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Whenever I think of Lenders of Last Resort, I think of Gary Coleman and Montell Williams. They are always on TV, offering cash-strapped consumers an easy way to “Get up to $10,000 in your bank account by tomorrow.” I also think of the Payday Loan stores, conveniently located downtown and next to military bases. They are waiting for a weak moment in someone’s life to entice a new customer.
This is the last post in a series of Money Fails.
Money Fail: Broke on Thursday
Money Fail: Dead End Job
Money Fail: The Payment Mentality
Money Fail: Ignoring Unpaid Bills
Money Fail: Spending to Impress
Money Fail: Never Track Finances
Money Fail: Lenders of Last Resort
Borrowers Wanted
 - Image by Taber Andrew Bain
I recently read debt is now the most aggressively marketed product on earth. And, it makes a lot of sense, since it is also one of the most profitable. The old days of hocking your belongings at a pawn shop have been replaced by the Payday Advance button on your bank’s ATM. It’s has never been so easy or convenient to get into debt.
To a financial institution, a profitable customer is one who frequently overdraws their account and takes advantage of the lending services the bank offers. In their eyes, the more struggling and disorganized a person is the more money they can make off of them.
Debt is Servitude
Even though debt is marketed as a status and convenience product, the truth is it’s financial slavery. But, instead of owning a person, the lender owns part of that person’s future income. Who do you suppose came up with the concept of “good debt”? Was it the college student who owes $100,000 in student loans and can’t find a job? Was it the family who lost their home to foreclosure after their interest rate ballooned? No, it was probably someone in the financial services industry.
 The moral of the story is, never take financial advice from the people who benefit from your spending. This includes bankers, insurance agents, car dealers, real estate agents and mortgage brokers. Their advice will always be influenced by their commission. And, their recommendation will often be to spend the largest amount possible. Debt is a liability to you, an asset to the lender and income to the agent. Remember that before you sign on the dotted line. Continue reading Money Fail: Lenders of Last Resort
One common thread between most people who are floundering financially, is that they don’t keep track of their finances. This happens for a number of reasons. Some people don’t like budgeting and reconciling. Others want to ignore their balances in order to keep spending. Some just don’t want to be held accountable for their finances. In any case, people can’t improve their financial lives, unless they know where their money is going.
This is the sixth post in a series of Money Fails.
Money Fail: Broke on Thursday
Money Fail: Dead End Job
Money Fail: The Payment Mentality
Money Fail: Ignoring Unpaid Bills
Money Fail: Spending to Impress
Money Fail: Never Track Finances
Money Fail: Lenders of Last Resort
Keeping a Budget
 - Image by 05com
Anyone who has read my blog for any length of time knows I don’t keep a budget. But, I know how much I spend each month and where my money is going. I know the approximate balances on my investments and bank accounts. I know how much my bills are and when they are due. I have an income that leaves some wiggle-room and money put away for surprises. So, I don’t have to count my pennies at this stage in my life and I am thankful.
For people who don’t know where their money is going, can’t pay all of their bills or are sinking deeper into debt each month, a budget is a pretty good idea. In fact, it’s critical for financial survival. I have been there as well, but I was too stubborn to create a budget. So, I accumulated a lot of credit card debt. I don’t recommend the debt treadmill for anyone. It costs a lot of money in interest and creates a lot of stress. You are way better off with a budget.
It’s not fun to sit down and go over your expenses each month. But, it’s an eye opener to see where all of your money goes. And, it becomes obvious what needs to be cut to balance the budget. The credit card statements alone can give you enough buyer’s remorse to change your spending habits permanently.
If you were lost in the forest, you would need a compass. If you were lost in your car, you would need a GPS. If you are lost financially, you need a budget.
Bank Overdrafts
 Before they reformed the overdraft laws for banks, I know a person who used to overdraw their checking account regularly. Two years ago, he spent nearly $1,700 on overdrafts. Some of them happened because the banks reordered the transactions, but most just happened because he wasn’t paying attention. One time, I looked at his statement and he had bought seven different small items in one day. So, for a total of about $40 in purchases, he wound up with $245 in overdraft charges. That was a pretty expensive energy drink and burrito.
It’s easy to avoid overdrafts, if you are keeping track of your balance. If you don’t want to your balance your checkbook, you can check the balance quickly on your cell phone, before you pay an extra $35 with your debit card. Better yet, just say No to overdraft and let the purchase get declined. Your bank should have automatically turned off overdraft on your debit card after the reform act went into effect. But, the banks are going around trying to convince everyone to turn it back on. They were making billions on overdrafts and they aren’t happy about losing all of that easy money.
Continue reading Money Fail: Never Track Finances
I was recently interviewed in the Best of the Best Blogger series on the Credit Card Assist website. This series has featured a number of popular Personal Finance bloggers, most recently Steve from Brip Blap.
I enjoyed giving the interview and I am truly honored to have been selected.
 Credit Card Assist There are a lot of financial tips and some of my personal background.
