Lynnette Khalfani - The Money Coach™ Newsletter 4-14-2005
 

Hi,

Happy Spring 2005 from The Money Coach!

After all the snow, ice and torrential rain in some parts of the country (can you believe L.A. has received nearly 40 inches of rain in recent months!?!) has a lot of you thinking about getting an SUV or some kind of car that can withstand mother nature at her fiercest.

Even if the weather is just fine in your neck of the woods, you may still be thinking about buying a new car or even getting a “pre-owned” vehicle this year. Before you visit an auto dealer for some new wheels, arm yourself with these money-saving tips from the experts at Capital One Auto. For more info, click here.

Authorities recently announced a pretty scary case of identity theft. It turns out con artists posing as bank officials and legitimate businessmen were able to obtain more than 145,000 individuals’ personal financial information – everything from credit card accounts to social security numbers – from a Georgia-based company called Choice Point. The case reminded me that we all need to safeguard our personal data to avoid falling victim to identity theft scams. For more info, click here.

How prepared are you for retirement? If you’re not where you should be, maybe it is time you got some help. We all know that most people are not saving enough for retirement. Well, a new survey from Prudential Retirement finds that many Americans are also in the dark about how to withdraw retirement dollars and generate a sufficient income stream when they leave the workplace. For more info, click here.

What’s new with The Money Coach?

Over the next two months I will continue to teach people nationwide “How to Have Zero Debt,” based on the principles and strategies outlined in my latest book, Zero Debt: The Ultimate Guide To Financial Freedom. By the way, I am really proud that Zero Debt has such “cross over” appeal as is evidenced by the book’s strong reception among mainstream and African American publications. So far, it has hit the bestsellers list for The New York Times, Business Week and now Essence Magazine (#3 in the March issue of Essence).

I’ll also make a number of public appearances at conferences, conventions, and in the media nationwide. Some highlights: Barnes & Noble in NYC on April 13th & 29th; a talk on KSU Radio in Salt Lake City, Utah on April 9th and appearances on Black Enterprise TV in late April 2005.

To find out where else you can see me on television, read my advice in print, or hear me on the radio, click here.

Here’s wishing you health, wealth and financial freedom!

Lynnette

The Money Coach

http://www.themoneycoach.net

Identity Theft Problem Worsens; Highlights Need For Personal Safeguards

It seems you can’t open the newspaper or watch television these days without learning about some scam where criminals have stolen the identities of unsuspecting people, and often wrecked their credit as well. For those who do not know it, identity theft occurs when thieves misappropriate your personal information – such as your social security number (SSN) – and use it for their own financial gain. A case is point is when a crook gets a hold of your SSN and opens up credit card accounts without your knowledge or consent. That’s out and out fraud. And the Federal Trade Commission says fraud accounted for 60% of all complaints the agency received last year.

So what can you do to combat this growing problem? Here are 11 ways to thwart identity thieves:

