Anthem Data Breach: How to Guard Against Identity Theft

Anthem, one of America's largest health insurers, has confirmed a massive data breach. Hackers stole as many as 80 million records of customers, as well as of past and current employees. Social security numbers, birthdays and addresses have been compromised, though at this point, no credit card data, bank information or medical history appears to have been accessed. The Anthem breach follows big events at Experian, eBay, JP Morgan Chase, Home Depot, Target, all of which have occurred in the last two years. While there is no single way to protect your coveted identity, but there are plenty of best practices to employ to keep the criminals at bay.

Because it is tax season, let’s start with specific tax-related scams, which the I.R.S has highlighted on its “Dirty Dozen” List of Tax Scams for the 2015-filing season. In addition to electronic hoaxes, where some may unknowingly turn over personal information to criminals; there are also fake calls from fraudsters get unsuspecting taxpayers to fork over money they don't owe. The IRS says that some of the most common scams are those, which are the most personal -- unscrupulous tax practitioners who promise outlandish refunds. If you think you've been scammed by a tax preparer, report it to the Treasury Inspector General Administration and forward any IRS phishing emails to the IRS.

In general, you should refrain from providing businesses with your Social Security Number just because they ask for it. Give it only when required. (Medicare recipients take note: your SSN is printed on your Medicare card, so be careful with it!) Also, don’t give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you know with whom you are dealing. If you have older relatives or friends, encourage them to let you know if they have been contacted by any organization, which offers a very high or “guaranteed” return at “no risk”, requires an urgent response or cash payment or sends email from an unrecognizable address.

Additionally, it is imperative that you review each credit card statement before you pay it -- I know it sounds silly, but many simply pay the bill, potentially missing a fraudulent charge. Finally review your credit report every 12 months at annualcreditreport.com. You want to make sure that nothing fishy has cropped up.

If you think that your identity has been stolen, you should immediately contact one of the three national credit-reporting companies (Equifax 1-800-525-6285, Experian 1-888-397-3742 and TransUnion 1-800-680-7289) to put a free fraud alert on your credit report. The alert makes it harder for an identity thief to open more accounts in your name. The company you call must tell the other companies, so need to call all three. The alert lasts 90 days but you can renew it, and the alert entitles you to a free credit report from each of the three companies.

The next step is to file a complaint with the Federal Trade Commission and print your Identity Theft Affidavit. Use that to file a police report and create your Identity Theft Report. After these initially notifications and filings, you should consider taking a few more steps to prevent further damage. You can place credit-freeze on your credit file, which generally stops all access to your credit report. A less draconian step is to place an extended fraud alert on your file, which permits creditors to get your report as long as they take steps to verify your identity. The availability of a credit freeze depends on state law or a consumer reporting company’s policies; while fraud alerts are federal rights intended for people who believe they are, or who actually have been, identity theft victims. Some states charge a fee for placing or removing a credit freeze, but it’s free to place or remove a fraud alert.

Unfortunately, identity theft is here to stay, so the sooner you familiarize yourself with protections as well as remedies, the better off you will be.

U.S. Economy is "SOLID"

The Federal Reserve described economic activity as growing at a “solid pace,” when it convened its first policy meeting of the year. The subsequent release of the nation’s Gross Domestic Product confirmed that description. The first estimate (there are two more revisions due) of fourth quarter economic growth showed an expansion of 2.6 percent. While the result was about a half of a percentage point shy of estimates, even with the slowdown in the fourth quarter, “the economy expanded at a 4.3 percent annualized pace during the second half of the year.  That is hardly chopped liver,” according to Joel Naroff of Naroff Economic Advisors.

For 2014 as a whole, the economy grew by 2.4 percent – not bad, considering that there was a 2.1 percent contraction in the first three months of the year. (Bill McBride of Calculated Risk provides a more detailed discussion on how annual GDP growth is determined.) How does this growth rate stack up? It’s a touch higher than that the average 2.2 percent growth of 2010-2013, though below the post World War II average of 3.3 percent.

