This week, Tracy Davidson, consumer reporter for WCAU in Philadelphia, answers the question of whether your money is safe in the bank and in your 401(k).

Is Your Money Safe?
by Tracy Davidson

iVillage user thegymmom asks: Are we truly in trouble? Should we take our money out of the bank and hide it? Is it as scary and dire as the media is predicting? Or is it all hype, just another way to help the rich keep their money?

Are We In Trouble?
First, we truly are in trouble, for a number of reasons. Fortunately or unfortunately, our economy runs on credit. The credit markets are frozen, which basically means that banks have stopped lending money to each other and to major customers. And that trickles down. Small businesses depend on credit; some use it to make payroll. Consumers need credit to buy homes, cars and make purchases. We are all impacted by this crisis, so it needs to be solved.

Should We Take Our Money Out of the Bank?
But I really want to address your second question about taking your money out of the bank and hiding it. No, no, no! Here's why:

The money in your bank is safe! If your bank is FDIC insured, your money is insured. What does that mean? The FDIC insures accounts up to $100,000 per depositor, per insured bank. So if the bank fails, your money is still safe. If you have more than $100,000 in the bank, the bill that passed the senate Wednesday night would raise that insurance to $250,000.

What About Your 401(k)
You also shouldn't stop contributing to your 401(k). The markets are volatile right now and I know people are panicking, but don't. Your 401(k) money could be your greatest retirement asset, so it's important to keep it intact. The match of money provided by your company more than makes up for any hits you're taking right now in the market. It's free money!

When it comes to your 401(k), the best thing you can do is make sure your asset allocation is right for your financial plan. Do you have the right amount in stocks versus mutual funds and bonds? If you're not sure, ask your HR department to explain it.

Finally, whatever you do, don't take money out of your 401(k), because you'll be penalized for it. If you really need money, find another way to get it. If you think there is no other way, seek professional financial advice before you touch your 401(k).

Lessons Learned?
What can we, as individuals, learn from all of this? That it is dangerous to live on credit. We live in a world—or we did—where we could buy a house bigger than we could really afford, where we could buy a car that was nicer than we could afford, or where if we didn't save, we just said, "credit card." It's a dangerous way to live. Remember the days when, if we wanted something, we actually planned and saved until we had enough money? That's what we need to get back to.

Check out All That & More with Tracy Davidson.

Read more of Tracy's blog posts.

The economic news lately has been a little frightening. It seems like banks are failing all over. This week, Tracy Davidson, consumer reporter for WCAU in Philadelphia, talks about what you can do to protect your money.

Wall Street Woes! What Should I Do?
by Tracy Davidson

Lehman Brothers filed for bankruptcy. Bank of America acquired Merrill Lynch. And the market is taking a dive.

In such situations, what's the best financial advice for average folks like you and me? Actually, financial planners are giving the same advice now as they did when the crisis began. And for the sake of saving your money, it's worth shouting from the rooftops!

Be smart, don't panic
Smart financial planning is always long range. Don't react with your emotions.

If your bank is FDIC insured, don't worry
FDIC insures up to $100,000 per depositor, per insured bank. If you have more than that, FDIC provides separate insurance coverage for deposit accounts held in different categories. Meaning: If you have single accounts in your name, your joint accounts are looked at separately. If you have questions about that or want to see if your bank is FDIC insured, check online or call 877-275-3342.

The best thing you can do
Protecting your house should be your number-one priority in tough economic times, so take care that you are making responsible moves with your money. Are you borrowing too much? Carrying too much debt? Really take a good, hard look at how you manage your money. How do you spend and save? If a domino collapsed in your world, would you still be able to pay the mortgage or make your car payment? Or are you extended to the max? Are you saving as part of a personal financial plan with goals and objectives (the kids' college education, your retirement, etc.)? If there's anything you should do in the wake of all this—this is it!

