Ask Madam Money

Flip your credit union statement over; there’s a form for balancing what you think you have against what the credit union says you have. Write down the ending balance from the statement. Then subtract every check you’ve written, and any ATM or debit card transactions, automatic payments or fees you’ve been charged since the statement date, as well as any previous checks that haven’t cleared the credit union yet. Also, add deposits you’ve made since the statement date. The number you get should match—or balance—what you show in your check register, which hopefully you’ve been keeping up to date.

If the numbers are different, the most likely reason is a math error in your check register. Maybe you missed a check or deposit, or failed to deduct a fee. If you have a monthly service charge, make sure you’re subtracting it in your register. There is a slight chance the credit union made a mistake. If you can’t find the error, stop by the credit union or call member service.

Get Help If your credit union or bank has online banking, set up online access for your account. Then, sign in daily to make sure the checks, debit card and ATM transactions match what you’ve done, and that all of your checks are clearing.

Dear Madam Money.

What do the symbols mean on money?

Curious about money

Dear Curious,

There is currently $820 billion in U.S. currency in circulation around the world. Even though most of us carry some cash around every day, we know very little about all the words and symbols on it.

What do the pyramid and eye represent on the $1 bill? Thanks to popular movies and books, there are all sorts of claims of a Masonic conspiracy that injected hidden symbols and meanings on our money. In truth, a committee of the Continental Congress first designed our dollars. They chose a pyramid as a symbol of strength and duration. There are 13 steps that represent the original 13 colonies. The pyramid is unfinished suggesting future growth of the nation. The eye is called the "Eye of Providence" representing the guiding hand of God.

What does all that Latin mean? The back of the $1 bill is full of Latin phrases. The great seal of the United States contains the phrase E Pluribus Unum, which means "Out of many, one.” Annuit Coeptis means, "he has favored our undertakings" referring to God, while Novus Ordo Seclorum translates to "a new order of the ages" followed by the Roman numerals for 1776.

Why does it say "In God We Trust?" The phrase has been on coins since the late 1800s but did not appear on paper money until 1957. That is when Congress declared it our national motto and President Eisenhower signed a law requiring it on all currency.

Other facts about money: The average $1 bill lasts in circulation about two years. Less common bills like $100's last up to seven years. Most bills have presidents on them, except for Benjamin Franklin on the $100 and Alexander Hamilton on the $10. The law actually bans pictures of living people from appearing on our money.

Dear Madam Money,

I have heard that the credit union is going to offer “green loans”. What does that mean?

Curious in Crestone

Dear CC,

SCCU is committed to helping green up our environment. In order to do our part we have begun a new loan program that will help members buy products that can help our environment.

With gasoline prices hitting all-time highs, maybe it is time for a hybrid vehicle or one that runs on alternative fuel. If that is in your plans, SCCU can save you money on your loan. On any hybrid or alternative fuel vehicle, SCCU will reduce the interest rate 1% lower than our going rate. The rate on a new car can be as low as 6%.

A “Green Home Improvement Loan” may be what you are looking for. Green Home Improvement Loans can include the following: to purchase energy-efficient appliances; window replacement; water-saving or low-flow sprinkler systems; drought resistant/ecological landscaping; water heaters and special water heating reduction appliances/equipment; energy efficient lighting; energy efficient roofing; solar, including passive; wind power; heating/cooling; insulation; waste reduction; recycling; greenhousing and composting. Green Home Improvement Loans can be financed either as a first or second mortgage, personal loan, unsecured loan, or secured line of credit depending on which loan you qualify for. SCCU will reduce the interest rate 1% lower than our going rate. Your rate could be as low as 7.5% to make your house greener. There are also tax breaks you can get for these types of home improvements, so you can get greener in two ways: a greener house and more green money in your pocket.

SCCU will have a booth at the 18th Annual Crestone Energy fair over the Labor Day weekend. Please stop by and talk with us about “green loans” or about any other way that SCCU can help us have a greener world.

