Category Archives: Money

Take Credit for Being Credit-Wise

While it does interfere with the comfortable digestion of my breakfast, I usually watch the morning TV news for twenty minutes or so, just to see if anything important has happened in the world…and I have to watch carefully, as most morning TV shows just consist of cute exchanges, truncated conversations with important people, or the rehashing of stories that have minimal significance but maximum power to pull in an audience. Recently, though, I watched a story about how credit card companies are raising their interest rates to 30%, and how that might border on “usury” – which is supposed to be illegal. 

As a young adult, I didn’t even have a credit card.  I got my paycheck, put it in the bank, and used checks against what I actually had in my account in order to pay bills.  If there was anything over at the end of the month (and if there was, it was very little, as I was making only $11,000 per year as a college professor), I considered it “splurge money” and used it on something stupid.  Today, I’ve got lots of credit cards, but never pay any interest, as we pay off the bills in full the day they arrive.  Admittedly, in between being a young adult and today, there have been some stupid and/or disastrous times when the use of a credit card put us in debt, and it took effort and pain to pay it off. 

I say all this to make it clear that I’ve “been there and done that” like everyone else.  And ultimately, I think the answer is: don’t use a credit card unless you have every cent in the bank to back it up.  Don’t consider it a credit card at all – consider it a cash card.  In fact, you might consider only having a debit card, which means it can only be used in relation to what you have, and not what you wish you had.  That way, you won’t have credit charges which can rip apart the fabric of your life.

Here’s another idea:  take the time to earn what you want – that special car, a home, jewelry, a vacation – instead of having your folks give you a down payment for a house you can barely afford.  Take the time to build your foundation, and when you can finally afford the next step in your life, you’ll feel much more accomplished, proud, special, and downright happy.

Greedy Woman in Oregon

Awwww…give me a break.  I’m actually supposed to feel sorry for this Oregon woman who is out $400,000 because of…well, GREED!  I feel as sorry for her as I feel for the folks who took out home loans they couldn’t pay back or the CEOs of bankrupt companies who get to lose their jobs with tens of millions in severance pay.

This woman mortgaged her house, took a lien out on the family car and ran through her husband’s retirement account.  How and why?  Well, here it comes: she received an e-mail promising her $20.5 million if she would only help out a long-lost relative with a little money up front.  Her family and bank officials told her it was a scam and begged her to stop, but she was obsessed with the thought of becoming a multi-millionaire.

This whole affair was a scheme called the “Nigerian scam” and it’s familiar to many people with e-mail accounts.  Over the last several years, one of these has come to my email address.  They promise you zillions of dollars for just thousands of dollars necessary to jump-start some transfer of money or some business.

I remember long ago seeing a Donohue TV program with six women all complaining that some guy scammed them by “wining and dining” them…on their own money!  The guys would say they were coming into lots of money, but they needed a place to live and money to spend until their golden ship came in….oh please….this was a study in denial: “I’m getting attention so I’ll deep-six my brain.”

Back to this woman in Oregon.   She’s gotten herself and her husband into horrific debt and who knows if, how, or when they’ll be able to get out of it.
As a psychotherapist, I’m frankly happy with some aspects of America’s economic crisis.  While stores are worried that people don’t impulse buy any more, or that the purchase of frivolous, unnecessary, redundant or “show-off” things is dropping, I’m glad that so many adults, and hopefully their children, are learning an important lesson in the difference between want and need, and the potential devastation of leveraging yourself with debt for possessions that ultimately don’t matter much.

 During the recent California fires, people didn’t run out of their homes with their cars, iPods or fancy clothes.  They left with photos of the family as their number one concern.

 I don’t feel sorry for that Oregonian – I feel sorry for the family she devastated financially with her greed.

Do Financial Crises Cause Marital Crises?

The world’s finances are being shaken to their core because of – well – cheating and greed.  Nonetheless, people are being laid off, large companies are going out of business, small businesses can hardly pay for even minor fees to keep themselves afloat, and the price of gas keeps yo-yoing.  The good news is that you can buy a car for under sticker price…as long as you don’t need a loan; you can also buy a house for a pittance…as long as you don’t need a loan.

A number of financial advisors have reported that their biggest problem is not the most obvious one, which is explaining what folks should and shouldn’t do with their cash, savings, and investments.  As it turns out, their biggest problem is how husbands and wives are turning on each other with blame and rage or turning away from each other with blame and fear.

Feelings of concern, anxiety, sadness, confusion and fear are, frankly, reasonable emotions when tornados, hurricanes, and earthquakes hit your community…it is reasonable to slap your own – and maybe each other’s – foreheads, regretful that you both didn’t plan better.  But ultimately, it happened to each of you and all of your neighbors and you have to respond in a constructive way despite your personal pain.

Feelings of concern, anxiety, sadness, confusion and fear are, frankly, reasonable responses when the financial bottom falls out from under you.  It’s not unusual to want to look for the cause of the disaster whether it is a bank CEO, the President, the Treasurer, modest-income people who borrowed to live beyond their means….or….your spouse.

“Kicking the dog” because you are upset with your day is animal cruelty.  Kicking your husband or wife when you are both in the same lifeboat is also cruel, and it is destructive to the marriage and the family.

Perhaps it is true that one or both of you made some financially unwise moves with investments or by spending too much and living beyond your means with credit cards and loans.  I think that in these situations it is always best for the person in charge of the “errors” to simply own up to screwing up, apologize, and then offer to help make things right.  Once your spouse has thrown himself or herself on your mercy, do not ever make them feel stupid or bad in an attempt to regain a sense of superiority or control. 

When things go wrong, turn TO each other with compassion, solace, and a pledge to be a team and work it through together, survive it together, brainstorm together, and work together.  No matter how sad you feel, this is the time for lots of attention and great sex.  Endorphins and orgasms go a long way to keeping you both cheerful about life and life with each other.

The financial situation in America and the world, as well as the Dow, will come back up.  Make sure your marriage weathers the storm so that you can both be there to enjoy it.

Why Aren’t We Saving for “Rainy Days” Anymore?

Back in the day, people believed it was morally correct and pragmatically smart to save for a rainy day.  These days, folks prefer to spend what they have to “enjoy the moment.”  It turns out that most Americans say they’re not saving as much as they should, but apparently, they’re not very worried about it.  Talk about living in dreamland!

It is sad to receive a call to my daily radio program from a hard-working young couple with children who are frustrated with their parents who spend, spend, and spend some more and don’t worry at all about retirement or medical issues they might face as they age.  These young families are frantic, concerned about their obligation to parents who are doing nothing to provide for themselves.  And then there are the young men who are making babies, “shacking up,” and/or marrying young women they are in no financial position to support.

Somewhere along the line, we’ve lost the notion of personal responsibility, and have substituted a sense of entitlement – i.e., that our families or our tax-paying communities should be paying our way.

According to federal economic data and a recent survey by the Pew Research Center’s Social  and Demographic Trends Project, 3 out of 4 Americans admit they aren’t saving enough.  While you constantly hear people complaining about their finances, these feelings don’t seem to motivate action:  Americans now save, on average, less than 1% of their incomes, and the saving rate has been in almost continuous decline for more than twenty years!

This lack of fiscal planning is equally evident for men and women.  From the lowest income level to the highest, the admission of not saving enough ranges from 78% to 71%, indicating that level of wealth is irrelevant to notions of saving.

Interestingly, the group most involved in saving is….senior citizens!  Only a narrow majority (54%) of those ages 65 and older say they aren’t saving enough. 

Necessity is the mother of frugality.