Saturday, December 29, 2012

Don't be a Financial Hobbit


Hobbits are best known from the movie series Lord of the Rings.  Hobbits are described as a race of people slightly taller than the average table, broad in the shoulders and have the strength of ten men.  Hobbit in old English means hole builder. Hobbits like an unadventurous, rural and simple life of farming, eating, and socializing. They eat 6-7 meals a day if they can find enough food.  They are small, shy, afraid of the big people, are content with their lifestyle, live in holes, and find strength when placed under moral pressure to survive a war that threatens to devastate their land.  

Here are 6 reasons you may be a financial hobbit:
  1. If you are in debt, throw your bills away, avoid calls from creditors, screen your calls or are in denial about your financial situation, you are digging yourself into a deeper hole of debt. 
  2. If you are shy about your financial situation and are afraid to talk to anyone about it.
  3. If you feel like a criminal or outcast, feel small or become afraid when you come near to those who appear larger than life or appear to be doing better than you and quickly remove yourself from their presence.
  4. You feel comfortable accepting your financial situation, you are in a comfort zone and the fear or doing something to get out of your situation frightens you.
  5. When placed under intense pressure from a creditor which threatens to change your life drastically, you at the last minute decide to take action to improve your financial situation.
  6. You are like Biblo that goes from a place where he is never hungry to a place where everyone is always hungry. You were living a decent life but then you started to live paycheck to paycheck and are now concerned with the high cost of food and other items and wonder how you will manage.  He goes from a place where he is never far from the ground to a place where everyone is always dangling far above it by their fingertips. You go from never worrying about your finances to hanging from a thread wondering when you will fall into a financial hole.
Here are 7 ways to stop being a financial hobbit:
  1. Admission. Admit that you have a problem, make a plan to fix it and stick to it.
  2. Become a warrior.  Don’t get depressed, shy, afraid or stressed about your situation. Know that you are not alone and that you have the strength of ten hobbits and can overcome your situation.
  3. Come out of your hole.  You can’t hide from your debt.  Face your fears and responsibilities.  Call your creditors to setup payment plans to pay off your debt.
  4. Don’t be shy. Let those close to you know that you are having financial problems.  Consult a professional to get assistance if you are not able to resolve the issues on your own.
  5. Become allergic. Become allergic to getting into financial problems.  Make a permanent change to ensure you avoid filing for bankruptcy or foreclosure or have legal action taken against you because you make a financial mistake.  Create a financial safety net to ease future unexpected financial situations you may encounter.
  6. Don’t disappear.  Don’t avoid contact with your loved ones because of your situation. Talking to others about your problems helps gain insight to see the “big picture” and your situation may not seem as bad as you think.  Rally around your loved one for support and encouragement.
  7. Find “big people”.  Don’t be afraid to interact with people who are doing well financially.  Share your experiences and seek advice from those that have good financial habits.  Ask for resources to help you with your situation.

Wednesday, December 26, 2012

29 End of Year Financial Tips

A new year will arrive in less than 72 hours.  Many people have made a list of New Year’s Resolutions? I hope that one of your resolutions is to improve your finances even if you are good with managing your money.  Finances are a monumental part of your life.  Finances can destroy relationships; result in divorce, arguments, sadness, depression, anxiety, fear, health issues and unemployment. Finances must be properly managed which requires eradicating bad spending habits.  

Make a promise to yourself that you will do at least one thing to become better at managing your finances in 2013. A financial goal should be a positive statement, i.e. I will pay off my Visa bill by March 2013 instead of an uncertain or negative goal such as, I hope I can pay off my Visa bill by March 2013. Here are 29 end of the year financial tips to improve your finances in 2013 which will help you save money, improve for your retirement goals, get organized, and reduce stress and give you peace of mind and plan for the year ahead. 

