Personal Finance — Some tips to help

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(From USA Today on Sunday, June 25, 2017)

From Robert Powell who suggests, “If you have to go it alone, use these tips to help you get started.” (See USA Today for full article.)

  • Knowledge is power
  • Build a budget
  • Set goals
  • Save as much as you can, as early as you can
  • Maximize the benefits you already have
  • Work with an adviser
  • (Powell is editor of Retirement Weekly and contributes regularly to USA Today.)

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Positive trend for small businesses

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(From USA Today and 2017 American Express OPEN Small Business Monitor survey of 700 USA small-business owners. Credit Jae Yang and Paul Trap, USA Today.)

Forty-five (45) percent of small -business owners are worried about their ability to save for retirement , down from 53 percent last year.

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Remote workers’ fear — “love”

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Psychologist Maxine Schnall once said, “Never love anything that can’t love you back.” Thus, one in six people have had a harder time “breaking up” with their car than ending their first relationship (CarMax survey of 3,044 drivers 18 and older) from USA Today – Michael B. Smith and Paul Trap.

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Sixty-two percent of remote workers fear that other employees do not think they are working as hard as them. (Polycom survey of 25,234 employees) from USA Today – Jae Yang and Janet Loehrke

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Finance by the numbers…

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Reasons people age 50 and older give adult children money — according to Robert Powell, USA Today

  • Don’t know. Just give money = 36%
  • Rent/mortgage/home purchase = 20%
  • Cellphone bill = 18%
  • Purchase or lease a car = 17%
  • Education expenses = 15%
  • Health care expenses = 15%
  • Pay down debt = 13%
  • Insurance = 11%
  • Student loans = 11%
  • Credit card bills = 10%
  • Legal matter = 9%

Credit score analysis from Experian and Jae Yano and Janet Loehrke, USA Today

  • Payment history = 35%
  • Amount owed = 30%
  • Length of credit history = 15%
  • Credit mix = 10%                         
  • New credit = 10%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               [To comment: larry@larrylitwin.com]

Emergencies happen — here’s how to be prepared

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As warmer weather approaches, more travelers will be hitting the road, rails and airways. Not long ago, The Philadelphia Inquirer carried some hints from Shary Nassimi, creator of the UrgentCall emergency service mobile app. She offers Seven Ways to Be Prepared for a Travel Emergency:

  • Give your loved ones your emergency contact information.
  • Carry your health insurance card.
  • Set up and have medevac insurance so you can get airlifted to a medical center that can provide proper medical care.
  • Leave copies of your plans with someone at ho,e and tell someone where the copies are.
  • Carry money wisely and in multiple form. Do not just carry it all in your wallet or only as a card or cash. Mix it up. Put some money in your suitcase. Don’t just keep it on your person. Have a credit card on hand for emergencies.
  • Know the lingo. Be able to say I need help, and Please call police in the local language (or carry a card with the words in local script.)
  • Know yourself, know your locale. If you are traveling abroad, know where your embassy is and how to get there. Know where the nearest hospital and police station are.

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CHECKLIST: Improve you credit score

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Consumer Reports suggests the following to improve credit scores in the long run.

  • Sign up for automatic bill payment. A late bill can make your credit score drop by as much as 100 points.
  • Watch the timing of your spending, especially if you plan to apply for a loan. The lower the balance, the better the credit rating.
  • Limit credit-card applications. Each time a lender inquires to view a credit report, it gets noted and can reduce the score.
  • Think twice before canceling cards. Consumers gain points if they are tapping only a small percentage of the total credit available to them.
  • Make sure credit limits are posted

From: www.courierpostonline.com

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Record number of car buyers ‘upside down’ on trade-ins — ‘Under water’ with your car

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(From USA Today and The Detroit Free Press on Sunday, Nov. 27.

Greg Gardner, Detroit Free Press

DETROIT — The wave of easy credit and longer auto loans has left a record percentage of consumers trading in vehicles that are worth less than what they owe on their loans.

In auto finance parlance, these folks are underwater, or upside down. They already are affecting the market as automakers boost incentives and subprime lenders monitor their delinquency rates more closely.

So far this year, a record 32%, or nearly one-third, of all vehicles offered for trade-ins at U.S. dealerships are in this category, according to research by Edmunds.com. When these people go to buy a new vehicle they must add the difference between their loan balance and the vehicle’s value to the price of the one they want to buy.

For perspective, the lowest the underwater percentage has been was 13.9% in 2009, the depths of the Great Recession when credit was tight. The previous high was 29.2% in 2006, about when the housing market was near its frothiest point.

“There’s been a lot of water building behind this dam for some time because of higher transaction prices, lower down payments and long-term loans,” said Greg McBride, chief analyst with Bankrate.com, a consumer finance information service.

