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When Your Friends Become Social Sellers and Multi-Level Marketers

Here are suggestions for overcoming guilt and saying no to your friends and co-workers.

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Consumer Reports’ Best Cars of 2010

There are a couple of surprises on Consumer Reports' latest list of the best cars.

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Take a New Inventory of Your Credit Cards or Pay New Fees

Issuers are establishing new fees for inactive cards. Know whether you're affected.

Take a New Inventory of Your Credit Cards or Pay New Fees Take a New Inventory of Your Credit Cards or Pay New Fees

How To Handle Requests For Financial Advice

Here is what I want my friends and family to know when they ask me for my suggestions.

How To Handle Requests For Financial Advice How To Handle Requests For Financial Advice

How to Get Audited By the IRS

Invite deeper scrutiny of your federal income tax return by following these ten tips.

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Doing laundry is one of those chores that’s rather easy, but I find myself avoiding it as much as possible. As a result, I end up doing large loads every seven to ten days. Even for these full loads of clothing, I usually only fill the detergent cup about half way. Even at that point, I may be using too much soap, wasting money, and decreasing the life of my washing machine.

I have noticed that the texture of my clothing, towels, and linens changes considerably even after just a few washes. I don’t use dryer sheets, so I am certain that is not the problem. My new plan after reading an article in the New York Times (linked below) is to use as little detergent as possible. It can’t hurt to start with a small amount of soap and increase only if necessary.

As suggested in the article, I took one of my towels that has not been used since being washed, and placed it in the washing machine without any detergent. After running the machine for five minutes, it was full of suds. I used so much detergent that it was still embedded in the fabric after normal rinsing and drying. This is not normal. I’ll probably need to run my towels through several times without new soap just to remove all that is still on the fabric.

I may have to run my towels through the washing machine as many as eight times before all the leftover soap comes out. While that’s not a good idea for saving money on electricity, I’ve learned a lesson. Even though I thought I was making a smart choice by filling the detergent cup only halfway, the soap stays with the material.

How much detergent do you use?

Photo: mccheek, nateOne
For the Dishwasher’s Sake, Go Easy on the Detergent, Alina Tugeno, New York Times, March 12, 2010

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I buy maybe three video games a year, which is as often as they make games good enough to buy. I find it impossible to pay $60 for a new game, partially because as a child of the original Nintendo, I got accustomed to $40 games, so I always wait at least a couple weeks to get a used copy. And I did the same thing with Assassin’s Creed II, which was worth every penny.

But I’m not going to tell you how awesome this game is, since you’d either like it or you wouldn’t. No, the interesting part is how I almost wasted a bunch of money on it.

I got my used copy for about $45 and spent a couple of weeks playing it on and off until I finished the story. I don’t care much about unlocking achievements or finding every treasure, I just care about being good enough to finish the story. Eventually I was, and I brought the game back and traded it in for a used copy of Batman: Arkham Asylum (which is also very good). I was satisfied, and excited about future sequels.

A little while after that, I saw on the Xbox dashboard that there was new DLC (downloadable content) available for Assassin’s Creed II. A whole new piece of the story was ready to be unlocked for 320 points, or if you want to talk like a normal human American, four dollars. I found myself in a brand new position: I had finished the story, and yet I had not. The satisfaction of finishing the game had been yanked away from me, which would normally have angered me, except that the game is so good that mostly I was annoyed I had sold the game back.

So I did what seemed natural: I complained about it on Facebook. I had given up, and had no intention of buying the game again, that would be absurd. I was just planning on feeling sorry for myself, or at least waiting until I felt like I had the free cash to throw around.

Fortuitously, I have a co-worker that follows me on Facebook, and whose son likes to get in considerable trouble (imagine police officers, broken arms and many fights). She punished him by taking away some of his video games, and lent one to me, the one I needed to continue the story… which I did, and then the next day, there was yet another DLC pack available for the same game. Naturally, I immediately paid another four human American dollars and played through that in a few hours.

So, lesson learned: do some research on whether the game developers are planning any DLC before selling the game back. Unlike the $40 price tag, I’m still not used to the idea that games get add-ons over time, but I’m thrilled that they do. I’m also really lucky that my friend’s son gets in trouble, but hopefully he and I can both learn to make smarter choices.

