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The www.FedPrimeRate.com Personal Finance Blog and Magazine

Friday, August 29, 2008

Applying For Unemployment Benefits Can Blow Up In Your Face

Sometimes you just don’t finish on top. The last time I worked a job was quite a few years ago, and unfortunately, I was fired. I was chronically late, and at a call center, that’s very bad. Very bad. That last time that I was late, I had a great excuse for not making it on time, but there was no room for negotiation. I had acquired too many demerits in too short a period of time, so I was let go.

The next step for me was applying for unemployment benefits. I had always been warned that getting fired from a job could disqualify one from receiving them, but my mom advised me to apply anyway. “The worst thing that could happen is that you get denied, right?”, she asked. I agreed with her sentiment and went for it. They approved me, and I was relieved. I would be getting married in less than six months, so I couldn’t afford to go from a full-time income to no income at all. I figured that since I would be moving to a new city once I got married, never to work again, I could simply receive the unemployment benefits until they ran out, and life would go on.

And that’s exactly what happened.

That is, until I received a letter from the state at my new address 150 miles away letting me know that my unemployment benefits were being disputed. I couldn’t believe it; I didn’t even know that such a thing existed. I received unemployment checks for months - why would the company dispute my eligibility after they had already paid the money? I was so young at the time that I didn’t even realize that it was my former employer footing the bill to begin with, so the entire ordeal was a whirlwind of confusion and questions. It also hurt my feelings because my former manager and boss personally signed off on the dispute. It truly was business, and nothing personal, but it sure felt personal. I couldn’t understand the fairness in being approved for unemployment benefits by the state and then being denied after the fact. If I was receiving unemployment benefits, the assumption would logically be that I do not have enough money to pay them back, or else I wouldn’t have needed them to begin with! I felt like I was being robbed at gunpoint.

And that’s almost what happened.

There was a hearing, and it did not go well. My former employer had a lawyer present - I was totally blindsided. I didn’t even know I needed legal representation, considering that the hearing was not before a judge. They ran me through the mud, my former manager speaking about me as if we never had any camaraderie at all. I was ordered to pay back every dime of a benefit that I was told legally belonged to me. However, just spending all that we had on our wedding and post-nuptial activities, we didn’t have the few thousands dollars that my former employer demanded. And so our joint state tax returns were garnished for a few years.

I later found out that I was not the only person I knew who had experienced this. Another young friend of mine found himself behind the barrel of the same gun, except General Motors was conducting the stickup that time. Who knew that just like buckshot spraying from a barrel, applying for unemployment benefits could blow up in your face?

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Thursday, August 28, 2008

How Safe is Your Car? Getting Bullied into Unnecessary Repairs by a National Auto Repair Chain

 Getting Bullied into Unnecessary Repairs by a National Auto Repair ChainUnscrupulous mechanics have been ripping off naive customers long enough that it's almost a cliché, something you take for granted when you're dealing with a national chain like Just Brakes, but small-time operators aren't the only mechanics who deserve an unsavory reputation. If my experience with the hustlers at Just Brakes is any indication, it may be that the last honest mechanics are the small, family-owned outfits and that corporations with slogans like, "At Just Brakes, We Really Do Care!" should offer their customers a complimentary bottle of water, considering what they expect you to swallow.

I went to Just Brakes because I saw an ad that offered new brakes for $89.99, and a friend said that was a pretty good deal. I know next to nothing about cars, and my brakes had been squeaking for a while, so, advertisement in hand, I took a drive down to the nearest Just Brakes shop to see how quickly they could take a look at my beaten-down Chevy. All but one of the shop's bays were empty, so the counter man took my keys and said to have a seat. While I was waiting, I marveled at just how many people Just Brakes paid to work the counter. At first, it looked like just the one, but two more neatly dressed men with “Sales Associate” tags showed up to loiter behind the counter. These weren't bored mechanics, and it set me wondering why the place employed as many people behind the counter as they did in their garage.

About ten minutes later, a grim-faced mechanic came to the office and asked if I was the one who brought in the Chevy. Together with the sales associate who took my information down when I first arrived, they ushered me into the garage to explain just how screwed up my car really was. The counter man took out a little clipboard and started jotting down every thing the mechanic said, while the mechanic focused on visual aids, like the sheet where he'd written down the measurements for my brake pads. He talked fast, and I lost track of the names of parts and systems right after calipers and rotors. The only thing I heard really clearly, before they started talking price, was when he showed me the range of numbers my brakes should have matched, the “safe” measurements, and I thought it was odd that what he wrote down for my brakes seemed to fall into the “safe” range, only he didn't say that my brakes were safe. He said everything from the brake pads all the way to the ruptured shocks would need to be replaced.

“How much are we looking at?” the sales associate asked, eyes on his clipboard.

“This much work, probably a thousand or more.”

It felt like the bottom had dropped out of my stomach. I didn't have anywhere near that amount in my checking account. I probably could have bought another car for a thousand dollars. Instead of saying that, I told them I couldn't afford the repairs.

The sales associate nodded compassionately. “What do you think? Is there anything we can do for him? I mean, man's got to get his car fixed. We can't let him keep driving around in a car that's not safe. How much can we shave off that?”

I watched the mechanic's eyes and suddenly I understood exactly what was going on. This was a routine, rehearsed, performed, perfected. There were three people working the counter because it was a two-man job. First, the mechanic bombards you with a list of brake problems, ticking them off so quickly you don't have time to examine the evidence. Then his partner, the man with the clipboard, backs him up and asks for a number that's way too high. The mechanic obliges. Then they conveniently cut the price, so it looks like you're getting a bargain.

