personal finance

By CAROLE MOORE
bankrate.com
Friday, June 29, 2007

Cash-challenged seniors who want to stay in their own homes have kept reverse mortgages high on the public radar. But, despite glowing testimonials from some customers, not everyone thinks they're such a good idea.

By MARVIN WALBERG
Scripps Howard News Service
Thursday, May 17, 2007

Dear Mr. Walberg:

I'm considering changing jobs, but need to find my best match. My current employer is great -- good benefits, lots of vacation time, plenty of independence -- but I'm significantly underpaid by market standards and I'm no longer using my degree. Four years ago, after completing my master's in psychology, I was hired into this job from a temp position. I'm now managing 15 people and doing well, but feel unappreciated and I'm not sure where to go.

I've seen a couple of headhunters, but they are having a difficult time narrowing things down for me. What do you suggest for helping me figure out my best match?

Confused in NYC

Dear Confused:

It's said that if you do what you love to do, you'll do it best and be most productive. And, if you are productive, your income should reflect that productivity.

Headhunters may not be your best career counselors. Their job is to match skills and experiences required for jobs requested from client-companies who pay for their services.

Certainly one approach is to meet with a certified career counselor. If you go that route, choose someone whom you feel relates to your situation; someone you feel you can put trust in; and, of course, someone whom you can afford.

In the meantime, you can do some work for yourself. Focus on what aspects of your work you truly enjoy every day, and then ask yourself why. Do the same exercise with any volunteer work that you do, and hobbies. Concentrate on those things in life that you do well and truly enjoy doing, then try to transfer those skill sets to jobs that might be out there.

Many publications can help you. Seek advice from a reference librarian in a "Careers" section, and look for other related publications in any quality bookstore. A new book that could help is "150 Best Jobs for Your Skills," by Michael Farr and Laurence Shatkin, published by Jist Works (www.jist.com).

(Marvin Walberg is a job-search consultant. He can be contacted at P.O. Box 43056, Birmingham, AL, 35243. E-mail him at mwalberg(at)bellsouth.net.)

By KATHLEEN PENDER
San Francisco Chronicle
Wednesday, May 16, 2007

A rule that took effect April 1 makes it easier for investors to see what sales commissions and annual fees they are paying for mutual funds. But it's causing confusion for some 401(k) participants, who are now getting less information about their funds.

Fidelity, a major 401(k) service provider, has temporarily pulled fund-performance data from quarterly statements while it tries to comply with the new rule.

Under the National Association of Securities Dealers rule, any time a mutual fund shows any type of performance data, it also must show three things: standardized performance results that follow Securities and Exchange Commission requirements; the maximum sales charges applicable to that fund; and its annual operating expenses, known as the expense ratio. The expense ratio cannot reflect any fee waivers or reimbursements.

The rule applies to all mutual funds except money market funds and to virtually all "communications with the public," including sales brochures; fund fact sheets; Web sites; and print, radio and TV advertising. It does not apply to institutional sales material and public appearances.

The rule says the three required disclosures must be presented prominently whenever performance data is given.

In print advertising only, the required disclosures must be displayed in a prominent text box, which is why the new regulation is nicknamed the NASD text box rule.

Other types of printed material, such as sales brochures, don't have to provide a text box but do have to disclose the information prominently. On Web sites, funds can use a hyperlink to connect performance data to the required disclosures.

Under existing SEC rules, when funds show performance data, they also have to disclose sales commissions, but the commissions could show up in a footnote.

The NASD rule goes further by requiring disclosure of expense ratios and more prominent disclosure of sales commissions, says Tom Selman, an executive vice president with the NASD.

Selman says that when the stock market was hot, like in the late 1990s, many funds were advertising their knockout performance without mentioning their fees, which in many cases were far above average.

The SEC approved the final rule in July, with an April 1 effective date.

It's not clear what impact the rule will have on 401(k) plans, where fee disclosure has been woefully inadequate. Congress is looking at ways to improve disclosure but has not taken action.

Many 401(k) plans offer mutual funds that are subject to the NASD rules. But 401(k) plans themselves are regulated by the Labor Department under different rules.

If a 401(k) provides fund-performance data to participants, it's not clear whether it will have to include the disclosures required by the NASD rule.

Many firms that administer 401(k) plans also sell mutual funds. To be safe, many will provide the required disclosures if they don't already, says Mitch Nichter, a lawyer with Paul, Hastings, Janofsky & Walker.

