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FTC Retools Used-Car Buyers Guide

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NEW BEDFORD, Mass. (2/26/13)--The Federal Trade Commission (FTC) is asking for input about proposed revisions to the Used Car Buyers Guide--window stickers the FTC requires dealers to place on used cars. The proposals contain some good news for consumers but could make it harder to find some information or to hold dealers responsible in cases of fraud (SouthCoastToday Feb. 17).

The existing Buyers Guide contains basic information about the car, tells whether or not the dealer offers a warranty and informs potential buyers of their legal rights. If a dealer offers a warranty, it must list the terms and conditions, including coverage duration, what percentage of total repair costs the dealer will pay and which vehicle systems the warranty covers.

Under the proposed changes, if a car still is covered by a manufacturer's or a third-party warranty, the dealer would have the option of marking check boxes located on the back of the Buyers Guide to indicate whether:

  • The manufacturer's warranty still applies.
  • The manufacturer's used vehicle warranty, such as a manufacturer's certified used car warranty, applies.
  • Some other used vehicle warranty applies.
This is the good news that addresses a warranty question potential buyers frequently ask. But, the notice would be located in a place most people won't or can't see--and marking it is optional.

And, if any warranties apply, the dealer would not have to provide copies. It would be up to the potential buyer to track down and pay for reports about the vehicle's history by consulting the National Motor Vehicle Title Information System (NMVTIS). The information also is available from private providers such as Autocheck or Carfax. Access to these services requires computer access and a credit card.

Another potential area of change is language that would define the "as-is" selection on the sticker: "The dealer won't pay for any repairs. The dealer is not responsible for any repairs, regardless of what anybody tells you." The National Association of Consumer Advocates, Washington D.C., points out that this language is confusing--under state law in all 50 states, if dealers commit fraud they might have to pay for repairs and be liable for refunds or punitive damages.

Consumer Action, San Francisco, is also concerned (Feb. 8) that the new rules would not require dealers to inspect a vehicle before sale or even to disclose known defects.

The FTC invites comments during the proposal's public comment period, which runs through March 13. Post your comment on the FTC.gov website.

Regardless of FTC proposals and the final rule, it's always up to you to look for hidden damage and potential problems when buying a used vehicle. No database, whether the NMVTIS or a commercial service, has consistently up-to-date or complete information about a particular vehicle. Disregard verbal promises by friendly salespersons, check the car's history and have the vehicle inspected by an independent mechanic before you sign a sales contract. Consider arranging loan preapproval from your credit union to avoid pricey, shady, or confusing financing deals.

For more information, read "Avoid Buying a Flood-Damaged Used Car" in the Home & Family Finance Resource Center.

Military Family Finance, Lavish Lifestyles On H&FF Radio

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WASHINGTON (2/25/13)--Helping military families save, signs you're living beyond your means, and a roundup of the best advice from 125 accountants were all up for discussion on Sunday's Home & Family Finance 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:

  • "Military Saves Week." Andia Dinesen, manager of the Department of Defense's Financial Readiness Campaign's Military Saves, Washington D.C., discussed the Feb. 25 to March 2 social-media campaign encouraging military families to save money automatically every month.
  • "Living Beyond Your Means." New York Times best-selling author and host of the National Geographic Channel's reality show "Turnaround King," Grant Cardone, Miami Beach, Fla., shared telltale signs your lifestyle is unsustainable.
  • "Save Wisely, Spend Happily." Sharon Lechter, a certified public accountant and financial literacy spokesperson for the American Institute of CPAs, Washington D.C., divulged some of the advice she collected from 125 CPAs for the new book "Save Wisely, Spend Happily," published to mark the AICPA's 125th anniversary.
Home & Family Finance is a resource center for personal finance information at Credit Union National Association. 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 related information, read "February Financial Fitness Challenge--Reset Your Money Cycle" and "Do You Need a Financial Plan?" in the Home & Family Finance Resource Center.

Don't Brake For Yo-Yo Car Financing

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McLEAN, Va. (2/19/13)--You're at the car dealership and you're good to go--you even get to drive your new car home while the dealer works out final financing details. Don't do it. The dealer could ask you to come back--days or even weeks later--to sign a more costly deal. This abusive practice is called spot delivery or "yo-yo financing," and happens most often to consumers having shaky credit (USAToday.com Feb. 8).

Yo-yo financing occurs when the dealer calls the buyer back to the dealership at a later time and pressures the consumer into signing a new financing agreement with less favorable terms. The buyer is pulled back to the dealership like a yo-yo on a string.

Unscrupulous dealers do this because, once buyers take the car, they think the deal is done. They stop shopping elsewhere for better rates and terms. In some cases, buyers who won't agree to the new terms have a hard time getting down payments or trade-ins returned. They're sometimes told their trade-ins already have been sold, leaving them with the unsavory choice of agreeing to the new terms or not having a car to drive.

