Continue reading "Consumer Sundays: Free money, the Fed bailout and you, Watchdog updates" »

Posted by Dan Thanh Dang at 3:00 PM | Permalink | Comments (0)
                    

Happy Monday dear readers.

How many of you out there realized there is a difference between using your credit card and debit card at gas stations, hotels and car rental agencies?

Better yet, do you think I was too tough on the Zulichs? Every parent wants to help their children, though, right? Do you think Elizabeth could have eventually resolved this on her own or do you think it was only resolved because of Dad?

Are you like me? Worried that too many people aren't financially literate?

With today's financial crisis and move toward tightening credit policies, being financially illiterate could really hurt you.  As Eileen told you in her Sunday column, the current credit crunch isn't just affecting auto loans and mortgages, it's also affecting credit cards now, too.

Continue reading "Consumer Sundays: credit cards and abandoned cars" »

Posted by Dan Thanh Dang at 7:08 AM | Permalink | Comments (1)
                    

A report from Gus at the Inner Harbor earlier today:

I spoke with Knight Kiplinger, editor in chief of Kiplinger's personal finance magazine, earlier today in downtown Baltimore. He was in town with the "Your Money Bus" -- a roving coach that's going to be touring 60 cities this year, with volunteer financial advisors giving free advice to people. (Kiplinger's magazine is one of the sponsors.)

He had some interesting observations about the current crisis and how it might affect Baltimore. Watch the video of my interview with him.

Posted by Dan Thanh Dang at 5:22 PM | Permalink | Comments (0)
                    

If I told you I'm working on a story about young love, debit card rules, a beach getaway, enormous security holds and an angry Papa Bear, would you want to hear more?

If the answer is yes, please check out my Consuming Interests column on Sunday.

La Liz tells you the story behind the abandoned SUV that was found with its front fender wrapped around a tree on a grassy median in Park Circle two months ago. If you were wondering about it, too, check out her Watchdog column on Sunday.

Are you breathing a sigh of relief now that the House has passed the financial rescue plan? We're not out of the woods yet.

Continue reading "Consumer Sundays: beach getaways, credit and abandoned SUVs" »

Posted by Dan Thanh Dang at 3:35 PM | Permalink | Comments (0)
                    

Are you looking for advice on how to lower your debt and increase your savings?

On Friday, Your Money Bus is coming to Baltimore's Inner Harbor, offering fee-only financial advisors who will be holding free advice events and symposiums where you can learn how to get your financial life in order.

Continue reading "Your Money Bus Tour coming to Baltimore" »

Posted by Dan Thanh Dang at 2:07 PM | Permalink | Comments (0)
                    

The debt settlement industry is about to get a much-needed spotlight on it.

The Federal Trade Commission later this month is holding a conference on debt settlement to learn more about this fast-growing industry.

Debt settlers advertise heavily online, promising to settle your debt for as little as 50 cents on the dollar. But there’s a lot they don’t tell you, like you can end up worse than before.

A few years ago, there were about 300 companies offering debt settlement; now there are at least 1,000, says Peggy Twohig, with the FTC’s division of financial practices.

Calling them all companies may be generous. Twohig says a “telephone and Internet site is all you need in this industry.”

Twohig was in Baltimore this week to speak at National Foundation for Credit Counseling conference.

Twohig says she’s not suggesting all debt settlers are bad players, but the enforcement actions the FTC has taken against debt settlers reveals some disturbing practices.

For instance, she says, some debt settlers tell consumers to stop repaying debts and ignore their creditors. That doesn’t stop interest and late fees from piling up, nor does it keep creditors at bay. There’s “no mention of fees or the negative consequences of stopping to pay creditors," she says.

 Many times consumers get frustrated and drop out of the program, yet they still owe the ballooning debt, Twohig says.

NFCC members are credit counselors who offer debt management programs, where counselors work with creditors and consumers on a repayment plan. Consumers end up repaying their debt, but usually get a break on interest and late fees.

Credit counselors are no fans of debt settlers. One complained to Twohig that debt settlers from across the country call consumers in her state in violation of state law. “There’s no regulation of these groups,” she complained.

Another asked if the FTC would be interested in receiving case studies of consumers’ experiences with debt settlers. "Everyone in this room could just swamp you," he said.

Posted by Eileen Ambrose at 11:16 AM | Permalink | Comments (0)
                    

Alas, the trials of the print journalism. In today’s story about AmeriDebt, the last line — and important one — was cut.

The article says consumers burned by the defunct credit counselor’s shady business practices will soon start getting checks sent to them in the mail. It’s part of settlement between AmeriDebt’s founder Andris Pukke and the Federal Trade Commission that sued AmeriDebt and Pukke for deceptive business practices about five years ago.

