Want to save more? Ask for a text reminder.

The Wall Street Journal today reported on a study showing that individuals who were reminded by text messages to save increased their savings account balances by 6 percent. The researchers concluded that attentiveness plays a part in savings discipline. Consumers were particularly motivated by reminders of certain personal goals. Those who were offered particular incentives by their banks upped their savings by 16 percent, on average. Negative messages were no help at all.

If you'd like a regular nudge to urge you to save, you may be able to set up electronic reminders through an online personal finance service. Consumer Reports Money Adviser looked at a few online services recently. (Note: Intuit, which now owns Mint, is reported to be shutting down its original online personal finance service, Quicken Online, and moving customers to Mint.) 

You also can easily automate savings by arranging periodic transfers of funds from a checking account to an online savings account. Consumer Reports offers tips for ramping up your savings. And Consumer Reports Money Adviser judges several online banks.–Tobie Stanger

Holiday regifting: How to do it right

Consumer Reports Holiday Shopping Poll recently reported that this year, 36 percent of Americans plan on regifting–that is, giving a gift they received to someone else. That's up from 31 percent the year before. Our own Tightwad Tod discusses the phenomenon here. 

If you think you'll be among that population passing on the wealth, consider these tips, adapted from Regiftable.com, a Web site sponsored by Money Management International, a not-for-profit credit-counseling service: 

•Ensure the gift is something you really can give again. Handmade or one-of-a-kind items are taboo for regifting. Same for signed books and monogrammed items. Appropriate goods might be bottles of wine, unopened boxes of candy, new household items and inexpensive jewelry. 

•Check the condition. Give only new, unopened packages.

•Consider the gift's desirability. If you don't like it, do you really think someone else will?  

•Think: Can you get away with it?  Make sure you don't give back the gift to the giver. Regift to folks unlikely to see or know the original giver. And consider whether you can keep the secret, without guilt.

•Wrap it up nice. Use new wrapping paper and a new card or gift tag. Only reuse gift bags in good condition.

•Explore other options. You also could donate the gift to a charitable group's thrift shop or holiday gift drive. Assuming you know its value, you could get a tax deduction in the deal, as well.

College Board: States' money strains = higher public college costs

Students at public colleges and universities are bearing a higher increase in tuition and fees this school year than students at other types of institutions, the College Board reported today. 

In its report, Trends in College Pricing 2009, the not-for-profit organization reports that overall costs for in-state students in four-year public colleges average $7,020 in the 2009-2010 school year, an increase of $429. Total charges, including tuition, fees, room and board, are up 5.9 percent, to $15,213. 

Out-of-state tuition and fees for four-year public colleges and universities average $18,548, a rise of 6.2 percent over the prior school year. Average total charges are $26,741, up 6 percent. And tuition and fees at public two-year schools are up 7.3 percent, to $2,544 a year. 

The increases in public college costs, the Board notes, occur against a backdrop of lower state education appropriations and higher enrollment. State appropriations for the 2008-09, the last school year for which data are available, did not keep up with inflation has they had done in prior years. Per student, the average $7,953 appropriation was $1,100 less in constant dollars than a decade earlier. 

Private, not-for-profit, four-year colleges increased their tuition and fees the least, 4.4 percent, to an average, $26,273. With room and board, these schools charge the most, on average: $35,636. 

The good news and the bad

On the positive side, students rarely pay the published prices, the report says. About two-thirds of all students receive grants; among students in public institutions, the average grant was $5,400, leaving a net cost of around $1,600. Students in private colleges received, on average, $14,400 in grant aid and tax benefits, reducing their out-of-pocket bill to about $11,900. More students are taking advantage of federal Pell grants, Hope tax credits and other forms of financial aid that increase affordability. They're also moving away from higher-interest private loans, which generally offer less generous repayment options than government loans.

Target case: For correct unit prices, bring a calculator!

