Managing Your Credit Cards While Moving

I absolutely HATE moving! I would rather have my wisdom teeth pulled without anesthesia while lying on a bed of nails. I really hate it that much. It’s stressful, I hate packing, and I especially hate unpacking. I’m terrible about it, too. I’ll be living in a place six months or more before I finally get all of the boxes unpacked. As a matter of fact, I moved into my new place in October and I still have boxes that I need to go through…eight months later.

But aside from the aggravation of the move itself, I worry over finances and it seems that I’m in good company. A recent study by Forrester Research found that moving was also a time where people relied on their credit more. It’s expensive to move. Deposits, movers - or beer and pizza for friends which is just as expensive and takes three times as long! - new things for the new place. Everything comes at once and sometimes it’s very overwhelming. The study also suggested that during a move, people tended to forget things like credit card payments, which can drop your score and cause any new credit to be at higher rates.

Moving your financial life from one household to another should be given the same amount of time and attention as anything else, and I would argue it deserves quite a bit more. Here are some suggestions on how you can make the move easier.

• Be proactive. Several weeks prior to your move, make a master list of phone numbers and account numbers to have on hand should anything be lost in the shuffle. Also call your credit card companies and change the address as opposed to just filing the change of address with the post office. This will help ensure that you get your mail promptly.

• Automatic payments. Because you’re likely to forget payments when moving, the best way to avoid any issues with your credit is to set up automatic payments for at least the minimum payments. You can always go back later when things have settled down to pay off the rest; however, setting up auto payments alleviates one less thing for you to worry about while you’re moving.

• To pack or not to pack. What I’ve always done is kept my financial life in an accordion file and I carry it with me when I move. However, if you pack your financial information, just make sure you don’t write “Financial Records” on the box. I don’t recommend spreading your financial records out amongst several boxes, either. It’s an easy way to loose something that you need…and have you ever noticed how hard it is to find stuff in a box? Or is that just me? But, I have a friend that spreads his records between boxes and he’s constantly losing stuff. I bought him an accordion file for his birthday.

• Cancel or add credit cards with caution. Many times places like Home Depot, Lowes, and other retailers offer special discounts for those movers who open a new line of credit with them. Just be careful. If you take out too much credit all at once, then it could hurt your credit. Similarly, if you close out too much credit - particularly your longest standing accounts - you can hurt your credit.

• Don’t be tempted! When we move this sense of newness takes over us and for some that can be very dangerous. If you’re starting over after some major life change, then it may be reasonable that you’re buying new furniture and televisions - although I’d argue you’re old ones are probably just fine. However, just because you’ve moved doesn’t necessarily mean that you have to go shopping for new things right away. This is especially true for first-time homebuyers. A friend of mine had this problem where they bought all new furniture, appliances, and furnishings at one time. Now they’re trying to get out of debt. If new things must be bought, prioritize and buy the things you need (or want) one at a time, if possible.

While moving can be stressful, managing your finances and credit cards while you move doesn’t have to be.

Does anyone else tend to worry about their financial information and credit cards when they move? What kinds of things have you done to protect your information in a move?

Popularity: 11% [?]

Why Keeping a Check Register Is Important

I always love training new bankers. I’m actually not “training” the new girl at work, but she’s still a lot of fun to be around.

She came into the credit union today in a bit of a panic. She had checked her account and there was a fraudulent charge showing up. She was nervous and worried that her identity had been stolen. She wanted to know what to do. I’ve been through this many times with many customers so I told her what to do and what we would do for her account.

The charge, she said was for an establishment she’s never been to and she wanted to know how it was possible that someone could have charged the card when she had it in her purse the whole time. I tell her that it’s possible she could have swiped the card somewhere that a crook had set up a skimmer to copy the numbers or they could have gotten a picture of the card number. These things are possible, though I know that’s not what had happened in this case.

If someone gets a hold of your debit or credit card, very rarely do they just charge one item. Usually it’s multiple items in rapid succession of each other, and you’ll almost always find a few gas charges on your account. They’re filling up theirs and their buddies’ tanks on your dime. Taco Bell also seems to be really popular with people who steal other people’s debit and credit cards. Go figure.

