Crazy Checks

CWR Building Wealth – Crazy Checks

By Dwight Harshaw, BBA, Personal Finance Counselor

 

Dwight Harshaw, BBA

Dwight Harshaw, BBA

We all receive them, mailings from credit card companies that contain checks-that were not ordered or requested. I must confess that I have used one. I’ve taken advantage of a zero percent transfer fee, no interest offer-which is rare today-to pay off the balance of another credit card that I could have paid anyway. I remember it felt good initially but for months afterwards, it was a burden to pay the loan back. Fortunately I was able to pay it back within the designated time period and suffered no repercussions from using it. I was lucky. Many are not.

 

The marketers of debt do all they can to entice us to use their crazy checks. The checks can be used to pay off debt, make purchases, or deposit money into bank accounts. The credit card companies want to make sure that we have money to spend-up to a defined limit because they are not crazy-with strings attached. The strings or terms for using the checks are not hidden. There is a time period in which the interest charged will be zero or very low, provided that you make your payments on time. There is a transfer fee that is capped at a nominal amount. They are almost like regular checks, right? Wrong!

 

Many people use the checks, experience setbacks, and their terms change. A delayed or missed payment can cause you to pay more fees and high interest. It is all there in black and white in the terms and conditions, read it.

 

When you receive unsolicited checks in the mail from your bank or credit card company, tear them up. Using them is almost as bad as writing a hot check. They are not money substitutes, they are loans. They are a clever way for issuers to keep you in perpetual debt. It is too easy to overextend yourself. And when you are overextended you can’t build wealth.

 

© Copyright Donell Edwards Media, 2008 -2013. All rights reserved.

About Dwight Harshaw:  Dwight Harshaw is a personal finance counselor and writer. He is also a Realtor with Access Realty, Inc. in Little Rock, Arkansas. He has a BBA from the University of Arkansas at Little Rock in Finance with emphasis on financial planning.

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Prudence Is Paramount

CWR Building Wealth – Prudence Is Paramount

By Dwight Harshaw, BBA, Personal Finance Counselor

 

Dwight Harshaw, BBA

Dwight Harshaw, BBA

Many of us know someone or-are ourselves-beneficiaries of a financial windfall of some sort.  It may be the rare result of winning a game of chance such as the lottery, casino games, or betting in general.  Often times it’s the result of receiving an employment lump sum, sale of property, sale of a business, insurance proceeds, or an inheritance.  It does not matter what caused the windfall, what matters is how it is handled.  It can be used sensibly or squandered. It can be a curse or a blessing for the recipient. Here are five things you should do if you receive a financial (cash) windfall:

 

Take possession. Whatever it takes to receive your money, do it. It should be done in a timely manner. If there are things you don’t understand or don’t want to deal with, seek assistance from someone you trust. The person you seek assistance from, whether friend or professional should help you to become an expert at the task.

 

Secure it. Since receiving a windfall is not an ordinary event, take your time deciding on how to use it. Put it in a safe secure place. A good place to put cash is in the bank or a brokerage cash account. Both are insured up to $250,000 for cash deposits by the Federal Deposit Insurance Corporation (FDIC) and the Securities Investor Protection Corporation (SIPC) respectively. Depending on the size of your fortune, you may have to spread it around to several places. Your money will not earn much but it will be safe and hopefully there for only a short period of time. That gives you a chance to sort things out.

 

Pause, take a break. Avoid making commitments at the time you receive a windfall because you’re not thinking straight. There may be pressure from family, friends, and others for you to make decisions; nevertheless it is wise to give yourself time to get use to your new situation. If your financial windfall is the result of the death of a love one, you need time to grieve. If it’s from an employer or from winning a game of chance, you need time to evaluate your future. Money is useful and it will serve you for a lifetime-not just for a fleeting moment-if you use it properly.

 

Increase your knowledge on the proper way to use your gain to achieve your goals. If you haven’t set financial goals, this is when you should do it. Define what you need and desire for your future. Also use this time to take a personal finance class, learn about investing, risk, and strategies. The more knowledge you have about personal finance the less likely others can take advantage of you. Find people that will help and teach you about money matters and don’t be afraid to get several opinions on how you should proceed.

