How to Complain Effectively

If you have a problem with a business, you may be able to resolve it by returning the product or making a phone call. In some instances, you may have to write a letter of complaint. However, before you do anything, decide what you want the company to do: Refund your money, repair the product, or exchange it for a new one.

Making a Phone Call

• If the call is long distance, look at the product package for a toll-free customer service number, or call toll-free directory assistance (1-800-555-1212) to see if the company has a toll-free number.
  
  
• Ask to speak to the consumer affairs or customer relations department or the head of the company if there is no consumer affairs office.
  
  
• Calmly and concisely describe the problem and what action you would like the company to take.
  
  
• Keep notes detailing who you spoke with, what she or he said, the date, and time. Ask when you should expect a response.
  
  
• If the issue is not resolved, and you call again, ask for the name of the person's supervisor so that you can write a letter to him or her.
  
  

Sending a Letter, Fax or Email

• Type your letter and be specific. Be sure to include your name, address, phone number, and email address. Include your account number if you have an account with the company.
  
  
• Be reasonable and persistent, not angry or threatening.
  
  
• Include copies of any relevant documents and keep a copy of your complaint letter.
  
  
• File a complaint with your state or local consumer protection office, Better Business Bureau, or state agency that regulates the industry or product if the company doesn't resolve your problem in a reasonable time.
  
  

Additional Options

• Stop payment on a check.
  
  
• Dispute charges through your credit card company. You do not have to pay the charges while the bill is in dispute, but the interest will still accrue.
  

Check Your Credit Report

Check your credit report once a year. It's a credit healthy thing to do—and now it's free. Creditors determine whether to give you credit or a loan—and how much you will pay—based on information in your credit history. The national credit bureaus (now called consumer reporting companies) collect information from your creditors about how many credit cards and loans you have and how many accounts are late, overdue, or in collection. They sell information in your file to creditors who determine if you'll get a loan and how much interest you'll pay on a credit card. This information about how much credit you have and how you pay your bills can even be used to decide if you get a job, new cell phone service, an apartment lease, or car insurance.

Even if you think your credit history is good, you still should get a copy of your report. You might find anything from old accounts to errors to outright identity theft. You shouldn’t be the last to know what’s in your file. That’s especially true now that you can get free copies of your credit reports from the three major consumer reporting companies (Equifax, Experian, and TransUnion).

Important advice:

Know that there are imposters that use web site names that are extremely similar to the real “free” web site.

• Only order from this official source.
• Don’t open emails or click on pop-ups that offer a free credit report. This could be a scam to steal your personal information.
• Never give a credit card number for a “free” credit report.
• You don’t have to purchase anything to get a “free” credit report. Many supposedly free credit reports will cost you money.
• Don’t contact the consumer reporting companies directly to get this free annual report opportunity.

How do I correct a mistake on my file?

If you find something wrong in your file, you need to tell the consumer reporting company what information is inaccurate. It is best to do this in writing. AARP recommends you use certified mail so you can prove you sent the dispute. If you have documents that support your claim, send copies—not the originals. The company has to investigate your claim and report back to you. You will also get another free credit report if your claim changes your file. You should also write to the creditor that provided the information to the consumer reporting company that you are disputing information it gave.

Bankruptcy: A New World

By the National Endowment for Financial Education

Your employer downsizes and your job is gone. Your health deteriorates and you run up big medical bills. Your breadwinner spouse dies or divorces you. Your retirement nest egg disappears when the stock market drops.

For some people, these kinds of events can lead to financial disaster and, in the worst cases, possible bankruptcy. Those who seek bankruptcy generally are not spendthrifts who purchase fancy cars or cruise the Caribbean. They're not deadbeats who run up big bills, and then duck creditors. You might say they've had plain bad luck.

"For most of my clients, it's something that has happened to them," says Nancy L. Thompson, a lawyer specializing in bankruptcy in Des Moines, Iowa. "It's not something they could have avoided or something they did wrong."

