Category Financial Planning Topics

Sep 13 2014

U.S. Job Growth: Eight-Month Low, Labor Force Shrinks

U.S. employers hired the fewest number of workers in eight months in August and more Americans gave up the hunt for jobs . . .”

This Reuters article describes current employment trends and the effect it has on both the economy and the actions of the Federal Reserve.  Specifically,

  • Nonfarm payrolls increased 142,000 in August after expanding by 212,000 in July.
  • The jobless rate fell one-tenth of a percentage point to 6.1 percent in August.
  • The lower jobless rate in August was the result of more people dropping out of the labor force and not because of an increase in working Americans.
  • The Federal Reserve Board and Fed Chair Janet Yellen will use the weakness in the unemployment numbers to keep interest rates at present levels in order to provide a stimulus for the economy.

Specific information about different industry sectors, labor force participation, the number of part-time employees, etc. is also provided in this article.

For more information go to http://www.reuters.com/article/2014/09/05/us-usa-economy-idUSKBN0H008E20140905

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Reinforce how the nation’s economy can affect a person’s ability to obtain employment, develop a financial plan, and achieve both personal and financial goals.

Discussion Questions

  1. Assume you are unemployed and looking for a full-time position after graduating from college.  What knowledge, skills, and experience do you have that will make an employer want to hire you?
  2. What steps can you take to provide financial security if you think the economy is about to experience a recession?
Sep 10 2014

Home Depot Data Breach May Top $50 Million

“Home Depot spokeswoman Paula Drake said ‘protecting our customers’ information is something we take extremely seriously.’” 

At the time of this blog, it is not clear how many Home Depot stores or shoppers were involved, but this breach could be one of the largest data breaches to ever hit a retailer.  It is also estimated that the cyber thieves made an estimated $50 million from this breach by selling credit card numbers and personal information.

Home Depot and many other retailers including Target, P. F. Chang’s, Neiman Marcus, and other companies, have all experienced similar data breaches in recent months.  To combat this problem, many companies are beginning to use a new “chip and pin” technology.  Already in use in Europe, the new technology contains a chip in your credit or debit card with account information, requires the user to use pin identification, and is nearly impossible to counterfeit.  Because the new technology has dual verification, card transactions are much, much safer for both retailer and customer.

For more information go to http://www.cbsnews.com/news/home-depot-data-breach-may-top-50-million/

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Stress the importance of students monitoring credit and debit card activity on a regular basis.
  • Obtain a credit or debit card with the new chip and pin technology.
  • Encourage students to determine their liability if their credit or debit card information is stolen.

Discussion Questions

  1. Assume you are trying to decide between two different credit cards. One card does not have chip and pin technology and does not charge an annual fee.  The other card does have chip and pin technology, but charges an $85 annual fee?  Which card would you choose?  Explain your answer.
  2. Besides choosing a credit or debit card with chip and pin technology, what other steps can you take to make sure you are not a victim of identity theft?
Sep 6 2014

Six Bank Fees to Avoid

Each year, it seems that banks are reporting ever higher profits.  How do they make so much money?  By charging customers service fees!

Here is a list of six fees that you should avoid:

  1. ATM Fees-It’s important to know where ATM’s are located that are in your network. This will help you avoid a charge to use another bank’s ATM.
  2. Account Fees-Check the fine print. Is there a fee if your balance falls below a certain limit? The limit fees are monthly and can really add up.
  3. Overdraft Fees-Know how much money that you have to spend. Budget wisely and make sure that you have a cushion in your checking account, in case of unexpected expenses.
  4. Fancy Checks-How cute! How much do those Frozen Personalized checks cost? The reality is that the checks and the shipping costs can be very expensive. There are numerous options to acquire cheaper checks (Sam’s club, BJ’s, Costco, Walmart).  One more thing to consider:  checks are used much less frequently today, so, that box of Frozen checks might last a really long time, make sure you like the design.
  5. Credit Reports-You can get a copy of your credit report for free from AnnualCreditReport.com, so, don’t pay for one.
  6. Loan Interest– As an incentive, banks offer a discount by utilizing more than one of their services. You might get a lower rate, if you agree to direct deposit, in exchange for a reduced interest rate on your loan.

Bottom Line: Do your homework when it comes to bank fees.  There are many ways to avoid spending money on unnecessary fees.

For more information:  http://www.wisebread.com/are-you-paying-these-6-unfair-banking-fees

Teaching points:

  • Discuss these six fees with your students. Survey how many have paid at least one of these fees.
  • Have students research at least two local banks and report back on the account fees that each bank charges.

