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Have the talk before students leave for campus

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MADISON, Wis. (8/3/09)--If you know some college students heading back to the dorms this month, do them a favor: Tell them now what they probably will wish they’d known when they left home. Make sure they understand how to track their spending and manage their finances before setting foot on campus, say Credit Union National Association Center for Personal Finance editors. College life comes with many extra expenses--books, tuition, room and board, bills, groceries, parking, and entertainment costs--and some students turn to credit cards as a way to spend now and pay later. According to Sallie Mae’s 2009 National Study of Usage Rates and Trends, college students are swiping credit cards more than ever before. Consider these statistics:
* Undergraduates carry an average of $3,173 in credit card debt; * Eighty-four percent of students had at least one credit card, and half had four or more; and * Ninety-two percent of students charged textbooks, school supplies, or other education expenses; 84% charged food; and 70% charged clothing.
Although data suggest that many students spend outside their means, there is good news: A large majority of those surveyed expressed interest in more financial literacy education either before or during college. “The biggest surprise was how fast expenses add up in college,” says Hannah Gaskins, a student at the University of Wisconsin-Madison. “I never had to worry about money before getting to college. Learning how to balance a checkbook, use credit, or manage spending would all have been useful skills to know.” Use these tips to help returning students put personal finances in order:
* Make a spending plan. After accounting for all the big expenses--such as tuition, books, and room and board--you will find the small daily purchases can add up quickly. If you buy a $4 latte before class five days a week, that’s $80 a month. Then there’s dining out with friends, going out on the weekends and other entertainment expenses. Know your income stream each month and align that with your spending. If lattes are important to you, plan for them in your budget. * Use personal finance software or websites. Sites such as mint.com, quicken.intuit.com and buxfer.com are tools to keep you organized while you track your spending, pay bills, and take better control of your finances. * Go easy on credit. While credit cards are an important financial tool, they are best saved for emergencies or big-ticket items, not groceries or clothing. If you must use one, try to pay off the balance at the end of the month. Credit union cards typically carry the best rates--don’t give in to campus credit card solicitors. * Keep credit healthy. You need good credit to get car loans, a mortgage, the lowest interest rates--and a job. Roughly 50% of employers now check the credit of possible hires, according to the Society for Human Resource Management (MarketWatch July 30). To keep a good score while in college, pay all bills on time, keep low balances on credit cards, regularly check accounts for unusual activity, and pay parking tickets and library fines. Also, order a free credit report from annualcreditreport.com to track your credit history and check for errors. * Visit your credit union. The professionals there are available to help you set up accounts or offer personal finance advice, so stop by with any questions.
For more information, read “Credit Card Debt Rising for Students” in Money Mix.

Marketing expert shares career tips for recent grads

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WASHINGTON (7/31/09)--Parents and their recent college graduates are the subject of one of this week’s H&FF Radio guests, who shares tips on getting out of the parents’ house and into a career. Other guests give advice about back-to-school shopping and how the current economy has changed that annual ritual. Home & Family Finance airs Sundays at 3 p.m. EDT 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. 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:
* “Back-to-School Sales Tax Holidays,” with Verenda Smith, manager, administration and policy, Federation of Tax Administrators, Washington, D.C.; * “Seven Steps to Getting Out of Your Parents’ House and Into a Career: A Guide for Recent College Graduates,” with Robin Fisher Roffer, author of “The Fearless Fish Out of Water: How to Succeed When You’re the Only One Like You,” and CEO, Big Fish Marketing, Los Angeles, Calif.; * “Back-to-School and Back-to-College Shopping Surveys,” with Ellen Davis, vice president, National Retail Federation of America, Washington, D.C.; * “Nine Reasons to Choose a Vacation Rental Home,” with Christine Karpinski, author and director of owner community, HomeAway, Austin, Texas; and * Your Questions Answered.
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; Western Corporate FCU (WesCorp) and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide. For more information, listen to “Postcollege Life Requires Financial Transition” in Home & Family Finance Resource Center.

