by David Bakke on August 24, 2010
I guess it is a combination of changes in the banking industry and the current state of the economy, but there are hidden fees popping up all over the place. It is really getting to be ridiculous!
Here is a quick glimpse of some that I have come across lately.
They Are Everywhere!
My registration renewal came in the mail recently for my car from the state. They just “included in” a $35 fee for a brand new license plate. This $35 was more than the entire cost of the rest of the registration. The first two people I called said there was nothing I could do about it. After a third phone call, I was finally able to avoid the charge.
I have been researching quite a few banking websites lately and since the recent government intervention/legislation into the credit card/banking industry, they’ve had to get quite creative with how they are now trying to screw the consumer. I found a $20 “research fee”. Basically, if they have to do any research regarding your account, they can charge you up to $20 per hour. I also found a “copy fee”. Would you like a paper copy of your banking statement? That will be $10 please. Boy, I’d love to see the copier and paper they use to produce those babies. They must be something else!
The router recently “went” on my internet connection set up at my house. I called my internet service provider to request a new one. Got all the way through the process when he tried to verbally sneak in a $19.99 replacement fee he was trying to charge me. Are you kidding me? This is their equipment that they provided me for free when I signed up—all of a sudden a replacement costs money?
Regardless, it’s safe to say that fees and hidden charges are really almost a part of our daily lives. I’d like to outline for you a few quick tips on what you can do to avoid them.
Wake Up/Pay Attention
Boy have you got to be on your toes these days. This especially comes into play whenever you sign up for something new or whenever you get a renewal notice in the mail. You have got to read through the fine print whenever applicable. Another neat trick that I’ve employed is a lot of times I’ll find an internet offer for a credit card or something similar that I end up signing up for over the telephone. Well, you know how most of the time those conversations are recorded? Well, I use that to my advantage. I confirm that it’s being recorded and then I make the rep I’m speaking with go over any and all “hidden” fees or any and all other fees not previously discussed. This will cover me if I ever find out about one in the future and want to dispute it.
Act!
When you find a fee that you’ve been charged, don’t take it lying down. Let me give you an example. If some huge company out there charges a $2 fee for whatever to all of their customers, and they have a million customers, then they can generate an additional $2 million in revenues. So, its huge money for them. However,i f you call up and complain about this $2 charge, do you think you’ll have to go too far before they just waive it? Will they risk an upset customer for $2? I highly doubt it.
The bottom line is that you’ve got to realize that these hidden fees are popping up all over the place, in places you’d never expect to see them. Keep your eyes wide open, do your best to avoid them on the front end, but if one slips past you, do something about it to get it reversed. Don’t take the situation lying down.
As always, your comments are greatly appreciated below.
by David Bakke on August 10, 2010
Another product that is widely mentioned when people talk about retirement and estate planning is a living trust. A living trust is a trust created during a person’s lifetime to either save money on taxes or to set up long-term property management. The main benefit of having living trust is to avoid the probate process but may also be used to maintain financial privacy and regulate your assets should you become incapacitated.
What Does It Do?
Basically, a living trust allows you to pass money on to your heirs without going through the time-consuming and expensive process of probate. It is revocable and can be changed at any time. Also, depending on the size of your estate, you can save significant amounts of money by avoiding the probate process.
The Negatives
Keep in mind though, that there are some negative aspects to having a living trust. The beneficiaries of a living trust will not save on any inheritance or estate taxes. Setting up a living trust can be time-consuming, expensive, and it is an upfront cost. These documents are generally much more expensive to prepare than simple wills. Living trusts also need to be maintained. So there are maintenance costs as well. The fee is usually a one-time fee based on the size of the trust, usually running between 1% and 4% of the estate. Interestingly enough, this fee will also be assessed for anyone dying without a will or a living trust.
There is an estate tax exemption, which is a separate issue in and of itself. Keep in mind though that married couples can double the estate tax exemption amount by adding a formula clause to their living trust.
Is It Right For You?
So we’ve outlined what a living trust is and gone into some of the basic pros and cons to having one. It is a complex thing so these positives and negatives are not all-inclusive lists, just the highlights.
Regardless, now the question is…Is a living trust right for you? As it turns out, the answer may not be an absolute “yes”. Actually, I’d call the answer more like “It depends”. There are several factors you should evaluate before making a choice on going with living trust or not.
You’re Age
Put simply, if you are under the age of 55 or so, in good health, and are of moderate means, there is not much point in worrying about a living will just yet. A healthy 45 year-old just simply will not have to worry about probate for many years. At this age, a standard will should suffice in the event of your untimely death.
Also, in the recent past a variety of other probate avoidance tools have come into play, which may make the whole issue moot.
You’re Wealth
Again, I may be oversimplifying, but the richer you are, the more sense it may make to consider a living trust. Someone who is worth a million dollars may be able to save his inheritors a lot more money than someone who is only worth $200,000.
But it also depends on the type of assets you own. If you own a small business, even if its net worth is not substantial, you may still want to consider a living trust. It would be hard to run a small business that is tied up in probate.
Married?
And finally, if you are married and planning to leave the bulk of your assets to your spouse in the event of your death, you probably don’t need to worry about establishing a living trust. The probate rules and fess are less stringent for surviving spouses.