  1. Change Your Mindset.  Change the way you think about money. If you believe you will always be in debt or always be broke you will.  Be grateful for what you have, it could be worse.
  2. Develop a Plan (Budget). Write a list of your entire total monthly expenses including debt and write down your total monthly income after taxes.  If you do not have any money left over (at least 10% of your monthly income) look at the areas where you can reduce spending. 
  3. Pay with cash. Pay for purchases with cash until your credit card balances are paid in full. If you pay for an item with a credit card you end up paying 2-3 times the original cost of the item. 
  4. Spend less.  Reduce spending by 30-50% each month. You should always have extra money left over each month after you pay your monthly expenses; if you don't,hange your spending habits. 
  5. Save. Do at least one thing a week to save money, i.e. bring your lunch to work, buy generic brands or bring coffee from home at least one day a week.  
  6. Plan for the unexpected. Create an emergency savings fund to cover all of your monthly bills and expenses for 9-12 months. 
  7. Get Out of Debt. Get current on any late payments. Negotiate with creditors to setup payment plans and pay off all debts. Keep debt (excluding rent/mortgage) at 15% or less of your net monthly income (after taxes). 
  8. Ask for help. Request a financial hardship for debt owed if you cannot afford to send the minimum monthly payment. 
  9. Limit Credit Card Usage. Use your credit card for emergencies only.  Keep credit card balances at 20% or less of the credit limit. Pay balances off at the end of each month or make multiples payments each month. 
  10. Fix your credit. Order a copy of your credit reports at and fix any errors. 
  11. Avoid filing for bankruptcy. Use bankruptcy as a last resort for large amounts of debt. 
  12. Develop What If Scenarios.  List different financial scenarios that could happen and how you would handle each one, i.e. job loss, sickness, death, new baby, loss of health insurance or other benefits, car repair, etc. 
  13. Get Your Financial House in Order.  Organize financial papers and store in a centralized secure location. Backup financial documents and records saved on your personal computer.  Make copies of all personal documents and store in a waterproof fire proof safe. 
  14. Get insured. Make sure you have adequate health, auto, life, disability and long-term care insurance. 
  15. Keep money in your pocket. Do an annual check on your heating system. Insulate your attic. Automate thermostat settings and use the lowest setting. Seal drafts and cover floors to retain heat. Open blinds during the day to let heat in. 
  16. Use direct deposit for paychecks.  Open a checking account with overdraft protection. 
  17. Create a will. Create a will to ensure your children and/or other family members are cared for after your death. 
  18. Know the law. Know the financial laws in your state for foreclosure, bankruptcy, dvorce, child support, retirement, debt, etc. 
  19. Update information yearly.  Update beneficiary, bank account, credit account and other account information such as loans. 
  20. Automate. Pay bills online to prevent late payments, late fees and damage to your credit. Setup automatic withdrawals to contribute to a savings account. 
  21. Diversify. Control your risks by investing in various mutual funds that are a combination or low, medium and high risk to limit your losses and maximize gains. 
  22. Reconcile. Balance your checkbook and write down every transaction, including check card or debit cards transactions and trips to the ATM. 
  23. Setup a debt payoff plan. Setup a debt payoff plan to prioritize your bills. Identify any terms and negotiations you would like to make with each company and stick to the terms. Start by paying off the smallest bills first, then use the money paid towards a previous bill and apply it to the next bill and continue this process until all your debts are paid. 
  24. Don't transfer balances.  Transferring balances to another credit card may lower your credit score and there may be fees associated with transferring the balance. Pay off the full balance before the introductory rate special ends because after the introductory rate ends the interest rate will increase dramatically. 
  25. Get current on student loans. Get current on student loans or request a financial hardship, forbearance or deferment until you are able to make the minimum monthly payments. 
  26. Plan for the future. Open a retirement account and save at least 10% towards your retirement each month. You will need 70-80% of your pre-retirement salary for a minimum of 20 years to have enough money during retirement or at least $1,000,000. 
  27. Consult a professional.  Contact a financial advisor or financial planner to help you determine your financial goals, where you want to live, the age you want to retire and the lifestyle you would like to have when you retire. 
  28. Know your worth.  Know your net worth (assets - liabilities). Verify your net worth annually. Know how much you earn, how much you owe and how many assets you have. Your net worth should increase on a yearly basis. 
  29. Don't stop at retirement. Don't just plan for your retirement, plan for your children's retirement. If you plan for your children's retirement or your grandchildren's college education this will ensure you have more than enough money to retire and enjoy your golden years.

Sunday, December 23, 2012

The Sneaky Way Companies Make Money


I am not sure how long this tactic has been used by companies but I wasn’t a victim until this year. I have been doubled billed twice for bills I already paid.  I talked to some of my friends and they have been double billed too, the frequency has increased during the month of December. I guess companies are hoping customers don’t verify their accounts and send in the double payment. 

It is sad that companies do this. It is bad enough that every product or service nowadays is overpriced.  Customer service at most companies is at an all-time low and they have the nerve to double bill, at least provide quality products and customer service.  Many people are aware that lawyers use this tactic frequently. Unfortunately, no industry is immune from this sneaky tactic. 

Companies should realize that everyone is suffering; consumers have less money to spend and don’t need to be tricked into paying money they don’t owe.  This tactic should be illegal and criminal.
In May 2012, Apple double billed customers for iTunes purchases and as a result a class-action lawsuit was filed.  In March 2012, BGE claimed a glitch in a new billing system caused 14,000 customers to be double billed. I wonder if those customers got their money back. 

In August 2011, Microsoft was sued for double billing customers who purchased Xbox Live.  According to the website customers’ claim that ADT Home Security double bills customers even if the credit card has expired.

According to the website customers claim that Netflix double billed them. Some customers who pay for their Comcast service via ebill have been double billed. If they call to have the charges reversed they will have to pay $25. The city of Los Angeles has already paid out $1.25 million dollars in refunds to apartment and condo residents who were overcharged on their Department of Public Works bill. Other companies such as AT&T, DirectTV, utility companies, Verizon, Quest Diagnostics, the IRS and more are also guilty of double billing.  If you feel you have been double billed here are 8 ways to fight it:

  1. Keep all of your receipts, statements and bills for at least a year.
  2. Review your monthly bank and credit card statements and compare with your bill to verify the charges before making a payment. You may have to go back a few months.
  3. Call the company's customer service department right away to try to solve the problem.
  4. If you are not satisfied, call back and ask to speak to a supervisor. A trick I use which has been successful is I state I want to give a compliment about an employee. Some supervisors refuse to answer a customer call if they know it is a complaint.
  5. If you are not satisfied with the response from the supervisor you can contact your credit card company or bank you used a debit card and ask that the charge be reversed.
  6. File a complaint with the Better Business Bureau if you are not satisfied with the response from the company that double billed you.  Log on to, enter your zip code, Click on “File a Complaint".  Complete the questions. You should get a response with 30 days.
  7. You can also file a complaint with the Federal Trade Commission.
  8. Let family members and friends know about your experience to prevent others from being victims of double billing.