Big U.S. Tax on Overseas Earnings Means Fewer Jobs Here, Finance Pros Say

/PRNewswire/ -- U.S. corporations are making fewer domestic hires and investing less in U.S. operations, due to cash trapped overseas, according to a recent survey from the Association for Financial Professionals (AFP). High U.S. corporate tax rates create an incentive for companies to leave cash abroad, often permanently.

In follow-up questions to AFP's recent 2011 Business Outlook Survey, 26% of respondents with operations abroad say that excessive U.S. corporate tax discourages their organization from bringing cash back to the U.S. and using it to invest in corporate growth in the form of new hires, capital investments, or research and development.

Proponents of the current tax rates on repatriated foreign earnings say the tax deters companies from making investments in non-U.S. operations and stems the flow of American-based jobs overseas, but AFP members indicate that this is not the case. Of those with non-U.S. operations responding to the survey, two-thirds indicate that the tax on repatriated foreign earnings at current rates has little to no impact on the decision to begin or continue operations outside of the U.S.

"Capital is mobile. Companies have choices about where to locate and where to invest," said Jim Kaitz, AFP's president and CEO. "For U.S. companies to grow domestic operations and make hires here, AFP believes that the current corporate tax regime must become competitive with that of other nations."

In a January 2011 policy statement, AFP said that U.S. companies should be permitted to repatriate foreign earnings at a tax rate that allows the U.S. to compete for investment of those earnings with other countries that tax those earnings at significantly lower rates. AFP recently delivered the same message to members of the 112th U.S. Congress, the White House and staff of the U.S. Treasury.

Since U.S. companies can choose when and if ever to repatriate earnings that are taxable in the U.S., the lost tax revenue is extremely low. In fact, a more favorable tax treatment might increase tax revenue in both the short- and long-term because companies would no longer have a strong incentive to avoid high U.S. taxes by reinvesting foreign earnings elsewhere. The likely inflow of capital to the U.S. could stimulate capital investment and hiring, contributing to economic recovery and long-term economic growth.

Reported estimates have U.S. corporations holding $1 trillion in cash and cash-like investments abroad.

AFP members, who are responsible for ensuring that their organizations have enough cash on hand to fund operations, are uniquely positioned to observe the cash flows of their organizations, and many of them are directly responsible for tax-related issues. Since they work in a wide range of industries and in both public and private organizations of varying sizes, their opinions reflect a broad corporate perspective that is both operational and strategic.

ABOUT THE SURVEY

From November 29 through December 10, 2010, the AFP surveyed U.S. financial professionals about current and expected business conditions in the U.S., then sent follow-up questions based upon policy issues, which included corporate tax issues for repatriated cash and floating NAV for money market funds. These two issues are the focus of the 2011 AFP Business Outlook Survey Policy Supplement. The original survey generated 808 responses from professionals holding a variety of financial positions within their organizations, including CFO, vice president of finance, treasurer and assistant treasurer. The results produce a margin of error of +/- 3.4 percent.

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AARP Survey Looks at Recession's Impact on Lower-Income Adults 45+

/PRNewswire/ -- An AARP report released today for the first time paints a picture of the struggles lower-income older adults are facing during the recession. The AARP Closer Look June 2010 survey found that nearly six in 10 Americans 45+ who make less than $25,000 a year say they are either "not at all" or "not too" confident they will have enough money to pay medical and living expenses in retirement, compared to 36 percent of higher income adults.

More than four in 10 (42 percent) lower-income older adults rate their health as "fair" or "poor," compared to only 18 percent of those who earn more than $25,000 a year. Additionally, many report they are struggling to meet basic needs, like paying for food and electricity, heat and water bills.

"While the recession has been devastating for many older Americans, this recent data indicates lower-income folks are being hit particularly hard," said Jo Ann Jenkins, president of AARP's affiliated charity, the AARP Foundation. "Each day, millions are choosing between essentials like buying groceries or paying for prescriptions. It's a devastating choice that no one should have to make."

Similar to the general population, lower-income older adults have cut back, but they are doing so in greater numbers. Nearly 40 percent had to cancel or postpone needed healthcare or dental treatments in the last six months--twice as many as higher-income adults. Twenty-three percent skipped doses, cut pills in half or did not fill prescriptions, compared with 15 percent of higher-income people. Lower-income adults are twice as likely to have looked for more affordable housing in the last six months compared to higher-income levels. And half used their car less to cut down on gas costs.

Additional findings for all income levels indicate the continual struggles older Americans are experiencing in tough economic times:

-- More than one in four adults 45+ (28 percent) stopped contributing to
retirement savings in the past six months, and 14 percent of adults 45
to 64 reported having to prematurely withdraw funds from retirement
savings vehicles--a trend which has increased at a significant rate
over the recession.
-- When asked about current value of retirement savings available, nearly
half (48 percent) reported having less than $50,000 in savings, with
16 percent of those reporting no savings at all.
-- With many older workers currently facing extended unemployment, a
large majority (63 percent) of respondents said that, based on what
they have experienced or observed, older workers face age
discrimination in the workplace.
-- Twenty percent of people 45+ reported problems paying their medical
bills in the last six months. The percentages were significantly
higher for Hispanics (29 percent) and African-Americans (33 percent).
-- More than a quarter of people 45+ have put off or postponed getting
needed health care or dental treatments or services in the last six
months.
-- Gas prices continue to be a challenge for more than a third (35
percent) of people age 45+, but finding adequate public transportation
alternatives is also a problem, 34 percent say.
-- A third of people age 45+ report are fixing up their homes to stay
there longer even as almost half (45 percent) note that their
community lacks affordable housing if they chose to move.


AARP Foundation (www.aarp.org/foundation) and AARP Real Relief (www.aarp.org/realrelief) have resources to help lower-income older Americans make ends meet, including federal benefits assistance, money management programs and tips to cut expenses.

AARP Closer Look is a twice-yearly poll to help understand the effect of social and economic changes on baby boomers and older Americans. The full survey is available at http://www.aarp.org/money/budgeting-saving/info-09-2010/closer-look-econ-0610. html.

Methodology

ICR conducted the Closer Look Survey for AARP via telephone between June 9 and June 30, 2010, among a nationally representative sample of 1,000 respondents 45+. One hundred respondents were Hispanic and 100 were African American. The margin of error is +/- 3.35 percent at a 95 percent confidence level.

