Stock in pawnbrokers is increasing as the recession continues. Image: Pink Moose/Flickr/CC BY

As the recession continues, stock is rising in industries that profit from hard times. Pawn brokers, payday lenders, debt collectors and discount stores are more profitable than ever. Brokers are recommending buying stock in these sorts of companies rather than traditionally higher-end investments.

Recession continues as employment falls

The unemployment rate rose to 9.2 percent in June, making many stocks plummet. The number of people living below the poverty line has risen to one in seven, the highest since 1994. Consumer spending has dropped for two months in a row. Times are hard, and nobody knows if or when they will get better.

Profiting from hard times

Some industries profit from bad times. Stocks for many pawnbrokers, payday lenders, discount stores and debt collectors are on the rise. And while that may raise ethical issues for some, stock brokers are recommending buying stocks from many of these companies.

David Rosenberg, an economist at the money management firm Gluskin Sheff, said, “People are broke. They’re all chasing value. It’s a seismic shift in mindset.”

Pawnbrokers and payday lenders on the rise

John Coffey Jr., an analyst with Sterne, issued a report in June urging stock buyers to seek out Ezcorp (EZWP), a firm that owns pawn shops and makes payday loans. The stock has gone up an average of 48 percent for the last five years. Coffey argued that the stocks were worth more than than their cost by a third and would most certainly go up. Within a few hours, the stock rose by 7 percent and is now worth double what it was a year ago.

Payday lenders are increasingly becoming a good investment. Advance America Cash Advance Centers (AEA),  has seen the price of its stock double in the last year. Cash America International Inc. (CSH) is up 64 percent from a year ago.

Debt collectors also making a profit

The same holds true for many other companies that thrive on financial hardship. The profits for San Diego based debt collector Encore Capital Group (ECPG) are up 59 percent from last year. This is despite the fact that the company has faced class action lawsuits in many states concerning its debt collection practices.

Some experts disagree

Some experts believe that investing in these kinds of companies is not as safe as it may seem. They say the stocks are as likely to fall as to rise. Should the economy recover and fewer people become financially stressed, stock for these companies will drop drastically. And if the economy should continue to slip, even those companies will find less traffic.

Sources

Huffington Post
Cox

Encore Capital Group

Choosing the right credit card can be challenging. (Photo Credit: CC BY/MoneyBlogNewz/Flickr)

If you pay for everything in cash, learning how to find the best credit card may not be for you. However, if you plan to use credit cards responsibly and pay them off each month, choosing the right credit card is important. Save cash with these helpful hints.

No credit card is perfect

Imagine a credit card with a permanent zero percent interest rate, rewards and an ample grace period during which no late payment penalties occur. Now crumple up that fantasy and get ready to wade through thousands of credit card offers on sites like Bankrate and Credit Card Offers, to name two of many. The path to finding your ideal credit card must begin with a clear assessment of where you stand. The ideal situation is to pay off your credit card balance each month, but most people fall into one of these three categories:

1. You’re attempting to pay down a pre-existing balance
2. You sometimes carry a balance, spread across multiple cards
3. You have either no credit history or are sporting a battle-scarred credit rating

1. Paying down the mountain

If you’re already dealing with a balance, you’ll want a credit card that offers a low introductory rate and an even lower rate on balance transfers. Such cards generally don’t offer additional perks, such as frequent flier miles. However, most credit card companies have pulled rewards programs off the table these days, so go for a great interest rate, no annual fee and no hidden usage fees.

Read the fine print to ensure that things won’t go south after the initial rate expires. If you execute a large balance transfer, you probably won’t pay it all off during the introductory period. Hence, be prepared for when interest rates go up. Watch out for loopholes in the introductory rate, too. It may only apply to purchases and not balance transfers. The cap for balance transfers may also be significantly lower than your approved credit limit.

2. Be prepared, balance carrier

If you plan to use a credit card regularly and carry a balance, go for a rewards program that offers air miles, points or even cash – if you can find such a program. Watch for expiration dates on your rewards, blackout dates for airline miles and minimum-spending requirements for cash-back programs. When it comes to managing your balance, choose a card with at least a 20-day grace period. That way, you can avoid being charged interest before you even receive your bill.

3. No credit? Not necessarily a problem

While no credit or bad credit will limit your options when it comes to choosing a credit card, many online resources can clue you in to the best subprime secured credit card offers. Try not to carry a large balance on a secured card because the APR is almost always more than 20 percent. Upfront fees of $200 or more on a card with a credit limit of only $250 should not even be considered.

Sources

Bankrate

Credit Card Guide

Motley Fool

The world's largest retailer is slipping stateside. Image: galaygobi/Flickr/CC BY

Walmart, the world’s leading box store, has been steadily losing customers in the United States. To lure shopper back, the store is using heavy coupon promotions and free samples on its website.

US sales on the decline

Though it is the largest retailer worldwide, Walmart’s revenue has been on the decline in the U.S. for more than two years now. The retail giant has been steadily losing business amid the rise in the popularity of the dollar store. Walmart’s holiday season last year was another disappointment that made stocks dip. Recently, press about the failed class action suit, which accused Walmart of discriminating against women employees, also damaged the mega store’s image.

