Scammers push people to pay with iTunes gift cards

itunesOne thing we know about scammers — they want money, and they want it fast. That’s why, whatever the con they’re running, they usually ask people to pay a certain way. They want to make it easy for themselves to get the money — and nearly impossible for you to get it back.

Their latest method? iTunes gift cards. To convince you to pay, they might pretend to be with the IRS and say you’ll be arrested if you don’t pay back taxes right now. Or pose as a family member or online love interest who needs your help fast. But as soon as you put money on a card and share the code with them, the money’s gone for good.

If you’re not shopping at the iTunes store, you shouldn’t be paying with an iTunes gift card. Other payment methods scammers might ask for include Amazon gift cards, PayPal, reloadable cards like MoneyPak, Reloadit, or Vanilla, or by wiring money through services like Western Union or MoneyGram. Government offices won’t require you to use these payment methods.

If you get targeted by a scam like this, report it to the FTC at ftc.gov/complaint.

by Amy Hebert
Consumer Education Specialist, FTC

Should a Destination Club Be Your Home Away from Home?

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If you’ve thought about buying or building a vacation home, but have hesitated because you aren’t sure that you want to limit yourself to a single location, there’s an alternative you may want to consider: purchasing a membership in a destination club.

What are destination clubs?

Destination clubs are becoming increasingly popular. In return for a one-time membership fee and annual dues, destination club members are allowed to use a club’s global network of luxurious properties for a certain amount of time each year, depending on their membership level. Club holdings are generally restricted to high-end properties–typically those with values of $1.5 million to $3 million. Accommodations are usually large, luxurious private homes, villas, and apartments that are located in travel hot spots such as cities and resort areas. They offer upscale amenities, and a host of personal services.

A destination club or a vacation home?

If you’ve ever fallen in love with a vacation spot, you know that there are some places worth going back to. You may be happy to own a home in a favorite locale and travel to it year after year. One of the main advantages of owning a vacation home is that you’re in the driver’s seat. You can use the property as often as you like, invite friends or family members to use it, or even rent it out. You can also customize your home and decorate it as you wish. But no matter how much you enjoy owning a vacation home, there’s no escaping the fact that it’s a big responsibility. You have to worry about maintaining it, and you must handle all expected–and unexpected–expenses.

The hallmark of a destination club, on the other hand, is flexibility. Joining a destination club allows you to travel to many different places and stay in homes spacious enough to accommodate your family and friends, without the hassles of owning vacation property.
Comparing costs

To compare a destination club membership financially with the purchase of a second home, you have to consider the upfront and ongoing costs of each. Some costs may be similar. For example, maybe you’re considering a destination club with a one-time membership fee of $300,000 and annual dues of $25,000. Alternatively, you could buy a comparable property, let’s say one that’s worth $1.5 million. If you opt to finance the home, your $300,000 (20%) down payment would be equivalent to the destination club’s membership fee, and the amount you’ll spend annually on home maintenance and utility costs could be equivalent to the destination club’s annual dues. (Of course, financing the remaining $1.2 million of the home’s purchase price will also mean making significant monthly payments.)

Costs can vary widely, however. Initial membership fees for a destination club typically range from $100,000 to $1 million or more, and annual fees typically range from $10,000 to $75,000 or more. Home ownership costs may include mortgage expenses, taxes, insurance, utilities, and maintenance (which may be offset somewhat by any rental income you receive).

Another variable to account for is what you’ll get for your money. Destination club memberships entitle you to a certain number of days of use annually, whereas you can use a vacation home as much as you’d like. You’ll also need to take into account home values. For example, joining a destination club may entitle you to stay in a home worth much more than one you could afford to buy (and will also give you access to personal concierge services), but it depends on the specifics.

As a vacation home owner, you can decide when to sell your property, and you’ll benefit from any appreciation in value. Destination clubs, on the other hand, are frank about the fact that becoming a member should be viewed mainly as a lifestyle decision, rather than as an investment decision, although some do allow you to benefit directly or indirectly from any appreciation in the club’s property values. Most destination clubs also have provisions that enable you to “cash out” your membership at your request. For example, you may be allowed to cash out your membership for a specified percentage of the membership fee being charged at the time (generally 80% to 100%). If that’s the case, you might benefit if you cash out at a time when the club’s holdings have risen in value and membership fees are higher than when you joined.

Do your homework

When you join a destination club you’re committing a substantial amount of money. So, make sure that the club is financially sound. Get information about the club’s finances, and carefully read materials and contracts before you sign on the dotted line.

Copyright 2013 Forefield Inc. All rights reserved.

Getting Your Finances Ready for Adoption

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The decision to start a family is a joyful event. However, parents considering adoption should consider advance planning for a range of financial issues unique to the process and the child they hope to bring into their home.

