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i have a pet peeve with banks. while i sincerely appreciate the fraud prevention that many have implemented, i find it disturbing to be called at home by someone purporting to be from my bank, who asks me about my accounts and charges on those accounts. my normal reaction is to give them absolutely no information and to request a name and phone number from them. then i call the bank’s main number and tell them who i was contacted by. if it’s a valid call, they’ll transfer me to the correct department. it may seem somewhat paranoid, but with identity theft a very real issue, it’s the safest way.
Every three years, the Federal Reserve Board conducts a survey on finances of U.S. families. The survey includes information on income, assets, net worth, pensions, etc. Being curious, I decided to see what the last survey had to say. What exactly ~is~ the status of U.S. families? How are they faring?
First, for those who don’t know or have forgotten, let’s cover what is meant by “mean” and “median”. “Mean” is an average, while “median” means the middle.
You have a list of numbers: 1,2,3,4,5,6,7. The mean (or average) would be: 4. The median is: 4.
But suppose you replaced the 7 with 29: 1,2,3,4,5,6,29. The mean (or average) would be: 7. The median is still: 4.
What does this show?
The Federal Reserve Board cut the short-term interest rate one quarter of a percent to 4.5 percent. The prime rate will drop to 7.5 percent.
Don’t expect yields on CDs (especially short term CDs) to fall or for fixed-rate mortgage rates to fall, this time. After the previous half a percentage cut in September, neither reacted as expected.
from www.chron.com:
Mortgage lenders are bracing for a flood of defaults as many adjustable-rate mortgages originated in 2005 and 2006 during the height of the housing market frenzy reset to higher interest rates.
The loans were initially attractive options for buyers because of their cheaper “teaser” interest rates that kept monthly payments low, but even a small percentage increase can translate into a far higher payment.
With home sales in decline and prices down or flat in many regions, more homeowners are landing in foreclosure because they can’t afford to sell their homes after falling behind on payments.
It seems they’re right.
Credit Freezes will be available to all consumers by November 1st, whether or not they have been victims of Identity Theft.
from bankrate:
Consumers in all 50 states already have the right to place a fraud alert, regardless of whether they are victims of ID theft. The fraud alert lasts for 90 days and alerts new creditors and other businesses checking the creditworthiness of an applicant that the consumer may be a victim of fraud.
While the fraud alert merely asks the lender to take additional precautions, a credit or security freeze prevents third parties from receiving a copy of the consumer’s credit report or credit score, making businesses less likely to grant credit or services to the applicant. Only businesses with a permissible purpose, or for whom the consumer lifts the freeze may obtain the consumer’s credit information.
A recent study on identity theft by the center for identity management and information protection focused on identity theft offenders rather than victims, as in previous studies. The purpose of the study, funded by the Dept of Justice, was to assist both public and private sectors in order to combat identity theft crimes.
The Secret Service cases (517 cases, 933 defendents) that were reviewed included only those where personal information was used to commit fraud. “Personal information includes name, address, social security number, and date of birth, but excludes credit cards, debit cards, and other bank cards.”
The results of the study included some interesting findings:
alternet reviews the documentary “in debt we trust”, by veteran TV journalist and media critic Danny Schechter.
If you wonder why borrowed money fuels the lifestyles of all ages, turn on a new documentary, “In Debt We Trust,” by the veteran dissenting TV journalist and media critic, Danny Schechter. “In Debt We Trust” vividly shows how Americans get ensnared in a web of debt spun by a “credit industrial complex” that almost seems to function like a conspiracy to drive people into financial servitude. Schechter’s central insight is bold, provocative and timely. As he quotes a Brooklyn consumer activist, “Debt is profitable.”
Zachary: What can be done?
Schechter: The first step is raising awareness. People don’t usually talk about this problem. It’s a point of embarrassment to be overwhelmed by debt. When you give people permission to talk about this, they pour out. We also need grassroots political action to promote responsible lending. We have to roll back the bankruptcy law changes. We have to fund counseling and advice. We need to make financial literacy part of our educational system.
read the story here: young borrowers face a life of debt and, if you’re interested in the documentary, see in debt we trust.
Eight great year-end moves
These financial steps will help you save more money, get better insurance coverage and pay less tax.
October 12 2006: 7:23 PM EDTBy Ellen McGirt, Fortune senior writer
(Fortune Magazine)—Nathaniel Hawthorne understood the temptations of the season. “I cannot endure to waste anything as precious as autumn sunshine,” he wrote. “So I spend almost all daylight hours in the open air.” Nice work if you can get it.