My bargain was still going to run more than $600, so I told him again I just couldn't afford it. I didn't tell him I thought I was being scammed and just wanted out. That's when the salesman with the clipboard got in my face, angry and aggressive, and asked me why I was wasting his time. “Why'd you come here and waste my time if you haven't got any money?” I said I had the money for the brake replacement they advertised, but not for almost a thousand dollars worth of work. He kept the pressure on. “You understand, this car is unsafe. If I let you out of here with this car, you're going to be driving around in an unsafe vehicle. I can't just give you new brakes if the rest of the car is unsafe. You feel me?” I explained again that I couldn't afford the repairs and he backed off. They had me wait out front and drove the car out to me a few minutes later, emphasizing again that the car was unsafe and that if I had a credit card or something I could use, someone who could loan me the money, it was in my best interests to get the repairs done because they couldn't be held responsible if I drove off in an unsafe car.

Hammering me over and over again with how unsafe the car was achieved the desired effect. I went straight to a local mechanic, Bob Clarke, who'd been doing my oil changes for years. I figured if the brake problems were real, my mechanic wouldn't try a two-man con job just to sell me on the repairs. Mr. Clarke looked the car over himself and came back a little while later with a funny look on his face. “What exactly's wrong with it, Chris?” I told him as much as I could remember from the laundry list of problems Just Brakes had described, and Mr. Clarke said there was nothing wrong with the brakes, the car, anything. He couldn't in good conscience charge me for anything except cleaning the brake pads, which wasn't even necessary, he said. One thing he did notice that troubled him, however, was that the radiator cap had gone missing. When I said how I'd been treated at Just Brakes and how angry the salesman had been when I didn't authorize the repairs, Mr. Clarke said he'd seen just this sort of thing before. An unscrupulous mechanic will do a minor bit of sabotage, like stealing a radiator cap, so that the car will seem fine for a while... and then, dramatically, go bad. He suggested before I go calling the dealer for a replacement, that I call Just Brakes. “Just see what they say when you mention that the cap is missing. Most people wouldn't have noticed a thing like that until the damage was already done.”

I did just what Bob Clarke suggested, and as luck would have it, it was my sales guy who answered the phone. I asked if he remembered me stopping in earlier in the day. He did. His tone was very neutral. I said that when I checked under my hood, my radiator cap seemed to be missing. Long pause. He said to come right back and they'd take care of it. As soon as he saw me pull up in front of the Just Brakes garage, he was already walking outside with a replacement radiator cap in hand, still mint in the plastic bag. He handed it to me, said nothing, and walked back inside.

Not only did these hustlers try to con me into hundreds of dollars in repairs that I didn't really need, they tried to set me up for engine problems by snatching my radiator cap. Maybe it was a simple mistake, and in their haste to get rid of me when I couldn't pay for their fake repairs, the mechanic forgot to put it back. That would have explained why they gave me a new one, no questions asked, but why give me a whole new radiator cap? What happened to my actual cap? And how many other people were rooked into paying for ridiculously expensive repairs because they were bullied into thinking their cars were unsafe?

I've read up on Just Brakes since then, and I am not the first person to be hustled by them, nor will I be the last. At least one former manager from the company has come forward and exposed the company's sleazy tactics and dozens of customers have reported them to the Better Business Bureau and online consumer sites like RipOffReport.com. If you see one of their ads, no matter how promising the bargain, steer clear or you may find yourself driving an “unsafe” vehicle, too.

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StudentLoanJustice.org

Student Loan Debt
Student Loan Debt
Was reading the New York Times on Sunday and came across an article about the StudentLoanJustice.org website. It's a web space you must visit at least once if you or a member of your family has student loans. Site is chock full of content that's both shocking and engaging. This site is not just a place to read up on the injustice that exists in the American student loan industry, it's also the official website of the StudentLoanJustice.org Political Action Committee (PAC).

Here's a clip from the site's "about" page:

"StudentLoanJustice.Org is a grassroots organization started in March, 2005. The purpose of StudentLoanJustice.Org is to give borrowers who's lives have been adversely affected by the predatory, uncompetitive laws that have been passed by Congress since the 1990's a place to tell their stories, to conduct research about higher education legislation, higher education lenders, the effect these have had on the lives of citizens, and to cause a solution to be legislated. Without advertising, revenue, or staff, StudentLoanJustice.Org has grown to thousands of members across the country comprising every state in the Union..."

When I defaulted on my student loans, it was because I didn't want to make the payments. I was trying to get ahead in life. I didn't think the government could or would take every penny I had in my bank account. But that's exactly what happened; I learned a hard lesson.

The U.S. economy is languishing right now, and I'm certain that a consequence of the economic downturn will be lots of Americans defaulting on their student loans in the months ahead. Many will have legitimate reasons for defaulting, like an unexpected illness or unemployment. And here is a very ugly truth I learn at the StudentLoanJustice.Org site: Sallie Mae CEO Albert Lord made more than $230 million in compensation since the late 90's, and a significant portion of that money came from the fees associated with borrowers defaulting on their student loans. Lord got so fat from student loans that he put in a bid to purchase the Washington Nationals baseball team.

Now, if a CEO grows a company's profits during his tenure at the top then, yes, he should get a generous bonus. If a company goes from grossing $3 billion per year to grossing $35 billion, then a bonus of $500 million is OK with me.

But banks that are in the business of making student loans are not like banks that make business loans, originate mortgages or issue credit cards.

