I’m reviewing Jane White’s new book, America, Welcome to the Poorhouse. Jane White is the founder of Retirement Solutions, LLC., whose goal is to push for 401(k) reform and provide investment education. I should mention that as I was reading this book, the theme of having 401(k) reform is pushed heavily in this book.

Win a free copy of this book, check the Twitter contests below!

This may be a turnoff for some readers while others may be intrigued and decide to weigh the pros and cons of the authors reform ideas.

Like a lot of my other book reviews, I’m going to present a review of some of the chapters, so you can see if this book would be a good fit for you and your situation.

Chapter 1: Why You Can’t Retire from a 401(k) Plan

White opens up  at the alarming fact that many Americans are hoping to retire have nowhere near the amount they need to retire. Fidelity had a report in 2007 that the median balance was $43,000 for workers aged 60-65.

She then compares the situation to Australian workers who have a mandated 9% of the salary invested in their retirement accounts. She argues that automatic enrollement is not enough with defined contribution plans.

Running the numbers, White notes that workers starting to contribute at age 25 should see at least save 10% of their salary for retirement.   She passionately pleads that people need to be informed that the amount that the typical American put aside is not enough to retire on.

She criticizes mutual fund company in the media for not bringing this to the public attention.

Chapter 2: How to Save Wisely Until We Get  401(k)

White mentions that 401(k) reform is necessary, and give her rules to cope with the economic hardships. Many readers may be familiar with the financial principles. Some highlighted here on the blog and in this book were:

• Work longer and live on one income ( if you’re two income family).
• Don’t jump out of the stock market when it’s low.
• Don’t base your investment decisions on the fluctuations of the market, instead focused on your long term strategy.
• Don’t borrow from your 401(k) account
• Rollover your old 401(k) into an IRA

She then mentions her reform plan, and how certain lobbyists might try to fight it.

Chapter 3: The Mortgage Mess: It Ain’t Just Subprime

Jane White tackles mortgage and how some home owners cannot afford their house.

The author gives an example of a young couple in San Francisco who bought a house for $730,000. The problem was they the couples house and expenses came out to 55% of their income. My problem with using this example is that they sat down and did their budget after they bought the house.

When buying a house, people need to ask themselves: Can we afford the costs of home ownership? Besides the mortgage, can you afford to pay:

• Homeowner’s Insurance
• Private mortgage insurance
• Home Association Fees
• Property Tax
• Maintenance & Improvement

One part of the mortgage mess is people buying more house than they can afford. Personal responsibility is a factor in this and to just ignore bad financial decisions isn’t going to fix it.

Home buyers, thought, are not the only one at blame. The other two examples given in the chapter’s opening do a better job pointing out some of the problems of the mortgage problems we see.

We have cases of lenders, real estate agents, mortgage brokers, and appraisers all trying to maximize their income to the detriment of the homebuyer.   One example of this is the push for homeowners to get an adjustable rate mortgage, so they can qualify for a house they cannot afford.

I included the definition on my post on mortgages and interest rates:

An adjustable rate (better known as an ARM):  The interest rate changes at specific times and the interest rate is subject to market conditions. There is a lifetime cap and annual limits to give some protection to radical increases, but your mortgage payments can still increase dramatically.

White argues that ARMs have an effect on the increasing price of housing in United States. She says a factor in this housing bubble was a decrease of government subsidy for low income housing  under the Nixon administration  referencing a New York Times article from 1975.

White suggest abolishing adjustable rate mortgages as part of the solution. She also suggest that like AIG and GM the mortgages ahould be scrutinized by Congress.

My Take on the Book

What I enjoyed about the book was the references and statistics that White presented. While some of the suggestions were a bit vague (move to an affordable region), I did get some useful information from it.

I would go ahead use the information to make some changes to your finances. It’s obvious that socking away 3% of your pay into a 401(k) isn’t enough. White makes the case for challenging yourself and putting away 10% of your gross income towards retirement.

The advice in the book has some financial rules of thumbs for those struggling with money.   Later in the book, in part five, White goes towards more political commentary about big business is lobby and and politicians.

This section was not my cup of tea , but I know some readers may find this interesting. I hope this review was helpful for you.

I think the book is suited for readers trying to determine a general strategy with their retirement and want to examine a viewpoint on the economic mess.

Your Take

I’m curious to see how you have dealt with your finances so far. How do you manage your finances to make retirement possibility? If you’re a homeowner or are thinking of buying a home,  what precautions are you taking with your finances? When you finish reading the book, I’d love to hear your thoughts.

Twitter Contest

I have an extra copy of  America, Welcome to the Poorhouse! to give away to a reader. I’m excited about the contest andI’m grateful for the extra copy from the publisher.

