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10 Mistakes to Avoid – When Trying To Save Money

Addressing the issue of saving money is the most fundamental, yet neglected, aspect of personal finance in the U.S. today. According to a 2012 survey by Credit Donkey, almost 50 percent of Americans don’t have more than $500 in their emergency savings accounts , which not only puts a kink in savers’ finances in the event of an unforeseen expense, but also creates undue stress for failing to prepare a safety net adequately.

So, in our latest Money Mistakes series, we highlight the top 10 money mistakes Americans make when it comes to saving money.

 

Not budgeting

There are a number of philosophies on the best approach to take when budgeting your money; but at times, the thought of sitting down with statements, bills, and an expense sheet is just too stressful. This mind-set is an easy trap to fall victim to, but is one of the worst money mistakes to make if you want to grow your savings fund.

Hope A. Rising of Clearwater, Fla., learned this lesson the hard way. “Rather than make savings a part of my life I ‘lived for the moment’ and now have virtually no savings for emergencies,” Rising said. “For example, my car recently broke down and I had to borrow money to have it fixed, rather than just being able to take the money out of the bank.”

 

Saving too little

It’s commendable that about half of Credit Donkey’s survey participants had saved up some cash; but often, individuals don’t save enough money to carry themselves through a challenging and sudden financial crisis. A common recommendation when it comes to the appropriate amount to save in a nest egg is about three months’ salary, or six months worth of expenses (i.e. mortgage, auto loan, utility bills, gas, etc.).

For instance, the average American in 2013 made $42,693 before taxes. Take away about 25 percent of that income for taxes, and the average person walks away with $32,020 annually. Three months of net income (the ideal emergency fund amount) is about $8,000 to help keep you comfortably afloat in an emergency.

 

Not setting specific goals

Determining what exactly you’re saving for, and when you need to save by, is a helpful motivational guide to follow. It acts as a constant reminder of what you’re working toward, and lets you know when your efforts have been successful.

Examples of this include saving money for a down payment on a car in the next six months, or getting more specific like committing to saving $200 per month for the next six months, to achieve this goal.

 

Failing to track spending

Creating a budget is the start of the savings process and setting a goal is the end of it, but there has to be a quantitative way to follow your progression in the time between. Tools such as Mint.com  or even a simple spreadsheet are great ways to avoid this money mistake.

 

Living paycheck to paycheck

When budgeting your spending allowance, don’t stretch your money to the last dollar. Not allowing yourself about a $100 per month buffer sets you up for disaster, as small, seemingly harmless purchases quickly add up.

 

Overdrawing an account

Overdrawing a checking account is usually the result of making one of these other money mistakes, but expensive overdraft fees are a cost you have complete control over. A $35 overdraft fee might not sting now, but as more pile up on your account statement, the damage can become apparent in a short period of time.

Simply put, overdrawing is a money waster and an entirely avoidable circumstance if you stay diligent with your savings plan.

 

Claiming the wrong tax withholding

Claiming the lowest withholding allowance when it comes to your federal taxes is a mistake that Americans commonly make. When you do so, the government takes away more income taxes throughout the year, and you’re left with a fat tax return check.

Don’t let this windfall fool you — what you’re doing is essentially giving Uncle Sam an interest-free loan and getting nothing back in return. Instead, you can claim the withholding allowance you rightfully qualify for, and use the extra cash in each paycheck to grow your savings fund in a high-interest savings account.

 

Signing up for low deductibles

One way to increase the amount of cash you can save each month is to lower your premium and raise your deductible for auto and health insurance. This means you assume more risk up front by paying a lower monthly premium, with the expectation to pay more out of pocket in the event you have to file a claim (which should be no problem if you’ve saved that emergency fund).

 

According to the Insurance Information Institute, increasing your deductible from $200 to $1,000 can lower collision and comprehensive coverage premiums by at least 40 percent.

 

Buying name brands

More customers are employing frugal tactics like passing on branded products in lieu of a generic version. Similarly, retailers have caught onto the fact that shoppers are looking for a frugal alternative in today’s challenging economic times.

That’s not to say you should never splurge on a brand that’s worth it, but most generics are the same product as their pricier counterparts. Look for generic products on the lower shelves of grocer’s aisles.

