Ask Liz Weston

Swine flu quarantines in Mexico and the U.S. got me wondering: how would we cope with being “confined to quarters” for two or three weeks?

Quarantine preparation is a variation of the disaster preparedness each of us should do anyway, to make sure we can:

• cope on our own without basic services for at least three days (and preferably a couple of weeks) in case of disaster and
• promptly evacuate our house if necessary

Unlike other disasters, a quarantine wouldn’t cut us off from electricity, water supplies or other services, and we probably could get necessities delivered. But it still would be smart to keep a two-week supply of food, medicine, pet supplies and hygiene items in the house at all times. (Check out my column “The emergency fund you can eat” for details about preparing your pantry.)

If you don’t have a general disaster supplies kit, here’s a list of items the Red Cross recommends keeping in an easily-accessible place:

• Water for at least three days (one gallon per person per day)
• Food that won’t spoil or need much cooking (replace this food every six months)
• A change of clothes, comfortable shoes, and blankets or sleeping bags
• Battery-powered radio or television, flashlight, extra batteries, lighter or matches, sanitation supplies, basic tools, and a few dishes and kitchen utensills
• An extra set of car and house keys
• A basic first-aid kit
• A manual can opener
• Personal hygiene items to last at least three days
• A reminder to grab your prescriptions (or include copies of prescriptions)

I would add a few additional items:

• Work gloves (for dealing with broken glass and other debris)
• A pry bar (for debris and opening doors warped shut in shifting structures)
• A wrench (for shutting off gas and water supplies if necessary)
• A wad of cash sufficient to last at least three days

Thinking of canceling a trip because of swine flu concerns? Even if you bought travel insurance, you may not get reimbursed. Policies sold after April 24 will likely exclude swine flu, while some policies sold before that date routinely exclude cancellations due to epidemics and pandemics.

If you actually catch the disease while abroad, though, the medical coverage portion of your policy probably will kick in–unless, again, there are exclusions for epidemics/pandemics.

See why it’s important to read these policies before you buy?

Travel insurance is a great idea for expensive trips or any trip that takes you somewhere where your health coverage doesn’t apply (for example, international trips). But policy details vary, so you have to do your research.

John Cook, president of QuoteWright, posted this overview:

Basic trip cancellation coverage is what is referred to as “named peril” coverage where only those perils that are listed by the insurance company and not limited by the company’s exclusions are covered. Most companies refer to these as “covered reasons”. Under the basic trip cancellation/interruption coverage there are no benefits if you cancel due to the threat of avian [sic] flu because the threat of sickness is not listed as a covered reason. Most policies include being “quarantined” as a covered reason and would provide coverage if one was forced to cancel their trip due to it however; some companies exclude an “Epidemic” and would not cover being “quarantined” if it was caused by an “Epidemic”. Under the basic coverage benefits are limited or non-existent however, several companies offer an option that you can add to the basic coverage for “Cancel for Any Reason”. Generally this allows you to cancel your trip for any reason that is not otherwise covered.

For more, read “Tips for choosing the right travel insurance“

Unpaid time off is one way employers are trying to make ends meet in the recession while avoiding, reducing or at least delaying layoffs.

But furloughs are a far cry from vacations. You’re too worried to spend money going anywhere, but just hanging around the house can give you too much time to think–and worry even more.

If you’ve been furloughed, here are some ideas for making the most of your time off:

Create your layoff plan. Don’t stick your head in the sand: Your company’s in serious trouble if it’s furloughing workers. Review your finances and look for ways to build up your emergency fund. If there’s an expense you’d cut if you were laid off, trim it now and bank the extra cash. Read my “Survival Guide for the Unemployed” for tips about handling the worst if it happens.

Get serious about online networking. Build your profile on at least one professional networking site such as LinkedIn or Plaxo. Reach out to former colleagues, friends, old classmates. Many people find jobs not through their nearest and dearest but from “weak” connections: acquaintances, friends of friends. The bigger your network, the better your chances of uncovering your next great position.

