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Consumer Archive

Consumer

Survey Gens X and Y admit savings shortfall

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WASHINGTON (3/31/08)--Members of Generations X and Y, despite saying they know they need to save for retirement and believe they can achieve important financial goals, report that they know more about making their iPods work than they do about making their money work for them (AARP March 19). A report released this month by the American Savings Education Council and the Divided We Fail group (AARP, Business Roundtable, National Federation of Independent Business, and the Service Employees International Union) revealed a disconnect between what young adults know and what they practice. Even though 86% know they should be more prepared for financial emergencies, 40% report that they’re more knowledgeable about their iPods than they are about filing taxes (26%), buying a house (21%), investing outside their employer (15%), and saving for retirement (15%). The report, “Preparing for Their Future: A Look at the Financial State of Gen X and Gen Y,” indicates that young adults still aren’t aligning actions with financial values and goals. The report serves as a wake-up call to these generations, as well as to older generations who need to educate Gen Xers and Gen Yers about the importance of starting to save early (American Savings Education Council March 19). Other findings:
* Nearly three out of five (57%) young adult respondents described themselves as “financially independent.” * Only half of Gen Yers (52%) and Gen Xers (48%) save money regularly. * Only 9% say they feel very satisfied with their current financial situation. * Eight out of ten (83%) report having some type of non-mortgage debt, 65% have credit card debt, 48% have a car loan, 31% have student loans, 27% have medical debt, and 22% have some other type of non-mortgage debt. * More than one out of ten (11%) respondents say they have a home equity loan.
For this study, Gen X was defined as those born between 1968 and 1979, and Gen Y includes those born between 1980 and 1988.

Radio guest explains pros cons of reverse mortgages

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WASHINGTON (3/28/08)--If you’re wondering whether a reverse mortgage is something you or a family member should consider, listen in as H&FF Radio guests tackle that topic and more, including why you may be paying more for new or used cars, how a national ID card would affect you, and how to make the most of your 401(k). Home & Family Finance airs Sundays at 3 p.m. EDT on the Radio America 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. The Credit Union National Association (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. Sunday’s 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:
* “How Auto Auction Prices Influence What You Pay for a Vehicle,” with Ricky Beggs, vice president and managing editor, Black Book Guides, Gainesville, Ga.; * “REAL ID: Will the U.S. Have a National Identity Card? Is it a REAL Nightmare?” with Stephen Hannan, executive director, Maryland Consumer Rights Coalition, Baltimore, Md.; * “Is a Reverse Mortgage Right for You?” with Jason Alderman, director, Issues Management, Visa USA, San Francisco, Calif.; * “March Challenge: Listener’s 401(k) Savings Tip,” with Susan Tiffany, director of personal finance information for adults, CUNA, Madison, Wis.; and * Listener Q&A.
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, makers of cheddar cheese; Visa; and WesCorp. For more information, read, “Auto Auctions: Prices Influence What You Pay for Cars” in Home & Family Finance Resource Center.

