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NEW YORK: Many car models did not make the gas mileage cutoff qualification for Cash for Clunkers. If yours didn’t make the grade, and you are looking to save money on overall car expenses, here are some steps you can take.1. Check your vitalsFirst of all, maintain things that could cause your old car to lose control and possibly cause an accident — like your tires, your battery and your brakes. Make sure the tread isn’t worn. Remember to check your tire pressure every month on all four tires. “Get the (tire pressure) number from inside the car door,” says Lauren Fix, the author of “Lauren Fix’s Guide to Loving Your Car.” Check your tires when it’s cooler out. If have too much air in your tires, your tires will wear in the center. If you put too little air in the tires, you’ll have trouble braking and you’ll lose about 2 -3 miles per gallon. When it comes to your battery, make sure you have it checked at an auto parts store or a service station. A battery can die with no warning. And of course, make sure you check for wear on all those little rubber bits that are on your car — including the windshield wiper blades.2. Maintain fluidsIf you use conventional motor oil, switch to synthetic oil. Your engine runs more efficiently with synthetic oil. It costs about 5 more than conventional oil, but with synthetic oil, you can go longer between oil changes — every 7,500 miles instead of every 5,000 miles. Find out the last time the oil was checked says Phil Reed of Edmunds.com. If your car is really old and you don’t have the owners manual that tells you when to switch the oil — or other fluids, use your senses. Look at the quality of the fluid. “If it’s dirty or smells burnt, consider replacing it,” says Reed. 3. Beware the up sellIf you do take your car in for an oil change, you may be persuaded to buy a more expensive part or have a service performed that’s not really necessary. An example is changing your air filter. Surely, changing the air filter will give you better fuel efficiency, but not doing so won’t jeopardize the life of your car according to Edmunds.com. Having your rotors on your tires turned is often a service that’s not needed, but commonly recommended. And it’s not cheap, it can run 50 a tire.4. Know when to throw in the towelDon’t sell just because you’ve recently been forced into a major repair according to Edmunds. But you may want to get a sense of what other major repairs are on the horizon. Since specific models tend to suffer identical problems, you can simply talk to other owners or talk to a trusted mechanic who works on that specific model of car. In the meantime, consider what vehicle you would like to buy and figure out the cost of monthly payments and try to squirrel away that much money every month.– CNN’s Jen Haley contributed to this article.Got a financial dilemma? Go to CNNMoney.com/helpdesk to submit questions, read the Help Desk articles and check out new Help Desk videos. And tune in to CNN’s Newsroom Tuesdays and Fridays, when Gerri Willis and other experts answer your questions.

