Ask Liz Weston

A rising personal savings rate indicates we’re doing better at putting money aside, but we have a long way to go. A survey released today jointly by the Consumer Federation of American, the Financial Services Roundtable and the Employee Benefit Research Institute shows many American families not only lack savings–they lack a savings account.

Taking data from the latest Federal Reserve Survey of Consumer Finances, they found:

• Less than one-third (32%) of low-income households – bottom quintile with incomes below $18,900 in 2007 – have savings or money market accounts.
• Less than one-half (48%) of moderate-income households – second quintile with incomes $18,900-33,899 – have savings or money market accounts.
• Even less than three-fifths (58%) of middle-income households – third quintile with incomes $33,899-53,599 – have an account.
• But 80% of upper-income households – highest quintile with income above $89,300 – have an account.

The three groups are trying to promote automatic savings–a worthy goal. And their press release includes a handy guide to banks that are currently offering savings promotions. I’m including it here, plus a couple of suggestions of my own:

1. Fifth Third Bank provides a double interest bonus to those who meet a goal in the Goal Setter Savings.

2. U.S. Bank offers a $50 Rewards Card for the first $1,000 in savings and another $50 Rewards Card if that balance is maintained for a year in its S.T.A.R.T. Savings Today and Rewards Tomorrow program.

3. SunTrust, in its Get Started Savings Program that in March will become its Live Solid Savings, offers a 1.5% rate for two months and a 2% anniversary bonus (up to $50) as well as free overdraft protection for those agreeing to automatically transfer at least $25 monthly to savings.

4. Regions, in its LifeGreen Savings, provides a 1% interest rate bonus if automatic deposits are made for 12 months.

5. BBVA Compass, in its Build My Savings^SM, will match, on an annual basis, up to 6% of a customer’s monthly automatic savings transfer amount. This program will be launching in April.

6. Bank of America, in its Keep the Change program, rounds up debit card purchases and transfers the difference from checking to savings where it provides a 100% match for three months then matches 5% a year (up to $250/year).

7. The Way2Save® account, created by Wachovia, will be offered to Wells Fargo customers in the future. It’s a savings account that can be linked to checking, turning purchases into automatic savings by transferring $1 from checking to the Way2Save® account each time you make a check card purchase or use bill pay.

(Liz’s note: With both these programs, make sure you have true overdraft protection, not bounce protection, since they can increase the risk of overdrafts.)

8. Union Bank offering a $25 bonus to those opening a new savings account.

And now my two additions:

9. ING Direct has a refer-a-friend program that currently gives the new account opener $25 and the referrer $20. UPDATE: ING Direct just announced it’s also offering a $25 account bonus to new customers who open an account with the special reference code “AMSAVES2.”

10. Check out your local credit union. Savings bonuses abound. First Entertainment Credit Union in Los Angeles, for example, is currently offering 7% interest on the first $500 you save. Check out FindACreditUnion.com to check out the CUs in your area.

On Monday–the day the final portions of credit card reform go into effect–CreditCards.com is hosting a live town hall meeting with White House economic adviser Austan Goolsbee about the sweeping changes authorized by the new law.

You can ask questions during the event, which starts at 2 p.m. Eastern, or submit them in advance at www.creditcards.com/askthewhitehouse. You can also submit questions via Twitter using the hashtag #cardlaw.

I hope you’ll tune into this event. I also hope Goolsbee or someone else at the event will dispute the widespread notion that credit card reform somehow triggered the Great Credit Slamdown we’ve been seeing lately, with issuers raising interest rates, lowering limits and closing accounts. That was well underway before Congress even began considering the CARD Act, as you can read in my February 2008 column, “The credit card party is officially over.”

The authors of a new personal finance book make a perfectly accurate, and perfectly ironic, observation about money advice today—which is that most of it seems geared to people with steady paychecks, ignoring freelancers and the self-employed.

Joseph D’Agnese and Denise Kiernan have written a terrific new guide, “The Money Book for Freelancers, Part-Timers and the Self-Employed,” to address that gap. More on that in a minute.

The reason most advice assumes traditional employment is that most workers (about 75%) are, in fact, traditionally employed, working for a company that pays them at regular intervals. But that leaves quite a few who don’t have traditional jobs, including (here comes the irony) a lot of the people writing that personal finance advice.

I’m self-employed. So is Kathy Kristof of MarketWatch. So is Ilyce Glink of ThinkGlink.com. All the big guns—Suze, Dave, David, Robert—are self-employed. So are many of the best personal finance bloggers who, even if they haven’t yet left their day jobs, are typically earning money on the side.

So we all know the pain of paying for all our own benefits, saving for retirement without a match, irregular incomes, estimated tax payments and clients who don’t pay or pay late. Yet too often that experience isn’t reflected in what we write.

Of course, the best advice is universal. Live below your means. Track your spending. Save for the future. Know your goals and have a plan to get there. But how you get there is going to be a little different when you’re on your own.