Coupons and samples to lure shoppers

Walmart’s move to combat losses is to lean heavily on an old ploy, coupon promotions and free samples. But by concentrating the heaviest promotions on the store website, Walmart is attempting to adapt to the way consumers shop today. Walmart’s site, according to the research firm ComScore, was the 29th most visited site in the U.S. in May. The store is offering more coupons than ever and making the site more user-friendly. The site even offers a download for PCs to make it easier for customers to print out coupons.

Promotions from the site

The store’s site today showed bargains on everything from chili to specific movies on DVD and Blu-Ray. There was a giveaway of lens cleaner just for visiting the optical section at any store location. There were many larger discounts only available on the site. Items bought online can be picked up at store outlets for free or delivered for a small added fee.

Samples in stores

Walmart is offering a multitude of free samples in stores — the old try-it-before-you-buy-it approach. In-store events, promoted by calendars on the website, advertise multiple items which can be sampled. July’s promotions include coffee, cereal, yogurt, olives and more.

Sources

Daily Finance
AZ Central
Walmart

Learn how to have fun without spending money. (Photo Credit: CC BY/Allan Lee/Flickr)

If you’re looking for summer fun but burdened by a miniscule budget, consider what your community has to offer. A little creativity and a community activity guide can lead you to free fun in no time. Here are some ideas about how to have family fun without spending any (or much) money.

Mining your community for gems

It’s easy to plop down major coin on entertainment. Food, activities and monthly memberships are fabulous fun, but not if you’re left with too little money to pay the bills. City tourism bureaus and chambers of commerce are great places to find out about fun, free summer activities that will enable you to still save money.

Community swimming pools

For little or no money, a community swimming pool is a great place to keep cool. Prices range from free to just a few dollars per visit, depending upon where you live. For frequent swimmers, season passes can translate into significant savings.

Join the YMCA or YWCA

Top-of-the-line gym facilities, swimming pools and childcare are available at most local YMCA/YWCA facilities. Family rates can make the monthly expense much more affordable; they are weighted on a sliding scale depending upon your household income.

Free events at the community center

From art and exercise classes to dances and potlucks, local community centers offer many events that are free or minimally expensive. Community centers are a great place to meet people, too.

Go for a run in the park

Put on some running shoes and hit a safe neighborhood park. Enjoy sunshine, fresh air and exercise. You’ll feel better and won’t spend a dime. During summer, many communities offer free concerts, plays and art festivals in large public parks. Look online for a community events calendar!

Unleash your imagination at the library

A good book is a window into another world. Checking out books movies in DVD and Blu-Ray format, music CDs and, in some areas, vinyl and cassettes, is free at the library.

Enjoy a free museum or gallery ride

Once or twice per month, most public museums feature a free admission day. Contact your local museum to see when you should go. Expect the free day to fall mid-week when visitor traffic is low.

Back in your own backyard

Have you ever tried camping in your backyard? This can be a fun activity, particularly if you have young children. Watch squirrels scamper and listen to the summer chorus of crickets and cicadas when the sun goes down.

If you have a table or a flat patio, board games can also be fun on lazy summer days. If you don’t have board or card games, scan the “free” column in Craigslist, or watch local garage sales.

If the gaming fun spins on, break out the lantern for nighttime fun!

Real fun at no cost: Supermarket twist-tie art

Sources

For Dummies

One Girl’s Quest

Trent’s Blog

New Hampshire Governor John Lynch. Image: marcn/Flickr/CC BY

New Hampshire Gov. John Lynch vetoed a bill Wednesday that would raise the ceiling title loan lenders can charge. The bill would have allowed up to 25 percent interest charged monthly. The state joins 31 others in disallowing these kinds of loans.

Short term loans secured by vehicle titles

Title loans are short term loans secured by vehicle titles. The current rate allowable, adopted by the state in 2008, is 36 percent annually. That is the same cap allowed nationally on loans made to members of the military and their families. That federal bill was passed by Congress in 2006 and signed into law by President George W. Bush.

State Bill 57

New Hampshire State Bill 57 would have allowed lenders to charge up to 300 percent annually. It also would have increased the percentage of the principal a borrower would have paid to renew the loan from 5 percent to 10.

Bill had many detractors

Lynch supported the veto by saying the bill was opposed by many legislators in both parties, as well as the Local Welfare Administrator’s Association, AARP, the Banking Department, the Department of Justice, the New Hampshire Community Loan Fund and New Hampshire Legal Assistance.

Governor says it would hurt families

The bill, Lynch said in a press release, would be detrimental to families, the community and to the economy. The current 36 percent cap, he said, is “reasonable and well thought out. There is no evidence that reversing that law would benefit New Hampshire. On the contrary, there is significant evidence that it would harm our state and families.”

A cycle of debt for vulnerable families

“Failure to repay a loan could lead to seizure of the family car,” Lynch explained, “Which is often essential for family members to maintain employment. “Furthermore,” he said, “for vulnerable families, these excessive interest charges could force them further into a cycle of debt and potentially onto public assistance.”

