Ask Karen Gibbs

Veteran business correspondent Karen Gibbs answers your personal money questions and addresses current topics that affect YOUR finances on a daily basis. Karen is the financial expert in your corner--no question is too basic or too small. Karen boils down the issues simply: here's what you need to know, and here's what you need to do. Send your money questions to and post your comments below.

financial freedomI missed your visit to Cecil College’s Cash, Chat and Change conference.  Can I get any handout or information that you presented that day?
    - Natalie, Cecil, MD

Natalie, sorry you missed the conference.  It was informative and covered such topics as budgeting basics, buying a car, understanding your credit report, identity theft, financial aid and investing.

Along with involved and dedicated Cecil College educators, the conference included representatives from the community, regional banks and local credit unions.

It was my pleasure to give a keynote speech to kick off the conference.  While I won’t repeat the entire speech here, I will pass along what I call the “Ten Steps to Financial Freedom”:

1.  Determine your cash flow and establish a budget. 

2.  Establish a direct deposit checking account and a savings account with an insured financial institution.  Ask about fees, minimum balance required, ATM, debit card ...

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kid moneyKaren, how do I talk to my son about money?  He knows I pay child support, but still thinks I have all the money in the world to spend on him and I feel guilty saying “no”.
-    Steve, PG County

Steve, this is probably one of the most important discussions you can have with your child.  Laying the foundation for good money habits is one of the best gifts you can give your son.  Children make the association between money and the ability to buy stuff very early.  Teaching them the importance of money and credit as early as possible will put them on the path of financial capability.

Does he understand the connection between work and pay?  I’m big on paying children for age-appropriate chores instead of just handing out an allowance.  It’s never too early to teach the gospel of saving.  Money from the tooth fairy, birthday cash from Grandma, even the penny found on the street all offer opportunities to teach about saving, ...

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bank Karen, I don’t have a bank account.  I pay my bills with money orders purchased at the Post Office.  What other options are available to me?
-    Lauria, Baltimore

Lauria, you are one of the 88 million U.S. residents that are “unbanked” or rely on institutions other than banks to conduct their financial business.  The average income for unbanked households is $25,500 and ten percent of that annual income is spent on fees.

The Post Office once had a postal saving system, geared toward immigrants and those with limited income, with the goal of encouraging savings and economy.  Started in 1911, the Post Office would pay 2% annual interest on an account that could be opened for just $1.  The account balance could not exceed $500 excluding interest.   Deposits rose to $3.4 billion in 1947, in part due to rising economic tides and an influx of after WII.

Competition from savings and loan institutions, banks and U.S. savings bonds ...

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retirement keyboardKaren, what are your thoughts about the proposed myRA accounts?
    Vicki, Pasadena

Vicki, this is a proposal designed to address the serious retirement crisis facing us all.  With defined benefit pension plans on the wane and social security insolvency issues, individuals need to ramp up their personal savings.

According to the Center for Retirement Research, the median retirement account balance for all working class households is $3,000.  For those households approaching retirement, the median account balance is $12,000.  Clearly that is not enough money to last the twenty or even thirty years of retirement.

According to the Employee Benefits Research Institute, 75 million full time employees have no retirement plan except for social security.  Of those 75 million, only 5% have an IRA (individual retirement account).  34% of U.S. households have no retirement savings at all.  Currently, the IRA and 401(k) system tilts toward those who work at ...

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credit card lockKaren, what’s the difference between credit monitoring, fraud alert and a credit freeze?  I’m worried my credit may be compromised by the security breach at Target and other retailers over the holiday shopping season.- Elaine,  Baltimore

Elaine, credit card hacking is one of the fastest growing forms of fraud, thanks to our increasing use of plastic instead of cash and to outdated technology.  Target, Michaels Craft Stores and Neiman Marcus are just a few of the U.S. retailers vulnerable to a global attack.  These hackers steal information that is stored on that black stripe on the back of your card, including your name, address, account number issuing institution, expiration date and service code, just for starters.  Hackers can then sell this knowledge to those who can make duplicate cards or use this information to open new accounts.  Many credit card issuers, as well as affected retailers, are issuing new debt and credit cards to card holders. ...

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