If you have money invested
As always—not just when the market is tanking—make sure your portfolio is well diversified. Review your investments on a regular basis, even your 401(k) allocations. And seek professional help. I can't possibly pretend that I know everything there is to know about investing. That's not what I do for a living. So what do I do? I seek out experts who can help me make the best decisions for my family in the long term—not just not gut-reactions. Does it cost a lot of money to seek professional help? No. There are plenty of free financial planning seminars. Ask your local bank or call your local Consumer Credit Counseling Service office and ask.

Have faith
If you're like me, you get overwhelmed and panicked when you feel helpless. You are not helpless. Take control of what you can: your finances. Even if you just take one small step, like paying more than the minimum of your credit card bills, that's something. That's a first step toward being more responsible with your money and your future. Take a deep breath and start. You have more control than you think.

Check out All That & More with Tracy Davidson.

Read more of Tracy's blog posts.

Only 104 more shopping days! And with money tight all over it's going to be a challenge to make this holiday season festive without going over budget. This week, Tracy Davidson, consumer reporter for WCAU in Philadelphia, talks about how you can get a handle on your holiday shopping.

We can't be talking about Christmas!
by Tracy Davidson

Oh, but we are. I know, I know. You're barely surviving the back to school rush. And if you're like me, you can't believe we're already seeing Halloween candy in the drug stores. But yes, it is time to talk about Christmas, or at least how to pay for it! At this writing, we have a little less than 15 weeks.

Credit counselors are already being bombarded with calls from people who can't make ends meet. In Philadelphia, where I live, the Consumer Credit Counseling Service is taking almost nine thousand calls a month. So at a time when there's very little wiggle room in many of our household budgets, we're about to face the pressure of holiday spending.

So what can you do? Here are four tips for smart holiday spending.

1. Pay down your credit cards. My hope for you is that you'll save enough money not have to go the credit card route but, if you are going to be using your credit cards, we want your balance to be under control. It's a bad for your credit score when you're nearly maxed out on your credit cards and it means you'll only qualify for higher interest rates. So start paying them down right now. If you have good credit and pay your bills on time, call your credit card company (the 800 number is on the back of your credit card). Tell them you've been a good customer, you pay on time and you'd like them to lower your interest rate. There's a good chance they will.


2. Create a spending plan. You can't decide how much you need to set aside or save unless you know how much you plan to spend. So make your list early this year. Who are you buying for and how much do you want to spend on each gift?


3. Make some extra money. One of the things I'm doing right now is a good fall purging around my house. I'm giving plenty of stuff to charity. I've also made a pile of clothes to go to consignment. I have a pile of items to put on eBay and Craigslist. I also have a few gadgets to sell on-line (at gazelle.com and venjuvo.com). A lot of people are also considering a second, seasonal job to bring in some extra money.


4. Save some money. I know, I know. Everyone says, "There's no way." But you can do. Do it the old fashioned way: when you get your paycheck, pay yourself first. Don't trust yourself? Let a financial institution do it for you. For instance, you can open an ING Direct Orange Savings Account. Label it "Holiday Shopping," and decide how much money you want coming out of your checking account and into this savings account on a weekly basis.

It'll help you avoid one of the biggest holiday money hazards—last minute emotional spending! So make a plan, and then stick to it.

Check out All That & More with Tracy Davidson.

Read more of Tracy's blog posts.

This past weekend, my nephew told me that kids needed cell phones when they turned 10. He sees the older kids at school with their phones and thinks that all kids should have them. I don't think his mother is quite on board with that plan just yet, but it's a question that she, and other mom's like her, will eventually have to deal with. This week, Tracy Davidson, consumer reporter for WCAU in Philadelphia, looks at what to consider and how to shop for cell phones for your child.

Is a cell phone on your back to school shopping list?
by Tracy Davidson

A lot of kids are heading back to school with new pencils and notebooks and cell phones. The Yankee Group says nearly three quarters of 13 to 17 year olds in this country have cell phones and the Center on Media and Child Health estimates that in the next three years, 54 percent of kids 8 to 12 will have cell phones. If you're trying to figure out if this is the right time or the right age for your child to have a cell phone, there are three key things to consider: need, cost and parental controls.

