Archive for Jun, 2012

Important Personal Finance Rates 6/29

Friday to Friday: Important week-ending personal finance rates compared from last Friday to today 6/29/12, 4pm EST. Mortgage rates up tick a little, but rates are still great for refinancing homes. The stock market was quite volatile but finished up, good for those invested in stocks. Crude oil futures bounced back from about $80 per barrel to almost $85, still much better than over $100 p/b a few months ago. The Dollar remains strong compared to the Euro. Lastly gold values continue to stagnate in general compared to upward trends over the last several years. Unemployment rates and jobless claims fluctuated  little.

  • Mortgage Rates  INCREASE: 30 year last/this week: 3.62%/3.67%, 15 year 2.97 %/3.04%
  • Dow Jones Industrial Average of 30 companies INCREASE from 12,640 to 12,880 (highest all time 14,164 10/9/07)
  • S&P 500 INCREASE from 1335 to 1362 (all time 1565 10/9/2007)
  • US Treasury’s DECREASE: 2-Year Note from .315% to .305%, 10-Year from 1.678% to 1.652%
  • Crude Oil Futures INCREASE from $80.15 to $84.77
  • Gold prices INCREASE from $1,573 to $1,597 (High $1,895 9/6/11) per ounce
  • Euro INCREASE from 1.2570 to 1.2641 (2011 high 1.48 5/11, all time 1.59 7/2008)
  • US Dollar Index DECREASE from $82.21 to $81.69

Other important rates

  • Unemployment data from the Bureau of Labor Statistics: INCREASE in May 8.2% up from 8.10% in April
    • This tracks those who are without jobs, and have actively sought work within the past 4 weeks. The Great Recession’s unemployment peaked at 10.10% in October 2010. In 2012 it has varied in the range of 8.10% – 8.30%.
  • Jobless Claims for Unemployment Insurance: INCREASE from 386,250 to 386,750 4 week rolling average
    • Historical numbers: Peaked at over 650,000 in 2009. In 2010 we saw a decrease from nearly 500,000 early in the year to the low 400,000′s, in 2011 the claims were in the low to mid 400,000′s but since October of 2011 they have been below 400,000. The lowest we have seen this rate in 10 years is 282,000 in January of 2006, and the earlier part of the last decade we saw the average similar to what we are seeing now

Revive the Economy Through Child Parent Business Startups

A couple of weeks ago in the Wall Street Journal there was a very interesting article about a father and son that started a new enterprise that so far is succeeding quite well. A 15-year old Nicky got the idea to create candy made out of healthy ingredients, and with the help of his successful father, they have created  Unreal Brands, Inc. from scratch that has already signed contracts with major retailers like Target.

In this case the father is quite wealthy, and has a lot of business know how- major advantages to new businesses that usually lack funding and business development expertise. I admire wealthy people who use their wealth to create jobs, or become more active in charitable organizations that they invest heavily in. It makes little sense to accumulate large fortunes and wait to pass that on after death, which for many will not occur for decades.

Children have a wide range of interests but in American suburbia though it seems as if much of the energy is focused on childhood sports programs and to a lessor extent the arts- but not all children and young adults are interested in music and sports. Children who have natural business acumen have fewer places to explore their interests besides lemonade stands and lawn mowing. I find articles like this really cool; parents working together with their children on a common and creative business venture. Not only is this a great relationship builder, but transfers skills from the parent in a productive learning environment.

Starting new businesses is key to reviving the economy, and this is one great way to go about it.

Obama Care Stands

Various news sources are reporting that the Supreme Court upholds key part of Obama Health Care, the individual mandate. More evaluation on 7/2/12 blog.

Not Well Known Veteran’s Benefit

If you are a veteran who served in active duty, you may be eligible for a monthly VA pension. This is a benefit that I just heard about, and a lot of people are eligible for it, and since it isn’t widely know, many who are eligible don’t apply for it.

I am far from an expert in this topic, but as a quick review, of the many benefits that veterans and those in active military are eligible, a few of them are:

  • Military Pension for those who have 15 to 20 years or more of service
  • VA disability benefit for those injured as a result of active duty
  • VA pension or non-service connected disability

The VA pension or non-service connected disability, pays a monthly benefit, but there are tests for service, such as honorable discharge and 90 or more days of active duty with at least 1 day during a period of war-time of WWII, Korean Conflict, Vietnam Era or Gulf War. There are additional tests for disability, income, and assets. To file a claim application form 21-526 “Veterans Application for Compensation and/or Pension.” Surviving spouses may be eligible too, and would file 21-534 for death pension.  Applicants may have to provide financial information, such as income, but may be able to meet the tests considering some deductions such as for things like health care.