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It’s time for another giveaway. H&R Block wants to give an iPod Touch to two Consumerism Commentary readers. The iPods will be delivered with an app pre-installed to help taxpayers as we approach the final filing stretch.

The strongest feature of the “H&R Block Tax Answers App,” available here from the Apple store, is the ability to get personalized answers to your tax questions. When using the app, your iPhone or iPod Touch with WiFi is connected directly to H&R Block’s Get it Right Community, with 1,000 tax experts on hand. In general, you will receive your response, for free, within 24 hours.

Other features include a glossary so you can quickly get a definition for an unfamiliar tax term and a quiz where you can test your tax knowledge.

H&R Block Tax AnswersAs you can see from the Tax Answers app’s main menu, you can also use this program to locate the nearest H&R Block office. If nothing else, you can use this for a scavenger hunt or you can check with your friends to see who has the most locations in a ten-mile radius of his or her home.

As I’ve mentioned before, an independent tax accountant completes my tax return. If you have a simple tax situation, many online tools are available. H&R Block’s At Home is the company’s re-branding of TaxCut, and other perennial favorites include Intuit’s TurboTax and TaxACT. All of these options offer free federal filing for taxpayers in certain situations.

How to win a free iPod Touch

I’m going to keep this simple. If you would like to be entered in the giveaway to win one of two iPod Touch devices, leave a comment here. If you want two extra chances, follow @flexo on Twitter and link to this giveaway on Twitter with the following phrase:

Win a free iPod Touch from @flexo and @ConsumerismComm! http://bit.ly/d5r1BS

You must enter by 11:59 EDT on Friday, March 19, 2010. Two winners will be chosen randomly from among the respondents within a few days of the giveaway’s end. As always, only one set of entries (comment and Twitter) per name or IP address is allowed.

Now for some fine print. H&R Block is providing the iPod Touch devices directly to Consumerism Commentary readers. The software is being provided independently of any other H&R Block reviews posted on Consumerism Commentary. Consumerism Commentary is an authorized affiliate of H&R Block.

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The first time I shopped for car insurance I didn’t know much about what I would be buying. I should have taken the time to learn more about the various types of coverage before shopping. As a result of my lack of preparation, I did a poor job comparing rates. I was slightly better armed after I purchased a new car six years ago. By then I knew a little more about car insurance. I worked with AAA to find the best rates offered to me in New Jersey and received rates from a variety of other companies for similar coverage.

Yet I am still not a car insurance expert. A quick conversation with my co-workers reminded me that I should re-evaluate my coverage. I am currently covered for much more than necessary considering the reduced value of my car and the savings I have available. I plan to change my coverage this week.

An easy-to-read guide to the various types of auto insurance coverage would have been helpful when I first received a driver’s license. Here is the information I had familiarized myself with when I first assumed the responsibility of a driver.

Liability coverage

Liability coverage pays other people when you are at fault — the cause of an accident. Liability coverage is usually mandatory. If you do not have liability coverage and you cause an accident (and the other individual involved does not have uninsured motorist coverage) you would be responsible for paying their medical bills and car repair bills out of your own pocket. You could be sued if you don’t have insurance, or enough insurance, to cover the expenses paid by the victim resulting from your accident.

Liability coverage is separated between bodily injury and property. Your bodily injury liability coverage will pay for the other individual’s medical expenses and there are coverage levels per person and per accident. For example, my maximum coverage is currently $50,000 each person and $100,000 each accident. That means I will be liable for any excess expenses above those amounts. Property liability insurance covers repairs. My maximum coverage is currently $50,000 each accident. The insurance industry refers to these numbers in shorthand: 50/100/50.

Collision coverage

Collision coverage pays you or pays directly to a repair shop for damage to your car regardless of which driver is at fault. A deductible must be met first. Currently, my deductible is $500. This is low considering a portion of my Emergency Fund is ready to handle incidents. This type of insurance is not required unless you are financing the vehicle and the bank requires it or you are leasing the vehicle. I will eliminate this coverage when I call to adjust my policy.

