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Monday, September 15, 2008

My Three-Year-Old Thinks a Credit Card Can Solve Our Problems

credit cardsOne of my son’s favorite “toys” is his credit card. In actuality, it is a pre-paid Master Card that I received for the mail-in rebate on a PDA phone. The money long gone, I must have kept the card in my purse, because my excavating toddler found it and claimed it as his own. The card is bright orange, so it’s reasonable to believe that he would play with the small piece of plastic; however, the game he was playing was cause for alarm. My husband and I made the discovery one afternoon as he was leaving to run errands. We must have been discussing a bill of some sort because my son interrupted us, declaring, “Mom, it’ll be fine - I got my red car!” ‘Red car’, of course, is slurred toddler-speak for “credit card” - he pulled it out of his pocket to show us.

While the sentiment was heart warming, the premise was horrifying. First of all, how does my son know what a credit card is? We only have one credit card right now, and it’s locked away with the Hope Diamond as we rebuild our credit by paying off bills and living beneath our means. He may see us pay for items in retail stores with debit cards, but that’s only every now and then, as he rarely goes shopping with us. We knew that he understood that some plastic cards represent money, but to call it a “credit card” specifically and then assure me that everything would be okay because he had one was a leap in understanding that I did not predict or foster in my three-year-old son. Where did he get the idea that credit cards make everything alright?

Hubby and I laughed nervously, and then looked at each other, wondering how he could have formed such an idea. We talked about it and came to some realizations that we weren’t so happy with. Although we know that young children absorb new information like sponges, frequently learning things that their parents have not taught them directly, we were unaware of how acute his understanding of currency is…for a three-year-old, anyway. While he still thinks all paper money is worth $50, he comprehends that adults exchange money for items and services. He believes that money gets you things that you want; he usually wants food, and he sees us pay for food with money. However, to leap to the assumption that credit cards solve non-food related problems (my husband and I were not discussing food on the day in question) is a broad jump in my opinion. He is learning about money from some other sources, too. As a parent, I felt that it was time for me to take a closer look into his media exposure as it relates to money, credit, and how the economy works.

After I thought about it, I began to see how we in the Western world are so inundated with media messages promoting a consumer credit culture that there is no way to escape it without becoming a hermit. One of my son’s favorite cartoons has a main character who is rich, and she uses credit cards to fund her lifestyle - in elementary school. One CBS Evening News segment by Nancy Cordes explores how credit card companies are deliberately targeting children as young as three years old by integrating credit cards into children‘s games and toy accessories.



Then, even the safest of prime-time television shows are interrupted with commercial messages from credit card companies that promote lush, satisfying lifestyles that are made possible by the almighty plastic. While the television doesn’t baby sit my children, they see enough of it to possibly be affected by the onslaught of credit card marketing and comic characterizations of rich super-spenders who don’t carry cash.

What’s a mom to do?

I have to take a direct approach to teaching my toddler about money and credit, even now. Christian Credit One gives some great advice about how to begin exposing children to money management lessons, even in their pre-school years. Their website is at http://www.ccone.org/.



I plan on implementing some of those tactics in my daily routine with my little one. The first step is getting him a personalized piggy bank that he can cherish and keep as he gets older. I want him to be able to correlate responsible money management with fond family memories and family values. That way, instead of thinking that he is helping mommy by using his “red car,” he will remember the lessons that mommy and daddy taught him about saving and spending less than what you have in the bank, not more. We want him to think about how fun it was to go to the grocery store and help mom and dad pick out items based on cost to value comparisons, helping to spend the family money wisely. I have fond memories of learning about money in pre-school. I want his memories to be pleasant, too; not a reminder of how young he was when he first started on the road to ruining his credit through a warped understanding of money and red cars.

