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					                                    SPECIAL EDITION




Money Tips for All Ages
Your Finances at Different Stages of Life




                                                                  Ideas for…
                                                                  Any Age or Stage
                                                                  Teens
                                                                  Young Adults
                                                                  Newlyweds
                                                                  People at Midlife
                                                                  Teaching Our Kids
                                                                  Before You Retire
                                                                  After You Retire
                                                                  Financial Caregivers
                                                                  Coping After Changes

    F E D E R A L   D E P O S I T    I N S U R A N C E   C O R P O R A T I O N
 For Any Age or Stage


Practical Advice for Everyone on
How to Save and Manage Money
No matter how old or young you are,
there are some basic things you can
do to better manage and protect your
money. Here are recommendations                                                        The Federal Deposit Insurance
from FDIC Consumer News.                                                               Corporation was created by
Comparison shop for financial                                                          Congress in 1933 to protect
services. Just as you would do for                                                     depositors and ensure the safety
any major purchase, look at what is                                                    and soundness of the U.S.
being offered by your bank and a few                                                   banking system. Since that time,
competitors, then try to find the best                                                 the FDIC has remained true to
deal to meet your needs. For instance,                                                 its mission — to be a source of
with a mortgage, credit card or other                                                  confidence and stability for the
loan, you may be able to negotiate the                                                 American people. In fact, because
                                          Consumer Response Center. “Don’t let         of the FDIC, no depositor has
interest rate and other terms. This can   a low teaser rate lure you in; you may
save hundreds or thousands of dollars                                                  lost a single cent of insured funds
                                          be surprised later.”                         as a result of a bank failure.
over several years.
                                          When you consider opening checking           The FDIC is celebrating our
Start by comparing the Annual             and savings accounts, compare the
Percentage Rate (APR) on a loan                                                        75th anniversary in numerous
                                          Annual Percentage Yield (APY) offered        ways, including the publishing
or credit card. The APR is the cost       by several financial institutions. The
of credit expressed as a yearly rate,                                                  of “Money Tips for All Ages,”
                                          APY expresses the annual interest rate       this special edition of FDIC
including interest and certain fees.      you will earn on a deposit account,
“Many people looking for a loan                                                        Consumer News. We invite
                                          depending on the frequency of                you to learn more about what
only focus on the dollars they’d pay      compounding. However, keep in mind
each month instead of the APR and,                                                     we do to serve and protect
                                          that fees — such as those for ATM            consumers — and what you can
because of that, they don’t realize       withdrawals, account maintenance and
how much the loan will cost and they                                                   do to better manage your money.
                                          checks returned because of insufficient      Start by visiting our home page
could pay too much,” said Rae-Ann         funds — aren’t factored into the APY.
Miller, special advisor on consumer                                                    at www.fdic.gov. You also can
                                          Fees can make a big difference in how        call or write the FDIC for help
issues in the FDIC’s research division.   much you actually earn from money
For example, she said, payday loans                                                    regarding deposit insurance and
                                          you have on deposit.                         banking. See the back page for
(unsecured loans that borrowers
promise to repay out of their next        Get a free copy of your credit               information on how to contact us.
paycheck or regular income payment)       reports. These reports are prepared
                                          by companies called credit bureaus.        loan or credit card. Another reason to
and car-title loans (secured by the
                                          They summarize your history of paying      review your credit reports is to protect
borrower’s car) “may be quick and easy
                                          loans, credit cards and other bills.       against identity theft (see Page 4).
sources of cash, but they also have an
APR as high as 300 to 400 percent.”       If you apply for a loan, insurance or      Under federal law, you are entitled
                                          a job, or you want to rent an              to one free credit report every year
Also, for a mortgage, consider a          apartment, chances are your credit         from each of the nation’s three major
fixed-rate loan even if adjustable-rate   report will be reviewed.                   credit bureaus. To order your free
mortgages (ARMs) carry a lower
                                          One reason you should be monitoring        reports or for more information, go to
initial interest rate or lower monthly
                                          your credit reports is to correct errors   www.AnnualCreditReport.com or call
payments at the start. “If you are
                                          or omissions that can leave bad marks      toll-free 1-877-322-8228.
thinking about an ARM, before you
commit to one, make sure you know         on your credit history. Inaccuracies       Try to save more and spend less.
how much the monthly payments             in your credit report can needlessly       First, if you don’t already have a
could go up and be comfortable with       reduce your “credit score” and, in turn,   monthly budget, consider preparing
those higher payments,” cautioned         may cost you hundreds of dollars each      one to get a better handle on your
Janet Kincaid, Chief of the FDIC’s        year due to higher interest rates on a     income and expenses for necessities,

                                                     FDIC Consumer News                                        Spring 2008
  2
                                                                                                   M O N E Y TIP S FOR ALL AGES



such as housing, utilities, food and       could be to ask your bank to cover
transportation. You can also decide        insufficient funds by automatically          Understand your FDIC
what is appropriate for non-essential      transferring money from your savings
                                                                                        insurance so you can be fully
expenses, such as entertainment, eating    account.
out and the latest electronics. “This is                                                protected if your bank fails. The
                                           • At the ATM, limit or avoid
how a budget can help you commit to
                                           “surcharges” (access fees) by using your     basic coverage is $100,000 per
saving a little money every month and
                                           own bank’s machines or those owned
splurging a little less,” said Kincaid.                                                 depositor per institution, but
                                           by institutions that don’t charge fees
She also said that “a budget doesn’t       to non-customers. If you definitely          you may qualify for more FDIC
have to be complicated or scary,”          need cash when you’re out of town or
                                                                                        insurance depending on the
and that while there are budgets you       otherwise not near an ATM owned by
can easily create on a computer, “a        your bank, consider getting cash back        circumstances.
notebook and a pencil can be enough        when you use a debit card to make a
to get you started.”                       purchase at a supermarket or another       beneficiaries upon the death of the
                                           merchant.                                  owner, such as in payable-on-death
Keep banking costs down. With
planning, you can sidestep some of         • Don’t be afraid to ask for a break.      accounts, also can be insured for
the more costly fees and penalties.        Bounce a check or send in a late           more than $100,000 under certain
Examples:                                  payment for the first time ever? Think     circumstances. And, some retirement
                                           the fees for your mortgage application     accounts (notably Individual
• With credit cards, try to pay the                                                   Retirement Accounts) are insured up
                                           are a bit steep? Depending on the
card balance in full each month to                                                    to $250,000.
                                           circumstances, your bank might be
avoid interest charges. If you can’t
                                           willing to reduce or waive a fee or        For guidance about your FDIC
pay in full every month, send in as
                                           penalty, especially if you’ve been a       insurance, including how to make
much as possible to keep interest
                                           good customer and don’t have a history     sure that all your funds are protected,
costs to a minimum. “Think twice
                                           as a “repeat offender.”                    go to www.fdic.gov/deposit/deposits/
before accepting an offer from your
credit card issuer to skip a payment,”     For more ideas on how to cut banking       index.html to find FDIC brochures,
said Luke W. Reynolds, Chief of the        costs, see previous issues of FDIC         videos and an interactive insurance
FDIC’s Community Affairs Outreach          Consumer News at www.fdic.gov/             calculator. Or, you can call the FDIC
Section. “It’s likely that interest will   consumernews, including our Summer         or write or e-mail questions to us
still be charged, so you’ll actually be    2007 special edition called “51 Ways to    (see the back page).
paying more in interest because you’ll     Save Hundreds on Loans and Credit          Remember that investments
carry a higher balance on your card for    Cards” and the Summer 2005 feature         can lose value. Investment
a longer period of time.”                  “A Shopper’s Guide to Bank Products        products include stocks, bonds and
                                           and Services.”                             mutual funds. Over the long term,
In addition, pay your credit card bill
on time. One reason is to avoid late       Understand your FDIC insurance             investments might produce higher
fees. Another is that late payments can    coverage so you can be fully               returns than bank deposits. However,
damage your credit record. If repeated,    protected if your bank fails. If you       investments are not deposits, they
they could even trigger interest rate      (or your family) have $100,000 or less     are not FDIC-insured — not even
increases on your credit cards and         in all of your deposit accounts at the     the ones sold through FDIC-insured
loans.                                     same insured bank, you don’t need to       institutions — and they can lose value.
                                           worry about your insurance coverage.       Because of the risks associated with
• With your checking account, avoid                                                   any investment, always deal with a
                                           Your deposits are fully protected under
fees for insufficient funds and bounced                                               reputable, licensed salesperson and
                                           federal law because the basic insurance
checks. “Record every deposit and                                                     research the product before making
                                           coverage is $100,000 per depositor per
withdrawal in your checkbook —                                                        a purchase. See Page 12 for securities
                                           insured institution.
especially remember your debit card                                                   and insurance regulators that can help.
purchases and ATM withdrawals,” said       You also may qualify for more
Reynolds. “It is important to know how     than $100,000 in coverage at one           Certain annuities are a type of
much money you have in your account        insured bank. For example, the             investment. In general, an annuity
so you won’t overdraw your balance.”       money you have in your individually        is a contract with an insurance
                                           owned accounts (not including your         company. The consumer makes one
Your bank may offer various “overdraft                                                or more payments to the insurer, as an
                                           retirement accounts) is insured up to
protection” services for your checking                                                investment, and the insurer agrees to
                                           $100,000 separately from your share
account, but be aware that these come                                                 make a series of income payments to
                                           of any joint accounts at the same bank.
with their own costs. Reynolds added                                                  the consumer as long as he or she lives.
                                           Deposits designated to pass to named
that one of the least expensive options
                                                                                                             continued on next page

