Thursday, April 30, 2009

Census Releases New Data on Relationship between Education and Earnings

Highlights from the Census Press Release for the new issue of Educational Attainment in the United States: 2008

  • Workers with a high school degree earned an average of $31,286 in 2007, while those with a bachelor’s degree earned an average of $57,181.
  • The race and Hispanic origin data show that 53 percent of Asians in the U.S. had a bachelor’s degree or more education. For non-Hispanic whites, it was 33 percent; for blacks; it was 20 percent; and for Hispanics, it was 13 percent.
  • Among younger adults (age 25-29), 88 percent had completed high school, and 31 percent had completed college. Among adults 75 and over, 73 percent had completed high school and 17 percent had completed college.

Friday, April 24, 2009

Having Problems Downloading Office 2007 Files in IE8?

Some Office 2007 files have been posted under Your Financial Review for downloading. There seems to be a problem downloading these files with Internet Explorer 8. IE8 attempts to download Office 2007 files as zip files. When downloading the “xlsx” or “ docx” is changed to “zip”. There are two solutions to this problem. The first is to download the file and then change the suffix back to either “xlsx” or “docx”. The second is to download the files using an alternative browser such as IE7 or Firefox.

Thursday, April 23, 2009

How to Handle a Disagreement With Your Broker

Wall Street Journal’s Jason Zweig offers some good information on how you might deal with a disagreement over how your broker has been handling your portfolio.

Read “Investors Face Tough Duel When Fighting Brokers” Wall Street Journal

Bank Tracker Database Launched by American University

The American University School of Communication in partnership with MSNBC has posted a database of information on banks. You should be able to find detailed information on your bank and a “troubled asset ratio” explained below.

From the website  Bank Tracker – Investigative Reporting Workshop

Each quarter the Federal Deposit Insurance Corp. requires every bank in the nation to submit detailed reports about its financial condition. This data is public and contains hundreds of data points for each bank. The Investigative Reporting Workshop downloads the data files from the FDIC Web site. Using experienced computer-assisted journalists, we extract several key variables of bank performance.

These include:
*    Total Assets
*    Total Deposits
*    Loans (net of allowance for loan losses)
*    Net Income
*    Provision for loan losses (the charge to earnings for realized loan losses)
*    Tier 1 Capital
*    Loan Loss Reserves (the allowance for loan losses)
*    Loans that are 90 days or more past due (minus the amount of these loans guaranteed by the federal government)
*    Loans that are in nonaccrual status (minus the amount of these loans guaranteed by the federal government). Nonaccrual means the bank can no longer claim interest income from the loan.
*    Other real estate owned (primarily property the bank has acquired through foreclosures)

Using these variables, we calculated a “troubled asset ratio,” which compares the sum of troubled assets with the sum of Tier 1 Capital plus Loan Loss Reserves. Generally speaking, higher values in this ratio indicate that a bank is under more stress caused by loans that are not paying as scheduled.

2009 Consumer Action Handbook Now Available

The Consumer Action Handbook has a wealth of information on numerous consumer topics such as buying a car or home, preventing identity theft, understanding credit, and filing a complaint. It also includes key consumer information resources and a consumer assistance directory. The handbook is available and the Consumer Action Website.

Credit Card Payment Calculator from FTC

The FTC has posted a credit card calculator that estimates how long it will take you to pay off your balance with minimum payments. Credit Card Repayment Calculator

You can also use the Excel spreadsheet from Your Financial Review to calculate your payback period.

Sheet 6.4 Credit Card Payback

Seven Facts about the New Sales Tax Deduction for Vehicle Purchases From the IRS

From IRS News Release

Audio: American Recovery and Reinvestment Act Vehicle Tax Deduction

Taxpayers who buy a new car or several other types of motor vehicles this year may be entitled to a special tax deduction when they file their 2009 federal tax returns next year. The tax break is part of the American Recovery and Reinvestment Act of 2009.