According to the U.S. Department of Health and Human Services, the costs of adopting (https://www.childwelfare.gov) may be a few hundred dollars or can easily exceed $40,000 based on the form of adoption you choose.

So how do you get your finances ready for adoption? By doing your homework and making sure the price and processing work of adoption – all adoption resources, rules and requirements differ locally – won’t eclipse other essential financial goals like retirement, saving for your future child’s education and of course, the higher daily living expenses common to all new families. Start with these tips:

Evaluate your own finances first. It’s generally a good idea to work with qualified financial or tax experts to evaluate whether you can manage adoption costs from savings or grants you don’t have to pay back. Starting a family is a major overall financial commitment no matter what path you take to build yours.

Know the tax benefits of adoption. The federal government offers tax breaks for adoption, but you need to study and follow the rules. According to the IRS, tax benefits for adoption include both a tax credit for qualified adoption expenses paid to adopt an eligible child and an exclusion from income for employer-provided adoption assistance. The credit is nonrefundable, meaning that it is limited to one’s tax liability for the year. Any credit in excess of tax liability may be carried for up to five years. Adoptions of special needs children may qualify for special treatment. Visit IRS.gov for more details.

Check your workplace benefits. A 2013 Aon Hewitt study said only 12 percent of U.S. employers offered a financial adoption benefit in 1990 rising to 52 percent. Check with your employer to see whether they offer adoption benefits, and factor those benefits into your overall financial plan.

Know your legal costs. Adoption is a legal process, and depending on the kind of adoption process you pursue, it is wise to work with an attorney to make sure your application is in order and your rights are being protected.

Think about insurance. Life and health insurance options need to be reviewed for cost and thoroughness of coverage before you begin the adoption process. Life insurance may come up as part of the estate-planning process, but health insurance in particular requires special consideration in case the child you plan to adopt has medical or developmental needs.

Evaluate available adoption grants. Various community groups, religious organizations and nonprofit organizations and foundations may be a resource of grant funding for the adoption process. Work with trusted advisors to find out if these resources are reliable and could help you afford your adoption.

Network and learn. Many communities and organizations sponsor support and planning groups for parents of adopted kids and those planning to adopt. Depending on the adoption avenue you’re considering, make it a point to get to know parents who have already gone through the process to understand all sides of what their lives as adoptive parents are like – make your learning process about more than the money.

Bottom line: Adoption is one of life’s most rewarding events. The amount of financial planning you can do to support your adoption process will help give your new family the best possible start.

 

By Nathaniel Sillin

3 Ways to Be Financially Smart While Planning Your Honeymoon

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In the perfect world, couples would be able to spare no expense when it came to planning their wedding day. Aside from the possible birth of your children, it will undoubtedly be one of the most memorable days of your life; one in which not only celebrates your new partnership with your spouse, but also officially kicks off your future together too. Therefore, your honeymoon will truly be one of the, if not THE, first thing you do together as husband and wife.

Since it will be extremely easy to get carried away and want to plan the most extravagant destination/itinerary possible, you should keep a few things in mind while planning the trip. Hopefully, you’ll make a nice amount of money from your wedding guests, but there should already be a plan in place on how to best effectively spend or save it, which should include a budget for your trip. Follow these three helpful tips to plan an amazing once in a lifetime honeymoon, without blowing through you entire nest egg:

  1. Leverage Your Registry for Your Honeymoon– Rather than listing an item you’ll rarely use like fine china or a third set of candle stick holders; why not include a few honeymoon related items on your gift registry? This way, friends and family can contribute towards fun excursions during your big trip like a lavish dinner, reservations to a couple’s spa, or even the airfare itself. Don’t forget to throw any luggage needs that you and your spouse have on there too! People foolishly register for items out of tradition’s sake over practicality; there’s no better big ticket item to spoil yourselves with than your trip of a lifetime.

 

  1. Consider an All-Inclusive and Know Your Spend– By going on an all-inclusive trip, you are paying a flat rate up front for your airfare, lodging, food, drinks, and on-site activities. This is a great way to budget ahead for a vacation that will leave you having a great time without having to constantly carry your wallet with you; in all actuality, you won’t spend another dime outside of what you choose to tip the staff. This is a much more organized way to financially plan for a vacation over say a European trip where the cost hinges strongly on the economic relationship between the Dollar and the Euro; or say a cruise where the food may be included, but the drinks rarely are. Avoid getting hit with a sobering unexpected bill at the end of your trip and enjoy a carefree vacation where you don’t have to worry about the cost associated with trying new things.

 

  1. Take Advantage of Rewards Points– You’ll certainly be spending tons of money leading up to your big day, whether it’s on the venue, vendors, favors, or the rehearsal dinner, why not put those purchases on credit cards that offer great reward systems? For example, the $3,000 for your DJ and $6,500 for your Photographer can net you some serious airline mileage points through a card like the Chase United Explorer. With enough transactions, you’ll be able to fly to your honeymoon for free, or at the very least enjoy first class accommodations, which so few of us get a chance to do regularly. If you are going to be inevitably spending money anyways, you should reward yourself as much as possible for doing so.

