financialcounselor

Posts Tagged ‘Credit card’

Trust Numbers to Guide your Financial Decisions

In Uncategorized on August 14, 2012 at 8:36 pm
One of the most important points I try to get my clients to understand is that numbers can be trusted. You may have heard the saying, “Numbers don’t lie.” It’s very true. I’m not talking about corporate earnings and government employment figures. Those numbers can lie through their teeth. I’m talking about the simple budget numbers that I put together with each client to show their financial situation. Those numbers, as long as they’re accurate, will be entirely truthful. And I try to get my clients to let those numbers guide them in their financial decisions.
Here’s an example: I spoke today to a man named Darrell who had racked up a bunch of credit card debt and was considering filing bankruptcy to be rid of it.
We put together Darrell’s budget and found that his truck was costing him $1,000 per month–$450 for the truck payment and another $550 for gas and insurance Meanwhile, the guy’s monthly income was only $2,000. Darrell had been living on credit cards because he didn’t have much money left after paying for his rent and his monster truck. He just didn’t realize it because he never looked at these numbers; he just went along charging everything until he reached the limits on his credit cards. Even if he got rid of the credit card debt through bankruptcy, he still wouldn’t be able to keep up with that truck because there wasn’t enough income. He couldn’t afford it, plain and simple.
“Darrell, half your salary is going to pay for that truck,” I said. “And that’s not including any maintenance for it. Filing bankruptcy isn’t going to let you afford the truck. You need to make another five or six hundred a month at least to afford it. If you don’t make more money, you’re going to keep having problems unless you get rid of it.”
Darrel explained how he really liked the truck, and didn’t want to give it up.
“Well, can you live in it?” I asked him.
He chuckled and replied, no he could not.
“Well, can you move back in with your parents?”
Darrell didn’t want to do that either.
And that’s another thing about numbers. Because they don’t lie, they show you the reality of your situation. Then  it’s up to an individual person to decide if they want to face that reality. But either way, the reality of those numbers will confront the person eventually.
Just ask the guys who were running Enron.

Alarm Company Vivent Refuses to Cancel Customer’s Service

In Uncategorized on June 28, 2012 at 10:39 pm

HOME ALARM SYSTEM PROVIDER VIVENT SAYS THEY CAN’T GET CUSTOMER’S EMAILS OR FAXES SO THEY CAN’T STOP CHARGING HER FOR SERVICE

There’s an old saying that goes, “A lawyer with a briefcase can steal more money than 20 men with guns.” Boy, if that ain’t the truth.
I thought about that last week when one of my clients told me how she is being ripped off. This client, named Gerry, is being robbed according to a set monthly schedule, and her robbers have every right to take her hard-earned cash. Luckily, there was a solution to her problem.
The situation was, Gerry had an alarm system in her home, and the alarm company refused to cancel her service even though her contract was finished. Like with most alarm companies, Gerry was required to have her monthly service fee charged to a credit card. With her credit card info, this alarm company, Vivent, had went right on charging her card even though she repeatedly told Vivent that she no longer wanted their service.
When her contract was about to end, Gerry called Vivent to notify them not to renew the agreement. The monthly fee was $45, which is extremely high for a basic alarm system. Gerry had found other alarm companies that were way cheaper, so she wanted to go with one of them.
Well, when she called and told Vivent not to renew, which she did by the deadline in her contract, the shenanigans began. Vivent didn’t just give her a runaround, they gave her a marathon. First, they made her email a signed letter, requesting the cancellation. Gerry emailed this letter, but it came back as undeliverable each time she sent it. And she resent it several times over a month.
“I called and they told me their email server was down so I’d have to fax it,” Gerry said. “There was no other email address I could send it to.”
Now, not being able to get email, even for a day, is a big problem for a business. And if you don’t know, Vivent is a huge company. And you’re going to tell me that this company is not able to receive any email for an entire month? In the year 2012, when most communication is electronic? Sure.
But Gerry did as they instructed and faxed in the cancellation request. I’ll give you three guesses what happened, and the first two don’t count.
“I faxed that letter 10 times, and each time their fax machine was busy,” she said.
Whoa, big surprise there! So then she tried emailing again, and of course the emails all bounced back to her as undeliverable.
“Then I called and they told me to mail the cancellation request,” she said.
“Let me guess.” I said. “They didn’t get your letter?”
“No! And I mailed it three times,” Gerry said.
Gerry didn’t have to worry about her house getting broke into, but she was getting mugged on a monthly basis by Vivent.
There was only one solution. Call the credit card company, get a new account number, and order the bank not to allow any more charges to Vivent.
You got to hand it to them. A lot businesses will do this. Once they sign you up, they make you jump through a million hoops to cancel your business with them. And the requirements to cancel are, I’m sure, all spelled out in the contract. In legalese, and in very small print of course.

