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Know details before choosing reverse mortgage

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NEW YORK (10/30/12)--A reverse mortgage might sound like the perfect answer if you're looking for ways to cover retirement expenses.  If you're considering this option, proceed with caution (The New York Times Oct. 14).

A reverse mortgage allows homeowners age 62 and older to borrow money against the value of their homes and not repay it until the house is no longer their primary residence, they move out, or die. It lets a homeowner convert some home equity into cash without having to sell the house or pay additional monthly bills. Reverse mortgage proceeds are not taxable, and generally will not affect your Medicare or Social Security benefits. You retain the title to your home.

Unfortunately, new cases of reverse mortgage abuse by some small mortgage brokers, including some former subprime lenders, are growing.

If you're considering a reverse mortgage, think about these warnings from the Federal Trade Commission:

  • Beware of sales pitches. Once sellers know you're interested in a reverse mortgage, some will try to pressure you to buy additional financial products, such as long-term care insurance or annuities. If you're interested in these products, take the time to comparison shop. You'll have to maintain adequate homeowners insurance, but you don't have to buy additional products to qualify for a reverse mortgage. Other sellers may offer home improvement services, and then suggest that a reverse mortgage would be an easy way to pay for them. If cost or features of a reverse mortgage are confusing, or if you're feeling pressure to buy, walk away from the seller or lender and take your business elsewhere.
  • Know the features. Because you retain the title, you're responsible for property taxes, insurance, utilities and maintenance. If you don't take care of them, the mortgage can become due and payable. Reverse mortgages can use up all or some of the equity in your home and leave few assets for you or your heirs.
  • Know tax consequences. Reverse-mortgage interest is not deductible until you pay the loan off in part or in full.
  • Remember the right of rescission. You generally have three calendar days to change your mind and cancel the loan. This process should be explained at the loan closing. Get details from your lender.
  • Use a lender you can trust. If you aren't comfortable with a prospective lender, walk away. A good place to start is with your credit union. The professionals there will be straightforward about reverse-mortgage details. If your credit union doesn't offer them, the staff can refer you to another credit union or other reputable lender.
For related information, read "More Seniors Carry Mortgage Burden" in the Home & Family Finance Resource Center.

Car care school savings on HandFF Radio

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WASHINGTON (10/26/12)--Are you in the 99% of drivers who don't maintain their cars properly? Are you using a 529 plan to save for your own or a family member's education? Do you believe cash is doomed?  Sunday's H&FF Radio had answers and solutions.

The show, which you also can hear later via the Internet, featured Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:

  • "Keep Your Car Running." November is National Car Care Month. Pam Oakes, Fort Meyers, Fla., ASE-certified automotive technician and author of "Car Care for the Clueless: Successful Used-Car Buying 101," shares important automobile maintenance tips.
  • "529: As Important as 401(k)." Bridget Byron, Chicago, director of the College Savings Program at the Illinois State Treasurer's Office, says 529 plans, federal government's college savings plans, can be just as important as retirement plans.
  • "Money, Money, Money." David Wolman, Portland, Ore., author of "The End of Money: Counterfeiters, Preachers, Techies, Dreamers--and the Coming Cashless Society," says cash won't be around long in this world.
Home & Family Finance is a resource center for personal finance information at the Credit Union National Association (CUNA). The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide.

Home & Family Finance airs Sundays at 3 p.m. ET on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network.

CUNA and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites.

For more information, read "Tough Times Series: 401(k) Loans Poach Nest Eggs" and "Seven Tips to Avoid Auto Breakdowns" in the Home & Family Finance Resource Center.

Tricky ways restaurants get you to spend

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NORTH PALM BEACH, Fla. (10/23/12)--Restaurants may become the site of the newest savings battle. Consumers are using online coupons to find restaurant bargains. They're also taking advantage of half-price hors d'oeuvres or entrees at happy hours, drinking tap rather than mineral water, or having drinks or dessert at home.