  FDIC Consumer News                                        Spring 2008
                                                                                                                              3
MONEY TIPS FOR AL L AGE S


Be particularly careful before investing   accounts — especially after a birth,         • Assume that any offer that “sounds
in “variable” annuities (see Page 12),     death, divorce or other major life           too good to be true” — especially
which frequently come with high fees       event — to ensure that the named             one from a stranger or an unfamiliar
and penalties if you withdraw money        beneficiaries are correct.                   company — is probably a fraud.
early.                                                                                  Example: You receive a call or letter
                                           Also build an emergency savings
                                                                                        announcing you’ve won a lottery
Especially troubling have been reports     fund, preferably of about three to six
                                                                                        or other prize you don’t remember
of marketers steering people into          months of living expenses, so you have
                                                                                        signing up for, and you are told to pay
annuities that are unsuitable for them.    ready resources you can tap to pay
                                                                                        “taxes” or “fees” before you can claim
The National Association of Insurance      your mortgage, insurance or costly
                                                                                        your (nonexistent) prize.
Commissioners has published a              home repairs or medical bills. The
consumer alert to help consumers,          safest place for emergency savings is a      • Beware of transactions in which
especially seniors, better understand      federally insured deposit account.           another party sends you a check for
annuities and recognize questionable                                                    more than you are due and then asks
                                           Simplify your financial life. Have
sales practices. Read it online at                                                      you to wire back the difference. “If the
                                           your pay and benefit checks deposited
www.naic.org/documents/consumer_                                                        check is fraudulent, you could lose a
                                           directly into your bank account.
alert_annuities_senior_citizens.htm.                                                    lot of money,” said Michael Benardo,
                                           Arrange to automatically pay for
                                                                                        manager of the FDIC’s financial crimes
There also have been reports of            recurring expenses, such as a mortgage
                                                                                        section.
marketers making false statements          loan, insurance premium or utility bill.
about the FDIC — such as claims that       Banking and bill paying online or by         • Look at your bank statements and
the FDIC doesn’t have the financial        phone also can be good options.              credit card bills as soon as they arrive
resources to protect insured deposit                                                    and report any discrepancy or anything
                                           These and other ideas can help you
accounts — as a way to sell investments                                                 suspicious, such as an unauthorized
                                           save time, reduce stress, eliminate
or annuities to consumers. Again, for                                                   withdrawal or charge.
                                           clutter, lower the fees you pay, and
information about the FDIC or FDIC
                                           maybe help you earn a little extra on        • Keep bank and credit card
insurance, be sure to contact us.
                                           your savings and investments.                statements, tax returns, credit and debit
Be cautious when borrowing against                                                      cards and blank checks out of sight,
                                           Protect against fraud. Here are basic
the “equity” in your home. If you                                                       even at home. Also shred sensitive
                                           precautions against identity theft,
have property valued at $300,000 and                                                    documents before discarding them.
                                           check fraud and other financial scams:
you owe $100,000 on your mortgage,                                                      Why? Because dishonest relatives,
your equity is $200,000. Home equity       • Be wary of requests to “update” or         neighbors, workers around the house
loans and lines of credit are ways that    “confirm” personal information —             and other people could use these items
homeowners can borrow money using          especially your Social Security number,      to commit identity theft or other
their home’s value as collateral and       bank account numbers, credit card            crimes.
gradually pay it back.                     numbers (including security codes),
                                                                                        • Periodically review your credit
                                           personal identification numbers
Home equity products are relatively                                                     reports to make sure an identity thief
                                           (PINs), your date of birth or your
low-cost ways to borrow money, but                                                      hasn’t obtained a credit card or loan
                                           mother’s maiden name — in response
they must be repaid like any other loan.                                                in your name. Experts suggest that, to
                                           to an advertisement or an unsolicited
Especially important to remember is                                                     maximize your protection, you request
                                           call, letter or e-mail. Your bank won’t
that if you cannot pay a home equity                                                    copies from all three credit bureaus
                                           call or e-mail you to confirm account
loan, you risk losing your home.                                                        but spread out the requests during the
                                           numbers or passwords it already has.
                                                                                        course of the year.
Prepare for the unexpected. Have
                                           • If you want to find out if a company
adequate insurance, especially for life,                                                To learn more about common financial
                                           is legitimate, look it up using a reliable
health, disability, personal liability,                                                 frauds and how to protect yourself,
                                           source. Don’t rely on the contact
and coverage of property. Review your                                                   see back issues of FDIC Consumer
                                           information that was provided to you
coverage annually to ensure that it is                                                  News (online at www.fdic.gov/
                                           on a Web site or in an unsolicited
up to date.                                                                             consumernews) and our multimedia
                                           call or e-mail. For information about
                                                                                        presentation “Don’t Be an Online
Consult an attorney or another trusted     banks, you can use Bank Find, the
                                                                                        Victim” (at www.fdic.gov/consumers/
advisor about having a will and/or         FDIC’s online directory of insured
                                                                                        consumer/guard/index.html).
establishing a formal “trust” to specify   banking institutions, at www2.fdic.gov/
how your bank accounts, property and       idasp/main_bankfind.asp. Or, call the        For more help or information at
other assets should be distributed upon    FDIC’s toll-free consumer assistance         any age or stage: Keep reading this
your death. Periodically review your       line at 1-877-ASK-FDIC, which is             special edition for tips and strategies
life insurance policies and retirement     1-877-275-3342.                              for different times of your life. Q


                                                      FDIC Consumer News                                           Spring 2008
  4
                                                                                                    M O N E Y TIP S FOR ALL AGES


                                                                                       then making the right choices with
  For Teens                                                                            your money to help you achieve those
                                                                                       goals.”

