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By Rosemary White, January 19, 2012 12:58 pm

I’m always really leery of freebies.  I always assume there’s a catch…somewhere…somehow.   And so it was when I got my T-Mobile Value Visa Prepaid Card in the mail from Citibank.  What are they up to?

With a balance of $25 on the card, the letter said I can use the pre-paid debit card at any retailer that takes VISA.  (Does this mean I can use the card and maybe win ten Super Bowl tickets like in the TV commercials?  Now that would be of interest!)  I can spend the $25 at any T-Mobile store, of course or I can just go across the street to the Citibank branch and get the $25 in cash.  Why don’t they just call it a gift card?  I received the debit card because I added mobile broadband for my laptop so I don’t have to be limited to just mobile hot spots.  It was clear from the mailing, Citibank is targeting younger consumers with this offer.  Oh well.

This must be a lost leader for both T-Mobile and Citibank.  T-Mobile is probably counting on people coming to their stores and spending more than the $25 face amount.  I can’t imagine that T-Mobile coughed up the money.  I suspect Citibank wanted access to some of T-Mobile’s customer list and offered to provide the debit cards and the corresponding $25.  Even if 100,000 debit cards were issued, each valued at $25, that’s a potential cost of $2,500,000 for Citibank.  A drop in the bucket for them, I’m sure.  Even if only 20,000 people activate their cards, Citibank is sure to make money on its investment.  People who activate, but forget to use the card will get charged a $3 monthly fee.  Taking a cash advance generate additional fees.   Plus the bank has tens of thousands of possible new customers for credit cards, banking and other services.   Citibank will probably get that $2.5 million back before the end of the first quarter.    And T-Mobile?  New revenue through additional sales and, who knows, maybe the company was paid a fee by Citibank to get access to its customer list.

So, in the end, rather than being on anybody else’s mailing list, I decided not to activate the debit card and do what I always do with plastic that comes in the mail.  You might want to consider doing the same.  Until next time, here’s to good planning!

I'll Be Mailing It Back...

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By Rosemary White, January 12, 2012 10:09 am

There’s a new report that’s raising serious concerns about the risks we may all face when calling customer service centers.  The issue is whether the representative you’re speaking to is located in an off-shore call center.   Unlike the United States, most countries don’t have legal safeguards against fraud and identity theft.   I don’t know about you, but I don’t want my credit card information being stolen by someone in another country.

Getting the most attention are India and the Philippines, two countries that have the largest number of call centers used by U.S. corporations.  India did pass data privacy laws last year but the Indian government specifically exempted outsourcing companies from having to comply with the law.  The Philippines has no data protection laws and has seen more growth in their outsourcing business as more and more Indian call center work is being “sub-outsourced” to them.   Workers in the Philippines, apparently, are cheaper than those in India.  And, most foreign companies do not do background checks on those they hire.

What can you do?  

               *  When you are on the phone and about to use your credit or debit card, ask where the customer service representative is located.  If he/she is honest and acknowledges being outside the U.S., maybe there is another way to pay for your product.  Inform the rep of your concerns.  “Nothing personal, but I’m concerned about identity theft.”

                *  Support The U.S. Call Center Worker and Consumer Protection Act, a recently-introduced bill in Congress (Rep. Tim Bishop, D-NY) that has bipartisan support.   Contact your Senator and Congressperson.  This legislation would make American outsourcers ineligible for guaranteed federal loans and grants for five years.   Non-U.S. customer reps would have to disclose their location when asked by American callers and would have to transfer the call to an American call center if the customer requests it.   

Given the lack of safeguards for American consumers, you could be financially devastated if your information is stolen.  The United States has no authority to pursue restitution in other countries.  The report was written by researchers for the Communication Workers of America, a union that represents more than 150,000 call center workers in the United States.  The union says more than 700,000 American call center jobs have been outsourced by U.S. companies in the last several years.    Stay safe out there!  Until next time, here’s to good planning!

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By Rosemary White, January 4, 2012 3:59 pm

Happy 2012!  The holidays are now behind us so it’s a great time to turn your attention to your finances.  There may have been several things about money you weren’t thrilled about in 2012.  If you don’t make some course corrections in 2012, you’ll most likely end up at the same place this time next year.  Take the reins now and don’t let that happen.   My first suggestion is to figure out where your money goes every month.  Get yourself an online budgeting system.

I have used one for a while now.   There are many options out there… Mint.com and BudgetSimple.com come to mind.  Whatever you use, you’ll be amazed at how effective it is if you take a few minutes each month to enter in your correct income and expenses.  There’s no need for fibbing…nobody will see this but you.  But I think you’ll find that by tracking your expenses, you’ll be able to see patterns in your spending habits which, in turn, will help you focus on reducing unnecessary spending.   Do you eat out too much each week or buy a fancy coffee drink two or three times a week?  That only lightens your wallet and expands your waistline. 

So, try an online budgeting system as one New Year’s resolution.   Give it your best effort for at least two months.  I think you’ll be amazed and encouraged about how you can take control of your spending.   Next, increased savings should be on your plate…not that fancy bagel.  I’d be interested in which system you end up using.  Good luck.  Until next time, here’s to good planning!