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AARP Survey: Americans of All Ages Plan to Rely on Social Security

/PRNewswire/ -- With the 75th anniversary of Social Security approaching, AARP released a new survey report that shows that three in four (75%) adults age 18+ rely on or plan to rely on Social Security for their retirement income, including a large majority (62%) of younger adults age 18-29. The survey also showed a strong majority of those polled oppose reducing Social Security benefits for deficit reduction (85%), and support the infusion of additional revenues into the system to provide the same level of benefits in the future (57%).

Changes to Program Should Strengthen for Long Term, Not Reduce Deficit

The AARP survey found that regardless of age, 85% of adults oppose cutting Social Security to reduce the federal deficit, with more than seven out of ten (72%) strongly opposing it.

However, many support other changes to keep the program strong for future retirees. Over three-quarters (77%) of non-retired adults are worried that they may not have enough money to live on in retirement. To that end, 50% of non-retired adults are willing to pay more now in payroll taxes to ensure Social Security will be there for them when they retire, a finding that has remained consistent over time. Over half (57%) of adults under age 50 would prefer to pay more into Social Security so they can get the same level of benefits provided today as opposed to keeping payroll tax rates at current levels in exchange for lower benefits.

Eight in ten Americans 18+ (81%) believe the government made a commitment to Americans about Social Security being there for them when they retire, and that the government cannot break its promise. In addition, over eight in ten Americans (83%) agree that regardless of income, everyone who pays into Social Security should receive it, a finding that has not changed over time.

"The message from people of all ages to Washington is clear - don't erode the one bedrock of retirement security that unites all Americans," said AARP Executive Vice President Nancy LeaMond. "Americans see Social Security as a benefit they've earned over a lifetime of hard work, and they oppose it being used to reduce the deficit."

Lack of Confidence Does not Diminish Support, Including Among Younger Adults

Although confidence in the future of Social Security has consistently been low over the last 25 years, Americans of all ages strongly support the program. Consistent with previous surveys, a strong majority (63%) believe Social Security is one of the very most important programs in this country, with nine out of ten (90%) younger adults age 18-29 saying that Social Security is an important government program. Among non-retirees who are not confident about the future of Social Security, 84% agree with the statement that "Maybe I won't need Social Security when I retire, but I definitely want to know it's there just in case I do."

In addition, the public's lower level of confidence in the future of Social Security can be partially explained by the lack of awareness about solvency. Only one in five (21%) Americans knew that if the Social Security trust fund is exhausted in 2037, Social Security could still pay reduced benefits.

"Americans overwhelmingly understand that Social Security has literally been a lifeline to millions of friends, family members and neighbors for 75 years," added LeaMond. "More importantly, they want to make sure it will still be there for future generations. Younger Americans, although worried about whether Social Security will be there for them, value the program with unquestionable support, and want to know that they can rely on the benefits when they retire."

Social Security Provides Financial Security for Families

The AARP survey found widespread understanding and support for Social Security as an important resource for families and their loved ones.

Americans overwhelmingly support Social Security's protections for people who are disabled and for children and widowed spouses of deceased workers (91%). Almost two-thirds of Americans 18+ (65%) say that their family would be hard hit if Social Security were cut, including 72% of adults whose household annual income is less than $50,000. Eighty percent of Americans appreciate that Social Security alleviates the financial burden of taking care of parents and 88% of non-retired adults believe Social Security helps older Americans remain independent.

With increased attention on Social Security's future, the survey assessed Americans' attitudes toward key features of the program. Across all ages, nearly eight in ten (79%) Americans surveyed agree that Social Security should continue to provide guaranteed benefits while few (19%) think that it should be more like an investment account, subject to risk of possible losses. Half of Americans believe that Social Security payments for retirees are too low.

"We are celebrating Social Security's 75 years of success in reliably helping millions of people age with dignity, confidence and independence," said LeaMond. "We encourage leaders in Washington to reassure all Americans - in words and in actions - that Social Security will be strengthened, not treated as a piggy bank for deficit reduction, so that we can celebrate again 75 years from now."

During the August Congressional recess, AARP is engaging Americans of all ages in activities around the country to demonstrate to lawmakers the importance of Social Security. The organization is going to state fairs, holding community conversations, and collecting petitions that ask the President and Members of Congress on both sides of the aisle not to cut Social Security benefits for deficit reduction and to keep Social Security strong. AARP has already collected 1.5 million petitions over the past few months.

AARP commissioned GfK Roper, a national survey research firm, to conduct a national random digit dial (RDD) telephone survey of 1,200 adults aged 18 or older. A total of 781 respondents were not retired and 419 were retired. Interviews were conducted from July 15th to 27th, 2010. The results from the study were weighted by age, sex, race, region, and education. The margin of sampling error is approximately +/- 3%.

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New Survey Shows Significant Local Government Jobs Losses

/PRNewswire/ -- New survey research announced today shows that local governments are now facing a fiscal crisis that will force job losses approaching 500,000 and significant cuts in much needed public services. Representatives from the National League of Cities (NLC), United States Conference of Mayors (USCM) and the National Association of Counties (NACo) jointly released the survey results at a press conference on Capitol Hill earlier today and were joined by several members of Congress offering their support to cities and counties during these difficult economic times.

Local governments are a lifeline for their communities providing essential services to their residents. Unfortunately, according to the survey of local governments, these services are being cut and will continue to be cut over the course of the next 18 months as local governments attempt to balance their budgets in response to the on-going economic crisis. Most of the cuts are coming from public safety, public works, public health, and social services.

"For local governments, unemployment and foreclosures resulting from the Great Recession translate into too few revenues making it increasingly difficult to fund or satisfactorily maintain many basic services--not only parks, libraries, and public works projects but also public safety, police and fire services," said Ron Loveridge, NLC President, Mayor of Riverside, California.

Loveridge continued, "Cities are not only the engines of their local communities, they are also the backbone of their regional economies, where investments in infrastructure and services provide a platform for private sector investment and growth. And cities are the wealth of nations. We are where economic recovery must take place... we are where jobs are increased, or more commonly lately, are lost. We must change that equation."

Local governments continue to make the difficult choices in balancing budgets and finding news to operate. "As families all across our country have tightened their budgets, so have our nation's counties. Services to the public have been cut, county employees have been laid off or furloughed and capital expenditures have been reduced," said Judge B. Glen Whitley, NACo President, Tarrant County, TX.

But the report demonstrates that all of the cost cutting will come at a price to our nation's recovery and families. The report makes clear that federal action is critical to helping city leaders stabilize local economies and serve families. Continued Whitley, "The Local Jobs for America Act will help ensure that our county employees who fight crime, protect our communities from fire and natural and man-made disasters, and teach our children, are able to continue performing these vital functions. For this reason as a Republican and President of the National Association of Counties I support passage of H.R. 4812/S.3500."