Rules

• Follow me on Twitter and tweet about the book review.
• You can only enter once a day.
• You must be a resident of the U.S. or Canada

The contest will end Friday, November 13, 2009 at 6pm EST. I’ll announce the winner on Twitter. They will have until Sunday, November 15 at 6pm EST to contact me with their information to claim their prize.

Check out BudgetPulse's new feature!

For those looking at budgeting tools, there is a new feature over at BudgetPulse.com. They now have online fundraising capability. How can this be a help for some? Craig Kessler from Budget Pulse explains:

BudgetPulse.com is a free personal finance website offering customers the ability to set savings goals and then have their family and friends directly contribute funds (via PayPal or Amazon) or pledge money to their goals helping them out.  The goals can then be tracked for and integrated with the transactions involved within their personal budget allowing users to raise money and budget in one centralized location.

Budget Pulse’s Other Features

If you’re not familiar with BudgetPulse.com, you should check it out and see some of their other features.

• No Software to Downland
• Works in Any Country
• Money Tracking
• Secure
• Easy Data Import/Export
• Schedule Bill Payments

We had a fun and busy weekend. We went to celebrate family friends’ 30th anniversary. All in all it went well, but while driving up, we hit a snag. We’re about an hour and a half from our destination and decided to take a quick break and grab a snack. I ask my husband to pass me my purse, but he didn’t see it. After looking around for 10 minutes, we realize it’s not with us!

Report your debit card as soon as you realize it's missing or stolen.

Reporting My Missing Debit Cards

I was 99% sure it was still inside the apartment, but I didn’t want to take a chance for that 1%.  I immediately called the banks to freeze my cards until I can either verify they are at the apartment or stolen. I called Wachovia first. I was on hold hold a quite a bit, but when I did get my customer service representative, she was sweet. I explained my situation and she placed a hold/freeze on my debit card.

I then called ING Direct to do the same thing. They told me that was not possible and besides calling in every day to check, I could have a new one sent to me in approximately 5 business days. Since this was a short trip (2 days), I decided not to get a new card.

Liability for Debit Cards

The Federal Trade Commission(1-877-FTC-HELP) notes that credit card liability is $50, but it can be more for debit card, depending on how quickly you report it stolen.

…if you report the loss within two business days after you realize your card is missing, you will not be responsible for more than $50 for unauthorized use. However, if you don’t report the loss within two business days after you discover the loss, you could lose up to $500 because of an unauthorized transfer. You also risk unlimited loss if you fail to report an unauthorized transfer within 60 days after your bank statement containing unauthorized use is mailed to you.

I think most people will fall in the first or second category.  I can’t imagine too many people waiting more than 60 days, unless they are overseas and left their debit card at home.

Found my Purse!

I came home and it was right on the counter in the kitchen. Relieved, I called my bank to take the hold off my check card. I didn’t have to wait long (3 minutes) and my customer service representative was pleasant. He told me that they need to verify my identity before unfreezing the card. I went ahead and answered their security questions.

Unfreezing the Hold with Security Questions

The security questions were from my credit report. I found a couple questions bad to ask such as the birth month of a person since both my father and brother share the same first and last name. Which do I pick? It also had an incorrect address listed, but since I knew of this mistake, I have the the ‘right’ answer.

After verifying who I was and unfreezing my check card, the customer service representative asked if I wanted a Wachovia credit card. I politely declined, so he thanked me for being a customer.

Have you lost or had your check card stolen? Did your bank or credit union work with you?

Photo Credit: liewcf

What is the deal with $8,000 Tax Credit for First-Time Homebuyers?

The big financial news this week is that the Tax Credit for First-Time Homebuyers that was set to expire on November 30, 2009 has been extended until April 30, 2010. It also has been expanded to include a$6,500 tax credit for current home owners who buy a new house. President Obama is expected to sign the bill this morning.

Do you plan on buying a house?

Eligibility for the First-Time Homebuyer Credit

There are some requirements you have to meet before you can get the First-Time Homebuyers credit.

• You must be a first-time home buyer and you must have a purchase contract by April 30, 2010 and closes by .
• The house you purchase must be your primary residence and is not greater than $800,000.
• The buyer must live in the home for at least three years after the purchase date. You will have to repay the credit on a home only if the home ceases to be your primary residence within 3 years from the date of purchase. The full amount of the credit received becomes due on the return for the year the home ceased being your principal residence.
• The income limits have been raised for singles to $125,000 and married to $225,000.