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By Rosemary White, December 16, 2011 7:15 am

There’s not many trading days left in 2011.  But there’s still time to sell those losing stocks and take your losses on next year’s tax return.  It’s called tax loss harvesting and most people wait too long.  It’s basic human nature, I guess.   If you bought a stock at $20 per share, and it’s dropped to $12, you figure your loss is only on paper.  If you just hold onto it long enough, the stock will return and then surpass your original cost.   That often doesn’t happen.

There’s the January Effect that some researchers support.  That’s where stocks that drop in one year tend to outperform in January of the following year.  But the January Effect may be partially due to tax loss harvesting that investors partake of.  Lots of people selling particular stocks…the selling puts downward pressure on the share price so the stocks drops even more.  Then, in January, the price starts going up.  This is where your particular situation becomes important.  Are the stocks you’re eyeing to dump still a good fit for your overall portfolio?   How’s the long-term outlook for the affected industries?  Would selling the downers help on your income taxes.  Remember you can deduct up to $3,000 of tax losses a year and you can carry over any unused losses for as many years as it takes to use up all those losses.   Work with your financial and tax persons.

The S&P 500 is roughly 5% below where it started 2011.  So, give this another look.  Good luck.  I’m taking the next couple of weeks off from blogging.  In the meantime, I hope you and your family have a wonderful holiday and a Happy New Year!  All the best in 2012!

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By Rosemary White, December 14, 2011 12:53 pm

The answer is a very big “most likely”.  If you’ve bought anything on Amazon.com, I’m sure you’ve probably noticed that you haven’t had to pay any sales taxes.  That’s generally been the case for most online retailers.  Federal sales tax policy requires a “physical presence” in a state before sales tax must be paid.  But Amazon has been pushing federal legislation that would permit states to collect such sales taxes.  I guess it’s been inevitable but it does seem odd Amazon would take such a position.  Amazon is, of course, one of the largest internet retailers.

California passed a law earlier this year that allows for the tax collection, but Amazon was able to negotiate a start date of September, 2012.  I think they want a federal law so all online retailers have to play by the same rules.  Florida, Indiana and Connecticut have followed California’s lead.  More state are sure to follow.  So, getting a national law passed may eliminate the sales tax patchwork that would be sure to exist.  So, that’s why the Marketeplace Fairness Act has become Amazon’s #1 priority, other than increasing sales, of course.  So, stay tuned.  It’s just another reason to shop around and get your best deal.  You may have an additional tax to pay.  Until next time, here’s to good planning!

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By Rosemary White, December 9, 2011 10:12 am

I never thought I’d say this, but home mortgages have become even cheaper. This summer, economists and real estate industry analysts looked at skidding Treasury yields and wondered just how much further interest rates on home loans could fall.  The answer: perhaps even further.

On November 17, interest rates on 15-year adjustable rate loans averaged just 3.31%. Rates on conventional 30-year home loans averaged 4.00%, and average rates for 5/1-year ARMs and  1-year ARMs were respectively at 2.97% and 2.98%, according to the U.S. government.  I remember being thrilled, almost 30 years ago, getting my condo refinanced at 10.75%.  That was the going rate in the early ’80s. 

Those able to refinance are seizing the moment. If you can do it, keep your long-term goals in mind. Years ago, a refi came down to one factor: if you could knock a couple of percentage points off your interest rate, you did it. Today, it’s a bit more complex. There are three aspects to consider: a) how much you can save per month, b) lender points and fees, and c) how long you intend to live in your home.

How long will rates stay this low? It is truly hard to say and recent history has illustrated that. On April 10, 2010, a New York Times headline blared: “Interest Rates Have Nowhere to Go but Up”. At that time, the average rate for a 30-year fixed mortgage was 5.31%. Look where it is now.  Interest rates will move significantly north at some point, so a window of opportunity beckons – and no one really knows how long it will stay open.

Think before you make a move. Before you get out that pen and sign anything, talk about your options for refinancing with a qualified mortgage specialist, and talk to your financial consultant to see how your choice to refinance relates to your overall financial situation.

The spouse and I are, thankfully, within spitting distance of having our home paid off.  That will be a big day…maybe worth a party.  But if we had more time left, we’d seriously consider refinancing.  If you choose this option, I hope it goes without a hitch.  Until next time, here’s to good planning!

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By Rosemary White, December 6, 2011 2:58 pm

OK…there’s less than 30 days before the end of 2011.  That means, you don’t have much time to think about what you need to do to save money on your income taxes next April.  I know you don’t want to think about from Form 1040, but what if you could save some money?  So, here are a few quick ideas for you to ponder before December 30th (the 31st falls on a Saturday):

   *  Are there any investments you can sell that will generate a loss?  You can claim investment losses up to $3,000 per year and anything over that amount can be carried over from year to year to offset gains.  Nobody knows what the capital gains rate will be after 2012 (currently 15%), so even if you sell an investment and have no losses to offset, the tax owed may be minimal and worth paying if you need to cash out of something

   *  If you’re self-employed, 2011 expenses must be taken by the end of this month if you want to reduce your taxable income.  If you’re able to project income this year vs. next year, will you get a bigger bank for your buck if you bunch your expenses after January 1st? 