One great way to make sure you’re getting the best deal when shopping is to compare unit prices you typically find on store shelves - the price of a product by ounce, pound, quart, or other unit of measure.

But that’s only if the unit prices are accurate.

In September 2006, Consumer Reports Money Adviser reported finding a New York-area Target and A&P supermarket using different units of measure to unit-price various brands of the same product, making price comparisons difficult. For instance, the A&P displayed prices of spaghetti sauce in units of ounces, pounds, quarts and millileters, depending on the jar.

Now the Connecticut Department of Consumer Protection has accused Target of posting incorrect unit prices during separate visits by a state inspector to the very same store. 

During a September inspection of the Stamford, Conn., Target, the state said it found that 17 of 50 products were incorrectly unit-priced, more than during a visit to the same store in July. That was the result even though the store had been warned about the problem during the earlier inspection, the state said. A hearing for the chain, which could face civil penalties, is scheduled for October 27.

Given these unit price inaccuracies and failure of at least some retailers to correct them even when they’re alerted, our advice is to bring a calculator when you’re shopping and verify the prices yourself. Otherwise, that jug of Tide that you thought cost less per ounce than that bottle of Cheer, might actually have cost you more.

By the way, don’t assume that the larger container of the same product is a better value, even if your comparing just one brand. Some items, such as tuna fish and ketchup, often have a so-called “quantity surcharge.” In other words, the large container costs more per unit than the smaller one..–Anthony Giorgianni

 

 

 

Best dogs for retirees

Now that the stock market seems to have calmed down a bit, those of us who are planning for retirement might want to put away the Tums and focus on some other important matters. One of those, for the dog nuts among us (and you know who you are), is to consider what kind of canine we'd most enjoy spending our retirement years with.

I recently consulted professional dog trainers from across the U.S. on that topic. Obviously a lot depends on your lifestyle and other circumstances, so there’s no all-around ideal retirement dog. But these are some of the breeds the trainers said they often recommend:

• Basset hound
• Bichon
• Cavalier King Charles spaniel
• French bulldog
• Greyhound, or the smaller whippet
• Maltese
• Papillon
• Poodle
• Pug
• Sporting dog (pointer, retriever, setter)
• Yorkie

If you have a type of dog you'd nominate (or, on the other paw, suggest that retirees avoid), we'd welcome your comments, below.

Meanwhile, three more of the trainers’ suggestions:

1. Consider an older dog. They’re calmer and less destructive than puppies, cute as those may be.

2. Check out shelters and rescue organizations. You can find many breed-specific rescue organizations on the Internet. And if you’re looking for a non-dog pet companion, you can probably find that too: In our vet’s office the other day I saw a flier for a hamster rescue group.

3. If adopting a dog isn’t workable because of your travel plans, where you live, or whatever, note that you can often volunteer to walk one at your local shelter.

Finally, here's some other pet-related content on this site that you might find useful: an article on setting up a trust to take care of a pet, an article on saving on pet expenses, a video on buying pet toys, and another video on saving money on pet food. — Greg Daugherty

Greg writes the “Retirement Guy” column each month in the Consumer Reports Money Adviser newsletter.

Report: Reverse mortgages could be next financial fiasco

As we reported recently, reverse mortgages have the potential to become the next financial fiasco. Our assessment of the risks posed by abusive sales practices and misleading marketing of these loans for consumers 62 or older is supported  by the findings in a  new report from the National Consumer Law Center:  “Subprime Revisted:  How the Rise of the Reverse Mortgage Lending Industry Puts Older Homeowners at Risk.”

Many of the same players who fueled the subprime mortgage boom have migrated to the reverse mortgage market, which is viewed by lenders as a source of profits that have dried up elsewhere. Predators who once reaped their rewards from exotic loans are now focused on wresting wealth from vulnerable seniors, the report concludes.  

