High Cost of Keeping up with the Joneses

There is a family that is famous all over America for maintaining the appearance of wealth for the benefit of others.

You know them as the Joneses. They have the big house, a boss car and a 108-inch flat-screen television they flaunt at backyard parties during football season.

They are extremely popular in your neighborhood, and everyone else’s for that matter, because neighbors venerate their consumption and use them as a measuring stick for success.

“Keeping up with the Joneses is what America is all about,” financial consultant Tarra Jackson said. “People get all caught up living the lifestyle of their dreams, not the lifestyle they can afford.”

Not surprisingly, there are a lot of financial casualties in the battle to keep up with the Joneses. There have been 14.9 million foreclosure filings and 8.7 million bankruptcy filings since 2007. Not all are attributable to attempts to keep up with the Joneses, but Jackson thinks many of them are.

“People are trying to buy status, and all they’re really doing is going further and further into debt for the sake of appearances,” Jackson said. “They make a good living, but they have nothing to show for it.”

That is where Jackson, also known as Madam Money, wants to jump in.

She’s a money manager, life skills coach and motivational speaker who run her own website. One of her favorite subjects is not keeping up with the Joneses.

“I’m in the business of raising people’s financial IQ,” she said. “I don’t want them to spend for the sake of appearance. I don’t want to see them living paycheck-to-paycheck. I want to teach them how much they can afford to spend, and how much they need to save for the rainy day.”

Three Areas to Improve Personal Finance

Jackson says there are three things people know about personal finance, but really don’t do much with to improve their standing:

  • Credit score: “People don’t understand how credit scores are calculated. They don’t know what to do to improve their credit scores. There are a lot of so-called “credit repair” companies out there doing a lot of things you could do for yourself, if you knew it was available.”
  • Savings: “This one is really difficult because nobody saves anymore. I start people with the “jar method” of putting whatever change you accumulate during a day into a jar, and not touching it until the end of the month when you bring it to a bank and deposit everything there. Once they see some success in saving, they start putting $1 and $5 bills in there and pretty soon, they’ve acquired the habit of savings. Next thing you know, they start putting five or 10 percent of their paycheck to savings, which is something everyone should be doing.”
  • Rock Bottom (as in, don’t hit it): “Some people see the writing on the wall and get help before it’s too late, but too many people wait until their car has been repossessed, their wages are being garnished, or they lose their home to foreclosure before realizing they’ve hit rock bottom. Trust me; you don’t want to go there. It’s excruciatingly painful. I know.”

Yes, she does know. Jackson spent some time in the Joneses neighborhood and it did not end well.

She bought a home in Delaware at the height of the real estate boom, but soon afterward, left for a job in Atlanta. She tried to keep residencies in both places, but couldn’t handle mortgage at the old house and rent on a new place. By the time she put it on the market, it was underwater.

She asked the bank for a loan modification to give her some breathing room, but when the bank’s officials calculated her income and expenses, they told her she could afford both places. Her paycheck and expenses said otherwise. The two sides argued over it for months before Jackson finally asked the bank, “Where do you want me to leave the keys?”

Her home went into foreclosure. Her credit score plummeted. Her self-esteem took a dive as well. How does a person with 20 years of experience in the financial industry let something like this happen?

Life After Financial Death

“It was a very painful, emotional experience,” Jackson said. “I had significant equity in that home when I started, but it went underwater and never was going to swim again.

“I got too emotionally involved. I was desperate and didn’t deal well with the psychological aspects of a situation like this. I could have done some things that would have turned that into a successful rental property, but that’s hindsight now. I learned a lot from the experience.”

She uses the experience to relate to her audience in lectures, seminars, books and one-on-one meetings. The Great Recession forced a lot of people who never thought they would be dealing with foreclosure, repossession, job loss and even bankruptcy, to work their way through or around those financial potholes.

“I’ve got a passion for helping people deal with the changes the economy is forcing them to make in their lifestyles,” Jackson said. “I understand the rules of the financial game, the policies and procedures.

“The main thing people have to understand: There is life after financial death. You just need a professional who can motor you through the process.”

Simple Financial Changes Can Yield Big Rewards

Saving big and living large doesn’t always mean sacrificing your lifestyle. Check out these small financial changes that can help you put more money in your pocket.

Paying Bills on Time

Reward: Saving $30+ in Late Fees, Better Credit

Paying your bills a little late may not seem like a huge deal, but not only can it hurt your credit, it can cost you. Late fees can run you up to $30 each late payment, which can add up to hundreds of dollars over time. Plus, while the occasional 30- or 60-day late payment may not completely hurt your credit, just one 90-day late payment can damage your credit for up to seven years.

The key is to pay bills on time by putting your bills on auto-pay or using an account management or bill reminder service that sends bill pay reminders via text or email.

Enrolling in Travel Programs

Reward: Free Hotel Stays, Lower Airfare, Free Upgrades and More

Taking five minutes to set up an account with your favorite travel companies can save you a ton of money, especially if you’re an avid traveler. For example, 7,500 Starwood Preferred Guest points can be used for anything from a $15 drink to a $250 free night reward stay at a Starwood hotel. And that doesn’t include the perks of simply being a member. When I traveled to New Orleans not long ago with a giant group of friends, I made sure to sign up for the hotel’s rewards program right before the trip. I had never stayed with them before, but on arrival, I received a complimentary drink ticket and a larger suite than any of my fellow travelers. The point? It’s worth it!