Source:CNN

NEW YORK: You’ve heard of speed dating? It’s got nothin’ on foreclosure buying these days. In many places, anyone who wants to buy a foreclosure better act fast, or they’re going to come away with bupkus.REOs, the industry term for homes repossessed by lenders and put back on the market, are often selling in a day — sometimes in less.”We’re seeing REOs go very quickly. Offers come in immediately after the listing comes on the market, within 24 hours,” said Brad Geisen, founder of Foreclosure.com. Some homes have been put into contract in less than 90 minutes.In Stockton, Calif., foreclosure ground zero, the market has changed radically. Last summer, Cesar Dias became famous for founding the “foreclosure tour,” in which he packed potential buyers on a bus and ferried them around to some of the thousands of distressed properties. Foreclosures: How bad is your city?Today, the foreclosure tour in Stockton is history. There are too few REOs.”For every listing that comes out, we have 10 buyers,” said Dias, an agent with Approved Real Estate Group. “We had a lot of inventory last summer. Now we’re down to 1,500 listings — from more than 5,000.”San Diego buyers face the same trend. “Agents have one or two REO listings now, compared with 15 or 20 a year ago,” said realtor Adrianna Delgado of the Delgado Group.0:00
/02:38Detroit’s housing baronAnd there’s almost no negotiating, no back-and-forth, after the initial bid. “We don’t get a counteroffer,” said Delgado. “The sellers just ask for your highest and best bid. If you’re not prepared to send in your best bid the first day, you may as well stop looking.”In Florida there are so many buyers for foreclosure listings that real-estate investment companies, which had been snapping up properties, are now facing stiff competition, said Vanessa Grout, VP for acquisitions at New Valley, a real estate investment fund.Even in distressed Detroit, REOs are still in high demand. “For a good house that’s not too beat up, in a good neighborhood, there’s no lack of buyers in this market,” said Andy Sakmar, founder of Century 21 Sakmar in the Motor City suburb of Rochester. “There are a lot fewer of these properties than a year ago, and the super buys get multiple offers.”Priced for speedThe biggest factor in the feeding frenzy is, of course, rock-bottom prices. Banks are pricing homes to move.Sakmar tells of an REO that recently went on sale in a community of mostly 300,000 homes. It was in good shape and should have sold for 200,000, in Sakmar’s opinion. Instead, the bank listed it for 129,000.”It drew thirteen offers in two days,” he said.That kind of cut-rate pricing is very common, according to Foreclosure.com’s Geisen. Instead of holding onto REOs for the best prices — and paying the property taxes and maintenance and heating costs — banks are selling the homes as quickly as possible. “In this market, if they can liquidate them fast, it makes more sense to get them off the books,” he said.The trend is causing intense agita for buyers. “People feel like they’re getting left out,” said Dias, the agent in Stockton. “We show a house on the weekend and it’s gone by Monday.”0:00
/2:20Why Louisville, Colo., is No. 1″There are plenty of buyers ready to move,” added Mark Brandemuehl, a spokesman for Movoto, a California real estate broker that specializes in foreclosures. “They tell their agents to make bids right away, as soon as they see something suitable come on the market.”Bubble marketsThe hot spots for this fast-paced foreclosure activity are former bubble markets where foreclosures soared — places like California cities Sacramento, Riverside and San Bernardino.In Sacramento, for example, the inventory is down to less than 30 days, making it a cut-throat market. The agents specializing in REOs “have nothing to sell,” said Brandemuehl.On average, inventories of California homes under 300,000, the most popular price point for foreclosure buyers, have shrunk drastically, from a nearly 10-month supply a year ago to less than three and a half-month supply today, according to the California Association of Realtors.Nationally, the number of bank-owned properties diminished by 26% from June 2008 to June 2009.The industry attributes the drop in inventories to foreclosure prevention efforts by President Obama and various state governments. In particular, they cite moratorium programs that, at the very least, postponed foreclosures. The bad news is that as the moratoriums lapse, more REOs will likely hit the market. That’s because these efforts tend to delay foreclosure rather than stop it. “Every lender I talk to has been telling me there’s every indication that a tsunami of new properties coming to the market later this fall,” Sakmar said.Geisen sees the same flood, but he attributes it to consumers failing out of Obama’s foreclosure-prevention program, Making Home Affordable. He believes that many of the modified loans will fall back into foreclosure — especially if the economy doesn’t perk up soon. In fact, last year the U.S. Comptroller of the Currency found that 53% of loans that were modified in the first half of 2008 fell back into arrears. Although, that was before Making Home Affordable standardized the terms and qualification process.Still, Geisen said, “There’ll be another wave of foreclosures. The wave that Obama stopped — temporarily.”

