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Money Matters

How Much You Make Doesn't Matter

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Many people think that if they only made more money, they’d be free from worries about money. I wish that was true. If it was, then three-time Pro Bowl cornerback and ex-Raven, Chris McAlister wouldn’t be dead broke and living with his parents.

Cornerback Chris McAlister was alleged to have made more than $50 million over his ten-year career. Now he says, in court documents in a child support case filed by his ex-wife, "I have been unemployed since 2009. I have no income. I live in my parent's home. My parents provide me with my basic living expenses as I do not have the funds to do so." I’m sure you can think of other people that should be wealthy, but aren’t. The first ones that come to mind for me include rapper MC Hammer and ex-Chicago Bulls player Randy Brown.

If you can’t manage $30,000 you can’t manage $30 million. The key is to find small opportunities that make a big financial difference:

Recognize when you’re being manipulated – The advertising industry is set up to make you want things that you don’t even need. Traditional advertising isn’t working as well as it used to because people are avoiding commercials, so more and more advertisers are turning to using product placement. Notice when you see specific products mentioned or shown in your favorite tv shows, music videos, movies, etc. Do you want something because it enhances your life or because it’s the cool new thing?

Get what you want at bargain prices – It’s important that you purchase the things that you enjoy, but consistently paying full price for those things doesn’t make sense. Now, you can find deals on everything from travel to groceries. With a little planning you can save hundreds of dollars per year.

Start where you are – Every little bit of money that can be squirreled away, should be squirreled away. There is no magic number to start building your Emergency Fund or start contributing to your retirement account. Even if you can only put away $10 a week, getting into the habit of saving is what’s important.

It’s the little things that we do every day, the small decisions that we make, that determine our net worth. Regardless of how much money you earn, it’s your habits that determine your wealth.

Shay Olivarria is the most dynamic financial education speaker working today. She has written three books on personal finance, contributes to multiple online media platforms, and is a foster care alumni. She's been quoted on Bankrate.com, FoxBusiness.com, and The Credit Union Times, among others. Visit www.BiggerThanYourBlock.com to find out more about her work.

New Credit Card Complaint Site: What You Need to Know

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Good news, the Consumer Financial Protection Bureau has launched a website to help “the little guy” get his voice heard. The site says it will, “Forward your issue to your credit card company, give you a tracking number, and keep you updated on the status of your complaint”.

Before the Consumer Financial Protection Bureau was created, if you had a problem you had to contact the regulatory agency for your specific type of financial institution. It was dreary work: tracking down the right agency, filing a complaint, and then trying to keep up with the complaint. Now, a one-stop-shop has been created to streamline the process.

What is the CFPB?
The Consumer Financial Protection Bureau was created to monitor how banks, credit unions, debt collectors, payday lenders and other financial services companies conduct business with their customers. It’s one of the many legislative changes that President Obama put into place. The agency is still quite new, the Bureau officially began functioning July 21, 2011, so right now they are only receiving complaints about credit card lenders on the Consumer Financial Protection Bureau website.

What does the new site do?
If you’ve tried to resolve an issue directly with the credit card issuer and you’re not getting the results you want, you can file a complaint with the Consumer Financial Protection Bureau by internet or phone. The website allows consumers to file complaints online about a myriad of problems. Consumers can also file a complaint via a toll-free number: 1-855-411-CFPB (2372). Some of the reasons that you may want to file a complaint include: credit card problems, including billing, advertising, fees, interest rates, rewards and collection problems.

The upside of the recent financial debacle is that financial education and protection is becoming top-of-mind to all Americans, but even with these improvements it’s up to each of us as individuals to make good choices and speak up when we feel we’re being taken advantage of.

Shay Olivarria is the most dynamic financial education speaker working today. She has written three books on personal finance, contributes to multiple online media platforms, and is a foster care alumni. She's been quoted on Bankrate.com, FoxBusiness.com, and The Credit Union Times, among others. Visit www.BiggerThanYourBlock.com to find out more about her work.

