Preferred Financial Services

Andover, Massachusetts September 13th, 2010 – For most of us, September brings a new school year and literally dozens of new things to buy. From new laptops, to clothing, to school supplies, back to school shopping is one of the busiest and most expensive times of the year for American families. As our children enter high school and learn how to drive, their personal responsibility becomes more important and they start to ask for and receive much more freedom. A much debated topic in the personal finance community deals with exactly this. Is your child ready for their own credit card or should you wait and let them get their own once they have a job and can support the spending that goes along with a credit card.

As with every discussion there are two sides to this debate. The first is that the sooner your kid learns how to use a credit card responsibly, the better off they will be in the long run. There are parents nationwide who make their kids authorized users on their accounts once they earn their drivers license. Not only does it make it much more convenient for the parent but it is also a great learning experience for the child. From a convenience stand point, kids with credit cards can run errands to the grocery store for their parents, fill up their family’s gas tank, and purchase items online without having to ask their parents for their credit cards. Obviously this is a great benefit but typically the number one reason parents give their kids a card is because it educates them of both the benefits AND the consequences of credit card use. It is much too common on college campuses nationwide that students get their first credit card, max it out, and then make minimum payments for the rest of college. Not only is this extremely expensive but it is also very avoidable. High Schools nationwide do not do a good enough job of teaching personal finance, so I do think that a parent who takes the initiative to teach their child about credit card use is in fact doing a huge favor. Wouldn’t you rather be able to stop bad habits while you can instead of watching your kid ruin their credit score as soon as they leave home for the first time?

But, of course there is also a group of parents that thinks an immature 17 year old has no right to purchase whatever they want without parental supervision. Being an authorized user on a parent’s credit card also gives the child the credit limit of the parent, typically much larger than the child could get themselves. I am sure there are thousands of parents nationwide who have received credit card bills filled with charges they had no idea about because their child just had no idea what it meant to charge an item or because they just didn’t care. This is why it is a huge decision for a parent. Trust the child with a card and then pay for the immaturity 30 days later with the first bill or don’t trust the child and watch the child make the same mistake 4 years later in college. Obviously, each family is different and has a different financial situation, but to me, if you can afford the near certain mistakes that will be made, teaching a child how to use a credit card at a young age will be one of the most beneficial and long lasting things you can do for your child.

Readers, what do you think? Have you trusted your kid and then had to pay for a huge bill 30 days later? Would you never trust a child with your credit card and by association credit score?

Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.

For more information, please visit www.pfsdebtrelief.com or follow us on our blog at www.pfsdebtrelief.com/blog/ .

Contact:

Stephan Tavernini

Marketing Coordinator

Certified IAPDA Debt Arbitrator

Preferred Financial Services

stavernini@pfs1.net

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Personal Finance

Andover, Massachusetts September 10th, 2010 – Well it’s the end of the week and that means its time for a new round of weekly unemployment numbers. This week, to the surprise of many experts the number of new claims for unemployment benefits dropped by 27,000 to 451,000, a 2 month low. This is 25,000 less than was expected by experts which just goes to show you that many of these so called experts are guessing on where the economy is headed. If you have followed this blog regularly you will know that productivity has been declining and companies nationwide were putting more and more work on their employees’ shoulders. This could not last and eventually more workers needed to be hired to handle the ongoing expansion of the nation’s economy. Does this mean we won’t see another dip in the future weeks? No, but it does mean that the fears of a double dip recession can now almost positively be put to rest.

Another round of positive news came out of the Commerce Department when they reported that the nation’s trade deficit declined sharply in July due to a large rise in exports and relatively flat imports. The deficit fell 14% in July to $42.8 billion. While this number is still much to big, its drop is great news as the 2^nd quarter saw the deficit eliminate over 3% of our nations GDP growth.  July saw the biggest increase in exports in over 2 years as US made products such as airplanes, industrial machinery, computers, and telecommunications equipment all saw increases in demand world wide. Airplane orders in particular saw a significant jump as our nation’s primary aircraft builder, Boeing, enjoyed a strong summer. While this is all great news in the short term, the long term solution to our massive trade deficit is still not easily available. Many groups in America continue to ask for trade protections from foreign countries such as China who they believe are using illegal practices to make their products more appealing on the international market. While this is politically popular, it will not do anything to improve our economy. A quick history lesson will show that this is exactly what Woodrow Wilson proposed after the stock market crash of 1929, and the end result was a trade war that not only extended the depression but also made it much worse. We as a nation need to come to terms that certain goods will never be manufactured in the US again. Simple economics will point out that as long as US workers make the wages they are, we can not compete in many industries because of the competition from low wage countries such as China, Thailand, and Vietnam. This is why we as a country produce almost no clothing anymore. This is a natural evolution of our economy and we need to embrace the new and upcoming industries where our skills and technology can make us not only competitive but also the international leader.

