Category Archives: money

30 Money Saving Tips for Senior Citizens

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This is a guest post by Teena Celis.  Although it applies to US citizens, citizens in most other countries will find the ideas useful.

The rising costs of everyday commodities are causing people all over the world to cut back on their expenses. Disposable incomes are getting limited; it’s getting tougher for people to make ends meet. 59% of available senior income is going towards housing and health care. This means there’s not much left over for food, transportation and other needs. How does a senior person save money in this kind of scenario?

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Senior Savings Tips – Cut Back On Energy And Save Money

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This is a guest post by Chris Johnson.

Thanks to the rising costs of almost anything and the bad state of the economy in general, more and more people are finding it tough to pay their bills. That’s to say nothing of being able to save money for a “rainy day”. Seniors are especially susceptible to those issues because most senior citizens are on a fixed income. Let’s face some facts. Costs are going up. However, the fixed income that seniors are receiving is not. So, whether you are a senior citizen yourself or you are just caring for one, you need to take action. Luckily, there are plenty of things that you can do to cut down your energy bills.

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Good Retirement Planning

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Most seniors look forward to a good life in retirement.  However there are now two key changes that mean that this only comes through careful financial planning for your retirement. 

  • Seniors are living longer
  • The major recession has depleted the funds they may have accumulated to cover their retirement.

In other words, you may have to trim your spending to make your savings last.  Just consider one of the examples quoted in the Star news item:

When Janet and Bob retired at age 55, they were earning a joint income of $400,000. Both were senior executives in the corporate world.  Now in their late 60s, they live more frugally. No longer do they own a cottage up north, buy new cars, eat in restaurants or rent condos in Florida with friends.  They live on a budget of $60,000 to $70,000 a year, which doesn’t include debt, to make their savings last.

Statistics Canada published a report in 2005, which detailed the spending patterns of older people:

  • Households age 75+ spent 73 cents of each income dollar on personal consumption.
  • Food, shelter and transportation made up the lion’s share (61 to 68 cents) of each consumption dollar.
  • Households pay more for government and private health insurance plans than 20 years ago.  There are higher out-of-pocket expenses for health costs not covered by insurance, such as prescription drugs, other medical equipment, dental services and eye care.

Here are some of the ways you can stretch your savings.

  • Live frugally and cut out unnecessary expenses
  • Stay healthy and vigorous
  • Give up the automobile and walk, take public transport or taxis as needed.  You’ll be much better off
  • Keep working part-time or make money out of your hobby
  • Use senior discounts to the maximum
  • Sell items on EBay
  • Learn to cook and cut down on prepared meals
  • Grow fruit and vegetables in your garden
  • Invite people to your home instead of dining out.
  • Buy any needed items on Craigslist or at Value Village
  • Sell unwanted belongings on Craigslist.
  • Have a financial planner and meet say twice a year to see if  you are still on track

As a retiree, you have fewer work-related expenses, you pay less in personal income tax and you contribute less to public benefit programs.  Since there is no need to leave an estate, with careful living you can enjoy what you have to the maximum and hope to die when your time comes just a little better than broke.

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Paradise Lost, Milton

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If we were only talking about the book, there would be little hardship involved. Unfortunately it could be used to label the latest Ponzi scheme in Canada as we read that Businessman missing as Dutch Canadians out millions.

At least 80 elderly Dutch Canadians trusted Harry Snoek Jr. with their life savings. But the money is gone. And so is Harry, possibly back in the Netherlands or maybe Qatar, leaving a trail of empty promises and despair in his wake.

By the latest tally of those who have come forward and who are trying in Ontario courts to recoup their losses, Snoek has absconded with more than $34 million. The total number of affected investors may be as high as 200.

Promissory notes and court documents obtained as part of a Toronto Star investigation, as well as interviews of investors and business partners, suggest Snoek ran a Ponzi scheme, where early investors are paid off from the contributions of later ones. The RCMP is looking into the case.

Troubling payment delays from Snoek started in 2007 with Snoek exploiting shared ties to motherland and church to ease anxieties and keep their money just a few months more, and then another few months more.

In a lawsuit filed in Brantford, a receiver was appointed who is combing through Snoek company files. The receiver may try to sell Snoek properties in Milton and spread the proceeds to investors. But it is believed that the land will fetch only a fraction of what Snoek owes.