The three organizations also emphasized there can be no national economic recovery as long as unemployment remains high and the ability of local governments to respond to the needs of their residents is hindered.

U.S. Conference of Mayors Second Vice President, Michael Nutter, mayor of Philadelphia, Pennsylvania, concluded, "As a nation, we made a good start with the American Recovery and Reinvestment Act. But make no mistake about it: the bleeding at the local level is hurting our nation's march toward recovery. And people in America's cities don't understand news reports that refer to a rebounding economy when companies still are not hiring.

"The nation's mayors support the Local Jobs for America Act because it will help people access jobs. These are the same people who own homes, pay taxes and send children to school in our communities. What message does it send to hard-working people if we helped Wall Street, but we can't help create jobs for Main Street?"

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We're Teaching Kids to Earn Money - Are We Teaching Them to Manage It? Money Management International Survey Shows Nearly 7 in 10 Children Participate in Fundraisers

/PRNewswire/ -- Money Management International (MMI), the largest nonprofit credit counseling agency in the nation, released a survey showing that nearly 7 in 10 kids in America are asked to participate in fundraisers on behalf of their school or organization.

According to MMI's 2010 Kids and Money Survey, the majority of parents say they take advantage of fundraisers as an opportunity to teach their children financial lessons. Two-thirds of parents say they teach children financial responsibility and basic math skills. Roughly half of parents use fundraisers to teach their children goal setting or basic business skills, and 4 in 10 parents use the opportunity to teach budgeting or charitable giving.

School and organization fundraisers offer kids the opportunity to earn money and practice raising funds, but lessons in responsible money management come mostly from parents taking the initiative. For parents wanting to take fundraising lessons a step further, MMI offers some ideas on teaching kids important financial life lessons while fundraising.

Teach goal setting. Many fundraisers make teaching goal setting easy because they offer a tiered system of prizes for kids who sell a certain amount of items. Before the fundraiser begins, talk to your child about their goals and help them set a realistic expectation of what they can sell based on the time and resources available. Make sure to explain to them that the funds they raise don't just earn them a prize at the end, but result in the greater prize of benefiting their organization or school.

Teach basic math skills. Help your children count back change to customers, total the funds they've raised, and calculate how much they still need to earn in order to reach their goals.

Teach basic business skills. Capitalism is the heart of the American economy. Use fundraisers as an opportunity to prune your little entrepreneurs' goal setting, budgeting, and customer service skills.

Teach responsibility. Responsibility was the lesson cited as the most taught by parents when it comes to fundraising, probably because responsibility encompasses more than pure financial skills. Remember that a single fundraiser will not teach kids responsibility as much as you setting a consistent example of responsible money management with your family's finances.

"Parents are highly influential when it comes to kids learning how to responsibly earn and manage money," says Cate Williams, vice president of financial literacy at MMI. "Parents should use fundraisers as a tool to expand on the financial lessons their children will use for life."

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Is Your Spouse a Secret Spender?

/24-7/ -- The success of a marriage may not be directly affected by a couple's financial situation, but according to recent polling, it is a factor. According to PayPal, which holds an annual survey in Australia, Canada, Italy, Mexico, the Netherlands, the United Kingdom and the United States, nearly a third of all the couples surveyed (and 43 percent of all American couples), state that the recent worldwide recession has led to an increase in arguments.

Of all couples surveyed in the United States and Mexico, 14 percent admit to ending a relationship because of money, and in the United States, nearly a quarter of all couples (23 percent) have hidden purchases from their partner. It is a combination of these factors, made even more stressful by the increased financial instability since the PayPal survey last year, that may cause couples to look for signs that partners are being less than truthful about spending. Geoff Williams, the co-author of "Living Well With Bad Credit", writing at WalletPop, outlined 10 signs your spouse may be hiding spending from you.

- Unexplained items around the house. Do new items suddenly appear around the home with no explanation? It could be that your spouse made a purchase, but is hoping you don't notice, or, if you do, that you accept the flimsy explanation about their origin.
- Spouse is secretive about money. A spouse who demands to keep finances separate, even as little as a joint checking account, could be a sign that your spouse's finances are not in as good condition as they should be.
- Spouse receives a "dock" in pay. If your spouse comes home from work claiming to have received a dock in pay, but you've never seen the paycheck that shows it, the possibility exists that there was no dock in pay, and your spouse is simply keeping the "lost" money.
- Spouse is eager to get the mail. Has your spouse suddenly become extra interested when the mailman delivers the mail? It could be because an extra credit card bill is in there, extra purchases are being shipped to your address, or that your credit card bill contains extra charges you aren't supposed to see.
- Spouse applies for credit card in your name. One sign you and your spouse need immediate financial help is when your spouse applies for a new credit card in your name. Definitely a red flag that someone's finances are completely out of order.
- Receiving collection calls from unknown creditors. Calls from collection agencies aren't uncommon, but what happens when you answer a call regarding a credit card or debt you know nothing about? Time to see what purchases have been made without your knowing.
- Spouse starts paying less on monthly credit card bills. A spouse who suddenly starts paying the minimum could mean your finances aren't as healthy as you thought. Sometimes this is because the extra money is going to new purchases, or to pay off purchases you know nothing about.
- Grocery bill grows unexpectedly. With today's supermarkets becoming more like shopping malls, the grocery bill that unexpectedly balloons could be from non-essential impulse purchases made in the checkout line.
- Spouse is "extra" nice. Always the stereotypical response to having done something "bad." In some cases your spouse put a ding in the car, but other times you might be being buttered up to break bad news about extra debt.
- Spouse handles all the bills. Couples should really share in everything, and so when your spouse offers or demands to take care of the bills without your help, it could be a sign that the bills are out of control, and the spouse doesn't want you to know.

Of course, any of these signs could have nothing to do with poor finances or secret spending. But add up too many of them, too close together, and there could be a problem. So, while money troubles might not be the prime factor in divorces, distrust certainly is, and so everything ties together. Extra spending, secrets and distrust are a bad mix, so cutting off this pattern of behavior before it gets too common is the key to keeping your marriage intact and your finances in good shape.

Article provided by Jeffrey W. Goldblatt Law Office
Visit us at www.jgoldblattlawfirm.com

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Stimulus Programs Remain Untapped by Most Americans: AICPA Survey

/PRNewswire/ -- The overwhelming majority of Americans haven't taken advantage of the U.S. government's programs to stimulate the national economy, according to a survey conducted for the American Institute of Certified Public Accountants by Harris Interactive.

