Twila Van Leer

Big Data About You Turns Into A Billion Dollar Industry

May 2, 2014 By Twila Van Leer

With our data, analysts can predict what we will do in the future with a high degree of accuracy.

Data brokers make a living by tracking the financial well-being of Americans and sharing the information with companies that specialize in services to those who are struggling.

It’s tricky. Sometimes the information is used by unscrupulous businesses that target the poor and elderly, including telemarketers who peddle scams via the telephone. Referring someone who already is in debt to a high-interest loan company for additional debt may not be doing them a favor. Lawmakers are wary and keeping an eye on the situation.

In its less worrisome guise, Big Data directs information to businesses that have legitimate interests in helping those who are in a bind. These include payday lenders, debt consolidation firms and other marketers.

Among the sources the brokers use to glean data are websites you browse, the credit cards you apply for and surveys to which you respond. Certain zip codes can suggest a high proportion of people who are in a financial bind. By tracking these and other sources, the brokers can then sell the information to the interested companies.

One data broker, List Connection, is adept at finding potential customers by learning who is at least 90 days in arrears on payments. According to its website, it can generate leads that are excellent prospects for payday loans, secured credit cards, debt consolidation, sub-prime credit and other financial assistance.

The List Connection data is intended for firms that are genuinely interested in helping people with bad credit, said Ken Wood, vice president for management.

Because of the potential for unscrupulous use of personal financial data, U.S. Senator John (Jay) Rockefeller, West Virginia, who heads the Senate Commerce Committee, has developed legislation that would allow customers to read and, if necessary, correct their information. The ability to opt out of the lists is included.

Rockefeller named one broker, Multimedia Lists, as one that offers such “get-rich-quick” schemes as questionable promotional offers, sweepstakes, contests and other dubious opportunities that might raise unreasonable expectations in those who are desperate.

The Fair Credit Reporting Act prohibits marketers from using sensitive credit information, such as credit scores, unless it is to make a firm offer of credit, such as a credit card or auto loan. But those who collect personal credit data argue that some information, such as whether you are facing foreclosure or have been denied a credit card, should be allowable information for their uses.

The delicate balance between legitimate uses of the data and the potential for misuse has become a serious issue for privacy advocates.

Ed Mierzwinski, consumer program director for the U.S. Public Interest Rearch Group, is one who believes in stronger safeguards. “We shouldn’t use our most private information for just any marketing purpose. We need additional protections,” he said. His group is pushing for more transparency as to who is buying information and how they are using it.

Some of the larger brokers, such as Epsilon, respond that they have built-in guidelines and assure that their clients use them. The Direct Marketing Association also insists that clients adhere to its guidelines and reports those that do no to the Federal Trade Commission.

As the debate heats up, it appears likely that more curbs may be put on the way your personal financial information can be used.

Make Your Kids Money-Wise

April 11, 2014 By Twila Van Leer

When you start thinking about the facts of life that your children need to know, remember that money is one of those facts. It’s the rare human being who doesn’t need to know, early or late, how to manage personal finances. And in this case, early is always better.

A foundation in finance can protect your children as they venture into the adult world. For instance, when they come up against the cold hard facts of things such as student loans. The Consumer Financial Protection Bureau estimated in 2013, for instance, that seven in ten college seniors graduating in2012 had an average debt load of $29,400 going into their productive years. More K-12k programs in financing are being offered, but still too many young adults launch themselves into the working world with no idea of what to do with the money they hope to make. Many of them will end up in the financial morass that will affect their well-being throughout their lives.

What to teach kids about money? First of all, you can’t teach what you don’t know. If you don’t feel prepared, learn what you can about budgeting, debt, saving, investing, <a href=”http://www.coolchecks.net/”>checking accounts</a>, etc. Then involve them in discussions and practice of these elements.

Remember that they will pay more attention to your example than anything that you may tell them about money. A bad example will offset any advice you offer. Make them part of family financial matters and don’t let them grow up thinking that their whims and desires cancel out reasonable spending policies. Honest dialogue and consistent example will take care of the first lessons in the fundamentals of money management.

Make your teaching concrete, with an underpinning of the basic principles, as well as the techniques. Encourage them to set money goals, to prioritize wants and to share. The principles, including the truth that you can’t reasonably purchase things you can’t afford without consequences, hopefully will stay with them for life.

