Friday, February 26, 2010

Exchange Traded Funds: Another Investing Option

Exchange Traded Funds or ETFs became available in 1993 and are index funds traded on the stock market. Index funds are a portfolio of stocks that usually duplicate the performance of a stock exchange such as S&P 500 or Dow Jones Industrial Average.

ETFs hold assets of stocks and bonds usually at the same price as the net asset value or fund assets minus liabilities of its primary assets over the course of the trading day. ETFs are another way to invest and have the features of a mutual fund. ETFs track indexes and provide more investing options than a mutual fund.

Anyone can buy ETFs. ETFs allow investors to diversify in U.S. and global stocks. Investors can use ETFs as a short-term investing strategy. ETFs allow investors to keep their assets invested instead of being inactive.

ETFs can be purchased or redeemed at the end of each trading day for its net asset value. Net asset value is used to designate price per share. Investors can buy and sell ETF shares throughout the day like stocks.

ETFs do not sell or redeem their individual shares at the net asset value. An ETF pays dividends or distribution of earnings received on a quarterly basis usually in your brokerage account. To reinvest the cash you have to make another purchase.

ETF's have low costs and tax benefits. ETFs generate fewer capital gains or profit due to the low turnover of the securities such as stocks, mutual funds, bonds, CDs, notes, etc. Fees for ETFs are clearly identified and are usually low.

Individual investors who purchase ETFs must pay a brokerage commission to purchase and sell ETF shares. This is a disadvantage for investors who trade frequently. Contact a financial advisor to be sure this is the right investment option for you.

Tuesday, February 23, 2010

America Saves Week

The non-profit organization Choose to Save states that saving is vital to a secure future and I agree. A savings account is your parachute or life vest for the unexpected. Many Americans have experienced financial crises or unexpected situations that have affected their finances which has resulted in unemployment, fights with your spouse or family, unpaid bills and mounds of debt. This week is America Saves Week where Choose to Save encourages Americans to save more money. America Saves Week began February 21, 2010 and ends on February 28, 2010.

Being disciplined to save money on a regular basis may seem like a chore but it is to your advantage to help yourself instead of having to use your credit cards, get a payday loan or sell your gold jewelry to get extra cash.

According to BEA, the personal savings rate was 4.8 percent in December 2009. Some economists believe that the personal savings will increase to 7 or 8 percent.

President Obama was pushing for a plan that would open savings accounts for 50 million Americans who currently do not have a savings account. The Automatic Individual Retirement Account would require employers who do not currently offer retirement savings to automatically enroll their employees in a government-sponsored savings plan.

Here are 7 ways to create a savings account:

1. Deal with the unexpected
2. Plan for your future
3. Go on a vacation
4. Be accountable
5. Develop good spending habits
6. Serve as a role model for your family and future generations
7. Reduce usage of credit cards

Do at least one thing this week to save money.

Visit for more tips on how to save. To become an American Saver visit

Saturday, February 20, 2010

Credit Card Purchases Under $25 and Risks

You may have noticed the increasing trend for merchants to allow credit card purchases under $25 to be approved without a signature and in some cases without providing a receipt. When this first happened to me I asked to sign the receipt and was told that my signature was not required which bothered me greatly. I feel merchants should post a sign informing consumers that purchases under $25 do not require a signature and include this in the consumer disclosure agreement.

In July 2010 Visa will increase usage of its No Signature Required program which began in 2003 to 98% of merchants because they feel it will offer merchants more payment options. Some of the retailers included are: department stores, book stores, hair salons, drug stores, electronic stores, car washes, sporting goods stores, parking lots and garages, fast food restaurants, movie theaters, restaurants, dry cleaners, gas stations, taxicabs and more.

MasterCard has a similar program where no signature is required and a receipt is optional for transactions between $15 to $50 depending on the merchant. MasterCard also has a PayPass and Go Card which is a contactless that can be used at merchants where their symbol is displayed and can also be used at regular checkouts. Your signature is not required for purchases of $50 or less.

Credit card companies feel that no-signature transactions will speed up checkout and encourage consumers to make more everyday purchases with credit cards. I feel this increases the chances of identity theft since a thief could make several small purchases which could go undetected.

Visa offers zero liability if you report the fraudulent charge within 5 business days. MasterCard offers zero liability based on certain conditions.
Merchants feel that consumers will not bother to dispute transactions under $25 but is that fair to consumers. Visa's website states that "Underpinning digital currency is one of the world's most advanced processing networks VisaNet that is capable of handling more than 10,000 transactions a second, with fraud protection for consumers and guaranteed payment for merchants. Really, so how exactly does Visa plan to protect consumers for fraudulent transactions under $25?

For purchases over $25 if a person is a victim of identity theft many banks use signature comparison as a method to prove the transaction with a theft. For purchases under $25, how can a consumer prove that the transaction was fraudulent?

