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If so, you might want to take a few tips from Laura and Tom McKanna on how to do it right. I wrote about their vacation at home in this week's column. One of the things they found was that advance planning is really important. They got their chores done before the vacation even started. Feel free to add your own tips if you've had a successful home vacation.
In honor of the Fourth of July, I'd like to congratulate all of you who have achieved financial independence and say "way to go" to all of you who are making a focused effort to get there. Here are some thoughts from Liz Pulliam Weston, one of my favorite personal finance writers. It's tough watching your savings decline in value with the market. Obviously we can't control the market. But we can stay diversified and focus on the long term. And when we suffer reversals, it's especially important to save more, spend less and stay (or get) out of debt.
Q: My children attend private school on a scholarship based on our family’s low income. I recently got a part-time job making $8,000 a year that will put me $4,000 over the limit if I keep it all year. I need to find a legal way not to count my income. Can you help?
A: You could reduce the adjusted gross income on your tax return by contributing that $4,000 to a deductible IRA. Or, put it into a flexible spending account for medical or child care expenses if your employer offers one (Caution: you would lose any money you had not spent on qualifying expenses during the year.)
But before you do anything, take a close look at the school’s financial aid form. It might require you to add IRA and flexible spending account contributions to your adjusted gross income.
Reverse mortgages are a hot financial product these days, mainly because mortgage lenders and brokers see them as a way to revive their flagging business. However, they actually are a great financial tool under the right circumstances, as I wrote about today. Quite simply, they are a way that older homeowners (62 and up) can tap the equity in their homes for living expenses without having to pay the money back so long as they remain in the home. If that sounds like something that interests you, read my story and check out these great pamphlets
Home Made Money from AARP
Money from Home from Fannie Mae
Q: I have property in South Carolina that I would like to do a quick deed to children in New York. How do I go about doing that?
A: Assuming that you own the property, you should give them a warranty deed, which needs to be recorded with the register of deeds in the appropriate county. Deeds must meet specific legal requirements, which you can read here. I recommend contacting a title company in the county where the property is located to assist you with the transfer. If it has a branch office in the area where you live, that will make the transaction even easier. Your children should get title insurance as part of the transaction to be sure they have a clear title. A "quitclaim" deed is not recommended in a situation like this.
When you give property to someone else, you also give them your tax basis. If they sell, they will owe capital gains tax on the gain since you bought it. On the other hand, if you leave the property to them at your death, they will get a stepped-up basis in value to the date at your death.
The cost of nursing home care is rising faster in the Tampa Bay area than it is in the rest of nation, according to a study released Monday by Genworth Financial, which sells long- term care insurance along with other financial products. Over the past five years, the cost of a private room in a nursing home has risen 24 percent in the Tampa Bay area, compared to 17 percent nationally. Costs are highest in Miami.
Here's what you'll pay per year in the Tampa Bay area: $77,212 for a private room in a nursing home, $33,124 for a private one-bedroom unit in an assisted living facility or $44,959 ($19.65 per hour for 44 hours a week) for a licensed home health aide.
This month I had a wonderful hiking adventure in the Grand Teton National Park that ranks among the best vacations my husband and I have ever taken. We had some great hikes and saw amazing wildlife--grizzly bears, moose, elk, bison, beaver, otters and lots more. It was reasonably priced because it was an Elderhostel program run by a non-profit organization, Teton Science Schools in Jackson, Wyoming. Elderhostel offers a tremendous range of programs all over the world. The prices tend to be more reasonable than other vacation adventures because many of them are in more basic accommodations (we helped with the dishes after meals and cleaned our rooms when it was time to check out), they often are held during the off season and many are run by nonprofit groups. Most offer an opportunity to learn something about local history, culture or wildife. There is an age requirement--you or your traveling companion have to be 55 or older. But many Elderhostel partners also offer programs for other age groups. For example, both the Teton Science School and the sponsor of an Elderhostel program I attended last fall, the Great Smoky Mountains Institute in Tremont, Tenn., offer a variety of programs for children, teens, adults and families.
For those interested in seeing more, here are my Jackon Hole/Grand Tetons photos and here are Yellowstone National Park photos (a side trip not part of Elderhostel.) Click on the first one to enlarge it, then click on "next" to see each photo.
