Monday, October 6, 2008

The national Your Money Bus Tour rolled into Washington last week with a team of financial advisers whose mission was to dispense financial advice and encourage people to start saving now.

“I think this bus is right on time and right on the money,” said Thomas Hampton, commissioner of the Department of Insurance, Securities and Banking (DISB). “In 2007, our home foreclosure rate was around 277 homes. So far in 2008, we have about 1,000 foreclosures and it is still climbing.”

The event Wednesday was a collaborative effort by groups including TD Ameritrade, Kiplinger’s Personal Finance magazine, the National Association of Personal Financial Advisors Consumer Education Foundation and the District of Columbia Department of Insurance, Securities and Banking.

The DISB wants to warn investors about the potential for fraudulent investment schemes to take advantage of those making tough financial decisions.

“It is those who seek to violate your trust that we have been actively out to prosecute,” Mr. Hampton said. “Financial fraud causes people to lose time and money, and DISB has made several efforts on that front through education and investigation.”

People questioning whether an opportunity is too good to be true are encouraged to defend themselves by calling consumer services at DISB to ensure that the financial institution is properly licensed.

A main problem consumers are facing is investing their wealth in their home’s value, which is now dropping in many areas across the country. Their lack of saving cash is causing many people times of hardship.

“America is suffering from an epidemic of undersaving,” said Knight Kiplinger, editor in chief of Kiplinger Personal Finance magazine. “For years, we Americans have been living beyond our means by overspending, overborrowing and undersaving.”

According to the New York Federal Reserve, consumer debt in the United States now exceeds $2.6 trillion and the average American household now carries a debt load of $16,700 excluding mortgages.

“Americans need to become savers and to live within their means,” said Michael Joyce, president of the board of trustees for the NAPFA Consumer Education Foundation. “This is a message that everyone can take to heart, regardless of their age, income or level of wealth.”

Some measures that people can take to help themselves would be to start saving 10 percent to 15 percent of their current income to build a nest egg, obtain objective financial advice from a trusted adviser and diversifying their portfolio.

“You need to own a mix of assets,” Mr. Kiplinger said. “At any particular time, one asset will have its day in the sunshine and another asset will be in the doghouse.”

The Your Money Bus Tour, to cities nationwide, aims to eliminate consumer debt and increase savings by educating consumers about sound financial practices.

“NAPFA has done a great job, and we’re happy to partner with them to give this financial opportunity to people to get the advice they need and want,” said Jim Frawley, communications manager for TD Ameritrade.

NAPFA officials admit they do not know if the measures taken by Congress will be enough to quell economic jitters because “we are in uncharted economic waters.” The foundation does know, however, that people are concerned about their economic futures.

Throughout the next year, the Your Money Bus will travel to more than 60 cities from coast to coast, hoping to end the American trend of living lavish, extravagant lives when their income should not allow such spending.

“We’re going to make living within our means fashionable again, as it once was in America,” Mr. Kiplinger said. “The path to future wealth is called ‘getting rich slowly.’”

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