These days fall is also an ideal time to assess your financial security - before the inevitable ramping up of workplace pressures and in time to affect this year’s tax filings.
Here’s a painless eight-step program - from retirement and insurance planning to health care and philanthropy - that not only protects your future but also helps you take advantage of new tax twists (kiddie tax trap; see No. 8) that can save money and reduce anxiety. Getting your financial house in order casts its own warm glow, freeing you to enjoy falling leaves with the peace of mind Hawthorne sought long ago.
Boosting your post-bankruptcy credit score
Posted: Oct. 10, 2006The Bankruptcy Adviser by Justin Harelik • Bankrate.com
Dear Bankruptcy Adviser,
Why should I care about a bankruptcy on my credit report? Six years after being discharged, my credit score is 736. Does it still make a difference?
-- SharonDear Sharon,
This is a great question. You may have “ghost credit,” and I’ll get more into that in a minute, but first things first: Congratulations! I have no doubt your improved credit score is the result of hard work. There is more you can do to improve your credit and I hope this article will give you, and everyone else in similar situations, a few ideas.You should always care about every mark on your credit report. When a lender is deciding whether to give you access to their money, they rarely make a mistake by saying, “No.” “No” is their default answer and anything that leads them down the path to saying “no” is worthy of concern.
However, once you’ve done everything you can do, let it go. Because bankruptcy information stays on your credit report for 10 years, you have four years to go before the bankruptcy mark can be removed.
What’s a ‘mortgage accelerator’?
Here’s how to shrink your mortgage and save — all by yourself
COMMENTARYBy John W. Schoen
Senior Producer
MSNBCWith higher interest rates putting the squeeze on borrowers, a number of readers, including Linda in Tampa, have heard from a new crop of companies offering a plan to “accelerate” their mortgages and save them a bundle-- for a fee. Here’s what the people who are selling this product won’t tell you.
I recently found out about a financial product called a mortgage accelerator. This is not a bimonthly payoff of a 30-year mortgage; it’s a line of credit tied to an account with direct deposit that works like a checking account to pay out regular living expenses as well as paydown the balance of the house cost. The high average daily balance allows you to pay off the home loan much faster than a traditional mortgage. There is a fee, but the costs still seem so much lower than the accumulated interest of a 30 year mortgage. It sounds great, but could you investigate the good and bad points of this for me?
-- Linda R., Tampa, Fla.There’s nothing illegal about these plans; they’re simply charging you a fee for something you can do on your own. They belong in the same category of services as “credit monitoring” companies that charge $50 a year to send you the same credit reports you can get on own for nothing. It’s kind of like someone asking to borrow your watch, telling you the time and then sending you a bill.
There are a number of flavors of “mortgage accelerators,” but they work the same way. The pitch goes like this: We’ll collect money from your checking account and make a mortgage payment on your behalf every two weeks, which works out to 13 monthly payments instead of 12. By making that extra payment, you’ll pay down your principal faster and save tens of thousands of dollars in interest payments over the life of the loan.
We called one of the more popular purveyors of this plan to get the details. To sign up, you’ll pay a one-time fee of $295 and then $5.42 a month (or about $65 a year). If the “accelerator” gets you out from under a 30-year mortgage five years early, the total cost of this plan comes to about $1,900. When you compare that to the tens of thousands of dollars in interest you’ll save, it sounds like a great deal.
Here’s the problem: you almost certainly can do the same thing yourself — for free. (Some mortgages specifically carry a “pre-payment penalty” — something to ask about, and avoid, when you’re shopping for a new loan). If yours doesn’t penalize pre-payment, you can send extra payments to reduce the principal any time you want — without paying anyone a fee.
Some things leave you speechless…
Insurers expect record profits
Consumers, hit with rate hikes after last year’s storms, not likely to get any relief
Oct. 13, 2006, 11:27PMBy JOSEPH B. TREASTER
New York TimesInsurance companies are expecting record profits in 2006 after predictions of another year of devastating hurricanes have so far come to naught.
Industry experts are estimating that profits may reach $60 billion, on a combination of higher premiums along the coasts, no major payouts for natural disasters and strong investment returns. The insurers also had high profits on other lines of coverage such as auto insurance, workers compensation and general liability.