Network offline, too. Check out professional or social organizations that might help you expand your sphere. Consider volunteering, not just for the contacts but for the sense of gratitude you’ll get. Resume expert Tony Bashera recommends writing down the name and number of every single person you know as a kind of master networking sheet, then working your way through it to let folks know you’re looking for your next post.

Build up some goodwill. Keith Ferrazzi’s book “Never Eat Alone” is the best networking book I’ve read, and he emphasizes the importance of doing good deeds for others without direct expectation of rewards. Write a glowing recommendation for someone, tell someone else about a job prospect, encourage someone who’s feeling down. This stuff is easy to put off in the rush of a typical workday but is so essential to building a strong network–and feeling good about yourself.

Tackle a (reasonable) home repair or improvement project. Survey your abode and make a list of all the projects you haven’t had time to tackle because you’ve been working too hard to save your job. Then pick the tasks that will give you the best payoff in money saved, money earned or sheer satisfaction. You could declutter the house and sell the excess in a yard sale, for example, or catch up on all those little painting and repair jobs to save yourself the cost of a handyman. Read “5 things it’s cheaper to do yourself” for more ideas.

If you pay your credit cards in full every month, rewards programs can give you some nice perks: free travel, free stuff, cash back.

But the programs are getting stingier as banks try to battle the recession and the credit crunch.

“The banks are strapped for cash. As a result, consumers will have to spend a lot more than they did last year to earn similar rewards,” says Jody Farmer, vice president of strategic marketing for CreditCards.com, whose Web site helps consumers compare credit-card offers from across the country.

CreditCards.com suggests six ways to tap your card’s highest rewards earning potential:

Redeem now: If you’ve earned a lot of points, redeem them sooner rather than later. (The redemption value of points is largely hidden and at the discretion of the card issuer, so the true devaluation of rewards occurs at this stage.)

Switch cards: If you’ve recently redeemed your rewards from a longstanding card, consider shopping around for a new card with a better program. Consider programs that offer extra rewards for the type of spending you do the most — such as grocery shopping, gas and drug-store purchases. Choose a reward that you will actually use and will provide a meaningful incentive.  For example, if finding the time and money to go on a far away vacation isn’t in the cards, airline miles may not be an optimal reward choice.

Go for cash-back rewards: Cash-back rewards are straight-forward in how they are earned and what they are worth. They typically don’t have redemption restrictions such as expiration dates or black-out dates. American Express Blue Cash was the favorite cash-back card among the credit card experts I recently interviewed.

Look for hidden fees: Read the fine print. You might be earning a lot of points or miles but if you’re carrying a balance, you’re probably also paying a higher interest rate or a stiff annual fee — and that negates the freebie rewards concept. Also, understand that your rewards are subject to term changes — with very little or no notice. So keep track of your expiration dates on points or miles so you understand when the system changes.

Double down: To earn more rewards, you might want to add your spouse as an authorized user on your account so you can leverage all of your household card spending and increase your annual reward-earning power.

Loyalty counts: Until it’s time to switch, be true to one credit card to maximize your rewards-earning potential. Choose a card with a low or non-existent annual fee. Then confine your spending to that one card to reap the best rewards.

For the latest credit-card news, check out my columns:

• 20 credit cards that pay you back
• 18 ways to foil credit card thieves
• Credit cards with the happiest users

The credit card industry has taken careful, deliberate aim, and shot itself in the foot.

Prior to the financial crisis, credit card issuers mostly picked on subprime borrowers. Recently, though, it seems no one is immune from issuers’ capriciousness. Even folks with the best credit, who paid on time and followed all the rules, are seeing inexplicable rate hikes, slashed credit lines and closed accounts.

Two of the banks that received the most bailout money, Bank of America and Citi, have been at the forefront of this retrenchment, yanking away billions in credit from their customers. Instead of using taxpayer money to lend more, they’re lending less, and understandably incurring customers’ ire.