Could you use some help managing your money? If the answer is yes and you live in Tampa or have transportation to get there, you might want to look into classes being offered next month by Tampa Bay Saves. Dates and topics are: June 10, Developing a Financial Plan; June 17- Evaluating Credit Offers & Credit Scores; and June 24- Using Financial Institutions & Achieving Financial Goals. The classes will be held from 5:45pm – 8:00pm. Cost is $7. Location is the Family Support & Resource Center, 7520 W. Waters Ave., Tampa. Childcare and refreshments are provided. For more information, call the Hillsborough County Extension Service at 813-744-5519 x 137. Here's the registration form.
Q: We currently have a 30-year fixed-rate mortgage at 5.75%. Our unpaid principal balance is $145,496. We've been in the home for five years. We have credit card debt of almost $16,000 that we'd like to pay off. We've been offered a new loan for $175,000 at 5.375% rate for 30 years. The closing costs will be about $9,734, monthly payment approximately $1,363 (including taxes and insurance). We will receive approximately $1,100 in cash. We really can't afford to make another bad decision. What should we do?
A: I would not do this, but I do not know what your alternatives are. Something is wrong with your math, because it looks to me like you'll end up owing $13,504 more than you do now and extending your mortgage for an additional five years, both of which seem like a bad deal to me. The best approach, in my opinion, would be to put your credit card balance on the lowest interest rate card you can get and make extra-large payments every month until it is paid off.
The way I look at it, there are hundreds of thousands (maybe millions) of homeowners out there who a few years ago did something very similar to what you are contemplating and now regret it very much. This is particularly a problem if their mortgage is now more than their house is worth. If you had to sell your house, would it bring at least $175,000 plus real estate commissions and other closing costs? If there's any doubt about that, you definitely don't want to refinance.
Are you telling me that it is impossible for you to pay off your $16,000 in credit card debt? If so, maybe you should be considering bankruptcy. Talk to a credit counselor about your options before signing anything. Credit card debt can be discharged in bankruptcy but if you put it on your mortgage, you put your house at risk. Here are some calculators (one, two) you can look at in analyzing your situation. There are numerous others on the Web as well--just do a google search on mortgage refinancing calculators.
Is St. Petersburg’s free museum day on your calendar for May 17? How about one of these adventures: Civil War Days at Heritage Village in Largo (free, May 17), $5 Day at Lowry Park Zoo in Tampa (May 18) or maybe the Ruskin Tomato Festival ($5, May 3 and 4)? Or how about just going to the beach or taking a walk in a nearby park?
My column this Sunday is about living a rich life without being rich. You're invited to contribute your own ideas about free and low-cost things to do in the Tampa Bay area. In addition, I have some suggestions for more absorbing activities.
Here are readers' suggestions about great low-cost things to do.
College savings plan guru Joe Hurley likes the Florida Prepaid College Plan, but isn't so enamored with its younger sibling, the Florida College Investment Plan. Hurley gives the prepaid plan four out of five caps on his Web site, SavingforCollege.com, meaning he thinks it is "an excellent program with many benefits for the participant and positive investment attributes. If it has any significant weaknesses then it also has some particularly good things to recommend it." The caps are little mortar boards. The investment plan only gets three caps, meaning "a very good program that offers valuable benefits but may have some limitations or concerns that investors need to be aware of." But then Hurley is pretty picky. Florida residents can buy an investment-style plan from another state, but there aren't any that rate Hurley's five caps for out-of-state residents.The closest are Illinois' Bright Start College Savings plan (the direct-sold version, not the broker-sold), the Michigan Education Savings Plan, the College Savings Plan of Nebraska , the South Carolina Future College 529 Savings Plan and the Virginia Education Savings Trust, all of which get 4.5 caps for nonresidents. Here's his full list of ratings and here's the Web site for the Florida plans.
That's the question facing retirees who don't have a traditional pension. Naturally, the financial services industry is coming up with ideas on how to answer it. The latest is a new offering Vanguard introduced today. Fidelity Investments also offers a set of income replacement funds. And, of course, there is the option of the traditional life annuity. Today's New York Times has a story on the money management challenge facing retirees.
