Friday, February 29, 2008
By Dr. Boyce Watkins - Syracuse University
Bill Collectors really want their money, like the rest of us. Some of them seem to feel that it is O.K. to resort to flat out thuggish intimidation to get their money back. That might work on The Sopranos, but it shouldn't work in real life.
Part of the reason abusive bill collectors can have their way with the public is because many citizens do not know their rights. Bill collectors prey on the uninformed in a terrible way: they threaten to have them arrested, they harass their relatives, call all hours of the night, the list goes on and on.
One woman successfully sued a rogue bill collector after he called her repeatedly with threatening language. The woman, a senior citizen, was told by the man to "Stop with the sob stories and pay your god damn bill!"
The Federal Trace Commission states that complaints against bill collectors are rising, reaching the highest level they've seen in the past 3 years. Most of the complaints focus on vulgar language, trying to collect more than the amount of the true debt, and extra fees, such as court costs.
There are rights that can protect you from bad and malicious bill collectors. You want to keep these in mind as you work yourself out of debt:
1) There is something called "The Fair Debt Collection Practices Act". If you are not familiar with this document, get familiar with it. You can read it by clicking here.
2) A bill collector cannot contact you at work if your employer does not approve of the contact. Let the bill collector know that this is the case and they must legally stop contacting you at your job.
3) Bill collectors cannot call you before 8 am or after 9 pm. The only exception is if you give them permission to do so.
4) A bill collector can only contact your friends and family if they are trying to find a way to get in touch with you. However, some of them may do this in order to harass or embarrass you. If that is the case, you may want to tell your friends to tell the bill collector, "She does not live here and I do not know how to get in touch with her. Please don't call here anymore." Then, get the bill collector's information from your friend and reach out to them when you can.
5) You can get them to stop contacting you altogether by sending them a letter telling them to stop. You still must pay the debt, but they won't be calling you during dinner.
6) The bill collector can not curse at you or use foul language and they must tell the truth about how much you owe. They cannot threaten to sue unless they are serious about it, and they can't touch your 401k or IRA.
7) If they call you, you can demand that they send you a written notice of the amount you owe and who you owe the money to. If you do not believe that the debt is yours, you can write a letter to them stating that this is not your debt. They must then send you proof that the debt is actually yours.
If you feel that a debt collector has violated any of these rules, you can contact the Federal Trade Commission at www.ftc.gov. Remember that you are not powerless in this situation.
Dr. Boyce Watkins is a Finance Professor at Syracuse University and author of "Financial Lovemaking 101", the definitive guide to love, money and relationships. For more information, please visit www.financiallovemaking.net.
Monday, February 11, 2008
By Dr. Boyce Watkins
You may have heard from the “financial experts” on TV that the recession is coming. For lack of a better phrase, many of us might be tempted to say “no duh”. Hearing a rich person on TV tell you that hard times are on the way is like being knee deep in water and getting a rain alert from the weather man.
Most Americans knew the recession was here when they started losing their homes in the subprime lending crisis. Many others learned about the recession when they could not afford heat for their homes, health care for their families, or college tuition for their children. According to a recent Gallup poll, 50% of all Americans expect their standard of living to decline. We don’t need a Suzie Orman, Larry King or some random journalist to tell us that.
As a financial researcher, I saw the recession coming 2 years ago during my fellowship with the Center for European Economic Research. The data showed, quite clearly, that Americans were managing their money like a pack of drunken sailors. We were over spending, over borrowing, under saving and under investing. That combination is never good in the long-term. Financial chickens always come home to roost.
We weren’t exactly seeing a good example from the Federal government, who has taken the word “conservative” out of the term “Conservative Republican”. Spending on a war that cost entirely too much, we were borrowing in a manner that even scared people who don’t care about politics. If our government were a college student, he would be getting an angry phone call from his mother.
It is not my belief that we should worry about the government when it comes to getting through the recession. The highly publicized “stimulus package” is only designed to stimulate you to do more of what got you in this mess in the first place. Giving Americans money back in hopes that they will spend it is like getting the drug addict high again to avoid the hangover.
“Personally responsibility” is a phrase often used by conservatives toward the poor. But it is also the key phrase here, as many have demanded that the government bail out those of us who bought homes we could not afford, stopped saving for retirement, or took extra hits from the “credit card crack pipe”. All of us make mistakes, but it is important to learn from the mistakes to move forward in prosperity.