Eligibility for the Existing Homebuyer Credit

• You must have lived in your current residence for 5 of the last 8 years.
• The house you purchase must be your primary residence and is not greater than $800,000.
• The buyer must live in the home for at least three years after the purchase date. You will have to repay the credit on a home only if the home ceases to be your primary residence within 3 years from the date of purchase. The full amount of the credit received becomes due on the return for the year the home ceased being your principal residence.
• The income limits have been raised for singles to $125,000 and married to $225,000.

Please check out the NY Times for more details and other provisions in the bill.

Your Thoughts

Will you buy a house within the tax credit’s extension? How much did the tax credit factor into your plans?

Photo Credit: roarofthefour

It’s time for another book review. In Good Times and Bad: Strengthening Your Relationship When the Going Gets Tough and the Money Gets Tight is from M. Gary Neuman and Melisa Neuman. This is an interesting one, especially in light of the economic times we live in. Gary Neuman has been on Oprah a few times and discussed this topic earlier this year.

Relationship advice for couples having problems with finances

Like a lot of my other book reviews, I’m going to present a review of some of the chapters.  So you can see if this book would be a good fit for you in your situation.

Chapter 1: Our personal story

The Neumans open up with their personal stories and share the growth and learning.  They’ve received from their struggles.  They had to deal with both financial and family health struggles.  Something I think some readers can identify with is their story of being upside down on a mortgage while balancing a family, raising two small kids, and having little savings.

They also shared a serious health crisis with one of their children. I could relate to this as my sister had to be hospitalized many times.  When she was a small child, due to epilepsy.  What I found interesting were the two questions posed in the first chapter, how do we come through an experience of difficult he impact or with a sense of growth?  What makes one couple stronger while other families deteriorate and failed?

I think this first chapter gives readers an idea if this book is for them.  It’s a great personal introduction and sets up how the Neumans’ can cover this topic.

Chapter 2: The decision to fight for your relationship

This chapter, shared many stories from different families struggling in their relationship.  Gary shared how he had helped a couple on the Oprah Winfrey show, with their marriage. Amy and Timothy were in a very difficult situation. Timothy had lost his job and then went into a deep depression.  He was isolating himself and Amy eventually left him and lived with her mother for a bit.

Gary spoke with Amy about her battle with cancer, and she had made the comment that that was easier than this problem her family was facing. besides the couple’s own struggles, Amy’s family added more tension.  Her mother was generously helping Amy out by watching the baby. Timothy made changes in his behavior and along with Amy, they decided to fight for their marriage.

Using the examples, the Neumans pointed out some teachable threads. They emphasize the fighting spirit, give yourself permission to have fun, and find something constructive.  They also shared a little history behind the Nobel Prize story.

Chapters 3: The moment to save (or lose) relationship

From reading this chapter, I gathered that a lack of clear and honest communication can be a huge problem. for one reason or another instead of tackling of the problem as a couple.  Sometimes we want to handle it ourselves. Some of the stories here present different ways that couples decided to communicate and work on their marriage.

Chapter 4: What money really means to you and your partner

This chapter starts off the second part of the book, transform your relationship. For many people, a fight about money isn’t really about the money. As Dave Ramsey likes the point out how personal finance is 80% personal. While we were growing up we were learning what money is or is it from our family, whether right or wrong.

There’s an exercise on page 41 that can quickly let you and your spouse see, what money represents to you.

as with the other chapters, the Neumans gives case study after case study of couples working through their financial and their family problems. Many people have a fear of money and have been paralyzed, allowing their relationship to deteriorate in their finances to dwindle.

Chapter 5: What you learned about money

This chapter gets a little bit deeper about the lessons we learn concerning money.  It tackles topics like:

• the difference is between handling money
• who’s responsible for managing and making the money you sentence,
• how should people discuss money
• What money means to you

The issue of keeping up with the Joneses is discussed here. I think it’s quite easy to be influenced by your friends and neighbors ever so slightly.  But sometimes you don’t even notice.  I also found it interesting that the Neumans looked at, briefly, the American culture of consumption.

My Take

I really enjoyed this book, and while I would’ve preferred more financial topics discussed, I understand that that wasn’t the authors intention in writing the book. I think this is a helpful book specifically for families trying to keep themselves together, while going through hard economic times. I think the biggest message here is the advice:

Attack the problem, not each other.

I enjoyed the exercises and case studies that the book presented and it definitely made for a good conversation topic with my husband this weekend.

If you are single college student,  you should probably check out the book in the library and just scan and review part two with the book.  It does a pretty good job of covering situations that many people find themselves in when they’re dealing with money in a relationship.

Your Take

Do you think that this economy has added more stress to your marriage? What have you been doing to stay on track with your family and your finances? When you finish reading the book, I’d love to hear your thoughts.