Putting More Money Toward Debt

Reward: Saving Money in Interest

It can be tempting to only pay the minimum amount due on your credit card bill or student loan payment. However, this can actually cost you a lot more money over time because you’ll be forced to pay more interest on the loan.

For example, paying $350 a month on a $10,000 credit card balance with a 15 percent interest will cost you almost $2,500 in interest over time. Paying $500 per month, on the other hand, lowers your interest to $1,580, shaving off about $1,000 of your overall payment.

5 Financial Stats You Need to Know to be Successful with Money

Not everyone enjoys managing their money.

Some of us aren’t successful at it, or we just don’t have the time. Whether you’re a financial geek like me or a novice budget buster, there are some basic financial stats you need to know to be successful with money.

Why? Because you can’t achieve your goals or progress financially if you remain uneducated about your finances. Ignorance is not bliss in this case.

Gross Income

Your gross income is what you get paid from your job or your business before taxes, insurance, investments or any other expenses are taken out. It’s your base salary/hourly wage.

Net income is what you receive when you get your paycheck. It’s the income you use to live on, and have available for your household and living expenses.

Expenses

General expenses can be very broad and can include both essential and excessive spending. By dividing out the essential and non-essential expenses, you can see what you’re really spending your money on.

In the event of a job loss or other life tragedy, you want to be prepared to live on the least amount possible. If you lump the figures together, you won’t know what you can truly live on in case of emergencies.

Debt Balances

You don’t need to keep up with your balances every day, but you should at least do a quick weekly checkup. It’s vital you understand the type of debt you have and how to properly manage it.

You want to make sure your payments are being posted properly and that creditors aren’t charging you extra fees. Plus, seeing the balances go down every month is very motivating and will keep you on track toward financial freedom.

Assets

The value of your vehicles, houses, property and any other items of value are considered assets. Any cash in the bank, investments and other financial accounts are assets too.

In the event that everything needs to be liquidated, it’s important to know the total value of all your assets.

Net Worth

This is one of the most commonly overlooked financial stats, but it’s very important. Net worth is determined by subtracting your loans (the debts you owe) from your assets (the valuables you own).

If you have more debts than assets, you will have a negative net worth, and if you own more property than your debts, your net income will be positive. The last one is something everyone works toward!

How to be Successful with Money

At the end of the day, knowing your financial standing can give you peace of mind and help you get a grasp on your money. Even if you only look at your finances every month or every quarter, you want to stay in touch with your money as often as possible.

You don’t need to be an expert to handle your money perfectly. Just familiarize yourself with these basic financial figures, and you will be in much better financial shape going forward!

Carrie Smith is the owner and editor of Careful Cents, a blog that specializes in helping small businesses and solopreneurs earn more money in less time through systems and financial organization. She also writes for The Huffington Post, AllBusiness Experts and several other business websites. Connect with her on Twitter @carefulcents.

Sydney McIntosh of IamSydMac.com

Blogging About Finances, Debt from a Personal Perspective

Are you in debt? You might want to tell the world — or at least the worldwide web.

That’s what Atlanta resident Sydney McIntosh did. She was tired of being broke, living paycheck-to-paycheck and having $10,000 in debt attached to her name at the end of last year. In 2013, McIntosh landed a second job working the front desk in a yoga studio and cut back on luxuries like vacationing, clothes shopping, manicures and pedicures to pay down her credit and student loan bills.

Those experiences and ongoing strategies to keep herself out of debt prompted the 27-year-old television news producer to launch IamSydMac.com or “Just a Girl Name Syd: Living Life on a Budget While Having Fun.”

“I love a good story about people finding their way out of debt or people quitting their jobs and following their dreams,” says the Virginia Tech communications graduate, whose financial role models include television finance guru Suze Orman and Michelle Singletary, finance writer at The Washington Post.


Sydney McIntosh of IamSydMac.com

Sydney McIntosh runs IamSydMac.com, a personal blog about financial experiences.


Internet-savvy people like McIntosh, who have personal and sometimes painful stories of debt, are turning to the web to share their ups and downs of paying off that debt, tips on bargains and keeping debt at bay in an effort to inspire others in similar situations.

The Allure of Sharing

People can be very hush-hush about sharing their personal debt stories because they reflect decisions made under duress, in haste, as the result of a family issue or medical problem. It remains one of those topics that is off limits like religion and politics; however, these days more people are willing to share.

“I think once people see others talking about something they may have once considered taboo, then it opens up the table for discussion on their end of things,” says Kristin Luna, co-founder of KEEN Digital Summit, a digital media professionals’ conference in Nashville.

For instance, take splitting a meal among friends. It’s often an uncomfortable discussion, especially when you may not have ordered the three glasses of wine or the same fancy meal as everyone else. McIntosh covers that topic in one of her blogs.

The blog post recounts how she had to stick to her strict $100 spending budget while on a trip to New York City – a nearly impossible task in Manhattan. She tells how she went out to eat with her friends and cried foul on splitting the bill equally. She convinced the waitress to separate the checks, also a nearly impossible feat in the Big Apple. McIntosh ordered much less than her friends and ended up spending $25 on her meal, instead of paying the $38 if the bill was split evenly.