Nine out of 10 Americans (91 percent) said they haven't capitalized on the job stimulus plan covered under the American Recovery and Reinvestment Act, the housing stimulus tax credit of 2009 and Cash for Clunkers.

The AICPA commissioned the survey in recognition of April as Financial Literacy Month. In 2007 the Institute began conducting an annual survey of Americans to determine their attitudes toward their finances.

"The government's stimulus efforts and the hard financial challenges people have faced over the past year emphasize the essential role financial literacy plays in our lives," said Carl George, immediate past chairman of the AICPA's National CPA Financial Literacy Commission, which seeks to help Americans become financially astute and achieve financial well-being. "Individuals can't always control the events that affect their finances, but they can learn to control their finances. We want everyone to understand that financial literacy can and should be a major part of their lifestyle."

Four percent of the survey respondents said they've taken advantage of the housing tax credit to buy their first home. That figure represents 5.1 million Americans(1). The housing stimulus tax credit, which now includes homebuyers who've owned their previous residence for five years and are seeking a new principal home, expires on April 30.

Only 2 percent said they applied for jobs through the stimulus program, and another 2 percent received rebates when purchasing new cars through Cash for Clunkers, the 2009 legislation that encouraged citizens to replace their gas-guzzling cars with more fuel-efficient vehicles. The U.S. government reported creating 608,000 jobs in the fourth quarter of 2009. The government also reported that Cash for Clunkers resulted in the sales of 680,000 vehicles.

The CPA profession's financial literacy efforts encourage Americans to educate themselves and consider all financial decisions in the context of their individual circumstances, George said. "Americans potentially interested in a housing stimulus credit must consider basic questions: What does the program offer? How do the provisions relate to their own personal situations? Can they afford the mortgage payments even after the stimulus credit? What is the overall financial commitment? Does it make sense for them to apply?"

Sixty percent of Americans said they were delaying major decisions because of financial concerns. Interestingly, out of a list of nine, buying an automobile is the most common financial decision Americans are putting on hold (27 percent). Buying a home ranked fourth, behind "some other major purchase or decision" and medical procedures.

The National CPA Financial Literacy Commission oversees two programs to help Americans achieve financial well-being. The first, 360 Degrees of Financial Literacy (www.360financialliteracy.org), educates Americans on how financial issues affect them at 10 life stages, from childhood to retirement. The free Web site, devoid of all marketing and advertising, includes tools and articles on homeownership and financial considerations of a job search.

A second campaign, Feed the Pig (www.feedthepig.org), created with the Advertising Council, encourages Americans aged 25 to 34 to begin preparing for long-term financial security. Ad Council research has shown that individuals who have seen or heard a Feed the Pig public service announcement are more likely to change their financial behavior for the better.

Methodology

In an effort to understand how the economic crisis has affected behaviors and attitudes among the general public, the AICPA participated in the Harris Interactive March 2010 Harris Poll Quorum telephone omnibus study. The interviewing took place from March 17 to 21, 2010. The Harris Poll Quorum is a bi-monthly survey among 1,009 U.S. adults ages 18 and older.

(1) Based on a total of 129,065,264 housing units as reported by the U.S. Census Annual Estimates of Housing Units as of J uly1, 2008.

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Solid Index Findings: Americans Define Themselves Based on Finances, But Don't Invest in Their Fiscal Futures

/PRNewswire/ -- The economic contraction has highlighted the internal duel between Americans' beliefs and actions according to the latest Solid Index, a survey by SunTrust Banks (NYSE:STI) that studies Americans' emotions and perceptions toward their finances. The Solid Index revealed that while more than half (58 percent) of the respondents feel that their financial situation contributes to their perceptions of self-worth, 40 percent of American adults will not be enrolling in a retirement plan this year.

The most recent survey is the fourth in a series of six throughout 2009 and it investigated Americans' thoughts around benefits enrollment, the contributors of their self-worth and their reactions to the recession. In addition to their financial situation, the findings revealed that 55 percent of Americans feel that their job contributes to their sense of self-worth, with 43 percent citing their salary and more than a third (37 percent) noting their possessions.

"It is surprising and unsettling that many Americans are neglecting to properly invest in their future even while using their financial situation as a litmus test for their self worth," said Rilla Delorier, chief marketing officer for SunTrust Banks. "In this current economic situation it may seem difficult to invest in one's retirement, but proper planning and budgeting can lead to solid behaviors and help individuals feel good about themselves now and in the future."

Other key findings of Americans' reactions to the recession include:

-- Almost two thirds (64 percent) feel that they are obligated to feel
grateful for having a job in today's economy.
-- Penny pinching is getting old, with 54 percent stating they are tired
of cutting back on the little things.
-- To combat the restrictions of penny pinching, 93 percent said that
they have purchased an item in the last three months to give
themselves a "pick me up".
-- Women are significantly more likely than men to indulge themselves by
spending on clothes (59% vs. 43% men), while men tend to be more
interested in splurging on electronics (30% vs. 18% women).

Not all reactions to the economic turbulence have been negative. One in two respondents stated that the economy has caused them to spend more quality time with their family, bringing them closer, despite the fact that 55 percent believe a night out with the family has become unaffordable. Additionally, many reported becoming more generous due to the economy by helping their friends, family and neighbors save money by giving away hand-me-down clothes (66 percent), preparing meals for others (55 percent), babysitting (38 percent) and doing renovations (37 percent).

"While Americans are challenged by this economy, they are finding new ways to enjoy their families and friends, whether it's spending more time together or swapping a solid - that is, supporting and helping each other with favors instead of paying others to do it for them," added Delorier. "These types of solid behaviors underscore the generosity and resiliency of Americans."

The Solid Index was conducted by StrategyOne as a five-question, single wave telephone omnibus survey among a census representative sample of 1,000 American adults aged 18 and older. The next wave of SunTrust's Solid Index will be released this December.

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'The State of College Savings' Survey Finds Parent Confidence Crashing As They Rely on Loans, Shift Debt Burden to Their Children

'The State of College Savings' Survey Finds Parent Confidence Crashing As They Rely on Loans, Shift Debt Burden to Their Children - 529 Investors Still Most Successful Savers

/PRNewswire/ -- Parents' confidence in their ability to save for college plummeted over the last year, as they socked away less and relied more on the prospect of student loans and grants to fund their children's college education, according to the 2009 "The State of College Savings" survey of nearly 800 parents across regions and income levels conducted by the College Savings Foundation (CSF).

Forty-four percent of parents are "not very confident" that they will reach their college savings goals, up from 31 percent in 2008; while the number of parents who are "very confident" has plunged to 12 percent from 20 percent last year.