But restaurant owners are studying human behavior to counter this trend, employing "menu engineers" to get you to spend more (Bankrate.com Oct. 1). Here are some of the ways restaurants try to inflate your bill:

  • Taking dollar signs off menus so people don't think of money when ordering;
  • Including elaborate descriptions of dishes that also help take your mind off money;
  • "Contrasting" menu items. A $50 steak looks reasonable listed next to a $100 dish with caviar;
  • "Bundling" dishes, from the combo fast-food meal to the high-end prix-fixe dinner--you don't know what you're paying for each component;
  • Offering intimidating wine lists, again "contrasting" the $300 champagne with the $50 bottle;
  • Serving less expensive meat--pork bellies, goat, tongue--without shrinking prices;
  • Serving expensive specials without posting prices--"special" doesn't mean low-cost; and
  • Playing slower music that makes you linger and potentially order more.
How can you avoid these traps?

Don't be afraid to ask questions when it comes to prices, ingredients, or wine. Ask how much entrees cost--particularly specials--and what they include. Even ask how many scallops, if you want to know, or how big the salad is.

If you're not a wine expert, tell the waiter your price range and ask for recommendations. Expensive wine can be great, but so can moderately priced bottles.

Don't order the house wine--restaurants buy the cheapest kind they can and mark it way up. If several people at your table plan to have wine, buy a bottle rather than individual glasses--it's much less expensive.

Linda Johnson, vice president of conferences and meetings experiences at the Credit Union National Association, offers a tip for trying higher-end restaurants on a budget. "Many cities offer 'restaurant week' several times a year," she notes. "You can get a several-course meal for a lower price point because restaurant owners want to showcase their products. It's usually a really good deal and you get to sample nicer restaurants affordably."

If you can afford it and want to treat yourself, go ahead. Knowing what you're paying for helps you choose what to splurge on.

For related information, read "Negotiate Your Way to a Better Price" in the Home & Family Finance Resource Center.

HandFF Radio rings in the holidays

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WASHINGTON (10/19/12)--From affordable ghosts and goblins to savvy holiday savings, Sunday's H&FF Radio program discussed how to plan and spend wisely for happier holidays.

The show, which you also can hear later via the Internet, featured Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:

  • "Holiday Retail Outlook." Andrea Woroch, consumer expert, Kinoli Inc., Windsor, Colo., previewed prices, products and getting the most for your money.
  • "Is Black Friday Now Irrelevant." Woroch again took the microphone to talk technology and shopping habits.
  • "Five Ways to Save at Halloween." Savings expert, author and founder of couponmom.com Stephanie Nelson, The Coupon Mom, Atlanta, told how to have spooky fun affordably.
  • "Plan Now for Holiday Success." Susan Tiffany, certified credit union financial counselor and director of consumer periodicals, Credit Union National Association (CUNA), Madison, Wis., explained that happy holidays don't just happen--it takes thought and preparation.
  • "Quit the Gym but Not the Workouts." Host Paul Berry gave tips from pricegrabber.com, including how cutting out extras helps garner all-around holiday savings.
Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide.

Home & Family Finance airs Sundays at 3 p.m. ET on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network.

CUNA and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites.

For more information, read "Smart Spending Puts Holiday Shoppers in Control of Cart" and "Create a Spending Plan for a Special Holiday" in the Home & Family Finance Resource Center.

ID theft Have you checked your kids lately

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McLEAN, Va. (10/16/12)--October is Cyber Security Awareness Month, and experts warn that college students and very young children increasingly are targeted by identity thieves.

College students are at risk for several reasons. Crooks exploit the fact that campuses typically are considered trusted environments by the students, and many students lack financial experience and know-how.

Even more concerning is the extent that young adults overshare personal details on social media. As a result, they're targeted in sophisticated phishing scams where thieves impersonate legitimate financial institutions, companies and organizations to steal login and personal details. Financial accounts are compromised, identities stolen, and credit histories ruined--just as the students are starting their financial lives (USNews.com Oct. 2).