Luna explains people respond to blogs like these, because they feel they get to know the writer. While journalists report on people’s lives, bloggers tell their own stories. “There’s an authenticity to reading a first person account,” Luna said.

McIntosh chose to be open about her personal debt experiences to engage her readers.

“It’s a personal journey that I’m on. I want to give enough information that people can relate to,” she said. “If I say I’m in $10,000 of debt, people can relate to that number and see the scope of my goal. Without numbers, how can people relate?”

Carrie Smith, a 28-year-old accountant, consultant and freelance writer, blogs about her budget and personal finance issues on CarefulCents.com. Blogging opened her eyes about her personal money issues. It helped unshackle her from $14,000 of credit card and car loan debt in 14 months.

“For me, it helps because I didn’t grow up in a house that talked about money a lot,” said Smith, of Dallas, Texas. “The adults just handled it. From my generation’s perspective, we may not have had that kind of talk at home.”

Blogging Creates Accountability

Big audience or small, the main reason why McIntosh says she decided to blog about her experience was actually personal. She wanted to be held accountable.

Accountability seems to be a direct by-product of blogging.

Smith equates blogging to putting your goals on paper or writing financial goals on a wall for motivation. It just happens that everyone can read it. “I originally did not want to tell my story and be accountable, that just happened.


Carrie Smith of CarefulCents.com

Carrie Smith is the writer and founder of financial blog, CarefulCents.com.


“It has made me a lot more aware when I tell other people about my goals whether it’s online or in person that they may be as invested in it as I am. They want to see me succeed, they want to see me reach my goals and vice versa.”

Smith also generates a small amount of income from the blog, but “it’s not a lot.”

“There are other budget bloggers that make money from products they create, advertising or sponsorships with brands. I intentionally keep my blog free of ads and only endorse products I use personally, so most of the little income I make comes from affiliate sales,” she said. “I never got into blogging to make money, so I don’t view it as a way to get rich. But of course, every little bit helps when paying off debt!”

Is There a Link Between Debt, Blogging and Stress Relief?

A recent study published by Fidelity Investments found that 70 percent of the graduating class of 2013 will have an average debt of $35,200. That debt load includes public and private loans, and other debts owed to families and credit cards.

That’s plenty of debt for a young person entering a workforce riddled with unemployment and low wages. Researchers at Northwestern University in August published a study about the emotional and medical effects of debt.

It found that participants with higher debt reported feeling more stressed and having higher levels of depression than those with less debt.

Those with higher debt also had a 1.3 percent increase in diastolic blood pressure. Researches said that’s an important finding because “a two-point increase in diastolic blood pressure, for example, is associated with a 17 percent higher risk of hypertension and a 15 percent higher risk of stroke,” the report shows.

How does blogging fit in the picture of stress relief? Scientific American magazine published a study in 2008 that found blogging can serve as a coping mechanism and that expressive writing may have therapeutic benefits for people with serious medical conditions by providing a community.

“I think it’s always comforting finding people going through the same things you are, whether post-partum depression, anxiety, or bankruptcy,” Luna says. “It helps others realize they are not alone in what they’re going through.”

McIntosh finds that her debt journey can be frustrating and writing about it is cathartic for her. “It makes me feel better. Every time I hit a milestone, I’m like ‘I can go blog about it!’ “

Chart compares national wedding costs to Streiffs' costs

Budgeting, Tandem Bike Cuts Down on Couple’s Wedding Debt

When Jordan and Sharly Streiff of Atlanta exchanged vows last August, their white wedding started out in the red.

Sharly lost her job a month before the couple tied the knot. They splurged $700 on his suit and $1,200 on their wedding photography. Since Atlanta heat can reach into the upper 80s in August, they catered the affair with icy popsicles from King of Pops, one of Atlanta’s popular street-food vendors. While the frozen indulgence was a hit among their guests, it cost $500.

Although the couple held their ceremony in a public park for a $30 reservation fee, self-catered the reception, mailed out their own DIY invitations and the groom’s mother picked up the tab for the frozen treats, they charged most of their $6,000 wedding. Credit card debt, a personal loan and student loans swelled their combined debt to $28,000.

“When Sharly didn’t have a job, we were definitely living right on the edge and it hurt seeing almost $1,000 go out every month in debt payments,” said Jordan, a 28-year-old video editor for a news network. “My wife and I had talked about budgeting and paying down my debt, but hadn’t come up with a concrete plan.”

Financial experts often warn couples about plunging into considerable debt as a result of their weddings. While debt overwhelmed the newlyweds at first, they slashed that debt by more than half by scaling back on living and entertainment expenses and using a tandem bike instead of a car.

Their Combined Debt Spiked After the Wedding

Jordan says credit card debt was the unpleasant reminder that lingered from their memorable moment.

A 2012 survey conducted by theknot.com, a wedding website, estimated the national average cost of a wedding is $28,500. Their wedding was only a fraction of that amount, but it was still an overwhelming debt to carry a few months into their marriage.

“It was definitely one of the bigger catalysts. We hadn’t planned on accumulating any debt as a result of the wedding,” he said.

