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175 Past Due – No More Free Lunches (Or Banks)

by Derek Sisterhen on October 8, 2011

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Past Due: Radio 175 – No More Free Lunches (Or Banks)

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Greg has been reading the news and seeing how banks are beginning to charge for previously free services. In particular, he noticed that Bank of America is preparing to charge customers $5 a month to use their debit cards. Greg asked: “First, how did this happen (that banks are charging fees like this)? And second, what does this mean for an average guy like me? How should I be vetting my banks?”

These are great questions. Oftentimes we assume that our bank has our best interest at heart, but we forget that they work for shareholders (which is why it’s a good idea to have your financial institution(s) in your mix of mutual funds, too). When things change, we figure the bank is out to get us; but the reality is that they need us, or else they wouldn’t be in business.

Today we discussed:

1) How banks actually work; why they offered free services for so long and what recent regulatory changes are forcing them to do differently.

2) The three questions you should ask to determine if your bank relationship fits your needs.

If you put a premium on relationships – having a banker that knows your name – recognize that those services cost money and may require you to pay for them. If you prefer free self-service banking options, just remember that you get what you pay for.

If you have a specific question, I’d be happy to answer it and further cultivate the wisdom of the Past Due Radio masses. The experiences of our listener base provide plenty of insight we all can learn from; don’t hesitate to ask – I’m happy to help!

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Does Money Make Us Happy?

by Derek Sisterhen on September 6, 2011

Danny Kofke answered this question – “Does money make me happy?” – a long time ago. He and his family have accomplished more in the way of strong relationships and meaningful adventures on a salary most people would call meager. He appeared on Past Due Radio back in the good ol’ days when we broadcasted on AM 1030 in Raleigh. It’s great to have him back with us! ~D.S.

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We live in one of the wealthiest nations on Earth, yet so many people are unhappy. A lot of us seek professional help for this very reason. Clearly, having money can take away many worries, but it doesn’t automatically guarantee happiness.

Think about some of your peers. Do any of them make a lot of money but have nothing to show for it? There might be some who press the snooze button numerous times on Monday morning because they dread going to work. Even if you make $500,000 a year, if you are unhappy Monday through Friday you are not “wealthy.” Many people in this situation spend money and buy things to make themselves “happy.” Once the weekend rolls around, they can come up with some great reasons to buy things. “I work so hard and put up with so much I deserve ________________.” Fill in this blank with clothes, jewelry, eating out, and so on. I’ll make them happy, won’t it?

Let’s face it, buying things can bring about a sense of joy, but only for a moment. If I go out and buy a shirt it feels great. The first few times I wear it, it feels good. Then, after five or six times of wearing this shirt, something happens; it becomes old. How many of us have looked in our closet and said, “I have nothing to wear” even though we have 50 outfits staring back at us? At one point in time we liked these clothes (or at least we liked them enough to buy them) but, after a while, that feeling faded away. If our happiness is based on material things, we enter a vicious cycle of having to routinely make purchases to replace the dwindling happiness we once experienced from the previous purchase. Sounds a little expensive.

Emotions account for the largest component of any money problem. We know not to buy things we cannot afford using credit cards, but we still do. Let’s say we use a credit card with a 24% annual percentage rate (APR) and spend $1,000 on “happiness purchases”. If we didn’t make a single payment during the course of the year, we’d owe $1,240 after 12 months. An 8th grader can do the math, but we choose to look the other away. We’re too busy being happy with our new stuff.

The vicious cycle of happiness spending tends to drag other areas of our life into the whirlpool. Money and weight problems often go hand-in-hand. Just like the calculating simple interest, we now have easy access to basically all of the nutritional information for the food we eat. Yet nearly two-thirds of our country is classified overweight or obese. We know how bad it is to continually stop by our favorite fast-food restaurant to order a number 3 and super-size it, but we still do it. Why do we do this to ourselves? The answer is the same as why we buy things we can’t afford: the temporary feeling of satisfaction.