“We’ve seen this movie before and it didn’t have a pretty ending,” said Sen. Claire McCaskill at a news conference announcing the release of the new report.  “Abuses in the subprime lending market almost brought down our economy. Now we’re seeing similar abuses with reverse mortgage lending—something needs to be done before more lifesavings are depleted and more tax dollars are drained.”  McCaskill plans to introduce new federal legislation to improve government oversight of reverse mortgages and further strengthen consumer protections.

Sadly, reforms will come too late to help  Ernest Minor, a Marysville, Calif. senior who was featured in our story because he is  facing foreclosure as a result of taking out a reverse mortgage.  According to this local press account, Minor and his family are about to join the ranks of the homeless if they are evicted as they anticipate on Oct. 15.

More than 110,000 federally-backed reverse mortgages worth a total $17 billion are originated annually. The number one lender in that market is Wells Fargo Bank, followed by Bank of America, which enjoyed a 37-percent increase in reverse mortgage sales volume for the 12 months ending Sept. 30,  a record year for the reverse mortgage industry,  according to industry trade publications.–Andrea Rock

 

Consumer Reports Index: Consumers' mood low, troubles rise

Consumer sentiment remains low for many Americans, and consumers are reporting more financial troubles, according to the latest Consumer Reports Index, published today. Lower-income people—those making less than $50,000 a year—are shouldering more financial pain than the rest of the population. And consumers living in the Western part of the U.S report a worse financial outlook than do those in other regions. 

The Consumer Reports Index, a composite of several measures, shows consumer sentiment nationwide at 40.3, rising only slightly from a low, 38.1 last month. When the index is greater than 50, more consumers are feeling positive about their financial situation. 

At the same time, this month's Consumer Reports Trouble Tracker Index, which measures negative household financial events, rose to 66.7, its highest ever. The percentage of consumers who reported negative events dropped slightly, but the total number of negative events was up, from 1.6 to 1.9 per household, the greatest increase in 6 months.

Some details:

• Job losses mounted. The Consumer Reports Employment Index declined markedly in October. The proportion of respondents reporting job losses was 7.7 percent, compared with 5.6 percent last month.

• Lower-income households had more troubles than average. The Consumer Reports Trouble Tracker revealed that more than a quarter (26 percent) were unable to afford afford medical bills or medications in the past 30 days, versus 15.1 percent for all Americans. Twelve percent of this group lost a job or was laid off, compared with 7.7 percent of the general population. Another 12 percent lost medical care or experienced reduced coverage, compared with 7.2 percent of total respondents.   

• Spending stayed the same. The Consumer Reports Past 30-Day Retail Index shows purchases in the past 30 days about the same as in the prior month. The index was up for major appliances, but down for major home electronics and personal electronics. 

• Consumers plan to spend more for electronics, but not for other items. Planned purchases of personal and major electronics were up for October versus the prior month. In general, however, plans for future purchases remained about the same as our measure in September. 

• Sentiment was worst in the West. Consumer sentiment took a dive in the West, down to 32.8. In the North/Central region and the South, sentiment remained even, at 41.9 and 43.2. Residents in the Northeast reported a modest uptick in consumer sentiment, to 42.3.

"The economy is in a precarious position balanced between recovery and further decline," concludes the report, published by the Consumer Reports National Research Center. Without substantial improvements as measured by the Trouble Tracker, Employment and Retail indices, it adds, "it is doubtful that a meaningful consumer recovery will be mounted in this calendar year."

The Consumer Reports Index reflects results of a nationwide, representative survey of Americans conducted last week by the Consumer Reports National Research Center. To read more about the Consumer Reports Index, including how it was conducted, click here.

Would you support a tax break for pet care?

In the midst of all the heated conversation about health-care reform, a Michigan Congressman is sponsoring a bill to give pet owners a tax break for pet care.  