Fidelity, which administers 401(k) plans for many employers, this year stopped including performance data for individual funds in the quarterly statements it sends to participants.

"The NASD rule change April 1 required that expense ratios be included anywhere performance data is communicated," Fidelity spokeswoman Jenny Engle says.

"We communicated with plan sponsors that we will temporarily suspend this section of the statements. We're working to incorporate the new information in a streamlined and user-friendly way."

Employers who were not providing performance data will not start doing so as a result of the new rule.

Many employees and even some employers don't know how much they are paying in 401(k) fees.

The largest expense is investment management. This cost is usually reflected in the expense ratios of the mutual funds or other investment options. Participants usually pay these fees.

Additional fees _ for record-keeping, custodial and other services _ can be paid by either the employer or the participants. These fees might be paid separately, or can be added into the mutual expense ratios.

Buying a fund based on its performance without knowing its cost is like buying a shiny new car without looking at the sticker price.

Funds should have been forced long ago to provide expense ratios alongside performance. Let's hope that 401(k) plans follow suit.

For more information on the rule, see nasd.complinet.com/nasd/display/display.html?rbid=1189&element_id=1159006088.

(E-mail Kathleen Pender at kpender(at)sfchronicle.com. To comment or for more stories visit scrippsnews.com)

By KARA McGUIRE
Minneapolis-St. Paul Star Tribune
Wednesday, May 16, 2007

Women as a group face some unique financial challenges.

On average, women earn less money than men (80 cents on the dollar) and spend less time in the workforce in order to raise children or take care of aging loved ones. Most women will be on their own financially at some point in their lives because they divorce or outlive their husbands. Only through financial planning can women ensure that they won't outlive their money. This is a common worry; studies have shown that even well-off women fear becoming bag ladies.

Dawn Jurkovich, a financial planner with Ameriprise Financial in Minneapolis, said women are on a "ship" like the Titanic heading for a big iceberg. The word ship is an acronym: "s" stands for Social Security changes, "h" for higher health care costs, "i" for more income needed because of longer life expectancies, and "p" for pensions that are being reduced or going away. The iceberg is retirement. Jurkovich said many women come into her office feeling sorry for themselves. To them her message is : "(Your income) is what it is. If you make less, you have to do more."

She suggests women save 15 percent to 20 percent of their income no matter what. "I have women who come in here and give me big eyes about how they can't afford to save and guess what? Their nails are done and they have a Caribou or Starbucks coffee in their hand." Other women spend more than they can afford on their children, whether it's for clothes or college.

If money isn't too tight, a working spouse could open up a spousal IRA for a partner out of the workforce. Generally, a spousal IRA behaves and has the same rules as a regular IRA or Roth IRA retirement account except your spouse contributes the $4,000 maximum ($5,000 for those age 50 or older) for you.

To be realistic, many families can't afford to save that much money throughout their lives. Families on one income because they're raising children or caregiving, or families with day-care costs through the roof may have just a percent or two available to save, even after examining their budgets.

But sticking with a savings plan, even if it's a small amount, is critical. "When people start and stop they don't start again," Jurkovich said.

Planning for parents

Cathy O'Keefe and her husband sat down and created a financial plan as soon as they started a family. "We never deviated from putting money into the kids' college fund" or toward retirement, even though it has meant being "extremely conservative in our purchases," she said. As her three children grew older, she took a job as a teaching assistant. But after her father had a series of strokes, she quit and moved him to their home so she could care for him.

Therein lies a key problem: Even women planning their financial future often don't plan for all of it.

While most women feel the need to care for parents later in life, few people plan for that financially, according to a recent survey conducted for Securian Financial Group. It can mean lost income and increased expenses -- significant sums for each. Half the women surveyed said they worry that they don't have the financial means to help their parents receive quality care.

Fortunately, O'Keefe's family didn't rely on her income, and her dad had some retirement savings available to reduce the financial strain of care. But when he became ill, he didn't have any game plan. O'Keefe and her siblings had to come up with one quickly, and at a very stressful time. The experience has made her realize how important being prepared truly is; she and her husband now have health care directives and wills on top of their financial plan.

Anticipating financial needs, sticking with a doable budget and becoming knowledgeable about finances must be as big a part of mom's job as getting kids to school, checking homework and saving for college.

Kara McGuire writes about money. Send e-mails to kara(at)startribune.com. To comment or for more stories visit scrippsnews.com

By TOM RAITHEL
Scripps Howard News Service
Friday, May 11, 2007

Like your garden-variety rabbit, money has a surprising way of multiplying.