So I do a little research on the charge and discover that it’s not from the place she never frequents, but rather from a place she visits ALL the time. I tell her the place and she says she hasn’t been there in….then it hits her! She was, in fact, there the day the charge had cleared her account. She had forgotten. She turns a little red and apologizes for the mistake. I smile knowingly - but only because I just like to pick on her anyway - and ask her if she has a check register. She says she does. I ask her if she’s using it. She looks down and sheepishly answers no. I told her she needs to use it; it will help her avoid the panic next time around. Apparently I sounded like her mom.

Sometimes bankers have the unenviable job of sounding like mothers, but keeping a check register is important on many levels. Not just for keeping balances, though that’s important, too. I get a lot of members that tell me they use online banking and that works for them. Yes, but what happens in a situation like this where you forget that you used the card at a certain place and freak out because you think you’ve lost your card? Or, the reverse where you don’t pay any attention to your charges and you may actually have fraudulent charges on the account. Having a register where you write down your transactions can help you monitor that. Keep in mind that most banks only allow you 60 days to dispute an item, so if you miss something from three months ago, to bad because you’re probably not going to get it back. It’s important to keep up with your account.

The other reason that you want a register is because there’s a difference in how your transactions will post. If you use your card as debit and enter your four-digit pin number, it usually posts to your account right away. I only know of a few who don’t post them right away. But, if you use your card as credit and sign for it, then it can take a few days to show up on your online banking. The reason is that it all depends on when the merchant batches out their credit files and sends them off for payment. Some go through the process every night and post them right away. Others may go every week. But, they have 60 days to post a transaction so if you haven’t written it down and they don’t take it out until 45 days later, it can cause some damage to your account if you’re not expecting it.

Ok, so how many of you out there have check registers and are actively using them? If you’re not, how come? Have you run into any problems not using one?

Popularity: 12% [?]

It’s Just Money!

And you can’t take it with you to the grave, so why bother saving at all? Enjoy the one life you’ve got to live and don’t worry about the rest!

Ok, I got that argument spewed at me today by someone who was unwilling to see the dangers in not saving. For him, money was just something that existed as a by-product of our wants and needs. He didn’t see the value in saving long-term.

I spent a good two hours talking to this guy about his financial picture. He genuinely was not concerned with money. While it must be nice not to experience the everyday stress most of us associate with money, I have to wonder if he had given any thought to his situation. He had no savings, two credit cards that were close to being maxed out, a minimum wage job with no desire to move beyond it, and nothing else that he actively wanted to pursue. I was concerned.

I asked him what he’d do in an emergency and he said that he’d use his credit cards - which were close to being maxed out, at 16%, and had nothing to offer him but high interest debt. I asked him how he would protect his family in the event that something happened to him. He said there was just him. I finally asked him how he planned to enjoy life when he was broke and living on the streets because he didn’t have two nickels to rub together. He looked at me, blinked, and then shrugged his shoulders. He hadn’t thought about it.

Sigh!

The fact is, unless you’re a monk living in a monastery, everyone needs money for one reason or another. It’s not about being able to take it to your grave. If you don’t want to worry about becoming a millionaire, fine. But money is a necessity for everyday living. Bills, food, gas they all cost money. Even if your sole mission in life is to enjoy each day to the fullest and not give a worry to tomorrow, you still need money to make that happen. Want to pick up and move, travel the world, go save the whales? Guess what, that all costs money.

I often find this mentality of living for today and not tomorrow in younger adults, yet they don’t really think it through in terms of their finances. The perception from the younger generations is vastly different from that of the baby boomers. Retirement was the goal, the end-game. It was where you pursued your passions and enjoyed the fruits of your labor. But, the younger generations these days don’t want to wait until retirement to experience the world. They want to enjoy it now, while they’re younger and able to actively be a part of whatever moves them. I understand the mentality and pursuing passion, I’m a big advocate of that. BUT, you still have to have a plan for your financial future if you hope to have a roof over your head and food on the table.