Discussion items:

  1. Do you believe that any one demographic pays more fees than another? Why?
  2. What are some other ways that people can avoid these fees?
Sep 3 2014

Mulligans aren’t just for golf.

How can you improve student engagement and participation?  Are there methods to reduce test anxiety?  The attached article uses a novel approach to address both of these issues through the use of gamification.  The game portion provides an avenue for students to earn small tokens for excellent work by mastering concepts, expanding classroom discussion, or demonstrating improvement in certain skills.  The costs are small: little stickers (which could even be made on a printer).  Here’s a link for free stickers:  http://www.stickersandcharts.com/smiley1.php.  The benefits are great: lively classrooms filled with more knowledgeable students.

For more information go to:
http://www.facultyfocus.com/articles/teaching-and-learning/using-mulligans-enhance-student-participation-reduce-text-anxiety/

Discussion Questions

  1. What is the difference between gamification and game-based learning?
  2. Why are “flow” and “fiero” important elements of the classroom environment?
  3. What ways will you use this idea in your classroom?

Teaching Suggestions

  • Use this article as a starting point to access how you can improve student participation and reduce test anxiety for your students.
  • Conduct online research to obtain additional information to see how other professors are motivating their students.
Aug 30 2014

Consumer Finance: Medical Credit Cards

Medical credit cards are offered by financial institutions to pay for services not covered by health insurance, such as, dental and cosmetic procedures, or for veterinary care.  Medical credit cards received increased attention after the New York attorney General and the Bureau of Consumer Financial Protection brought enforcement actions against Care Credit LLC, an affiliate of GE Capital Retail Bank.  It is alleged that Care Credit failed to provide disclosures and gave inaccurate information to 4.4 million cardholders.

Medical credit cards from large banks offer a revolving line of credit with an established credit limit with some form of promotional financing (special terms and conditions, which are valid for a specified period of time). The most commonly used financing option is deferred interest, with no interest charged for promotional period, but interest charged retroactively if the balance is not paid in full before the end of the promotional period, usually 6 to 24 months.  Among large banks the Government Accountability Office reviewed in May 2014, the most commonly used cards had an annual percentage rate of 26.99 percent or more.  These banks also offered revolving line of credit with fixed monthly payments, with an APR of zero to 17.99 percent.

For more information , go to

http://www.gao.gov/assets/670/664256.pdf

Teaching Suggestions

  • Ask students what are other alternatives in financing medical expenses that are not covered by health insurance.
  • Have students survey friends or relatives to determine the use of medical cards.

Discussion Questions

  1. Why would someone get medical credit cards when mainstream credit cards, such as Visa, and MasterCard, offer relatively lower-rate credit cards?
  2. What might be advantages or disadvantages of using medical credit cards?
Aug 27 2014

When is Debt Collection Illegal?

If you do not pay your bills, you’ll probably get calls from debt collectors.  Their job is to force you to pay or make arrangements to pay.  But any debt collector who harasses or threatens you is breaking the law.

In August 2014, the Federal Trade Commission alleged that Credit Smart used illegal tactics to pressure people into paying debts.  According to the Federal Trade Commission’s complaint, the company threatened to garnish peoples’ wages and sue them for nonpayment.  The Federal Trade  Commission’s complaint alleges that sometimes Credit Smart told people they owed debts and interest without having  a reasonable basis to say so, misrepresented themselves as working for attorneys or a financial relief counselors, and failed to tell people they were debt collectors.

For additional information, go to

http://www.consumer.ftc.gov/blog/when-debt-collection-illegal-0

Teaching Suggestions

  • Ask students what is the best way to solve debt problems before the delinquent account is turned over to debt collectors.
  • What can people do to avoid debt problems in the first place?
  • Why should people with debt problems seek the assistance of Consumer Credit Counseling Services?

Discussion Questions

  1. How can companies, such as Credit Smart, harass people when they know it is illegal to engage in such practices?
  2. What are the major provisions of the Fair Debt Collections Practices Act that specifically prohibit certain actions by debt collectors?
Aug 23 2014

Russian Hackers Might Have Your Information

You first heard the reports in August 2014: reports that Russian hackers have stolen more than a billion unique username and password combinations, and more than 500 million email addresses, grabbed from thousands of websites.

How do you know if your information was part of this hack?  You really don’t, but don’t take any chances.  Change the passwords you use for sensitive sites like your bank and email account–really any site that has important financial or health information.  Make sure each password is different so someone who knows one of your passwords won’t suddenly have access to all your important accounts.

