Author: rober269_wp

 

Smoking destroys your health and your budget.  Due to the massive increase in the cost of cigarettes, smoking is a budget buster.  According to theawl.com, the cost of a pack of cigarettes ranges from a high of about $14 in New York to about $4.96 in Kentucky.  This is just an incredible difference.

Cigarette taxes can cost you over $1,200 more per year, if you smoke in New York, rather than Kentucky.   Smokers need to live in a low tax state.   Living in Connecticut, I am somewhat used to seeing the high prices of cigarettes (over $9 per pack), as the Connecticut politicians have continued to raise cigarette taxes to incredible highs.

For one person with a pack a day habit, in a state such as New Hampshire, the cost of your habit is over $1,825 per year.  Double this amount, if you have two people smoking in the house, or you smoke two packs of cigarettes a day.  Also, if you are in a high sin tax state such as Connecticut, your costs can exceed $3,600 per year.

Personal finance experts don’t seem to like to get involved in personal issues.  However, I will be candid.  Smoking has become both a personal health issue and a personal finance issue.    I understand the difficulty associated with quitting.  But for your overall health, you need to stop.  Don’t let the tobacco companies and sin taxes steal your retirement, by smoking up your retirement funds.

Attorney Robert M. Singer

Law Offices of Robert M. Singer, LLC

2572 Whitney Avenue

Hamden, CT  06518

203-248-8278

rsingerct@yahoo.com

I have seen payday loans used by clients, on several occasions, all with disastrous results.

Connecticut has a usury law which limits the interest rate on money loans.  Therefore, the loans are illegal in Connecticut.

Unfortunately, not all states have usury laws; therefore, there are the states where the payday lenders are located.  In addition, with the internet, the payday lenders can be located outside of the United States.

The payday lenders provide a service, which should be illegal.  The lender will provide a very short term loan (often under 30 days) for a low amount of money, normally no more than $1,500.  The problem with the payday loans is the fees and interest rate- the effective interest rate (APR) can be over 600% a year.  According to one web site, the cost of credit can average $25, per $100 borrowed.  For a 30 day loan, you are paying 25% interest for a one month loan.

The situation gets worse if the borrower fails to pay back the payday loan, within the normal payment period, as additional charges apply.

There is simply no excuse to take out a payday loan.  Consumers need to plan ahead, to avoid the need for payday loans.  Consumers need to have at least one month’s savings in the bank, for emergencies.

It is time that the politicians act, to establish a national usury law, and interest rate cap on loans.  Senator Bernie Sanders attempted to pass such a law.  However there is little, if any, support for this legislation.  Let’s send a letter to our Senators and Representatives to support Sander’s Bill.

Attorney Robert M. Singer

Law Offices of Robert M. Singer, LLC

2572 Whitney Avenue

Hamden, CT  06518

203-248-8278

rsingerct@yahoo.com

Bank fees should be the topic of a book. Your job is to avoid all the bank fees, andwatch your savings grow, not the banks.
Understand the terms of no fee checking. Follow the terms to the letter, and avoid checking account fees.
The banks made an estimated $39 billion dollars in fees for overdrafts and insufficient funds per year. The average overdraft fee is $30. If you have multiple overdrafts in one day, your fees can be over $100. Use all options to avoid the overdraft charges – have an overdraft protection. In addition, you can often link a savings account to your checking account.          Finally, you may even be able to link your credit card to the checking account (but this is a last option).
My bank has an alert which provides me a warning when the balance gets below a preset amount, set by me. Check if your bank has this alert.
Overdraft Protection (“OD”) is nothing but an expensive credit line, just like a credit card. It is cheaper to use the overdraft protection, than have bounced checks. You need to look at the interest rate on the OD. The rates on OD are typically approximately 18% per year. On a $2,000 line of credit, this adds $360 a year to your budget, similar to 10 bounced checks.

Attorney Robert M. Singer

Law Offices of Robert M. Singer, LLC

2572 Whitney Avenue

Hamden, CT  06518

203-248-8278

rsingerct@yahoo.com

 

Most people should not bother with prepaid cards, because of the costs.  The issuer makes money by processing the transactions, typically in a monthly fee.  The card is a fee for service.   Each transaction has a cost.

There are situations in which someone will need to have a prepaid card.  Typically, the person cannot get a credit card because of bad credit, and the person cannot open a bank account ( because he or she is in ChexSystems as a  bad risk).

Many people do not understand ChexSystems.   According to the ChexSystems website:  “ The Chex Systems, Inc.  network is comprised of member Financial Institutions that regularly contribute information on mishandled checking and savings accounts to a central location.   ChexSystems  shares this information among member institutions to help them assess the risk of opening new accounts.  ChexSystems only shares information with the member institutions and does not decide on new account openings.”

