Broke-Ass Student

Hey guys.

I just wanted to do a quick update. Obviously I’ve been away for awhile and have been feverishly absorbed in an investigative research project over the past eight month. As my research begins to wind down, I look forward to again concentrating on updating articles to this site. Lords knows, given the current state of our economy, there’s a wide array of financial material to cover. This site is probably due for a serious healthy overhaul as well.

I am amazed by all the readers who sent email over the past few months. Many of you have found yourselves in sticky financial situations and hounded relentlessly by debt collectors. I can personally say there is indeed hope - my own struggle with being sued over an invalidated credit card debt has given me invaluable insight and the experience turned out to be a blessing in disguise.

I hope everyone is enjoying the lovely spring weather as much as I am.

 =^..^=

Enjoying a dash of r&r

Well, I headed out of town to lose myself for a bit in the majestic Finger Lakes region of New York. There’s nothing quite like trekking through waterfalls and gorges to invigorate the spirit and clear my head. Now it’s time to absorb myself back into the grinding mentality of academic and regular work again.

During the next twelve weeks, I’ve decided to participate in an income tax preparation course. It’ll be interesting to see the knowledge I’ll glean from doing this (and will be sure to share any fruitful insights). At the very least the course will offer a solid basic understanding on filing income taxes, plus give me the added benefit of receiving an overview of how the entire system works.

If anyone has participated in an income tax preparation course, I’d love to hear your feedback and thoughts.

Later this week I’ll be exploring my financial progress. It’s also interesting to note that I still have not heard anything back regarding the lawsuit filed against me on an alleged credit card debt back in January.

(If you’re a new reader, you can catch up on that beauty of a tale at Broke-Ass Student Just Got A Whole Lot Broker).

All in all, I’m anticipating a peaceful autumn. But being a Western New Yorker, it’s only natural to begin bracing for the upcoming snowfall. We get pounded with at least one or two whopper blizzards each winter.

Western New York will also soon be celebrating the anniversary of a freak thunder-ice storm which clobbered us last year on (ironically enough) Friday, October 13th. The devastating thunder-ice storm downed tons of power lines and tree branches all across the region, leaving as many as 400,000 residents without electricity. The storm, also lovingly coined “Arborgeddon”, dumped up to two feet of snow and brought down many of our beautiful trees. Over 90% of this region’s trees were bruised in some fashion.

Oh, and yesterday for about ten minutes I could have sworn a monsoon blew through the city. I was driving home from class when a lightning storm began dropping hail balls and wind gusts of over 60 mph.

Ahh, to be home again.

 =^..^=

Developing a More Conscious Lifestyle

During the chaotic nature of life, it’s easy to become distracted and engulfed in day-to-day affairs. Every once in a while I feel a need to suspend all the buzz swirling around me and find a private sanctuary to curl up in for quiet contemplation.

Finances may feel important, but over obsessing about money is unbalanced and certainly not healthy. Whenever I feel overwhelmed in general, the following guidelines serve as gentle reminders which help bring things into greater perspective for me.

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• Don’t only do what is convenient. Learn how to make a deeper commitment and take a more radical responsibility for yourself. Build integrity by exercising the values and ethics which are important to you.

• Recognize the Divine in others through practicing respect and love. Although everyone has their own needs, each are different but equal.

• During conflict, don’t be limited only to your needs. Step outside yourself to consider the needs of others in a more compassionate manner. This helps manifest a positive solution for all concerned.

• Eliminate manipulation through demands, threats and passive-aggressive behavior. Only take from others what they are willing to give freely, and accept others for who they are.

• Let go of Ego and practice simply being in each moment. Rather than trying to exert control over circumstances, learn instead how to become present.

• Healing begins from within. Treat your body well through exercise and a well-balanced diet rich in grains, fruits and vegetables. Drink plenty of water each day, the rich honey of life.

• Volunteer your time. Use your creativity and energy to motivate and help causes which are important to you.

• Recognize that everything has a limit; the day, the night, even one’s own energy and time. No matter how great one’s perceived wealth, there always exists an extent to which one may enjoy it. Feel grateful for and humbled by your current unique blessings.

• Ever catch yourself saying, “I just don’t have time” or “I wish I had time to”? Take responsibility by recognizing that everyone has the same amount of time in each day and ultimately you decide how that time is used. Choose productively and wisely how you wish to dedicate each precious moment.

• Incorporate a quiet meditative practice into your daily routine. Prolonged meditation sharpens focus and enables you to think well, while awakening new levels of the Divine Self. Recent empirical studies are now recognizing how continued meditation physically enlarges and alters our brain.