Dear Madam Money,

Should I retire now at age 62 and collect Social Security benefits, or should I wait until age 65?

Older by the day

Dear OBD,

Unless you live to an especially old age, you may actually end up with more money if you start collecting Social Security benefits at age 62, even though you'll receive approximately 20 percent less per month than if you wait until age 65 to start collecting benefits.

As strange as this sounds, the explanation is quite simple. Even though you'll receive less per month if you start collecting benefits early at age 62, you'll receive 36 more benefit checks than if you begin collecting benefits at age 65. Those benefit checks can add up to a lot of money. In fact, the Social Security Administration estimates that if you wait until age 65 to begin receiving benefits, it will take you until age 77 to make up for those three years of "lost" benefit payments.

However, here are two reasons to wait until age 65 to start collecting benefits. First, if you work full-time past age 62, you'll have the opportunity to increase your eventual retirement benefit, particularly if you are in your peak earnings years, because your benefit will be figured using your 35 highest earnings years. Second, if you'll barely scrape by after you retire, you may want to receive as much as possible from Social Security each month.

So, do I need the money at age 62? Can I live with the reduced benefit after I reach full retirement age or will I regret my choice later? If my family has a history of short life expectancies, then age 62 doesn't look bad. Alternatively, if I can expect to live into my 90s, then perhaps I'm better off waiting.

If you decide to collect at 62, and you keep working, you’ll need to account for the “earnings cap” — which was $12,480 for 2006. For every $1 you make over that limit, you have to give back 50 cents of your Social Security check. The earnings cap goes away at 66. So if you plan to keep working, starting your benefits at 62 may not be such a good idea.

To the surprise of some, age 65 is no longer the age at which full benefits are received. Any one turning age 65 in 2006 (born in year 1941), will have to wait until they are 65 and 8 months to be eligible for full benefits.

Year 2003 was the first year in which someone on their 65th birthday (anyone born in 1938) did not reach Social Security's full retirement age. Full Social Security benefits became available for this group at 65 years and 2 months. For each birth year thereafter, two additional months are required before qualifying for full benefits, i.e. those born in 1939 must be 65 and 4 months, born in 1940 must be 65 and 6 months and so on until 1943. Anyone born in years 1943 through 1954 must be 66 years and those born in 1960 and later must be 67 years of age. However, regardless of when you reach your full retirement benefit age, you can still receive a reduced benefit as early as age 62.

Each year the Social Security Administration sends you a report showing your recorded earnings by year and the monthly benefit that you can expect if you retire at age 62, your full retirement age, or age 70. The approximate benefit amount assumes that you continue to work and earn at your current rate until the designated age.

Once you retire, calculate your personal breakeven point for beginning to receive a reduced amount versus delaying your benefit until your full retirement age. The closer you are to your full retirement date when you stop working, the lower the number of years to breakeven. Unfortunately, none of us has a crystal ball to tell us how long we will be collecting Social Security, so your final decision may not be based purely on the numbers.

MM

Dear Madam Money,

With so many reports about account fraud and personal information theft, I am afraid to use the internet to transact any business. Is it as dangerous as I think? What can I do to prevent it?

Worried about being netted on the internet

Dear Worried,

The best phishin' hole around these days is the World Wide Web. Account theft is now the fastest-growing consumer fraud in the country -- and most of it occurs on the Web. Check fraud in the United States is a $16 billion industry that is growing at the rate of about $1 billion per year.

Most of the losses occur through "phishing" expeditions, in which counterfeit e-mails appearing to be from credit unions, banks and other financial institutions are sent to millions of Internet users, asking the user to verify his or her account balance, Social Security number and other information.

The user clicks on a link in the e-mail and is taken to a site that, through the use of stolen logos and carefully copied color schemes, looks just like the real thing. The consumer provides the information requested and thereby gives the scam artists access to the consumer's checking account.

Other methods include the use of "spyware." These programs are installed surreptitiously on consumers' computers, often by clicking on a pop-up ad. Once installed, the program records key clicks, enabling crooks to learn the consumers' user IDs and passwords.