Learning trade can be ticket to new job

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McLEAN, Va. (7/29/09)--It won’t only be fresh high-school grads entering trade schools this fall. Many newcomers are twice their age. Job loss, due to the down economy, is one force driving would-be workers back to school (USA Today July 20). Thousand of new and returning students across the nation are choosing trade schools/community colleges over traditional colleges for the first time (The Wall Street Journal July 16). If you’ve dreamt of learning a trade so you can switch careers, but just haven’t had the opportunity--or the guts--now could be the time if you’ve been handed a pink slip or if you’re facing a possible layoff. Learning a trade can be the edge you need to stay employed or find employment. Trade schools differ from traditional colleges in many ways, according to The School Directory. They include:
* Fewer students in classrooms and more individual attention than in larger college classes; * Curriculum less lecture-based vs. shop-based, with more hands-on experience than traditional college courses; * Focus on students entering the work force upon completion of training; * Shorter courses, saving you time and money; * Flexible class options: online, evening, and weekend courses allowing you to also hold a job; and * Opportunity for an apprenticeship, internship, or externship program giving you hands-on experience.
Whatever your plans--traditional college or vocational school--your credit union can help answer questions you may have about financing your education. For more information, listen to “Touch Times Series: Getting Student Loans During the Credit Crunch” in Home & Family Finance Resource Center.

Laid off and looking for work after 50

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NEW YORK (7/27/09)--Many older workers are struggling to land on their feet after a layoff and having to settle for entry-level jobs. Some are starting their own business. If you’re older than age 50, and looking for work for the first time in several years, know where to go for help because the job search process has changed (CNNMoney.com July 22). Compounding the problem is a growing pool of older workers. According to AARP, one of six workers older than 65 is in the work force, compared with one of 10 in 1985. If you’re older than 50 and looking for work, be prepared to use new technology, social networking sites, virtual career fairs, advice blogs and more. Check out these resources:
* LinkedIn. Currently more than 40 million professionals use this site to network, get advice, and connect with recruiters. * Careerbuilder.com. Look for local jobs, post your résumé, and get tips and advice about staying focused, organized, and flexible. * Retirementjobs.com, yourencore.com (for scientists and engineers) and retiredbrains.com contain listings and databases for job seekers older than 50. Some of these sites may charge a fee. * The Five O’Clock Club. For a $49 membership fee, you receive outplacement and career counseling. Visit fiveoclockclub.com for details. * SCORE. More than 10,000 experienced volunteers help train and counsel small-business operators. Visit sba.gov for details. * Entrepreneur.com. This site contains information for starting and growing your own business. * aarp.org/money/personal/real_relief_aarp/. Find information about how to make ends meet while you’re unemployed, how to find a job, and where to go for help with medicare and Social Security programs.
One upside to the down economy: More Americans are volunteering. Career counselors stress the benefits, such as broadening your résumé, filling unemployed hours with meaningful work, and making contacts in the community which may lead to full-time, paid positions. For more information, read the Turning Point “Get Back in the Game After Losing a Job” in Home & Family Finance Resource Center.

Credit reports scores How legislation affects yours

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WASHINGTON (7/24/09)--One of the guests on Sunday’s H&FF Radio show cuts to the chase to explain which aspects of the current credit-related legislation you need to pay attention to, and why. Home & Family Finance airs Sundays at 3 p.m. EDT 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. 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:
* “Don’t Forget to Sing in the Lifeboats: Quotes on Home, Family and Finance,” with Kathryn and Ross Petras, authors, New York City; * “Consumers Eating Healthier, Saving Money During Recession: Healthy Eating on a Budget,” with Phil Lempert, the supermarket guru, Santa Monica, Calif.; * “How Credit Unions Help the Financially Underserved,” with Carolyn Lane, senior vice president, business development and marketing, CO-OP Financial Services, Rancho Cucamonga, Calif.; * “Credit Reports, Credit Scores and More: What You Need to Know Amid 2009 Legislation and Economy,” with Brad Stroh, co-CEO, Bills.com, San Mateo, Calif.; and * Your Questions Answered.
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; Western Corporate FCU, also known as WesCorp, and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve our country worldwide. For more information, listen to “June Financial Fitness Challenge--Power Through Credit Card Debt” in Home & Family Finance Resource Center.

