Personal Banking E-Newsletter - September 2013

How to Shop for a Used Car

Buying a used car is a great way to keep costs down when purchasing a vehicle. And with the option of certified pre-owned autos, you can cut some of the risk out of buying used and get some new car perks.

But before rushing down to the showroom, arm yourself with the pricing and safety information you'll need to avoid the lemons. The resources and steps outlined below will help you research a used car quickly and thoroughly.

Settle on a Price

There are several books and Web sites that help you find the going rate for used vehicles. Most offer several prices including, retail, trade-in and private party. If you're shopping for a car, look for retail value -- what you can expect to pay at a dealership. The trade-in value is what you'll get for a car you sell to the dealer. Don't expect to get retail value for your trade-in vehicle. That's because the dealer will spend money to improve its condition before reselling it and wants to make a profit, too.

Because used car prices vary widely depending on condition and mileage. Use at least two or three of these sources to develop a reasonable price range.

  • Lists retail, private party and trade-in values. Edmunds' True Market Value reflects actual dealer sales from across the country, factoring in inventory levels, economic trends, local market conditions and unpublished incentives.
  • Kelley Blue Book. Provides retail, private sale and trade-in values. KBB's editors monitor the wholesale market, rental car companies, dealerships and financial institutions to derive values. The site does not provide values for vehicles more than 20 years old, but it does factor in condition when estimating values.
  • Find the retail or trade-in value on vehicles. The values from NADA are based on information gathered from new- and used-car dealers, auto shows, trade periodicals, vehicle classifieds, magazines, newspapers, advisory boards, associations, and car clubs.
  • Also search or for actual retail prices of used cars on sale throughout the country. Or check manufacturers' Web sites for a listing of their certified-used-car inventory and prices.

You likely will find discrepancies from guide to guide. Retail values tend to run higher on Kelley Blue Book, while trade-in values are typically lower than other guides. Kelley Blue Book was designed for dealers, not consumers and it relies more heavily on data from the West Coast, where cars depreciate slower.

Banks and credit unions in different parts of the country also tend to rely on different guides, so find out which guide your lender uses. If you pay more than your banker expects, he might not finance the entire amount.

Go Shopping

Start your search online at or, which list private sales and vehicles at dealerships. You can search nationwide or just in your area and narrow by the features and mileage you’re looking for. These aggregator sites will also list “certified pre-owned” vehicles. It's as close to buying new as you can get.

To be certified, low-mileage, late-model vehicles must pass a 110- to 300-point plus inspection, depending on the manufacturer. Warranty lengths will vary by manufacturer, but generally cover major driveline components.

Do Your Homework

Research is the key to getting a deal on a used car. Once you've found the car you might buy, check its history and safety record.

History. Get the VIN, or vehicle identification number, to check a car's history at Carfax ($35 for one report or $45 for five) or Auto Check ($25 for one report or $45 for unlimited reports). Be on the lookout for a mileage discrepancy or a salvage/junk record. Also note if the car has crossed state lines. State salvage laws vary, and a state-to-state move could be an attempt to hide problems. The government's National Motor Vehicle Title Information System ( also gives information related to fraud and theft for $5 per report, including title and salvage data that's required by law to be reported.

Consumer Reports provides reliability histories on used cars based on surveys of thousands of car owners. The survey results are published each April in the magazine and are available to online subscribers.

Safety record. Crash-test results, consumer complaints and manufacturer's technical bulletins, which alert dealers to problems, can all be found at the National Highway Traffic Safety Administration's Web site.

Research won't guarantee that you'll find every problem with a car, but it will help you steer clear of a clunker.


6 Homework Help Apps Students Will Love

As high school students get ready to head back to school, and college students pack up all their worldly belongings and return to campus to start a new semester, it's an appropriate time to delve into the amazing world of smartphone and tablet apps.

Here are six free and inexpensive apps that will help make you a better student and save precious time in the process.