Beware crooks filing phony tax returns

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NEW YORK (3/26/08)--One of the most serious problems facing taxpayers has nothing to do with calculations or complicated forms. An increasing number of complaints involves a form of identity theft, and it’s throwing taxpayer victims for a loop (ABC News March 17). Although the Internal Revenue Service (IRS) and Federal Trade Commission (FTC) received 20,782 complaints about tax refund fraud in 2007, the IRS is sure those numbers significantly understate the size of the problem because it’s difficult to track (The Wall Street Journal March 12). This form of ID theft occurs when a scam artist files a phony tax return--in your name, with your Social Security number and other personal information--in an attempt to collect a fraudulent refund. In one case reported by The Wall Street Journal (March 12), a woman was notified by her bank that she had been rejected for a refund anticipation loan--yet she hadn’t applied for one and hadn’t even filed her tax returns yet. Another woman was asked by H&R Block Inc. to bring in some paperwork that she’d accidentally taken with her from its office two days earlier. After informing the agent that she hadn’t been to the office and hadn’t filed her taxes, she discovered that a crook had filed a tax return in her name and already pocketed a $4,005 instant loan. In other cases, phony returns have been filed using children’s Social Security numbers. Take precautions to guard against tax refund ID theft:
* Check out tax preparers. Make sure you hand over sensitive information only to people you trust after checking credentials carefully. * Choose passwords carefully. Don’t use your birthday--it’s on your tax form and easily can be lifted by crooks--or the word “password.” Make sure all forms you print are password-protected. * Download forms with caution. If you download tax forms from the IRS website or tax documents from your employer, create a strong password--a combination of numbers, symbols, and upper and lower case letters. * Use caution with photocopiers. Some copiers store images of copies in memory. If so, personal information that’s been copied may be compromised. * Ensure e-mails are encrypted. If you send tax documents to your accountant, make sure the information you send is scrambled--or encrypted--to prevent others from gaining access to sensitive information. * Use a secure mailbox. Mail your tax return from a secure location like a post office or a U.S. Postal Service collection box. * Beware fake calls. Phony calls or e-mails have one goal: to get you to hand over personal information or financial data. Remember that the IRS will never call you or send unsolicited e-mail asking for personal information. * Check your child’s credit report. Go to idtheftcenter.org and type "Letter Form 120" in the search box. Scroll down to Letter Form 120 Requesting a Child's Credit Report. If the child has no credit report, breathe a sigh of relief, because that means a crook hasn't set up fraudulent accounts in the child's name.
Report suspicious activity to the IRS at irs.gov (click Taxpayer Advocate at the bottom of the page) and to the FTC at ftc.gov/bcp/edu/microsites/idtheft/.

Best defense on ID theft Go digital detect quickly

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SAN FRANCISCO (3/24/08)--The longer you wait to report identity theft, the more it costs you, warn authors of Javelin’s 2008 Identity Fraud Survey Report (MarketWatch.com March 17). Victims who reported identity theft or fraud within one day spent an average of $428, compared with $1,207 for victims who wait up to five months, according to the report--the nation’s longest-running study of identity theft, now in its fourth consecutive year. Despite a 12% decline in the number of reported thefts from 2006, fraud is still a major concern. And despite the growing incidence of reported data breaches, identity thieves more often obtain your personal information primarily from traditional methods--theft of personal belongings and phony phone calls--rather than from online fraud (govtech.com Feb. 11). Take precautions now to reduce your risk of becoming a victim:
* Go digital. By paying bills online, you reduce the risk that checks and statements containing personal information may be stolen by identity thieves. And have your paycheck deposited electronically into your account. * Monitor accounts online and frequently. Use credit union and other financial institutions’websites to check for signs of fraud, and report suspicious or unauthorized activity immediately. Consumers with 24/7 access to account activity are most likely to uncover fraud the fastest. * Install and update security software. Make sure you have a firewall, antispyware, antivirus software, and browser security software on your home computer. * Never give personal information to callers. Don’t respond to phone messages that prompt you to call another telephone number about your account. Similarly, don’t send account information via e-mail messages--they’re not secure. Use contact information you already have for the financial institutions with which you do business. * Order your free credit reports. A regular review of your credit file may detect unauthorized accounts or other fraudulent activity. Go to annualcreditreport.com to order one free report per year from Equifax, TransUnion, and Experian. * Shred it. Get rid of sensitive papers and statements you no longer need that contain personal information.
Finally, change a few daily habits. Mail bills from a locked mailbox; secure sensitive mobile data stored on a laptop, PDA (personal data assistant) or phone; and don’t carry your Social Security card in your wallet unless you need it for a specific purpose on that given day. A stolen wallet that contains a Social Security card--as well as your address and other forms of identification--is like handing over your identity to a thief.

Radio guests focus on tax credits saving digital TV

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WASHINGTON (3/21/08)--Are you prepared for the conversion to digital television? Join guests on Sunday’s H&FF Radio show as they discuss the rollout of the digital TV coupon program as well as strategies to help you get the most from your money during the current economic downturn. Home & Family Finance airs Sundays at 3 p.m. EDT on the Radio America 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. The Credit Union National Association (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. Sunday’s 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:
* “Give Your Wallet a Workout,” with Cate Williams, vice president of financial literacy, Money Management International, Chicago, Ill.; * “Earned Income Tax Credit” with Jeanette Valencia, earned income tax credit program coordinator, The Legal Aid Society of Orange County, Calif.; * “U.S. Conversion to Digital TV and Coupon Program Rollout,” with Catherine Seidel, chief, Consumer and Governmental Affairs Bureau, Federal Communications Commission, Washington, D.C.; * “Unscrewed: The Consumer’s Guide to Getting What You Paid For,” with Ron Burley, broadcast reporter, author and consumer activist, Eugene, Ore.; and * Listener Q&A.
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, makers of cheddar cheese; Visa; and WesCorp. For more information, read “Is Your TV Set to Go Digital?” and “Making Sure Merchants Measure Up” in Home & Family Finance Resource Center.