 

Be sensible.

  • Take care of your needs first. Pay off debt, increase your retirement fund, or use it for income.
  • Invest in what you feel comfortable with. If you don’t understand it, don’t do it.
  • Don’t start a business without proper research and consultation.
  • Don’t spend frivolously on things that don’t hold value well. Cars, clothes, and vacations are fun but they don’t increase your wealth.
  • Don’t overspend on housing. Homes hold value but you should not buy more than you need to live comfortably.
  • Avoid using credit. If you can’t pay with cash, you can’t afford it.
  • Don’t loan money because more than likely you won’t get it back.
  • When family, friends, and organizations compete for your generosity, don’t give foolishly.

 

Finally be careful. We all know them, people who’ve had it and lost it. They did not take the time to sync their mindset to their new asset. In wealth building, prudence is paramount.

© Copyright Donell Edwards Media, 2008 -2013. All rights reserved.

 

About Dwight Harshaw:  Dwight Harshaw is a personal finance counselor and writer. He is also a Realtor with Access Realty, Inc. in Little Rock, Arkansas. He has a BBA from the University of Arkansas at Little Rock in Finance with emphasis on financial planning.

In A Perfect World

CWR Building Wealth – In A Perfect World

By Dwight Harshaw, BBA, Personal Finance Counselor

Dwight Harshaw, BBA

Dwight Harshaw, BBA

In a perfect world, one would work hard for a single company and retire. They would start at an entry level and work their way up the ladder. Health care would be no problem because it’s a part of a well deserved benefits package. Wages keep pace with the cost of living. Raises are scheduled and saving for retirement is automatic. In a perfect world, a middle class lifestyle and all of its accoutrements would be accessible without the fear of losing it. Upon retirement, savings, pension, and social security would allow for an elder status of dignity and financial independence.

 

In a perfect world, wealth would be better distributed in the United States than it is now. The poor would be few, the rich would be less so, and there would be scores in between the two. Poverty would be on the decrease and our leaders in government would be working in the best interest for the most people. Building wealth and moving up into a higher wealth class would be no problem.

 

Well, we don’t live in a perfect world. There is growing inequality in the way wealth is distributed in our country and the sooner one realizes their place-in that distribution-the better. One has to know where one is, to get to where one wants to be.

 

What is wealth? Wealth is based on net worth. Net worth is determined by subtracting what is owed from the value of what is own.

 

Where is the wealth?

 

According to census.gov there are 114,825,428 households in the United States. When synthesized with data from the Economic Policy Institute – The State of Working America 2011, we get the following:

 

  • One percent or 1,114,825 households control 35.6% of the wealth;
  • Four percent or 4,593,017 households control the next 27.9%;
  • Fifteen percent or 17,223,814 households manage 23.7%;
  • While the bottom eighty percent or 91,860,342 control just 12.8% of the wealth.

 

Dwight's Table

Source: Inequality.org

 

 

The median household wealth in 2009 was $62,000. That means 57,412,714 households have more and 57,412,714 households have less than that amount of wealth. So somewhere almost in the middle of the bottom 80% is where the median can be found.

 

What should be gathered from this information-many people aren’t as wealthy as they appear. Eight out of every 10 persons exist in the bottom 80%. There are people, who earn lots of money and have the best of everything materially, who are broke. They owe more than what their things are worth. Instead of looking like a million dollars by what is worn, driven, and lived in, ratchet it back and do what is necessary and no more. To move up from the bottom one must not only work hard but also manage one’s own finances well. That means goal settings, budgeting, investing, and saving more, while spending less. In an imperfect world, that is how wealth is built.

© Copyright Donell Edwards Media, 2008 -2013.   All rights reserved.

 

About Dwight Harshaw:  Dwight Harshaw is a personal finance counselor and writer. He is also a Realtor with Access Realty, Inc. in Little Rock, Arkansas. He has a BBA from the University of Arkansas at Little Rock in Finance with emphasis on financial planning.