Source:CNN

NEW YORK: Fees are big money makers for banks, savings and loans, and credit unions. But that doesn’t mean you have to pad their bottom line. Here’s you can fight back against those fees. 1. Know what type of loan you’re getting intoWe’ve told you to stay away from payday loans at all costs. Be leery of all short-term loans.Payday loans — also called cash advances — are short-term cash loans that don’t require a credit check. And these short-term loans typically cost 400% to 5,000% interest if annualized. Now, some credit unions are offering short-term loans couched as Payday Loan Alternatives. Some of these loans are no better than regular payday loans. Keep in mind that it’s against the law for federally chartered credit unions to charge more than 18% on loans, but some credit unions charge excessive fees that drive up the effective rate to as much as 455% according to the National Consumer Law Center. Fees you should be on the lookout for: application and participation fees. If you’re really strapped for cash and you need money immediately, negotiate a payment plan to your lender. Stay away from short-term loans. It will just keep you in debt.2. Don’t get caught up in paying fees on your unemployment benefits Instead of getting paper checks for unemployment benefits, prepaid cards are being distributed in about 30 states. The National Consumer Law Center says fees for using the prepaid cards range from 40 cents to a high of 3 per transaction. Even some banking services that are normally free — like checking your account over the phone or inactivity — cost cardholders according to Creditcards.com. If you have one of these cards, make sure you read the fine print. You can skip the headache all together by choosing the “direct deposit” unemployment payment option over the prepaid card — and have your money immediately deposited into your regular bank account. Find out if this option is available to you.3. Skip overdraft protectionOverdraft fees are what your bank charges you if you don’t have enough money in your account to cover the transaction. About 75% of U.S. banks automatically enroll their customers in automatic overdraft protection services according to the Federal Reserve. And at 35 a pop, that’s an expensive tab. The Fed is considering whether to crack down on automatic overdraft protection that’s triggered if you use a debit card to purchase something or if you use your ATM to get cash. The proposals include the provision that customers would have to either opt-in or opt-out of overdraft protection. Representative Carolyn Maloney also introduced legislation that would require you to be warned before you overdraw your account. In the meantime, make sure you have access to your checking account online so you can keep tabs on your balance. You should also link your checking to your savings account. This way if you go over your limit in your checking account, your savings can be tapped. You will pay a nominal fee, but it’ll be much cheaper than overdraft penalties. Got a financial dilemma? Go to CNNMoney.com/helpdesk to submit questions, read the Help Desk articles and check out new Help Desk videos. And tune in to CNN’s Newsroom Tuesdays and Fridays, when Gerri Willis and other experts answer your questions.

Source:CNN

NEW YORK: Leave no nest egg unscathed. That seemed to be the mission statement of the market meltdown that began in 2008.On March 9 of this year, stocks hit a bottom, with both the S&P and the Dow closing at 12-year lows. The market has since had better days, but halfway through the year, the S&P was still down 37% from where it was 18 months earlier.Yet, there is some good news. The balances of 401(k) investors fared much better, according to calculations made for CNNMoney.com by Jack VanDerhei, research director of the Employee Benefit Research Institute.Among all 401(k) accounts, the average balance fell 8.75% in the 18 months that ended June 30.EBRI, working with the Investment Company Institute, has the country’s most extensive information on 401(k) performance and investor behavior — a database covering more than 21 million participants.The numbers offer some measure of hope for 401(k) participants looking to get back to where they were. They also provide snapshots of how different groups were affected. Factors playing the biggest role were a participant’s age, tenure at a company and whether or not she started 2008 with a small balance or a large one.For example, young workers with no more than 4 years’ tenure at a company fared the best. That’s primarily because they had low balances to begin with and the power of their contributions easily trumped the downward pressure of the equity returns in their portfolios. The average balance for this group was actually up 47% over the past 18 months.Hardest hit were those 401(k) participants between the ages of 45 and 64 who had worked 20 years at a company. Their balances were down an average of 17.5%.Balances of 401(k) plans tended to outperform stocks as a whole in part because most 401(k) participants were invested in a mix of stocks and bonds or stable value funds.And some participants did grow more conservative in how they invested. “Over the last 18 months, the allocation [of new contributions] to equities fell 12.7%” at large companies, said Byron Beebe, a U.S. retirement market leader at Hewitt Associates, which keeps records for 500 retirement plans at the largest U.S. companies.But the biggest factor bolstering 401(k) balances against the riptides of the market was the fact that participants kept contributing to their accounts much as they had before the meltdown last fall.”Almost everyone has stayed the course,” said Michael Doshier, vice president of workplace investing at Fidelity Investments, which tracks 17,500 defined contribution plans representing over 11 million participants.0:00
/2:52401(k): Don’t stop believingParticipants kept investing even though nearly 8% of companies have suspended their matching contributions to employees since last August, according to Fidelity. Hewitt estimates that between 6% and 7% of Fortune 500 companies were among them.Recovering what’s been lostOf course, knowing that your 401(k) balance hasn’t fallen as far as the S&P doesn’t erase the cold fact of the downturn: A big part of your nest egg is still in the red and it will take some time to recover what’s been lost.Just how long it takes will depend on two main factors: how much you and your employer contribute to your account as a percent of your current balance;how much of a return your portfolio will generate going forward.In the two tables below, VanDerhei calculated roughly how long it would take for 401(k) participants to restore their balances to their Jan. 1, 2008, levels. One table assumes the participant’s portfolio generates annual returns of 4% going forward; the other assumes an 8% return.Say your 401(k) was worth 100,000 at the start of last year and has fallen 20%, leaving you with an 80,000 balance. If your portfolio is generating an 8% annual return and you and your employer combined contribute 8,000 to your account every year (that is, 10% of your current balance), VanDerhei estimates it will take you roughly 1 year and 4 months to restore your balance to 100,000.If your portfolio only generates 4%, then it would take 1 year and 9 months.If, however, you bumped up contributions to 12,000 (or 15% of your current balance), you could do it even sooner.Once you’ve gotten back to even you might be tempted to ratchet back your contributions. But consider that even before the market meltdown, many workers — both current 401(k) participants and those who don’t participate — weren’t saving enough to begin with.”A very large percentage were not saving anything close to what would be required to replace a significant percentage of their pre-retirement income by age 67,” VanDerhei said. “The recent market crisis has only exacerbated their dilemma to the extent they were invested in equities.”
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How long will it take to get back what you lost?
How long it will take you to restore your 401(k) balance to where it was at the start of 2008 will depend on how much youve lost, how much you contribute as a percentage of your balance today and what kind of return your portfolio generates.
Assuming an 8% annual return
Contribution*
How much you lost between Jan. 1, 2008 and June 30, 2009

