Financial crunch

Filed under: Real Estate , Tax Move over, mortgage payment. You're being nudged out of the headlines. A new report from the Center for Housing Policy reports that almost every major expense associated with home ownership has shot up in the last ten years. (the study looks at the years between 1996 and 2006). The report, "Stretched Thin : The Impact of Rising Housing Expenses on America's Owners and Renters" lays out some sobering realities. But at least you know it's not just your imagination. (make sure to read the comments of this MarketWatch piece. Very interesting). Not only has the average mortgage payment increased by 46% in those ten years, but property taxes increased 66%. Utilities shot up 43%. Property insurance spiked 83%! Homeowner Incomes? Those went up by about 36% in those ten years, according to the survey (wonder if they collected that information from mortgage applications. "Liar Loans" were rife in the latter part of that decade). Renters aren't excluded from this pain, either, as landlords tend to pass their increased costs onto their tenants. According to the report, rents rose by about 51% over the period examined, while renter incomes only rose 31%. Apart from adding more gloomy news for your weekend, the report does make some recommendations. New housing needs to be far more energy efficient, and built closer to urban centers and public transportation. For more details, see the entire report here. Read | Read | Permalink | Email this | Comments

Filed under: Retire , Recession My husband has a great job in a stable industry, but he's 63. Two years ago, we thought by this year he'd be officially retired -- doing a little consulting, but taking the winter off so we could spend the cold months somewhere warm. I have a home-based business that has always offered flexibility. Together, we were looking forward to a more leisurely life. The economic slowdown has made us rethink our plans. My husband continues to work at his old job -- usually 50 or 60 hours a week -- and I'm not slowing down either because we and those who depend on us need what we earn. We're not alone in this. A survey conducted for AARP found that nearly 20 percent of the people in our age group have postponed retirement. In most ways we're lucky. Overall, 66 percent of people older than 55 are having trouble paying for essential items such as food, gas and medicine. Fortunately, we don't have those troubles. But we do worry about our grown children who have found this tough economy a drag on independence. Our two oldest children are economically solid citizens. They got their careers off the ground before the economy soured. But our younger ones face bigger challenges.Continue reading What the meltdown means to me, a boomer with grown children Permalink | Email this | Comments

Filed under: Food , Fantastic Freebies Sure, there may be some quibbling out there about whether Seattle's Best Coffee is really Seattle's best (and as it's now owned by Seattle native Starbucks, well, that's just a conundrum, ain't it?). But free coffee is free coffee, and I, for one, am not going to quibble about that. Getting a free sample is as easy as filling out your name, address and email -- you'll get to choose between Henry's Blend ("uncommonly smooth"), Seattle's Best Blend ("captivating aroma and a smooth finish") and Vanilla Bean ("perfectly combines smooth coffee flavor with vanilla"). Is Seattle's Best Coffee "a whole different cup"? Soon, you'll know. Every day, WalletPop will be bringing you information about a fantastic freebie. Like what you see? Check back tomorrow for more! Permalink | Email this | Comments

Filed under: Retire The unthinkable has happened. The sight of my portfolio of investments has reduced me to tears. Who wouldn't be crying when looking at 40% of their value gone this year? Even worse than the sheer magnitude of my losses... what those losses mean to me and to others. I'm lucky. I don't need my retirement funds for at least 20 years or more. There is no doubt in my mind that I will have recovered all the lost value well before that. I worry about those who don't have years to wait, though. They're the big losers in all of this. Think about all the Baby Boomers who scrimped and saved to get to retirement, only to see their hard earned dollars massively reduced in a period of a few weeks. Some Boomer friends of mine who were invested more conservatively have seen their portfolio drop "only" 15%. Imagine the impact of that over 20 years of retirement. These retirees need to draw on their accounts now, and can't wait to recover value. The portfolios of all retirees are going to be depleted much quicker than they thought. Who would have thought that the people with all their money in certificates of deposit earning 3% or 4% would now look like geniuses? They were missing out on stock market gains, but now are feeling pretty good about the fact that their principal investment was protected. This is depressing. And each day I tell myself that the bottom has to be near; that my investments can't go down much further than they already have. And each day Wall Street surprises me with a hefty drop in my value. There's not much to be done about my ailing retirement fund, other than to work hard and keep saving for the retirement that will hopefully still be funded when I get there. Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting , and is the author of Essentials of Corporate Fraud . Permalink | Email this | Comments

Filed under: Banks Recent bank failures have required the Federal Deposit Insurance Corporation to make payments to depositors. The FDIC is called in when a bank fails and can't give depositors the cash in their bank accounts. A lot of focus has been on the limits of FDIC insurance, so that depositors are protected. But there hasn't seemed to be as much focus on the actual ability of the FDIC to pay claims. Bankrate.com has a nice article about the FDIC and how it works. The agency is funded with insurance premiums paid by banks for the coverage on their deposits. Can the FDIC run out of money to pay depositors? Yes, the agency could be giving out more than it's bringing in from insurance premiums. But if that happens, the FDIC can borrow money which would be paid back via future collections of insurance premiums paid by banks. Funds at the FDIC are currently lower than legally allowed. The law requires it to have $1.15 on hand for every $100 of insured deposits sitting in banks. Currently, it has only $1.01 for every $100 of insured deposits. How will this difference be made up? The agency is trying to raise insurance premiums for 2009, so that increase along with a hope that other banks don't fail (further depleting cash reserves) will help the FDIC bring its cash balance back up.Continue reading How secure is the FDIC? Read | Read | Permalink | Email this | Comments

