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Your Money | CONSUMER CHECKLIST / KATHY M. KRISTOF

Financial Planning Clicks

Internet programs can reduce the dollars people pay to financial planners for math calculations.

September 06, 1996|KATHY M. KRISTOF

Online calculators

Ever wonder how much mortgage you can afford or how much you'd need to save to send the kids to an Ivy League college?

Most people don't know how to figure the answers themselves, so many pay professional financial planners hundreds of dollars to do the math for them.

But thanks to the wonders of computers and the Internet, there's help for those who want to do it alone.

The American Bankers Assn. added a new calculator feature to its Web site, which already includes information on ATM safety, banking facts and debt information.

The calculators are actually questionnaires, where you plug in numbers relating to the interest rate you'd expect to pay on a loan, the size of your down payment and your monthly income. Click "compute" and the site tells you what size loan you could qualify for, based on standard banking criteria that say you can spend 28% of your gross monthly income on a mortgage. (In reality, the 28% is merely a rule of thumb. Some banks will go higher, others lower based on the individual borrower's specifics.)

In addition, there's a refinance work sheet. You plug in the numbers on your current loan, the rate you'd expect to pay on a refinance, an estimate of other refinancing costs and the ABA calculator will tell you how many months it will take to break even.

The shortcomings of the site: It doesn't explain how to get the answers to the financial questions asked by the calculator. For instance, unless you've actually been through a refinance, you probably don't have a good handle on what you'd pay in other fees. You can get an estimate by talking to a reliable lender or loan broker, and it would be wise to do that before visiting the site.

The college work sheets, however, are fairly simple. One gives you the opportunity to plug in a specific dollar amount that you'd like to save and, after punching in the rate of return you expect to earn on your savings and how long you have until college, it will tell you how much you should be putting aside each month.

An alternative involves checking a box that indicates whether you're saving for a private school or a state university. The calculator automatically plugs in numbers from recent College Board surveys, indicating the annual cost and the estimated rate of college cost appreciation, and tells you how much you need to save each month to pay the cost in cash.

The address: http://www.aba.com

* Your credit rights

With credit disputes making the news--a San Antonio woman recently won a landmark judgment when credit-reporting firms refused to correct errors in her file--consumers may wonder just what their credit rights are.

The Federal Reserve system answers the questions with a 41-page booklet called "Consumer Handbook to Credit Protection Laws." It explains what U.S. laws help you shop for credit, deal with billing disputes, battle credit discrimination and understand your rights when dealing with debit cards.

The book is free. It can be ordered by mail, phone or fax. Send written requests to: Publications Services, Division of Support Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. To phone, call (202) 452-3245; fax orders can be sent to (202) 728-5886.

* Saving and Gen-X

Generation X, the roughly 40 million 20- and 30-year-olds who had the bum luck to be born in the shadow of the gigantic baby boom generation, turn out to be a fairly serious group of investors, according to a recent survey by the American Stock Exchange.

Apparently spurred by a generational lack of confidence in the long-term viability of Social Security--88% of those surveyed didn't think they could count on Social Security as a source of income when they retire--the vast majority, 79%, are already saving for a long-term goal such as retirement, education, emergencies, major purchases or just for the thrill of it.

Although just 25% of the general public own mutual funds, 52% of the surveyed Gen-Xers own mutual funds. In addition, 32% of the Gen-X group owned individual stocks and 24% own bonds, compared with 20% of the general public, according to the Amex survey.

Consumer Checklist is a weekly feature that covers a range of pocketbook issues of interest to Californians. To contribute information about new legislation, products, services or surveys, write to Kathy M. Kristof, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053; or e-mail kathy.kristof@latimes.com

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