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Recommended Reading:

The Harvard Gazette, Meditation Found to Increase Brain Size

The Washington Post, Meditation Gives Brain A Charge

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• Take the time to properly honor all the small steps leading up to where you want to be. Don’t miss the beauty of the journey, as each step is equally fulfilling and significant.

• Experience temporary sensory deprivation. Try fasting, taking an hour long vow of silence, or wearing a blindfold or earplugs for an extended period of time. This will enhance awareness of both body and breath, bring perspective and allow you to develop a deeper appreciation for each sensory organ.

• Change is inevitable and everything is constantly influx. Use this wisdom to react less to personal inner dramas and focus more on acceptance and being present.

• Instead of dismissing or burying negative emotion, become aware of fear, worry and discomfort to fully observe and experience it. This helps bring perspective and heightened awareness as you begin to understand the root causes of these emotions.

• Obtaining financial peace of mind means allowing your wealth to absorb unexpected expenses. Obsessing and fretting over financial situations which do not directly affect day-to-day situations sabotages this entire concept. As Marshall Glickman states in his book The Mindful Money Guide, “Getting into a tizzy about a small misfortune undermines the whole point of having any fortune [at all].”

• Take action. Don’t feel discouraged if progress feels slow. Just as a toddler learns how to walk one step at a time, it’s taking that baby step which is most crucial.

~†~ Baby Steps Are Key ~†~ Explore your unique purpose in life and discover what fills your heart with joy. There is never a better time to live fully and with integrity than right now.

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Sayings of the Wise

Drip by drip, a cup gets filled. -Unknown

“Begin doing what you want to do now. We are not living in eternity. We have only this moment, sparkling like a star in our hand - and melting like a snowflake…”
(Francis Bacon, 1561 – 1626)

“The most effective way to do it, is to do it.” -Amelia Earhart

The Master once offered a banana to an awestruck visitor who so venerated the gift that he hardly knew what to do with it. When the Master was told of this, he said characteristically, “Tell the silly ass to eat it.”

-Awakening, Conversations with the Masters by Anthony de Mello

Here are current rates of some online savings accounts, as of August 15, 2007.

iGObanking 5.30% APY ($1 to open, no minimum, no fees, FDIC insured, compounded daily)

E*Trade 5.05% APY ($1 to open, no minimum, no fees, FDIC insured, compounded daily)

EmigrantDirect 5.05% APY ($1 to open, no minimum, no fees, FDIC insured, compounded daily)

HSBC Direct 5.05% APY ($1 to open, no minimum, no fees, FDIC insured, compounded monthly)

ING Direct 4.50 % APY ($1 to open, no minimum, no fees, FDIC insured, compounded monthly)

iGObanking still remains the top contender in terms of a low minimum of $1 to open, with no annual fees attached and an excellent high yield. I opened my first online savings account with iGObanking six months ago and have had a very positive experience overall. (You can click on these article titles to read more about my experiences with iGObanking.)

Battling Against the Risk of Inflation

All the above mentioned online accounts are attractive options for savings due to one inescapable factor eroding the value of our hard-earned dollar - inflation. US economic growth, on average, battles roughly a 3% inflation rate every year.

A wise investor knows they must seek out investments which will keep pace with continued inflation, or their money will lose essential purchasing power as the cost of living continues to increase.

If your savings are stashed at a traditional bank earning 1% APY or lower, the money is unfortunately losing value every year. And if your savings are tucked in an investment vehicle earning roughly 3% APY, you are just barely breaking even.

Consider this sobering example of inflation.

If $1 was invested in stocks at the end of 1925, your $1 initial investment would be worth $98.37 at the end of 1994, after inflation adjustment. However, if you had tucked that same $1 in your undies drawer instead of investing it, that $1 would be worth roughly 12 cents by 1994. (”A Guide to Growth Investing,” Ibbotson Associates, 1994 yearbook). 

Brett Machtig offers another example of the corrosive effects of inflation in his book Wealth In A Decade:

In 1965, on one of his annual trips to Las Vegas, a gambler named Jay won $25,000 after taxes at a casino. Just for reference, Jay could have purchased a modest home for that sum in 1965. Instead, he put the money in a safe deposit box, where it remains today. While the money has been gathering dust, the effect of inflation has made the money worth less than $7,000 in today’s dollars. If, on the other hand, he had invested the money in a tax deferred annuity at 8 percent, it would have been worth more than $270,000 by 1997  - ($76,000 adjusted for inflation) - about 11 times as much (assuming a 4 percent rate of inflation).