Unfortunately paradise will not be regained.

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Taxes Add Insult To Injury For Ponzi Victims

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If you have income, then you must pay taxes. That is true even when that income may be only what a Ponzi schemer may have reported to you. That is unfortunately the situation in which the Montréal victims of Earl Jones now find themselves.

Apparently the Quebec tax authorities will try to lighten the tax burden on Jones’s victims even though many should have no tax burden since the income was illusory.

Victims of financial fraudster Earl Jones won’t have to pay taxes on investment income they didn’t actually earn, Quebec Revenue Minister Robert Dutil announced. Jones’s victims will also be able claim a deduction for lost revenues, Dutil said in a statement. “I sympathize with these people who are going through a deplorable situation, and I want to clarify this to help avoid all confusion for these victims,” he said.

When someone is in a precarious financial situation and unable to meet their obligations, the agency follows their case closely in line with the information available.

Some of the fraudster’s victims are finding at the federal level that things are moving more slowly and there are delays in getting some relief for taxes they paid on fictitious income.

Kevin Curran, a member of the Earl Jones Victims Organizing Committee, says the government told victims last summer to file adjusted tax returns for previous years stating that the fake income provided to them by Mr. Jones was erroneously reported, at which point they would receive tax refunds. Many of the more than 150 victims did so, but despite a promise to move swiftly, they are still waiting for their tax returns. Some of these people are struggling to afford daily living expenses. Furthermore, a handful of the victims that would qualify for increased government pensions cannot get them because their income is still wrongly pegged as being too high.

Last year in the United States, the Ponzi Scheme victims of Bernie Madoff received somewhat faster tax breaks although the public resentment about the support the troubled banks were getting may have created a more favorable climate for speedy action.

The Internal Revenue Service announced unprecedented tax relief for victims of Ponzi schemes, saying many of those affected could deduct up to 95% of their losses immediately. The move represents a significant relaxation of longstanding limits on tax relief for victims of investment scams. It reflects the pressure officials are feeling to help individuals who have been hurt in the current financial crisis, when public resentment is growing over the billions of dollars the government is directing into troubled banks and other big corporations.

Meanwhile it is good to see that vigorous action is being taken to prosecute those who perpetrated these dreadful schemes. The Feds are targeting Bernie Madoff’s brother and sons for Tax Fraud.

Last summer, prosecutors essentially made clear they wouldn’t go after Bernie’s wife, Ruth. But that’s not the case in regard to his brother, Peter, or his sons, Mark and Andrew. It is reported that federal tax-fraud prosecutors in Manhattan are pursuing cases against Bernard Madoff’s brother and sons.

To add to this sorry tale of woe, it now appears that there is a Bogus Web Site Reportedly Trying to Rip Off Madoff Victims

A bogus Web site is targeting victims of Bernard Madoff’s record Ponzi scheme in an apparent identity-theft scam, the Securities Investor Protection Corp warned today, The New York Post reported. The site claims that $1.3 billion in Madoff money was recently found hidden in Malaysia, and displays photos of huge stacks of cash allegedly stashed by the mega-crook. The so-called “International Securities Investor Protection Corporation” urges burned investors to submit claims by filling out an online form and mailing in a copy of “your most recent brokerage account statement.”

The site rips off design elements of the real SIPC site. The SIPC wants to be as clear as possible that Madoff victims and other investors should not share any personal financial information via this Web site or rely upon it as an information source.

One would hope that these poor victims have gone through enough to realize that once bitten requires them to be twice shy.

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Is Your Retirement Plan In The Red

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.. and if not now, will your retirement plan be going into the red.  According to Jonathan Chevreau, Most Boomers’ retirement plans ‘going nowhere’. 

He is featuring the concepts that financial planner Jim Otar lays out in his forthcoming book, Unveiling the Retirement Myth.   In his opinion, most Baby Boomers have not saved enough to retire comfortably and should plan to remain in the workforce longer.

Otar describes three “zones” of retirement preparedness.

  • Green: good to go
  • Orange: (or as Otar calls it the grey zone) where extreme caution is appropriate
  • Red: where retirement plans are completely inadequate

His views might be described as depressing but reflects the dual reality that investments have not been performing well and that people are living longer.  His advice is that you should plan for the worst because unfortunately that may be what happens.

