CFO Alex Sink's Consumer eViews Newsletter

FLORIDA CHIEF FINANCIAL OFFICER ALEX SINK'S NEWSLETTER

Volume 6 Number 2 January 9, 2009

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This week marked the first week of a special session called by the Legislature to fix the state’s budget deficit of $2.4 billion for the current fiscal year. It is estimated Florida could be facing a $4 to $5 billion budget shortfall next fiscal year.

Concerned with lawmakers’ desire to raid the state’s Budget Stabilization Fund and Lawton Chiles Endowment Fund, Chief Financial Officer Alex Sink advocated for a smarter approach to resolving Florida’s $2.4 billion deficit. In a letter addressed to House Speaker Ray Sansom and Senate President Jeff Atwater, CFO Sink urged the Legislature to reconsider the proposal to empty the state’s savings account. Only $72 million would remain, which is not a sufficient cushion to ensure the state has enough resources to pay bills at the end of the fiscal year. Additionally, raiding the Chiles Fund risks future funding for children’s health care programs at a time when the faltering economy means Floridians will depend on them more than ever. While recognizing that budget cuts are never easy, CFO Sink promotes reducing non-essential programs while still preserving our government’s core services. You can read CFO Sink’s letter here.


CFO Sink meets with senior victims of financial fraud

Discussion followed by the third meeting of the Safeguard our Seniors Task Force

Florida Chief Financial Officer Alex Sink met with several senior victims of financial fraud on Friday, January 9, 2009, at the State Attorney’s Office in West Palm Beach. These senior investors shared their stories with CFO Sink and discussed possible solutions to better protect other seniors against financial fraud. CFO Sink also convened a meeting of the Safeguard our Seniors Task Force. The Task Force discussed annuities fraud and began examining other products, such as stranger-originated life insurance policies and reverse mortgages.


CFO Sink's Florida Housing Help workshop draws 200 early registrants, others encouraged to participate

Nearly 200 homeowners have pre-registered for Florida Chief Financial Officer Alex Sink’s free Florida Housing Help Workshop being held this Saturday in Cape Coral to help area homeowners struggling with foreclosure.

The free workshop, to be held 9 a.m. to 2 p.m. in the Cape Coral City Hall Complex located at 1015 Cultural Park Blvd, Cape Coral, offers one-on-one meetings with lenders and HUD-certified counselors as well as job and financial counselors. Counseling services will also be available for small business owners facing financial challenges.

“I deeply regret that there is a need for this workshop, but I am proud of the response we have received from lenders and counselors willing to work together to provide alternatives and hands-on assistance,” said CFO Sink. “Recent reports show that the Fort Myers-Cape Coral area leads the nation in foreclosures – as many as one in 59 homes in the area are in foreclosure. We must turn those numbers around.”

Sink oversees the Department of Financial Services, which is producing the workshop on behalf of the CFO’s Financial Action Team (FACT). Sink created the FACT Team last year to ensure Floridians get all of the federal benefits they may be entitled to under the Housing and Economic Recovery Act of 2008 (HERA).

Pre-registration is encouraged for those wanting to meet individually with a lender or counselor. To register, call the CFO’s toll-free consumer helpline at 1-877-My-FL-CFO (1-877-693-5236).

In addition to private meetings with lenders and counselors, the workshop will offer free seminars throughout the day on a variety of programs on subjects including what to expect when meeting with a housing counselor, why and how to create a family financial plan, local services available to homeowners, affordable housing opportunities, foreclosure prevention measures and legal options, short sales and real estate options, and how to avoid foreclosure scams. Speakers represent a variety of non-profit agencies.

Cape Coral Mayor Jim Burch will help kick off the workshop.

The FACT Team members represent a broad coalition of financial and housing stakeholders and are continuing to study ways to help Floridians through the foreclosure crisis.

For more information on the Florida Housing Help Workshop and the FACT Team, please visit http://www.myfloridacfo.com/FloridaHousingHelp/.


CFO Sink warns annuity fraudsters: tougher laws now on the books

Florida Chief Financial Officer Alex Sink's 2008 legislative push to target agents using predatory annuity practices against seniors now results in tougher penalties for fraudsters in Florida. Effective January 1, 2009, SB 2082 strengthens the fines against agents who target Floridians using fraudulent annuities sales practices. The legislation also makes it a third degree felony to submit a fraudulent signature, prohibits agents from using fake designations to falsely imply financial expertise, and clarifies and strengthens suitability requirements that agents must meet when selling an annuity to a consumer.

"This legislation represents a good first step," CFO Sink said. "We were able to increase protections for seniors and punish agents who commit financially devastating crimes. That said, I will continue to push for it to be a felony to intentionally deceive a senior into an inappropriate annuity product. And I'm not going to rest until we're able to put unscrupulous agents that prey on our seniors behind bars."

Highlights of amendments to F.S. 627.4554 – Annuity Investments by Seniors (effective 1/01/09):

Every day, hundreds of Floridians fall victim to financial fraud. Many of these victims are trusting seniors who were misled into making risky or inappropriate financial investments, including annuities and reverse mortgages, by unscrupulous agents and scam artists. In response, Chief Financial Officer Alex Sink has created the Safeguard our Seniors (SOS) Task Force to develop solutions to better protect Florida seniors from falling victim to financial fraud. For more information visit www.flseniors.net.

Floridians who believe they may have been victims of annuity fraud should call 1-877-MY-FL-CFO (1-877-693-5236) or log on to www.MyFloridaCFO.com to file a complaint.


