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The www.FedPrimeRate.com Personal Finance Blog and Magazine

Tuesday, February 24, 2009

Chase "Forces" Me to Close My Favorite Business Credit Card

Chase business credit card goes from 9.9% fixed to 15.24% variableIt's the old credit card bait 'n switch. The credit card banks bait you with attractive terms and generous rewards programs to get you to signup. Then, they wait. They wait for you to accumulate a large enough balance, then jack up your interest rate. I've been reading about this a lot on other websites recently; now it's happened to me, with my Chase business credit card.

Just got a snail mail notice from Chase informing me that the company is going to raise the interest rate on my favorite business credit card, from a fixed rate of 9.9% to a variable rate of (Prime + 11.99%) = 15.24%. 15.24% is now the interest rate floor for this card, since Prime is not likely to go any lower. Chase business credit card: Important notice regarding changes to you accountOf course, I have the option to opt out of the change. This would cause my account to be closed, and I would then continue to pay the balance down to zero at the original 9.9% APR.

Thankfully, I'm prepared for this contingency. I plan on paying the balance off with some cash from savings.

I don't have to borrow any money via Lending Club to payoff my Chase business card, but I really like the idea of Lending Club -- bypassing the banks and borrowing from regular folks across the country -- and I want to go through the process of borrowing through Lending Club myself so that I can report on my experience here in this blog.

To be perfectly honest, I really like my Chase business card, but, clearly, it's time for us to part ways. With the U.S. Prime Rate at 3.25%, any rate above 10% is a subprime rate, in my opinion, and I'm not a subprime borrower. I took advantage of an excellent 0% intro APR offer with this card, and, when the 12-month, interest-free period ended, I used the cash back rewards program to lower my cost of borrowing to a nominal level.

I really like the cash back rewards program with this card. I spend money on it and reward points accumulate. Then, when points reach a certain threshold, I simply login to my account and request a statement credit. With a few business days, the statement credit is posted to my account. Easy. No forms to fill out, No waiting until the end of the year to get my cash back reward and no waiting for a snail mail check. I will miss this rewards program.

I have to hand it to Chase for being honest. In the change of terms notice they sent, they explained the change as a, "response to market conditions," and they also added that the company wants to "maintain profitability."Chase business card change of terms to maintain profitability I'm hating the change but I respect the honesty. Contrast this with the Barclay's notice I received when that credit card bank closed my BJ's Visa Card. The company wrote that it was to, "...help [me] better manage [my] credit accounts..." In other words, not only did they close my account without consulting me first, they also felt it necessary to insult my intelligence.

In other business credit card news: Citi® closed my inactive CitiBusiness® card recently. I will miss this card because:

  • it had a decent credit line (~$10,000) which enhanced my business's credit profile, and
  • the account was aged which, again, contributes to my business's credit rating. It was my first business credit card.

CitiBusiness Card: Closed!

So now I'm left with 3 business credit cards: two from Bank of America and one from Advanta. The Advanta card is about to be anointed as my "goto" card, because I'm still enjoying 0% intro APR on purchases, and the purchase APR will jump to a somewhat reasonable 7.99% when the interest-free period ends . I have been reading some horror stories about this particular Advanta business card (unwarranted rate hikes), but so far I've all is well. If Advanta tries to pull some funny business by raising my rate, I'll just pay the card off (my credit limit is under $3,000, and my balance isn't anywhere near that.)

As a final note: it's really no wonder that American Express is consistently rated as the best credit card bank. Right now the company is offering some high-risk cardholders a $300 payment (in the form of a prepaid gift card) in exchange for these accountholders paying their balance down to zero within a certain timeframe, and closing their account. Now that's my kinda' credit card bank!

NB: In that same JD Power & Associates Credit Card Satisfaction Study(1), Discover Card placed second.

Chase, on the other hand, has identified certain credit card accounts that may be at risk for default, and has responded by imposing a $10 per month fee. Yikes! I'm not a public relations professional, but I do have some sage advice for JP Morgan Chase CEO Jamie Dimon: stop doing that!

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Monday, February 23, 2009

One More Reason to Read Those Credit Card Terms and Conditions Carefully

One More Reason to Read Those Credit Card Terms and Conditions CarefullyWe've all heard horror stories about it, and we all dread it. I'm talking about fine print. Many of us fail to read it, or even give it a cursory glance before we sign, or agree to something. I'll tell a story of how fine print can trip a person up, and end up costing them more than they expected.

A little over a year ago, my husband opened a credit account with Bank of America. He received the card in the mail, activated it, and began to use it. I advised him to read the terms and conditions carefully, but with the bravado that's so typical of him, he said that "he didn't have time for fine print". I shrugged, and went about my business, hoping that he wouldn't go too crazy with the credit card, and that we'd be able to pay the balance each month.

Oh, how wrong I was.

We managed to pay the balance for about six months, then he bit off more than he could chew by requesting a cash advance on the card. He found an incredible deal on a classic car that needed restoring, and the owner wanted $2500 for the vehicle. He got the cash, but not before I again told him that he should review the terms on the credit card agreement that referred to the interest rate charged on cash advances (If I recall correctly, the rate was 32%. Steep!). He was in such a rush to get the car that technicalities like that weren't important to him. They soon would become important, however.

