Archive for the ‘Finance’ Category
Saving a Buck Here and There Adds Up
By Cecil Scaglione
Mature Life Features
Every so often, Kiplinger’s Personal Finance magazine publishes lists of such need-to-know topics as how to keep more cash, invest $1,000, or retire as a millionaire without having $1 million. Among the most prevalent pieces of advice is how to get out of debt. You start by paying off all credit cards and then shopping around for cards with lower interest rates. You might consider a no-points home-equity line of credit to pay off those cards and then pay off the loan, which should be at a much lower interest rate than the credit-card debt.
Opportunities to save around the house are legion: switch to flourescent light bulbs, turn down the thermostat on your water heater, unplug that old refrigerator in the basement or garage, and install low-water-use shower heads and faucets. You can make a buck or two by holding an on-line yard sale.
Review your insurance premiums. Get rid of mortgage insurance if you don’t need it. Shop around to see if consolidating your auto and property coverage will cut down on premium costs.
Clip coupons for shopping and buy store brands as well as generic drugs. You can save a lot of money by buying a used car rather than new one. The higher the price of a new car, the more you save on a used model.
Also add to your assets by consolidating your investment portfolio to avoid multiple management fees. Tax breaks are available in the form of medical expenses, charitable donations, and mileage deduction for volunteer work. Don’t forget to deduct business expenses if you do any type of work or business out of your home. This includes phone bills, dues for professional memberships, and subscriptions, stationery, computer equipment, and postage.
Bear markets are an excellent time to make investments because stock prices are low. Lean times are good times to fatten your portfolio. Remember the first rule of business and investing: buy low, sell high. You also can invest small amounts of cash in items that you think might appreciate – wine, Persian rugs, or other collectibles-to-be.
Consider investing some time and money expert economic advice. Have a financial planner review your investments and prepare an opinion for you on which direction you should follow.
Mature Life Features, Copyright 2003
Who Do You Trust With Your Trust?
By Cecil Scaglione
Mature Life Features
Finding one or more trustees for your trust presents both emotional and economic problems. If you haven’t begun your search yet, start now.
Do you want someone in the family to handle all the responsibilities and conditions outlined in the trust that you, and your spouse and your attorney agonized over? Or do you feel more comfortable putting all this work in the hands of an impersonal professional?
Trusts are merely tools to help you with taxes and planning for the distribution of your estate. The costs and fees for preparing and managing a trust vary widely. So shop around.
Talk to an attorney. He or she will probably prepare the trust with you. You can name the attorney a trustee if you both agree. More likely, you will name one or two friends or family members as the main trustees. Some financial experts suggest you name an “outsider” as a backup trustee. This can be your attorney, a brokerage firm, your financial consultant, a mutual fund, or your bank. Banks still handle a major share of trust-account assets in the nation. This role reaches back to the days when customers and trust officers in community banks knew each other and established life-long relationships.
There should be provisions in your trust to replace a trustee who may become too expensive or who doesn’t perform his or her job according to the terms of the document. There also should be provisions allowing you or the beneficiaries of the trust to move to another state.
The trustee(s) you name can hire their own experts to help manage the trust. These duties include the responsibility of distributing the assets to beneficiaries, investing assets according to instructions in the trust, filing tax returns, and any other paper work.
Most institutions set the minimum trust size they will handle at $250,000. Those that accept smaller accounts may pool them together or invest them in mutual funds. The usual annual management cost is 1 per cent of the assets in the trust, although fees have been reported as high as 2 percent. The larger the account, the lower the percentage charged in most cases.
Before you begin shopping around for an institutional trustee, discuss the matter with your attorney, accountant, people you know who have appointed such trustees, and with the individuals you have named or plan to name as trustees of your assets.
Mature Life Features, Copyright 2003
Shop for your Retirement
By Cecil Scaglione
Mature Life Features
Instead of saving for your retirement, go shopping — for an income plan, that is.
Saving has such an onerous connotation to many of us. We think it requires discipline and deprives us of the immediate use of all the money we work so hard for. The notion of buying your retirement might ease the pain of the process, suggests the Financial Planning Association.
You’re going to shop a 401(k), individual retirement account, tax-deferred fixed annuity or some other plan that best for you. The money you put into that investment will be used for delayed purchases of groceries, vacations, medical treatment, family cars, insurance, clothing — everything you shop for and buy now. “Think of it as buying something on the lay-away plan,” said FPA member and San Diego certified financial planner Andrew Castiglione.
Act like your taking a trip to the Retirement Planning Mall. When you head to the megastores looking for a television set or refrigerator or winter jacket, you have an idea of what you want or need. Your study the colors and qualities of several models on your shopping trip, narrow down your choices, and finally make your purchase. Shop the same way for your retirement.