Most kids WANT a cell phone. Does your kid really NEED one?
While some parents say, "Why would my 8 year old need a cell phone?" others believe it's a necessity these days. Dan Derry, from Verizon Wireless, says the decision is not so much about age. He says many parents base their decisions on where, when and with who their child will be. Is the child taking part in extra-curricular activities? Is he or she by themselves a lot?

Once you've decided whether to buy, shop around to find the best plan for your budget.
There are a lot of offerings out there for young people. Many parents think they save money either by choosing plans with unlimited minutes or unlimited texting. Texting, in particular, is a really important thing to focus on, since that seems to be the dominant form of communication for teens. (I don't get it, but it seems work better for them than talking.) Prepaid plans are also an option for some families. With these plans, once your child has used her minutes, she's done for the month. Some parents like that control and it helps them feel like they can monitor the child's behavior a lot better.

How much do you want to monitor your child's behavior?
There are a lot of ways to keep a close watch on your child's activities. Different providers offer a variety of options for controlling usage. You can restrict internet access, turn off their text messaging or block specific numbers at certain times and days. Good options for parents of teens like my nephew who, if allowed, would be texting his girlfriend all night. You can also restrict messages and downloads. Ask providers specifically for what you want when you start shopping and compare prices.

A lot of parents get their child a cell phone for safety. If this is a big concern for you, I think the coolest feature offered by some carriers is the GPS capability. Here's how it works: Say you know that your child will go to school, followed by practice, then to a friend's house and finally home. You can set it up so if his cell phone goes outside that geographic perimeter, you are notified.

Bottom line: Shop around for features that fit your needs for cost and control. And then have a talk with your child about responsibility. You might even consider having her sign a contract, like this one. Check out these links for more information:

• Kids and cell phones pros and cons
• Cell phone parental controls
• Best cell phones for kids
• Cell phone plan comparison chart

Check out All That & More with Tracy Davidson.

Read more of Tracy's blog posts.

Sometimes it feels like the only things I get in the mail are bills and credit card offers. But for a lot of people, the credit card offers are becoming fewer and fewer. Less junk mail may be a mixed blessing, though. This week, Tracy Davidson, consumer reporter for WCAU in Philadelphia, explains how it's getting more difficult to get credit when you need it—and what you can do about it.

You Never Thought You'd Miss the Junk Mail
by Tracy Davidson

If you think your prayers have been answered and your mailbox is no longer filled with credit card offers you don't want—you're right. Lenders have tightened their standards. Fewer offers are going out. Zero-balance teaser rate offers are down about 15% over the last year and the rules have changed for many of the credit card offers that are out there. If they have low interest rates, chances are good they have more stipulations and fees. For instance, some might require you to make two purchases a month in order to keep that low rate. Otherwise that low interest rate is not so low anymore. And that higher rate can actually cost you a lot over time, especially if you carry a balance. Creditors are really increasing the number of things that can trigger a higher interest rate so, when you're shopping around for the credit card that fits you the best, look really closely at the fine print. There are lots of Web sites to help you compare cards including bankrate.com, lowcards.com and creditcards.com.

Getting the best rate
What can you do to get the best rate? As with so many things, it goes back to that all-important credit score. The better your score, the better the interest rate. It's really simple. And improving your score is really simple too—but that doesn't mean it's easy.

First, pay your bills on time. It's the single most important component of FICO scores. Recent, frequent and severe delinquencies dramatically lower your score. So do everything you can to pay on time. You might even consider automatic bill paying.

Second, if you're behind on any bills, contact your lender and try to make alternative payment arrangements. Do it now! Don't put it off.

Third, keep your balances low. I know it's easy to think, “Well, I'm not to my limit yet." But higher revolving balances as a percentage of your total available credit limits make you a higher credit risk.

So the bottom line on this topic on the consumer side—even though you may have less junk mail to sift through these days—is you have to be smarter than ever. Companies who want your money are usually great on the “sell." They'll put the benefits in BIG, BOLD print, but all those added fees? They'll look a little more like this! So even if you have to invest in a pair of reading glasses from the corner drug store, do it so you'll know what that card could really cost you!