Readers, do you agree that trade tariffs and other anti free trade ideas will only hurt us more? Or do you believe in protecting American workers no matter what? I look forward to seeing your opinions on this controversial topic!

Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.

For more information, please visit www.pfsdebtrelief.com or follow us on our blog at www.pfsdebtrelief.com/blog/ .

Contact:

Stephan Tavernini

Marketing Coordinator

Certified IAPDA Debt Arbitrator

Preferred Financial Services

stavernini@pfs1.net

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Andover, Massachusetts September 9th, 2010 –  Over the past week the US government has proposed a new batch of spending projects and tax credits/cuts for certain industries with the goal of boosting short term job growth and increasing the long term competitiveness of the US economy. While the debate over the effectiveness of the TARP bill of 2009 continues and will likely never end, its effects are starting to run out as much of the money has already been spent. While it was hoped that the first stimulus bill would jump start and maintain economic growth this clearly has not happened. Many things outside of Washington’s control have impacted and limited the effectiveness of the increased government spending. This new round of “Stimulus” is expected to lead off where the last bill ended and hopefully drive the US economy out of its current uncertainty and into a strong leadership position on the international level.

The new proposals have two main parts to it. The first is another round of spending on infrastructure projects throughout the country. The emphasis is being placed on repairing the aging interstate system and also building new high speed rail lines in select, high population areas throughout the USA including Southern California, Central Florida, and the Northeast. Infrastructure spending might not create new skilled jobs but it does put many out of work laborers, construction workers, electricians, etc. back to work. Not only that, but the current state of our nation’s highways, railways, and airports is quite poor. For the USA to remain competitive its infrastructure system needs to be upgraded to meet the needs of the 21^st century economy. Railways are an effective way of moving large amounts of people and more importantly cargo without clogging up the already congested interstate system. Our current highway network needs a major facelift to deal with the realities of a much larger population than was planned for in the 1950’s when many of our nation’s highways were designed and constructed. While some politicians, particularly on the right see this as another favor being passed along to unions, I do think that everyone can agree that our nation’s infrastructure has not kept pace with our economy over the past 30 years.

The 2^nd part of the new proposal involves granting a large tax cut to businesses nationwide to spur investment and growth. The largest part of this proposal is a 200 billion dollar tax cut that will allow business to write off 100% of all new investments in plant and equipment between now and the end of 2011. Not only will this significantly lower the tax burden facing businesses but it should also remove any hesitation that businesses are currently showing to expand and invest in their operations. Knowing that there is an incentive not to wait for the economy to fully return to normal should lead to increased investments and job growth nationwide. If companies can build more factories and purchase more equipment they will also have to hire more workers to run these factories and equipment. A smaller part of this proposal is making the current tax credit for R&D permanent. Currently this is set to expire at the end of this year but the White House is proposing to make these permanent at a price of $100 billion. Encouraging R&D is one of the easiest ways for the government to increase innovation in our economy so that we can continue to be the leaders in high technology, pharmaceuticals, engineering, and any other industry that is on the brink of a breakthrough.

Readers, have you had enough government spending or do you think that these steps are necessary to propel the economy out of its current state? Have you seen the first stimulus bill make a difference in your area?

Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.

For more information, please visit www.pfsdebtrelief.com or follow us on our blog at www.pfsdebtrelief.com/blog/ .

Contact:

Stephan Tavernini

Marketing Coordinator

Certified IAPDA Debt Arbitrator

Preferred Financial Services

stavernini@pfs1.net

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Andover, Massachusetts September 8th, 2010 – As the fall season begins Congresswill be getting back to work shortly after a month long summer recess. While there is always a lot on the table for Congress to deal with, this upcoming fall could have a huge and lasting impact on this nation. Not only are the upcoming midterm elections exrememly important in deciding where our country is headed but our economy is still not growing at the pace it should be. At the moment, Congress already has a small business tax cut proposal on its desk and the president recently announced a new round of tax breaks, tax cuts, and spending that is designed to not only stimulate the economy and hiring in the short term but also to position the country to lead world economy for decades to come. Research and Development as well as a renewed emphasis on infrastructure investments are the most critical aspects of this spending proposal. I will be detailing both proposals in detail tomorrow, so stay tuned!