Do you want one with plenty of travel time or lots of hobbies? Are visits to your grandchildren high on the list of desired features? Are you thinking of moving or working part time? What medical-treatment options do you have in mind? It’s just like buying a TV set, in a way. You may not be able to afford the latest 60-inch flat-screen entertainment center and have to settle for a 32-inch model.
So you may not be able to afford a dream retirement, but you can avoid facing a nightmare if you shop as early as possible. Like, right now if you haven’t done it yet.
A retirement lifestyle that reflects your working-life standard of living will cost about 75 percent of the income you earn during your career, according to the FPA. Social Security and your company pension plan will cover part of that, but that’s not likely to cover it all. To get the best bang for your buck, buy your retirement plan as early as possible.
Mature Life Features, Copyright 2003
Frugality Firms Fiscal Muscles
By Cecil Scaglione, Mature Life Features
There’s a myth perpetuated in the saying “If you have to ask how much it costs, you can’t afford it.”
Nonsense. Even the wealthiest nabobs want to know the price of a product or service they’re buying. It doesn’t mean they won’t spend the money. They just want to know what value or return they’re getting for their money. That’s one reason they have money. They keep an eye on it.
Most people don’t know how much money they have in their pockets or purses. Even more have no idea how much credit they have on their cards. Those who know how much credit remains on their credit cards at any particular moment are pretty well nonexistent.
How do they expect to win at any financial game, which is measured in dollars, when they don’t even know the score? There are some simple economic exercises you can take to become fiscally fit.
For one thing, you can look at your credit cards to determine how much total credit you have. Then subtract your credit-card debt against that total find out how much credit you have left. And keep a running account of your available credit.
Then see how much money you have in your checking account. And in your savings account. Did you know what the totals were before looking? You shouldn’t have had to check. You should have known before looking.
If you didn’t know any of the above figures, it’s like playing a game of baseball, football, hockey, golf, you name it, and never knowing the score. How can you expect t be a winner?
Now count the money in your pocket or purse. Did you know how much you had? Put the change in a piggy bank, cigar box or whatever is handy. Never spend pocket change you carry home. It can accumulate and become a handy pool for spending for birthday or Christmas gifts.
All this is aimed at making you take account of every penny you spend. Do you leave the television set running while you take a shower? Or while you’re out cutting the lawn? Do you switch off the light when you leave a room? Why do you have two lights on in the same room? All this costs money that you can save by simply flicking a switch.
And it turns the spotlight on your money game.
Another exercise is the simple one your mother probably taught you: “gluing” the final small sliver of soap to a new bar. You can cut down the amount of laundry soap usage around the house if you wear those pair of casual jeans one day longer than you had planned. Same with that fleece vest.
These moves of economy stretch out to other areas. Why spend big bucks on movies when you can watch them on the Internet at home eating much cheaper popcorn? The same with pulling in books from cyberspace.
These simple moves should leave you with a clearer picture of what the money game is all about and lead you to more powerful exercises to help boost your financial fortunes.
Mature Life Features, Copyright 2003
Closet Collectors Cram Closets
By Cecil Scaglione, Mature Life Features
So you’ve completed a couple or more sets of 50-state quarters you began putting together for your grandkids, and decided to keep one or two packages for yourself.
What are you going to do with your collections? Will they sell for the profit you had in your head when you began? If you spend each set, you can buy $12.50 worth of something. You probably would have been better off buying each grandchild a $10 savings bond.
Collectibles just don’t cut it a lot of the time if profit is the motive. Pasting $1 bills into a book is a lousy idea. Inflation deflates their value over time.
A recently deceased relative left behind cartons of comic books and baseball cards. His heirs haven’t found it worth their while to catalog the collection and have it appraised.
During a neighbor’s family visits back to northern Canada, resolves were made to rent a vehicle to transport antiques and collectibles back home to California to be sold to provide for a comfortable retirement. After getting over the wishing, a cold calculating look at the costs involved usually trumped the emotional ardor and gave way to common business sense.
The point is that collectibles are not only in the eye of the beholder, they’re also in the heart of the collector. They usually offer more thrill in the hunt and satisfaction in the acquisition than profit in the purse. They provide the collector with a circle of like-minded colleagues to discuss likes and dislikes, as well as the opportunity to brag about the latest addition to one’s collection. But you can conduct the same spirited exchanges over your favorite book, movie or sports teams without having to spend time and money tracking down another piece of cloisonné for your collectible closet.
If you enjoy the hunt and your chest swells with pride when you add to your hoard, you contain the core of a collector. And there are always new “hot” items to boost you up the ladder of collecting society.