1. iHomework
No, the iHomework app does not do your homework for you; if it did it would sell for a lot more than $1.99. Instead, it allows you to stay organized and on top of your assignments through a handy calendar function that allows you to enter class times, homework assignments and study sessions. The app also lets you set reminders so you never forget what assignments and reading you need to complete. For example, if you have a class on Tuesday and need to read two chapters of your textbook by Monday night, the app will send you a reminder on the day of your choosing so you can stay ahead of the game. ($1.99 for iPhone, iPad, iPod Touch)

2. iFormulas
No longer will you have to flip through a math textbook hoping to find the right formula. The iFormulas app is for students taking a math class and need help remembering which formula to plug into the equation. Essentially, the app lists and categorizes hundreds of math formulas and allows you to customize your options so you can add your favorite formulas for quick retrieval. (Free for iPhone, iPad, iPod Touch)

3. Studious
Similar to the iHomework app, the Studious app allows you to use your smartphone to quickly and easily keep track of all your assignments and upcoming tests. What differentiates the app is a feature called timetable exchange. Essentially, this allows you to sync your schedule so you can easily coordinate study sessions with fellow students and friends. ($1.99 for iPhone, iPad, Android)

4. SparkNotes
The SparkNotes app is a great way to get free study guides directly on your mobile device. Popular study guides include literature, poetry, philosophy, Shakespeare and short stories. If you need some extra help trying to understand a particular character or story twist, SparkNotes is a beautiful thing. The app lets you download study guides so you can still access them when you are offline. It also includes an option to check-in and share your current location with friends so you can easily start a study group. (Free for iPhone, iPad, Android)

5. PocketCAS Lite
The PocketCAS is a free graphing calculator for Apple devices. For those familiar with Texas Instruments products, the features of the PocketCAS are comparable to the TI-89 model. The app has the following mathematical capabilities: 2-D plots, 3-D plots, calculus, linear algebra and scripting to name just a few. The interface is user-friendly and intuitive, and the app is often updated with new features, graphs and bug fixes. If you are looking for a solid graphing calculator this semester, give this app a try before you spend money on an expensive physical calculator. (Free for iPhone, iPad, iPod Touch)

6. My GradeBook
The My Gradebook app is easy to use and customizable. Essentially, the app allows you to track your assignments so you never have to guess what your current grade might be. You can view all your assignments in a calendar or list format organized by course. Mark homework assignments as completed, not done or graded, and quickly sort your lists to determine what is due next. The app also allows you to enter the grading style of each particular course. For example, perhaps your math teacher uses a percentage-based grading system. Just tell My Gradebook, and it will automatically calculate your current grade for you. The app is also a great tool for parents who want to monitor their child's grades. ($0.99 for iPhone, iPad, Android)


7 Tips for Creating a Secure Online Password

The Federal Trade Commission reports that 9 million Americans experience identity theft each year, a crime that can lead to everything from Social Security fraud to a drained bank account. Identify theft can start with a weak password, since hacking into an online account can lead to bank account information and other personal details such as birth dates and credit cards. Even hacking into a Facebook account can lead to major fraud, as some Facebook users experienced when hackers broke into their accounts to impersonate them and solicit funds from friends. (The Latest Facebook Scam Uses Your Friends)

As recently reported in a story on online banking safety, consumers themselves play a big role in protecting their online accounts. Ignoring emails from strangers, never clicking on unfamiliar hyperlinks, and using virus-protection software on smartphones and other mobile devices are just a few of the basic steps that we should all be taking. Choosing secure passwords is one of the simplest strategies to an overall theft-resistant online existence.

The firm, which provides identity protection services, offers these seven tips for choosing a password that no one—person or machine—can guess.

1. Skip the obvious, simple words. “Words that you can find in a dictionary, even if written backgrounds or in another language, or with a simple number following the world are definite no-nos,” warns the company. That’s because hackers use software that automatically checks for commonly used words.