How to Ace Your First Test Managing                                                    Consider a part-time or summer
                                                                                       job. Whether it’s babysitting, lawn
Real Money in the Real World                                                           mowing or a job in a “real” business,
                                                                                       working outside of your home can
As a teen, you’re beginning to make         If you need some help sorting and          provide you with income, new skills
some grown-up decisions about how           counting your change, he said, find out    and references that can be useful
to save and spend your money. That’s        if your bank has a coin machine you        after high school or college. Before
why learning the right ways to manage       can use for free. If not, the bank may     accepting any job, ask your parents for
money…right from the start…is               give you coin wrappers.                    their permission and advice.
important. Here are suggestions.
                                            Some supermarkets and other                Think before you buy. Many teens
Save some money before you’re               non-banking companies have                 make quick and costly decisions to buy
tempted to spend it. When you get           self-service machines that quickly         the latest clothes or electronics without
cash for your birthday or from a job,       turn coins into cash, but expect to        considering whether they are getting a
automatically put a portion of it — at      pay a significant fee for the service,     good value.
least 10 percent, but possibly more —       often close to 10 cents for every dollar
into a savings or investment account.                                                  “A $200 pair of shoes hawked by
                                            counted, plus you still have to take the
This strategy is what financial advisors                                               a celebrity gets you to the same
                                            cash to the bank to deposit it into your
call “paying yourself first.” Making this                                              destination at the same speed as a $50
                                            savings account.
a habit can gradually turn small sums                                                  pair,” said Reynolds. “Before you buy
of money into big amounts that can          Keep track of your spending. A good        something, especially a big purchase,
help pay for really important purchases     way to take control of your money is to    ask yourself if you really need or just
in the future.                              decide on maximum amounts you aim          want the item, if you’ve done enough
                                            to spend each week or each month for       research and comparison-shopping,
Also put your spare change to use.          certain expenses, such as entertainment    and if you can truly afford the purchase
When you empty your pockets at the          and snack food. This task is commonly      without having to cut back on spending
end of the day, consider putting some       known as “budgeting” your money or         for something else.”
of that loose change into a jar or any      developing a “spending plan.” And to
other container, and then about once                                                   Be careful with cards. Under most
                                            help manage your money, it’s worth
a month put that money into a savings                                                  state laws, you must be at least 18 years
                                            keeping a list of your expenses for
account at the bank.                                                                   old to obtain your own credit card and
                                            about a month, so you have a better
                                                                                       be held responsible for repaying the
“Spare change can add up quickly,”          idea of where your dollars and cents
                                                                                       debt. If you’re under 18, though, you
said Luke W. Reynolds, Chief of the         are going.
                                                                                       may be able to qualify for a credit card
FDIC’s Community Affairs Outreach           “If you find you’re spending more          as long as a parent or other adult agrees
Section. “But don’t let that money sit      than you intended, you may need to         to repay your debts if you fail to do so.
around your house month after month,        reduce your spending or increase your
earning no interest and at risk of being                                               An alternative to a credit card is
                                            income,” Reynolds added. “It’s all
lost or stolen.”                                                                       a debit card, which automatically
                                            about setting goals for yourself and
                                                                                       deducts purchases from your savings
                                                                                       or checking account. Credit cards and
                                                                                       debit cards offer convenience, but they
                                                                                       also come with costs and risks that
                                                                                       must be taken seriously.
                                                                                       Protect yourself from crooks who
                                                                                       target teens. Even if you’re too young
                                                                                       to have a checking account or credit
                                                                                       card, a criminal who learns your name,
                                                                                       address and Social Security number
                                                                                       may be able to obtain a new credit card
                                                                                       using your name to make purchases.
                                                                                       One of the most important things you
                                                                                       can do to protect against identity theft
                                                                                                              continued on next page


  FDIC Consumer News                                         Spring 2008
                                                                                                                               5
MONEY TIPS FOR AL L AGE S




  Save some money before you’re              For Young Adults
  tempted to spend it. When you
  get cash for your birthday or
                                           What to Know Before Declaring
  from a job, automatically put a          Your Financial Independence
  portion of it into savings.              Twenty-somethings may not realize         the better your credit history and
                                           it, but every time they enter a new       credit score, the better your chances
is to be very suspicious of requests for   phase of their life as young adults —     are of getting a loan, including a credit
your name, Social Security number,         perhaps starting college, a career or a   card, with an attractive interest rate.
passwords or bank or credit card           family — they’re also venturing into      Credit reports and scores also can be
information that come to you in an         a new world of money management.          considered when you apply for a job,
e-mail or an Internet advertisement, no    Here are ways to be prepared.             an insurance policy or an apartment.
matter how legitimate they may seem.       Save money that could make your           One of the best ways to build and
“Teens are very comfortable using          future dreams a reality. It’s important   maintain a good credit record is to pay
e-mail and the Internet, but they          to put money aside for purchases you      your credit card bill and other debts
need to be aware that criminals can        expect to make in the next few months     on time — to show you are a reliable
be hiding at the other end of the          or years. But even at this stage of       money manager.
computer screen,” said Michael             your adult life, it’s smart to save for
                                                                                     What else can you do to improve your
Benardo, manager of the FDIC’s             long-term goals, perhaps buying a
                                                                                     credit score? “Try to charge on your
financial crimes section. These types of   home, owning a business or saving for
                                                                                     credit card only what you can afford
fraudulent requests can also come by       retirement (even though that may be
                                                                                     to pay off immediately or within a
phone, text message or in the mail.        40 or 50 years away).
                                                                                     reasonable time frame,” said Robert
For more guidance on how to guard          To help you stay focused on saving        Mooney, FDIC Deputy Director for
your personal information, see Page 4.     money and controlling your spending,      Consumer Protection and Community
                                           think about creating a formal or          Affairs. “Whenever possible, pay your
Be smart about college. If you’re          informal budget. “The important thing     credit card bill in full each month, but
planning to go to college, learn about     is to understand how much you earn        if you can’t do that, pay as much as you
your options for saving or borrowing       each month, how much you pay for          can over the minimum amount due.”
money for what could be a major            essentials like rent or transportation,
expense — from tuition to books,                                                     If you need to get a car, consider
                                           and how much is left over for
fees and housing. Also consider the                                                  the best way to pay for it. For many
                                           everything else,” said Janet Kincaid,
costs when you search for a school.                                                  young adults, their first big purchase
                                           Chief of the FDIC’s Consumer
Otherwise, when you graduate, your                                                   and ongoing expense is their vehicle.
                                           Response Center. It’s how you spend
college debts could be high and may                                                  Often, the first question is whether
                                           what is in the “everything else”
limit your options when it comes to a                                                to buy (which may involve taking out
                                           category that is critical to successful
career path or where you can afford                                                  a loan) or lease (which is similar to
                                           money management, Kincaid added.
to live.                                                                             renting a car but for a few years).
                                           Also, to make saving easy and painless,
For more information on saving                                                       “There are different pros and cons
                                           consider arranging with your bank
and borrowing for college, visit                                                     to buying or leasing,” said Kincaid.
                                           or employer to automatically transfer
www.students.gov, a Web site with                                                    “For example, monthly lease payments
                                           a certain amount each month to a
information from the U.S. government                                                 are usually lower than monthly loan
                                           savings or investment account.
and other sources.                                                                   payments, but at the end of the lease
                                           Build a good credit record. As you        you don’t own the car you’ve been
For more help or information for           become responsible for paying your        paying for and you may owe a sizeable
teens: Read “Start Smart: Money            own debts — for credit card purchases,    sum of money. If you buy, you do have
Management for Teens,” a special           rent, car loans or student loans, and     a vehicle you can sell or trade in.”
edition of FDIC Consumer News from         other obligations — you are building
the Summer of 2006 with information                                                  The Federal Reserve Board has
                                           a credit record. Companies called
to help teens (and many pre-teens)                                                   published a guide to the differences
                                           credit bureaus are authorized by law
learn how to make good decisions                                                     between buying and leasing a car.
                                           to collect information on each person’s
about their money. Find it online at                                                 “Keys to Vehicle Leasing” is online at
                                           history of paying debts, which is then
www.fdic.gov/consumers/consumer/                                                     www.federalreserve.gov/pubs/leasing.
                                           used to prepare “credit reports” and
news/cnsum06. Also see our tips for                                                  If you’re thinking about buying a car
                                           summary “credit scores.” In general,
anyone at any age starting on Page 2. Q                                              and borrowing money to pay for it, see