For example, it seems that almost anything from an old gas station – those roadside oases that began sprouting about a century ago – has become popular despite environmental activists’ aversions to gasoline-gulping sports utility vehicles. As items such as the solid glass gasoline-pump globes become more scarce, their prices rise. So does the number of reproductions that appear at flea markets and in collector catalogs.
As electronic slot machines become the norm in the ever-expanding coast-to-coast casino industry, the old one-armed bandits with those old-fashioned mechanical spinning reels have taken on new value because some collectors began coveting them. Jukeboxes have been a favorite among collectors for several decades now, especially since compact disks have all but eliminated the old black plastic records.
The best way to find out if what you’re collecting, whether it’s little red wagons or ceramic salt and pepper shakers, can make you any money is to check catalogs, flea markets, and Internet sites for that particular item. If you already have a collection built up, you should have some idea of what the items are worth and how prices have risen since you began collecting.
You can test the waters by pricing similar items at swap meets or trying to buy one on the Internet.
Mature Life Features, Copyright 2003
Find Someone to Trust for Your Trust
By Cecil Scaglione
Mature Life Features
Finding one or more trustees for your trust presents both emotional and economic problems.
Do you want someone in the family to handle all the responsibilities and conditions outlined in the trust that you, and your spouse and your attorney agonized over? Or do you feel more comfortable putting all this work in the hands of an impersonal professional?
Trusts are merely tools to help you with taxes and planning for the distribution of your estate. The costs and fees for preparing and managing a trust vary widely. So shop around.
You’ll need to talk to an attorney. He or she will probably prepare the trust with you. And you can name the attorney a trustee if you and he/she agree. More than likely you will name one or two friends or family members as the main trustees. Some financial experts suggest you name an “outsider” as a backup trustee. This can be your attorney, a brokerage firm, your financial consultant, a mutual fund, or your bank.
There should be provisions in your trust to replace a trustee whot may become too expensive or doesn’t perform his or her job according to the terms of the document. There also should be provisions allowing you or the beneficiaries of the trust to move to another state.
The trustee(s) you name can hire their own experts to help manage the trust. These duties include the responsibility of distributing the assets to beneficiaries, investing assets according to instructions in the trust, filing tax returns, and any other paper work.
Most institutions set the minimum trust size they will handle. Before you begin shopping around for an institutional trustee, discuss the matter with your attorney, accountant, people you know who have appointed such trustees, and with the individuals you have named or plan to name as trustees of your assets.
Mature Life Features. Copyright 2003
Financial Planning Akin to Root Canal
By Cecil Scaglione
Mature Life Features
If you think preparing and maintaining a financial plan is akin to a visiting your dentist, you’re in a big club.
More than 80 percent of Americans hate or only do financial planning because they have to, like cleaning the garage or the toilet bowl, according to a nationwide NFO Research Inc. survey of 1,000 adults aged 19 – 64.
More than half said they don’t feel confident about making good decisions, don’t understand numbers, or are afraid of what they might find if they examine their financial picture too closely.
“It’s hard to feel confident in your ability to manage your finances if you feel like you don’t make enough money,” said Randy Schuldt, a vice- president with IHate-FinancialPlanning.com, a website designed for people who dread financial planning. The survey was conducted by his firm.
Rather than shut down your economic engine, the company suggested you prepare for you financial future just as you would for a cross-country trip.
Just as you wouldn’t leave on such a trip without a road map, you should prepare and maintain a household budget to track daily spending, saving, and investing, and a financial plan to map out long-term financial goals.
Fifty percent of Americans maintain a household budget and only slightly more balance their checkbooks monthly, according to survey results, and more than 65 percent have never worked with a financial planner.
We hire plumbers, electricians, and auto mechanics to handle complicated repair problems but avoid seeing a financial professional to help with one of the most important aspects of our lives – finances, according to company spokepeople..
Survey figures present a rather bleak picture. Almost 20 percent of the respondents said they never learned how to do financial planning. Less than 5 percent actually took a course or seminar on the subject. The remainder said they learned about financial planning on their own by watching their parents or television, reading books and magazine articles, or from a friend or sibling.
Thirty percent said their parents never talked to them about money.
The survey revealed it often takes a serious life-altering event, such as a job-loss, having a baby, winning a lottery, or sending the children to college, to make people focus on their finances.
The purpose of financial planning, Holman said, is to reduce the stress in such situations.
While many Americans try to save money, they sabotage their efforts with too much debt and not investing in the best financial vehicles.
Almost a quarter of the survey respondents admitted they had too much credit-card debt, 14 percent do not have any money saved anywhere, and 12 percent are not putting anything away for retirement despite the fact that more than half said they’ll need at least $1 million for retirement.
Less than half contribute to a retirement account at work and 30 percent save money, whether its in coins or dollars or in a cookie jar at home — about the same amount that invest in stocks.