Rep. Thaddeus McCotter (R-Mi) has introduced H.R. 3501 to create a deduction of up to $3,500 on federal tax returns for the care of "qualified" pets, defined as "legally owned, domesticated, and live animals." Animals used for business purposes–say, a dog that helps round up sheep or a cat filmed in TV commercials–aren't covered. The bill says qualified care includes veterinary care, though it doesn't mention what else (pet sitting? chew toys?) would be included. There's no apparent provision for people who don't itemize and utilize the standard deduction instead. And there's no word on whether the pet needs a valid Social Security number. (Just kidding.)

A main finding to support the proposed deduction is that the human-animal bond "has been shown to have positive effects upon people's emotions and physical well-being," in the bill's words. The title of the bill is the Humanity and Pets Partnered Through the Years (HAPPY) Act. 

The bill doesn't mention the growing expense of medical care for pets, though ostensibly that's a major impetus for it. Consumer Reports Money Adviser recently discussed ways to save on pet expenses, regardless of whether this bill becomes law.

What do you think about such a tax break? Is it needed? Feel free to comment below.–Tobie Stanger

October 15 deadline to change Roth IRAs for tax savings

Last year's stock-market meltdown was hard enough to stomach without having to lose a chunk of losses to taxes. If you converted from a traditional IRA to a Roth IRA last year and paid taxes on an account that's been decimated, you have until October 15 to reverse it. 

Say your IRA was worth $100,000 last year when you converted it to a Roth, and your account is only worth $60,000 now. You essentially paid taxes to convert the IRA on an additional $40,000 you no longer have. The tax code allows you to reconvert, or recharacterize, the Roth back to a traditional IRA and get a refund on the taxes you paid. And if you want, you can then convert it back to a Roth, but pay taxes only on the new account value. If you undo a Roth conversion that you made in 2008, you only have to wait 31 days to reconvert it into a Roth. However, if you converted in 2009, you'll have to wait until Jan. 2, 2010 to reconvert.

To do the deal, talk with the custodians of your Roth IRA; they’re the ones who need to set up a new IRA in which to transfer your Roth money, says Jim Wagner, CEO of Trust Administration Services, a Carlsbad, Ca.-based company that provides services for self-directed retirement plans. Depending on your administrator, there may be fees involved. You’ll need to fill out IRS Form 8606, Nondeductible IRAs. Your accountant can tell you whether you’ll need to amend any tax returns as a result of the change.

For a more in-depth discussion see this article in Financial Planning magazine by IRA guru Ed Slott  and this article from Bankrate.com. For more information on tax-law changes that will give many more people the chance to convert to Roth IRAs next year, read "New Twists on Roth IRAs" from Consumer Reports Money Adviser.–Chris Fichera 

Splurging on savings

Consumers have scaled back their spending in a major way since the economic crisis started last year. Federal Reserve data show that in July Americans cut their use of revolving credit, mostly credit cards, by 8 percent over the previous year. And the personal saving rate in the US was 4.2 percent in July, up from zero in April 2008, according to the Bureau of Economic Analysis.

Our new reality is reflected in the findings of a recent survey by the Consumer Reports National Research Center: 71 percent of respondents said they purchased only what they absolutely needed; 61 percent said they ate dinner out less often; 58 percent spent less on vacations; and 53 percent used their credit cards less.

Even more heartening to those of us who preach financial responsibility, many respondents said they would continue those behaviors after the recession is over. For example, 39 percent reported that they’d put more money into savings, and 95 percent said they’d continue to do so once the economy recovered. Ninety percent of those who put less on their credit cards said they’d continue to keep a lid on charges.

We also asked respondents what they would splurge on when the recession was over. The most often mentioned indulgence was a vacation (17 percent), followed by nothing (15 percent). Then we posed the question: If you were to win $10,000 tax-free and could use it for only one purpose, what would you do? Two-thirds of the respondents said they would pay off their debts or put it into savings or investments.

Now that the economy is showing signs of recovery, we may soon see if consumers retain the lessons learned through this difficult period and follow through on those good intentions.—Noreen Perrotta

Noreen is the editor of the Consumer Reports Money Adviser newsletter.