If a borrower suddenly finds himself in financial dire straits and can't make payments on his/her student loans, that person can't get the debt discharged via bankruptcy, thanks to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 [1][3]. Default on your loans, and the fees will pile up (don't forget about the interest.) Those fees go to student loan specialists like Sallie Mae, and make CEO's like Mr. Lord very rich. To me, it's obscene that a CEO can get rich in this way.

There are some interesting articles and OpEd's here.  You can share your student loan horror story here.

Many Americans have shared their student loan horror story with StudentLoanJustice.org here. It's truly amazing how many defaulted due to hardship only to find that their student loan debt has doubled, tripled and even quadrupled due to interest and fees. No, it's not amazing, it's disgusting.

In a recent blog entry, I was second guessing my decision to use a significant chunk of my savings to payoff my student loans. After reading unnumbered horror stories at the StudentLoanJustice.org site, all my doubts have disappeared. Yep.

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Wednesday, August 27, 2008

After 9/11 Creditors Told Me, "There's Nothing We Can Do"

My husband worked on the 81st floor of Tower One in the World Trade Center for a company called Network Plus. On September 11th his entire office managed to climb down all 81 flights of stairs and escape just minutes before the buildings started to collapse. His boss guided the entire team of salespeople down and encouraged my husband to continue when he felt tired. At one point my husband’s boss even left the team in order to help carry a woman in a wheelchair down the stairs to safety. Miraculously, she survived as did everyone in my husband’s company. As the highest office to have every member survive, Oprah Winfrey even had them appear on her show.


The ordeal was stressful enough for us to deal with, and after a few weeks passed the company he worked for went out of business. They tried to survive by relocating but the entire city was in such turmoil that the company simply couldn’t make it work. I realized that my husband was the bread winner and I had no idea how we were going to pay for our bills. We had managed to accrue quite a lot of credit card debt and now had only my small teacher’s salary to pay for it all. As the bills continued to pile up I started to make phone calls to the credit card companies with the hopes of working out a payment plan. What ended up happening instead was my filing for Chapter 7 bankruptcy.


Before September 11th I had a credit score of about 650 and had over $10,000 in credit card debt. My payments were always on time and I rarely had any problems. Most of my debt was due to department store credit cards such as Macy’s, Ikea, Express and Spiegel. I also had an electric bill that I couldn’t pay and a cell phone bill which piled up. The interest rates were sky high, over twenty percent for each card and I knew if I didn’t work something out I was going to sink fast. Paired with the late fees I knew it would happen quickly if I didn’t do something fast. The largest amount I owed was to American Express and since they require payment within thirty days they were the first company I called.


To say that American Express is cold-hearted would be a nice way of describing them. I explained to the representatives over numerous phone calls that I wasn’t looking to get out of paying the $2,000 I owed them but that I needed more time than the thirty days. They could care less. They didn’t even sound sympathetic when I spoke to them nor did they seem to care about my situation. As if programmed like a robot, each representative I spoke with said the same thing to me, “there’s nothing we can do”. They would take nothing less than the full amount owed and as long as I didn’t pay it the late fees would continue. The late fees started to add up into the hundreds as November rolled around.


The other department stores sometimes sounded sympathetic when I told them about my situation but could do little to nothing to help me. The representative I spoke to at Spiegel was distraught to hear about my situation and immediately put her manager on the phone. He explained that there was little he could for me except to lower my interest rate from a 22% to a 12%. He waived one late fee for me but gave me no extension.


I found that no one really wanted to do me any favors at all. I explained to each one that I simply needed a two month period during which no late fees or other charges would be given to me. Even when I explained that I would be forced to file for bankruptcy they still gave me the same line – “there’s nothing we can do”.


The only company that helped me out was the bank that issued my student loans. Citibank immediately issued me forbearance for my student loans and gave me no problems whatsoever. They were nice and understanding and were actually the only company that did anything to help me during the difficult time.


My credit score began to plummet as did my credit history. After I filed for bankruptcy in December my score dropped to the low 500’s and stayed there for years. I couldn’t rent an apartment and I had a hard time getting utilities without paying a deposit. The funny thing was that my husband found a new job within months and our income was back where it was before, but none of that mattered when companies looked at my credit report.


Today my credit is back up to a 620 but is still marked with the bankruptcy. If the credit card companies had taken the time to work with me they would’ve had their money and I would’ve kept a clean credit report.

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Is Leasing A City's Waste Treatment Plant A Good Way to Raise Cash for Students?

Mayor Don Plusquellic of Akron, Ohio has an ambitious plan to help graduates of Akron's public high schools pay for college and trade school. The plan: lease the city's waste treatment facility to a private contractor and generate as much as $200 million.

Yeah, I know. You're thinking that maybe this story is a hoax, that it belongs in the Onion. But it's not. Click here to read the AP story.

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Tuesday, August 26, 2008

Can You Get a Good Job With Bad Debt?

People generally go to college to get the tools they need to get a great job. A degree gives you the credentials you need for professional employment. However, the job hunt doesn’t start after graduation. One of the benefits of the college experience is the opportunity to attain internships and student positions that are designed to lead to permanent placement. They’re the diamonds in the rough that lead to the very job security people attend college to obtain. My best friend landed such a job, and despite how much her employers liked her and how qualified she was for the position, she was still very uneasy about her future.

It turns out that you need more than a great resume and an education to get a good job these days.