Here are seven things you should know about this new deduction:

1. State and local sales taxes paid on up to $49,500 of the purchase price of qualifying vehicles are deductible.

2. Qualified motor vehicles generally include new (not used) cars, light trucks, motor homes and motorcycles.

3. Purchases must occur after Feb. 16, 2009, and before Jan. 1, 2010.

4. This deduction can be taken regardless of whether or not you itemize other deductions on your tax return.

5. Taxpayers will claim this deduction when filing their 2009 federal income tax return next year.

6. The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.

7. The deduction may not be taken on 2008 tax returns.

Consumers who are considering buying a new car may find that this tax incentive means there may have never been a better time to buy.

For more information about the sales and excise tax deduction for motor vehicle purchases visit the official IRS web site at

A Primer on Alternative Financial Services

The most recent issue of the FDIC Quarterly contains “Alternative Financial Services: A Primer.” The FDIC defines “alternative financial services” as financial services offered by providers that operate outside of federally insured banks and thrifts. The accompanying chart from the report indicates the types of services this includes. The report contains a description and basic economic facts on each of the services.


Tuesday, April 21, 2009

Survey on Student Use of Credit Cards

Sallie Mae just completed a survey of credit card use among undergraduate students. Included in the key findings was an increased reliance on credit card debt.

Undergraduates are carrying record-high credit card balances. The average (mean) balance grew to $3,173, the highest in the years the study has been conducted. Median debt grew from 2004’s $946 to $1,645. Twenty-one percent of undergraduates had balances of between $3,000 and $7,000, also up from the last study.

More than half the students were surprised a their high balances and 82 percent carried balances incurring finance charges. Not surprisingly, 84 percent indicated they needed more information on personal financial management that could be provided in a personal finance course.

credit card debt

The full report is available at How Undergraduate Students Use Credit Cards: Sallie Mae’s National Study of Usage Rates and Trends 2009

Saturday, April 18, 2009

Gloomy Outlook on Retirement

According to the latest Retirement Confidence Survey from the Employee Benefits Institute potential retirees are taking a gloomier view of their future retirement.

From press release

The recession has cast a pall over the retirement expectations of the vast majority of Americans, leaving a record-low 13 percent this year able to say they are very confident of having enough money to live comfortably in retirement, according to the 19th Annual Retirement Confidence Survey (RCS) released today by the nonpartisan Employee Benefit Research Institute (EBRI). Among workers, those feeling very confident about retirement has tumbled by one-half in the last two years.

Retirement Confidence Survey - 2009 Results

Thursday, April 16, 2009

Where’s My Refund?

Wondering whether you refund got lost in the mail. You can track your refund at the IRS website Where’s My Refund?.

COBRA Continuation Coverage for Small Firm Employees

Federal statutes limit COBRA health insurance protections to firms with 20 or more employees. State statutes, however, may extent COBRA protections to smaller firms. The Kaiser Family Foundation in State Health Facts provides a table listing states with expanded coverage.

Expanded COBRA Continuation Coverage for Small Firm Employees, 2009

Foreclosure Rescue Scams

The Office of Thrift Supervision has issued a warning detailing foreclosure scams. Avoid anyone who wants to charge a fee for helping you avoid foreclosure or reduce your monthly mortgage payment. Government services are fee and can be found at


Foreclosure rescue scams target homeowners facing foreclosure, particularly if they are equity-rich but cash-poor. Rescue scams cost consumers thousands of dollars and, often, their most valuable asset — their homes.

With foreclosure rates on the rise, foreclosure rescue scams are also increasing. The elderly, and people with low incomes or blemished credit, are particularly vulnerable.

Read more.

The Cost of Completing Your Tax Return

As the tax code becomes more complicated, individuals spend more time and money on completing tax returns. The National Taxpayers Union estimates that, “Taxpayers using any of the 1040 tax form series will spend an average of 26.4 hours and $209 completing their returns for the most current tax year, up from 25.4 hours and $185 four years ago.”

Read more.

See also the WSJ What I Learned in My 16 Years on the Tax Beat by Tom Herman

The President’s Federal and State Tax Returns

Copies of the returns are available below:

Download the President’s Federal 1040 form (pdf)

Download the President’s Federal 709 form (pdf).