~†~ Baby Steps Are Key ~†~ When contemplating investment options, always consider the impact of inflation and the effects of your purchasing power over time

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Sayings of the Wise

“The wise man saves for the future, but the foolish man spends whatever he gets.” Proverbs 21:20

“Invest in inflation. It’s the only thing that’s going up.” Will Rogers

Lillian Snow makes her debut

Early this morning, an itty bitty pink ball of mucous was lifted from her sheltered pod and let out an enormous squall. Lillian Snow scrunched open her eyes for the first time, as an exhausted Daddy stared in disbelief at his new glistening daughter.

After more than 18 hours of arduous labor, my brother’s baby girl had finally popped into the world.

What an amazing feeling it was to cradle that infant burping beauty and know I’m an Auntie now. And what would Momma Kat and Daddy Joe think if I passed along information on compound interest to my little niece?

From Wealth in a Decade by Brett Machtig:

Compound interest is truly amazing. If you were given $1.00 at birth and were able to double that dollar every year:

• At age 15, you’d have enough to buy a mid-priced car

• At age 18, you’d be able to buy a home valued at $130,000

• At age 22, you’d be earning $200,000 in interest from your investments if they were invested at 10 percent

• At age 30, you could own a $1 million home in over 500 cities worldwide

• At just over 43 years of age, you would be able to pay off the national debt of approximately $5 trillion

• Just in time for retirement at age 65, you would have amassed the tidy sum of $18,000,000,000,000,000,000. I really have no idea what the name is for that amount of money. Suffice it to say that you could give about $72 billion to every man, woman, and child in the United States (assuming a population of 25 million).

Not too shabby for some early investing.

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To move forward in your quest for wealth, you need to establish a clear financial picture

Is one of your aspirations to have complete control and power over your finances? Are you ready to reign in frivolous spending and not allow hard earned money to continuously be sucked into a spiraling black abyss?

Here is a small but effective strategy to guide you toward – and keep you firmly planted on – the prosperous road to abundant wealth.

Create a Financial Action Plan, Write Your Personal Goals

In order to move forward, you must first develop a very clear and concise picture of your finances. Why not take a moment to physically write out your personal goals? (Yes, I mean really do it, Lazy One.) This is a powerful financial strategy which allows you to determine precisely where you’d like your money to go, regardless of income size.

Begin by separating your financial snapshot into three distinct categories;

¤ Your Necessities

¤ Things You Enjoy

¤ Things Which Are Important To You

• Your Necessities are monthly expenses which can’t necessarily be cut back on, such as shelter (mortgage or rent payments, electricity bill, etc), food, clothing and transportation expenses (the cost of a vehicle and maintenance, gas, car insurance). But be honest with yourself on this part while distinguishing what is actually a pertinent necessity. For example, a car may seem so, but a brand new one would fit more appropriately in the category below.

• Things You Enjoy includes your personal interests and hobbies. These are fun activities and items which bring enhancement and fulfillment into your life, such as traveling, gourmet cooking, musical endeavors, sports, gardening, collectibles, movies/entertainment, racing cars, etc.

• Things Which Are Important usually require discipline and wise financial foresight, such as tucking away a cash savings cushion, various retirement investments, a college tuition fund, having life or home insurance, etc.

Now take a moment to consider your ambitions. Financially, what would you like to accomplish in three months, six months, a year, or even five to ten years and beyond? These general goals may include:

• Investing in a Roth IRA or contributing to a 401(k)
• Aggressively eliminating credit card debt
• Contributing to a charity or spiritual institution
• Saving for an exotic trip around the world
• Paying off student loans
• Purchasing a car or home
• Establishing a cash safety cushion
• Investing in additional real estate
• Starting your own business venture

Once you have an accurate overview of what your ambitions are, start formulating a detailed plan on how to accomplish them. (”I’d like to take a summer trip to Copenhagen, therefore I will contribute $50 a month for xx amount of months, while meeting with travel agents to compare discount flight rates and accomodation options.”) 

Here is a quick rundown of my personal snapshot.

Necessity - Sufficient funds are set aside every month to cover these expenses, which include food, shelter, clothing and transportation expenses.

Things I Enjoy - traveling, a yearly gym membership, funds for movie/theatre/entertainment purposes, playing my piano, and eventually saving for a Lasik eye surgery procedure.

Important Items - Funding a Roth IRA and establishing a plump cash savings cushion for emergencies.

From this overview, I can immediately glimpse where I’d like to allocate money and decide what portion of each paycheck to devote toward each item, and what may need to be sacrificed. I’m also able to clearly calculate how to productively contribute to more than one endeavor while simultaneously working toward many or all goals at the same time.