If you are a veteran with an honorable discharge and 90 or more days of active duty with at least 1 day during WWII, Korean Conflict, Vietnam Era or Gulf War, you may want to look into this, or if a friend or relative may qualify, be sure to pass this information on.

When to Use Credit Counseling Agencies

US households debt service ratio is now down to 11.5 percent from a high of 14.0 percent, in the third quarter of 2007. People are making great strides to reduce or eliminate debt altogether. This is good news, however many people are still concerned about their debt.  The conventional ways of debt reduction entail some type of snowball method and lowering of expenses.  Snowballing is a simple way to more quickly eliminate debt by committing to a total fixed dollar amount each month towards a debt reduction schedule. When one debt is totally repaid, then the next one (typically the one with the highest interest rate or lowest balance) receives a larger amount of the fixed payment.  People ask me what they should do if they can only make the minimum payments, and nothing more, snowballing will help but they may be decades away from being debt free. Down sizing and second jobs is the answer for many, while others can refinance homes in this day of very low mortgage rates to get a little room in their budgets.

If people can’t make minimum payments, no matter how much they tighten their budgets, often they consider bankruptcy (either Chapter 7 forgiveness or Chapter 13 repayment), or credit negotiation companies. Dave Ramsey advocates a pro-rata approach instead of those options, and that might work for some people if creditors comply, but IRS and student debt or debts long in collections may not cooperate.

What can people do who are barely making minimum payments, or are doing further in debt in each month, and are not yet to the point of needing to consider these options, should they ever consider credit counseling agencies?  The answer is maybe. I think people should at least talk to a couple of really good ones, and get proposals. To read more about them, Mary Hunt has written an excellent piece below. Mary is founder and publisher of Debt-Proof Living, a highly regarded organization consisting of interactive website, monthly newsletter, personal finance tools and almost 20 books.

Is Credit Counseling For You?

If there’s one thing that makes many people go hmmmm, it’s the topic of credit counseling. Many people still confuse credit counseling—paying back all of what a borrower owes—with debt settlement and negotiating payoffs of 50 percent or less of what the borrower owes. Others assume incorrectly that credit counseling is the same as debt consolidation.

Credit counseling is educating consumers on how to avoid incurring debts that cannot be repaid, and creating an effective debt management plan and budget. Credit counselors are often able to negotiate lower interest rates and a more favorable payback schedule.

Here’s when a credit counselor’s debt-management program may help you:

1. Your unsecured debt is mostly on credit cards. Debt-management plans typically can’t deal directly with overwhelming medical bills, student loans or other similar debts.

2. You are ready to get on a strict budget. A debt-management plan requires you to turn over a certain dollar amount each month to the credit counselor, who distributes the money to your creditors.

3. You are determined to avoid bankruptcy. Credit counseling is designed to help you avoid bankruptcy or debt settlement.

4. You’re not already in too deep. Unfortunately, people wait too long to seek aid. If you have enough income to pay the minimums on your bills and a little bit extra, you’ll have the best shot at success with credit counseling.

For most of credit counseling’s history, the industry has been dominated by the National Foundation for Credit Counseling, whose nonprofit affiliates known mostly as Consumer Credit Counseling Services offer lower interest rates and payment plans for people who have fallen behind.

NFCC, offering credit counseling and financial rehabilitation since 1951, has become the gold standard in credit counseling.

Recently, I spoke with Gail Cunningham of NFCC and asked her about NFCC’s success rate. “In 2011, of the 2.5 million people NFCC counseled, one-third required only a number of counseling sessions to get them back on track,” says Gail. “Another one-third of that group required professional intervention by means of our debt-management program.” The final one-third were found to be better served by someone else.

About 53 percent of those who come to NFCC seeking help go on to a successful completion, which means unsecured debt is 100 percent paid off and they’re back on their feet financially.