The next month we couldn't afford to pay the entire balance, of course. The total owed on the card was $3,100, and after we paid all the necessary bills like rent, car insurance, water, phone, and utilities, we could barely manage to pay the minimum of $150. As times got rougher, we couldn't even bear to pay the minimum. After about five more months of not paying at all, the account went into default and collection efforts were started. My husband received several "courtesy notices" reminding him of the money he owed, and he foolishly continued to disregard them. Then, the efforts got decidedly less friendly.

My husband checked his online banking statement one morning, and he was more than $1,000 overdrawn. He'd written five other checks the week previously, but they didn't add up to what he'd had in the account, which was almost $4,000. Here's a breakdown of what the bounced checks were supposed to pay for.

  • Car insurance. He lost coverage that month, and had to borrow money from his parents to get it reinstated.

  • The phone bill. Our house was without phone and internet service for a week, until he was able to pay the bill, plus the returned check fee, in cash.

  • Our electricity bill. Luckily I was able to call and get an extension, to avoid having the lights cut off.

  • The water bill. As with the electric company, I was able to negotiate a payment arrangement to avoid losing the water service.

  • The trash collection bill. As that was the smallest bill of the lot, my husband was able to go to the hauling company's local office and pay in cash.

He called the customer service number for Bank of America, and after waiting ten minutes to speak to a representative, he found out why the account was so seriously in the red. Since he hadn't read the fine print on the credit card agreement, he hadn't known that his Bank of America card was linked to his Bank of America checking account- and that after the account went into default, the credit card company could go in and drain his bank account to pay the bill. He was angry and shocked, but it was really his mistake because he didn't bother to read the terms and conditions that went with the card.

After alternately pleading, feigning ignorance, and arguing with the Bank of America credit card customer service rep, he finally negotiated a deal where he'd be partially reimbursed for the money taken out of his checking account. He ended up losing $2,500- the amount of the cash advance he'd gotten. He was still irritated about that, but as I quite rightly pointed out, losing $2,500 is a lot better than losing nearly $4,000. I told him to let that whole experience serve as a lesson and a warning, which, thankfully, he has. He's much more diligent now about reading the fine print on everything.

Always, always read the terms and conditions on any credit card you're about to sign up for. The credit card companies LOVE it when people don't read the fine print, because that means they can slap them with all kinds of late fees, higher interest rates, and other miscellaneous charges. It may not be exactly fair, but it's perfectly legal.

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Friday, February 20, 2009

The Helping Families Save Their Homes in Bankruptcy Act of 2009

The Helping Families Save Their Homes in Bankruptcy Act of 2009A couple of years ago, the mother of my child moved out of the townhouse where I still live (and rent) and moved into a coop nearby. It was (and still is) my opinion that it's never a good idea to buy a home when you have no cash in the bank, but she did it anyway. I had cash, but not enough to make me feel comfortable about buying a nice home in a decent neighborhood, and put 20% or more down. I decided to continue renting, even though I could have qualified (easily) for an ALT-A mortgage. I felt that it was the right move: continue renting for a few more years, then buy a really great home when I had enough cash in the bank.

The mother of my child is struggling now, and she may have to file for bankruptcy protection. H. R. 200, the Helping Families Save Their Homes in Bankruptcy Act of 2009, is a bill that, if enacted into law, would empower bankruptcy judges to modify the terms of a mortgage in bankruptcy court. A bankruptcy judge would be able to lower both the principal and the interest rate on a mortgage loan. A lot of American see this bill as an unfair helping hand for homeowners who bought a home they really couldn't afford. Here is how John Conyers, Jr., the bill's main sponsor, explains it,

"...The legislation before us today would grant bankruptcy courts the ability to modify the terms of a home mortgage in a chapter 13 bankruptcy to bring them closer in line with the value of the home in a depressed real estate market.

For families in dire distress, this is a much-needed reform. And considering the realistic alternatives, it is fair – to all concerned.

I have been working on this legislation – on a bipartisan, bicameral basis – for nearly two years, because I believe it represents one of the most tangible steps we can take to limit the fallout from the real estate depression sweeping the nation.

While bankruptcy reform may not provide all of the answers to this crisis, surely it provides a common-sense and practical approach to helping stop the spiral of home foreclosures – which are not helping anyone.

To those who say we should continue to hold up this legislation while we seek to encourage voluntary mortgage loan modifications, outside of bankruptcy, I would point out that the evidence has shown that such modifications don’t work.

For one thing, most of the servicers who control the mortgage loans are not even legally permitted to agree to voluntary modifications.

And even when they can agree, their financial incentives are stacked in the direction of foreclosure.

As a result, the much-vaunted “Hope for Homeowners” program, which went into effect last October with the goal of helping hundreds of thousands of distressed homeowners, has processed less than 400 applications to date.

To those who claim that this legislation will only end up harming consumers by increasing the cost of credit, I would respectfully suggest that they are not taking account of the track record of the modern-day Bankruptcy Code, and have perhaps not kept up with the latest changes we will be making to the bill today..."