My friend applied for a student position with the U.S. Army as a civilian working on base. She would be hired as a technical writer, which was right up her alley. As an English major and a freelance résumé writer, my friend could create instruction manuals for equipment usage or artillery assembly in her sleep. Technical writing takes a skilled pen and an analytical mind, and she has both. So, from the moment my friend saw the listing, she got excited because she knew she had a real shot. The salary was nice and they offered tuition reimbursement. She knew that this was her job. Since she is a skilled résumé writer, she has never applied for a job and not received an interview (her résumés are that good), and she knew her résumé would also serve as a preliminary writing sample. She could kill two birds with one stone!

And that’s exactly what she did.

She got a callback and an interview. In fact, there were two interviews. In both of the panel interviews that she had to undergo, she absolutely shined. She’s just one of those people who knows how and when to turn on the charm, you know? I never did as well as she does in the standard, run of the mill, one-on-one interviews most people get from potential employers; yet in two separate panel interviews, she was able to handle the pressure and even impress them. If that scrutiny weren’t enough, there was the extreme background check; she had to fill out a form that was between 40 and 50 pages long, recounting almost every significant aspect of her life. It was so detailed that she had to give the names, addresses, and contact information of every person whom she had lived with for seven days or longer over the last ten years! How can you ask a college student who has had various roommates to give you that kind of information? It was a nightmare just gathering all of the information that they required. They looked into every job she ever had and anyone who she ever called a friend. It caused me to be a bit paranoid, being her best friend since childhood. I felt like I was under the microscope, too. Yet, despite it all, she passed the very extensive background check. She told me about how much her interviewers liked her. It was an exciting time for her.

That is, until she found out that they would also be checking her credit.

We both panicked - at the time she had a little over $10,000 in unsecured debt besides her student loans. It was also bad debt - as a full time college student she wasn’t making enough to may her bills, so those accounts were in collections. If the credit check was a part of the hiring process, my friend knew she was toast. We tried to remain optimistic about it, thinking that maybe they would let it slide or somehow the results would slip through the cracks. For a moment, there was a small ray of hope; she received an acceptance letter saying that she had been hired and received clearance to begin working. Then, the dreaded reminder at the end of the letter - she would start after her pending credit check was completed.

Of course, the credit check caused a problem.

My friend was called in and her would-be manager explained that her bad credit history posed a unique security risk that would prevent her from being employed by the Armed Forces. Because she would have access to extremely sensitive information, her financial woes could very well serve as a bargaining chip for terrorists seeking information. In a nutshell, they could not afford to have people who may be desperate for money walking around an army base with access to classified information and areas. They did, however, tell her that if she paid the debt off she could reapply. Without the job, she couldn’t afford to pay off the debt. So, a great opportunity was lost because of previous financial irresponsibility. Soon after this experience, my friend, an older student at the time, filed for bankruptcy.

Ironically enough, she was later hired by the IRS!

Go figure…

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Monday, August 25, 2008

The $4000 "Free" Trip to Paris

My oldest child has retinitis pigmentosa, a degenerative eye disease that slowly erodes her vision. She is now legally blind, but eventually, she will lose all of her sight. Her world will go dark forever, and there’s not a thing I can do about it. Some day, medical science will hopefully find a cure, but until then, we deal with the situation as best as we can.

My daughter has had a fascination with Paris ever since I read the Madeline books to her when she was very, very small. When she got older, she told me quite often that someday she was going to go to Paris. I smiled, but I just kept my thoughts to myself. One day, she came to me and point blank asked me to take her to Paris so she could see the Eiffel Tower before she went blind.

My heart just broke because as a single American mother of 4 children going through a horrific and costly divorce, Paris was just not on my “can do” list. There simply was no way I could even dream of affording such a trip. I tried to do the best I could for her—I got her French lessons and books on Paris. I bought her an Eiffel Tower 3-D puzzle and helped her put it together. I hoped that she might accept this instead of the real deal but all of these things made it actually worse.

I was homeschooling my children at that time and they were attending a local homeschool co-op where I taught. My daughter was taking French lessons there and happened to mention to her teacher that she wanted to go to Paris before she went blind. The teacher had actually lived in Paris and still had contacts there. She didn’t say anything to my daughter or me, but she began to work on that Paris trip.

The group began to do fundraisers and spread the word that they were raising money for a community service project. The project: granting a wish to a handicapped child which would allow her to see Paris before she lost her sight. Our community rallied behind this project and the group collected enough money to send both my child and I to Paris for 2 weeks along with the French teacher as our guide. Another mom in the group agreed to keep my other children for free.

When the French teacher told my daughter and I that we were going to Paris after class one day, my child cried tears of joy. She was SO happy and I simply couldn’t believe it; maybe the world wasn’t such an awful place after all. The teacher bought tickets for the airline as we assumed (wrongly) that my ex would be excited for his child to go to Paris, especially since it was free, and would help in any way he could.

I went to my ex and told him about the trip and asked him to sign the paper for the passport. He refused. I went again and again and went with friends and he still refused. I had my lawyer write his lawyer a letter and they never responded. The Paris trip was approaching.

I know it sounds stupid. I mean, why wouldn’t the man just SIGN the paper and be done with it? To understand that, you’d need to understand a little bit more about the relationship the ex and I had. My ex was a very abusive, controlling man. He also had been diagnosed schizophrenia, borderline personality disorder, and oppositional defiant disorder.

Another thing that happened shortly after I left and filed for divorce was that my daughter had admitted to a counselor that he’d been abusing her during her court ordered visitation. Because of this, he’d lost his visitation privileges for a time. They’d been recently re-instated, but he was furious. He was angry that I’d left him and filed for divorce; he was angry about the abuse charges; and he was mad that we were moving on with our lives without him. We were going to pay for what we’d done to him, and this was the perfect opportunity for him to demand payment.

