My grandmother recently, and reluctantly, asked if I could give her some money.
There’s no question my wife, Amy, and I will give her the funds; she raised me and is, by and large, the woman I consider my mom. She has always been kind to Amy. If we have the discretionary cash that can make my grandmother’s life happy, shouldn’t we hand it over?
Yet the request has caused us a lot of angst.
Part of our concern is where this will lead. Although my grandmother isn’t asking for a lot of money — just a few hundred dollars — when you open your wallet to family members, the first time is rarely the last. We don’t want to get in the position of becoming my grandmother’s ATM.
But it’s more than that. Amy and I have worked hard to earn this money, and it’s frustrating to have somebody want to tap into our account. What’s more, my grandmother will no doubt use the money for things that we’d never buy ourselves. We don’t want to feel like suckers for funding a lifestyle that we might consider indulgent.
So that leads us to the question we’ve been grappling with: When providing financial assistance to a family member, is it fair to say the money comes with constraints on how it is spent? Or, is financial assistance an exercise in unconditional love?
* * *
Let me say it at the outset: I don’t believe children bear an obligation to their parents as a cost of having been raised by those parents. Bringing a child into the world is a parent’s choice, not the child’s. Thus, the obligations that do exist run from parent to child, not in reverse.
That said, I certainly feel a desire to assist my grandmother out of a sense of love and caring. She also has always been careful with money — in terms of both spending and saving. And she and my grandfather obviously weren’t my birth parents, but they did choose to raise me.
Still, loving and understanding don’t necessarily erase the questions that inevitably arise when family members seek funding. In particular: Why do you need this money? And how are you spending the money you do have?
If you, the giver, don’t agree with how the person spends his or her money, do you have a right to impose your restrictions? Do you have a right to tell someone to change his or her spending habits in order to get any money from you?
One of my longtime friends, who’s providing financial support for her two sisters, says no.
She’s helping one sister pay off thousands of dollars of credit-card debt. “I’ve talked to her about managing her money,” my friend says, “and the need to stop relying on credit, but I would never tell her how to spend her money.”
With the other sister, my friend is paying more than $200 a month for cable and Internet access, cellphone charges and a cleaning service. She’s also considering sending her a few hundred dollars each month for spending money, again with no stipulations about how the cash is spent.
In both cases, my friend says that the offerings are acts of love, and that while she may not necessarily agree with how the money is ultimately spent, each sister “obviously has different spending priorities.” Moreover, she adds, using that money to shop, go to lunch or spend on a friend “are really positive things in a personal life, and I would never deny my sisters that just because their choices may not mirror my own spending priorities.”
“Giving money,” she concludes, “doesn’t give me the right to impose my views on how it’s spent.”
* * *
I admit that I am not as reflexively selfless as my friend. When my grandmother asked for money, I immediately started thinking about her spending that I consider wasteful. She regularly pays for brunch for herself and friends, and frequently hosts parties for friends. If she didn’t do these things, I thought, she wouldn’t need my money. And while I don’t mind paying for my grandmother’s brunch, I don’t particularly want to treat her friends.
But as I talked to a friend about it, I realized that a grandson’s idea of waste is a grandmother’s idea of pleasure. Who am I to consider her parties wasteful, any more than somebody else might consider my dining out or trips to a casino wasteful? Unless the spending is egregious, it seems unfair to impose my standards on someone else’s life.
On top of that, giving her the money with the stipulation that she only use it on herself would rob her of a big piece of her happiness. And what’s the point of giving her money if it only reminds her of what she cannot do?
So, after much thought, here’s where I am: I can’t deny that the dollars I will give to my grandmother will be tossed away on expenses that will make me cringe. I can’t deny that if the money requests continue, things might change.
But for the moment, at least, my grandmother’s happiness wins out. I will give her the money and say nothing.
Jeff Opdyke covers personal finance for The Wall Street Journal.
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Grandma Needs Money. Now What?
Transferring your credit card balance, or balances, to a lower interest rate card can save you money.
The process is a tricky one — there are a lot of possible fees, penalties and ‘catches’ to beware of lest this move actually end up costing you money.
It is also getting harder to do. Credit card companies are try to stop losing customers, and they are also trying not to gain customers who are only there to take advantage of introductory rates before they move on again.
This is one credit card move that absolutely demands you read — and understand — all of the fine print. Different card companies handle it in different ways and have a wide range of fine print containing a myriad of rules.