There are many reasons people choose to save. Among them are retirement needs, more choices when it comes to life, emergencies, and helping family and loved ones. Those who don’t care to wait until their retirement to enjoy life need to understand that money plays an integral part in everything we do from living expenses to backpacking through Europe. Almost everything we do requires money. Saving is the best way to make it happen.

What would you say to someone who told you it was ‘just money’ and not really important to save?

Popularity: 11% [?]

Is Outsourcing of the Financial Industry Feasible?

I read an article today that talked about the possibility of the financial industry outsourcing some of their positions. That got me thinking, is such a thing even possible? I mean I know it’s possible, but what I mean is, would it work? It’s not like the IT department that does everything remotely in most cases anyway. And the finance industry doesn’t manufacture anything. But, the fact is, the CFA test-taking numbers suggest that more and more people outside of the U.S. are fully capable of taking on Wall Street. analyst jobs.

For those of you not familiar with the CFA tests, they’re a three-year self-study course in financial analysis. It covers accounting, corporate finance, statistics, economics, equity and debt securities, derivatives, ethics, portfolio management, and much more. But, the test is really tough. They certainly don’t make it easy and it’s rooted in American accounting practices and given in English. Those who pass the test have the right to add CFA after their name, i.e. Kristy Young, CFA (I’m not, by the way, just giving an example). The acronym CFA stands for “Chartered Financial Analyst”, in case you didn’t know.

As I was saying, the test is really hard. But what’s interesting about this is that over 40% of this year’s 175,000 test-takers (remember we’re only half way through the year) were in Asia. And, according to news reports, job ads in the South China Morning Post actually require a CFA to even be considered. Now, if you’re a kid right out of college going to work for Wall Street with your CFA firmly in hand, your going rate is about $100,000 with a company car, phone, and laptop as your standard package. Depending on the company, you could even get an entertainment budget for those nights when it calls for you to entertain clients. But, we’ve all seen the effects of outsourcing. It costs the company far less overall. There is no need to provide a company car, phone, or laptop and there is certainly no need to provide the entertainment budget. Outside of that, the salary for outsourced jobs is less than what they pay the college kid on Wall Street.

While I’m not suggesting this is something that would happen overnight, if at all, I have to wonder just how feasible an option it might be. Financial analysts will always be in need, but with the economy in it’s current state, the weakening of the U.S. dollar, and the loss of jobs on Wall Street, who isn’t considering options to decrease their expenses right now? These savvy CEOs have probably considered outsourcing some of the analyst jobs to save a buck or two, and by ‘buck or two’ I mean thousands. Still, can people outside of the U.S. really offer the same kind of analysis someone in the thick of things can? The argument that someone outside the situation could probably provide a better understanding of the problem is valid, but somewhere there needs to be a line drawn. I don’t presume that any of us, no matter how well we did on a test, would fully understand the complexities of Asian governments enough to hold jobs offering strategic advisement of their markets. Because of that, I think the same holds true in reverse. There is no way that someone outside of the U.S. can fully understand the complexities of our markets to the extent that they can fully replace someone here. That’s just my opinion though, I’ve been known to be wrong before. However, I think these big companies will need to consider what such outsourcing would do to the economy. Wall Street’s a big place and that many job losses could really throw the market for a loop if they decided to outsource most of those positions.

What do you guys think? Would it bother you that someone managing your assets lived outside of the U.S.? Are any of you CFAs? I’d love to get your opinions on, first do you see such a venture happening, and second, how you would feel about it.

Any of you living outside the U.S. hold a CFA? How effectively do you think you can (or do) manage and analyze U.S. markets?

Popularity: 12% [?]

Bank of America Review

I thought I’d try something a little different and add a bank and credit union review, sort of like the credit card review that Jonathan did with the Amex card. Each week I’ll pick a bank or credit union and give a review of their services and fees - you guys are welcome to throw suggestions out there for ones you’d like to see reviewed!

