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1. The Economics of Daily Life

You are dreaming the American Dream of going into business for yourself. What are the chances that you'll succeed and what guides will help you succeed? You are feeling low about your cash position right now and would get what could be a vital lift if you knew just how big your financial assets are. How do you go about figuring your net worth? You have noticed as you checked your monthly bank statements recently that the service charges have been increasing. How can you cut them?

These and other questions that are covered in this chapter come about as close as possible to the bread-and-butter lives of tens of millions of us. I hope you'll find more than a handful of money-saving and money-making hints in these pages. I think you will.

How Much Are You Worth?

Financially speaking, how much are you worth? As a family, what is your net worth? How does your wealth—that is, the total of your assets after you have subtracted your liabilities— compare with that of other American families?

As a nation, we now have a record six hundred thirty billion dollars in financial assets—meaning money in the bank, savings institutions, United States bonds, stocks, etc. We also have one hundred fifty-five billion  dollars  in liabilities. These are mostly mortgages and installment debts. So the financial assets of those of us who make up America's fifty-seven million families top our total liabilities by a thumping four times. And when our investments in businesses, farms, homes, cars, and other goods are counted in, too, our total assets are considerably greater than four times our total liabilities.

But these over-all totals are so stupendous that they defy comprehension. Therefore I'll get specific and give you a simple method to calculate your own net worth. Take a pencil, three sheets of paper, and:

Mark the first sheet "Family Assets" and list:

The amount of money you have in checking and savings ac­counts, in savings and loan associations, in postal savings, in credit unions, in cash on hand, in a strongbox at home or else­where.

The cash value of your life insurance. This is the amount you actually have paid on your policy and could borrow back on request.

The cash value of your United States Savings Bonds. This is not the maturity value but the amount you'd get if you turned in your bonds now.

The amount you have invested in pension plans and retire­ment programs, etc. A rough calculation will do.

The market value of stocks you may own. Not the purchase price, but what you'd get if you sold the stocks tomorrow.

The market value of other securities you may own—marketable Federal Government, municipal, or corporate bonds—and the market value of other investments, such as mortgages.

The price you would get if you put your house and land or other real estate on the market this week. Get a conservative estimate from a reliable neighborhood real-estate agent.

The price you would get if you offered your car to a used-car dealer for cash right now. Be cold-blooded about it.

The market value of your household goods—furniture, rugs, appliances, linen, silverware, and the like. Make your own esti­mate, then slash it by 75 per cent and you'll be on safe ground.

The market value of your other personal assets, such as jewelry, paintings, furs, clothes. Cut your own estimate here too to one-quarter.

The price you'd get if you sold out your investment in an unincorporated business or farm, or other ventures.

Add the totals.

Take the second sheet, mark it "Family Liabilities" and list:

The amount you owe on your mortgage and your car.

The amount you owe on installment debts, personal debts, other bills.

The amount you owe on taxes not withheld.

Add the totals.

Take a third sheet, mark it "Family Net Worth" and:

Here you simply subtract the total on your second sheet from the total on your first. The result is your net worth.

You should be happily surprised by the outcome, for you are only average if your net worth runs into many thousands of dollars, quite probably into five figures. You are part of the vast majority of Americans if you have some cash in the bank and in savings accounts, if you own a car, and while you have debts, you also have assets to offset the debts. Figuring your own wealth should, in short, dramatize as no amount of explaining by others could, the meaning of the statistics on your nation's wealth.

You're Richer Than You Think

The calculations above may have surprised you, for most of us are worth a lot more than we may think. But those figures do not give the whole story. You would need a fortune of over $100,000—invested at 3 per cent interest tax-free—to produce in­terest to duplicate the $254.00 a month maximum benefit a family will be able to get under today's social security law.

You would have to have an estate of more than $76,000, also bringing you 3 per cent a year tax-free, to produce interest to duplicate the $190.50 maximum pension that a retired worker and his wife, both sixty-five or older, will be able to get under the social security law now in effect.

You would need a hefty nest egg of over $50,000, again in­vested at 3 per cent tax free, to produce interest to match the $127.00 a month maximum you, as an individual worker covered by social security, will be able to get when you retire.

As these calculations surely dramatize, that social security card of yours really is becoming the equivalent of a fortune in retire­ment benefits. Few of us could even hope to accumulate the estates essential to give us the monthly incomes that payment of our social security taxes guarantees we will receive when we retire in the years ahead.

What's more, millions are also accumulating impressive re­tirement incomes under private pension plans; it is estimated that 34 per cent of all workers in industry are covered by private pension programs now. Millions of others have insurance pro­grams that will pad their retirement incomes too; eight in ten families have life insurance coverage today and many have an­nuity and similar policies. And a growing percentage of us have reserves in cash, United States bonds, stocks, and other invest­ments which will, in addition to our social security benefits, help us live on a decent scale in our senior years.

We are, in fact as well as in theory, creating an economy in which the person working today and contributing to public pen­sion and private retirement programs can look forward to retire­ment with confidence that he will not need to depend on family charity for support. We are doing it by taxing ourselves on an increasing scale. Let's not kid ourselves—the social security tax is becoming a real pocketbook "bite." Consider the record just of the past ten years.

In 1949, the social security tax was a minor 1 per cent on a maximum of $3,000 of your pay, meaning it amounted to $30.00 a year at most. In 1950, the tax went up to 1.5 per cent on a maximum of $3,000, meaning it amounted to $45.00 a year at most. In 1954, the tax went to 2 per cent on a maximum of $3,600 of annual earnings, a top of $72.00 a year. In 1958, it was 2.25 per cent on a maximum of $4,200, a top of $94.50 a year. In 1959, it was 2.5 per cent on a maximum of $4,800, a top of $120.00. In 1960, it rose to 3 per cent on a $4,800 maximum, a top of $144.00.

What are we getting for this? The answer is, "Plenty!" For as the taxes on our pay have climbed so have the benefits they provide climbed. In 1949, the peak benefits an individual worker could get were only $45.20 a month, and the peak social security benefits a family could receive were only $85.00 a month. Under the latest law, in 1961 the peak an individual can get is $123.00 a month while the peak a family can get is $254.00 a month.

What do these tax and benefit changes mean to us?

They certainly mean that the millions of us who have been working for years and paying social security taxes and who will continue working and paying the taxes for many more years are now contributing major amounts of our pay to the support of our older citizens. Our taxes are providing the benefits to those already retired, maintaining the basic social security pension at a decent level. And, incidentally, a record 14,800,000 were draw­ing social security benefits at the beginning of 1961.

They also mean that these taxes are helping to protect our own jobs, for one of the great props under our economy today is the spending of social security checks by our senior citizens. The spending of these benefits has become a crucial job-making and antirecession weapon.

And, most important, they mean that we are building a system which some day will give us in turn an adequate, basic retirement pension.