These security tips for college students apply to most consumers and include vigilance and common sense:

  • Keep login details to yourself. If you share passwords with friends and relatives, you've handed over the keys.
  • Treat personal information like cash. Don't post your full address, Social Security number, or date of birth on social media sites. Thieves use those to confirm identities.
  • Vary passwords between accounts. Small changes across accounts to a strong password--containing upper and lower case letters, numbers and symbols--can protect you if one password is compromised.
  • Memorize them. Don't save passwords or personal identification numbers (PINs) online or on your computers or phones.
  • Update security protection. Make this a high priority. Set your security software, operating system, and Web browser protections to update automatically to detect and get rid of malware. Never buy security software in response to unexpected pop-up messages or e-mails, especially messages that claim to have scanned your computer and found malware.
  • Hold on to your wallet. ID theft frequently starts with a lost or stolen wallet.
  • Look for the "s." When shopping or banking online, make sure the website is encrypted; look for "https" at the beginning of the Web address.
Younger children also are at risk. According to the 2012 Child Identity Theft report from AllClear ID, children are 35 times more likely to be victims of identity theft than adults, and the incidence of ID theft among victims age five and younger has doubled since 2011.

The impact of identity theft on a child's life can be devastating, affecting the ability to get a loan, scholarship, apartment, credit card and job. For specific ways to protect your child's identity, search for and download the Federal Trade Commission (FTC) fact sheet, "Safeguard Your Child's Future," at ftc.gov. It contains instructions for checking your child's credit report, placing an initial fraud alert, requesting a credit freeze, and filing a report with the 

FTC.

Arm yourself with additional security tips by visiting ProtectYourIDNow.org, which has guidance for all ages, a quiz, and steps to take if you're a victim. Print "First Steps for Victims" and keep a copy handy.

For more information, read "Be Cautiously Sociable on Social Networking Sites" in the Home & Family Finance Resource Center.

HandFF Radio covers combatting bank fees

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WASHINGTON (10/12/12)--Sunday's H&FF Radio program shared tips for handling high bank fees, investing, job searches, and travel in a still-challenging economy. This is a rebroadcast of an earlier H&FF Radio program.

The show, which you also can hear later via the Internet, featured Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:

  • "The Nine Most Irritating Bank Fees." Andrea Woroch, consumer expert, Kinoli, Inc., Windsor, Colo., discusses what you can do about unfair bank fees.
  • "Investing In Today's Market." Michael Farr, Farr, Miller and Washington, Washington, D.C., discusses the importance of reducing debt and investing wisely, even in a tough economy.
  • "Get Out of the House and Find a Job." Tim Tyrell-Smith, Mission Viejo, Calif., author of "Ideas for Job Search, Career and Life," and Timsstrategy.com, says it's possible to find a job in an employer's market.
  • "Make the Most of Your Vacation Dollars and Fun." Susan Tanzman, president, Martin's Travel & Tours, Los Angeles, reveals the best times to travel.
Home & Family Finance is a resource center for personal finance information at the Credit Union National Association (CUNA). The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide.

Home & Family Finance airs Sundays at 3 p.m. ET on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network.

CUNA and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites.

For more information, read "Learn to Evaluate Financial Information" and "Do You Need a Travel Agent?" in the Home & Family Finance Resource Center.

Retire at 70 Maybe not

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CHICAGO (10/9/12)--Are you expecting to work an extra five years, say to age 70 instead of 65, so you can afford to retire? According to recent data from the Employee Benefit Research Institute (EBRI), this could be a dicey strategy (Chicago Tribune Sept. 28).