"...Finally, to those who argue that this legislation constitutes some form of “moral hazard” that will encourage reckless borrowing in the future, I would simply ask them to come to Detroit.

Detroit has had more than 100,000 foreclosures over the last three years. And they are continuing at the rate of 126 each day. We have block after block of “for sale” and foreclosure signs – feeding off each other, driving down home values, uprooting families, decimating communities – and causing local tax revenue that pays for police and firefighters to plummet.

We don’t have the luxury of worrying about theoretical future moral lessons; we need to stop the actual bleeding today. And the same is true in Ohio. And in California, and Florida, and Nevada, and Massachusetts, and Arizona – and in countless communities all across the country.

If we can spend 700 billion dollars to bail out the brokers on Wall Street, it seems the very least we can do is allow working families, willing to repay their debts as best they can, under court supervision, the dignity of being able to stay in their home..."

It's all pretty convincing, until you reach the part about increasing the cost of credit. I'm not an economist, but it's clear to me that this bill would increase the cost of credit, making it harder for responsible borrowers to buy a home. Mr. Conyers is not being realistic. When a bank prices a loan, the primary factor is risk. Giving bankruptcy judges the power to modify mortgages would obviously make loans riskier, which would in turn drive up interest rates.

Mr. Conyers then tries to dismiss the moral hazard issue like it's some theoretical nonsense. He doesn't seem to get that, for responsible borrowers, it's an issue of fairness . Mr. Conyers, it seems, doesn't mind rewarding the irresponsible. H.R. 200 would legitimize reckless borrowing at the highest possible level by condoning it in the United States Code.

And now for the counter. George Mason University law professor Todd Zywicki wrote an extremely poignant article about this issue in the Wall Street Journal:

"...The nation faces a foreclosure crisis of historic proportions, and there is an understandable desire on the part of the federal government to "do something" to help. House Judiciary Chairman John Conyers's bill, which is moving swiftly through Congress (and companion legislation introduced by Sen. Richard Durbin) would allow bankruptcy judges to modify home mortgages by reducing both the interest rate and principal amount on the loan. This would be a profound mistake.

Mortgage modification would indeed provide a windfall for some troubled homeowners -- but its costs will be borne by aspiring future homeowners, and by any American who uses credit of any kind, from car loans to credit cards. The ripple effects could further roil America's consumer credit markets.

In the first place, mortgage costs will rise. If bankruptcy judges can rewrite mortgage loans after they are made, it will increase the risk of mortgage lending at the time they are made. Increased risk increases the overall cost of lending, which in turn will require future borrowers to pay higher interest rates and upfront costs, such as higher down payments and points. This is illustrated by a recent example: In 2005, Congress eliminated the power of bankruptcy judges to modify auto loans. A recent staff report by the Federal Reserve Bank of New York estimated a 265 basis-point reduction on average in auto loan terms as a result of the reform.

Allowing mortgage modification in bankruptcy also could unleash a torrent of bankruptcies. To gain a sense of the potential size of the problem, consider that about 800,000 American families filed for bankruptcy in 2007. Rising unemployment and the weakening economy pushed the number near one million in 2008. But by recent count, some five million homeowners are currently delinquent on their mortgages and some 12 million to 15 million homeowners owe more on their mortgages than the home is worth. If even a fraction of those homeowners file for bankruptcy to reduce their interest rates or strip down their principal amounts to the value of their homes, we could see an unprecedented surge in filings, overwhelming the bankruptcy system.

Finally, a bankruptcy proceeding sweeps in all of the filer's other debts, including credit cards, car loans, unpaid medical bills, etc. This means that a surge in new bankruptcy filings, brought about by a judge's power to modify mortgages, could destabilize the market for all other types of consumer credit.

There are other problems. A bankruptcy judge's power to reset interest rates and strip down principal to the value of the property sets up a dynamic that will fail to help many needy homeowners, and also reward bankruptcy abuse.

Consider that the pending legislation requires the judge to set the interest rate at the prime rate plus "a reasonable premium for risk." Question: What is a reasonable risk premium for an already risky subprime borrower who has filed for bankruptcy and is getting the equivalent of a new loan with nothing down?

In a competitive market, such a mortgage would likely fetch a double-digit interest rate -- comparable to the rate they already have. Thus, the bankruptcy plan would offer either no relief at all to a subprime borrower, or the bankruptcy judge would set the interest rate at a submarket rate, apparently violating the premise of the statute and piling further harm on the lender.

More worrisome is the opportunity for abuse.

Imagine the following situation: A few years ago a borrower took out a $300,000 loan with nothing down to buy a new house. The house rises in value to $400,000, at which time he refinances or takes out a home-equity loan to buy a big-screen TV and expensive vacations. He still has no equity in the house.

The house subsequently falls in value to $250,000, at which point the borrower files for bankruptcy, the mortgage principal is written down, and the homeowner keeps all the goodies purchased with the home-equity loan. Several years from now, however, the house appreciates in value back to $300,000 or more -- at which point the homeowner sells the house for a tidy profit.