What To Do

Consumers need to be very careful and regard the Internet as though it were hostile territory. A few simple rules:

• Never click on a link in an e-mail that claims to be from your credit union, bank, credit card issuer or other financial institution

• Never respond to any request -- e-mail, telephone, door-to-door -- from anyone who claims they must "verify" your identity, account number, balance, etc. If in doubt, call your credit union, bank or service provider directly.

• Never click on pop-up ads. There are several free programs that will block pop-ups, including the Google Toolbar. Or download the free, non-commercial Mozilla browser, which blocks pop-ups by default.

• Don't use computers in public places to access credit union or bank accounts or other sensitive data. Your user id and password may be retained and made available to others.

• Restrict access to your computer. If you leave your computer running all the time, you should log off whenever you leave your desk. It only takes a minute for someone to sit down at your machine and swipe valuable information on your machine.

• Check your credit union or bank account and credit card statements carefully ... and promptly. It's the only way you'll know if you've been robbed.

MM

Dear Madam Money,

What’s this I hear about a telephone teller at the credit union? The tellers answer the telephone anyway. What’s going on?

Wondering in wonderland

Dear Wonderer,

His name is Frank, and he’s been hired to man a 24/7 telephone answering service to help our members transfer money within their account and answer question about their account (i.e. deposits, withdrawals, checks). Frank is trained to know the tone of your telephone keypad so he asks that you punch those keys to identify the service that you desire. He’s got two local numbers, 256-5700 and 256-5701. Also you can call a toll-free number if you are out of town, 800-503-0542 or 800-503-0558. When you call in, Frank will ask for your account number (which is either a 4 or 5 digit number) and your pin number (5 digits)

The credit union sent out application forms to sign up with last months statements. You may return those forms to the credit union to sign up. Please write on the application what 5digit pin number you would like to use. It is easy to sign up.

This new service will help all of us to contact the credit union staff when we need them because Frank will answer the account information calls (assuming you’ll call him) and our staff will have more time to answer more sophisticated questions.

DON’T PANIC says Madam Money!

The RUMOR in Crestone is that, since there is a 4-sale sign in the neighborhood and that the wind has blown over the “Future Branch” sign for the 4th time, SCCU is abandoning its space and plans are off for the Crestone Branch office.

However, you need not fret, despair, worry, consternate, and particularly Don’t Panic! I assure you that out of that ethereal, esoteric, contemplative, “hope like heck that we’re finally going to do it” space, the Crestone Branch is manifesting. Soon the space left by the displaced and dilapidated sign will be filled with denser molecules of cement, wood, and rock. (By the way, the land right across the street from the Silver Palace is not owned by the credit union. Our space is a lot and a half back on the rise.)

By now SCCU’s Board of Directors has chosen a contractor and before you know it, you will see physical signs of construction in that space. There will be a spacious lobby for 3 tellers, office space for a loan officer and manager, and board room space for meetings. There will be more space for work areas and file cabinets. Additional space will be available to park 15 vehicles.

Hisa Ota, the architect for the project, will prove again that he has a special talent for designing space beautifully. Those of you who have not yet seen SCCU’s Center Branch office that he designed need to see it and feel the comfortable use of space that Hisa creates.

My crystal ball says “Be patient.” SCCU is coming to Crestone. It’s only a matter of space and time.

Dearest Madame,

Why does our locally-owed, much loved, Saguache County Credit Union use language that is so hard to decipher? For example, instead of saying “Share” and “Share Draft”, why don’t they just say “Savings” and “Checking”, so that credit union members don’t have to figure out whether their deposits actually went into their saving or their checking, as they’d requested? Sometime I feel we’re operating in parallel universes.

Is this really a ploy to keep the international banking cabal from knowing that we’re operating so well here, below their radar? Do you think it has any relation to the contrails that are so numerous in the skies over the San Luis Valley?

Conspiratorially yours,

A SCCU member.