 

Waiting

One of the worst money mistakes you can make is procrastinating on getting started with your savings plan, since achieving a savings goal can take longer than you might expect. Paying $500 per month toward an emergency fund at the income outlined in mistake No. 2, for example, would take the average American 16 months to save up three months’ income.

 

The article 10 Huge Mistakes to Avoid When Trying to Save Money originally appeared on Fool.com.

 

 

Beef – Is It Still – What’s For Dinner?

WASHINGTON — Grocery shoppers facing sticker shock at the supermarket for beef, pork and other meats should get ready to pay even more in 2014, the federal government said Thursday, with high prices unlikely to ease any time soon.

Estimates for the growth in retail prices for meats, many of which are sitting at record highs because of drought and diseases across the country, were increased by the Agriculture Department in August. The department now expects meat prices to rise 6.5% in 2014, up from 5.5% forecast a month earlier, and well ahead of the 20-year average increase of 2.9%. The beef and veal category was revised upward to 8.5% this year, with pork slated to jump 8%. Poultry was unchanged at 3.5%.

“We weren’t so much surprised that we had to raise (beef prices) as we were that demand has remained high for beef,” said Annemarie Kuhns, an economist with USDA’s Economic Research Service who compiles the report. “Typically, you see a bit of consumer push-back that would ease the demand for the limited supply.” The increase in meat prices, she said, was the result of small herd sizes and continued demand for meat by U.S. consumers.

This year alone, food prices across the United States are forecast to jump 3%, nearly in line with the historical average of 2.6% during the past two decades. USDA said despite the surge in meats, overall food prices are being kept in check by lower-than-normal increases in breads, cereals and other packaged goods.

Beef and veal prices have soared as a result of the lingering impact of a widespread drought in 2012 and dry conditions currently affecting cattle producing states of Texas and Oklahoma. Cattle inventories have decreased in recent months to their lowest level since 1951. As a result, consumers paid an average of $4 a pound for 100% ground beef in August, up 55 cents from the same month in 2013, according to the Labor Department’s Bureau of Labor Statistics.

Sunshine Foods, which operates 14 stores in South Dakota, Iowa and Minnesota, has raised prices on 80% ground beef by $1 during the past year to $3.99 a pound. Darin Hill, who oversees meat purchases for the regional grocer, said consumers initially shunned high beef prices and shifted their money to pork and chicken that were comparatively cheaper. While beef sales at Sunshine are down about 20% from September 2013, consumers have shown signs of coming back to the popular meat.

“People just kind of get adjusted to the pricing,” Hill said. “They always come back to beef.”

Meanwhile, the pork industry has been decimated by the fast-moving porcine epidemic diarrhea (PED) virus that has ravaged hog farms in 31 states, including Iowa, killing an estimated 8 million pigs, or about 10% of the U.S. herd. The reduction has pushed up prices for bacon, ham and other hog products. Center cut pork chops, for example, sold for about $4.35 a pound in August, an increase of 21% during the last year.

Meat prices are not expected to fall anytime soon, but as livestock herds expand, producers are expected to benefit from a multi-year low in grain prices. Eventually, consumers will, too.

“From a consumer standpoint, cheap grain makes cheaper livestock,” said Don Roose, president of U.S. Commodities in West Des Moines. “That’s the catalyst, that’s the game-changer.”

The cattle market is not expected to experience a noticeable increase in herd sizes for about two years, while hogs could take nine months to improve if the industry does not see the PED worsen during the winter. That means it could be several months before consumers see a drop in prices for these meats. Poultry can get to market much faster, in just a few months, allowing chicken supplies to rebound more rapidly.

“It looks like meat supplies are on the rise, it’s just a matter of how quickly,” Roose said.

Meat prices are expected to jump 3.5% in 2015, assuming normal weather conditions. Overall, food prices are expected to increase an average of 2.5% next year. Severe weather events could push food costs higher than the current forecasts, the government said.

 

By Christopher Doering, USATODAY

And Yet Another Data Breach…

ATLANTA, September 8, 2014 – The Home Depot®, the world’s largest home improvement retailer, today confirmed that its payment data systems have been breached, which could potentially impact customers using payment cards at its U.S. and Canadian stores. There is no evidence that the breach has impacted stores in Mexico or customers who shopped online at HomeDepot.com.