Nothing in Mr. Conyers's proposed legislation would prevent this scenario from occurring. To modify a mortgage, a borrower would have to enter a Chapter 13 repayment plan for five years. If the homeowner sells his house while he is still in bankruptcy, the mortgage lender can recapture some of any appreciation in its value on a sliding scale -- 80% the first year, 60% the second, 40% the third, and 20% the fourth. After that, however, any appreciation in the value of the house goes into the debtor's pocket.

This dynamic creates obvious opportunities for borrowers to file for bankruptcy to strip down the value of their property in anticipation of rising real-estate markets down the road. At the very least, Congress should extend the time period for allowing lenders to recapture home appreciation beyond five years.

Mortgage modifications during bankruptcy will almost certainly increase the losses of mortgage lenders -- and this may further freeze credit markets. The reason is that when mortgage-backed securities were created, they provided no allocation of how losses were to be assessed in the event that Congress would do something inconceivable, such as permitting modification of home mortgages in bankruptcy. According to a Standard & Poor's study, most mortgage-backed securities provide that bankruptcy losses (at least above a certain initial carve-out) should be assessed pro rata across all tranches of securities holders. Given the likelihood of an explosion of bankruptcy filings and mortgage losses through bankruptcy, these pro rata sharing provisions likely will be triggered. Thus, the holders of the most senior, lowest-risk tranches would be assessed losses on the same basis as the most junior, riskiest tranches.

The implications of this are obvious and potentially severe: The uncertainty will exacerbate the already existing uncertainty in the financial system, further freezing credit markets.

If Congress wants to deal with the rising number of foreclosures, it should not create a new mess by converting the mortgage crisis into a bankruptcy crisis. Doing so will open the door to a host of unintended consequences that will further freeze credit markets, raise interest rates for new home buyers, and spread the mortgage contagion to other types of consumer credit. Congress needs to reject this plan and look for better solutions..."

Sorry, but I just had to quote the whole thing. I didn't want to dilute the power of the article by leaving anything out.

I've been watching the credit crisis very closely since it began, and I think Todd Zywicki is right on all points.

I found myself cheering as I watched CNBC's Rick Santelli tell it like it is:

Yes, calling misguided homebuyers "losers" on national television was indelicate. Mr. Santelli could have been a bit more diplomatic in his tirade, but no one should hold that slip of the tongue against him. When you're fired up, sometimes the wrong word slips out. Happens to the best of us.

So, what does H.R. 200 do for folks like me who made responsible, housing-related decisions when others did whatever they wanted? What does it do for those responsible borrowers who put 20% down and bought the right-sized house, and who now owe more on their mortgage than their home is worth? Nothing. Lots of decent Americans are getting very hot under the collar about the government's fixes for the economic crisis. Lots of hard working, responsible Americans have been gnashing their teeth as careless mortgage borrowers and Wall Street banks get generous bailouts, while they get...well, they get to sit in their underwater homes and watch.

The American Recovery and Reinvestment Act of 2009, which was recently signed into law by President Obama does offer some help for those who may be looking to buy soon. That help comes in the form of a homebuyer tax credit:

"...$8,000 credit for all homes bought between 1/1/2009 and 12/1/2009 and repayment provision repealed for homes purchased in 2009 and held more than three years..."

The Senate wanted a $15,000 tax credit. It's a shame they didn't get their way.

The new law also contain these provisions:

  • $2 billion to help communities purchase and repair foreclosed housing
  • $200 million for helping rural Americans buy homes

Hmmm...Maybe it's just me, but these numbers seem kinda' wimpy considering the scale of the entire package. At the core of this nation's economic woes is a major housing crisis, so I think the spending in this arena should be as aggressive as possible. Lawmakers should make sure that people like me have all the help we need to go into a distressed neighborhood, buy a foreclosed home on the cheap and fix it up. Without the boldest possible action, I fear that the housing crisis will still be with us 2 years from now.


If the mother of my child ends up loosing her home, my daughter always the option of moving back with me. I recently fixed her up her room with a desktop computer I put together with mostly salvaged parts from other PC's.

Foreclosed homeowners can move back to renting. What's wrong with that? There's nothing wrong with renting!

I think the big question is: do we, as Americans, want to be a nation of Sullenbergers or a nation of Sulemans? There's a great WSJ article by Peggy Noonan here.

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Thursday, February 19, 2009

Living Together After Divorce: It CAN work

living together after divorceIf you've been through a divorce, you know that running into your ex-spouse can be really stressful. Some deal with that issue every day. Because of the failing economy, more and more couples are choosing not to divorce, citing the financial hardship such a move would cause. Even more couples are being forced to live together because neither one can afford to move out. I'll tell you about one such couple. My father and his second wife, Susan, have been divorced for a year, but they remain in the same home. My dad doesn't really like the situation, but he is handling it with good grace and a great measure of patience.

Susan found out before she and my father married that she has Huntington's disease, a progressive, degenerative neurological disorder. People with Huntington's often suffer from jerky, uncoordinated body movements and a decline in mental abilities. The disease itself isn't fatal, but as symptoms get worse a lot of complications can arise that both shorten life and reduce the quality of it. Knowing what he was getting into, my father chose to marry her anyway. They got along well for almost five years, until my father found out that Susan had been unfaithful. Things around their house got more and more strained, with Susan and my father fighting about everything, day in and day out.