In extreme cases, dealers threaten to repossess the vehicle and destroy the buyer's credit. Some threaten to report young military members to their base command.

Some legwork can help you avoid the yo-yo game, according to USAToday.com:

  • Get preapproved for an auto loan at your credit union before you shop. Preapproval removes the whole financing question from the dealer's hands; you're as good as shopping with cash, which also improves your position when bargaining on sale price. Credit unions generally have lower loan rates and better terms than other financial institutions.
  • Know your credit score and what's on your credit report. You can request one free report a year from each of the three major credit reporting bureaus by visiting annualcreditreport.com, the only website authorized to provide these free reports. You also can call 877-322-8228 to request a report. Some lenders will tell you your three-digit credit score when you apply for credit, or you can buy your score from one of the three reporting agencies.
  • Don't drive the car home until the deal is final, no matter how tempting. If you are in desperate need of transportation, consider renting a vehicle, taking public transportation, or asking someone else for help.
  • Read the contract. Get every detail in writing, encourages dailyfinance.com. Be especially cautious of contract conditions that would allow the dealer to rewrite the deal or add charges after the sale.
For more information about smart vehicle shopping, read "The Best Cars for Stages of Your Life" in the Home & Family Finance Resource Center.

H&FF Radio: Overcome Adversity, Run Your Home Like a Business

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WASHINGTON (2/15/13)--H&FF Radio this week showcases the story of a Bahamian woman's rise from poverty to world-renowned hotelier, making office culture work at home, and passing financial advice on to the next generation.

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:

  • "A Girl Called Nettie." Netica Symonette, author of the book "A Girl Called Nettie: A Memoir of Fate, Friendship, and Love" from Dunham Books, Los Angeles, discusses how she overcame prejudice, a lack of education, and her impoverished upbringing in the Bahamas to become a premier hotelier.
  • "Run Your Home Like a Business." Caitlin Friedman, co-author of the book "Family Inc.: Office-Inspired Solutions to Reduce the Chaos in Your Home (and Save Your Sanity!)" from Tarcher Books, New York, offer tips from the book she wrote with her husband about how office culture can make a household run more smoothly.
  • "Money Letters 2 My Daughter." Jackie Cummings Koski, financial-literacy advocate and director of a tristate chapter of the nonprofit BetterInvesting, Cincinnati, discusses a series of letters, recently turned into a book, she wrote to share her financial and money-management wisdom with her daughter.
Home & Family Finance is a resource center for personal finance information at 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 related information, read "Giving Your Kids an Allowance (Or Not)" and "Finding Life-Changing Apps" in the Home & Family Finance Resource Center.

More Americans Risk Savings, Tap 401(k)s Early

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NEW YORK (2/12/13)--More Americans are raiding retirement savings to cover routine expenses such as mortgages and credit card bills, according to a new report. HelloWallet, a budgeting-technology website, estimated that 25% of Americans make withdrawals from their 401(k)s before they reach retirement age, to the tune of about $70 billion a year (The Wall Street Journal Jan. 25).

Similarly, Aon Hewitt, a human resources consulting firm, reported the number of participants borrowing against retirement accounts reached an all-time high in 2010. Vanguard, a large investment-management company, recently released numbers showing that, since 2008, 401(k) loans are up by 12% (The Washington Post Jan. 14).

These reports are troubling omens for millions of future retirees.

In 1980, roughly 80% of private-sector workers were covered by traditional pensions. With that number down to 20% today, 401(k)s and similar plans are crucial to workers being able to afford retirement. While that retirement nest egg is a tempting source for quick cash, especially when budgets are tight, cracking it for monthly bills puts you at risk for additional taxes, penalties and, most dire of all, not having enough to live on when you're older.

If you're younger than age 59½ and you default on a 401(k) loan or take a cash-out distribution, you must pay not only income tax but a 10% penalty on the amount withdrawn. If you're in the 25% tax bracket that means 35% of your withdrawal disappears--money that otherwise would be earning for you.

But is it ever OK to withdraw money early from your retirement savings? The short answer from most financial planners would be an emphatic, "No." However, the Wall Street Journal reports that, in a limited number of instances, siphoning money from your 401(k) might be acceptable.

These exceptions include:

  • If you make a short-term loan from your 401(k)--thus avoiding penalties--and it's for an important investment such as a house, education, or to pay off high-interest debt. Considering that the interest you pay on the loan goes to you, this could be preferable to high-interest alternatives. But given the opportunity cost from lost future earnings on the amount you withdraw, consider if a credit union loan is a smarter option.
  • If knowing the money is available leads you to contribute more to your retirement savings than you would otherwise.
  • If your circumstances are grim enough that you qualify for a "hardship withdrawal," often taken to avoid foreclosure, bankruptcy, or to pay for medical expenses. Keep in mind that 401(k) funds are protected from seizure in bankruptcy proceedings.
Most of the time, depleting your 401(k) is akin to robbing yourself. Even if you take a short-term loan, if you stop contributing to pay it back this puts you behind on savings goals. You lose compounding interest for the sum you borrowed as well as the amount you stopped contributing in order to repay it.