Too many modern children grow up feeling entitled and blaming others when things go awry. A foundation of wise money management will help foster honesty and the sense of responsibility that are the basis of sound finances. Ideally applied, it’s the foundation on which a child can learn to handle debt and save something to meet future needs.

Having a little spending money is essential to learning how to manage resources. Ideally, it will be tied to responsibilities. That’s how it works in the adult world. Having a little to spend gives the child the opportunity for practical application of what you’ve been telling them. Resist the urge to micromanage. You won’t be on the spot when they are making those adult decisions. If they make mistakes, point out the inevitable consequences. (They can only spend their money once and when it is gone, there isn’t any more until the allotted time. And make that stick.)

People who have succeeded financially in this world point out that an early start is one of the best predictors of who will make it. Warren Buffett, for instance, started his first business at age 6. If it’s feasible, make opportunities for your children to dabble in finance. A lemonade stand or garage sale will facilitate that.

Talk to your kids about consumerism, impulse buying and the effect that advertising may have on one’s spending. Suggest a “cool-off” period before any considerable purchase to help distinguish between “wants” and “needs.” Being required to wait a month for something perceived to be a “need” may help recast it as a “wants.”

Money is a tool to help achieve the things you desire in life. Ignoring the laws of financial health can have serious consequences. That’s the message your children need.

Debit Card Pre-Authorization Holds

February 3, 2014 By Twila Van Leer

You insert your debit card. You pump the gas. You cringe (the current average price- per-gallon for premium is $3.62) and you leave the filling station assuming the $40 total will be subtracted from the balance in your debit card account. Simple, right?

What you don’t know is that behind the scenes, computers are doing their thing and when they are done, your bank may have put a pre-authorized hold on your account. It may be larger than your actual balance, especially if you are chronically hovering about the edges of the account. That means that when you drive from the gas station to the grocery store, your $15 purchase there may not be covered by the debit account.

For example, this made-up scenario: You have $100 in your account balance. You purchase $80 worth of merchandise or services (restaurants and hotels may also use this approach, as well as gas stations). The bank puts a pre-authorization hold on your account for $80. So the $20 you thought you had in the account is not available and additional use of the card will not be honored, which could mean additional fees. Some credit card users have found themselves in serious trouble with overdrafts, not to mention the embarrassment and inconvenience involved.

In essence, your “available” balance and your “actual” balance can be two different figures. The amount of the hold is deducted from your accounts “available” balance but not from the “actual” balance until the transaction that triggered the hold is processed, which could be several days. Paying attention to your “available” balance will help, but given the time frames involved, may not always provide the needed information as quickly as necessary.

“I don’t think the average customer has any idea what goes on behind the scenes when they swipe a card,” said Jeff Lenard, vice president of communications for the National Association of Convenience Stores (which sell about 80 percent of the gasoline purchased in the United States each year.) “The credit and debit card system is incredibly complex.”

The problems associated with pre-authorized holds are only part of the potential trouble with using cards for gas station transactions. Financial gurus also point out that the stations are a “danger zone” for theft of card data for fraudulent uses. Julie McNellely, senior analyst for Aite Group, a Boston-based financial services research organization, describes how bad guys bent on fraud use the stations to achieve their ends.

While customers are using their debit cards to make purchases at the pump, a thief sitting in a car nearby, armed with a laptop, a pinpoint camera and an antenna, has skimmed off the vital information from the card, including, if the camera is able to get a good view, the PIN. Before the unwary customer has even arrived at home, the information may have been put to fraudulent use.

Experts familiar with the potential for fraud at the gas station suggest the use of cash or credit cards, rather than debit cards, when filling up.

Start A New Thanksgiving Tradition

November 20, 2013 By Twila Van Leer

Traditions have to start somewhere. Besides gobbling up the turkey and trimmings, which is at the heart of the annual feast, you might consider something new this year to help cement family bonds and give deeper meaning to the holiday.

Suggestions from moneycrashers.com include the following:

Put technology aside for the day. Outlaw all the gadgets at least for the duration of the dinner and for a period of uninterrupted and uninterrupted visiting. Collect the cell phones in a basket as family and guests arrive. And let host and hostess lead the way by keeping conversation flowing and providing opportunities for children’s entertainment (Nope. No TV) to bridge the “tech fast.”