The Bank Fees are Coming!

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[Disclosure: Shay Olivarria has worked closely with SCE Credit Union on various projects over several years.]

I’m sure by now you’ve heard the news that Wells Fargo debit card customers in Oregon, New Mexico, Georgia, Washington and Nevada will be charged a $3 monthly fee for using their debit cards beginning Oct. 14, 2011. The new fee is due a change in the ways that interchange fees are collected. If you’re not sure what an interchange fee is or why it matters, please keep reading.

Interchange fees are a small percentage of each transaction when you use your debit card. Someone has to pay to process that electronic swipe or hand-written signature and that costs money. The fee was $0.44 before the Federal Reserve ruling. The Fed wanted to lower it to $0.12, but after a lot of heated discussion from financial institutions the fee was lowered to $0.21 instead. The great part of this, for those of us that use credit unions, is that “financial institutions under $10 billion (like SCE FCU) are exempt” according to SCE Credit Union’s Chief Operating Officer, George Poitou. You probably don’t care what the fee is as long as you don’t have to pay it, and for those of you that choose to use large financial institutions, this is where it gets interesting.

Financial institutions are primed to lose about half of their revenue from interchange fees. A 2010 lawsuit made the yearly interchange fee revenue available and we’re talking about $20.5 billion annually. Don’t think for a second that financial institutions are just going to walk away from billions of dollars. Instead they have decided to recoup some of that revenue by charging customers to use their debit cards. In some markets JP Morgan Chase and SunTrust Banks Inc. have already initiated a monthly fee for debit cards. Now, Wells Fargo is joining the list. The $3 monthly fee will cost customers $36 a year.

It might seem like a small thing, but all those fees add up. Did I mention that the $3 fee does not include your monthly fee to use your account? That means you’ll get your usual monthly usage charge plus this charge if you use your debit card. It’s time to start thinking about why you use the financial institution that you do and if that institution is helping you leverage your money to build wealth.

Credit unions are not-for-profit financial institutions whose, “principal strategy is to offer members all the financial products and services they need at a fair price” says Poitou. That means that all the members of credit unions are part of a group that pools money together to make loans, via mortgage loans, car loans, credit cards, etc., and provide services, checking accounts, savings accounts, etc., to each other. Since the job of credit unions is not to make as much money as possible for shareholders, interest rates tend to be low and several credit unions have programs to help people with not-so-great credit or accounts on ChexSystems to get back on track. Every decision you make brings you one step closer to being wealthy or one step further away from being wealthy. Choose wisely.

Shay Olivarria is the most dynamic financial education speaker working today. She has written three books on personal finance, contributes to multiple online media platforms, and is a foster care alumni. She's been quoted on Bankrate.com, FoxBusiness.com, and The Credit Union Times, among others. Visit www.BiggerThanYourBlock.com to find out more about her work.

Don’t Save Money in Your Savings Account

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When you open an account at a bank or credit union you’re usually going to open both a checking account and a savings account. People think that the savings account is for saving money, but nothing could be further from the truth.

When you open your savings account the associate that helps you will usually ask you if you want to have your savings account “linked” to your checking account. Linking it helps you avoid overdraft charges by pulling money from your savings account when you spend more money than is in your checking account. So far, this sounds great, right? It sounds wonderful until you realize that using this method may reduce your bank fees, but you’re not saving any money.

A better solution is to keep the money that you want to save, say for an Emergency Fund, in a money market account. A money market account can be opened up at your brick and mortar credit union or bank or an online financial institution. Money market accounts are better than savings accounts for saving money for two reasons. The first reason is that they usually offer better interest rates (free money) than a savings account. The second reason is that they are less accessible.

Having less access to your money is great if you really are trying to save it because you won’t be able to spend it as easily. Money market accounts have restrictions that levy fees if you make more than a specific amount of withdrawals and/or deposits per month. This will help you leave the money in the account thereby earning more interest and reaching your savings goals more quickly. If you want to spend the money in your money market account on a non-emergency item but you remember that you have to go home and get the ATM card or checks for that account and come back to purchase the item you might think twice. If you know you can just slide your card for your checking account and it will pull money from your savings accounts there’s a larger chance that you’ll spend the money you’re supposed to save.