ChexSystems shares your banking account (history) information, with members of the system.  The typical information report includes items such as bad checks history.   Therefore, if you have many unpaid bad checks at one  bank, such as Citibank, Citibank can report your activity to ChexSystems.  And if you try to open up an account at Chase  Bank, Chase can get your ChexSystems report and refuse to open up a new checking  account.

For your financial health, you need to stay away from ChexSystems.  With a bad ChexSystems report, you may not be able to open a bank account (to get checking services and a debit card).

You can order a copy of your ChexSystems report at:               https://www.consumerdebit.com/consumerinfo/us/es/chexsystems/report/index.htm

Filing for bankruptcy does not automatically mean that you will have a bad report in ChexSystems.  I have seen clients want to file bankruptcy and include, in the filing, amounts due to a bank for overdraft checks.  In these instances, I always tell the client to pay off the overdraft balance, to avoid a ChexSystems bad checking account report.

The only people who should be using a prepaid (secured) card is someone who has a bad credit file, who cannot open a credit card account, and a bad CheckSystems file, who cannot open a checking account and get a regular debit card as part of a checking account.

Law Offices of Robert M. Singer, LLC

2572 Whitney Avenue

Hamden, CT  06518

203-248-8278

rsingerct@yahoo.com

 

Unless you are professional gambler, playing any type gambling is a simple way to lose money.

There are so many ways to bet.  I cannot even describe all of the ways.  In fact, I am sure I don’t know all of the ways to make a bet.  I have seen many financial planning books.  However, I have never seen a financial planning book discuss the effect of gambling on a household’s ability to save for retirement.   With the massive availability of places to gamble, this approach is incredible.   Everyone in the world needs to understand that gambling can ruin your financial life and retirement.

In Connecticut, I remember when, many years ago, the lottery was the only “place to go.”   Then we had a Jai Alai fronton, where people could go to watch games, and bet.  Now, Connecticut has two huge casinos, Foxwoods Resort & Casino and Mohican Sun.  Just to give you an idea, slot revenue at Foxwoods was $707 million for 2008-09 fiscal year.

According to the Nelson A Rockefeller Institute of Government Fiscal Studies dated June 23, 2011, 43 states operate lotteries, 15 allow commercial casinos, 12 have racinos, and over 40 states allow pari-mutuel wagering.  In addition, according to an article of the Christian Science Monitor, dated December 26, 2011, the Department of Justice is changing its interpretation of the federal 1961 wire act, which should allow for online gambling.  Instead of restricting gambling sites, we are getting more betting.

Since the states get a cut of the take at casinos, we can expect an expansion of legalized gambling.  Connecticut gets a portion of the casino revenue from slot machines.  Although the revenue has been declining, Connecticut, like many states, rely on this money for its operations.

In order to get control of your gambling spending, you need to treat this like any other expense.  Track each dollar you spend for any and all gambling, including online gambling, poker and lottery tickets.

For many people, gambling is an addition.  If you find that your gambling is out of control, you need to get help.  The information for gamblers anonymous is below

Gamblers Annonymous

PO Box 17173

Los Angelos, CA  90017

626-960-3500

www.gamblersanonymous.org

For people who are thinking about going to the casino, remember that the casino is set up so that people gamble and forget about their time and money.  Notice that there is no outside windows and clocks inside the casino (somebody else made me aware of this).  To combat these two tricks

1. Limit the amount of money you can spend inside the casino – by only bringing cash on the trip. Never bring a credit card or debt card.  The casinos want you to believe that they will conveniently take your debit card or credit card.
2. Bring a watch with a time alarm, so you are prepared to leave at a set time.  If you are losing, you limit your loss.  If you are winning, you can cash out and take your winnings with you.

If one wants to look at an interesting study about the relationship between gambling and bankruptcy, go read Casino Gambling and Bankruptcy in New United States Casino Jurisdictions.  (Journal of Socio-Economics 29 (2000) 247-261).  The article argues that there seems to be a relationship between the location of gambling establishments and the level of bankruptcy filings.  The article was written in 2000; since 2000, there are ever more outlets for gambling.

For anyone convinced that they can win at slots, go to “The Wizard of Odds” web page, which shows the slot machine odds in Vegas. The odds range from about 85% to 93%.   Over the long term, the house wins 100%.

I have seen tax information from casinos showing a gambler’s winning at the casino, which need to be reported on a Form 1040 personal income tax return. In all of these cases, the gambler admitted that the winnings are gross, the losses are net.   The losses exceed any winnings, and the losses are often $3, for every $1 won.

Nothing is worse than a family going together to the casino. What I will call this is the “family addiction.”   The husband and wife go together, for a day out of fun.  This is a fast way to home loss and bankruptcy.

Law Offices of Robert M. Singer, LLC

2572 Whitney Avenue

Hamden, CT  06518

203-248-8278

rsingerct@yahoo.com

 

Welcome to my blog.  I expect the blog to cover financial and legal issues.   However, please feel free to join in one any discussion.

Robert M. Singer