Glance again at the jump in the benefits in one decade. Let yourself enjoy the feeling of confidence inspired by the knowledge that there will be a pension for you, too. Then you'll truly under­stand how rich our older folks are now and how rich you will be.

A Young Widow's Fortune

Social security is not just of value to older people. A young father of three infants was killed in a freak accident in our community the other day, leaving not only a heartbroken widow but also an empty bank account. While we were discussing with the neighbors how to ease at least her financial tragedy, I vol­unteered, "One 'good" angle is the fortune she'll get from social security from now on. It'll run into tens of thousands of dollars in cash."

The astonishment at the size of the "inheritance" I mentioned pounded home again the fact that most Americans—and this probably includes you—don't realize that social security can be worth more to young people than to the older citizens of our land.

The cash stake of this young widow and her infants comes to almost $70,000. And what's more, this inheritance is free of in­come and estate taxes. Social security is so very much more than retirement benefits, pensions for aged widows, aged parents, and retired people. It is, as the following details dramatize, also tre­mendous protection for young children and young wilows. In our neighbor's case, the father had been fully insured at the top social security salary level of $4,800 a year. His infants are one, two, and three years old. Now:

On application, his widow will get a lump-sum death benefit. This amounts to $255.00.

His infants and their mother will get a pension of $254.10 a month until the oldest child is eighteen. Assuming she doesn't remarry during the fifteen-year period, this adds up to $45,738.

For the next twelve months, his widow and her two children still under eighteen will still get a monthly pension of $254.10. This amounts to $3,048 over the year.

For the next twelve months, she and her one child still under eighteen will get a monthly pension of $180.00. This amounts to $2,160 over the year.

Her widow's pension ceases when all three children are eighteen, but she gets widow's benefits when she reaches her sixty-second birthday. At that date and for the rest of her life, assuming she hasn't remarried, she draws $90.00 a month, equal to three-quarters of her husband's monthly retirement pension. If she then lives for her normal life expectancy of about seventeen years, she will receive an additional $18,360.

Add it up. It comes to $69,561! And all this income is, by law, free of all taxi

Of course, the totals will vary from family to family, depend on the number of children, their ages, the amount of credits in the social security account. But the key angle is not the precise total of benefits; rather it is the impressive value of social security to the young family as well as the old. How many young people can accumulate nest eggs and invest them at returns suf­ficient to guarantee over $250.00 a month for years?

The ironic tragedy is that it often is those most in need who forfeit their benefits because they don't know the elementary details of the social security program. If this tale of the young widow's fortune jolts you into learning more, her heartbreaking loss may be your gain.

How To Check Your Social Security Credit

In my account at the Social Security Administration's head office in Baltimore, Maryland, is a record of $82,800 of covered earnings. It represents the basis for determining the benefits that I may receive since I became a part of this greatest insurance system ever devised in our nation.

It was back in 1937, when the system started, that I began my contributions as an employee. By the end of 1960 my con­tributions over all these years totaled $1,290—the maximum any employee could have contributed, for I came into the system and I have remained in it at the top salary for social security payments. In these years, my employer has contributed an identi­cal amount—$1,290.

The total of our contributions as of the end of 1960 was $2,580. With this I have achieved an earnings credit totaling an impressive $82,800. And millions of Americans have similar credits in their social security accounts, although they probably aren't aware of it.

What if I were single and sixty-two at the end of 1960, and I decided to retire and draw my benefits?

Even though I'd have to take a reduced benefit because I had chosen to retire at an earlier than traditional age, I would be guaranteed $96.00 a month in benefits for life tax-free. In a little over a year, my monthly benefits would have exceeded my total tax contributions. I'd be "home free" with a guaranteed lifetime monthly pension of $96.00, exempt from all taxes.

What if I were single and sixty-five at the end of 1960, and I decided to retire and draw my benefits? My monthly pension, guaranteed for life and tax-free, would come to $120.00. In less than a year, I would get back my entire tax contributions.

What if I were single, sixty-five in the mid-1960s, and ready to retire? My guaranteed monthly pension then would come to approximately $125.00.

The story about the young widow who didn't know that her husband's social security had provided her and her three infants with a potential inheritance of almost $70,000 was what prompted me to check my own credits—and it is a sound move for you to make too. It's easy.

Go in person or write to the office of the Social Security Ad­ministration nearest you (you'll find the address in the telephone book under the heading "United States Government—Health Educ. & Welfare, Dept. of,") and ask for post card, Form OAR-7004.

The post card is preaddressed to the Social Security Adminis­tration at Baltimore and is entitled "Request for Statement of Earnings." On this card, you will write: your social security account number; date of birth; name; address. You must sign your own name. Then stamp the card, mail it, and by return mail you'll receive a statement of earnings credited to your account.

There are lots of reasons you should do this—all good.

First, the knowledge of your earnings credits will give you a lift. Second, the knowledge will be vital to your intelligent planning for your financially independent older years. Of course, a social security pension is hardly adequate for comfortable retirement, but it is a darn good base on which to build a personal investment program. And the knowledge will give you new understanding of how your social security tax contributions are protecting not only your future but also your nation's future. For you, as a citizen with a pension check to spend to the hilt every month, will be a distinct prop under the economy's prosperity. So check your credit now. Whatever is in it is a plus for you, and I'll wager your account is fatter than you suspect.
If You Go into Business for Yourself

It well may be that you are among the millions who are dreaming the American Dream of starting your own business, of finally becoming boss of your own store. If you are—and this is a dream which through the years has helped build our land into the greatest industrial nation of all time—I urge you to read what follows with utmost care.

For if you start your own little business or buy into one nearby, you have only a fifty-fifty chance of lasting two years. The chances are only one out of three that your firm will live to four years. The chances sink to one out of five that your concern will attain an age of ten years. If you do survive two years, how­ever, the life expectancy of your business will be lengthened and the odds are your firm will remain in operation an additional five years.

Your chances of survival will be best if you go into some form of wholesale trade. About three-fourths of these firms live through the first full year, about half survive three years, and about 30 per cent survive more than a decade. If you go into retail trade, though, your chances of survival will be considerably less. Only about three-fifths of these concerns live out the first year, and only about one-sixth reach the age of ten years. Most vulnerable today are firms selling infants' and children's wear, men's wear and women's ready-to-wear. Least vulnerable are firms selling farm equipment, drugs, groceries, meats, etc.

What is the failure record at the manufacturing level? Most vulnerable are companies manufacturing furniture, transportation equipment, leather and shoes. In the best positions are printing and publishing companies, chemical and drug firms, and man­ufacturers of stone, clay, and glass.

