Gold Hits $1600/oz - What are some "safe" investments?

I was on Fox News - Your World with Neil Cavuto -- this week discussing the fact that gold hit $1600 an ounce. I want to give a big shout out to Larry Shover, the author of Trading Options in Turbulent Markets who (literally) wrote the book on how to invest during economic turmoil.

First of all, remember that "safe investing" is an oxymoron. When you invest seriously (for more than 1% on a bank CD), then you are going to face some kind of risk. But there are some areas to invest that present less risk than others. So with that disclaimer, let's look at where to put your money in a turbulent economy.

1. Stock Market (S/P 500 stocks): It's important to acknowledge that there have been and will likely be strong corporate profits. The stock market is very attractively priced - especially given the good profits and strong balance sheets of the top-tier US stocks. Could the stock market go lower? Of course, yet the "cheapness" in the stock market is a reflection of: Sovereign debt, US issues, concern of slowdown in emerging economies. It would appear a lot of this negative stuff is already priced into the market. Any top-tier (dividend paying) issue is a good long-term bet.

2. CTA: Invest in a "Commodities Trading Advisor" most of which take advantage of the various/sundry trends in the market whether they be up or down. CTA's tend to perform very,very well in economic uncertainty - especially in very toxic markets like 2008. Every portfolio should take advantage of a CTA fund that captures trends in: FX, oil, grains, indexes, bonds, et al. Warning: CTA's can be very volatile yet, history has proven that even with the volatility they tend to be less risky.

3. Gold: According to my friend, Larry Shover, "Gold is the Casual driver of global liquidity" and,I agree. If you believe that money is to remain cheap than gold makes sense. However, if you feel there will be a spike in inflation or reverse monetary policies I wouldn't own gold with a ten foot pole. Also, golds most recent run-up to 1600 has had more to do with contagion fear than fundamentals. I wouldn't be suprised to see it back at around 1550 in the near-term.

4. Asian Tiger Exposure: Invest in either a mutual fund or ETF that has genuine exposure to the asian tigers (Hong Kong, Singapore, South Korea, Taiwan). These are countries that are booming - without all the fetters of taxation and regulation. In fact, most of them have been described as replicating the US back in the early 20th century! Cheaper labor, low taxation, growing middle class = success!

Ellie Kay
America's Family Financial Expert (R)

The Writers Corner - Can You Handle an SMT?

So you're a writer. Then you get a book published and now you're an author. Now it's time to try your hand at media and you begin to do "phoners" or radio interviews on the phone. Next, you have a nice break and get to do some regional and even national television. Eventually, you'll progress to the point where you'll hit out of the nearest large city via Satellite and do an interview for a major cable or network station. Then, if you're among the top 10% of authors, at some point, you may be ready to try an SMT or a RMT.

A Satellite Media Tour or Radio Media Tour is where an author is interviewed in back-to-back shows for anywhere from 3 to 6 hours. It usually starts at 6:00 AM Eastern Time, which is 3:00 AM Pacific Time (my time). This means I'll wake up at 1:30 in the morning, go to the studio, go through makeup, then rehearse the interviews, then hit the first show live at 3:00 AM. The challenge is to stay alert and high energy for the next six hours through sometimes as many as 35 interviews. You won't see your interviewers, but they will be in your ear as the the morning news teams from Boston to Los Angeles. You'll hear them ask questions while you look straight into the camera and sometimes they'll stick to the question list, but at other times they'll throw you a curve ball. You will have 3 minutes for the entire interview in which you will need to deliver your points and then it's off the air with a 2 to 3 minute break and on to the next show. Forget about going to the bathroom, that's a luxury that isn't built into the schedule!

Who sponsors SMTS? Sometimes, if your publisher has a boat load of money, they'll give you media training and sponsor a book tour SMT. But those are quickly becoming a thing of the past. Most of the time there is a corporate sponsor, who will handle the bookings, pay the expense of the SMT and handle all the details. Your job is to give a good interview based on the predetermined focus of the SMT. It becomes a win/win for the author and the corporate sponsor. You get to promote your book and the sponsor gets to say "this interview brought to you by...."

SMTs are a strange breed, but I find them to be loads of fun because I like a good challenge. They're like a media marathon and at the end, you get to go back to the hotel and go to sleep. Since most SMTs are done out of NYC, you might also wake up in time to hit a Broadway show.

It's an adventure, but one that is worth it!

Ellie Kay
America's Family Financial Expert (R)

Writer's Corner -- Should I Fund My Own Travel to Go on National Media?

I’m beginning an “Writer’s Corner” for my friends who are in the publishing and media field. One of the questions that authors often ask is, “Where should I put my marketing dollars?” When you have an opportunity to go on a nice, national show and you have to fund the trip yourself, how can you make sure it’s worth what I call the “Media Investment.” So if you are invited on a show, make sure that they are a class act, with a nice set, great team of professionals, excellent production quality and easy to work with ahead of time. But NEVER pay production costs and RARELY pay for play! I do have a source that has a worthwhile pay-for-placement schedule and if you email me at assistant@elliekay.com, I'll send you her contact info. The main thing this blog is looking at is: paying your own travel costs.

When it comes to the ever present question: “should I fund my travel or should I not?” A big consideration is if your publicity dollars are tight--then you might want to pass. Instead, spend those dollars on your website, social media and radio or skype ops that can be done from your home office.

That having been said, there are some ways to make the possibility of a national television appearance more viable financially, even if you have to fund travel yourself. Here are some ideas:

1) TWO FOR ONE DEAL -- Dovetail the media trip off of a nearby major market media trip. If your publisher will pay for you to do a nearby media market tour, then let them know you’ll do the secondary show on your own. This might make your publisher more likely to fund the first market for you since they will be getting a “two for one” deal out of it –two media markets for their one market investment. Or, if you are speaking at an event near the proposed television show, then dovetail the media gig off the speaking gig.

2) MULTIPLES --Pitch the producer with the idea of recording multiple interviews. If you can do the live interview that day, then record 2 to 3 more interview segments on the set after the show, then they will have these shows in the can and you will be on once a week until these segments run out. It makes your monetary investment (for the trip) more valuable. This is how I was able to be on one international show 12 times in 3 trips. I did one live show on each of these trips and 3 recorded shows. But please note: THESE MUST BE ARRANGED BEFOREHAND. Don’t expect to make the pitch about multiple shows the day before you travel and then expect to record afterwards. Pitch the idea of multiples ahead of time, before you book the show and see if they have time in their production schedule to make it work.

3) TIMELESS – If your interview is not headline driven, then try to make it timeless by avoiding mention of events in the news, holidays, days of the week or seasons. Then tell the producer that you are going to try not to “date” the interview so they can re-air it at another time in the event it fits another show in the future and they want to drop in as a segment again on another show.

4) SKYPE - Pitch the idea of a skype interview (free for you). If the angle of your story can become newsworthy (highlighting something that is in the headlines), then they might consider a skype interview. These are usually reserved for those who have been in studio at least once and proven that they can handle an interview. But if you have media clips you could show them and if you’ve done skype interviews before, then make the offer. That way you don’t incur any travel expenses at all. Furthermore, if you go in studio (following one of the tips listed), then be sure you get the producer’s card for future skype opportunities.

NEW AUTHORS - For some writers who are new to the game, a show where you have to fund your own travel would be a good option for you if: 1) you are just starting out in media & want the experience 2) you have the money to invest, and/or 3) you really need a media clip of you on an international or national show. In these cases, it could be all right to invest in going on this show. But be sure you try to get the most “bang for your buck” by following some of the ideas I listed above.

