January 26, 2009


Kiplinger's Personal Finance & NAPFA

For the eighth time, Kiplinger’s Personal Finance Magazine is working with the NAPFA (National Association of Personal Financial Advisors) Consumer Education Foundation to provide free, objective financial planning advice for consumers. The beginning of the New Year is a great time to get your financial checkup.

NAPFA (http://napfa.org) is the leading professional organization for fee-only financial advisors. Regardless of your current stage of life, this is a great opportunity to jumpstart your financial plan (follow through on your New Years resolution!) and address questions you may have about retirement savings, estate planning, taxes, insurance, college savings, etc.
Last year, more than 12,000 people received assistance. Typically, fee only planners charge an hourly rate of $100 to $250.

Make sure you have relevant documents on hand to make the most of your time. If your question(s) are too complex to be addressed on the spot, you may be directed to the NAPFA site to find a planner in your area. A planner can aid you in making rational [rather than emotional] financial decisions. The services are available to anyone.

Where do you go to get the free assistance?
*CALL – 888-919-2345
*AVAILABILITY – 1/30/09 - (9:00am – 6:00pm EST)

January 22, 2009


Errors on a credit report are about as common as spots on a dalmatian. Information on your credit report (accurate or not) will impact your ability to obtain credit, insurance, and possibly your job. Unfortunately, many consumers are unaware of how to remedy these mistakes…

Begin by obtaining a current copy of your credit reports (Experian, Equifax, and TransUnion are the three primary credit reporting agencies). Make certain to avoid the gimmick “free credit report” websites (these places typically provide you with one report and then stick you with costly fees for a credit monitoring service of questionable value). Always use the government -sanctioned website to get your free reports: www.annualcreditreport.com. You are entitled to one free report per agency every 12 months.

Before going on, let’s be certain we are clear on some important points:
-- Errors are mistakes (inaccurate information) on your report, NOT merely negative information. You have a legal right to have wrong information corrected. If information is accurate and verifiable, it will remain on your report as part of your “credit history” for the allowable duration (typically 7 years; there are exceptions – inquiries, some instances of bankruptcy, tax liens, etc.). This information [if negative] will be removed after the expiration time window; if it has not been removed (and should have), it can be disputed and removed.

-- It is CRITICAL to understand that the vast majority of “credit repair” agencies are scams! Most will do nothing for you that you can’t do on your own (legally) at no cost. Companies seeking a fee prior to rendering any services are a good tip-off to the rip-off.

While there are multiple methods of initiating a dispute – mail, online, and phone – the most convenient and efficient means is online.

- Locate the “report number.” This can be referred to by different names. It is the number on the top center of your report. This number provides the reporting agency with a ‘snapshot’ of the report you are viewing.

- Dispute the errors directly to the agency whose report you are reviewing:
o Equifax (www.equifax.com/online-credit-dispute)
o Experian (www.experian.com/disputes)
o TransUnion (annualcreditreport.transunion.com/entry/disputeonline)

- Specify the information you believe is inaccurate (i.e., current account shown as delinquent, account shown that consumer never opened, information from someone else’s report …) and enter any additional information that further explains the problem. (You can submit multiple errors in the same dispute). Know that it is not your responsibility to prove they are wrong; it is their job to prove they are right.

After your dispute is submitted, the credit reporting agency will contact the provider of the data asking them to verify the information. They will typically have 30 days (can be up to 45) to verify the accuracy of the information in question. If the information is unable to be verified [or if they do not respond in this timeframe], it will be removed from your report. If they are able to verify the information, you will be notified of that and will want to contact the company directly to seek closure (the credit report will provide contact information to do so). If the dispute is initiated online, you will be notified (typically within 3-5 days of the outcome) by e-mail and you can immediately view the results. You will also receive an updated credit report that reflects all changes made. If requested, the credit reporting agency must send notices of any corrections to anyone who received your report in the past 6 months. You can also have a corrected copy of your report sent to anyone who received a copy during the past 2 years for employment purposes.

What if that does not resolve the problem?
If you disagree with the results of the investigation, you have the right to add a 100-word statement to your report that explains your side of the story. This consumer statement gives you an opportunity to explain why a negative item is listed on your report. Creditors and potential lenders may review this information and take it into consideration when making credit decisions. It will remain on your report until you request that it be removed. Some credit reporting agencies will provide assistance [if desired] in drafting your statement.

While it is in the best interests of the credit reporting agencies to ensure the information they maintain is accurate, mistakes/errors are common. Ultimately, it is YOUR RESPONSIBILITY to ensure that the information in your credit report is accurate!

