Payday Loans, Rent-to-Own and Other Spooky Tales

Scary stories and fiendish tricks are all part of Halloween fun. But the last thing you expect is for those stories and tricks to be about your friendly lenders, bankers, and credit card companies.

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Payday loans. You’re broke but payday is two weeks away. You write a personal check to the loan shark, uh … Payday Loan Company  for $115 so you can borrow $100. The shark makes you sign a contract and agrees to hold the check until your next payday. In two weeks, the lender deposits the check or you can redeem the check by paying $115 in cash. But you’re as broke then as you were before so for $15 you can extend the loan for another two weeks.

In this example the cost of the initial loan is a $15 finance charge—or 391 percent interest! If you roll over the loan three times, the finance charge climbs to $60 to borrow $100 for six weeks!

These legal loan sharks (there are more than 10,000 payday loan outlets in business in the U.S., with thousands more on the Internet) are in the business of bleeding people for as much money as possible and then forcing them into bankruptcy.

Rent-to-own. It sounds like a great idea. You can’t afford new furniture and you don’t want to go into debt, so you decide to rent. You go to a local rent-to-own store and discover that after 78 weekly rental payments, you’ll own it—paid in full. Yes, it sounds great, but don’t believe it. Renting to own is a creepy way to throw your money away.

Gratitude: The Antidote for Greed

Gratitude is more than pausing once a year to offer up thanks. It’s more than a snappy word that rhymes with “attitude.” I am told that of all the human emotions, gratitude is the most powerful.

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So powerful is gratitude, it can obliterate fear, hopelessness and doubt. Gratitude can heal a broken heart, slow the aging process and restore broken relationships. Gratitude creates hope and hope brings joy. It is in joy, not fear, that we can find strength.

Greed is the enemy. Never in this history of our country has so much meant so little to so many. The easy availability of credit has allowed us to live beyond our means. It has encouraged greed to creep into every area of our lives. Some call this affliction Affluenza—an unhappy condition of overload, debt, anxiety and waste resulting from the dogged pursuit of more.

The more we have, the more we want. The more we want, the more it takes to feel satisfied. The more credit we accept the farther we slide into debt.

Trick Yourself into Saving Money

Buying things when they’re on sale is a great way to avoid overspending. But unless you are diligent to take the difference between the regular price and the sale price and actually deposit that into a savings account, are you really saving money? Nope. You’re just spending less. And you can “spend less” right through your entire paycheck. 

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While being careful to keep spending under control is admirable, it’s easy to fool yourself into believing that you’re a money-saving genius, when in truth you’re just spending all that you earn, wishing you made enough money to save some of it.

Getting started with actual savings—and by that I mean money that is put away into a safe place—can be difficult if you have a spending habit, a small budget or some of each. The way to remove the pain is to trick yourself into thinking you’re not really saving that much. Check out these tricks and get started today.

Call it a bill. This may sound silly, but just go with me here. Create a new monthly bill that you are obligated to pay and call it “Paying Myself First.” Make it look like an invoice of $5, billed to you. I don’t care how little money you earn or how poor you believe that you are. Anyone who really wants to start saving has $5 they can devote to the effort. Put this tiny bill at the top—ahead of the rent, food or phone bill. Your smallest bill will soon become your favorite.

15 Minutes to Financial Freedom

The email message contained a single-word subject: Help! The sender, I’ll call her Emily, had been asked by her community group leader to give a 15-minute presentation on how to achieve financial freedom. She was honored to have been asked, excited to do it but also panicked by the thought. She asked if I would help.

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My first thought was I can’t even introduce myself in 15 minutes. How could I, Emily or anyone else tackle that subject in just 15 minutes? But then I got to thinking: If money management is, as I believe, not that difficult, why couldn’t she do it? Why couldn’t I do it? I decided to give it a try.

Save. Do not confuse saving money with spending less, as in “I save money when I buy things on sale.” You are not saving at all, you are spending less. Saving money means that you actually put money into a safe place for some future time. Do that. Starting right now and forevermore, make it a rule that you will put some amount of your paycheck into a savings account before you spend any of it. Make it automatic and you won’t miss what you don’t see. Goal: 10-percent of all you receive goes straight into savings.

Your Consumer Behavior is Keeping You Broke

You know what I love? Walking into my supermarket the day after Thanksgiving and hearing the best Christmas music ever. Yeah! And if I wasn’t in the mood to bake Christmas cookies before I got there, just hearing that lovely music changes everything. Right there, that proves I am a quintessential, typical consumer. That retailer’s got my number.

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While I don’t want to stop loving music (I swoon to the Beach Boys during the summer months because this store has an uncanny way of knowing what I like) what I have changed is the way I hear it while loading up on groceries. They’re doing this on purpose, by design because retailers have irrefutable evidence that the right music can result in increased sales of targeted products. It’s like tasty bait on the end of a sharp hook.

Playing the right music isn’t all that retailers do to manipulate us into dropping more money than we’d ever intended to spend before walking in their store.

Financial Planners and Other Mysteries of Life

I am noticing a growing trend in my mailbox—readers in search of financial planners or advisors. Or assistants. The problem is that when taken in the message’s context it’s pretty clear that not everyone means the same thing when they refer to a financial “planneradvisorassistanthelper”

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One reader wanted to know where to find a “financial planner” who would just take her paycheck, pay all of her bills, invest for her retirement, give her an allowance, balance her checkbook and not charge her very much. (We’d all like one of those, right?)

Then, there are times when the context lets me know that a desperate reader looking for a “financial planner” really needs a reputable credit counseling organization that offers debt management.

And so, in an effort to clarify and perhaps educate, here’s the low down on financial planners.

General. Anyone can call himself or herself a financial planner. If you are ready to seek the services of a financial planner, and to avoid an amateur, you want one who has earned the special credentials of Chartered Financial Consultant (ChFC) or Certified Financial Planner (CFP).

Keep Your Money and Your Attitude in the Black

When I am not writing about personal finance and consumer debt, I knit. Something about the gentle rhythm of yarn and needle calms my spirit and unwinds my brain.

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I have managed to finish a few projects, not because I’m a great knitter but because I can tink almost as well as I knit (knit spelled backwards is tearing out). Because all knitters make mistakes, tinking is a required skill for those who take the craft seriously. It doesn’t take too many oversized sweaters or undersized hats to figure out that the smallest error at the beginning of a project can produce disastrous results if not found and corrected.

Money is a lot like knitting. By some miracle, all knitting consists of just two stitches: knit and purl. Likewise, with money you have two options: spend or save. And who among us can say they have never made a financial error? We all make mistakes but the secret to staying out of the red is correcting the little mistakes before they lead to disastrous results.

The Kid With a 60-Page Christmas List

I’ll never forget the day I asked one of my young piano students what he wanted for Christmas. It was a generic question, a pleasantry. I wasn’t looking for make, model, and serial number, but that’s what I got. He whipped out a 60-page list from his book bag. I gulped, checked to see if this child was serious (he was), and quickly proceeded with his music lesson. 

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I don’t know how many toys, electronics, and gadgets he had on that list, but at five things per page that would be three hundred entries. I’ll admit to participating in a few overly indulged Christmases in my foolish past, but even I cannot imagine what that child’s dream Christmas would look like.