Their combined debt grew to $28,000 by January. It included:

  • Subsidized and unsubsidized federal student loans totaled $12,000.
  • A personal loan for $8,000 at 9 percent interest rate.
  • An $8,000 credit card balance at 13.24 percent APR.

“We were paying almost $100 a month in [credit card] interest for [wedding charges],” he said. “Paying every month for a single-day event that already passed kind of sucks.”


Chart compares national wedding costs to Streiffs' costs

A study from TheKnot.com and WeddingChannel.com shows the national average wedding costs $28,427. The Streiffs spent $6,000 tying the knot by keeping some of the larger costs down, including the bridal gown, photographer and ceremony site.


Light Breaks Through the Dark Cloud of Debt

Sharly, 26, took a job in early 2013 as tech support for a startup company and that helped pay some of that credit card debt.

They paid the credit card off in early July. Now they’re working on the personal loan, which they expect to eliminate from their books before October. “Getting rid of the high interest credit card and loan debt was first priority,” Jordan explained. The couple also carries a credit card with zero percent interest in case of an emergency.

As soon as they have a better financial footing, they will put aside money for an emergency fund. “Once we get to a place where we’re not losing as much money each month to interest payments, I’ll feel much more comfortable building up our savings.”

The next step was starting a strict budget. Jordan posted his resolution on social media, writing “I announced my spending fast on Facebook for accountability’s sake.”

One of the hardest parts for the couple was figuring out the difference between a need and a want when they started budgeting.

“That took a lot of consultation before we came to a compromise that worked for both of us,” Jordan said. The couple agreed that healthcare, food, rent and existing bills are needs that could not be reduced.

Then they scaled back on wants like home decorations and clothes. They also sacrificed some entertainment, including cable, Hulu entertainment streaming service and their Spotify digital music account. The couple kept their Netflix account.

But there have been some obstacles in their quest to save money.

“The biggest change has been our dining habits, from eating out whenever we felt like it to cooking most nights and packing lunches,” he said. The couple tries buying fresh ingredients to encourage their desire to cook, but they still spend about $75 to $100 a week on groceries.

Riding a Tandem Bike Cut Travel Expenses

They consider Atlanta’s public transportation system decent, and since Jordan’s job is close to their home, they decided against owning two cars. He estimates that maintaining two vehicles could cost them $5,000 annually.

“We wouldn’t be anywhere close to where we are now if we were a two-car household,” Jordan said. “I bike to work and around town, and that saves us at least $400 a month in gas, insurance and maintenance.”

Because Jordan loves cycling, the couple bought a tandem bike to enjoy activities together. Their clever cost-saving measure is the topic of many conversations around town.

“We really bought it so we could enjoy biking together,” he said. “We get lots of looks and comments, especially from kids.”

Plan Your Finances for the Entire Marriage

The traditional gift for the first anniversary is paper, and Jordan and Sharly are seeing more of it — dollar bills — in the bank.

Jordan says their decision to tackle debt had more to do with their long-term goals as a couple than anything else.

He wanted to travel, move to bigger place, and eventually have a child, but debt placed limitations on those goals. “Once I finally made a full assessment of what I owed and what it was keeping me from doing, I started to feel energized rather than scared,” he said.

Jordan credits his wife for helping them stick to their financial commitment.

“Sharly has made a lot of sacrifices while I took steps to pay down what is largely my debt,” Jordan said. “I’m lucky in that regard.”

Percentages of the types of most popular apps download in the United States

Personal Finance is Easy on Your Smartphone, Apps

Adulthood comes with certain freedoms and financial responsibilities.

Not only do you have car insurance, car payments and groceries to pay, but you may have student loans, health insurance, credit card bills, rent or mortgage and what seems like an endless list of monthly expenses, not to mention other spending habits like shopping and eating out.

Our hectic lives often leave little time for scribbling a budget or reviewing your checkbook, but there’s a convenient tool tucked in your back pocket or purse that takes care of all that for you – your smartphone.

Hundreds of apps available on different platforms effortlessly help keep you financially smart, tracking and monitoring finances. Since these mobile tools are increasingly becoming virtual vaults of personal and financial information, it’s a good idea to learn how to protect your data.


Percentages of the types of most popular apps download in the United States

Most U.S. smartphone owners use a multitude of apps on their devices from playing games to finding the best shopping deals in town or on the Internet. The least used apps among users across the globe are from news organizations or those developed to aggregate news stories.


Convenient Personal Finance Apps

The Nielsen 2013 Mobile Consumer Report shows 53 percent of Americans who own a mobile phone use a smartphone. These devices have brought nearly every aspect of a desktop computer to the palms of your hands.

Smartphone owners mostly use their devices for texting, web browsing, emailing, social networking and downloading applications. Banking and finance apps are the sixth most popular applications downloaded by American smartphone users, the report shows.