What happens to your credit during counseling largely depends on how your lenders report your account to the credit bureaus. Some creditors report customers as delinquent on their bills until they make three consecutive payments of the negotiated new minimums. Being reported as late or delinquent can certainly hurt your credit scores, but a simple notation about credit counseling probably won’t.

To be connected with a credit counselor that is certified by NFCC, go to www.NFCC.org and look for “Click Here to Begin.” Or call 800-388-2227 to be connected to the counselor closest to you.
©Copyright 2012 by Mary Hunt

Counting on Inheritances

Many people are counting on receiving an inheritance, therefore they don’t adequately make good financial plans. It isn’t unusual for some to not fund their retirement plans, because they think their parents are well off and will leave them enough money to live on. Parents though may not have as much money as we think they have, but they might just be really good at personal finances. On the other hand a lot of money might be consumed by health care in older age, or the parent might leave the money to a new spouse, skip you and transfer to your children, or might just not make good plans and the money is lost through mismanagement.

The Wall Street Journal had a pretty good article, if you want to read more about this topic, but suffice to say most experts agree that your financial plans should probably not take inheritances into consideration.

Vacation Savings

I just returned from a much-needed vacation. Since it been many years since we had a real one, I underestimated some of the expense of it all.

First of all we saved a lot on the beach house by getting a great deal, and we bought a lot of our food locally and took it with us in a cooler since grocery stores at beach areas are much more expensive. We also brought our own lotions and purchased beverages from Costco to entertain us and keep hydrated, again much less than at the beach. We cooked several of our own meals, and ate sandwiches from our cooler during the drive. I think we were pretty frugal.

Eating out, souvenirs, goggles, sun hats, and various other items just added up. We had a budget, but we went over a little, although next year, we won’t have to buy some things we did this year.

When you add the gas, beach house, food and various other items, a simple vacation isn’t really cheap I wonder if an all-inclusive resort would be cheaper. It would be nice to have everything provided- definitely would simplify things. Next time around, we may look into going to one of these resorts, and compare to how much we spent this year. We kept all of our receipts so we know exactly how much we spent. There are some budget minded all-inclusive resorts outlined on this article at FoxNews/Travel.

Save on Clothes, With New Antiperspirant

Financial blogs like this usually don’t have recommendations about personal care products, but this one might save you some money. Do you throw clothes away by yellowing caused by deodorants and antiperspirants? Over the years it has really bothered me to toss out a light-colored favorite polo or white dress shirt that still had a lot of wear left in it, but had ugly yellow stains. These clothes aren’t cheap. I was skeptical when a family member recommended an antiperspirant product that I have never heard of called CertainDri. I’ve been using it for several months now, and in this single user test, I have found shirts are unaffected, and I actually perspire less than when using heavy-duty products like Mitchum. The amount of product that is applied is very little, so it lasts a long time, thus saving us more money. CertainDri is unisex, with simple packaging and I believe are all unscented. Pretty limited product line, but I like simplicity. The one my store carries is applied at night, but I understand they have an AM product now.

 

Front versus Top Loading Washers and Dryers

Mary Hunt founder and publisher of Debt-Proof Living, a highly regarded organization consisting of interactive website, monthly newsletter, personal finance tools and almost 20 books, recently wrote about the front and top loading washer and dryer debate. I thought this information to be very valuable to people considering those new appliances.

Dear Mary,
In a recent column you said you didn’t buy a front-loading washing machine, as you learned from others’ mistakes. What are the pros and cons of a front loader, and what’s your opinion of the top-loader machines without the middle agitator? Pat, email

Dear Pat,
Front-loading washers suffer from a unique set of technical problems, due to the drum lying sideways. If the clothes are out of balance or there are too few items in the load to properly balance it, many front-loaders will just shut down, or rock slowly until time runs out. I have received a myriad of comments from readers with front loaders who complain about water left behind at the end of the wash cycle, bleach spotting, long wash cycles, excessive vibrations and other complaints.

One issue unique to front-loaders is most troubling of all: mold buildup in the rubber gasket of the door and the resulting odor on clothes, especially towels.

If all of this is not enough, recent studies of consumer-reviews posted across the Internet show a trend of U.S. front-loading washers to have problems with bearing failure usually within the first six years, with the repair costs close to a replacement cost.

