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Consumer Archive

Consumer

State events mark 529 College Savings Day

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LEXINGTON, Ky. (5/27/14)--May 29 marks 529 College Savings Day, an opportunity to raise awareness about the importance of saving for college. Nationally, individual states have planned activities and promotions to educate families and friends of future college students about the best ways to save (College Savings Plan Network May 21).
 
The College Savings Plans Network (CSPN), a source for information about Section 529 college savings and prepaid tuition plans, has released an infographic map compiling all of the state activities--educational programs, discount admission to zoos, museums and sporting events and waived enrollment fees.

In a May 20 column, Washington Post columnist Michelle Singletary wrote that in a 529 savings plan, you invest as you would in a workplace 401(k) or other investment. Returns are based on how your portfolio performs through the years. Most 529 savings plans offer age-based options--the investments become more conservative as the beneficiary gets closer to college age.
 
All 50 states and the District of Columbia offer at least one 529 plan named for Section 529 of the Internal Revenue Code. Although the 529s are state-sponsored, you can invest in any of them regardless of where you live. Many states offer a tax deduction for residents who use their state's plan.
 
Despite 529 plan benefits, many people aren't aware of this college-savings vehicle. For the past three years, the financial firm Edward Jones has commissioned a survey to gauge what Americans know about the plans.
 
In 2012, only 37% of respondents correctly identified a 529 plan from among four options. Others thought it was a retirement account, a form of life insurance, or a low-cost health-care plan. Only 30% of participants overall could identify a 529 plan.
 
Among those with household income between $50,000 and $75,000, awareness was marginally better at 32%. Awareness increased when income increased, but still wasn't high: Forty-two percent of households with incomes between $75,000 and $100,000 could identify a 529 plan, and 48% making more than $100,000 answered correctly.
 
Hence the importance of a day to raise awareness. Betty Lochner, chair of the CSPN, said, "Our goal for 529 Day is to raise awareness throughout the country about 529 plans, so that future generations of students may have better financial access to higher education. Anyone with a child in their life should make 529 Day count by checking our infographic to learn more about their state's activities."
 
James DiUlio, director of Edvest, the Wisconsin 529 college savings program, said, "Being able to reach your full potential and love what you do for a living is part of the American dream. No student should have to pass up the opportunity of college, professional school, technical school, or graduate school because they can't afford to go."
 
For related information, read the newly revised Turning Point, "Paying for Your Child's Higher Education," in the Home & Family Finance Resource Center.

Protect info on your phone from theft

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NEW YORK (5/20/14)--Would you risk personal injury to retrieve your cellphone? Surprisingly, most respondents (68%) to a recent study said they'd put themselves in danger to get back a stolen cellphone (Fox News Insider May 9).
 
Another study, by Consumer Reports (April 17), reveals more troubling information: More than 3 million smartphones were stolen from American consumers in 2013.
 
Whether you become a victim of physical theft or you simply lose your phone, someone you don't know might end up accessing a pocket-sized summary of your digital life: photos of the places you've been and the people you know, what you've posted on Facebook or bought from Amazon, the content of your text messages, where you keep your money, Web searches, and more.
 
Before your phone is gone, here are some ways to guard your personal information and increase the chances of recovering your phone: 
  • Enable encryption on your smartphone. Encrypting data can protect you against identity theft and the loss of sensitive data. If your device doesn't offer encryption by default, ask your carrier to recommend additional security software.
     
  • Use a strong screen lock. You don't have to settle for the four-digit PIN options among your cellphone's security features. Consider creating a strong password that contains a string of at least eight letters, numbers, and special characters that don't form recognizable words or phrases that could be associated with you.
     
  • Install and regularly update anti-theft software. Look for an app from your provider or manufacturer that will locate your phone from any computer, lock it to restrict access, erase sensitive data (contacts, messages, browser history, social media posts), and emit a loud sound to help police locate it (AARP Bulletin May 2014). But don't rely on it. Thieves know that for the app to work the phone must be turned on, have a network or Wi-Fi connection, and GPS must be enabled.
     
  • Regularly clear the browser history. This prevents smartphone thieves from retracing your digital steps to hijack your accounts.
     
  • Make your lock screen display "if found" contact information. If your missing phone is found, it might be returned to you. Provide only safe contact information such as an e-mail address or alternate phone number. Search for carrier-approved apps to help you create a lock screen that meets your needs.
     
  • Back up photos and videos. Most carriers and manufacturers offer free over-the-air backup for your phone. Select a carrier-neutral source, such as Apple's iCloud, Android's Google+, or Microsoft's OneDrive so you can retrieve your information if you get your next phone from a different carrier.
 
Explore your phone's settings, search the Web, and ask your wireless carrier about ways to accomplish these tasks. For related information, read "What to Do if You Lose Your Smartphone" in the Home & Family Finance Resource Center.