Under 9%
9% to 16%
16% to 20%
More than 20%
6.5% or less
5 months
1 year 3 months
1 year 10 months
3 years 5 months
6.5% to 11%
4 months
11 months
1 year 4 months
2 years 2 months
11% to 15%
3 months
9 months
1 year 1 month
1 year 6 months
More than 15%
2 months
7 months
11 months
1 year 1 month
Assuming an 4% annual return

Under 9%
9% to 16%
16% to 20%
More than 20%
6.5% or less
7 months
1 year 10 months
2 years 8 months
5 years 2 months
6.5% to 11%
5 months
1 year 2 months
1year 9 months
2 years 10 months
11% to 15%
4 months
11 months
1 year 4 months
1 year 10 months
More than 15%
2 months
8 months
1 year 1 month
1 year 4 months
* Worker and employer annual contributions combined as a percent of your balance today.
Source: EBRI. Time periods represent the median time for recovery and are rounded to the nearest whole number.
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Source:CNN

(Fortune Magazine) — With layoffs rampant, holding on to workers ought to be the least of a company’s worries — unless those employees are scientists and engineers. According to the National Science Foundation, nearly 40% of these skilled workers in the U.S. are more than 50 years old, and the pipeline of talent to replace them is shrinking. IHS Cambridge Energy Research Associates predicts a 7% to 11% shortage of experienced engineers in 2011. America is not alone; industrial powerhouses Germany and Japan face similar demographic challenges. BASF, the German chemical giant, which makes, among other products, ammonia, fertilizer, and plastics, says it has found a way to beat the crunch. The 91-billion-a-year company has been around for more than a century, and its skilled workforce of production managers, scientists, and engineers, while not quite that old, have decades of experience under their belts. By 2020 the majority of BASF’s German employees will be 50 to 65 years old. “It’s become apparent that we’re going to hit a wall,” says CFO Kurt Bock, himself a sprightly 50. BASF’s demographic problem is bigger than most because it mainly operates in Germany, Japan, and the U.S., where the elderly make up an increasingly large chunk of the population. While the company is trying to replenish its workforce from the bottom up, even sending its scientists to teach classes in elementary schools, that may only address the problem of 2050. A more pressing concern is the next decade. “If we don’t deal with aging,” says Hartmut Lang, BASF’s HR chief, “we’ll face a serious challenge.” Three years ago BASF decided to create a series of programs aimed at boosting workers’ longevity and productivity. 0:00
/03:26Google: U.S. needs engineersOne initiative focuses simply on maintaining health. Doctors visit laboratories and plants, where they assess the physical condition of individuals who volunteer and offer them advice. Another targets the facilities themselves. In office settings, notes Lang, the company has instituted “ergonomics checks” for furniture. At the plants, managers divvy up labor among different generations to reduce stress on older employees. Peter Gleich, a plant manager in Ludwigshafen, Germany, says, “We’re also looking at organization to boost productivity” — which means putting younger and older people together in teams to take advantage of both generations’ skill sets. Yet even if senior employees work longer and better, they’ll have to leave eventually — and they’ll take much of their experience with them. “For the engineers, transferring knowledge to their successors is easier said than done,” says Bock. BASF encourages older staffers to take on a mentee. To ensure expertise gets passed on, BASF created teaching sessions called Wissensstafette, or knowledge relay, where older workers share their knowledge with newcomers. It also changed its compensation scheme to reward mentoring. Now 360-degree evaluations are conducted to get feedback from those being mentored — a rare approach in Germany, where most bonuses are based solely on seniority. If BASF can unlock the potential of its older workers, its golden years may still be ahead.