Dear Co-conspirator,

The answer to your question is that credit unions are different than the bank cartels who coin our words. For the same reason, SCCU is locally-owned and much loved. We are DIFFERENT.

Take the word “Share.” Banks don’t share and make no pretence about it. Their rich shareholders want all the profit they can get and their “customers” are treated as numbers and dollar signs.

Credit unions are different. When you open an account at SCCU, you deposit $25 into a Share/Savings account. With that deposit, you own a share in the credit union and have a vote to determine who represents you on our voluntary Board of Directors. All profits from the credit union are “shared” with all the “members” of the credit union. We call this account a Share/Savings account because it serves the dual role of a depository for your share in the credit union and your savings account.

The words check (cheque) and draft have a similar history. Paper money originated in two forms: drafts that are receipts for value held on account, and "bills", which were issued with a promise to convert at a later date. Money is based on the coming to pre-eminence of some commodity as payment. The oldest monetary basis was for agricultural capital: cattle and grain. In Ancient Mesopotamia, drafts were issued against stored grain as a unit of account. A "drachma" was a weight of grain. Japan's feudal system was based on rice per year – koku. The word “cheque” came about when there was a need to inspect, examine, or check the drafts for authenticity.

Credit unions were under the radar for a while but now are coming under more attention because the bankers want credit union profits to be taxed even though our profits are shared among our entire membership in better rates and services. Ask them at the credit union for more information about what the banks are trying to lobby through Congress.

The contrails are certainly clouding up our skies and perhaps they are clouding up our minds as well. So, the next time you are beginning to think that credit unions, because they do or say something a little different than the banks, wonder if maybe there is a connection between the cartels and the contrails crisscrossing our beautiful blue sky.

MM

Madam Money on Account Fraud

Back in the old days before our electronic age, bank robbers would have to appear in person at the job site. They would mask and arm themselves and were easily identifiable as criminals. They usually had a get-away car to escape after the job was accomplished. Law enforcement could track the robbers by using fingerprints, eye-witness testimony, and other physical evidence. Marked bills and exploding bank bags were other techniques of detection.

The world has changed since we have electrified our money system. Robbers and criminals have kept up and prospered with our swift ever-changing monetary system far more than the ordinary account holder can understand.

We now call robbers, hackers. Their weapons are not guns. They don’t mask their faces with bandanas. There is no need for a get-away car.

Hacker’s weapons are viruses, bugs, spy-ware, and our gullibility. They mask themselves as legitimate, and they are great imitators. One of the most often used methods of getting your account information is by email.

It's often difficult to tell if an email is legitimate. Scammers have become increasingly sophisticated in creating fraudulent emails and Web sites that look authentic. These emails and Web sites often appear to be from legitimate companies and include images and logos of these organizations. Following are some common characteristics of fraudulent emails and Web sites:

1. They have an urgent tone. They often have a sense of urgency telling clients that if they fail to update, verify or confirm their personal or account information, access to their accounts will be suspended.

2. They request your information. They typically ask for personal or account information such as:

3. Account numbers

o Credit and Check Card numbers

o Social Security Numbers

o Online Banking sign on IDs and passwords

o Mother's maiden name

o Date of birth

o Other sensitive information

4. They include links that appear legitimate. They often include links that include a legitimate company's name or Web address. Always type Web addresses into your browser instead of clicking on links.

5. They forge sender's email addresses. The fraudulent emails will disguise or forge the sender's email address so they appear to be from a legitimate company.

6. They often have incorrect grammar. The emails and pop-up Web sites may include misspelled words and incorrect grammar.

Dear Madam Money,

What is e-money? Is it like e-mail? Where can I get it? Can I spend it?

e-curious

Dear e-curious,

Suppose you're driving along, and there's a McDonald's on the next block. Your cell phone beeps, sending you a message about a special on Big Macs. You push a button on the phone to place your order and buzz past the drive-through; an electronic transponder on your windshield records the sale. You grab your burger at the window and leave—and you didn't even have to dig around in your seat cushions for loose change. Later, you receive a monthly statement that shows all your burger (and other) e-transactions.