Savings accounts are great to use as a cushion for your checking account, but make sure that you understand their purpose. If you really want to save money, don’t put it in a savings account put the money in a money market account.

Shay Olivarria is the most dynamic financial education speaker working today and the author of three books on personal finance. To hire her, visit www.BiggerThanYourBlock.com.

Save Money on Back-to-School Shopping with a Team Effort

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It’s that time of year again. The kiddies will be starting back to school soon and parents will be searching for the best deals on binders, lunch boxes, and pencils. To help you save money, and keep your sanity while shopping this year, include your children in the decision making process.

First things first
Students tend to have similar needs from year to year. Ask your students to bring all the backpacks, calculators, pencils, erasers, binders, etc. from last year to the table. Ask your child what they used last year, what they needed more of, what they didn’t use very often, and how they used the items mentioned. Take stock of what everyone has, what needs to be replaced, and what can be mended or repurposed.

Consider value and cost
Now that you’ve taken a look at what you need to purchase, it’s time to consider what the best value buys are. If you find yourself saying, “I bought you seventy-five of those last month and you’re telling me you’ve used them all!” then it may be time to figure out if the quality of the item isn’t that good, your child is misusing the items, your child is losing the items, or some combination of all three. Sometimes items are priced more cheaply than others because they are more cheaply constructed. Choose items that will cost you less by not having to purchase so many. For example, what good is a $10 backpack that you’ll have to buy three times during the school year because the straps keep breaking? Purchasing one $25 backpack at the beginning of the year will end up saving you $5.

Create a list and stick to it
Okay, now you have a list of the things you need to purchase. Have you taken a moment to write down the estimated cost of each item? It’s important that you have a dollar amount in your head for each item so you don’t get caught up in the emotion of shopping and spend more than you intended.

The other great reason to create a list is to help your child get on board with finding the items and staying under budget. This will teach your child how to use a spending plan and create some positive energy around financial education. Remember to ask your child if there is something specific they would like on the list. If your spending plan for school supplies has a bottom-line number, ask your child to find a way to use the existing money to purchase the needed supplies and the item(s) they want. You’re creating a situation for critical thought, personal empowerment, practice of mathematical concepts, and ownership. Way to go parents!

Get things for free
There are several programs that collect things for back-to-school drives every year and give them out. Ask around to find out who is doing what. Another great option is asking local businesses or local financial institutions what items they may have available. Many places have items such as calculators, pencils, etc. that they use for promotional purposes that they will give away to students when asked. Remember, if you don’t ask then you don’t get.

Come up with some cash
Sell things that you don’t use anymore to free up some money for back-to-school purchases. Have your children get involved by rounding up items around the house that are no longer used. Put the items on Craigslist.org or have a garage sale. Anything that you get rid of is clearing physical space in your home, clearing mental space in your psyche, and putting dollars in your hand.

Find the deals
Now that you have a list with dollar amounts, you’ve crossed off a few items because you got them for free, you have cash in your pockets from the garage sale, it’s time to go out and find some deals. This is the easiest part of the adventure. Circulars are mailed to your home every week advertising ten cent pencils and ninety-nine cent folders. Take a moment to really look through each ad and make a list of which items you want to get from each store. This is a great activity for children. You already have you list outlining how many of each item you want to purchase at what price, so encourage your children to scour the ads for deals. It may surprise you how good they are at it. If they need some encouragement, tell them that they can keep the difference between the sale and what you expected to spend.

Including your student in the process of back-to-school shopping is a fun way to get involved with their educational needs and spend some time together while saving money. Let me know if you have any more great tips for saving money while back-to-school shopping.

Shay Olivarria is the most dynamic financial education speaker working today and the author of three books on personal finance. Visit her at www.BiggerThanYourBlock.com.

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