Source:CNN

NEW YORK (Money) — There’s plenty to like about the credit card reforms President Obama signed into law this May. For example, starting in February, your card company won’t be able to raise the interest rate on an existing balance. Payments will be applied first to the portion of your balance with the highest rate. And if you miss a deadline for one card, the issuer of another can’t hold it against you. All major victories for consumers.But this doesn’t mean you won’t pay in other ways. Federal regulators recently estimated that the country’s largest banks will suffer a total of 82 billion in credit card losses through 2010 as a result of the recession. And that has the institutions anxious to concoct new methods of creating revenue and limiting risk, says banking industry consultant Robert Hammer. It also has them leaning heavily on some old standbys. After all, the law doesn’t prevent banks from hiking rates on new purchases. Or zapping credit lines. Or yanking rewards. What’s more, until the bulk of provisions go into effect this winter, the newly outlawed practices will still be in play.Bottom line: You’ll have to set your own rules, and not just rely on the government’s. If you want to protect your plastic and all of its benefits, these six guidelines are a good place to start.Don’t: let your cards collect dust.Chances are, you favor a particular card. But if you’ve got another idling in your wallet, now’s the time to show it some love. To limit risk and expenses, “a lot of issuers are closing accounts because of inactivity,” says John Ulzheimer of Credit.com. And they’re doing so even to model cardholders.Obviously, having a card canceled hampers your access to credit. But having less credit can also mean a lower credit score. Bad news all around. To avoid this scenario, use each card at least once every three to six months. Just buy something small and pay it off. (Issuers will be placated by the fees they get from retailers when you swipe.) If you have more than two cards — in reality, that’s all you need — rotate them, using only two in any given month.Do: keep charging in check.Not only are creditors canceling cards you don’t use, they’re also cutting limits on the ones you do. Banking analyst Meredith Whitney expects lenders to reduce available credit by 2.7 trillion through 2010, and a recent Credit.com survey concluded that 14% of Americans have already been victims. Issuers have been targeting customers based on, among other things, location, spending pattern, and debt-to-credit ratio. This last one — which refers to how much of your available credit you’re using — is easy to manage. You’ll especially want to keep it in check to avoid a vicious cycle: A high ratio results in a lowered credit score, which also triggers credit line cuts.”Ideally you’d use less than 10% of your limit,” says Ulzheimer. That’s stingy — 500 on a 5,000 line. But you can safely creep up to 20% on any one card and in total unless you’re applying for a loan soon and want as pristine a profile as possible. (In that case, zero out your cards and put them on ice for two months.) Don’t go over the 20% line even if you pay in full every month. Issuers report the statement balance to the bureaus, so it looks as if you’re utilizing that amount.And if your limit is cut anyway? Banks haven’t been receptive lately to consumers’ requests for line reinstatements. So instead, open a new card (see the next point) to extend your available credit.Don’t: wait around for a rate hike.About one in five consumers have recently seen the annual percentage rate (APR) on a card spike, according to Credit.com’s June survey. Big banks — hit hardest by losses — have been especially eager to raise rates, says Curtis Arnold of CardRatings.com. You’re likely to see them hurriedly hiking the APR on existing balances before February, and continuing to juice longtime cardholders on new purchases even after, he predicts.So if you carry a balance and have a credit score of 730 or above, move your big-bank card into secondary status and rotate in a regional bank or credit union card, Arnold advises. Because such institutions use stricter underwriting standards, they offer lower rates and rarer hikes. The average major bank card is running 13.76%, says Arnold. But Arkansas-based IberiaBank FSB is offering a Visa Classic starting at 6.25% (800-980- 2265); NIH Federal Credit Union is advertising a Visa Platinum Rewards card at 8.9% (800-877-6440).For more regional bank options, search CardRatings.com. For credit unions, use Bankrate.com’s state-by-state list, then visit the unions’ sites directly. (Most have lenient membership requirements, says Arnold.)Do: force them to remind you.With creditors expected to lose significant interest revenue as a result of the legislation, they’ll have to increase penalty rates and fees, predicts bank advisory firm R.K. Hammer. Already in 2008 the average penalty APR was 26.87%, with some as high as 32.99%, per Consumer Action. And the average late charge at the 10 biggest banks was 39, R.K. Hammer reports.Think you’re too responsible to be late? Guess again. Issuers have been shrinking grace periods, and thereby shifting due dates by a few days, says Bill Hardekopf of LowCards.com. To add insult, banks have been raising minimum-payment amounts, and sticking customers with fees when they underpay. Avoid the double whammy of fees plus penalty rates by setting up e-mail or text message alerts notifying you when your bill is due and what minimum is owed. (You can usually sign up on your issuer’s website.) The alerts will keep up with account changes, even if you can’t.Do: reassess your rewards.Issuers have been scaling back rewards for a while now; and industry insiders expect the trend to accelerate as companies try to cut costs. It’s unlikely banks will pull the plug completely, given their need to lure new customers, says Emily Peters of Credit.com. But you can expect changes in accrual and redemption. Discover, for example, recently reduced its cashback bonus so that cardholders earn just 0.25% on annual purchases up to 3,000 and 1% after that. (Previously, a middle tier between 1,500 and 3,000 paid 0.5%). Citi doubled the ThankYou points required to get some airline tickets, and moved up the expiration on other points.The best way to protect your rewards? “Use them before you lose them,” says Hardekopf. In other words, cash them out frequently. That’s especially true of miles and points, which are getting harder to redeem anyway. In fact, you’ll probably get better value with a cashback card that pays out frequently; the Schwab Invest First Visa (866-724-9223) returns 2% on all purchases and pays out every month.Don’t: miss changes that’ll cost you.As of this month, issuers must give you 45 days’ notice before changing the rate or other terms on your card (vs. 15 days before). Since the new terms will likely be less wallet-friendly, it’s crucial that you pay attention. Problem is, there’s no standard way issuers must notify you. So even the most vigilant cardholder can miss an important change. That said, the factors likely to have the biggest impact are credit limits and interest rates, and there’s an easy way to keep up on these: Verify them on every statement. Your limit is usually near the top, and your rate is typically listed among the finance calculations. New law or no, it’s still up to you to protect yourself.

