Entries for October 2007

U.S. News Associate Editor Kimberly Palmer talks to Retirement Living TV about how to ensure companies treat you right.

When I got my new Dell laptop, I couldn't wait to turn it on and start using it. But first I had to spend an hour on the phone with my Internet service provider because the new computer wasn't compatible with my wireless modem. Then I had to spend two Saturdays in a row on the phone with Dell customer service trying to figure out why the computer shut off and started beeping if I left it on for too long when plugged in.

During one of my last calls to the company, a technical support representative asked me to run an hour-long diagnostic test on the machine. When another representative called back later to check up on how the test went, I had to repeat the entire story of what was wrong with the computer, wasting even more of my precious weekend time.

When Steven Kopp went home to Orlando to visit his parents earlier this year, they took him to see what will one day be their final resting place. They explained to him how they chose the simple spot in a cemetery near their home.

Such openness about death is rare, as Kopp well knows. The business professor at the University of Arkansas studies why people don't better plan what they want to happen after they die and the economic costs of failing to do so. "Many people have a resistance to even thinking about the events involved in dying," Kopp says. That lack of awareness and planning can make death more stressful and more costly for family members as they struggle to quickly plan a funeral and think about dividing up family property while grieving.

Dear Alpha Consumer,

I'm self-employed, and I've read that it is very difficult for self-employed people to get a mortgage without putting down 20 percent of the home's purchase price. I've tried calling lenders to find out whether this is true. They all say to call them back after I've been working for myself for over a year (it's now been about five months) but won't go into detail about what will happen then. Is there anything you can tell me?

When it comes to taking out a mortgage, self-employed people face obstacles that their cubicle-contained neighbors do not. It's harder to prove how much income a self-employed person has since he usually lacks a weekly paycheck. What's more, some of the money coming in may be going to business costs. So lenders often charge a premium to entrepreneurs. You do have options, though, and waiting a year may not be the best one.

Funerals, like weddings, are expensive affairs usually planned by people with very little experience. After all, with funerals at least, it's a once-in-a-lifetime event. Many people are unaware of their rights guaranteed by federal law, such as the right to receive price information from funeral homes over the phone. And they tend not to plan funerals, which often drives their price up, because people rarely have the time or inclination to shop around while grieving.

The average price of a funeral is $6,580, according to the National Funeral Directors Association. U.S. News spoke with Steven Kopp, an associate professor of business at the University of Arkansas, and Joshua Slocum, executive director of the nonprofit Funeral Consumers Alliance, about how to minimize sticker shock on what is usually an emotionally wrought purchase.

For many women, retirement isn't the relaxing haven it's cracked up to be. Because women earn less over their lifetimes than men and live longer in retirement, they also tend to have less saved. According to a Government Accountability Office report, 12 percent of women over 65 are living in poverty, compared with only 7 percent of men. For divorced and widowed women, the poverty rate is higher, at 21 and 15 percent, respectively.

Dear Alpha Consumer,

I recently purchased a home. I obtained a mortgage broker through LendingTree. Its ads state, "No surprises at closing." But I was met with several major surprises, including extra closing costs, a higher interest rate, and a spike in the private mortgage insurance of about 100 percent from the original quote. Is this legal and/or typical?

Unfortunately, first-time home buyers are often surprised by fees, insurance, taxes, and other costs. But it doesn't have to be that way.

The Internal Revenue Service relaunched its program of random audits this month in an effort to hone its ability to estimate compliance rates and crack down on tax fraud. Unlike its usual audits, which are more targeted and so not representative of all taxpayers, the program will randomly select about 13,000 individuals for a closer examination of their 2006 returns. The goal is to gather information that will help reduce the $290 billion "tax gap," the estimated difference between taxes paid and taxes owed. (In 2006, the IRS audited about 1.3 million taxpayers as part of its routine auditing process.)

Dear Alpha Consumer,

Is it safe to shop online?

Ramit Sethi, creator of the popular I Will Teach You to Be Rich blog and author of a forthcoming book by the same name, wants to show young people how to manage their money. While there's no dearth of books on personal finance, he thinks most of them repeat the same old—and unhelpful—story. U.S. News spoke with the 25-year-old recent Stanford graduate.

Dear Alpha Consumer,

To make a long story short, I borrowed $30,000 from my mom. I signed a legal agreement to pay the money back to her. I built a house leveraging the money and now have good renters in it. My mom died. We each received about $20,000 from her estate. That leaves $10,000, or $2,000 each, that I owe to my five siblings. (I did not sign any separate agreement with them.) One sister in particular could use some money. But I cannot afford to pay them. What should I do?