To curb the amount spent, nine out of 10 respondents said they clip coupons, 70 percent eat leftovers, and 60 percent buy items only when they’re on sale. What do they spend their money on? The number one financial pleasure is eating out, followed by spending too much on holiday gifts, and splurging on clothes.
Mature Life Features, Copyright 2003
‘Tis the holiday season …
… better known as “It’s Debt Time of Year Again.”
— Cecil Scaglione, Mature Life Features
Beware of Greeks …
… receiving gifts, to apply a present-day twist to an ancient adage.
Instead of disarming their foes with the legendary gift of a large wooden Trojan horse, their leader turns his back on a bailout by their friends in the European Union and threatens to topple the entire global economy.
— Cecil Scaglione, Mature Life Features
Lean Financial Times Fatten Scam Artists
By Cecil Scaglione
Mature Life Features
Uncertain economic times are playtimes for con artists.
While the crooks are around all the time, they feast on the fear and greed that grips everyone when the stock market goes south, pensions shrink, and investment portfolios get sucked dry. Add other types of events such as flailing governments, terrorism, and natural disasters that include hurricanes, floods, and droughts that are fallow financial fields for scam artists.
There is no official estimate of how much money is bilked from Americans each year by a variety of crooked schemes, but most experts agree that it spirals into the billions of dollars.
In the wake of the Sept. 11, 2001, terrorist attacks involving four U.S. airliners that killed some 3,000 Americans, the number of sleazy schemes multiplied. They all sounded full of promise.
In North Dakota, investors were milked of more than $2 million by a small group of salespeople linked with a local pastor who used religious and family ties to assure the victims they could achieve financial returns up to 300 percent. They were promised access to investment secrets of the world’s elite banks and their portfolios.
Schemers also preyed with victims in Indiana, where some 20 elderly investors were bilked of $1.4 million in a promissary-note scam. The folks were promised returns up to 12 percent on their money. Instead, it was funneled into off-shore bank accounts used by the perpetrators to subsidize a high-flying life style.
Also rampant are liars who laud little-known stocks with the expert assurances that they are bound to increase in value when the dust settles after these disastrous times end.
The biggest target for all these wolves are seniors.
Another sleazy scheme involves a referral from someone you know who already has made money on what he or she is about to recommend to you. All you have to do is come up with $20,000 or $30,000 and double it in a month or so.
The catch, you’re told, is that it’s not quite legal because it’s a tax dodge. The money will be used to buy high-ticket automobiles in a foreign country and bring them into the United States without paying import duties.
You feel comfortable because you’ve been given all the inside information you need. And your friend made money on this already. What you don’t know – and your friend may not realize, either, if he or she goes for the proposal again – is that the original deal was the “come-on.” That was the bait to lure you, and others, into the scheme.
This time, the crook will come back with some problems. One scenario is that the scam artist will report the vehicle, or vehicles, were stopped at the border and everyone involved in the deal has to come up with another $5,000 or $10,000 to pay taxes and penalties. Then he may come back for more money, claiming the truck driver needs a lawyer you’re going to have to pay for or the driver’s going to implicate you.
You’re relief may come in the form of an explanation that your money is gone but the trucker isn’t going to talk so you have no tax worries. That way, you drop the whole matter and forget the loss.
Because you feel you’ve been part of an illicit and illegal deal, you don’t go to the police or the government. These crooks are free to feast on another group of fiscal “fish.”
There are variations of this con, ranging from scalping tickets for concerts and sporting events to fencing stolen goods.
Another insidious scheme that lures seniors is the work-at-home scam. The crook convinces you there are ways to make money by working at home. Legal analysts can tell you the crooks make more than $30 million a year in this scam.
Victims usually are the elderly who need to supplement their fixed retirement income.
The prevalent schemes require victims to buy something up front – some materials, a manual to follow, or a mailing list – at prices as low as $40 or so.
The problem, of course, is that what you purchased may not be worth a cent. For example, the mailing list probably is old and already has been sold to hundreds, or thousands, of other people. Or the company from whom you bought the envelope-stuffing program may only pay you for recruiting other envelope-stuffers.
If you buy some material to make handicraft articles at home, you probably will never get a penny because you’ll be told that the results of your work don’t meet the company’s standards.
There are a couple of simple rules to follow if you’d like to avoid getting conned.
One is, if it costs money up front, it’s probably not a good idea.
Two is, if it sounds too good to be true, it probably is too good to be true.
And then remember the words of W.C. Fields, who covered both sides of this matter. In one breath he said, “Never give a sucker an even break.” And then he said, “You can’t cheat an honest man.”
Mature Life Features Copyright 2003
Mature Life Features 