Mailbag for Friday, March 30, 2007

Marketplace Staff Mar 30, 2007
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Mailbag for Friday, March 30, 2007

Marketplace Staff Mar 30, 2007
HTML EMBED:
COPY

TESS VIGELAND: It’s about that time in this show where we listen to you. And I’m joined, of course, by our economics expert, Chris Farrell. Together we’re gonna try to figure out all the solutions to your financial problems. Hey, Chris.

CHRIS FARRELL:
Hi. How are you doing, Tess?

VIGELAND:
We’re doing all right. We’re gonna figure out all the solutions, right?

FARRELL:
I cease to say all the solutions. Well, maybe we’ll give a hint or two, how’s that?

VIGELAND:
Okay. Sounds good. But before we get to that, please take down our Web site address. It’s Marketplace.org. Click on the contact button there. Or you can give us a call. Our number is 877-275-6669. That’s 877-ASK-M-O-N-Y. Well, there are a lot of people who feel that one way to look at a crowded house is to think of it as, cozy. But if you ask our next caller, a couple of recent family additions make her house seem downright congested. Joy is calling from Bloomfield Hills, Michigan. Hey, Joy.

JOY:
Hi.

VIGELAND:
So tell us about where you live.

JOY:
We live in a one-bedroom town home in Bloomfield Hills. I purchased it right before I met my husband. And we now have a 17-month old and a 13-week old, and all the stuff that comes with them.

VIGELAND:
And I’m guessing I’m hearing the 13-week old there in the background.

JOY:
Yes. He’s a fat and happy boy. He just got fed, and he’s excited to here mommy talk right now. So…

VIGELAND:
Well, congratulations on your two additions to your home.

JOY:
Thank you very much.

VIGELAND:
So what’s your question for Chris this week?

JOY:
Our questions–we are in Michigan, which obviously is one of the hardest hit states, and we are not wanting to move up because of–we can get a good deal on our house right now. We’re wanting to move because we need to. And we’ve had our house in the market for a year and three months now and have not even had an offer. Our price is so low right now. It’s basically just getting out of the mortgage.

VIGELAND:
How far down have you dropped it?

JOY:
We’ve come from, like, $150 down to $120 something…

VIGELAND:
Hmm.

JOY:
Hello?

VIGELAND:
Oh, hello?

JOY:
Hello. Oh, you know what? I think my other son just get on the phone. Sorry about that.

VIGELAND:
Quite all right. Quite–if he does have a question, you can let us know. You can call us back later.

JOY:
Okay.

VIGELAND:
So, so what–what are kind of the options that you’re exploring right now?

JOY:
You know, we talked to the bank about our short sale. And they won’t even work with us until we start skipping payments. My question is if it goes into foreclosure…

VIGELAND:
Wait a minute. So, so you’re thinking about actively going into foreclosure as your option?

JOY:
If it need be–if–I mean, we’re–our hand has kind of been forced here.

VIGELAND:
Hmm.

FARRELL:
Okay. I think we need to do a little definitions here, Tess. Obviously, Joy, you’ve done a lot of research. The terms short sale that Joy was just using is you go to the bank and you say, okay, let’s say, the home is on the market for $100,000. You can sell it for $50,000, and the bank accepts it.

VIGELAND:
And it’s not foreclosure.

FARRELL:
And it’s not foreclosure. And you–do you see–do you have, by the way, a tax liability?

JOY:
Okay.

FARRELL:
Because the bank is an essence, in the example that I used, for giving $50,000 of the loan. So the IRS looks at that and says, well, you got a benefit from that, and therefore, you usually have to pay taxes on it, which is usually a fairly painful thing to do.

JOY:
Mm-hmm. Okay.

FARRELL:
But, you know, that is one possibility. And the other thing is foreclosure, which is the thing that’s happening all around the country, an essence you go into default, there’s a foreclosure sale. And then, the bank can come back at you and say, we got a judgment against you. It will have an impact on your credit. You know, if you wanted to go out and get another home, another mortgage, depending on your circumstances, it could really spill over and have an impact. Most of the foreclosures that we’re seeing, people are being forced into foreclosure. It’s no longer affordable, and so they’re involuntarily losing their house. You’re in a situation where, you know, you can meet the mortgage payments. You’re gonna have a tough living situation for a while. But hopefully, a year or two, you can get yourself out of it. And even if you stake a small loss, that’d be fine, just to get out of there.