Visually I’ve created a clear financial action plan for each aspiration, which is a powerful gesture in prioritizing and transforming these goals into reality. By taking a moment to physically write down each of these personal financial goals, I’ve been given clarity, purpose and structure within my limited income stream.

Do you know what your current personal financial snapshot looks like?

1. Get power and control over your finances and reign in frivolous spending
2. Stop living paycheck to paycheck
3. Learn how to save and plan for future goals and dreams
4. Avoid becoming entrapped in unnecessary debt; learn how to live like a lender instead of a borrower

~†~ Baby Steps Are Key ~†~ Create a written action plan to give purpose, structure and specificity to your personal financial dreams

=^..^=

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Sayings of the Wise 

“Great estates may venture more, but little boats should keep near shore.” Benjamin Franklin

“Just as the rich rule the poor, so the borrower is servant to the lender.” Proverbs 22:7

“Dost thou love life, then do not squander time, for that’s the stuff life is made of.” Benjamin Franklin

Taking Inventory of My Finances

This week I’ve decided to set aside a bit of contemplative time and quietly review my financial situation.  Every few months I sporadically enjoy kicking my feet up at a coffee house, with my trusty notepad in tow, to scribble an overview of whether or not my financial priorities are being established and my goals are being driven forward.

That time has rolled around, and it’s once again time to review The Good, The Bad and The Ugly. *thoughtfully nibbles on pencil tip* Hmm, so let’s see where these past four months have taken me.

The Ugly - My debt

My debt currently consists of car payments and student loans. I still owe $10,000 on my car loan (fixed at 9%), while two student loans, equaling $5,000 combined, are teetering between 7.9% and 8.1%. These interest rates are ouchie, and one of my top priorities has been to consistently chip away at all this debt.

Yep, I’m one of those fanatics who despises debt, even in the seemingly friendlier form of student loans. 

I’ve been making payments on my car for over a year now and barely dented the balance due to the high interest rate. The plan I initially concocted four months ago was to; 

• Faithfully stash between 10%-25% of each paycheck into a savings account to establish a safety cushion of at least $1,000. This was primarily to break the habit of ’living paycheck to paycheck’. A few unexpected expenses and stumbling blocks cropped up along the way (a tuition payment of $540, being one), but I was gracefully able to take care of these situations and knock my savings back up immediately after. 

• Aggressively focus on tackling the car loan while paying the minimum balances on my two student loans.

And then suddenly, pleasant relief arrived. 

The Good!

I’m elated that a family member has kindly offered to help consolidate all my loans and refinance my payments into a tidy manageable payment every month, at a nifty 3.9% interest rate.  

My financial priorities are now beginning to shift a bit, as this unexpected gift has thrust me more ahead than I had anticipated at this point.

Here’s my current status after four months of starting with nothing (at $0):

¤ Debt - approximately $15,000, soon to be refinanced at a much yummier 3.9% interest rate after this week (The Ugly morphs into The Bad - not too shabby!)

¤ Savings - approximately $2,000 stashed away in an iGObanking Online Savings Account at 5.30% (The Good)

And finally, The Better. I now have a fighting chance of not only opening a Roth IRA this year, but also an opportunity to focus on aggressively funneling the maximum contribution of $4,000 for 2007.

As I delicately sip my vanilla chai, I am finally beginning to glimpse a delicious taste of what LAD (Life After Debt) just might feel like.

=^..^=

Suggested Reading: Why You Need A Roth IRA - Now!

Millionaire Mommy Next Door poses an excellent question of Can Money Make You Happy? on her personal blog today. Here is my response to her.

Hi Mommy Millionaire!

There can be a deep correlation between happiness and money. Money has the potential to make us happy through the freedom it provides. It can extend our impact on a grander scale through providing both necessary leisure and adequate resources at our disposal.

There are also many abstract ideals money can’t buy (love, spirituality and contentment, for example)

It’s certainly an interesting topic. Being from a lower middle class family, my lack of income has helped me appreciate money more intensely. And I can see myself still finding happiness here, even now at rock bottom.

If I can find peace and contentment with so little, the more I gain through wise decisions and planning will add another zestful layer into my meager life.

In conclusion, is it easier to find happiness with money? Absolutely! Is money absolutely necessary for happiness?

No, I believe it truly isn’t.

Be sure to nip over to Millionaire Mommy to offer your opinion.

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Obtaining Happiness Through Freedom

In contemporary consumerist society, it’s far too easy to unknowingly become swept up and become a slave chained to persistent debt. Freedom unexpectedly becomes squashed when we’re continually forced to stack personal desires on the back burner in order to pay the incoming bills for next month. And for many Americans, those bills containing their debt can feel excruciatingly overwhelming.