Also edging higher in 2014 was the Employment Cost Index (ECI), which measures pay and benefits. According to the government, ECI rose 2.2 percent in 2014, up a touch from the previous year and the fastest pace in six years. Still, in a healthy economy, the index usually rises at about a 3.5 percent pace. The saving grace on the pokey rate of wage growth is the low inflation rate, which at 1.3 percent, means that workers are able to make due.

The bright spot of the GDP report was found in consumer spending, which grew at a better than expected 4.3 percent annualized rate in the final three months of the year, the biggest gain since the first quarter of 2006. Imagine the pace of spending that could occur if American workers get a little raise in 2015!

There will be additional data in the week ahead, which should provide a more in depth picture of wages. In the beginning of the week, there will be a report on Personal Income and Spending and then on Friday, the January jobs report is due. It is expected that the economy added 230,000 new jobs and that the unemployment rate remaining at 5.6 percent.

MARKETS: After two strong years for stocks, there has been concern that the party could come to an end in 2015. Last week, mixed news on corporate earnings renewed fears that the increasing value of the U.S. dollar will hinder multi-national companies and act as a headwind for overall economic growth. Stock investors, who had to swallow the worst monthly performance in a year, make take solace in this bottom line analysis from Capital Economics “the combined impact of lower oil prices, the stronger dollar and lower long-term interest rates will be a big net positive, with more winners than losers.”

• DJIA: 17,165, down 2.9% on week, down 3.7% YTD
• S&P 500: 1995, down 2.8% on week, down 3.1% YTD
• NASDAQ: 4,635 down 2.6% on week, down 2.1% YTD
• Russell 2000: 1165, down 2% on week, down 3.2% YTD
• 10-Year Treasury yield: 1.68% (from 1.79% a week ago; the biggest one-month decline in yield since mid-2011)
• March Crude Oil: $48.24, up 5.8% on week, down 9.4% on month
• February Gold: $1,278.50, up 1.2% on week, up 8% on month, best monthly percentage gain since Jan 2012.
• AAA Nat'l average price for gallon of regular Gas: $2.05 (from $3.28 a year ago)

THE WEEK AHEAD:

Mon 2/2:

8:30 Personal Income and Spending

9:45 PMI Manufacturing

10:00 ISM Manufacturing

10:00 Construction Spending

Tues 2/3:

Chipotle, UPS, Disney

Motor Vehicle Sales

10:00 Factory Orders

Weds 2/4:

Clorox, GM, Merck, Yum Brands

8:15 ADP Private Jobs Report

10:00 ISM Non-Manufacturing

Thurs 2/5:

Dunkin Brands, GoPro, LinkedIn

8:30 Weekly Jobless Claims

8:30 International Trade

8:30 Productivity

Fri 2/6:

8:30 January Employment Report

3:00 Consumer Credit

#204 The Super Bowl of Financial Shows

While you're picking up the wings, the 6-foot subs and snacks for the big game, we've got some x's and o's for your financial life! In honor of the big game, we started the show with Seahawks' season ticket holder Brian, who snuck a quick call about his Roth IRA before rooting on his team.

• Download the podcast on iTunes
• Download the podcast on feedburner
• Download this week's show (MP3)

Karen asked about longevity annuities and Gordon needed help on how to manage his TSP. We talked allocation with David and told Joe to check out the IRS withholding calculator so that he can better manage his cash flow and prepare for tax season.

Thanks to everyone who participated and to Mark, the BEST producer in the world. Check out Mark's first-producing credit for this CBS Evening News segment that aired recently. If you have a financial question, there are lots of ways to contact us:

• Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

• Send an email: askjill@jillonmoney.com 

• Tweet us: @jillonmoney and @MTalercio

America's Retirement IQ

Are Americans in good shape or bad shape when it comes to retirement? It depends on which research report you read. According to a retirement savings analysis from Fidelity Investments, the 2014 year-end average 401(k) balance was $91,300, a record high and up two percent from 2013. The news was even better for employees who have maintained a 401(k) plan for 10 years or more -- the average balance was $248,000, up 11 percent year-over-year.

Perhaps the most encouraging data point from the Fidelity report is that the average savings rate increased to 8.1 percent, the highest since year-end 2011. When combined with employer contributions, the average employee savings rate was 12.2 percent of his or her salary in 2014.