Reduced savings may be contributing to this malaise: one-third of parents said that they are saving less for college this year than last, with 43 percent of those prioritizing current living expenses and 29 percent suffering a cut in income. Of the total parents surveyed, 41 percent have saved nothing at all, and 28 percent have saved less than $5,000 per child.

The number of parents expecting student loans to pay for college soared to 47 percent from 37 percent one year ago. Those expecting financial aid spiked up to 73 percent from 62 percent last year. And, more parents are shifting the debt burden to their children: 68 percent versus 63 percent last year, with 46 percent expecting their kids to be responsible for up to one-third of their college debt - up from 34 percent in 2008.

Despite this behavior, parents haven't adjusted or changed their hopes and aspirations: 76 percent of parents don't expect to have to narrow their children's college choices; and 76 percent would be very disappointed if their child could not afford to go to college (at least 8 on a scale of 1-10).

Pointing to a clear strategy for bridging this gap between intention and action was the finding that parents owning 529 college savings plans were the most successful group in saving for college: 61 percent of parents with 529s have saved more than $5,000 per child, versus 22 percent of those without one.

"This survey is a call to action for parents to save early and often - even if they can only start with small amounts," said Kevin McMullen, Chairman of the College Savings Foundation, a leading nonprofit encouraging American families to save for their children's college education. "The economic reality is that parents cannot count on college loans and grants being available or affordable when their children reach college age. Any shortfall in college funding will cascade as debt burden onto their children's futures."

Parents realize that their dependence on debt will have a long term impact: 65 percent expect that it will take at least five years for them or their children to pay it off after graduation.

Those who can't get loans anticipate getting Federal or State grants: 28 percent of parents are relying on these as their primary source of college funds, compared to 20 percent last year. Seventeen percent expect financial aid to cover over two-thirds of all college costs - up from only ten percent last year. Thirty-four percent expect it to cover up to one third of college costs.

"Financial aid covers only a portion of college costs and families need to look for ways to close that gap," McMullen said. According to the College Board, in 2007-2008 undergraduate students received on average $8,896 in financial aid, including $4,656 in grant aid and $3,650 in federal loans. This represents a fraction of the average $14,333 cost of today's four-year public college, or $34,132 for a private college or university.

As in last year's survey, 22 percent of parents expect help from grandparents; and 72 percent expect no help in paying for college at all. Twenty-seven percent would ask friends and family to "trade toys for tuition," or contribute to college rather than in material gifts.

Three-quarters (74 percent) of parents do not even know how much they need to save, up from 70 percent last year.

"In the face of an economic climate that is clearly putting families under pressure, we as an industry including financial advisors and policy makers should redouble our efforts to raise awareness on how to save to stave off debt," McMullen said.

The survey showed that many parents are saving successfully through vehicles like 529 college savings plans and strategies like automatic savings programs, enabling systematic and regular contributions of funds for college savings.

Parents owning 529s were far more successful in saving than those using other investments: 34% of parents who have saved more than $5,000 per child invest in 529s as their primary savings vehicle, more than double that of the next most popular ones: 14 percent of parents who have saved more than $5,000 per child are primarily in mutual funds, and 14 percent are in cash.

The percentage of parents in 529 plans held steady from the 2008 report. Nearly one in four, or 23 percent, is invested in a 529 college savings plan, and one in five (19 percent) says that 529s are the number one college savings vehicle, exceeded only by cash at 25 percent. At the same time, in a question that permitted more than one answer, the 2009 survey found that those parents who are saving are also squirreling money away in general (57 percent) and emergency (31 percent) funds.

"While it is understandable that parents are keeping cash at hand in these uncertain economic times, families are continuing to recognize the benefits of 529 college savings plans in reducing taxes and reaching their college savings goals," said McMullen. "Parents have the option to keep 529 funds in cash as well."

The 2009 State of College Savings survey also offered these glimmers of good news:

-- Although 46 percent of parents said that they would like to save more
in general but can't because of this year's economic reality, one in
four parents - 24 percent - said that they were actually saving more
than before.
-- Parents seemed to understand that a little is better than nothing:
those who tried to save at least something edged up from last year:
28 percent have saved less than $5,000 per child - but that is up from
22 percent in 2008. Around 30 percent of those are invested in a 529.
-- Parenthood prompts saving and gives parents time to build savings
momentum: 25 percent of parents started saving when their child was
born, and 20 percent when the child was 1-5 years old. Those parents
with children 11-13 years old, and those with children 14-18 years
old, had saved more than those in other age groups. Approximately 42
percent of each of those groups has saved more than $5,000 per child,
versus 26 percent of those with children in younger and older
categories.
-- While 20% of parents used an automatic savings strategy, those that
did were successful savers. 63% of them have saved more than $5,000
per child. 35% have been able to save between $100-$300 per month.
57% of those utilizing an automatic savings strategy own a 529.

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Will Debt-Free Retirement Be the Downturn's Biggest Casualty?

/PRNewswire/ -- Consumers are more concerned about short-term security than long-term financial goals. The 2009 Survey of Financial Values and Debt, sponsored by Securian Financial Group, indicated that saving for emergencies is among Americans' top financial priorities. And while they have found many ways to spend less, consumers are not reducing their debt. Eighty-two percent are carrying non-mortgage debt, a figure that is virtually undiminished since Securian's initial survey in 2007.

"Consumers are clutching cash and postponing debt reduction," said Kerry Geurkink, director of Individual Annuity Marketing, Securian Retirement. "They are wisely adjusting their spending and borrowing, but the ultimate goal of debt-free retirement will be more difficult to achieve without a better balance between saving and debt reduction."

Although consumers may be unable to expedite debt repayment right now, they are focused on the long-term consequences of debt. Three quarters of non-retirees are concerned about the amount of debt they may carry into retirement, a plausible worry for Baby Boomers who are accumulating new debt.

One-fifth of Boomers owe at least $50,000 in non-mortgage debt, a 10-point spike from the 2007 survey. Boomers were the only generation in the survey (which included Generations Y, X, and the Silent Generation) to add debt since 2007.

Only one in five of people polled for the Securian survey (22%) applied for credit or non-mortgage loans in the last 12 months, and they were less willing overall to take on debt for cars, vacations, gifts, home improvements or meals out. They also identified several ways to save money on everyday expenses, and eight out of 10 expressed pride in the ways they have cut back.

"It is encouraging that Americans are willing to shun new debt and adopt more cautious attitudes toward spending," Geurkink said. "But consumers need effective debt-reduction strategies to set themselves up for debt-free retirement."