But just because hopping from one card company to another is harder than it used to be rates for balance transfers, but there are low fixed rates offered for balance transfers (that’s the card company’s way of getting you to bring your balance and stay).
Key numbers
If you do not transfer to a fixed rate (or even if you do because fixed — the rate you are getting, how long it lasts and what it jumps to when that rate is over. With a fixed rate you may not know when it will change, but there will at least be a guaranteed period before it can change.
After you have those numbers, check out all of the related costs:
• Does either company charge a fee for moving the balance?
• Is that fee a flat sum or a percentage?
• Does your old card company charge you another fee for terminating your account?
• What fees and rates does the new company charge for new customers?
• Will both card companies notify you when the transfer is done?
• Under what circumstances can the new company change the introductory rate it gives you for your balance transfer?
Beware of ‘tiered’ arrangements. These will let you transfer a balance and give you some sort of interest amnesty or super low rate for a period, and then there may be another rate or arrangement for some more time, then a third (or even a fourth) rate. The trap here is that you may start with a great arrangement and slowly find your deal getting worse and worse.
Different rates
There may also be different rates for purchases you make with your new card. For example you may transfer with no interest for three months on your transferred balance and any new purchases. Then for three months you may have different, but not too bad, rates for what’s left of the balance but a higher rate for new purchases In the third and sometimes fourth tiers both rates could rise to the point where you don’t have a good deal any more.
So make sure you know how you intend to pay off your transferred debt.
If you are sure you can pay it off during that interest payment holiday or super teaser rate it may be a good deal. If you’re not sure, think again. If you know it won’t happen, go to your calculator and work on different scenarios. You may find that if you haven’t paid off enough of the transferred balance in, say a year, you’re actually moving into a worse deal.
Some card company’s limit how much you can transfer or how many times you can transfer a balance. Make sure you use your calculator because the more complex the transfer arrangements the more chances the movement might not be as beneficial as your at first thought.
One thing is surprisingly commonly overlooked in balance transfers — are there fees? Not only might the new card company charge you, but your old one might charge you a fee for the transfer and even a penalty fee for closing the account. They may also charge you more money to manage any money you leave behind with them if you don’t transfer your total balance. Check it out, be sure!
Also be clear just how long the whole process will take, when you stop paying on the old card and start paying on the new. You don’t want to find you’re paying for a balance in two places at the same time, however briefly.
Make very sure too that you know under what circumstances your new card company can change the rate your transfer is being charged. Sometimes a late payment, or maybe some other obscure transgression, will automatically end your deal and bounce you into a stratospheric rate. Know every circumstance under which they can do this.
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Balance Transfers
Zac Bissonnette
Suze Orman is in a federal court in Oakland defending herself against civil fraud, breach of fiduciary duty and conspiracy charges related to a long-term care insurance policy sold by her financial advisory business in 1999. It’s a convoluted case, but the gist of it is this: The Suze Orman Financial Group of Emeryville, California sold a long-term care insurance policy and there was confusion about what it covered and the policyholder sued.
The brochure specified that in order for the policy to pay out, the caregiver “cannot be a member of your immediate family living with you.” but the fine print in the actual contract specified that payments couldn’t be made to family members, regardless of where they lived.
When the policyholder got sick and her family cared for her, CNA Financial Group — the issuer of the policy — refused to pay up. Forbes reports that “The complaint, which seeks unspecified damages from CNA, Orman, her firm and others, quotes repeated advice in Orman books to buy long-term care coverage.” Orman’s lawyers say the case is without merit.
The case itself is not that interesting, but Forbes’ decision to cover it is. Forbes writer William P. Barrett adds to the piece, somewhat clumsily, that “At the time, Orman, now 57, portrayed herself to the public as a practicing financial planner. But a contemporaneous Forbes story said she hadn’t done such paid work in years; her financial services earned income was coming mainly from selling insurance. Our story pointed out a number of other false statements in her published author’s bio, which was quickly changed.”
And that has precisely nothing to do with the lawsuit, but who cares about that? Barrett adds at the end that “The lengthy New York Times Magazine profile of Orman published Sunday calls her “the best-known financial adviser in the country” and “a trusted national adviser.” It makes no mention of this litigation, which has been pending in the courts against her for several months.”
It makes no mention of the lawsuit because the lawsuit has nothing to do with anything. People who run businesses that sell financial services like insurance end up in litigation from time to time. Who cares?