The Florida Institute of CPAs is celebrating "Financial Fitness Friday" Friday, April 18, by volunteering to answer your financial questions.So here's your chance to ask that question you always wanted to know but were afraid to ask me :)
Call the FICPA Financial Fitness Hotline toll-free at (800) 342-3197, ext. 554, between 9 a.m. and 5 p.m. Friday.
More information about financial topics is available at the American Institute of CPAs' "360 Degrees of Financial Literacy" Web site.
There's so much information out there, it can be overwhelming to know where to start. I came across some recommendations today that I think would benefit anyone who wants to learn more.
Here are RETIREMENT PLANNING RESOURCES, available for free online and in some cases by mail.
Here are INVESTMENT BOOKS recommended on the Vanguard Diehards' forum.
Some of you may have noticed that the Times has been running an occasional series about financial fraud to educate readers about how they work. Here are the ones we've published so far:
Ponzi schemes, Lottery and Sweepstakes Scams, Pump and Dump Schemes, Tips to Avoid Becoming a Scam Victim
Do you have a scam you'd like to suggest for this series? Each scam we highlight needs to be illustrated with an example that has a Tampa Bay connection. The Lou Pearlman case is obviously an example of a Ponzi scheme, although I used a different example here so people wouldn't get the impression it's the only Ponzi scheme around. In fact, the majority of investment frauds are a variation of a Ponzi scheme.
On a related note: Tonight's Dateline program (7 p.m., NBC) turns a spotlight on the highly questionable sales pitches insurance agents use to sell annuities to older people.
Many Americans are woefully uninformed about money and it costs them dearly. The subprime mortgage debacle wasn't solely caused by greed; ignorance played a big role. But, as I discuss in today's column, some groups are trying to upgrade our knowledge of finances to help us live better lives. One, is the United Way of Tampa Bay, which recently launched the Web site My Family's Future. It has a great set of personal finance calculators, including this one that shows how to pay off credit card debt. And it has the beginnings of a search engine to connect people with organizations and companies that offer various kinds of financial help (currently limited to Pinellas and Hillsborough counties).
Here are some other non-commercial sites that offer personal finance information: My Florida Money, America Saves, American Savings Education Council, U.S. Financial Literacy and Education Commission, Federal Trade Commission, Federal Deposit Insurance Corp. Do you have a favorite site to add to the list?
Q: I feel that I was cheated by the state of Florida. I agreed to pay $19,000 for a Mazda. When the dealer presented the invoice, the sales tax was calculated on $22,000 and then a "rebate" of $3,000 was deducted from the price. I protested, but the dealer insisted it was required by the state. A cash rebate was not discussed or offered. I felt it was a price adjustment or discount. The state is collecting tax on fictitious prices. I don't know if fraud is the correct term, but it sure is unfair. What do you think?
A: I see your point, but there wasn't any fraud. Florida sales tax is based on the amount received by the seller. In this case, the dealer received $19,000 from you and $3,000 from the manufacturer for a total of $22,000. "The tax is due on that amount because that's what the dealer received," said Mark Zych, director of technical assistance for the Florida Department of Revenue.
The same principle applies at the grocery store. If you use a manufacturer's coupon, you'll pay tax on the precoupon price because the retailer collects from you and the manufacturer. If you use the store's coupon, the tax is on the after-coupon price.
Q: I recently purchased an item online from a national retail chain. While I realize that I must pay sales tax on the item, I questioned the fact that I should pay sales tax on the shipping and handling as well. After all, I don't pay sales tax on stamps, or labor. What gives?
A: What's taxable and what isn't is a matter of state law. Under Florida law, the sales tax applies to shipping and handling charges. Here's a reference.
You know that home equity credit line you thought would substitute for an emergency fund if you ever had an emergency? Think again. Banks are "freezing" credit lines left and right, as I report in my story today. A freeze means you can't charge any more than you already have. Credit lines generally are frozen with no prior notice, to prevent you from running up debt at the 11th hour. That means if your credit line hasn't been frozen yet and you know for sure you'll need the money, you'd better borrow it now. That could be especially important if you've got a home improvement project in process. Of course it's always best to avoid borrowing if it's not necessary.