Personal finance apps have many different uses and tools to help you stay on track. Here is a selection of popular apps:

  • Banking Apps: Most banks offer free apps for quickly accessing your accounts. These apps let you deposit checks, monitor latest transactions, pay bills and transfer money, among other services.
  • Mint: Personal finance website, Mint.com, offers its own free app that tracks your spending, sends alerts about bills and budgeting, and also monitors your savings goals. Mint pulls all of your financial information from your bank accounts into one app and categories your spending habits for you. Financial software giant Intuit, known for its secure suite of programs, including Quicken, TurboTax and QuickBooks, runs Mint. Available for Android and iOS.
  • Easy Envelope Budget Aid (EEBA): A free virtual version of the envelope budgeting system. The app creates envelopes for your spending categories on your device. You enter the monthly budget for each envelope at the start of the month. Every time you purchase something, you enter the amount and it’s deducted from that envelope. You can also create just one envelope for the month, instead of assigning categories. This app can sync up to two devices, making it ideal for a couple trying to stay on top of their finances. Available for Android and iOS.
  • SaleQ: Shoppers can use this free app to calculate the final price of an item on sale. You simply enter the store price of the item in the virtual keypad, set the sale to the correct percentage and change the sales tax percentage, if needed. Additional discounts can also be applied. Staying within your budget is much easier with this app. Available only for iOS.
  • RetailMeNot: If shopping is your budget weakness, this app allows you to browse top coupons for the most popular stores and receive alerts when your favorite stores have a new deal. It also lets you store the coupons you’ve found for when you have more spending money. No more cutting and shuffling around paper coupons in the checkout line. Available for Android and iOS.

Dangers of Carrying Virtual Vaults of Personal Information

Since most of these personal finance tools that access sensitive information require a password and other security measures to log in, banking and budgeting on your phone or a computer can be risky.

The 2013 Mobile Consumer Habits survey shows 65 percent of American smartphone users are concerned with theft of personal information. That’s why nearly half of American smartphone owners protect access to their phones with passwords, according to the study.

If you use any financial apps, don’t forget to log out when you’re done with your session. Although most financial apps shut off access after some minutes of inactivity, not logging off could put your information at risk if someone else uses your device.

Some budgeting apps can’t access personal banking information, but they might show unauthorized users how and where you spend your money, making you more susceptible to fraud and identity theft.

Always remember to not save any personal information on your device, including passwords to accounts. It’s always a good idea to use a password to access your smartphone, even after a few seconds of inactivity.

Another responsibility of adulthood in a time of technological advances is spotting the differences between what’s legitimate and what isn’t. While iTunes and Google Play feature thousands of apps for your devices, some of these reliable ones have been pulled because they accessed users’ information without permission.

There are plenty of app reviews available on the Internet through iTunes, Google Play and other third-party websites dedicated to reviewing apps.

As the popularity of smartphones increases, so will the use of personal financing on mobile devices. If you take the right precautions, mobile banking can be convenient, easy and free. However, without the right precautions, you may be putting yourself and finances at risk. Be smart and mobile on.

Dollar amounts lost after reporting a missing debit card

Lost Debit Card Leaves Me Stranded

“Can you hold please?” the banking representative asks me over the phone.

“Yes,” I say. Deep breaths. Count to 10. This is the second time I’ve called my bank to replace my lost debit card. Three weeks without plastic is unbearable.

Paying for everything in cash isn’t convenient for me: Walking inside the gas station to pay for gas instead of at the pump, guessing how much cash to carry for the cost of groceries or remembering to bring my co-pay in cash to a doctor’s appointment I made two months ago.

Ma’am?” the banking representative asks as she returns to the line. “There is no record of a debit card order. Do you know the name of the person who put your order through? I can put the order in now. It will take five to 10 business days to reach you. Is there anything else I can do for you?”

It was too much to handle.

“No, I didn’t get that representative’s name. This is the second time they didn’t process my card. With these circumstances, would you be able to put a rush on it? I have automatic payments that I need to connect the new account number to.”

“We can’t rush the cards. Did someone tell you about the ATM card you can pick up while you’re waiting? Is there anything else I can do for you?” she asked.

“No,” I said, feeling defeated. “No one told me about the ATM card. Can I get your name?”

The conversation continued. I almost held back tears.

An Unexplained Disappearance

This mess started on a Saturday night three weeks ago.

Dinner plans required my fancy blue clutch that matched my outfit, but the purse barely holds my keys, phone and lip gloss. Instead of taking a wallet, I grabbed the necessities: Driver’s license, $10 in cash and my debit card. I paid for dinner and everything went smoothly.

The next morning I reached for my debit card to pay for breakfast. The card was gone.

I checked my car, room and other purses. No debit card. I called the restaurant. Nothing.

My loss came at the worst time. I was leaving for vacation in two days and I’d be in another state without the convenience of my debit card. I withdrew cash to cover my trip.

Getting Nowhere with the Bank

The card never resurfaced, so I ordered a replacement. A bank official said the card would arrive in five to 10 business days.

Ten days later and there was still no sign of the card.

I called the bank and they claimed they never received the order. They also listed the incorrect address on their records. I went to the bank and changed my address in person. A week later I called the bank for an update. A bank representative said the order was never placed.


Dollar amounts lost after reporting a missing debit card

The amount of money at risk from losing your debit card ranges from nothing to a complete loss. The best advice to avoid losing your hard-earned money to a thief is to report the theft of a debit card immediately.


Life Without Plastic

Some people facing a similar situation can rely on their credit cards, but I cut mine up a long time ago after maxing them out and spending years repaying the credit card issuers. My debit card, on the other hand, is tied to my checking account and only gives me access to money I have.

Running to the bank whenever I needed cash started to drain my gas tank and time. Lunch required careful planning and budgeting to ensure I’d have enough cash on hand. I couldn’t make certain purchases like running shoes because my spending cash wouldn’t stretch to cover the cost.