Click Here: Best of the Best Blogger Interview
I hope you enjoy reading it.
Bret
Last weekend, we had some of the neighbors over and we were talking about the way some people act. One of my neighbors, who is a salesman, used to live in the new upscale part of town. He told us he was invited to a barbecue and his neighbor had almost nothing to eat or drink for 20 guests. My other neighbor, who owns a landscaping company, told us he has customers with two or three multi-million dollar houses that have a Camry or an old Mercedes station wagon in the garage. We all agreed most of the truly wealthy people we knew were some of the nicest and least pretentious. Most of the people flaunting their money, complained about being broke whenever they got a bid or had some work done.
This is the fifth post in a series of Money Fails.
Money Fail: Broke on Thursday
Money Fail: Dead End Job
Money Fail: The Payment Mentality
Money Fail: Ignoring Unpaid Bills
Money Fail: Spending to Impress
Money Fail: Never Track Finances
Money Fail: Lenders of Last Resort
All Show and No Dough
 - Image by Rob Lee
A couple of years ago, I was sitting in Big O Tires, waiting for them to put some new tires on my wife’s Jeep. A doctor drove in with a new Mercedes and needed some tires. The reason I knew he was a doctor was because he made sure everyone in the waiting room knew he was Doctor so and so. Anyway, he tried to get some tires with their 90-Day Same as Cash, but his credit was declined. Honestly, I felt really bad for the guy. I’m sure he worked very hard and had a high income. He probably has a nice house to go with his new Mercedes, but he couldn’t afford tires. It left quite an impression on me.
Let’s face it; looking wealthy isn’t the same as being wealthy. It’s a lot easier to look successful than it is to actually become successful. To some people, image is everything. But, image doesn’t buy you much in the financial world. The irony is that some people spend themselves so heavily into debt to look successful, that financial security becomes almost impossible. Instead of living the dream life, they are living with the bills for the things they really couldn’t afford to buy.
Security is the Reward
Most of the wealthy people I know are more concerned with financial security than material possessions. Sure, they have nice cars and houses, but it’s knowing they could live for many years without an income that makes them happy. I believe it’s one of the reasons they are so down-to-earth. They don’t have the stress and worry that people on the debt treadmill have. They aren’t worried about losing everything, because it would take a catastrophic event for that to happen. They have a surplus of income and they can enjoy most of the things that make them happy.
 That’s my dream for the future. I don’t need to live like a rock-star, in a mansion. But, I do want to live without stress and worry. I want to be able to buy a car or take a vacation, without wondering how long it will take me to pay it off. I want to be able to wake up without an alarm clock and take a day off of work, without filling out a form. I don’t know how long it will take before I can live my dream. But, I do know I am getting closer each and every payday.
Continue reading Money Fail: Spending to Impress
A lot of people are out of work and under financial stress. Others have gotten sick or behind on payments. Some don’t make enough to pay all of their bills. There are millions of others who choose not to pay. They consider it unimportant, don’t feel obligated or just don’t care. Ignoring the unpaid bills is a colossal Money Fail.
This is the fourth post in a series of Money Fails.
Money Fail: Broke on Thursday
Money Fail: Dead End Job
Money Fail: The Payment Mentality
Money Fail: Ignoring Unpaid Bills
Money Fail: Spending to Impress
Money Fail: Never Track Finances
Money Fail: Lenders of Last Resort
The Conscience of a Deadbeat
 - Image by Jason Rogers
Have you ever gone out to eat or drink with someone who always shows up with no money? Have you ever been hit up for an emergency loan by someone who is short on the rent or needs a car repair? These are classic signs of a serial debtor. Their financial lifestyle is based on using their friends and coworkers as an emergency fund. They value money over friendship and convenience over integrity. Past loans are quickly forgotten and the next emergency brings a search for a new friend who will lend money.
I had someone show up at my apartment on vacation claiming to have lost their wallet. Normally, I take people at their word, but this person owed money to everyone we knew. She cleared customs and got on a plane, so I assume she had some form of ID. When we lent her $150, I considered it a gift, instead of a loan. I knew she wouldn’t pay us back and she didn’t. This is the mindset of someone who shirks their debts. They have no problem lying or taking money from others. They feel entitled to money that doesn’t belong to them.
Borrowing without repaying is a lot like stealing.
The Lifestyle of a Debtor
 Being heavily in debt is about as close as a person can get to modern day slavery. Much of their future income goes to service the debt, which leaves little money to enjoy for themselves. Even after the payments are made, the debt often grows under its own interest and new spending. It can seem nearly impossible to shed the burden. Some debt, such as tax liens and student loans, can’t be discharged in bankruptcy. So, they can literally follow someone to the grave.
Here are some of the degrading things debtors face.
- Wage Garnishments
- Subprime Credit Rating
- Harassing Phone Calls
- Lawsuits and Judgments
- Collection Agencies
- Foreclosure and Eviction
- Fines and Repossession
Ignoring debt only makes it worse.
Continue reading Money Fail: Ignoring Unpaid Bills
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