                                                      FDIC Consumer News                                        Spring 2008
  6
                                                                                                     M O N E Y TIP S FOR ALL AGES



the Summer 2007 FDIC Consumer
News (www.fdic.gov/consumers/
                                             For Newlyweds
consumer/news/cnsum07/auto.html)
for tips that can help you save time and
money, perhaps hundreds of dollars.         Starting a Household on Solid Ground Financially
If you’re renting a house or                For newlyweds, the first big financial
apartment, consider if it’s time to         decisions go beyond how to pay for the
buy. Once you start earning a good,         honeymoon and how to invest all those
steady income, you’ll most likely face      checks. They also involve starting
the decision about when is the right        a new household on solid ground
time to own your first home. Real           financially. “Financial incompatibility
estate can be an excellent investment.      is a primary reason for a significant
But home ownership is a big financial       number of failed marriages,” said
commitment, and home values                 Lee Bowman, National Coordinator
sometimes can go down. “There’s a           for Community Affairs. “Achieving
lot to consider before making that big      harmony regarding financial matters
leap into home ownership, and what          before marriage, or as early in the
works for one person isn’t always the       marriage as possible, is critical to
best fit for someone else,” said Lee        sustaining the relationship and
Bowman, FDIC National Coordinator           preventing conflicts.”
for Community Affairs.
                                            Before exchanging wedding vows,            Understand the risks and
First look at the costs of renting versus   have a candid discussion about             responsibilities of jointly held
paying a mortgage. “When buying a           your finances. Be open and honest          accounts. If a husband and wife are
home, the most important thing to           about matters that could be a source       co-owners of a credit card and one
look at is what you can reasonably          of friction in the future, such as major   of them goes on a spending spree,
afford,” added Kincaid. “Remember           outstanding debts from student loans       the other spouse may be held
you’ll be paying real estate taxes and      or credit cards.                           responsible for paying the bill.
insurance, mortgage interest payments,                                                 Likewise, irresponsible use of a
                                            Some experts suggest that both of you
and the costs of maintenance and                                                       jointly owned credit card by one
                                            order your latest credit reports and
improvements. But also remember                                                        spouse would be reported on both of
                                            then, together, sit down and review
the upsides of buying a home, such                                                     their credit histories, and that could
                                            them to avoid major surprises. Credit
as tax benefits, the potential for your                                                damage the “innocent” partner’s
                                            reports include information on debts
home to appreciate in value, and the                                                   chances of getting a good loan or credit
                                            outstanding and, for example, whether
satisfaction of having a place to call                                                 card in the future. And when two
                                            someone has filed for bankruptcy.
your own.”                                                                             people use the same checking account,
                                            By federal law, you can receive one
                                                                                       they should share one checkbook
Other factors to consider include how       free copy of your credit report every
                                                                                       and record all transactions, because
long you plan to stay in the house, how     12 months from each of the three
                                                                                       otherwise they risk losing track of
much money you have for the down            nationwide credit reporting companies
                                                                                       their balance and paying charges for
payment, and how good your credit           (www.AnnualCreditReport.com or call
                                                                                       insufficient funds.
record is. “If your credit record is less   toll-free 1-877-322-8228).
than stellar, you may only be offered                                                  For more help or information for
                                            Set short-term and long-term
a mortgage at a high interest rate,”                                                   newlyweds: See the Spring 2005
                                            financial goals. Figure out how much
Kincaid said.                                                                          special issue of FDIC Consumer News,
                                            money each of you should be able to
                                                                                       which is devoted to helping young
To learn more about renting vs.             spend for “fun” and how much you
                                                                                       adults, including those just beginning
buying a home and paying a                  should set aside for important goals,
                                                                                       a family, to learn the right ways to
mortgage, go to www.mymoney.gov/            perhaps to buy a home. Financial
                                                                                       save and manage money. It is online at
homeownership.shtml, a federal Web          advisors suggest that young couples
                                                                                       www.fdic.gov/consumers/consumer/
site for information from a variety of      consider preparing and following a
                                                                                       news/cnspr05. Also see our basic tips
                                                                                       for consumers starting on Page 2. Q
sources, and www.hud.gov, the U.S.          monthly budget (see Page 6).
Department of Housing and Urban
Development.
                                            on Page 2 and those for newlyweds           of Your Finances,” which is online at
For more help or information for            above. Also see our Spring 2005 FDIC        www.fdic.gov/consumers/consumer/
young adults: Turn to our financial         Consumer News special issue for             news/cnspr05. Q
tips for consumers of all ages starting     young adults entitled “Taking Control

  FDIC Consumer News                                        Spring 2008
                                                                                                                             7
MONEY TIPS FOR AL L AGE S


                                                                                       Also consider paying off high-interest
  At Midlife                                                                           debt, such as the outstanding balances
                                                                                       on your credit cards.
Multi-Tasking In Your 30s, 40s or 50s                                                  Plan a strategy for having a home
                                                                                       and a mortgage. If you don’t own
Managing for today and saving for tomorrow, including                                  a house, consider if it makes sense
a child’s college expenses and your retirement                                         to buy one, especially if you don’t
                                                                                       plan to move in two or three years.
If you’re “living in the middle ages” —   for parents and students, and loans          Homeownership can offer tax
you’re 35 to 55 (or thereabouts),         from private financial institutions.         advantages and a stable place to live,
the years between young adulthood         There often are big differences              but don’t take on more of a mortgage
and senior status — you’ve got a          between government and private loans,        than you can afford to pay each month.
lot to think about when it comes to       though, and private lenders could offer
managing money.                           both types. So ask questions and fully       If you do have a mortgage, periodically
                                          understand the fees, the interest rate,      compare your interest rate to current
Among the issues you face: how to                                                      market rates and, if rates have
                                          and when loan payments and interest
maximize your income during your                                                       declined, calculate whether refinancing
                                          charges will begin.
remaining work years so you’re better                                                  makes sense.
positioned to retire when, where          “Teenagers are solicited by direct mail
and how you want. Here are some           for very large student loans that would      “Just because you can get a new
suggestions for minimizing stress and     put a heavy debt burden on them              mortgage at a better interest rate than
maximizing results.                       when they graduate from college,”            what you already have, you’ve still
                                          said Deirdre Foley, an FDIC Senior           got to be careful before refinancing,”
Save as much as you can for your                                                       said Luke W. Reynolds, Chief of the
                                          Policy Analyst on consumer issues.
retirement. Tax-advantaged savings                                                     FDIC’s Community Affairs Outreach
                                          “My recommendations to parents
vehicles, such as Individual Retirement                                                Section.
                                          and students are to shop around at
Accounts (IRAs) and 401(k)s, are solid
                                          multiple lenders, read all the fine print,   “First,” he added, “if you only have
choices. And once you reach age 50,
                                          and borrow only what you need for            a few years left on your mortgage,
you can also make “catch-up” (extra)
                                          school-related expenses that are not         refinancing doesn’t make sense if the
contributions to these retirement
                                          covered by grants, scholarships or           costs to refinance are greater than the
savings accounts.
                                          other sources.”                              cost savings from the lower monthly
Consider speaking with a financial                                                     payments. Second, remember that if
                                          Also be on guard against scams that
planner or other personal advisor                                                      you stretch out the number of years
                                          begin with a “guarantee” or promise
about a recommended investment                                                         you have to repay the new mortgage,
                                          of scholarships, grants or fantastic
strategy for your age and stage of                                                     you will pay more in interest over the
                                          financial aid packages. For details, see
life — especially the mix of stocks,                                                   total life of the loan.”
                                          a Federal Trade Commission warning
bonds, mutual funds and lower-risk
                                          about fraudulent scholarship offers at       So, if you have 15 years left on your
alternatives such as U.S. Savings Bonds
                                          www.ftc.gov/bcp/menus/consumer/              30-year mortgage and you want to
and bank deposits.
                                          education/scholarships.shtm.                 refinance, in the long run, you’re
Explore tax-preferred ways to save                                                     usually better off with a 15-year loan
                                          Make the best use of a financial
money for a child. State-sponsored                                                     instead of refinancing into another
                                          “windfall.” Many people receive
“529-plan” savings accounts and                                                        30-year loan.
                                          a large sum of money from an
Coverdell educational savings accounts
                                          inheritance, a home sale or an               For more help or information for
carry tax advantages and help families
                                          insurance payment, and they aren’t           people at midlife: Find basic tips on a
and individuals save for higher
                                          sure how to use or protect it. Consider      variety of topics starting on Page 2 of
education expenses.
                                          asking a financial or tax advisor about      this special edition as well as online at
Also, many families may be able to        the best options, which may include          www.mymoney.gov, a U.S. government
qualify for a tax break on earnings       starting or adding to a rainy-day fund       Web site. For parents teaching kids
from certain U.S. Savings Bonds used      for emergency expenses or putting            about money, see our tips on the next
for educational purposes.                 money into your retirement accounts.         page. And for anyone caring for an ill
Do your homework if you need a            If you deposit a large amount of money       or elderly relative, read our article on
loan to pay for a child’s education.      in a bank account, make sure it is fully     Page 13. Q
Among the many options are                protected by FDIC insurance (see
government-guaranteed loan programs       Page 3).