Disturbing trend on the 401k front

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NEW YORK (7/22/09)--While the numbers indicate that workers still are stashing cash in their employer-sponsored 401(k)s, the news is not all good and requires many workers to take action now to catch up (Money August 2009). A recent survey of 2.7 million eligible employees by Hewitt Associates revealed that 401(k) participation rates have increased from 67.2% in 2005 to 74.2% in 2008, thanks in part to auto-enrollment programs. And 15.4% of 401(k) participants increased their contributions in 2008. But that’s the end of the good news. Here’s the bad news:
* Almost 15% of 401(k) participants decreased their contributions in 2008; * Workers who cut their contributions did so by an average 6.3 percentage points; and * About 5% of workers stopped saving money altogether in their 401(k) plan in 2008, compared with 3.6% on average each year from 2003 to 2007.
If you’ve voluntarily cut back on saving, or if you’ve experienced a reduction or loss in workplace retirement benefits due to stock market losses or company cutbacks, take action and start to play catch-up as quickly as possible:
* Boost your 401(k) contributions. Losing the company match doesn't mean you should stop contributing. Research from Hewitt Associates revealed that the average employee could bridge the gap caused by a 401(k) match suspension by increasing contributions just three percentage points a year. * Redirect spending leaks to personal savings. Start--or beef up--an emergency fund. This is particularly important if your job is in jeopardy. Ideally, you want three to six months' living expenses handy in a liquid, interest-bearing account in case you need cash quickly. After you've built up a solid emergency fund and you're maxing out your 401(k), then consider an IRA (individual retirement account). * Resist the urge to cash out. If you're in the 25% federal tax bracket, a $50,000 withdrawal before age 59 1/2 will cost you $12,500 in federal taxes, $3,500 in state taxes (assuming a 7% state tax rate), and $5,000 because of a 10% early withdrawal penalty, according to Fidelity. That means your $50,000 withdrawal from retirement savings shrinks to $29,000. * Take another look at your retirement plans. As painful as it may be, rerun the numbers in light of lower balances and economic uncertainties. Use several retirement calculators to figure out how much more you need to save to reach your goals. Check out Choosetosave.org/ballpark/ and Bankrate.com (click the Retirement tab then scroll to Calculators). * Know when you're vested. If your employer terminates your 401(k) plan because of bankruptcy, merger or acquisition, remember that any pre-tax contributions you made, plus earnings, are yours to keep. The company's vesting schedule, though, determines whether you're entitled to the employer contribution portion. If you're not sure when you're vested, contact your company's human resources department.
For more information, read “Key to Investing in Recession: Stay Calm” in Plan It: Retire Ready Toolkit.

Sales tax holiday cushions back-to-school outlays

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WASHINGTON (7/20/09)--The economy is putting a tight squeeze on back-to-school shoppers this year, confirmed a recent survey by Washington, D.C.-based National Retail Federation (NRF). One option for budget-conscious parents or students is to take advantage of some tax-free holidays in the coming weeks. According to the NRF's 2009 Back to School Consumer Intentions and Actions Survey, released July 14, the average family with K-12 learners will spend an average $548.72. That represents a decrease of 7.7% from $594.24 in 2008. The survey revealed that four of five Americans expect to cut back on back-to-school spending this year, 56.2% will search for sales, 59.6% will spend less overall, 41.7% will buy generic, and 40% will cut coupons. If you live in or near a state with a sales tax holiday, there’s another way to stretch your back-to-school dollar. On designated days in August--dates vary by state--shoppers can purchase school supplies, computers, and clothing exempt from state sales tax. (Local sales tax may still apply.) In a state with a 6% sales tax, a family spending $550 will see savings of $33--simply by shopping on the given holiday. Items must be priced below a maximum amount--$100 for clothes and shoes in many states, and between $20 and $100 for school supplies. Aside from the back-to-school sales tax holiday, some states hold sales tax holidays for other purchases, including Energy Star products, rifles and handguns, and hurricane-preparedness items. Visit taxadmin.org/fta/rate/sales_holiday.html for a list of all sales tax holiday dates, along with participating states and guidelines. Other ways you can budget for back-to-school supplies:
* Start now. Forty-four percent of those surveyed said they will start shopping three weeks to one month early to take advantage of retailers’ promotions and to space spending over time. * Or, wait until school is in session. Although only 2.5% of Americans said they plan to shop this way, there are savings to be had. After school begins, many retailers try to move merchandise using clearance prices. * Use leftover school supplies and replace only what’s not usable. Sharpen last year’s colored pencils. Tear used pages from an old notebook and it’s almost like new. * Compare prices and shop sales. Use newspaper ads, online promotion codes, and sales racks. * Shop at discount and outlet stores. They carry many name-brand clothes at off-brand prices. Three of four shoppers surveyed plan to visit discount stores. Also, you sometimes can find high-quality goods at second-hand stores or rummage sales. * Use the Internet to find special deals available only online. Also, sites such as eBay and Craigslist carry discounted books, clothing, computers and other electronics. * Swap or share items. Ask friends and neighbors to share or swap outgrown clothing or school supplies you no longer need.
For more information, listen to “Simplify Your Finances” in Home & Family Finance Resource Center.