Banks are giving the general decline in real estate values as the reason for the freezes. If your home value goes down, you have less equity and they have less security for any money you borrow.
Maybe. But don't ask and it's highly likely that you won't get what you're looking for. My column today is about asking companies for a better deal. It was inspired by my personal experience with Internet providers Bright House and Verizon. I was paying too much for my DSL service simply because I didn't call Verizon and ask for the better deal they would have given me if only I'd asked.
What's been your experience asking for a better deal?
If your mortgage payments have become overwhelming, don't just sit idly by and wait for the bank to foreclose.
If you can't sell your house for enough to pay off the mortgage, read my column today to learn more about short sales and deeds in lieu of foreclosure.
If you really want to keep your house even though you can’t make the payments, here’s what to do next:
• Get advice from a pro. Go to www.hud.gov or call toll-free (800) 569-4287 to find a HUD-approved
housing counselor near you. Or call the Project HOPE hotline at (888) 995-4673. The earlier you ask for help, the better. A counselor can help you evaluate your options and review your budget to see what’s financially feasible for you.
• Refinance or ask your lender to modify the terms of your mortgage if that would bring the payments to a level you could afford and you can qualify. If you have an adjustable rate mortgage that recently reset or will soon, talk to any FHA lender about the FHASecure program to see if you can qualify. The drawback: If you have no equity in your home, you probably will have to put up some cash to refinance.
• Consider a Chapter 13 bankruptcy filing. You’ll stop foreclosure proceedings and be put on a
payment schedule for all your debts. Eventually you may be able to refinance. The drawback: bankruptcy stays on your credit report for 10 years.
While the important trends are clearly negative, from unemployment to foreclosures, we're not officially in a recession--that would require two quarters of negative growth. However, if your income is less than it was in the past, then you are in a personal recession. Lately my colleagues and I have spoken to some people for whom the recession is very real. Some of them are profiled in today's paper. Others were quoted in a Saturday story about rising unemployment. Others say they aren't affected at all.
How might a recession affect you?
If you're a worker: If your company's business suffers, your job might be in jeopardy or you might see your hours or commissions cut. Companies might hire fewer workers, which would mean fewer job openings.
If you're a retiree: Interest earnings on CDs and money market funds will fall if, as expected, the Federal Reserve lowers rates to try to stimulate the economy. Stock prices already have fallen and could go lower. The longer a recession lasts, the more dividends could be in jeopardy.
If you're in transition: A recession is a tough time to try to sell a house, find a job or liquidate a stock portfolio.
I put together a little quiz offering an opportunity to rate yourself on 10 key points of financial well-being. If you're up to the challenge, click here.
Mortgage rates are at their lowest levels in two years, according to Bankrate.com, which is good news if you've been thinking of refinancing or buying a house. You should be able to get 5.45% on a fixed-rate 15-year loan or 5.88% on a fixed-rate 30-year loan, according to Bankrate's survey. That's if you've got good credit, of course.
I've recently heard from some older homeowners, including some of Lou Pearlman's victims, who are struggling financially and wonder where to go to get help. One of the best programs for low-income people who are 65 and older is SSI, or Supplemental Security Income. One note is that to qualify you cannot have more than $3,000 in countable assets for a couple ($2,000 for a single person), not including your home or car. If you have more than that in the bank, you may be able to qualify by using your money to pay down your mortgage or other debt.
For homeowners, a little-known source of help is homestead property tax deferral. Call your local tax collector's office for information in your community. Social service organizations in the area where you live can you refer you to helping organizations. In the Tampa Bay area, call 211 for information and referral or click here.
This time of year lots of kind-hearted people find themselves in a quandary. The mail brings appeals from one seemingly-worthy charity after another. You want to be generous, but you can't afford to give to everybody. What's a person to do?
I recommend the top-down approach. Select one or two areas of concern that are closest to your heart, such as religion, education, the arts or social services to the needy. Throw out all appeals unrelated to your choice. Learn something about the organizations that are related to your choice by visiting them in person or researching them on the Internet (Guidstar is a good source). Then pick. Larger gifts to a few organizations are more meaningful than small gifts to many. Or, as an alternative, make one large gift and a few small ones. Remember that whatever you do helps make the world a better place and none of us can solve the world's problems alone.