While Americans have saved $24 trillion in retirement assets, according to the Investment Company Institute, many individuals have not saved enough and millions have no retirement savings or pension at all. In fact, the National Institute on Retirement Security (NIRS) found that when all households are included— not just those with retirement accounts — “the average working household has virtually no retirement savings—the median retirement account balance is $3,000 for all working-age households and $12,000 for near-retirement households.” The NIRS report is important because it shows that some 45 percent, or 38 million working-age households, do not have any retirement account assets at all.

There is also a disconnect between knowing that you have to save prior to retirement and the important information that is necessary once you actually retire. In a recent survey by The American College of Financial Services, only 20 percent of Americans aged 65 to 75 with at least $100,000 in assets were able to pass a basic quiz on the steps they need to take to secure their finances after retirement.

In other words, Americans' retirement income IQ is not where it needs to be. Among some of the findings that are worrisome to financial planners:

• Over half of the respondents underestimate life expectancy (76.2 for men and 81 for women, according to the CDC), which means that they probably don’t realize how long their retirement nest eggs need to last.
• The lack of basic understanding of the Social Security system. Just 54 percent realize that Social Security retirement benefits increase each year that a worker delays to claim until age 70. Although the survey did not ask about whether respondents understood that claiming benefits before reaching full retirement age would reduce benefits, my guess is that most aren’t aware that claiming early could result in a reduction of as much as 30 percent for the worker as well as a non-working spouse who is relying on the working spouse’s SS retirement benefit.
• Only 30 percent understand that lifetime SS benefits can increase more by working two years longer or by deferring for two years than by increasing contributions just prior to retirement. (The Social Security Administration provides an easy to use free calculator that shows the effect of early or delayed retirement. For those seeking more customized SS advice, including when to claim benefits, you can pay Social Security Solutions a nominal fee of $20 to $250 to help make what for some may be the largest financial decision of their lives.)
• Respondents were either unaware of or overly ambitious when it comes to a “withdrawal rate,” which the percentage that retirees can safely withdraw from their assets annually without depleting their nest eggs. Most financial planners suggest 3 to 4 percent as a baseline, which means that for every $1,000,000 in assets, you can safely withdraw $30,000 to $40,000 per year.

Here’s the kicker of the survey: “Despite the failing grades, many Americans are confident about their post-retirement income. More than half of those surveyed consider themselves well-prepared to meet their income needs in retirement, and 91 percent are at least moderately confident in their ability to achieve a secure retirement.”

FAFSA Freak Out

While dorm move-in day is months away, now is the time for college applicants hoping to receive financial aid to complete the much-maligned Free Application for Federal Student Aid (FAFSA). While each school sets its own financial aid due date, some of the money is available on a first-come, first-serve basis, so it’s time to get busy! Before you start moaning, you should know that you have lots of company: the National Center for Education Statistics (NCES) found that over 70 percent of all undergraduate students received some type of financial aid in recent years, of which one-third was provided by the federal government. Over 20 million people completed FAFSA forms last year.

Many parents tell me that they won’t qualify for financial aid, “so why bother going through the drudgery of doing it?” According to the U.S. Department of Education, “the FAFSA takes most people 23 minutes to complete…and contrary to popular belief, there is no income cut-off when it comes to federal student aid.”

Maybe the procrastinators are already coming up with an excuse: “I’ll wait until after April 15^th, so I’ll have my tax returns in hand." Contrary to conventional wisdom, you don’t have to wait until you file to start the FAFSA. Use your 2013 return as a guide to estimate your 2014 numbers so that the government can process the application immediately - you can submit your actual 2014 return later.

In fact, there is now a partnership between the FAFSA site and the IRS, allowing students and parents to automatically transfer the necessary tax info into the FAFSA using the IRS Data Retrieval Tool. In most cases, your information will be available from the IRS two weeks after you file. You can also change your mind about which schools you’re applying to, by logging in to the FAFSA site and updating school information – the same goes for when family income drops.

