Personal Finance Blog — Page 18 — Tips And Stories To Help You With Managing Money

Congress Reluctant To Fix Data Leaks

October 25, 2017 By Twila Van Leer

With the country reeling from the effects of the Equifax data breach, which gave hackers access to personal information of an estimated 43 million Americans, Congress still seems wary of regulations to try to prevent further episodes of the sort.

In fact, under the leadership of President Trump, Congress has been repealing the new bank laws passed after the 2008 recession that resulted in an economic crisis. More than a dozen of the Obama-era laws, designed to prevent future meltdowns have been repealed.

Very serious hacking incidents at businesses such as Target, Yahoo, Neiman Marcus and Home Depot also have failed to move Congress to action. The argument is that too much regulation in the business arena could stifle economic growth.

Consumer watchdogs such as Consumer Reports have said they can’t imagine what would have to happen to have the federal lawmakers take steps that might impose tougher data security regulations. The advocacy groups are lobbying for such measures. They hope for higher standards for companies that store personal information of customers and for immediate notification to those customers when breaches occur.

Republicans in both houses of Congress say they are gathering facts and that the issues will be on their agendas in October. Democrats are watching to see what will happen and some are calling for measures that will protect Americans from further thievery of their private information.

Among proposals being tossed about is a bill that would require a credit reporting company to immediately inform all affected consumers in the event of a data breach and to freeze the affected accounts without charge. A freeze is the most effective move a consumer can make to prevent the illegal use of the information that has been hacked, but it complicates personal financial decisions.

ATM Fees at Record Highs

October 24, 2017 By Twila Van Leer

Makes you wonder, doesn’t it? Why should you pay a fee to access your own money. But the fact is that fees for withdrawing money from an out-of-network ATM are now 55 percent higher than they were 10 years ago – and rising.

The average cost now is a record $4.69 per transaction, according to Bankrate.com, which did a survey to reach its conclusions. And the fees are likely to continue rising, Bankrate officials say, as fewer people use cash and make fewer withdrawals from the automatic tellers.

Banks that have ATMs on the premises are charging more to non-customers who use the machines to make up the difference.

The five cities that have the highest charges for out-of-network ATM transactions are : Pittsburgh, $5.19; New York, $5.14; Washington D.C. and Cleveland, tied at $5.11; and Atlanta, $5.05.

Rises in overdraft fees also are costing consumers more to handle their money. The average fee hit a new high this year of $33.38 per bounce. Philadelphians pay the heftiest fee at $35.30, while in San Francisco, the fee is $31.44 on average.

You can avoid fees by being proactive about your money, Plan ahead if you need to make an ATM withdrawal and avoid machines that are not in your bank’s network. Be aware of where you can make free withdrawals or get change when you make purchases with your card. Use your phone to find out where the ATMs in your network are available. Make a habit of carrying a small amount of cash. Find a bank that doesn’t charge ATM fees.

Avoid overdrafts by keeping close tabs on your balances. It’s as easy as making a smartphone check.

Getting signed up for email or text alerts that let you know you are approaching the level where your balance is chancy is smart. Fees are a waste of your money, so avoid them every chance you get.

Middle Class Is Moving Up

October 22, 2017 By Twila Van Leer

“The national median household income rose to $59,039 — an increase of 3.2% from the previous year and the American middle class’ highest income level to date, beating the previous record of $58,655 in 1999 (all numbers are adjusted for inflation).” 2017 Business Insider

America’s middle class is moving up the financial ladder. But they can’t outpace the wealthiest Americans in economic growth, according to a Federal Reserve survey.

The figures show that the net worth of all American families rose 16 percent from 2013 to 2016. The median is the point at which half are above the figure and half below.

The time frame for the survey represents the recovery period after the 2008 recession. During that time, wealthy Americans saw more economic improvement than those in the middle class and whites saw more positive growth than either African-Americans or Latinos.

Two factors that have contributed to the improvement are the declining levels of unemployment and the recovery of the housing market, which has shown steady growth for the past few years.

The Survey of Consumer Finances still shows significant gaps between the middle class and the wealthy, economic gurus say. The middle tier is taking longer to recover from the recession. Those with wealth contribute more to the 16 percent improvement overall.

African-American families showed more improvement in net worth than did white families, the survey found. Median wealth for an African-American family was $17,600, up 29 percent since 2013. The increase for white families was 17 percent.

But white families enjoyed median wealth 10 times greater than for the African-Americans at $171,000. The white families also had median wealth eight times greater than Latinos. The median incomes for middle-class whites rose only 6 percent, but still easily outstripped the medians for other ethnic groups.