BONUS TIP: If you are recording multiple interviews (in person or via skype) for a faith based show, then try to make one of them a bit more generic (or crossover friendly). Oftentimes these clips are required by national shows like The Today Show, the Nate Berkus Show, ABC News, CNN, CNBC, MSNBC, etc, when they are exploring the idea of having you on a show. These mainstream producers might come calling (or if your publicist pitches them) and they will ask for a media clip to see how you look and act on the air. If you have a clip that is more mainstream (and less evangelical), then you’re more likely to get the media booking.


Ellie Kay
America's Family Financial Expert (R)
www.elliekay.com

Five Top Money Moves for 2011

This week I'll be on over 25 television and radio stations talking about the Top Five Money Moves for 2011.



According to a recent survey, 40 to 45% of American adults make one or more resolutions each year. Among the top new year’s decisions are resolutions about weight loss, exercise, and money management or/ debt reduction. While a lot of people who make decisions during the new year do break them, research shows that making a decision to change is useful. People who explicitly make resolutions are 10 times more likely to attain their goals than people who don't explicitly make resolutions.

If one of your resolutions involve getting fiscally fit, then there are five things individuals, couples and families should do every January, year in and year out, to help their financial picture. These five money moves will help you pay down debt, save more in your emergency fund and be prepared for possible financial setbacks in 2011. They include:



1) CUT COSTS ON FIXED EXPENSES – there are some expenses that people rarely check, but they could be missing out on hundreds of dollars of savings. For one thing, it’s important to call your homeowners insurance provider and ask about getting a better rate. Oftentimes, you don’t think about this policy because the bank may cover this premium and you put that renewal to the side—wrong answer. The other biggie in fixed expenses is auto insurance. If you drive less, in safer ways, and during safer times of the day you can save money on your car insurance. With Progressive’s Snapshot Discount you can save up to 30 percent. It’s currently available in select states so go see if it’s available where you live. A lot of these money savings tips are courtesy of Progressive Insurance, where you can compare rates with a local insurance agent or online at. It’s a good idea to look at the rates listed from different insurance providers because drivers who saved when switching to Progressive reported saving an average of over $500. Shopping around can add up big time! One final, quick tip to cut costs by shopping around, is for groceries. Go to www.couponmom.com where the site will tell you what’s on sale in your neighborhood, which items have coupons, double coupons and store coupons. Using this layered savings approach in the store helped our large family save hundreds of dollars a year on food.



2) COMPLETE TAXES EARLY & FREE– The sooner you file, the sooner you’ll get your refund. When you have your tax forms, do your “Sixty Minute Money Tax Workout”. I recommend TaxACT Free Edition has everything you need to prepare, print and e-file your federal return free. I’ve partnered with TaxACT because it guides you step by step through your return and guarantees your biggest refund. It’s fast, easy and even offers free help. Remember to e-file and choose direct deposit for the fastest refund. Go to TaxACT.com. And once you have that refund, put the money to smart use.



3) CATCH UP ON SAVINGS – In money moves one and two, you freed up extra money by cutting costs and getting your refund back early. I recommend that you take a hard look at your emergency fund. If you are a single income family, you should have twelve to fifteen months of living expenses in this fund. If you are a dual income family, you need six to nine months of living expenses. With unemployment hovering between 9% and 10% in early 2011, it’s important that you save for a rainy day. Use 50% of that tax refund and money saved from cutting fixed expenses to help build up your emergency fund. Then every time you save money on expenses, write a check or transfer those funds into this important account. It will become a habit and you’ll build that account up more quickly.



4) CUT DOWN DEBT – You took 50% of the money you gained from steps one and two and put it in your emergency fund—good job! Now it’s time to use the other 50% to pay down credit card debt and get started on the “snowball effect” of getting rid of consumer debt. This snowball plan works by paying off the credit card with the highest rate first. Then you take the payment you would have made on that first card and put it toward the next card on your list. Each time you pay off a card, you keep taking what would have been that minimum payments on paid off cards and put them toward the next credit card balance. By the time you get to your last few cards, you are paying 2, 3, 4 times the minimum payment, thus getting ahead of interest charges and paying your debt down more quickly.



5) CARE AND SHARE MORE – This is a good time of the year to map out a strategy to give more and get more out of your giving so that you can itemize your deductions. Go through closets and donate clothing and furniture to IRS- approved charities, but keep track of your donations. Ask charities for receipts. You usually get more for each item than you would selling it at a yard sale. Getting certified values for your donations is where a solution like TaxACT can also help. Remember, monetary donations and certain expenses for volunteering are also deductible.

Happy 2011

Ellie Kay

ABC NEWS - Q&A From Military Members & Families

Here's a "Hero Shot" of hubby Bob and his F-4 Phantom, that he flew up until last year when a jet incident caused him to break his back. Thankfully, he is fully functional, but his injuries will not allow him to fly an ejection seat aircraft. The good news: he's gainfully employed flying "regular" airplanes and also the Global Hawk UAV (think the high tech airplane on Transformers).

We had a lot of questions when he had that accident and I speak with a lot of military members and their families who have questions about their lives and finances as well. Some of these fine people were on ABC News with me recently for a Q&A. Here's the recap for you to share with others you know who are in our armed forces. The questions that made it on ABC NEWS won a free copy of their choice of my books! But here are the answers to many more questions.


Q. Is SGLI enough insurance for families or do you need an additional supplemental insurance? From Melody O’Sullivan

ELLIE: SGLI is relatively cheap, term group life insurance that is offered to members of the military on active duty, in the ready reservists, members of the National Guard, members of the Commissioned Corps of the National Oceanic and Atmospheric Administration and the Public Health Service, cadets and midshipmen of the four service academies, and members of the Reserve Officer Training Corps. The insurance is also offered to spouses as well.
Servicemembers’ Group Life Insurance coverage is available in $50,000 increments up to the maximum of $400,000 for members of the military. The price for this insurance is very cheap, so it’s certainly a good value. But is it enough? If you are a young family with only one or two children, then it could be enough. But if you are a more senior servicemember with a lot of family members depending on you, then you might want to buy some term supplemental insurance. Remember that once you leave the military, SGLI is no longer available to you. So if you know you are going to separate in the next couple of years, then it would be a good idea to get a modest supplemental life insurance policy in place.

Q. As a “Key Spouse” how do we encourage other spouses to take advantage of all the benefits the military has to offer? From Starr Vuchetich

ELLIE: Thank you, Starr, for your volunteer work with other spouses, you are to be commended as should ALL our Key Spouses! There’s an old saying that “you can lead a horse to water, but you can’t make it drink.” Your job, as a key spouse, is a difficult one. You know the benefit of taking advantage of the services and perks available to military families, but others have to decide for themselves. The best thing you can do is to lead those spouses by example and express the benefits you are personally receiving from taking advantage of, such as free childcare for volunteering, free financial counseling, free oil changes (or whatever program your base offers), as well as the many benefits listed at sites such as www.militaryonesource.com or www.ourmilitary.mil

Q. How did you arrange childcare during deployments with very little money and how did you maintain sanity with so many small children on a tight budget?
From Jana Baez

ELLIE: I do remember what an incredible challenge it was when all my kids were so young and my husband was gone for weeks (or months) on end. But the first thing I did was plug into all the “free babysitting” I could get. Go to the Family Support Center and see if they offer free childcare for those who volunteer. I also got on site childcare provided when I attended Army Family Team Building classes, so sometimes you can get a break and learn something, too. Don’t forget the community outside of the base gates, either. There are a number of churches, community centers and MOPS (Mothers of Preschoolers) groups that try to support military families during deployments by offering free “Mother’s Day Out” programs or onsite classes where childcare is provided. Last, but not least, form a babysitting co-op, where you get tickets for every child you babysit for every hour. You can “redeem” your tickets with other co-op members and it serves as a way to escape for a while as well as a playgroup when you are watching other children.