Those who don’t complete the FAFSA could be leaving a lot of money on the table and frankly, it is a pretty good trade: your time for a potential reduction in college costs. According to the College Board, the average cost of tuition and fees for the 2013–2014 academic year totaled $8,893 for state residents at public colleges; $22,203 for out-of-state residents attending public universities; and $30,094 at private colleges.

It should be noted that the same report also found that the actual amount that most students pay is lower, because of increased discounts, grants and tax benefits. Still, families need to tap whatever resources are available to finance higher education, which is why outstanding student loan balances stand at $1.13 trillion, as of September 30, 2014. There could be some relief from that mountain of debt: analysis from the New York Times shows that legislative changes to the Income-Based Repayment program (IBR) "may make it much easier for students to get out from under their debts."

Before you go into shock with all of these numbers, it might be helpful to utilize the FAFSA4caster, a free financial aid calculator that gives you an early estimate of your eligibility for federal student aid and helps families plan ahead for college.

And while not every student should attend a four-year private college, some higher education gives the average worker an advantage in the current labor market. Through the end of 2014, the national unemployment rate stood at 5.6 percent, but those who held an associate’s degree or had some college under their belts, were in much better shape, with just a 4.9 percent unemployment rate. Graduates with a bachelor’s degree or higher had a rate of just 2.9 percent. On the other end of the spectrum, those who did not finish high school have a still-high 8.6 percent rate.

And college degrees really do pay great dividends: a 2014 New York Federal Reserve study found that the return on a college education remains at about 14-15 percent, "easily surpassing the threshold for a sound investment." Separately, a San Francisco Federal Reserve study showed that the average college graduate could expect to earn at least $800,000 more than the average high school graduate over a lifetime.

Meanwhile, if you have younger kids or grandchildren and you are considering the various ways to save for college, the 529 plan is still my favorite vehicle. Under current law, 529 plans allow for tax-advantaged investing for college. Contributions within the account grow tax-free and are not taxed upon withdrawal, provided they are used for qualified higher education costs.

There was some concern after 529 plan changes ended up in President Obama's tax reform plan. Under the proposal, you would no longer be able to withdraw 529 funds on a tax-free basis. (The changes in would apply only to new contributions.) After harsh criticism, the Administration dropped the plan so 529 plans remain safe!

Super Mario to the Rescue, Greek Election, Fed Fun

After four years of doing absolutely nothing to propel the moribund Euro Zone economy, European Central Bank President Mario Draghi (aka Super Mario) finally unveiled the ECB’s version of bond buying last week, where it will buy €60 billion ($68 billion) of bonds a month in an effort to boost stagnant growth and fight falling prices. The ECB will fire up the printing presses in March and will conduct the purchases “until we see a sustained adjustment in the path of inflation.” So although the European version of QE at first seemed half the size of that in the US and UK, the open-ended prospect seemed to quell fears that it was not enough.

While on the topic of Europe, it is worth noting that there is a big election in Greece today, where Alexis Tsipras, the leader of the leftwing, anti- austerity Syriza party is leading in the polls. There are fears that Tsipras might lead Greece out of the euro zone (the so-called “Grexit”), but it now seems more likely that he will seek a restructuring of debt with the Troika (the European Commission, the European Central Bank and the International Monetary Fund).

As a reminder, Greece has suffered through six years of economic contraction, triggered by over-the-top spending, the financial crisis and then exacerbated by fiscal belt-tightening imposed by the Troika. According to Capital Economics, Greek “gross domestic product is now a quarter smaller than it was in 2008. A quarter of the working age population is out of work. Only half of the eligible young have jobs.” Both the Troika and Greece have reason to come to terms, which should prevent a Grexit, at least for now.

Here in the US, the week ahead should be a little less dramatic. The Federal Reserve will conduct a two-day policy meeting, where it is widely expected to maintain its recently adopted language that it “can be patient in beginning to normalize the stance of monetary policy.” With wage growth tepid, no meaningful increase in core inflation and global uncertainty swirling, the Fed is likely to sit still and do nothing.

On Friday, the first reading of fourth quarter growth is due. GDP is expected to increase at a 3.2 percent annualized rate. That would be downshift from the strong 5 percent gain in the third quarter, but would still be a lot better than the 2.25 percent pace of the recovery.