Check out All That & More with Tracy Davidson.

Read more of Tracy's blog posts.

With gas prices as high as they are, everyone is looking for a way to save at the pump. This week, Tracy Davidson, consumer reporter for WCAU in Philadelphia, explains how using your debit card can actually cost you and what you can do to avoid this added expense.

How Using Your Debit Card Can Cost You at the Pump
by Tracy Davidson

As if paying for gas doesn't hurt enough, if you use your debit card it can hurt even more. That's because of something called a "hold." One of our viewers, "Fred," told me he put 15 dollars of gas into his tank using his debit card. When he looked at his bank account online he was overdrawn because of an unexpected charge of $37.50. For three days that money was not available. "How could this be?" he asked? "And who's got my money?"

"Holds" usually happen when the total amount to be debited is not known at the time the debit card is swiped. When you swipe at the gas station before you pump, they don't know what the final amount will be. (It happens at restaurants too, because you haven't added your tip at the time the card is swiped, so they don't know the total amount.)

So here's what happens at the gas station: The gas station sends through a pre-authorization to your financial institution to make sure the card is valid and that you have enough money in your account to cover the purchase. These days the cost of filling up could be $75 or more because that's how much it might cost to fill a tank. Then the bank decides to hold a certain percentage of that pre-authorization and it also decides for how long to hold it.

How Long Are They Holding Your Money?
Even though Fred ultimately put only $15 of gas into his tank, the bank "held" $37.50 for three days. How do they decide how long to "hold" the money? It makes sense that it should be for as long as it takes the charge to actually clear. But in some cases it's longer and in some cases the bank may keep the hold longer for people who have lower balances, which, of course, sends overdraft and check bouncing charges spiraling.

How to Avoid a Hold
In October 2008, gas retailers will be able to use a RTC or "Real Time Clearing" procedure offered by Visa that is supposed to allow Visa debit card transactions to clear in two hours or less. Until then, here's how to avoid those dreaded "holds":

1. First, ask your bank what their policy is, so you'll know.
2. Use your credit card. Now, some people will say, "That'll cost me more because gas retailers are charging a lower price for cash purchases and a higher price when you use your credit card, and using your debit card is same as cash right?" Wrong. Stations still pay a fee for the transaction, so for them, it's not the same as cash, and most will charge you the "credit card" rate.
3. Pay with cash. I know it's hard but it can save you a lot of money.

The American Bankers Association offers other tips to avoid overdraft fees.

Check out All That & More with Tracy Davidson.

Read more of Tracy's blog posts.

With home foreclosures on the rise, it’s hard for homeowners not to worry about the safety of their own home. This week, Tracy Davidson, consumer reporter for WCAU in Philadelphia, explains how to tell if your home is at risk for foreclosure, how protect your family from losing their home, and what you can do to recover your financial health if you’ve already had your home foreclosed on.

Mortgage Woes
by Tracy Davidson

The numbers are astonishing! Month after month, thousands of homes are being foreclosed on. Each time I report the latest statistics, I know there are people behind those numbers, people who probably never expected to end up in such a financial struggle that they’d lose their home. So it’s a good time for all of us to make sure we’re taking some important steps to avoid foreclosure.

3 things you can and should do to avoid losing your home

• Plan for the unexpected. Job loss, death or illness in the family are all situations that can throw your monthly budget off course, and when you aren’t prepared, bills spiral. Create an emergency fund: Experts say you should have the equivalent of at least 3 months of your salary saved.


• Know how much house you can and cannot afford. Start by figuring out what your debt-to-income ratio is. Try this calculator. Look at your monthly gross income, before taxes and contributions. This is how much you make per month, not how much you take home. Then, make a list of all of your monthly debts: your mortgage payment (principal, interest, taxes and insurance), car payment, credit card bill, student loan—any bill you pay on a monthly basis should be on the list. Then take your total monthly debt payments and divide it by your total monthly income. This will give you your debt-to-income ratio. Experts say it should be no more than 36% of your monthly gross income. If your debt-to-income ratio is higher than this number, create a budget to get yourself there.