Banks can use other forms of identification to verify the consumer, like your SSN or Date of Birth but if the thief has your SSN and date of birth that doesn't work. If you have a very smart thief who also has your mailing address how will Visa prove your identity? I suppose they could verify by your account number but the thief has that too, or maybe by the last transaction made. One would have to dig through their receipts to find the last transaction made. If a dispute is found exactly how will it be handled?

If you have been a victim of identity theft like I have and want to decrease your chances of identity theft, consider making purchases under $25 with cash instead of with a credit card or Visa check card.

Wednesday, February 17, 2010

CARD Act Credit Card Changes on February 22nd

The Credit Card Accountability, Responsibility and Disclosures Act or CARD Act that was signed on May 22, 2010 provides changes to credit card guidelines and goes into effect on February 22, 2010.

According to the Act credit card regulations and disclosures will be easier to understand and more transparent but at a higher cost to consumers. There will be additional or higher upfront costs for the consumer because of the CARD act. This will greatly impact lower to middle income consumers and consumers with bad credit who are only able to make the minimum monthly payments. Here are some key facts to be aware of regarding the CARD act:

1. Interest Rate Hikes. Interest rate hikes would not be applied to existing credit card balances but is still allowed provided credit card companies give at least 45 days advance notice.

2. Existing Balances. Limits interest rate hikes on existing balances in certain instances.

3. Minimum payments. Credit card companies must disclose the risks of making only minimum payments each month including how long it would take to pay off the entire balance if they only made the minimum monthly payment.

4. Term Changes. Changes in terms on accounts cannot occur without 45 days advance notice.

5. Paying Bills. Credit card payments are due at least 21 days after the monthly statement is mailed.

6. Due Dates. Credit card companies have to set payment cut-off times no sooner than 5pm on payment due dates and payments due on weekends or holidays are not subject to late fees.

7. Over-the-limit Fees. Consumers will now have the option to "opt in" for being charged over-the-limit fees. Those who opt-out would be unable to exceed their credit limits and will be charged a fee.

8. Subprime Credit. Consumers with bad credit who get subprime credit cards are charged upfront fees but cannot exceed 25% of the available credit limit in the first year of using the card.

9. Requires easy explanation of disclosures. Disclosures would also be available online.

10. Under 21. Credit offers can not be made to anyone under 21 unless they have an adult co-signer or can provide proof that they have enough income to repay the debt.

Sunday, February 14, 2010

Money Saving Tips for Valentine's Day

Valentine's Day is so commercialized nowadays. Advertisers show commercials that focus mainly on buying women gifts. They also make women believe that the only time a man should show affection is on Valentine's Day. I believe if you show affection all year long you won't have to dash at the last minute to buy an expensive gift because you acted like a jerk last week. If couples treat each other with respect and communicate with each other and live in love, Valentine's Day will not seem as one the biggest holidays of the year.

Don't get me wrong I love getting gifts and love expressing love but if you focus more on giving love throughout the year and stop putting so much pressure on one single day as if that day will fix all the problems and make you forget about all the arguments and bad times.

Valentine's Day gifts and memories should be a bonus to a healthy relationship not a chore or ultimatum of "he better get me something nice or else". Gifts should not be a measure of how much someone loves and you should not fall in love with someone because of the gifts they give you.

If you know you significant other is financially strapped don't be selfish and ask for or expect an expensive gift. Be realistic and understanding and know that sometimes men need a little help with gift ideas and be appreciative of whatever you get. You could be with someone who didn't get you anything. Remember to give love and you will get love in return. Here are 9 tips to celebrate Valentine's Day and save money.

1. If you suspect your date feels uncomfortable or is short on cash offer to split the bill and don't get upset about it. Things happen. At least he was thoughtful enough to want to spend time with you. He may just be afraid to admit he is having financial problems.

2. Be honest. If you don't have money or your funds are limited be honest, she will understand and if she is not understanding she may be the one for you.

3. Write a love letter or love note. If you aren't in love yet, write a note expressing how you feel and what you like about your significant other.

4. Be creative with flowers. Everyone buys roses on Valentine's Day. Find out what her favorite flower is and buy that instead of roses. It will show her that you were listening to her and that you really care about her.

5. Give something from the heart. If you get a balloon or chocolate get a balloon with your significant other's name on it or get personalized chocolates or baked goods.

6. Make a quick getaway. Check online for specials for bed and breakfast inns that are inexpensive or stay overnight in a local hotel room.

7. Be romantic. Give each other massages with scented massage oils. Read love poetry. Watch romantic movies. Cook a romantic dinner, slow dance, gaze into each other's eyes, and then have "desert".