While the company continues to determine the full scope, scale and impact of the breach, there is no evidence that debit PIN numbers were compromised.

Home Depot’s investigation is focused on April forward, and the company has taken aggressive steps to address the malware and protect customer data. The Home Depot is offering free identity protection services, including credit monitoring, to any customer who used a payment card at a Home Depot store in 2014, from April on. Customers who wish to take advantage of these services can learn more at http://www.homedepot.com or by calling 1-800-HOMEDEPOT (800-466-3337).

“We apologize for the frustration and anxiety this causes our customers, and I want to thank them for their patience and support as we work through this issue,” said Frank Blake, chairman and CEO. “We owe it to our customers to alert them that we now have enough evidence to confirm that a breach has indeed occurred. It’s important to emphasize that no customers will be responsible for fraudulent charges to their accounts.”

The investigation began on Tuesday morning, September 2, immediately after the company received reports from its banking partners and law enforcement that criminals may have hacked its payment data systems.

Since then, the company’s internal IT security team has been working around the clock with leading IT security firms, its banking partners and the Secret Service to rapidly gather facts and provide information to customers.

Responding to the increasing threat of cyber-attacks on the retail industry, The Home Depot previously confirmed it will roll out EMV “Chip and PIN” to all U.S. stores by the end of this year, well in advance of the October 2015 deadline established by the payments industry.

Things You Should Know – About Financial Literacy

As reported this week in U.S. News – Money in a  story on financial literacy, the PISA international survey recently found that American teens scored in the middle of the pack when it came to answering finance-related questions. We turned to two financial literacy experts to discuss how teachers and parents can help make money lessons stick. Annamaria Lusardi​, professor of economics and accountancy at the George Washington University School of Business and academic director at the Global Financial Literacy Excellence Center, which hosted the U.S. release of the PISA data in collaboration with other organizations, as well as Shannon Schuyler​, ​corporate responsibility leader at the public accounting firm and consultancy PricewaterhouseCoopers, who was a panelist at the PISA event, shared their takeaways with U.S. News:

1. The problem is dire and widespread. The survey found that 18 percent of the American 15-year-olds surveyed could not answer basic financial questions or handle simple tasks, like understanding an invoice. “In the United States and around the world, young people know relatively little about basic skills that are necessary for managing money. We see that in almost every country,” Lusardi says. The United States has one of the most developed financial markets in the world, and “a country with the most developed financial markets should not be average, given the decisions young people are already asked to make,” like whether to take out student loans, she adds.

2. Adding personal finance classes to school curriculum could help. “For this generation, I don’t think there is any solution other than putting financial literacy in schools,” Lusardi says. Just as students learn math and English, they should learn financial literacy because it is also a basic skill that young people need, she argues. Although research on the effectiveness of financial literacy courses is mixed, Lusardi says that doesn’t matter. “I don’t know that teaching literature and math is effective, but nobody seems to worry about that,” she says. In other words, personal finance is so important that it should be part of a curriculum, regardless of whether it’s proven to influence later financial decisions or not.

Lusardi says the topic should be taught starting earlier than high school, and that the lessons should also be incorporated into college coursework. “What if when young people started their first job, they already [knew to] put money into their retirement account? If young people could do this at age 20 rather than age 50, it would make an enormous difference,” Lusardi says.

Schuyler says personal finance classes can also be integrated into other lessons, including history. “What happened to the finance system in the Great Depression? How do you teach those things in a combined way?” she asks. She adds that students can also benefit from lessons that are relevant to their lives, like how to determine the difference between wants and needs at the mall. PwC has invested $160 million, including $60 million in cash and 1 million service hours from employees, to help promote financial literacy in schools. Through those efforts, it has reached over 1.1 million students.

3. Parents need help, too. Lusardi notes that the PISA survey found a correlation between socioeconomic background and financial literacy levels in the United States. “The people who know the most have parents with a college background and higher socioeconomic background,” she notes, adding that leaving financial education to parents “creates disparities from the beginning.”