In what financial classification do you find the greatest con­centration of business failures? In the $5,000 to $25,000 group; 49 per cent of the firms going under have liabilities in this range. The next largest concentration is in the $25,000 to $100,000 group; another 28 per cent of the failures have liabilities in this range. Among very small and really big businesses failures are few. Only a tiny per cent of the companies which go bankrupt have liabilities of over one million dollars.

You should also know that if you go into your own business today, the odds on your survival are less favorable than if you had done this in the middle or late forties. In the late war and early postwar years, our business population was expanding strongly; and although the mortality rate among business infants was high, in that great economic upsurge many more managed to stay alive than died. But now the business death rate is matching the birth rate. Since 1952 the total of business firms in our country has remained static at around 4,500,000.

The sale or liquidation of a business does not necessarily imply a failure, of course. Many businesses are given up because of the illness or retirement of the owner, or because the owner finds alternative opportunities in another enterprise, or because he finds it preferable to be a wage earner. Nevertheless, the facts cannot be ducked. The new small business has only an even chance of surviving two years. It's tougher for a little business­man to survive today than it was at the end of World War II. Of 9,000,000 firms established or bought between 1944 and 1955, 7,800,000 have since been sold, reorganized, or liquidated.

What were the causes underlying the failures of 15,445 busi­nesses in 1960, for example? A thumping 49.0 per cent of all these failures can be traced to lack of experience in the line, lack of managerial experience, or unbalanced experience. An addi­tional 41.8 per cent of the bankruptcies can be traced to incom­petence. The apparent causes may have been inadequate sales, heavy operating expenses, competitive weakness, or poor location, but the real causes of the bankruptcies were lack of experience and incompetence.

And all the other reasons—neglect, fraud, such disasters as fire, flood, and burglary—account for only 9.2 per cent of total business failures.

Does all this mean you should give up the dream? Oh, no! I shudder to think of what would happen to our America if ever we became content to be just cogs in the wheels of the big corporations. It does mean that if you do decide to make your dream real, be sure you really know your business. If you want to open a little restaurant, for instance, go to work for a little restaurant for a while. Be sure you have the cash and the credit to see you through the rough periods that are virtually certain to come in the first crucial years. Many fail not because of ignor­ance or inefficiency but because they simply haven't the capital to get through the lean times. Be sure you have the will and temperament to make a go of it and stick it out. Look within yourself and be honest with yourself, for it may be that in coming years many would-be independents will find it even tougher than it has been to survive and prosper.

Competition among businessmen within our borders and from producers the world over for the consumer's dollar is intensifying every day. It is the stiffest this generation ever has known. In this sort of competitive era, a high-cost, low-efficiency small businessman is fighting a losing battle on prices, service, research. The difficulties of getting capital with which to grow at tolerable cost have been mounting, particularly for small businessmen. In phases of scarce, expensive credit, a big and established corporation can get the funds it needs to compete and grow but our nation's financial structure is simply not yet set up to provide the un­known, small, marginal concern with adequate risk capital and long-term funds. Surely the structure will be further reformed to fill this gap in financing for the small businessman and progress is being made. But that the gap still exists is undeniable.

The basic message remains. Ask yourself if you have the know-how, the competence, the sufficient experience to survive, and give yourself honest answers. Realize that your first years are your most crucial. In short, study the failure statistics of the past to make sure you don't become a failure statistic of the future.

How To Check Your Will

It is important that you know your net worth while you are alive. But that same net worth should also be protected in the event of your death.

Recently, one of America's beloved comedians died. He left an excellent will providing for disposition of his property. But the executor found, to his dismay, that after the comedian had completed his will, he had transferred a major part of his property into joint ownership with his wife. This meant that automat­ically the jointly owned property went to her. By this one action, it is said, the comedian prevented his own will from operating.

The above is a tale that to date has not been published. I do so now only to illustrate how essential it is that your own will has a checkup from time to time. If you find your will is not up to date, you should get your lawyer's advice at once.

What questions should you ask yourself about your will? Here are the key ones.

Has a child been born into your family since you made your will? In most States, this after-born child will receive a share of your estate—even though no share goes, under your will, to children born before it was made. In this way a will designed for a wife and two children might be thrown out of balance by the birth of another child.

Was your will properly witnessed? A man owned property in three States, so he carefully had his will witnessed in all three. But each of his three witnesses had acted alone without either of the others being present. As a result, the will was invalid under the laws of all three States.

Is your will easy to locate? When Smith died, no will could be found and his property was therefore distributed under the law. More than eighteen months later, his will turned up. It left some real estate to a relative who hadn't received any share when Smith's estate was distributed. But the relative didn't get it. Though the Court gave him permission to sue the present owners, this would have been a poor gamble; the chance of recovering money that might have been spent was too uncertain.

Where is your legal residence? If you divide your time between two States, both may claim you as a resident for purposes of death taxes. If they do, your estate will be involved in expensive litigation and it may have to pay taxes in both States. Your lawyer will tell you how to avoid this problem; the first step is a will which makes your residence clear and which is drawn to conform with the laws of the State where you actually live.

Have you married since you made your will? If so, call your lawyer, tell him so, and ask him what you should do about your will. If you own a business interest, have you provided for its disposition at your death? No matter what the size of your in­terest, make a sound plan for its disposition. If your interest must be sold in a hurry to pay death taxes, it may be sacrificed— and your family may be badly hurt.

Does your wife also have a will? It is essential that she have one, unless she has no property of her own at all and unless your will leaves your property in a way covering every con­tingency. That's asking a lot.

Have you changed your will without your lawyer's help? The person who tries to "go it alone" on this is leaving to chance things nobody should ever leave to chance.

Have you considered the question of naming an executor of your estate? The usual inclination is to name a member of your family or a close friend, but in view of the importance of an informed, competent executor, the usual move may be unwise. The commission for executing an estate is the same and fixed by law, whether done by a bank or an individual, and since the duties are complicated, a sound move may be to name a bank to serve as executor. Certainly look into this matter before you select yours. For the executor of your estate has a tough job. He must, for instance, offer your will for probate in court, notify all persons interested in the estate, take possession of all property and prepare a detailed inventory of it, file an appraisal in court, attend meetings of appraisers, and file all income-tax returns. If you name an individual, it is possible he will be absent or in­capacitated in some way when expected to assume duties in your behalf. If you name an inexperienced individual, he may have to engage professional aid and the shortsightedness of "keeping the fee in the family" may backfire.

These are just questions to intrigue your interest. Your lawyer surely will bring up others. The big thing is to ask yourself now whether your will needs revision. This reminder will help protect your family from heartbreak and loss.

How To Help Your Family

Shortly after my last birthday, I finally got to the job of work­ing out a personal who-what-when-how. I admit I was prodded into it by a banker friend, but it has been a most valuable ex­perience and I hope I can prod you into doing the same thing. Pick a quiet, relaxed moment and approach your record-making in this mood. Get a small notebook and start thinking: what do you put into a personal record to help guide those who must settle your affairs?