 

 

Personal Finance Gifts for the New Graduate

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College graduation season is upon us. How about a gift that will really mean something to a student in your life?

The best graduation gift may not be just a check in an envelope – it’s coming up with a few great, memorable ideas to help a new grad get a great financial start in life. At a time when money skills for young adults have never been more important, consider the following:

Buy them a session (or more) with a money coach. If you already work with a qualified financial planner or professional tax preparer, why not pay for a session or two for the new grad to help them work out their first budget as a working adult? Take the time to talk with the professional about specific financial issues the grad will need to address as well as their first, formal budget setup if they’ve never budgeted before.

Help them get a start on their retirement savings. Again, most of these gift ideas can come from one person or a group throwing in cash contributions. Consider taking your new grad out to open a Roth IRA (https://www.irs.gov/Retirement-Plans/Roth-IRAs) or Traditional IRA (https://www.irs.gov/Retirement-Plans/Traditional-IRAs). Early retirement investing is one of the most important lessons any new college grad can learn.

If they’re continuing school, create a 529 plan or contribute to an existing one. Many new college graduates return to school to start a master’s degree or other advanced training. If such an idea makes sense for your finances, consider opening or contributing to a 529 college savings plan (https://www.irs.gov/uac/529-Plans:-Questions-and-Answers) to support their continuing education. A 529 plan is a college savings plan set up by a state or educational institution that offers tax advantages and potentially other incentives to make it easier to save for college and other post-secondary training for a designated beneficiary, such as a child or grandchild. A friend or a relative can set one up and name anyone as a beneficiary – the new grad, another relative, even yourself – and there are no income restrictions on doing so. You’ll also be free to change the beneficiary if necessary. One suggestion – before you act, talk it over with the new grad or his or her family members to make sure this is the best approach for helping with their future education.

If your new grad loves a company, consider buying them a few shares. Again, evaluate this decision against your own finances and parental opinion, but if there is a particular company the new grad has bought merchandise from or otherwise has taken a great interest in, consider going with them to a brokerage to buy a few shares in the company. Make it a lesson not only in the purchase process, but in the valuation, tax and ownership issues anyone has to deal with as a long-term shareholder. Even though he or she will probably own more investments in mutual funds over a lifetime, understanding the ownership of individual stocks will inform all the investing they do.

Bottom line: Money issues can be daunting for today’s new graduate. Why not disarm their concerns with some solid advice from experts you trust? By offering up basics in budgeting, saving and investing, you just might become one of their favorites.

 

By Nathaniel Sillin

3 Financial Tips That Will Lead to a Better Mortgage

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Buying a house is one of the most exciting (and nerve-racking) times in a person’s life. As you begin reviewing the inventory that is available in your local towns, you’ll want to take several pro-active steps to ensure that securing a mortgage is as easy as possible when the time comes to bid.

Since you’ll be dealing with what seems to be mountains of legal paperwork, the stress of selling off any old properties you have, and literally scouring each bank account you own for every piece of usable savings, it is important to have a clearly organized path towards successfully obtaining a mortgage neatly laid out in front of you.

It is in that light that experts suggest focusing on the following 4 tips as you prepare to formally buy a house

  1. Clean up Your Financial Life– The first step towards successfully securing a mortgage is to make sure that your (and your fiancée’s!) personal expenses are in proper order. Look into every credit card and recurring bill to make sure there are no large outstanding balances. Double check that your accounts are all in good standing and that you are up to date on your taxes. Most importantly, make sure that there are no unusually large deposits in the bank account you plan on leveraging for your down payment within at least 3 months of your planned bidding date; loan advisers will not only want to see your detailed bank account history, you’ll have to formally explain every non-recurring paycheck deposit of over a $1,000. Simply put- they’ll want to make sure you aren’t relying on non-maintainable means for your home like a family loan.
  1. Get Pre-Approved– Becoming pre-approved adds a certain level of “seriousness” to your bidding ability. Sellers will be much more inclined to accept an offer from a pre-approved buyer because there’s significantly less uncertainty as to whether they can afford to purchase the house. From a buyer’s point of view, providing the necessary tax returns, bank statements, and paycheck stubs to get pre-approved early in the process will only save you valuable time on the back end; there’s no need to over-complicate the closing with unforeseen financial issues that can stop you from receiving your mortgage in the “25th
  1. Be Smart About Closing Costs– Most people totally forget about closing costs when it comes to planning out the percentage they want to establish as their down payment. Deposits, attorney and agency fees, inspector invoices, etc. all need to be accounted for to ensure a smooth transaction. There are so many things that can slow or completely halt a closing process. Make sure you’re financially equipped.