For a combination of reasons — jealousy, sexism, elitism, and arrogance come to mind — a number of financial journalists have made mini-careers out of Suze-bashing. Maxed Out director James Scurlock recently wrote a piece titled If You Knew Suze Like We Know Suze ,You wouldn’t listen to her advice — and then failed to explain what part of Suze’s advice is so bad, other than a trashing of dollar-cost averaging, a fairly generic investing strategy recommended by most financial advisers. He also complains that her emphasis on personal responsibility is flawed because “Although study after study has shown that personal bankruptcies are caused primarily by catastrophic events like divorce, job loss, and, above all, medical bills and that most of us are struggling with a gap between our income growth and the soaring cost of necessities like housing, Suze tends toward psychological causes that invariably blame the victim.”
Well no, Mr. Scurlock, it’s not that simple: Most personal bankruptcies are precipitated by “catastrophic events” — although job losses, illness, and divorce are pretty common — but might have been prevented by careful financial planning, frugality, and saving. That’s why Suze is such a big fan of emergency funds, something that Scurlock fails to mention. There are number of factors that lead to financial ruin, and poor financial planning is present in most cases, even if the straw that breaks the camel’s back is a job loss or illness.
In case you can’t tell by now, I love Suze Orman and here’s why: She gives solid, conservative and reasonable financial advice and delivers it in a format that appeals to people who otherwise wouldn’t want to hear it. Suze Orman is to finance what Yo Yo Ma is to music: Purists might be annoyed by the marketing and occasional pandering but the bottom line is it brings a wonderful thing to people who otherwise never would have heard it.
There are plenty of charlatans out there offering bad advice and charging outrageous sums for it. Suze isn’t one of them. Suze offers good advice at reasonable prices — You can watch her show for free and get her books at the library. She deserves praise. Save the hatchet jobs for people like Robert Kiyosaki.
Read more here:
In defense of Suze Orman
SEARCH ENGINE KEYWORD RESULTS :
Our anemic economy appears to be struggling further still. By the end of the week, the “soft†stock market became downright cotton candy-ish, plummeting to index lows we’ve not seen in some time.Â
The culprit? Well, there’s a few of them…and they remain the “usual suspects.â€Â On the mortgage front, we were greeted this week with the cheerful news that a record 9 percent of Americans who have mortgages are now either behind or in foreclosure; almost 1 in 10!Â
The jobless rate? It is now the highest it’s been in five years. As for oil, sure it’s come down from record prices here recently, but let’s be honest – gas at $3.65 a gallon is still irritatingly high. In short, things are lousy.
Most people will eventually exit these tough times relatively unscathed, but many will be battered and bruised nonetheless. Still, once things return to “normal,†it will be tempting for a lot of people to resume the consumer patterns in which they’ve engaged all along, buying and buying, largely with credit, seeking as much house, car, and big-screen TV as they can possibly afford.Â
My advice? Fight that temptation, taking stock of your life and of what we’re going through right now, and endeavor to give yourself the greatest gift money (or credit) can’t buy: peace of mind.
Financial serenity comes about only one way: By living a simpler, less materialistic existence. Granted, we all like a few creature comforts, but the emphasis in the lives of many has been on creature, as in possessions that tend to devour us in one way or another.Â
Take cars, for example. How much car do you really need? How big does it have to be? How many options does it have to have? How new does it have to be? The reality is that cars are made so well nowadays that they’re expected to go well over 100,000 miles if properly maintained.Â
From a financial planning standpoint, car payments are a colossal waste of money, and yet too many view the idea of always making a car payment a fact of life. Why? Why not purchase a solid used car, and when it’s paid off, hang on to it for as long as possible, and investing the car payment you would be making during that time into growth mutual funds?Â
Look at this: If you bought a modest used car with the intention of making it last 10 years, spent three years paying it off…let’s assume a car payment of $350 per month…and then took that same $350 and invested it in a quality stock mutual fund for the remaining seven years, you would end up with just under $41,000 set aside (assuming an annualized rate of return of 9% per year). AND, if your car is still running fine after your 10 year time frame expires…just keep driving it, pushing back the initiation of another loan while continuing to add to your net worth.
I’m picking on car payments right now…they are an easy target for the financially prudent…but what I’m speaking about is applicable to just about any high-dollar consumer good. What about houses? We all need a place to call home, but how much house do you really need?Â
In fact, depending on the market in which you live, you may well be better off renting now than buying, which is an idea that likely goes against what you’ve always been told. What about other big-ticket items, like consumer electronics? I like football as well as the next person, but I don’t need to watch it on a $3,000 TV. The list could go on and on here, but you get the point.