January 12, 2009


With the beginning of a new year, it seems like an opportune time to review the financial tips from the past year... As I have done in the past, I have provided a topical/organized archive of tips. The hot links will allow you to easily review prior tips. You can also view archived tips (by date) on the blog site or at:
--> 2006 Tips
--> 2007 Tips

- Cures for a Lean Purse (05/2008)
- [Free] Online Financial Management Resources (11/2008)
- Save More Each Month (09/2008)

- Closing Unused Credit Card Accounts (12/2008)
- Credit Card Update (12/2008)
- Credit Cardholders' Bill of Rights (10/2008)
- Debit Card Realities (06/2008)
- New Rules for Card Companies (12/2008)
- Proposed Credit Card Changes (05/2008)
- Schumer's Box (08/2008)
- The Best Credit Card Reward Programs (12/2008)

- Credit-Based Insurance Scoring (11/2008)
- Credit/Security Freeze (09/2008)
- "Free Credit" Services (07/2008)

- Cash Course (01/2008)
- Financial Illiteracy Persists (04/2008)

- 401(k) and Other Investment Fees (12/2008)
- Building Wealth (04/2008)
- Coping With Market Volatility (01/2008)
- Deal or No Deal (03/2008)
- Free Planning Assistance (01/2008)
- Index vs. Active Fund Investing (04/2008)
- Is Your Money Safe (09/2008)
- Market Anniversary... Increase in Cyberscams (10/2008)
- No More Free Lunch... (09/2008)
- Portfolio X-Ray (03/2008)
- Responding to a Turbulent Market (12/2008)
- [Still] The Best High Yield Savings Accounts (08/2008)

- Financial Pitfalls - Overconfidence (06/2008)
- Financial Resolutions (01/2008)
- Gift Cards (11/2008)
- "Opt Out" (07/2008)

- July 1 -- Rate Change (06/2008)
- Project on Student Debt (07/2008)
- Rewarding Those Who Serve (09/2008)
- Student Loan Borrower Assistance (10/2008)
- Student Loan Comparison - Resources (02/2008)
- Student Loan Update (05/2008)

- Economic Stimulus Package (03/2008)
- Economic Stimulus - Payment Schedule (04/2008)
- Free Tax Assistance (01/2008)
- Rebate Snafu (07/2008)

January 06, 2009


I'm sure all of you have had moments (financial or otherwise) where you've wished you could have a "do-over"... Typically, you won't experience that sensation when you've done the right thing. This year could be an exception for you if you've converted/rolled over an IRA to a Roth IRA account...

For example: In 2008 suppose you converted a Traditional IRA (or other tax deferred retirement account) to a Roth IRA (typically considered a pretty savvy move); this enables you to pay taxes now and withdraw the funds later TAX FREE! Obviously, since the funds have yet to be taxed, this conversion will result in a taxable "event." You will be sent a tax 'bill' for the full amount being transferred; so even though the account is in all likelihood worth significantly less than what was transferred earlier in the year, the taxed amount will be on the sum being transfered. For someone in a 25% tax bracket, rolling $20,000, the taxes would equal $5,000. If they had instead waited until the end of the year when the account was only worth $12,000, the tax bill would instead have only been $3,000 ($2,000 or 40% less!). Fortunately, the IRS allows for a 'do-over' of the conversion so that you can in effect pay the smaller tax bill! The process, recharacterization, enables you to "put your money back" into a traditional IRA so that you won't need to report the original conversion to the IRS. You can then convert to a Roth IRA later on and pay taxes on the resulting smaller balance.

Be aware that an IRA that has been switched to a Roth earlier in the year and then switched back (to a Traditional IRA) can’t be reconverted to a Roth again this year. The 'reconversion' has to be delayed until at least January 1 or if later, 30 days after the IRA was switched back to the traditional.

* You have until October 15, 2009 to undo a 2008 Roth conversion. See IRS Publication 590, Individual Retirement Accounts (IRAs), for more information.

** As an aside ... If you have money in a Traditional IRA and want to convert it to a Roth IRA, you are unable to do so if your Adjusted Gross Income is greater than $100,000/year. This is especially frustrating if your income is greater than the Roth IRA Phaseout/Contribution Limits that leaves you unable to take advantage of one of the [The?] greatest retirement planning tools. 2010 will mark the removal of this Roth IRA Conversion Limit. In 2010, these income limits will become extinct, so that anyone, regardless of income, can convert from Traditional IRAs to Roth IRAs (you'll also be able to split the tax bill over two years).

You don't want to screw up your do-over ... it is wise to consult with a professional: the IRA custodian (where you have your account), a financial planner, a tax planner, or all of the above.