Obviously, you list the names, addresses, and dates of birth of yourself, your wife or husband, your children, your father and mother, and your brothers and sisters.

Also obviously, you should write on separate lines and in clear detail such information as the following.

The location and date of your will, the name of the executor, and, if a bank is the executor, the name of the bank officer with whom your family should get in touch.

The location of your birth certificate, your marriage certificate, veteran's discharge certificate, divorce papers.

The location of your safe-deposit box and the box key.

The location and types of your insurance policies, the issuing companies, the amount and beneficiary of each policy, the name and address of your insurance agent, and any other pertinent information.

The location and total of stocks, bonds, and other securities you may own, the name and address of your broker.

The location and important details about your mortgage papers, notes, and financial agreements.

The location of your bank account or accounts and bankbooks.

Vital data on your social security—•the number of your social security card, the location of it, and the name and address of your employer.

Location of your income-tax papers and significant tax records.

Names of your debtors or creditors and a complete description of the amounts and terms involved.

These items are obvious to most of us—but not so obvious and yet so deeply important are such facts as the following.

The name of your lawyer, his address, telephone number, and a list of your papers in his safekeeping.

The name and address of any person to whom you may have given power of attorney.

Any pension arrangements you may have.

The names of organizations—such as fraternal or trade societies —to which you belong. Make a special note here about any benefits which may be coming to your family from these organizations.

Funeral arrangements you prefer and any preparations you have made.

Names and addresses of friends you wish notified in any former as well as your present city. In this instance, think hard about the friends you choose to mention—you may find it as hard as I did to fill out a list as important as this!

Names and addresses of relatives you wish notified at once.

Significant information about your children's medical records —data they may have difficulty collecting if you're not around.

An inventory of your personal possessions and the approximate value of each and possibly directions about the disposition of these possessions.

As you've been reading, perhaps you've thought of other facts that would be important in your record, and if so, by all means include them. Then, when you've completed this guide for your family, put it in a safe place—but not your safe-deposit box. Notify your family or closest friend where the list is and forget it until you want to bring it up to date a year or so from now.

What Happened to the Family Budget?

Do you keep a written budget in your family? If so, you arc one of a rapidly dwindling number of Americans; you are actually becoming the exception among us.

Fewer families than ever before in our country are now keeping written budgets. More and more men and women are managing their personal finances on the basis of a general "feeling" of how the family's income should be split up, spent, or saved. The traditional family budget—with its X number of dollars ear­marked for food, X number for clothes, and so on—is on its way out. And that in itself, I submit, tells volumes about us, the state of our financial health, and our way of life in the mid-twentieth century.

Recently I made a survey of my own among people in the $4,000-$6,000 income bracket, because these would be families you might expect would be most budget-conscious today. Yet out of 105 families I checked, only 24 said they kept precise written budgets; more than half said they had never even bothered to try a budget or had just put down a few figures and let it go at that.

The decreasing role of the budget is not the significant point of this report, however. The key points lie in "why?" One reason is that the great majority of Americans are more prosperous today than ever before, and thus they find rigid control over spending less imperative. A family living at or near subsistence level must watch every penny; it was in the depression thirties that budget-keeping hit its peak. As incomes have soared to all-time highs, though, the budgeting drive has declined. It is normal and understandable.

But much more provocative, I believe, is that more and more people are "budgeting" their spending via their borrowing— and that is really something new under the economic sun. What is happening throughout our nation is that millions are going into and staying constantly in debt to the local finance company or local bank or store. They simply never do get off the installment plan! The little payment books become the domin­ant budget discipline. At specified dates each month, X dollars are due for payment on the car or appliances or furniture, and X dollars are paid. The family spends for day-to-day living what is left. In short, the lending institution is taking over the budget­ing chore from the family.

Equally revealing is the fact that millions of Americans have been disciplining their saving via their automatic purchases of United States Savings Bonds, regular purchases of stocks, or weekly deposits into such special savings accounts as Christmas Clubs. In short, the corporation's paymaster and the local bank are taking over the saving chore from the family—and that too is new.

There are many aspects about our financial way of life in the mid-twentieth century that set us apart from past generations. The tale of the disappearing budget highlights some of the most significant of them.

This report was written back in the spring of 1955. Now in this decade of the 1960s, the chances are the traditional budget with its "Xs" for this essential expense and its "Ys" for that desired luxury will continue to fade even farther into limbo. Re­placing it more and more as discipline will be the payment book for spending and the payroll deduction for saving. Incidentally, that payroll deduction can be a superb discipline. Anyway, I found it so, as the following tale of my own experience illus­trates to my sorrow. . . .

How To Save Money

When my husband changed jobs this past spring, he stopped having a specified amount deducted from his paycheck every week toward the purchase of United States Savings Bonds for us. He thereby cut off a way we had been saving regularly and automatically for years, and I vividly recall my pledge at the time. "Out of every paycheck that goes into our joint household account, I'll earmark exactly the amount we have previously been putting into savings bonds. Periodically, I'll draw it out of the bank and then we can invest it as we think proper. You can trust me to do this."

Because, like most wives in America, I manage the household account, I was put in sole charge of the earmarking and I was enthusiastically faithful to the program at the start. This weekend, though, as I was glancing over our last monthly bank statement, I suddenly realized that:

1. It has been  months  since  I've done any  earmarking, physically or mentally. I think it was in summer that I forgot the whole thing.
2. The extra money we had been saving so painlessly over the years isn't in the account. The total is about the same as it was before my husband stopped the deductions from his paychecks.
3. I don't know where the money has gone. We haven't done or bought anything unusual. Our cost of living hasn't been bounced sharply upward.
4. I have no valid excuse for what has happened. I can only admit that the money has been frittered away in dribs and drabs.

Here, in our own experience, is the key reason why the United States Savings Bond program deserves continued life and our support. This little anecdote goes to the heart of the program's value. Despite overwhelming odds at times, the program has survived magnificently through the years since World War II. It didn't die even when inflation was most virulent in our land and every dollar we earned in interest on a United States Savings Bond was being eaten up by the climbing cost of living.

But in 1959, as interest rates paid on all types of savings soared, the program went into a serious retreat. It lost ground because even the new higher rate paid on United States Sav­ings Bonds—3.75 per cent if the bond is held to maturity in seven years, nine months—didn't match what you could get just by putting your money in many savings institutions or by buy­ing marketable United States government securities or other top-grade bonds. And it has been losing ground because lots of corporations, weary of the trouble and expense of maintaining payroll savings plans, are not pushing them as they did.

But the heart of the program's value remains as strong as ever. It lies in the discipline of savings which a payroll savings pro­gram imposes on us—in the "magic" way a few dollars saved regularly every week becomes hundreds of dollars saved over a year. Would we have "lost" our savings had my husband still been buying bonds via payroll deductions? No. The money would have gone into the bonds before I got my hands on it. Would we have been squeezed by the lack of those dollars in the household account? No. We weren't squeezed in the past.