So where have so many gone wrong? Is the problem with society or with ourselves? More importantly, where has our personal happiness vanished to?

Accepting Responsibility Through Conscious Spending

It’s crucial for each of us to approach this question with an honest assessment of our personal financial spending. Perhaps asking yourself some of the following questions might help.

Can you really afford the lifestyle you’re trying (or struggling) to maintain? How many of your daily purchases are completely necessary? To what depth and enjoyment does each purchase amplify your life, to enhance and help you grow as an individual? Will your purchases appreciate over time - or depreciate?

Are you, in fact, spending as consciously as you should be?

Learning Contentment for What You Have

The biggest danger with accumulating items (what I also lovingly refer to as ’stuff’) is that often, it doesn’t end after one purchase. When we become ensnared to a consumerist mode of thought, it helps perpetuate a vicious cycle of never feeling adequately satiated (aka, the ‘never having enough’ syndrome).

Where is the line drawn of what’s in fact enough ‘stuff’ to keep us happy?

Finding Balance With What You Enjoy While Avoiding Debt

Individuals who comfortably afford luxuries by paying cash and avoid making purchases with future earnings, are situated on one end of the spectrum. May we all be so lucky and wise to be in a similar situation one day, with a surplus of wealth!

However, those remaining individuals who choose to hand their freedom over to debt in order to maintain a standard of living well above their means are in a critical bind. They are selling their freedom to rent a lifestyle they simply can’t afford, and it’s a heavy price to pay. 

Is accumulating all this ’stuff’ worth enslaving yourself to debt? Does your debt justify giving up personal freedom for? Ultimately, will you be happy?

~†~ Baby Steps Are Key ~†~ Eradicate unnecessary clutter and stop further debt to help bring peace of mind – as well as your own slice of freedom and contentment

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Here are some intriguing articles I’ve been reading:

Ramit Sethi at I Will Teach You To Be Rich encourages his readers to sound off their own stories – and many of their experiences on debt are shocking.

Greg Rodgers re-evaluates his own happiness as he plots an escape from cubicle hell, in The Journey Begins With A Single Step (an account that resonated so strongly within, it actually moved me to tears)

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Broke-Ass Student is honored to host the 108th Edition of the Carnival of Personal Finance. With over 68 submissions this week, there should be enough reading material included to make your eyes bleed.

The following articles are some of my favorites from this week’s batch of submissions.

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¤ Think Like The Rich delivers a potent example of the dangers of ignorant investing, in Watch Those Fees (and annuities)

¤ Ask Mr Credit Card’s Blog offers the sobering question of whether us Personal Finance junkies are in fact sabotaging ourselves - Are You Spending Too Much Time On Personal Finance?

¤ Living Behind the Curve uncovers surprising ways the popular diet concepts can be applied to personal finance, in Sweatin’ To The Low Calorie, Fat Free, South Beach, Cabbage Soup Finances 

¤ Clever Dude Personal Finance draws an excellent parallel between fitness and finance, in Money And Marathons: Guess What, They’re Related

¤ Millionaire Mommy Next Door (a bona fide millionaire mommy) shares her recipe to success and wealth in Create Your Treasure Map to Riches

¤ Consumerism Commentary illustrates creative ways to self-promote salary increases in Don’t Expect A Big Pay Increase: Other Options

¤ Grad Money Matters offers some savvy cues on establishing discipline and presents Discipline (Or Lack Thereof) And Personal Finance

¤ My Money and My Life showers us with Food, Money, and Love, an entertaining account of endearingly compromising the grocery bill with hubby (minus strangulation)

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Here are the remaining goodies, listed in order of submission. Enjoy!

¤ Frugal Law Student educates on The Difference Between A Credit Report And A Credit Score

¤ Resident Alien answers the questions of Buying a New Construction Home: Do I Need A Realtor?

¤ How I Save Money shares Top 25 Tips On How To Save Money 

¤ Million Dollar Journey presents a helpful article for the first time home buyer on Home Buying Costs

¤ PowerWealth introduces how to Change the Game: Replace Your Credit Score with Your PowerWealth Debit Score™

¤ Getting married soon? Suite 101 Personal Budgeting presents Cheap-chic Wedding Dresses for Bridal Gown Savings, where there are more options now than ever for finding attractive wedding dresses at bargain prices.

¤ Rocket Finance outlines The Worst Uses For A Home Equity Loan

¤ Tyro Investor presents Kids and Money: The Future of America and says, “Some ideas on how to teach kids about saving and investing. Also a very interesting NY Times documentary video about kids and money in Los Angeles.”