Today, more people realize what has long been true: that credit card issuers can change virtually anything about your agreement with little notice and regardless of how good a customer you’ve been.

Yes, card issuers should be able to make a profit, but they also have a corporate responsibility to play fair, a responsiblity they’ve been ignoring for years. Double-cycle billing, universal default penalties, egregious fees and hidden “gotchas” in contracts aren’t legitimate ways to make a buck; they’re playing foul.

President Obama said as much when he summoned credit card executives to the White House Thursday, and made clear he supports legislation that would:

• restrict sudden rate increases
• rein in fees
• require clearer applications, notices and contract language
• put some teeth into enforcement against issuers who violate fair-play rules

The fate of bills like the Credit Cardholders Bill of Rights is in some doubt, however, since the banking lobby is so very powerful in Washington.

If you agree that credit card excesses need to be curbed, contact your lawmakers, particularly your U.S. Senators, who are facing particular pressure to water down any reforms. CLICK HERE for contact information for your state senators.

College students are carrying record-high balances on credit cards and charging items even though they know they don’t have the money to pay for them, says a new study by student lending giant Sallie Mae.

Students last year carried an average balance of $3,173, up 46% from 2004. And graduating seniors carried an average balance of more than $4,100, up from $2,900 in 2004. Almost half of graduating seniors carried a balance greater than $7,000.

Other findings:

How many cards: 84% have at least one credit card. That’s up  from 76% in 2004. The average number of cards is 4.6. Half have four or more cards.

Making payments: Only 17% pay off their balance each month, and 22% make the minimum payment. Only 14% pay some cards in full and make only the minimum payments on others. And 7% pay less than the minimum payment.

Charging tuition: One-third put tuition on their credit card, up from 24% in 2004.

What else do they charge? Besides education supplies and books, 84% use credit cards to pay for food; 70% for clothing; 69% for cosmetics.

No clue about balances: 60% were surprised how high their balances had reached, and 40% charged items they knew they couldn’t afford.

Getting that first card: 58% got their first card from a direct mail solicitation. Only 17% said parental referral.

“These statistics are concerning, because these students will walk into the ‘real world’ with a lot of debt from their credit cards and student loans,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “It is going to take some time and work to pay it all off. They are also learning bad practices with credit cards and not receiving the financial guidance they need.”

I think the answer goes beyond mere education. We need to restrict the kinds of cards people under 21 can get, as I explained in my recent MSN column, “Teens need a financial driver’s license.”

Hardekopf, however, said card issuers will battle any attempts by Congress to restrict the marketing and availability of credit cards to college students.

“College students are an important target market because card loyalty starts at a young age,” he said. Issuers “also consider these loans to be a pretty good risk because parents usually bail out their children.”

To conduct the study, researchers analyzed aggregate credit bureau reports for a randomly selected group of 1,200 student loan applicants. In addition, surveys were sent to 5,800 undergraduates, of which roughly 5 percent responded. The full study is available online:  www.SallieMae.com/creditcardstudy

For the latest news on credit cards, check out my columns:

• Teens need debt driver’s licenses
  

• 5 tips: Protect our credit scores now

• 3 things you shouldn’t charge

• 9 big credit card myths

Yesterday I wrote about where the jobs are, according to Sageworks‘ analysis of privately-held industries.

Now here’s Sageworks’ list of struggling industries. Below is a list of five sectors that have seen profits drop by at least 21% and sales growth decline by as little as 4% but as high as 20%.

Industry: Furniture and cabinet manufacturers
Net profit % change: -34.5%
Sales % change: -4.5%
What they do: Manufacture furniture for homes and commercial buildings.

Industry: Land Subdividers
Net profit % change: -31.10%
Sales % change: -20%
What they do: Buy land, divide it into lots and sell it to builders for residential and commercial development.

