Archive for March, 2009

This is the time of year when many of us grow impatient to end our winter hibernations and start daydreaming of our upcoming summer vacations.

If, like many people these days, you’re reining in your spending, there’s a low-cost vacation option you may not have considered before. For those who have a hankering for fine art, historical architecture, prestigious rare-book collections and other culture, but on a shoestring budget, the New York Times has turned the spotlight on an intriguing vacation destination – college campuses. Read more »

The recession is creating job losses across a wide swath of America and in every industry group. A recent New York Times story took a closer look at which demographic and ethnic groups (and states) are disproportionately feeling the pain of what’s been coined The Great Recession.

The Winners
• Renters, who had no equity to lose in real estate or the ability to take on risky mortgages
• Retirees who rely on Social Security income rather than personal investments
• Young families, who stand to benefit if their investments in the current, depressed stock market normalize in coming years Read more »

First Hyundai “assured” customers they could return their new cars if they lost their job within one year of purchasing it without any negative impact to their finances. Next, the car company upped the ante by tossing in three months’ worth of payments to give you time to look for a new job. Well, now it seems their “we-understand-it’s-hard-out-there” approach to business is catching on. Citigroup just announced its pledge to take a similar approach with its customers.

The seriously-hurting bank promises to cut monthly mortgage payments to $500, on average, for three months to give mortgage holders who’ve lost their jobs and have fallen behind in payments a little breathing room. Citigroup thinks the new Homeowner Unemployment Assist program will help thousands of mortgage holders bridge their financial gaps until they can find a long-term solution. Read more »

As the recession continues to deepen, what should you be doing with your discretionary money at the end of the month, after your basic living expenses are paid? Conventional advice has, in the past, touted the benefits of paying off high-interest debts as quickly as possible, then dividing your money to pay off debts and set some aside for savings. But in today’s economic slump, there are certain scenarios in which you may want to consider a different approach.

If there’s a chance you could lose your job …

Let’s face it, there probably aren’t many jobs that are 100% secure in this economy. If you have reason to believe you’re likely to get laid off, the best thing you can do for yourself is pay off debts. When you’re laid off, your income will be reduced to the amount of unemployment benefits you’re eligible for, and chances are you won’t have access to additional credit. Paying off as much debt as possible before you’re laid off will increase your available credit line in the event you need to access more money than you receive through unemployment benefits.

Read more »

Many people know that certain items sell better during an economic slump – things like liquor or movie ticket sales tend to perk up people who are looking for an “escape,” no matter how temporary, from their day-to-day money worries.

Interestingly, H.J. Heinz Company reported an 11% increase in its quarterly profit even after raising prices by 8%.

Well, that’s a lot of ketchup sales!

Actually, the Pittsburgh-based Heinz makes much more than just ketchup (including frozen food, soups, beans and pasta meals), but the food company’s obviously enjoying the benefits of the dining-in trend among consumers.

Prepared meals by Heinz and other food makers are also enjoying renewed popularity, as busy families on the go are trading down from catching dinner at local establishments to prepared meals at home. Not everyone is ready to try cooking from scratch.

Can you predict the winners or losers of food sales during an economic downturn? Which foods will sell briskly, and which will languish?

Also take a look at “How to Save Money on Groceries” for ways to cut back and still eat great.

Adversity breeds ingenuity. And one Florida lawyer has come up with an ingenious way to fight back against foreclosures: force banks to prove they have the right to foreclose in the first place.

The same convoluted system that helped collapse the mortgage lending structure in the first place could hold the key to stopping many foreclosure proceedings. That’s if attorney April Charney’s argument catches on nationwide.

She contends that, since a lending bank typically turns mortgages into bonds — which are put in trusts as collateralized debt obligations (CDO) — and then “sells” the right to collect revenue, the bank no longer legally owns the mortgage or the right to foreclose on it.

According to the New York Post, her strategy is working in Jacksonville. So far, she’s forced banks to admit they don’t have legal ownership and stopped foreclosure proceedings many times over. Her argument has “spread virally around the country and now thousands of foreclosure lawsuits are sitting idly — in legal limbo.” Charney has one case that’s been in limbo since 2004 because the bank simply hasn’t come back to court. Read more »

Being unemployed has just gotten a little easier.