Finally, my father had enough and he filed for divorce. The divorce was granted in January of 2008, but by then Susan's health and mental capacity had deteriorated to the point that she could not live on her own. My father couldn't afford to put her in an assisted-living facility, because he is on a fixed income and only gets $800 per month. That barely covers his mortgage payment. She has no family that is willing to help, either. He makes a little pocket money selling on eBay, but not nearly enough to afford a new residence. Basically, he's stuck between a rock and a hard place. He can't leave, but he doesn't want to stay either. Many others are in a similar situation, and here are some tidbits on couples living together after divorce:

  • Many couples choose to live together after a separation or divorce for financial reasons. Perhaps one was the primary breadwinner and the other cannot afford to move out on their own, or they owe more on their home than what it's worth (otherwise known as being "upside down") and cannot find a buyer. This is especially true in today's dismal housing market. Homes that would before sell within weeks, now remain listed for months at a time, if they sell at all.
  • Some couples remain together out of stubbornness. Neither one wants to concede, or be perceived as being "in the wrong", so they delay the inevitable.
  • Living with an ex is usually the last resort. (as evidenced by my father's situation)
  • Many couples who remain together after divorce are seniors living on fixed incomes, who have no family living in the area that they can depend on.
  • Also, a lot of couples who have young children are electing to stay together after divorce, because they believe it's cheaper to maintain the status quo than it is to deal with child support and alimony issues.
Read a related article here, or here.

The state of the economy (such as it is) is surely contributing to the divorce rate. It's been said that money is the number one issue that couples fight over, and it's also the number one reason they divorce. If there isn't enough money to go around, and both parties are stressed out about how their bills are going to get paid, that stress and resentment will spill over into other areas of their relationship, deteriorating it.

I admire the way my father has handled the situation. He's dealing with a wife, who now has the mental and physical capacity of the average five-year old. He takes care of all her personal needs, getting up at 5 am to make sure she takes all of her medications, bathing her, dressing her, feeding her, and anything else she may need. He seems to be coping well, and is receiving a lot of support from everyone in the family. He's a Christian, and I believe that his faith in God is helping him get through this tough situation. We all get together and help him whenever he needs it, and we sit with Susan once or twice a week so that he can get out of the house. I honestly don't know how he has the discipline to do it, (Maybe his training as a Marine has something to do with it) especially as he's no longer legally obligated to do so. He told me that he does it "because I would want someone to do the same for me". I've recommended that he call the local Hospice and get them involved, even if it is just for "respite care" for Susan, so that he can have a break occasionally. He has an appointment with them on February 23rd, and I hope that they are able to help him.

Living together after divorce can happen for many reasons, and some handle it better than others. My father is a prime example of how to "make the best of a bad situation". I hope that others in a similar situation can take something from this story and apply it to their own lives. It's tricky, but it can work.

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Tuesday, February 17, 2009

Identity Theft: How it Affected my Family, and How we Stopped it from Happening Again

Identity TheftYou've probably heard about identity theft, and the ways that the unscrupulous can use our personal information . It wasn't an issue for our family, because we thought we were being careful with our personally identifiable information. I guess we weren't being careful enough, though, because someone used my husband's name, birth date and Social Security number to open a PayPal Buyer Credit account. He was unaware until he started receiving collection notices in the mail.

If you haven't heard of it, PayPal Buyer Credit enables a PayPal account holder to buy now, and make monthly payments. I found out these facts about the service:

  • PayPal Buyer Credit is a credit line charging a variable APR. (Equal to prime rate plus 15.5%, but not less than 20.8%.)
  • If you make a late payment, a fee of $15-$35 applies. That can get expensive, fast.
  • You will receive a paper statement in the mail, and the grace period to pay charges can be up to 26 days.
  • You can only pay your Buyer Credit bill by check, or through linking your bank account.
  • Once you enroll in the program, it will become your default funding source, if you don't have a PayPal balance or a linked bank account.
  • PayPal and Buyer Credit are two separate programs. That means if you close your PayPal account, your Buyer Credit account is still open.

He received his first collection notice back in March of last year. According to the statement, he owed over $1500. Strange, since he had never heard of PayPal Buyer Credit, and had certainly never opened an account with them. He immediately called the toll-free number on the Buyer Credit website, and after waiting what seemed like an hour, he finally got through to a real person. He was told that interest and finance charges had been accruing on the account for six months. My husband told the company that he was not the one who had opened the account, and was told that without solid proof of that fact, he'd still be responsible for the entire amount owed.

He didn't know how someone had gained access to his personal information. We always shred all our bank statements, credit card offers, and any other such mail. I guess some enterprising soul with a lot of time on their hands went through our trash, or intercepted some of our mail when it was still in the mailbox. It's also entirely possible that a keylogger or Trojan on our home PC could have allowed a criminal access to that information. He's still trying to clear his name, and clear the blemish from his credit report. Here are some steps that we have taken to clear up this fiasco:

  • We've documented all communication and actions with the company that's trying to collect debts that we don't owe.
  • We limit further disclosure of personal information. He told the bank, credit card companies, and any other entity that he does business with that he wants to "opt out" of programs that share personal info.
  • I changed all our online account passwords.
  • We've updated the virus definition files of our virus software, and we are in the process of scanning all our computers and external hard drives.
  • He filed a police report concerning the incident.