Finally, there was some concern late last week, after the National Association of Realtors released its Existing Home Sales report. While sales accelerated in December, for all of 2014, existing home sales dropped by 3.1 percent from 2013, the first annual decrease since 2010. The problem was a lack of inventory, but as Bill McBride of Calculated Risk points out, “the NAR inventory data is ‘noisy’ and difficult to forecast based on other data.” The good news is that “distressed sales were down sharply - and normal sales up around 7 percent.” With the economy strengthening, confidence building and mortgage rates at 18-month lows, home sales should accelerate in 2015.

MARKETS: Stocks rose, snapping a three-week losing streak and the euro dropped to its lowest level ($1.12) in 11 years.

• DJIA: 17,672, up 0.9% on week, down 0.8% YTD
• S&P 500: 2051, up 1.6% on week, down 0.3% YTD
• NASDAQ: 4757, up 2.7% on week, up 0.5% YTD
• Russell 2000: 1189, up 0.3% on week, down 1.3% YTD
• 10-Year Treasury yield: 1.79% (from 1.84% a week ago)
• March Crude Oil: $45.59, down 7.2% on week
• February Gold: $1,292.60, up 1.2% on week
• AAA Nat'l average price for gallon of regular Gas: $2.04 (from $3.29 a year ago)

THE WEEK AHEAD:

Mon 1/26:

DR Horton, Microsoft, Texas Instruments

Tues 1/27:

3M, Apple, AT&T, Caterpillar, Coach, DuPont, Pfizer, P&G, Yahoo

FOMC 2-day meeting begins

8:30 Durable Goods Orders

9:00 Case Shiller Home Price Index

10:00 New Home Sales

10:00 Consumer Confidence

Weds 1/28:

Boeing, Facebook

2:00 Fed Policy Announcement

Thurs 1/29:

Amazon, Conoco Phillips, Ford, Harley Davidson, Visa

8:30 Weekly Jobless Claims

10:00 Pending Home Sales

Fri 1/30:

Altria, Chevron, MasterCard

8:30 Q4 GDP (1^st estimate)

9:45 Chicago PMI

9:55 U Mich Consumer Sentiment

#203 Who's Watching Financial Fiduciaries?

We always talk about the importance of working with fiduciary advisors, but who's keeping tabs on them? Guest and current FPA President Ed Gjertsen weighs in on the question. He says that the oversight is conducted by a trio of entities: the CFP Board of Standards, the SEC and FINRA. Ed also discussed why he and the FPA remain "fee-neutral".

• Download the podcast on iTunes
• Download the podcast on feedburner
• Download this week's show (MP3)

Jack from GA needed advice about his future retirement from the military, we discussed in greater detail why revocable trust may not be necessary for most and reviewed new IRA rollover rules for Marilyn.

In case you missed it, last week was the official start of tax season. Here's last week's CTM segment outlining what you need to know about changes to your tax returns and here's how to stick to your New Year's Financial Resolutions.

Thanks to everyone who participated and to Mark, the BEST producer in the world. Check out Mark's first-producing credit for this CBS Evening News segment that aired recently. If you have a financial question, there are lots of ways to contact us:

• Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

• Send an email: askjill@jillonmoney.com 

• Tweet us: @jillonmoney and @MTalercio

Mortgage Market: What you Need to Know to Close a Loan in 2015

Fears over a global slowdown may have stock investors wishing for the merry go-round instead of the roller coaster, but bond investors have been thrilled. In fact, the recent unrest has meant that investors are pouring money into the US government bond market, which drives prices higher and yields lower. As of this writing, the yield on the 10-year treasury has fallen to 1.85 percent, a far cry from the 3 percent seen just over a year ago. As a result of the bond market rally, the average contract interest rate for 30-year fixed-rate mortgages for conforming loans ($417,000 or less) has dropped to 3.8 percent, the lowest level since May 2013, according to the Mortgage Banker’s Association. A jumbo loan will cost slightly more—3.86 percent and the average rate for a 15-year loan has decreased to 3.1 percent.