The areas of the review are as follows:

1. Checking
2. Savings
3. CDs
4. Cool Features
5. Customer Service

This week’s pick: Bank of America

Checking Accounts

Bank of America has four main checking accounts - MyAccess Checking, CampusEdge Checking, Bank of America Advantage Checking, and Regular Checking.

MyAccess Checking:

The minimum opening deposit is $25, no minimum balance required thereafter. According to the website and their phone representatives, the online offer does not require direct deposit, but if you go in person to open the account, direct deposit and other service fees may apply. This is a non-interest bearing account.

CampusEdge Checking:

Same as the MyAccess, except it’s for students - high school and college. Students are also eligible for a “Stuff Happens” card which allows the owner to waive one fee assessed to their account. Once the student is no longer in school, the account converts to a MyAccess.

Bank of America Advantage Checking:

The minimum opening deposit is $100 and the monthly service fee can be waived with a daily average balance of $5000. Account allows loan and investment balances to be included to avoid monthly service fees. All loan and investment balances - except mortgages - must have at least $15,000 outstanding. Mortgages can be any amount. If requirements are not met, the monthly service charge is $20. This is a tiered interest bearing account; however as of now, all tiers are earning .05% APY. Users also get priority calling for telephone banking - means they get a special number to call and skip the line.

Regular Checking:

There is a $25 minimum opening deposit. To avoid a monthly service fee, users must keep a minimum of $750 in the checking account, or $2500 in the savings account. If below either of those balances, the monthly fee is $9 with direct deposit or $11 without direct deposit.

All checking accounts come with a free debit card (with picture), online banking, bill pay, telephone banking, and unlimited teller transactions. Non-Bank of America ATM fees in the U.S. are $2 for withdrawal or balance inquiry. Non-Bank of America fees in foreign countries are $5.

NSF fees: $25 per item for the first offense. The second offense and up within a consecutive 12-month period is $35 per item. Each day limited to 5 items.

Savings Accounts

There are two main savings accounts - Regular Savings and Balance Rewards Money Market.

Regular Savings:

There is no monthly fee with a $300 minimum or automatic transfers of $25 or more from a Bank of America checking account. Users are limited to a total of six withdrawals per month, three free and the remainder are $3 per withdrawal if the balance falls below $2500. Continued violations of the six per month will result in the savings account being turned into a checking account or shut down completely. It is interest bearing, .20% APY, compounded daily and paid monthly.

Balance Rewards Money Market

There is no monthly fee when linked to an Advantage checking account or with a minimum balance of $25,000. Otherwise, the fee is $20 per month. The account offers an annual cash bonus based on the balances in the account - a complete bonus schedule is available online. Offers limited check writing capabilities and can be linked to checking account for overdraft protection. The interest is tiered based on the balances, and runs from .5% APY to 1.55% APY.

CD Accounts

Bank of America offers CDs in terms of 28 days to 10 years. Interest rates are tiered based on the balance and run from 1.4% APY to 4.00% APY.

Cool Features

The cool feature for Bank of America is the “Keep the Change” program. When consumers use their debit cards, the purchase is rounded up to the nearest dollar amount and moved over to the savings account. For the first three months of a new account or set-up, Bank of America will match the savings penny for penny. Thereafter, they will match a total of 5%, not to exceed $250 a year.

Customer Service

Terrible. I went inside to get some information and was left sitting in the lobby for 25 minutes. When I asked for some literature on their accounts, the representative told me they didn’t have any but that he would be glad to explain the accounts to me. I agreed to hear him out and then he proceeded to basically read me off a memorized script about the accounts. It was methodical. I’ve heard from other employees that have left Bank of America and come over to other banks that they do require the employees to read an approved script.

Beyond that, the guy was interested in asking a bunch of personal questions without telling me what he was doing. I knew what he was doing, but from a customer’s standpoint, he should have explained. Not doing so put me on the defensive since I just wanted account info. Instead, I was bombarded with questions about my investments, mortgage, and car loans.

There are no direct numbers for a branch, which is really frustrating. If you want to speak to someone at your local branch for something as simple as directions, expect to be on hold with their 1-800 number for a period of time. The individual I finally got had an extremely thick accent that I couldn’t understand and I finally had to ask to be transferred to a supervisor just to understand what I was being told.