This scenario is not so far-fetched. In fact, McDonald's is testing a system in southern California where customers can use the same transponders that pay highway tolls to pay for burgers and fries. In parts of Europe, people use their cell phones to buy sodas from vending machines. In Hong Kong, commuters swipe cards in front of electronic readers to pay for train fares or their morning newspapers.

All of these examples of mobile e-commerce hint at the potential of electronic money, or e-money—digital cash that moves outside the traditional network of banks, checks, and paper currency. E-money lets online and wireless shoppers pay for merchandise by directly debiting their bank accounts through electronic payment systems that include person-to-person transactions, digital wallets, smart cards, and Internet currency.

The revolution that's waiting in the woods is smartcards. They issued 300,000 during the Olympics in Atlanta. It was the first mass use of smartcards in America.

A smartcard is an electronic purse. It's basically a traveler's check that makes exact change. You give 7-Eleven 50 bucks, and they give you a card that goes in vending machines. When the card is debited down to zero, you throw it away.

The second kind of smartcard is rechargeable. A third kind involves identification. It holds a computer chip with your DNA signature or a digital picture.

This technology is on the verge of exploding, and when it does, people will think of smartcards as money in the same way they now think of traveler's checks as money.

The most common smart card applications are: credit cards, electronic cash, computer security systems, wireless communication, loyalty systems (like frequent flyer points), banking, satellite TV, and government identification.
Smart cards are used widely in parts of Europe, Asia, Africa, and South America. Visa is issuing millions of smart cards worldwide. MasterCard is doing the same.

History has taken money from barter to metal to paper and now to electronic money. As long as you can spend it, I guess it’s ok.

Dear Madam Money,
I heard that the Saguache County Credit Union has a neural network connect to our debit cards. What does that mean?
Nervous

Dear Nervous,
Neural networks should make you feel secure not nervous.
Since debit and credit card fraud is getting more sophisticated and is as limitless as the range of the Internet and the depth of my crystal ball, card companies have had to develop new and innovative ways to combat that crime. One of the effective new weapons in this war is the neural network technology.
Neural networks develop a predictive model based on the actual spending habits of individual cardholders. In this way, unusual activity patterns can be detected often enabling a financial institution to prevent fraud from starting or to minimize losses. For instance, if there were charges on your debit card from the Alamosa Wal-Mart and the Honolulu Marriott on the same day, the neural network would send an alert.
SCCU uses Falcon as their neural network. If for some reason, your card is used for some purchase that is not within your usual activity patterns for the card, Falcon will alert both you and the credit union of that fact. You will be asked to verify your card transaction.
Please be careful with your personal information. Do not respond to email?s soliciting your information. Guard your card! Help us protect your money.
MM

Dear Madam Money,

If I can not afford to continue paying my car loan what can I do?

Soon to be carless in Crestone.

Dear STBCIC,

You may be able to afford your car payment if you can reduce your other expenses. Can you cut-down on food and entertainment costs? If you find that you can’t continue making your car payment try to find a buyer for your car. First find out what the sale value of your car is by consulting the NADA Book, an auto consumer guide or your car loan company. Then ask your loan company what the pay-off amount would be. The pay-off is the amount you would have to pay to completely pay-off the loan, including interest on the debt. If the value of your car is more than the pay-off amount then you could sell your car, pay off the car loan and maybe even have money left. If you are unable to find a buyer, contact your loan company and explain your situation. They might be able to delay a payment.

If you must default on your loan it is better to be up-front with your loan company. It will save you and them time, money and frustration. Keep in mind that if your car is repossessed, you might still be liable for the loan amount that is not covered after the loan company sells your car, plus any of their costs in reclaiming the car such as towing costs. Try to avoid repossession. This will have long-term negative consequences on your credit report, which could prevent you from obtaining credit in the future.

MM

Dear Madam Money,

I hear a lot about ACHs. What are they? And what are they good for?