Use prom to teach teens to budget

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MADISON, Wis. (3/19/08)--Spring prom is a rite of passage with lifelong memories for teenagers who participate. But if you’re not careful, that memory’s price tag could cost a wallet--or a suitcase--full of money, says the Credit Union National Association's Center for Personal Finance. Researchers at North Dakota State University Extension estimated last year that the total spent on prom-related items in the U.S. was $4 billion (NDSU Magazine Spring 2007). Debra Pankow, assistant professor of child development and family science at North Dakota State University, has studied the social and economic impact of proms for the past seven years. She suggests prom as an opportunity for parents to introduce a budgeting lesson for their children, making it a memorable experience while ensuring that a large credit card bill doesn’t become a prom souvenir. The first step is to decide--with your child--on a spending plan. Determine how much you will contribute and what your teenager is expected to pay for each item, including easily overlooked expenses like accessories and photographs. Pankow says parents can help their teenagers have a memorable night without overspending, which is a valuable lesson for their future. These strategies can help save money on prom expenses:
* Carpool with other couples and split the cost of gasoline. * Borrow a dress or tux, rent one from a formalwear store, or buy from a consignment or thrift shop. * Do your own hair and makeup or visit a local cosmetology school instead of an expensive salon. * Use accessories you already have or borrow from a friend. * Hold a dinner party or barbeque instead of dining out. * Ask a friend or relative to take pictures rather than paying for a portrait at the dance.
For more information, read “Planning for the Prom” in Googolplex.

Understand risks costs of 401k hardship withdrawal

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McLEAN, Va. (3/17/08)--Homeowners facing foreclosure are raiding retirement funds to stay afloat, often without understanding the severe financial consequences of their actions (USA Today March 11). Typically, you can’t get your hands on 401(k) monies unless you retire, leave the company, or become disabled. Some companies, though, permit hardship withdrawals if you have an immediate financial need, including the purchase of a home. These withdrawals require that you pay taxes and penalties--usually in the year you take the money out--on the money withdrawn. Another option is to borrow against your 401(k); you pay interest on the loan, but the interest goes back into your account. Recent reports document a disturbing trend. A survey by the Transamerica Center for Retirement Studies revealed that 18% of workers had outstanding 401(k) loans in 2007, up from 11% in 2006 (MSNMoney.com March 7). Fidelity Investments and T. Rowe Price Group also reported increases in loans and hardship withdrawals in 2007. Based on a sampling of hardship withdrawal applications filed in January, Merrill Lynch found that the primary reason for the request was to prevent foreclosure or eviction. And Principal Financial received 245 calls in January from participants asking about hardship withdrawals, compared with 45 similar calls in January 2007. Although a hardship withdrawal or loan against your retirement account appears as a seemingly quick solution to financial problems, using a 401(k) like a piggy bank has long-term--and expensive--implications.
* Contributions may be barred. About 85% of employers won’t let you make 401(k) contributions for six months following a hardship withdrawal. * Funds withdrawn for financial hardship lose benefits of compounding. As a result, your nest egg will be smaller when you retire. * Withdrawals before age 59 1/2 incur penalties. On top of the taxes owed, you’ll pay a 10% early withdrawal penalty on retirement funds. * Job loss means immediate payback of loan. If you lose or change your job, the loan against your 401(k) is due in full before you leave, or you’ll face taxes and potential penalties. If you can’t pay the loan back in time--sometimes within 60 days--it’s considered a withdrawal and subject to taxes and penalties. Loans can’t be rolled over to a new employer. Unlike 401(k) accounts, which usually can be rolled over into a new employer’s plan without penalties, loans against your 401(k) cannot. * Another loan, another payment. If you’re already experiencing financial difficulty, you’re just adding to your debt payments.
For more information, read, “401(k) Distribution Options for Retirees” in Plan It: Retire Ready Toolkit.