Bottom line:

Not my favorite. The products are decent - I especially like the “Keep the Change” program. But, interest rates are average and their service is terrible. They seem to be a company that does well for those with a lot of money - as evidenced by the priority calling for the Advantage folks; but those who don’t have a lot of money don’t get much for the hassle.

I’d recommend Bank of America for those who have a chunk of change they want to deposit or for those who like the nationwide aspect. Otherwise, you may find another institution better suits your needs.

Popularity: 16% [?]

Person-to-Person Online Lending

We’ve talked a lot about the fact that the credit crunch is affecting everyone. But take a group of people looking for loans at a reasonable rate coupled with a group of people looking for better rates of interest than the paltry sum banks are offering these days, and you get person-to-person online lending.

In case you’ve never heard of this, it works like so. A borrower can go onto an online lending site - like Prosper or Zopa - and request to borrow a specific amount of money for a specific amount of time. Then they’d list the max interest rate they would be willing to pay. From there, lenders will then bid on the requested loan amount. Most lenders will only lend any one person $50-500 because there’s a certain amount of risk for them if the borrower defaults.

These third party websites hosting the transactions between lenders and borrowers do a lot of the leg work for the lenders. They run the credit score of the borrower and assign a risk grade based on the score. That risk grade is shown to lenders and from there they can make their decision on how much, if any, to lend to that specific borrower. The websites also take care of the disclosures, paperwork, and collecting and distributing of payments in most cases. There’s also a bunch of U.S. regulations that these companies have to go through, so it’s perfectly legit. They’re licensed lenders and registered with the SEC, and some of them even have direct relationships with certain credit unions to make things more secure.

The benefit to lenders is of course the higher rates of interest. The minimum loan that these sites usually allow is $50. As I said, most lenders spread the risk a little bit so they don’t take such a large hit if one borrower defaults, but many people on these sites looking to borrow are there because they can’t get loans through the normal channels. So, they’re willing to pay higher rates of interest just to get the money they need. As a lender, you could potentially have a borrower paying you 18% interest for one loan, which is marginally better than 3% at your bank. And even if you have multiple borrowers that you’ve lent to, you’re still likely to have higher returns than what the banks are paying.

The companies providing this service to people are expecting over $100 million dollars in loans this year as people borrow to pay down their credit card debt, use the funds in lieu of student loans, and various other needs that arise. According to a study conducted by Javelin Strategy and Research, the number one reason people want to engage in person-to-person lending is to pay off credit card debt.

Neat concept, but does it work? Well, my coworker lent out $1000 on Prosper. She chose her borrowers very carefully and she never lost anything. Both of her borrowers paid their payments on time every month. Other lenders have reported equal amounts of success, citing only that some borrowers paid late on occasion, but their payments were always made.

Not having tried this either way, you’ll have to take my opinion with a grain of salt. I think it’s a great concept for those willing to take a little risk and lend to complete strangers. You can get some great returns on your money and unfortunately, banks just can’t compete with that. However, for borrowers, I’m not so sure that it will always work out to their advantage. Sure, they’re likely to get a loan when they really need it - and in those situations, that’s great - but someone with a 660 credit score can get a better rate than 18% with a bank. My suggestion would be to weigh the options and the interest rates and see which route is better.

I also don’t think this kind of lending should be for student loans. While I understand that the student loan companies are cracking down on their lending policies, at least through them payments are deferred until after graduation. With person-to-person lending, the due date is set from the date of closing and then you’re required to make your payments. Ultimately though, there are things both good and bad about such a venture.

I’m curious to know what you think - especially from those who’ve participated with these sites in one way or another. Would you borrow from such a forum? Would you lend?

Popularity: 12% [?]

Lifestyles of the Rich and In Debt

After reading an article in the New York Times I thought we should revisit our discussion of millionaires. Now, none of the clients I’ve worked with have done any of what you’ll find in the New York Times piece, but it does remind me of a trip I took to New York a few years back.