After about six months of wrangling, he finally got the mess sorted out. PayPal Buyer Credit finally understood that he in fact did not authorize the charges made under his name, so they closed the fraudulent account and absolved him of any responsibility for the money owed. The entire situation left him mistrustful and frustrated, and I don't blame him at all. It's all too easy for someone to steal another person's identity, but extremely hard for the victim to clear their good name. Unfortunately, identity theft victims are usually "guilty until proven innocent".

I convinced him to sign up for LifeLock identity theft protection service, and it has been very effective. The company placed fraud alerts on his credit reports, which are renewed every ninety days. They also requested that his name be removed from lists for pre-approved credit card offers. He hasn't received one since! This service is well worth the price, and my husband and I wholeheartedly recommend it.

There's nothing like the sinking feeling that you get in the pit of your stomach when you realize that your identity has been stolen, and I wouldn't wish it on anyone. But, in case it ever happens to you, the tips I've outlined here can help reclaim your identity.

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Monday, February 16, 2009

Sometimes Giving Up a Career to be a Stay-at-Home Mom is the Right Choice

giving up a career to be a stay-at-home momWe all know (or we should, anyway) that mothers work harder than almost anyone. Whether they stay at home, or they hold down a job outside the home, women often shoulder much of the responsibility for caring for children. Most mothers work for pay, and they spend a lot of time juggling their careers, and the needs of their families. That's why a lot of women are "opting out" of trying to have a family and a full-time job, and choosing to stay home with their children full time. Let me tell you about a friend of mine, who gave up running a successful business to be an at-home parent. Did she know what she was giving up? That's hard to say.

Her name is April, and I've known her since the ninth grade. Even back then, she had an entrepreneurial spirit. She was always the one raking lawns or walking the neighbor's dog to pick up a little spending money. She always told me that her ambition was to run her own dog-grooming business, because she loved dogs. After we graduated, we lost touch for a few years. I recently got into contact with her again, and what she had to say surprised me.

She told me that she'd gone to Florida Atlantic University and gotten a two-year degree in business management. All in all, she spent about $12,000 to get that degree, broken down like this:

  • $7,000 on tuition

  • $1,000 on books and study materials

  • $2,000 on child care so that she could attend evening classes

  • $2,000 on other miscellaneous expenses (gas, school supplies, etc.)

It was tough for her and her family during that time. Her husband couldn't help with the children in the evenings, because his job required him to work 14-hour shifts. So, she did the job of both parents, all while working a full-time job and going to school. She worked really hard though, and ended up getting an associate's degree.

She started her business, grooming and boarding dogs and cats. She was quite successful at it, building a loyal customer base who wouldn't take their pets to anyone but her. But, the 12-hour days took their toll. She told me that she just got tired of working her fingers to the bone every day, with rarely a day off, and then having to go home and work a full day there, too. She discussed it with her husband, and they decided together that the constant worry and stress weren't worth it, and that she'd sell the business and become a stay-at-home mom.

April, and women like her, give up a lot when they decide to stay home and take care of their families full-time. In her book The Feminine Mistake, author Leslie Bennetts states that:

  • A woman who stays out of the paid work force for three years will lose at least 37% of her earning power.

  • This book also tells us that elderly women are more than twice as likely as elderly men to live in poverty.
Contrary to what people may think, marriage isn't a lifelong paycheck for the stay-at-home wife. With more than half of marriages ending in divorce, women give up their permanent financial security when they decide to leave the working world.

According to the book Leaving Women Behind: Modern Families, Outdated Laws by Kimberly Strassel, tax laws, labor laws, and employee benefit laws work against women who are trying to balance a career with raising a family. She says the laws are designed for couples where one is a primary wage-earner and one is a stay-at-home spouse, and that these laws punish any other kind of arrangement. Some would like to work a 25 or 30-hour week, allowing them to spend more time with their families, and these rigid laws make that tough for those who depend on their employer's health insurance coverage, pension plan, and other benefits.With all the things working against them, it's no wonder that many overwhelmed, overworked, and underpaid women decide to remove themselves from the rat race completely.

April has been a stay-at-home mom for three years now, and she couldn't be happier. She tells me that when her children are both in school, she'll look into getting a part time job, or finding work that she can do from home. As she and I are in the same situation, I'm curious to see how well she fares, and I wish her all the best.

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Friday, February 13, 2009

The Real-World Cost of Getting a GED: About $1000

The Real-World Cost of Getting a GED:  About $1000Everyone has probably heard that people who don't graduate from high school don't make as much money over the course of their work life as those who did finish school. I knew that, I was aware of what I was giving up, and I quit school anyway. I was young, and infatuated with someone, and in the haze of what I thought was "true love" school seemed inconsequential. I never officially withdrew from school, I just decided one day that I wasn't going back. I figured that it didn't really make any difference, but as it turns out, quitting school cost me in more ways than I could have conceived.

The person I was dating never encouraged me to go back to school, and I was just along for the ride. I ended up getting a few dead-end jobs, first as an assistant at a dog grooming salon, then as an attendant at a car wash, then as a waitress at a Waffle House. All of these jobs brought in money, true enough, but none brought in enough to even pay half of the bills. I felt cheated and unfulfilled.