• Only give out your social security number when absolutely necessary. If a store clerk or someone else you’re doing business with requests it, ask whether you can supply a substitute number, such as your driver’s license
• Never give out personal information over the phone or Internet to someone who has contacted you unsolicited. If you get a call that’s from a legitimate company, explain that you’re wary about identity theft, then ask to call back their customers service line or their toll-free number to verify that the call or email is legitimate.
• Shred bills, receipts, pre-approved credit card offers or any other documents containing your personal information before you throw these papers in the trash. Some identity thieves engage in “dumpster diving,” where they simply fish your information out of the trash. Don’t make it easy for them do to this.
• Use a locked mailbox or have one of those ‘push in’ mail slots installed in your front door.
• At work, keep your wallet, purse or handbag in a locked drawer. Believe it or not, the workplace is one of the main places where identity theft occurs.
• Destroy carbon copies and save your credit card receipts to compare them with your billing statements. You want to be on the lookout for unauthorized charges at all times.
• Order your credit report and FICO score at least once a year (visit www.myfico.com to do so) to make sure the information contained in your credit file is accurate. Make sure you get credit reports from all of the “Big 3” credit reporting agencies: Trans Union, Experian, and Equifax.
• Consider carrying your credit cards separately from your purse or wallet. This way, if a crook steals your purse/wallet, at least he hasn’t made off with your credit cards as well.
• Look into credit monitoring services offered by companies like Fair Isaac, as well as the credit bureaus. These services will send you electronic alerts – via email – whenever something in your credit file changes. That can alert you to identity theft if you notice that credit inquiries were made in your name or accounts that you don’t know about were opened.
• Think about purchasing identity theft insurance. It reimburses you for out of pocket expenses, such as mailing costs, time lost at work, and sometimes even having a lawyer when you have to pay a professional to clean up the mess that an identity thief has created. Some companies that offer identity theft insurance are American Express (www.americanexpress.com), American International Group (www.aig.com), Farmers Group Inc., (www.farmers.com), and Travelers Insurance (www.travelers.com).
• Finally, if you are victimized by identity theft, notify all the credit bureaus, so they can put an alert on your credit file; contact your local police department to report what has happened; and also let the Federal Trade Commission (www.ftc.gov) know. For additional help and support, also contact the Identity Theft Resource Center in San Diego (www.idtheftcenter.org).

Get The Best Deal On That New Or Used Automobile

Many of you have written me asking about auto loans. And with interest rates on the upswing in 2005, shopping for a car loan is more important than ever. Don’t make the mistake of failing to shop around for a car loan before you buy. That’s a costly error that can haunt you for years to come.

Consider these facts from the experts at Capital One Auto Finance, the nation’s largest online lender

·        Car loan interest rates are expected to rise in 2005 – continuing a pattern seen in 2004. People who take the time to comparison shop for the best rates and terms of their auto loans fare far better than those who don’t. For instance, let’s say you’ve found your “to-die-for” car. You know. The hot-looking ride you’ve been pining over for years. Only there’s a problem. You don’t have the cash to pay for those wheels up front.

      If you accept a car dealer’s 5-year, $20,000 loan at 7% APR, you’ll pay about $1,115 more over the life of the loan (roughly $18 more a month) than if you shopped around and secured the same loan on your own at 5% APR, according to Capital One Auto Finance.

·        Those 0% financing deals you hear about are few and far between. Only 7% of all new car sales in 2003 and 2004 were made with interest-free loans according to the Power Information Network. And it stands to reason that auto makers will be even more stingy with 0% deals in 2005 as rates rise.

·         Many car buyers don't consider all of their financing options.  Six out of 10 people purchasing a car today still take the traditional path of arranging their loans at the dealer at the time of purchase. Sure, it’s convenient. But make sure you know what’s going on in the finance office. Be especially vigilant against your rate getting marked up by the dealer (know as "dealer reserve").  A better car buying strategy: weigh your other options, which include direct-to-consumer channels like credit unions, online lenders and banks.

·         Ignore all that dealer paperwork at your own peril. A 2004 survey shows one-third of car buyers admit they gloss over a portion or all of their car purchase paperwork.  Don’t let yourself get into a loan you can’t afford or that will cause you to have “buyer’s remorse” after you drive off the lot. Make sure you’re not one of the 50% of those making monthly car payments who say their loans are burdensome enough to keep them from making a major purchase.

·        Savvy consumers leverage the power of the Internet. The web is an enormously valuable tool in your hunt to get a nice car without breaking your bank. From the comfort of your desktop or laptop, you can: 1) check your credit report and FICO score (that’s help when you’re auto shopping; and you can also fix any mistakes since more than 70% of credit files have errors); 2) comparison shop for interest rates so you know a competitive offer from a lousy one; 3) apply for an auto loan from an online lender, bank or credit union before they buy.

      For example, online applications submitted to  www.CapitalOneAutoFinance.com take just 15 minutes to process. They run your credit; and you tell them the price of the car you want to purchase. When you get approved, Capital One sends you a no-obligation Blank Check (usually within 24 hours), which you then use like a personal check at the dealer.