HandFF Radio Is a national ID card in your future

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WASHINGTON (3/14/08)--Join guests on Sunday’s H&FF Radio show as they discuss the reasons behind auto price increases, how to build a financial cushion if you lose your job, and whether a national ID card would solve problems or cause a national nightmare. Home & Family Finance airs Sundays at 3 p.m. EDT on the Radio America 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. The Credit Union National Association (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. Sunday’s 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:
* “How Auto Auction Prices Influence What You Pay for a Vehicle,” with Ricky Beggs, vice president and managing editor, Black Book Guides, Gainesville, Ga.; * “REAL I.D.: Will the U.S. Have a National Identity Card? Is it a REAL Nightmare?” with Stephen Hannan, executive director, Maryland Consumer Rights Coalition, Baltimore, Md.; * “Preparing Financially for a Possible Lay-Off,” with Jason Alderman, director, Issues Management, Visa USA, San Francisco, Calif.; * “March Challenge: Our Listeners’ Best Money Tips,” with Susan Tiffany, director of personal finance information for adults, CUNA, Madison, Wis.; and * Listener Q&A.
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, makers of cheddar cheese; Visa; and WesCorp. For more information, read, “Auto Auctions: Prices Influence What You Pay for Cars” and “Negotiate Before Accepting Employer’s Buyout Offer” in Home & Family Finance Resource Center.

Are you holding an invalid gift card

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SAN FRANCISCO (3/12/08--Waiting for the right moment to spend that gift card in your wallet? That moment may have passed if the card is from a retailer going through bankruptcy (MarketWatch.com March 3). Sharper Image is one example. The retailer is under Chapter 11 bankruptcy and has stopped accepting gift cards until further notice. With the number of retail bankruptcies expected to jump to the highest level since 1991, those other gift cards in your wallet may become void as well (yahoo.com Mar. 3). What can you do to prevent that birthday or holiday gift from turning into a worthless piece of plastic? These tips may help you recoup your losses:
Use them quickly. Take a trip to the mall and use that gift card as soon as possible. If you wait too long, you run the risk of a retailer deciding not to honor the card, or the card could lose value, depending on the store's gift card policy. Read the fine print. Whether giving or receiving, check out the back of the gift card or go to the company's website for the gift card policy. It should tell you how you can redeem the card and whether there are conditions that may reduce the card's value. Contact the competition. If you’re stuck with a card that the original business won't honor, contact the competition and ask for a special exception. For example, Brookstone stores are offering 25% off Brookstone merchandise if a customer presents a Sharper Image gift card of any value. The competition sees it as a way to gain customers; consumers see it as a way to get something for their seemingly worthless gift card. Hang on to it. If all else fails, keep the card in a safe place and hope that the retailer will begin honoring gift cards again soon. A retailer coming back from Chapter 11 bankruptcy will be eager to drum up business to keep the company afloat.
For more information, listen to “Gift Card Do’s and Don’ts” radio segment in Home & Family Finance Resource Center.

