This month saw the return of something we all hate: inflation. The Consumer Price Index went up by 0.5%, which was its biggest increase since summer 2023. This brought overall inflation up to 3%, which means that the Federal Reserve will probably postpone any reductions in interest rates for the foreseeable future. Recent changes within the Consumer Financial Protection Bureau (CFPB) are also causing concern within consumer advocacy groups and the banking industry, although for very different reasons.
Home Financing
Even Gamblers Need a Home
While betting on your favorite sports teams may not be a big deal, others are definitely taking it seriously. Around 20% of Americans use an online account to place sports bets, and 31% of these people consider it an investment.
In theory, the lucky winners could use their winnings to supplement their income when applying for a mortgage. In practice, it’s more complicated. Even though winners receive a 1099 tax form that documents this income, they’re not able to prove that their picks will be as lucrative in the future. Mortgage underwriters like to see income sources with a high “likelihood of continuance”, and gambling wins are rarely considered as such.
Even if you’re a professional gambler, getting a mortgage may require some shopping around. World Series of Poker winner Chris Wallace has won prizes up to $507,000, but since he’s technically self-employed, his career choice was considered higher risk than those of us working nine to five office jobs. Wallace admitted that he was on the verge of looking for a conventional job before a lender offered him a mortgage with rates he considered acceptable.
Source: bankrate.com
Insurance
Why Life Insurance Isn’t Just for Gen Xers
If you’re in your 20s or 30s, you may not have given any thought to buying life insurance. However, the coverage it provides can be well-worth the expense, especially as you may find it more affordable than expected.
If you have young children, life insurance is essential. But if you don’t, you still may want to consider buying coverage for those who depend on you for financial assistance. This can be a parent, sibling, or even a friend with disabilities. A policy will protect them if something happens to you.
If you’re single and own your home, you may want to make sure it goes to a family member. For example, you can buy a life insurance policy that pays off your mortgage, so your executor won’t have to arrange a quick sale.
(If your mortgage required Private Mortgage Insurance (PMI) or a Mortgage Insurance Premium (MIP), this is NOT the same as life insurance. It protects lenders from possible loss if a loan goes into default.)
To determine how much coverage you need, add up your expenses and liabilities, including your mortgage and car payments. Ideally, your policy will cover these expenses. If you have dependents, experts suggest you buy a policy that pays at least 10 times your annual income.
Source: kiplinger.com
In the News
Inflation’s On the Rise…Again
US inflation rose in January, strengthening the Federal Reserve’s determination to keep interest rate cuts on hold until later this year. The Consumer Price Index (CPI) posted its biggest increase since August 2023, rising by 0.5% as the price of groceries and gas ticked upwards.
The headline inflation figure now sits at 3%, while the core CPI, which excludes food and energy costs, saw a bigger-than-expected climb to 3.3%.
Higher shelter costs contributed to almost 30% of January’s overall inflation increase, while car insurance, prescription drug, and airfare costs all put upward pressure on the core numbers.
Earlier this month, Federal Reserve chairman Jerome Powell indicated that the central bank won’t be rushed on rate cuts and said it would be weighing up the “net effect” of the new administration’s policies. Traders aren’t expecting an interest cut until later in the year.
Source: mpamag.com
Credit and Consumer Finance
How to Spot Scam Sellers on Social Media
From Facebook Marketplace to Craig’s List, social media is flooded with fake ads. Many are selling items like cars, trucks, high-end electronics and even purebred puppies. Other scammers pretend to be property managers, scamming would-be renters for a four-figure deposit in exchange for holding a non-existing property.
Some banks are taking steps to protect their customers from these scams. For example, some banks no longer allow customers to send Zelle payments when they’re going to a social media contact instead of a friend or family member.
Most fake ads posted by scammers will display at least one of these red flags.
- Do the ad’s photos look as if they were screen-grabbed from another web site?
- Have you seen the photos in other postings? Doing an image search can ID a scam. You can do an image search with Chrome, Firefox, Safari and other browsers.
- Is the seller pressuring buyers to act quickly?
- Is the price ridiculously low?
If a seller’s ad seems legit, it’s best to arrange payment for an item in person. Be safe by meeting in a public place and taking a friend or two along.
Source: chase.com
Did You Know?
How To Find Those Lost 401(k)s
If you held some short-term jobs before settling into a career, you may have left a 401(k) account behind and forgotten about it. It’s not as uncommon as you think, especially as a Labor Department study found that many Americans have held a dozen jobs by the time they reach their mid-40s. But what if you forgot which company was managing your retirement account?
A new federal database, the Retirement Savings Lost and Found Database, should make it easier to track down. You’ll need to set up an account at Login.gov before searching to verify your identity, so be ready to photograph your ID and have your photo taken.
If you locate one or more retirement plans that are linked to your Social Security number, you’ll be provided with contact information for the plan administrators.
Don’t want your retirement plans in this database? You can opt out so nobody can access data linked to your name and/or Social Security number.
Source: lifehacker.com