Before you shrug off a payroll deduction for savings bonds be­cause you can get an extra per cent by saving elsewhere, think about this warning. Ask yourself if the extra interest (1 per cent on $100 equals only $1.00 a year, incidentally) is worth the risk of giving up the discipline. Your answer will, I'll wager, put the program back in its right perspective.

How Not To Buy a Car

Let's say you bought a 1959 Ford for $2,200 delivered in June

1. on a one-third-down, thirty-six-months-to-pay deal. In May you would still owe $1,525 to $1,550 on your car. But the
   actual as-is value of your year-old Ford listed in the official Used Car Guide of the Automotive Dealers Association would be only $1,305.

You would owe $220 to $255 more than you could get for your car on a resale! You would have faithfully paid your in­stallments for twelve months, but you still would have no trading equity whatsoever in your car. Worse, you'd be "minus" on the arrangement; if you liquidated the car tomorrow, you would not get enough cash to pay off what you still owe. And this example, mind you, assumes a car which has one of the best resale values in its field. We are assuming a down payment of a full one-third and a liberalizing of terms applying only to the length of the loan.

Actually, even though the dealer may think he's doing you a favor to extend loose terms, he may be pushing your transportation costs too high and tying you down too long. Your equity is stretched so thin that you can't refinance on a sound basis if you run into financial trouble. You stand to lose "your" car and all the money you have put into it.

There's absolutely nothing wrong about buying a car on credit. In fact, there's everything right about it; most cars are financed on the installment basis; it's the only way millions of Americans could possibly swing a purchase of this magnitude. And there's not even anything unduly disturbing about the fact that loans on automobiles are now at an all-time record of over eighteen billion dollars.

But there's plenty wrong about buying a car on repayment terms as long as forty-two months, for that means you won't own your car until it is three and a half years old and its resale value has crumbled.

Let's be even more specific with an illustration GMAC (Gen­eral Motors Acceptance Corporation, the largest auto financing organization in the world) worked out for me on a $3,000 car— a price which includes most popular models.

We'll assume you're putting down one-third or $1,000 (GMAC says its average down payment is better than one-third). We'll assume you're financing the $2,000 balance due on your car.

Your auto insurance will come to around $89.00 a year. Your credit life insurance—the insurance you'll buy to make sure your loan is taken care of in case of your death—will cost you from $10.82 to $22.84, depending on the length of your payment period.

If you arrange to pay off your loan in eighteen months, your $2,000 balance will rise to $2,288.80—covering your auto insur­ance, credit life insurance, and financing charges of $188.98.

If you arrange to pay off your loan in twenty-four months, your $2,000 balance will rise to $2,356.07—covering your auto insurance, credit life insurance and financing charges of $252.44.

If you arrange to pay off your loan in thirty months, your $2,000 balance will rise to $2,423.79.

If you arrange to pay off your loan in thirty-six months, your $2,000 balance will rise to $2,491.97.

The thirty-six-month deal may seem the "easiest" because the monthly payments come to only $69.22. The eighteen-month deal may seem the "most expensive," because the monthly pay­ments come to $127.15.

But just glance at the difference between the price of the car to you on an eighteen-month and a thirty-six-month repayment arrangement and then decide which is easiest, which is most expensive.

Another illustration may demonstrate it even more dramatically. If you buy a car on the basis of one-third down, twenty-four months to pay off, the first three and one-half monthly payments will go for finance charges and insurance costs. If you buy it on the basis of one-third down, thirty-six months to pay off, nearly the first eight monthly payments will go for these charges. You'll be paying installments for almost a year before you start to reduce the principal of your auto loan!

Use installment credit, of course—but never forget this basic guide:

The cheapest way to buy anything is to pay cash for it. Then you pay no finance charges at all. The next cheapest way to buy is to pay down as much as you can, pay off as quickly as you can. The most expensive way to buy is to pay down as little as you are permitted, stretch your repayment period as far as you're permitted.

This guide always has made sense. In today's era of expensive borrowing, the sense can be translated into big totals of dollars.

How To Borrow Money—And What It Will Cost You

Let's say you borrow $100.00, agree to pay it back in twelve equal monthly installments and to pay $6.00 as interest in ad­vance to the lender. Are you really paying 6 per cent interest for your loan?

No. Your true annual interest rate is more than 11.5 per cent, or almost double the apparent cost of your loan. For the key fact is that you're paying off half the $100.00 in six months, you have the use of only an average of around $50.00 for the full year, and yet you paid the $6.00 in advance. As the Bowery Savings Bank, one of New York's and the nation's top savings banks, flatly puts it: "The true annual interest on a loan, large or small, that you pay off in equal periodical installments is roughly double the rate quoted as the yearly finance charge, deducted in advance. This is true, no matter how much or little the quoted rate may be. . . ."

Let's say you arrange a financing deal under which you pay the lender 2 per cent a month, computed on the unpaid balance. Is that monthly charge as minor as it seems? No. You're paying a monthly interest, and 2 per cent a month is 24 per cent a year, 1.5 per cent a month is 18 per cent a year, 2.5 per cent a month is 30 per cent a year. And this is true, emphasizes the Bowery, in any language.

Let's say you borrow $100.00 for a year, agree to pay 6 per cent interest, and at the end of twelve months pay back $106.00. Is your rate also more than it appears? No. The extra $6.00 you pay on this so-called noninstallment personal loan is true interest at 6 per cent a year.

Or let's say you arrange for a $20,000 mortgage loan, agree to pay 6 per cent a year in monthly installments of $129.00 for 25 years. Is your charge bigger than 6 per cent too? No. Even though you're paying off in monthly installments, you're paying a true annual interest rate. Here a key point is that in the early years of your mortgage, most of your payments go for interest and little to repayment of principal, but as your loan nears maturity, most of your payments go to principal and less and less to interest.

Never has the concern over informing you what borrowing ac­tually costs you been so great. Senator Paul H. Douglas of Illinois, chairman of a Senate banking subcommittee, has been pushing for legislation to require full disclosure of all charges on con­sumer loans. The bill's objective has powerful backing, and even if it doesn't become law soon, its existence indicates the trend of thinking.

In an era when installment credit has become a way of life, it's imperative for your own financial welfare that you not only know how to buy but also how to borrow.

How To Meet College Costs

Our daughter Cris is in elementary school and we're trying to impress on her that these are the years in which she's laying the base for college. We are typical—seven of every ten families in our land are planning to send their children to college. According to schedule, Cris will be ready to enter college in September of 1967. And according to government projections. . .