And bankruptcy's not an easy choice, particularly for older people, many of whom consider being unable to pay their bills embarrassing.

"Older folks feel almost a moral guilt about bankruptcy," says Jose Vasquez, staff attorney for Colorado Legal Services, formerly Legal Aid Society of Metro Denver. "They look at it as a last resort. They see it as something they have to do, but they feel badly."

Both Vasquez and Thompson also cite deceptive or aggressive consumer practices as prime reasons older people end up in financial trouble. Among the culprits: home-improvement scams, predatory mortgage lending, and aggressive solicitation of credit cards. "I've seen them offered cards with limits way, way beyond what they're capable of paying," Vasquez says.

How Many Older People File for Bankruptcy?

The number of older people turning to bankruptcy remains small but is growing, according to the Consumer Bankruptcy Project at Harvard University. The project's 2001 analysis showed that a little more than 82,000 Americans 65 years or older filed for bankruptcy that year—up 244 percent in a decade. Despite that increase, older persons are still a small portion of the overall cases.

Total filings have jumped in 2005 as word has spread that new, stricter laws are to take effect in October 2005. "We were flooded with requests for bankruptcy," says Vasquez. "People's perception was they have to file soon because the laws are changing."

New Law Reforms Bankruptcy

The new Bankruptcy Abuse Prevention and Consumer Protection Act—supported by credit card companies, banks, and other lenders—makes it more difficult to discharge debts, requires credit counseling and education for persons filing for bankruptcy, and raises the cost and complexity of a bankruptcy case. Most parts of the law will go into effect October 17, 2005, although homestead exemptions are in effect now.

The new laws maintain Chapter 7 and Chapter 13 bankruptcy filings.

Chapter 7, under which most individual debtors now file, allows a debtor to keep certain exempt property (defined differently among the states). Other property—when there is any—is sold and proceeds are divided among creditors. Most remaining debts are erased, giving the person a fresh start.

Chapter 13 allows a debtor to keep non-exempt property-such as a home-while following a plan to pay back creditors over three to five years.

But big changes were made to bankruptcy as well:

• Means Test. There's a new "means test" that is designed to steer more debtors to Chapter 13's repayment system rather than Chapter 7's erasure of debts. If the debtor's income is below her/his state's median income, s/he can file under Chapter 7. If her/his income is over the state median, a complex formula weighing income, expenses, and unsecured debt, comes into play to decide which chapter is appropriate.
• Debt Repayment. If the debtor files for Chapter 13, stricter IRS guidelines will be used to determine what s/he can afford to pay.
• Higher Costs. Chapter 7 filing fees increase under the new laws, and attorneys predict legal fees will rise as well because the new laws require more work.
• Creditor Actions. Creditors who won't receive any money owed in a bankruptcy case may now contest the ruling for Chapter 13 filings as well as Chapter 7 filings.
• Waiting Period. The period a person must wait to file another bankruptcy case increases from six to eight years.
• Homestead Exemptions. These exemptions allow the debtor to keep some of the equity in her/his home safe from creditors. The amount varies from state to state. As of April, 2005, the homestead exemption is stricter.
• Retirement Accounts. Retirement accounts, such as Individual Retirement Accounts (IRAs) and 401(k) accounts, are protected for up to one million dollars in retirement savings per person.
• Financial Counseling. The law also requires the debtor to take an approved financial counseling course outlining alternatives to bankruptcy within six months of filing. At the end of the bankruptcy, he must also take an approved financial management course to learn the personal financial skills needed to avoid future financial problems.

Thompson doesn't expect the new means test to affect very low-income older people because their low income will still allow them to erase their debts under Chapter 7, in part because the means test does not count Social Security payments as income. Middle-income people will see the biggest change from the new means test. "Before, bankruptcy has always been an option for persons who cannot dig out of their financial hole to start over," she says, "but now it's going to be more difficult."