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

The science behind your habits and more on H&FF Radio

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WASHINGTON (2/11/13)--Thispast Sunday, H&FF Radio explored how to make and break habits, and dives into the weighty issues of online security and privacy. 

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

  • "How Do We Make, Break Habits?" Jeremy Dean, psychologist, founder of PsyBlog.co.uk  and author of the new book "Making Habits, Breaking Habits: Why We Do Things, Why We Don't, and How to Make Any Change Stick," United Kingdom, discussed the science behind good (and bad) habits.
  • "Opting Out of Spam Mail." Scott Mitic, CEO at TrustedID, Palo Alto, Calif., offered advice on how to protect your identity and credit online.
  • "Is There Any Privacy in Social Media?" Martha Zoller, media personality and co-host of the "Zoller and Bryant" radio show, WGAU-AM, Athens, Ga., discussed whether there is any expectation of privacy when using sites such as Twitter and Facebook.
Home & Family Finance is a resource center for personal finance information at the Credit Union National Association. 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 listeners 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 related information, read "Finding Liife-Changing Apps" and "Step Carefully: Covering Digital Footprint is Key to Web Privacy" in the Home & Family Finance  Resource Center.

Tax ID theft: One million fraudulent returns expected

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WASHINGTON (2/5/12)--Although the Internal Revenue Service (IRS) has stepped up efforts to spot fraudulent tax returns filed by thieves, expect an explosion in tax identity theft--and know that the burden falls on you to protect yourself (Kiplinger's Jan. 28).

According to a recent National Taxpayer Advocate report to Congress, tax-related ID theft has increased 650% since 2008 (Dailyfinance.com Jan. 25). About 940,000 tax returns were filed fraudulently during the 2011 tax year, and the number is expected to reach  one million for the 2012 tax year. The sudden boom has caught filers and tax experts off guard.

Scammers hope to beat you to the punch and file before you do. They steal year-end statements, W-2s and other documents containing personal information to file a return in your name. Their preferred method of receiving your refund is prepaid cards because they're just like cash.

Avoid becoming a victim:

  • Monitor the mail. Watch for your W-2, 1099, and other tax forms. Follow up with the financial institution if you haven't received the forms and ask when they were mailed. If you suspect fraud, call the IRS Identity Protection Specialized Unit at 800-908-4490, ext. 245.
  • Ignore IRS emails, texts. The IRS does not use e-mails or texts to contact you, so don't respond. If you click on an attachment that purports to be from the IRS, it may contain a virus or take you to a fraudulent site. Forward suspect e-mails to phishing@irs.gov.
  • Watch for pop-ups. When filing taxes online, be suspicious of out-of-place pop-ups or a slow-running computer.
  • Secure your refund. Choose direct deposit to avoid lost or stolen checks.
  • Send your return safely. File online if you can. If you file by mail, never put your return in an unsecured mailbox, an office mailbox, or outgoing mail bin at work. The envelope says "tax return" and can easily be snatched. Take the return directly to the post office and use certified mail.
  • Choose preparers carefully. Scammers may pose as tax-preparation companies offering to review your return for errors, but instead they steal your information and your refund. Verify the status of the preparer's license with the Better Business Bureau and the IRS Office of Professional Responsibility at opr@irs.gov. Don't sign your return if the preparer didn't sign it, or if the return is incomplete.
For more information, read "IRS Releases Dirty Dozen Tax Scams" in the Home & Family Finance Resource Center.

H&FF Radio talks taxes, teen finance, and cash flow

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WASHINGTON (2/4/13)--Sunday's H&FF Radio provided ideas about saving your tax refund, upping teenagers' financial savvy, and mastering your cash flow.

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:

  • "Save Your Refund Sweepstakes." Joanna Smith-Ramani, director of scale strategies, D2D Fund, Allston, Mass., shared inventive ways to save your tax refund.
  • "Providing Free Financial Education for Teenagers." Susan Sharkey, a director at the National Endowment for Financial Education, Denver, discussed helping high school students learn to be fiscally responsible.
  • "Reset Your Money Cycle." Susan Tiffany, certified credit union financial counselor and director of consumer periodicals, Credit Union National Association, Madison, Wis., examined how your unique money cycle--your cash-flow pattern--can make the difference between success and failure for your financial goals. Learn how to name it and how to tame it.
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 related information, read "EITC can help taxpayers, if they're aware" and "Teach Teens Financial Responsibility" in the Home & Family Finance Resource Center.