My lawyer advised me to sue him in court and ask the judge to order him to sign the paper. The only catch—it would cost me $3000. I signed the papers and charged the 3k to my credit card. I remember how angry and embarrassed I felt. I simply couldn’t believe that one nasty man was spoiling this wonderful thing for everyone. Strangers had, out of the kindness of their heart, given of their time and money to make this possible for our child and he was going to spoil that. Another thing, how can you deny your child her wish to see Paris before she went blind, if the trip is FREE? How? He was a cruel, heartless person indeed.

The day of the court hearing arrived and we argued our points in front of the judge. The ex’s lawyer argued that our daughter should not be allowed to go to Paris for a whole bunch of stupid reasons and asked the court to deny my request. My lawyer argued that our daughter should be allowed to go to Paris for a whole bunch of reasons and asked the court to grant me my request. Many of those who had contributed to the wish fund were present observing the court session. They too were shocked that things had gotten to this point.

After a brief recess, the judge agreed to grant me my request. He ordered my ex to sign the passport and allow our daughter to go to France and then the judge left the courtroom. This is when the ex, his sister, and his lawyer made a break for the exit. They had no intentions of obeying the judge’s order.

I lost them in the crowds as the different courts let out. I can not even describe the amount of anger I felt at that point. Well, maybe I could describe it, but my description would be peppered with a lot of not so nice words. I saw that across the hall, the ex had taken the elevator with his lawyer and I ran for the stairway followed by a bunch of the people who had supported me. We ran down the stairs and found…nothing. He and his lawyer were gone. I ran out of the courthouse and there they were, talking in one of the gardens in front of the courthouse. I ran up to them both and they were shocked.

“The judge told you to sign this. Do it now.” His lawyer started to argue that he couldn’t and make a whole bunch of excuses when the rest of the group of my supporters caught up with me. The ex and his lawyer were surrounded by a group of us…all very, very angry.

“Sign it. Or I’ll call the judge and report you to the Bar Association.” His lawyer, seeing we meant business, told him to sign.

The crowds started cheering and the ex and his lawyer left. We walked to the parking garage, and the ex’s sister came out of nowhere and tried to hit me and get the passport paper away from me. My friends helped me to fight her off and we continued walking.

I know, it’s incredible, but it really happened this way.

I expedited the passport application, which cost me several hundred extra dollars, but I did get the passport back in time for the trip. The judge had also ordered that my ex be allowed to contact his child for regular phone calls of 1 hour 3 times per week. It was my job to pay for these expenses too. This cost me several hundred dollars as well.

If my experiences were a commercial, it would read this way:

“Free” trip to Paris for 2: $4000
Knowing that your child has seen the Eiffel Tower before she went blind: PRICELESS

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Saturday, August 23, 2008

When A Family Member Commits Identity Theft

I applied for and received my first credit card in college. I had no credit history, so I had a clean slate to start with. Soon after, pre-approved credit card offers started arriving at my apartment and my parent's house. The temptation was too much for my mom. She applied for and received two credit cards in my name. I first suspected that something was up when an envelope addressed to me arrived in the mail, but she refused to let me see it. Even though I had a nagging suspicion and a bad feeling, I chose to ignore them. She was my mom, after all. I didn't think she would ever do anything malicious to me.

After I graduated, I noticed statements arriving at the house for credit cards I didn't have. I opened one and discovered it had a $6000 balance. I didn't want to say anything, and I didn't. I still wanted to believe that my mom would never do anything to hurt me, but eventually, I did ask when the balance continued rising. She told me she was building my credit for me. I was young and had no practical knowledge about finances, so I accepted her excuse, even though the idea still felt wrong.

About five years later, my mom quit her job to open an antique store. She needed money to purchase inventory, rent a building and pay start-up fees. She borrowed against her retirement fund, and when that was tapped out, she cashed checks from credit card companies. I should rephrase that: she cashed checks from my credit card companies. I remained blissfully unaware until I noticed my statements no longer arrived in the mail, and when I called the bank, my balance had doubled. My mom tearfully admitted she had made charges on my card. She promised to pay me back and never do it again. I believed her until my balanced tripled and then finally maxed out. My mother never gave me any money towards her charges, even when confronted. I paid off the balance over the course of five years, totally unaware of the total impact my mom had made on my credit.

Those credit cards she had taken out when I was in college returned to haunt me, and still haunt me, long after I thought they had been cancelled. After maxing out the credit limits, she defaulted on them. They were sent to collection agencies, and the collection agencies came after me.

I had become much more financially savvy, and after my mom had stolen checks and statements from me, I switched my mail to a post office box so she no longer had access to them. The first letter from a collection agency arrived at my box announcing I had 30 days to pay a balance of $7000 or I would be prosecuted. I pulled my credit report and did some research. Then I wrote a carefully worded letter based on ones I'd seen on the ID Theft Center website. That collection agency never contacted me again, and the collection account and all things associated with it were removed from my credit report. According to my credit report, another default card was still out, and I took action to get it removed as well. I wrote letters and disputed the account on the credit report. I wasn't so lucky this time.

Since I lived with my parents, the majority of my mail arrived there, including letters related to that other card. It had a massive balance, and with interest and past due charges, the bank wanted almost $30,000. I knew about the card, and I took as much action as I could without filing a police report.

