Debt & Personal Finance Blog

Montel Williams Will Still Loan You Money: How To Inherit An Elderly Relative's Credit Card Debt

2011-11-19T12:22:00.011-05:00

The first thing I noticed the day I moved in with my grandmother was Montel Williams sitting on top of her unopened mail.

She's been in and out of the hospital over the past few months. After 84 years, her body just isn't holding together anymore. Worse, her memory and cognition are becoming unreliable. She was in terrible shape when my parents first hospitalized her, in denial about how poorly she was taking care of herself and the three-bedroom house my father built for her. Dirty dishes in the cabinets, a layer of dust over all the furniture, floors stained with what could only be dried vomit or worse... but she insisted that she could still take care of herself.

When she was first admitted to the hospital, my mother started handling her bills. Many of them were months overdue or, more worrying, paid more than once in the same period. One of the overdue bills was a credit card statement from Capital One, a card that my grandmother denied having, a card that was still being used while she was in the hospital. When my mother said she was going to report the card stolen, my grandmother admitted the card was hers. She'd given it to a neighbor who said they needed money. One of her “friends,” like Montel Williams.

Leafing through pages and pages of my grandmother's credit history, we were horrified to find that the $500 Capital One card was the least of her credit card secrets. At one time, she owed Bank of America a little over $20,000, but that account had been in collections for almost two years, purchased by a company called Asset Acceptance, that had bumped her debt all the way to $28,000 and put a lien on her home, the one my father built for her just a few years ago.

The envelope with Montel Williams on it was from a company called MoneyMutual. Montel promised, “Get up to $500 deposited into your account by tomorrow!” The information in the envelope was confidential, exclusively for the “member,” and assured my 84-year-old grandmother, who believes the city inspects her garbage for recycling and will fine her if they find any, “Your Emergency Cash Card has been activated and is ready for you to use. Keep it in your wallet or near your computer so that your personal Reservation Number is always handy.” Much like the neighbor running up her Capital One card, Montel Williams was her “friend,” always ready to lend her money if she needed it. On the back of the MoneyMutual letter, the fine print reads, “www.MyMoneyMutualNow.com is not a lender, an agent, a broker, or a representative of a lender, and does not make cash advances or lending decisions. MyMoneyMutualNow.com will provide your information to lender(s) that offer short term loan products.” In other words, MoneyMutual would happily give my grandmother's name and finances to whoever was swimming in the low end of the shark pool. Thanks, Montel.

My grandmother lives on food stamps and social security checks, but companies like Aspire Visa, Bank of America, HSBC, Chase, Upfront Rewards and even Barclays Bank of Delaware have been extending her enormous credit lines over the past five years. She had limits as high as $15,000 dollars on some of these cards, which she would use and then roll onto another card as soon as she had trouble making the payments. Some time during 2009, she stopped being able to keep track of which cards were canceled and which were due, and stopped paying all of them. The companies wrote off the debts, and various collection companies scooped them, including Asset Acceptance, a collection agency notorious for its tactics. The lien on the house is likely their doing, but my grandmother can't tell us anything about how it happened.

According to a recent article on the New York Times website, heavy credit card debt among the elderly is exploding in recent years, with seniors “regularly swiping cards to pay for things like gas and groceries.” The balances pile up, leaving it difficult for them to cope by themselves. The same article cites a study by Demos, a public policy research organization: “The growing reliance on plastic has driven the average credit card debt for people over 65 to $10,235.” My grandmother owes three times that amount.

A few years ago, when my grandmother was just starting her life in Florida, she mentioned a few of the credit card offers she'd accepted as though it wasn't a big deal. “I asked my lawyer, and he said that no one has to pay those bills after I die. So why not?” My parents were skeptical, but neither of them believed a credit card company would extend much credit to an old woman on social security. I tried to tell them that these same credit card companies extended credit to freshman college students living off SallieMae loans.

My grandmother's lawyer was only half right. In a column posted on www.creditcards.com, a woman named Roberta wrote in asking about a similar situation with her elderly mother's credit card debt. Roberta's mother and my grandmother are both what Harry S. Margolis, Boston Attorney and president of ElderLawAnswers (http://www.elderlawanswers.com/), call, “'Judgment proof,' meaning the credit card companies may be able to sue her, but they can't collect anything if there's nothing to collect.” Credit card debt is unsecured debt, which is why collection agencies will try so hard to convince you to pay them. Unsecured debt won't live on after my grandmother's death, but somewhere between running up almost $30,000 in credit debt and now, that unsecured debt became firmly anchored by her house through a lawsuit or a home equity line of credit she doesn't remember agreeing to through a lien. When the house passes completely to my father, the lien and her $30,000 worth of debt will go with it.

Every morning, I remind my grandmother to take her pills, and every morning, she asks a short while later whether she took them or not. Despite a failing memory, she gets mail almost daily from her “friend,” Montel Williams, who wants her to borrow more money. Her calendar on the refrigerator still shows the due date for the last cash advance a local check cashing store forwarded her against her social security check. My grandmother used to keep a detailed record of every phone call and transaction in a notebook. I've read through the entries during the period where she stopped paying her credit-card statements, trying to find a clue to how the debt became so huge, why it became tethered to the house. All I found were a few confusing scribbles about lost credit cards and this note, dated March 19 of 2010, “Letter from Bank of America Attorney – left message, no way I can pay them, do what they want.” Her handwriting grows erratic after that point, and the notes stop altogether in early 2011. One of the last entries was that she sold some of her custom jewelry for $100.

My grandmother's phone never stops ringing, but it's not collection calls. Those must have stopped when Asset Acceptance placed a lien on her house. The calls are from dozens of my grandmother's “friends,” all the people she used to do favors for. “I've done a lot of good for a lot of people,” she said to me the other day. I believe her. $30,000 worth of favors, including credit cards to friends and paying other people's bills and lending borrowed money to people who neither me nor my parents have ever met. My mother wants me to be polite when these friends come to visit because we don't know the whole story. We'll never know the whole story. So I smile and shake the hands of these strangers, like the woman who borrowed the credit card, but whenever Montel Williams pays a visit, I tear him in half and toss him in the trash.

Tips On Selling Stuff On Craigslist

2011-01-10T16:28:00.107-05:00

I used to love selling stuff on eBay, but I lost my love for that site years ago. Selling via online auction on the Internet's #1 auction site should be very efficient, but for me it's not.

First of all, the fees are too high. IMO, eBay used to be great for both eBay and sellers, but these days it's only a good deal for eBay. They dominate the market, so, of course, they're going to charge whatever the market will bear. For sellers, the economics of this can only work if you're selling big ticket items. Otherwise, it's almost always a waste of time. IMO, selling anything for less than $100 is tantamount to selling lemonade on the sidewalk in summer. Cute for while, and great for anyone who just wants to stay busy, but otherwise it's child's play.

So I'm very happy to report that I'm enjoying moderate success selling on Craigslist.

Craigslist is far more efficient than eBay. Not only do you not have to pay to list your items, but you also don't have to waste time running to the post office to ship your stuff. The lines at my local post office are furious more often than they're tame, and driving to another location would be a waste of fuel.

Moreover, when you sell on eBay, you're probably going to receive payment via Paypal. In my experience, more often than not, I've had to take yet another hair cut via PayPal's transaction fee. Poo!

With Craigs, you list, you sell and the buyer comes to you with cash. Love it. Another thing I love: the buyer doesn't have to worry about shill bidding, something that still happens every day on eBay (the clever scammers know how to setup shills that are virtually impossible to detect.)

I have a few tips to share for listing on Craigs:

Include lots of detail in your post. The more detail you add, the more prospective buyers are going to feel that you are honest and honorable. If you can't remember the exact date when you bought your item, include a reasonable estimate, and make it clear that it is in fact your best guess.

Also -- and this may seem old fashioned -- but I always include a "reason for selling" at the end on my posts.
Tell A Story: If you can tell a story about your items, do it! Buyers will appreciate it. Selling that great bike because you developed a pinched nerve and can't cycle anymore? Tell them all about it. Selling that sowing machine because your ex moved out years ago and left it? Share those details! Buyers often like the idea of telling their friends and family the story behind their Craigslist purchases. Human nature.

Not a good idea, however, to post any fiction. Savvy buyers can often tell when a story is made up, and if they detect even the faintest whiff of BS, they're likely move onto something else in a flash.
Always include an image! If you can't include an image with your post, the odds on a successful sale go way down. I love photography so I always add high quality pics. But even if your images are far from perfect, include at least something. If your image(s) are blurry, have weird tints or are poorly composed, you should make an effort to do better. If you can't, just use whatever you've got.

If I have a receipt, I like to scan it, blot out sensitive details with Paint Shop Pro, and include it in my post. I believe this adds much to my credibility as a seller.
If you know your price is fair, stick to it! Some buyers will stop by your house then inject as many complaints about your item as possible. Then they'll say something like, "I think I'm going to pass" to get you to lower your price. Bottom line: if you know your price is fair, then don't fall for any such manipulation, especially if others are interested in your item. I very recently let someone walk out my door when he tried this on me, then later sold my item (a Fuji road bike) a few days later at the price I wanted.
Pricing really isn't that hard: Setting the right price can seem like a daunting task, but don't stress out about it. Search eBay for similar items and see what they are going for there. You can also search Craigs to see what others are listing for.

If what you're selling is very unique, and you can't find any comparable items anywhere, I recommend setting a price point that you know is competitive, but also won't have you crying tears of regret after the item sells. Don't lowball your stuff. If it doesn't sell at the price you're comfortable with, just relist the item after a week or two (Craigs makes it easy to relist. In your account, click the [manage] link next to your item to delete your post, then return to your account and click [manage] again to relist it.)