Just the average fixed costs—tuition, fees, room and board only —will cost us more than $15,000 if she goes to an Ivy League college or its equivalent for four years. Just these expenses will come to $11,700 if she goes to a private college, and to almost $6,000 if she goes to a State college. In addition, she'll need hundreds upon hundreds of dollars more for clothing, transporta­tion, books, supplies, laundry and cleaning, grooming costs, snacks, entertainment, dues, et cetera.

Will we have this sort of money at hand when she's ready (we hope!) for college? We're trying to get it together. We're specifically earmarking cash for her education in an investment-savings account.

As parents of one or two or more youngsters also slated to go to college as this decade wears on, are you preparing now too? You're in the minority if you are. Only two of five families saying they plan to send their children to college are putting anything aside to finance the costs, and the average being earmarked is only $150.00 a year.

What are the various ways a college education can be financed? By your youngster? By you? Here are the major methods.

Scholarships. While today there are hundreds of thousands of annual scholarships available, the average amounts to a modest $145.00, and college costs are mounting faster than scholarship aid. Also, since in most cases, a student must prove a need for the assistance, the odds are any scholarship your youngster may get will be of token help.

Part-time work. The working-your-way-through method is fine and in the American tradition. But there is a limit to how much students can earn during college years without endangering their academic records or sacrificing much that college has to offer.

Borrowing. If parents can properly borrow to finance a vacation, they certainly can properly borrow to finance a child's education. Student loans are becoming increasingly liberal and acceptable as well.

Paying out of current income. Not many parents can manage this method of financing a college education.

Regular, systematic investing. Mutual fund shares are being bought by growing numbers of families to create a college ed­ucation fund. Investing in top-grade individual stocks can be an answer too. The investments, though, must be regular, of fair size, and watched.

Life insurance endowment policy. This is another traditional method. A new "College-Paid-For" endowment policy has just been developed by a leading life insurance company, under which parents can spread the costs of college over the years before the child enters and after he graduates. An insurance broker's advice will be helpful on this.

You may work out combinations or variations of these methods. The main point is to recognize that your child's college years will be the most expensive of their lives for you, but their value in terms of your child's future is immeasurable. Once you've recognized that basic point, you'll not just talk about your youngsters' going to college. You'll start a systematic program to finance the costs now.

Money ABCs—For College and for Life

When young Robert goes off to college as a freshman, a vital subject in his home, as in millions of homes across the land, is money. "What's the best way for Robert to handle his college allowance?" asked his mother as she gazed fondly at her son. "Should he get a fixed allowance or write home as he needs cash? Open a checking or savings account?"

There are fundamental rules to guide Robert and his parents, you and your youngsters—and these guides apply whether the student is a boy or girl, goes away to school or stays at home, has five dollars or fifty dollars. Here are the major Money ABC's for College which I've worked out over the years. I know they can help every student in our land.

(1)        Decide in advance with your parents what your allowance
is supposed to pay for.
If your allowance is to pay for clothes and important supplies at school, have this clearly understood and allocate funds for these expenses. Don't say, "Sure, twenty-five dollars will do," only to discover a few weeks from now that twenty-five dollars simply won't do and you must start the weekly "please, I need more" refrain. If your allowance is to cover just ordinary expenses, such as laundry, cleaning, grooming, have this understood too.
(2)        Plan the spending of your allowance as carefully as you
plan your study courses—both with your parents and on your
own.
The vital secret to this is a seven-days-a-week plan under which you'll divide your available cash into a spending kitty for each day. If you don't do this, you'll be feasting on the first days, in a famine on the last days. You should start your day-by-day plan right after you get to school and be honest with yourself about it. If you know you'll want to spend X amount per day at the soda fountain, allow for X amount per day.

(3)       Open a bank checking account as soon as you get

to school.
Do not use your desk drawer or pocket as a "bank." The chances of loss or a feast-famine pattern are overwhelming. Open an account, learn how to make deposits, draw checks, balance a checkbook, keep any service charges to a minimum. It will be invaluable training for later life.
(4)        If you and your parents can manage it, start with a rainy-
day account in a sayings bank nearby, or try to build one through the term.
There always will be extra expenses—a special event or a crisis —for which you'll need or want to spend money. This savings account should be earmarked for these extraordinary expenses only, not otherwise touched. If you can't start with this savings nest egg, try to juggle your seven-days-a-week spending plan so you can save a bit and build one yourself.
(5)        Don't try to figure your spending down to the penny.
No plan ever should be that precise. You must have a margin of safety over your regular spending to cover "regular emergencies."
(6)        Maintain some simple records on where your money is
going.
Your check stubs will help, but also keep a notebook in a spot where you easily can jot down every day how you're spending your allowance. Don't be too detailed in these records, but don't neglect them either.
(7)        Look for ways you can stretch your allowance by free
entertainment and by using your leisure time to save on expenses.
You may be able to pool basic items or divide up chores among your college friends and save. You can save a lot with a needle and thread.
(8)        Learn sensible buying methods and apply them to yourself.
If you're handling your own wardrobe at school, take advantage
of neighborhood store sales and off-season clearances. Buying essentials in bulk or on special sales can save you impressive amounts over a term.
(9)        During your first reunion with your parents, show your
record books, discuss what’s right and wrong with your allowance
setup.
If you're running short despite all your efforts and have records to prove your responsible management, you'll have a good case for a raise. You'll also be able to decide intelligently what you should do if your parents can't afford to give you that raise.
(10)      Once you ye learned these rules, stick with them
Actually, these are money guides for life, not just for college.
No matter what your age, you can apply most or all of them to yourself.

How To Buy a House

Hundreds of thousands of American families will be buying houses in coming months, millions will be making this most im­portant financial move of their lives in the next few years. Should they arrange for the financing on the basis of a little down, a high mortgage and interest, or should they put what they can into a home, keeping mortgage and interest low?

It is a question of great general concern. We have become a nation of homeowners on an unparalleled scale. You'll be the exception among us if you don't own a house during this decade and have to face precisely the question posed here. Moreover, in no previous era in our history has the home-buyer had so wide a choice of financing methods. You can buy a home with practically nothing down and the equivalent of a lifetime mort­gage, you can pay 100 per cent cash, or you can arrange a variety of deals in between.

Here, therefore, is my answer and the first key point I want to emphasize is that in financing your house, the cheapest method —namely, putting down as much cash as you can and thereby holding your interest charges to a minimum—is not necessarily the wisest for you.

A small amount down and a high mortgage at, of course, the least expensive mortgage rate you can find can be an advantage to you if you are thinking in terms of resale at a future date. A large mortgage and a small equity in your house can help you sell your house, for the simple reason that a purchaser can take over your mortgage and your house without having to put down much cash either. If your buyer has only a limited amount of cash and you have only a modest mortgage, he'll have to arrange his financing, and this can drastically reduce your number of potential purchasers.