Q. How does one begin a business without acquiring debt?
From Chana Montgomery

ELLIE: In the case of a military family, you need to start a business that is completely portable and can move with you. It’s important to select a homebased business that requires little initial investment and will still yield an income to keep you in the black. Do your research and talk to a mentor at SCORE.org where you can get free business counseling in your desired field. If you follow your passion, you’ll be far more likely to succeed. Just email assistant@elliekay.com and ask for the “Homemade Business” file, we’ll send it to you for free as it contains all the information you need to be successful in your endeavor.

Q. When you have extra income flowing in, is it better to work on paying off debts or continue paying normal payments and stash the money into savings?
From Emily Haffner

ELLIE: The answer is “both” if you pay even $5 to $10 more on your credit card minimums, you’ll improve your FICO score and begin to pay down that debt. But you also need a safety net in savings just in case your car breaks down and your husband is downrange and not home to fix it. The optimum savings goal is to have 12 months worth of living expenses. But even if you just save up to 3 months (and keep adding to it little by little) you’ll be better prepared for rainy days.

Q. I have three children and I wanted to know if I should apply the new 9-11 GI Bill to the first child (not knowing how long it will be around) or should I split it up among the children.
Stephanie Berg

ELLIE: Because the Post 911 GI bill is relatively new, and because we don't know how Congress will vote to continue this practice, it may be best to take the money while you can. It's still important to have your child go to the most affordable school possible, get scholarships and other means of payment. But go ahead and use as much of that GI Bill money as you can to pay what you can on your oldest child's college. In the meantime, the money you would have put toward his/her college (from your own 529 plan or other savings vehicle) put into another college fund for your other two children.

By funding more on the other two children's accounts, your money will continue to grow as the market continues to rebound. But in the meantime, you will also be able to take advantage of the current bill. Do not give your first child his/her saved "college money." Instead, put whatever you have saved toward the other two. You can tell your oldest that his/her college money is coming in the form of the POST 9ll GI bill. Because you don't want the youngest two to be stuck with student loan debt that the oldest child did not have to accrue.

Q. With limited funds, what should be the priorities for the best use of financial planning? Should I invest in the TSP (Thrift Savings Plan), IRA, life insurance or mutual funds? Major Anthony Smith

ELLIE: Once you’ve paid off your credit cards and funded a 12 month savings account, then you are ready to take your investments to the next level. It will depend on your family size, retirement needs and current income. I do not recommend life insurance as a good investment tool, even though agents may point you toward that route since the commissions are significant. Better to max out your TSP benefit since those funds will still be available to you if you do not make the military your career for a twenty year retirement requirement. It’s also a good idea to get a ROTH IRA or regular IRA. Go to your Airman and Family Readiness center and ask for an appointment with a financial counselor. It’s free advice and the expert there can look at your entire financial picture to help you come up with the best method of investing. Or try the military friendly company, USAA, they help to fund a lot of military events and can offer good advice on mutual funds.

Q. Being that you moved many times during your military career and have many children, how did you present it to the children when you had to PCS (Permanent Change of Station)? From Kristie Fromer

ELLIE: This is the hard part of military life, Kristie, and thank you for your willingness to go through this. One of the advantages of having so many kids is that they were sure to have built in playmates wherever they went! When we told our kids they would have to leave their friends, we allowed them the freedom to grieve and be sad over leaving. But we were also positive about where we were going. We printed out materials about the new base and all the places we could visit and where we would go camping along the way. By focusing on the positive, while allowing them the freedom to express their feelings, we had healthy, adjusted kids and a well bonded family.

Q. If your auto is less than two years old, is it a good time to refinance? We retire in 2011 and will be buying a house wherever my husband starts his second career. Is this wise to do before buying a house? From Lisa McClain

ELLIE: Refinancing a car will cause a hit to your FICO score, but it can be a good idea in order to get you a lower interest rate. I offer two words of caution: 1) refi at least six months before you get a home loan in order to give your credit time to recover and 2) refi with payments that will end at the same time your original loan would have ended (otherwise, you're just paying interest over a longer period of time.) For example, if you have 3 years left on your car loan. Then refi the loan for 3 years (instead of 4 or 5).

Thank you for your service, military members and your families. Remember three things:

• America loves you
• We support you
• And together we'll be all right!

Ellie Kay
America's Military Family Expert (TM)

On ABC NEWS - Heroes at Home Corner - Military Financial Issues

I'm going to fly in one of those jets one of these days! My work with military money matters makes me concerned with recent bad news for military members and their families.

I was on ABC News this week talking about this survey. And here's the short version of what we discussed:

The Investor Education Foundation of the Financial Industry Regulatory Authority developed a military survey in consultation with the Treasury Department and the President’s Advisory Council on Financial Literacy. Their findings were alarming in that there is a significant increase in consumer debt among military members with more than one in four reporting a credit card debt load of more than $10,000.

Q. Ellie, you work extensively with military members in addressing their financial concerns, how bad is the problem?

A. The information that came out of this new survey is pretty sobering. The study focused on the financial capability of military personnel and found that while some in the armed forces are handling their finances fine, an alarming percentage aren’t doing so well. Debt is only one of the concerns that came out of the report, but it made it to the top of the list because the average military member has more consumer debt than the average American civilian.


Q. Why is debt more of an issue for service members than for civilians?

A. There are a number of reasons that account for this higher debt burden. For one thing, the survey found that military personnel and spouses are generally heavier users of credit cards than are civilians. And we all know that the more you use them, the more likely you are to be more heavily indebted to credit card issuers. In online polling of 700 current members of the U.S. armed services and 100 spouses of current members, more than one in four respondents reported having more than $10,000 in credit card debt. Ten percent of respondents said they were carrying $20,000 or more in such debt. The percentage of those who made minimum credit card payments, took out cash advances and paid fees was highest among families of enlisted personnel and junior noncommissioned officers.


Q. I can certainly appreciate the concern over this increased debt load, but what are some of the reasons that military families have more debt besides the fact that they use their cards more? After all, they do get a regular paycheck, military housing and health care.

A. Even though active duty troops can count on a regular paycheck from Uncle Sam, many military families face the same pressures affecting other Americans during this downturn: Spouses are having difficulty finding work, and mounting debts and foreclosures are forcing them out of rental homes. For those who are stationed overseas those factors are multiplied even more because in some countries spouses are not allowed to work on the economy. Also, when your loved one is deployed in harm’s way, there’s a greater tendency to overspend on comfort items for yourself and your children, for childcare and for eating out because you’re too tired or too depressed to cook. So military families are feeling the effects of our economy…and doubly hard in some cases.

Q. Most Americans I’ve talked to are concerned about their own finances in a post recession economy, but there seems to be a greater concern when military members have money problems. What are the long term implications regarding a lack of financial stability among service members?

A. Yes, you’re right, all of us are concerned about our money and how the economy is going, but our individual money problems usually don’t impact national security. But when you have those serving in the armed forces bogged down with the same issues, it is elevated to that disturbing level of impacting national security. It’s important that military personnel not be weighed down with money issues. Their financial stability is directly linked to their military readiness, according to studies by the Defense Department and the Government Accountability Office. Service members with severe financial problems can lose their security clearances, and bad money management also can result in sanctions, impair career advancement or lead to a discharge.

Q. We’ve talked about consumer debt, but what are some of the other problems that tend to plague military families that may not necessarily impact civilian families?

A. More than one-third of the military respondents said they had trouble keeping up with monthly expenses and bills. Many service members have gotten payday or auto title loans and these kinds of loans deteriorate their assets. Members of the military use payday loans three times as often as civilians, a separate Defense Department study found. With a payday loan, you borrow against a future paycheck. On an annualized basis, I’ve seen the interest rate on such loans range from 400 percent to more than 1,000 percent. Although there are many similarities in how they handle their money compared with the civilian population, military families have unique issues such as frequent deployments. Being in the military may be a secure job, but for many the paycheck is small. It’s not hard to end up with ‘more month than money,’ especially if you are young and have little experience of managing finances. And the military does have special challenges with frequent moves that always end up costing money.