Regardless of income or age, the new law's higher legal and filing costs will be burdens, she believes, because those filing for bankruptcy are strapped for money to begin with.

The paperwork and documentation needed to file for bankruptcy also can be challenging for older people, Vasquez notes. Often, the personal property they have is old and its worth is impossible to prove through receipts or records. They may not have cars or they may have physical disabilities, both of which make getting appraisals difficult.

If you are in a financial situation in which you are wondering if bankruptcy is your only way out, talk with a lawyer who is aware of the new legal requirements. If you've just had a personal crisis that has changed your financial situation dramatically, assess what next steps are best for you. If you are living paycheck to paycheck just to keep up with creditors, look for ways in which you can get off the debt treadmill—getting credit cards and debt paid off not only saves money in fees and interest costs, it also creates a safety net should an unexpected event occur. While no one can fully prepare for the most catastrophic of life events, everyone can try to prepare for a more secure financial future.

New Bankruptcy Rules Temporarily Waived for Katrina Victims

Some of the new bankruptcy rules will be waived for people affected by Hurricane Katrina. The waiver applies to people who lived in any areas on August 29, 2005 that were declared by the President as part of the disaster. People seeking to file for bankruptcy do not need to be living in this area now or at the time they file for bankruptcy. Anyone who files for bankruptcy under the waiver must have been adversely affected by the Hurricane.

Specifically, the exceptions to the new bankruptcy act for Katrina victims are:

• Means test. For Katrina victims, bankruptcy trustees will look at a person losing income, such as from their job, and how much their expenses have gone up. These are considered special circumstances and can mean a consumer may not have to meet the means test requirement.
• Documents required. Katrina victims will not have to provide the amount of supporting paperwork that the new Act requires. This is because consumers may no longer have these documents or be able to get copies.
• Location. Many people have been relocated or chosen to move out of the Hurricane Katrina area. Because of this, consumers will not, in most cases, have to return home to file for bankruptcy.
• Credit requirements. The new law requires consumers to attend a meeting of creditors. However, Katrina victims will be treated with flexibility for this requirement. Bankruptcy trustees are allowed to waive the counseling requirement in a judicial district where consumers may not be able to receive credit counseling. This applies to consumers hit hardest by Katrina, including the eastern, middle, and western districts of Louisiana, and the southern district of Mississippi.

Consumer Self-Assessment: How Good are Your Money Management Skills?

Directions: Choose the best answer for each question. Answer only the Bonus Questions that apply to you. I have a financial record-keeping system in place at home to track income and expenses. True False I have a household spending plan or budget and use it. True False I regularly reconcile my checks and ATM withdrawals. True False I pay my bills on time. True False I compare offers from credit card companies before applying for credit. True False I pay more than the minimum on my credit card bill each month. True False Not applicable / I do not have any credit cards. I have requested and reviewed a copy of my credit report from at least one credit-reporting agency. True False I have identified immediate and long-term savings goals. True False I save money regularly. True False I have an emergency fund that covers three to six months of my living expenses. True False I put my money in low-risk savings products such as savings accounts, money market accounts, or certificates of deposit (CDs). True False I shop for the best interest rates for my savings vehicles. True False I review my annual Social Security statement from the Social Security Administration. True False I have calculated how much money I will need to retire comfortably. True False I am vested in an employer-funded pension plan. True False Not applicable / I am not eligible for an employer pension plan. I contribute regularly to an employer-sponsored retirement savings plan, such as a 401(k). True False Not applicable / I am not eligible for an employer retirement savings plan. I save money in a tax-advantaged Individual Retirement Account (IRA). True False Not applicable / I am not eligible for an IRA. I put my money in different types of investments to boost returns and reduce risk. True False I have a mutual fund. True False I don't dip into my retirement savings to cover other expenses. True False I have searched to find the lowest interest rates and fees on a home mortgage. True False Not applicable / I do not own a home. I have a will. True False I have adequate disability insurance. True False I have adequate life insurance. True False Not applicable / I do not have dependents. I have adequate health insurance. True False I have explored the pros and cons of long-term care insurance. True False I educate myself about financial issues. True False BONUS I pay my credit card balances off in full each month. True False BONUS I calculated how much money I will need for retirement, AND I adjust my savings plan as needed to ensure that I have the best chance of reaching my retirement savings goals. True False BONUS I own my home outright (I either paid the full purchase price of my home without taking out a loan, or I have fully paid off my home loan). True False BONUS I have a no-load mutual fund, a fund that does not charge me a transaction fee when I buy or redeem shares. True False