About 460,000 consumers will receive checks totaling around $20 million. That’s an average of $43, but you might get more or less depending on the amount of fees you paid to AmeriDebt or one of its affiliated credit counseling agencies.

Pukke, who didn't admit wrongdoing, agreed to return up to $35 million for restitution. The FTC decided not to wait for all the money to come in before distributing checks to consumers.

The FTC advises consumers to be on the lookout for the checks in the next week and make sure they cash them.

The deleted last line of the article noted that this is that another restitution check could be in the offing if more money is collected from Pukke. Or, if many consumers don’t cash this check — which happens often when restitution is made — that money will go back into the pot and be redistributed to consumers.

Eric Friedman, director of Montgomery County’s Office of Consumer Protection, was an early critic of AmeriDebt. He says the fact that consumers are getting any money back is better news than usual in such cases.

“A lot of times, consumer protection agencies file a big lawsuit for a lot of money and you rarely see payback,” he says. Often the offending company either goes out of business and has no cash to make restitution or the case is settled for little money and consumers get little in return, he says.

If you get one of these AmeriDebt checks, let us know how much and what you think.

Posted by Eileen Ambrose at 9:58 AM | Permalink | Comments (0)
                    

Ethan Ewing, president of free online consumer portal Bills.com, shares with us the top ten "mistakes others are making" for people who are concerned with their financial futures :

1. Casually using a credit card: People who pay for their food with a credit card spend 30 percent more on average than people who pay with cash, according to a Visa study of 100,000 restaurant transactions. Those who want to avoid overspending should pay with cash when shopping or dining. (oh geez. I rarely ever carry cash with me.)

2. Buying too much house: "The bigger the house, the bigger the headaches," Ewing said. A mini-mansion comes with mansion-sized tax payments, insurance, maintenance, upkeep, repairs and yard work, and owners of more luxurious homes are more likely to feel pressure to upgrade everything from appliances to furnishings to the cars that go in the garage. Realtors sometimes encourage buyers to purchase as much house as they can "stretch" to, but Ewing said, "Take a realistic look at your needs and your budget to choose the house that is the right size for both. Ideally, all home costs -- including insurance, taxes and maintenance – should amount to less than 35 percent of your budget." (whew. I have a tiny house, one that I could afford even if my day job as your consumer columnist took a sudden nose dive.)

Continue reading "10 Ways to Avoid Worst Financial Mistakes" »

Posted by Dan Thanh Dang at 2:13 PM | Permalink | Comments (0)
                    

Hola, my cheeky little monkeys.

So what did you think of our Consumer Sunday triple play? 

For those who missed it, Lovely Liz alerted the city to the missing guardrails on a Fort Avenue bridge leading to Fort McHenry. The city is warning pedestrians and joggers to be careful along that Locust Point area until they can fix it this week. Please do since no one wants anyone to accidentally fall over 40 feet on to the train tracks below.

You should, if you haven't already, find out how much Excellent Eileen says Michael Phelps can spend each year without stressing his budget. (I'll give you a hint: it's way more than what your three consumer bloggers here make in a year.) Do you think you could invest Michael Phelp's money better than the experts she talked to?

As for my column on protecting your personal and financial accounts after a breakup, do you side with Chantel, the Ex or Sprint in this case? Are you prepared to deal with a messy breakup or would you be stuck in the same boat?

Love it, Hate it? Tell us what you think. Got a problem? Share it here. Think we're wrong, wrong wrong? Rant about it here. Just so you know, in our redesign, we will likely republish some blog comments in the paper so we really do want to hear from you. That means that while we encourage all thought and opinions, we are asking everyone to to try your best to be civil, courteous and free of foul language.

Oh yes, the Powers That Be (PTB from now on) are also adding this commenting policy to all the blogs: "All comments must be approved by the blog author. Please do not resubmit comments if they do not immediately appear. You are not required to use your full name when posting, but you should use a real e-mail address. Comments may be republished in print, but we will not publish your e-mail address."

We also won't share your address with anyone else unless we receive authorization from you to do so (some of you who complained about Comcast are familiar with this. But for those who don't know, Comcast and other companies read the blog, asks to get in touch with an unhappy customers, I reach out to unhappy customers to see if you want to hear from Comcast, you say yes, I pass it on. If you say no, I tell Comcast no can do. It's that easy.)

So there you have it. Our first Consumer Sunday in the redesign launch. Questions, Comments, Applause (or er... the opposite of applause if need be... what is that boos?)