IBM Survey Predicts New Financial World Order With Shift to Specialization, Transparency and Lower Overall Returns

/PRNewswire/ -- According to a survey by the IBM Institute for Business Value, 90% of financial markets executives and government officials believe the returns of the past are over. The study reveals that as the financial markets industry radically restructures, firms must adapt to a new lower-margin landscape where they will need to specialize around services that clients value rather than continuing to provide a full range of in-house offerings.

The new IBM study predicts significant consolidation in segments wrought with over-capacity such as investment banking, asset management, and wealth management. Enhanced regulation and transparency will also eliminate opacity, with previously high-margin activities becoming commoditized.

The study predicts three specific areas of specialization that are likely to emerge from the new economic condition:

-- Beta transactors: the majority of financial markets firms will
concentrate on utility services (trading, asset management, etc) that
provide the infrastructure required to facilitate market-making in the
same way that water companies provide the reservoirs, purification
processes and pipes required to deliver clean water.
-- Advisors: a smaller number of firms will concentrate on providing
advice - such as wealth management or mergers and acquisitions advice.
-- Alpha seekers: a handful of private equity firms, hedge funds and
boutique investment houses, none of which are 'too large to fail',
will focus on generating high returns from high-risk investments.


"The three trends - towards specialization, client orientation and improved efficiency - are triggering a restructuring wave on a greater scale then ever before, eroding margins and forcing all firms to reconsider their value propositions and their core business models," said Shanker Ramamurthy, Global Managing Partner for Banking & Financial Markets at IBM Global Business Services. "The new industry will not only lack some of the great brand names of the past, but will also lack many of its past characteristics - from excessive risk taking, opacity and leverage, to massively high returns."

For some time, firms found it all too easy to make vast profits by exploiting pockets of opacity in the market and did little to refine management or control systems, to improve transparency or to connect with their clients. Respondents to the IBM survey said that improved client service and efficiency will be critical for competitive survival in a new lower-margin financial order, a finding consistent with other more mature industries. In the future, firms will need 'smarter' systems that can continuously assess their risks and returns across each line of business and adjust their business mix accordingly. At the same time these systems will also enable firms to refine client service through improved understand of profitability by business line and product as well as by individual client.

"Banks have been used to a level of volatility and business cyclicality, and are currently slashing headcount and closing business lines in order to save money, just as they have done in previous downturns. However, in the current restructuring, radical efficiency improvements will be required for survival," added Ramamurthy. "Indeed IBM's analysis suggests that the current wave of redundancies and divestitures will provide insufficient savings and that firms will need to seek further efficiency improvements of 20% or more as they face the need for a level of transformation and radical business model reform not seen in previous downturns."

Although growth is expected to be sluggish through 2012; it will depend on a firm's ability to thrive in an increasingly transparent environment. For example, hedge funds (and their prime brokerage service providers as a result) will come under severe pressure as transparency reveals that the majority of funds are not delivering on their 'alpha promise'. Meanwhile flow businesses (derivatives in particular), passive investments and infrastructure providers such as custodians, clearing firms and exchanges will grow as a result of increased transparency and a movement away from risk assumption towards risk mitigation.

In one of the most extensive surveys of the financial markets industry ever undertaken, and at a time when the industry is facing its greatest period of turmoil, the IBM Institute for Business Value surveyed 2,754 industry participants, including 1,076 individual investors and 1,678 executives and public officials, to determine how financial markets firms should prepare for the future. In a report published today entitled "Toward transparency and sustainability - Building a new financial order", it found that respondents were in broad agreement on the need to eliminate complexity and excess and move to a more transparent, sustainable market. They also agreed on the need for effective regulation not only to avoid the mistakes of the past, but also to prevent new ones in the future - but they feared that poor regulation may hinder necessary innovation.

Further findings in the report (available at www.ibm.com/gbs/newfinancialorder) include:

-- Providers and clients are disconnected 79% of the time (what clients
actually value and will pay for vs. what providers think their clients
value and will pay for).
-- 80% of firms ranked themselves as moderate to poor in delivering on
their brand promises of client-centricity, agility and stability
(brand promises are for multiple stakeholders including clients,
governments and employees).
-- Over 60% of clients believe their provider isn't acting in the best
interest of the client; and nearly 60% of providers agree that they
are not acting in their clients' best interest.
-- The buy side understands client behavior to a greater extent vs. the
sell side - but there is still room for improvement even on the buy
side.
-- Over 90% of executives and government officials believe the industry
will unbundle; apparently 'wealth destruction leads to self
reflection' - the industry is specializing by thinking through 1) what
to do, 2) what not to do, and 3) how to specialize around what the
client values.
-- When asked about the new world order, financial executives and
government officials ranked as number one the need for greater
transparency, second the need to address capital and liquidity and
third the misalignment between firms' incentives and the needs of
governments and individual consumers.
-- 70% of executives are concerned that the government will 'overshoot'
and over-prioritize financial stability at the expense of innovation.

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Recession Has No Effect on Mid-Income Retirement Hopes

/PRNewswire/ -- The recession has forced nearly two in five (39 percent) Americans to save less for their golden years, but it hasn't changed their perception about whether middle income families can save for retirement.

Thirty-five percent of Americans believe it is possible for a typical middle income family to save for a secure retirement, according to a new COUNTRY Financial Survey. While that percentage doesn't necessarily paint a positive picture, it's virtually unchanged from the prior two years - 36 percent in 2008 and 37 percent in 2007 - when the US economy was in a better state.

Yet, the recession is having an impact on people's plans as more than one-quarter of the adults (26 percent) surveyed say the effects of today's economy will cause them to delay their retirement.

"It's encouraging that all the bad news has not caused people to give up hope," says Keith Brannan, vice president of Financial Security Planning at COUNTRY. "If you're struggling, review and adjust your financial plan to get by in the short-term without losing sight of long-term goals like retirement. If you don't have a plan, you may want to talk to a professional who can help you create a tangible plan to get from where you are today to where you want to be in the future."

Genders split on best saving skills for the future
-- Overall, Americans think women (37 percent) are better at saving and
investing for the future than men (29 percent). However, men think
they are better at this task (42 percent) while women believe they
have the upper hand (49 percent).


Employers pull back on contributions
-- Nearly one-quarter of Americans (23 percent) who participate in a
work-sponsored plan like 401(k) say their employer has cut
contributions to their retirement account.


"If your employer has cut their contributions to your retirement account, you have several options to choose from to maximize your retirement plan," adds Brannan. "The worst thing you can do is to stop contributing to retirement just because you no longer have a company match."