Always Confused Human

Dear ACH,

ACH is the Automated Clearing House, which is a secure, private electronic payment transfer system that connects all U.S. financial institutions through the Federal Reserve. Direct paycheck deposits (including SSI payments), preauthorized loan payments, and other electronic payments are made through this network.

17% of business-to-business payments are now made electronically; the rest still involve paper checks or paper money orders. Of the transactions that are now conducted electronically, 33% are ACH payments and 39% are wire transfers.

Wire transfers also go through the Federal Reserve, but they differ from ACH payments in several important ways. For instance, ACH payments are processed in batches, so a transaction can take a day or two to be completed. Wire transfers, on the other hand, take place immediately. In addition, ACH payments can be repudiated. There's a window of time in which a consumer or business can decide to cancel the payment. Wire transfers can't be canceled.

There also isn't any guarantee that an ACH payment won't bounce in the event that there isn't enough money in an account to cover it. Wire transfers are guaranteed.

On the upside, ACH transactions cost considerably less than wire payments, although actual costs vary by financial institution. A simple ACH transaction usually costs less than 25 cents, whereas a wire payment typically costs between $10 and $40.

MM

Dear Madam Money,

A couple years ago interest rates went up, up, up. Then they went down, down, down until money was worth almost nothing. Now they are going up again. Why do they do this? Why can’t they just hold steady?

Fluctuating Wonderer

Dear FW,

When interest rates rise, the cost of money rises. Credit union and banks pay more for depositors’ money and in turn charge more for loans. This is an inducement for people to save more, borrow less, and therefore spend less. The reverse happens when interest rates fall. Money is cheaper. People save less, borrow more, and spend more.

Interest rates don’t rise and fall by themselves. The Federal Reserve, under the thumb of Dr. Greenspan, determines the ‘Prime’ interest rate. The Prime Rate is the interest rate charged by banks to their most creditworthy customers (usually the most prominent and stable business customers). Interest rates to all other customers extend upwards from the Prime Rate depending on the credit of the customer. When the Prime Rate is changed, all interest rates change.

So why does Dr. G. raise and lower rates periodically? If he feels the economy is slipping, depressing, or needs a kick in the butt, Dr. G. will lower interest rates to persuade large corporations and us, the consumers, to spend more and borrow more. The extra spending and borrowing puts more money in the economy which should give it a lift. If Dr. G. feels that the economy is growing too fast, inflation is showing its nasty head, and we need to slow down, he will raise rates. Some people call it fiddling. Some people call it managing our economy.

One problem with manipulating interest rates is that the effect of it is long-term rather than short. Interest rates on current deposits and loans do not change immediately after a Prime Rate change. New loans and deposits often do change immediately. But the effect on the cost of money and our spending habits can have a slower reaction time. Properly functioning crystal balls can help predict the future value of your money.

Dear Madam Money,

I want to start a new business but don’t know how to start. Where can I find information on business plans, market studies, and other tools to start a business?

Budding Baca Business-owner

Dear BBB,

It is great that you are planning before you start your business. Too many new business owners jump into a business before they have adequately researched, studied, and planned the business.

On the internet, there is a wealth of information on starting and managing a business. Here are some links to get you going.

http://www.sba.gov/starting_business/planning/basic.html
http://www.bplans.com/
http://www.planware.org/bizplan.htm
http://www.businesstown.com/planning/creating.asp
http://www.soyouwanna.com/site/syws/bizplan/bizplan.html
http://www.inc.com/guides/write_biz_plan/
http://sbinfocanada.about.com/cs/businessplans/
http://www.howtowritebusinessplans.com/
http://www.onlinewbc.gov/docs/starting/preparing.html
http://www.bplans.com/contentkit/?affiliate=wsj
http://www-bus.colorado.edu/faculty/lawrence/busplan/
http://www.business-plan-help.com/
http://www.myownbusiness.org/s2/
http://www.entrepreneur.com/howto/bizplan/0,5971,,00.html

Dear Madam Money,

I’ve heard that it is better to shop locally, but prices are higher here than in the cities. Why should I shop at home if I can save money going somewhere else?