 

Hispanic Resilience In Today’s Economy

CWR Building Wealth – Hispanic Resilience In Today’s Economy

By Gil Michel, MBA, CPA

Gil Michel, MBA, CPA

Gil Michel, MBA, CPA

There are few trends in the U.S. that are predictably consistent. The economy at large is supposedly on a roller coaster to recovery but no one knows when the ride will settle into steady growth. However, one certain growing trend in the nation is the rise of the Hispanic population. According to the Pew Pew Hispanic Center , growth is primarily due to birth over immigration among Mexican-Americans. Of the 11.4 million in Hispanic resident increase, 7.2 million of those Hispanics are native born every year. Each Hispanic is infused with the unparalleled work ethic and resilience of the Latino community under even the tightest conditions. Though deeply scythed by the sharp market changes, the unity of the Hispanic community builds their potential for further success in the future.

As the Hispanic population grows, their political influence closely follows. But even with a rise of Hispanic community advocates, city officials, state representatives  and federal government agents, the recession has heavily affected the hard earned wealth of Hispanic households. According to the Pew Research Center Project’s latest discoveries, Hispanic household wealth has been cut by 66% over the four year period of 2005-2009 while Caucasians as a whole have been negatively hit by only 16%. Blacks have suffered a drop of approximately 53% but have not been as adversely affected as the Hispanic community according to the research.  (See Full Article)

Texas television KCENTV features a story that highlights the  desperation of the struggling Hispanic families in Texas and suggest the similar occurrences elsewhere to be just as concerning, etc. But the statistic for struggling Hispanic families, even after such a drop in wealth, only leaves 25% falling below poverty level. Therefore, amidst the exponential growth from year to year, 75% are able to make do with the resources they are given. The communal effort and sense of unity among Hispanic groups distinguish them from other minorities in the U.S. The pride in each other’s individual accomplishments add to the community as a whole making them a force to be reckoned with from the rest of the broken and divided groups of people or systems that might seek to oppose them.

The media tends to focus lots of time and energy magnifying the negative aspects of a the Hispanic’s situation. From reverse perspective, the Hispanic community deserves recognition for the financial resilience displayed in the middle of a financial crisis. Everyone has been affected, but everyone has reacted differently under the pressure. Hispanics have launched new businesses to employ new generations and established Hispanic companies are expanding with countless good intentions. The trend of success among the Hispanic community will easily continue on if there were more business strategy taught to Hispanic entrepreneurs. Good intentions alone do not ensure longevity. The U.S. Hispanic Chamber of Commerce Foundation pose a good example in awarding business coaching to two Hispanic businesses in Milwaukee for their initiative for green business building. (See Full Story) If other sponsors follow this trend, the financial setbacks among the Hispanic community will mend and they will indeed continue to gain influence and rise in power in the United States.

© Copyright Donell Edwards Media, 2008 -2013. All rights reserved.

About Gil Michel:  Gil Michel is a CPA and financial planning expert, and is the CEO and President of The Caleb Group, Inc., a small business solutions firm.  Gil’s experience has evolved from working in top ten CPA firms to working one-on-one with small business owners in developing realistic budgets to create wealth for their families.  Gil’s Caleb Group is the parent company of BlackMoneyMatters.com, an interactive website that seeks to educate, inform, and enlighten the Black community in areas of financial health.  Currently Gil is featured on Sheridan Gospel Network’s The Light, which is syndicated in 56 radio stations/48 cities across the United States.  In addition, Gil is also featured on The Good Life Radio broadcast financial segment every week in a feature called “Stacking Paper.”  Gil’s passion to see urban cities turned around in the next 10 years inspired him to form TACTT, Inc. (www.tactt.org) in 2003 (Teens Achieving Community Through Training).  TACTT is a financial literacy program that empowers teens in the five areas of entrepreneurship, real estate, banking/personal finance, investing, and positive life skills.

What Should I Do Now?

CWR Building Wealth – What Should I Do Now?