More serious problems arose. The automatic payments for my cell phone, toll road transponder and car insurance provider would not go through until I had the new debit card account number. Eventually I wouldn’t even be able to call my bank to complain, because without successful payments my phone service would be disconnected.

10 Lessons about Dealing with Lost Debit Cards

Enduring this exasperating ordeal taught me how to handle debit card losses in the future. Hopefully these lessons can prevent you from unnecessary bank trips or countless days waiting for a card in the mail.

  1. Write down the name of the representative who processes your order and date of the phone call for all non-automated banking transactions, even checking your balance. You never know when this information will come in handy in the future.
  2. If you lose a debit card, immediately place the account on hold to protect yourself from fraud.
  3. Make sure the bank has your updated phone number and address to prevent complications when they try to contact you.
  4. Never keep your PIN number in your wallet or purse. Losing your wallet, along with your debit card and PIN number increases the risk of fraud.
  5. If you order a new debit card, ask the representative to give you the last four numbers of your new card to confirm the order. This will ensure they actually entered your information in their computer system.
  6. Estimate all expenses for the period without a debit card and withdraw that cash. Make sure you have extra cash, too, for gas, groceries and other personal expenses that quickly add up.
  7. Stop by the bank to get an ATM cash card. Some banks offer these cards as temporary tools to access to your money past banking hours. However, because of fraud, getting these cards may be difficult. It may require special circumstances. Call ahead to find your bank’s policy on ATM cards.
  8. Call the billing departments for any automatic payments and explain your situation. If you can, supply them with a number to another account.
  9. Get backup plastic. If you don’t already have a credit card, now might be a time to apply for one. For those of us with low credit scores, it will be easier to get approved for a secured credit card. Secured cards require a cash deposit and come with smaller lines of credit. These are a good stepping stone for rebuilding credit — and will tide you over while waiting for a new debit card to arrive.
  10. If you do find the missing debit card, cut it in half, making sure the account number is broken into separate pieces.

Today, success. I confirmed my card was en route. I called my bank and wrote down the names of the representatives who helped me. (By the way, always do this with banks, insurance companies and other large organizations.) Luke and Viviane assured me I have only a few days until the debit card arrives. If this ever happens again, you can bet I will be better prepared.

On my way home from work, I drove past a Redbox and thought of the movies that require a simple swipe of plastic. Next week maybe I’ll be able to rent one.

Things to Consider When Attempting Your Own Debt Settlement

Debt settlement is a problem that seems easy enough to handle on your own — sort of like painting the house.

I recently painted the inside of my house. I spent three weeks finishing three rooms, spilled a few pints of paint on the carpet and the cleanup is ongoing. I still have some trim work and two rooms to go.

But for the outside of my house, I hired pros. They finished the job in three days, trim and all, and cleaned up after themselves. A perfect job. But their professional assessment of my paint job: I needed to be better prepared if I was ever going to finish. Lesson learned.

Debt settlement is the same as handling a massive paint job on your own. Whether you’re trying to settle credit card, medical or even private student loan debt, it pays to be ready.

Steps to Consider When Handling Debt Settlement

Here are five suggestions that might help you avoid making a mess out of the situation:

  • Get a copy of the Fair Debt Collection Practices Act (FDCPA), which spells out what collection agencies can and can’t do to collect a debt. There are plenty of provisions that protect you from being harassed. For example, if the collection agency is after you about a car loan, there are specific times of day they can and can’t call. They can’t visit you at work. They can’t lie about your debt or the penalties you will incur for not paying. If they violate any of the rules, you can sue. First, you must know the rules of the game, so look up the FDCPA.
  • Know exactly how much you can afford.  This is an obvious starting point, but one commonly overlooked by people too anxious to settle their debt. They jump into negotiations, get 20 percent knocked off their principal and start rejoicing, only to find out that’s still more than they can afford. Determine how much a month you can pay and stick to that throughout the negotiation process. It is not unreasonable to think you can get the principal reduced by a substantial amount. Whatever amount you settle on, be sure you can comfortably afford it.
  • Making a deal over the phone and sending a check out the next day, puts all the risk on you. The person at the other end could treat that as a payment on the principal and claim there never was an agreement. Ask for a written agreement before you do anything. Read it over carefully and understand payments, due dates and penalties before you sign it.
  • Keep track of every communication. Many off the harassment techniques mentioned in the FDCPA takes place over the phone. It will pay off handsomely to have everything documented.
  • Be patient. Collection agencies are good at intimidation. They rush debtors into a process with subtle and sometimes not-so-subtle threats about the consequences for not paying. Play the negotiating game at a slow pace. Make them explain everything to you in detail. If you drag the process out long enough, they may improve their offer to get something out of you. Patience definitely pays off.

Finding the Right Financial Adviser You Can Trust

They say money makes the world go ’round. That well may be true, but you don’t have gravity and other universal constants to keep your financial world in a constant and reliable orbit.

Many people depend on their financial instincts, know-how and sometimes the advice of their friends and family members. Regardless, the reality is that absent your consistent administration and supervision your world of personal finance easily can spin out of control.