If the Income Drops, Save yourself Trouble, and Drop the Spending

In Lesson of the Day on February 27, 2011 at 6:34 pm

2 + 2 CAN NEVER EQUAL 5

One of the best pieces of financial advice I can give is this: If your income drops– because of a cut in hours, a job change, why ever–the first thing to do is put together a budget to determine your new financial situation. If you need to cut some things out of your budget to save money, do it immediately.
So many people come to us for help with debts that they accumulated keeping up with their old spending habits even though they saw their income drop. This is another major cause of headaches that can sometimes be avoided.
Arthur and his wife Mary were one such couple. They had been planning a vacation to Hawaii for the past year. They’d always wanted to go, and finally they decided to do it. However, three months before their trip, Arthur got laid off. Mary was working but didn’t earn nearly much as him.
Arthur and Mary were faced with a dilemma. Should they keep their plans or cancel the trip to save money? They didn’t want to lose their deposit. They fretted about what to do. Many of their family and friends urged them to just go on their vacation and get away from it all, forget about money problems for a while. After all, their friends said, ‘You guys have earned it, working hard all these years.’
So they took their advice to just do it.
“We should never have listened to other people,” Mary said. “Art wanted to cancel the trip, and that’s what we should have done. He was right.”
“How much did the trip end up costing you?” I asked, preparing myself for the worst.
“Thousands!” she said. “It’s freaking Hawaii! That was so stupid of us. I never thought it would take as long as it did for him to find a job.”
“How much was the deposit you didn’t want to lose,” I asked.
“It was only five hundred bucks,” she said.
What those well meaning friends and family members probably didn’t know was that Art and Mary had only $5,000 in the bank. Five grand is a lot of money, but when you’re constantly picking at it to pay your major bills, it’s going to go fast. And that’s exactly what happened. By the time it came time to leave for Hawaii, it was half gone. Art was receiving unemployment by then, but it was barely enough to cover their bills even with the help of Mary’s salary.
So as they drove to the airport, instead of happily anticipating the vacation they’d been dreaming about for years, their thoughts of fun in the sun were distracted by the fact they had no money, no job prospects, and would very soon be facing enormous bills from the trip.
It took Art a total of 10 months to land a job that paid him more than the unemployment. By that time they were up to their eyeballs in credit card debt, and the harassing phone calls had begun. They even called Arthur at his new job. Just what he didn’t need.
“We didn’t even have a good time in Hawaii,” Mary cried. “Can you imagine that? We’re on vacation in Hawaii and we’re worrying about money. Everytime we had to swipe a credit card I got a pain in my stomach.”
I felt bad for Mary and Arthur. If they’d just canceled the trip, they might have come out of the job loss okay. Even if they lost their deposit, they wouldn’t have given themselves that huge bill to pay. The travel and lodging was $2,000 alone. And as Mary and Arthur discovered, everything in Hawaii’s touristy areas is quite expensive.
Of course, the cause for their money problems was Arthur’s sudden job loss. But his unemployment benefits, together with Mary’s income almost covered their monthly bills. Plus they had the five grand in the bank.
Mary and Art could have probably gotten through his job loss without all the stress and harassing collection calls they endured. Of course, they would have probably still used up all their savings even if they hadn’t gone to Hawaii. But they set themselves up with a $3,000 vacation tab to pay off with no job. And they already owed about $2,000 in credit card debt at the time. Barely paying their bills, they had no extra money to send to the credit cards, so the balances skyrocketed, along with the required payments.
As much a bummer as it is to cancel a vacation, the fact is, Hawaii isn’t going anywhere. Art and Mary could have rescheduled the trip after they’d regrouped from his job loss. Then, the trip would have been a celebration, a triumph for them over their adversity. Instead, they went to Hawaii and didn’t have fun. That is the real bummer.

Stay away from Debt Settlement Companies

In Scams, Uncategorized on August 9, 2010 at 1:44 pm
Credit card

Image via Wikipedia

Outrageous fees are the norm with these companies

  Many people who get into credit card debt will sign up with a debt settlement company for representation in negotiating a settlement of the debts. Here is how a debt settlement company works: They instruct you to stop making your credit card payments, and instead, to send all that money you would have sent to the credit card company to them.
  Their promise is that the money you send them will build up in a savings account, and when it reaches a certain amount, they will use that money and their expert negotiating skills to settle your debts for pennies on the dollar.
  That’s the plan anyway.
  But it’s a scam. They extract such high administrative fees out of the money you send them, there is little to go into the savings account that is supposed to be building up. And after you go a few months without making any payment to the credit cards, those credit cards will sue you for non-payment. They’ll seek to garnish your wages or take the money from a bank  account. Do not fall for this scam.
  The following is a conversation I had just last week with a client who had signed on with one of these debt settlement companies.

  “My credit card is suing me,” said Alex from Hawaii. “I tried a debt settlement company but it didn’t work.”
  “How much did you end up paying them in fees?” I asked.
  “Tons! You wouldn’t believe what they took!”
  “And the credit card company sued you after you’d stopped making the payments, right?”
  “That’s exactly what happened,” Alex said.

   I hate to generalize, and there may actually be some debt settlement companies out there who do not rip off their clients.

  But remember, if you want to negotiate a settlement on your credit card debts, just call up and negotiate it yourself. No company, no law firm, is going to say anything that you can’t say yourself.