DEAR DAVE: Your bank’s advice is bad, and so is debt consolidation

by Shelton on May 17th, 2014

filed under Debt Consolidation

Dear Dave,

I want to roll over a 401(k), and my bank is encouraging me to roll it over to fixed annuities. Is this a good investment?


Dear John,

More times than not, when you go to a bank for investment advice, what youll get in the bargain is bad advice. And thats the case here.

Id move toward a traditional IRA, in a series of good growth stock mutual funds. Put it across four types of accounts: growth; growth and income; aggressive growth; and international.

What youre looking for, John, is a great track record for your investments. You want a track record so ridiculously good that it gives you a great sense of comfort, even though theres no guarantee of whats to come. And there are mutual funds out there that can do just that for you? I own one thats more than 70 years old, and it has averaged nearly 12 percent over that time.

Lots of people talk in what ifs when it comes to investing. Well, you can play that little game all day. But if the economy goes completely down the tubes, and the government destroys things like mutual funds and real estate completely, your little bank-recommended annuity isnt going to make it, either. The banking system as a whole will fail if all the mutual funds close because theyre all based in publicly traded companies. And that means virtually every business you drive by on your way to work would be out of business. A banks not going to survive that kind of thing.

If youre looking for things to help you survive the apocalypse, youre talking about food and water. But if you want rational, well-reasoned investments, you need to look at growth stock mutual funds and paid-for real estate. Thats what I do!

Dear Dave,

Why do you think debt consolidation is such a bad thing?


Dear Tessa,

Debt consolidation is a bad thing because it makes you feel like you really did something to get out of debt and change your financial world when you didnt. People come to me all the time saying stuff like, Dave, I got a second mortgage. I paid off all my debt! Well, no you didnt pay off all your debt. You just moved it around.

Thats part of the catch when it comes to debt consolidation. If you get a lower payment and move things around a little bit, you feel like you actually accomplished something. The problem with that is you dont do anything to address the real problem, which is you.

The organ’s mighty sounds capture Hyde Park students’ imaginations

by Shelton on May 17th, 2014

filed under Personal Funding

A local preservation non-profit is working hard to educate kids and teach them to use their imagination by playing the organ.

NYTOS (New York Theatre Organ Society) is one of over 65 chapters in the 3,500-member American Theatre Organ Society. The society’s mission is “to preserve the organs and their theatres, and promote theatre organ performances,” but the local chapter goes a step further.

“Good organists are a dying breed because nobody is teaching, and they do not know how to approach the young student. We think we found a formula to getting kids interested locally,” John Vanderlee, vice chairman of NYTOS, told the Observer.

The Hyde Park-based chapter, which is currently housed in the former Hyde Park Elementary School building, focuses on outreach to young people.

“My focus is not the preservation; other people are busy in that. But what I found missing — what we found to be a hole — is the ability to attract younger people, to educate them,” Vanderlee added.

Vanderlee approaches the challenge of teaching a new generation about organ in two ways: supplying quality instruments and providing training. He is always looking for opportunities to present the organ to young performers. For example, the society arranged for the winner of the 2013 National American Theatre Organ Society Competition, Justin Lavoie, 19, from Michigan, to play the organ at the FDR high school production of “South Pacific” before the show, during intermission and after the show.

“Several years ago, we completed installing a $100,000 organ in the FDR High School auditorium, for which we raised all the funds,” Vanderlee said. Additionally, the organization has arranged for organ installations in the Bardavon Opera House and Haviland Middle School – in all cases providing the funding. These instruments are used for entertaining and for training young students.

“All these activities cost money, and force us to raise about $10,000 a year for our Hyde Park activities alone,” Vanderlee said. “We raise money in a variety of ways: outright donations, putting on shows like our latest holiday show, but mostly by reselling donated organ-related itemspipe organs, as well as electronic organs or pieces” Vanderlee also acknowledged the individuals who provide personal funding to support the society and its projects.

Vanderlee tells the story of a concert last year at which Michael Barone, founder of Pipedreams (a special membership organization dedicated to traditional pipe organs) was present. Barone expressed his amazement at the performance of the theatre organist who performed because, he said, “There was no music on his music stand – it was all interpretation!”

“The individual knows the tune and orchestrates,” with theatre organs, according to Vanderlee. “This is why we have an edge in attracting kids because we concentrate more on the lighter side. Kids can use their own imagination.”

Through the society’s efforts, John Barrata now teaches organ to six students at FDR High School and four at Haviland Middle School with the costs covered by the society. The lessons are not part of the curriculum and are squeezed into lunch breaks, study halls and free periods or after school.

Vanderlee and Barrata also take their show on the road to the entire region their chapter serves, including NYC, Long Island and parts of upstate New York. Vanderlee said that initially, students are reluctant to attend an organ class. But eventually, he and Barrata win them over. “In the end, they are applauding and cheering,” he added.

As for his own role, he said, “I am never bored. I am doing something people said could not be done. My goal is to demystify the organ (for everyone); and if you do it right, you can reach the kids.”