Here are some strategies Times readers follow for their giving.
The Federal Reserve Board is expected to cut the target rate for Federal Funds Tuesday for the first time since 2003, when the rate fell to 1%. (Here's a chart showing the rate history.) The rate has been 5.25% for a little more than a year. Everybody seems to expect at least a quarter of a point cut, with some hoping for half a point.
Here's what a rate cut is likely to mean for investors and savers:
*Expect a pullback in those juicy CD and money market yields. Rate cuts are always bad news for short-term income investors.
*Interest rates will decline on home equity credit lines, which are directly tied to short-term rates. That's good news if you already have a credit line or if you're in the market for one.
*Adjustable rate mortgages aren't quite so straightforward. Depending on the terms of your mortgage, you may be locked in at your current rate. If your mortgage is approaching reset, your new rate may be better than it would have been. However, it's still likely to be higher than the teaser rate that got you into the loan in the first place.
*Fixed mortgage rates are not directly tied to short-term rates. They're affected by what happens in the broader bond market. Those rates could go lower if the economy continues to slow. However, right now rates are low, so this is a good time to lock in a rate if you're thinking of refinancing.
We're fortunate that we haven't had a hurricane come our way yet this season, but we all know it could happen any time. Here are some tips to make sure you're ready:
1. Know what your homeowners insurance policy covers and what it doesn't. You need separate flood insurance to cover damage from flooding.
2. Have an emergency fund with part of the money in cash and part easily accessible through ATM withdrawals (money market or checking account). Some of it can be a little less accessible (savings bonds, short-term CDs).
3. Make a list of account numbers and telephone numbers for all your banking/investment/insurance accounts.
4. Make a list of names and phone numbers of people you might need to reach following a storm (relatives, doctors, friends.)
5. Make sure all your important papers are safe. One way to handle this is to scan copies and have the data on a portable computer drive or CD. Another approach is to store backups with a close friend or relative who lives elsewhere. If you have a business, it's important to safeguard those records too. I don't recommend trying to carry boxes of records with you to a shelter if that can possibly be avoided. What you do need to take with you is identification (driver's license, passport), phone numbers (see 3. and 4), medical/drug information and, of course, money and your ATM card.
Here are more tips on preparing for and dealing with a natural disaster.
(Photo credit: Associated Press)
When my husband and I went car shopping recently, the salesman joked that our 1994 Camry was getting so old we'd soon be sending it off to college. In fact, it had already been to college and come back. When our daughter graduated, I gave her my newer Corolla, took back the Camry and drove it for two more years. It had 165,450 miles on it when we passed it on to our son this month. Consumer Reports says its useful life isn't anywhere near over. The magazine, in a feature in its October issue, says if you've got a reliable car and take care of it, it should last 200,000 miles or more, saving you many thousands of dollars compared to buying a new car every five years.
What kind of car should you get? Consumer Reports says these are the best bets, based on at least three years of model reliability data: Honda Civic, CR-V or Element; Lexus ES or LS; Toyota 4Runner, Highlander, Land Cruiser, Prius or RAV4. These vehicles are rated as bad bets: BMW 7-Series; Infinit QX56; Jaguar S-Type or X-Type; Mercedes-Benz M-Class (V8) or SL; Nissan Armada or Titan; Volkswagen Touareg or Volvo XC90 (6-cyl).
The magazine's survey of readers found 6,769 who had vehicles with 200,000 or more miles on their odometers, including a 1994 Ford Ranger pickup driven 488,000 miles.
Have you driven a vehicle more than 200,000 miles? Tell about it in a comment to this post.