How? Because nothing ever stays the same, and at some point you must make money decisions. Some are easy. (Yes, put some money aside every two weeks for an emergency fund.) Some are much more difficult. Maybe now is now the time to look at a long-term health insurance policy?

Perhaps you’ve mastered some basic money skills that get you by on a daily basis, but more issues are coming – things like buying a home, starting a business, devising a long-term strategy for retirement or just trying to maximize the money and assets you already have.

When you’re confronted by these life circumstances you don’t know what to do, it may be time for you to seek the professional guidance of a financial adviser.

Navigating through certifications, credentials and costs can be daunting, but never fear. You don’t have to leap blindly into the cosmic abyss. There are tried and true approaches to help you choose a financial adviser.

You want one who fits your personality, someone with whom you can have an honest and open conversation. You want someone who has a full grasp of your particular situation, your budget needs and your long-term goals for yourself and your family. You also want to make sure your adviser is qualified, fully licensed and has the necessary credentials and recommendations.

This much is true, too: You have a variety of options at your disposal, and you should spend time understanding the options and the people you are considering.

Choosing from a Variety of Financial Advisers

First, know what kind of information you need. Not all financial advisers offer comprehensive advice. Some focus on retirement and estate planning, others provide help with filing taxes and investments.

Some financial advisers are accountants, while others sell insurance. The range is wide and the answers you seek will depend upon the questions you ask and to whom you ask them. Look for expertise in your prime areas of interest and choose an adviser who will put those interests first.

There are four main types of financial advisers among approximately 300,000 of these credentialed professionals in the United States:

  • Registered Representatives: Includes stockbrokers, investment advisers, and bank representatives who sell investment and insurance products. They generally hold Series 6 or 7 sales licenses.
  • Financial Planners: While anyone can claim to be a financial planner, most reputable ones have some sort of certification earned from a licensing board like a CFP (Certified Financial Planner), ChFC (Chartered Financial Consultant) or CPA/PFS (Certified Public Accountant/Personal Financial Specialist) earned from the American Institute of Certified Public Accountants.
  • Financial Advisers: This category includes Registered Investment Advisers (RIAs) and Investment Adviser Representatives (IARs), who are also financial fiduciaries, meaning that they are held to the highest ethical standards in the financial services industry.
  • Money Managers: These are financial advisers who generally make decisions for their investor clients without their advance approval.

Do some online research, too. These websites show listings of financial advisers who have been vetted, licensed or certified:

  • National Association of Personal Financial Advisers
  • Certified Financial Planner Board of Standards
  • Financial Planning Association
  • Garret Planning Network

Word of mouth also is a valuable reference. Seek out referrals from friends, family and co-workers.

Once you have an idea of which basic type of adviser best suits your needs, interview at least three prospects. Ask about the services they provide, credentials, relevant experience, interaction with clients, and investments or products they may promote.

Check the background and history of your top choice. Use the Financial Industry Regulatory Authority’s BrokerCheck to see if the financial adviser has been disciplined for unlawful or unethical behavior.

Understand How Financial Advisers Make Their Money

Another important factor when interviewing your potential financial adviser: Ask how much they charge and how they get paid.

There are three ways in which financial advisers charge their clients:

  • Fee-only: Paid solely for the advice they give. They do not earn commissions by selling any financial products like mutual funds or insurance policies. Some fee-only planners charge a percentage of a client’s assets, bill by the hour, charge a flat fee or earn an annual retainer. Many experts believe that a fee-only adviser is preferable because conflicts of interest are minimized or eliminated.
  • Commission-based: High commission from products they sell. They generally won’t charge for an office visit or consultation, but they may want to steer you into buying a particular product that doesn’t suit your needs.
  • Fee-based: Profit from a combination of fees and commissions on some of the products they sell.

Make sure you get a written and detailed account that shows services and compensations provided.

Let Trust and Comfort Guide Your Choice

A financial adviser is just that — someone whose professional experience can help you reach your financial goals.

Your relationship with your adviser must always be based on mutual respect, trust and ongoing interaction. Not only should you ask the right questions, you should expect that your adviser asks the right questions of you. Some of them could be difficult ones, like questions about your credit card debt and whether you are carrying too much overall debt to meet the goals you have.

Your adviser probably will not pull a credit report on you and other family members, but the adviser almost certainly will assess your debt and paint an accurate personal financial picture for you.

Make sure your financial adviser promises to respond to your changing needs and goals. Set up regular meetings that meet the schedules of both. You might want to speak monthly, quarterly or only once a year at tax time.

In the end, your personal comfort level is extremely important.

If you don’t understand or trust the advice, if you believe your adviser does not truly understand your situation or can’t devise an investment plan that fits your needs, keep shopping.

Remember: The movement of stars and planets are dominated by forces greater than you, but your finances are under your control. Seek the best advice possible, put everything into motion, and your own economic universe will achieve the balance and harmony you desire and deserve.

Feds Continue Cracking Down on Dishonest Debt-Relief Companies

One of the ways in which debt-relief companies serve their clients is by negotiating debt settlement agreements with creditors with the goal of reducing the amount of money owed.

When done honestly and correctly, debt settlement can be a win-win situation: Borrowers pay only a fraction their obligations. Creditors receive at least part of the debt owed (all of which might be lost should the borrower need to declare bankruptcy). And the debt-relief company earns a fee for services rendered.