Suzy Saver

Dear SS,

The cost savings of shopping out of our area is largely a myth. The Department of Transportation now estimates that it costs over $.30 per mile to drive a vehicle. That coupled with cost of our time usually makes it less costly to buy locally rather than driving hours to save a few dollars. In addition, by shopping at home, you also help the local economy grow. So it helps you and everybody else in the community if you buy at our neighborhood businesses.

Dear Madam Money,

I’m upset! The principle on my mortgage loan never goes down! Every time I pay, it only goes to interest. Sometimes I’m a few days late (there’s no late fee if I pay within 10 days) but I pay every month. Is the Credit Union calculating it right?

Mad Mortgagee

Dear MM,

Mortgage loans are ravenous beasts who take a lot of interest in your money. This creature calculates your interest every single day. So when you pay on him, he takes all that daily interest before any of your money goes to the principle of chopping him down to size.

For instance, if you have a $150K mortgage loan at 7%, your monthly payment will be $1K. Your daily interest is almost 30 bucks. If you do not pay your loan within 33 days, your interest to the beast will consume all of your payment. If you pay 9 days late, you are already behind by more than 250 bucks. You can never catch up even if you make your payment on time for the next 29 years and 11 months.

There are various way to get rid of this beast (albeit, slowly but surely cause he’s a big guy). One: Never pay late. Two: Pay ahead. Three: Pay extra anytime you can.

Stay ahead of the beast and you will shrink him down to nothing.

PS to my readers:

SCCU still has some openings for it’s IDA Program. It involves matching your money to help you with your housing, education, or business. It’s free money, so check it out at the Credit Union.

Remember my e-mail address is madammoney@sccu4u.net.

Dear Madam Money,

How can someone steal my identity? I keep hearing so much about identity theft that it’s got me worried.

Anonymous

Dear Anonymous,

Check credit reports on an annual basis (Call SCCU to find out how to get a free copy)

Review your credit card, credit union or bank statements immediately upon receipt

Keep credit cards and PIN numbers secure and separate at all times

Understand when the teller or merchant asks for identification, it is for your protection

Shred every unnecessary document that includes personal information

Don’t carry unnecessary information in purse or wallet

Check out http://www.usdoj.gov/criminal/fraud/idtheft.html for more information about identity theft.

Dear Madam Money,

I keep hearing in the news that the Dollar is at an all-time low compared with other currencies. Why is that, and how will it affect us in Saguache County?

Worried about my money

Dear Worried,

Money works wonders when it is spent with a neighbor.

Dear Madam Money,

I’ve heard that it is better to shop locally, but prices are higher here than in the cities. Why should I shop at home if I can save money going somewhere else?

Suzy Saver

Dear SS,

Dear Madam Money,

What are credit reports and what are they used for?

Curious about Credit

Dear CaC,

Credit bureaus make money by gathering your credit information from credit grantors, listing the information in your credit file, and then selling it to other credit grantors who want to see your credit history before they decide to lend you money. If you have shown any tendency to pay late or to default on paying your financial commitments, many credit grantors’ computers are programmed to immediately reject your application.

Credit bureaus get our personal information from the same lenders who grant you credit through agreements they have made that require the credit grantor to inform the credit bureau of everything that occurs in your relationship with the credit grantor. For example, if you are late with a payment, this fact is quickly reported to the credit bureau and is added to your credit history. Credit reports not only show how you are currently managing your credit, they are also histories of everything you have done in the past as far as your credit is concerned.

It is a good idea to check your credit report periodically in case someone has stolen your identity (see above) or there is a mistake on your credit report which could hurt your credit rating.

Dear Madam Money,

I’m 50 years old and have been able to set aside very little up to this point. I am becoming concerned about supporting myself in my older years. What would you recommend?

Long In The Tooth

Dear LITT,

Planning for retirement can be like trying to predict the future. My crystal ball has always been a bit fuzzy about future possibilities, so here are some basic tips that should help you to get to your financially secure golden years no matter what the economy does.