¤ It is commonly believed that you shouldn’t pay off your home mortgage
early. Finding Financial Peace encourages us to examine this further and perhaps reconsider Why You SHOULD Pay Off Your Home Mortgage Early

¤ My Wealth Builder issues a Retirement Savings Challenge to entice readers to get started

¤ The Financial Blogger questions the utility of real estate agents and their high commission rates, in Are Real Estate Agents Still Helpful?

¤ Daddy Financials tries to figure out how and when it’s appropriate to Teach Your Kids About Money

¤ Growing Up presents Financial Housecleaning and says, “A routine examination of your monthly statements can save you money”

¤ The Road 2 Riches ponders whether we as a society are Spending Too Much On Our Kids

¤ Life Lessons of a Military Wife promises to show us how to Never Again Pay a Bill Late (A Foolproof Billpaying System) !

¤ Boomie of The Wastrel Show shares her hardy experiment of Cutting The Cable Cord without deprivation

¤ What’s a Medicare Fee-For-Service plan, and why should you care?
InsureBlog’s Henry Stern explains why these could save you big bucks (or cause you extra headaches) when you retire, in FFS and Medicare

¤ Moneymonk offers a clear and concise definition of What is Considered An Emergency?

¤ Frugalbabe shares some thoughts she’s had on the financial ramifications of having a child, presented in Baby Talk

¤ MoneyNing presents The Cost of Financial Independence - whether you spend your money now or later is your choice, but MoneyNing believes the cost to be financial independent is worth it

¤ Money Walks offers Tips On Protection Against Phone Fraud

¤ FILAM Personal Finance delivers handy homeowner resources on Having Trouble With Mortgage Payment? Where To Get Help

¤ Searchlight Crusade presents Considering Condos, Townhomes, and PUDs

¤ Rich Minx sounds off on How To Nail Or Fail Job Interviews

¤ The Mortgage Blog looks at the advantages and disadvantages of getting a mortgage more than six times one’s income (from his personal experience), in Is It A Good Idea To Get A Mortgage Six Or Seven Times Income?

¤ The Money Well presents the tyranny of The Iphone and the ‘I Want It Now’ Society

¤ Make Your Nut declares the financial and health benefits to ordering the kid’s size popcorn versus the huge megatub, in Movie Theater Tips - Do You Really Need to Eat an Entire Bucket of Popcorn?

¤ The Money Mythos vividly explains Why A 0% Loan Keeps Me Up At Night

¤ Does using a credit card cost us more than we think? The Happy Rock presents The Credit Card Premium - How Much Are We Paying?

¤ Thomas L Shaffer provides a useful tip on how to save some money, especially during the summer reading months, in How To Save Money - Use Your Public Library

¤ Free Money Finance presents a unique perspective on Is It Better to Rent and Invest Rather than Buy a House?

¤ Wish your thumb was a little bit greener? Finance Is Personal illustrates How To Create A Basic Garden

¤ Bluntmoney provides Four Good Reasons Not To Raid The 401(k)

¤ Conversely, Advanced Personal Finance shows effective ways on how to Use An IRA Before Retirement

¤ The Financial Philosopher shows how the best hedge fund managers make more than $140 million per year. (That’s nearly 10 times the average corporate CEO and close to 4000 times the average American worker.) What else would $140 million buy, and How Much Is Enough?

¤ Money and Such believes the 401(k) system is a horrible idea and lists five of the biggest problems with the system, in 401(k) System Makes No Sense

¤ Cash Money Life warns of an Identity Theft: Jury Duty Scam, verified by the FBI, to be aware and vigilant of

¤ Finance Tank discusses why tracking the bond market (including how
to do so) is important since Your Mortgage Rate Depends On The Bond Market

¤ We’re In Debt illustrates how to Make Money Online By Buying Online and Pay Off Your Debt

¤ A Richer Life sums up the philosophy of using spending to enrich your personal life, in Earn A High Happiness ROI

¤ My Retirement Blog challenges the question of, Think You Don’t Make Enough To Save?

¤ Blueprint for Financial Prosperity offers an interesting debate - If You Won The Lottery, Would You Tell Anyone? (No, Jim, I probably wouldn’t. But I might blog anonymously about it! ; )

¤ The Simple Dollar writes an engaging article on Overspending On Children And How To Fight It

¤ The Digerati Life encourages inspiration with Find Your Dream Job, Just Like This Millionaire Did!

¤ The Time & Money Group finds it peculiarly ironic that society is Outraged At Oil Companies But Not Chicken Farmers?