8. Free entertainment. Check your local newspaper for free events during Valentine's Day weekend.

9. Cook. If your significant other likes baked goods. Bake their favorite baked good and feed it to them or fix them breakfast in bed.

Friday, February 12, 2010

Keep Energy Costs Low During Snow Season

Due to the unusual amount of snow that has fallen this winter season energy prices have increased. Many East Coast residents lost power for several days due to the winter storms and blizzards that rocked the East Coast.

The Federal Government was closed for 4 days due to the snow storms. Approximately 80,000 people in Washington DC, Maryland and Virginia lost power.

Many East Coast residents were snow bound due to high snow drifts, cars covered in snow and painful recovery from digging out from the previous snow storm. Since many residents had "cabin fever", more energy was used during the past two weeks than usual this winter season and has reduced the United States' supply of natural gas and heating oil.

The Mid-Atlantic states such as DE, MD, NY, NJ, PA, VA, WV and DC use the largest amount of natural gas and heating oil in the United States. Although the snowy season has reduced energy supplies we are in no danger of running out. Heating oil for March 2010 caused prices to increase to $1.8855 a gallon on the New York Mercantile Exchange.

If heating oil prices keep increasing utility companies will try to pass the additional costs to consumers by charging higher rates. If you are snowbound at home for several days here are 7 ways to reduce energy costs.

1. Run appliances at off-peak times on the weekends or Monday-Friday after 7pm to save money.

2. Don't overload washes or dryers, this causes the appliance to use more energy and increase energy costs.

3. Keep heat between 68 and 70 degrees. Turn heat on the normal time you would arrive home from work.

4. Wear additional clothes during the day to prevent turning up the thermostat. Open blinds or curtains to let sunlight in during the day to keep the house warm.

5. Cover drafty winds with plastic insulation. Cover drafty doors with insulation or a throw rug.

6. Take showers instead of baths to conserve heating costs. Use luke warm water when taking showers.

7. Be creative and find other ways to entertain yourself instead of watching television or using the computer. Play games with your family, do some pre-spring cleaning, call loves ones or friends, etc.

Tuesday, February 09, 2010

Airlines Freebies a Thing of the Past

First it was elimination of meals on short flights. Then it was charging for the second bag, and then charging for the first bag. Now airlines have found another way to make money. Airlines will now charge passengers who wish to have a pillow and blanket. Many free services have been eliminated by airlines since 2008 and will probably continue for several years.

Starting May 1, 2010, American Airlines will now charge passengers $8 for a pillow and blanket in coach on domestic flights which will include a coupon for $10 off any purchase at Bed, Bath and Beyond. Pillows and blankets will still be free on first-class or business class flights. US Airways and JetBlue will charge $7 for a pillow and blanket which includes earplugs and eye shades. Many other airlines will probably follow their lead.

Also, according to reports in newspapers and investigative reporting shows airlines do not wash their pillows or blankets as frequently as we think. So although pillows and blankets have been free to passengers they are certainly not free of germs.

For the past two years I have carried my own blanket. Some passengers fall asleep when traveling on airplanes - some snore, some drool, some pass gas, some wake up with slob on their mouths and more. All of this is passed on to the pillows and blankets that are used. I have witnessed with my own eyes airline stewardesses cleaning up passenger seats and taking used pillows and blankets and properly folding them up as if they were freshly cleaned or brand new and handing them out to new passengers.

Unsuspecting passengers believe they have been cleaned and wrap them around their bodies, mouths, feet and children. These germs are passed on to other passengers over and over again. Here are 6 tips to reduce your chances of being infected with airplane germs and to help you save money.

1. Carry hand sanitizer and use just before you flight takes off and as soon as your plane lands and use each time you touch a common area.

2. If you are concerned about airplane germs carry a mini-can of Lysol or other air sanitizer and spray your seat, armrests and tray table. If you are unable to find a min-can that is within the security check limits use Clorox or Lysol wipes instead.

3. The less crowded a plane and the more cutbacks in airline services, the less frequently blankets and pillows will be cleaned so bring your own blanket and pillow.

4. Get a good night's sleep the night before. Take advantage of flights that are more than 2 hours and take a nap during flights.

5. Drink plenty of water and eat properly when traveling.
6. If you have to travel when you are ill, cough or sneeze in your arm. Go to the bathroom to blow your nose and use tissues or disposable cloths to wipe runny eyes or noses. Don't leave used tissues lying around your seat or tray table. Dispose of them quickly after use. Wash your hands frequently.

Saturday, February 06, 2010

How to Plan for the Unexpected

The East Coast has been hit with 3 snow storms this winter season. Many did not believe the meteorologists predictions because many times in the past they have been incorrect, but this season it seems they were pretty accurate. This accuracy unfortunately left many of us unprepared for the snow and have had "cabin fever" so bad that many people started walking to the store in these dangerous conditions just to get out of the house.