Additionally, there is new pricing on FHA loans, which could bring more first time homebuyers into the market this year. With an FHA loan, borrowers need a 3.5 percent down payment and the agency is more flexible when it comes to underwriting, especially for those with credit scores all the way down to 620 and for those carrying student loan debt. This year, FHA loans are cheaper, because the government reduced premiums for FHA mortgage insurance by 0.5 percent – its now 0.85 percent, down from 1.35 percent of a loan's value. The move is expected to save a typical first-time homebuyer about $900 in her annual mortgage payments.

With all of this news, I thought it was time to check in with Mortgage Mike (aka Mike Raimi of PMAC Lending Services) for an update on the 2015 mortgage market.

What do you need to know about attaining a mortgage now? “The process continues to improve, but it is still labor intensive. Borrowers need patience and perseverance” according to Mike. Mortgages for new home purchases can take about three weeks to close, while refinancing can take longer – “anywhere from 30 to 45 days.”

If you are looking for a 30-year conventional mortgage with 20 percent down, the best rates are available for those with credit scores above 740. For every 20-point drop in score, the mortgage rate jumps by a quarter of a percent. If your credit score is below 620, it’s tough to get a loan closed. (Credit scores do not have nearly as much impact on loans of 15 years and shorter.)

If you are preparing for the mortgage process, here’s what you will need:

• W-2 (2 years)
• Tax Returns (2 years)
• Pay Stubs (2 months)
• Bank statements – all pages (2 months): You may also need to provide the lender with an explanation for any large deposits that have been made into bank accounts. This has more to do with beefed up anti-money laundering efforts than the mortgage process itself.
• 6 months of mortgage payments in cash reserves (sometimes less, but this is a good rule of thumb)
• Investment accounts: If bank accounts do not show adequate assets, lenders may ask for investment account statements.
• Donor letter: If a family member or friend is helping you with your down payment or providing cash for the re-fi, he or she may be required to provide a letter and may also have to present his or her account statements.
• Self-employed applicants: Must have 2 years of proof of self-employment and 2 years of tax returns. Gone are the days when self-employed borrowers can “add-back” tax preference items. While you may have used the tax code to your advantage, the bank will not cut you any slack – the numbers on the return are set in stone.

Will the US Become the Next Deflation Nation?

Since the Great Recession, the Federal Reserve has worked hard to boost the economy. Part of the Fed’s mission was to keep core inflation (the price of goods and services excluding food and energy), at a pace of two percent annually. Although there have been instances over the past six years when either energy or food prices jumped, temporarily raising the specter of inflation, throughout the financial crisis and the recovery, the central bank has been much more focused on deflation, which is defined as a drop in the price of goods and services. For those who were around during the inflationary 1970s and 1980s, deflation is an alien concept. But according to data released by the government last week, the near-60 percent plunge in oil prices pushed down consumer prices by 0.4 percent in December from the previous month, leaving the CPI just 1.6 percent above where it stood a year ago, below the 1.9 percent annual rate over the past ten years.

Although the idea of falling prices seems like a good thing, when deflation is persistent, it can put into a motion a scary, downward spiral. It starts when the economy cools, which prompts companies to reduce prices in the hopes of luring customers and maintaining sales volume. But as companies make less money, they could then cut jobs and/or wages, which could then cause consumers to spend less in order to service their fixed costs, like taxes and mortgages/rents.

The longer that deflation goes on, the higher the risk that consumers’ and businesses’ become accustomed to the situation and delay spending, hoping they will eventually be able to buy goods more cheaply and to invest more efficiently. They also become less willing to borrow.

The vicious deflationary cycle can mire an economy in a deep recession or even worse, a depression. As an example, between 1929 and 1933, US consumer prices fell by a cumulative 25 percent. More recently, Japanese consumer prices have been stuck for the past 20 years and the Euro Zone and the United Kingdom are both currently battling falling prices.

Besides the obvious harm that deflation can cause, the other problem is that central bankers have limited tools to fight it. (In contrast, when there is inflation, hiking interest rates may hurt in the short-term, but it is effective in combating higher prices.) In a deflationary environment, policy makers would likely return to bond buying (Quantitative Easing), which depending on the magnitude of price declines, may not stop the downward spiral. (FYI, there will be an excellent test case in the efficacy of QE coming up. This week, the European Central Bank is expected to unveil its version of bond buying to boost prices in the euro zone.)