Caveat: relisting your item will cause it to rise to the top of your chosen Craigslist category, which is great because that translates to a lot more eyeballs on your item. But if you relist your items too often, it'll be seen as "excessive bumping" and Craigs may delete your post. I recommend waiting at least 7 days before relisting any item.
Check The cash: Don't trust anyone. Someone may try to pay you with counterfeit money, and not even realize that their money is fake. Happens all the time. Check each note -- especially the big ones! -- under a bright light. For example, for a $100 bill, check for the watermark, red and blue threads, the plastic USA100 strip and the sparkly/raised 100 in the bottom right corner on the front side of the bill.
Scammers are not hard to detect: you may be wary about using Craigs because of all the scammers lurking on the site. It's true: there are lots of scammers on Craigs, but, IMO, they are easy to thwart.

The simpleton scammers will reply to your post with something like:

"I'm very interested in your item. I can't buy now, but I'm willing to pay you an extra $30 above your asking price if you can hold it for a few days. Please send me your name, address and phone number so I can contact you when I'm ready to pick up your item."
Have a good laugh at these, and delete them right away. These idiots are so lazy they can't even be bothered to include details of your specific item.

Some scammers are a bit smarter, and will reply with something simpler like:

"Is your bike still available?"
This could easily be a legitimate buyer, but if they later ask for your name, then you know you're dealing with a scammer.

On Craigs, it's very, very simple: NEVER GIVE ANYONE YOUR REAL NAME! You have no reason to. I always sign my emails with either my first initial or one of my nicknames from college. When a potential buyer stops by, again, I use my nickname. You won't be able to avoid giving strangers your address (unless you deliver), but as long as they don't know your real name you don't have much to worry about.

I also don't mind giving out my cell phone number. Makes communicating much more efficient. However, I only reply with it after at least some trust has been established in the initial email conversation (one or two replies if often enough for me.)

No Balance Transfer Fee Credit Cards

2010-11-30T18:02:00.058-05:00

I'd really like to see 0% intro APR, no fee balance transfer credit card return to the U.S. Credit card offers have been improving, but, these days, banks are very keen on charging a fee for all kinds of services, including credit card balance transfers.

I know from experience that the best way to raise your credit score above 800 is to spend plenty of money with credit cards, then pay all that money back. That's what I did during the last decade, as I built my business. As of last month, my TransUnion credit score is still above 800; 804 to be exact.

I very rarely use my personal credit cards these days. I use my business cards for business spending, and for personal stuff I use my personal debit card.

I was thinking of transferring some of my business-credit-card debt to another business credit card that includes an attractive, no fee balance transfer, 0% intro APR deal, but I can't find any. And I can't transfer my business debt to a personal card, since, technically, that would be breaking the rules.

Before the financial crisis of 2008, there were plenty of no fee balance transfer deals out there, with both business and personal cards. Bank of America, Citi, Discover -- they all had at least one no transfer fee 0% card.

So I guess I'll just have to wait and do my best to pay down my business cards, so that I don't get overwhelmed with finance charges.

Used My Citi Personal Card, Just In Case

Last weekend, I decided to use my Citi personal credit card, just to use it.

My Citi card has a credit limit above $30,000. The APR isn't good, but I keep the card as a backup in case of a financial emergency, and to keep my credit score high. Closing a credit-card account that has a zero balance and a high credit limit would almost certainly cause my credit score to drop. As you probably already know, having lots of credit available to you, and not using it, looks very good to credit scoring algorithms.

So I used my Citi card to keep the account active. I don't want Citi to close it due to inactivity.

Spent a little more than $69 on some gas, then paid it off right away via an online payment.

I don't drive anymore (sold my car) but I was riding shotgun in my friend's car on a trip to New York. Trip was mostly benefiting my todo list, so I paid for the gas.

I was very surprised to find that at Sunoco stations, you can't use a credit or debit card more than once in a day. This is true even if you use a credit card to pay for fuel in one state, then try to use it again in another. VERY annoying.

So I found myself with limited cash and a debit card that I can't use to pay for gas. Seemed like the perfect opportunity to dust off my Citi card and send a clear signal to the good folks at Citi that I want to keep this card alive!

Why do I insist on using Sunoco? I like the quality of the fuel, and I also very much like the fact that the company gets not a drop of crude oil from the Middle East. Does all Persian Gulf oil money fund radical Islam? Of course not! But if even $0.01 goes to support terrorism, I'm spending my money elsewhere.

January 10, 2011 UPDATE: No Fee Balance Transfer, 0% credit cars are back! Check out this YouTube clip.

The Financial Crisis: Blame It On The Government, Of Course!

2010-11-29T14:17:00.009-05:00

Found this interest video clip on the WSJ's new Opinion Journal Live:

What I find truly unbelievable is that at one point, half the mortgages in the U.S. were either subprime or ALT-A. Yikes!

I also find it very....err....interesting that the commission places most of the blame for the financial meltdown that led to the Great Recession on institutions that really don't matter anymore, like Fannie Mae and Freddie Mac. IMO, they are letting way too many fraudsters and other super-greedy players off the hook.

New Credit Card Rules

2010-11-15T00:14:00.001-05:00

Consumers are now familiar with the Credit Card Accountability Responsibility and Disclosure Act of 2009 or CARD and how it protects borrowers against unfair interest rate hikes and other exorbitant credit card fees. However, most consumers are not aware that the Federal Reserve enacted new rules for credit card companies on February 22, 2010 to ensure that consumer rights outlined in the CARD Act of 2009 are truly protected. As the regulatory agency of America’s banks, the Federal Reserve has to police the banks to make sure that they don’t try to exploit potential loopholes in legislation and thereby exploit consumers.

The February 2010 regulations enacted by the Federal Reserve provide the following protections to credit card consumers:

Credit card companies must tell you how long it will take to pay off your balance. Now your monthly credit card bill must include a breakdown of how long it will take to pay off your balance if you only make the minimum payments as well as what you would need to pay each month in order to pay off your balance in three years.

No interest rate increases for the first year. Credit card companies can no longer increase your rate for the first 12 months after you open an account, EXCEPT IF:

Your card has a variable interest rate tied to an index.
There is an introductory rate, but it must be in place for at least 6 months.
You are over 60 days late in paying your bill.
You violate a payment arrangement agreement.

You MUST be notified when they plan to increase your rate or other fees. Your credit card company is now required to give you 45 days written notice before they can

Increase your interest rate;
Change fees that apply to your account
Make any significant changes to the credit contract terms.

If you do not agree to the new terms you now have 45 days to cancel your card before the changes are put into effect. However, if you do choose to cancel your card your credit card company may close your account and increase your monthly payment, with certain limitations.

Your credit card company DOES NOT have to give you 45-day written notice if:

You have a variable interest rate tied to an index and the index goes up.
Your introductory rate expires.
You violate a payment arrangement agreement and you experience a rate increase as a consequence.

Increased interest rates can only be applied to new charges. If after 12 months your interest rate is increased it cannot be applied to a balance accrued before the rate increase itself.

Restrictions on over-the-limit transactions. You must now opt-in to allow transactions above your credit limit to be processed; otherwise the charges must be denied. If you do not opt-in and your credit card company allows your card to be charged above your credit limit, you cannot be charged an over-the-limit fee. Also, if you do go over your limit you can only be charged one over-the-limit fee per billing cycle, and you can opt-out at any time.

Payments must be directed to highest interest balances first. If you make more than the minimum payment, the difference must be applied to the balance with the highest interest rate, with one exception:

When you owe a balance on a deferred interest plan, the credit card company may give you the option to apply payment in excess of the minimum balance to the deferred interest balance before other balances. Otherwise, for two billing cycles prior to the end of the deferred interest period, your entire payment must be applied to the deferred interest-rate balance first.

No double-cycle billing. Interest charges can only be applied on balances in the current billing cycle.

Standard payment dates and times. Your credit card bill must be mailed or delivered at least 21 days before your payment is due. Furthermore,

Your due date must be the same date each month
Payments must be accepted until 5 p.m. on the due date.
If your payment due date falls on a weekend or holiday you will have until the following business day to pay.

New caps on high-fee cards. If a card comes with fees such as an annual fee or application fee, those fees cannot total more than 25% of the credit limit. The 25% cap does not, however, apply to penalty fees.

Protections for underage consumers. Applicants under the age of 21 must prove that they have the income to pay their balances or they must have a cosigner in order to open a credit card account. Also, if an underage cardholder wishes to increase their credit limit and they have a cosigner, the cosigner must agree in writing to the limit increase.

The Fed also announced in October 2010 that it would amend Regulation Z, the regulations implementing the statutes of the Truth In Lending Act, in order to stop certain predatory practices enacted by credit card companies in attempts to maneuver around the CARD Act rules and earlier Federal Reserve regulations. The amendments will clarify matters of compliance for card issuers on the following:

Promotional programs that waive interest charges for a specified period of time. Reduced interest rate promotions are subject to the same protections as promotions that employ a reduced interest rate for a specified period. Credit card companies have recently used a ‘bait and switch’ approach to certain reduced rate offers, not disclosing that the promotion rules would allow them to revoke the benefit at any time.

Fees charged before a credit card account is opened. Application fees and other fees that are paid before a credit card account is opened are covered by the same limitations as fees charged during the 12 months after the account is opened to further avoid predatory lending practices.

Proof of ability to pay must be proven for the cardholder as an individual, not household income. Predatory lenders often issue cards to individuals who do not truly have the ability to maintain their accounts based on household income or other income credits, locking these consumers into a debt trap.

The Life and Death of A Mortgage-Backed Security

2010-11-07T16:21:00.037-05:00

Listened to a great episode of the NPR radio program This American Life earlier today. Truly excellent. The show was about the life and death of a mortgage-backed security (MBS), which was given the innocuous nickname "Toxie."

Basically, a group of Planet Money reporters pooled their money to buy a bond backed by mortgage debt. This is same type of investment that caused the financial crisis of 2008 and the global recession that followed.

