There was a time when the American savings rate was pitifully low. Then the recession hit. People realized they needed a cushion, and they started saving again, pouring $6.9 trillion into savings accounts even though interest rates are at historic lows, according to recent Federal Reserve data.

As The Washington Post’s Danielle Douglas reported this week: “The savings rate, which was at 1 percent in 2005, generally fluctuated between 5 percent and 6 percent during the recent recession. This year it has hovered around 4 percent, still above historical norms.”

But squirreling your money into low-interest-paying savings accounts could hurt you in the long run. People who are stashing their cash that way are missing out on the highs of the stock market and a recovering real estate sector, experts say.

“The rate on the 10-year Treasury bond has been well under 2 percent, and banks typically offer less than 1 percent in interest on savings accounts, not nearly enough to keep up with inflation, let alone build enough wealth for a child’s college education or retirement,” Douglas points out.

But, understandably, people don’t have the stomach to take the risk involved in investing.

“People have lost their appetite for risk,” says Karen Dynan, co-director of the economic studies program at the Brookings Institution. “They’ve been burned by the stock market. They’ve suffered through capital losses on their homes. And so they’re hunkering down in what they view as the safest place to store money.”

Douglas asks a great question: “Who could really blame Americans for their trepidation?”

“Many watched what little wealth they created through homeownership or retirement plans evaporate. That kind of devastation is enough to sour most people on investing, or at least make them more conservative in their choices,” she writes.

What do you think? This week’s Color of Money question: Are you afraid of the risk in investing? Send your responses to Be sure to include your full name, city and state. Put “Squirreling Away Your Savings” in the subject line.

Savers vs. Spenders

Although the savings rate is up, there are still plenty of people who are living above their means,

How do we know? They are spending more money than they have in their bank accounts, according to a new study from bank research firm Moebs Services.

The Moebs report found that in the past year bank account holders were hit with $31.5 billion in overdraft fees, up from $30.8 billion, with a 10 percent rise in the past nine months, reports Stephen Gandel of

Live Chat Today

Join me at noon ET for a live online discussion with Andrea Pomerantz Lustig, author of

“How to Look Expensive: A Beauty Editor’s Secrets to Getting Gorgeous without Breaking the Bank.” Lustig’s book was the September Color of Money Book Club pick.

Be sure to send your questions in early or read the transcript later.

Beware of Scammers

Distressed homeowners often have a lot to stress about.

Not only are they fighting to save their homes from foreclosure but they also have to watch out for scammers who are looking to take what little money they have left.

Homeowners around the country facing foreclosure have been the targets of con artists who are using the government’s $25 billion mortgage settlement as a way to scam people, reports Brady Dennis and Danielle Douglas of The Washington Post.

In Alabama, struggling homeowners received calls promising them money from the government’s recent mortgage settlement with the big banks, but they had to provide the routing number to their bank accounts. In Illinois, in another scheme people were told they qualified for loan refinancing under the settlement, but only after they paid a hefty upfront fee, Dennis and Douglas report.

“Every time there’s a new government program announced — in this case, it’s a very large settlement — scam artists use that as an opportunity to defraud people,” Illinois Attorney General Lisa Madigan said in the article.

Madigan said her office has seen an “explosion” in such scams since the bottom fell out of the housing boom in 2006. “As the economy goes, so goes our consumer fraud complaints,” she said.

Folks, please be careful out there. You should not pay upfront fees for foreclosure help. And know this: If you are entitled to part of the mortgage settlement, you would not be asked for money to get your money.

Communications Curfew

A recent survey by the Society for Human Resource Management found that one in four companies have created rules to limit after-hours e-mails.

For last week’s Color of Money question, I asked: “What do you think of employers encouraging workers to stop sending e-mails after work hours?”

Here are some comments.

“I’m a working parent, so after-hours communication gives me the flexibility to be a parent during working hours, whether it’s for a parent conference, filed trip, doctor’s appointment, etc.” wrote Tammy Carpowich of San Diego. “My employer gets more than a 40-hour work week out of me, and I get the benefit of being able to be part of my child’s life in a way that I couldn’t with a strict 9 a.m. to 5 p.m. schedule. It’s very hectic and I go to bed exhausted every day. But it works better for me than a bright line between work and home. I’m sure my answer would be different if I were a young professional, an empty nester or someone with a different needs for work/life balance.”

Tom Wahl of Monument, Colo., thinks it is a great idea. “Companies need to stop trying to get blood out of turnips and realize that an employee with a good out-of-office life will be more productive and energetic,” he said. “Also, some employees need to know that they aren’t compelled to take the office home with them.”

Cynthia Jones of Temple Hills, Md., wrote: “I feel after-hour emails and phone calls should cease and [we should] bring ‘old time’ family values back to the family structure. Kids are pretty much watching out for themselves and not having the chance of communicating with parents, and spouses are neglecting each other, as well.”

Upcoming Events

--On Saturday, Oct. 13, from 10 a.m. – 12 p.m., I will be speaking at Meadows Baptist Church in Maryland. The free workshop, “Personal Finance: Getting Your Finances Back on Track,” is open to the public. The church is located at 6600 Croom Station Rd., Upper Marlboro, Md., 20772. For more information, call (301) 257-4857.

--On Saturday, Oct. 27, I’ll be speaking in Detroit at Triumph Church. My keynote is part of a day of free financial workshops open to the public. The theme for the event, scheduled from 8 a.m. to noon, is “If Money Is The Key, Why Am I Still Locked Out?”. The church is located at 2670 E. Grand Blvd., Detroit, Mich., 48211. The workshops will include information on budgeting, credit management, retirement, saving and investing. There will also be a special youth track for teens ages 14 to. For information and to register, visit the church’s Web site, or call (313) 871-0300 or (313) 874-3724. This is an annual event presented by the Financial Empowerment Ministry of Triumph.

Tia Lewis contributed to this report.

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