• Take action at the first sign of trouble. If you find yourself in danger of missing or making a late payment on your mortgage, the single most important thing you can do is to call your lender right away! Discuss your options. The biggest mistake struggling homeowners make is doing nothing. Put any fear of embarrassment aside and pick up the phone. Get some support. Consider contacting a housing counseling agency for help. Or consider calling the Homeowner's HOPE Helpline at 888-995-HOPE.

After Foreclosure
If you’ve already lost your home to foreclosure, it probably feels like the end of the world to you, but it’s not. You can get back on your feet, learn from your mistakes and start fresh.

3 things you can do after losing your home to foreclosure

• Review your credit report. By reviewing your credit, you’ll be able to see what needs your attention. You can get a free copy of your credit report once a year from each of the 3 credit bureaus by visiting annualcreditreport.com.


• Rebuild your credit. This is extremely important, especially if you want to buy a house again someday. Get into the habit of paying all your bills on time every month. Keep low balances on all of your credit cards. Avoid opening new accounts or financing large purchases. Keep an eye on your credit report.


• Create a financial plan. Set realistic spending goals and stick to your budget. More importantly, live within your means and be realistic about what you can afford.

We can all survive what’s happening around us. Remember, it’s your money. Set simple and realistic financial goals and then stay informed and stay committed!

Check out All That & More with Tracy Davidson.

Read more of Tracy's blog posts.

We have an exciting new guest blogger joining us on House Calls. Tracy Davidson, consumer reporter for WCAU in Philadelphia, is going to be blogging weekly about your money and smart ways to both save and spend it. If you live in the Philadelphia area you may have seen Tracy on All That & More with Tracy Davidson. This week: Tracy tells you how to find out if your bank accounts are safe.

Are Your Bank Accounts Safe?
by Tracy Davidson

The video of people lined up to get their money out of Indymac made me think of the "run on the bank" in the movie It's a Wonderful Life. Unfortunately it's real life for more and more customers. Estimates are that this "crisis" could take down many more banks. So what should you do? Don't panic! And don't think that stuffing your mattress is the answer!

Is your bank FDIC insured?
First: Make sure your financial institution is FDIC insured. How do you do that? Banks and financial institutions post FDIC signs at their locations. Or you can call 877-275-3342 or check online to see if your bank is FDIC insured.

What exactly does it mean if a bank is FDIC insured? The Federal Deposit Insurance Corporation is an independent agency of the federal government. It was created in 1933 to address the problem of failed banks. The key fact in this history lesson: Since January 1934 no depositor has lost a single cent of insured funds as a result of a bank failure.

How much are you "insured" for? Basically you're insured up to $100,000 per depositor, per insured bank, which includes principal and accrued interest. So ask yourself which types of accounts you have with your bank—checking, savings, trust CDs? You'd be covered for up to $100,000 for all of those accounts, combined. Now, could you be insured for more? Yes, for instance if you have a checking account in your name and another checking or savings account that is in both your and your husband's names. Different ownership categories are separately insured. IRAs are insured separately for up to $250,000, but other investment products like stocks, mutual funds, bonds or annuities are not covered, even if purchased at an insured institution.

Check up on your bank
Still curious about whether your bank will be the next one in the headlines? The FDIC has a list of 90 banks that could be in danger of failing but, unfortunately, that list is not available to the public. You can, however, check Bankrate.com. It has a rating system where you can plug in your bank's name and check out its relative financial strength.

Bottom line: If your bank is insured, you can rest easy. The FDIC guarantee is a direct obligation of the United States Government. So as long as the government is in business, your FDIC-insured money is safe.

Added note: Have your money in a credit union? They are insured by the National Credit Union Administration.

Check out All That & More with Tracy Davidson.

Read more of Tracy's blog posts.