Coshocton sidewalk safety still a top priority

by Shelton on May 17th, 2014

filed under Personal Funding

COSHOCTON — Coshocton City Council continues to pursue grant funding to improve walking paths around the Coshocton City Schools campus.

The council is pursuing up to $500,000 in grant funding from the Ohio Department of Transportation Safe Routes to School program. It’s hoped all needed forms and information will be completed this fall for 2015 funding consideration.

Council members and city officials recently did a tour of the area looking at repairs and sidewalk installation recommended by TransSystems, which assists communities with the safe routes program. The next step is to prioritize needs and have an engineering firm draw up work estimates.

TransSystems had the total project targeted at about $1 million, with other funding to come from additional grants, donations and personal funding. Councilwoman Jackie Salmans said no matching funding is required for Safe Routes to School, and right now, the city and school district were just looking at what could be done with safe routes funding if awarded.

Main routes being looked at include Cambridge Road from the school campus to Walnut Street and Denman Avenue from the campus toward the Coshocton County Fairgrounds.

Foot traffic has increased in the area since the opening of the new Coshocton Elementary School in October. Elementary students and their parents are more likely to walk to and from school than junior high and high school students.

Salmans has been exploring the grant for almost two years, as she was the chairwoman of the council’s Grant and Economic Development Committee. ODOT representatives gave a presentation to the council and for the public last May. She said council members were waiting on ODOT to approve the TransSystems plan, which came late last year.

Safe Routes to School is a federal program managed in the state by ODOT. It focuses on removing barriers and improving conditions for students to walk or bike to and from school.

An additional $50,000 also could be obtained for non-infrastructure elements, such as promoting walking awareness and establishing school walking programs.

ODOT said the program is to complement, not replace, busing and that walking offers a healthful alternative when the weather is suitable. Walking also can eliminate possible traffic congestion from parents who live nearby dropping off or picking up students in cars.

That’s an issue Salmans can speak to, as she often picks up her daughter from school and knows how traffic can be. They live nearby on Marion Drive, but there isn’t a good way to get home, Salmans said.

“I think parents would want sidewalks so kids can be up out of the traffic and out of the grass,” she said. “Most parents feel safer knowing their kids are on sidewalks and not in the streets.”

The council meets at 7 pm Monday at City Hall.


Twitter: @llhayhurst

During Chapter 13 Bankruptcy, Secured Cards Tough to Get

by Shelton on May 17th, 2014

filed under Secured Credit

Dear Opening Credits,

My husband and I declared Chapter 13 bankruptcy. We cannot rebuild our credit because no one will give us the opportunity to do so. I have tried all the recommended secured cards and have been turned down. What do we do now? At this rate in five years when our plan is complete, we will be in the same boat we are in right now.

– Sherri

Dear Sherri,

No matter who its from, rejection stings. To recover, youve got to hold your head up high, walk away and do something else. Dont delude yourself, though. When a multitude of issuers have turned you down for even secured products, theyre sending an indisputable message: At this time, youre simply not what theyre looking for in a cardholder.

Of course this raises the question of why credit card companies are giving you the heave ho. Though I cant speak for them, I can give you my professional best guess as to what their reasons most likely are.

It likely boils down to two key factors: affordability and credit rating.

According to their calculations, you dont have the means to simultaneously pay the debts that youre currently dealing with plus add another payment for a new line of credit. They know this based on the income you listed on the application as well as the obligations they discovered from your credit reports.

It makes sense, too. Your Chapter 13 payment was was based on your household bills and your income. What is left over is routed to your creditors. The trustees overseeing such cases rarely give much extra leg room for additional expenses, and that includes a credit card balance.

The other factor pertains to your credit rating. If youre like most people who have recently turned to the bankruptcy process to deal with their creditors, your FICO scores are quite poor. The damage is most egregious in the first couple of years after filing. As Chapter 13s are payment plans lasting up to five years and you have that much remaining, youve just begun. That puts you in the high risk category.

Mind that creditors also see and may judge the activity that led to the bankruptcy in the first place. All derogatory information that preceded it and that remains on your credit report is apparent. Evidence of late payments, collection accounts, monitory judgments, defaulted student loans, and debts not included in the bankruptcy can scare off a lender fast.

Regarding secured credit cards, typically they are a great way for people with damaged credit to get back in business. The money you put down as collateral reduces the issuers risk, since they can simply claim the funds on hold in case of default. However they still have standards, and for the stated reasons, youre not meeting them at this stage.

No fear, though, Sherri. Eventually you will be eligible for a secured card. And after that, one that requires no deposit.

As the months pass and your debt declines, your credit rating will naturally escalate. Check your FICO scores after a year to check where they are. The higher those numbers, the more apt an issuer will be to welcome you in as a customer. Before trying again, however, be sure to communicate your desire for credit with your trustees. They have to agree to all new credit obligations, so youll need their permission first.

See related: Your map through Chapter 7 and Chapter 13 bankruptcy