One of the best things parents can do is advocate for financial literacy in their school district, she says. “Perhaps the local business community can pay for training teachers,” she adds.

Some lessons, though, are simple enough even for a toddler to grasp. Schuyler says that with her 19-month-old son, she’s already imparting lessons about sharing toys and delayed gratification, by giving him the option of one treat now or two later. “Some of those things you start to bake in – that you can’t always get what you want or that you’re looking out to the future,” she says. Then, parents can build on those lessons as their children grow, incorporating piggy banks for savings, for example. “It’s important for parents to talk about their financial situation in a positive way. …If parents are willing to have this conversation, it goes a long way,” she adds.

4. Money lessons can be fun. “The topic can be pretty fun and intriguing, like talking about people who made money and lost money,” Schuyler says. Training doesn’t work as well when a topic like the stock market is taught in one lesson and is never revisited again, she says. Instead, she envisions ongoing lessons that are related to topics students care about, a goal of the PwC financial literacy curriculum.

5. Certain groups of people need special attention. Schuyler says PwC continues to expand its curriculum for specific groups, including veteran organizations, students with special needs like autism and parents themselves. “It’s really blossomed into this large, connected initiative, and we keep seeing ways and tentacles for it to grow,” she says.

 

Article by – Kimberly Palmer a senior editor for U.S. News Money.

35% of Adults Have Debt in Collections

 

Thirty-five percent of adults have a debt in collections reported in their credit files, an Urban Institute study shows. The study, conducted with Encore Capital Group’s Consumer Credit Research Institute, found these 77 million Americans owed an average of $5,200 in September 2013.

Nevada, hit hard by the housing crisis, tops the list of states: 47 percent of people with a credit file have reported debt in collections. The state also has the highest average collections debt, $7,198.

Twelve other states (11 in the South) and the District of Columbia top 40 percent: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, New Mexico, North Carolina, South Carolina, Texas, and West Virginia. On the low end, the Midwest’s Minnesota, North Dakota, and South Dakota have about 20 percent of residents with reported debt in collections.

Debt in collections involves a nonmortgage bill—such as a credit card balance, child support obligation, medical or utility bill, parking ticket, or membership fee—that has been reported so far past due that the account has been closed and placed in collections, often with a third-party debt collection agency. This debt can remain in a person’s credit file for seven years. Some consumers become aware of collections debt only when they review their credit report.

Of the 100 largest metropolitan areas, five have at least 45 percent of people with collections debt: McAllen, Texas (51.7 percent); Las Vegas, Nevada (49.2 percent); Lakeland, Florida (47.3 percent); Columbia, South Carolina (45.2 percent); and Jacksonville, Florida (45.0 percent).

Some 5.3 percent of people with a credit file (roughly 10 million adults) are at least 30 days late on a credit card, auto loan, student loan, or other nonmortgage payment. The average amount needed to pay to become current on that debt is $2,258.

Debt past due is most pronounced in the South, led by Louisiana (8.7 percent), Texas (7.6 percent), and Mississippi (7.2 percent). Only three states have less than 4 percent of their credit file population with debt past due: Utah, Washington, and New Jersey.

Across the largest 100 metropolitan areas, Salt Lake City, Utah, has just 3.2 percent of people with debt past due, followed by San Jose, California, and Seattle, Washington, each at 3.5 percent. At the other end of the spectrum is McAllen, Texas, at 10.1 percent, followed at about 9 percent by Texas’s El Paso and San Antonio and Louisiana’s Baton Rouge and New Orleans.

Of the nearly 1,000 census tracts with at least 15 percent of people with debt past due, nearly 40 percent are in Louisiana or Texas. Almost 4,600 of the nation’s census tracts—scattered throughout the United States—have no one with past due debt.

In contrast to the situations involving debt past due and collections debt, five southern states—Mississippi, West Virginia, Arkansas, Louisiana, and Oklahoma—have the lowest levels of debt and tend to have low levels of debt relative to income. In general, low-debt areas tend to be low-income and less-populous locales.

Total debt, largely driven by mortgages, is high along the Pacific Coast in California, Oregon, and Washington and along the East Coast from Washington, DC, through Boston, Massachusetts. People in these areas may have higher debt because they have higher incomes or more assets, providing them with greater access to credit. Hawaii has the highest average mortgage debt ($67,300) and Mississippi has the lowest ($16,864).