Sources

Governor NH
Boston.com

Learn how to write a cover letter that gets attention. (Photo Credit: CC BY-SA/Joel Gillman/Flickr)

In order to taste victory in the job market, you must convince a hiring manager that you can financially benefit the company and that you are likable, too. Before securing an interview, stating your case begins with a cover letter. Learn how to write a customized cover letter that emphasizes your unique qualifications to stay ahead of the game.

Don’t just send a resume

For the most part, resumes are a painful bore for employers. Names and jobs change, but the anonymity remains the same. The cover letter is an applicant’s chance to stand out from the herd and capture some interview time. Tailor your cover letter to the company in your sights, and your chances of receiving attention increase. It isn’t as hard as you think.

Changing names on the fly

Admittedly, resume blasts to large groups of companies within a desired field require a great deal of time if you plan to customize each cover letter from scratch. Thus, just changing names to suit the occasion can work, provided you’ve put thought into truly tailoring your language to match the requirements of the best companies within the chosen industry.

Ramp up the detail

A cover letter shouldn’t merely restate the objective or opening statement from your resume — perhaps it shouldn’t do that at all. Change the introduction, including pertinent details you’ve gleaned from your research of the target company. Point out how your work has increased efficiency, “dollarizing” your worth whenever possible. Once your cover letter packs that extra punch, you can flow in bullets regarding your skill set to sell yourself.

Use the best bullets your career can provide

Bullet points are visually convenient for quick reference. An HR staff member or hiring manager can scan your skills and experience to see if it matches up with what the company needs. Address specific requirements laid out in the job ad for the position, but don’t parrot them back exactly. Artful manipulation of language is key. Along the way, use spell check and as many human proofreaders as you can find before clicking send.

Throw the boomerang

Marketing guru Jeffrey Fox wrote a book entitled “Don’t Send a Resume: And Other Contrarian Rules to Help Land a Great Job.” The book is an invaluable resource for any job seeker, plus it’s short and cheap. When it comes to cover letters, Fox prefers the “boomerang” letter as a response to job ads more than the cookie-cutter resume and cover letter. Not merely an arrow that points to your resume, a boomerang letter is a sales letter that gives a prospective employer a snapshot of your skills and ambitions as they relate to generating money for the company. And like any good sales letter, the high point of a boomerang letter is the point where you assertively ask for the job.

Skip the HR department after the cover letter is sent

Sources

“Don’t Send a Resume: And Other Contrarian Rules to Help Land a Great Job”

eHow

Job Finder Advisory

Quintessential Careers

Credit reporting agency Teletrack has been fined nearly $2 million by the FTC for illegally selling credit reports. Photo Credit: TrinityCreditServices/Flickr/CC-BY

Credit reporting agency Teletrack, which specializes in subprime credit reports, has been fined by the FTC for selling credit reports illegally. The agency was found to have sold credit reports to payday loan lenders and has to pay $1.8 million in fines to the Federal Trade Commission.

Company cited for selling credit reports for marketing purposes

The Federal Trade Commission has slapped credit rating agency Teletrack with $1.8 million in fines for illegally selling credit reports to payday loan companies for marketing purposes, according to WalletPop. Teletrack has agreed to pay the fines, but insists that it acted entirely within the law. The FTC says the company violated the Fair Credit Reporting Act, which prohibits the selling of financial information such as credit histories or borrowing habits of customers or similar information for any reason other than a “permissible purpose,” according to Statesboro Business and Lifestyle Magazine. Marketing is not a permissible purpose.

Huge presence in subprime credit market

Teletrack is one of the largest subprime credit reporting agencies. It reports the credit history and activities of hundreds of thousands of people who use subprime credit products. Also known as alternative financial services, Teletrack compiles data on people who borrow payday loans, purchase furniture through rent-to-own companies, use car title loans or get an auto loan through non-prime lenders. The FCRA doesn’t prevents companies like Teletrack from providing information when asked for a credit check and paid by a second party, but selling information to third parties for non-approved purposes is grounds for an FTC lawsuit, according to Forbes.

New rules for credit scores

Until the past few years, it was fairly difficult for consumers to obtain much information about their credit history or learn about how that information is being shared with their creditors or third parties. Part of the financial reform laws of the past few years include new rules and regulations concerning credit reporting and credit scores, according to NASDAQ. The Dodd-Frank Act created the new rules last year, and the Federal Trade Commission and the Federal Reserve are implementing them this year. Now, any creditor that uses a credit score as a factor in creating the terms of a loan must tell consumers what their credit scores are.

Sources

WalletPop

Statesboro Business and Lifestyle Magazine

Forbes

Nasdaq

Right now, it's Landlords over Tenants. Image: umjanedoan/Flickr/CC BY

Renting a home is not as easy at it once was. As the economy degrades, more and more people are looking to rent, while the number of available rentals is down. Landlords have the upper hand and can afford to be much more selective about who they rent to. The renter has to be more savvy than ever to ensure a happy outcome.