Save more:

  • If you don't have a budget, create one. If you already have a budget, revise it to reflect your serious commitment to saving.
  • Contribute to retirement accounts such as individual retirement accounts (IRAs) and 401(k)s. If you have an employer match, make sure you meet it. Ask your financial adviser for help with asset allocation--it will have a big impact on your long-term returns.
  • Devise a withdrawal strategy. Work with your financial adviser to make sure you withdraw from taxable and tax-deferred accounts in a way that makes your money last as long as possible.
Spend less:

  • Reduce or eliminate any high-interest debt. Prime example: credit card debt.
  • Alter your lifestyle. If today's lifestyle includes expensive vacations far from home, look local for satisfying, affordable getaways.
  • Downsize. Reduce housing costs by moving to a more affordable home and/or community.
Create income:

  • Stay at your job if you are able. Even part-time work will help you meet expenses.
  • Start a small business. Network with seniors to get ideas and support.
  • Take in housemates. Family members may also provide mutually beneficial living arrangements.
  • Find out if a reverse mortgage could benefit you.
Include health-care insurance costs:

  • Procure private health insurance or Medicare. Sign up for Medicare on time to avoid a premium hike.
  • Plan for chronic illness. Investigate the pros and cons of signing up for long-term care insurance.
EBRI's website, Choose to Save, offers a simple, two-page calculator that helps you quickly identify the ballpark amount you need to save to fund a comfortable retirement. If you've already used other calculators, this one provides a new slant on the numbers.

For more retirement information, read "Four Key Steps to 'No Regrets' Retirement" in the Home & Family Finance Resource Center.

HandFF Radio considers Social Security withdrawal age

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WASHINGTON (10/5/12)--Sunday's H&FF Radio program has guidance for when to begin claiming Social Security benefits, energy efficiency ideas, and knowing the likelihood you'll be accountable for a late relative's bills. This is a rebroadcast of an earlier H&FF Radio program.

The show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:

  • "Know When to Start Taking Social Security." Jim Sloan, president, Jim Sloan Associates, Houston, and author of "Financially Informed Boomer," talks about the tradeoffs you make when choosing Social Security payouts.
  • "Are You Liable for Grandma's Debt?" Gerri Detweiler, Ultimate Credit Solution Inc., Sarasota, Fla., discusses whether you're responsible for the debts of deceased relatives.
  • "The Energy Efficiency Payoff." Kateri Callahan, president, Alliance to Save Energy, Washington, examines the expanding benefits of energy efficiency.
Home & Family Finance is a resource center for personal finance information at the Credit Union National Association (CUNA). The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide.

Home & Family Finance airs Sundays at 3 p.m. ET on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network.

CUNA and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites.

For more information, read "Define Your Retirement Before You Set the Date" and "Debunk Energy Saving Myths" in the Home & Family Finance Resource Center.

Open Roth IRA now avoid taxes later

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McLEAN, Va. (10/2/12)--You've landed your first "real" job, you've got an awesome new apartment and you're ready to conquer the world. Believe it or not, this is the perfect time to think about your retirement. Once you take care of bills and expenses, and contribute to your employer's 401(k), think about opening a Roth IRA (individual retirement account) (USAToday.com Sept. 21).

A Roth IRA lets you set aside a specified dollar amount of income after taxes, providing tax-free growth of your money. You won't get a tax deduction as you make contributions but, starting at age 59 ½, when you start making withdrawals, you won't pay taxes. With a traditional IRA, contributions are tax-deductible, but you'll pay taxes on withdrawals at retirement.

For young people especially, a Roth IRA can be a great investment because of:

  • Early withdrawals. You'll avoid the 10% early withdrawal penalty if you're using the money as a first-time home buyer, or if you're disabled.
  • Low tax rates. If you're in your 20s, you're most likely paying a lower rate than the anticipated higher tax bracket when you retire, making it a better deal for you to pay taxes now.
  • Ease and simplicity. When you retire, it's easier to take tax-free withdrawals than to calculate what you'll need for living expenses after taxes and to send estimated payments to the Internal Revenue Service.
  • Benefits of compounding. Because of your early start, you'll far outpace any progress your peers make if they start 10 years later, even though their incomes and ability to make contributions could be higher then.
For 2012, you can contribute up to $5,000 to a Roth IRA. (If you're older than age 50, you can contribute up to $6,000.) The professionals at your credit union can explain the differences between Roth IRAs and traditional IRAs, and can help you decide which option is best for you.

For related information, read "IRA Withdrawals: The Good, the Bad, and the Ugly" in the Home & Family Finance Resource Center.