2. Stay away from any personal information, such as birthdays, sports teams, or children’s names. Anyone who knows you personally—or can find such information about you through social networking sites—will be able to make a reasonable guess at your password.

3. Go long. Longer passwords (over eight characters) reduce the chances of a hacker making a correct guess. That’s why many online companies require passwords to be at least eight characters long.

4. Use those old elementary school memory tricks. If you want an easy way to remember a complicated password, try making up a sentence about it. For example, “I love my dog Harry so much” can translate into the hard-to-guess password ILMDHSM.”

5. Change passwords as often as you change your air conditioning filter. That’s about once a month for online financial accounts. Other accounts should be changed every three to four months, says

6. Be original. Repeating the same or similar passwords across many accounts might make them easier to remember, but they leave you vulnerable, since a breach in one account can quickly lead to domino effect of multi-account hacking.

7. Don’t share. Keep passwords to yourself and try to avoid storing them on your computer or smartphone, where others could see them, including hackers. says they belong in your head or a locked safe.


How to Save for Retirement on a Small Salary

It's extremely difficult to save for retirement when your paychecks are barely big enough to cover your basic expenses. But there are a variety of strategies you can use to build a nest egg, even on a small income. Here's how to best prepare for retirement with a meager salary:

Find a job with good retirement benefits. When deciding where you would like to work, make sure you consider the retirement plan as part of the compensation package. "If they offer a retirement plan, that's a job that should probably be looked at a little harder than one that does not have a retirement plan," says Sam McPherson, a certified financial planner and CEO of McPherson Financial Advisors in Brooklyn, N.Y. "If you participate and you get a match, you are effectively getting a raise beyond what their quoted salary is." For example, if you are choosing between two positions that each pay $35,000 per year, but one offers a 401(k) match of up to 3 percent a year, you could potentially earn $36,050 at the job with the retirement account if you save enough to get the entire match, $1,050 more than the job without the 401(k) match.

Take advantage of tax breaks. If you save even a small amount in a traditional 401(k) or IRA, you can defer paying income tax on the amount contributed. "You reduce your taxable income by the amount of your contributions to a regular 401(k)," says Scott Winkler, a certified financial planner and founder of Winkler Financial Planning in Norcross, Ga. A worker in the 15 percent tax bracket who saves $1,000 in an IRA or 401(k) will save $150 on their next federal income tax bill. IRA, but not 401(k), contributions can even be made just before you file your tax return in April to capture nearly immediate tax savings.

Get the saver's credit. Low- and moderate-income workers who contribute to a 401(k) or IRA are additionally eligible for a retirement saver's tax credit. Employees who earn less than $29,500 for singles, $44,250 for heads of household and $59,000 for couples in 2013 may be able to claim this tax credit worth up to $1,000 for individuals and $2,000 for couples. "Your credit rate is dependent on how much you contribute and depends on the size of your income," Winkler says. The saver's credit can be claimed on up to $2,000 in retirement account contributions, and the credit ranges from 10 percent to 50 percent of the amount contributed, with the biggest credits going to savers with the lowest incomes. For example, a couple earning $30,000 that contributes $1,000 to a traditional IRA would get a $500 credit.

Consider a Roth IRA. Workers who are in a low tax bracket but expect to be in a higher tax bracket later in their career or in retirement have much to gain by making Roth IRA or Roth 401(k) contributions. Roth accounts allow you to pre-pay income tax based on your current low income. No income tax will be due on withdrawals in retirement, even if you are in a higher tax bracket then. "It's best to use a Roth when you are younger and you have a very long time for growth," Winkler says. Roth accounts also give you the ability to withdraw your contributions, but not the earnings, without having to pay income tax or a penalty if you need the money for an emergency. "The Roth has more flexibility," McPherson says. "With a Roth, you don't get any tax deduction, but if you had to withdraw your contributions, you don't have to pay any tax or any penalty."