Source:CNN

NEW YORK: Today the government will begin offering a repayment plan that lets graduates reduce their monthly student loan payments based on their income. It’s called the income based repayment plan and it’s available to borrowers who took out federal loans or used a federal consolidation loan to combine their debt. 1. Advantages and disadvantagesSome of the benefits of the program include the ability to get your monthly payments lowered. If you make timely payments for 25 years, the balance of your loan is forgiven or if you go into public service, your debt is forgiven after 10 years. But there are drawbacks. First, you’ll pay more in interest over the life of the loan since you’re stretching your payments out. And you must submit documentation of your income and family size each year to set your payment amount. If you do not provide the documentation, your payment reverts to the standard 10-year repayment amount. 2. Do you qualify? You will generally qualify if your federal student loan debt is high compared to your income and family size. While your lender will perform the calculations to determine your eligibility, you can use the Education Departments calculator at studentaid.ed.gov to estimate if you would benefit from this program. Contact your lender or the lenders who hold your student loans. Keep in mind you may need to submit a copy of last year’s taxes. 3. Help for the unemployed If you don’t have any income at all either because you can’t find a job, or you lost your job, you can still take part in this program. And if you qualify, your monthly payments could turn out to be zero. Keep in mind there are other options out there too. The government has always allowed for people who can’t make their student loan payments to apply for deferments and forbearances. In both cases you can stop making payments for a little while. The debt doesn’t go away, but interest does continue to accrue even if you don’t make payments. And, just to mention another bit of good news, interest rates on subsidized undergrad Stafford loans are now at 5.6% and older variable rate Stafford loans consolidated after today will carry an interest rate of 2% — a historic low. — CNN’s Jen Haley contributed to this article.Got a financial dilemma? Go to CNNMoney.com/helpdesk to submit questions, read the Help Desk articles and check out new Help Desk videos. And tune in to CNN’s Newsroom Tuesdays and Fridays, when Gerri Willis and other experts answer your questions.