Tax reminders for final five-week stretch

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MADISON, Wis. (3/10/08)--With five weeks to go before the April 15 tax filing deadline, don’t overlook free help, Web resources, and e-filing benefits, says the Credit Union National Association. If you haven’t yet filed, there’s still plenty of time to make sure you send in an accurate form and get a speedy refund if you’re entitled to one:
* Pick up the phone. For questions about your federal tax return, call the Internal Revenue Service (IRS) Tax Help Line at 800-829-1040 from 7 a.m. to 10 p.m. (local time) on weekdays. Note that Alaska and Hawaii follow Pacific Time. To order tax forms, call 800-TAX-FORM (800-829-3676). To check the status of your return, call 800-829-1954. For recorded messages on more than 100 tax topics, call 800-829-4477. Individuals with hearing impairments can call 800-829-4059 to ask questions or order forms. * Use online valuation guides. To help you figure the tax value of any donated goods, use the fair market value range in the Salvation Army’s valuation guide at satruck.com/ValueGuide.asp. Or, search online for the Goodwill guide to donating for your state. Tax law now requires that donated items must be in good or better condition. Some tax prep software provides valuation help. * File electronically. If you’re expecting a refund, e-filing clearly is the preferred method (CNNMoney.com March 3). Of the 46.9 million returns filed by Feb. 22, roughly 38 million were filed electronically--5% more than those filed by the same time last year. The benefits include fewer errors, greater tax accuracy, and faster refunds. Best of all: It’s safe and secure. * Use Free-File, if eligible. If your adjusted gross income (AGI) is $54,000 or less, you can file your federal return for free via the IRS Free File program. There are several options, so read each one carefully to make sure you qualify. And always access the Free-File program from the irs.gov website. * Opt for direct deposit. Of the 46.9 million taxpayers who had filed their 2007 returns by Feb. 22, about 33 million opted for direct deposit (Internal Revenue Service March 3). The average refund was $2,708, up 2% from the same time last year. * Use split refund. You can direct your refund to as many as three accounts, including an individual retirement account. * Stick with .gov. Don’t become a victim of tax scams that mimic legitimate websites. If the purported IRS website you’re viewing ends in .com, .net, .org, or any designation other than .gov, don’t use it.
For more information, watch the video “Getting Tax Records Organized” in Home & Family Finance Resource Center.

HandFF Radio Help for homeowners

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WASHINGTON (3/7/08)--All three guests on Sunday’s H&FF Radio show have one goal: Help you make sense of the mortgage crisis and know where to turn if you’re in trouble. Home & Family Finance airs Sundays at 3 p.m. EDT on the Radio America 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. The Credit Union National Association (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. Sunday’s 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:
* “Securities Impact on Mortgage Lending,” with Dwight Johnston, vice president—economic and market research, WesCorp, San Dimas, Calif. * “State of Mortgage and Housing Markets,” with Mike Schenk, vice president—economics and statistics, CUNA, Madison, Wis. * “Help for Homeowners,” with John Snyder, homeownership specialist, NeighborWorks America, Washington, D.C.
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, makers of cheddar cheese; Visa; and WesCorp. For more information, read, “What to Do When Your ARM Is Due” in Home & Family Finance Resource Center.

Small sacrifices help in unstable environment

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DULLES, Va. (3/5/08)--When the economy is booming, small luxuries almost seem like necessities--like that daily cappuccino or that soda from the vending machine. But in today’s economic environment, many consumers are cutting back (AOL News Feb. 27). One Wisconsin man used to stop at a local convenience store each morning and buy coffee for his 5 a.m. commute to work. Now he fills a thermos and takes it along for the drive. His wife, who used to pick up a sandwich during lunch-hour errands, is being more conscientious about packing her lunch. The couple has invested in a membership at a local wholesaler to take advantage of discounts on cases of Gatorade. Their 10-year-old son, an avid hockey player, used to ask for a Gatorade from the rink concession stand several times a week. Now, he’s content to throw a bottle from home in his bag and drink it after practice. In a time of belt-tightening, there are many ways to cut back:
* Rent movies. A night at the cinema easily can cost $40 for two people--after stocking up on buttery popcorn, large sodas, and peanut clusters. Instead, rent a movie and stay in. Pop corn in the microwave. * Get a library card. Instead of running to the bookstore to buy your favorite author’s newest release, reserve it at the library. You also can rent movies there. * Cook dinner at home. If you’re itching for a night out, consider cooking your main meal at home and going out for dessert. You’ll still have the social enjoyment--but at a fraction of the cost. * Double your recipe. When you make a home-cooked meal, make enough for leftovers for the next several days. Or, freeze half so you’re not running to the grocery store as much. Use coupons and “savers” cards. Comb the Sunday paper for coupons and take advantage of grocery store savers cards. The woman mentioned earlier saved $30 last week and bought only the things she needed--except for a half-gallon of ice cream. Check for online coupons from the stores you regularly shop, too. * Drink tap water. At $1.25 a pop, purchasing bottled water adds up. Fill a cup with ice and get water from a faucet. That’s probably all that was available when you were a kid--you’ll survive.
For more information, read “Live Simply to Reap Savings” in Home & Family Finance Resource Center.