Senior housing takes center stage on HandFF Radio

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WASHINGTON (7/17/09)--Each guest on Sunday’s Home & Family Finance Radio show will focus on timely housing topics for older Americans: senior cooperative housing, and trends related to housing and the aging population. However, due to technical difficulties, the show will not air a segment on reverse mortgages with John Dugan, Comptroller of the Currency. Home & Family Finance airs Sundays at 3 p.m. EDT 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. 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:
* “Housing Trends for an Aging U.S.,” with Elinor Ginzler, senior vice president for livable communities, AARP, Washington, D.C.; * “Senior Cooperative Housing,” with Amy Fredregill, vice president, Cooperative Network, St. Paul, Minn.; and * Your Questions Answered: Length of time information stays on your credit report; check cashers and payday lenders; credible source for investment information; and the benefits of using direct deposit for your pay checks.
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; Western Corporate FCU (WesCorp) and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide. For more information, read “FAQ: Reverse Mortgages--Ask Before You Apply” in Plan It: Retire Ready Toolkit.

Dont stress over travel insurance

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CHICAGO (7/15/09)--With summer travel season in full swing, more vacationers are considering buying travel insurance as a way to relieve stress and gain some peace of mind. But ask questions first to know whether travel insurance is right for you. A recent survey from staffing firm Randstad U.S. reveals that more than 40% of respondents feel stressed when preparing to be away from work for vacation (suburbanchicagonews.com June 29). And following 9/11, more travelers worry about whether travel plans will go off without a hitch. Do your homework before purchasing travel insurance:
*Avoid redundancy. Check insurance policies, credit card agreements, automobile clubs, and other memberships for existing coverage. These may already provide adequate coverage for the trip. *Double check. Review reservations and purchase agreements to see what contingencies are already in place. Airlines, for example, must reimburse travelers up to $3,300 per passenger for lost baggage on domestic flights (airconsumer.dot.gov/publications/flyrights.htm). *Shop around. Look for coverage differences in competing policies. Read the fine print to understand exactly what is covered and how. For example, some emergency medical assistance policies provide for evacuation to a hospital of the policy holder’s discretion, while other policies provide for evacuation to the nearest hospital.
To compare travel insurance plans and coverage options, and obtain pricing, visit insuremytrip.com. For more information, listen to “Travel Fraud: Vacation Certificates & Vacation Clubs” in Home & Family Finance Resource Center.

Peer-to-peer lending Credit unions do it better

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MADISON, Wis. (7/13/09)--Lending Club, an online business that operates like a dating service to pair individuals who want to borrow money with people willing to lend it, reports more than 5,000 successful “marriages” worth more than $43 million since its launch two years ago. Credit Union National Association’s (CUNA's) Center for Personal Finance reminds borrowers that credit unions remain a better option. Peer-to-peer lending networks bypass the traditional lending industry by allowing consumers to appeal directly to other consumers for a loan. Peer lenders often can earn more interest lending their money to strangers than they’d earn on conventional investments such as certificates of deposit. Peer borrowers often can get loans at rates lower than banks offer. Appeals found on peer-to-peer lending networks tend to be personal and emotional, often including photos of kids and pets in an attempt to make their requests for money more persuasive. Peer lenders respond by offering amounts and interest rates based on their assessments of individuals’ personal stories and credit report data that the networks provide. Peer borrowers who appear to be good risks get all the money they want at favorable interest rates. People with less attractive stories and credit histories might have to settle for high rates or no offers at all. Overall, peer-to-peer networks have about $1.5 billion in loans on the books, a tiny fraction of outstanding bank consumer loans. Should you consider participating in peer-to-peer lending? “If you have a credit union auto loan, credit card, or mortgage, you already take advantage of the best peer-to-peer network out there,” said James A. Hanson, vice president of the CUNA's Center for Personal Finance. “Ordinary consumers created credit unions more than 100 years ago by pooling their money to make loans to each other,” Hanson explained. “Their motive was not profit, but the desire to lend to their peers at better rates than loan sharks and even banks provide.” Credit unions were the first peer-to-peer lenders. If you don’t belong to one, you should, Hanson advises, for the significant advantages and safeguards they give members:
* Deposit insurance. Credit union members’ savings, from which loans are made, are insured up to $250,000 per individual per account by the National Credit Union Administration, an agency of the federal government. Peer-to-peer lenders have no such insurance protection if a network goes out of business. * Help to improve creditworthiness. Credit unions, which exist to serve members, go out of their way to help members with poor or new credit histories improve their credit scores and become eligible for better interest rates. Peer-to-peer borrowers are at the mercy of peer lenders’ opinions, with no help to improve their chances of getting a loan. * Professional oversight and other services. Credit union staff are trained to assess loan applications and approve them quickly and efficiently. Loan interest income funds other member services, such as revolving credit (credit cards and home equity lines of credit), checking accounts, debit cards and bill payment services. Peer-to-peer networks are strictly in the closed-end loan business.
For more information, read “Loans Among Friends and Family: Win-Win, or Sure Loss?” in Home & Family Finance Resource Center.