VIGELAND:
So, Joy, is there any chance that you could just stay in this house for a little while despite the fact that it’s cramped?

JOY:
Yeah. Well, I thought that, you know–I mean, that’s what’s gonna end up happening. That’s–those are the consequences. We’re gonna end up, you know, just waiting and…

VIGELAND:
Yeah. Foreclosure is a very, very serious financial risk.

JOY:
It is. And like I said, we’re trying to, you know, avoid everything like that. And if we’re gonna have to build on the inside somehow, you know, build out, save a really big bedroom, and that could be, two, you know, is there something like that we may have to look into?

VIGELAND:
All right. Well, best of luck in this tough time. And tell you what, we’re gonna check back with you and see how things are going.

JOY:
Great. Thank you very much for all your help.

VIGELAND:
Take care. Thanks for the call.

JOY:
Bye-bye.

VIGELAND:
Well, it is time to stop procrastinating, folks, because April is upon us, since we’re all well aware. And if you got a question about filing your taxes, check out our latest Marketplace Money clip. You could see Chris on video. He’s got some advice for all you tax filers. And even if you wait up ’til the last minute, just visit our Web site. It’s Marketplace.org and click on the Money clip link. All right, back to the e-mails we go, Chris. Tim writes in from Iowa City, Iowa. And he received two shares of Heinz stock in 1976, promptly forgot about it. But recently, when he tried to catch up to it, let’s move on.

VIGELAND:
Anyway, he found out that it went from $20 a share to more than $1300 a share. So he wants to sell it, but he doesn’t have a brokerage account. And the bad news here is that the management company is gonna charge him a 15 percent commission to sell these two shares of stock. Any alternative for him here, or are they just gonna get his money?

FARRELL:
You know, there’s a couple of alternatives, at least to pursue. I don’t know, which one is going to work out. One is to contact the Heinz directly. I know that they have a dividend reinvestment plan. And so call the Heinz investment office. Give them the joke about ketchup. I’m sure they have never heard that before. And then see if you can do a transfer to them. You know, I have a brokerage account, but my guess is–you’re on 401K, 403B, maybe an IRA, some sort of retirement savings plan. My guess is they’ll have a brokerage operational. So you might be able to get a decent deal that way. Again, call Heinz first, and then check with your provider of your retirement savings plan and see if you can do a more advantageous deal for yourself.

VIGELAND:
Who knew condiments could be so rewarding? Well, if you’ve got questions about anything financially related, we would relish the opportunity to answer them for you. Oh, I need to stop now. That is what we’re here for. Click on the contact button on our Web site. It’s Marketplace.org, or give us a call. We’re at 877-275-6669. That’s 877-ASK-M-O-N-Y. Well, you know, we ask for your financial questions all the time, and we’ve gotten some pretty unusual ones over the years. But when we heard about the situation from our next caller, even we were a little floored. Cynthia is calling from Mountaintop, Pennsylvania. Hi, Cynthia.

CYNTHIA:
Hi.

VIGELAND:
So why don’t you tell us what happened?

CYNTHIA:
My husband and I took our 18-year-old daughter to go get her very own cell phone. She signed up, of course, to open an account and so forth. And shortly thereafter, we received a letter from a company called RiskWise, and the letter was requesting all kinds of information such as her birth certificate, her W2 form, and it wasn’t actually from a consumer-reporting agency, but a company called RiskWise, which I’d never heard of.

VIGELAND:
Chris, you’ve done a little research into this. What are we looking at here?

FARRELL:
Well, what you’re looking at, RiskWise is a subsidiary of NexisLexis and it’s a legitimate company, and actually–Cynthia faxed me the letter that they had sent in and there were two columns. So you had, you know, your Social Security number, driver’s license and then a W2 form.

VIGELAND:
And here’s one that really got me. It says any other official document containing your Social Security number–please give us, give us anything that has your Social Security number on it. What?