Grads: Get off on the right financial foot

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DENVER (5/13/14)--You'll be a college grad in just a few days. As you say goodbye to all-nighters spent studying, say hello to some new spending habits. Decisions you make today can affect your finances for the rest of your life (denverpost.com May 5).
 
Here's some advice to set you off on the right path:
 
Stay frugal. If you already landed a job, this might be the first time in your life that you'll be earning a regular paycheck. It's tempting to go on a spending spree. Treating yourself to a few things is fine, but stay mindful of what you're spending. Check with your gym, and cellphone and cable providers, to make sure you're getting the best rates. Pack lunches from home. Have friends over for dinner and movies instead of going out.
 
Negotiate your pay. When you get your first job offer you don't have to agree to the salary. The implications of taking less money than you're able to negotiate have long-term effects. Raises often are based on what you're already making, so starting out with a higher salary will mean higher earnings over the course of your career.
 
Build an emergency fund. You could lose your job or face another financial emergency at any time. Prepare for the unexpected by setting up an emergency savings account. Have your paycheck directly deposited to your credit union checking account and set up automatic transfers into that savings account. Experts advise trying to save three to six months of living expenses. Setbacks, such as a couple-thousand dollar car repair, can cause someone without savings to borrow from retirement accounts--not a good plan.
 
Start saving for retirement now. Many employers offer 401(k)s or similar retirement savings accounts. If your employer offers to match a percentage of your contributions, take advantage. If you don't, you're leaving money on the table. Consider opening a Roth individual retirement account at your credit union as well.
 
Pay down student loan debt. In 2012, 71% of graduates had student loan debt, with the average graduate owing almost $30,000 according to the Institute for College Access & Success, Washington, D.C. Know student loan details, save all correspondence about loans, and contact your lender immediately--before the due date--if you're going to miss a payment. If you're able to, pay extra toward your loan to save on interest and pay it off sooner.
 
Use credit appropriately.  It's important to establish credit in your own name to develop a credit history. A strong credit history will pay off in the future when you want to buy a house or purchase other big-ticket items. It even can affect your ability to get a job or rent a place to live. Don't charge more than you can afford to pay off monthly, and always pay your bill on time. Consider getting a secured credit card to help build or rebuild credit. A secured credit card trades access to credit for your commitment to keep a certain amount of money in a savings account. Once you've made, say, 12 months or so of on-time credit card payments, you'll be eligible to apply for a conventional credit card.
 
For related information, read "Go Cold Turkey on Consuming Addiction" in the Home & Family Finance Resource Center.

Don't believe these 9 widespread money myths

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SAN FRANCISCO (5/6/14)--Even the most battle-tested budget warrior might be making money decisions based on bad information, according to results of a new survey.
 
Charles Schwab interviewed 998 people to discover their biggest financial misconceptions (Forbes April 25). A large number of them believed common money myths. In fact, those who described themselves as "savvy" actually were more likely to believe the myths.
 
Because it's dangerous to not know what you don't know, here are the nine common money myths.
 
Myth No. 1: A will guarantees your property and money will be distributed the way you wish.
 
Unfortunately, 91% believed this. However, if you've named beneficiaries on financial accounts, such as your IRA (individual retirement account) or insurance policy, those designations override any will. You'll need to update them to ensure you don't leave something to someone you didn't intend, such as an ex-spouse.
 
Myth No. 2: You should have no debt when you retire.
 
Differentiate between "bad" and "good" debt. No credit card debt is a good goal, but you shouldn't pay off a low-interest mortgage or student debt at the expense of saving more for retirement.
 
Myth No. 3: You can always shore up your income in retirement by getting another job.
 
This is easier said than done for a number of reasons, including declining health and the erosion of marketable skills. Only 4% of retirees end up getting another job, despite 39% of those surveyed indicating they plan to work after they retire.
 
Myth No. 4: Everyone should have life insurance.
 
Life insurance is necessary only if you have disabled or young children or a spouse depending on your income, or if you own a small business.
 
Myth No. 5: You should take Social Security when you turn 62. 
 
Not unless you really need it. If you wait and take Social Security at age 70, your benefits will be 76% higher.
 
Myth No. 6: You should buy long-term care insurance in your 40s when premiums are lower.
 
The premiums will be lower, sure, but you'll be paying them for a longer time. If you're healthy, Schwab says the ideal age for purchasing long-term insurance is between 50 and 65.
 
Myth No. 7: Retirees should keep their money out of the stock market.
 
If you anticipate a long retirement, keeping a portion of your savings in the stock market can help you keep pace with inflation.
 
Myth No. 8: You should borrow from your 401(k) if you need a loan.
 
Only if it's an emergency, otherwise you're putting your retirement savings at risk.
 
Myth No. 9: Your 50s are too late to make a difference in your financial future.
 
If you don't retire until your late 60s, you could have almost two decades left to save. In 2014 anyone older than 50 can contribute an additional $5,500 in catch-up 401(k) contributions.
 
For related information, read "Everybody's Money Matters: Deciding How Much to Save" in the Home & Family Finance Resource Center.