It’s pretty simple to have money and be healthy on paper. In practice, though, the results will show our true level of commitment. Imagine if you lived by the phrase “Eat Less Than You Burn, Spend Less Than You Earn”. Live healthy, live happy.

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Danny Kofke is currently a special education teacher in Georgia. His love of teaching and finances led him to write two books – How To Survive (and perhaps thrive) On A Teacher’s Salary and the just released A Simple Book of Financial Wisdom: Teach Yourself (and Your Kids) How to Live Wealthy with Little Money. Danny has appeared on numerous television shows including Fox & Friends and CNN’s Newsroom, and has been interviewed on over 250 radio shows. Danny wants to show others that, if this 35 year-old school teacher can gain financial wisdom, then they can too. He is living proof that a family can live wealthy on little money. To learn more about Danny, please visit dannykofke.blogspot.com.

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Past Due: Radio 157 – What to do with $130,000 in Credit Card Debt

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What do you tell someone that has $130,000 in credit card debt?

That’s the question that was posed to me over lunch with a friend. He’s a financial planner and was working with a couple recently that told him they carried six-figure credit card debt. Today, I addressed the typical causes of that level of credit card debt and two steps for getting out of it.

While that level of credit card debt may have shocked my friend, I’ve seen it on many occasions. I recounted many of the experiences of Doug and Kathy Grant, former clients who had that same level of credit card debt when we first met. Their story is one of changed attitudes and sacrifice; today they’re well on their way to recovery.

Kids & Money Contest: I’m looking for stories of parents teaching their kids about managing money and understanding how money works. If you have a great story (humorous, big life lesson, etc) of what to do – even what not to do – please send it to mailbag@pastdueradio.com by Sunday, June 19th with “Kids Money Content” in the subject line. Entries will be gathered for the next few weeks and the winner will receive Junior’s Adventures, the boxed set of money lessons for children by Dave Ramsey, and a copy of my book, Get Naked: Stripping Down to Money & Marriage.

If you have a specific question, I’d be happy to answer it and further cultivate the wisdom of the Past Due Radio masses. The experiences of our listener base provide plenty of insight we all can learn from; don’t hesitate to ask – I’m happy to help!

Today’s Mentionables:

Episode 110 – Real Life: Kathy Grant – My interview with Kathy one year after we forged a new path for herself and her husband.

Episode 144 – Why the American Dream is Ruining Lives – A show uncovering how our desire for more and increasing standards of living actually result in depression and broken relationships.

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Past Due: Radio 146 – Mailbag: Do Balance Transfers Work After A Job Loss?

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Today we took a Mailbag question from Aideen in Chicago on behalf of a friend of hers dealing with some credit card debt. We did a whole show based on one of Aideen’s previous questions (Episode 132 – Money & Twenty-Somethings) and it was great to help her with guidance for her friend!

Like so many, Aideen’s friend was unemployed during 2010 and used credit cards to fill the gaps in her expenses. Now, she’s employed but dealing with nearly $12,000 in credit card debt with interest rates as high as 29.9%!

The discussion centered around whether transferring the balances would be wise as she tries to eliminate these debts. As you’ll hear, I gave two compelling reasons why balance transfers shouldn’t be entered into lightly before I shared what I would do if I were in her shoes.

If you have a specific question, I’d be happy to answer it and further cultivate the wisdom the of Past Due Radio masses. The experiences of our listener base provide plenty of insight we all can learn from; don’t hesitate to ask – I’m happy to help!

Subscribe to the Past Due: Radio Podcast:

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Balance Transfers: A Financial Shell Game

April 5, 2010

Remember when you could charge a bunch of purchases to a new, low-rate credit card, and when the promotional period ended, you could then transfer the balance to another new, low-rate credit card? Thanks to the recently passed CARD Act, that shell game will likely become a vestige of yesteryear when credit was easy to […]

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