These quotes have nothing to do with personal finances, but they are just some of my recent favorites. This first one is a sad, but perhaps too real statement about our addiction to technology, “Did you get that email I sent you? I need an answer before you wake up.” Then there is this one about food from Panera Bread, “When did mixing food with not food become food?” This last one for those exercise conscious Americans, who may want to be a little self-deprecating, is from the Broadway Play “The Present. “ When complimented about how he looked to be in good shape, the actor replied, “I am in good shape, but that’s in part because I’m underutilized.”
I don’t know about you, but I was more than a little discouraged by the recent report which advised me that, as a New York state resident, my share of the $267 billion in debt owed by the various state public authorities was $13,487. That appears to be separate from my share of the approximately $350.5 billion in general New York state debt, according to USDebtClock.org.
Then, as of April 2016, according to cnsnews.com, I owed over $58,000 on our over $19 trillion in U.S. debt, the same as every other person who lives in the U. S., including children. That doesn’t include my share of any local municipal debt. That means that even those of us who try to avoid consumer debt as much as possible are still heavily in debt when we wake up every day in New York state, despite all of the taxes that we pay. There is some good news, however. We don’t live in California.
We have discussed those IRS scam telephone calls in the past, indicating that the IRS never calls without first having sent a written demand notice. You may have seen the recent report which indicated that, starting this spring, the IRS will once again be using some private debt collection agencies to pursue overdue taxes. Interestingly, Conserve, of Fairport, is one of the agencies. The accounts being turned over are designated as inactive, those not being actively pursued, but there are also a number of exceptions, including those where the taxpayer is negotiating with the IRS or is considered to be an “innocent spouse.” Right there it says something about dealing upfront with the issue.
Preventing inevitable additional scams is important, even to the IRS, so that it is required to notify taxpayers by mail if their accounts are being turned over to a collection agency. In addition, the assigned collection agency must also mail the taxpayer a notice of its assignment and its intention to collect the amounts due.
The bottom line is that if you or anyone you know gets a call from a collection agency, and they don’t think they owe any taxes, and they have not received the required two necessary mailed notices, something is not right and they should contact the IRS to report the possible scam. In Rochester, the phone number is 585-263-5840.
On a final subject, one of the things that I talk about in my CARE financial literacy presentations in the schools is to avoid agreeing to over-limit or overdraft protection on their accounts. This includes checking, debit and credit card accounts. Now, I know first-hand from my many years in and around the bankruptcy courts that many low income individuals feel that they need this as a form of short-term emergency credit, even though it is outrageously expensive, when you think of it this way.
According to a recent Pew Charitable trust study, reported by USA Today, most overdraft fees are in the $30 to $35 range.That means if you write a check or charge an item that is $10 more than your amount on deposit or the amount of your credit limit, the financial institution will clear it, charge you the $30 overdraft fee and then charge you interest on the $10 overdraft amount.
Here is the key. Even if you pay the overdraft amount with a small amount of interest immediately, or within a month, let’s say, if you consider the fee to be additional interest, which you should, think of the effective interest rate you are paying for that short-term small loan. Outrageous.
Beyond that, I try to explain that it just makes good sense to manage your accounts effectively. Know what your balances and credit limits are, and live within them, so that you are in control of that aspect of your finances. One last thing. Most account agreements today automatically provide you with overdraft protection, so you must affirmatively “opt out” of it.