The average new car loan is for 68 months, according to Experian Automotive, which tracks the auto finance market. But subprime borrowers, generally those with FICO credit scores in the low 600s or lower, are borrowing over an average of 72 months, or six years.

While those loans reduce monthly payments, they also mean that the buyer’s equity, or the portion of the loan principal paid off,grows more slowly than the vehicle depreciates.

“It’s problematic for the consumer because there’s no foolproof way to eliminate his financial exposure,” McBride said. “If the car gets stolen, is totaled or you get new car envy while you’re upside down then it’s a big problem.”

This is happening as the average selling price of a new vehicle is near a historic high of about $34,000. Some of that increase is driven by consumers’ preference for larger, fully equipped pickups, SUVs and crossovers.

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The result is consumers borrow more to get the vehicle they want. The average new auto loan was $29,880 in the second quarter of this year, according to Experian Automotive. That’s 4.8% higher than a year earlier.

Moreover, leasing, which has reached record levels of more than 30% of all vehicle sales, has grown more popular for several years.

Already, especially in segments such as subcompact, compact and midsize cars, used car values are falling as a wave of 3-year-old models are returned by lessees. This increased supply is pushing down the price dealers are willing to pay for them at auctions.

Just last week, Ford Chief Financial Officer Bob Shanks told analysts that the company’s finance arm, Ford Credit, cut its forecast for 2017 pretax profits because of declining auction values for used cars.

Credit agencies, such as Moody’s, Standard & Poor’s and Fitch, so far, have expressed mild concern about the trend. Their focus is on the $38-billion market for securities backed by auto loans. These are bundles of auto loans, similar to the tranches of mortgages that collapsed in the 2008 crash of the housing bubble.

But they are also different. History shows borrowers are more likely to stay current on their car loans than on their house payments if the economy weakens. Lenders can repossess automobiles more quickly than it takes for mortgage holders to foreclose on a house.

Fitch reported that 60-days-plus delinquencies on subprime auto loans rose to 5.05% in September, the second highest level since 2001, and 13.2% higher than a year earlier.

“When you look at recessionary levels where unemployment was near 10% in 2009 and late 2008, we touched 5.04%,” said Hylton Heard, senior director at Fitch Ratings. “Today you’re pretty much at that peak.”

Fortunately, unemployment is down to 4.9% nationally. Prime borrowers have a 60-day delinquency rate of only 0.44%. Those factors tend to offset the higher risk in the subprime market.

New vehicle sales are expected to continue slightly below their record year-ago levels in November, according to J.D. Power and LMC Automotive.

Yet even their forecast flags some warning signs.

Incentive spending — discounts or extras to lure buyers to close a deal — in early November rose to $3,886 per vehicle, up 15% from $3,374 from November 2015 and the second-highest level ever behind the record $3,939 set in September.

“People’s monthly payments are being kept very low by low interest rates that most manufacturers are willing to subsidize,” said Ivan Drury, senior analyst at Edmunds.com. “But if we see those rates go up a bit, some of these people won’t be able to afford their cars.”

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Time to start looking…

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CareerBuilder’s Mary Lorenz identifies some signs that  suggest you should quit your job. I summary:

  1. You are not advancing
  2. You dread going into work
  3. You’ve lost all ability to care
  4. Your boss doesn’t support you
  5. Your goals do not align with your employer’s

Mary is a writer for the “Advice & Resources” section on CareerBuilder.com. She researches and writes about job-search strategy, career management, hiring trends and workplace issues.

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Protect your kids’ IDs — FRAUD

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From The Detroit Free Press comes this story by Zlati Meyer on Aug. 29.

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They wear helmets.

They’re told not to play with matches.

They’re warned not to talk to strangers.

But this is one crime it’s tough to protect them from.

Children are the newest victims of identity fraud — and sometimes, they don’t even know they’ve been exploited.

How to guard your children from identity thieves

  • Don’t give out their Social Security numbers. If you’re asked for it, find out if it is mandatory information. If it is, ask who has access to it and how the data, be it a paper form or an online database, is kept safe and, when no longer needed, destroyed.
  • Protect their dates of birth and mothers’ maiden names.
  • Have a talk with older children about the importance of keeping private information private. Instruct them to ask you for permission before sharing it with people who ask them for it.
  • Freeze their credit with the three credit reporting agencies:  Experian, Equifax and Transunion.

Signs your children’s identities may have been stolen

  • Pre-approved credit card offers are mailed to your home, addressed to them.
  • Collection agencies call and ask to speak to them.
  • Your children are served notices to appear in court for unpaid bills.

What to do if your children’s identities, in fact, have been compromised

  • File a police report.
  • Contact credit agencies.
  • Contact creditors.
  • Keep a journal, detailing everyone you’ve contacted, on what dates, what you said and what they said.

Source: Free Press research

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