Stupid Tax

If you are a fan of Dave Ramsey, like I am, you know the term "stupid tax." That is his codeword for something you have done with money that is stupid beyond belief.

Of course, I have paid more than my share of stupid tax. (Should I apply for a refund?)

But probably my most stupid one involved a piece of athletic equipment, and you guessed it....a credit card!

At the time, I was in my fitness mode (unlike now. While in school, I haven't had a chance to exercise at all.) I was enamored with the exerciser that looks like you are walking--you just move your legs back and forth and there are arm pieces that go in tandem. I can't remember the name of the equipment--I think I have blocked it out of my mind, it was so painful.

I was enamored with it, because it looked like fun, and also it was quiet. This was important, as I could exercise in front of the TV and hear the TV, and I live in a condominium, and it would be quiet for my neighbors.

Well, I saw them on sale at K-Mart, so I go trudging over to K-Mart, all excited. On top of the sale, I could get an extra 10 percent off if I applied for the store credit card and bought the item that day. It was not an impulse item, as I had wanted to buy it for a long time. But the smart thoughts stopped there.

I applied for the card, got it, and charged the equipment--$200. I put it in the car and drive home thrilled. I get the awkward package up the stairs into my place, and couldn't wait to put it together.

Unfortunately, I could never get it assembled correctly. It looked right, but if I got on it and started walking on it, one side would basically collapse. I worked and worked and re-did it and re-did it, and it would never work.

Deflated, I called my handyman and asked him if he could put it together. He came over, took it apart, and then back together and charged me $50. It was a bargain!

The problem is, it still wouldn't work right. It still kept collapsing on the same side. I knew then there was something wrong with it, because the handyman would know how to assemble it.

Well, before long, I trudged it out to the trash, and someone else picked it up. Buh bye!

But the cost didn't go away. My money was so strapped, I only paid the minimum on it. Over the months and years, the fees and late charges added up, and now I owe about $2,000. That is definitely one of the debts I am paying off this year, no excuses.

At least I can say I did my part to keep K-mart solvent.

Stupid tax!

Questions to Ask Before Making a Purchase

Last week was a mixed bad week for me. I paid off a few small loans (yay me!) but didn't pay attention to my checking account and ended up bouncing some transactions. Not really bouncing, as my bank pays my overdrafts, but still sticks me with NSF fees. I wasn't being vigil about my account, and it happened again. Anytime I am not vigil, this happens. All I had to do was deposit $50 in my account and there would have been no NSF fees. Jeez.

I read in the local paper not along ago some tips about making purchases. The paper has a column entitled "Ms. Cheap," and she always has some good hints about how to save money and get free items.

Quoting another writer, Mary Hunt, Ms. Cheap listed these questions to ask yourself before opening your wallet:

1) Do I need it really?
2) Could this be considered by any reasonable person to be a planned purchase?
3) Will this make my life better or add to the clutter and chaos?
4) Don't I already have something that will do just as well?
5) Do I have the cash to pay for it right now?
6) If I walk away from this purchase, how will I feel a month from now?
7) Am I willing to sleep on my decision for 48 hours?

Good advice, I think. I think I will pay particular attention to # 6 and 7.

Military Have Special Rules Regarding Payday Loans

I am certainly not a fan of payday loans or cash advance companies. I know it is a proliferating business as in Nashville you see these companies everywhere. Maybe not in the best of neighborhoods, but literally everywhere else. They straddle almost every corner of every intersection.

I read something interesting the other day. That a law was passed in September capping the interest these companies could charge those in the military. It also legislated that these companies could not go after deployed military people in default of these loans. (My wording is not exact.)

It makes sense that the companies could not prosecute those who are deployed. They are not here. But why give them a better interest rate than everyone else? I think I read that that military people could not be charged more than 36 percent APR, whereas everyone else who uses those services are charged 385 percent APR or higher.

Why discriminate here? I think everyone should be capped at a lower rate. As I said, I am not a fan of payday loan companies. It is close to usery, if not usery. But the idea is not a bad one: Give someone a loan on their paycheck. But why does the interest have to be so outrageous? Why couldn't someone charge a more reasonable interest? I wonder if anyone would be able to start "Wal-marting" this industry? Open up a bunch of payday loans at a lower interest and make the others come down on theirs.

Money Habits are Contagious

I read an article today in Yahoo Finance "Getting Rich is Contagious--So Catch the Bug." How true it is. Why do all the important articles come out about 20 years after I need to read them?

Not that it is not common sense. But tell that to a 20 something.

For me, I never had money troubles growing up or in college, thanks to my parents who were good providers.

I have always thought, and this article confirms it for me, that I got into some bad habits with money when I was in my 20s. I had always thought that it seemed like an excuse though to blame it on that.

But the Yahoo article points out that the money contagion is like the fat contagion that has recently been discussed in the news. Hang around with fat friends and you may get fat. (This has been a problem for me in the past too--when I am with my overweight friends, I feel thin and am more likely to overeat).