Not so good for the renter

According to Christina Argon of Ebay, rents went up 2 percent in the first quarter of 2011 and are expected to rise 3 or 4 percent over the rest of the year. Vacancy rates, however, are dropping as renters are choosing to stay put. Vacancy rates are down 6.2 percent from this time last year. The trends point to an improvement in the housing market and may be an early sign of economic recovery. It is not, however, currently a great position for the renter to be in. Rents are rising, vacancies are more scarce, competition is tougher for properties, and landlords are less willing to make concessions or offer incentives.

Do your homework

But there are many things a prospective tenant can do to hedge bets in the rental game. The first is to begin early and do your research. Start a month or two before your current lease expires. Once you find a house or apartment you like, contact the County Clerk to search the public records for legal action or liens against the property. Remember, each rental you apply for will require a background search with accompanying application fee. It is best to narrow the field as much as possible ahead of time.

Background checks

Landlords today routinely check credit scores and criminal backgrounds. While some blotches on the credit report do not necessarily spell rejection from landlords, they will be turned off by consistent late payments on utilities and other bills. And, of course, the cleaner your criminal background the better. One or two minor marks will not disqualify a person, but any pattern of legal problems could be very difficult to overcome.

A third or less of income

Another factor to consider is what you can afford. You may have set ideas on this, depending on your own needs and spending patterns. But one needs to consider this from the landlord’s perspective. Generally speaking, a landlord will consider a prospective tenant who earns at least three times the rent. A person looking to rent an apartment for $1,000 a month will likely be rejected if they do not have an income of $3,000 a month, or roughly $39,000 annually.

Lock in a lease

When you find the place that you can afford and that meets your needs — and you garner the landlord’s approval — Argon suggests trying to lock that rate into a lease of 12 or 18 months. Experts say rents will only go up in the foreseeable future. Keep it as low as you can for as long as you can.

Patch
Marketplace
Daily Finance

One saved is one earned. Image: stevendepolo/Flickr/CC BY

The economic crisis affects most of us every day as we tighten our belts and keep our wallets in check. But like a dieter craving sweets, temptation is always there to consume beyond our means. Thankfully, there are simple things you can do when the cravings get to be too much.

Think ahead

Thinking long term can help. Instead of seeing savings and frugality as a chore, think big picture. You and your family will be happier if you aren’t overextending to pay off last month’s splurge.

Realistic frugality begins with a realistic plan. If a budget is too restrictive, it adds stress to your life. That constant pressure may lead to abandoning the budget altogether. Make your plan realistic, but not a “starvation diet.”

Include some fun

While a budget must begin with month-to-month obligations and essentials — mortgage, groceries, car insurance, utilities –  it should also include some “fun money.” If you enjoy sports, make sure to include some greens fees or club dues. If concerts or theater are your thing, figure in a ticket every couple of months.

Another way to achieve this is to keep a “fun fund,” which is reserved only for a specific goal. Instead of giving in to every impulse, focus on the really satisfying ones and put a little away toward it out of every paycheck. Maybe there is a trip you want to take, or one luxury item that you truly want. With a little patience and persistence, it can be yours.

Ways to cut corners

For the day-to-day items, there are many things you can do to cut corners. Here are just a few suggestions to get the ball rolling.

Most beauty schools and community colleges offer cut-rate haircuts and beauty services, as students need opportunities to practice their craft. While that may sound risky, rest assured most places only let advanced students touch the paying customers.

Second-hand and thrift stores are a wonderful resource for items we use every day. Flea markets, garage sales and Craigslist are good, too. Somebody once said one man’s trash is another man’s treasure. Go explore. You never know what you might find for a song.

Fuel expenses are one of the worst drains on our resources these days. Try public transportation, carpooling and consolidating trips. Remember, the less you are behind the wheel, the less you are spending.

Tell yourself ‘Wait’

The best thing you can do to stay frugal and on budget is tell yourself to wait. We see something on television, online or in a store and think we just have to have it. Tell yourself, “Wait.” How many times have we given in to that urge, only to see the item gather dust or wind up in the next garage sale? Chances are it is a whim brought on by budget fatigue, and the burning desire will go away. If the feeling persists, then maybe it is something worth saving for in your “fun fund.”

Sources

Walletpop
The Frisky
Retire by 40

Bank of America has agreed to buy back investments to the tune of $8.5 billion. Image: MoneyBlogNews/Flickr/CC BY

Bank of America Corp. agreed Wednesday to pay out $8.5 billion to investors who lost on mortgage-backed securities purchased from the lender. The blue chip investors claim the securities were of poor quality. The investments tanked when the bottom fell out of the housing industry. The payout could pave the way for some mortgage-related investors to bring action against other banks.

Investments of poor quality

The dispute started last fall when Bank of America received a letter from 22 investors. The letter claimed that mortgage-backed securities they bought from Countrywide Financial Corp. before the financial crisis did not meet the seller’s promises about the quality of the borrowers or of the collateral. The Charlotte, N.C. based bank acquired Countrywide Financial in 2008 for $4 billion.