He has particular concern for those who are in the grey zone who may or  may not make it, depending on how lucky they are and the timing of their retirement.  For him, when you are within five years of retirement you are in the dreaded Retirement Risk Zone.  This is a dangerous period when investment returns may determine success or failure of one’s plans. Retiring into a vicious bear market may torpedo a retirement, while retiring into a bull market is more fortuitous.

Otar’s website has much more to offer on retirement planning.  His 500-page book will be available in the fall, but an unprintable “green” version is available for $3.99.  It probably should be required reading, particularly for those who are in that Retirement Risk Zone.

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Paper Money Currency – Urstromtaler, Cheers Or Plenty – Take Your Pick

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One meaning of currency is general acceptance or use.  Plastic is taking a bit of a beating recently so perhaps it is better to go back to paper.  Bank notes are of course generally accepted for what they are worth. If you are into bank note collecting, you may even be willing to pay more for attractive world paper money or rare United States currency.  What about something printed up by your neighbour?

Well apparently communities are now printing their own currency in order to keep cash flowing.  It’s a Depression-era idea that aims to help consumers make ends meet and support struggling local businesses.

paper money currency

It works like this: Businesses and individuals form a network to print currency. Shoppers buy it at a discount — say, 95 cents for $1 value — and spend the full value at local stores that accept the currency.  Here are some of these paper money currencies you may be aware of in the USA:

The BerkShares system started in 2006 and is the largest of its kind in the country with $2.3 million worth of BerkShares in circulation.

There are an estimated 75 local currency systems that have sprung up recently in the U.S., according to Michael Shuman, author of “The Small-Mart Revolution: How Local Businesses Are Beating the Global Competition”

Such paper money currencies are not found only in the USA.  In England you have the Lewes Pound.  Again it is a complementary currency, redeemable for goods or services with local traders. It is certainly not intended to replace sterling, but it raises awareness of the importance of shopping locally.  It can be bought or redeemed for sterling at any of the issuing points in Lewes, which is located in East Sussex.

In Magdeburg, Germany, they are also very proud of their local currency.  It is called the Urstromtaler and is used alongside the normal currency, which is the euro. Even two years ago there were more than 200 businesses using the regional currency, including shops, bakeries, florists, restaurants. There was even a cinema that accepted Urstromtaler.

Of course the grand-daddy of them all is to be found in Switzerland.  It’s the WIR, now over 75 years old.  For an explanation in English, you can check out the WIR Economic Circle Cooperative. It notes that the WIR is a successful Swiss local currency for business to business transactions based on mutual credit:

The WIR credit clearing association, now called the WIR Bank, also provides conventional banking services. WIR is an important case for monetary reformers and free exchange advocates to study. While there may yet be some deficiencies in its operating policies, WIR has proven over a long period of time the effectiveness of direct clearing of credits between buyers and sellers as an alternative to conventional bank-created debt-money.

Clearly something that has achieved general acceptance and use for 75 years has earned the right to be called a currency.  Let’s hope the Cheers, Hours and Plenty earn their place in the paper money currency Hall of Fame.

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Personal Finance Software For Seniors

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To help handle personal finances in the best way during a tough recession like this, many people turn to Personal Finance software. As a result, there is a plethora of personal finance software programs to consider. The right choice is always a very personal matter given particular needs. However everyone wants a good user experience. In other words it should be a pleasure to use and it should do the job.

If you have this software choice dilemma, you may find the reviews at Personal Finance Software a good place to start your exploration.

Of course everyone and particularly seniors is looking for something that is easy to use and install. So we list below the Top Ten choices in descending order of attractiveness. In each case, the comments on Ease of Use and Installation from the review site are displayed. By clicking on the link, you can see the full review, which clearly you should do before homing in on the choice that works for you.