                                                     FDIC Consumer News                                          Spring 2008
  8
                                                                                                    M O N E Y TIP S FOR ALL AGES



 For Parents

Teaching Children the Financial Facts of Life
Showing the importance of saving, spending wisely and sharing with others
We try to teach our kids to be               Help your child start a savings or
street-smart and use good manners,           investment account. Young kids will
but teaching them the financial facts        enjoy saving money in piggy banks,
of life can be difficult. To help parents,   but at around age eight, think about
guardians and even grandparents raise        helping them open a small savings
responsible money-managers, FDIC             account. That way they also begin
Consumer News offers the following           learning what banking is all about.
suggestions.
                                             Many parents reward their children
Play “show and tell” while you               for sticking to a savings plan by
manage your own money. If you                matching or adding to what the child
expect your kids to become responsible       contributes.
with their money — and yours —
                                             As children get older, discuss the pros
practice what you preach. Serve as a
                                             and cons of owning investments, such
good example of what it means to save,
                                             as stocks, bonds and mutual funds.
spend wisely and share with others.
                                             Investments can produce higher
You’ll make more of an impression on
                                             returns than bank deposits over
your children if they can see and hear
                                             the long term, but remember that
what you’re doing to manage your
                                             investments can lose money and they
money.                                                                                  Encourage older children to get
                                             are not insured by the FDIC.
So, take your child along on shopping                                                   work experience. Summer or
                                             Give an allowance. If used as a            part-time jobs can teach young people
trips and discuss what makes some
                                             teaching tool and not a giveaway, an       good business skills and how to be
items “too expensive” and others
                                             allowance can be one of the best ways      responsible. They also may enjoy
“good buys.”
                                             to teach kids, even as young as five or    earning and saving money.
Also take your child to the bank.            six, about money management. It also
Note the variety of services provided        allows children to experiment with         For more help or information
by visiting different departments of         money management and learn from            for parents: The FDIC has a new
the bank. Explain basic principles,          their mistakes without losing too much     financial education program for youths
such as how money deposited in               in the process.                            between the ages of 12 and 20 that is
insured accounts is protected by the                                                    primarily for use by teachers but also
                                             Encourage them to decide in advance        can help parents explain the basics of
government against loss.
                                             how much should go into savings            good money-management to their
Around the house, let your child help        (which reinforces the concept of           children. You can order a free CD of
with simple tasks associated with            “pay yourself first”), how much should     the FDIC’s “Money Smart for Young
preparing deposits or investments,           go into the spending pile (for their use   Adults” at www.fdic.gov/consumers/
or balancing the checkbook. As you           as “pocket money”) and how much            consumer/moneysmart/young.html.
pay your bills, especially the ones for      should be set aside to share with
your credit cards, explain how debts         others — for charity or birthday or        Find other resources on money
must be repaid on time or you can            holiday gifts. Giving an allowance in      management for youths from the
face additional fees and have trouble        small bills or coins also allows them      Jump$tart Coalition® for Personal
getting a good loan in the future.           to easily set aside the portions for the   Financial Literacy, which consists
                                             different purposes.                        of more than 180 national partners,
Also discuss your charitable                                                            including the FDIC (go to
contributions and why you are                Consider gifts that encourage              www.jumpstart.org), and the money
making them. Ask your child for              saving. Examples include U.S. Savings      pages at www.kids.gov, a federal
input on which charities to support.         Bonds and books that reinforce             government Web site for children and
He or she also can help you prepare          financial responsibility.                  educators. Q
contributions, even if just by stuffing
checks into envelopes.



  FDIC Consumer News                                          Spring 2008
                                                                                                                            9
MONEY TIPS FOR AL L AGE S



   Before You Retire

Getting Your Finances Ready for Your Golden Years
If you’re seriously considering             Susan Boenau, Chief of the FDIC’s         more conservative investment strategy
retirement, you also should be              Consumer Affairs Section.                 than in the past so you can avoid losses
seriously thinking about how to                                                       to principal that could mean having
                                            For example, consult with the
ensure that your financial life is as                                                 to postpone retirement or struggle
                                            Social Security Administration
comfortable and stress-free as possible.                                              financially.
                                            (call 1-800-772-1213 or go to
Here are a few tips.
                                            www.socialsecurity.gov) or your           For additional guidance, see “Helping
Make the most of your remaining             accountant to learn how much Social       Your Money Last...After Your Last
paychecks to save for retirement.           Security and pension income you’d get     Paycheck” in the Fall 2005
How much money you’ll need to set           each month if you “retire early” — any    FDIC Consumer News, online at
aside for retirement — which for many       time between 62 and your “normal”         www.fdic.gov/consumers/consumer/
people could last 30 years or more —        retirement age — and how much more        news/cnfall05/helpingPG2.html#q1.
will depend on a variety of factors.        you would receive if you hold off on
                                                                                      For more help or information
Among them: When do you expect              retirement. The penalty for starting to
                                                                                      for people nearing retirement:
to quit working? Will you continue          collect Social Security payments early
                                                                                      Read our tips for consumers of all
to earn some income part-time? How          can be substantial.
                                                                                      ages starting on Page 2, including
much money do you have in savings
                                            Discuss with a financial advisor how      those regarding annuities, which are
and pensions? And, what kinds of
                                            and when to withdraw money from           investments commonly marketed
expenses will you incur for housing
                                            your tax-deferred retirement accounts,    to people in or near retirement.
and health care?
                                            such as employer-sponsored retirement     Also see our suggestions regarding
Because the future is uncertain, it         plans and traditional IRAs. Also          “reverse mortgages” and “variable
makes sense, while you’re still             periodically review your retirement       annuities” in the article starting on
working, to put as much money as            portfolio — your mix among stocks,        the next page, and our guidance for
possible — 10 to 20 percent of your         mutual funds, CDs (certificates of        financial caregivers on Page 13. For
annual income, if not more — into           deposit), bonds and so on — to be         more information about retirement
savings for your golden years. Also         sure it’s well-diversified. And as you    planning, see www.mymoney.gov/
make use of employer-sponsored              get closer to retirement, consider a      retirement.shtml. Q
retirement plans (especially if you’ll
receive matching contributions) and
tax-advantaged Individual Retirement
Accounts (IRAs).
Try to reduce or eliminate debt.
“Another way to save more money
now for a more enjoyable retirement
later is to cut back on unnecessary
expenses,” especially if you will need to
go into debt to pay for them, said Luke
W. Reynolds, Chief of the FDIC’s
Community Affairs Outreach Section.
He said to try to pay off most or all
of your credit card balances and other
loans to save on interest charges and
avoid being burdened with repayment
during your retirement years.
Develop a plan to stretch your
money through a long retirement.
“The idea is to determine where
your money will come from during
retirement, so you won’t have to live
in fear of running out of money,” said


                                                      FDIC Consumer News                                        Spring 2008
 10
                                                                                                    M O N E Y TIP S FOR ALL AGES



