Cla december 2007


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Cla december 2007

  1. 1. Finance Matters A Financial Services Corporation 9300 Wade Boulevard Suite 125 Frisco, Texas 75035 Keeping you in touch 1.888.404.6848 with your financial futureDecember 2007 Better Business Bureau Tips on Repairing Your Home or Business After a DisasterWhen your home or business is damage in a storm, chances are you will be looking for a contractor to help withrepair and restoration. After such a damaging event occurs the demand for contractors causes the supply todwindle. Because of this, some contractors are known to take advantage of people in this very vulnerableposition. They will often times perform shoddy work and skip town before the job is finished.Legitimate and licensed home repair companies can be booked solid for months causing frustrated and anxioushomeowners and landlords to compromise their usual high standards when choosing a contractor. Someconsumers will hire part-time contractors who may or may not get the job done in time or contractors from a dif-ferent town who may be hard to contact if problems arise. Inexperienced contractors may not be able to performthe tasks they are undertaking and some may be opportunists looking to make a fast buck. The consequencesmay be devastating and will cost much more in the long run.The Better Business Bureau offers the following tips for consumers who are giving major repairs after a disasterhits home:∞ Deal only with licensed and insured contractors. Verify the track record of any roofer, builder or contractor youre thinking of hiring. Ask for a list of recent customers and call them.∞ Get recommendations from friends, relatives, neighbors, co-workers, insurance agents or claims adjusters. Also check with the local Better Business Bureau and Home Builders Association to see if complaints have been lodged against any contractor youre considering.∞ Take your time about signing a contract. Get a written estimate that includes any oral promises the contractor made. Remember to ask if theres a charge for an estimate before allowing anyone into your home. Ask for explanations for price variations, and dont automatically choose the lowest bidder. Get a copy of the final, signed contract before the job begins.∞ Resist dealing with any contractor who asks you to pay for the entire job up-front. A deposit of one-third of the total price is standard procedure. Pay only by check or credit card and pay the final amount only after the work is completed to your satisfaction. Dont pay cash.∞ Be skeptical of contractors who encourage you to spend a lot of money on temporary repairs. Make sure theres enough money for permanent repairs.∞ Ask a knowledgeable friend, relative or attorney to review a home repair contract before you sign. If you get a loan to pay for the work, be cautious about using your home as security. If you dont repay the loan as agreed, you could lose your home. Finally, consider asking an attorney to review the loan documents.For more tips, go to the Better Business Bureau website at
  2. 2. Your Old Hard Drive Is a Criminals Gold MineTwo MIT graduate students recently bought 158 used hard drives from computer stores, small businesses andeBay, the online auction site. Many of the hard drives were physically damaged or had unreadable sections.Nevertheless, the pair managed to retrieve information from directories and files that had been deleted. Many ofthe drives had what appeared to be credit card numbers, some with expiration dates that may have been used forinternet purchases. One drive appeared to have been used in an Illinois ATM and had nearly 3,000 numbersthat they suspect are ATM card numbers. The hard drive also contained account numbers and balances. Itappeared that no effort had been made to remove the drives financial information. Their finding: People arenot generally aware that even after the computer says the information has been deleted, it can be recovered.The ease of obtaining this information makes it a treasure trove for potential identity thieves. Most users andbusinesses do not realize that deleting or simply formatting a hard disk doesnt actually remove all the data fromthe drive and that a dedicated hard drive cleaning application is needed.Covering Your Digital TracksTo really get rid of something on your hard drive you have to go way beyond pressing the delete key. Whenyou delete a file, the computers operating system marks the file with a symbol and, essentially, removes it fromview. If you did a search for the file, it wouldnt show up, but its still on the hard drive until its been writtenover multiple times by other files. Its like a pencil mark on a wall that you cover with a coat of paint. You canstill see the mark, so you cover it with another layer of paint and its obscured some more. That process is calledwiping, shredding or file wiping. In fact, its adding layers of data on top of other data. Keep in mind, if youdont use a lot of graphics, video or music files, you may not run out of space, so your system may never needto write over data you deleted. Thankfully, there are freely-available disk-cleaning apps that write over everyarea of the disk several times with random garbage data.One free software program called AutoClave claims to overwrite to U.S. Department of Defense specifications,which is a seven-layer overwrite. Thats an important feature. In fact, many experts like to use DOD specs asthe minimum standard when erasing hard drives.Another software program, CyberScrub, is not free but it contains two erasure programs. The first, CyberCide,is designed to erase everything on the hard drive, including the operating system. The other, CyberScrub, isdesigned for daily use. It erases your files on demand as well as any previously deleted material and ensures itis not recoverable.But, if you really want to be sure, opt for the heavy-duty programs. Some software uses a higher standard,called the Gutman, which overwrites the data 35 times. An Internet search will turn up hundreds of softwareprograms that erase hard drives. But, be aware that all scrubbing software can fail. Most software is soldwithout warranty and while its pretty safe using technology to get rid of technology, there is always the humanerror factor and possible equipment problems. That leaves you with one other option.Destroying the hard driveIn case youve never looked inside your computer, the hard drive is in a flat metal box thats about the size of apaperback novel. Many technicians prefer unplugging the drive and using a drill with a good, strong drill bit todrill through the metal casing of the hard drive five or six times in different locations. Drilling makes the harddrive inoperable, but someone with forensics ability may be able to recover the data where it wasnt drilled.Others prefer using a sledgehammer to crush to drive. Many technicians think that is socially irresponsiblesince there are many schools, non-profit organizations and low income individuals whom can benefit from yourused computer.Beware: If youre under investigation, or if your computer files are about to be subpoenaed, its not a good ideato start wiping your hard drive. Its illegal and your intentional destruction could easily be detected.