Source:CNN

(Money Magazine) — The combination of a deep recession and widespread law-enforcement funding cuts will most likely spell a banner summer for burglars. If your house makes a good target – it’s upscale, off the beaten path, and in or near a city – an alarm system is your best defense, according to Temple University economics professor Simon Hakim, who studies security and policing. Installing one will reduce your risk of a break-in by two-thirds. To determine what you really need, follow the guidelines below. Don’t overequipA top-shelf security system that includes a detector on every door and two on every window could set you back thousands. But unless you have Picassos hanging on your walls, it isn’t necessary, says Stan Martin, executive director of the Security Industry Alarm Coalition, a trade association dedicated to reducing false alarms. For the most part, a basic package that secures all exterior doors and includes a handful of well-placed motion detectors will stop the average thief. Also get smoke, carbon monoxide, and flood-alert devices (about 250 each), which operate even when the burglar alarm is disarmed. Vet the companiesAlarm installers will drill holes in your walls and woodwork – and will know how to bypass your security system – so you need them to be honest as well as skilled. Collect referrals from friends, neighbors, and trusted tradesmen, and verify that the companies are members of the National Burglar and Fire Alarm Association. Compare long-term costsGet price quotes from at least three companies. A basic system should cost 1,500 to 2,000, says Martin. You’ll also need a monitoring service, which will send the cops to your door when an alarm is tripped. Monitoring ranges from 20 to 50 a month, plus 10 to 30 more if you get cellular backup, which ensures a distress signal will come through even if your phone line is cut. Since alarm companies make the bulk of their profit from monitoring, some offer discounted or free installation of a basic system when you sign a contract. Consider a few extrasMake sure to get keypads with digital readouts (about 100) that clearly identify which detector has tripped, so that you and the monitoring center know immediately if the problem is carbon monoxide or an open dining room window. If you have plaster walls, consider wireless detectors, which require no drilling or snaking of lines (the cost is about the same as for the standard models – and battery replacement comes at no extra charge). And if you have or would ever get a dog or cat, ask for pet-immune motion detectors (an extra 50 to 100 each). Of course, a canine can make a pretty good alarm of its own, with no battery replacement necessary. Just daily walks – and a treat every time he barks at a passerby.