The San Jose, California, metro area has the highest average debt in the country at $97,150. California is home to 4 of the 10 most-indebted areas. McAllen, Texas, at $23,546, has the lowest average debt.

 

- Source: Cornerstone Credit Union League Article – Wednesday, July 30, 2014 6:35 AM

Financial Literacy & Debt Problems for GEN Y

MADISON, Wis. (5/28/14)–Millennials have a difficult time grappling with debt–which they shoulder at a high rate–and don’t demonstrate strong levels of financial literacy, a report by Filene Research Institute has found.

The findings are drawn from the first of four reports from Filene that will be released as part of a broader National Financial Capability Study, an effort that seeks to ferret out indicators of financial capability and evaluate how these indicators change between demographics (See News Now Dec. 18, 2013).

Two-thirds of “Gen Yers,” or those born between the late 1970s and mid-1990s, bear at least one type of outstanding, long-term debt, such as student loans, mortgages or car loans, the report found. About 30% are dealing with two or more.

Further, more than 50% of credit card users report carrying a balance in the past year, and nearly 70% of respondents–5,500 in all–rated themselves as highly financially knowledgeable, despite the report also finding pervasive poor financial literacy based on responses to financial questions posed during the study.

Given their experience with financial education, credit unions have an opportunity to intervene and help address the growing problem, researchers said.

“With tactics that focus on debt management and financial literacy, credit unions can target the most problematic areas for Generation Y,” researchers from George Washington University, a partner on the study, wrote.

Researchers also found that overconfidence and a reliance on alternative financial services, such as payday loans or pawn shops, exacerbates the financial problems.

The authors of the report also listed other insights credit unions should be mindful of:

“Gen Yers may be ambitious and driven, but a closer analysis reveals a generation deeply indebted and relying too heavily on alternative financial services,” the authors wrote. “Credit unions should promote financial literacy through products and real-life behaviors in order to create a meaningful impact with young adults.”

  • Debt management tactics will resonate with millennials, such as helping individuals understand sources of debt;
  • Millennials are difficult to engage, especially when many believe they already comprehend their financial situations;
  • A college degree doesn’t guarantee financial literacy, even for those with high levels of education; and
  • Millennials access high-cost borrowing products too often.

Medical Identity Theft on the Rise

WASHINGTON – If modern technology has ushered in a plague of identity theft, one particular strain of the disease has emerged as most virulent: medical identity theft.

Last month, the Identity Theft Resource Center produced a survey showing that medical-related identity theft accounted for 43 percent of all identity thefts reported in the United States in 2013. That is a far greater chunk than identity thefts involving banking and finance, the government and the military, or education. The U.S. Department of Health and Human Services says that since it started keeping records in 2009, the medical records of between 27.8 million and 67.7 million people have been breached.

The definition of medical identity theft is the fraudulent acquisition of someone’s personal information _ name, Social Security number, health insurance number _ for the purpose of illegally obtaining medical services or devices, insurance reimbursements or prescription drugs.

“Medical identity theft is a growing and dangerous crime that leaves its victims with little to no recourse for recovery,” said Pam Dixon, the founder and executive director of World Privacy Forum. “Victims often experience financial repercussions and worse yet, they frequently discover erroneous information has been added to their personal medical files due to the thief’s activities.”

The Affordable Care Act has raised the stakes. One of the main concerns swirling around the disastrous rollout of federal and state health insurance exchanges last fall was whether the malfunctioning online marketplaces were compromising the confidentiality of Americans’ medical information. Meanwhile, the law’s emphasis on digitizing medical records, touted as a way to boost efficiency and cut costs, comes amid intensifying concerns over the security of computer networks.

Edward Snowden, the former National Security Agency contractor who has disclosed the agency’s activities to the media, says the NSA has cracked the encryption used to protect the medical records of millions of Americans.

Thieves have used stolen medical information for all sorts of nefarious reasons, according to information collected by World Privacy Forum, a research group that seeks to educate consumers about privacy risks. For example:

A Massachusetts psychiatrist created false diagnoses of drug addiction and severe depression for people who were not his patients in order to submit medical insurance claims for psychiatric sessions that never occurred. One man discovered the false diagnoses when he applied for a job. He hadn’t even been a patient.