Stephan Tavernini

Marketing Coordinator

Preferred Financial Services

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Settlements

September 7th, 2010 -  It’s back-to-school time!  As a parent, you’ll soon be given the dreaded school supply checklist which will contain the must-have supplies to assist your little one through school.  A trip to Wal-Mart® or Staples® and one swipe of your credit card usually does the trick!  Now, fast forward a few years from now and instead of Five-Star® binders and decorated pocket folders, your “little one” is now bringing home a hefty tuition bill and a list of expensive but required supplies needed for their college courses!

  The average cost for a year of tuition at a four-year public college or university according to College Board’s Trends in College Pricing, is currently $15,213.  Textbooks and other supplies are estimated around $4,000. That’s an average of $19,213 a year! Take into account the tuition inflation rate of 7% and you’ve now found yourself in a heap of debt.  With the rising cost of tuition, it’s hard to know how much you’ll need to save for college.  There will almost always be unexpected costs, and piling more debt on high interest credit cards is usually the only option…right?

  Section 529 of the Internal Revenue Code allows you to save hassle free for college, and allows for tax-breaks when paying for qualified tuition programs, which eases the blow of the ever-increasing costs for education.  What if your child decides against college?  A 529 plan is easily transferable by the account holder to another beneficiary who is related to the original beneficiary.  Even if you decide you want to go back to school, you would be able to use the money towards your own education.

  You’re able to fund these plans by using after-tax dollars.  This means that unlike your IRA, or 401(k), you’re only able to fund the plan after the Federal and State taxes have been taken out of your paycheck.  However, the real benefit of the 529 plans are that the earnings within the account are able to grow tax deferred, and are not subject to taxes when used for qualified expenses such as tuition, room and board, and even laptops or graphing calculators, that is, if the college or university requires them.  This can add up to a great deal of savings once college rolls around.

  Automatic contribution plans can be easily set up and can also be funded by lump sums, such as writing a check.  529 plans are usually invested in mutual funds or annuities; this allows the account owner to decide what amount of risk they want to take on with the money invested in the plan.  In fact, there are now mutual funds that adjust over the years according to the age of the beneficiary, usually taking on more risk when the child is young, and becoming increasingly more conservative the closer the beneficiary is to using the funds. 

  However if you chose to make risky investments rather than a more conservative approach, there is always the potential for a loss.  Another benefit of the 529 plan is that you are usually able to deduct those losses from your taxable income, if and when they do occur.

  It’s surprising how fast your own children can grow up; be prepared when it comes to their education, or even your own!  By utilizing government programs such as 529 plans, you’ll be able to save money and build a future for your family that will not be hindered by a lack of formal education.

Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.

For more information, please visit www.pfsdebtrelief.com or follow us on our blog at www.pfsdebtrelief.com/blog/ .

Contact:

Stephan Tavernini

Financial Education Coordinator

Certified IAPDA Debt Arbitrator

Preferred Financial Services

stavernini@pfs1.net

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Andover, Massachusetts September 3^rd, 2010 –  When it comes to financial advice there are literally hundreds of suggestions, options, and tips that you hear from a variety of sources. While many are good ideas the long term payoffs are not usually guaranteed. During these tough times it’s important to make decisions that you know the outcome of. The following is a list of moves you can make today that will pay off in the future…