Can you make sure this doesn’t happen to you again?  Unfortunately, you can’t.  But take all precautionary steps and lessen the odds scammers will get a hold of your information.

For additional information, go to

http://www.consumer.ftc.gov/blog/russian-hackers-might-have-your-info-now-what

 

 

Teaching Suggestions

You may want to use the information in this blog post and the original article to discuss

  • Ask students if anyone they know has had sensitive information hacked.
  • Have students present proposals on how to protect themselves from hackers.

Discussion Questions

  1. Is creating new passwords enough to keep your information safe?
  2. Is there anything else you can do to protect your sensitive information?
Aug 13 2014

Survey Says: Investors Are Getting Scared

“As world unrest surges and the stock market wobbles, investors have gotten nervous.”

At least three separate sentiment polls indicate stock investors are worried about the trouble in Ukraine, the Middle East violence, continuing projections for a long-overdue correction or worse in the financial markets, and frustration with Washington politics.

For example, respondents to the weekly American Association of Individual Investors survey indicated their strongest levels of pessimism in almost a year.  A survey by Investors Intelligence (which polls investor newsletter editors) indicates a drop in investor bullishness compared to the previous survey.  And, a Bank of America/Merrill Lynch survey of investment strategists indicated heavy bearishness on Wall Street.

For more information go to http://t.money.msn.com/top-stocks/survey-says-investors-are-getting-scared-1

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Reinforce the relationship between world affairs, the economy, and the financial markets.

Discussion Questions

  1. At the time of this post, the world situation is troublesome to say the least. What is the relationship between world events, the economy, and the financial markets?
  2. These three recent sentiment surveys indicate that there are more bears than bulls? How would you define a bear?  A bull?
  3. Even though the sentiment surveys indicate investors are pessimistic about the market, some analysts view the market’s bearishness as a buying opportunity. Why could pessimism in the financial markets signal a time for investors to purchase stocks or mutual funds that invest in stocks?
Aug 9 2014

Is Your Credit Card Denied By Mistake?

When your credit card issuer suspects fraudulent activity on your credit card, it triggers a red flag to deny the charge.  Generally, it is a great protection.  But if you are making the purchase and not a thief, it can be frustrating.  Some purchase patterns that could cause your purchase to be denied include:

  • A purchase for a small dollar amount, followed by a large purchase. Credit card thieves sometimes make a small dollar “test purchase” followed by big ticket items, so this raises a red flag.
  • Multiple purchases back-to-back in a short span of time.
  • Making purchases in a new city, in a different part of town, or in stores where you do not normally shop.

Though inconvenient, these protections are to keep you from being a victim of fraud.  Take these steps to prevent or deal with a credit card purchase being denied by mistake:

  • Inform your credit card company if you will be using your card out of town (especially internationally).
  • Update your billing address if you move, so that the company recognizes the new pattern of purchases as a new normal.
  • Make sure the company has your cell phone number so that it can contact you faster to verify or authorize a purchase.
  • Contact your credit company immediately if your purchase is denied.

For more information go to http://www.usa.gov/topics/consumer/consumer-action-handbook.pdf

Teaching Suggestions

  • Ask students if their credit card was ever denied in error.
  • If the transaction was denied, how did they resolve the problem.

Discussion Questions

  1. What are a few reasons that your credit card purchase might be denied?
  2. What can you do to avoid such an embarrassment at the check-out counter?
Aug 6 2014

Health Scams: Don’t Take Risks With Your Health and Your Money

Lots of people are fooled with buying health products that sound great, but are really fakes.  These products may cause serious health problems, such as pain, suffering, or even death.

Watch out for the following fraudulent claims:

  • It’s Natural. Just because a product is “natural” does not mean it is safe.
  • It’s So Easy. Don’t believe the promises of “lose weight while you sleep.”  If it sounds too easy, it might be a scam.
  • Miracle Cure. Generally, one pill will not treat or cure many different illnesses such as cancer, diabetes, AIDS, or arthritis.
  • It Worked for Me. Personal success stories by “real people” or doctors are easy to make up.
  • They Don’t Want You to Know. Always ask your health care providers what is best for your health.

 

For additional information on health fraud and scams go to http://www.fda.gov/healthfraud, http://www.fda.gov/medwatch, and http://www.ftc.gov

Teaching Suggestions

  • Ask students if they have fallen prey to health care scammers.
  • Have students make a short presentation with a summary of actions that might be taken to avoid health scams.

Discussion Questions

  1. Why do health scammers continue to prey on unsuspecting consumers?
  2. What can consumers do to avoid being victimized by health scammers?