¤ Tick Marks shares his initial reactions after reading through the first 40% of
Dave Ramsey’s well-known personal finance program, Financial Peace: An Update On The Ramsey Course

¤ Plus6 Personal Finance doubts the long term effects of severe frugality. Are “Buy Nothing” Weeks/Months/Years Constructive Exercises Or Short Term Fixes?

¤ JuiceFairy steers her readers away from reckless spending with coupons and offers The Best Way To Shop With A Coupon

¤ One Frugal Girl encourages us to think about our relationship with money “and the memories and experiences that have formed those correlations”, in Forming A Relationship With Money

¤ KMull graciously introduces some fab green real estate options to his readers at Green, PreFab Homes

¤ Living Almost Large offers her opinion of Michael Moore’s newest documentary, Sicko…A Review

¤ Cheap As Chips investigates the financial security aspects of the arranged marriage in, Do Arranged Marriages Equal Financial Security?

¤ Saving Advice presents a Harvard study, How Much Money Would You Require To Become Black? (Err .. so this is what our intellectuals are expending their time on? :p)

¤ Home Finance Freedom differentiates between “spending to provide a healthy, happy child as opposed to spending to use a child as a billboard for the parents’ ostentation”, in Is Your Baby Cost Free?

¤ Since it’s no fun to worry about not having enough cash or losing your
money on vacation, Money Smart Life suggests Credit Card Strategies For A Stress Free Vacation

¤ Everyday Finance presents the case for an under-covered equity with strong performance and potential in General Cable - It’s Performance Has Been Anything But Generic

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And that’s a wrap, folks. Follow this monsterous Carnival of Personal Finance to its newest destination, hosted next week at The Mint Blog.

It was a pleasure to read all the articles - a huge ‘thank you’ to everyone who participated in this edition.

=^..^= 

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A Continuation Of My Struggle Battling Alleged Credit Card Debt

The beginning of this story can be found at Broke-Ass Student Just Got A Whole Lot Broker, with a bristled rebuttal at How To Fight Back Against Collection Agencies.

I squinted at the words scrawled across the pages through the dim light, entirely absorbed in my reading, when suddenly loud rasping at the door interrupted my thoughts. Sighing, I set the book aside and took a moment to wiggle into slippers before shuffling toward the door. The clock in the kitchen read 7:03. Was I expecting someone?

A heavier set woman stood outside my door, entirely bundled against the brisk evening chill. Suddenly she thrust fat mittened hands engulfing a clipboard toward me.

“Jennifer Lynn?” the tart voice came.

“Yes?” I shivered and stepped outside.

“Please sign here.”

I surrendering my signature and was presented with an unimpressive plain envelope. I had actually been expecting a mail delivery from Victoria’s Secret, but this small morsel didn’t represent the sleek package I had been anticipating.

“Err, what is this?”

“Jennifer Lynn, you’ve just been served a summons.”

“A what?!”

I gave an incredulous stare as she spun on thick heels and strutted away.

“Hey lady,” I bellowed at the Pillsbury Dough boy retreating back. “What the hell is this?”

“Read the summons. All the information is contained therein,” the curt reply sliced through the air. A car door closed, an engine started, and she was gone.

I immediately felt queasy – as well as utterly baffled and confused. What on earth was I being sued for? I numbly stepped inside and tore open the thin envelope. A neatly typed two-page document was nestled within. After a few minutes, I finished reading and dropped into a chair, letting out a long shaky exhale.

What the hell?

It was indeed a summons for the local city court, and I was being sued by a law firm on behalf of a federal bank for an alleged credit card debt of $5,000.

Since I had been served in person by the female process server, the document stated that I had ten days to file an appropriate answer to the summons with the city court. If I failed to oblige, I would lose by default.

Ironically, a day earlier I had received a letter in the mail from this law firm regarding an alleged debt with almost the same amount stated. I had frantically racked my brain for any outstanding debts I owed but came up blank. All my modest balances were faithfully paid off each month. And $5,000 sure as hell seemed like a pretty hefty amount to simply have forgotten about.

Earlier that afternoon I sent a validation letter disputing the alleged debt through certified mail with return receipt requested. And now a mere three hours after delivering my validation and dispute letter to the local post office, I’d been served a summons at my door.

What was going on here?

I didn’t rest well that night. Nightmares of court rooms and angry judges chased me into an uneasy sleep.

The next morning, I called the city court clerk to see if the summons was a legit document or not. She confirmed the docket number was indeed real. Next, I decided to research the name of the female server who was stamped on the summons to see if she was legit or not. And indeed she was.

Ok, my brain rationalized, so this was obviously serious business. And I was starting to develop a serious headache. The law firm had expended quite a bit of money to issue this summons. The document also stated that all legal fees accrued on their end would be included with the amount I was being sued for.