Personal Finance Software – Top Ten Reviews

with Ease of Use/Install Comments

    Quicken Starter Edition – Gold Award
    Quicken Starter Edition was easy to install, and easy to use. It’s not packed with a bunch of clutter, so finding what you need and figuring out how to use features is a snap.
    Microsoft Money Essentials – Silver Award
    Microsoft Money was easy to install, and very easy to use. We found it had a little more of a polished interface compared to Quicken Starter Edition and Moneydance. The update process was simple, and Money’s home page provides a great at-a-glance summary of your finances.
    Moneydance – Bronze Award
    The main page of Moneydance is visually simple, which is one of its strengths. The navigation bar and buttons can get you to any section, and the main content area neatly summarizes your accounts, even displaying bill reminders and a tidy calendar. Adding new accounts is a snap as well, and Moneydance 2009 connects to a large number of banks and credit unions the world over.
    AceMoney
    AceMoney was easy to install, and even easier to use. It’s not difficult to figure out what you need to do to access your portfolio, schedule bills and deposits, or run reports, to name a few. AceMoney also supports importing data in a large number of formats, including qif, ofx, ofc, qfx, and xml, so even if AceMoney can’t automatically update your account information, it can read files your bank exports.
    BankTree Personal
    BankTree was easy to install, and easy to use, with large navigation buttons at the top that make it apparent where to go to look at accounts, reports, etc.
    RichOrPoor
    We were disappointed RichOrPoor doesn’t have a setup wizard to guide you through the setup process. RichOrPoor doesn’t import any of the standard formats that most banks use, such as qif or csv. You have to locate where the information goes and then type it in. This becomes tiresome, considering some personal finance software packages connect directly to your bank accounts, and most import a standard set of file types. If by chance your bank exports your accounts to a .rop file, your data entry would be diminished significantly. Once you have entered all of your information, accounts, balances, transactions, and so on, the program is fairly easy to navigate. It’s getting there that’s a chore.
    Budget Express
    Budget Express is a software program that focuses primarily on budgeting and does a good job—this combined with its functionality make Budget Express one of the top ten money management products. If Budget express wanted to compete with some of the all inclusive financial software packages, they would have to add financial planning and investing features.
    Account Xpress
    Accounts Xpress doesn’t offer a setup wizard to help you initially input your financial information. This is a real downfall for people who are not familiar with finance software.
    iCash
    iCash has the ability to reconcile your accounts with your
    bank statements and form a budget for everything in your books. We only found five different reports available within this product: balance sheet, profit and loss statement, profit and loss summary, account statement and taxes.
    Home Bookkeeping
    A user-friendly toolbar, that allows you to quickly access all your accounts, expenses, income, planning and debt, makes Home Bookkeeping a good program for the computer novice. The program was easy to install and we didn’t encounter any errors during installation.

Given the importance of the software working for you, if you have either good or poor experiences of any of these personal finance software programs, why not add a comment here. You then will be helping others to make a better choice.

Footnote: If you are interested in books on Personal Finance, then why not visit the Personal Finances Bookstore.

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Fair Pay For All

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It is good to see that President Obama’s first law concerned The fight for fair pay.

President Barack Obama’s first bill, the Lilly Ledbetter Fair Pay Act he signed into law, loosens the statute of limitations under which workers can sue employers for pay discrimination based on characteristics such as gender, race, age or disability.  To ward off discrimination suits, companies will need to meticulously document pay decisions and retain detailed employment records, legal experts say.

It is rather ironic that should have been the first bill, since at the same time he is acting on salaries and compensation at the other end of the scale.

The President proposes to limit the total compensation for senior executives of those companies receiving support under the bailout arrangement.  The top brass would no longer have golden parachutes and the severance packages to those in the second tire would be limited to one year’s salary.  Although it may sound perfectly reasonable to you and me, it immediately raises criticisms from others.

For example, Carly Fiorina, former chief executive of HP, believes that Government shouldn’t decide executive pay.

Americans are outraged over excessive CEO pay and perks. That outrage is justified, particularly when American taxpayers are footing the bill.  Our capitalist system works best when there is transparency and accountability. There has been too little of both on Wall Street.

She is concerned that the proposed cap for top executive pay at $500,000 for institutions that have received bailout money is arbitrary and applies only to them.  She calls for an across-the-board approach.

  • To strengthen transparency, all aspects of CEO pay and perks should be fully disclosed on a regular basis. This should include airplanes, cars, golf-club memberships, bonuses, stock options, retirement plans and salaries — in short everything that a common-sense person would consider part of a CEO reward package.
  • To strengthen accountability, all aspects of CEO compensation should be voted on by shareholders on an annual basis.

These are very reasonable suggestions and legislation to bring them in would receive wide support.  However the President’s proposed limits send a strong message and prepare the ground for such legislation down the road.  Open government requires transparency and equity.  Fair pay for all should apply at all levels.

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