·         Arriving at the dealership with a loan in hand puts you a step ahead.  Imagine walking into a dealership with a no-obligation loan in your pocket from an outside lender. Almost instantly, you have the upper hand in negotiations. You already know your interest rate and spending limit.  Dealers who want your loan business will have to beat the rate you already have.

Now how’s that for smarter car-financing decisions!

Retirement Readiness: It’s About More Than Saving Money For Your Golden Years

If you feel unprepared for retirement, you’re not alone.

A new study from Prudential Retirement finds Americans are woefully ill-informed and ill-prepared to meet the financial realities that set in once they stop receive a regular paycheck. In its fourth annual Workplace Report on Retirement Planning, Prudential queried Americans aged 55 to 64 to ask about their retirement readiness and their financial goals.

      Not surprisingly, the #1 financial desire for most people aged 55 and older was to have a steady stream of income during their Golden Years. (Heck – those of us in our 30s and 40s are keeping our fingers crossed for the same thing!)

But for people closer to retirement, it’s more important than ever to be assured that once they stop receiving a regular paycheck they won’t be in the poorhouse.

A big part of the problem is that many people are clueless about what to do with their retirement money once they stop working. In an ideal world, while you’re in the workplace you would receive plenty of information (and sometimes, advice) about how to invest your 401(k), the best way to handle your pension plan (if you’re lucky enough to have one), and so on.

But this obviously isn’t the case.

The reality is that most Americans feel at a loss as to what to do with their retirement money, where to put it, how to divide it up, and even who they should turn to for help in managing it.

      According to the survey, on one in five workers approaching retirement said they knew how to generate an income that would provide for a comfortable retirement lifestyle.

      Moreover, when asked if they would choose an income annuity to create a retirement paycheck, (the only option available to guarantee a stream of income that one cannot outlive, the folks at Pru point out), only 44% had even heard of the income annuity option, and a scant 9% said they would use it.

So what are most people doing? According to Prudential, most individuals (85%) are simply focusing on “saving more” as if this alone will provide them with the nest egg they need. Sure, it’s great to consistently squirrel away a portion of your income for retirement; a 10% target is a good goal for most people. However, you need to also focus on strategies for building and growing your nest egg. If you don’t, inflation will wipe out your buying power. Think about it this way: That $1 you save today may be enough to buy you a loaf of bread and a gallon of milk. But if you’re retiring, say, 15 or 20 years from now, that same $5 will probably only buy the bread. 

We all know that Americans don’t save enough. The interesting thing about the Prudential surveys is that it found that Americans lack of preparedness concerning retirement extends beyond just the accumulation phase of retirement planning. It also goes into the distribution phase.

Another part of the problem is that the average saver or investor isn’t getting the help he or she needs from the financial community. The Prudential Survey revealed that a paltry 7% of near-retirees have a formal written plan in place to help them with crucial areas of their personal finances.

 “Even those who are conscientious savers and investors, including Baby Boomers now aged 55-58, aren't prepared to convert their retirement savings into a predictable retirement paycheck that they can’t outlive,” said John Kim, president of Prudential Retirement. “We believe our survey should be a 'wake-up call' to employers, to retirement-plan providers and

to the nation as a whole that those nearing retirement need help in managing the payout phase of retirement, especially in light of current discussions on Social Security," he added.

"Our survey also underscores the need for better education -- targeted specifically to the needs of older workers -- on distribution options and strategies that deliver a predictable, guaranteed income in the increasingly do-it-yourself world of retirement planning.”

For more information or a copy of the Prudential Workplace Report on Retirement Planning, visit www.prudential.com.

Here are some of the places you can find The Money Coach – in the media and elsewhere – during April 2005 

• Black Enterprise Television - check your local cable listings

• Life and Style Television

• Barnes & Noble 18th Street and 5th - April 13th

• Barnes & Noble 2289 Broadway @ 82nd Street - April 29th

Best,

Lynnette Khalfani

The Money Coach^TM

http://www.themoneycoach.net