Once they cover the basics of organizing your finances, estimating your future income and figuring out where your money is going, The Money Book’s authors have some great suggestions. One of them is to save a percentage of each check you receive for taxes, retirement and emergencies, rather than saving a set dollar amount each month for those goals. With irregular incomes, your dollar amount may be too big one month and too little the next. (Ideally, you’ll be saving 25% to 30% to cover taxes, 10% to 15% for retirement and maybe 5% for your emergency fund. That may seem like a lot, but the tax portion at least is about what an employer would slice out of a regular paycheck.)

That’s just the start of their good advice. If you’re self-employed or your income is irregular, I’d strongly encourage you to pick up this book.

Student loan lender Sallie Mae will provide experts to answer your questions about filing out the Free Application for Federal Student Aid (FAFSA) during a live chat Thursday night, from 9 p.m. to 10 p.m. Eastern. To submit a question in advance or join the chat, visit www.SallieMae.com/FAFSA.

You’ll also find brief how-to videos to learn what documents you need to complete the aid form, get answers to commonly-asked questions and explore the next steps in the financial aid process.

Another great resource is FinAid.org. The site has a FAFSA calculator that can estimate your expected family contribution as well as tons of information about the financial aid process.

Washington, D.C.-area residents are encountering long lines and bare shelves at their local groceries as the snow delays shipments and encourages hoarding.

Jim Wang of Bargaineering (@bargainr) tweeted:

wife just went to the local grocery store (Giant) and they’re sold out of everything. no meat, no produce, nothing left. snow wins, we dead

I’m sure the situation there will ease soon, but there’s nothing like a well-stocked pantry to give you some piece of mind and help you through a disaster, natural or otherwise, as I wrote in “The emergency fund you can eat.” Having lived in earthquake country my whole life–and being the daughter of a woman born during the Depression–I’ve always felt more comfortable when we have at least a two-week supply of food in the house.

You can follow the link above to read my whole game plan for creating a two-week food emergency fund, but here are some highlights:

Stock food you’ll actually eat. Forget the C rations. Think about the meals you usually prepare and what goes into them, and stock up on those foods. Consider substitutes for perishables, such as canned fruit for fresh, but again–ONLY BUY WHAT YOU’LL EAT. If nobody will touch dried milk, you’re wasting money by buying it. Better to freeze a couple of gallons of milk instead.

Stock up on sale. Trying to create a well-stocked pantry in one visit to the grocery store will cost a fortune. Instead, build your food EF over time, taking advantage of grocery sales and coupons.

Don’t forget water. One gallon per person per day should be stocked somewhere in your house.

Rotate. Don’t let your food EF go bad. Patrol your pantry and freezer so you can use up your supplies before they expire and replace them with newer items. There are charts in the column showing you how long various foods will last on the shelf and in the freezer.

Some of you work for employers who match your charitable contributions. Good for you, and for them.

Others, like me, work for cheap companies that don’t match. (I’m self-employed).

So I was delighted to hear that two outfits WILL match my contributions to the American Red Cross for Haiti relief efforts. DealNews.com will match your contribution dollar-for-dollar until Thursday Feb. 11 (unless they meet their $50,000 goal earlier) and the Starwood Preferred Guest program will match your donation of points (2,000 points equals a $25 donation). Yay for them, for us and for the people who need our help in Haiti.

The corpse of health care reform wasn’t even cold before we got a letter from our insurer telling us our premiums were about to increase 40%, to $1,026 a month.

This is for a policy that has a $5,000-per-person deductible ($10,000 family). Eight years ago, when we first secured coverage, the premium was less than $250 a month.

We’re not alone. Our insurer, Anthem, is jacking rates on thousands of its policyholders, as this Los Angeles Times article attests. California’s insurance commissioner says he’s “very concerned.” I’ll bet.

Anthem is blaming this on rising health care costs. Insurance agents are saying Anthem’s trying to rid itself of less profitable policies.

Anthem does offer policies with even less coverage that might save us some money on monthly premiums, but we’d have to go through underwriting again—and our insurance agent doubts we’d pass.

Why is that, you might ask? Do we have cancer, diabetes, heart disease?

No. Neither of us is overweight. We don’t drink or smoke, we exercise regularly and we’re in excellent health.

But I’m over 40, and my husband is over 50, and we each take a prescription medication. Mine’s for an underactive thyroid. My husband’s cholesterol is a little high.

That’s it. But that’s enough to prevent us from getting new insurance.

There is nothing about this situation that isn’t insane.

I don’t believe insurance should cover every sniffle and check-up. I was fine with paying most of our family’s health care costs out of pocket, as long as we had protection against catastrophic expenses. But I also expect insurance companies to hold up their end. When they cherry-pick their customers, drop those who are sick and jam through eye-popping rate increases, they aren’t providing insurance in any real sense of the word. They’re not pooling risk; they’re evading it.

The good news is that we can afford this increase, and probably a few more to come. Others can’t. One of my friends got a notice that her premium is going up to $500, and she can’t pay it. She, like many of Anthem’s other customers, will be going bare.

Kathy Kristof writes in this thoughtful column that the reason health care reform is dead is that Congress doesn’t understand what insurance should really do.

So instead of getting what we needed—coverage that’s available, affordable and there when you need it—we got squat.