Q. What is the Department of Defense doing in light of the recent financial crisis among military members?

A. The DOD has had financial counselors as part of each branch’s family support centers, but one or two people servicing the population of an entire base isn’t enough. Consequently, they have also created a financial readiness campaign because of the number of military personnel in debt and because so many were losing their security clearances. The Investor Education Foundation is also helping, conducting financial education forums here and abroad and awarding fellowships to military spouses to help them become accredited financial counselors so that they can help their peers. A soldier who is worried about finances is not a soldier who can focus 100 percent on his or her job. I think that when we put our national security in the hands of our fighting forces, then it’s in all our interests that they be able to do their jobs without being sidetracked by financial problems.

Lest you be discouraged by this recent survey--there is hope! Next blog, I'll answer questions from our men and women in the military (and their families), so stay tuned.

And to all those who serve in our armed forces, we thank you!

Ellie Kay

America's Family Financial Expert (R)

Red, White and Scammed - Tell Your Military Friends to Beware!

This week on ABC NEWS and KLOVE, I've been discussing how
thousands of service members engaged in fighting America’s battles overseas are now encountering a foe here at home. Enlisted men and women are easy marks for sleazy car dealers, insurance scammers predatory lenders, and identity thieves. So pervasive are the rip-offs and so troubling is the debt incurred by military personnel that US Department of Defense officials recently labeled the situation a threat to national security.

We have a long tradition of military service in our family. My grandfather was a bombardier who died in WWII, my father is a retired chief master sergeant in the Air Force, my husband, Bob, flew Air Force fighters for 25 years, our son, Philip, is a senior at the Naval Academy and will to cross commission into Marine Corp Aviation, our next son is headed toward the Air Force Academy next year and the youngest son wants to go to Westpoint and be in the Army. In fact, the photo you see is Bob, pinning on the Philip's Airborne wings--the very wings Bob earned 30 years ago when he was a cadet at the Air Force Academy!

Q. The DOD has labeled the fraud situation among the military as a threat to national security. How does getting scammed impact lives overseas?

ELLIE: It’s all about distraction. When military members are distracted, whether it’s worry over identity theft or trying to wondering if their spouse is able to deal with messy finances at home—then that’s when accidents happen. Distraction leads to worry which leads to accidents. And when accidents happen, then there is loss of life. So if we want to help save lives overseas, then we can all do our part to protect our military members by exposing rip offs and scams whenever possible.

Q. What kind of paycheck does a typical recruit make & what are some of the questionable ways that local businesses try to get a piece of that paycheck?

ELLIE: They earn about $1800 per month & these paychecks can be carved to bits by bad deals. For example, a computer store outside of Great Lakes Naval Training Center in Illinois employs attractive women to troll for new sailors. Once they get them inside the store, they are pressured into buying a very basic laptop for more than $4000, which is three times as much as the computer is worth. Then they finance the deal and the computer ends up costing even more with the store also making money on financing.

Q. What are some other common ways that the military is ripped off and people should be aware of?

ELLIE: There was recently a multistate investigation launched into life insurance scams that were being perpetrated against military members just before they took off to the Middle East. These scamsters sold soldiers extremely overpriced or misrepresented policies, taking advantage of the emotional situation of leaving families to go into harm’s way. This investigation ended with the companies offering more than $70 million dollars in refunds to thousands of service members. When it comes to life insurance, military members are offered SGLI or Servicemembers Group Life Insurance, which is a legitimate source for low premiums, so there’s really no need to secure other private insurance!

Q. Tell us about the “Red Cross” scam that is getting a lot of attention among military families?

ELLIE: This is fairly despicable, as it prays on the emotions of family members. A con artist claiming to be with the Red Cross will call a parent of a servicemember or their spouse, telling them their loved one has been injured and they need their social security number to authorize help for them. In some cases, they ask for an initial cash payment. Military members need to clear any report of injury through the chain of command or by contacting the base family community services.

Q. It seems that our military is very young, what is the average age of a service member and do they receive any kind of personal finance education as part of their training?

ELLIE: Yes, they are young, in fact, the average age range of military members is between 22 and 28 years old. Of the groups I routinely speak to around the world, I’d say that the average 22 year old has an even younger wife and a baby as well—so it’s a lot of responsibility for someone so young. The good news is that since 2004, service members learn about personal finance as part of their early training. When I go to give my “Heroes at Home” message I teach about finances and also encourage them to use the resources they have available to them on base. Army Community Services, Airman and Family Readiness Centers, Fleet and Family Support Centers—all of these have personal finance counselors there who are ready and willing to give free financial counseling to service members and their families. It’s what I call my $300 tip, because a couple hours with the caliber of financial professional at any of these centers is equivalent to paying $300 to a CFP or CPA.


Ellie Kay
America's Family Financial Expert (R)
http://www.elliekay.com/

College Grads Avoid Debt Trap

Son, Daniel graduates from college in this happy snap and it's that time of year when proud parents of the class of 2010 gather to watch their children graduate from college. I was recently talking about this topic on ABC NEWS, Good Money where you can watch the clip.

After the hats are tossed, tears are wiped away and the celebratory cake is gone—the graduates will begin their new lives in the real world. But this year’s graduating class faces a wretched job market where there may be as many as five candidates for every job. Consequently, one of the most daunting tasks becomes the challenge of not falling behind on student loans. While challenging times can build moral fiber, you don’t want to build character by getting involved in the debt trap.

Q. First of all, what are some of the consequences that graduates face by getting behind on student loans?

Ellie: As a mom of kids in college as well as a recent graduate, I know personally, how difficult the job market is and what a challenge these graduates face. First of all there will be interest charged for late payments as well as fees that will inflate the amount they owe---and chances are good that they owe too much as it is! If you default, the government could garnish your wages and withhold your tax refund. Not to mention a huge hit on your FICO score, when you’re just starting out and trying to build a good score that will help get lower interest rates on a car or a house. This isn’t a good way to start your post-graduate life!

Q. But you say there is good news and that these dire consequences are avoidable, as least as far as federal student loans are concerned. The key is to understand your options and take action before you fall behind on payments. The first tip you list is to understand your grace period, when do students have to start paying back these loans and how do grace periods vary?

ELLIE: Borrowers typically have a few months after graduation before they are required to start repaying their federal student loans. For most federal student loans, the grace period is only six months. Most loans have up to ten years to repay. It’s important that you contact your loan provider and find out when the statements begin—especially if you haven’t received notification yet.

Q. What if the graduate has trouble finding work or they find an entry level job that typically doesn’t offer much in the way of compensation? Is there recourse for the amount they are required to pay for their loans?

ELLIE: That’s an excellent point and it brings us to our second tip, they need to find out whether they qualify for the income-based repayment program. Under this program, your loan payment could be reduced, based on the amount of discretionary income you have available. In most cases your loan payments won’t exceed 10% of your total income. After 25 years, anything you still owe on the loan will be forgiven.

Q. Is this income based repayment program an automatic enrollment or does the graduate need to apply for it?

ELLIE: You definitely need to apply for it by contacting the company that is servicing your student loan. If you’ve moved a time or two and your loan papers have not been forwarded to you and you are not sure who services your student loan, then you can go to the database of the National Student Loan Data System.


Q. Is there some paperwork you need to compile before you apply for the income based repayment program?

ELLIE: Yes, it’s important to have this paperwork on hand in order to streamline the process because you do want to get this filed as soon as possible—especially if you’re in danger of being late on loans and you have a genuine financial hardship due to your current income levels. You’ll need to authorize the IRS to provide last year’s tax return to the Department of Education. If you feel that your tax return doesn’t reflect your current situation, there’s a form you can use to show how your situation has changed. Get info on these forms and criteria, as well as links to major student loan servicers at the Project on Student Debt.