Industry: Cement and concrete product manufacturers
Net profit % change: -28.7%
Sales % change: -5.3%
What they do: Manufacture cement, ready-mix concrete, or concrete pipes, bricks, and blocks.

Industry: Real Estate Agencies & Brokerages
Net profit % change: -22.1%
Sales % change: -13%
What they do: Sell, buy or rent real estate for others.

Industry: Furniture retailers
Net profit % change: -21.9%
Sales % change: -4.8%
What they do: Sell new furniture.

While many industries are struggling in the current economy, there are some that are doing well and growing, according to Sageworks, which provides private company financial information.. Below is a list of five sectors that have remained financially stable and show profit growth greater than 17% and sales growth greater than 4,5% over the last 12 months. These might be good industries for job seekers to check out:

Industry: Accounting & Tax Service Firms
Net profit % change: 20.9%
Sales % change: 10.9%
What they do: Work with businesses and individuals to provide auditing of accounting records, financial and budget consulting, and to prepare financial statements and tax returns.

Industry: Specialized Freight Trucking Companies
Net profit % change: 20.8%
Sales % change: 6.8%
What they do: Provide local or long-distance trucking using special equipment, such as flat-beds, tankers, or refrigerated trailers.

Industry: Offices of other health practitioners
Net profit % change: 19.5%
Sales % change: 10%
What they do: These are offices of chiropractors, mental-health practitioners, physical therapists and occupational therapists.

Industry: Offices of dentists
Net profit % change: 19.3%
Sales % change: 7,8%
What they do: Provide dental services; cleanings, fillings, crowns, etc.

Industry: Beer, Wine and Liquor Wholesalers
Net profit % change: 17.9%
Sales % change: 4.7%
What they do: Distribute beer, wine and liquor to retail stores, restaurants and bars.

Dear Liz: I’m a 19-year-old student who will be transferring to a four-year college from community college in the fall. My parents don’t really play a part in paying for college or determining where I go or where to apply; I do all that myself.

I’m seriously considering a university that costs about $46,000 a year and has offered me $39,200 in financial aid (the majority of which is grants, not loans).

However, I have no idea how I’ll be able to pay for the $6,800 gap. My parents don’t have much savings, and I’ve never asked them to pay for anything college-related.

I was planning to get a summer job, and I’m applying for scholarships, but what if that’s not enough?

Do you have any advice for me as to the best way of going about this?

Answer: You’re getting a substantial discount on an expensive education. You should investigate whether you can get a better deal at a public school, but the gap between the cost and the aid you’re being offered might wind up being about the same.

If that’s the case, talk to your parents about whether they can help. If they can’t, consider filling at least some of the gap with federal student loans. The loans in your aid package may be need-based, but you probably qualify for additional federal loan money that doesn’t require you to demonstrate need.

Those loans, plus your earnings, should allow you to pay for this education.

Winning scholarships may not get you much further ahead, since colleges typically compensate by reducing the grants you’re given.

You want to use federal student loans before you turn to the private student-loan market, since private loans are more expensive and less flexible.

Also, don’t borrow more for your education than you expect to make in your first year out of school.

If you follow those guidelines, you should be able to comfortably afford your payments once you’re out of school.

You can find out more about student loans and paying for college at FinAid.org.

Dear Liz: I’ve had a Bank of America Visa card for years. My interest rate was lowered from 7.9% to 5.4% a few months ago, but I recently got a letter saying that if I did not agree to a 12% rate, I could “opt out” but no longer use the card. I never carry a balance but use the card extensively. It just seems unfair that they can do this. Can I report them to some agency?

Answer: Like other issuers, Bank of America has been raising interest rates across the board, but what’s mystifying is why you care. If you never carry a balance, you don’t pay interest, so the rate is irrelevant.

If you object to card issuers raising rates on principle, contact your congressional representatives, who are contemplating changes that would make it tougher for credit card companies to alter rates and terms.

Otherwise, simply accept the new rate and use the card as you always have.