Posted by Dan Thanh Dang at 6:48 AM | Permalink | Comments (1)
                    

Do you have any methods you use to help you sock away money for big-ticket items or just a rainy day?

Multimedia editor Mary pointed me to this Lifehacker post about tricking yourself into saving money. it goes beyond the usual "pay yourself first" tips, which recommend things like automatically transferring money from each pay check so you don't even notice it's missing. If you get a raise, you could also bank that money or direct it automatically toward your outstanding debts, continuing to live at your original income level.

Some of the Lifehacker tips use psychological means to discourage you from spending, such as making a picture of what's motivating you to save (your kid, your dog, your dream car or vacation destination) into a credit card sleeve so you have a visual disincentive every time you are tempted to buy buy buy.

Others are more practical ...

Continue reading "Tricks to help you save" »

Posted by Liz Kay at 6:01 AM | Permalink | Comments (3)
                    

One of the worst financial ideas out there is the 401(k) debit card, which basically allows you tap your 401(k) like it was an ATM machine.

I wrote about this disturbing product in March. The story is posted below. 

The good news is that the card isn’t widespead – yet. But regulators are worried.

The Financial Industry Regulatory Authority – the industry group representing brokerages – issued an alert on the cards.

"Regardless of how easy it might be to do, borrowing against your retirement savings should be a last resort - and done only in emergency situations," says John Gannon, the group’s senior vice president for investor education, in a news release. "If a debit card is one of the options in your 401(k) plan, be mindful of the hazards that can come with using the card - from a smaller nest egg when you retire to a possible loan default that can deal a serious financial blow. Remember that with every swipe comes the real potential to wipe out a portion of your hard-earned retirement savings."

Money in a 401(k) is best left alone and allowed to grow. Even taking out a loan from a 401(k), which most plans allow, will leave you with a smaller nest egg than if you didn’t borrow at all. Sure, you pay that money back with interest. But you may go for years without that money invested and growing. Also, money goes into a 401(k) before taxes have been paid on it. You pay income tax on those dollars when you withdraw them iin retirement.

FINRA warns of a variety of reasons why debit card loans are bad. Fees are one of them. The other is double-taxation. Money goes into a 401(k) before taxes have been paid on it. You'll pay income tax on those dollars when you withdraw them in retirement. But when you borrow from a 401(k) using a debit card, you repay the short-term loan with money you've already been taxed on. Later, when you pull the money out in retirement, you'll pay taxes again on those dollars.

“This is double taxation that would not take place if you took out a conventional loan,” the group says.

So, if your employer offers a 401(k) debit card feature, just say, “No, thanks.”

Continue reading " 401(k) Debit Cards" »

Posted by Eileen Ambrose at 3:08 PM | Permalink | Comments (1)
                    

As Dan Thanh pointed out earlier, banks don't have too many fans these days. 

Take a look at the Internets Celebrities' amusing video about why people in poor neighborhoods use check-cashing services. (Thanks to Maryann over at Baltamour for the heads up on this one.)

There are so few banks in poor neighborhoods that it makes sense to use one of the check-cashing centers conveniently located in their communities. And banks are not open when you're available, after business hours.

Then again, banks earn a lot of money charging their customers for penalties and services as well, especially if you don't carry a large balance. Consumerist.com tallied a local check casher's fees and found them to be 1 to 4 percent per transaction.

Continue reading "Banks versus check cashing" »

Posted by Liz Kay at 11:10 AM | Permalink | Comments (0)
                    

Lately, there have been a number of online tools to help with budgeting. You give your account and credit card numbers and these sites inform you when bills are due and show you where you’re spending your money.

One of the latest is Quizzle from online mortgage lender Quicken Loans.

But Quizzle is more in-depth than some of the other sites. It will look at your credit report.

The site doesn’t ask for your Social Security number, but it does ask lots of personal information to get access to your Experian credit report. Quicken says the inquiry into your credit report doesn’t affect your credit score, as it does when a potential creditor takes a peek.

Giving out so much personal information made me Queasy when I tried Quizzle. But Quicken’s Mike Dunklee swears the site is secure and the company is not going to start pitching you products. (The site’s disclosure information does say it may contact you to take part in a survey, and if you agree, will then ask for contact information.)

Quizzle is fun. You immediately get your Experian credit score and can look at the accounts open in your name, the balances, whether you have been late and who has looked at your report of late. It makes estimates on your home’s value and taxes. It’s interactive, so you can update your Quizzle account when your finances change.

The site also creates a Quizzle Score, which is a combination of your credit score, home value, savings and the amount of debt you have in relation to your income. According to Quicken, the debt-to-income ratio weighs far more heavily in mortgage lending decisions than the credit score.