Investors who let their investment earnings compound year after year, as opposed to spending those earnings, can build a large advantage over time.

Let's say we have $1,000 to invest. That's a nice round number you can use to easily calculate what you can earn with much larger units of money.

And let's say we earn an 8 percent return on it, year after year. I know this is higher than you will get today on most interest-earning investments, such as certificates of deposit (CDs), but it's also less than the historical return of stocks. It's a reasonable number for the kind of return you might get over many years with a combination of stock and interest-earning investments.

Now let's say we have two ways to invest this money. One way is without compounding the earnings. In other words we earn our 8 percent each year on our $1,000, then we spend that 8 percent. The next year, that $1,000 earns another 8 percent and we spend it, and so on, year after year.

The second way is with compounded earnings. In other words, we keep our earnings as well as our original investment invested and let them continue to grow at 8 percent. How much difference does this compounding make over time?

At first not much. Both investments return $80 the first year. In the second year, the uncompounded investment would again return $80. The compounded investment would return that $80 plus a small difference of $6.40 This may seem like small change to you, but over time, this small change grows.

After five years, the investment that doesn't compound has earned $80 times five, or $400. The one that has compounded earnings has made $469.33, an advantage of $69.33.

Over 10 years, the compounded investment has a $358 advantage over the uncompounded one. Over 15 years, that advantage has grown to $972 or almost as much as the original $1,000 investment.

Over 20 years, the advantage is $2,060, or twice the original investment. Over 30 years, it is $6,662. Over 40, it's $17,524.

Note that I'm only talking about the advantage you earn by compounding all these years. The investor that let his money compound would also have the unspent earnings from this time, which could add up to a considerable fortune.

Also, remember what I said earlier. These examples use only $1,000. If you had $10,000 to invest, the advantage in dollars would be 10 times the above amounts. If you had $50,000, it would be 50 times the amounts.

Compounding is a big advantage. It's much more than small change.

Contact Tom Raithel at raithelt(at)courierpress.com. To comment or for more stories visit scrippsnews.com

By BRUCE FREEMAN
Scripps Howard News Service
Wednesday, May 09, 2007

Ask the Small Business Professor

Dear Professor Bruce: My daughter's friend is in a high school a few towns away. She has been taking some business courses as part of her academic program. Of particular interest to me is that she is taking a course in entrepreneurship. Is this unique? Is it a trend? Why would it be taught this early when students, especially those going on to college, have several years before they enter the working world?

Answer:

Introducing students to concepts of entrepreneurship does more than just provide them with additional knowledge. The earlier we can introduce them to alternative learning patterns, the easier it is for them to believe that they can create their own life opportunities.

In addition, the work world has changed. The era of the "gold watch" is long gone.

Large corporations are laying off skilled workers by the thousands due to downsizing, mergers, acquisitions and outsourcing jobs overseas. The question is, where are all these workers going?

According to Anthony Warren, director of the Farrell Center for Corporate Innovation & Entrepreneurship at the Pennsylvania State University, "teaching entrepreneurship is not a luxury in today's world but a necessity. Entrepreneurship is about optimism and knowing that you can reach your personal targets, attributes that all students should acquire at an earlier a stage as possible." Fortunately, there is an upward trend in offering entrepreneurial experiences usually championed by school officials that see the bigger picture.

How early? While colleges and universities entrepreneurship programs have grown significantly over the past few years, such courses at the high school level are still rather rare. This is due more to the shortage of teachers with the training and skills to teach such courses, rather than the enthusiasm students show for such courses.

Livingston High School in New Jersey is one of only a few high schools that have introduced entrepreneurship into a business education curriculum. According to Livingston High School Business Department Supervisor Robert Keenan, "This year (2006/2007) is the first time we offered this full year course and we already have three classes. The students are very excited about entrepreneurship and enjoy the activities that allow them to participate in various problem solving activities. Students are currently developing business plans based on research and other collaborative resources."

Northview High School in Sylvania, Ohio, experimented with a student-run venture capital competition this year as part of its business education program. The five winners were all awarded seed money to start their own businesses. According to Michael Temple, successful entrepreneur and executive director of the Sylvania Entrepreneur Venture Program, "the goal was to emphasize the entrepreneurial spirit and provide students the opportunity to run their own businesses."

Although school districts are under pressure to raise test scores in reading, writing and math, teaching business skills in a changing economic environment can have long term benefits for students.