NBC Today money expert How to boost financial status

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WASHINGTON (7/10/09)--One of the experts on Sunday’s H&FF Radio show--a well-known talk show host, columnist, and author--shares timely tips on moving to higher economic strata by implementing simple, anyone-can-do-it strategies on a daily basis. Home & Family Finance airs Sundays at 3 p.m. EDT 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. 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:
* “The Difference: Traits and Habits of Those Who Moved From the Lowest Economic Strata to the Highest and How You Can, Too,” with Jean Chatzky, financial editor for NBC’s "Today" show, columnist, talk show host, and author, New York City; * “The New GI Bill,” with Sean-Michael Green, author of Marching to College: Turning Military Experience into College Admissions, attorney, dean of graduate and adult enrollment at Marist College, Poughkeepsie, N.Y.; * “Are You Worried About Your Financial Advisor?” with Diahann Lassus, chair, National Association of Personal Financial Advisors, New Providence, N.J.; * “U.S. Lags World in Paid Sick Days for Workers and Families: Are You at Greater Risk of Contracting Communicable Diseases?” with Dr. Jody Heymann, director of the Institute for Health and Social Policy, and professor of epidemiology at McGill University, Montreal, Canada.
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; Western Corporate FCU (WesCorp) and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve our country worldwide. For more information, listen to “Audio: Investing for Retirement” in Plan It: Retire Ready Toolkit.

New tax credit eases college tuition burden

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WASHINGTON (7/8/09)--If you want help financing college education, it could be as easy as filing your taxes. The American Recovery and Reinvestment Act allows for a tax credit--a reduction in your tax bill--of up to $2,500 per student for the cost of tuition, fees and book expenses paid in 2009 and 2010. This amount is an increase over previous Hope and Lifetime Learning Credit limits and applies to tax years 2009 and 2010, so the earliest you’ll get the credit is early 2010 for the 2009 tax year (MSN Money June 24). You don’t have to fill out any extra financial-aid applications to get the money--just file your tax return, whether you owe taxes or not. Note that the credit is phased out for individuals with modified adjusted gross income of between $80,000 and $90,000, or $160,000 and $180,000 for married couples. To find out if you’re eligible and learn what’s covered, visit irs.gov. For example, the credit is available only for undergraduates attending college at least half time. And if you receive a grant or scholarship that covers tuition, fees and books, you can’t get the tax credit. If you’re ineligible, you still can apply for the lifetime learning credit of up to $2,000. Either way, you can take only one of the tax breaks for a particular college expense. Many students pay their own college tuition, and this money will land back in their pockets. In addition, there’s some nontraditional help for parents and relatives who are saving to pay for a child’s tuition. Some states, businesses and colleges are handing out free cash in the form of rebates and grants to help build up parents' college savings accounts (US News & World Report March 31). The amount is modest compared with the $2,500 money available immediately through the new economic stimulus bill. But if you collect the grants now, you could have an extra several thousand dollars when your child is ready for college. Be diligent. Consider six sources of free cash for college savings via a 529 college savings account(irs.gov/taxtopics/tc313.html):
* States. Government agencies and charities offer grants for college savings to local residents. Use the map at Savingforcollege.com/529_plan_details/ to find your state and see what you’re eligible to receive. * Employers. Ask your employer about grants for parents who use the 529 account. * Credit cards. If you typically pay your credit card bill in full and on time, ask about programs that will rebate a certain percent of your purchases directly to your 529. Some programs to consider: Fidelity, UPromise, Babymint, Freshmanfund, or Futuretrust. * Websites. Websites such as Babymint, Littlegrad, Futuretrust, and Upromise will send cash back to shoppers who click through their sites to partner retailers. * Colleges. Several hundred colleges offer matching grants for parents who save for their children. Use these programs if you’re certain your child will attend a school that’s signed up for this program. You could lose some or most of the rebate if your child chooses to go elsewhere. * Relatives and friends. Freshmanfund makes it easy to ask relatives and friends to donate to your college savings account. The website will funnel the gift to any 529.
To get the tax credit, complete IRS Form 8863 next year when you file your 2009 return. In the meantime, make sure you keep good records for tuition, fees and book expenses throughout the year. For more information, read Avoid the Paying-for-College Pothole in C-Note, the high school level of Googolplex: The Credit Union Guide for Student Moneymakers.