Q. We’ve looked at income based repayment, but what about those who need a quick, temporary fix? Maybe they have to take an unpaid internment at first or they may have a job that will become available in six months. Are there options such as deferment or forbearance available to this class of graduates?

ELLIE: If you are unemployed, still in school or experiencing economic hardship, you can apply to have payments on your federal student loans deferred for up to three years. If you have subsidized Stafford loans, which are provided to students who demonstrate financial need, the government will pay the interest on the loans during deferment. Interest on unsubsidized Stafford loans will accrue during deferment. If you don’t qualify for deferment, then you still might be eligible for forbearance, which allows you to put off payments for up to three years. It’s harder to qualify for deferment than it is for forbearance because in forbearance you will still have to pay interest that accrues.

Q. Does it take a long time for the paperwork to go through for these kinds of programs we’ve discussed: income based repayment, deferment and forbearance? Couldn’t a graduate find themselves in default by the time the paperwork is processed?

ELLIE: It’s important that you continue to make full payments until you’re notified otherwise. It takes longer for income based repayments and doesn’t take as long for deferment and forbearance because the latter two are temporary relief from loan payments. Whereas income based repayments could be longer term, depending upon how long you are in that job, making that salary. It’s important to look at forbearance and deferment as short term fixes and not long term—that’s why it’s really important to file for these right away, while you’re looking for a job. But if it looks like your payment problems will last longer than a few months, you definitely need to look at income-based repayment.

Q. Some graduates have huge student loans, in some cases, they have more than $30,000 in principal and interest. It is especially difficult for these grads to face this mountain of student loan debt. Can they extend the payment term in order to get through the first few years?

ELLIE: If you are a borrower who owes more than 30K , most lenders will allow you to extend the term beyond the standard 10 years, thus reducing monthly payments. The amount of interest you pay will increase, though, particularly if you extend payment over the maximum term of 25 years. And who wants to spend the next 30 years paying off a student loan? So I would only recommend this option as a last resort. Try to pay it within the standard 10 year term so that you can avoid thousands of more dollars in interest.

Q. Finally, we’ve discussed federal student loans, but a lot of viewers may hold private student loans that they have to repay. What are their options?

ELLIE: Well, the outlook is not as sunny for those who have private loans. They have fewer options. Private education lenders don’t participate in the income-based repayment program and they’re not required to allow you to defer payments, even if you’re out of work. If you’re having trouble with your private loans, read your loan agreement. It may require that the lender grant you forbearance under certain conditions. Even if your contract doesn’t include an economic hardship provision, your lender may be willing to provide relief. Some lenders have become more flexible in this post-great recession environment. You could ask for interest only payments or even to change the terms of the loan. For more information, go to Student Loan Borrower Assistance

Ellie Kay
America's Family Financial Expert (R)
http://www.elliekay.com/

The Great Escape Plan - Vacation for Less!

There's nothing worse than anticipating a much needed getaway only to discover a lot of unexpected fees, add-ons and additional expenses once you get to your dream spot. With so many sites and so many choices, how do you know if you’re getting the best deal?

Today, I was on KLOVE, with the fun-loving Scott and Kelli to make some recommendations that will make the process easier and more rewarding.

STEP 1: Be the Expert - You may think you have a good idea of what a great price is for airfare to the Grand Canyon, but how can you be sure? By subscribing to a few travel alerts and newsletters, such as Travelzoo, SmarterTravel, Yapta are good as well as Bing.

STEP 2: Beware! -- You don't want to show up for your dream vacation and find out that the "Five Star" hotel you booked looks more like the Professor's hut on Gilligan's Island. For videos of hotels, restaurants, and attractions, go to Tripfilms and take a peek from videos posted by other travelers. You can also look at families' vacation photos of your destination at Flickr. Or read reviews by others posted at TripAdvisor.

STEP 3: Be Smart -- "A Wise man count the cost before he builds a tower" says Proverbs. When you're searching for the best air fare, go to BookingBuddy, which will save time and money because it will search almost all of the OTHER airfare research sites (such as Orbitz, Expedia, CheapTickets, etc) to give you the best price. Also, find out the real price of your airline experience by checking Airline Fees: The Ultimate Guide at SmarterTravel where you'll find the cost of carryons, checked luggage, blankets, pillows or if you have to cough up $100 more for that extra leg room!

STEP 4: Be Open -- It's really a buyer's market in some areas this year, especially if you are open to more than one vacation idea. For example, this year, according to the 40% to 60% off deals at Travel-ticker to go on a seven day Mexican Carribbean Cruise than it is for us to go to Disneyland. So we'll feast on fajitas this year and leave the mouse ears for next year!

STEP 5: Be Social - Do you want to know if that restaurant you're considering is good or not? Then turn to your social media friends (and a smart phone) to find out! By using facebook and twitter, just ask your friends what they think. Or log onto Yelp to see what others are saying. By getting a free app with FlightAware you can track your flight within five minutes of real time.

Question of the Week from Georgina from Baker, FL - Ellie, I know you purchase $25 gift certificates when they go on sale at Restaurant.com for only $2, but is there a "catch" or any restrictions involved?

ELLIE: Georgina, I find out that these are on sale by subscribing to the Top Twenty and I LOVE them! The restrictions are listed and usually include the fact that they will add 18% automatically at the restaurant for a tip (before the gift certificate, so don't double tip) and you have to spend $35 to use the $25 gift certificate. Even so, we still save about 50% and it's worth it!

More Sites for Savings
Hotels.com – Find best prices on hotels internationally and earn bonus stays
Ifly.com – terminal maps, estimates on how long security lines are, where to eat.
Otalo.com – vacation house rental deals
Tripkick.com – detailed info on hotels and specific room info
TVtrip.com – photos of lobbies, rooms and neighborhoods
Oyster.com – pros and cons of different hotels
Voyij.com – checks best sales, promotions and package deals from departure city
Seatexpert.com – guide to the best and worst airline seats

Have a Great Escape!

Ellie Kay

America's Family Financial Expert

http://www.elliekay.com/

The Road to Financial Heckie-Fire

Here's one of my favorite picks taken a few years ago with the "Pastor to Presidents," Billy Graham. He's an amazing man of integrity and in the business of keeping people out of hell.

They say that the road to hell is paved with good intentions. When it comes to your finances, some of these well meaning money moves can actually become major slip-ups that only compound existing financial difficulties. While parts of the economy are looking better, unemployment remains at a rate of 9.7% and this means that many families are dealing with weeks of unpaid leave. Still others are trying to recover what they lost in their investments, home equity and in the stock market. Recently on ABC NEWS NOW, I shared with the host, Tanya Rivero, some advice on how to stay out of the bad place. Here are some things to avoid:

Q. Ellie, one of the primary money sources that some families are using to avoid bankruptcy is to raid their 401 (k), which, you say is a major misstep. Why is this so problematic?

ELLIE: Our parents’ generation tended to work for someone who gave them a pension check for the rest of their lives. This means that current workers may not have been raised with the mindset that they control their own pensions and need to make funding their own retirements a priority. There’s an alarming trend that involves looking at 401(k) accounts as “now” money when it’s really “later” money, that really must be saved for later. While raiding an IRA to avoid bankruptcy is a well intentioned money move, it’s also foolish because if you end up in bankruptcy anyway, then you’ve passed up the benefit you have in the fact that retirement accounts are protected under bankruptcy laws in most states.

Q. For twelve million Americans, their homes are worth less than they owe, which leads us to the next major money misstep that has become more common in the past two years and that is walking out on a mortgage. What are some other options available to families that feel this is their only option?