(Bruce Freeman, owner of a small business and an adjunct business professor at Kean University, is always looking for interesting success stories and lessons learned. Entrepreneurs can e-mail their ideas to bruce(at)SmallBusinessProf.com)

By KARA McGUIRE
Minneapolis-St. Paul Star Tribune
Thursday, May 03, 2007

It's not that my husband and I have a problem with our household finances. I simply wanted to write about financial counselor Ruth Hayden's popular money-and-couples class. She has refused numerous media requests to document her class over the years, even the "Today" show, in the name of protecting students' privacy. "You'll have to take the class," she said, asking that I not write about it until it was over, and "as a couple, not a columnist."

My husband, Matt, was less than thrilled with the idea of spending Saturday mornings in the dead of winter in a money class. The poor guy doesn't like talking about money, yet somehow he ended up married to a financial columnist.

And neither of us thought we needed to be there: We save, have little debt and spend within our means. Then again, within minutes of opening Quicken we'd gripe at each other, me for his refusal to let me drive the mouse and him for my impatience.

Fifteen couples of all ages chatted nervously that first Saturday. Hayden, who has been teaching the class for more than a decade, said it's the class she would have liked as a newlywed, to avoid all the "fussing."

Money will hurt your relationship if you don't know how to work with it," Hayden warned. "That's a guarantee."

Indeed, money is one of the top reasons couples fight and even divorce. Studies show that most couples don't talk effectively about money, nor do they see eye to eye on critical financial issues such as retirement savings and handling risk.

Each couple gave a reason for paying $315 to take a money class. They ranged from "no matter how much money we make our debt doesn't go down" to "because my marriage counselor recommended it."

Before tackling numbers, Hayden said we must understand our money emotions. Much of that first class was spent discussing what was learned about money as children that influences financial behaviors as adults.

She introduced the main communications strategies couples use to tackle finances that don't work: fighting, silence, and acquiescing.

Acquiescing. Finally a word to describe what we do.

"Money is a necessary evil," Matt wrote during one exercise.

But I enjoy ruminating over spending and saving. So I guess it's natural that I do all the money managing?

"One of you might be better (at money management) and might like it, but both must learn to own it," Hayden lectured. Matt agreed to play a more active role and I agreed to save cash talk for Hayden's suggested weekly money meeting.

Money's past

"Money training plus money beliefs equals money behaviors," Hayden said the following week.

So we answered questions about our needs and wants, how our parents discussed money, and our family's social status, all while pretending we were 8-year-olds.

Then we had to tabulate our weekly flexible expenses _ from groceries (we have to eat but can choose how much to spend to some extent) to movies and Target runs _ and pull out the cash in a lump sum. When it's gone, it's gone.

To be sure of that, we had to ban plastic currency from our wallets. If we worried about what would happen if the car broke down, she said we could duct tape a credit card to our car's underbelly.

Matt and I came up with $260 for our household weekly flexible expenses _ the house cleaner, a cheap date, milk, a pair of kid's shoes. Hayden said it's this flexible spending that kills a budget and gets couples in trouble.

Our homework: figuring out how much each of us costs as individuals.

Goodbye credit, hello cash

Matt and I are members of the cashless society, swiping a credit or debit card for nearly everything we buy. Cash burned holes in our pockets. Others hoarded their money, paralyzed by the fear they would run out. One guy cheated and kept his debit card.

Feeling money leave your hand is the key to trying to understand why you spend the way you do, Hayden said. For many, credit simply doesn't feel real. "That pretend money is leveraging your future," she said.

Many couples calculated wildly different figures for individual needs _ haircuts to happy hour. Mine was $265 a month; Matt's was $150. This is our new monthly individual spending. Hayden says equal is not necessarily fair. I agree. Whatever the amount, we had to agree not to micromanage the other's spending.

Our homework: Come up with dollar amounts for escrow accounts, essentially different savings accounts _ one for occasional, mandatory expenses such as property taxes, the other for optional expenses such as vacations. Then balance the budget.

Putting it all together

We're nearing the end and Matt and I still miss our plastic. Costco with cash is no fun. (I had to raid my parking meter quarters to afford the total.) That said, it's exciting to see our credit cards without balances to pay off.

Less exciting is our new budget. All the pieces of our perfect budget came to more than $1,000 over. Hayden suggested increasing our incomes. Not an option.

We decided to compromise, one of Hayden's four couple cornerstones for a healthy relationship. (The others: commitment, respect and trust.)