    After You Retire

Managing Your Expenses on a Fixed or Reduced Income
Once you’ve retired, you finally have       do your banking and bill paying online
the opportunity to work at your dream       24 hours a day, seven days a week. Be
job — keeping yourself happy. It’s your     sure you know about any fees.
chance to visit places you’ve always
                                            Look for banking services geared
wanted to see, take up a new hobby
                                            to older consumers. Find out if
and spend more time with your family
                                            your bank has special accounts, clubs,
and friends. But to be successful at this
                                            discounts, events, publications or other
new position, you’ve got to make the
                                            services for senior citizens, sometimes
most of your income and investments.
                                            including people as young as 50.
Here are suggestions.
                                            Comparison shop among several banks
Make it easy to manage your money           to get the best package of services to
and pay the bills. One way is to            meet your needs.
have your Social Security benefits,
                                            Consider a second career or
pension payments and other income
                                            working part-time. “Working longer,
automatically deposited into your bank
                                            even part-time, can allow you to
account each month. “Direct deposit
                                            increase your savings and may boost
isn’t just safe and reliable — it also
                                            your retirement income,” added
ensures that you don’t need to schedule
                                            Boenau. “That alone could also enable
your activities around a visit to the
                                            you to delay or reduce withdrawals
bank just to deposit your funds,” said                                                 thief has stolen one of your cards and
                                            from your savings to cover living
Susan Boenau, Chief of the FDIC’s                                                      made purchases with it.
                                            expenses.”
Consumer Affairs Section.
                                            But if you already are collecting          Understand the pros, cons and costs
Signing up for direct deposit of                                                       before borrowing money with a
                                            Social Security benefits, find out if
Social Security or other government                                                    “reverse mortgage.” This is a type of
                                            income from a job could reduce what
payments is easy and free. Contact                                                     home equity loan — a way to get cash
                                            you are entitled to collect from the
the U.S. Treasury Department’s “Go                                                     by borrowing money using your home
                                            government. Likewise, understand if
Direct” hotline at 1-800-333-1795 or                                                   as collateral (see Page 4). But there are
                                            going back to work could reduce any
visit www.GoDirect.org.                                                                some important differences between a
                                            benefits from an employer’s retirement
Banks also offer quick and easy             or pension plan.                           reverse mortgage and the traditional
money-management and bill-paying                                                       home equity loan.
                                            Be careful with credit cards. You’ll
services by telephone or online by                                                     First, a reverse mortgage is available to
                                            probably find that credit cards in
computer, usually for free or at low                                                   homeowners age 62 or older. Second,
                                            retirement are just as necessary as they
cost. With telephone banking, you can                                                  you don’t need an income to obtain a
                                            were when you were younger. But
monitor your account balance, find out                                                 reverse mortgage. And third, you don’t
                                            be cautious with your credit cards. If
if checks or deposits have cleared, or                                                 need to pay back what you owe until
                                            you carry a large balance, you’ll pay a
transfer money between accounts at                                                     you move out of the house, sell the
                                            lot of money in interest charges for a
the same bank. If you have a personal                                                  property or die.
                                            long time. If you have many accounts
computer with Internet access, you can
                                            and get too deep in debt, your credit      While there are potential benefits to
                                            record could be damaged, which means       reverse mortgages, they don’t make
   Make it easy to manage your              you would have a tougher time getting      sense for everyone. They generally are
                                            the best deal the next time you apply      not advisable if you plan to stay in your
   money and pay the bills. One
                                            for a loan, insurance or an apartment.     home for less than five years or need
   way is to have your Social                                                          extra monthly income for relatively
                                            Another problem with having
   Security benefits, pension               numerous credit cards is that if you’re    small expenses. Among the reasons:
                                            not closely monitoring your accounts,      The fees associated with reverse
   payments and other income                                                           mortgage loans can be high. You still
                                            you can forget to send a payment (and
   automatically deposited into your        incur late fees and additional finance     will be responsible for maintaining the
                                            charges) or you may not notice if a        house and paying property taxes. And,
   bank account each month.
                                                                                                              continued on next page


  FDIC Consumer News                                         Spring 2008
                                                                                                                              11
MONEY TIPS FOR AL L AGE S



your beneficiaries won’t inherit the full   the policyholder’s cash value is invested
value of the house. They will have to       in one or more portfolios of securities.       While there are potential benefits
pay off the loan either by refinancing                                                     to reverse mortgages, they don’t
                                            The second product is an annuity, for
or selling the house.
                                            which the consumer invests, through            make sense for everyone. Among
Also be aware that some unscrupulous        the insurer, in a variety of investment
individuals or companies have               options, typically mutual funds.               the reasons: The fees can be
promoted reverse mortgages that were                                                       high. You still will be responsible
                                            Insurance companies issue both
not in the consumers’ best interest
                                            products, and anyone who sells                 for maintaining the house and
or that involved extra payments for
                                            them must be registered under state
unnecessary services.                                                                      paying property taxes. And, your
                                            insurance laws and state and federal
For example, there have been                securities laws.                               beneficiaries won’t inherit the
reports of companies attempting to
                                            Although these products provide                full value of the house.
sell questionable home repairs or
                                            tax-deferred earnings, you can lose
investments in connection with a
                                            money investing in them. Income and
reverse mortgage, or they charged
                                            value can move up and down. That’s           of Insurance Commissioners has a
a fee for information about reverse
                                            what the “variable” in the name means.       Web site (www.insureuonline.org) that
mortgages that is available for free
from the U.S. Department of Housing         These products also may carry                includes a special alert for seniors on
and Urban Development (HUD) or              relatively high sales commissions,           annuities. The NAIC also provides
other sources. One problem with using       fees and “surrender charges” if you          information on how to contact your
any loan product to fund an investment      withdraw money early, typically              state insurance regulator to verify that
is that you could lose money on the         within the first five to eight years after   a company and an individual agent are
investment and still owe on the loan.       purchasing the product but sometimes         licensed to sell in your state.
                                            after a longer period.                       For additional guidance about variable
How can you protect yourself?
As with any loan you’re considering,        So, think of variable annuities as           annuities and what to consider before
do some research using information          long-term investments that can tie           buying, the U.S. Securities and
from neutral, unbiased sources, such        up your money for many years. The            Exchange Commission has published
as HUD. If you later decide that a          older you are, the less likely a variable    investor tips at www.sec.gov/investor/
reverse mortgage is right for you,          annuity is suitable for you.                 pubs/varannty.htm.
contact several reputable lenders and                                                    Also consider going to the Web site
                                            Of special concern is that securities
read and understand all documents and                                                    of the Financial Industry Regulatory
                                            and insurance regulators have reported
contracts, perhaps with the help of an                                                   Authority (www.finra.org), the largest
                                            an increase in unsuitable sales of
attorney you trust, before you agree to                                                  non-governmental regulator of
                                            variable products to older investors,
anything.                                                                                securities firms operating in the United
                                            who experts say should generally stick
For help or guidance regarding              to low-risk, low- or no-fee financial        States. It publishes investor alerts and
reverse mortgages, go online at             products instead of those with               provides background and disciplinary
www.hud.gov/buying/rvrsmort.cfm             potentially high risks and fees.             information about securities firms and
or contact a HUD-approved housing                                                        brokers that sell these products.
                                            “Before you invest in a variable life
counselor by calling toll-free                                                           For more help or information for
                                            insurance or variable annuity product,
1-800-569-4287. Also, to receive                                                         retirees: See our tips for consumers of
                                            be sure that you fully understand how
a reverse mortgage insured by the                                                        all ages starting on Page 2. Also read
                                            the product works, the risk of loss,
Federal Housing Administration                                                           “Fiscal Fitness for Older Americans,”
                                            and the applicable fees and surrender
(FHA), you must first speak with a                                                       the Fall 2005 special issue of FDIC
                                            charges,” said Victoria Pawelski, an
HUD-approved counselor, who can                                                          Consumer News, which is a special
                                            FDIC Policy Analyst. “Carefully
help you determine if the program                                                        guide for seniors and their families. It
                                            evaluate whether the product is
meets your needs.                                                                        is online at www.fdic.gov/consumers/
                                            suitable for you given your investment
Do your research before purchasing          objectives and time frame. And               consumer/news/cnfall05/index.html.
“variable life insurance” or a              beware of high-pressure sales tactics        Also find out about federal government
“variable annuity.” Both products are       from sales representatives who may           resources and information for senior
part insurance and part securities.         have an incentive to generate high           citizens at www.usa.gov/Topics/
                                            commissions and fees.”                       Seniors.shtml. Q
The first is a type of “whole life”
insurance product (also called              For more information about insurance
“permanent life” insurance) for which       and annuities, the National Association