A large mortgage and small equity also may be an advantage because the interest you pay is a tax deduction and you may have better ways to invest your available funds than in a house. Or this may be sound financing because you need cash for other purposes.

If you do take on a big mortgage, though, you should have an insurance policy that will pay off the debt and protect your family should anything happen to you and your paycheck be lost.

But there are excellent financial reasons for making a large down payment and taking on a relatively small mortgage too. The most compelling reason for this choice of financing methods is the striking total you can save in interest charges. A man who buys his house with virtually no cash down and a lifetime mortgage can over the term of his mortgage pay almost as much in interest as the original purchase price of the house. A 6 per cent interest charge on $10,000 amounts to $600.00 a year. Over ten years—even though amortization is reducing the interest cost— the interest bill on a typical mortgage can run into thousands of dollars.

A second reason to have a large equity in your house is that it will help protect you against unexpected financial emergencies —and if the holder of your mortgage knows that you have a substantial amount in your house, he will be much more in­clined to carry you through a period of difficulty than if you're mortgaged to the eyebrows.

Obviously, the right answer to the question for you will depend on your family circumstances, needs, and aims. While the basic generality is that it is only prudent to have a fair equity in your house, buying with "all cash" is not the best financing method for the majority of America's middle-income, mobile families.

If You Must Default

If you lose or have lost your job during a recession, and as a result you can't keep up payments due on your bank loans, go to your banker, tell him the whole truth, and ask for help. You will get the assistance you need. Your banker will work out new arrangements which will relieve you of the devastating, re­lentless pressures of your debts until you are called back to work or get another job and are back on your financial feet.

This is a direct message from the nation's bankers themselves. Otto C. Lorenz, associate editor of the American Banker, the only daily banking newspaper in the country, recently surveyed one hundred top bankers from coast to coast specializing in in­stallment loans. I have seen the list of bankers questioned; they are the leaders in the installment credit field, and they represent our smaller as well as largest banks.

Without exception, the bankers declared it is now policy to help any borrower who falls into a financial trap because of sudden misfortune—loss of a job, staggering medical bills, similar disasters. Without exception, they emphasized that the era of quick repossessions when loan payments are overdue is dead.

They said they would crack down on only two types of bor­rowers now: the chronic deadbeat—the man who defaults on payments when he is in a position to make them; and the bor­rower they cannot reach—the man who panics, tries to hide from his creditors, or attempts to conceal the facts. On these bor­rowers, bankers will be tough. The others, representing the 98 per cent of the borrowing public which is always prompt with payments when possible, will find their bankers are ready to help them in many practical ways.

Let's take the case of }oe, one of the approximately 5,000,000 out of work today. Let's say Joe is now at the point where he can't meet the monthly payments due on his bank loan. What might the bank do? First, it probably would suggest rewriting Joe's loan contract to cut the monthly payment so as to be within Joe's capacity to pay. Or it might suggest an extension of the loan and a waiver of the first two or three payments. Or it even might carry Joe along in its "past due" loan file, ac­cepting payments from him when and as he could make them.

Suspiciously liberal? No. Repossessions are few and bank losses on loans are at a minimum. One reason for this good record is bank policy on delinquencies today.

Lorenz urges, 'Tell people this. Tell them not to be darn fools and try to hide from the bank if they get into trouble. Tell them to go to their banker and put the facts on the table. Then they'll get help fast."

Bank Service Charges—And How To Cut Them

When Teamsters Union boss James R. Hoffa was testifying before a Senate investigating committee in Washington a while ago, he explained the disappearance of much of a seventy-five-dollar balance in a Teamsters Union account by saying the money had been consumed by bank service charges. On hearing this, former New York Senator Irving M. Ives exploded: "Do you mean to tell me that banks charge people nowadays to put money in them?"

Hoffa, the "expert/' answered yes indeed, banks do this— but, he added, the charges usually are made only when a check­ing account balance is very low. Which led Senator John L. McClellan, of Arkansas, to make the matter even muddier by commenting, "Senator Ives, you've never had just a little bit of money in the bank."

Well, what Senator Ives doesn't know about bank practices in this country could fill most of the pages in this chapter—and what Hoffa and McClellan don't know could fill the rest. For bank service charges—or what some members of the financial world prefer to call bank "activity" charges—have been en­trenched in our nation for more than thirty years.

The fact is that bank income from service charges has more than tripled since World War II and many banks have doubled key service charges just in the past couple of years. But the bank service charge picture is a crazy quilt. The type of charge and the level of charges vary widely from city to city, from bank to bank. On regular checking accounts, a full 6 per cent of banks recently surveyed by the American Bankers Association make no charges at all; almost 10 per cent simply impose a flat charge, generally limited to fifty cents a month if the balance drops below one hundred dollars; not even half the banks use the so-called "analysis plan," charging each account on the basis of its earnings and expenses. Although bank service charges have been rising steadily, experts in the field are convinced that most banks are losing money on regular checking accounts.

Despite the bewildering variety and level of charges, the ABA has worked out some averages on costs and income which indicate the current situation and what's coming.

For instance, the average charge made by banks for maintain­ing a checking account is fifty cents a month. But the ABA's studies suggest the average cost of maintaining an account is sixty-one cents a month and that charge is heading up.

The average charge for a check you draw on your bank is three cents. The average cost to the bank of that check is five cents. That figure is going up, too.

The average charge for a deposit you make is five cents. The cost of each deposit to a bank is almost sixteen cents. That, too, is going up.

In view of these up trends, you will find these ten money-saving hints on checking accounts valuable.

1. If you have both a regular checking and a savings account in the same bank and because of its low balance, your regular account is being subjected to a service charge, check the interest you receive on savings against the charges on your checking account to see if a transfer of funds will save you money.
2. If you're paying off several monthly debts, each with a separate check, it may be feasible to consolidate the debts and pay with one check. Banks charge two to seven cents for each check.
3. Similarly, if you're in the habit of writing lots of little checks, change your habit now. Write one big one and allocate your spending to carry you through a specified period.
4. If you cannot maintain a balance of several hundred dollars in a regular account and you don't ordinarily write more than five or ten checks a month, you'll probably save money by shifting to a special checking account. In a special account, no minimum balance is required and the charge per check, as a rule, is usually ten cents.
5. On the other hand if you do maintain a large balance and do write lots of checks, a special account is not for you and if you have one, switch to a regular account. One banker told me of a depositor who had a special checking account in which he kept a balance of over $10,000. A ridiculous waste of money.
6. Keep down the number of individual deposits in your checking account. More and more banks are imposing and raising charges on each deposit made.
7. If the practice in your family is to have two or more little checking accounts—for convenience, discipline, or some other reason—consider consolidating them into one fairly substantial account. This not only may save on charges but also may enhance your credit standing at the bank you favor and help you get loans at more favorable rates.
8. If you're opening an account, ask your banker what type of account will best fit your needs and be least costly. Because a type of account is well publicized doesn't mean it's the one for you.
9. Ask your banker about miscellaneous service charges. There are many types which you can avoid.
10. Review your canceled checks for the past few months to see if some of them might have been unnecessary. This will help you tighten up your account activity.