This study out from the General Accountability Office, concerning Credit Card Companies.... you can read the report (PDF) or highlights (PDF) from the GAO. Read further articles below…
from the FTC:
For Release: June 4 , 2004
FTC Issues Final Rule on Free Annual Credit Reports
The Federal Trade Commission has issued its final rule regarding free annual credit reports under the Fair and Accurate Credit Transactions Act (FACTA) and the Fair Credit Reporting Act (FCRA). FACTA, which was enacted on December 4, 2003, amends the FCRA and requires, among other things, that the three nationwide consumer reporting agencies (CRAs) – Equifax, Experian, and Trans Union – provide to consumers, upon request, a free copy of their credit report once every 12 months.
woohoo! good move by the FTC. so what does this mean to you? once a year, you are entitled to a *free* credit report, so you can find out what information has been gathered about you. eligibility for these free reports is based on the FTC’s rollout schedule:
House Passes Bankruptcy Bill; Overhaul Now Awaits President’s Signature
By STEPHEN LABATON / Published: April 15, 2005WASHINGTON, April 14 - The House overwhelmingly approved a major overhaul of the nation’s bankruptcy laws on Thursday, completing Congressional action on the measure and sending it to President Bush.
The 302-to-126 vote adopted the first significant revision of the bankruptcy laws in 27 years and is the culmination of years of intensive lobbying by the nation’s largest banks, credit card companies and retailers, who have complained about what they say is a rising tide of abusive bankruptcy filings.
It is a victory for Mr. Bush, who supported the measure, and a setback for civil rights, labor and consumer organizations.
Bankruptcy bill bad for debtors
Boomer Bucks by Barbara Whelehan • Bankrate.comEditor’s note: On the afternoon of April 14, 2005, the House passed the bankruptcy bill, clearing the way for President Bush to sign it into law.
The bankruptcy bill that the Senate passed earlier this month is a good news/bad news bill. It’s good news for big business, and mostly bad news for financially troubled consumers.
yet another link on social security:
Commentary: “Economic Scene: A Weekly Column” from the December 27, 2004 edition
One man’s retirement math: Social Security wins
By David R. Francis | Staff writer of The Christian Science MonitorAt the heart of President Bush’s plan to sell Social Security private accounts is a simple notion: You’re always better off investing your retirement money than letting the government do it.
By doing it yourself, you can stow some money in the stock market, and over the long run will get a better return on that investment than today’s Social Security system offers.
The idea is broadly accepted. That’s why the administration’s plan to partially privatize the system sounds appealing to many. But that better return won’t always happen.
This published on Wednesday, February 2, 2005 by Reuters:
Half of Bankruptcy Due to Medical Bills—U.S. Study
By Maggie Fox, Health and Science Correspondent
WASHINGTON (Reuters) - Half of all U.S. bankruptcies are caused by soaring medical bills and most people sent into debt by illness are middle-class workers with health insurance, researchers said on Wednesday.
The study, published in the journal Health Affairs, estimated that medical bankruptcies affect about 2 million Americans every year, if both debtors and their dependents, including about 700,000 children, are counted.
“Our study is frightening. Unless you’re Bill Gates you’re just one serious illness away from bankruptcy,” said Dr. David Himmelstein, an associate professor of medicine at Harvard Medical School who led the study.
“Most of the medically bankrupt were average Americans who happened to get sick. Health insurance offered little protection.”
there seems to be a bit of confusion over the social security issue. is it a “problem”, a “crisis”, or neither? and, honestly, i’m not sure that i know myself.
here are two places to start:
from kathleen hays @ cnn: Straight talk on Social Security
Tired of partisan rhetoric, Hays turned to Government Accountability Office chief David Walker.
NEW YORK (CNN/Money) - Separating the spin from the substance in the Social Security debate can be challenging. So, I went looking for an honest broker, someone who could give me the facts, figures and fundamentals without the thread of a political agenda running through it.
from the social security administration: About Social Security’s Future
based on these *two* articles, there is a problem with social security...but not a crisis. as i find other articles on the issue, i’ll post them as well.
From Holden Lewis @www.bankrate.com:
“The Federal Reserve raised a key short-term interest rate today, reassuring investors that major combat operations against inflation are not over.
The Fed’s Open Market Committee increased the target for the federal funds rate a quarter point, to 2.5 percent. The prime rate will rise to 5.5 percent. Consumer loans based on the prime rate—variable-rate credit cards and home equity lines of credit, for the most part—can be expected to rise in the coming days and weeks.
Short-term rates have gone up 1.5 percentage points since the end of June. In that time, the Fed’s rate-setting committee has met six times, and each time it raised the federal funds rate by a quarter of a percentage point. In today’s after-meeting statement, the committee hinted that more rate increases are in store.”
What does this mean to you in a nutshell?
Survey of Consumer Finances
Feds Cut Interest Rate
Homes Facing Foreclosures Doubles
Credit Freeze Laws, Effective Nov 1st
New Study on Identity Theft
in debt we trust
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