Tips for maintaining retirement savings in tough times:
-- Establish and maintain an emergency fund. In these tough times, it's
important to have an emergency fund sufficient to cover at least three
months of your expenses saved in a highly-liquid account, such as a
money market mutual fund or a savings account.
-- Try not to borrow against your 401(k) account. Besides borrowing
against your future, if you leave your employer, you may still be
responsible for paying the loan back within 60 days. If you can't
repay it within that time, IRS penalties could be imposed.
-- If your employer stops matching your 401(k) contributions, consider
redirecting your contributions to a Roth IRA. In addition to
providing tax-free income once you retire, you can liquefy your
contributions at any time for any reason without IRS penalty or income
tax consequences.

For more information on Americans' sentiments about financial security, please visit www.countryfinancialsecurityindex.com.

The March COUNTRY Retirement survey is based on a national telephone survey of 3,000 Americans and is compiled by Rasmussen Reports, LLC (www.rasmussenreports.com), an independent research firm. The margin of sampling error for this survey is approximately +/- 2 percentage points with a 95 percent level of confidence.

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Bankrate: Mortgage Rates Flirt with Record Lows

PRNewswire-FirstCall/ -- Mortgage rates fell sharply in the first week of 2009, with the average 30-year fixed mortgage rate plummeting to 5.33 percent. According to Bankrate.com's weekly national survey, the average 30-year fixed mortgage has an average of 0.39 discount and origination points.

The average 15-year fixed rate mortgage dropped to 4.85 percent, while the average jumbo 30-year fixed rate slumped to 6.91 percent. Adjustable rate mortgages were mixed, with the average 1-year ARM inching higher to 5.98 percent and the average 5/1 ARM pulling back to 5.72 percent.

Mortgage rates fell sharply as the Federal Reserve initiated a program of mortgage bond purchases. The average 30-year fixed mortgage rate is at the third lowest point ever, 5.33 percent. The two prior occasions when rates were lower both occurred in June 2003. Low mortgage rates will be a theme in 2009 as Fed and Treasury policies aim to stabilize the housing market by facilitating refinancing and enticing home buyers into the marketplace.

The sharp decline in mortgage rates since Halloween has sparked a refinancing frenzy. In late October, the average 30-year fixed mortgage rate was 6.77 percent, meaning a $200,000 loan would have carried a monthly payment of $1,299.86. With the average rate having since fallen to 5.33 percent, the monthly payment on a $200,000 loan is now $1,114.34.

SURVEY RESULTS
30-year fixed: 5.33% -- down from 5.64% last week (avg. points: 0.39)
15-year fixed: 4.85% -- down from 5.16% last week (avg. points: 0.38)
5/1 ARM: 5.72% -- down from 5.86% last week (avg. points: 0.47)

Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

For a full analysis of this week's move in mortgage rates, go to http://www.bankrate.com/mortgagerates

The survey is complemented by Bankrate's weekly forward-looking Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next 30 to 45 days. A plurality of panelists, 42 percent, predict rates will continue falling. One in three expect rates to rebound, while the remaining 25 percent believe rates will remain more or less unchanged.

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Consumer Reports' Annual Public-Education Campaign Warns of the Pitfalls of Credit Card Debt

/PRNewswire-USNewswire/ -- Consumer Reports today unveiled the third installment of its annual public education campaign, warning holiday shoppers of the pitfalls of credit card debt. Consumer Reports' public education campaign kicks off on Monday, November 24th with a full-page ad in USA Today advising shoppers: "There is no 'bailout clause' in your credit card contract." Americans owe nearly $1 trillion in credit card debt according to the Federal Reserve Board.

A recent survey from the Consumer Reports National Research Center found that 12 million Americans are still in debt from last year's holiday season. Additionally 38 percent of Americans said they plan to use credit cards this holiday season as much as they did last year (35%) or more than last year (3%).

In addition to the full-page ad in USA Today, Consumer Reports will run a series of online ads across highly trafficked or influential personal finance and consumer blogs including Consumerist.com, Yahoo Shopping, and Bargainist.com. The online ads will highlight the Consumer Reports "Tightwad Tod" blog on www.ConsumerReports.org/TightwadTod.

Launched at the start of the holiday shopping season, the "Tightwad Tod" blog covers a wide variety of topics that affect consumers during these tight economic times including advice on getting the best deals during the holiday season -- everything from layaway plans to getting a holiday job to navigating outlet malls. The blog is written by Consumer Reports Senior Project Editor Tod Marks, who has been finding deals and exposing scams in every area of consumer spending for nearly 20 years.

"This campaign reminds consumers that Wall Street's bailout won't cover them this holiday season. If consumers over-extend their credit cards, there won't be a rescue package waiting in the wings, so they need to remain vigilant about spending within their budgets," said Jim Guest, president and CEO of Consumers Union, nonprofit publisher of Consumer Reports. "As an organization that doesn't take advertising, we're using this venue as a way to educate consumers and foster marketplace change."

A Tradition of Public Education and Marketplace Change

This latest effort by Consumer Reports follows a tradition of public education campaigns against gift cards and extended warranties. Last year, the organization took on the retail sector and the ubiquitous gift card with a full-page ad in the New York Times, which advised consumers that $8 billion in gift cards go unused and wind up back in the pockets of retailers. The campaign called on retailers and the National Retail Federation to eliminate expiration dates and service fees. In 2006, Consumer Reports took out a full-page ad in USA Today advising consumers to skip the extended warranty. That ad was rebutted by a full-page ad one week later from the Service Contract Industry Council. Following this campaign, the Consumer Electronics Association reported consumer interest in purchasing extended warranties fell 20 percent.

Which way to pay: Credit, debit, check, or cash

A recent poll conducted by the Consumer Reports National Research Center found that 59% of consumers plan to make a budget before they begin to shop this holiday season. And while making a budget is a good first step, being able to stick with it is quite another. Of the 39% of consumers who said they made a budget last year, 45% were able to stay on budget while, nearly as many (44%) went over budget. Only 3% discarded their budget all together going way over budget.

Consumer Reports advises consumers that whether they make a budget or not this year the method of payment makes a difference. Credit cards offer the most protections for consumers, but consumers who routinely carry a balance will pay more for their purchases once fees and interest charges are factored in.