But not every company performs this service honestly and correctly. In fact, officials with the Consumer Financial Protection Bureau (CFPB), the federal agency in charge regulating consumer protection, say some debt-relief companies swindle the most vulnerable borrowers.

The most recent example stems from a complaint filed in May by the CFPB against American Debt Settlement Solutions, Inc. (ADSS) of Boca Raton, Fla., and its owner Michael DiPanni. The suit alleges ADSS “misled consumers across the country and charged illegal upfront fees for debt-relief services that rarely, if ever, materialized.”

The bureau submitted a proposed consent order that would stop ADSS and DiPanni from operating and providing debt-relief services in the future, as well as levying a $15,000 civil penalty fine, if approved by a judge. A notice on the ADSS website now reads: “American Debt Settlement Solutions is winding down operations and is no longer able to service its clients.” Its phone is disconnected.

“Consumers struggling to pay off a debt are among the most at risk and deserve better,” CFPB Director Richard Cordray said in an agency statement. “We will continue to crack down on this type of harmful behavior.”

Allegations Against American Debt Settlement Solutions

The CFPB filing shows ADSS deceived hundreds of consumers in multiple states by charging approximately $500,000 in fees while making misrepresentations about its debt-relief services.

Since its inception in 2008, ADSS did not provide any debt relief for 89 percent of its enrolled clients, according to the filing.

Although consumers deposited nearly $10 million into accounts designated for debt repayment, the company directed less than $2 million in payments to creditors, according to the complaint filed in a federal district court in West Palm Beach, Fla.

The complaint charges ADSS and DiPanni with “abusive” acts or practices in the consumer-financial marketplace. This is the first time that the CFPB has applied the abusive standard under the CFPA (Title X of the Dodd-Frank Act), and it signals the use of an important new tool in protecting American consumers from financial predation.

Legacy of Accusations 

The May complaint against ADSS leads a trail of earlier accusations made against the debt-relief company.

Minnesota Attorney General Lori Swanson in 2010 filed a lawsuit against ADSS, charging it violated numerous provisions of a 2009 state law that limits the origination and monthly fees that may be charged by licensed debt settlement firms.

In  2011, Oregon’s Department of Consumer and Business Services filed a cease-and-desist order against the company and fined it $55,000 for the same illegal conduct it perpetrated in Minnesota.

The Better Business Bureau (BBB) had already given ADSS an “F” rating, noting 63 complaints filed against the company over the last three years. In January 2013, the BBB requested American Debt Settlement Solutions’ voluntary cooperation in resolving the complaints, but never received a response from DiPanni.

Debt-Relief Agencies Targeted by CFPB

American Debt Settlement Solutions is one of approximately 2,000 debt-relief companies in the United States, and it’s not the only one targeted by the CFPB for its deception of the American public.

  • CFPB officials on May 7 accused Mission Settlement Agency of New York and its principal, Michael Levitis, and Premier Consultant Group LLC of New Jersey, of charging consumers $1.3 million in illegal advance fees for debt settlement services and engaging in other deceptive and unfair practices. The Bureau is currently seeking to halt the operations and obtain penalties and relief for victims.
  • Attorneys General from New Mexico, North Carolina, North Dakota and Wisconsin, and the Hawaii Office of Consumer Protection, in conjunction with the CFPB, filed a similar action in Dec. 2012 against Payday Loan Debt Solution, Inc. (PLDS) and its owner, Sanjeet Parvani. Officials alleged the Miami-based debt-relief firm charged consumers a fee ahead of actually settling their debts, violating the FTC’s Telemarketing Sales Rule, the Dodd-Frank Act and the laws of various states. PLDS paid $100,000 in restitution to consumers who were charged fees, but received no services; and paid the CFPB a $5,000 civil penalty.

Protect Yourself from Debt Relief Scams

Today there is one less dishonest debt-relief company in operation, but that doesn’t mean that there aren’t other dishonest players out there.

For many people in debt, debt settlement is a viable method for resolving their financial problems – but only if their debt-relief company does its job honestly and well.

In addition to charging illegal upfront fees, as well as unlawfully keeping money that should be paid to a creditor to settle an account, a dishonest company could also force a debtor into more trouble by suggesting that he or she stop paying a creditor before a debt settlement plan has been negotiated and accepted. This practice can lead to further erosion of a borrower’s credit worthiness, or worse – complete financial ruin and bankruptcy.

If you are in debt and looking for a company to help you negotiate a debt settlement, make sure you do your homework and understand your rights under the law:

  • Check the company’s credentials and references, including its rating with the BBB.
  • Talk to people who have used, and were satisfied with the company’s services.
  • Don’t believe inflated or unrealistic claims about how soon you can get out of debt and how much money the company can save you. Companies can’t claim that they can get you out of debt in any specific time period.
  • Get everything from the company in writing: Exactly what it will do for you, how, and when. This should be in your contract.
  • If you are asked to pay money up front, make sure the money is being used for attorneys who handle debt settlement.
  • Follow up constantly. Ask for a copy of every creditor settlement letter.

If you suspect a debt-relief company of dishonest behavior you have several options. You can contact your local Better Business Bureau, your State Attorney General’s Office, the Federal Trade Commission, and/or the Consumer Financial Protection Bureau.