Reluctant to reduce our savings, we pared down monthly fixed expenses, downgrading cable (Matt agreed to give up HBO) and chopping in half our account for home improvements and vacation (I'll live with a chain-link fence another year).

This made the next project _ brainstorm your life goals no matter the cost _ equal parts exhilarating and depressing. It's fun to think about life without financial constraints, but not when we know just what our financial reality is.

Our goals ran the gamut. Matt's: "Swim in the ocean." "Become a one-car family." Mine: "Save for the kids' college."

With two full-time jobs, small kids and a dog, brainstorming goals was harder than we thought. It's tough enough thinking ahead to the next week's dinner menu let alone how we want our life to be in 2017. But we took Hayden's message to heart: Put your dreams down on paper, turn them into goals, and make a financial plan to make them happen

Staying the course

I divided our savings into emergency, mandatory and optional, automatically funding them each month with the amount we decided on in class. Just recently I paid property taxes from a mandatory escrow account instead of dipping into emergency savings. Yes, I'm still doing most of the day-to-day money chores, usually when he's taking out the trash or putting a kid to bed. In six weeks we'll be swimming in the ocean. But the all-cash system? It had to go. And Matt hasn't "gotten around to" canceling HBO. Maybe "Entourage" has something to do with that.

After two weeks we stopped our weekly money meeting, although he just suggested we schedule one next week.

Matt said I'm talking less about money and he's more engaged when I do.

Although Hayden, Matt, and I agree that we probably didn't need the class, we now better understand each other's relationship with money. And that's good for our relationship with each other.

How do you communicate with your better half? Tell Kara McGuire at kara(at)startribune.com. To comment or for more stories visit scrippsnews.com

Minneapolis-St. Paul Star Tribune
Thursday, May 03, 2007

Money is the No. 1 reason couples fight. Financial experts warn that unless couples find healthy ways to discuss money, the problem could lead to divorce. The financial industry has responded with couples and money books, counseling, even classes.

Here are some other sources of information:

"The Family CFO: The Couples Business Plan for Love & Money," by Mary Claire Allvine and Christine Larson

"he Big Payoff: 8 Steps Couples Can Take to Make the Most of Their Money and Live Richly Ever After," by Sharon Epperson

"For Richer, Not Poorer: The Money Book for Couples," by Ruth Hayden

"Financial Bliss: A Couples Guide to Merging Money Styles and Building a Rich Life Together," by Bambi Holzer

"Your Money and Your Man," by Michelle Singletary

Here is a sampling of questions from Ruth Haydens money history handout. Answer the questions as if you were 8-years-old, or at an age when you first remember money. There are no right answers. Then share the answers with your partner, following Haydens advice, "No shame, no blame."

1. Set the scene. What do you look like? Where do you live? With whom?

2. What if there is something you really need? What do you do? Do you ask? Who do you ask? If you ask, what would be the response?

3. What if there is something you really want? What do you do? Do you ask? Who do you ask? If you ask, what would be the response?

4. What does it mean to be rich? Are you rich? Are your friends? How do you know?

5. What does it mean to be poor? Are you poor? Are your friends? How do you know?

6. Who earns the money in the family? From the perspective of you as a child, does that person do a "good job" earning the money? Why?

7. Who spends the money? Do they do a "good job" making spending decisions? How do you know?

8. Who pays the bills in the family? Do they do a "good job?"

9. Do any adults talk with you about money? Who? What do they say?

10. Do you get spending money or an allowance? Do the adults in your life think you do a "good job" spending it?

Here are a some questions to discuss with your partner from Chapter 1 of Haydens book, "For Richer, Not Poorer: The Money Book for Couples":

Can a discussion about how much money is enough cause conflict?

Do you and your partner ever argue about the amount of money to spend on something? Describe the conflict.

Do you and your partner ever argue over the amount of money you earn? If so, is the conflict over the amount of money or the lack of money earned? Is the conflict over the amount of time you spend away from home earning money?

How would you describe your own level of comfort with debt? How much debt would make you uncomfortable?

What kinds of debt would cause you the most anxiety? Why?

Is there any stress in your relationship due to your different comfort levels with debt?

Do you argue more over small items or large items? Why, do you suppose?

What started the last money argument you and your partner had over a large money expenditure?

What was the last argument you had over a small money expenditure?

By KARA MCGUIRE
Minneapolis-St. Paul Star Tribune

Taxes aren't typically a hot topic of conversation. But if you're a certified public accountant like 31-year-old Nate Albrecht, you can't escape tax talk come spring, even outside the office.