The investors, which include BlackRock Inc., MetLife Inc., Pimco Investment Management and the Federal Reserve Bank of New York, paid out $105 billion total for the investments. The original face value of all the bonds covered in the deal totaled $424 billion. The investors were asking for $47 billion of the bonds to be bought back.

Not B of A’s first buyback this year

Bank of America already paid out $2.6 billion in buybacks to Fannie Mae and Freddie Mac in January, and $1.6 billion to insurance provider Assured Guarantee Ltd. in April. Because of these added expenses, the bank expects to report a net loss of $8.6 billion to $9.1 billion in the second quarter of this year.

CEO could be in hot water

The mortgage buyback deal is the largest ever in the U.S.  The Wall Street Journal speculates that the bank’s CEO, Brian Moynihan, who acquired the top job only a year and a half ago, may have reason to fear for his position. Last year, Moynihan vowed to fight “day-to-day, hand-to-hand combat” against investor buybacks and to “not just do a settlement to move the matter behind us.”

May pave the way for other buybacks

The precedent of this buyback deal may lead to others, says the Wall Street Journal. Investment holders, who feel their mortgage-backed securities didn’t perform the way they were promised may decide to seek similar deals with other major U.S. banks. Bank of America, JPMorgan Chase and Wells Fargo banks collect payments for about half of all outstanding mortgages in the U.S.

Sources

CBS
Wall Street Journal
AOL News

The Federal Reserve is going to announce the debit card swipe fee cap soon. Photo Credit: MoneyBlogNewz/Flickr.com/CC-BY

The Federal Reserve will soon make a definitive ruling on capping interchange fees, or debit card swipe fees charged to merchants by banks. The Fed was mandated to set a cap on the fees by the 2010 financial reform laws, but it may set the cap higher than anticipated.

Merchants cheering prospect of lower swipe fees

For the past year, there has been a tug-of-war in the press and in Congress over interchange fees, the fee that banks charge merchants to wire money from the accounts of customers who have made purchases with debit and credit cards. Merchants ranging from small mom and pop stores to corporate juggernauts such as Walmart and Target, according to Bloomberg, lobbied members of Congress to vote in favor of the interchange fee cap. Financial industry titans such as Bank of America and JPMorgan Chase, along with small credit unions and community banks, lobbied members of Congress to do the opposite and delay any “swipe fee” cap, if not vote to get rid of the legislation outright. The Federal Reserve, according to DailyFinance, is going to announce the cap on swipe fees soon.

Cap could be set higher

The Fed had tentatively said it would cap interchange fees at 12 cents per transaction, but insiders are saying that the fees could be set as high as 24 cents per transaction. Currently, merchants are charged an average of 44 cents per transaction, according to MarketWatch. If fees are set at 12 cents per transaction, it will be a reduction of almost 75 percent. It only costs banks about a penny to make the transaction. The banking industry is estimated to take in more than $1 billion per month from swipe fees. The cap on the debit and credit card transaction fees is a portion of the Dodd-Frank Act, the financial reform laws that were passed in 2010. The card fee cap was mandated by the Durbin amendment to the Dodd-Frank Act, which will take effect on July 21.

Expect user unfriendliness

Due to the massive loss of revenues, consumers can expect that many former perks of banking will either disappear or come with far more conditions. A debit card transaction cap has been bandied about in the press by megabanks such as JPMorgan Chase and Wells Fargo, and free checking accounts have largely gone extinct. Changes to rules regarding overdraft protection fees have cost banks dearly, as well. It is estimated that banks and credit unions have lost about $1.6 billion in revenue, according to MyBankTracker, when financial reform laws mandated that customers have to be asked if they want to “opt-in” to overdraft protection programs. Faced with a drop in revenue that the banking industry is used to, the consumer is the party who will end up feeling the pinch.

Sources

Daily Finance

Bloomberg

MarketWatch

MyBankTracker

White House adviser Elizabeth Warren is in charge of setting up the CFPB. Image: Leader Nancy Pelosi/Flickr/CC BY

The U.S. Consumer Financial Protection Bureau (CFPB) is set to open next month in spite of attempts by Republican Senators to stop it. The bureau, which is the result of last year’s Dodd-Frank Act, is seeking input as to which financial entities it needs to regulate in addition to banks.

Bureau to police the consumer financial industry

The 2010 Dodd-Frank Act, which created the bureau, states that it will regulate banks with more than $10 billion in assets as well as payday lenders and non-bank providers of home and student loans. The act does not define, however, what other “larger participants” of the financial markets it should cover.

Created by the Dodd-Frank Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act is a federal statute that President Obama signed into law July 21, 2010. The law seeks to regulate the financial services industry to an unprecedented degree. From it, the CFPB was born, under White House adviser Elizabeth Warren. The stated mission of the bureau is to “make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products.”

“Consumers deserve the peace of mind that financial companies — both banks and non-banks — are following the rules,” said Warren. The bureau has until July 2012 to determine which industries will be regulated and in what ways.