Credit Card Fraud

Not long ago a woman dined at a favorite restaurant. She paid by credit card. When she received her next credit card bill, though, she was shocked. She saw charges of several hundred dollars for things that she didn’t buy.

Credit card fraud is increasing. It costs businesses billions of dollars each year. And it costs you, too. Businesses pass these costs on to you in the form of higher prices, interest rates and fees. If you are victimized by a credit card scam, you also pay with your time and inconvenience getting your credit cleared.

You are not usually required to pay unauthorized charges – especially if you call the credit card company immediately after discovering a problem.

When the woman at the restaurant called her credit card company, they said she was a victim of “skimming” – a growing area of credit card theft. At the restaurant an employee probably ran her credit card twice, once for the meal charge and a second time on a magnetic card reader. The employee then copied the data onto a blank credit card and sold it to a third person or used it personally. The woman didn’t have to pay for the unauthorized charges.

Today, you, like most people, undoubtedly use credit cards routinely. Few people pay cash. Credit cards are just so convenient. And even though fraud is increasing, the good news, consumer advocates say, is that credit card theft is one of the easier crimes to prevent.

Credit card companies are taking steps to make the cards more secure. Some display a photograph of the cardholder so criminals can't make face-to-face purchases with a stolen credit card. Most cards have holograms, secret imprints, or hidden images so thieves have a harder time making a new credit card with a stolen card number.

Despite these improvements, you still be a victim of credit card fraud. Even though credit card companies usually won't make you pay for the merchandise that thieves buy, it can be nerve-wracking to lose a credit card or find unauthorized charges on your credit card bill. That's why it's important to protect your credit card, your credit card number, and your credit card sales slip.

Protect your credit cards:

Use common sense when it comes to your credit cards. Don’t lend your card to anyone else. If you want someone else to use your credit card, go with the person and do it yourself. Some other tips:

• Only carry one or, at most, two credit cards.
• Don't write your PIN (personal identification number) on your credit card. This prevents thieves from using your card and PIN to withdraw money at an ATM machine.
• Write down the phone numbers of the credit card companies and keep them in a safe place to have them handy if a credit card is stolen or lost.
• Immediately report lost or stolen cards to the credit card company. The credit card company can stop the thief by canceling your credit card and number.

Guard Your Credit Card Number

Thieves don’t need your credit card to charge merchandise to your account. They only need the card number. Criminals use stolen credit card numbers to make purchases over the phone or through the mail. Sophisticated lawbreakers can even make a new credit card with your name and number on it.

If you receive an offer for a new credit card in the mail and don’t intend to use it, cut up the application form into several pieces. Some crooks go through trash looking for discarded but still usable applications in your name. Also,

• When checking out at store registers, shield your credit card from the people around you. Someone might be looking over your shoulder to copy your number.
• Don't give your credit card number to telemarketers unless you are sure they represent a reputable company or you placed the call. Con artists pretend to sell you something just to get your credit card number.
• Con artists also may pretend to be your credit card company or bank and say they need to verify your card number because of some “computer problem.” Don’t fall for this scam. Verify directly with the credit card company using the telephone number on your card, not the number the caller may give you. They number they give on the phone you may be false.
• Make sure your transactions are accurate. Be on guard for dishonest merchants who might change your credit card slip after you sign it.
• Always add up your charge slip before signing the credit card receipt. Don't leave blank spaces where additional amounts could be added.
• Never sign a blank charge slip.