By Dwight Harshaw, BBA, Personal Finance Counselor

Dwight Harshaw, BBA

Dwight Harshaw, BBA

The stock market is like a roller coaster ride at an amusement park. You get in and secure yourself to avoid a disaster. You enjoy the view during the slow ride up to the apex. And then, suddenly, you’re in freefall, speeding to the bottom with the crushing force of the wind in your face, your stomach turns and your body shakes with excitement and fear, as the car turns and jerks on the tracks. When you think you’ve had enough, it slows down and stops to allow you to get off, or to get back on to be thrilled again. The stock market(s) takes investors on a similar ride; rising and falling on the collective exuberance, fears, expectations, and disappointments of those who invest money into stocks. As I am writing this-August 2011-the market(s) are down significantly and this is one of those volatile periods when some people ask, what should I do?

Should I sell now?

Yes, if you need the money immediately to live on or you can’t sleep at night. No, if you have time and you don’t need the money now. The compound annual growth rate of the S&P 500 from 1910 through 2010 is 11.43%. If you are invested in good companies or indexed mutual funds your money should grow over time, based on the historical returns. Don’t allow a moment in time to overshadow a century of evidence.

Should I wait for the market(s) to hit bottom to get in?

No one knows with absolute certainty, when that time is, not until after it has occurred. Timing the market’s ups and downs is a matter of chance, even for professionals. Stocks are significantly lower than they were a short time ago. If you want to invest in the stock market, and you have years for your investment to grow, do so by making periodic investments, not lump sums, into good quality mutual funds. It is a safer investing technique and a good way to smooth out risk.

Should I switch to safer low return investments?

You should switch from growth investments only if you need your money soon or you can’t endure the volatility of the market. Lower risk usually means lower returns. Lower returns on your money can cost you dearly in the future with lost purchasing power, due to your money not keeping pace with inflation.

What should I do now?

If you’re in, stay put. If you’re a new investor you should take some risk for higher returns, if you have the tolerance. Assuming that you are in the accumulation or consolidation phases of life (25 – retirement), investing the same amount, at the same time each month, no matter what the market is doing, is the best strategy. Dollar cost averaging is an ideal way for small investors to purchase stocks for long term gains. This strategy also helps mitigate short term downward risk. When the markets are down, you’re getting more for your money and that’s how you build wealth. You buy low and sell high.

This information is for general use, not specific advice. You should consult with a financial professional that you trust, for matters regarding your particular situation.

© Copyright Donell Edwards Media, 2008 -2013.   All rights reserved. 

About Dwight Harshaw:  Dwight Harshaw is a personal finance counselor and writer. He is also a Realtor with Access Realty, Inc. in Little Rock, Arkansas. He has a BBA from the University of Arkansas at Little Rock in Finance with emphasis on financial planning.

$chool Daze

CWR Building Wealth – $chool Daze

By Dwight Harshaw, BBA, Personal Finance Counselor

Dwight Harshaw, BBA

Dwight Harshaw, BBA

Every August thousands of college students prepare to go to school. One important aspect of their task is how to pay for it. My recommendation, pay with scholarships and cash. For many, that is easier said than done. If you are one of those who are financing your college education with loans or you’re thinking about it, here are some things to consider.

Search for scholarships, grants, and tuition reimbursement. The process of finding scholarships and grants should be done while one is in high school but it can be done at anytime. There are always scholarships, work study programs and grants available for continuing students. Make it a priority to find out what is offered at your school and apply. If you are already in the workforce, see if tuition reimbursement is offered by your employer. You will get the assistance you need to earn your degree and you will be a more valuable employee.

Work and save for school. Do it the old fashion way. Work and save, work and pay, as you go. In the long run that is better than borrowing to pay for school. It may take longer to graduate but once it is over, it’s over. You can then move on with your life.

Consider attending community colleges and state universities for lower fees.Government supported schools offer a quality education and are generally less costly than most private and for-profit schools. You should compare costs and maximize your education dollar, especially if you are borrowing to finance your education.

Don’t borrow a fortune for a degree that pays pennies. If the job or profession you’re training for pays an average annual salary of $40,000, don’t borrow $100,000 to get it. Keep a level head and borrow as little as possible to obtain your degree.

Avoid using credit cards. The number one way for college students to get sucked into the debt trap is through the use of credit cards. Don’t let this happen to you. Don’t use them, especially for paying for tuition and fees. The interest is too high.