Non-bank industries to be targeted

In a statement released Thursday, the bureau stated several “larger participants” that could be targeted. Those include consumer credit and related activities, consumer reporting, check-cashing, money transmitting, debt-relief services and prepaid cards. However, the bureau is also asking for input into which industries it should oversee.

Republican resistance

The bureau has met resistance from the start by Capitol Hill conservatives. The bureau can’t begin its work until a permanent director has been appointed, and some Senate Republicans have vowed to block anyone the president may nominate for the job. The bureau, however, is continuing to lay its foundation for the scheduled opening on July 21.

Bureau opposed by banks

Bank lobbies have also opposed the creation of the bureau, arguing that it will lead to fewer loans and fewer financial choices for consumers. They say it will have a negative effect on economic growth.

Sources

Reuters
Advisor fyi
Fox

American families have cut expenses to the bone, but stagnant wages still make keeping up with inflation impossible for the middle class. (Photo Credit: CC BY-SA/Dennis Jarvis/Flickr)

A corporate information service called American Pulse recently conducted a survey that shows how far the U.S. job market has fallen into the mire of class distinction. As the Huffington Post notes, 90 percent of U.S. workers surveyed admitted that they do not expect their stagnant wages to be able to compensate for rising gas and food prices.

‘Permanent midnight’ for the middle class

As the American middle class continues to sink beneath mountains of debt, rising prices and inadequate pay en route to a “permanent midnight” of poverty, faith in U.S. government’s economic policies has declined. Talk of rising inflation and a double-dip recession continues, and families who can ill afford to tighten the belt any more wonder where they can cut back. Provided salaries remain at low levels and prices continue to skyrocket, survey respondents said they’d undergo greater austerity measures in the following areas:

• Only buying necessities: confirmed by 70.5 percent
• Infrequent driving: 63.4 percent
• Spending less on clothes: 58.9 percent
• More bargain hunting: 53.1 percent
• Tightening the personal budget: 50.0 percent
• Buying generic: 49.9 percent
• Buying fewer groceries: 42.0 percent
• No change: 6.6 percent

Adieu, gross domestic product

Historically, consumer spending accounts for about 70 percent of the United States’ gross domestic product. Significant decreases in consumer spending retard economic growth. As the consumer spending growth rate of 2.2 percent in the first quarter of 2011 was much lower than economists had anticipated, the problem becomes obvious.

Nearly half of Americans believe a second Great Depression is rapping at the chamber door, according to a CNN poll. A June Gallup poll reflected shrinking consumer confidence, while a separate poll found that workers are currently less satisfied with their salaries and overall economic condition than they were before recession struck in 2008. Lack of career advancement was a common problem listed by respondents in nearly all recent surveys on the topic.

Breaking the link between profits and raises

Getting a raise used to have some connection to corporate profits, notes Brad Delong in Mother Jones. However, even though U.S. Department of Labor research has shown that U.S. worker productivity has surged, income has remained stagnant for most Americans. Data indicates that if the median U.S. household income had kept pace with the state of the economy since 1970, it would currently be $92,000, rather than $50,000. U.S. CEOs are making more money than they have since 2007.

How to ask for a raise, just in case

Sources

American Pulse

CNN

Economic Policy Institute

Huffington Post

Mother Jones

Though the Better Business Bureau is a trusted institution, many businesses insist the rating system is akin to robbery. Image from Wikimedia Commons.

One of the supposed safeguards against unethical companies is the Better Business Bureau ratings system. Customers have long relied on the bureau’s grading system, but now the BBB is plagued by allegations that it runs a “pay-for-A” scheme.

Long-standing business rating service admits mistakes were made

The Better Business Bureau is thought to be among the few resources that consumers can trust in order to find out whether a business is trustworthy. The BBB has existed for decades and gives the public at large a way to vent frustrations at dealings that went sour, but there is a growing body of evidence that something could be rotten about the state of the BBB. Allegations have been made repeatedly over the years that businesses have to pay for a membership to get an “A” rating. According to a recent article at DailyFinance.com, the finance and business news site of AOL News, in response to questions on whether its rating system has a “pay to play” component, a BBB rep admitted “mistakes” had been made.

Rating system changed after news sting

The BBB announced last year that it was going to change its business rating system following a sting operation by a small group of Los Angeles area businessmen, an anonymous blogger and an accompanying “20/20″ news segment, according to ABC. It was also revealed that some very high profile companies have received disparaging grades for not being members. Some companies that have received F grades that aren’t BBB members include Wolfgang Puck restaurants, Disneyland and the Boston Ritz Carlton hotel. The Boston Celtics basketball team at one point held a D minus, and the New York Yankees currently have a C minus. The Boston Red Sox, as fate would have it, have an “A plus” rating– and the team is a BBB member. The sting operation by some Los Angeles area businessmen established a company called Hamas, after the Palestinian terrorist organization, and by simply paying $425 for a membership, Hamas received an A minus rating.

Holes exist in some nets

The group that created the Hamas company also created a BBB listing for a company they called Stormfront, the name of a neo-Nazi organization, which also received an A rating. It is not that the BBB is simply a “pay to play” organization, though it has been criticized as such by a fair number of people. The BBB does give consumers a legitimate forum to air grievances and use an impartial third party to register legitimate complaints about businesses.

