March 3, 2008 issue

Needed: 50,000 new financial planners, and in a hurry. Boomers are reaching pre-retirement and retirement age, and, often, they’re clueless about what to do with their money now. They’re eager for help with decisions that could make or break their lives: Can I afford to retire? Should I take a pension or a lump sum? What’s a suitable investment? How do I make my nest egg last? There aren’t enough people trained to answer those questions well, says Deena Katz, associate professor in the Personal Financial Planning department of Texas Tech University in Lubbock.

As always, the issue is quality, and the financial sharks are circling. “That keeps me up at night,” says Sheryl Garrett, founder of Garrett Planning Network, an association of nearly 300 independent planners. “There are so many people drooling over all the money that’s going to be coming out of retirement plans.”

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By Linda Stern 

If you missed your chance five years ago, this might be a good time to refinance your home mortgage. The credit crunch has paradoxically produced the lowest interest rates in years. Rates on 30-year loans are below 6 percent, and 15-year loans are skirting the 5 percent level.

A refi now should appeal to three groups in particular: those who have dangerous interest-only or negative-amortization mortgages, those whose credit scores have improved significantly since they got the loans they have now and those whose variable loans reset last summer to 7 percent or higher.

Folks who have big loans— so-called jumbo mortgages of more than $417,000—should wait and see. The federal stimulus package is supposed to help rates on those loans, but that effect may not kick in until spring.

The Internet is crawling with smart money sites offering calculators, data and advice. Below, TIP SHEET reviews some standouts that can help you make good financial choices.

Analyzenow.com: A former engineer breaks down all the math behind retirement planning. It includes free Excel spreadsheets, book suggestions, articles and a “tough love” approach to building post-job budgets—just the brutal facts, according to its author.

Retailmenot.com: Easy, comprehensive couponing, with discount codes for just about every online and retail store. Also includes user reports, so you don’t get stuck using bad codes. Check this site before you click “place order” and you’ll save money.

By Linda Stern 

Greenwashing isn’t about salad prep. It’s what companies do when they plaster their products with meaningless but inspiring labels like EARTH-FRIENDLY and ECO-SAFE. Sounds good, looks pretty, but how do you know whether you’re really getting an environmentally sound product?

You don’t, according to the Federal Trade Commission, which is reviewing the guidance it gives consumers on green pitches. “There’s a heightened potential for deception” with green claims like carbon offsets when you can’t monitor the actual effect, says FTC chair Deborah Platt Majoras.

Ignore the fluff and look for specifics, suggests the Center for American Progress, a liberal think tank. The words “organic” and “recycled” are regulated by the government and have legal meaning, as do the Energy Star designations given to appliances, electronics and other products by the Environmental Protection Agency and the Energy Department. You can look for independent certification by groups such as Green Seal (greenseal.org), EcoLogo (ecologo.org), the Greenguard Environmental Institute (greenguard.org) and the Forest Stewardship Council (fscus.org).

The more details you get, the better, says the FTC. Instead of going for the box that says “less waste,” buy one that says “20 percent less material.” If a product has those three little green chasing arrows, check to see if the box offers more info, like whether it’s recyclable or recycled, whether the symbol refers to the product or the package and what percentage is actually made of recycled materials. Be aware of what the environmental marketing company Terra Choice calls “hidden trade-offs”: products that claim one environmental virtue, like energy efficiency, but deliver another sin, like hazardous contents. Finally, don’t get smitten with the word “biodegradable.” Most of that stuff ends up in landfills anyway, and still takes a long time to go away.

With rates on money-market accounts and certificates of deposit stuck around 3 percent, it hardly seems worth driving by the bank to make a deposit. But now a relatively new kind of account, called rewards checking, is showing up at hundreds of banks around the country, promising to pay as much as 5 percent in interest without any fees. Here’s what you need to know before you start looking for one.

• They come with strings. These accounts typically require you to use your debit card at least 10 times a month and to give up paper statements in favor of online ones.

• They’re not at the big banks. These accounts can be found at community institutions like the State Bank of Toledo (www .banktoledo.com) and Southern Community Bank and Trust (smallenoughtocare.com). Some cater only to a local clientele.

March 3, 2008 issue

Cash-strapped parents are filling out their aid forms in the face of higher college costs, a credit crunch and new student-loan legislation from Washington. TIP SHEET’s Linda Stern asked Mark Kantrowitz, publisher of FinAid.org, how you can get the most cash for your kids.

STERN: Will there be college money for next year’s freshmen? How much will it cost?
KANTROWITZ: There will be fewer lenders, but students will still be able to obtain federal education loans. Undergraduate federal student loans will cost 6 percent if they are subsidized, 6.8 percent if they are unsubsidized, and parents’ loans will cost as much as 8.5 percent.

Those rates all seem pretty pricey. Shouldn’t families just get a home-equity line instead?
Remember that these are fixed rates, and home-equity rates will vary, so over the long term they may go up higher. And student loans have some other favorable terms like hardship deferments and extended repayment plans. But, if you think you can pay it off over the next couple of years, I’d recommend the home- equity line.

 March 3, 2008 issue

Our top picks for the week

Rent “Darjeeling Limited.” Director Wes Anderson transports his arch, melancholic sensibility to India, where three estranged brothers hop a train in a quixotic attempt to heal spiritual wounds. “Darjeeling” has a lightweight, coloring-book charm that deepens after these odd, privileged ducks are thrown off the train.

Hear Terry Riley’s “The Cusp of Magic.” Kronos Quartet, along with pipa player Wu Man, introduce noisemaking children’s toys to Riley’s 2004 composition. With a quack, quack here and a glissando there, they bring this mesmerizing piece to vivid and magical life ($12.99; Amazon.com).

Buy John Allan’s Travel Kit. The jet-set man on the go can travel with style and ease with this six-piece TSA-approved set. The clear, zippered pack includes two-ounce bottles of necessities like shaving cream, shampoo and moisturizer ($38; johnallans.com).

Watch NFL Super Bowl XLII—New York Giants Championship DVD. See the historic upset a different way: through the prism of NFL Films. The DVD offers three hours of footage that takes the Giants from training camp to the championship ($24.99; nflshop.com).

Go to Miami’s Carnaval. Enjoy two weeks of food and festivities, culminating with Calle Ocho, Carnaval’s marquee event on the 16th, when 23 street blocks are opened up for the grandest party of all (March 1–16; carnavalmiami.com).

March 3, 2008 issue

By Linda Stern

Individual workers can sue their bosses for mismanaging their 401(k) plans, the Supreme Court said last week. But that doesn’t mean the millions of employees who are watching their nest eggs shrink this year should race to the courthouse. They are more likely victims of a fickle stock market than financial malfeasance. And, because most workers make their own investment decisions, they can’t blame their companies for those losses.

But employers can misuse 401(k) plans, says Rebecca Davis of the Pension Rights Center (pensionrights.org), a Washington advocacy group. They can stuff a plan with poorly performing company stock, or with mutual funds that charge excessive fees. They can delay making investments or depositing money into the account. When that happens, employees should first take their complaints to their employers and then, if they aren’t satisfied, to the Labor Department (dol.gov/ebsa), which regulates retirement plans. And as for those red-inked statements of 2008, just sit tight, says David Wray of the Profit Sharing 401k Council of America (psca.org). With stock-market prices down, your monthly contributions are simply buying more shares cheaply, and that’s not bad.