Choose a charity project and use the usual pre- and post-dinner periods to fulfill it. If it’s feasible, volunteer as a group at a local soup kitchen or other organization that provides for the needy. Organize a neighborhood food drive to be completed after Thanksgiving. Or actually go out to collect items. Plan ahead to donate to annual Christmas toy drives by asking each child in your group to find ten expendable toys. Visit an assisted living or long-term nursing facility. Contact the facility ahead of time to learn what particular needs are. Reading, telling stories or providing music are simple gifts that have great meaning to patients. Take dinner to someone you know might not have ready access to family during the holiday. You’ll return to your own table uplifted and more grateful for what you have.

Make a jar for “thankful” comments. Put it in a prominent place and provide sticky notes or notepaper for family members. Encourage them to think about daily blessings and the extraordinary graces that come from time to time. Pass the jar and have each person read a note during your meal.

Register for a race. Many communities sponsor a “turkey trot” or 5K race of other outdoor events to mart the holiday. A list of such events is posted on the Running in the USA site. What a great way to work off the extra calories hidden in those yummy holiday specialties.

Write a letter to a hero. Maybe he or she didn’t make headlines, but we all have heroes. Encourage children to identify those they most admire and then write that person or persons a letter expressing thanks. If they need help recognizing their heroes, remind them of church leaders, teachers, doctors, special friends, family members, even favorite entertainers who contribute to the joys of his or her life. Then be sure to post those letters when the post office re-opens.

Theaters usually have special family movies lined up for the holiday period. Buying tickets ahead of time might save some frustration on site. Some theaters allow you to reserve seats. Just do it in plenty of time to avoid any last-minute hassle that would detract from the meal.

Instead of eating and then running for the football game, take time for some genuine family conversation. Give each member of your group time to talk about him or herself. Call for everyone to say something positive about little Suzy or Uncle Bill. Or ask each person to choose just one other member of the gathering, focusing on good qualities and explaining how valuable that individual is in the life of the speaker. Thanksgiving is the perfect time to celebrate those qualities that make us willing, wanting and waiting to sit down together for feasting and family nurturing.

Managing Credit Is Essential

November 19, 2013 By Twila Van Leer

The successful financial management of a household in a day of easy credit depends to a large degree on controlling the credit load you acquire. The amount of money being paid on credit card debt compared with income is a critical figure that household managers often don’t know, or simply ignore and it can lead to financial disaster.

Figures compiled by government overseers show that in 2001, 11 percent of all American households had debt that was using up more than 40 percent of their income. The ratio is even greater in low-income families, which have a greater tendency to use credit when cash is short. The 2001 study was conducted by the Survey of Consumer Finances, an arm of the Federal Reserve. Results indicated that 7 percent of all the households contacted had a payment at least 60 days overdue. Only 45 percent of the credit card-holding households surveyed did not carry over a balance on their accounts.

Using some smarts at the beginning of the credit card pipeline pays. But even this common sense approach often is overlooked. Only a third of those who responded to the survey said they compared the many offers being made to potential credit card holders before acquiring a card.

The low figures may reflect how individuals view credit purchasing in the overall management of their resources. Those who simply use credit as a convenience in purchasing, with no intent ever to have a balance, may see no need to compare. Even so, it pays to look at the fees, terms and special features of the many credit offerings.

The level of financial knowledge in a household often mirrors how finances are managed. The survey found that lower levels of knowledge often correlated directly with less efficient handling of credit debt.

Debt management and savings also had direct correlations. Families that had control of debt payment also were more likely to make regular payments into a savings account. Four-fifths of all the families surveyed reported a savings account, but fewer than half of these made regular contributions to their savings out of each paycheck.

Maintaining an emergency fund to cushion against financial shocks also tied sound credit management to being prepared. Many studies, including those done by the Federal Reserve, consistently show that more than half of the country’s households are unprepared, even for a moderate period of unemployment. Again, general understanding of financial principles lagged in those families least prepared.

Planning ahead for such things as vacations, college expenses, medical needs, replacement of vehicles and other large-tag items also should be considered when credit use is a factor. One area that should call for some particularly thought is the prospect of retirement. A third of those surveyed did not know how much they needed for reasonable retirement and many who had looked ahead were far short of the amount financial experts suggest.

The survey emphasized the need for making credit buying a significant factor when analyzing family finances across the board. And it definitely made a strong connection between knowing about finances and managing them. That can be taken as a word to the wise.