Those Joneses with whom you’ve been trying to keep up all these years, with their McMansions, new cars, home theaters, etc? We now know their dirty little secret: They weren’t wealthier than you; just more extended. Indeed, becoming “stuff-obsessed†rarely adds to wealth, but rather diminishes it instead.Â
I’ve heard it said that the less you possess, the less you are possessed. Given the extraordinary high cost of possessing things at all in these trying economic times, perhaps it’s time we all reevaluate our priorities, dig deep within ourselves to locate that which is truly important, and adopt the best strategy in the world against the high cost of consumerism: avoiding it altogether.
Robert G. Yetman, Jr. Contributing Editor – www.ChristianMoney.com
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Safeguard Your Money and Your Mind By Adopting a Simpler Life NOW!
I have been laid off for seven months and am having trouble making my mortgage payments. I’ve seen a lot of ads from companies that offer to help with mortgage restructuring. Are they legitimate?
Maybe. Maybe not. Crooks respond to headlines and trends. When it became apparent that many Americans were having trouble paying their mortgages, the scam artists seized the opportunity to offer their own form of “help.” But instead of getting homeowners out of mortgage trouble, these crooks take your money and run — or may even take your home.
You may find them by reading a compelling ad or receiving a convincing phone call. Their tactics are varied and clever. Sometimes they search through the government’s public foreclosure documents and send you a personalized letter offering to help you save your home. The scam artists may offer to negotiate with your lender — then run off with your money instead.
In some of the worst cases, they may deceive you by claiming the documents you’re signing are to restructure the terms of your existing mortgage, but instead you unwittingly transfer the title of your house to the scam artists. Another ploy is to ask you to surrender the title and remain in the home as a renter, then buy it back over several years — but the contracts include outrageous buyback terms that make it nearly impossible for you to get your house back. Or they offer to find a buyer for your home and share the profits with you, but only if you sign over the deed and move out.
Beware of companies or individuals that charge a fee to enroll you in a government program to help you with your mortgage. You can do that yourself for free. Some may be out to steal your money; others are looking to gather important information to steal your identity.
Housing-related scams have become such a big problem that federal and state agencies started working together to crack down on the crooks. The Federal Trade Commission recently surveyed online and print advertising for mortgage-foreclosure rescue operations and identified 71 separate companies running suspicious ads, and states have brought more than 150 enforcement actions against mortgage-rescue companies. The FTC recently warned homeowners to avoid businesses that:
- Guarantee to stop the foreclosure process — no matter what your circumstances.
- Advise you not to contact your lender, lawyer, or credit or housing counselor.
- Collect a fee before providing any services.
- Accept payment only by cashier’s check or wire transfer.
- Encourage you to lease your home so you can buy it back over time.
- Tell you to make your mortgage payments directly to the business, rather than to your lender.
- Advise you to transfer your property deed or title.
- Offer to buy your house for cash at a fixed price that is not set by the housing market at the time of sale.
- Offer to fill out paperwork for you.
- Pressure you to sign papers you haven’t had a chance to read thoroughly or that you don’t understand.
But don’t despair. There are many sources of legitimate help. First, tell your lender that you’re having trouble making payments and find out if you can negotiate a new payment schedule. If that doesn’t work — or if you’re just nervous about approaching your mortgage company — contact a housing counselor approved by the Department of Housing and Urban Development, says Ted Beck, president and chief executive of the National Endowment for Financial Education. “Talk with them first so that you can get comfortable. They can give you guidance on how to get your information together and what assistance you might be eligible for — so you have a good, vetted source of information.” You can find a HUD-approved housing counselor in your area at the HUD Web site, or you can get help through the Homeownership Preservation Foundation (at www.995hope.org or by calling 888-995-HOPE).
For more information about the government’s new refinancing and loan-modification programs — including a valuable tool to help you see if you’re eligible for this assistance — go to MakingHomeAffordable.gov. This site also includes a lot of resources for people who don’t qualify for these government programs, and it provides alerts about recent mortgage-rescue scams. And check the FTC’s Scam Watch for information about all kinds of scams and how to report potential problems.
Keep in mind that the legitimate forms of help can take time. “Don’t assume this is going to be done over you lunch hour,” says Beck. You may need to prove hardship, prove your income and prove that you’re eligible for some of the government programs. “But if you can get all your information together, there may be some real potential for you if you qualify.” Be suspicious of anyone who promises otherwise.
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Mortgage Crisis Fuels Scams