I never saw letters from the creditors. My mom accepted the summons to appear in court. I never saw that either. I knew nothing about the extensive court proceedings, or my mom's involvement, until I stumbled upon some court records at work. I could only stare in disbelief, not really certain what to do. The court had tried and failed to contact me, and they were about to garnish my wages. I chose not to confront my mother. Instead, I called a legal assistance program offered by my employer. They put me in touch with an attorney who agreed to take on the case and find out what had happened. I was left with the unpleasant task of talking to my mother.

She couldn't understand how I had found out. She had gone to great lengths to keep me in the dark about the whole mess. She had intercepted all letters she could. She had spoken to the sheriff when he came to the house, assuring him I had nothing of value. She had appeared in court in my name, but the day the judgment was rendered she had been unable to appear because of a doctor's appointment. She tried to call the court, but they refused to cancel or move the court date. She swore she never thought the case would result in a judgment. She hired an attorney to try to clear up the situation. The best the attorney could offer was to have me sign over all of my assets and accounts to my mom so I truly owned nothing. At this point, I knew more about finances, and I had no intention of signing anything over to the woman who had created the entire mess. Instead, I took the case back to court.

My attorney gave me copies of the court records where my mom had signed my name. He recommended I find a new place to live, and he advised against signing anything over to my mother. I had never filed a police report, because I didn't want to send my mom to jail. The rest of my family urged me to settle the whole situation out of court, set up a payment plan and just pay off the balance. I had already paid off one balance, and I didn't intend to pay this one. My attorney wanted my mom to sign an affidavit admitting her guilt, but when I asked her she informed me that she did not want to be saddled with the $30,000 worth of debt. I let the case go to trial.

Part of the process involved filing a fraud report with the creditor. I listed my mom as the thief who stole my identity. The creditor withdrew the case and the judgment was thrown out, but it remains on my credit report. It will be there for another five years. It affects everything I try to do. When I bought my house, I had to provide copies of court records. I cannot get new credit cards, and any loans automatically have a higher interest rate. Even though the nightmare has passed, its effects have not.

Financial ghosts of the mess will probably stick around to haunt me for years to come. I have developed phobias related to debt and money. I feel guilty for spending money and worry constantly about debt, even though my monthly income is more than enough to live comfortably. I cannot trust my family's advice related to financial matters. When I look at my mom, I have a slow, seething anger towards her that I'm not sure will ever go away. I feel obligated to love her, when in reality I want nothing to do with her. I resisted turning the theft over to the police, but if this same situation were to happen again, I wouldn't hesitate. I wouldn't let family ties stand in the way of justice.

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Thursday, August 21, 2008

The Unforeseen Consequences of Keeping a Card in "Good Standing"

A few months ago, I called Capital One as part of my rounds when I tried to make arrangements with all the credit card companies I could no longer afford to pay. I started missing payments earlier in the year, after a surgery kept me out of work for a month. My wife and I are teachers, and summers are usually the lean months, which leaves us spending most of the year trying to catch up on our debt instead of getting ahead of it. That one month was like the pebble that started the avalanche, and soon I was missing or late with payments on most of my credit cards, instead of letting one slip so I could catch up on the others.

I had financial trouble the year before, which I fixed for the most part, except for my interest rates, which had jumped to insane and unreasonable levels. When I had to choose between paying the mortgage on my house or making payments on several credit cards I hadn't been able to use in years, I chose to let them slide. My interest rates were already terrible at 37.17% for the Bank of America card, 25.83% for First USA, and a variable rate with Capital One that never went lower than 21%. I had a Best Buy card floating around as well, but the last time I'd gone to their website, they refused to take my payment and sent me to a customer service number, clearly part of some brilliant scheme to get me to pay by denying me access to my usual method of payment.

The rates were already out of control, how much worse could they possibly get? And how exactly did they think that I could pay twice my normal payment if I couldn't pay the regular payment the month before? Maybe if I spent a few months trying to catch up on my overdue utilities, I could put together enough money to tackle one of the ever-expanding minimum payments and start fresh.

Even as I was missing these payments, I still made an effort to pay Capital One on time. It was my oldest credit card, with my largest balance, and like so many Americans with debt problems, I made the mistake of treating the highest balance as the highest priority. Here's what I received from Capital One in return: while all the credit card companies I had been unable to pay were willing to place me in programs that would accept lower payments, offer lower rates, or even just cut out the ridiculously high late payment fees, Capital One wouldn't.

By paying them when all of my other cards were getting late or no payments at all, I kept them in good standing. That was, apparently, a mistake. I was informed that they could not possibly put me in their program because my account was in good standing. They would only do that if I missed several payments.

I asked to speak with a supervisor, and the supervisor confirmed that even though I was trying to avoid damaging my credit by making arrangements, they could not make arrangements with me as long as my account was in "good standing." "Okay, so what you're saying to me is that the only way you'll be able to put me in a program is if I stop making payments for a while and destroy my credit with you?" The supervisor hedged a little, but he basically agreed. They only offer the program to people who haven't paid.

So I took his advice and stopped making payments. I put the money toward payments I negotiated with the other credit card companies, who were very understanding about my situation. It's been about 90 days now and I've finally fallen from Capital One's good graces. They sent me a letter urging me to call them and make arrangements so that my credit won't be further damaged. Imagine that.

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Wednesday, August 20, 2008

The Really, Really, Really, Really, Really Stupid Things I Have Done with Money

The currThe Really, Really, Really, Really, Really Stupid Things I Have Done with Moneyent financial situation of my family -- me, my wife and our two young boys -- is so tight that stupid decisions we make about money really cost us. It wasn't always the case. Back when we could still use our credit cards and my wife was working for a nice paying corporation that would eventually lay her off about a month before our second son was born, we had enough financial wriggle room to be boneheads. Which we were. Repeatedly. I have kept a mental list of some of the most egregious of our mistakes.