ELLIE: I would say that half of the people who walked away from mortgages didn’t have to take that path and probably didn’t consider all their options. Providing you still have some income to pay on a house where you owe more than it is worth, the first step homeowners should take is to decide whether their mortgage issue is a short term or longer term problem. For example, if you just got laid off and have no savings or small savings, but the job market in your town is such that you can probably get some part time or full time work to keep money coming in, then you have a short term problem. On the other hand, a long-term problem means you’ve been unemployed, you’ve wiped out your savings and you don’t see a way back into the job market.
The sooner you recognize the fact that it’s a long term problem, the sooner you can put your best food forward to sell your home in a short sale and move into a smaller, less expensive place. That way, you can preserve your capital for a better time.
If it’s a short term problem, then talk with your mortgage lenders and see if they will suspend or lower your payments over the next three to six months until you are employed again. You can go to MakingHomeAffordable.gov, which is a federal government website with the goal of helping families by providing free HUD-approved counselors who can help you modify your mortgage.

Q. In every newspaper and on television, we see advertisements for credit counseling agencies that will eliminate your debt. But you say that debt wipeout scams are a major problem. How can we tell the scam from the real deal?

ELLIE: It can really be confusing because they sometimes advertise as debt consolidation companies, but you need to be extremely cautious because I would say the majority of those advertisements are misleading at best and a scam at worst. If it sounds too good to be true, it usually is. Instead, go to the NFCC.org with is the National Foundation for Credit Counseling. This is a non-profit and free service that you can trust.


Q. An alarming number of Americans, some 19 million of them, have also resorted to payday loans in order to make ends meet. How do these loans work and are they ever a good idea?

ELLIE: These are high interest loans that have an average interest rate of between 390% and 520%. They are marketed as short-term cash advances to help meet emergency expenses between paychecks. But the problem, besides, the interest rate, is that it becomes a repeated pattern and consumers become trapped in this kind of borrowing. Avoid these at all costs, and if you have young adult children, especially those in the military, educate them on the dangers of payday loans since these companies tend to flourish near military bases.

Q. Credit card usage has dipped more than 13% in February and yet almost 15% of American families still owe more than 40% of their income in consumer debt, according to the Federal Reserve. Ellie, you say that another major misstep is ignoring the card balance.

ELLIE: Yes, Tanya, while it’s commendable that credit card usage has declined, it’s still an issue when the credit card is used as a means to spend more than you can afford. This is a strategic error that can lead to financial hell as consumers ignore the balance. The new government mandated box on your credit card bill will show you how long it will take to pay off your balance if you pay only the minimum and how much interest you pay to carry a balance. Pay attention to these numbers, instead of ignoring them, and ask yourself if you can afford that item before you put it on your credit card. Behavior modification doesn’t happen overnight, but eventually, you can begin the climb toward getting out of debt.

Q. One final area that we’ll look at today has to do with trying to fool Uncle Sam. Ellie, you say that this money misstep can cost taxpayers big bucks if they are caught and that there is a difference between mistakes and intent—what is the difference?

ELLIE: It’s really pretty simple. Everyone will make a mistake here and there can be accidental errors on the tax returns of the most honest kind of people. But some folks are looking to save money by “accidentally” misrepresenting large amounts of money. We see them in the news—whether you’re a celebrity or a politician, you still have to pay your taxes. By signing the box on your tax form that you believe everything to be accurate and true on your form, you open yourself up to significant liability. If you’re audited and they can prove that the misrepresentation is intentional, then not only are there penalties involved, but you could also be charged with federal fraud. So pay those taxes, even if you have an extension and call the IRS to set up payments if you cannot pay all you owe.

Ellie Kay
America's Family Financial Expert (R)
http://www.elliekay.com/

Double Your Returns on Investments - Viewer Q & A

I had a very nice response from my ABC NEWS NOW show last week and wanted to share my favorite questions from viewers, along with some answers you might find helpful!




Q. Should I buy gold? If so, how do I buy it?
Thomas, Sante Fe, NM
Submitted via Facebook


Ellie: Today’s discussion has been about investments that double your returns, and we’re talking about small returns to begin with. Consequently, gold doesn’t qualify as a risk free way to double your returns. But you could keep gold in your portfolio for safety and protection as a hedge against inflation. As always, keep your portfolio diversified and don’t overstock on gold. If the dollar stays weak, as it is suppose to do until interest rates are rising again, then the price of gold is expected to rise in the second half of the year. You can buy gold in one of two ways: you can buy a gold based ETF (exchange traded fund), which is traded like stock. Or, you can buy gold coins such as the American Eagles. Go to money.org, to find a gold coin dealer. Store these coins in a safety deposit box at a bank.



Q. If a high interest bearing checking account has so many hoops that I have to jump through, then is it worth the effort it to park my extra $20,000 in that account?
Rosha, New York
Submitted via blog

Ellie: Yes, high interest bearing checking accounts can earn as much as 4.3% and they are complicated and require a certain number of debit transactions because they make their money from merchant fees from those transactions. They also can require direct deposits or automatic payments. But if you took your $20,000 and parked it there, instead of making nothing (which is what you would do in an average checking account, when adjusted for inflation), you could, instead, make $860 in interest.


Q. Do high interest checking accounts have the same protections that regular checking accounts have? I’m concerned because most of these are found in small banks and we all know how many banks have failed in the last couple of years—plus, they aren’t local to me and I’m a bit squeamish about banking long distance.
Victoria, Spokane, WA
Submitted via email

Ellie: Yes, most of the high interest checking accounts you’ll find at www.checkingfinder.com are held with small to medium sized banks because it’s a new stream of revenue that is working for these smaller financial institutions. Not all of these accounts are created equal, so you need to do your research before you sign up. Some of these have an automatic reimbursement of up to $25 monthly for ATM fees, because they understand there will be a charge for their customers who don’t bank with a mainstream banker. In terms of your money being secure, have no fear! They have the same FDIC protection offered by any local or big named bank, which among other benefits is up to $250,000 per person per bank.


Q. I’m interested in investing for double my return at less risk and was thinking about investing in bonds because some of my more savvy investing friends have found success with their bond investments. What, would you say, are the least risky bond mutual funds?
Jill from Chicago, IL
Submitted via online contact form

Ellie: Even though bond mutual funds are less risky than stock mutual funds there is still some risk involved, unlike non traditional CDs and high interest bearing checking accounts. Short term bonds tend to be less risky than intermediate and long-term bond funds. But understand that you can lose money as the bond market goes up and down. Do your homework by going to Morningstar.com to research how the bond mutual fund performs. Granted, it’s rare that you would lose money over the course of a year. In fact, the greatest kind of disappointment you might have, if anything, is that they just don’t make as much money as you hoped they would make. But that is a price worth paying for a 4% to 5% return on this kind of short term investment.

Q. If I want to concentrate on de-leveraging, should I pay off consumer debt before I build up an emergency fund? If the most I can get on a high interest checking account is a 4% then wouldn’t paying off a credit card that is at 16% make better financial sense?
Lee Green from Colorado Springs, CO
Submitted via Facebook

Ellie: On paper, it makes more sense to use that saved money to pay down a 16% rate than it would be to get a 4% (max) rate on the high interest checking account. However, there’s a hidden factor here and that is the uncertainty of what your economic future holds. With unemployment in double digits in many parts of the country and employers offering paycuts to keep employees gainfully employed, there are no guarantees. That’s why you need an ample emergency fund—around 9 months of living expenses if you are a dual income family and 12 months if you are a single paycheck income. I’d recommend you put a portion of your savings toward consumer debt and a portion toward building your emergency fund in order to build one up while you’re paying the other down.

Ellie Kay
America's Family Financial Expert (R)
www.elliekay.com

Earn 4.3% on Your Checking Account? You Can Double the Returns on Short Term Investments

The return on your savings account, money market account or certificate of deposit is probably hovering at 1.7% (see below), but what if you could boost that return to 3.4% or more? You would double the returns on your short term investment!