                                                       FDIC Consumer News                                          Spring 2008
 12
                                                                                                      M O N E Y TIP S FOR ALL AGES



  For Financial Caregivers

Helping Disabled or Elderly Relatives With
Money Management, Even From Far Away
Millions of people serve as financial       giving one or more people the
caregivers for ill or elderly spouses,      authority to handle finances or other
parents, children or other loved ones.      personal matters if the individual
They perform services that include          becomes mentally or physically
paying bills, handling deposits and         incapacitated.
investments, filing insurance claims
                                            Suggest a “living will” or other
and preparing taxes. Because this
                                            instructions about future medical
role can be costly and physically and
                                            care. Most people should have a living
emotionally exhausting, especially for a
                                            will specifying the type of medical
caregiver who lives far away or has the
                                            care they want or don’t want if they
usual time-demands, FDIC Consumer
                                            become terminally ill and are unable to
News offers some suggestions.                                                           transactions or take ownership of
                                            communicate their wishes.
Preventive Measures                                                                     property.
                                            Experts also recommend a “health care
Consider taking these steps before          power of attorney” or “health care          “First, it helps to have a trusted family
someone becomes ill or disabled:            proxy” designating a family member or       member who is in regular contact
                                            other trusted person to make decisions      with a disabled or elderly relative
Make sure the family knows where            about medical treatment.                    and, if necessary, helps review bank
to find personal and financial                                                          and investment account statements
documents in an emergency. These            Living wills and health care proxies        to look for unusual activity,” said
include bank, brokerage and credit card     are intended to ensure that someone’s       Linda Ortega, an FDIC Community
statements; original wills; insurance       wishes regarding medical care are           Affairs Officer. “Beyond that, there
policies; and Social Security, Medicare     honored, but they also can prevent          are precautions to take, including
and pension records.                        unnecessary and costly procedures.          arranging for direct deposit of Social
Think about the direct deposit of           After an Illness or Disability              Security or government payments, and
pay and benefit checks into bank                                                        making sure that checkbooks and credit
                                            The following should be on a family’s       cards are properly protected.”
accounts. Direct deposit is safer and
                                            checklist after a serious health problem:
more convenient than paper checks.                                                      To learn more about how to avoid or
There are no delays in getting funds        Get solid financial and legal advice        report elder fraud, contact your state’s
deposited, and no checks are lost or        from professionals you know and             Adult Protective Services department.
stolen in the mail or forgotten at home.    trust. Contact bankers, lawyers,
                                            accountants, insurance agents or            For more help or information
Consider automatic payment of                                                           for financial caregivers: The U.S.
                                            financial planners your family has
important, recurring bills. You will                                                    Administration on Aging (AoA), part of
                                            dealt with in the past. Ask how they’d
have one fewer thing to worry about if                                                  the Department of Health and Human
                                            recommend you deal with money
you can arrange for utility bills as well                                               Services, helps older Americans and
                                            matters and how they can assist.
as other regular commitments (such as                                                   their caregivers connect with state
insurance and the mortgage) to be paid      Guard against frauds that target            and local government agencies and
electronically out of your loved one’s      the vulnerable. Among the saddest           community-based organizations that
checking account.                           and costliest issues facing families is     can assist with a variety of problems.
                                            fraud and theft committed against the       Call 1-800-677-1116 or go to
Try to make sure your elderly
                                            disabled or elderly by unscrupulous         www.eldercare.gov to use the AoA’s
relatives are properly insured. If you
                                            relatives, contractors, caregivers,         Eldercare Locator service and obtain
have doubts about someone’s insurance
                                            friends, neighbors or other individuals.    valuable information. Also find
coverage or ability to pay for long-term
                                            These sinister acts cover a wide            resources for caregivers from the U.S.
care, get a second opinion from a
                                            range of lies and deception, including      government at www.usa.gov/Citizen/
financial planner or an insurance agent
you trust.
                                            cashing checks without permission           Topics/Health/caregivers.shtml. Q
                                            and changing legal documents to give
Consider a “durable power of                this other person rights to conduct
attorney.” This is a legal document

  FDIC Consumer News                                         Spring 2008
                                                                                                                              13
MONEY TIPS FOR AL L AGE S



 For Major Life Events

Ways to Cope Financially During and After a Big Change
Here are suggestions for staying            committing to any funeral costs,
focused and avoiding costly decisions       consult with other family members and
during changing times.                      the lawyer about any prior instructions
                                            or arrangements.
• Getting married. Newlyweds should
say “I do” to a plan to manage money        Locate important documents, such as
together responsibly. Before getting        insurance policies and the most recent
married, a couple should understand         will (an original, not a copy). Obtain
each other’s attitudes toward saving        multiple copies of the death certificate,
and spending money. And to avoid big        which will be needed to apply for death
surprises, they also should know about      benefits (such as through life insurance
any major outstanding debts held by         policies or Social Security) and to
their partner. A husband and wife also      access bank and brokerage accounts.
should set short-term and long-term
                                            If the family’s medical insurance
financial goals. For more specifics, see
                                            is through the deceased person’s            Think twice before using credit cards
the article on Page 7.
                                            employer, consider options for              to pay for large medical expenses,
• Buying your first home. For most          continuing coverage.                        especially if you are already deep in
people, buying a home will be the                                                       debt or if it will take years to pay
                                            Also, if your family has deposits of
biggest expense of their life, starting                                                 off the card balance, in which case
                                            more than $100,000 at one bank, and
with the initial purchase (including a                                                  the interest charges could add up
                                            one of the depositors or beneficiaries
“down payment” and fees paid to the                                                     significantly.
                                            dies, you should review the coverage
lender and others) followed by years
                                            to determine whether funds exceed           If you can’t afford your medical or
of monthly mortgage payments, real
                                            the insurance limits. The FDIC’s rules      hospital charges, don’t allow the debt to
estate taxes, insurance and maintenance
                                            allow a six-month grace period after a      be turned over to a collection agency,
costs. But homeownership often can
                                            depositor’s death to give survivors or      which could damage your credit score.
be a tremendous (perhaps your best)
                                            estate planners a chance to restructure     Instead, contact the service provider’s
investment and a source of tax breaks
                                            accounts. But if you fail to act within     billing department to try to negotiate
as well as stability. To learn more about
                                            six months, you run the risk of, for        a reduced bill or a payment plan with
the basics of renting vs. buying a home,
                                            example, joint accounts becoming part       monthly payments. Also ask about
see Page 7.
                                            of the survivor’s individual accounts,      assistance from a government program
• A new child. A new member of              and that could put the funds over the       or charitable organization.
the family brings extra financial           $100,000 limit. Also note that the
responsibilities. You can have one          death of an owner or a beneficiary          You can also consider turning to a
fewer thing to interrupt your sleep at      named in trust accounts can reduce the      credit counselor for guidance, but
night if you get the family finances in     deposit insurance coverage.                 choose one carefully because some
shape. Start by getting spending under                                                  offer questionable or expensive services
                                            For more guidance about deposit             and others may be scams. For guidance
control (preferably with a budget,
                                            insurance coverage, go to the FDIC’s        on choosing a credit counselor, see
as described on Page 6). Also build
                                            Web site or contact us (see the back        a Web site from the Federal Trade
your savings accounts for short-term
                                            page).                                      Commission at www.ftc.gov/bcp/
expenses (especially if a spouse will
be leaving a job) and long-term needs       • A medical emergency. First,               conline/pubs/credit/fiscal.shtm.
(including college tuition costs). In       carefully review all doctor and hospital    If your medical bills are sufficiently
addition, review and update your            bills and insurance claim payments/         high, you could qualify for a federal tax
insurance coverage (life, health,           denials, because mistakes do happen         deduction, so be sure to save bills and
disability) and wills (to designate who     and uncorrected errors can be costly.       cancelled checks or other receipts for
will raise the child and handle finances    If you are unable to resolve a billing      your tax preparer.
in case of your death).                     dispute with a doctor, hospital or
                                            insurer, contact your state consumer        • A divorce. Consult legal counsel
• The death of a family member.                                                         because uninformed decisions could
                                            protection office or insurance regulator
Contact the deceased person’s attorney                                                  cost you. Also consider discussing tax
                                            for guidance.
and other financial advisors. Before                                                    issues with an accountant or other