1. Max out your retirement vehicles. While it may seem hard to do now during these tough times, maxing out your retirement options when you are young and continuing to do so over the entire time of your working life will lead to huge benefits in the future. The two most common retirement options nowadays are 401(k)’s and Roth IRA’s.
   1. 401(k) plans were created to give workers a way of saving for their retirement through their place of work without the costly benefits that a traditional pension used to offer. Companies large and small have embraced 401(k)’s as an affordable and easy way to attract talented employees as well as helping their employees save for the future. Contributions are done pre-tax which means your effective tax bill goes down the more you contribute as each contribution is taken out of your paycheck before taxes are calculated. Remember, the max contribution this year is $16,500 and if you can’t afford to contribute the entire amount, make sure you at least contribute the amount needed to collect the matching contribution from your employer if offered.
   2. Roth IRA’s are relatively new investment vehicles and are designed to give a retirement option to people who are not able to enroll in a 401(k) plan. Unlike 401(k)’s, Roth IRA’s are built up using post tax earnings. This means the money you enroll in it has already been taxed. While this does not provide any tax relief right now, it does mean that when you turn 59 ½ you can cash out your entire IRA without having to pay any taxes on this amount. This is a huge benefit as typically you go up in the tax bracket as you get older and earn more money. The yearly limit on Roth IRA’s is $5,000 for Americans younger than 50 and $6,000 for Americans older than 50.
2. Pay off your Credit Card Debt. While this is an obvious one that is talked about often in Personal Finance circles, the message that credit card debt is extremely costly never gets old. Holding any balance on your card each month is costing you and your family dearly over the long term. Focus on using credit cards like a monthly debit card; always pay off the bill in full each month. If used correctly, credit cards are an easy and convenient way to borrow money for less than 30 days for free. As long as you pay back the balance in full each month a credit card should not cost you a cent (unless you have yearly fees, maintenance fees, etc.). If you do carry a balance each month, every purchase you make will cost you more and it will become harder and harder to become debt free the longer you wait and the larger your balance becomes.
3. Reevaluate your bank and financial planner. While having professional advice is a key component of any sound financial plan for your family it is important to realize that other motives besides your family’s future could be at play. Many financial planners and bank representatives are paid partly or entirely on commission. This means that they could be advising you to take steps that will certainly enrich their lives but not necessarily yours. This has been a huge topic recently as the market crash of 2008 exposed many risky decisions and plans that financial planners recommended to clients. The end result was a very rich financial planner and a very poor American family. You can find professionals that work on an hourly pay basis so do your best to make sure that the person you are trusting with your financial future has your best interests in mind.
4. Minimize the size of your yearly tax refund. Receiving your tax refund check and splurging on consumer goods has almost become an American tradition recently. Many families actually budget a refund into their yearly spending plan and typically do so to purchase luxury goods that not needed or excessive. While splurging once in a while is great, doing so when you have credit card debt is not only dumb but it is also putting you deeper and deeper into debt. Whenever you receive a refund check from the IRS it means that you paid too much in taxes over the previous year. This means you were giving the government an interest free loan for a year only to receive the excess back without interest. What every family should be trying to do is make the tax refund as small as possible without having to owe the IRS money.
5. Create a Budget to find areas of waste. While budgets are typically the first thing on the list of Personal Finance to do lists, I would like to focus on their use as a way to find waste in your spending habits. Creating a budget and analyzing past spending patterns is a great way to find areas where you wasting your money. If you notice that 10% of your monthly net pay is being spent on lunch at work, maybe it is time to start making your own lunch and saving those 10% in a Roth IRA or other investment. Remember, just creating a budget is the easy part. Actually taking the steps necessary to cut your expenses is the hard part and will require significant sacrifices on your part.

Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.

For more information, please visit www.pfsdebtrelief.com or follow us on our blog at www.pfsdebtrelief.com/blog/ .

Contact:

Stephan Tavernini

Marketing Coordinator

Certified IAPDA Debt Arbitrator

Preferred Financial Services

stavernini@pfs1.net

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September 2, 2010, Andover Massachusetts – After what has turned out to be a really rough end to the summer for the US economy, the changeover to September appears to be bringing with it some encouraging if not upbeat news. Data released today covers all the important sectors including unemployment, retail sales, productivity, as well as home purchases. While the data does not indicate a strong rebound is imminent, it does point to the fact that we may have hit the bottom of what has been a tough 2 month stretch.

New unemployment claims dropped for a 2^nd straight week by more than was expected. New claims fell to 472,000 last week, 3,000 less than what was expected. While this is still significantly higher than we need to create consistent job growth it is encouraging that we are trending down not up. As the economy cooled over the past 3 months many had expected another round of massive layoffs, but this data along with the new productivity numbers indicates this is an unlikely possibility. The productivity report released by the Labor Department indicates that worker productivity fell in the spring by the largest amount in over 4 years. In a good economy this would mean more cutbacks are needed, but in our current situation this indicates that current workers are being overloaded with work and are thus not able to perform at the levels they previously had. The logical conclusion to this would be that firms will need to start hiring again in the fall to remain competitive on the international market.

Retailers indicated that sales rose surprisingly in August as analysts expected near zero growth due to the continued uncertainty. While most of the gain can be attributed to steep discounting that is used during the summer months to attract customers, a part of the gain has to be attributed to consumers who are sick and tired of sitting at home not spending their hard earned money. As the summer fades and the fall begins we can only hope that more people will begin to start shopping again as the economy improves. On top of this, after a dismal summer of housing reports indicating that the sector continued to weaken data released today showed that existing home purchases rose in July. While the rate is no better than it was a year ago it again indicates that we may have hit the bottom there as well.

While the data released over the past 2 weeks has not been great it is starting to look like we may have hit bottom. The double dip recession never came to fruition, a 2^nd round of large scale layoffs never came to be, and consumer spending has been making a comeback. Readers, where do you see us heading? Do you believe we are out of the woods or is this just another momentary up tick before more bad news is relapsed over the next few weeks?

Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.

For more information, please visit www.pfsdebtrelief.com or follow us on our blog at www.pfsdebtrelief.com/blog/ .

Contact:

Stephan Tavernini

Marketing Coordinator

Certified IAPDA Debt Arbitrator

Preferred Financial Services

stavernini@pfs1.net

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