Don’t borrow for personal living expenses. Personal expenses should be paid for out of pocket. If you don’t have money in your pocket, get a job.

 

Pay your loans off as soon as possible. After finishing school there is no reason to prolong the process of paying back the money you borrowed. When you accelerate the payback of your loan(s) you will pay less in interest expense.

Look for jobs that offer loan forgiveness as a benefit. This is an excellent way to eliminate student loan debt. It may require you to relocate and go into public service or the military for a period of time. And there is nothing wrong with that. It is a good thing for you and the entity that hires you.

Don’t co-sign for student loans. This message is for parents, lovers, relatives and friends. Do not co-sign for a student loan. The risk of you having to pay the loan back is too high. According to the Wall Street Journal, the latest data on federal student loans shows that students are defaulting at a rate of 13.8%. (February 4, 2011)

Speaking of default, what happens if you don’t pay back your loan(s)? The IRS can seize your tax refund, you can suffer garnishment, some of your social security can be taken away and you can be sued. Also student loans aren’t bankrupt-able. Many people that use student loans find themselves in debtor’s hell after finishing or dropping out of college. The only way to get rid of student loans is to pay them off. If you can avoid borrowing, you’ll be better off. If not, borrow as little as possible, and pay them back ASAP!

About Dwight Harshaw:  Dwight Harshaw is a personal finance counselor and writer. He is also a Realtor with Access Realty, Inc. in Little Rock, Arkansas. He has a BBA from the University of Arkansas at Little Rock in Finance with emphasis on financial planning.

Know Thyself

CWR Building Wealth – Know Thyself

By Dwight Harshaw, BBA, Personal Finance Counselor

 

Dwight Harshaw, BBA

Dwight Harshaw, BBA

I was watching an Oprah rerun one afternoon when Iyanla Vanzant was her guest. I would describe Iyanla as a personal-spiritual empowerment guru. During the 1990s my wife and I purchased several of her books and recordings-for ourselves and others-and attended some of her lectures which were very helpful for personal growth, clarity and empowerment. In addition to being an author and lecturer, she is an ordained minister, attorney and a past featured expert on Oprah. At the height of her popularity, Iyanla landed her own television talk show. For her, the last decade of the 20th century was financially rewarding.

 

Since then, Iyanla has suffered devastating personal and financial setbacks. She lost her beloved daughter to cancer, her marriage to the love of her life dissolved, the television show was cancelled, and she lost her fortune which is the area of my focus. How did it happen? She told Oprah that losing her money was the result of, “being a millionaire with a ghetto mentality.” She lost her money because her attitude about finance did not change with her neighborhood.   Before she had money, she spent all she earned. It took all she earned to live from week to week. When she became wealthy she continued living that way. The only relationship she had with money was spending it.

 

What happened to Iyanla happens all the time however we marvel at those who have the farthest to fall. Her mistake was not paying attention to where her money was going and not watching the people that allowed her to fall. It is important to always know your current financial condition. If she had practiced that, she would not have spent money on a building instead of paying her taxes which led to the unraveling of her empire.

 

To know where you stand currently, simply gather and organize all of your financial information. That would include all things financial i.e.; check stubs, tax returns employee benefit information, insurance (all types), credit cards bills, mortgages, student loans, auto loans, retirement plans, and living expenses, just to name a few. Look at it, analyze it and determine if what you’re doing is in sync with your goals. If it isn’t, then you will have to make adjustments. Adjustments could be living by a budget, selling an asset or getting a second job.

 

You should always know your current financial condition if you want to be financially secure. Based on your condition you will be able to use the information to make wise decisions about your future.  If you find that this step is difficult for you, seek counsel from someone who has demonstrated financial wisdom or a financial planner that you feel comfortable with. It is important to know what you use your money for.

 

Iyanla will rise again financially because she is still a sought after speaker who has another powerful healing message to deliver. She will likely make a second fortune and keep it.  

 

About Dwight Harshaw:  Dwight Harshaw is a personal finance counselor and writer. He is also a Realtor with Access Realty, Inc. in Little Rock, Arkansas. He has a BBA from the University of Arkansas at Little Rock in Finance with emphasis on financial planning.