(Photo credit: Getty Images)
Today's paper has a story about yet-another-example of the theft of personal information from companies trusted to protect it. This one involves Certegy, a credit card and check processor based in St. Petersburg. The good news is that it is not believed that the information has (yet) been used for identity theft. However, it's another reminder for all of us to be on the alert for signs of ID theft. Paying close attention to statements -and noticing if one doesn't arrive- is by far the best way to detect problems in your existing accounts. However, we need to be alert to signs that new accounts have been created in our name, ideally before we start getting dunning phone calls from lenders wanting to know why we haven't been making payments. You can order a free credit report once every 12 months from each of the three major credit bureaus. Staggering the reports and ordering one every four months will allow you to stay on top of your credit year round. When you visit these sites, you do have to be alert so that you don't accidentally order a credit score or credit monitoring service or some other product unless you actually want it.
Hard as it may be to believe, money that belongs to you or your neighbors could be languishing in the custody of Florida's Bureau of Unclaimed Property. They don't look very hard to find you. In fact, just a simple search turned up the fact that our esteemed Gov. Charlie (Charles J.) Crist is owed a premium refund on his car insurance. Although I've never found my own name on the list, I've often found friends and relatives listed.
The state says it currently holds more than $1-billion in unclaimed property, mostly from dormant accounts in financial institutions, insurance and utility companies, securities and trust holdings. That includes $44.7-million from Hillsborough County and $39.2-million in Pinellas County. Here's the Web site to check on whether you're on Florida's list. (or call 1-88-VALUABLE). I recommend bookmarking the site and checking periodically.
Check here for links to sites in other states.
Today's column is one of the more interesting I've done in awhile, exploring the money-sex connection. A big part of that connection is that anxiety about anything affects our functioning. Spending more than you make and/or worrying about how you are going to pay your bills takes a toll. And of course, in a society like ours, many people's sense of self worth is tied into money, whether it's how much they make or what they spend it on. Some people's overspending is the result of trying to look good to others by buying things you cannot afford. Ultimately it's about keeping things in balance.
Here's a new tool for organizing your family's financial, medical and other important records - and it's free. T. Rowe Price is offering the PC-compatible CD covering investments, credit cards, income, insurance, loans, property, medical information and estate and funeral planning. You can get it here or by calling (800) 538-2706.
(Photo credit: T. Rowe Price)
Business Week recently had an interesting piece, "The High Price of Free Insurance" about investors trying to convince wealthy seniors to take out life insurance policies for the purpose of resellign them. According to this articles and others I've seen, promoters are offering inducements such as cars and cruises to people to take out these policies. Have any of you ever come across that in the Tampa Bay area? If you have, I'd appreciate it if you'd email me the details. I have seen solicitation letters, but that's about it.
If you've ever thought of taking out one of these policies for resale, I recommend discussing the details with a financial adviser (other than the one trying to sell you on the policy) to confirm that it's right for you.
Most companies offer at least a few employee benefits and some have a whole array of options. However, many employees focus on health insurance and forget about everything else. If you're one of them, you could be leaving important benefits on the table, from retirement savings plans to disability and life insurance to flexible spending accounts. The key questions to ask are: What are my options? How much do they cost? Does my employer subsidize the cost? Are there tax benefits in it for me for participating? Is this something I need? If you are married, you and your spouse should go over this together, reviewing information from both your employers. Here are two benefits I especially recommend:
*Saving through payroll deduction. Saving is easiest when you don't get your hands on the money. Sign up for a retirement savings plan AND for direct deposit of part of your paycheck into a credit union or money market account where it can accumulate to help cover emergencies and major expenses.
* Flexible spending accounts for health care and child care expenses. Money is deducted from your paycheck and from your taxable income. You get it back tax-free when you submit receipts for covered expenses. If you've got predictable expenses in either category, this is a very valuable benefit. It's great for paying for day care and orthodontics.
Yahoo Finance debuts a new personal finance Web site offering 66 calculators, resource centers on personal finance topics and content from providers such as CNNMoney.com, Consumer Reports, Kiplinger, The Motley Fool, Smart Money and The Wall Street Journal.
Today's column mentions some of my favorite money books for readers to consider as possible holiday gifts. When I wrote it though, I knew I was undoubtedly leaving out some really super books. Although money-related books come across my desk by the cartload, I don't have time to read very many of them.
Thus I'm asking you: What's your favorite money book and what do you like about it? Please post your comments here.