UPDATE: The Los Angeles Times is reporting that the Obama Administration has called on Anthem to justify these huge price increases. Health and Human Services Secretary Kathleen Sebelius, who used to head the National Association of Insurance Commissions, wrote that Sebelius said that Anthem’s “strong financial position” made the increases “even more difficult to understand”:

These extraordinary increases are up to 15 times faster than inflation and threaten to make healthcare unaffordable for hundreds of thousands of Californians, many of whom are already struggling to make ends meet in a difficult economy.

Credit card rates are going back to the future.

Instead of a wide range of rates based on the borrower’s risk profile, credit card companies will move to toward a single-rate system for all their customers, Discover CEO David Nelms told the Salt Lake City Tribune recently.

The Credit Card Accountability, Responsibility and Disclosure Act will benefit some people and hurt others, said Nelms, who was in Utah visiting the company’s largest call center operation Tuesday, in West Valley. For those with good credit, “the ultra-low rates of the past 10 years aren’t going to be available anymore.”

That’s how credit card rates used to work, back in the days before credit scoring. One rate, usually around 18%, for all customers–and folks with bad credit need not apply at all.

In February 2008, I warned that “The credit card party is officially over” as rising defaults and the credit crunch led issuers to start raising rates and lowering credit limits. That trend only accelerated after credit card reform passed. Balance transfer offers have gotten much less generous and rewards programs are about to suffer, as well. (I’ll be writing about that next week for MSN Money.)

All told, it’s a good time to get that credit card debt paid off. If you still have a low rate after Feb. 22, when the last of the CARD Act reforms kick in, you should be able to keep it unless you’re late paying by 60 days. Otherwise, you might want to consider locking in a lower rate with a personal loan from a credit union. With good credit, you could get a three-year loan with a fixed rate around 10%.

Balance transfer fees used to be a minor annoyance: typically less than 3% and generally capped at $50 to $75. Now they’re as high as 5% of the transferred balance, with no caps, and issuers may well continue to boost them in their never-ending quest for profits to replace what they lost to credit card reform.

Bill Hardekopf of LowCards.com recently did a round-up of current balance transfer fees by issuer, and here’s what he found:

Chase: 5%
Discover: 5%
Bank of America: 4%
Citi: 3%
American Express: 3%
Capital One: most do not have balance transfer fee, but the Platinum
Prestige card charges 3%

As before, you have to do the math to make sure a balance transfer makes sense, since the fees will offset and could outweigh any interest rate savings. Hardekopf advises that if you need longer than a year to pay off your debt, you should consider a card with a low on-going rate rather than one with an ultra-low teaser rate that will expire.

Hardekopf’s additional advice:

You must pay on time, every time. If you have a late payment, your
introductory period will likely end and you will be assessed the APR
on the transferred balance.

There is no grace period with balance transfers. Interest charges begin at
the time the check is issued to your credit card institution.

You can’t transfer your balance to another card with the same issuer.

It takes about four weeks for the balance to be transferred. Continue to
make all required payments until you confirm that the balance transfers were
made. Multiple balance transfers will process in the order they are
requested on the application.

The new issuer pays the amount of the balance directly to the old issuer
and the amount you owe them will be reduced by the amount you transferred.
The available credit on your new account will be reduced, as if you had made
a purchase.

Transferring a balance does not automatically close your old account. If
you want to close the account, contact the issuer directly.

Issuers have the right to decline balance transfer requests or transfer
less than you requested.

Tax fraud and tax-related identity theft isn’t exactly rampant–there were 50,000 complaints in 2006, compared to nearly 10 million cases of identity theft total. But it does appear to be on the rise, and the last thing you want after the hassle of preparing your return is to find out your refund has been swiped by some bad guy.

Janice Chaffin, head of Symantec’s Norton Business Unit, offers these tax season safety tips:

1. Carefully select your tax prep provider or software.
Visit the IRS Web site for approved software partners that support online filing. If you use a tax prep provider, don’t just go with someone who promises big refunds. Ask if friends have used him/her before.

2. When ready to eFile, make sure your Internet connection is safe.
When you are using an online tax prep service, look for indications that the connection is encrypted (you should see the address change to “https” and a lock symbol appear in the browser frame). Don’t prepare or file taxes on a shared, insecure connection like the open Wi-Fi network in your neighborhood coffee shop.

3. Turn off (or remove) any peer-to-peer file sharing services.
If you use peer-to-peer services (like LimeWire, Kazaa, BitTorrent), you can inadvertently allow a criminal anywhere in the world to find your tax file record (usually a pdf file) on your computer, revealing all your personal information. It is best not to use these services, during tax season or any other time of the year.

4. Encrypt and secure any pdf copies of the return on your computer
In your My Documents view, right-click a file name to select “Encrypt.” Print out a copy and put in a safe location in your home. Back up or store additional copies to save someplace else.

5. Make sure your Internet security software is on and up-to-date.
Symantec advises all computer users to keep their security software updated; keep their computer systems clean and continue to use general best practices for staying safe online. Find more information on how to prevent criminals from invading your computer here.