I started having cabin fever but quickly got over it once I wrote a list of all the things I should have done in my spare time that I did not get around to doing. I then began to start working on the list and checking off each item I completed. I felt a sense of accomplishment and did not feel like I was just a couch potato watching t.v. all day.

I have been stuck in the house since it started snowing last Friday and can't say that I am unhappy about the days off. My street needs to be plowed and salted before the additional 10-20 inches that are expected to fall in our area on Tuesday and I am hopeful that they will get around to us. I can't remember when our area has had so much snow; I think back in 1996 we had a huge snow storm.

Every time there is a snow prediction I go to the grocery store to pick up one or two items which are not necessity items just items I want to have. I laugh every time I go because they are always lines of people in the grocery store who wait until the last minute to buy groceries for the snow and are probably the same people every year who repeat the same behavior over and over again which is insanity. Each time you go to the grocery store pick up one or two extra items that will last you for a few which are very helpful if you lose power. Here are 13 tips to help if you experience an emergency or an unexpected situation and are stuck at home for several days.

1. Have a week's supply of food to prepare or eat at least two meals a day.

2. Have a week's supply of non-perishable food - dried foods that does not need to be refrigerated or cooked such as canned foods, dry cereal, fruit or protein bars, and soups.

3. Have a week's supply of toiletries, prescription drugs and nonprescription drugs such as cold medicine, aspirin, anti-diarrhea medication, heartburn medicine, upset stomach relief, hand sanitizer, rubbing alcohol, peroxide, a first aid kit and vitamins.

4. Buy batteries, flashlights and a portable radio.

5. If you live in a home consider buying a generator, wood-oven stove or kerosene lights to keep your house warm and provide light.

6. Buy a week's supply of bottled water.

7. Buy a thermometer.

8. Know where you gas line, cable line, and closest fire hydrants are located in the event of an emergency so that repair crews can fix the problem quickly.

9. If you are snowed in, help out your neighbors if you are physically able. Don't shovel your snow onto your neighbor's property or park in an empty space that someone shoveled out. Take time to shovel out your car and driveway. You can get sued if someone walks on your property and falls.

10. Check on loved ones often to make sure they are safe and have enough food, water and heat.

11. If you drive a 4-wheel drive vehicle such as a truck or hummer assist others who need to get to doctor's appointments, hospitals, or go to the grocery store.

12. Clean off your car completely. Many drivers only clean off a portion of the snow on their cars and when driving down the street or on the highway snows flies off sometimes causing accidents or causing cars behind them to swerve out of the way. Imagine how you would feel if someone died in a car accident trying to swerve out of the way of snowing flying off of your car.

13. Use caution and common sense. Don't drive down a snowy or icy street; you will get stuck and will appear on t.v. like many drivers who thought they could get through the snow.

Wednesday, February 03, 2010

Why You Should Start Saving

Many Americans don't have a savings account. According to a study by the Commerce Department Americans spend all the money they have.

Your savings account is your safety net, in case you get sick or lose your job. You can use your savings to hold you for a few months until your situation improves. Your savings account should be separate from your checking, money market or investment accounts and should only be used for emergencies such as an unexpected expense, unemployment, medical bills, etc. Some of the main reasons Americans file for bankruptcy or go into debt is due to medical bills or lack of a savings account.

A saving account should have enough money to pay your bills for at least 9 to 12 months. The money should be readily accessible and stored in a high interest account, preferably an online savings account such as Emigrant Direct, HSBC, ING or a money market account where you can make money while saving money.

Write down all your monthly bills and expenses and the amount spent for each. Calculate the total. Use this amount and multiple by 9 or 12 to determine the total amount you need to save in your savings account.

Start by contributing small amounts to your savings account until you are able to contribute more. Start off with a contribution of at least $20 a month towards your savings account. Once you are able to contribute more do so.

Once you have reached your savings account goal start developing long-term goals such as planning for retirement. A great site to learn about retirement planning is and look under the Personal Finance section. Here are 8 easy ways to save money.

1. Saving coins in a jar – the money saved can be put in a high interest online savings account such as Emigrant Direct, ING Orange Account or HSBC

2. Using coupons especially during sales - the money saved can be put into a savings account

3. Use automatic deductions – sometimes it is easier for people to save money if they can't touch it or see it

4. If you buy a cup of Starbucks coffee at $4 a day and invest in with an annual rate of 10% you could have over $500,000 in 40 years

5. Get a free checking account and save up to $144 a year

6. Get a lower interest rate on your credit cards and save up to $422 a year

7. Save up to $400 a year on eating out by going to restaurants that offer coupons or specials or inexpensive dishes

8. Selling or donating unused items (clothes, shoes, toys, coats, purses, etc.) can save up to $1,000 a year