  3. 3. Annuity Surrender Charges vs Mutual Fund Fees and Costs; Who Wins?You dont have to read too many investment magazines and newspapers to come across articles making negativecomments about annuities. In many cases, the authors of these articles zero in on SURRENDER CHARGES. Asan example, we have seen these negative articles state that $100,000 placed into an annuity with a beginningsurrender charge in year one of 16% would have a cost to the owner of $16,000. But is this really how annuitiesare sold and used? Do agents actually suggest consumers purchase an annuity knowing full well that the customerwill need access to 100% of their money within one year? Of course not. To level the playing field, we thought you would enjoy seeing a comparison between the above mentioned annuity($100,000) growing at 5% and an average mutual fund ($100,000) growing at 8% each year (thats 60% more thatthe annuity). The annuity also has a 5% first year premium bonus. According to Investment News July 9, 2007edition, the average mutual fund has an expense ratio of 1.21% and an average trading cost of 1.44% for a totalaverage annual cost of 2.61% of the account value. Using these numbers, we calculated the following results toevaluate how the customers money might be affected by these variables when accessing their money or simplyleaving it to grow.Leave it Alone!Mutual funds often tout their performance over an extended period of time and advise investors to buy andhold. Over 10 years, our hypothetical mutual fund will have grown by $70,163.67. The total costs for owning themutual fund would be $35,755.87. The sample annuity, on the other hand, would have grown by $71,033.94 with asurrender charge cost of ZERO! Since this annuity has only 10 years of surrender charges, the customer will neverpay a surrender charge. The Mutual fund will charge them $4,671.30 the next year.Withdraw a Lot!What if this customer needs to access $10,000 each and every year? The Mutual fund will charge $21,149.47 inthe first 10 years. By the 15th year, the Mutual Fund will be out of money and the costs will have equaled$24,257.72. The annuity will also have some charges for withdrawals that exceed the penalty fee totaling$1,303.94. The annuity will also last one year longer with funds available for withdrawal in year 16. ANNUITIESSTACK UP JUST FINE! The fact is that mutual funds have costs just like any other financial product. The key is that these costs areincurred by the investors whether they take withdrawals or not. In fact, as a mutual funds account value grows, sodo the actual fees associated with the fund. A Fixed Indexed Annuitys surrender charges decrease over time. Asthe annuitys account value grows, so does the penalty free withdrawal amount thus increasing the amount ofactual cash they can withdraw without incurring a charge. We can help you evaluate what is a suitable amount for you to place within an annuity. By planning ahead, youcan actually experience outstanding liquidity, guarantees, and benefits without ever paying one penny to surrendercharges. For more information, please call us at 888-404-6848. NEW PROTECTIONS FOR CONSUMERS BEGIN JAN. 1Starting Jan. 1, consumers will gain protection against identity theft and unwanted credit-card solicitations. Banksand other financial institutions must have ID-theft prevention systems that will allow consumers to "opt out" ofsolicitations.Steps include watching for unusual credit-card activities, sharp increases in the number of credit-related questionsor new credit lines under a customers name. Credit card issuers must scrutinize change-of-address requests that areclosely followed by requests for an additional or replacement card.The "opt out" provision restricts financial institutions in the use of consumer’s information to send solicitations.The financial institution must notify consumers and give them a reasonable opportunity to opt out. The newregulations are required by the Fair Credit Reporting Act of 2003.
  4. 4. 7 Reasons to Choose Credit Over Debit By Marshall Loeb, MarketWatch1.Credit costs you less. Money Advisor reports that some banks charge customers for so-called in-store "PIN-based" debit-card transactions. Fees range from 25 cents to $1, depending on the bank. By choosing a "signature-based" transaction, you sidestep these fees.2.Credit wont result in a hold on your account. When you use a debit card to reserve a hotel, rent a car or evenfill up your tank, vendors sometimes put a "block" on your checking account until the transaction is processed --and the amount of the block can significantly exceed the purchase price. Using your debit card to buy $25 worth ofgas, for instance, may result in $100 of the money in your account being "blocked." If youre running a lowbalance, this can result in punishing overdraft charges.3.Credit makes it easier to cover your bases. If you havent been keeping a close eye on your bank balance, itmay be a good idea to choose the credit option on your debit card because it takes longer for the money to bedebited from your account (usually around two days). This gives you a little time to make sure you have enough inyour account to cover the charge.4.Credit offers better rewards. While some debit cards now offer rewards, such as air miles and cash-backbonuses, credit-card rewards tend to be far more generous, according to Money Advisor.5.Credit allows interest to accrue. If you religiously pay off your balance at the end of the month, you stand tomake more money by paying with a no-fee credit card. Why? Because you can allow your money to grow in aninterest-bearing account until your bill comes due.6.Credit gives you an out. Using a traditional credit card makes it easier to reverse the charges if you get into adispute with a merchant or vendor.7.Credit shields you from liability. If someone gets hold of your credit card and wracks up a laundry list ofcharges, youre typically responsible for only $50 worth of fraudulent charges. If youre unfortunate enough tohave your debit card stolen, you may be liable for as much as $500 in unauthorized purchases, unless you reportthe theft within two business days. Moving? Be sure to contact our offices at 888-404-6848 & update your address & phone number so we may continue to provide you the excellent service you have come to expect. PRE-SORTED STANDARD A U.S. POSTAGE PAID DALLAS, TX A Financial Services Corporation PERMIT NO. 3998 9300 Wade Boulevard, Suite 125 Frisco, Texas 75035