I was working for one of the larger banks at that time. About a year prior, we had completed a merge and switched over to the other banks computer systems because they were significantly more advanced. The company had decided that the New York branches were going to stay on the old systems for a year - no one really knows why. At any rate, my trip to New York was to help some of the branches become familiar with the new systems. I spent about a week down there and worked specifically with the bankers, teaching them how to upload loans and so forth.

The very first Monday I was there, a woman came into the bank and haughtily asked to speak to her banker. When her banker came up front, she was all smiles with him - they did the kiss on each cheek thing. Anyway, they went into an office and he motioned for me to follow him. He explained to her that I was helping him with the new system. I smiled politely and offered to shake her hand. She looked at me for a moment and then turned back to him. She told him that she would like to speak to him in private. Then she looked back at me and gave me a hard stare.

Taking the hint I told the banker I’d be back in a little while. He sat in there with her for 25 minutes before he poked his head out of the office looking for me. When I went back in, she was dabbing her eyes - careful not to smear her makeup. We proceeded to put in a loan application for her. I walked him through the steps and then left the room before she could tell me to get lost. What I found out later was that she was having financial trouble. Her husband was some big tycoon on Wall Street and apparently a lot of their personal assets had been tied into several funds that had lost money. It dropped their net income from about $15 million to about $4 million. But, their lifestyle was a $15 million lifestyle and they couldn’t afford to drop to $4 million.

None of that was her primary concern though. Apparently she was very concerned with what her friends would think of her. Like the NY Times article talks about, being snubbed in a public restaurant is the ultimate disgrace for these socialites. She even asked about liquidating some of their remaining assets over a period of time to make up the difference because she couldn’t sell her car or her jewelry - her friends would notice.

It’s almost disgusting to those of us struggling to make mortgage payments and meet our regular bills to read stories of the really wealthy stressed out because their income dropped from a 9-figure to an 8-figure. But, to their credit when they’ve lived a certain lifestyle so long, it’s hard to imagine living any differently. We laugh at shows like the Simple Life because it’s a bunch of spoiled heiresses joining the real world, but a lot of these socialites who’ve inherited their wealth and never had to earn it have no clue what it’s like to be without money. So when the economy takes a turn for the worst, they feel the pinch just like everyone else.

For me, the difference is in how they accumulated their wealth. Heirs and heiresses who’ve never had to work a day in their life don’t really appreciate the value of hard work or a dollar, for that matter. For them, money has always been there for the taking. In our last discussion of millionaires, we focused on stories of people who worked their way up to millionaire status; it wasn’t just handed to them. To that end, those people know how to be frugal with their money so even in an economic downturn their lifestyles don’t change.

Do you feel sorry for the rich people who find themselves in these situations? Or do you think they need the reality check?

Popularity: 13% [?]

Justifying 3-6 Months of Expenses in Savings

First, thanks to Megan for asking the question. The Dave Ramsey debate is still raging on so if you haven’t weighed in, please do so! We’d love to read your opinions. But Megan asked how we can justify leaving 3-6 months worth of expenses in a savings account only paying 3% when there are clearly other investments that can offer a better return.

The answer: that money is intended to cover expenses in the event you lose your job, become disabled and unable to make payments for a period of time, or if something happens to one of the breadwinners in your family. Yes, there are certain insurances that cover most of these things; however, most have stipulations on how long before they kick in, how much and how long they will make payments, and even as to what will be paid. There is no such insurance for being laid off. Can your family really afford to take the risk of not being protected in the event one of these scenarios takes place? Can your credit report afford it?

Some people have suggested the use of credit to cover these types of emergencies; however, I think that’s asking for trouble when you start relying on your credit cards to cover your monthly expenses without the intention of paying them off at the end of the month. An occasional emergency here and there isn’t a big deal and a good reason to have a credit card in the first place. But we’re talking about having at least six months of expenses saved here. If you lost your job and were out of work, how would you pay the credit card back? You could end up defaulting on the card and disparage your credit report in the process. This is also why I think it is important to have the savings account and contribute as much as you can until you reach the six month’s of expenses, even if you have debt. Again, if your income is suddenly gone, how would you pay for anything? Credit is an option for a while, but eventually that runs out and the bills have to be paid. What then?