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Wednesday, August 27, 2008

After 9/11 Creditors Told Me, "There's Nothing We Can Do"

My husband worked on the 81st floor of Tower One in the World Trade Center for a company called Network Plus. On September 11th his entire office managed to climb down all 81 flights of stairs and escape just minutes before the buildings started to collapse. His boss guided the entire team of salespeople down and encouraged my husband to continue when he felt tired. At one point my husband’s boss even left the team in order to help carry a woman in a wheelchair down the stairs to safety. Miraculously, she survived as did everyone in my husband’s company. As the highest office to have every member survive, Oprah Winfrey even had them appear on her show.


The ordeal was stressful enough for us to deal with, and after a few weeks passed the company he worked for went out of business. They tried to survive by relocating but the entire city was in such turmoil that the company simply couldn’t make it work. I realized that my husband was the bread winner and I had no idea how we were going to pay for our bills. We had managed to accrue quite a lot of credit card debt and now had only my small teacher’s salary to pay for it all. As the bills continued to pile up I started to make phone calls to the credit card companies with the hopes of working out a payment plan. What ended up happening instead was my filing for Chapter 7 bankruptcy.


Before September 11th I had a credit score of about 650 and had over $10,000 in credit card debt. My payments were always on time and I rarely had any problems. Most of my debt was due to department store credit cards such as Macy’s, Ikea, Express and Spiegel. I also had an electric bill that I couldn’t pay and a cell phone bill which piled up. The interest rates were sky high, over twenty percent for each card and I knew if I didn’t work something out I was going to sink fast. Paired with the late fees I knew it would happen quickly if I didn’t do something fast. The largest amount I owed was to American Express and since they require payment within thirty days they were the first company I called.


To say that American Express is cold-hearted would be a nice way of describing them. I explained to the representatives over numerous phone calls that I wasn’t looking to get out of paying the $2,000 I owed them but that I needed more time than the thirty days. They could care less. They didn’t even sound sympathetic when I spoke to them nor did they seem to care about my situation. As if programmed like a robot, each representative I spoke with said the same thing to me, “there’s nothing we can do”. They would take nothing less than the full amount owed and as long as I didn’t pay it the late fees would continue. The late fees started to add up into the hundreds as November rolled around.


The other department stores sometimes sounded sympathetic when I told them about my situation but could do little to nothing to help me. The representative I spoke to at Spiegel was distraught to hear about my situation and immediately put her manager on the phone. He explained that there was little he could for me except to lower my interest rate from a 22% to a 12%. He waived one late fee for me but gave me no extension.


I found that no one really wanted to do me any favors at all. I explained to each one that I simply needed a two month period during which no late fees or other charges would be given to me. Even when I explained that I would be forced to file for bankruptcy they still gave me the same line – “there’s nothing we can do”.


The only company that helped me out was the bank that issued my student loans. Citibank immediately issued me forbearance for my student loans and gave me no problems whatsoever. They were nice and understanding and were actually the only company that did anything to help me during the difficult time.


My credit score began to plummet as did my credit history. After I filed for bankruptcy in December my score dropped to the low 500’s and stayed there for years. I couldn’t rent an apartment and I had a hard time getting utilities without paying a deposit. The funny thing was that my husband found a new job within months and our income was back where it was before, but none of that mattered when companies looked at my credit report.


Today my credit is back up to a 620 but is still marked with the bankruptcy. If the credit card companies had taken the time to work with me they would’ve had their money and I would’ve kept a clean credit report.

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Tuesday, August 19, 2008

The End of an Affair

Most people love money. So many people today choose to buy expensive material things and validate themselves by these purchases. Money helps people feel important, to take control, to make a statement about who they are. Money becomes a best friend, a family member, and a lover. Obtaining money is all some people can think about and all that they believe in. It doesn’t matter how they get it or who they hurt in the process, as long as in the end they get the money they need to feed their addiction.

Some people don't have the means to gain the money they desire but this doesn't stop them from having irresponsible flings with it. Even though these people may be late on their bills, they will go out and buy something they can't afford just to make themselves feel better. And it will usually work. During the heat of the moment people who make an impulsive purchase will feel like they are at the peak of their happiness. And when the feeling disappears they'll likely feel guilty, ashamed and regretful. Not much different than a one night stand.