5 reporters contributed $200 each, and bought the mortgage bond for $1,000. During the housing boom, that same bond was worth about $75,000! The investment -- essentially a big pile of paper drawn up by lawyers -- actually does OK for a while, producing a stream of income in the form of a monthly check. Eventually, however, the monthly checks dry up, and the MBS dies. In total, the investment returned $449.06, so the MBS ends up losing $550.94. Each of the five reporters gets back $89.80 from their $200 contribution. Ugly!

The reporters decide to invest what they have left in a gold coin. Much smarter, considering how gold has been doing since 2008. Moreover, the Fed just announced a new round of quantitative easing: printing new money out of thin air to buy Treasury securities. These purchases will, among other things, weaken the dollar, and will very likely contribute to gold's rise.

To read more about this episode of This American Life, and to download the free MP3, visit this link. There's also a fascinating interactive timeline here. Highly recommended!

Toxie's Dead from Enkhtulga on Vimeo.

Here's a cartoon we made for NPR's show, Planet Money. It's about Toxie, a personified toxic asset that helped burst the housing bubble. enjoy!

The Punisher, from VH1's "I Love Money" (aka Sharay Hayes)

2010-10-27T00:21:00.036-04:00

I've always been impressed with people who make money in unique and interesting ways. Take, for example, Mr. Sharay Hayes, a man who I know and respect a great deal. Sharay uses his unique talents, excellent business instincts and love of life to make a great living -- and he's having a whole lot of fun doing it. How's this for a unique and interesting mix:

Real estate entrepreneur, based in New York City
Exotic Dancer: on stage, Sharay's is known as The Punisher. He has a truly electric stage presence, and is a lot of fun to watch.
Reality TV Star: Sharay The Punisher can currently be seen in the current season of the VH1 Reality TV show "I Love Money"

Sharay is an American renaissance man, and is easily one of the coolest guys I know. He's very successful because he knows what he wants, follows his instincts and doesn't let any kind of negativity hold him back.

With the unemployment rate as high as it is, we can all learn a thing or two from enterprising folks like Sharay. You can't teach ambition, but anyone can rethink and reexamine the way they perceive life, work and money, and find opportunities in places that once seemed outside their universe. Fortune favors the bold, and, in my opinion, it always will.

You can read more about The Punisher here.

Sharay The Punisher Hayes has a new website @ www.GetPunished.com (warning: it's a bit racy!)

A Freezer Full of Meat: Nutritional Hedging Gone Awry

2010-09-28T11:27:00.024-04:00

So, two years ago, when I was still making a good living, I decided to stock up on some steaks. I own a spacious deep freezer and I had plenty of room in it. The cuts I like (Porterhouse, Ribeye, Shoulder Steak, etc.) would go on sale every fortnight at my local supermarket, and when I'd find a sale of cuts I like, I'd buy up all they had. On some days, they'd have so much supply that I'd end up with a shopping cart stacked high with meat. Yeah, I got a lot of funny looks.

I thought I was pretty darn smart. It was nutritional hedging. I was buying quality meat at a very low price now, so that I could enjoy it a year or more later when the cost, at any given moment, would almost certainly be higher.

My plan, however, backfired on me. These days, I rarely eat red meat. I slowly and inexplicably lost my craving for it. I still like chicken, turkey, fish and pork, but the savory love affair I had with red meat, a food item I thought I'd never get tired of, is no more.

So now I find myself trying to limit the waste and financial loss as best I can. I gave some away last summer, to friends and neighbors who like to grill. I also sold some to a close friend who agreed to pay me $0.50 on the dollar for a number of frozen packages (she likes to feed her German Shepherd only the best.) As for the rest, I'm not sure what to do. I may be moving soon, and the meat probably won't survive the relocation.

Anyone need some old but still very pink meat?

Batteries In The Freezer: Not A Good Idea

2010-09-25T02:59:00.020-04:00

Witnessing the birth of my only daughter was, as you can imagine, a very moving experience. My daughter shot out of her mother like a rocket, so fast that the obstetrician had to catch her like a football. I was so pleased, proud, excited and thankful to be the father of a healthy baby girl.

In anticipation of the big day, I had bought a very nice digital camera: The Fuji FinePix S602Z. I've been very happy with it since day one.

Imagine my disappointment when it stopped working a few months ago.

I assumed it stopped working because I had left some batteries in it for too long, and the corrosive ooze that leaks from the decaying cells ruined some critical components.

I cleaned the camera up as best I could, using cotton swabs and cleaning solutions that wouldn't hurt the camera. Despite my efforts, I failed to bring the camera back to life.

I gave up on it for a couple of weeks, and made plans to send the camera back to Fuji along with a letter expressing my dissatisfaction with the reliability of the camera. Before doing so, I decided to try a cleaning one more time. This time I used a tiny screwdriver to scrape off any hardened material that might be causing problems inside the battery compartment.

Bingo! The camera was back! Sooooo happy.

I disposed off the old batteries and went to my freezer to get new ones.

I was shocked to find that the batteries I had in cold storage were all rusting and falling apart (see the photo I snapped above.)

Seems that in trying to preserve my batteries, I ended up destroying them, and wasting money! And to make matters worse, I almost ruined an expensive digital camera. The theory of placing batteries in cold storage was sound, in my opinion, but in practice, I guess the cold has a deleterious effect on power cells.

Reverse Mortgages: Look Before You Go In Reverse

2010-09-19T23:17:00.007-04:00

A phrase has been densely clogging up the blogosphere of late in columns concerning financial loans and home mortgages. I am speaking, of course about reverse mortgages, also called home equity schemes or equity release schemes. These home mortgage products allow mature home owners to tilt the balance of equity in their paid off properties and enjoy spending cash, continuing income, and the good life as long as their mortality lingers. Sounds great, right? Sensible equity guardians get to enjoy the fruits of their labors. Right?

Yet, these are the same consumer home loan borrowers who claimed to get victimized by the refinance wave. As a real estate financier and an escrow processor, I saw my fair share of these "bewildered lenders' and uneasy borrowers eagerly come in to sign forms they barely paused to consider before signing the documents as fast as they could. There was no sign of the mortgage finance "victim" that would later emerge, who claimed to be hornswoggled by the terms of their loans. The potential borrowers of the reverse mortgage loans have that same aura....

Many of these borrowers are barely rescued from the Great Mortgage Debacle of 2008-2009. The media was full of displaced seniors and heads of households rapt in dismay over their plights. The buzzword causing all the ruckus was "family."

Most of those people who were crying foul as their mortgages entered default had a funny resonance between their stories. People with 17 inch rims in the driveway were crying poor, after years of conspicuous consumerism that blatantly demonstrated their inability or lack of desire (or both) to rein in spending. Nobody seemed to be looking at how these people actually lived as their credit margins moved to the left of red. But when the home mortgage applications were being filed, the story was much different.

I settled and closed escrows where wide eyed borrowers were amazed to discover they had childcare and alimony payments attached to their addresses. I saw hotel bellhops claiming $45K in stated income from undeclared tips get homes worth $650,000 or more. People with very limited education were minting fresh county recorder stamps marked "sold." And escrow agents making millions came down off the high and eyed their files uneasily, as if rabid wolves -- the Department of Corporations -- might leap out to consume them at any time.

Years later, these documentary chickens came home to roost. People who had convinced themselves they were "doing well" in fact had not won the paperwork lottery but crashed and burned in stated-income hell.

I processed refinance mortgages for people living in swanky hotels and divorcing celebrities who each wanted a payday no matter how the paperwork came out. I saw barely literate Latina women hugging infants show up to scribble their illegible names on $800,000 worth of documents as their eyes darted from all corners of the room. These people weren't living on a budget or using the two years adjustment period to prepare for stiff mortgage payments. They were looking for free cash on Uncle Sam.

Today we sit in one of the worst recessions in history, thanks in large part to a tidal wave of cash greedy borrowers turning their home mortgages inside out like piggy banks to get manicures, take vacations, and buy new gas-guzzling cars. Jobs are thin, foreign imports rule the markets, and many Americans are starting to figure out that, when the decade is done, they may end up with much less wealth than they anticipated. Hungry banks, anxious to call back the heyday of those heady refi limbo dances with home mortgage rates, have invented the reverse mortgage to slake consumer thirst for irresponsible spending.

As someone who used to work in escrow, I saw a lot of refinance applications cross my desk. These people called every hour on the hour to ask when their money would be ready. And they still obtained credit cards and maxed them out. I think reverse mortgages are putting the same dynamics back into place, but when the final round of mortgage loan jeopardy comes this time the Fed will be making sucking sounds.

Asking For A Salary I Deserve: MY 911 Story

2010-09-11T15:22:00.089-04:00

I've always believed that when negotiating a salary at a new job, one must price oneself right. Ask for too little, and you'll end up bitter and feeling unappreciated. Your job performance will probably be not so great too, because you'll feel like the company you're working for is ripping you off every day. Why do your best for a company that pays you significantly less than you deserve?

This is a story about using leverage to try and get a bigger paycheck. It's also my 911 story, which I'm compelled to share here on this 9th anniversary of the 9/11 attacks.

Back in the year 2000, I was looking to make more money, and decided to go on some job interviews, even though I was working at a job I liked at a company that treated me quite fairly. All was quite well at this job: great coworkers, great benefits, Lincoln Towncar ride home every night, and more. But I wasn't happy with my salary, and that was enough to prompt me to look for even greener pastures.

At the time I figured I would use the leverage I had, i.e. being someone already employed at a prestigious NYC law firm, to achieve my goal.

I went on a few interviews, which were OK, but nothing special.

It was the fourth interview that I felt was the most promising. It was at a well known financial services company at the World Trade Center. The company needed a IT guy, fast, and they wanted someone who could hit the ground running.

I remember taking a long elevator ride to a very well decorated office. Actually, what I remember most vividly was the view from the lobby. It was breathtakingly stunning. Not only could I see the curve of the Earth, I was also taken aback by how small the Brooklyn Bridge appeared at that height. To give you an idea, imagine being in an office near the top of one of the towers, and placing yourself right next to a large window. Then imagine lining your index finger up with the Brooklyn Bridge below. The bridge, from that vantage point, was just a little bit longer than my finger.