Thus, I concluded, the law firm seemed pretty confident they would be victorious in court. Well, they should be able to tell me what this alleged debt was all about then and I could finally get to the bottom of this whole ridiculous fiasco.

As mentioned previously in this post (Broke-Ass Student Just Got A Whole Lot Broker ), I called both the law firm and the credit card company to inquire about the alleged debt. No one I spoke to was able to provide me with any information or refer me to anyone who could help. I felt more confused and frustrated than ever.

As I debated what my next move should be, I spent sleepless nights researching anything I could uncover on the actual law firm suing me. And things began taking an intriguing twist.

This suing ’law firm’ had quite a notorious reputation for being a bottom feeder collection agency with an extremely unethical stigma attached to its services. In 2004, New York State residents filed a class action suit against them for engaging in rampant and abusive collection practices. The firm appeared numerous times on different consumer protection resources and sites, such as Ripoffreport.com.

Repeatedly, on each site and message board I visited, the warnings were similar; beware. bottom feeders. notorious for winning by default. unethical collection practices. extremely shady. barely on legal side of the law. watch your back.

So these bastards were mainly hoping to win by default, were they? Unfortunately for them, they had picked the wrong target. Although it was traumatizing to know I was being sued, I wasn’t prepared to give up without a fight. And the more research and information I compiled the more in control of the situation I felt.

I visited a few different attorneys in the area who offered free consultations. Finally I hired a consumer protection lawyer at a very reasonable rate to file my answer with the court in proper legalese. By that point, I had acquired so much knowledge through my personal research that my attorney seemed impressed and asked if I was studying to be a law student.

My attorney chuckled when, in a frenzy, I pointed out the ten day limit to file an answer (which loomed ominously closer).

“Oh boy,” he said as he glanced through the document. “I’ve dealt with this firm before. You give these guys way too much credit.”

The plaintiff, my attorney explained, was responsible for typing up the actual summons and not the courts. And the law firm suing lied about the time to legally file my answer. By law, it exceeded way more than the ten day limit they stated. Obviously these slimeballs hoped the defendant would feel pressured by such a limited time frame and nervously submit a half-assed answer, or feel frazzled and not bother to respond at all.

The receipt for my dispute and validation letter came back a few weeks later, signed in sloppy blue ink. I figured these guys hadn’t anticipated my immediately firing out a validation letter disputing the debt before they had a chance to serve me with the summons. At least now I had proof of disputing the debt in its entirety before the female process server had arrived at my door.

After filing my answer to the summons with the court, I sat back and tried to patiently wait for their next move. Two months later, it finally came. But it wasn’t quite the validation response with the information I expected.

Dear Mr. XXX:

In an effort to avoid the cost and uncertainties of litigation, we would like to discuss an amicable resolution and possible settlement with your client, Jennifer Lynn.

Sincerely,
Scumbag Law Firm  Cohen and Slamowitz

My lawyer presented the letter to me and thoughtfully tapped his fingers together.

“Well, it’s up to you,” he said slowly. “If you want to settle and throw $50 or $100 at these monkeys to get them off your back for good, it might cost less than if we go to court and push for a discovery process. During the discovery process, we’ll be forcing them to reveal any hard evidence they actually have in their arsenal against you.

However, if they can’t intimidate you into settling and have no evidence to support their claims, they may realize it’s hopeless and cut their losses.”

“But,” I protested, “I can’t settle. They still haven’t validated this alleged debt. I have no clue what it’s for.”

My lawyer raised his brow and nodded slowly.

“I’m just laying it all out for you.” He smiled faintly. “You’re obviously a bit smarter than the average bear. They thought they could use scare tactics for payment or a default judgment. And certainly didn’t expect a fight back. I’ll leave it up to your own discretion which direction you feel is best. The ball’s now in your court.”

“No,” I said firmly, taking a deep breath. I felt like a scrawny little David stepping up to the behemoth Goliath. “I do appreciate you laying out all my options. But they need to first provide documentation and validate this alleged debt. There won’t be a settlement.”

“Very well, I’ll notify them of our decision immediately.”

That was  four months ago and I have not heard anything further from them (at least, not yet). I wish I had a more substantial update, but perhaps this little bit can help others in a similar frustrating situation.

One of the most valuable lessons I’ve learned through this nightmare is the criticalness of checking credit reports every year for discrepancies or errors. Again, I encourage everyone to go to Annual Credit Report.com for a free copy of their credit reports from all three credit bureaus (TransUnion, Equifax and Experian).

Stay tuned for further developments.

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