Senior Personal Finance Correspondent
Linda's Feed
Mar 7, 2011
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Saving up for a big down payment? Sucker! (Corrected)

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Remember the Red Queen’s warning to Alice? “It takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast.”

That must be what it feels like to be saving up for a down payment on a home these days. Washington policymakers are entertaining several proposals that would raise the minimum down payment required for loans backed by Fannie Mae and Freddie Mac. Lenders are raising their own minimum cash requirements — the average down payment on new loans for home purchases is now around 27 percent, according to the Mortgage Bankers Association of America. Meanwhile, the Federal Housing Administration, the chief source of low down payment loans, is raising the fees it charges folks who only have minimal amounts of cash to the table.

Mar 2, 2011

Stern Advice: Who’s putting ads in your bank statement?

WASHINGTON, March 2 (Reuters) – What if you went to your
online bank statement and saw a message like this: “Hello, shoe
lover! Here’s 15 percent off the hottest spring styles!” Would
it make you happy to get the discount, or uncomfortable because
somebody at your bank knew you had a weakness for strappy
sandals?

Get used to it, because banks are quickly adopting new
marketing techniques that target specific interests. They are
using third-party technology companies to pitch specialized
offers at debit and credit-card customers. The offers are based
on the shopping habits of those customers.

Mar 1, 2011
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Do you really need a bank account?

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Here’s a little bit of personal finance heresy: Maybe you don’t need a checking account at all.

With banks raising fees on basic checking account services, the prepaid card industry is making the case that some consumers, especially students and young adults with uncomplicated finances, may find it cheaper and easier to use a prepaid card to manage their money.

Feb 28, 2011
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What you need to know now about credit scores

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Consumers may think they know all about credit scores, but they don’t, a key advocacy group has found.

“The bad news is that consumer knowledge has lagged behind recent changes in the credit score marketplace,” Stephen Brobeck, executive director of the Consumer Federation of America, told reporters on Monday, Feb. 28.  The Consumer Federation joined with VantageScore Solutions, a credit scoring company, to survey consumers’ current knowledge about credit scoring. On average, consumers scored a barely passing 60 percent.

Feb 28, 2011
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Bond strategies for a rising rate environment

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For the most part, bond investors have had a very nice, very long run.

Interest rates had been in a falling pattern for 30 years, and that meant solid gains for anyone who bought big yields and then held onto them while new securities offered lesser rates of return. ”If you were a little kid and hopped on the bond slide in 1981, you would have had a pretty fun ride until 2010,”  said Steve Huxley, chief investment strategist of Asset Dedication, an investment research firm.

That ride may have ended in August of 2010, when yields bottomed out and started to rise. The yield on 10-year Treasuries hit 2.52 percent then; now they are trading at 3.61 percent. As the economy strengthens and inflation rises, interest rates could be entering a long upward trajectory. That leaves income-oriented investors unsure of how to collect the benefits of bonds while protecting themselves from a rout.

Feb 24, 2011
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Protesters rally in Libya, and you’ll pay at the pump

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There’s not much that’s good or reassuring that can be said about rising oil prices and their effects on consumers. Crude costs rise halfway around the world, and U.S. drivers and shoppers feel it in their wallets faster than the actual oil could be shipped. On a macro level, analysts frequently suggest that every $10 per barrel increase in the price of oil cuts half a percentage point off of world gross domestic product growth.

The latest hit occurred because of turmoil in Libya, which interrupted production there. Oil prices surged, with prices for U.S. crude futures jumping over $103 a barrel in intraday trading Thursday, up 15 percent from Friday’s $89.71 close. That hike was short lived, as Saudi Arabia stepped up to guarantee supplies and oil prices walked part way back to under $97 a barrel.

Feb 24, 2011

IRS says it’s easing up on those who owe

WASHINGTON (Reuters) – The Internal Revenue Service is going to go easier on taxpayers who owe money, its commissioner said on Thursday.

“We are making fundamental changes to our lien system and other collection tools that will help taxpayers and give them a fresh start,” Doug Shulman told reporters. “I always encourage our employees to try to walk in the taxpayer’s shoes.”

Feb 23, 2011

Stern Advice: Tax breaks for the Sandwich Generation

WASHINGTON (Reuters) – What can you do when your parents are struggling to pay medical bills and your kids can’t land jobs? Why, write checks, of course!

Being surrounded by loved ones can be a costly proposition. Much has been made of the recession’s effect on recent college graduates; they’re pouring lattes and surfing sofas. And aging parents can run through money at rates that would challenge Donald Trump’s next wife.

Feb 23, 2011
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New tax breaks for the self-employed

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Limited-time offers usually come from television pitchmen, but this year the Internal Revenue Service is tossing a couple at self-employed folks who cover their own health insurance. If that describes you, check out these breaks on your 2010 tax returns. They’re new this year, and could offer significant savings. Here are the details.

Health insurance premiums will offset the self-employment tax

People who have salaried jobs pay 7.65 percent in Social Security and Medicare taxes, and their employers pay a like amount. But self-employed workers pay both halves — a total of 15.3 percent —  in what is called the self-employment tax. In all other years, they have been able to deduct their health insurance from their net income, but not until after the self-employment tax is calculated. So, a consultant earning $100,000 and paying $15,000 for health insurance would owe the self-employment tax on the full $100,000, and then be able to deduct $15,000 before the income tax is calculated. (Half of the self-employment tax is then deductible.) That would leave her with a $15,300 self employment tax, and a taxable income of $77,400.

Feb 18, 2011
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3 ways to save money on a new car loan

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Car dealers don’t just make money on cars. They make money on extended warranties, undercoating, fancy floor mats, extra insurance and loans. They make a lot of money on loans, according to the consumerist Center for Responsible Lending, which reckons that dealers rack up hundreds of dollars in kickbacks for every loan they offer.

How much? According to a new calculator at the center’s website, if you’re financing a $26,000 car for five years and you have a decent credit score, the dealer is getting between $556 to $2,223 back from the lender. That’s because the dealer is essentially acting as a loan broker, according to Chris Kukla, the center’s senior counsel for government affairs. Dealers make the loans and then sell them to third party lenders. The sale price includes a markup that goes into the dealer’s pocket… not yours.

    • About Linda

      "Linda Stern is an award-winning personal finance journalist who loves to write about how the big picture affects your pocketbook. A former contributing editor at Newsweek magazine and a long-time Reuters columnist, Stern covers everything from credit cards to retirement planning to investing. As a Washington-based correspondent, she sneaks in as much tax and economic policy as her editors will allow. She tweets at www.twitter.com/LindaStern. And when she expresses opinions, they are her own and not those of her employer."
      Joined Reuters:
      October 2010
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