The interview went very well. It was conducted by the department head and an employee who, if I ended up getting hired, would be my coworker. Most of the interview was consumed by an extensive, verbal quiz. I got most of the answers correct.

The next day, the man who would be my boss called me and gave me another test. He quizzed me on the 2 questions I got wrong the day before. I got them right this time. He was just making sure I was the right kind of person for the job, someone who would get stumped on something important and job-related, and would respond by getting knowledgeable as quickly as possible.

The next day I got a call from the same manager, and he asked me what my salary expectations were. With confidence, I gave him a figure. The angry response from the other end of the phone was:

"What?!!! There's no way in hell we're paying you that much!"

And, at that, he hung up the phone. I never heard back from him or from anyone else at that firm. The job was lost.

Do I regret giving him a figure that I thought was fair and commensurate with my experience. Heck no! However, if I had access to a time machine that day -- not an expensive H.G. Wells model but something simple like those sold at Wal-Mart -- I may have considered going back in time and changing my response to "negotiable" or something to that effect.

About a year later, the 9/11 attacks happened.

I'm no mystic. In fact, I'm an extremely firm secular humanist. But sometimes things happen in life that make me wonder if I have some sort of guardian angel watching over me.

A few months later, on Christmas Day, I found myself watching the Frank Capra classic "It's A Wonderful Life," and getting a bit chocked up, which is really not my thing. I then found myself praying for all those who perished on September 11, 2001. I have no idea if heaven exists, but I found myself wishing them godspeed to a peaceful afterlife.

I've never liked the idea of someone else dictating how much I deserve to get paid. Why should someone I don't know have that kind of power over me? Bottom line: why should I be happy letting someone else determine how much I am worth? I didn't get the job, but I retained my sense of self-worth, which I feel is very important in life. I guess that's just my personality, and it's why I knew I would have to break free of the 9-to-5 thing eventually.

Tips On Becoming A Legal Resident of The United States

2010-09-09T22:05:00.018-04:00

Despite concerted efforts by the US government, the American economy is still facing serious challenges as it fights to return to prosperity. The Federal Reserve has lowered interest rates to record-low levels, and has used an astronomical amount of newly printed cash to help bolster economic growth. Yet unemployment remains high and the threat of another economic downturn continues to stalk the mighty economic animal that is the United States.

Without a doubt, America is struggling to return to sustainable economic growth. Yet, even with weaknesses in numerous sectors of the American economy, people from other nations still want to enter the United States and enjoy America’s freedoms and opportunities. Unfortunately, too many immigrants choose to enter and remain in the United States illegally, which often leads to living in fear, incarceration and deportation.

The following are some tips for those who entered the United States legally, but who are not sure about what it takes to become legal permanent residents:

Hire A Really Good Lawyer: Don’t settle for a mediocre immigration attorney. Find the best, and follow that lawyers instructions to the letter. If you think you’ve found a great immigration attorney, use your favorite search engine to research that lawyers background and experience. Look for credentials like Vice President of the Court of Appeals for the Second Circuit. More often than not, quality attorneys are very busy and their fees are generally higher than lawyers who lack experience and professional credentials. The wait and the added expense, however, are most often worth it.

Don’t Commit Any Crimes: This may seem like obvious advice but it’s extremely important to stay out of trouble with the law. What may seem like a minor misdemeanor to you could be seen as just cause for deportation by a judge.

Don’t Purchase of Create Fake Documentation: This is probably the worst thing you can do. If you purchase a fake green card, or manufacture one yourself, it’s likely that you will eventually get caught and will at the very least spend time in jail. At worst, you’ll get deported.

Pay Your Taxes: All honest Americans pay their taxes. If you want to be a part of American society, do as honest and honorable Americans do, and that includes doing your part to help pay for roads, schools and national defense. If you find yourself in a situation where you have to defend your presence in this country, you may find that the authorities will want to know if you’ve been prompt and consistent about paying your taxes.

Participate Positively In Your Community: Donating your time to a worthy cause will look good to any judge, so volunteering is definitely something you should consider doing if you want to present yourself in the best possible light. You don’t have to give up a huge block of your free time on a regular basis. Volunteering just a few hours a week at a hospital or religious institution can help to convince a judge or other decision maker that having you as a permanent resident of the United States would benefit both you and the country.

Stay Employed: Even if you hate your job, don’t quit until you’ve got a new one lined up. Being unemployed will hurt your chances of becoming a permanent resident considerably, as no country wants to import people who will sap resources unduly from the state as opposed to being a productive, taxpaying member of society.

The Anchor Baby Trick Is The Worst Crime of All: Don’t get it into your head that getting pregnant and giving birth to an “anchor baby” is a good idea. Just because your child is an American citizen, doesn’t mean a judge won’t deport you. It’s very well known that certain unprincipled, female illegal immigrants get themselves pregnant at any cost in order to have an American citizen baby. Certain judges used to let such mothers stay in the country, even when the mother in question has committed serious crimes. However, the anchor baby trick is moribund, if not dead already.

Social Security and Prudent Financial Planning: Friends or Foes?

2010-08-23T02:52:00.008-04:00

August 14, 2010 marked the 75^th anniversary of Social Security, and since then national political debate has been heavily focused on the future of the program. Democrats wish to paint themselves as the sole champions for the working and middle class by opposing Social Security reform and reviling Republicans who even suggest that seniors don’t deserve the greatest income benefit possible. Republicans are digging their heels into the facts and figures surrounding the fiscal folly of a government-controlled ponzi scheme doomed to fail. Paul Krugman’s inflammatory column in the New York Times calling conservative concern for the future of Social Security “nonsense” has fueled even more heated debate in the blogosphere and on social networking websites.

Everybody is concerned about Social Security these days.

Debthelp.tv reported in 2009 how an SSA press release revealed that “program costs will exceed tax revenues in 2016” and “the combined assets of the Old-Age and Survivors, and Disability Insurance (OASDI) Trust Funds will be exhausted in 2037”. The current debate ensues over what these numbers really mean and whether or not Americans should consider Social Security to be stable and dependable or at a crisis status.

Unfortunately, very few economists and financial analysts are making mention of the fact that a heavy dependence on Social Security benefits is not prudent financial planning, regardless of the stability of the program.

The National Academy of Social Insurance released a brief in May 2007 confirming that American retirees are not receiving proportionate income replacement when they depend on Social Security for their livelihood. According to NASI, retirees need to replace 70-80% of their income in order to maintain their quality of life, but Social Security benefits only replace about 40%. Furthermore, most American retirees depend on Social Security benefits for at least 66% of their retirement income, with SS benefits accounting for 80% among seniors in the lowest wage earning bracket. Any retirement fund that replaces less than half of the pre-retirement income should be supplemental, not a primary income source!

Yet, Washington is consumed with taking sides on the issue of reform instead of educating the public on how to do more toward securing their retirement through sound investing, savings, debt reduction, and entrepreneurship or other income supplement. Financial literacy is the real issue here, and too many Americans are so busy arguing about and depending on Social Security benefits that they miss the truth about how well these benefits can actually sustain retirees.

In a related article on Social Security I propose the following:

“It is not the government’s responsibility to take care of me in my old age...That’s my job. All of the wisdom we learned from our predecessors has been thrown out the window – we don’t have to live modestly and below our means so that we can save for a rainy day. We no longer have to be prudent for ourselves because we no longer believe that the dynamics of life can swing the pendulum to the unfavorable side of financial stability. Americans think that employers, politicians, and institutions of various sorts exist to take care of them, not to serve a specific purpose within a limited scope.”

Whose responsibility is it to plan for your financial future, and how heavily should anyone rely on government to secure their income replacement? No matter how you crunch the numbers, replacing income is hard work, and it would be wise not leave such a crucial function to the wits of elected officials who will retire well whether you do or not.

I Thought I Bought A Foreclosed Property, but In Fact I Bought a Worthless Piece of Paper!

2010-08-04T13:41:00.022-04:00

As you might imagine, with the nation in the grips of a foreclosure epidemic, banks are very eager to unload mortgages gone bad. They'll do whatever's legal to recover whatever they can from a foreclosed home. Doing what's ethical? Irrelevant!

Take, for example, the Strand family in California. They took close to $98,000 out of their paidoff house and bought what they thought was a foreclosed property at a courthouse auction. In fact, they bought a second mortgage -- a useless piece of paper -- and were left with virtually no recourse.

The Strands were smart enough to get the media involved, which, of course, led to the bank suddenly being open to negotiating a settlement.

Click here to read the full story. It's a good read.

Fore some good tips on purchasing a foreclosed home, visit this page.

A Strategic Default on Your Mortgage May Cost You More Than You Think

2010-05-19T17:14:00.019-04:00

I was listening to some business news the other day. According to the well respected economist who was being interviewed, folks who have been walking away from their home loans in response to owing more on their home than their home is worth, have been helping to fuel consumer spending. The money that was being used to pay the mortgage has been freed up to be spent on other things. Great news for this fledgling economic recovery, but going the strategic default route should never be taken lightly. Not only will your credit score being ruined for years, you may end up with a massive tax bill from the Internal Revenue Service (IRS).

Here's a clip from a great WSJ personal finance article:

"...Americans considering walking away from an unaffordable mortgage: Beware of taxes.

Though not every homeowner who's underwater on a mortgage need worry, many are finding that a foreclosure or other form of housing loss can lead to a big tax obligation.

Maxine McDaniel walked away from her Loveland, Colo., home in January. Now the 59-year-old nurse faces a potentially huge tax bill.

In Ms. McDaniel's case, the 59-year-old in January abandoned the 4,300-square-foot Loveland, Colo., home she and her late husband built. After her husband's death in July 2008, Ms. McDaniel, who earns about $34,000 a year as a home-health nurse, couldn't maintain the $3,000 monthly payments necessary on her nearly $500,000 interest-only mortgage. So she stopped making them and moved in with an uncle.