-- My family kept one of those grocery store carpet machines out for a about a week and half. We used the machine for maybe two hours and then didn't return it due to sheer laziness. That Hall of Shame moment cost us $325 dollars.

-- We've racked up $50 in Blockbuster late fees. Maybe more. I joke to my wife that one day they're going to put us in Blockbuster jail. We're a funny family, but we're also idiots.

-- Sorry, this one is directly on my wife. It's late at night, the kids are finally in bed and she picks out a movie that she'd like to watch on Pay Per View. I order it, see how much we're going to pay, the credits roll and the next sound I hear is her snoring.

-- We've paid for swimming lessons we've given up on. Gym memberships that went moldering. Fat and broke, that's how we roll.

-- I've agreed to those extended car warranties even when I knew I they were a rip off.

-- We bought a sandbox for our two boys. Two bags of play sand costs about $8 at Home Depot. In the world of expenses for kids, that is nothing. But when you keep leaving the top of the sand box off and it rains and ruins the sand and then you GO BACK to Home Depot again and again to fill up the sandbox, well, you're entering some higher plain of stupidity.

-- Back then, every once in a while, we'd make these grand shows of getting serious about our finances. We'd go to great lengths combing through the paper and cutting out grocery store coupons -- which, of course, we would leave at home each and every time.

I'd like to say that making this list makes me feel better. But really the only thing that would do that is if we start saving money. And we aren't there yet, but our circumstances are forcing us to try harder and hopefully one day be smarter.

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Tuesday, August 19, 2008

The End of an Affair

Most people love money. So many people today choose to buy expensive material things and validate themselves by these purchases. Money helps people feel important, to take control, to make a statement about who they are. Money becomes a best friend, a family member, and a lover. Obtaining money is all some people can think about and all that they believe in. It doesn’t matter how they get it or who they hurt in the process, as long as in the end they get the money they need to feed their addiction.

Some people don't have the means to gain the money they desire but this doesn't stop them from having irresponsible flings with it. Even though these people may be late on their bills, they will go out and buy something they can't afford just to make themselves feel better. And it will usually work. During the heat of the moment people who make an impulsive purchase will feel like they are at the peak of their happiness. And when the feeling disappears they'll likely feel guilty, ashamed and regretful. Not much different than a one night stand.

Like all love affairs, my own love affair with money was short, sweet and tumultuous. It was both satisfying and completely unsatisfying at the same time. And similar to many love affairs, mine began at work. My job as a sales representative on Wall Street in New York City started up a love for money that would only go away after it ran its course. It became a love-hate relationship in which I began to spiral out of control.

Making a ton of money as a person who wasn’t even good at her job seemed like everything I ever wanted. I was renting an apartment in a top building and I was able to buy anything I wanted. I shopped in boutiques, purchased the newest cell phones the day they hit the market and treated people to dinners and drinks. What I didn’t realize at the time was that I was building my life around money and money was the thing that was in control.

After I lost my job the love affair became quite rocky. I no longer had the sparkle of admiration I once felt towards money since it was now seeing less and less of me. I moved out of my elevator building apartment into someone’s rental in their house. I went from having a washer, dryer, dishwasher, microwave and air conditioner to having none of these. The quiet of the building I had lived in was replaced by screaming landlords who constantly argued with each other. Instead of shopping at boutiques I started shopping at Old Navy and other discount clothing stores. Eating out and partying all the time was replaced with staying home and cooking dinner.

Some people in my situation would have never given in to the evil tricks that money played on them. These types of people would have picked themselves up, got a new high paying job and started up their love affair again. They would believe that they were back in control, but of course this would just be another trick money would play on them. The second time around would likely be more passionate than the first, and it would become a lifelong addiction that created life for those who chose it. People that would never dream of a real life affair find themselves embroiled in controversy and secret desires.

But love affairs rarely end up so happy in the end. If they do, it takes a lot of pain and struggle to get to the end goal and a lot of people get hurt in the process. I chose to end my love affair with money by replacing it with something real, a true love that was not based on sneaky escapades and under-the-cover operations. As you look back on the choices you’ve made thus far in your life, ask yourself, are you in the midst of an affair?

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Tuesday, August 12, 2008

The Expensive Road Trip To Hell and Back

Life isn’t fair. Perhaps you have learned this tidbit already. Family court really isn’t fair. You may not have learned this already.

When I divorced my ex, I didn’t realize that the share of justice pie you get largely is determined based upon how much money you can shell out to hire a lawyer. My ex’s family re-mortgaged their expensive suburban Philadelphia house in order to hire him a lawyer. My family smiled and said, “Good luck with that!”

I hired the best lawyer I could almost afford and wracked up debt on my credit cards paying for his services. That was a bad decision, but the only one I had really. My ex was abusive and I really feared for the safety of my children. So my choices were: fight for my children or go into debt. I chose the first option.

Years went by and I happened to go into a coffee shop one day while the kids were visiting their dad. I met the most wonderful man who was a soldier visiting the area for some training. He lived over 800 miles away near the beach in Virginia. We ended up exchanging information after we’d finished our coffee and went our separate ways. I really didn’t expect anything to come of it at all, but life rarely turns out like we expect.

Fast forward a year or so and we are preparing to get married. We went to court to work out visitation because my ex frankly asked the court to NOT allow me to move out of state with the kids. I assumed that the judge would give us a standard “long distance” visitation arrangement. You know, the non-custodial parent gets the summer and long school breaks. It didn’t work that way.