Download the President’s Illinois State income tax return (pdf)

Download the Vice President’s Federal 1040 form (pdf)

Download the Vice President’s Delaware tax return (pdf)

AARP Report Review Census Data on Work Related Disabilities

A report by the AARP, “19 Million Working-Age Americans Have a Disability that Limits or Prevents Work. Most Are Poor or Low-Income,” highlights the need for disability income protection.  Work related disabilities are negatively correlated with income and education and positively correlated with age. At this site you will also find a Disability Insurance Primer.

Tuesday, April 14, 2009

PEW Promotes Standards for Safe Credit Cards

The PEW Charitable Trust reviewed current credit card practices and has issued a report with suggested practices for making credit cards safer. The survey uncovered the following facts.

  • 100 percent of cards allowed the issuer to apply payments in a manner which, according to the Federal Reserve, is likely to cause substantial monetary injury to consumers.
  • 93 percent of cards allowed the issuer to raise any interest rate at any time by changing the account agreement.
  • 87 percent of cards allowed the issuer to impose automatic penalty interest rate increases on all balances, even if the account is not 30 days or more past due. The median allowable penalty interest rate was 27.99 percent per year.
  • 72 percent of cards included offers of low promotional rates which issuers could revoke after a single late payment.
  • 92 percent of cards included a fee for exceeding the credit limit, including 100 percent of all student cards. The amount of the overlimit fee is $39 on most accounts.
  • 84 percent of cards included binding arbitration agreements, limiting cardholders’ legal rights to settle disputes with the issuer in court.

Read the full report here.

Health Insurance UCRs May Have Downward Bias

Health insurers typically establish “usual, customary and reasonable (UCR) rates” for reimbursing direct health care providers. The amount paid may be at full or partial UCR. The patient is responsible for paying the balance. The UCR rates are supposed to reflect typical charges for a particular service within a geographic market.

Charles Bell, Consumers Union Programs Director, in testimony before the Senate claimed that UCR rates for out-of-network providers have not be calculated in a fair and impartial way. The Attorney General for New York found that within that state UCRs understated physician expenses by 10 to 28 percent. Moreover, there is no easy way for consumers to check on the accuracy of the UCRs.

For text and video on the complete Senate Hears go to PART I: Deceptive Health Insurance Industry Practices – Are Consumers Getting What They Paid For?

Wednesday, April 8, 2009


All of the above are examined in a working paper by Oren Bar-Gill in LAW & ECONOMICS RESEARCH PAPER SERIES, WORKING PAPER NO. 08-59.

Excerpt from introduction.

During the five years preceding the crisis, the subprime market experienced staggering growth as riskier loans were made to riskier borrowers.3 Not surprisingly these riskier loans came at the price of higher interest rates, which compensated lenders for the increased risk that they undertook. But high prices themselves are not the central problem; the problem is that these high prices were hidden by lenders and underappreciated by borrowers. In the prime market, the traditional loan is a standardized 30-year fixed-rate mortgage (FRM). Lenders could have accounted for the increased risk of subprime loans by simply raising the interest rate on the traditional FRM. Yet the typical subprime loan is a far cry from an FRM. The subprime market boasted a broad variety of complex loans with multidimensional pricing structures.

Read more>

Consumer Reports Provides Clues for Identifying Junk Health Insurance

In a May 2009 article, Hazardous Health Plans, Consumer Reports provides tools for identifying inadequate health insurance. Among the tip offs are

  • limited benefits
  • low overall coverage limits
  • “affordable” premiums
  • no coverage for important medical care
  • ceilings on categories of care
  • limitless out-of-pocket expenses
  • random gotchas

Dr. Jennifer Ashton and Harry Smith discuss the topic in this video.

Monday, April 6, 2009

Last Minute Tax Tips from the WSJ and TurboTax

IRS Announces Tax Break on New Car Purchases

New IRS rules allow you to deduct sales taxes on a new car purchase. The deduction is phased out at upper incomes. For more information see the IRS Press Release.

Only About One-Half of Employees Participate in Retirement Plans

The BLS March Issue of Program Perspectives focuses on participation in retirement plans. Overall, only about 51% of employees participate in an employee sponsored retirement plan. The following table lists participation by occupational group. Defined contribution plans experienced growth in participation and except among union members are more common than defined contribution plans.

Read more.