Following a great deal of thought and research, I purchased an LG Wave Force top-loading washer and the companion Perfect Steam dryer. The washer has no center agitator, has extra large capacity and high efficiency. So far I could not be happier. The wave action is a hoot to watch through the window on top of the machine. I can wash a small load or large, customize the water temperature, use preset cycles for specific needs, and even stop the cycle to add garments or change the settings at any point. Whites come out bright and sparkling without using bleach and even in cold water, which thrills me to no end. (Read more about my new washer and dryer, “If It’s Not One Thing, It’s Three Others,” on my blog.) 

Dear Mary,
I read your column, “A Badge of Thrifty Honor.” I’ll ask the question that I know everyone wants to ask: HOW did you find that washer/dryer deal? Gail, email

Dear Gail,
We purchase refurbished machines. The washer and dryer are the top of the line models from LG and were used as floor models in trade shows. Neither had been operated. But because they were removed from the boxes and people opened and peered inside, they could not be sold as “new,” so they became “refurbs.” Both appliances have full warranties and are about as new as can be as far as I am concerned.

The washer, as you read, has a small scratch on one side. I found the washer locally on www.CraigList.org. I found the dryer by searching online, at www.SearsOutlet.com. The secret is that I knew exactly the models, and I wanted them in white and I was willing to wait until I found them.

How to Revive the Economy, Op-ed

The opening quote in Ron Kitchen’s book Community Capitalism is “The best social program in the world is a well-paying job with health care benefits and a retirement program (Ewing Kauffman).” struck me hard in light of the constant negative or trivial din in the media.

The top story almost every night on the news since 2007, wow 5 years now, is the Great Recession. I find it sickening that few politicians and leaders in the private sector are voicing good ways to revive the economy. Have you heard many creative ideas? Have you read or even heard of any great books about this?  Where is all of the intellectual capital our country has in providing leadership?

Part of the problem is the media, they only like to report bad news, stories about celebrities, what the presidential candidate said yesterday (picking apart every sentence with a panel of experts – how boring) and sports. We’ve heard enough about the Queen’s Diamond celebration, John Travolta, Trayvon Martin and George Zimmerman, or the sport that you follow. We know the jobs report isn’t good, ObamaCare is going to cost trillions, the world economy is stagnating and other bad economic news, in fact we are fed daily dosages of this negative news. This creates an aura of fear that will actually retard the recovery, how you might ask?, just wait…

Actually the US economy isn’t as bad as it may seem on the nightly news. A lot more people are back to work now than in the last few years. The stock market is recovering, although with bumps. Interest rates to borrow are the lowest in over 50 years. The Dollar is stronger than many foreign currencies. Fewer houses are going into foreclosure. Is there a lot of suffering out there still, yes.  Still pain, but reason for hope, not fear.

The solution isn’t political (although that would help, and I will get to that). The solution is leadership. Leadership in business, academia and the pulpit. Lastly leadership from the media. What do the leaders need to talk about? The answer is capitalism, entrepreneurship, and hard work. Taking risks on starting new businesses, learning new things, taking on new jobs to pay off debt so that you are financially free to consider starting a new business. Pushing through fear and taking risks.

Is the economy going to take time to recover, yes. But the answer isn’t tax policy (although tax incentives would help new and existing business, and a more fair and less complicated tax system would be nice). The answer isn’t more entitlement programs, although a lot of people really need them, but we have to careful putting too many people into a dependence relationship on government, since it only creates long-term adult children living in the spare bedroom. Yes health care costs and availability needs to be better, but can be fixed easily through insurance pools, greater efficiency (simplification) and limits on law suits. The answer isn’t more regulations, although it might be good to have better oversight of Wall Street to prevent the next debacle.

I am more hopeful than ever, the future landscape is bright for our country. This recession is shaking things up, and creating space and opportunity for a new wave of business start-ups. These will create many new jobs, that have the potential to lead the world to a new era of prosperity. Pain causes fear, but for some, it breaks them free from where they were headed, into new areas of personal development. In the coming decade I expect to see ground breaking innovations that will come out of this, that we can barely imagine now.

The answer to reviving the economy is focusing on job and business creation, and education. More bi-partisan politics and government spending in those areas, business and job creation through tax incentives both for businesses and venture capitalists, and the media focus more on great business and community revival like featured in “Community Capitalism.”

There are surely more ideas on how to revive our economy, what ideas do you have?

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