FARRELL:
And your birth certificate…

VIGELAND:
Yeah.

FARRELL:
…which is incredibly important. I mean, it was so revealing.

VIGELAND:
In fact, by the way, folks, we’ll go ahead and put a copy of this letter up on our Web site Marketplace.org, so you can take a look at it. So, Chris, what would the purpose of this letter be for this company?

FARRELL:
Well, what they’re really trying to do is, I mean, look, teenagers are the growth market. Because by definition, they don’t have credit, they’re our new customers. And the thing that I think is really upsetting and it’s a stunning figure is that more than 30% of all cases of identity theft involve teenagers.

CYNTHIA:
Wow.

FARRELL:
And it makes sense, once you think about it, which is that because they have unblemished credit records, this can go on, once their identity is stolen, it can be undetected for years. And I really have only one action to say to a letter like that which is shred it.

VIGELAND:
Yep.

FARRELL:
It was absolutely–I think it’s, I think that it is unconscionable in today’s world where we worry a lot about identity theft that a letter is sent asking for that kind of information. Don’t ever fill it out. It’s just–and again, again, it is a legitimate company but…

VIGELAND:
But you shouldn’t have to go through this process to establish a credit record.

CYNTHIA:
Right.

FARRELL:
Absolutely. And you don’t need to. I mean, that’s the bottom line–is you just don’t need to. So toss it away, throw it away, get rid of it.

VIGELAND:
All right. Well, some lessons for all of us, including your teenage daughter there. So thanks for alerting us to this.

FARRELL:
Yeah.

CYNTHIA:
Thank you so much. I love your show.

VIGELAND:
All right. Thanks for the call.

CYNTHIA:
All right.

VIGELAND:
There are lots of people out there that say they wanna help you with your finances, but all they’re concerned with is lining their own pockets. That is not us. All we need is your name, your telephone number and your financial question. Give us a call. It’s 877-275-6669. That’s 877-ASK-M-O-N-Y. Or visit our Web site, it’s Marketplace.org and click on contact. This is Marketplace Money from American Public Media. All right. How about we hit the e-mail bag one more time? Chris, are you ready?

FARRELL:
Okay. Yeah.

VIGELAND:
Okay. We’ve got Neil from Monterrey, Mexico. And his brother is the primary caregiver for their elderly mother. And his wife, Neil’s wife, is a Foreign Service officer and so they’re going to be living outside the U.S. a whole lot of the time. And he already kind of helps out with his mother’s care by direct deposit into a checking account, but he wants to do more. So here’s his question. He wants to know if it’s a good idea to provide his brother with a credit card for emergency purposes? Of course, handing over a credit card, no matter who it’s to, always carries some measure of risk. He wants to know if there’s any better way of getting some money to help with the care of his mother.

FARRELL:
As an outsider trying to give good advice, I would say don’t hand over a credit card. There’s really two things that you can do. One is, in today’s world, with cell phones and Internet, even though you’re outside of the country, it’s pretty hard to be out of touch for any length of time. His brother could probably get in touch with him right away in case of an emergency. And he can always use his credit card at that point. You know, call up the institution. The other thing is he already has the direct deposit into the checking account. I’d be emphasizing building up my emergency savings because there might be a draw that’s coming on and then if that does your brother calls you, you say, no problem. I’m gonna go right on the Internet. I’m gonna do a wire transfer.

FARRELL:
I’m gonna get the money right in there that you’re going to need. And then, you know, he and his brother can get together may be every once in a while or at least, you know, set up a time on the phone and just make sure that, you know, everything is going smoothly on the financial side of things. Because a lot of times, the issue is less the money and more the communication and that everyone feels that they’re being fair and being helpful. So that’s what I’d actually focus on because I think they’ve actually got it pretty well covered here.

VIGELAND:
All right. I hope that helps you out, Neil. That’s all the questions we can take on this week’s show. But leave your question for a future program on our voicemail. It’s 877-275-6669. That’s 877-ASK-M-O-N-Y. Or visit our contact page on our Web site, Marketplace.org. Thanks as always for a sound financial advice, Chris.

CHRIS FARRELL:
Okay. Bye, now.

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