Unemployment benefits vary, depending on where you live, and range from a modest $133 per week in Puerto Rico to $628 a week in Massachusetts. But the passage of the massive federal stimulus package has resulted in an additional boost of $25 per week, or an extra $100 a month, for the unemployed. Combined with other unemployment benefits the stimulus package provides, the enhanced benefits should make a substantial difference. For example:

• Those who are out of work are now eligible to receive 20 extra weeks of unemployment benefits in all states, and another 13 weeks if you happen to live in a state with a higher unemployment rate.
• Previously, all unemployment income would be taxed as income. In 2009, you get to keep the first $2,400 of your unemployment income all to yourself, tax-free.
• Thanks to COBRA, workers can extend their health insurance coverage while they’re unemployed. Read more »

While there’s obviously no guarantee that this recession will follow the same path as ones that have come before, here’s a very interesting look at how this downturn compares to some of the biggest of the last 80 years.

The chart above, created by dshort.com and updated on Feb. 25, gives a very compelling look at the stock-market path of the current economic recession compared to those of the Great Depression, the 1973 oil crisis, and the recession caused by the collapse of the technology bubble at the beginning of this century.

A lot of facts, figures and odd measurements (like the actual height of a stack of one billion dollar bills) have been thrown around since the start of the recession, but I find this chart a very tangible quantification of what’s really happening. Hopefully, you will too.

Do you find this chart illustrates the recession better than others you’ve seen? Does it help you put the recession in real terms?

CVS was ordered to fork over $2.25 million in a court settlement last month after an Indianapolis TV station went dumpster-diving and surfaced with pharmacy customers’ personal data.

WTHR-TV went on the prowl at Walgreen’s and Rite-Aid, too, and at both Walgreen’s and CVS dumpsters in 11 of 12 cities (Boston, Chicago, Cleveland, Dallas, Denver, Detroit, Louisville, Miami, New Haven (CT), Philadelphia, and Phoenix) it hit a mother lode of patients’ unshredded Social Security numbers, credit card numbers, names, addresses and prescription information, indicating a pattern of haphazard records disposal that put patients at risk for medical identity theft.

Such careless management of confidential medical records is in direct violation of the Health Insurance Portability and Accountability Act (HIPAA) privacy and security rules. Interestingly, CVS prominently cites its commitment to the HIPAA law under the Patient Privacy tab on its website.

“The WTHR investigation was initially prompted by news of a grandmother in Bloomington, Indiana, who was robbed at her front door by a thief who found her address in a CVS dumpster,” The Clark Howard Show reported.

Unfortunately, this isn’t the first time CVS has been nabbed for dumping patient records.  The Texas attorney general reached a settlement with CVS exactly one year ago.

Under that agreement, CVS said it would overhaul its information security program with administrative, technical and physical safeguards designed to protect the personal information of CVS customers. CVS also had to pay $315,000 to the state of Texas.

Why, then, are we hearing again about CVS dumping patient medical records?

If you’d like to share your thoughts with CVS, you can contact their director of public relations, Mike DeAngelis, at MJDeangelis@cvs.com.

Recently I wrote about the benefits of cutting credit cards out of your life to save money and help rein in your budget. I figured it’s only fair to put my money where my mouth is and follow through myself.

So last month I put my credit card on the shelf and relied exclusively on my debit card for, well, everything. Turns out I charged a total of $975.95 to my debit card, and saved $228 in interest fees by doing so.

But besides the obvious benefits of saving on those added interest costs, I also wanted the exercise to help me pinpoint where my money goes. I can’t say I am surprised at where the bulk went, but the amount shocked me — especially since, like the rest of America, I’ve been cutting back for many months already.

Maybe it’s because I’m tired when I get home, maybe it’s because I’m a bad cook, or maybe it’s because I live upstairs from a restaurant row; whatever the reason, I’ve realized I spend most of my money dining out — $338.83 last month, to be exact. This includes dinners, brunches, workday lunches, happy hours, take-out and anything else prepared by a restaurant.

So I’m taking on a new challenge this month: Cash only! And when I say cash only, I mean literally using greenbacks exclusively. It will probably be a pain to run to the ATM on a regular basis, but I’m hoping (hypothesizing even) that watching the cash dwindle before my eyes will help me put the breaks on spending across the board.

When using a credit or debit card, it’s easy to separate needs (gas and groceries) from wants (clothes and dining out). But when I have a finite cash flow for everything, I’m hoping it will force me to scrutinize each and every purchase — be it an office vending-machine snack or buying the expensive brand of shampoo at the grocery store.

So I’m only a few days into the month, and I’m already committed to a cash-only lifestyle. Oh, and I have to run to the ATM.

Be sure to check back in a couple of weeks and see how I’m doing with my cash-only diet.

Do you think I can stick to it and save? Are you willing to join me on a cash crusade to rein in spending habits? If you do switch to a cash-based existence, let me know about your progress!