Now, she's bracing for the next blow: an Internal Revenue Service form detailing as much as $150,000 in debt canceled by the bank when it took control of the house. The canceled debt is a form of income, says the IRS—meaning she'll owe taxes on it.

'I had no clue this would happen,' says Ms. McDaniel, who, with her husband, had refinanced at least three times, including one cash-out loan. That transaction caused her problems because, while canceled debt originally used to buy or build a house can be exempted from tax filings, debt used for other purposes cannot. 'I just thought I'd get out from under the house and that would be that,' she says.

As the U.S. economy continues struggling with the fallout of the debt-induced housing crisis, millions of homeowners like Ms. McDaniel are discovering that their decision to walk away from a mortgage could result in tax bills running into the thousands or tens of thousands of dollars.

The upshot: anyone weighing whether or not to seek a mortgage modification—or debating whether to abandon a house that is worth less than the mortgage—should consider the tax treatment carefully before making a move. The same holds for any form of consumer debt that a bank ultimately cancels, including credit-card balances or an auto lease.

Federal and state tax laws have long viewed canceled debt as income because consumers who borrow money to buy a house—or who pull money out of their house to buy cars and such—and then don't pay it back 'wind up ahead of where they were,' says an IRS spokesman.

Thus far this year, Michele Knight, a CPA with a high-end clientele in Keystone, Colo., has had five clients owe taxes tied to houses and another five tied to credit cards and auto leases. 'They're calling me in tears and saying, 'What do you mean I owe taxes?'" she says. 'I never would have expected it.'

Dianne Corsbie, a White Plains, N.Y., financial planner, says about 5% of her 200-client practice owes taxes because of a foreclosure, most tied to investment properties. In Napa, Calif., Duane Carey, owner of a Ranch Tax Service, says every fifth person he sees 'comes in angry, holding one of these 1099s.'

Overall, the IRS estimates that individual taxpayers will have filed nearly 3.6 million tax returns for 2009 that include income from canceled debt. That's down a bit from 2008, but up 17% from 2007. The numbers include taxes due on primary homes, vacation and rental property, credit cards, auto leases and other canceled debts. The IRS projects the numbers to rise in coming years.

Part of that rise will likely come as the government expands its mortgage-modification program, including a call in March by the Obama administration for banks to reduce principal as a way to help people remain in their homes. That reduction could lead to tax obligations.

At first the government's mortgage-modification program focused on primary mortgages, which are tied to the purchase or construction of a primary residence, and which are eligible for exemption under a 2007 Congressional act aimed at helping homeowners avoid the tax implications of a foreclosure.

That act—the 2007 Mortgage Forgiveness Debt Relief Act—exempts taxpayers from as much as $2 million in forgiven debt. But the debt had to be acquired before Jan. 1, 2009—and had to have been used solely to buy, build or remodel/repair a primary residence.

The government's new, expanded modification programs include short sales, in which a bank agrees to accept as full payment less than the value of the mortgage balance; deed-in-lieu transactions, when a homeowner gives the house to the bank instead of repaying the mortgage; and second mortgages such as home-equity lines of credit.

In many of those instances, say Treasury officials, homeowners used mortgage money to fund everything from tuition and medical bills to vacations and cars and even the down payment on a second home or investment property. That debt, however, isn't eligible for exemption.

Sometimes the tax bills are so high that people can't afford to pay. In such a situation, the IRS will allow taxpayers to apply for an installment-payment plan.

Some homeowners can avoid the taxes completely if they can prove insolvency, in which the total value of debt exceeds total assets. But even that could leave some owing taxes.

IRS rules stipulate that a taxpayer can escape taxes up to the extent of insolvency, meaning that if one's liabilities are $500,000 and assets are $300,000, the $200,000 difference is the extent of the insolvency. But if the person has $250,000 in debt canceled, then $50,000 is taxable income.

'People think their house was underwater, so they're insolvent and can get out of owing taxes,' says Arthur Auerbach, a member of the Individual Income Tax Technical Resource Panel at the American Institute of Certified Public Accountants. 'But it doesn't work that way...'"

If you visit WSJ online to read the full story, be sure to read the comments. Lots of insight there, as usual. Enjoy!

New York Times "Debt Trap" Interactive

2010-05-14T20:10:00.025-04:00

Just came across a "Debt Trap Interactive" on the New York Times website, and fell in love. It's very well done. It was made back in July of 2008, just before the global banking crisis which put us into this Great Recession. But it's still relevant today. I compared my debt to others in the U.S. and was not happy with my ranking. Lots of Americans are doing a lot better than I am -- and God bless them. Studying the numbers has helped me to realize that I really need to start ignoring the platitudes my friends and relatives have been offering me in recent months, and get my ass in gear.

Time to find a second job, I guess. It's going to be real hard, as the job market is still crappy, and I love what I do. But I need to make a lot more money, and job opportunities are starting to show up more often. There's a new casino opening up about a 10 minute drive from my place. Lots of positions that need filling. I wouldn't mind a security job -- with benefits, of course -- where I could get away with getting lots of reading done on the job. That would be sweet. I'm having a great time learning about economics these days, a subject I avoided in school due to all the math involved, but really love now. Real world economics is very interesting, and every time I learn something economics-related, I feel a lot smarter than before I owned that particular nugget of knowledge. Viva economics!

To explore the NYT Debt Trap Interactive, click here. Enjoy!

The Art of Complaining

2010-05-11T23:07:00.009-04:00

My husband and I volunteer as a host family to a Russian student at our local university. Over spring break, Masha traveled to see her mother and spent a day and a half in Chicago O'Hare International Airport because her flight was late, causing her to miss her connection.

Masha and I had lunch after her trip, and she told me about her ordeal, being awake for 18 hours straight, going from counter to counter, being bumped off flights, not sleeping and not even having the luxury of being able to study.

"You must write a letter," I told her.

"I have no idea how to do that," said Masha.

Her dilemma was not only rooted in a cultural difference, but a generational one. With the technological ease of e-mail and instant messaging, many people today simply do not have the knowledge of how to write a good old-fashioned letter of complaint. But I have found that even in the electronic age, a hard-copy letter, signed with multiple CCs has a power all its own.

As we sat, waiting for our lunch, I helped her craft a draft to United Airlines, which began with "Dear Customer Representative." We told her story in detail, including the poignant line, "My American friends could not believe that I didn't even get airport vouchers for a Cinnabon purchase."

As I advised, Masha sent a hard-copy letter to United, CCing every official entity she could think of, including the Russian Embassy.

Two weeks later, she received a letter of apology and a voucher for $150 on her next flight.
As I enter middle age, I have discovered that there is indeed an art and efficacy to the complaint. And there are rules.

First, you must find the proper person to whom to complain. If you have had a problem with a Walmart clerk, do not complain to that person, but that person's manager. Do not be afraid of asking for a supervisor. When I was trying to negotiate to delete a late charge with Discover, the phone representative said there was nothing I could do. I asked for his manager. As a result, I, as a long-term customer who had never been late on bill before, was not only able to get a refund on the late fee but also have my promotional rate restored.

Second, make sure you have evidence to support your complaint -- a broken product, receipt, or witnesses.

Third, follow the old aphorism that honey is more effective than vinegar. Do not yell or have a hissy fit -- particularly if you are a woman, as you will be seen as hysterical rather than justly injured. Try to stick to the facts as much as possible, but don't be afraid to insert an honest and sane appeal, such as, "I have been shopping here all of my life and have never experienced such poor customer service. As a long-time and loyal customer, I am disappointed in your treatment."

Finally, suggest a reasonable and acceptable appeasement. When my husband and I were literally chastised by a Walmart employee while purchasing an iPhone, I complained to the manager and told him that I would be happy with a deluxe phone case for our problems. We went home with the case.

Last week, I purchased a Roomba from KMart. When I bought it, the clerk asked if I wanted the three-year guarantee, which I declined. When I got home, I discovered that the Roomba had been used. I immediately returned it to KMart for a replacement. While at the service desk, I asked the clerk if KMart would be willing to comp me the guarantee for the inconvenience. She phoned her manager, and it was done. I walked out of the store, as a satisfied and well compensated consumer.

When you feel you have been wronged in business transaction, don't bite your tongue, but respond in a reasoned and respectful way. You will be surprised by the results.

In Pursuit Of Child Support

2010-04-27T14:54:00.004-04:00

Your heart sinks down deep into your belly as you open your phone bill. With shame and dread you see not just the current charges, but a sterile red insert alerting you that your account is seriously past due. Again. Gently, the bill is placed on top of the others. Electric bill. Credit card statement. Mortgage note. Relief from this debt seems elusive as your sadness turns to anger when you realize that your ex has failed, once again, to pay even a dime in child support for the month. The pale excuses ring in your ears - “Times are tough”, “I bought her a video game last month” and “Next week, I promise”. None of that nonsense pays the bills nor puts food on the table. None of that eases the despair that you feel down to your soul.

According to the U. S. Census 2006 report, nearly 22 million children depend on timely child support payments to sustain them. This report further indicates that approximately 87% of custodial parents were owed delinquent payments from the non-custodial parent. Clearly there is a need for more efficient child support collection efforts. Because of this gap in services in 2009 Senate Bill 1859 entitled “Child Support Protection Act of 2009” was proposed and has a predicted implementation date of mid-2010. This bill seeks to allow federal funds to match state funds in pursuit of past due child support payments. While this is a step in the right direction as far as protecting the financial interest of dependent children, much more needs to be done. And, there is much that the custodial parent can do to move their case forward.

Sometimes it seems that the easiest piece of business is the actual child support order. All parties work together to come to some sort of mutually beneficial agreement, given the guidelines of each individual state. Most states work with a child support guideline worksheet which translates to a support order of about 20% of the non-custodial parent’s income. Further, orders concerning the coverage of day care expenses, health insurance cost and extra-curricular activities may also be drafted. Many a parent has walked out of a courtroom clutching these agreements smiling as they think that the worst was over. Actually, the real work starts at that very moment. According to the US Department of Health and Human Services 27% of non-custodial fathers and 47% of non-custodial mothers completely default on their support payments and offer zero monetary contribution.