Median wealth for the richest 10 percent of the overall population rose by 40 percent, the survey showed, to $1.63 million, a disparity that would be hard to diminish quickly. That means that nearly 39 percent of all U.S. wealth is now held by 1 percent of the population.

The survey also divided people by where they live. City-dwellers saw median income increase by 10 percent and those outside cities just 2 percent.

Graduating From College? What Next?

October 21, 2017 By Twila Van Leer

There’s an interesting dichotomy related to the college grads who are diving into first post-college jobs this spring. The majority, 69 percent, have student debt and almost exactly the same percentage, 70, said their college didn’t prepare them for real-world personal finance decisions.

Finance leaders/researchers Experian and KeyBank both reached the same conclusions. Bottom line, about one in five graduates has a sense of their financial goals, but are not certain how to reach them.

Based on the numbers, KeyBank offers these insights to grads and those who share a financial link with them:

Budget. The first paycheck post-grad may look large, especially compared with the part-time, campus and vacation jobs that are typical for students. New realities call for new budgets. Be sure to include all income and all fixed expenditures, including student loan payments, rent, utilities, transportation, clothing (Your new status might mean a new wardrobe), insurance, food and other necessities. Then work on a budget that leaves 10 percent of your income unencumbered so you can begin saving. If necessary, make lifestyle changes to support your decisions. Learn early the difference between wants and needs.

Establish a savings strategy. Small but consistent steps will eventually make noticeable results. A three-pronged approach provides for short-term goals, long-term goals and retirement. Keep an emergency fund intact, building up to a three- to six-month cushion. Try to have sufficient savings that you don’t have to use a credit card for car repairs and other unexpected expenses. Take advantage of your employer’s 401(k) plan if they have one. Start with the minimum necessary to trigger the employer match and increase your contribution by 1 percent per year until you are saving 10 to 15 percent of your salary. Learn about investing and when you are able, start. Know about compounding and be patient. A small investment, well-managed over time, can become a substantial nest egg against retirement.

Take a crash course in credit, preferably before you need to use it. It’s part of the financial reality for the majority of Americans. Know about credit ratings, how they are calculated, how you can protect your own and how you can maintain a respectable score that will kick in when you want to purchase a home, car or other top-ticket item. You’ll hear talk of “good credit” and “bad credit,” but what it boils down to is good or bad credit management.

Look Before You Jump Into A Car Lease

October 19, 2017 By Twila Van Leer

Leasing a car rather than purchasing one outright may be a cost-effective choice, but there are some fine details that might trip you up. Be sure you read the fine print before signing.

Consumer advice experts at Edmunds.com offer these tips to help you make an informed choice:

You may be asked to pay a hefty fee up front to qualify for the comparatively low monthly payments. Repaying may become a problem if anything should happen, such as theft of the vehicle or a wreck. The insurance company would reimburse the leasing company for the value of the car, but the money paid up front likely would not be reimbursed to the lessee.

The advice is not to pay more than $2,000 in advance, and less if possible. That would increase the monthly payment, but you’d have the option of putting the “pre-lease” amount into 1:18 AMan interest-bearing account. Or use what you have to help make the monthly payments. If something happens to the vehicle during the lease term, you won’t lose a chunk of money to the dealer.

“Gap insurance” is a very good idea. It covers you if the vehicle is stolen or totaled and your regular insurance doesn’t cover the full amount of its value under the lease terms. Like all vehicles, a leased car loses value as soon as it leaves the lot. Ask before the lease is finalized if the contract includes gap insurance. If not, you may want to keep looking for a lease plan that does.

Underestimating the miles you have driven in a leased vehicle could cost you. Many leasing companies base their low monthly payments on a low mileage limit. When you turn in the vehicle, the overages on mileage could add significantly to the cost. Ask for a higher limit to begin with if you are pretty sure you’ll run over the mileage limit. That could result in a higher monthly payment. Balance it out before signing.

If you fail to maintain the vehicle, you could pay more for wear and tear when you turn it in. A rule of thumb: If a scratch or ding is larger than the size of a driver’s license or business card, it is likely to fall into the category of “normal use.” Be aware of the leasing company’s standards before you get into the deal. If there is significant damage, you can expect to pay in full.

Leasing for a long time may entail additional costs. After the car passes beyond its warranty, usually three years, any costs for maintenance, such as brakes and tires, becomes your responsibility. You are then putting money into a vehicle you don’t own. You pay those costs over and above the lease cost.