So for me the justification is simple: I need this money just in case something was to happen to me or in case I lose my job. I would rather only be paid 3% and pay no penalty fees if an emergency comes along as opposed to earning a better rate of return in investments but then have to pay penalties and taxes if I need the money. Not to mention the fact that investments can lose value and even though I started with six months, I could potentially have nothing if I ever need it. Investments are meant for the long haul, pulling out early could hamper your earnings. However, there is no need to have more than six months expenses saved at any one time. I’d say more than that and you’re losing out on better opportunities.

Still, that liquid savings account is fairly hard for some folks to swallow and I completely understand. Another option to consider would be certificates of deposit (CDs). Now, CDs aren’t 100% liquid; however, they are 100% safe and your money will be there when you need it. Most institutions will charge you a fee to withdrawal early, but most don’t touch your principal, only your interest. So, if you ever need that money, it’s there and it’s safe; but it’s also earning a little better than just a savings account. That option is completely up to you. I personally like the savings account because I just don’t like to spend money when I don’t have to. But that’s just me.

What do you think? Is it justified, or just a waste of time?

Popularity: 20% [?]

Do You Work to Live, Or Live to Work?

I have a friend from Germany that has moved to the states to work. He’s always wanted to live here, but now that he’s here he’s wondering whether or not he made the right choice. We got into a conversation about it the other day and he said the biggest difference between Americans and the rest of the world is that Americans live to work; everyone else works to live.

That statement was simple, yet very profound for me. I definitely live to work. I haven’t had a vacation in more than ten years - not a real one anyway - I haven’t stopped to smell the roses in I don’t know how long. My life is consumed with my work and school. My friend, on the other hand, working only to live goes sailing every weekend. He enjoys the simple things in life like a picnic in the field on a warm spring day or a drive through the countryside at dusk. These small pleasures that are simple and free, yet we often take for granted.

So now that I was feeling thoroughly depressed with how hard I seemed to work and how little I seemed to play, I thought about it a little more. Is it a bad thing to work as much as I do when you love what you do? Doesn’t passion count for something?

To be fair, my true passion is writing and I’m not doing nearly as much of that as I’d like. While I love the financial industry and helping people, if I’m honest I do it because it provides me the money I need to pursue my passion of writing. And while I occasionally get paid for my writing, I’m not so sure I’m ready to cut the safety net of the financial industry. But, part of my job in the financial industry means I keep up with financial news around the world and in the U.S., at least as much as possible. What I found today was both inspiring and deflating in equal measures - how’s that for injustice?

Kiplinger’s gave a report on a couple in Florida who have little debt, a new baby, one spouse working the steady 9-5 gig and one spouse doing the freelance gig. The one working 9-5 is Todd and his passion in life is to make films. He’s part-owner of an indie production company that’s made some acclaimed short films and now they’re seeking out investors to help develop feature films. The trouble is, he’s only able to devote himself part-time to this venture because his priority is to the job bringing in the income.

Todd and his wife are doing modestly well with $135,000 saved in retirement accounts, a liquid savings account with at least 6 months worth of expenses saved, and little debt - in other words, their finances are an excellent model of where a couple their age should be; however, market experts say now’s not the time to leave his steady job. Now’s the time to stay his course and keep the benefits given the uncertainty of the economy. That’s definitely a wise course of action, whether the economy is bad or not. While your passion may be a dream you’ve longed to pursue, when you have obligations that passion sometimes has to take a back seat to your life. Still, it has to be insanely frustrating to be so close yet so far away from his ultimate goal.

Clearly my inner artist is craving attention today as my post is more folly than practical, but assuming that we didn’t have bills to pay or had responsibilities to tend to, where would your passion lead you?

Popularity: 17% [?]