A savvy custodial parent will work immediately post-order to do what they can to ensure that they receive all monies owed to them in the near and distant future. This could be as simple as keeping notes concerning their ex’s employer, their work schedule, and the bosses name. This type of basic information will prove to be very helpful in the months ahead should the payment of support become increasingly erratic. Now is a time to start a file with all of your paperwork, including a log of all support related conversations with your ex, state child support hotlines and your attorney.

Speaking of your attorney, the question you may be asking is this: “Why not just let my attorney handle all of this?”. This simple answer is that it is cost prohibitive to nearly all custodial parents. Per www.lawyers.com the average national billing rate for an attorney is $284 per hour. This means that your 15 minute phone call just cost you over $70.00. Since nearly a quarter of custodial parents fall at or below the poverty line, a private attorney is just not feasible.

The first key to this process is to adjust your thinking about child support. This money is not a gift to you, is not optional and is not contingent on how often the non-custodial parent sees the child. This money is not a luxury, is not something to be bartered and is not a donation. It is money to support a child that two people created. It is a legal debt and a real obligation. Whatever happens outside of the support is secondary. You get along? Great! Hate each other? Doesn’t matter. Pondering getting back together? Of no consequence. The money is the money, plain and simple. This is a gender neutral issue as well, as 16% of all custodial parents are fathers and that number is anticipated to rise in the coming years

Another mistake that people make is believing that if the ex pays for additional items (e.g., a birthday party, new shoes, school supplies) then it relieves the non-custodial parent of all or part of their fiscal responsibility. New shoes are great, but that won’t pay the electric bill. This type of off-set system will only work if all parties agree to the terms in advance and preferably it is all in writing. It is one thing to come to agreement that you will reduce support by 25% if the ex pays for summer camp and it is quite another for a non-custodial parent to refuse to pay support in November because they bought a new backpack in August.

Yet another error that folks make is believing that in order to qualify for state child support enforcement services they must receive state benefits. While it is true that nearly a third of all child support cases involve a custodial parent who receives public assistance, most do not. All states have a department that deals with child support enforcement (“CSE”) and nearly all of these agencies charge no fee for their services. In 2004 over 4 million custodial parents turned to their local CSE for some sort of assistance with their case. Starting with the CSE of your state very early will prove to be helpful. As always, keep track of who you speak with, what you discussed, what follow up is necessary and what sort of timeline you are expecting. It is very helpful to also get an email address and fax number for your local CSE office, should you need to quickly get information to them.

Getting financial assistance for your dependent children is your duty and the non-custodial parent’s responsibility. Think of it in terms of an actual job and decide each week what you will do to get the money your children deserve. One week you may make a phone call to the local CSE office to get an update on your case. Another week you may try to verify where your ex is employed. Yet another week you may want to write to your local congressman to show support for any pending child support enforcement legislation.

If you feel that dealing directly with your ex on these matters is hazardous, then don’t. These things can quickly get escalated and virtually never result in a payment towards past due support. You will walk away angry, frustrated and empty handed. Needless to say, never let these matters trickle down to your children and make them aware of any animosity between the two of you.

Being a parent means many things. It means helping with homework and feeding them healthy foods and kissing their scrapes. You will also cry with your children and laugh at their silliness and dream with them. Part of your responsibility as a parent is also to ensure their continued financial security in order to create a peaceful living space where they can thrive. Do it for them.

Life Insurance: Do You Really Know What You Need? Term vs. Whole

2010-04-16T11:42:00.000-04:00

Some people are plain grumpy. Teaching a night course on Personal Finance at a local college painted my memory full of stupidity from one specific student. My other students were great and as a class we learned a great deal. Even Ms. Grumpy would eventually come around.

It just so happened I was much younger than Ms. Grumpy and this was my first adult teaching experience. I kept my cool and told the class from day one, "We all have something to learn, and if you can save yourself money from this, I have done my job." The big break came in about week 5, when we were on the topic of life insurance. I started class off with a short little introductory lecture on Term Life Insurance vs. Whole Life Insurance.

Each time in your life requires different life insurance strategies; and knowing these strategies will save you money on the policy you purchase.

Term and Whole Life Insurance both cover expenses in case of death.
Whole Life Insurance costs more because it is also a way for you to invest your money.
Term Life Insurance is for a set period of years and with the lower premiums, you can invest your money your way.

Whole life insurance makes insurance companies money, that is why many insurance salesman push Whole Life Insurance. Term life insurance is cheaper and does provide for your dependents in the case of your death.

There were a lot of glossed over faces looking at me, when Ms. Grumpy said,"I have a lot of money, I am divorced, my kids are out of the house, I have Whole Life Insurance, and I know how to invest myself." "So I should get Term Life Insurance." I replied, "If you weigh the price and length of the polices and if you have enough discipline to invest the remaining money, then, yes."

I could tell she was mad, but luckily this time it wasn't at me, but her Insurance company who had been selling here Whole Life Insurance for the last 4 years, when she could have the same protection under a Term Life Insurance Policy. It was a great moment, Ms. Grumpy in her own way had learned something from the new teacher.

Saving money in our budgets adds up in many different ways. Depending on you life situation, re-evaluating your Life Insurance needs could be one way to free up some extra cash for investing or paying down debt, while still giving you the protection for yourself or your family.

I wish the story of Ms. Grumpy would have a happy financial ending, but when we got to the investing unit, finding out she had all her eggs in Corporate Bonds because they paid a 8% interest rate, would not let that happen. She said here is where all my money is and it is safe. That will be for our next story. Life Insurance is a necessary evil. Finding the right coverage can save you money and allow you to invest the way you see fit. Keep in mind, Insurance Companies make a lot of money, but as a consumer you decide how much of yours they will get.

From WSJ.com: 15 Money Rules for Kids

2010-03-27T23:18:00.015-04:00

Just found this interesting 15 Money Rules to Teach Your Kids on the WSJ.com site. Worth sharing:

Click on the above image to view an almost readable version. Visit this link to read this FREE WSJ article.

Another great free WSJ article, How a Pro Handles His Family's Finances, can be found here.

"Support Master" Anita N. Botchway Ensures That My Daughter Grows Up With No Daddy

2010-03-20T14:05:00.035-04:00

Got the results of a recent Support Master hearing the other. I've been trying to get my child support payment lowered since the end of 2008, but the Philadelphia Family Court has rejected my pleas. I have been through hell, including spending time in prison thanks to judge Joel S. Johnson, also known as "Lock 'Em Up" Joel (more about judge Johnson here.) By refusing to reduce my support payments, the system has made it impossible for me to see my daughter. I simply can't afford it. And so, she is now a 7-year-old girl with no father.

A special thanks to Anita N. Botchway, the "Support Master" who heard my case. She decided to set my income to what it was 10 years ago when I was working in a law firm in New York City. My current income in barely a fraction of what it was then, as evidenced by the tax forms I submitted during the hearing. Despite presenting honest documentation of my income, despite a devastating recession -- the worst since the Great Depression -- Anita N. Botchway reached the most nonsensical conclusion I've even seen. So,

Anita N. Botchway, you deserve a very special thanks for setting my income to what it was back in the year 2000. You are now the #1 reason my daughter will have no daddy. Anita N. Botchway, you are an exceptional legal tyrant in an exceptionally tyrannical Philadelphia Family Court.

If I had completely given up on my business and got a job as a security guard, Ms. Botchway would have still set my income to what it was 10 years ago. And that's what so screwed about about this system.

Time for some background.

Years ago, when my support payment was set, I had every intention of making sure that my daughter had the best of everything, despite my rapidly declining income. The mother of my child (Mama) promised that my daughter would continue with the excellent reading and math learning at Kumon, and she promised that my daughter would attend private school. As soon as I signed on the dotted line, my daughter was enrolled in public school, and the visits to Kumon stopped. How that for dishonest? I've been trying to get my payment reduced ever since, to no avail. Reducing my payment to a level that's fair would have kept me from taking on a huge amount of credit card debt, and kept me out of prison.

Now, frustrated as I have never been frustrated before, I am forced to start the process all over again.

The entire child support process in Pennsylvania is inherently corrupt. That's because the system takes a 10% cut of every support payment made. Therefore, the employees -- including support masters and administrative judges -- are extremely reluctant to reduce anyone's payment, as this would mean less cash flowing into the system.

I received from Mama's lawyer today. Appears that she is interested in negotiating a settlement over support and custody. I am writing my reply now. I will blog again with news.

As always, thanks for reading. Your comments are always welcome.

Make Your Tax Dollars Work for You - Take the Credit!

2010-01-28T11:48:00.023-05:00

It’s tax time again, and every day I hope my W-2 will come in the mail. I am anxious to see how much my husband and I owe the state of Arizona, especially since we didn’t pay any state taxes in 2009. Rather than having state taxes deducted from our paychecks, we decided to give that money to the elementary school run by our church. That’s right – we donated our tax dollars to a school! The money we donated will be used to provide tuition assistance to students in need. We love the school and believe in the work that it does, which is more than we can say about many of the government programs run by the state.

We were able to do this through something called the CTODP - Catholic Tuition Organization of the Diocese of Phoenix. Arizona allows residents to donate up to $500 ($1,000 for married couples filing jointly) to a Catholic school of their choice and get a tax credit. The first time we heard about the CTODP it was late in the year, so we didn’t participate because we had already been paying state taxes all year and couldn't shell out more money. The next year, however, we changed our withholdings so that no state taxes were withheld, and the extra money in our paychecks we donated at the end of the year. We know we might owe Arizona some money if our tax liability is more than the $1,000 we donated, but we are prepared for this. And even though we might still owe a little, we were able to help kids who wouldn’t otherwise be able to attend a great private school, rather than funding the state government. Now that’s using my tax dollars the way I want to!