In the spring of 2008, consumers were saving less than 1% of their income. But then the economy headed south and savings headed north to where Americans were saving over 6% a year later. In fact, as a nation, we saved 5.6 trillion dollars last year. But wait! That’s not all the good news—there’s more! Inflation is projected to remain relatively low for the next five years, hovering around 2.5%. This means that all those people who have been saving money have a legitimate question to ask—what should we do with our savings? If you put it in your basic checking account, you will lose money due to inflation, but how do you make it grow without risk? I was recently on ABC NEWS NOW to discuss this problem and here are some of the highlights:

Q. Ellie, many of the people who are putting away 6% of their income are saving for a time in the near future when they feel comfortable enough to spend again. What are some of the things that these savers should not do with their money?


Ellie: I think it’s just as important to know what not to do with your money as it is to know what to do with that savings. If you are like most of those savers, you’re saving for the short term—at least temporarily. So that means you should not tie up your investments in stocks. If in the next three to five years, you plan on starting a business, buying a home, sending a child to college or buying a car—you should look at short term investing and not long term. There is a difference between funding long term investments, such as retirement and saving cash that you might need in the next three to five years. Second, you should not put these short term investments into money market accounts or traditional CDs because the money sitting in these low yield accounts, when weighed against inflation are basically making you nothing. When you do the math, you’ll see that a basic account making around 1.7 % interest, after you pay taxes on the growth and then adjust for a 2.5% inflation rate, is losing you money. In fact, that $100 you now have will be worth $98.60 next year.


Q. Then where do we start and if you are advising savers to avoid putting their short term savings into a savings account, then where do they put it to protect the principle and make the money grow?

Ellie: High Interest Bearing Checking accounts are a good place to start. In the past, these kinds of checking accounts haven’t been worth the effort. But recently, some financial companies have responded to the economic situation and they have found a way to still make money by allowing you to earn money as well. These kinds of high interest bearing checking accounts can usually be found in small to medium sized banks and some of them are paying 4% interest, which is 30 times what you could make in an average checking account or money market account. You can go to http://www.checkingfinder.com/ to find one of these kinds of accounts. An example of this is Royal Banks of Missouri, that pays 4.3% on balances up to $24,999 and 1.4% on balances over that maximum. There is a catch, however, you must use your debit card at least 10 times during the statement cycle, make at least one direct deposit or an automatic payment per month and then receive your statements online. If you don’t meet ALL this criteria, the hit is a big one because you’ll only earn .15% on the entire balance for the month.



Q. So a High Interest Bearing Checking account is one way to double your return. If we’re not having much luck in average money market funds and traditional CDs, then is there another kind of CD out there that might help those who want to double their return?

Ellie: As a matter of fact, you can look at some of the nontraditional certificates of deposits to get a better rate. First, look for the introductory teaser rate which are found at bankrate.com or ratebrain.com. I found some for 4.3%. You’ve seen the teaser rates for credit cards and these are basically the same kind of offer—they have limitations and stipulations and if you want them to work for you, then you’d better know what those boundaries are. Most of these introductory CD rates are from banks who want to boost their deposits by offering a drop dead gorgeous interest rates. As long as they are FDIC insured, you don’t have to worry.

Q. In the past, it’s been wise to ladder your CDs, is that still true, even with the nontraditional certificate of deposit?

Ellie: Yes, the laddering concept is still the same. Basically, you’ll divide your CD money into four or five pots of money, then invest the portions into CDs that will come due over the next five years. That way, when interest rates rise (and they will) then you won’t have to wait five years to take advantage of the higher rate; you’ll be able to roll over the CD that matures next. This strategy also gives you more access to cash, should need it.

Q. One of the new nontraditional CDs that can give you twice the return at no risk is called a STEP-UP product. How does this work?

Ellie: This is a new kind of product that offers longer maturing CDs at a higher rate for each year that you hold the certificate. The first year, it may offer a 1% return, but in years two and three, you could see it rise to 2% and in the fourth and fifth years it would be 4%. They are FDIC insured and you will need to buy them through your brokerage firm. But the good news is that you do not pay the commission, the issuing bank will cover that amount. However, if you want out of the CD early, you could go back to your broker and they could try to find someone to buy them from you, but in that case you would be the one paying the broker’s commission.

Q. A second kind of non-traditional CD is called a “Structured” CD, how does it work and are they a better option than a traditional CD?

Ellie: The returns on a structured CD are tied to an index (such as the S&P 500) or they could be tied to currency movements or inflation. You are guaranteed not to lose money should the index decline, which is nice but if it goes up, you’ll only get to take advantage of a part of that gain. So if the S&P goes up 10%, you may only get 6%. While some of these are FDIC insured, others are insured by the bank. I recommend the FDIC insured variety.


Q. Most of those who saved a part of that 5.6 trillion dollars last year, are short term investors who are saving to buy a car, house, or pay for college. While some aspects of the bond market have been attractive in recent months, is there a short term bond investment that will still allow savers to double their returns with no risk?

Ellie: There is a group of short term bonds that invest in municipal and corporate bonds and these can earn up to 4% and 5% in returns! Like our nontraditional CDs, these are also purchased through a brokerage firm, but as with any kind of a mutual fund it is a good idea to check the fund’s rating at Morningstar.com. Not all of these funds are created equal and some are better than others. Of all of the returns we’ve talked about so far, this investment option is the riskiest. Sometimes the bond market performs well and sometimes it doesn't, that's the risk you are taking for the higher return in this case.

Ellie Kay
America's Family Financial Expert (R)
http://www.elliekay.com/

When Free Credit Reports Aren't Free

When A “Free” Credit Report is not Free

Ellie was on ABC News Now this past week talking about this critical topic. Since 2004, consumers have had the right to request a free credit report every 12 months from each of the three credit-reporting agencies. But almost from the beginning there’s been confusion about how to get a free credit report. There are thousands of people who respond to TV ads offering “free” credit reports or they order a credit report online only to later discover that they have signed up for a monthly credit-monitoring service that was definitely not free.
**********

Q. Let’s start with the obvious question, Ellie, when is a free credit report really free?


Ellie: There’s basically one primary way to get a no-strings-attached free credit report and that is to go to AnnualCreditReport.com or call 1-877-322-8228. You can also write into Annual Credit Report Request Service at PO Box 105281, Atlanta, GA 30348-5281. While there are many look-a-likes sites, there is basically one government site and that is AnnualCreditReport.com .

Q. What is the difference between a credit report and a credit score and are they both free?

Ellie: A credit report is your credit history and that is free as outlined above. However, you are not entitled to a free credit score. The credit score is your FICO (Fair Isaac Credit Score) and it indicates your credit worthiness and will impact a variety of financial areas including what kind of Annual Percentage Rate you will pay for your mortgage loan.

Q. How often can you get a free credit report and from what credit reporting agencies?

Ellie: You are allowed one free report, per year, from each of the three major reporting agencies: TransUnion, Experian and Equifax. You don’t have to get all of them at the same time. In fact, I recommend that you spread out each of the reports every four months. That way you can track, for free, whether there have been any major changes in your credit history on a regular basis.


Q. Should I order a copy of my kids’ credit report to see if someone stole their ID?

Ellie: Child identity theft is on the rise and it is important for you to order a copy of your child’s credit report at least once a year to make sure it has not been compromised. You should also go to Social Security Administration website and order a copy of your child’s social security earnings to make sure someone isn’t using their number in order to obtain work.

Ellie Kay

America's Family Financial Expert (R)

http://www.elliekay.com/

Just Say "No" to All Credit Cards??