Incredibly, the courts ordered me to meet my ex half way each month in DE to exchange the children with him. Some months, with holidays and breaks, it is even two times a month. The visits are from Friday to Sunday (normal visits, not the holiday breaks) and take approximately 16 hours to complete. With gas, tolls and food costs, we are spending an incredible $500 a month if we have to do 1 visit. This month, we will make two trips—spending an astounding $1000 to obey a court order. His regular monthly visitation occurs a week after his court ordered Labor Day holiday visit and so, in the space of 6 weeks, I will spend $1500 on visitation. Of course, the total amount of money the trip costs depends upon the wildly fluctuating price of gasoline. The ironic thing—he has been court ordered to pay me $930 a month for our 4 children. I spend more paying to take them to visit him than I actually get in child support.


For him, this is really no big deal. His family feels sorry for him and pays all of his expenses, including a rental car to make the trip and reimburses his gas money. I do not have a financial fairy Godmother.

In order to ask the court to re-consider, I would have to save up a retainer fee of $5000. I have asked my ex to re-consider, but he refuses. I have caused him great pain by remarrying and getting on with my life, and he wishes to make it most difficult for me.

I try to not let it get me down…and think of all the things I could do with that money. Right now, I am trying to get the kids ready to go back to school, and that $1500 could surely buy a lot of clothes, backpacks and school supplies. It could also buy a lot of food. But I have no choice. If I can't make those trips, I risk being sued for contempt of court. Conceivably, if I was found guilty, my children could be taken from me and given to my abusive ex.

This month, to make the budget work, we’re eating a lot of Macaroni and Cheese and other pasta meals. I’ve found that if we eat soup once a week, that really helps the budget too. I’ve bought a bunch of back to school clothes at the local thrift stores and I shop on half price Wednesday in order to stretch that already pinched budget even further. I have even learned how to cut hair in order to minimize our expenses even further. As gas prices continued to rise this summer, we cancelled our vacation plans and other fun events we’d planned in order to be able to afford to pay for the trips I was court ordered to make.

Some days, the stupidity of it all really gets to me. My youngest child is 9 years old and I simply can't imagine having to do this for 9 more years, but what choice do I have? With how tight the budget is, there is no money left over to be able to save to go back to court to ask the judge to re-consider the current arrangement.

I don’t for a minute regret marrying my current husband and moving. My children are doing very well and loving life near the beach. Yes, moving was one of the best decisions I ever made. But if I had to do it all over again….I think I’d ask my husband to move too…and we’d go across the country, where no one would tell me I had to go through this insanity every single month. Sure, it would mean purchasing plane tickets several times a year so the ex could get his visitation, but think of the money I’d save!

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Thursday, August 07, 2008

The Student Loan Dilemma

The Student Loan DilemmaWhen I decided to go to college I knew that no matter where I went I was going to take out student loans. My parents didn’t have much money to pay for college and I had little to no savings for the occasion. Instead of thinking about money and how much the bill would add up, however, the school advisor was limited to helping me choose a school. After all, I was going to have a college degree in four years so what’s the difference how much my student loans added up to? While there are some kids that have a strong and dedicated desire to be something great like a doctor, lawyer, or dentist, most kids planning for college simply go to get a degree in whatever interests them by their junior year. If you plan on going to graduate school at a hard-to-get-into college then the undergraduate school may matter. If you are going to graduate with your bachelor’s and get a job, I’ve learned the institution really means nothing.

I chose to go away to school in upstate New York where most of my friends were going. I had no clue what I wanted to do but knew that I qualified to have just about everything paid for by my student loan. The majority of the loan was through a private bank while just a minute amount was funded through the government. An even smaller amount was given as a grant that I wouldn’t have to pay back. At 18 years old, I didn’t think twice. I packed up my belongings and headed off to what would become the best four years of my life.

After I graduated college, my loans totaled over $20,000. I slowly paid off the government loan which was around $3,000 and deferred payments on my private loan. Although the rate was pretty good at 4.41% I found it impossible to pay the $390.00 monthly payment with my newly acquired job. I applied for consolidations and was denied multiple times. Since the rate was good everyone I spoke to acted as though the $17,000 should be easy to get rid of. But I didn’t go to school to be a lawyer or doctor, I graduated with a degree in Psychology that I settled on after 3 years of trying to figure out what it was I wanted to do. In fact it seemed as though my college degree was more of a high school diploma and all the places I applied to could care less what I studied, only that I had the degree. Completing 4 years of college showed dedication and an aptitude for learning and that was all anyone seemed to worry about. My job was in sales and I had no idea how I was going to pay back the money I owed.

That was 8 years ago. Today my loan now totals over $19,000. The interest keeps building up and the payment remains at $390 a month, a nearly impossible amount for a person that makes $30,000 a year to afford. Now that I own a home I’m going to try the consolidation process again to see if that will help. After all, isn’t better for me to pay something rather than nothing? It would seem from the $2,000 in interest they’ve made that the answer to that is no.

While going away to college was a great experience, was it really worth the price of a new car? I could have easily got the same degree at a local community college for less than half the price and to be honest most employers could care less where the degree came from.

My answer to this dilemma is a big fat resounding yes.

While many kids may seem like they are just going to college for the sake of it, who are we to make that choice for them? I am happy I was given the chance to decide for myself and will do the same for my children someday. Limiting a child to a local community college when they have aspirations is like telling someone who wants to be a police office they can only be a security guard. Yes, many of them will fail and end up protecting the local mall anyway, but isn’t it worth it to give them a chance?

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