Posts Tagged "saving"

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Credit Unions a Popular Antidote to Fraud

The 1980s featured bankrupt Texas savings and loans. Then, in the mid-2000s, Countrywide failed to clearly disclose to customers the spike in their subprime mortgage payments in year 3. In 2016, 5 million customers learned about their fabricated Wells Fargo accounts. And last year, Equifax breached 140 million customers’ privacy.

No wonder people are flocking to the friendly credit union in their church, labor union or workplace.

The widespread fraud reports making headlines with regularity have fed a perception that “fraud happens in the banking world and a lot of it goes unpunished,” said Mike Schenk, senior economist for the Credit Union National Association (CUNA).

“It’s not just Countrywide as an abstract concept. It’s that Countrywide put people into these toxic mortgages to make a buck.”  The 2008 stock market and housing crashes, fueled partly by the collapse of several subprime lenders, hammered this point home.

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CUNA has a bold marketing message: credit unions care more about their customers than impersonal banking behemoths. Schenk said he has the evidence to prove credit unions are benefiting from Wall Street’s financial shenanigans: membership increased an “astonishing” 4 percent in 2017, as the U.S. population grew less than 1 percent.

Of course, most banks aren’t bad guys, and they provide services that small credit unions can’t.  Banks frequently upgrade their technology – Bank of America’s ATMs are cutting edge. Large banks also have much larger networks of ATMs and branches, and they can service the large corporate accounts credit unions aren’t equipped to do.

So, what do credit unions do better?  Here are their three big advantages: …Learn More

Video: Kids Say the Darndest Things

The children in this video have a delightful take on our cultural attitudes and mores about money – what it is, what it can do, and whether to share it.

The interviewer borrowed the format Art Linkletter used when asking kids questions on his Emmy Award-winning television show, “Art Linkletter’s House Party,” which aired between 1952 and 1969 – as boomers and their parents will remember.

The new video about kids and money is posted on the American Financial Services Association Education Foundation’s website.  The foundation’s mission is to educate people about responsible money management, starting with young children and teenagers.

The adorable factor makes this 6-minute video fly by.Learn More

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Creating Paths to Latino-owned Business

Rank-and-file workers’ wages have barely gone up since the 2008-09 recession, despite a U.S. job market firing on all cylinders for several years.

Latinos struggle more than most. Take restaurant workers. They are overrepresented in an industry that expanded rapidly post-recession, putting hundreds of thousands of cooks, waiters, and busboys to work. But “those are some of the worst jobs” says Carmen Rojas, who heads The Workers Lab in Oakland, which supports small entrepreneurs.

Food-service and other low-paying jobs not only lack benefits and security but typically don’t invest heavily in training and don’t provide upward mobility, “proving what it means to debase the promise of work away from opportunity and toward survival,” said Marie Mora of the University of Texas in the Rio Grande Valley.

She and Rojas were panelists at a recent Aspen Institute event to discuss Latino economic challenges and solutions. The focus was on new avenues to increasing their presence among small businesses, which are a good fit for their particular interests, needs, and culture.

There are, of course, extraordinary models of success in the Latino community. Maria Rios emigrated from El Salvador as a teenager and has the gumption of a character in a 19th century Horatio Alger novel. In the early years of her multi-million-dollar recycling and waste company in Houston, she drummed up commercial clients by showing up and pointing out their overflowing dumpsters.  “When I see trash, I see opportunity!” she says on Nation Waste Inc.’s website.

“I feel that if I did it, anybody can do it,” she told the other panelists and audience. …Learn More

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What’s New in Retirement Research

Millennials, longevity, Americans’ retirement outlook – these are among the topics economists tackle in five interesting research briefs.

Links to each brief below appear at the end of their titles. (Full disclosure: the researchers are at the Center for Retirement Research at Boston College, which funds this blog.)

  • “Will Millennials Be Ready for Retirement?” – They are the most educated generation. Yet they lag previous generations of young adults in their retirement preparedness. Student loan debt is one big reason.
  • “National Retirement Risk Index Shows Modest Improvement in 2016 – Rising house prices boosted individuals’ wealth, modestly improving our retirement outlook. But, again, Millennials face significant headwinds.
  • “Is Working Longer a Good Prescription for All? – Most households’ retirement plans would benefit from working longer, saving more, and delaying Social Security. Low-income and less-educated workers with the most to gain financially, however have fewer job options for postponing retirement. …
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Low Earners Save Their Tax Refunds

Cash-strapped workers understandably are tempted to spend their tax refunds, a sort of financial lifeboat that floats by once a year.

Financial experts see the windfall as something more: an ideal opportunity to sock money away. Yet only about 10 percent of low-income workers save their refunds, even though doing so could prevent the financial dominoes – past due bills, late rent payments, or delayed car repairs – from falling. These are common outcomes when their spending gets out of whack.

Past experiments that tried to encourage cash-strapped low earners to save had modest success. A novel research study looks for clues to what motivates them by examining who spends the refund versus who saves it. The central finding in a Journal of Consumer Affairs article: the people who saved had put some thought into predicting the size of their refunds at the time they filed their taxes. This held true whether their estimates were accurate or not.

The act of estimating in advance “appears to be a form of planning,” said the researchers, University of Rhode Island professor Nilton Porto and Michael Collins, director of the University of Wisconsin’s Center for Financial Security.

Porto said they don’t know the reason estimating leads to saving, but he had one idea. The connection between the two could stem partly from the taxpayer having some advantage, such as financial skill or superior knowledge – in short, they might have higher financial literacy. …Learn More

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Baker’s Dozen: Popular Retirement Blogs

Appropriately, the most popular blogs over the past six months were about retirement, among both the young adults looking ahead to it and the later baby boomers heading toward it.

Based on page view counts, here were the most-read blogs on Squared Away during the last six months of 2017:

Retirement Calculators: 3 Good Options

Why Many Retirees Choose Medigap

Reverse Mortgage: Yes or No?

Why Most Elderly Pay No Federal Tax

The 411 on Roth vs Regular 401ks

Medicare Advantage Shopping: 10 RulesLearn More

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Changes in Marriage Increase Class Divide

marriage rates by classIn the 1960s, half of all wives were housewives, and their husbands often earned enough money to support a family. Today, these traditional families are a rarity and two incomes have become essential to surviving economically.

A new joint report by the American Enterprise Institute and the Brookings Institution argues that poor and working-class families’ increasingly fragile family structure – despite the rise of dual-income spouses – often leaves them “doubly disadvantaged.” And lower marriage rates among poor and low-income couples help to explain why “America is increasingly divided by class,” write the authors, W. Bradford Wilcox, a professor and director of the National Marriage Project at the University of Virginia, and Wendy Wang, research director for the Institute for Family Studies.

They explain that higher rates of divorce and of couples cohabiting affected the poor’s marriage rate first and most harshly in the 1960s; working-class couples were next, though to a lesser extent in the 1980s. Marriage is far more common among the middle and upper classes.

The authors cite several economic and social forces behind these trends. The losses that less-educated, lower-income men “have experienced since the 1970s in job stability and real income have rendered them less ‘marriageable.’ ”   Stagnant or declining wages for middle- and working class couples impede their ability to afford a home, which is the most valuable financial asset most households own.  Couples lacking property may “have fewer reasons to avoid divorce.” …
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