Then, I learned that I was expecting a baby. I was 21, and work immediately took a back seat to making sure I had a happy, healthy baby. My fiance (now my husband) and I discussed it at length, and we decided that I would stay home and take care of the baby and the household. It would have been cost-prohibitive for me to return to work at that point, because child-care expenses, fuel, and other costs would have consumed my entire paycheck.

When my oldest entered school, I took stock of my life. I decided that when my other daughter was old enough to start school, that I would go back to work. First, I needed a high-school diploma. I looked into GED classes at the high school in my town, and I was told that the prep course would cost $100, and to take the exam for my GED would cost $50. I signed up, and started classes the next Monday.

Studying for my GED wasn't without its costs after the initial investment. I had to pay for gas to get back and forth between home and the school, and my husband and I also had to pay for a babysitter five evenings a week. If he had been able to take care of them, that would have saved us a lot of money, but his job was dependent on him working evenings and it wasn't possible for him to take the kids along. All in all, we probably spent $1000 so I could get my GED.

  • Child care cost us $30 per day, five days a week.

  • I spent an average of $10 per day on gas.

  • The GED prep course cost $100.

  • The exam (which thankfully I passed on my first try) set us back $50.

For me, quitting high school was one of the biggest mistakes of my life. When I think back to what else my family could have had with that $1000, I think that:

  • We could have taken a family vacation to the Florida Keys. I've been there before and I'd love to return.

  • I would have had the money to have some work done on my car. If I would have put that money into my vehicle, it would probably be fully restored by now.

  • My girls would have been able to go to summer camp, which they have wanted to do for about two years.

  • We'd have a big-screen TV and home theater system instead of the 17" and the bookshelf stereo that we have now.

  • My husband and I would have been able to afford to have a getaway for two, maybe a couple of days in the Bahamas.

  • I'd be able to buy my daughters more things that they want. Sometimes I feel badly because I can't buy them more toys and clothes like the other girls at school.

So, by impulsively quitting high school, I set myself way back. I'm just now getting to where I should have been, career-wise, ten years ago. I'm hoping to land a regular job, but that's tough these days. Meanwhile, I'm doing some freelance writing from home in order to bring in a little extra cash.

If I had it to do all over again, I would have finished school and then taken some college courses, maybe in graphic design or fitness and nutrition. If I can finance it somehow, I may still take some classes. The moral of my story is: Don't quit school, or it will cost you money far into the future.

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Thursday, February 12, 2009

How Cancer (And A Lack of Health Insurance) Cost My Mother Her Life

cancerWe all know the damage that cancer can do to lives and families. Not one of us has gone untouched in some way by this terrible disease. Almost as terrible, is the fact that a lot of people who have cancer either don't have insurance or cannot afford it. With President Bush and his veto of a bill that would have provided health insurance funding for children in low-income families that make too much to get Medicaid (but not enough to pay for private coverage), I don't see it getting any better. I'm here to tell you my mother's story, because she is no longer here to tell it herself. If, through telling this story, I can keep one person or family from going through what I've been through, then I've done something right.

My mother was a happy, vibrant, great person. At age 40, she had been through her share of struggles- a rocky marriage to my father, and then an abusive relationship with a man who almost beat her to death more than once. She managed to leave him, and rose above her circumstances. She met a wonderful man, who treated her with love and respect. A year after they met, they were married. Life was great, and for a year and a half everything went smoothly.

And then that peace was gone.

It started gradually. My mother would try to act as though nothing was wrong, but I knew something was up. She began to make a lot of trips to the restroom, and began to complain of bleeding and stomach cramps. After a couple of weeks of this, I urged her to see a doctor. She was reluctant to do it, because she didn't have health insurance, and could not afford to buy it. We were hard-pressed to get her the medical care she needed. Tired of seeing her suffer, I took her to the nearest emergency room because I knew that the doctors there are obligated to treat every patient who comes in.

When the doctor finally saw her, he took note of her symptoms, and gave her a (very) cursory examination. All in all, the whole process took less than ten minutes from start to finish. I kept expecting the doctor to order a round of tests, or want to draw blood, or something, anything. I was surprised when she was given a diagnosis of a severe urinary tract infection (UTI), written a prescription for antibiotics, and sent home. I'd been with her since the symptoms started, and I knew from the bottom of my heart that something was really wrong.

After almost six months with her illness getting worse day by day, I found a gynecologist who would be willing to see her, and work with her on a payment plan. I went with her to her first appointment, and I was very impressed with the quality of care that she received. Within a half hour she got a complete exam, and the doctor found that she had a tumor roughly the size of a baseball. He immediately made her an appointment for a biopsy, at H. Lee Moffitt Cancer Center in Tampa, Florida.

I was both angry and dumbfounded. If the attending physician in the ER had been more thorough in his examination and treatment of her, the tumor would have been found a lot earlier. Looking back, I wonder if the fact that she was uninsured had anything to do with the way her treatment was handled.