Sources

Daily Finance

ABC

ABC on BBB Hamas

ABC on Ritz Carlton

BBB New York Yankees

BBB Boston Red Sox

A gas station in the now-defunct town of Empire, Nev. Image: aturkus/Flicker/CC BY

The town of Empire, Nev., has been wiped off the map. Even the town’s zip code has been deleted. The company owned-town was the last of its kind, and was a victim of the recession. Located about 100 miles north of Reno, the town was owned by the U.S. Gypsum company, which mined the mineral and turned it into drywall Sheetrock for the construction industry. The company is the nation’s largest supplier of Sheetrock. But the factory shut down on Jan. 31, 2010. The 99 employees were reduced to four who stayed to clean things up. After that, residents were given five months free rent to finish out the school year.

Welcome to Nowhere

As of last Monday, the town ceased to exist. All 300 former residents have moved on and even the town’s zipcode, 89405, no longer exists. All that remains is an eight-foot tall chain-link fence around the 136-acre plot with a sign reading “Welcome to Nowhere.”

The mining town was founded in 1923. It was bought by U.S. Gypsum in 1948. In its heyday, the town had a population of more than 750. The company rented apartments to its employees for $110 to $125 dollars a month, and two-bedroom houses for $250. The company provided water, sewer, trash, cable TV and Internet access free of charge. It had four tree-lined streets, a tennis court, a swimming pool, a nine-hole golf course and a community hall. Former residents say it was the kind of place where you could leave your door unlocked and never worry.

‘The recession just outlasted us’

The drywall industry peaked in 2006, when the company had $297 million in profits. But over the past three years, U.S. Gypsum has reported losses of $1.5 billion. With the recession has come a vastly reduced demand for Sheetrock. Steve Conley, who was employed by the company since the early 1970s, said, “the recession just outlasted us.”

Calvin Ryle, 62, who worked at the plant since 1971, was given the task of shutting down the conveyor belt for the final time. “The worst thing you can hear in a board plant is silence. You’re a part of building America. It’s not just making Sheetrock here,” he said. The plant’s maintenance foreman, Aaron Constable, reported that Ryle wept as he shut the belt down.

Gold mines and gold helmets

A great many of the employees have found work in Nevada gold mines, an industry that is booming. The Gerlach-Empire school, to which the 23 Empire children were bussed every day, has been reduced from 73 students to just 12.

Rumors abound that if the economy recovers, the plant will reopen. But most former residents are not holding their breath. Ryle told the Christian Science Monitor before he moved that he planned to leave his gold helmet behind in his house. The gold helmets, worn with pride by the factory workers, were awarded to employees after 25 years of service.

Sources

Huffington Post
Daily Mail

Payday loan clerk shot in robbery. / Image: swanksalot/Flickr/CC BY-SA

Jamie Brock, a clerk for USA Payday Loans in Hanover park, Ill., was shot in the forehead at point blank range during an October robbery. The shooter, Admise Wilson, apologized to her in court Monday. He was sentenced to 25 years in prison.

Shooter had been in twice before

The robbery occurred on Oct. 5, 2010. Wilson, 34, was a regular customer who had been in twice before that day to check on his account. On the second visit, seeing that she was alone in the store, Wilson told Brock, 35, that he needed to check something at his bank and would be back in five minutes. He returned with a .22-calibre handgun, put the muzzle to her forehead, and fired.

”Everything went black,” Brock said. “I fell. I couldn’t see.”

Victim played dead

Wilson took $1,000 in cash and threw a paper shredder at Brock. He then put the gun to the back of her head, but Brock played dead.

“I’m holding my breath and thinking, ‘Please don’t shoot me,’” Brock recounted Monday in the Cook County Circuit Court.

Victim identified the gunman

Wilson fled without firing another shot. Brock then called 911 and identified the gunman. Next she knocked on the wall, trying to get help from the Jimmy Johns sandwich shop next door. Finally, she called her family and told them what had happened.

Wilson was arrested an hour later. Police found the gun still in his possession, as well as $242 in cash. He was taken into custody and later confessed to the shooting. He was charged with several crimes, including attempted first-degree murder.

A remarkable recovery

Brock has made a remarkable recovery, though she regularly sees a neurosurgeon, and has still not returned to work. The incident left a 3-inch scar in her forehead.

Victim confronts her shooter

Brock addressed Wilson in court Monday as she held her husband’s hand. “I don’t know the reason why you did what you did. I have a daughter who just had her eighth-grade graduation,” she said. “I have a son with cerebral palsy. I was the breadwinner in my family. You don’t know at all what you could have caused me that day if I had died.”

Wilson made a tearful apology to Brock in court. “I didn’t mean for it to happen that way. I’m sorry for the pain I caused to you and your family. I’m glad you’re up and moving around.”

