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Frugal living tip #46. November 21, 2009

Posted by ourfriendben in Uncategorized, wit and wisdom.
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Silence Dogood here. In 2009, we’re committed to bringing you a Frugal Living Tip every week to help people like us survive these tough economic times. This week’s is about not losing what little money you may have.

I’ll get to that in a minute. But first, a couple of statistics I read in the local paper that struck me as ironic. Savvy gardeners and homesteaders won’t be surprised to hear that, thanks to the recession, home canning is up. Sales of canning equipment were up 30% this year. That’s the good. Unfortunately, hard times also make us crave cheap indulgences—something we can still do to make ourselves feel better. So another sign of bad times is the skyrocketing sale of potato chips (up 22% this year) and other fatty, salty comfort-food snacks, rising dramatically after years of stagnant sales. Sansabelt, here we come. That’s the bad.

Now for the ugly, the point of this post: It’s bad enough when you don’t have much money sitting in the bank. But it’s a lot worse when what little you do have is siphoned off through overdraft fees. Here’s some scary data and excellent advice from Humberto Cruz in his article “Invest time to avoid fees.” (To read the entire article, go to www.themorningcall.com.)

First, the scary stats: 51 million American adults overdraw their checking accounts once a year; 27 million, five or more times a year; and 18 million, ten or more times each year. Those overdrafts come at the cost of $26.6 billion in hard-earned money, at an average of $29.58 per bounced check. Many banks charge fees if your checking balance falls below a minum each month as well. And late fees on credit cards are supposedly rising into the high 20s—in other words, heading towards a third of the bill.

The bad news doesn’t end there. Not only are fees for using debit cards at banks not affiliated with your own rising steeply—the average is now $2.22 per transaction plus a $1.32 fee levied by your own bank—$3.54 each time you use another bank’s ATM. (I’ve also read that some banks organize debit charges from highest to lowest amount rather than by transaction date, so unless you record each and every transaction as you make it in your checkbook and balance the total immediately, you may think you have more money than you actually do at any given time and overdraw inadvertently as a result.)

Yikes! How can you avoid this mess? Mr. Cruz offers some good advice from a consumer-oriented website, Bankrate.com: “Match your accounts to your needs. If it’s just simple checking, bill pay, ATM or debit card transactions, a non-interest-paying but free checking account with no minimum balance or per-check charge is best.” He also advises you to keep track of all your transactions and balances, including ATM and debit transactions and your credit cards. He checks his accounts online daily, and swears he can do this in under a minute. You may not want to check every single day, but if you have the uneasy feeling that your balance is bottoming out, it would be well worth it. After all, the last thing you need when money is already tight is to be handing what little there is over to the bank!

            ‘Til next time,

                         Silence

Credit and debit: watch out. November 3, 2009

Posted by ourfriendben in wit and wisdom.
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Our friend Ben was horrified to see an article in the business section of our local paper discussing how our banks were responding to the government’s attempt to rein in credit card abuse. According to the article, the banks were rushing to raise interest rates to almost 30%, slash credit limits, impose annual fees of up to $99, and insist that cardholders charge $2400 minimum on their cards to avoid additional “inactivity” fees. All this in an attempt to circumvent government regulations.

Well, now, isn’t that special?

Horrific as the banks’ immoral behavior and indefensible greed is in this time of nationwide belt-tightening, though, it’s not the darkest part of the picture. There are always vultures waiting to descend on the helpless and desperate, and this news is apparently just what they’ve been waiting for. Yes, our friend Ben is talking about the ever-opportunistic scammers.

Today, our paper carried a story about two new scams, in which supposedly both the state and federal government contacted their victims, informing them that an official-sounding government debit card would be issued to them to help them float credit/reduce debt in light of the banks’ credit card outrages. Awww, how helpful and kind of the government! All you had to do in return was give the caller your Social Security Number and current credit or debit card number so they could process the new card. Gee, what could be easier?

As P.T. Barnum famously said, there’s a sucker born every minute. But that doesn’t mean you have to join their ranks. As the news about credit cards worsens, be prepared to fend off any number of opportunistic scams attempting to separate you from both your identity and your savings account. Never, ever give out any personal data to any unsolicited caller. If the caller claims to be calling from your own bank, our friend Ben would suggest making an appointment to speak to someone in your bank branch in person to discuss whatever issue they’re raising.

As for what to do about this latest credit-card outrage, our friend Ben has no idea. Switch cards to one issued by a responsible bank that’s not trying to suck the lifeblood from its loyal customers? Great idea, if you can find one. Obvious steps are to pay off as many cards as you can so you only have one, but what that one should be, I don’t know. Silence and I only have one, but according to Sunday’s article, it’s owned by the most egregious offender of all, Citi Corp. And apparently the Bank of America is following hard on its heels in terms of rates and fees. Paying in cash for purchases is the ultimate answer, but when you purchase online as we often do, it’s simply not doable.

Readers, any ideas? Believe us, we’re all ears! And meanwhile, watch your back (and your bank balance)!

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