Check Those Receipts

• Keep track of your credit card receipts as proof the purchases you actually authorized.
• Read your monthly billing statement carefully to see if it includes purchases or transactions you did not make. Report any to the credit card company right away.
• Always check your receipts against your billing statement. If you think a charge amount was changed, call your credit card company immediately.
• Shred your receipts and anything with your credit card number on it. Thieves go through trash looking for this valuable information.

Credit Card Tips

It is difficult to imagine trying to live without the convenience of credit cards. Yet many get into financial trouble in part due to their misuse of credit cards. By following a few simple rules you can avoid the missteps and use credit cards to improve you personal finances instead of falling into the credit card traps.

First, don't use your credit card for loans. Pay off your balance each month. Pretty obvious advice but way way too many people don't follow it. If you use your credit card for a loans - 98% of the time that is a mistake and big risk to your personal financial future. Don't do it. There is a reason pretty much all the advice from financial advisers on credit cards starts with this - it is the most important advice. Second, if you don't follow the advise above pay off your loan as soon as possible. Payment the minimum payment is huge mistake. You should not be making any discretionary purchases if you are not paying down your credit card debt substantially each month.

Third, pay your credit card bill in full each month on time. The huge fees credit card companies charge if you are late should be avoided. I will admit I have slipped up occasionally but take great care to avoid paying you hard earned money in exorbitant fees.

Fourth, if following the advise above (which you should be) get a card that pays you for all your purchases. Straight cash is simplest and usually best but if you really want to take the time and effort to try and get more advantage through the use of airline miles or some such other gimmick go ahead.

Fifth, ask for reduced fees and interest rates (which you shouldn't have to worry about since you shouldn't use the credit card for loans but if you do...). The credit card companies make a great deal off the use of credit cards and the cost of acquiring new customers is high so they are most often willing to negotiate. If you miss a payment or make the payment late (by mistake, once or very occasionally) ask for a reduction in the fee. The fees are far too high and just by calling you can likely get a reduction in the fee.

Sixth, setup an automatic withdrawal of your monthly payment (the full payment) from your checking account. Of course you need to be sure you have the funds to cover these payments in full or you may incur fees not only for your credit card but from your bank. Many banks (and credit unions) will allow you to pre-arrange to have checks or deductions covered by the bank in the event you don't have the funds in your account though their may be a fee if they cover a payment for you.

Seventh, if you follow the advise above credit cards are a useful tool. You get to buy items and don't have to pay for them for a month or so (while you can be earning money on you money in a savings account or money market account). And since you are getting paid for a portion of your purchases you not only get a free loan for a month but get paid for the privilege.

If you don't follow the first piece of advice though you need to look at low interest rates over being paid - but don't go down that path.

Related tip: create a emergency cash reserve. Until you have built up a cash reserve of 3 month of living expense you should not be making many discretionary purchases. Once you have 3 months saved away then continue to build that to 6 months (but during that time feel free to spend some of your earnings on discretionary items).

Without the cash reserve it is too easy for anyone to take a financial hit and before you have a chance to get back on your feet be severely punished. Credit card companies take advantage of those that don't plan ahead: Don't Let the Credit Card Companies Play You for a Fool. And as soon as you slip huge fees, penalties and interest charges will start and you may have trouble getting out of the cycle of huge fees and interest. It is best to avoid every getting into that cycle.

Avoiding identity theft tip: shred your credit card statements before throwing them away.

TEN STEPS TO START SAVING MONEY ONLINE

1. Develop a simple, easy-to-implement plan. Guess what? You're at the perfect place to begin

Figure out how much you could put toward paying off your credit card balance(s). Trim a little from your monthly miscellaneous expenses and begin paying more than your monthly minimum payment on each card as quickly as possible. Remember, paying off your credit card balance can be one of the highest-paying investments you can make.