Until hearing of the CTODP, I didn’t know what a tax credit was; I was only familiar with deductions, and I never contributed enough to itemize at the federal level. However, I have learned that there is a significant difference. Tax credits are much more beneficial to taxpayers than deductions. It works like this:

Deductions reduce the amount of income on which you pay taxes. If you make $60,000 and deduct $1,000 for a charitable donation, you will then be taxed on an income of $59,000. Though helpful, this won't make a huge dent. A credit, however, is applied after your taxable income is calculated, and reduces the amount of taxes you actually owe. So if you make $60,000 and owe the state $600 in taxes, and you have donated $500 to a qualified charity, you will then owe the state only $100. You’re shelling out the same amount of money, but you’re getting to choose where it goes, and you’re paying that much less in taxes. (Credits like this currently seem to only be available at the state and local levels, and not at the federal level. Charitable contributions can be deducted at the federal level, though to do this, taxpayers need to itemize deductions greater than the standard deduction determined by the IRS.)

Arizona also offers the Charitable Tax Credit, sometimes referred to as the Working Poor Tax Credit, where you can donate to many different charities and get a dollar for dollar state tax credit - up to $200 for individuals, and $400 for married filing jointly. A list of qualifying organizations can be found at http://www.azdor.gov/TaxCredits/CharitableTaxCredit.aspx. You can get both the CTODP and the Working Poor credits – what a great way to redirect your tax dollars to organizations you want to support! It also seems possible to donate to other private non-Catholic schools in Arizona, though you’d need to investigate this.

Though my experience has been in Arizona, other states offer such credits, to varying degrees. In my research I have come across Idaho, Michigan, and North Carolina, though one article I read claimed that about 20 states offer them. There are restrictions on the types of charities you can support – most are required to help the poor – so if your state offers a credit, get a list of qualifying organizations before donating somewhere. To learn about what your state offers, ask your tax professional, or if you’re doing your own taxes, the IRS has a link to each state web site at http://www.irs.gov/businesses/small/article/0,,id=99021,00.html. If you are in Arizona, information about the CTODP is at http://www.ctodp.org/, and information about the Working Poor Tax Credit can be found at http://www.azdor.gov/TaxCredits/CharitableTaxCredit.aspx.

It may be obvious, but state tax credits like this only benefit you if you pay state taxes. It’s important for you to know your tax liability, because the credit will only benefit you to that extent. For example, if you are only required to pay $350 in state taxes, and you donate $500 to a qualifying charity, you will not get that extra $150 back. In Arizona, however, you can carry forward any unused credit for up to five years. If your income has remained steady, you can look at last year’s state tax return to get an idea of what your tax liability is this year.

If your state offers credits you qualify for, this is a good time to change your paycheck withholdings since we just started a new year. It’s also a good time to make a resolution to support some good work!

If you’re curious about the history of this type of tax credit, some articles of interest can be found at http://pewforum.org/publications/articles/charitytaxcredits.pdf or http://learningtogive.org/papers/paper63.html.

Take the credit!

We Listened To A Lender Go From Making Homes Affordable To Making Modifications Impossible

2010-01-23T22:41:00.011-05:00

I would not have believed this if I did not hear it for myself. I listened while a banks’ “home retention” representative refused to let a homeowner pre-qualify for the federal government program, Making Homes Affordable aka Home Affordable Modification Plan aka HAMP. THE LENDER’S REASON for the refusal: The home owner was “contesting” the foreclosure action started by the same lender. They would not accept his HAMP pre-qualification app over the phone. Mind you, the HAMP program let’s homeowners enter into a temporary 3 month lower payment trial period. During the trial period the homeowner sends the lender the required financial documentation in order to get a permanent modification. The application and approval for the 3 month lower payment trial period usually happens over the phone. The approval is given within minutes after a homeowner provides the lender with his or her income and expense info over the phone. Basically the lender’s “home retention” rep enters the income and expense info into a computer program…then POOF!!!...the home owner can be approved on the spot. However, in this case, the lender refused to let a homeowner apply over the phone because the homeowner hired a lawyer to defend the lender’s foreclosure case.

At times, people will ask me to conference in during phone calls with their lenders. In this case, Paul (name changed for privacy) asked me to assist him with a loan modification, so we called the lender together. It was America's Servicing Company, a division of Wells Fargo Home Mortgage. The “home retention" rep went through the standard verification procedures: name, social security, property address, & phone no#. Paul explained to the rep that he was in foreclosure. Paul told the rep that he was advised by his lawyer to call the lender for a loan modification. Paul then asked the rep about the HAMP program. The lender’s rep said “Yes, we provide modifications under HAMP, however you cannot apply over the phone because we were advised that you are contesting the foreclosure action.” Paul and I were totally stunned. I then asked “are you telling Paul that he can’t apply for the HAMP program and get an immediate 3 month pre-trial modification JUST BECAUSE he is defending himself in court” Initially, the rep said the software program would not allow Paul to apply. Then the rep got hung up on the word “contesting”. The rep tried to raise a distinction between “contesting” a foreclosure and “defending” a foreclosure. The rep implied that Paul was trying to claim he “should not be in foreclosure” that’s why Paul is “contesting” the foreclosure. The rep kept asking “Are you trying to say ‘you should not be in foreclosure’”...

Now let’s cut to the chase. It is clear that the lender’s “home retention” rep didn’t truly understand what was going on. Why would the lender deny Paul this option for a loan modification? Why would the lender’s be advised about defending a foreclosure case? What does it mean to “contest” a foreclosure and why does it affect Paul’s ability to apply for HAMP over the phone?

These are my thoughts: The lender wanted to discourage Paul from aggressively defending the foreclosure. It always benefits a homeowner to defend a foreclosure case, even though they owe the lender money. When a homeowner defends a foreclosure case, they invariably gain some leverage and extra time. There are more courts requiring mandatory settlement conferences between homeowners and lenders thus this creates pressures for settlement. It becomes a time consuming, costly affair for the lender. It comes to mind that phone conversations are recorded, so perhaps these recordings can be admissible in foreclosure cases? What if Paul said to the rep “I am not contesting the foreclosure” or “Yes, I should be in foreclosure, I owe you the money”.

If Paul were approved over the phone for the 3 month pre-trial modification, then the foreclosure action would be stalled. Most important, Paul could tell the judge he received a 3 month pre-approval and he expects to receive a permanent modification. This flies in the face of the abysmal record regarding lenders and HAMP. Beginning March 2009 up to including December 2009, there were 787,231 homeowners in a pre-trial period and only 66,465 homeowners with a completed permanent modification. Hmmm let’s see, what if the lenders collect monthly payments during the trial period and the homeowners ends up not receiving a permanent modification. What’s 787,231 homeowners times $1400 per month mortgage payment? That’s about $1.1 billion a month. Now let's multiply that by 10 months. You do the math and read between the lines.

I wonder how lenders treat homeowners who DON'T defend themselves in foreclosure. Are lender's denying the 3 month pre-trial mods to these homeowners? Hmmm.

I want to add that the “home retention” rep was respectful to Paul. In fact, I believe that this rep believed that his employers’ policy was wrong. He was sympathetic and supportive, however he had to do what he is ordered to do…he had to do his job.

At the end, Paul was unable to get the 3 month pre-approval, so Paul will bring it to the judge.

Now you know so take control.

Heart + Sweat = Cutting Student Debt

2010-01-08T13:27:00.005-05:00

For five years in my late twenties, I didn’t work what most people refer to as a “real job” (though the emotional and sweat equity I expended begs to differ). I was a volunteer in Arizona, and the work I did was as real as it gets! I lived and worked with pregnant women who were homeless or alone, serving as a staff member of a wonderful community called Maggie’s Place. Day after day, I had the extraordinary privilege of watching expectant mothers grow – and not just in their middles! Women came to us uncertain and scared, often having experienced violence, substance abuse, abandonment, or other forms of suffering. In the shelter of our welcoming home, made up of 20+ women and up to eight babies, mothers who lived at Maggie’s Place could learn about parenting, health, education, employment, housing, budgeting, communication, setting boundaries, and a myriad of other subjects in which skills are needed to make it as a single mom. These mothers were the strongest women I had ever met. How was I so blessed to get to share in their lives?

In 2004, I was three years out of college, and growing restless at my job in Pennsylvania. I knew I was fortunate to have grown up in a stable home, and I wanted to do something to help others who hadn’t. I had considered volunteering somewhere full time after high school or college, but didn’t know how it would be financially possible; I had about $13,000 in student loans. I also wasn’t sure where my skills could best be used. However, after several years of feeling unfulfilled in my work, I decided to finally give volunteering a shot.

Though not sure where to start, I discovered a web site for Catholic Network of Volunteer Service (http://www.cnvs.org/), an organization that matches volunteer hopefuls with places that need volunteers. Shortly after I submitted a profile about my background and the type of work I sought, a staff member from Maggie’s Place contacted me. I couldn’t believe it - the community sounded perfect for me! It was in the southwest (I needed a break from the northeastern winters), and seemed to offer most of what I was looking for. The application process began, and I was invited to fly out to Phoenix for an interview in April 2004. The five days in Arizona solidified my desire to volunteer at Maggie’s Place, and upon my return to Pennsylvania, I arranged for a year-long leave of absence from my job. I was sure that I would get the volunteer bug out of my system within that year. Little did I know that I would stay with the Maggie’s Place community for five years!

After a busy summer of tying up loose ends, I loaded down my ’93 Saturn for the long-dreamt-of drive across the country with my best friend. Our week on the road was everything such adventures should be, and I arrived in Phoenix refreshed and excited for this new chapter in my life.