Back to the US, where the big question is whether the current drop in prices is temporary or whether there is something scary brewing. Analysts at Capital Economics believe that odds are that while negative readings on headline inflation could persist at least for the first half of the year, “it is hard to see why this renewed slump in oil prices, which is developing against a backdrop of a rapidly improving real US economy, will lead to anything more than a temporary drop in inflation.” They are quick to point out that even when crude oil collapsed from a 2008 peak of $140 per barrel to $40, amid a deep recession, prices recovered and the economy avoided a prolonged bout of deflation.

That said, they also add that “Deflation may be just one recession away,” which is probably why Fed officials continue to err on the side of adding more stimulus to the economy than less and are taking a “wait and see” attitude towards increasing short-term interest rates. Currently, the consensus is for the first rate hike to occur in the third quarter of this year. But any indication of an economic slowdown, accompanied by a more substantial drop in core prices, could put the Fed on hold longer, to avoid a dangerous deflationary downward spiral.

MARKETS: Last week, the Swiss Central Bank’s decision to discontinue its 3½ practice of pegging the Swiss Franc to the Euro sent ripple effects throughout global markets. (The policy was intended to halt the rise of the Swiss currency, which made it difficult for Swiss exporters to remain competitive in the global market.) Meanwhile, the punk US Retail Sales report unnerved investors, who continue to worry about a slowdown in global growth.

• DJIA: 17,511, down 1.3% on week, down 1.8% YTD
• S&P 500: 2019, down 1.2% on week, down 1.9% YTD (still within 4% of all-time highs)
• NASDAQ: 4634, down 1.5% on week, down 1.5% YTD
• Russell 2000: 1176, down 0.8% on week, down 2.3% YTD
• 10-Year Treasury yield: 1.84% (from 1.97% a week ago)
• February Crude Oil: $48.69, up 0.7% on week (oil CAN rise!)
• February Gold: 1,276.90 $1,216.10, up 5% on week
• AAA Nat'l average price for gallon of regular Gas: $2.08 (from $3.33 a year ago)

THE WEEK AHEAD:

Mon 1/19: Markets closed in honor of MLK Day

Tues 1/20:

Baker Hughes, Coach, Haliburton, Morgan Stanley, Netflix

2014 Tax Season begins

10:00 NAHB Housing Market Index

State of the Union address

Weds 1/21:

American Express, eBay

8:30 Housing Starts

Thurs 1/22:

Southwest Air, Starbux, Verizon

European Central Bank Policy meeting

8:30 Weekly Jobless Claims

Fri 1/23:

General Electric, McDonald’s

8:30 Existing Home Sales

#202 Downsizing, Dollar Cost Averaging

Oh sure, I wanted to call this episode, "Islanders Shutout Rangers," but this is a financial, not a sports show...and after all, I can only torture Mark so much. After a brief recap of the game, we spoke with Tom (a Bruins fan), who needed help deciding whether or not he should downsize prior to retirement.

• Download the podcast on iTunes
• Download the podcast on feedburner
• Download this week's show (MP3)

Vicky and John sought guidance on putting cash to work, which allowed me to explain how hard it is to time the market and why even if you are risk averse, you may want to allocate a small percentage of your portfolio to stocks.

Jennifer had an interesting question about how to treat her rental properties; Rosetta and an anonymous e-mailer had estate questions; Jeff, JD and Mark asked about index funds vs. ETFs vs. Robo-Advisors; Alan asked about scrubbing his credit report of errors; and Vicky asked about ditching whole like policies for her kids.

Here's last week's CTM segment about weak retail sales and the negative impact on stocks.

Thanks to everyone who participated and to Mark, the BEST producer in the world. Check out Mark's first-producing credit for this CBS Evening News segment that aired recently. If you have a financial question, there are lots of ways to contact us:

• Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

• Send an email: askjill@jillonmoney.com 

• Tweet us: @jillonmoney and @MTalercio