Consumer Reports recommends the following tips to avoid debt and maximize the method of payment:

-- Cash. Consumers should use cash as much as they can. There's no fear
of identity theft, and it's accepted almost everywhere. Remember to
save the receipt for evidence of payment.
-- Checks. Write a check if you need to make a large purchase somewhere
that won't accept credit or debit and you don't want to carry cash.
Canceled checks can also be useful as receipts or for tax purposes. If
a check disappears, you can stop payment on it, if you act quickly
enough (checks are increasingly being processed in a single day).
-- Debit cards. Use a debit card when you don't mind having the money
withdrawn immediately from your checking account. Debit cards are a
surefire way to avoid onerous credit-card interest charges, but you
could be slapped with burdensome overdraft fees if you don't have
enough money in your account to cover your purchases. With a debit
card, your liability for unauthorized transactions is limited to $50
if you report the problem within two business days of discovering it.
After that the limit leaps to $500. Beyond 60 days of your account
statement you could lose all the money in your bank account.
-- Credit cards. Use a credit card for most large purchases, if you're
not carrying a balance and can pay off the bill each month. Credit
cards offer greater protection than other forms of payment. If you
don't pay off your purchases each month, you'll pay interest rates of
about 12 to 13 percent on your balance, depending on whether your card
has a variable or fixed rate. If your account number falls into the
wrong hands, you're liable for only the first $50 in charges, and most
large issuers waive liability altogether. If you have a legitimate
beef with a seller, it's relatively easy to have the charges removed
until the dispute is settled, if you report the matter to the issuer
within 60 days after the charge appears on your statement.


The Consumer Reports National Research Center conducted a telephone survey of a nationally-representative probability sample of telephone households. 1,001 interviews were completed among adults aged 18+. Interviewing took place over October 16-19, 2008. The margin of error is +/-3% points at a 95% confidence level.

DECEMBER 2008

(C) Consumers Union 2008. The material above is intended for legitimate news entities only; it may not be used for commercial or promotional purposes. Consumer Reports(R) is published by Consumers Union, an expert, independent nonprofit organization whose mission is to work for a fair, just, and safe marketplace for all consumers and to empower consumers to protect themselves. To achieve this mission, we test, inform, and protect. To maintain our independence and impartiality, Consumers Union accepts no outside advertising, no free test samples, and has no agenda other than the interests of consumers. Consumers Union supports itself through the sale of our information products and services, individual contributions, and a few noncommercial grants.

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Bankrate: Mortgage Rates Remain Volatile

PRNewswire-FirstCall/ -- Mortgage rates fell this week, with the average 30-year fixed mortgage rate dropping to 6.2 percent. According to Bankrate.com's weekly national survey, the average 30-year fixed mortgage has an average of 0.4 discount and origination points.

The average 15-year fixed rate mortgage popular for refinancing retreated to 5.95 percent, while the average jumbo 30-year fixed rate was down slightly to 7.61 percent. Adjustable mortgage rates were sharply lower, with the average 1-year ARM down to 5.89 percent and the average 5/1 ARM pulling back to 6.21 percent.

Mortgage rates continue to be volatile, yo-yoing up and down from one day to the next. Heightened economic worries pushed mortgage rates lower versus last week, but the continued twists and turns of the credit crunch are certain to produce more volatility in mortgage rates. Although mortgage rates are pegged to long-term Treasury yields, the spread above risk-free Treasury yields is ever-changing as credit worries prevail. The movement of fixed mortgage rates is not directly influenced by the Federal Reserve's cut to short-term interest rates.

This year has been a wild ride for mortgage rates, with a low in January of 5.57 percent and a high of 6.77 percent in July. At today's rate of 6.20 percent, a $200,000 loan carries a monthly payment of $1,224.94.

SURVEY RESULTS

30-year fixed: 6.20% -- down from 6.41% last week (avg. points: 0.4)
15-year fixed: 5.95% -- down from 6.14% last week (avg. points: 0.44)
5/1 ARM: 6.21% -- down from 6.49% last week (avg. points: 0.36)



Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

For a full analysis of this week's move in mortgage rates, go to http://www.bankrate.com/mortgagerates

The survey is complemented by Bankrate's weekly forward-looking Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next 30 to 45 days. More than half of respondents, 53 percent, expect rates to retreat further in the coming weeks. However, 41 percent predict a rebound in mortgage rates, while just 6 percent forecast that mortgage rates will remain more or less unchanged in the next 30 to 45 days.

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Survey Finds 29% of Americans Receiving Nonprofit Financial Counseling Use Federal Tax Stimulus to Pay for Food, Gasoline

PRNewswire -- A survey of 3,004 persons across the United States who receive financial counseling from a national nonprofit agency found that 29.4% used funds from their tax stimulus check to pay for everyday expenses, such as food and gasoline, while 20% said they paid down their credit card debt.

In addition, almost 5% of those surveyed said they utilized the funds to help them prevent foreclosure of their home or avoid bankruptcy. An additional 7.5% said the funds "give some more time to organize their finances and possibly avoid" these two scenarios.

In response to the question, "If you are facing foreclosure, will this check help you avoid foreclosure?" 3.5% responded "yes." An additional 5.1% of those surveyed, said the stimulus payment "gives some more time to organize finances and possibly avoid foreclosure."

Approximately 1.4% surveyed, said the funds would help them avoid bankruptcy, while 2.4% said the funds will allow them more time to organize their finances and possibly avoid bankruptcy.

The survey was conducted in late June by Consumer Credit Counseling Service (CCCS) of Greater Atlanta, a national nonprofit agency that provides credit counseling, as well as counseling to prevent foreclosure and avoid bankruptcy, to people in all 50 states. Of the 3,004 responding to the survey, 2,147 had received their check from the federal government.

"Many Americans are using the federal stimulus checks to help them get by and pay for everyday expenses," said Suzanne Boas, president of CCCS of Greater Atlanta. "The extra money is providing them breathing room with their creditors, including those who want to avoid foreclosure and keep their homes."

Approximately $106.7 billion in stimulus payments will be made this year to 130 million households. The payments began on April 28 and are scheduled to be completed by mid-July.

Rather than spend funds on new purchases, the survey also shows that some Americans are using the stimulus checks to make additional payments on their mortgage, car or other loans, and others are using the funds for home repairs. For example:

-- 7.8% said they would use the funds to make an additional payment on their mortgage;

-- 9% said they would make an additional payment on another debt, such as a car payment or a student loan;

-- Approximately 5.6% of respondents said the funds will be used to make home repairs;

-- 2.5% said they would use the funds to pre-pay their property or income taxes for 2008.

Other survey findings include:

-- Approximately 82% of the people surveyed said they plan to save 20% or less of the tax stimulus funds they receive.

Asked to rate the state of their current financial situation on a scale of 1 to 10, with 1 being the "most stressful," about 33.6% of respondents rated their situation a "1."

When asked, "What is your confidence level in the economy six months from now," 66% expect it to worsen and only 11% expect it to improve. The remaining people surveyed expect the economy to remain the same.