                                                       FDIC Consumer News                                          Spring 2008
 14
                                                                                                      M O N E Y TIP S FOR ALL AGES


advisor because certain decisions, such    • You can’t make your mortgage
as who will claim children on his or her   payment. Regardless of the cause, if                   FDIC
tax return, can affect each parent’s tax   you’re having difficulty paying your              Consumer News
liability. For more information, see IRS   mortgage, you should contact your
                                                                                        Published by the Federal Deposit
publication 504, “Tax Information for      loan servicer and find out if you qualify    Insurance Corporation
Divorced or Separated Individuals,”        for modified loan terms or other
online at www.irs.gov/pub/irs-pdf/         options to help you keep your home           Sheila C. Bair, Chairman
p504.pdf.                                  instead of losing it to foreclosure.         Andrew Gray, Director,
You also may be able to reduce some        You may also want to seek help from          Office of Public Affairs (OPA)
legal fees by working with a mediator      a trained homeownership counselor.           Elizabeth Ford, Assistant Director, OPA
to resolve issues such as child custody.   To find a reputable counselor, contact       Jay Rosenstein, Senior Writer-Editor, OPA
                                           the Homeowner’s HOPE Hotline
Cancel joint credit cards to prevent                                                    Mitchell Crawley, Graphic Design
                                           at the Homeownership Preservation
the other spouse from running up large
                                           Foundation (1-888-995-4673 or                FDIC Consumer News is produced
bills. Start or build your own credit
                                           www.995hope.org) or the U.S.                 quarterly by the FDIC Office of
history independent of the marriage,
                                           Department of Housing and Urban              Public Affairs in cooperation with
such as by opening a new credit card
                                           Development for a referral to a              other Divisions and Offices. It is
in your name only. Decide who is
                                           HUD-approved homeownership                   intended to present information in a
responsible for debts incurred during
                                           counseling agency (1-800-569-4287            nontechnical way and is not intended
the marriage. If you change your last
                                           or www.hud.gov/offices/hsg/sfh/hcc/          to be a legal interpretation of FDIC
name, notify the major credit bureaus
                                           hcs.cfm).                                    or other government regulations and
(www.equifax.com, www.experian.com
                                                                                        policies. Mention of a product, service
and www.transunion.com).                   • You’re having problems making credit
                                                                                        or company does not constitute an
                                           card or other loan payments. No matter       endorsement.
It’s also important that you update your
                                           what triggers a personal financial crisis,
will and the list of beneficiaries you                                                  This publication may be reprinted in
                                           the important thing is to be proactive
designate on life insurance policies,                                                   whole or in part. Please credit FDIC
                                           and address the problem as soon as
retirement savings accounts and U.S.                                                    Consumer News.
                                           possible by contacting your lender to
Savings Bonds, so your money and
                                           try to negotiate a long-term, workable       Send your story ideas, comments,
other assets will go to the right people
                                           solution.                                    and other suggestions or
upon your death.
                                           And if you need help negotiating             questions to: Jay Rosenstein, Editor,
• A job loss. Try to keep spending                                                      FDIC Consumer News, 550 17th
                                           with a lender or otherwise getting a
under control so you can pay your                                                       Street, NW, Washington, DC 20429
                                           debt problem under control, consider
bills using existing bank and brokerage                                                 jrosenstein@fdic.gov
                                           asking an attorney, accountant or
accounts for, say, the next three to six
                                           another trusted advisor to refer             Find current and past issues of
months. If possible, avoid withdrawing                                                  FDIC Consumer News at:
                                           you to a reliable credit counselor
or borrowing money from your                                                            www.fdic.gov/consumernews. Refer to
                                           (see Page 14) who, at little or no cost,
retirement savings. If you anticipate                                                   that same index to locate issues that are
                                           can help you develop a recovery plan.
problems paying debts, such as your                                                     specially formatted for being reprinted
                                           If you’re facing problems on a loan
mortgage or the minimum due on your                                                     in any quantity.
                                           secured by your home, including a
credit card (see the next two sections),
                                           home equity loan, see the previous           To receive an e-mail notice about
contact your creditors immediately and
                                           bullet point about mortgage payments.        each new issue with links to stories,
attempt to work out a payment plan.
                                           For more help or information                 follow instructions posted at:
One reason to keep loan and credit                                                      www.fdic.gov/about/subscriptions/
                                           when dealing with changing events:
card payments current is so that you                                                    index.html.
                                           See the back page for suggestions
can maintain the best possible credit
                                           about government resources you can
record. Prospective employers may
                                           contact regarding money matters.                 For More Information
review your credit reports when you
                                           One is www.mymoney.gov, a financial                  from the FDIC
apply for a new job.
                                           education Web site from the federal                 Go to www.fdic.gov or call
Also, carefully review your employer’s     government that includes a page of             toll-free 1-877-ASK-FDIC — that’s
severance benefits, including the          information about responding to life
                                           events. Another is 1-800-FEDINFO                        1-877-275-3342 —
temporary continuation of your
salary and health insurance, and try to    (1-800-333-4636), a toll-free hotline                 Monday through Friday
negotiate a better deal.                   you can call if you’re not sure which                 8:00 a.m. to 8:00 p.m.,
                                           federal government agency can provide                      Eastern Time.
                                           guidance with a problem. Q

  FDIC Consumer News                                         Spring 2008
                                                                                                                               15
MONEY TIPS FOR AL L AGE S




For More Help or Information on Managing Your Money
The Federal Deposit Insurance                 Other federal regulators of financial     offered by the U.S. Department of
Corporation has staff and other               institutions publish consumer             Agriculture in partnership with the
resources that can answer questions           information and have staff, Web sites     Cooperative Extension System (go to
about deposit insurance and banking           and other resources that can help         www.csrees.usda.gov/financialsecurity).
and can help resolve questions or             answer questions on financial matters.    One of Cooperative Extension’s
complaints involving an individual            Start at www.mymoney.gov, the federal     projects is an interactive Web site
institution.                                  government’s central Web site about       featuring answers to more than
                                              managing your money. It is a service of   1,100 frequently asked questions on
Start at www.fdic.gov/quicklinks/
                                              the interagency Financial Literacy and    personal finance and the opportunity
consumers.html or call toll-free
                                              Education Commission, of which the        to “ask an expert” from a university
1-877-ASK-FDIC (1-877-275-3342).
                                              FDIC is a partner.                        (www.extension.org/personal+finance).
FDIC publications, including our
quarterly FDIC Consumer News and              Other federal, state and local            You can also find additional
articles referred to in this special guide,   government agencies publish               information at your state or local
are available at that same Web site and       consumer information, offer financial     government’s Web site or by calling
telephone number (select the option           education classes and help answer         a consumer affairs office listed in the
for “FDIC publications”).                     questions on money matters.               government pages of your phone book.
You can also e-mail us using the              For more help from the U.S.               Financial institutions, consumer
Customer Assistance Form at                   government, start at www.usa.gov/         organizations and the news media
www2.fdic.gov/starsmail or send               Citizen/Topics/Money_Taxes.shtml          publish personal finance tips you can
a letter to the FDIC, Division of             or call toll-free 1-800-FEDINFO           find by searching the Internet. Q
Supervision and Consumer Protection,          (1-800-333-4636). Also check out the
550 17th Street, NW, Washington,              financial information and programs
DC 20429-9990.

				
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Description: Money Tips for All Ages Money Tips for All Ages