   *  Energy credits were extended through 2011.  If you install insulation, windows or energy efficient heating or air conditioning units may qualify for up to $500

   *  Section 179 for business owners.  This one allows you to write off up to $500,000, but only through the end of the month, for machinery, equipment and vehicles placed into service.  In 2012, this drops back to $125,000

   *  If you are able to prepay college tuition for some of 2012, you may qualify for the American Opportunity Tax Credit.  The maximum credit is $2,500.  You’ll have to have an Adjusted Gross Income of $160,000 if you’re married and filing jointly or $80,000 if you file as a single.  This would ease the pain of big tuition bills

These are just a few ideas to think about.  But don’t think about it too long.  Be sure and check with your tax preparer to firm up your course of action.  As with so many things in life, a little planning goes a long way.  Good luck.  Until next time, here’s to good planning!

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By Rosemary White, December 2, 2011 11:08 am

I was pleased to hear of the indictments recently of two midlevel staffers at a Nevada mortgage document company.  The two told employees to forge signatures and falsely notarize documents on more than 600 illegal home foreclosures between 2005 and 2008.  This is the first case of “robo-signing” ending in prosecution.  It’s about time.  Nevada, you may know, has had one of largest number of foreclosures in the country.

The two were employed by Lender Processing Services.  They haven’t been arrested as yet, but the Nevada attorney general has set bail at $500,000 each.   The company, while cooperating with authorities, insists there were no wrongful foreclosures.  There’s no indication the authorities are going to focus on the company owners…those who designed the system.

There is a coalition of state law enforcement officials working with the Obama administration in an attempt to forge a settlement with big banks over their role in robo-signing.  But the attorneys general in New York and Delaware think the settlement would let too many of the big banks off the hook for much of their dealings with struggling homeowners.  Stay tuned.  Here’s hoping those wheels of justice start moving faster.  Until next time, here’s to good planning!

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By Rosemary White, November 29, 2011 9:02 am

Well, here’s a new one:  buying someone’s pension income.  The Wall Street Journal first reported on this practice a couple of weeks ago and now it’s caught the eye of a United States senator so I’m hoping the practice can be curtailed before it gets out-of-hand.  Here’s how it works:  members of the military or other retirees sell some or all of their monthly pension income in exchange for a lump sum payment now.  There are a number of web sites that have sprung up in recent months trolling for Americans who are struggling in the tough economy and see this as a way to improve their current cash flow.   Problem is, once they reach retirement age, and accounting for inflation, their cash flow then will suffer greatly…when they need income the most and may not be employable due to age or health.  

Normally, pensions cannot be “assigned” to someone else (unless it’s set up as a Joint and Survivor pension, usually through heterosexual marriage).  In this case, it’s the pensioner who is receiving his income and assigning that.  Sen. Tom Harkin (D-Iowa) wants to make sure people have the information they need to make a wise choice now and not end up being a victim to illegal or unscrupulous practices.   Preying on people to make a buck.   Businesses wouldn’t do that, would they?  Right.

And the attraction for investors?  The promise of a higher return.  With bond yields low and the stock markets volatile, investors are told they can earn 6% – 7% a year.  The money they invest is returned over a period of up to 10 years.  The problem for investors, however, is that that pension income may not be there as promised.  If the pensioner breaks the contract or files for bankruptcy, then the investors will have to take a number in order to get repaid. 

So, if someone you know is thinking about selling future pension benefits, don’t let them do it.  This is what friends are for!  Until next time, here’s to good planning!

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By Rosemary White, November 18, 2011 8:54 am

It’s that time of year when I start offering tips on becoming a better shopper.  While the economy is improving slightly, it’s still a bit of a landmine out there:

   *  Push for free shipping.  According to the National Retail Federation, 93% of retailers will be offering it, but they may be mixing things up by throwing in coupon codes.  The code may require that you spend a minimum amount or maybe some items will not be included.  Shopping around online should bring you some big savings

   *  Utilize your smart phone.   If you’re in a store and you see what appears to be a good price on an item, comparison shop online right there and then.  THIS will make things interesting!   If you can find a better deal, show it to the sales clerk.  You may get a price match right on the spot

   *  Keep the gift card offers in mind.   Some retailers are offering to throw in a gift card if you purchase certain products.  Don’t automatically get swept off your feet, however.   If you’re able to find a price online (with free shipping) that makes up for the gift card then it might not be worth your while.  Of course, convenience is a consideration, too.   You may not want to spend time placing the online order

   *  Cyber Monday just won’t be the same.   Given the economy, many more retailers are looking for increased sales.  And, many are already offering very attractive deals.   So Cyber Monday may not be much better, especially if you can’t get free shipping.  So, consider your gift list and try to get the best deals you can early

The best advice I got years ago on holiday shopping:  make a list and stick to it.  That way you’ll be less likely to get carried away and spend more than you’ve budgeted.   You do have a budget, don’t you?  Until next time, here’s to good planning!