So there you go. There are a few things to consider before jumping in and establishing living trust. As I said, it is normally a time-consuming and expensive procedure, so consider all factors before making your decision. It can be a great tool to have at the time of your death; it’s just a matter of figuring out if it’s right for you and when.
by David Bakke on July 16, 2010
If you are about to get married, there are probably about a million thing on your mind. Plans for the ceremony, how you’ll pay for the ceremony, all the little details, and everything else.
But, and I cannot emphasize this enough, if you are about to get married or are even considering getting married, I would not underestimate the importance of having “the money talk”.
What is “The Money Talk?”
To me, the money talk is a pretty comprehensive discussion about how you and your future spouse will handle the money that comes in and goes out of your life. If you come from two different “schools” on this topic, it can be a difficult discussion to have. For someone that’s more of a “spender” they may try to deflect having the conversation at all. This could be a huge mistake.
In a very simplistic sense, I think that in life, there are “spenders” and “savers”. If you and your future spouse are both of the same school then this conversation should be a pretty easy one to have because more than likely, your thoughts will be the same and you’ll only have a little ironing out of details to do.
If you’re not of the same school, it can be a difficult conversation to have, but to me, that makes it all the more important.
Without trying to scare anyone, I can tell you this from very personal experience. Money can destroy a marriage. It is not something to be discounted or dismissed. If you want have a long and successful marriage, then have the “money talk” well before you decide to tie the knot.
What To Discuss
While this list is certainly not comprehensive, here are most certainly some of the things I would get straightened out before marrying.
- If you have credit card debt, what are your thoughts on it? Is it something you view as a part of life, or is it somewhere in the future to get it paid off? If one has it and one doesn’t, will it be paid off jointly?
- How do you feel about purchases that you can’t afford? Do you go into debt to get them or do you wait until you can pay for them?
- How will your finances be set up? Will everything become joint, or remain separate?
- How does each spouses’ salary come into play? If one makes more than the other, does that change the makeup of the financial relationship? Meaning, will that person have more say in financial decisions, or not?
- Do both parties have a good understanding of what good credit means, and how important maintaining a good credit score is?
And the list goes on.
On a personal note, I generated this list from my own mind. It was a list of all the questions that I wish I had asked my wife before getting married.
I’ve said it before and I’ll say it again—money can destroy a marriage. Especially, when there’s not a lot of it.
Have the talk, no matter how difficult it may seem. At some point in time, you’ll be glad you did.
by David Bakke on June 29, 2010
In this world that we live in today that is dominated by technology and the concept of “keeping up with the Joneses” we are constantly bombarded with the apparent need for upgrades and accessories. Advertisers everywhere are always telling us that it’s time for a new computer, a bigger flat screen TV, and the need to “accessorize” our personal appearance. For those of us trying to live frugally or trying to get out of debt, this can be a very slippery slope.
The first thing you need to understand (when trying to live frugally or get out of debt) is that you march to the beat of your own drummer. What am trying to say is that you and you alone should determine when you upgrade one of your technology products, or which personal accessories you really need in life.
What I found during my journey out of debt is that these are two areas that can really make or break you financially. If you follow the lead of the world of advertising, you would constantly be upgrading your cell phone, your personal computer or any of the other personal accessories that you choose to have.
One thing that sped up the pace of my journey out of debt is eliminating (or at least postponing) these upgrades and simply eliminating a lot of the personal accessories that I chose to have.
A lot of this is a matter of personal choice, but if you can eliminate a lot of these things, you’ll find that you’ll have that much more money to put towards the goal that should be more important to you: getting out of debt.
In the area of personal accessories, let me tell you what my current choices (or non-choices) are:
- I do not wear a watch
- I do not wear any jewelry whatsoever
- My clothes wardrobe is “bare-bones” minimum (I rarely buy new clothes)
The only thing that I can tell you here is that if you choose to use (or wear) any of the above accessories, I would stick with what you have until you are where you want to be financially. Unless of course it is a gift to yourself of some sort for reaching one of your financial goals.
Technologically speaking, I have these facts to offer you:
- The laptop we have was purchased two years ago.
- The PC we have was purchased three years ago.
- The flat screen TV we have purchased four years ago
- We do not have any of the following: IPods, blue tooths, Blackberries, etc.
When deciding to buy one of these items for the first time, the biggest question you need to answer for your self is this:
Do you really need this item?
When considering an upgrade, these are my thoughts. Whenever we buy a technology product for the first time, we usually go with about the latest, most advanced model that we can find at the time, at the very best price we can find, and we stick with it till it is no longer useful for us. Do not succumb to all the advertising out there that will tell you that you need a new laptop or flat screen every year or so. It simply isn’t true.
One of the biggest steps out of debt for me personally was to eliminate all unnecessary spending. Well, considering the hole that I was in, it didn’t take long to figure out that all accessories and upgrades, to me, were unnecessary. This didn’t mean that I had to give them up altogether, just until I was out of debt.
A hard review of your purchasing choices, I would imagine, would bear out close to the same conclusion.
As always, you feedback is appreciated below.