Source:CNN

NEW YORK (Money) — Question: I’m 52 years old and think I might get laid off soon. If I do, I’m thinking of rolling over the 250,000 in my 401(k) into a self-directed IRA that I would invest in real estate and try to make money in foreclosures, rental properties, etc. Do you think this is a good idea? –Larry C., Eldersburg, MarylandAnswer: The last time I got questions about investing IRA money in real estate was at the peak of the housing bubble back in 2005. Back then, when house prices in some frenzied markets were climbing at double-digit annual rates, people were looking to invest almost any money they could get their hands on in real estate, including the funds in their IRAs.And if the idea of investing in real estate within their IRA somehow hadn’t occurred to them on their own, there were plenty of advisors, consultants, columnists and self-directed IRA custodians raving about the opportunities to boost your IRA’s growth rate by buying housing and other real estate.My take on this issue at the time was that while real estate was a hot investment I didn’t think it was such a hot idea to invest one’s IRA stash in it.For one thing, I warned that after big runups in the past, house prices had fallen precipitously and in some markets had taken almost 10 years to regain their peaks. I also noted that owning real estate within an IRA can be a hassle. Most people don’t have enough dough in their IRA to buy enough properties to diversify properly. (Financing a purchase for an IRA is possible, but complicated.) And since there are limits (5,000 this year, plus 1,000 if you’re 50 or older) to how much you can contribute to an IRA in any year, you could run into problems if the cost of property maintenance and repairs exceeds the amount of cash you have in your IRA or that you’re allowed to put in.So now that at least some of the air has been let out of the real estate bubble have I changed my mind about investing in real estate through an IRA?Not really.Granted, since prices have fallen (make that “collapsed” in some areas), I think that housing is a more attractive investment today than it was back at the height of the boom. If nothing else, you’re getting the same sticks and bricks at a lower price. (To get a handle on current prices in your area, you can check out sites like Zillow, Trulia and Cyberhomes.)That said, even with incentives designed to spur demand, such as the 8,000 first-time homebuyer credit, it’s still unclear (to me at least) how long it will be until we see a sustainable turnaround. And given how the last boom turned out, you have to wonder how robust the upturn will be.But even setting that issue aside, you still have to deal with the other difficulties I mentioned about owning real estate in an IRA. One more thing you might want to consider is that real estate isn’t the most liquid investment around. That could be a problem if you need to raise cash from your IRA in a hurry (which could be a possibility for you if your premonitions of being laid off are accurate).To sum up, I don’t think an IRA is a particularly good vehicle for investing in actual real estate. If you feel you really want to take advantage of beaten-down home prices, I’d recommend you consider using funds from other accounts if possible.Even then, I’d avoid investing in actual properties if it meant tying up a large portion of your overall portfolio in real estate. After all, you probably already own a home, which gives you plenty of real estate exposure. And even if that’s not the case, the properties you buy are probably going to be located in one town or region of the country. In terms of diversification (or lack of), that’s the equivalent of limiting your stock investing to companies in one industry — not a good idea.All in all, I think you can get enough of the diversification benefit and return potential that real estate has to offer by investing in REITs or mutual funds that specialize in REITS or other forms of real estate. (For a few suggestions, check out our picks from our Money 70 list of recommended funds.)I know this answer won’t make me popular with real estate buffs and the people who push self-directed IRAs. But my feeling is that if you can get a good portion of the benefits of real estate while reining in the risk, that’s the more prudent way to go.Do you have a credit card horror story? Was your interest rate raised or your credit limit cut unexpectedly? Have you had difficulty redeeming reward points? If you’d like to tell your story to Money magazine, please email a brief note, with your contact information, to ismat_mangla@moneymail.com.

Source:CNN

(Money Magazine) — The average college grad comes out owing 22,500, per FinAid.org – a scary sum in good economic times. Now unemployment for BA holders is at its highest since the Labor Department started keeping track in 1992, making that debt burden even more onerous. If your kid is crushed by the bills, offer this advice before offering to write checks. Ask for a break. Unemployed or underemployed borrowers may be able to defer paying back federal Stafford or Perkins loans for up to three years at a time, says Mark Kantrowitz of FinAid.org. On some loans the government pays the interest. If your kid doesn’t qualify or his loans are private, ask for a forbearance, a temporary reprieve during which interest still accrues. Pay a percentage. Switch monthly payments on federal loans from a fixed amount to 15% of “discretionary income,” as defined by the Department of Education. If your child’s income stays low and she still has a balance after 25 years on this plan – 10 if she’s in public service and has certain loans – the government swallows the balance. Stretch ‘em out. Consider increasing the term on loans of 10 years or less, says financial planner Matthew Davis. Extending a 10-year loan to 20 years slices 34% off monthly payments. The interest over the life of the loan doubles, though, so once your kid’s income goes up, he should get back on the original schedule. Cut the rate. Since 2006 new Stafford borrowers are locked into their rate. But older Staffords can be refinanced based on 90-day T-bill rates, now at record lows. For information visit loanconsolidation.ed.gov. Beth Kobliner is the author of the newly released “Get a Financial Life: Personal Finance in Your Twenties and Thirties” (Simon & Schuster).

Source:CNN