Keep costs low. While it's important for all investors to make sure they aren't paying more in fees and investment expenses that they need to, fees can be especially problematic for retirement savers who need to make every dollar count. "It's enormously important to choose low-cost index funds," McPherson says. "The one thing investors can control is how much we pay for our investment management and investment accounts." Actively managed equity funds had an average expense ratio of 0.92 percent in 2012, far higher than the 0.13 percent average annual cost charged by index equity funds, according to Investment Company Institute and Lipper data.

Automate your retirement saving. It's often a good idea to have the money you plan to save for retirement withheld from your paycheck so that you are not tempted to spend it on something else. If payroll withholding is not an option at your job, consider setting up a direct deposit from your checking account to a savings or investment account that occurs immediately after you receive each paycheck. "Set up any sort of automatic transfer from your checking account to somewhere else that is not easily accessible," says Paul Sanchez, a certified financial planner for Sanchez and Zures in McLean, Va. "Once you turn it on, people tend to stick with it. Even something as simple as $10 a week over a period of time can add up pretty quickly."


How Working in Retirement Affects Your Social Security Benefit

If you work and claim Social Security benefits at the same time, part or all of your payments could be temporarily withheld. Here's a look at how working in retirement could affect your Social Security payments:

Factor in your age. If you are full retirement age or older, continued earnings from employment generally have no affect on your Social Security payments. The full retirement age is 66 for people born between 1943 and 1954, and it gradually increases in two-month increments until reaching 67 for people born in 1960 or later.

Annual earnings limit. If you are younger than full retirement age during all of 2013, you can earn up to $15,120 without it affecting your Social Security benefit. After that, $1 will be deducted from your Social Security benefit for each $2 you earn above the limit. For example, if you sign up for Social Security benefits worth $600 per month ($7,200 for the year) and earn $20,800 ($5,680 above the $15,120 limit), the Social Security Administration would withhold $2,840 of your benefit. "For people who did file at 62 and regret the decision, the way to make up for that is to, if possible, go back to work and have your benefit withheld," says Elaine Floyd, director of retirement and life planning at Horsesmouth. "If you work and if your benefit is withheld, it will be recalculated at full retirement age to give you back the reduction that was deducted."

In the year you turn your full retirement age, the earnings limit climbs to $40,080, after which $1 is deducted from your payment for every $3 you earn above the limit. And the earnings limit no longer applies once you reach the month you turn your full retirement age. For example, a retiree eligible for $600 monthly Social Security payments who will turn 66 in November 2013 and earns $41,580 between January and October would have $500 withheld from his checks. "Social Security will adjust your benefits upward at your full retirement age to account for months that you didn't receive a check, but you may not get what you are expecting in the short term if you are impacted by the earnings test," says Joe Elsasser, a certified financial planner for Sequent Planning in Omaha, Neb., and developer of the software program Social Security Timing.

Monthly earnings limit. Sometimes people who retire mid-year have already earned more than the annual earnings limit. In this case, there is a one-year exception to the annual earnings limit, and it is replaced with a monthly earnings limit. People who recently retired can earn up to the monthly earnings limit of $1,260 per month in 2013, and still receive Social Security payments even if their earnings exceed the annual earnings limit. For example, a man earns $45,000 in 2013 before retiring at age 62 at the end of October 2013. He then takes a part-time job earning $500 per month, so he will receive Social Security payments in November and December because his earnings in those months are less than $1,260. If he earns more than $1,260 in November or December, he will not receive a benefit for that month. And beginning in 2014, the annual earnings limits will apply to him.

What counts as earnings. Your wages and earnings from self-employment count toward Social Security's earnings limit. Sources of income that don't count toward the earnings limit include government benefits, investment earnings, interest, pensions, annuities and capital gains.