The work of Maggie’s Place was right in line with my values, and my gifts were a good match for the young and growing organization. I loved working with the moms and babies, and I knew I was truly making a difference. Mothers and their babies could stay in our homes for up to six months after the babies were born, so there was time for the moms to really get on their feet. I had thought I was the one who had something to teach, but I learned so much from the moms of Maggie’s Place! Our community was rich and diverse, with each member bringing a unique flavor to the mix. The other volunteers came from around the country, each wanting to use her abilities for the good of others. I was surrounded by a supportive community of people who shared my goals and ideals, and each day brought new joys. The work was hard – don’t get me wrong – but it was meaningful, and I went to bed each night knowing that I had given all I could to whatever challenges the day had presented.

Occasionally I was able to fly back east for family gatherings. Each holiday I was home, relatives would ask how on earth I could afford to be a volunteer. After all, I didn’t earn a salary, I had no 401K, and I had student loans to pay off. What was I thinking? How did I buy stuff? Wasn’t I wasting my hard-earned degree in English education? How could I live without a job? When was I going to rejoin society?

Despite my best attempts to explain, I don’t know if my extended family ever completely got my situation. While volunteering is not possible for everyone, it is often a more viable option than most people think. Here’s how it can work:

The country is full of non-profit organizations that provide services to various populations – families, youth, children, elderly, women, and men; people who are homeless, abused, hungry, disadvantaged, or in crisis due to any number of circumstances. There are projects in education, health and medicine, disaster relief, environmental protection, and community and economic development. There is more than enough work to go around.

Many of these non-profits are run primarily by volunteers, individuals from various backgrounds who commit to work for the organization for a certain amount of time – typically ten to twelve months. If both the volunteer and the placement site desire, these commitments often can be extended. In exchange for their work, volunteers do not earn a salary, but rather receive living stipends. These stipends can range widely, depending on the other benefits the organization offers - I have heard of monthly stipends from $50 - $800 - but basic needs are provided for, one way or the other. If an organization provides housing and transportation for its volunteers, the stipends might be lower. If volunteers are expected to pool their money for a shared apartment and utilities, their stipends will be higher.

For example, during my volunteer time at Maggie’s Place, my monthly stipend was $350. In addition to that, I received room and board, health insurance, access to community vehicles, and auto insurance while driving those vehicles. My only monthly bills were for my cell phone, personal car insurance (since I had chosen to bring my car), and asthma medication. Granted, there weren’t wads of cash left over, but I was still able to afford a few plane tickets home and the occasional meal out. The community was committed to living simply, so it didn’t matter that I couldn’t buy the latest trends or newest gadgets. I was living with formerly homeless women who might have given birth on the street if not for Maggie’s Place; how could I complain about what I didn’t have? Besides, with so many housemates, we could always borrow from someone!

Clearly, I did not choose to volunteer for the financial perks. However, volunteering offered one huge bonus that I wasn’t initially aware of – AmeriCorps Education Awards. AmeriCorps is a federal program in which non-profits can participate, allowing a year or two of full-time volunteering to be possible for many people. At the end of a ten to twelve month term of service, AmeriCorps members are eligible to receive an Education Award of up to $4,725. This money is a voucher that can be used to repay federal and state student loans (Stafford and Perkins loans are common ones), and you may receive two awards in your lifetime - a total of $9,450! This amount is for full-time service; smaller awards are available for part-time service.

You may ask “How do I pay my student loans while I volunteer?” Most federal and state loans qualify for forbearances, which means the borrower doesn’t make payments while volunteering. And while interest accrues while you volunteer, the government will pay that interest when your loan comes out of forbearance. So with two AmeriCorps Awards, plus over $600 of interest that was paid, I was able to knock over $10,000 off my student loans! After applying that money, my loans were paid up for the next seven years, and my remaining balance was quite manageable. Additionally, my husband Jim, whom I married after my first two years of volunteering, served as an AmeriCorps member in the Maggie’s Place office after our wedding. The combined $20,000 off our student loans made it possible for me to continue serving with the community long after I thought I could.

If you have gotten by without student loans, or if you haven’t been able to afford higher education, AmeriCorps Education Awards can also be used to pay for schooling after you have completed your volunteer time. And some schools will even match your award! Not a bad deal, eh?

Before you quit your job, ignore that student loan bill, and commit to your favorite cause, you’ll need to do your homework. Know that:

Not all non-profits have volunteer programs or offer AmeriCorps Education Awards, so investigate.

There are requirements on the number of hours of work volunteers must log, and regulations on the types of work that can count as AmeriCorps hours; these should be explained to you by the organization you go through to volunteer. I was required to log at least 1700 hours between 9-12 months of service; getting those hours was not a problem.

AmeriCorps Awards typically cannot be used to repay private loans, so know who your lenders are.

Education Awards are considered taxable income in the year you use them, so be prepared to part with a bit of the money.

Awards must be used within seven years of earning them.

You don’t have to use the award all at once, and you can split the money between different lenders and/or schools. Full information about AmeriCorps programs can be found at http://www.americorps.gov/.

As a volunteer, my days were full, often with tasks I never thought I could do. I managed a fleet of used, donated vehicles; sorted hundreds of maternity and baby donations; became equally comfortable with the wealthy and the impoverished; assembled and disassembled all kinds of furniture; grew in public speaking, problem solving, and time management; learned all about the social services in the greater Phoenix area; pulled off great celebration parties with little money and donated items that always arrived at the right time; witnessed the births of three babies (and even gave birth to my own!); and saw some of the best and worst characteristics of humanity. Though we did not grow rich monetarily, Jim and I grew rich in so many other ways.

Don’t know where to start searching for a service site that matches your interests? In addition to the AmeriCorps web site, I recommend visiting http://www.cnvs.org/ and http://www.pallotticenter.org/. If you choose the hard but rewarding road of service, you won’t regret it. Happy hunting! I wish you the best.

Paying for Someone Else's Mistakes

2010-01-07T11:25:00.003-05:00

I was a log home designer for over five years when the housing market imploded and the credit lines dried up. Once that happened, my job, along with countless others, was cut. I was fortunate enough to qualify for state unemployment compensation (UC) benefits, having worked and earned many times over the minimum requirements. The initial application process was easy enough; I answer employment history and salary questions, and they go back to my former employer to confirm it. All it took was a few days of waiting, and I was sent my Notice of Financial Determination, congratulating me on qualifying for benefits.

My job search started immediately, but with the housing market in a state of disrepair, no one in my area was looking for drafters. Countless resumes and cover letters went out, but next to nothing came back. When it did, I was told either that I was overqualified for the position or that they had decided to restructure from within. The months ticked by and having no firm offers, I became very concerned that I would be left without any form of income to help support my family. A few weeks before my benefits ran out, the President signed into law a bill extending UC benefits for millions of people like me who were in jeopardy of losing them. I was ecstatic, thankful for the lifeline that would help keep my family afloat.

While filing for EUC, I received a notice in the mail from the state saying that my benefit year would be ending, and that I would need to file a new application to continue receiving benefits. I went through the same application process, and within a few days got a letter in the mail with my Notice of Financial Determination. Everything seemed in order; it gave my weekly benefit rate and length of time I qualified for, but it also had some new information. It said that my qualification of benefits hinged on additional information.

I placed another call to the state asking what additional information they needed, and without asking any questions simply told me that I did not qualify for any more state UC benefits and would be kicked back to the EUC program. Once the EUC funds ran out on my claim, there was nothing else that I could do because I no longer had enough credit hours worked to support the claim. I was devastated, having just been told by the state that I qualified for six more months of benefits only to have them take it back.

So I filed my bi-weekly claim the Sunday after that depressing conversation, watching my funds deplete, wondering if I would ever find a job. I checked my bank statement that week, and to my surprise I found two deposits made. One was the EUC deposit, the one that I was expecting. The next was the regular UC from the state; you know the one I didn’t qualify for a few days before...

By this time I had the UC service center on speed dial, and immediately called them up to ask what in the world was going on. The person that I talked to said that I re-qualified for the state UC benefits and never should have been told otherwise. They also stated that I should have been taken off of the EUC program list to avoid overpayment. They proceeded to tell me that with people being laid off and filing for unemployment in record numbers that they had to add extra staff to support all the claims being filed. They told me that the UC service center employees basically train for a week, and after that they are on their own. A week is plenty of time to learn all the ins and outs of the entire UC system, you know.

The lack of knowledge of the people that I was interacting with at the UC service center coupled with a computer glitch that allowed both of the payments to be processed made for a huge mess that could have easily been avoided. I asked what exactly the overpayment meant for me, and all they would tell me was that sometime in the future they would expect it to be paid back. I told them I thought that was fair. After all, it was a mistake and the money did not really belong to me. I asked to make sure that they had taken me out of the EUC program to avoid this happening again, and they assured me it had been taken care of.

Fast forward two weeks when I filed my next bi-weekly claim and the same thing happened. I checked my bank statement to see if they had corrected the error, and alas, they did not. So now I had two more weeks of overpayment to worry about. Another call was placed to the center, but this time I was not as happy. I told them the whole story, about how I was in the wrong system and was overpaid the last time I filed. I explained that I was told that the problem was taken care of and that the overpayment would not happen again. But it did… The only reply I received was that they were terribly sorry, but the money would still need to be repaid.

I thought about that for a moment, and asked why I should have to pay back someone else’s mistake. The first time it happened I had no problem with it. It was an oversight/computer glitch and I was told it was taken care of. The second time, however, was not my fault. If the people that they have on the phones handling the claims knew what they were talking about I would not be in this mess. It was frustrating to basically hear “I’m sorry but too bad… It will still need to be repaid…” They told me that it would be several months before they got the information sorted out, and not to worry about it until then. So I didn’t.

About four months after all of this went down, I was finally sent an informational letter stating that the repayment of benefits would begin with the next time I filed. There was also something about an appeal form, but that was not sent with the packet of papers I received. I called the center again, but they told me that my time to appeal the repayment had passed and there was no way to get out of it. I explained to them that it was their oversight that caused the headaches, but they would not hear it. All in all, I was overpaid a total of seven weeks, which totaled about $2500. So in the end, my checks were cut in half to repay the amount that never should have been as high as it was. The balance has finally been repaid and life goes on, but what a headache it was getting here.