Personal Finance Blog

Tips And Stories To Help You With Managing Money

Financing Behind Olympic Competitors

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Personal finance skills are of utmost importance to those that train to compete in the Olympics. Gold is obviously the coveted prize at the end of the Olympics rainbow. But what some of the athletes do to earn their daily gold in between competitions shows a wide range of personal wealth — or poverty. On this year’s roster are a dentist, a bartender/bouncer, a former brothel owner and a monk, plus many with more mundane jobs, according to an Associated Press story.

The costs of training are enormous, and the time demands of training mean that earning a living has to fit a flexible schedule. In some countries, the local International Olympics Committee provides some help. Not so in the United States. The International body shares some money with the smaller organizations, but the latter get to decide what to do with it. In some places, none of it trickles down to the Olympic hopefuls.

That means some athletes end up jockeying two or more jobs — up to seven in rate instances — to pay for their training and keep themselves fed.

Before coming to the London Games this summer, Irish boxer Darren O’Neill was a teacher at Holy Trinity Primary School in Dublin. He quit before the London competition to train full-time. Will he have a job to go home to? He isn’t sure, although a hand-painted banner on the school saying “Good Luck Mr. O’Neill” is a promising sign. Bottom line: He likes boxing well enough to sacrifice the job if necessary.

When Lance Brooks, an American discus thrower, moved to Denver to start serious training five years ago, he became a bartender/bouncer and all-around bar backer, restocking shelves and taking out the trash. He also picked up cash working Denver Rockies baseball games and coaching at a local high school. He did a stint at an oil-change service and worked construction to make ends meet. Finally, his coach put the kibosh on so many jobs. Brooks had to choose to discontinue his patchy employment or lose his trainer.

Some of the Olympians combine work and training. Luca Tesconi of Italy, who won silver in 10-meter air pistol competition, is a police officer in his home town. And Kai Johnssan, a pistol shooter, is a member of Finland’s Coast Guard Air Flight Patrol.

Sometimes they get creative. Nick Symmonds, four-time U.S. outdoor track champion in the 9000-meter, went on eBay and auctioned a spot on his shoulder for $11,100, promising to sport a temporary tattoo for the highest bidder. The offer was picked up by Hanson Dodge Creative, a marketer focused on active lifestyles. Too bad. Olympic rules preclude athletes advertising brands during competition. Symmonds had to cover his billboard shoulder.

Wendy Houvenaghel had to take continuing education courses so she could go back to her career as a dentist in Northern Ireland after taking an extended break for training. She’ll go back to dentistry when the Olympics and her cycling career are over. She rides for Britain.

At the extremes are Logan Campell, a taekwondo fighter for New Zealand, who financed his training with an upscale brothel in Aukland, and Kenki Sato, a Japanese equestrian competitor, who is a monk at his family’s Buddhist Temple near Nagano. Campbell sold the brothel in 2010 (although prostitution is legal in New Zealand) when the help was provided by his the IOC and sponsors. Sato will go back to his job as monk, which he says is good for discipline.

The 2012 Olympics will end and then dozens of this year’s athletes, along with hundreds of hopefuls for Olympics future will be back to the grindstone to earn the pennies that lead to the gold.

Protect Yourself Against Check Fraud

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Check fraud is such a hot topic that Hollywood made a movie about it. The 2002 film, “Catch Me If You Can,” starred Leonardo DiCaprio as master fraud artist Frank Abagnale and Tom Hanks as the FBI agent who chased him all over the world. It was filmdom’s way of putting the spotlight on a problem that plagues real-life personal finances.

In the movie, DiCaprio’s character flitted across the United States and around the world using such cover as pediatrician, airline pilot, attorney and college professor to gouge a grand total of some $2.5 million out of unwary victims. He was caught, both in the movie and in real life, and spent five years in prison. Part of the agreement that set him free after such a relatively short term was that he would help the feds to combat the types of crimes he had himself so successfully perpetrated.

The switch from bad guy to good guy set him up as an authority and his crime prevention programs have been used by more than 14,000 companies, law enforcement agencies and financial institutions to protect their interests and those of the people they serve.

In an interview with U. S. News, Abagnale shared five tips for individuals to protect themselves against check fraud. Here they are:

1. Write as few checks as you can. The standard check provides such information as your name, address, often a phone number, sometimes your driver’s license number (In nine states such information is required by law, giving a fraudster near-direct access to your Social Security Number as well), the bank account number and routing number and a nice signature should he have a desire to replicate it. Use checks for making mortgage payments and paying bills, but be very chary of other uses. If someone wants to sell you a product at the door, use cash, don’t give him or her a tool to use against you.

2. Take special care at tax time. Ninety percent of those who owe Uncle Sam use a check to pay up and seasoned fraudsters are on the alert for such easily identifiable letters in your outgoing mail. They have only to modify the payee information and deposit. That benefits a criminal and puts you in hot water with the IRS.