The vital point is that millions of us are paying service charges unnecessarily and the charges are on the way up. It is only com­mon sense money management to use these guides.

How To Avoid Home Repairs Rackets

This spring and summer, hundreds of thousands of gullible Americans from coast to coast will be cheated out of tens of millions of dollars by the racketeers who are now crowding into the home improvement field. If you have a home which needs remodeling, repairing, or painting, take heed. You could be one of the victims. For the fertile field of home improvement has attracted swarms of swindlers who are cashing in on the interest and good will built up by the honest and fair contractors in the country. The operations of the smooth-talking gyp salesmen are at an all-time record pitch.

"On the fringe of the hundreds of legitimate contractors who will do good repair, remodeling work this year will be the shady contractors" was the flat comment of a spokesman for the Asso­ciation of Better Business Bureaus. And he added grimly: "While most of our bureaus report the situation is 'still under control/ it is worsening and the dangers are immense."

In 1960, over 266,000 inquiries and pleas for help on home improvement deals poured into the bureaus, up 91,000 over 1955 to a new peak. Each year, the number of Americans victimized by home improvement rackets has risen, and with so much interest in home improvement, the ranks of the victims are sure to swell again. Today, home improvement has the dubious distinction of being largest among all the business classifications on which the Better Business Bureaus maintain records. The rackets cover every conceivable type of sales approach, but the swindles against which you should be most on guard are listed here.

The model home scheme. This usually involves a "promise" by the salesman that it won't cost you much, if anything, to have your house fixed up—with new roofing, siding, paint, shingles, etc.—because the contractor will use your house as a "model" and you'll get a commission on every other contract sold in your neighborhood. The scheme appeals to the ego of the homeowner, but almost always he ends up owing big bills for shoddy work.

Repair of roof, shingles, chimney, etc. Here, the salesman uses a scare technique to get a contract. A minor repair, though, turns out to be a "major" job. The homeowner pays for the major job, but gets only a minimum of work.

Mastic paint jobs. These are sold on the basis of excessive claims and guarantees, but the victim who falls for the fast talk often finds the paint has cracked, peeled, or chipped within a few months.

Underquoting and overpricing. The promoters underquote legitimate dealers, then overmeasure materials to cheat the homeowner.

Completion certificates. In this case, the swindler coaxes the homeowner into signing a certificate before actual completion of the work. Then he takes off—and the homeowner is left not only with the unfinished job but also with the burden of repaying a full loan.

Itinerant contractors. These operate on a floating basis from city to city. They use a truck without identification, operate without bond or license, and leave behind them a trail of shame­fully bad jobs.

These just suggest the biggest rackets; there are many variations of them—and this year every variation will be tried in every area.

What specific steps, then, should you take to safeguard yourself? Here are tips to protect the homeowner:

Deal only with a contractor whose reputation you trust or whose reliability is easily verified. If you do not have any information on the contractor, get the names of homeowners he has served in your area and check with them. If you have any doubts at all, check with your local Better Business Bureau. There are bureaus in more than one hundred cities from coast to coast.

Before you accept an estimate on the cost of repairs, check it with several reliable local contractors and make sure each estimate is based on the same specifications. Know the exact financing terms. Ask the financing institution if it has received any com­plaints on other work done by the contractor or whether it has checked jobs completed by that contractor.

Do not deal with anyone who tries to high-pressure you into a deal. You can suspect "bait advertising" if the price for the job seems so fantastically low that it seems irresistible. Beware of the model home pitch. Before doing business with any firm promising a commission for use of your remodeled home as a display house demand the names of at least a dozen nearby homeowners who were benefited by this sort of deal and query those homeowners.

Do not authorize any person to do work on your house or to have access to your furnace, for example, until you have checked on him and have reached agreement on terms. Read all the fine print in your contract, be sure you understand it, and insist that all guarantees be in writing.

If you follow these rules, you'll be safe and the racketeers will find the home improvement field disappointingly slim pickings. If you do not, well, as one of my informants put it, "The home improvement field is like a chemical formula; every ingredient is present for an explosion of swindles. And the explosion could get out of hand."

This report was originally written in April 1956. On July 27, 1960, the Better Business Bureau of New York called an area-wide meeting of leaders in the home improvement industry to develop a "new code designed to eliminate deception and misrepresenta­tion in the offering of home improvements." Washington officials attended the meeting "to express their views on the urgency of action."

But the home improvement field is only one of many that swindlers have found particularly fertile. Following are three other vicious swindles which are being worked furiously today.

Three Top Swindles—And How To Avoid Them

The phony price comparison. Legitimate sales and clearances obviously lead to this one. The fringe operators scream such bargains as "formerly $25, now $8!" . . . "60 to 90 per cent off!" But the "formerly $25" is an invention. The "60 to 90 per cent off" is off a fictitious price. The savings don't exist and are adver­tised to sucker people in. And what is making matters worse is that some manufacturers are preticketing merchandise with phony prices that encourage phony markdowns.

Remember: a businessman can't stay in business if he sells goods and services at a loss. Suspect the ad full of exclamation points, be skeptical of seemingly fantastic bargains, and shop the sales before buying.

The work-at-home gyp. This is one of the filthiest of the rackets because it victimizes housewives and shut-ins who need to supple­ment the family's income—mostly those who can least afford to lose.

An ad might say you can earn money at home by sewing ready-cut aprons or knitting ties, and selling your finished product to the advertiser. You buy the kit and materials necessary (at a nice price, of course) to make the stuff, but when you send in your product it never comes up to the company's standards. You're left with the goods and a loss. Or the come-on might be that you address postcards, part-time, advertising the promoter's product. You buy the cards, then find you have to pick out the addresses and you get paid only if someone to whom you mail a card buys the product. These are just two samples of this sort of gyp.

Remember: check any work-at-home with your local Better Business Bureau. Don't blindly buy kits, machines, or materials or send money in response to a work-at-home ad. And don't expect to make big money working at home.

The "correspondence school" scheme. The racketeers are taking advantage of the reputations of responsible schools in this field and are now flourishing because of the eagerness of many workers to get extra training to help them get new jobs or improve their present ones.

Remember: don't sign up for a correspondence course until you are sure of the school's standing. Turn your back on grandiose promises and guarantees of a job "on graduation."

"Caveat emptor" seems so trite a maxim I wince at writing it. But the reason it is a maxim is that it is a basic truth. Buyer beware—or you well may be the next victim of the fast-buck boys.

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