Revised rules for 2009 for Individual Retirement Accounts

A new tax law will allow retirees to skip required withdrawals from individual retirement accounts and related accounts this year. The change -- signed into law by President Bush last month -- is intended to give IRAs time to rebound from the recent difficult market.

Normally, IRA owners over age 70½ must withdraw money each year. For your first withdrawal, however, the deadline is extended until April 1 of the year after you turn 70½. People who turned 70½ in 2007, for example, had until April 1, 2008, to take their first required distribution.

In a typical year, to calculate how much to withdraw, you look at your account balance as of the previous Dec. 31 -- and then divide that figure by your remaining life expectancy. (Life-expectancy tables can be found in Internal Revenue Service Publication 590.) Most people who inherit IRAs or 401(k)s can spread withdrawals over their own life expectancies.

These requirements also apply to 401(k)s and some other employer-sponsored plans, but not to defined-benefit pension plans or Roth IRAs. (If you are still working, you aren't required to take distributions from your current employer's retirement plan.)

The new law suspends required distributions in 2009. This gives those who can afford to leave their nest eggs alone a better chance of recovering some of the investment losses they sustained last year.

If you don't need to pull money out of retirement accounts for living expenses, the new law will also delay the tax you would have owed on your 2009 distribution.

Unless Congress decides to extend the moratorium, those over age 70½ -- along with those who have inherited IRAs or 401(k)s -- will be forced to resume taking withdrawals in 2010. (Note: Neither Congress nor the Treasury Department took any action involving withdrawals, or taxes on withdrawals, for 2008.)

For additional information, visit AARP.org.


My Family CFO

Are you the chief financial officer of your family? Are you always looking out for the best deals, wise investments and smart moves for your family's financial security?

As your family's fiscal watch dog, keep an eye on this column for money-smart ideas from the Chief Financial Officer of Florida, Alex Sink.

If you have a creative way to be fiscally smart, share it with us for this column!

MyFamilyCFO@MyFloridaCFO.com

Idea: Make a financial plan for life

Making a plan will help ensure a successful financial future. Following that plan will be the most important part of your financial life journey.

Look carefully at your financial needs. Differentiate between what you want and what you need - why do you want it; what will it change to have it; is it important to have; and does it match your established values? Discard the wants for now and concentrate on the needs.

Set goals based on your values and your needs. A goal is a specific result, long- or short-term, that you intend to achieve. Thinking about your goals in practical terms will help you learn how to meet them. For example, if you want to pay off a credit card increase your monthly payment and get your interest rate reduced. Our values are what we use to judge things as important or unimportant and are at the core of a good financial management plan. You need to really understand your own values as you develop your goals - for financial management and for life.

Evaluate your goals to develop a life plan. It is important to begin to develop a financial plan for your life. The end goal may be retirement, but five-, ten- and twenty-year plans will help along the way. Think of the actions and steps needed to achieve success with your plan. The more steps you can visualize, the more successful you will be in reaching your goals. Visualize the order of importance for the steps - what will you do first, second, ... last?

Take the first step. Having a plan doesn't mean you will reach your goals - you must actually do the things listed in your plan. An important part of taking action is affirming your goals, especially by reviewing them regularly. It is important to write them down. In fact, experts will tell you to post your goals where you will notice them. Seeing them in writing helps them become a reality.


Saving energy, saving moneyEnergy tips for Florida families - these actions represent ways to behave kindly toward Mother Earth, AND save money as well as energy. These tips are presented by CFO Alex Sink's science advisor Meg Lowman, Ph.D., on the faculty at New College of Florida. Dr. Lowman has written numerous award-winning books and is an expert on the rainforests of the world.

Good dishwasher habits can save energy and money.

About 60 percent of the energy used by a dishwasher goes towards heating the water, so models that use less water also use less energy. Thanks to national efficiency standards, new models use less than half the water that old models used.

Use energy-saving cycles whenever possible. If you stop your dishwasher just before the dry cycle, you can cut its energy usage in half. Most newer dishwashers have an energy-saving feature called air dry which will stop it for you automatically.

Washing and rinsing dishes by hand uses more energy than one dishwasher cycle. Studies are showing more and more that, when used to maximize energy-saving features, modern dishwashers can outperform all but the most water-frugal hand washers.

Scrape, don’t rinse dishes before loading the dishwasher. Pre-rinsing can use up to 20 gallons of water. Studies show that most people pre-rinse dishes before loading them into the dishwasher, even though dishwashers purchased within the last 5–10 years do a superb job of cleaning even heavily soiled dishes. If you find you must rinse dishes first, get in the habit of using cold water. Avoid using the rinse and hold cycles.

Wait until your dishwasher is completely full before you run it. Wash only full loads. The dishwasher uses the same amount of water whether it is half-full or completely full. Putting dishes in the dishwasher throughout the day and running it once in the evening will use less water and energy than washing the dishes by hand throughout the day.

Turn down the water heater temperature. Since the early 1990s, most dishwashers in the U.S. have been sold with built-in heaters to boost water temperature to 140–145°F, the temperature recommended by manufacturers for optimum dishwashing performance. The advantage to the booster heater is that you can turn down your water heater thermostat to 120°F (typically half-way between the “medium” and “low” settings).

When loading, make sure you don't block the dispenser and spray arms. Load dishes according to manufacturer’s instructions. Completely fill the racks to optimize water and energy use, but allow proper water circulation for adequate cleaning.