3. Use secure mailboxes. Putting bill payments and other letters containing checks into the box at the curb or outside your door, then putting the flag up to alert the postman is an open invitation to anyone bent on fraud who happens to notice. Go to a post office or put the letters in a secured box for collection.

4. Treat checks and checkbooks like cash. Lock them in a safe place. Some people like the convenience of having some checks in the glove compartment of their car. It’s the first place people looking for money, credit cards, gas cards and/or receipts with your information on them will look. The smart ones will remove only the last check or two from a book, giving themselves time to use the checks before you notice you have any missing.

5. Balance your checkbook every month. It’s only common sense, but 51 percent of Americans don’t do it. Many fail even to open the statement and check the bottom lines. That gives banks an advantage in assigning responsibility — the criterion by which they decide if they will compensate you or let you eat the loss yourself. A federal law, Article 3, Section 406 of the Uniform Commercial Code requires that you notify your bank within 30 days of any discrepancies. If you don’t do it, the bank has no liability.

All good advice from someone who knows.

Check Fraud Is A Serious Matter in U.S.

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Just how serious a problem is check fraud in this country? Well, put it just behind payment card fraud and ahead of phishing. The total losses are staggering, — $5 billion a year, according to the U.S, Secret Service.

The chief of the Secret Service’s financial crimes division calls it “the number one way criminals today are attacking our financial systems.” That means you need to know more about the problem and take steps to protect your checking account.

The statistics are chilling. The 2012 AFP Payments Fraud and Control survey of more than 5,000 corporations received 447 responses. Among the things they had to say:

Checks are the payment type most vulnerable to fraud.

The typical loss for the organizations that reported fraud was $19,200.

85 percent of those responding to the survey say check fraud is a problem.

More than 80 percent of the companies had “best practices” policies in place, but still lost money to fraud because they failed to follow their own policies. Sadly, according the American Banker’s figures, some 60 percent of the fraud incidents involve employees within the business.

American Banking Association’s Deposit Account Fraud survey in 2011 showed a loss totaling $893 million in 2010 among the institutions surveyed. In that year, attempted check fraud against bank deposit accounts amounted to some $11 billion. The figure reflects both actual losses and loss avoidance due to banks’ prevention efforts. Although slightly lower than the $11.4 billion posted in 2008, the figures are still appalling.

The steps banks must take to prevent fraud are costly as well, according to the ABA survey. Four “money center” sized banks said they spent more than $20 million each for fraud-related programs, not including actual losses that slipped through their prevention nets. Regional banks reported losses of a half million to a million, while mid-sized banks reported losses ranging from $R50,000 to $250,000. Community banks averaged $5,000.

It isn’t encouraging to know that the scope of the problem continues to expand. The ABA data show that the per-incidence cost of fraud have doubled in the past six years, even though more individuals and businesses are switching to electronic transfers to pay bills. The actual volume of check use had fallen by 26 percent, but the ill effects of fraud continued to climb. Even with the decline in check use, 80 percent of business-to-business transactions are consummated by check and financial experts say that trend will continue through the foreseeable future. The advantages simply make paying by check preferable.

Your bank is likely to have information about how you can protect your account. They can explain their polices regarding responsibility when fraud occurs. Many check printing companies are stepping up to make checks more fraud-proof. They incorporate such features as safety holograms, multi-dimensional foil seals hot-stamped to check stock. They can’t be photocopied. Chemically sensitive paper, micro-print borders, invisible fluorescent fibers, erasure protection, security screens and warning boxes are all innovative approaches available to businesses to help ensure check safety.

Don’t just look at the statistics and shudder. Take pro-active steps to make sure you don’t join the long lists of fraud victims.

Your Financial Well Being

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Financial Distress Is MiserableConcerns about personal finance and how consumers are dealing with financial distress are valid.  National consumer debt has risen to $2,572 billion in 2012 and that has the potential for dragging personal satisfaction with life down the drain. Your psychological well-being is closely related to your financial well being. People need to develop personal finance skills that are critical to building a stable financial future. The level of financial distress people feel directly affects their personal sense of happiness.

The Delphi Study of Experts’ Rankings of Personal Finance Concepts showed that the top two financial concerns that people worry about the most are having enough money to cover monthly expenses and living on a paycheck to paycheck basis. 

The National Foundation for Credit Counseling has released information about consumer behavior in relationship to budgeting, spending and saving money, which has been given on a yearly basis since 2007. Thousands of people were asked a series of questions. Answers to those questions brought to light some interesting data.

First, the most important skill deemed by the financial experts is that of budgeting and tracking expenses. A shocking 56% of adults surveyed said they didn’t have a budget and didn’t track their expenses. If this is the way you handle your financial matters, then it is time to improve your skills.