An identity thief in Missouri used the information of actual people to create false driver’s licenses in their names. Using one of them, she was able to enter a regional health center, obtain the health records of a woman she was impersonating, and leave with a prescription in the woman’s name.

An Ohio woman working in a dental office gained access to protected information of Medicaid patients in order to illegally obtain prescription drugs.

A Pennsylvania man found that an imposter had used his identity at five different hospitals in order to receive more than $100,000 in treatment. At each spot, the imposter left behind a medical history in his victim’s name.

A Colorado man whose Social Security number, name and address had been stolen received a bill for $44,000 for a surgery he not undergone.

Perpetrators use different methods to obtain the information, ranging from stealing laptops to hacking into computer networks, according to Sam Imandoust of the Identity Theft Resource Center. “With a click of a few buttons, you might have access to the records of 10,000 patients. Each bit of information can be sold for $10 to $20,” he said.

According to HHS, the theft of a computer or other electronic device is involved in more than half of medical-related security breaches. Twenty percent of medical identity thefts result from someone gaining unauthorized access to information or passing it on without permission. Fourteen percent of breaches can be attributed to hacking.

“We say encrypt, encrypt, encrypt,” said Rachel Seeger, a spokesman for HHS’s Office For Civil Rights, which is charged with investigating breaches of medical records in health plans, medical practices, hospitals and related institutions.

The records in a laptop that a fired employee lifted from the North County Hospital in Newport, Vt., last year had not been encrypted. The laptop contained the records of as many as 550 patients. Around the time that breach was uncovered, HHS cited the hospital for a second breach involving two employees gaining access to records without authorization. Those cases are ongoing.

Wendy Franklin, director of development and community relations at North County, said the hospital generally does encrypt its records. Franklin also noted that North County requires all of its employees to sign agreements not to disclose medical records and to undergo training in confidentiality laws and procedures. She also said the hospital has instituted an audit to track access to private health records.

But, in the end, Franklin said, the hospital largely has to rely on the honor system.

Two federal laws govern the confidentiality of medical records: the Health Insurance Portability and Accountability Act (HIPAA), originally passed in 1996, and the Health Information Technology (HITECH) Act of 2009. Together they lay out what health care providers and affiliated businesses are required to do to protect confidentiality of patients.

According to James Pyles, a Washington, D.C., lawyer who has dealt with health issues for more than 40 years, all 50 states have their own privacy laws and 46 of them require consumer notification when there is a security breach of private records.

HHS can impose a civil fine of between $100 and $50,000 for each failure of a business, institution or provider to meet privacy standards, up to a maximum of $1.5 million per year. A person who knowingly violates HIPAA faces a criminal fine of $50,000 and up to a year in prison. If the perpetrator tried to sell the information for “commercial advantage, personal gain or malicious harm,” he or she could face a $250,000 fine and up to 10 years in prison.

The HIPAA law includes exceptions that allow a provider to share medical information without a patient’s permission. A common example is when hospital business offices share information for the purpose of seeking payment. But there are also exceptions for “public health activities,” “health oversight activities,” “law enforcement purposes,” and other purposes. No wonder, Pyles said, some patients are reluctant to disclose to a medical provider that they have a sexually transmitted disease or a mental illness unless they have to.

Under the HITECH law, a medical provider, health plan or medical institution must notify patients when a breach of their medical records is discovered. HHS must also be contacted. HHS discloses breaches involving 500 or more patients.

Discovery of the breach is useful but doesn’t correct the mischief that may have happened. Although patients can have corrected information put in their files, it’s difficult to get fraudulent information removed because of the fear of medical liability.

“It’s almost impossible to clear up a medical record once medical identity theft has occurred,” said Pyles. “If someone is getting false information into your file, theirs gets laced with yours and it’s impossible to segregate what information is about you and what is about them.”

Pyles describes the status quo as “the worst of two worlds,” he said. The U.S. has “a regulated industry that is saddled with laws with so many loopholes that they don’t know what they are responsible for, and a public that doesn’t believe their health information is being protected.”

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