She went for a biopsy two days later, and we all prayed and hoped for the best. But, when she got the results, I knew what they were before the doctor even opened his mouth. My mother had cervical cancer, and it had already begun to spread. If she'd been able to afford proper health coverage, she would have received care when the symptoms first started, and she certainly wouldn't have had to wait six months to see a specialist.

"Although cervical cancer used to be one of the most common causes of cancer death among American women, in the past 40 years there has been a 75% decrease in mortality. This is primarily due to routine screening with Pap tests (Pap smear), to identify precancerous and early-invasive stages of cervical cancer. With treatment, these conditions have a cure rate of nearly 100%."

The staff at H. Lee Moffitt Cancer Center were outstanding. They gave her the care she desperately needed. I was with her through hospital stays, radiation treatments, and daily chemotherapy.

My mother was worried sick about how she and her husband were going to pay the bills. By the time it was all said and done, they added up to almost $200,000. I wasn't concerned about that, I was scared for her. The chemo and radiation took its toll on her, and she was getting sicker every day.

At an appointment in the beginning of October of 2002, her doctor asked me to leave the room so that he could speak to her in private. I excused myself, and went to the waiting room. When she came out, she could barely walk, and was trying not to cry. I asked her what was wrong, and it took a few minutes before she was ready to tell me.

"My doctors told me there's nothing else they can do for me- my cancer is terminal." She was given two months to live. This couldn't be happening! I had so much more to tell her. I'd just found out the same week that I was expecting a baby, but I didn't tell her because I didn't want her to know about a grandchild that she'd never get to see.

We tried our best to pack a lifetime of love, laughter and tears into the next few weeks. Then, three weeks after her 41st birthday, she began to have breathing problems, and I rushed her to the hospital. Her doctors examined her and said that her internal organs were shutting down. I knew it wouldn't be long before she was gone. She passed away on November 4th, 2002. I was inconsolable, and the stress made me so sick that I almost had a miscarriage.

For all the things my mother went through, I wouldn't wish it on anyone. That's why having AFFORDABLE health insurance is so vital. Hopefully, President Barack Obama will remain true to his word, and implement some sorely needed health-care reform.

"According to a U.S. Census Bureau report, the number of uninsured people in America has increased by 1.3 million to 46.6 million, including 400,000 more children." http://www.pbs.org/newshour/bb/health/july-dec06/insurance_08-30.html

Please, please make sure you and your family are covered. If you cannot afford insurance, look into your state's eligibility requirements for Medicaid. If my mother had done that, she might still be here today, and her husband wouldn't be under a mountain of unpaid medical bills.

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Monday, February 09, 2009

Debt and Marriage: How Selling on eBay Helped Me

When The Going Gets Tough, The Tough Sell Their Stuff On eBayAnyone who is in debt, or has been before, is aware of the stress it can place upon other areas of life. I know it all too well: my marriage almost ended because of our financial worries. We were overextended and stressed out over our mounting debt, and that made us more prone to argue about anything and everything else. Our relationship is faring much better these days, mainly because I am now actively seeking work, plus I'm bringing in a little extra money each month by selling on eBay.

I started my eBay "career" by selling a dress, similar to the one in the photo, that I wore when I was a bridesmaid in my mother's second wedding. I really liked the dress, and it had a bit of sentimental value to me because my mother passed away a couple of years ago. I knew, however, that the chances of me ever wearing it again were low. I ended up selling it for $48.00- not bad for something I didn't pay a dime for, and that was just languishing in my closet!

I also sell eBooks on CD. I found a website where private-label resale eBooks can be downloaded free of charge. For the price of a blank CD (less than fifty cents), plus a dollar or two for shipping, I had an instantly successful product. In my first week of selling eBooks, I had over fifty orders. My profit that first week alone was almost one hundred dollars!
Oster stand mixer sold on eBay
Not stopping there, I also make a decent amount of money by selling assorted knick-knacks and small items that I pick up at yard sales and flea markets for a low price. For example, last month I bought a 1970s-era Oster stand mixer at a garage sale for $4. I took it home, cleaned it up, and made sure that it worked and all the parts and pieces were there. Then I listed it on eBay, and it sold for $77 plus shipping. Quite a profit!

I also sell through drop-shipping. I list items that I think will sell. When the auctions end, and the money for the item is in my PayPal account, I go back to the drop-shipper's website, place the order, and the item is delivered directly to the customer. I don't have to keep an inventory or anything, which is what makes drop-shipping a convenient way to get into the eBay business. I have sold everything from baby items to mp3 players, and some are more profitable than others.

motorcycle sold on eBayMy biggest eBay sale to date is a motorcycle. My husband had it advertised in our local newspaper first. We had a few callers, but no one wanted to give a fair price for it. I listed it on eBay Motors, with a starting bid of $900, and it took off from there. It sold for $1,750, which was $250 more than we had hoped for.

I'm not claiming that becoming an eBay seller is a ticket to financial security, but I've been able to pay for our family's health coverage, and occasionally I can afford to put a little bit of money toward our credit card debt.

Money issues can cause stress in a marriage. I know it did for me, mainly because I didn't feel as if I was contributing to the household finances. Finding a side job (such as eBay selling) can go a long way toward easing that worry, and ironing some of the "wrinkles" out of daily life.

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