Protect investments from a Ponzi scheme

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NEW YORK (7/6/09)--Don’t let your guard down. Even though Bernard Madoff received a 150-year sentence for a massive Ponzi scheme that bilked investors out of billions of dollars, other investment fraudsters are on the prowl. Look for warning signs to avoid being caught in a similar scheme (CNNMoney June 29). In a Ponzi scheme, the operator, acting as a financial planner, promises investors steep returns--generally higher than those available through other investments. Instead of investing the funds, the operator uses money from those entering the scheme later to pay purported dividends to the earlier investors. Once the operator can no longer pay out to all investors, the scheme falls apart and victims are left stripped of their investments (FBI.gov). In legitimate transactions, financial planners generally do not have access to their client’s money directly. Instead, they buy, trade and sell investments on behalf of their client, but the planner never touches the actual funds--those are held in an outside custodial account, such as Charles Schwab, Fidelity Investments or T. Rowe Price. In the Madoff case, however, victims missed this safeguard and dealt directly with Madoff. Victims were unable to detect that he simply was paying them with investments stripped from other victims. Use caution to avoid falling prey to a Ponzi scheme:
* Always write and receive checks through a third-party custodial account--not your money manager. Ask your planner if he uses a custodian, and who it is. Make sure it is a well-known, independent firm. * Don’t give in to guarantees of big returns on investments--no investment is ever a sure thing. Madoff's scheme claimed an average return of more than 10% a year, which defied market fluctuations (abcnews.com Jan. 4). * Obtain confirmation of trades and check your mailed account statements against online account balances (Ohio Department of Commerce, June 30). * Check out financial adviser records with the “BrokerCheck” tool on Finra.org. The site reports adviser qualifications, such as licenses, registrations and employment history for the past 10 years, and includes a disclosure section where you can access complaints and references from past and current clients. * Find out how is your adviser paid? Some charge a flat fee; others have agreements with mutual fund or insurance companies and receive commission on products they sell. Find a flat-rate adviser to avoid this scenario.
For more information, read “Set-It-and-Forget-It Investing Via Lifecycle Funds” in Plan It: Retire Ready Toolkit.

Homeowner tips Control pests clutter energy costs

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WASHINGTON (7/2/09)--This Sunday’s H&FF Radio show is all about home improvement--from hiring pest control professionals and home improvement contractors, to getting a home inspection and slashing home energy consumption. Home & Family Finance airs Sundays at 3 p.m. EDT 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. 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:
* “Going Buggy? Hire a Pest Control Firm,” with Greg Baumann, senior scientist and technical director, National Pest Management Association, Fairfax, Va.; * “Get Your Home Inspected,” with Nick Gromicko, founder and director of public relations, International Association of Certified Home Inspectors, Boulder, Colo.; * “How to Hire a Home Improvement Contractor,” with Renee Rewiski, president, National Association of the Remodeling Industry, Des Plaines, Ill.; * “De-clutter and Organize Your Home,” with Marcia Weuve, owner, Impact Solutionz: The Organizing Specialists, Austin, Texas; and * “How to Zap Your Home Electricity Expense: Listener's Best Money Management Tip,” with Susan Tiffany, director of personal finance information for adults, CUNA, Madison, Wis.
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; Western Corporate FCU (WesCorp) and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve our country worldwide. For more information, read “Find a Reliable Pest Contractor” and “August Challenge: Zap Home Electricity Expenses” in Home & Family Finance Resource Center.