Insurance will only cover the actual cash value of your car minus the deductible. Assuming my car is now worth $6,000, insurance will cover at most $5,500 for collision, and I am paying $537 a year for that benefit.

Comprehensive coverage

Comprehensive coverage pays you or pays directly to a repair shop for any damage to your car that occurs at any time other than a collision. If your car is stolen, comprehensive coverage would pay you. We experienced a violent storm the past few days, and trees everywhere were uprooted. I didn’t personally notice any cars damaged by falling trees, only fences, buildings, utility poles, and roads. However, it’s likely quite a few people in the area experienced damage to their card. Comprehensive car insurance coverage would help them.

Like collision, comprehensive coverage is not required unless you have a car loan or a lease. I am currently covered with a $500 deductible. I will most likely raise the deductible on this coverage. I considered eliminating comprehensive coverage, but two issues are steering me towards keeping, First, I do not park in a garage, and while my neighborhood is usually quiet, I can’t control other people or nature. Second, I drive to New York City often and my car has already been broken into once.

Uninsured motorists coverage

Uninsured motorists coverage pays you if damage to your car cannot be reimbursed by the driver at fault because they fail to have adequate insurance. Although liability insurance is required for all legal drivers, not all drivers are operating a vehicle legally. There is some, but not complete, overlap with collision coverage. Uninsured motorists coverage might pay your collision deductible. Uninsured motorists coverage will also pay for bodily injury costs not reimbursed by the other driver’s insurance.

I currently have uninsured motorists coverage at the same levels as my liability coverage, 50/100/50.

Personal injury protection

Personal injury protection (PIP) pays you or a service provider for your medical, hospital, and funeral expenses. They may also pay for other family/household members and pedestrians involved in an accident. It’s a good idea to compare the personal injury protection benefits with those offered by your health insurance. If some of the benefits are duplicated, you may be able to justify lower PIP coverage.

If you drive passengers often, consider increasing your PIP coverage. I almost always drive alone, and I’m considering dropping PIP from my policy. Currently, I am covered for a maximum of $250,000 after a deductible of $250.

Other coverage

When my car was being repaired after the break-in I mentioned above, the rental car coverage was helpful. My insurance policy offers reimbursement for transportation expenses up to $30 per day or $900 per accident. This coverage costs me $35 a year. I will likely keep this insurance because its cost is low and I currently have no other convenient means of transportation.

Gap insurance usually is not associated directly with the other aspects of car insurance. It provides one specific benefit. For a driver whose vehicle is leased or finances, gap insurance will pay the driver the difference between the actual cash value of the car minus a deductible and the remaining balance due on the loan or lease.

For example, if you are upside-down, owing $20,000 on a car whose value is only $15,000, and the vehicle is totaled in an accident, your collision insurance will only cover $15,000. Without gap insurance, you would still need to pay what you owe without a car to show for it, and you’ll usually need to buy a new car as well. The gap insurance would cover the $5,000 difference.

Later this week, I’ll reduce my insurance coverage with my provider, Liberty Mutual, and soon after begin shopping around for better rates.

Photo: iboy_daniel, Eduardo Deboni, L. Marie, jeffwilcox, visualpanic, adrian8_8

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The Consumerism Commentary Podcast is featuring Lou Scatigna, author of the book The Financial Physician: How to Cure Your Money Problems and Boost Your Financial Health. Lou also hosts the Financial Physician Radio Show on WOBM and XM Radio.

Among the topics discussed, Lou talks about his approach to giving financial advice, his take on the housing market and why both husbands and wives need to be involved in financial decisions.

If you enjoy this podcast, please vote for us in the First Annual Plutus Awards for “Best Personal Finance Podcast.” Voting ends on Tuesday, March 16. Thanks!

Consumerism Commentary Podcast #47
Financial Physician, Lou Scatigna
Production/Segment: S02E21 / 59

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Table of contents

[00:00] Introduction from Flexo
[00:30] Interview with Lou Scatigna
[00:40] Lou’s tough-love approach to financial advice
[02:37] Lou’s financial background
[05:09] Buying used cars
[07:15] The housing market in 2010
[08:44] Income tax tips
[09:43] The Financial Physician
[13:50] Getting on the same page as your partner
[18:08] End

We always welcome feedback from listeners. If you have any comments for this episode or for any other, or if you have suggestions for future episodes, please leave us comments here or email us at podcast at this domain name.