Filed under: Budgets , Saving , Simplification The smart people are currently looking for ways to cut their expenses to save money and feel more financially secure. Today I found a way to save $33 a month without even giving up anything. I looked at my cable bill and decided to make a change. My cable bill is paid each month via a credit card which I pay in full every billing cycle. I wasn't paying much attention, until I saw that my cable bill for the month was $151. Huh? My bill wasn't that much. I took a look, and saw that my bill used to be $135 a month, until I got a mysterious increase in my internet access. I thought I'd give the cable company a call and see if I couldn't get that extra $16 a month removed. By the time I got off the phone, my monthly bill was down to $118, and it didn't hurt a bit. As I talked over my bill with the customer service representative, I was reminded that I was paying $13 a month for HBO. If I had to guess, I'd say I watch HBO once a month at the very most. Time to give up the HBO that I won't even miss anyway.Continue reading The kindest cut: Chopping my cable bill with a phone call...and without giving up anything Permalink | Email this | Comments

Filed under: Budgets , Home There are some things it doesn't pay to open your wallet for; cars, boats, and children's clothes . But sometimes it pays to cough up the extra bucks because it makes a big difference. Here's five things worth spending your money on: House. For most folks, this is one of your most important assets and an important investment. Present market aside, it is an appreciating asset; that is, it acquires more value over time. The present market actually makes it a great time to buy. Don't over buy your budget and be "house poor," but buy the most house you can comfortably afford. Bed. Several years ago we invested in a high quality pillow top bed. This is one of the best investments we ever made. Not only do you spend about one-third of your life in bed, a good night's rest makes all the difference the other two-thirds of the time. Continue reading Five things worth spending extra bucks on Read | Permalink | Email this | Comments

Filed under: Budgets , Recession The short answer to the question, should I worry about the market meltdown? Yes. And, duh. The long answer: In many ways, I'm lucky. Having been mired in debt since graduating from college in 1992 and embarking on the rewarding (but not necessarily lucrative) profession of writing, I haven't had much to lose in the 401K and investments department. And even if I did have a hefty 401K and numerous investments, I'm 38 years old. I think it's safe to say that any Generation X'er or young Baby Boomer shouldn't worry too much about how their savings has been affected. I know that in my case, even if I wanted to retire at age 65--and being a writer, I'm kind of hoping to be at my computer until I keel over at the age of 106-- that's 27 years away. In some ways, that's a lifetime, although, in other ways, it's just around the corner. My point is, the stock market is going to have a lot more ups and downs and bubbles and bursts in the next 27 years. So in the long-term, do I think someone my age should worry? No. But in the short term, I'm glad I'm content with the house I bought in 2000, shortly before getting married and about 18 months before becoming a father, because we're not going to be moving any time soon, if, um, ever. I don't have enough saved for a downpayment on a new mortgage, and my credit history isn't going to inspire any mortgage bankers to fight over me. Meanwhile, with my old Saturn having finally keeled over a few weeks ago, I need a new car and already understand that if I'm going buy one, I'm going to either have to save up the purchase price--or accept the fact that the interest rate offered by many lenders is going to be on par with what you'd expect from a loan shark. Yeah, in the short term, I'm concerned. Maybe even worried. Continue reading What the meltdown means to me, a married Midwestern parent Permalink | Email this | Comments

Filed under: Real Estate , Recession WalletPop bloggers Bruce Watson and Tracy Coenan have expressed diametrically opposed views about Sheriff Tom Dart of Cook County, Illinois's refusal to evict tenants who had paid their rent in good faith to landlords who had allowed the building to fall into foreclosure. The Sheriff apparently feels that the law in this case is punishing the wrong people. I can see both sides of the argument, and my opinion is somewhere in between. Laws are not divine decrees, but reflect the consensus of those governed. They change as society changes, and we often play fast and loose with those that, by consensus, no longer reflect our desires. The speed limit is just one example. Sometimes public attitude changes more quickly than the laws can reflect, throwing us into that gray area that Sheriff Dart is struggling with. Do you disregard one law, and risk inviting similar disregard for other laws? Enforce a law that runs counter to the best interests of the governed, and risk public rebellion? In this case, I look at the situation and ask, does anyone win by enforcing the eviction notices on rent-paying tenants? Certainly, the tenants lose. I think the eventual property owner loses, too. A property already housing loyal rent paying tenants is a more valuable commodity than one without, in a non-rent-controlled economy. And empty buildings are an invitation to arsonists and copper thieves. If enough people are evicted, public anger could also spark some ugly public demonstrations. Watts is not all that far in our past. The answer here could be a temporary moratorium on evictions foreclosures for tenants who are current on their rent. The county could set up an escrow account into which continued rent payments are made, to be distributed to the eventual property owners. This would shelter the sheriff from charges of non-performance of duty, allow tenants time to relocate, if necessary, and maintain the value of the foreclosed property until it is sold. I share Tracy's concern that the Sheriff is making decisions that should come from the courts and the politicians, but perhaps his decision is the impetus needed to inspire some creative problem-solving.We could sure use more of that. Permalink | Email this | Comments

Filed under: Career The Association of Certified Fraud Examiners just released its annual compensation survey , and the results clearly show that the right certifications can offer significant career enhancement. This particular survey focused on the CFE (Certified Fraud Examiner) credential, which is one of the leading credentials for investigators of fraud and financial crimes. Professionals with the CFE credential earn almost 22% more than professionals in similar jobs, but without the credential. In almost every single job classification and industry, the earnings of employees with the CFE credential were noticeably higher than those without. The job of a fraud investigator certainly doesn't require one to be a CFE, but the advantage of having the certification is clear, and I think it's likely that this isn't isolated to fraud-finding careers. It's clear that credentials like CPA (Certified Public Accountant) and CIA (Certified Internal Auditor) can also hel