Here are some quick lessons we can learn from the current economic downturn. The recession “out there” in the broader economy has little to do what is going on in your own home. In fact, my grandmother used to say that growing up “The Great Depression was business as usual for black folk. We didn’t know there even was a depression in the first place and we never really saw it come to an end.”
1) Budget Budget Budget – Most Americans don’t keep a budget and it leaves us in a financial mess. Spending money without a budget is like driving your car without a map. At the end of the day, you don’t really get anywhere meaningful and just end up running out of gas.
2) Use government help as a stepping stone, never as a crutch – if the government sends you a tax refund, save it. They are also making it easier for those with more expensive homes to get 3% mortgages, subsidized by tax payer money. Subsidized mortgages are a much better use of tax payer resources than blowing it on Iraq. Look into these options and learn what opportunities are available for you.
3) Take stock of your financial life – Calculate your net worth, which is the market value of all your assets, minus the debt you owe. Being in debt is not a terrible thing, but not trying to get out of debt can be a problem. If you are a professional, take account of the amount in your retirement savings and find out if your company has options for retirement investing.
4) Kill a Credit Card Today – Find a credit card and slice that son of a bitch in half. Most of us have 4 or 5 of them, so just pick one and see if you can go on a cash budget. In fact, you may want to give yourself a cash allowance in order to control your frivolous spending. Credit cards really do seem like free money, which impacts the perception of our spending.
5) Declare a One Month Spending Freeze – For four straight weeks, try to only pay necessary bills. Don’t go to the mall, don’t go out to eat, don’t buy any new clothes, shoes, hair, or fur coats for your puppy. Take the extra income you will get from the freeze (calculated in your budget) and put that money into your retirement plan or brokerage account. If you don’t have one, get one right now.
Habits are created by a series of seemingly insignificant actions, all headed in the same direction. The depths of despair serve as incubators for our greatest achievements. Let’s be wealthy and great in 2008.
Saturday, February 9, 2008
Americans recently expressed in an AP poll that rather than having a huge economic stimulus package to help with our nation's pending recession, they would rather stop waging an expensive war in Iraq.
Getting out of Iraq was tops in the list of remedies for economic problems, along with spending more on domestic programs and cutting tax rates. The most recent Congressional idea of giving rebates to the poor in hopes that they spend the money was at the bottom of the list.
The economic stimulus package has a cost of $168 Billion and will give rebates to taxpayers of between $600 and $1200. Only 19% of those polled stated that they planned to spend the money, as the government hopes they will do. Financial personality Suzie Orman, on Larry King Live, said that she hopes Americans will not spend the money.
Others tend to agree.
"Let's stop paying for this war," said Hilda Sanchez of Waterford, Calif. "There are a lot of people who are struggling. We can use the money to pay for medical care and help people who were put out of their homes."
Currently 65% of Democrats think the U.S. should leave Iraq, with only 18% of Republicans agreeing. 61% of all Americans think that the U.S. is already in the middle of a recession.
Dr. Boyce Watkins, Finance Professor at Syracuse University, says the recession was a long-time coming.
"When you consider that Americans have been spending their money like drunken sailors for the past few years, the recession was a long time coming," says Dr. Watkins, a regular CNN contributor. "The sub-prime lending crisis was a clear sign that many Americans are in financial trouble."
According to the National Priorities Project, a group that studies the Iraq War, the cost of the war has nearly reached a half trillion dollars. While American contractors have benefited financially, the average American has not. Millions of Americans have no health insurance and the public school system has been considered disgracefully inadequate.
The Federal Reserve has contributed to the economic stimulus package by aggressively lowering interest rates. Federal Reserve Chairman Ben Bernanke has been called "Bold Ben" by some who charge that he pushes too hard to reduce interest rates when the economy is struggling.
Some question whether the government's policies are good for consumers.
"What is good for the economy as a whole — spending a rebate — is not the best idea at an individual household level if you are buried in debt," said Greg McBride, senior financial analyst at Bankrate.com. "Issuing rebate checks to give a boost to consumer spending amounts to a Band-Aid over the much bigger problem of consumer debt burdens," he said.
Dr. Watkins also argues that in addition to the economic crisis set for the short-term, America should prepare itself for a pending retirement crisis.
"The perfect storm for a retirement crisis has been created," says Watkins, author of 'Financial Lovemaking 101'. "Americans are not saving, pension plans are disappearing, social security is dying, people are living longer and the cost of health care is rising. Something has got to give."