As we headed into the Memorial Day weekend, the business news seemed to quiet down for a few days. That said, here’s a quick look at the business news headlines of the week:
Stock Market Down for the Week, Month, and Year
The Dow Industrials fell another 56 points on Friday to close at 10136. The old investing adage, “Sell in May and stay away” seemed to be working, as the stock market fell for the month of May and then moved into negative territory for the year.
What should you do? Buy on dips and keep investing no matter what. That’s dollar cost investing at its best and it makes the most sense.
Congress Adjourns Without Extending the National Flood Insurance Program
Tuesday marks the start of the Hurricane season and NOAA has announced it expects a relatively active season with 14 to 23 named storms and as many as 3 to 7 major hurricanes. Read the full story on my MoneyWatch.com “Home Equity” blog.
This Week’s Calls:
We had a ton of callers this morning, all listening in during the holiday weekend. Thanks to all of our callers and for making us the top-rated talk show on Sunday morning in Atlanta!!
Norm is wondering whether he should pay to refinance or pay the $3,000 he’d spend on refinancing to simply pay down his loan. He has 23 years left and his loan is 5.375%. If he only has 23 years left, he should refinance to a 15-year at 4 or 4.25% if he can. Otherwise, if he can prepay enough to pay off his current loan in 15 years, then he should do that and forget about refinancing.
Sirpa has an annuity she’s thinking about selling. She wonders how she should diversify her portfolio.
Debbie got her mortgage 18 months ago and is wondering if she should do a bi-monthly program or just prepay on her own. She wants the loan paid off in 15 years. I think she should just prepay – which she is already doing! Go Debbie!
Jessie has no debt other than his mortgage and just got a substantial raise of $14,000. He wants to know what to do and if he need a financial planner. I told him to contribute the maximum to the federal government TSP (he now works for the federal government) and grow his $10,000 savings to $30,000 to $50,000. He should put money into a Roth IRA and start educating himself about money. I suggested my new Equifax Personal Finance Blog would be a GREAT place to start.
Carl has a rental property with a loan at 5 7/8% and owes 10 more years on it. His primary house has a 15-year loan at 5.25%. He has 8 years left on that loan. Should he refinance? I don’t think so. What do you think?
Jeff has an old stock certificate and wants to know how to research it to see if it has any value. The SEC offers some helpful advice on places to go. Most of these charge a fee although some of the resources are available at your local public library:
Jerry wanted to know what will happen if this country goes through a period of deflation. He shared that he owns a business and the products he needs to buy have gone up in cost but he can’t raise his prices because he won’t be able to sell anything.
Is this happening to you??
Brian said he owns an investment property that is far underwater. But because he can continue to make his payments, the lender wont’ work with him. Can he get a loan mod?
Ann wanted to know about Ariel Investments. Ariel is headed up by John Rogers, whose ex-wife Desiree just left the job of White House Social Secretary. The president of Ariel Funds is Mellody Hobson, who doubles as ABC’s personal finance expert. They’re a legitimate company. Find out more here: ArielInvestments.com
Aziza is a long-term listener and first-time caller. She has been investing $50 to $70 per month into her 5-year old son’s 529 plan every month since he was born. But, her plan now has less in it than she has invested. She wanted to know what to do. Also, her husband is 42 and just started saving for retirement. I suggested a Roth IRA for both her and her husband. They can use it to pay for college or they can use it for retirement. It’s a good deal either way.
Bill wanted to know what is the age where you have to start taking mandatory withdrawals from a 401(k) and are there any exceptions?
Jeff called the show a month to ask about his mortgage issues. He hasn’t made a payment in 18 months and has involved his congressional representative – who also can’t get his lender to call him back. He wanted to know if there was anything higher than a Congress person and what he could do to get a response from his lender.
I told Jeff to reapply for HAMP under the new provisions. He (and anyone in this same situation) should read my MoneyWatch.com Blog Post “Loan Modification Hell: Join The Club which now has 571 comments on it. There is some great advice, including links to another post where you can get the names/phone numbers of the executives who run the country’s top lenders.
Charles’ kids have lived way beyond their means. They bought a house a few years ago for $160,000 and it’s now worth $80,000. They are way upside down and their interest rate is 7.75%. The lender won’t work with them and they’re trying to do a short sale. Charles wanted to know if a short sale or foreclosure would be better for their credit. I told him a short sale would be better than a foreclosure, and a deed-in-lieu falls somewhere in the middle. But he needs to tell the kids to get a real estate attorney who can negotiate the final documentation with the lender so they don’t wind up getting chased for the money down the line.
Thinking About Converting Your IRA to a Roth IRA? Check out what my friend Dan Solin has to say
Dan Solin is a Senior Investment Advisor with Index Fund Advisors. He also has written several bestselling books about 401(k)s and retirement. He is now writing about retirement and investment issues with me at the new Equifax Personal Finance Blog.
Introducing the Equifax Personal Finance Blog
On the blog, you’ll find great information about the five pillars of personal finance:
Tax (written by Eva Rosenberg, an enrolled agent)
Insurance (written by Linda Rey, who is president of her family’s insurance company)
Retirement/Investing (written by Dan Solin, see above)
Credit (written by Equifax’s own credit experts)
Real Estate (written by yours truly)
The blog is a great resource of information and ideas on how to save money, better manage your credit and make smarter decisions with your money. Check it out, RSS it, bookmark the page, and follow all of us on Twitter.com/EquifaxPFB.
Tune in to hear all of these questions and my complete answers. We should have the show podcasted later this week.
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