Check to see if your company offers an employer-sponsored retirement plan – otherwise known as a “401(k) plan” (or “403(b) plan” if you work for a public agency or a nonprofit organization.) When you sign up to participate your employer will automatically deduct a certain amount of money (determined by you) from your regular paycheck and funnel it to this retirement plan (often you are able to choose which fund or funds the money is invested in.) The four biggest benefits to employer-sponsored retirement plans are:

1. the company does all the legwork for you;
2. it's an automatic payroll deduction so it forces you to save;
3. most companies will match a certain percentage of their employees' contributions, and
4. at least a portion of your contribution will be “pretax” so it will help lower your tax burden at the end of the year.

Sign up, even if it's just contributing the minimum amount. To learn more about 401(k) plans, click here.

Open up an individual retirement account (“IRA”) through a local bank, credit union or brokerage fund. You can contribute up to $4,000 a year (up to $5,000 if you are age 50 or older) into this account which, for many people, is tax deductible. So you save in two ways – you're putting money away toward your retirement, and you'll pay less in taxes at the end of the year.

Make one extra mortgage payment per year. Write “to principal” in the memo portion of the check so your bank will know you want to apply the entire amount to your principal. By lowering your principal, you're also lowering the amount of interest you owe on your mortgage…which can lead to substantial savings and can cut years off your mortgage.

Keep a strict record of expenses for one month. Write down everything. Then at the end of the month review your list. Categorize your spending and you'll begin to see where you could cut back. You might be surprised by how much you can begin to save once you really know where your money is going!

Transfer your credit card debt to a card that charges a lower interest rate. When checking for a new card, make sure that you'll get the lower rate you want for at least 6 months. Read the fine print in the application. You may find that the bright red “7% offer!” on the envelope is what's known as a “teaser” and only lasts for a few months, when they'll jack the rate back up to 18, 20, or 22 percent, often without you noticing. If you have a good history of timely payments with your own credit card company, call and ask them to lower your interest rate and lower or waive some of the fees in return for your continued use of their card. Many companies are willing to do so. You can also log on to www.bankrate.com or check to see if your local library carries “Bank Rate Monitor” (BRM) newsletter to get a list of the best rates for credit card deals both in your state and nationwide. You can contact any of the banks listed for an application and transfer your balance. If you belong to a credit union you should check with them to take advantage of lower interest rates. If you're interested in comparing costs and services of your local bank with a credit union in your area you can contact the Credit Union National Association (CUNA) by logging on to their website or calling (800) 358-5710.

Have you checked out your utility bills lately? Taking even a few simple steps can add up to hundreds of dollars in savings. For example, lower your hot water heater to 120 degree (which is recommended for families with small children anyway) and you can save 10-15%. Check with your electric or gas company to see what peak hours are. You'll save money by doing your laundry or dishwashing at non-peak times. And yes, it may be painful to hear, but your father was right...you don't need to leave the lights on in every room. Flipping the switch can help save money. These are small, easy steps to take to save money that even your kids can do. Many energy companies will send you, free of charge, a list of energy-efficiency (read: money-saving) tips, or will even come to your home to do a free evaluation at your request.

Review your next phone bill to see how much you're paying for services that you don't really need. Do you call your sister in-state every weekend but rarely make out-of-state long-distance calls? Your phone company can let you know of a calling plan that will give you better rates for the calls you typically make. Check out what you're paying for long-distance fees. Often phone companies will reduce your rates if you call to say you're considering switching to a cheaper plan offered by their competitor.

Review your insurance policies. Are you paying for more coverage than you need? By visiting websites like www.quotesmith.com you can comparison shop for virtually any type of insurance policies including life insurance, homeowners insurance, disability, dental, even small business coverage. It's worth a few minutes of research to determine if you could lower your monthly insurance rates and still receive the coverage you and your family need.