The site is free. Dunklee says Quicken hopes that if users ever are in the market for a mortgage, that they will think of Quicken. So far, more than 12,000 accounts have been opened.

Let us know what you think if you try Quizzle.

Posted by Eileen Ambrose at 3:07 PM | Permalink | Comments (1)
                    

After developing one of the nation’s toughest consumer laws on credit counseling, Maryland is ready to weaken it.

The General Assembly passed legislation that would open the doors to for-profit credit counseling. Right now, a counseling agency must be a non-profit to serve Marylanders.

The question is: Will the governor sign the legislation?

You might recall that the credit counseling scandal a few years ago basically involved non-profits acting like for-profits. Thousands of consumers ended up paying high fees to groups, like AmeriDebt, and got into worse debt. 

At a time when more consumers will need the services of credit counselors, do we really want profit-driven companies to provide counseling? (Read my article below about the issue.)

The Maryland Consumer Rights Coalition, which is opposed to for-profit counseling, is now asking for you help to make its case to the governor. In an e-mail today, executive director Stephen Hannan writes:

“In our letter to the Governor, we voiced our concerns that the bill will harm Marylanders who face serious credit problems now and will exacerbate the credit problems of those who may face economic hardships in the future. To make your voice heard against the licensing of for-profit debt management companies, contact the Governor.

The bill's number is SB646. The governor's next bill-signing ceremony is next week.

Continue reading "Tell MOM: VETO For-Profit Credit Counseling bill NOW" »

Posted by Eileen Ambrose at 3:17 PM | Permalink | Comments (0)
                    

Don't forget to pick up Forever stamps today and tomorrow!

As we reminded you before, the price of first-class stamps goes up to 42 cents on Monday --- but Forever stamps are good forever, no matter how much you paid for them originally.

It might not seem like a lot, but as wise people say, pennies make up dollars.

So, stock up! 

Posted by Liz Kay at 3:22 PM | Permalink | Comments (0)
                    

Tax day is over. Now can you throw away all those scraps of paper, right?

Maybe. Here’s the low-down on paperwork from the Privacy-Rights Clearinghouse:

— Throw away old pay stubs once you checked the information against your W-2.

— Keep any documentation related to an entry on your tax return this year, or some future tax year. If you bought stock, keep the paperwork so you can figure your cost basis whenever you sell the shares.

— Retain documents as long as the IRS is likely to audit a return. For most, that’s three years. But if you underreport your income by more than 25 percent, an IRS auditor can come knocking as much as six years later. Blatantly lie and file a fraudulent return and the IRS auditor has no time limit.

— Each state has its own audit deadlines. So, check with your home state.

One of the handier tips: If you lost your birth certificate, you can find out where to replace them at a government Web site.

Also, if you are throwing away papers, make sure you shred with a cross-cut or confetti shredder, the privacy group says.

(Photo courtesy of stockxchng.com)

Posted by Eileen Ambrose at 7:43 AM | Permalink | Comments (0)
                    

Are you putting off a major life decision because you’re cash-strapped or worried about the weak economy?

Four out of 10 adults say they are doing just that, according to a poll released today by the American Institute of Certified Public Accountants.

These adults say they have put off retirement, marriage, medical procedures, college education, buying a home or having a child because of their financial situation or the economy’s.

This is more pessimistic than last year, when three out of 10 were postponing life decisions. Among those putting life on hold this year, 28 percent said it was due to a lack of savings. Eighteen percent blamed the economy.

“It’s alarming that so many people are choosing not to get married, buy a home or further their education because they don’t have the money,” said Carl George, head of AICPA’s National CPA Financial Literacy Commission in a prepared statement.

The survey polled 1,026 adults.

So, are you putting off major expenses?

Posted by Eileen Ambrose at 5:15 PM | Permalink | Comments (0)
                    

Do you clip and collect coupons?

You can print out coupons at home, but that requires a printer --- not to mention an Internet connection. Some people swear by online sites such as The Grocery Game or couponmom.com to help stretch their food dollars by matching coupons with store sales to maximize savings.

Others pooh-pooh such discounts, say that they usually apply toward processed items sold on the inside aisles rather than whole foods that are better for you to eat --- think Hamburger Helper rather than produce.

Personally, I find myself using coupons for household products like detergent or soap --- or at least cutting them out. My problem is the follow through: making sure I have the coupons with me when I end up at the store, before the coupons themselves expire.

Well, one company has come up with a system to combat that problem, which I hope hits our shores soon.

Continue reading "Coupons without the clipping" »

Posted by Liz Kay at 11:15 AM |