Get paid what you are worth and spend less than you earn.

This sounds simplistic, but many people struggle with this first basic rule. Make sure you know what your job is worth in the marketplace. Evaluate your skills, productivity, job tasks, contribution to the company and the going rate for what you do, both inside and outside the company.

No matter how much or how little you’re paid, you will never get ahead if you spend more than you earn. Often it’s easier to spend less than it is to earn more, and a little cost-cutting effort in a number of areas can result in big savings. It doesn’t always have to involve making big sacrifices.
Budget is not a four-letter word.

How can you know where your money is going if you don’t budget? How can you set spending and savings goals if you don’t know where your money is going? You need a budget whether you make thousands or hundreds of thousands of dollars a year.
Pay off your credit card

Credit card debit is that number one obstacle to getting ahead financially. These little pieces of plastic connected to the electronic money world are so easy to use, and it’s so easy to forget that it’s real money we are dealing with when we slip them out to pay for a purchase, large or small. Despite our good resolves to pay the balance off quickly, the reality is that we often don’t and end up paying far more for things than we would have paid if we had used cash.
Contribute to a retirement plan

If your employer has a retirement plan, contribute to it. If not get an IRA.
Pay yourself! Save you money!

If you would save as little as $50 per month, you will have a nest egg of nearly $11K even at the low current interest rates (2.5%).
Your home is your castle!

Buy a home and pay off the mortgage before you retire. Buying and paying off a home in 15 years is realistic, especially at the current low interest rates. It’s worth the struggle. Your home is the most valuable asset anyone can have. It is security for the future. Once your home is paid for, housing expenses are far lower. You also have an asset that can be borrowed on in emergencies.
Your health is worth more than money!

A healthy diet and lifestyle will go a long way in making you more productive and happy. I guarantee that good health will save you money too.

Dear Madam Money,

I know what levitating is, but how do you float money?

Magician in search of liquidity

Dear MSL,

Money floating has to do with the time dimension. It is the time it takes a check you’ve written to a merchant to hit your checking account. All check go through the Federal Reserve for payment and until recently checks were literally transported from your merchant to the Federal Reserve and then to your bank or credit union account. This takes time. Hence, your money floats. You’ve spent it but it hasn’t been charged to your account yet.

Effective October 28, 2004, financial institutions will be allowed to make electronic "substitute" checks for your paper checks. They will be transmitted to the Federal Reserve and on to your account electronically. Your paper check will then be shredded. The effect of this is that the charge will hit your account much more quickly.

Crystal balls will not predict the money float, so keep your check book balanced.

Dear Madam Money,

In your last column you suggested that if you're not enrolled in a company retirement plan, to get an IRA. What is and IRA, and how do you get one?

Also, I own my own home free and clear but need to finish some parts of it to bring it up to full value. If I have to choose whether to invest my money in an IRA, or completing the house, which would be the wiser investment?

Thank you,

Puzzled

Dear PZ,

IRA’s are Individual Retirement Accounts. The two most widely used are the Traditional and the Roth.

The Traditional IRA is designed to allow you to save money for retirement without that money being taxed until you retire when you will be in a lower tax bracket. You are individually allowed to save $3000 per year in 2004 and $4000 per year in 2005. This savings account can accumulate until the age of 65 when you may withdraw the savings.

With a Roth IRA, your savings are taxed currently but then you are not taxed when the savings is distributed at retirement.

You can set up an IRA account at any credit union or bank. It’s easy.

The answer to your second question would be answered by making a multi-year plan to do both.

Madam's Memo

If you have any money questions, please contact me at Box 337, Moffat 81143 or email me at madammoney@sccu4u.net.

Equal_Housing_Logo.gif (19106 bytes)

This entire web domain - Copyright © 2004 - 2007 by Saguache County Credit Union except where otherwise noted. All rights reserved. No part of this domain may be copied or reproduced without permission.