Like all love affairs, my own love affair with money was short, sweet and tumultuous. It was both satisfying and completely unsatisfying at the same time. And similar to many love affairs, mine began at work. My job as a sales representative on Wall Street in New York City started up a love for money that would only go away after it ran its course. It became a love-hate relationship in which I began to spiral out of control.

Making a ton of money as a person who wasn’t even good at her job seemed like everything I ever wanted. I was renting an apartment in a top building and I was able to buy anything I wanted. I shopped in boutiques, purchased the newest cell phones the day they hit the market and treated people to dinners and drinks. What I didn’t realize at the time was that I was building my life around money and money was the thing that was in control.

After I lost my job the love affair became quite rocky. I no longer had the sparkle of admiration I once felt towards money since it was now seeing less and less of me. I moved out of my elevator building apartment into someone’s rental in their house. I went from having a washer, dryer, dishwasher, microwave and air conditioner to having none of these. The quiet of the building I had lived in was replaced by screaming landlords who constantly argued with each other. Instead of shopping at boutiques I started shopping at Old Navy and other discount clothing stores. Eating out and partying all the time was replaced with staying home and cooking dinner.

Some people in my situation would have never given in to the evil tricks that money played on them. These types of people would have picked themselves up, got a new high paying job and started up their love affair again. They would believe that they were back in control, but of course this would just be another trick money would play on them. The second time around would likely be more passionate than the first, and it would become a lifelong addiction that created life for those who chose it. People that would never dream of a real life affair find themselves embroiled in controversy and secret desires.

But love affairs rarely end up so happy in the end. If they do, it takes a lot of pain and struggle to get to the end goal and a lot of people get hurt in the process. I chose to end my love affair with money by replacing it with something real, a true love that was not based on sneaky escapades and under-the-cover operations. As you look back on the choices you’ve made thus far in your life, ask yourself, are you in the midst of an affair?

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Thursday, March 20, 2008

Check Writing Habits That Can Get You Prosecuted

I think that almost everyone who has a checkbook has written at least one check in their lifetime that they knew they could not cover at the time the check was written. Because there is usually a time lapse before the actual redemption of your check, sometimes people write checks for amounts they do not currently have in their accounts, knowing that by the time the check makes it to the bank, the money will be there.

This is not a good practice; my good friend found out the hard way.

Times got a little tight, and my friend found himself needing groceries before he received his regular paycheck. So, he went to his local grocery store and wrote a check that he couldn’t cover at the time, knowing that by the time the check was cashed, the funds would be available. The problem with this plan was that you must always expect the unexpected; some other bill payments that went through the same week maxed him out, and by the time the grocery check was processed, there were insufficient funds to cover that amount. My friend took care of the overdraft fees soon after the incident, but somehow managed to let a period of time go by without actually repaying the store for the bounced check.

Well, the huge regional grocery store chain did not forget.

By the time he returned to the store to settle the debt, they had sent him to collections. Who knew that grocery stores had collections departments? Collections had sent his information to the county prosecutor’s office, and my friend received a friendly notice in the mail stating that he had to attend and pass a class for check fraud offenders, or legal action would be taken against him!

The class, he told me, was an eye opener. Through group interaction, he learned that there were lots of people taking the class with him for a myriad of reasons. Little old ladies, young men and women, working class and professionals; all were there because of one bad check. Some were there because they were irresponsible, and some were there because they were so financially strapped that they had to pass a bad check to eat. Others, like my friend, just took a seemingly small risk and ended up on the losing side of the bet. The four-hour course was on money management and educated the attendees on the risks and legal ramifications of committing check fraud, which all of them were guilty of, whether intentionally or not.

My friend walked away from the experience having learned a lot about the importance of managing money meticulously when you are on a budget. Not only did this hard knock teach him a thing or two, but the class itself was actually very valuable, he says. Although his intentions were not malicious, what he did was still illegal. Otherwise honest people can participate in criminal activity because of a lack of prior planning and proper accounting.

Go figure...

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