Benefits are not permanently withheld. If some or all of your Social Security payments are withheld because you exceeded the earnings limit, your benefit will be recalculated at your full retirement age to give you credit for the withheld benefits. "In general, working as long as possible is a good idea," says Laurence Kotlikoff, an economist at Boston University and president of Economic Security Planning, Inc. "One can potentially dramatically raise one's benefits via the recomputation of benefits provision."

For example, if you claim a Social Security benefit of $750 per month at age 62 in 2013, but then earn enough between ages 62 and 66 that all of your payments in those years are withheld, your payments would be boosted to $1,000 a month at age 66 to make up for the withheld payments. "If he's single and never been married and takes benefits early, the benefits he loses via Social Security's earnings test will be made up to him in the form of permanently higher benefits starting at full retirement age," says Kotlikoff. "But for such a person, the best strategy is likely to be to wait until 70 to collect." Also, if your latest year of earnings turns out to be one of your 35 highest-earning years in the workforce, your benefit will be recalculated to pay you for your higher earnings.


Transferring Assets to a 529 Plan

A 529 College Savings Plan may be an attractive vehicle for those looking to save for a child's education.1 If you have already committed college-earmarked assets to another type of financial vehicle, such as a Coverdell Education Savings Account or a custodial account for a minor beneficiary, you may want to investigate transferring those assets into a 529 plan.

Making the Move From a Coverdell

Amounts transferred from a Coverdell account to a "qualified tuition program" (IRS lingo for a 529 plan) are viewed as qualified education expenses by the IRS and are therefore tax free as long as the amount of the withdrawal is not more than the designated beneficiary's qualified education expenses.

There are several reasons why a college saver may want to take this course of action.

  • Consolidation with a more generous contribution limit: Whereas Coverdell accounts limit contributions to $2,000 per beneficiary per year, 529 plans typically allow much higher lifetime contribution limits in excess of $200,000 per beneficiary in many states.
  • No income restrictions: Unlike Coverdells, 529 plans generally do not impose income limits that restrict the ability of higher-income taxpayers to contribute.
  • No taxes or penalties: Moving assets from a Coverdell to a 529 does not trigger taxes or penalties.

But there are also some drawbacks. Keep in mind that Coverdells and 529 plans are still relatively new, so legal and procedural precedents for specific strategies may not be well established yet. Since the funds in a Coverdell are owned by the beneficiary, any assets moved to a 529 plan owned by a parent could be construed as a transfer of ownership from the beneficiary to the parent. This could raise legal issues down the road if the parent subsequently changes the beneficiary. What's more, Coverdells can be used to pay for primary or secondary school costs, whereas 529 plans are limited to college expenses.

Relocating UGMA/UTMA Assets

Many 529 plans accept rollovers from custodial accounts established for minor beneficiaries, such as those created under the provisions of the Uniform Gifts/Uniform Transfers to Minors Act (UGMA/UTMA). Be aware that the money in an UGMA/UTMA account belongs to the minor, so any subsequent withdrawals after a transfer to a 529 plan may only be used for that minor. Also, since contributions to 529 plans must be in cash, UGMA/UTMA assets first need to be liquidated, with any capital gains taxable to the minor.

Moving Savings Bond Assets

The third option for a transfer to a 529 plan involves cashing in qualified U.S. savings bonds and contributing the proceeds to the plan, in accordance with the guidelines established by the IRS and the Treasury Department's Education Bond Program.2 You can find more information at the Treasury Department's Treasury Direct Web site:

1By investing in a 529 plan outside of the state in which you pay taxes, you may lose the tax benefits offered by that state's plan. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary.

2Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest, and, if held to maturity, offer a fixed rate of return and fixed principal value.

Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing "Investors should consider the investment objectives, risks, charges and expenses associated with the municipal fund securities carefully before investing. The issuer's official statement contains this and other information about the investment. You can obtain an official statement from your financial representative. Read carefully before investing.

© 2011 McGraw-Hill Financial Communications. All rights reserved.