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The giveaway has ended. Thanks to everyone who has participated. The winners will be notified shortly.

This week I will be giving away five “extreme finance packages” containing Quicken, TurboTax, and QuickBooks. Each winner will be able to choose their flavor of each piece of software.

Today is the last day to enter to win this giveaway. Response has been much slower than I expected, so your chances of winning are currently very good.

In order to put your name in the hat, read these instructions. There are many ways to increase your chances, as well, from participating with Consumerism Commentary on Twitter and Facebook.

The giveaway ends at 11:59 PM Eastern Time tonight, so make sure you enter today.

The giveaway has ended. Thanks to everyone who has participated. The winners will be notified shortly.

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Bank of America is controlling the news cycle lately. First, the bank eliminated overdraft fees for debit card purchases. Now, the bank has apologized to a woman for seizing her parrot.

Back in October, Bank of America believed Angela Iannelli was defaulting on her mortgage and she had abandoned her house. The bank ordered a contractor to visit the house to install a new lock and otherwise secure the location. The contractor saw Luke, a blue macaw, and took the pet, believed to be abandoned, away for its supposed safety.

When Iannelli called to rectify the situation with the bank, here is how the conversation progressed, from the Wall Street Journal, where the story was originally reported:

Ms. Iannelli, who owns a diner and works part-time as a bartender, said Bank of America representatives weren’t helpful when she called in to protest. They first denied knowing where the parrot was, and later told her she could go to the offices of the contractor, about 80 miles away, to retrieve the bird herself. Ms. Iannelli said bank representatives also told her they were “tired” of hearing from her, hung up on her and advised her to seek help from the police.

This incident occurred after the owner missed only one mortgage payment. She is now suing for $50,000 for the emotional distress of the event and the week she spent without Luke, in addition to the other actions taken by the contractor. Before the contractors walked off with the parrot, they cut water lines and electrical wiring and poured antifreeze into various drains.

Even if the bank had the correct information and were stepping in to secure a house that was truly in trouble, these actions seem drastic.

Bank Sorry for Taking Parrot, James R. Hagerty, Wall Street Journal, March 11, 2010

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ING Direct’s recent survey results about retirement are scary. I don’t know what the world is going to be like in thirty years, the time I’ll be approaching “retirement age.” I do know that if my pattern of increasing expenses doesn’t change until then, and if I’m still earning primary income by trading my time and effort, a comfortable retirement is going to require a lot of saved and invested money.

If you believe the 4% safe withdrawal estimate, in order to live off the equivalent of today’s $50,000 a year, I’m going to need the equivalent of today’s $1,250,000 invested. Assume a modest 3% rate of inflation and I’ll need more than $3,000,000 in 2040 dollars. Unless I make major reductive changes to my lifestyle or move somewhere in the world where the cost of living is low, I’d prefer to live on more than today’s $50,000 a year. I’m going to need a bigger nest egg.

Although it sounds sophisticated, this is speculation based on assumptions that could be very wrong. I’m doing exactly what 53% of working Americans are doing according to the ING Direct survey: guessing the amount of money I’ll need to save for retirement. Even if I were to use an online retirement calculator sponsored or designed by banks, investment companies, or bloggers, my results would still be guesses, though most likely slightly more accurate.

ING Direct is offering a planning tool that takes into account the lifestyle you’d like in retirement, your investment style, and your assets and planned contributions, and presents a savings plan. According to my results, I am surprisingly on target for over $3,000,000 in 2040. This includes a number of significant assumptions about my future income and rate of return on stocks.

According to the ING Direct survey, one third of Americans age 55 and over think their number is $250,000 or less. There is a subtle implication that this won’t be enough for many retirees.

In reality, I don’t know what my retirement will look like in 30 years. I may never be able to stop working in order to afford expenses for my future family. The best we can do is set a target that makes sense for what we know and understand of the world today, and make choices based on the assumption that the nature of money and finance won’t change too much between now and then.

What is your retirement number?

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