BTW, Here's what I said in my column:
Don't want to give money? Here are a few lower-cost ideas, available from bookstores except where noted:
- Personal Finance for Dummies, 5th Edition by Eric Tyson ($21.99, Wiley) There's a reason this book is in its fifth edition: It's a well-organized, practical guide to the world of personal finance.
- The Bogleheads' Guide to Investing by Taylor Larrimore and others ($24.95, Wiley). A good choice for people interested in learning how to invest wisely and keep their portfolios balanced.
- All Your Worth: The Ultimate Lifetime Money Plan by Elizabeth Warren and Amelia Warren Tyagi ($14, Free Press). Readable advice from a mother and daughter, aimed at people who are struggling financially.
- KidsWealth Money Kit ($39.95) contains materials to help you teach your kids money management. Made by a Tampa company. Where to go: www.kidswealth.com or call (813) 472-8600.
- Starting Out by Sheryl Garrett ($15.95, Dearborn Trade Publishing). One of a series of guidebooks, this one is aimed at young people who are or soon will be living on their own.
- Nolo (www.nolo.com) publishes outstanding books for those who want more detailed information on topics such as bankruptcy, credit repair, divorce, real estate and wills.
(Photo Credit: Wiley)
In today's paper I wrote about a study that found women 50 to 62 applying for entry level jobs are far less likely to get a shot at an interview than 35 to 45 year old women with similar work experience. You can read more about those findings here.
The response I've received to this article includes this excerpt from an email from a woman who said she is 52 and her husband 58:
"It is obvious that because of our age we are not employable at jobs other than those that don't pay a living wage, regardless of our good health, our job experience, and having our own life and health insurance and pensions. The people I feel sorry for are aquaintances and family members we have who are our age, but not as healthy as we, who have to work miserable service industry jobs just to pay for food and heat."
What has your experience been? I'd be delighted if you'd post your comments on this blog.
Q. With the cost of homeowners insurance, the maintenance fees and property taxes, we are trying to determine the best way to approach our home here. A number of friends have suggested a reverse mortgage. Is there an unbiased evalaution on a reverse mortgage that we can obtain to make our decision? We do not know enough about this type transaction and don't want to be misled by companies that could take advatage of us.
A. AARP publishes some good consumer info (here and here) on this topic. Fees are the big drawback of a reverse mortgage, so it's only something to consider if you plan to be in your home for the long haul. If you were to sell in a couple of years, it wouldn't be worth it.
Also, in case you didn't see it, here's my column about homestead tax deferral, which is basically a "mini" reverse mortgage without the fees.
Q. My father-in law is looking to gift some money to my wife and myself as well as our two kids this year. The money is coming from the United Kingdom. Would he need to send us a separate transfer for each one of us or can he send us one lump sum with a letter indicating that the amounts that he is gifting to each one of us Would there be any tax consequences? The gifts he is giving to my children will be placed in their 529 college savings plans.
A. Neither you nor your children will owe any taxes. Whether your father-in-law owes any will depend on UK law, assuming that's where he lives. Although the letter would document his intentions, I'd recommend three separate transfers to make it completely clear that he made separate gifts to each of you. You don't want the IRS to think that he gave the money to you and you gave part of it to your kids. Your best bet is to open 529 accounts for each child and then have your father-in-law make direct contributions to those accounts. And of course you and your kids should write some great thank-you notes!
If you're looking for help weathering the financial storms of life, Consumer Credit Counseling Services of Central Florida & the Florida Gulf Coast hopes you'll consider its umbrella. It offers budget and housing counseling and debt management programs. The new logo is part of an image upgrade that also includes a redesigned Web site.
(Photo Credit: Consumer Credit Counseling)
I get many questions about the taxability of gifts to individuals, so I wrote a column for today's paper explaining the ins and outs. Key points: 1. If a person gives you a gift, you don't owe any taxes on it. 2. The giver only owes taxes once lifetime potentially taxable gifts exceed $1-million.
Keep in mind that the free ride only applies to gifts from one individual to another. If a company gives you a bonus, a prize or some other type of gift, it might be taxable.