Just Say No? Fact or Fiction? ABC NEWS NOW Special with Ellie Kay



Revolving credit—largely made up of credit card debt—fell by nearly 20% in November, the largest drop on record, according to the Federal Reserve. Credit card usage is definitely slowing due to less borrowing by consumers as well as banks’ tighter lending standards. Through October, the number of new credit card accounts was down 46% from the same period in 2008, according to Equifax.
The average consumer in America owns five credit cards but there has been a slow emergence of a “no-credit-card” lifestyle among former credit card holders. These “cash only” buyers are convinced their numbers will grow as consumers become increasingly disenchanted with credit card industry practices. Cash-only can be inconvenient, but these consumers say it is worth it. **********

Q. Some of the consumers who have sworn off credit cards say that they are doing it in order to “get back to basics” and their “desire for a simpler lifestyle.” How do you think getting rid of credit cards can help them achieve their goals?


Ellie: I’ve done research on and talked to those families who have downsized, sold their rental property, small businesses or material “stuff” and used that money to pay off most of their debts. They’ve made these radical lifestyle choices in order to go back to the “less is more” worldview in a quest for the simple life. One of these families has a blog, ManVsDebt.com and reading about their experiences is both inspiring and challenging. In fact, our own family has “been there and done that” to a certain extent, when we had a lot of consumer debt and opted to become a one car family for a season. I think that there is an advantage in that you have fewer bills, fewer arguments over money with your spouse and fewer headaches. There is a lot to be said for the simple life—and I’m not talking about Paris Hilton’s “Simple Life” but a more streamlined lifestyle that if free of the trappings of consumer debt.


Q. According to a July 2009 survey by Auriema Consulting Group, 28% of consumers have shifted the way they pay for purchases in the past year with an increase in debit card usage coming at the expense of credit cards. In fact, 46% of consumers surveyed said they believed debit cards helped control their spending. Do you think the increased acceptance of debit cards makes the “cash life” easier to achieve?

Ellie: A decade ago, consumers who didn’t want to use credit cards had two choices: they could carry around a lot of cash or write a check and hold up the grocery store line. I do think that with the increased use of debit cards, we have a situation where you can blend the discipline of paying cash with the convenience of using plastic. Most merchants, including online retailers, accept debit cards if they accept credit cards. Plus, there are other options such as paypal that help those consumers who want to use a debit card instead of a credit card. Since debit cards are broadly accepted I think that the decline in credit card usage is due primarily to a desire by people to get a better handle on credit card spending rather than a rejection of credit cards.


Q. Abandoning credit cards seems to be a much more radical step than using them less. Furthermore, consumers who don’t own a credit card often have a hard time renting a car, among other inconveniences. What are some of the drawbacks of cutting up those cards?

Ellie: Getting rid of all of your credit cards is a radical step that can have a significant impact on your ability to function in a card based society. Not only is it almost impossible to rent a car, but some hotels won’t book a room to travelers who want to pay with a debit card or cash. Those that accept debit cards may place a hold of several hundred dollars in the customer’s bank account, which could cause checks to bounce. Debit cards also provide fewer consumer protections than credit cards. If fraudulent charges show up on a credit card bill, the card holder can refuse to pay them. Federal law limits credit card holder’s liability to $50 of the fraudulent charges and most card issuers have zero liability policies for victims of identity theft. Whereas money stolen from a debt card is immediately removed from the card holders bank account, which means they must fight to get funds reimbursed. All of these drawbacks don’t even begin to discuss the consumer’s ability to develop good credit.


Q. Many consumer experts say that responsible use of credit cards is one of the most effective ways to build a good credit record, how would a “cash or debit card only” approach impact the ability to develop a good FICO score?


Ellie: Personally, I don’t agree with a cash only approach, especially for people in their early twenties who are trying to develop a good credit history in order to get a car loan, rent an apartment or secure lower cost auto insurance—all of these are dependent upon a good FICO score. Not to mention the fact that more and more employers are checking an applicant’s credit score before they consider employing them. The philosophy is: if you can’t manage your own money, why should I let you manage my company’s resources?
I think it's important to stress the responsible use of credit cards. We have several of our children who are now young adults and we coach them in securing a credit card in order to build a good score.


Q. What are some of the guidelines you advocate among first time credit card users so that they can build a score without building consumer debt?

Ellie: If possible, their first card should be secured at the same lending institution where they have a checking account and a savings account. It should have a low limit, such as $500, and be a major credit card rather than a department store card. Then they should follow three rules: First, they should make sure they try to pay off the balance each month and pay it on time. Second, they should never charge more than 30% of the available credit in order to keep the proportionality or utilization aspect of their credit scoring healthy. And finally, if they cannot pay off the full balance, then they should always pay more than the minimum balance due in order to have their score reflect that they are paying down a balance.

Ellie Kay
America's Family Financial Expert (R)
http://www.elliekay.com/

TAX TIPS for Maximum Refunds

As seen with Ellie Kay and ABC NEWS NOW.

This year 75% of all Americans will get a tax refund. Last year's average refund was $2,753, with 2 out of 3 taxpayers e-filing their returns. Those with direct deposit averaged a $2,997 refund.

With the economy the way it is, families need every dollar they have coming to them.

But taxes can be sooooo incredibly complicated, especially with the recent tax laws that have passed--how can you figure it out? Help is just a click away as you follow my top tax tips for this year:

• Procrastination Costs $$ -- Just do it! Start now, the longer you procrastinate, the more likely you are to be rushed in filing your return and that translates into mistakes or missing something that could cost you money.
• Put Off Spending -- Some of you may be getting big bucks this year, but DO NOT SPEND IT UNTIL YOU HAVE IT! What if you don't qualify for the home buyers tax break and you've already spent that money? This is the same problem we ran into in 2008 when the stimulus checks came out. People spent the money (via credit) before it arrived and then ended up in a pickle when the checks were late. The IRS is having to navigate the new tax credits for home buyers and trying to avoid fraud. This means they won't even start processing those returns with the home buyers credit until mid-February. Many families are counting on these big returns, but you need to be cautious & don't spend what you don't have yet!
• Professional vs. Predatory Preparers --When the economy is down, fraud is up! Don't ever go to a tax preparer who sets up a shingle outside their door for a few months or those who claim they can get you a larger refund than another preparer. Instead go to a reputable and professional site where you can save money and file for free such as TaxAct . They can handle simple or complex returns and they are free for everyone, regardless of age or income, plus it includes the tax forms you will need.
• Pressure Loans -- Any tax preparer who pressures you to take a RAL (refund anticipation loan) is someone you need to run from! The interest rates are a rip-off and there are even big names associated with these costly practices such as H&R Block , so steer clear!
• Put it Off! -- Employers are required to have mailed W-2 forms by Feb 1, 2010. Some tax preparers say they can access W-2s for you early, but it's really best to wait until you receive the real deal in the mail before you e-file.
• Prepare to e-file! -- If you use the TaxACT Free Federal Edition to e-file, then you have an error rate of less than 1%, compared to 20% on paper returns. If you also get direct deposit on your e-file, then you can get your money in as little as 8 days.
• Pay Less -- Some of the new tax laws, such as the ARRA (American Recovery & Reinvestment Act) give tax breaks to 95% of taxpayers, with some families saving more than 13K in home, car, college and other tax credits. Make sure you use an online tax program that is all inclusive and up to date on these tax credits.
• Prepping Year Round -- Go to the IRS website and sign up for their tax e-mail updates that can help you reduce your taxes throughout the year. While you're there look at some of the other information on tax credits, you'll be surprised at how easy it is to understand and that knowledge can translate into dollars in your wallet! Don't forget to go to Ellie's tools section for all kinds of calculators that can help your finances year round as well!
• Print and mail -- Even if you are e-filing, you still need to print your own copy of the return. If you are filing for certain tax credits, such as the Home buyer's credit, then you are not allowed by the IRS to e-file. In which case, you can go to TaxAct, fill out all the info, print it and then mail it in with the necessary documents that aren't available electronically.

Hope this helps!

Ellie Kay

America's Family Financial Expert (R)

http://www.elliekay.com/