATION
LESS TAXING FOR
BUSINESS OWNERS
Uncle Sam has his hand out and, for business owners, the deadline is
closer than you think: March 15 is the IRS deadline for business tax
filings. To make filing easier,
www.bizownerHQ.com has a free online search tool that will help
you identify the correct IRS activity code from among the 400-plus
possible codes listed on the tax-return instructions. Having the
right code makes an IRS review less likely, reports SCORE (Service
Corps of Retired Executives;
www.score.org ).
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WHY, NOW MORE
THAN EVER, IT PAYS TO PAY OFF THOSE CREDIT-CARD BALANCES AND PAY ON
TIME!
Read carefully any literature you
get from your existing or prospective banks or credit-card
companies in the coming weeks and months. Buried in the fine
print, you just might find an increase in interest rates and/or late
fees.
The latest trend in consumer banking is an increase in interest
rates charged to cardholders. While consumers with less than stellar
credit histories may be the most likely targets of higher rates
(Providian has raised rates paid to “the highest risk segment” to
29.99% from 23.99%), even customers with perfect credit are getting
hit with increases.
And late fees are also rising. The typical late fee of $29 has risen
to as much as $35, with many banks showing preferential
treatment by charging lower fees to those who carry smaller balances.
Compare the rates your bank is charging at www.bankrate.com
.
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NUMBERS YOU NEED TO KNOW :
NEW
CONTRIBUTION LIMITS FOR IRA'S AND 401(K)'S
Start taking advantage now of higher contribution limits on
retirement accounts. Starting in 2002, you can contribute more money
into your retirement accounts, especially if you’re 50 or older. And
the limits increase over the next several years.
So, you don’t have
to wait until April 15, 2003 to make this year’s IRA contribution.
And, if you have a 401(k) plan at work, you should be able to
increase contributions right now as well. The advantage of
retirement accounts is that money contributed grows on a
tax-deferred basis.
Here are the new
limits—and how they will | |