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Two big banks - Bank of America and Wachovia - control more than 40% of the market in the Tampa Bay area and statewide. Here's a look at how the banks rank based on size. The question for you is how do they rank based on service? Are you a satisifed customer of one of the big guys? Or do you eschew them in favor of the little guys? Since Wachovia bought out Golden West Financial, parent of World Savings, combined deposits now exceed those of Bank of America statewide.
Rank
'06 ('05) Institution Tampa Bay deposits Market share
1 (1) Bank of America $10.6-billion 23.50%
2 (2) Wachovia $7.8-bil. 17.11%
3 (3) SunTrust $5.8-bil. 12.82%
4 (4) AmSouth $3.5-bil. 7.66%
5 (5) World Savings $1.8-bil. 3.89%
6 (8) Raymond James $1.4-bil. 3.19%
7 (6) Colonial Bank $1.4-bi. 3.13%
8 (7) BB&T $1.2-bil. 2.72%
9 (9) Third Federal $1.1-bil. 2.38%
10 (11) Fifth Third $1.1-bil. 2.36%
Source: Federal Deposit Insurance Corp.
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Q. I am a elderly woman on a fixed income with no savings or assets. I've gotten myself into serious finanical trouble. I need advice and help but have no money to hire a lawyer. Can you give me some direction in order to get some help?
A. A good starting point would be to talk to a counselor at a consumer credit counseling agency. Find one affiliated with the National Foundation for Credit Counseling.
If you need legal help, you might make an appointment with the legal aid organization serving your community. Gulfcoast Legal Services serves Pinellas, Manatee and Sarasota counties, Bay Area Legal Services serves Hillsborough County and here are links to services in other areas. You also could call the local bar association serving your area and ask for a referral to a lawyer who has no charge for an initial consultation. Any of these approaches should get you started.
Since you have no assets, you probably are "judgment proof," which means there is nothing for creditors to seize or any way they can force you to pay. You can read more about it in this article about alternatives to bankruptcy. A lawyer who knows more about your circumstances can advise you on this.
The Times' Sunday and Monday business sections feature a two-part report on foreclosures and the risks posed by adjustable rate mortgages. You'll be hearing more about adjustables, particularly the controversial option ARMs, which start out with minimum payments that don't even cover all the interest accruing. They made it possible for many people to buy homes they otherwise couldn't afford, but now they're adjusting upward and some borrowers can't afford the payments.
We'd like to hear about your experiences with adjustables and your opinions about our stories. Please post them as comments here.
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Q. Within the past year or so you did a column on the little used conveyance of a home or real property using either POD or ITF. I can’t find the article in my files. I’ve tried to access the article by going to the St. Pete Times website and I pull up other articles by you but not this one.
A. You are remembering a column that I wrote about "Lady Bird deeds." This type of deed conveys the property to another person, but retains use of the property for life and most important, retains the right to revoke the deed. It is a version of the "payable on death" account and it is better than a traditional life estate. However, I do not recommend it. My recommendation is to leave the deed in your own name. Here's the article.
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Here's some good news for IRA owners who are over 70 1/2 and who don't need those annual minimum distributions they are required to take. Now you can donate the money to charity and avoid paying taxes. This special provision is in effect only for the 2006 and 2007 tax years, although Congress could decide to extend it or make it permanent. IRA custodians will have to work out the mechanics since the money must come directly from the IRA. (IRA checkbooks, anyone?)
You can read my column this Sunday for more details. Or if you have questions now, post a comment here.
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Q. Can you have insurance on $100,000 in deposits at different banks?
A. Indeed you can. In fact you can have insurance on more than $100,000 in one bank. The key is how you set up the accounts. Your IRA accounts at one bank can be insured for up to $250,000. "Payable on death" and trust accounts can be insured for up to $100,000 for each beneficiary. These limits are all per bank, so when you open accounts at a second bank, you start fresh. The FDIC publication, Your Insured Deposit, offers examples of how to structure accounts.
My husband and I celebrated our wedding anniversary this week, so I've got marriage on my mind.
My column last Sunday featured an engaged couple who sat down with a financial planner months before tying the knot. They went over their debts and assets and came up with plans for handling them both. I think the idea of meeting with a financial planner before marriage is a great one. Very young couples could use the advice to get started on the right path.