5 Financial Myths Debunked

Every once in a while I’ll hear a new piece of lunacy about the financial industry and the things that people think are true. Some of my favorites include ‘requiring citizens to pay taxes is illegal’ and ‘checks float longer if they’re written in red ink’.

*sigh*

First of all, if you decide not to pay your taxes, I hope you’ll be very happy in prison when they come to collect you. If you think it’s perfectly legal to avoid your taxes, look throughout history and the news to see what happened to those who didn’t pay. Um, hello? Al Capone?

As far as red ink goes, the best I can figure on this is that people assume the scanners have a hard time with the red ink and it slows down the processing of checks once they reach the Fed. Hmm…nope! Now, gel pens do tend to trip up the scanners a little and what ends up happening is the Fed sends it back. Rather than having more floating time, you’re slapped with a Returned Item fee. As a side note, that little trick of floating checks when you don’t really have the money is called kiting and it’s illegal. Just in case you didn’t know.

But there are some financial myths out there that exist simply due to a lack of knowledge. There are five that I want to talk about today.

1.) I don’t need to learn about finances because my spouse handles all of that.

I can’t stress enough how important it is for spouses to share financial information and responsibility with one another. Even if one person is primarily responsible, the other should have a working knowledge of who they owe money to and when the bills are due.

I have a friend at the credit union whose husband took care of the family finances - I’m not really sure why as she was the banker and he was in construction, but that’s how it was divvied up. He took care of everything and only asked that she provide him with receipts when she spent money. She was always really careful to discuss any purchases with her husband - which was good since he took care of everything, but she couldn’t tell you who or what they owed.

Unfortunately, not too long ago, her husband had a severe heart attack and died. Her world was literally turned upside down. She didn’t know the first thing about where to begin and it took several of us to help sort through the mess. She had bills coming in she knew nothing about, she had money placed in several different accounts with different banks, and she discovered that they owed money to the IRS and that her husband had made payment arrangements. Suddenly, his very uptight mood about money made sense. But, it didn’t help her much when it came time to figure out it all out. Also, with divorce rates so high it’s a very good idea to at least familiarize yourself with your financial situation.

2.) Saving for your child’s education is more important than saving for retirement.

While every parent wants to provide their kids with the things they never had growing up, it shouldn’t be at the expense of your retirement. College funding can be achieved through many different avenues including scholarships, grants, student loans, part-time jobs, and payment plans. Retirement planning doesn’t have anything comparable.

3.) You need to make more money before you can start saving.

If that were true no one would ever save - and it’s the reason that the nation is so far in dept. The trick isn’t to make more money. If you live above your means, you will always live above your means regardless of what your income level is. The way to save is to learn what living below your means is and make a budget that keeps you there.

4.) All credit cards are bad.

Now I know I’m going to catch some heat for this one because there are folks out there that just don’t get along with credit cards. Well, I’m sorry to you guys, but the truth is, credit cards aren’t all that bad. The problem comes in when consumers misuse the credit cards. To be fair, credit card company practices are deceptive and the reason for many people’s ire, but that doesn’t mean the credit cards themselves are all bad. Using credit cards responsibly and repaying your debt timely can help build, re-establish, and maintain a credit rating.

5.) I’m under 18 so I can’t be held accountable for debt (or the counterpart: debt disappears at 19)

While the first part of this is true - anyone under 18 can’t legally sign a binding contract, many credit card companies will allow the minor to have a card with the caveat that there is a responsible party on the account. Guess what, Mr. Responsible, you’re now liable for that debt. If your teen went on a little spring break spree and ran up a bunch of hotel charges on the card, you’re stuck paying them. It’s important to educate your teenagers BEFORE handing over the plastic.

On the flip side with this one, contrary to many teenagers’ beliefs, debt doesn’t just magically disappear at 19. If you’ve got credit problems at 19, it’s probably going to take some time to sort through them and get them cleaned up. Take it from me, the sooner you start the sooner you’ll be free of it. Parents, you’ll be doing your teenagers a world of good if you make sure they understand this rule, as well.

And that’s it. What other financial myths can you think of that are completely bogus?

Popularity: 16% [?]