Secondly, one third (more than 77 million adults) say that they do not pay all of their bills on time every month.  At this point, if you are in that category, you need to look into online banking and get your bills set up on auto pilot. This will help to pay bills on time. It also lessens the amount of things you have to remember to do. If your problem is low income, it is time to do something about that and get creative.

Thirdly, thirty nine percent of Americans carry credit card debt from month to month. Nothing will help this problem unless you get a grasp on the fact that having no revolving debt is a lifetime goal and should be adhered to regularly. It is far too easy to say to yourself that you’ll have the money later. Often later doesn’t come and soon you are paying interest on a monthly basis too.

Fourthly, thirty nine percent have no personal savings other than retirement savings. The bare minimum is $1,000 just for emergencies. The best situation is having three to six months living expenses. The tricky thing about building this up is replacing it when  you have to use it. The peace of mind you have when you have funds available far exceeds the joy you can get from the latest toys.

How confident do you feel about your ability to meet your expenses? How confident do you feel in the strategies you use to add to savings and investments? How confident do you feel in your ability to take care of your past debt? The more confident you feel in meeting these needs, the happier you will feel. If you are far from feeling confident, you can always reach out and start to learn how to live life differently. There are many organizations devoted to helping you to reach your financial goals. Some of them are the U.S. Department of Treasury, The Bureau of Consumer Financial Protection, local colleges, local credit counseling agencies and community groups. Find the source that best meets your needs and work towards improving your personal financial well-being.

Consumers can save money on banking supplies by buying online. Your savings can add up.

Emergency Savings Tips

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Unless you’re sitting in a movie, chances of an overwhelming emergency (think invasion by aliens) are not very likely. But in the natural course of things , emergencies do occur, including earthquakes, hurricanes, floods, blizzards, windstorms, fires and landslides. On a more personal level, the theft of credit or debit cards, checks and other items that you routinely use to make your way financially can be a temporary emergency that deprives you of your usual ability to pay for purchases, cover usual expenses, etc.

Financial experts take the position that emergencies, large or small, are almost certain and they advise that you be prepared to see yourself through a temporary dry spell. The question is, how much to stash for an emergency and where to put it so it is accessible when you need it without being a target for thieves. The “how much” element is tricky. There is no set amount and the individual ability to tuck money away against future need varies greatly. Some say $500 minimum. Others set three to six months of usual income as the goal. Some see a “conservative” $10,000 as requisite. In the final analysis, you have to assess your ability and do what feels right for you. But you must make it a priority not to be taken lightly and then treat your emergency fund as inviolable. Don’t let little emergencies rob you of what you would need in a real emergency. Treat the emergency fund as you do insurance: Be sure it’s available, then hope you never have to draw on it.

Just be aware that in a real emergency, there is likely to be no power (no ATMs, no self-serve gasoline pumps, etc.) and financial institutions are likely to be unavailable. Your credit and debit cards are probably going to be useless. That makes cash the preferred mode of preparing for an emergency.

Financial guru Dave Ramsey advises starting small. Set a goal, for instance, to save $3,000 in a year. That amounts to $250 per month. Spread it over 18 months and the monthly set-aside is $166. Rule of thumb: It probably will be at least a week after a serious emergency before things return to normal for your finances. Plan on at least that long. If you already have savings accounts, consider taking out enough to finance your emergency fund. It is possible to invest the emergency funds, but don’t put them in accounts that can’t be accessed almost immediately. The money should be liquid and available. If for some reason, your emergency fund is depleted (say in an actual “little” emergency such as frozen pipes or some such) rebuild as soon as you can.

While in the normal routines of life it is not wise to keep a large amount of cash in your home, that might be exactly where you need the ready money for an emergency. Be creative in finding unobtrusive, unusual places to stash your cash. Not under the mattress, in a sock in the drawer or any of the other spots that have become so cliched they are obvious. Some suggestions from the experts:

Put cash, ideally in smaller bills such as tens and twenties, inside a plastic baggie, place it in a meat tray and put it in the freezer as unobtrusively as possible among other packages of meats.

Bury it in the yard, inside a piece of PVC pipe or other water-impervious container. (Use good sense. If your yard is covered in six feet of snow in the winter, take another tack.) The same idea would work with a large planter inside your home.

If you want to put an envelope of bills behind a photo or piece of art, insert it between the cardboard backing and the picture, not on the back.

Take a tip from the old movies and put “the evidence” inside a book from which you have carved a hollow section. Of course, that only works if you remember which book you used. In a real emergency, there will be no time for browsing.

Create a “decoy safe,” by putting the cash into a small container and burying it in any larger container that looks like anything but a bank — a mayonnaise jar, tin can, shaving cream tube, etc. etc.

Just remember that accessibility is the key in this instance. If you hide it so thoroughly that it takes hours to retrieve it, you need to reassess. Emergencies don’t, by their nature, provide lots of time to contemplate. The important thing is to recognize the need for an emergency fund, start now to provide one and have it handy if the need arises.