Likewise, you pick up money habits from those you hang around with. If all you have is broke friends, being broke seems like the norm, and you are more likely to be broke too. If you are around thrifty or investment minded friends, then you are more likely to be that way.

When I was in my 20s, I ran around with a lot of people who had bad money habits. They used plastic all the time and didn't have a good source of income. I had a good source of income, but they wheedled me into doing things I couldn't afford. Of course I could have said no, but they were my friends. They were older than me and I looked up to them. I was a dummy!

Of course I have known better for a long time, and in recent years have actually done better. I still have too much debt, but I did cut up my credit cards a couple of years ago. And I am much better with watching my money and not spending friviously.

I think the main problem is that when you develop a habit in your 20s, you are still impressionable, and it is hard to shake. I know--it has been hard for me to shake it. But I am shaking it, and I am more careful to not get into lockstep with those around me, unless it is a good habit!

"The Secret" and Money

By now, all of you have probably heard of The Secret. The hoopla The Secret created a few months back has more or less settled down now, but its message remains with many people, including me.

Basically, The Secret is based on the Laws of Attraction. In other words, like attracts like and be careful of what you wish for, as you may get it.

I take this to mean that rather than wishing not to be sick, you should wish to be well. Even when you are wishing to not be sick, the universe focuses on the word "sick."

Many may think this is a bunch of hooey, but I think it has merit, and I am trying to incorporate it into my life as much as possible.

This is a partial list of what I am focusing on:

The universe is sending the right man to me, and he is on his way.
I am healthy and will remain that way.
I have many people in my life who cherish my friendship and love me, and I will never be lonely.
People appreciate me for my mind and spirit; they appreciate my input
I have abundance of wealth, more money than I need.

Well the last one is a little exaggeration, but part of The Secret is to think as if what you want is already happening, and then it will come true.

I was at a business meeting the other day, and the speaker was offering a variety of inspirational messages.

He did not say the words "The Secret" specifically, but it was what he was talking about, I am sure. He said to always keep a $100 bill in your pocket to make yourself feel prosperous and to keep $20 bills lying around the house for the same reason. He didn't explain, but I think it is part of that "acting as if."

Speaking of that, I know that tuition check will not clear my account until after tomorrow and I will not have any NSF due to debit card transactions before then!

Due Dates are Important

I think a lot of my problem with debt (not all of course) is due to my inattention to small things (or big things, however you want to look at it) like due dates. I don't know how many times I have been tunnel-visioned at work and just let a due date go by. And by and by. I don't know why that has happened. But in my editor job, I would get so pressured at certain times,
I literally would not think about anything but work until I met the deadline. And due dates were sometimes the casualties.

It is like things just slip by me. I know I should do a calendar when things are due, but I just haven't done that.

Take today for instance. I almost forgot to call the electric company and make a payment arrangement. If I hadn't done that, my power might have been off in a couple of days. We have had a rough summer, and my bill is higher than normal because of the extra air conditioning needed. I needed to make an arrangement to pay at the end of the month, because it is more than I can pay right now.

I called today and arranged for that to happen. Had I forgotten to do that, and called tomorrow, it might have been too late. Then my power could have gone off, and then I would have had to pay the whole bill anyway, and I don't have the money in my account right now to do that.

Whew. Disaster averted. But it is things like that that get me in trouble. Inattention to details. I can't wait until I don't have to worry about this anymore.

The Devil is in the Debit Cards

I am really tired of holding my breath about my checking balance, and hoping that this check or that check doesn't clear for a couple of days.

I finally figured out that I should help manage my account by using my debit card less, particularly towards the end of my pay period. If you use your card a lot and then one stray check or another clears befroe you were expecting, you can get hit with some unwelcome NSF charges for those debit charges.

There has been a lot of news lately about how banks can stiff you by the order they choose to send your charges through. For example, on any given night, my bank will send through the largest charges first, whether checks or debit charges, followed by the other charges in descending order.

That has caused me great grief in the past. Say I have $100 in my checking account, and I have made debit purchases of $5, $10 and $15. Then I write a check for $89, and that check clears a day before I expect. That check at my bank would go through first, which would then bounce all three of those debit charges, assuming they go through my bank on the same night.

I have talked with my bank representatives before and asked why this happens. It seems like the debit charges should clear first, since they are smaller amounts, there are more of them, and I made those charges first. But no, say my representatives, they have polled their customers, and they said they would prefer the largest charges to go through first????? Well, they didn't poll me. By sending the larger charge through first, they will earn three NSF fees, as opposed to only one if they had done it the other way.

In recent weeks, I have held my breath many times, worried that a string of debit charges would go through at an inopportune time. Worse case scenario, it could wipe out a huge part of my balance. Luckily, that has not happened.

But what I have decided to do is that at the end of my pay period, when the dollars really count--is to try to pay cash for all the small things, like newspapers, coffee, gas even. It would be better for me to deduct some money from my checking account and pay for those things. That way if there is an overdraft charge, it would only be one from the withdrawal, rather than a bunch for small purchases.

I am really looking forward to the day, hopefully soon, when I don't have to hold my breath anymore.