Robber sentenced to prison

Wilson was sentenced to 25 years in prison by Judge Thomas Fecarotta Jr. To avoid prosecution for attempted murder, Wilson pleaded guilty to armed robbery and aggravated battery with a firearm. Under the terms of the plea bargain he must serve at least 85 percent of the sentence and three years supervised probation.

Sources

Chicago Tribune: http://triblocal.com/hoffman-estates/2011/06/20/please-dont-shoot-me-woman-recalls-shooting-as-man-pleas-guilty-apologizes/
Daily Herald: http://www.dailyherald.com/article/20110621/news/706219985/

People should watch for payday loan collection scams, which are usually conducted over the phone. Image from Wikimedia Commons.

Though any form of credit, from mortgages to payday loans, carries some risks and responsibilities, those risks do not include putting up with illegal activity. Unscrupulous people are trying all sorts of methods, including payday loan collection scams, to try to bilk people out of money.

Arkansas Attorney General sues Kansas firm for illegal collections

A Kansas-based debt collection firm is being sued by Arkansas Attorney General Dustin McDaniel for attempting to illegally collect debts the company claims are owed to payday loan lenders by citizens in the state of Arkansas, according to ArkansasNews. McDaniel has sent National Credit Adjusters two requests for information concerning its attempts to collect payday loan debts in Arkansas, but the Hutchinson, Kan., firm has not responded to either. According to a post on the Attorney General of Arkansas website, payday loan lending is illegal in Arkansas, and the debts are therefore not collectable, according to the Attorney General’s office.

Beware collectors posing as cops

A popular trick among some unscrupulous debt collectors and scam artists is to call people and pose as either state officials or police officers. People in North Carolina, according to WFMY, a CBS affiliate in the Raleigh, N.C. area, have been receiving phone calls from telemarketers posing as agents of the Federal State Bureau of North Carolina saying that people owe a debt and have to pay up right away or be arrested. An Ohio man, according to Credit.com, was contacted by lawyers for the Brooklyn County Court and told he owed a payday loan company almost $800 for a loan and collection fees, though he had only applied for an online loan but did not take it. Similar phone calls, involving a “thick accent” and posing as an official through the non-existent Brooklyn County Court, have been observed across the country, and many people who received such calls had recently applied for a payday loan online.

Forewarned and forearmed

Debt collections fall under the Fair Debt Collection Practices Act, and people who feel a debt collector is not abiding by these laws should complain to their state attorney general’s office and the Federal Trade Commission. Ask for a statement in writing, as a debt collector is required to provide one. Do not stand for tactics of intimidation; it is illegal for debt collectors to be abusive when trying to collect a debt. Also, if a debt collector claims to be an attorney, ask for the person’s name and proof of membership in the state bar association. Impersonating an attorney is a crime, and consumers should never hesitate to ask for credentials.

Sources

Arkansas News

Arkansas Attorney General’s Office

Credit.com

WFMY

Fair Debt Collection Practices Act

Paying off credit cards can save you big money long term. (Photo Credit: CC BY-ND/lemonjenny/Flickr)

A certificate of deposit is traditionally a worthwhile, low-risk investment. However, CD rates have been so low lately that many consumers have moved their money into more productive financial ventures, reports Bankrate. Paying down debt – particularly credit card debt – has taken center stage.

One-year CD rates scraping the bottom

According to Bankrate, the current average for one-year CD rates is a miniscule 0.44 percent. The highest surveyed was 1.31 percent. Considering that credit cards typically carry an APR of 20 percent or more, a paydown is attractive. U.S. consumer credit card debt still exceeds $790 billion, despite significant shrinkage since 2004, reports the Federal Reserve. That explains why CD balances have fallen to a six-year low of $839.2 billion.

This isn’t a new phenomenon. Market Rates Insight notes that such a shift was apparent in September 2010. From Jan. 1, 2010, to June 30 of the same year, the average monthly CD amount declined by about $3 million. Of the amount that was not rolled over, surveys indicate at least 15 percent was used to pay down credit cards. The rest went into liquid accounts like checking, savings and money markets.

Demand for liquid accounts is high

The Credit Union National Association’s June Credit Union Trends Report found that highly liquid accounts are desirable to consumers looking to eliminate debt. Regular share accounts, money markets and share draft accounts have all seen greater activity since April 2010: a 128-percent total savings increase. The $834 billion in total savings reflected a $35 billion (4.4 percent) increase since April 2010, writes Credit Union Times. CDs dropped 5.2 percent over the same period. These results are consistently below historical trends and suggest that the U.S. is still firmly in the grip of economic uncertainty.

Dave Colby, the chief economist at Credit Union National Association Mutual in Madison, Wis., sees the writing on the wall.

“From a member perspective, households are rational and will continue to pay down higher-cost debt obligations versus building savings, which are losing ground to inflation,” he said.

Savings vs. debt: Weighing the pros and cons

Sources

Bankrate

Credit Union Times

Credit union trends report (PDF)

Money Rates

Are payday loan cases clogging Utah courts? / Image: bloomsberries/Flickr/CC BY-ND

A recent study indicates that payday loan cases are clogging the courts in Utah, particularly in the city of Provo. But payday lenders say the report is biased and misleading.

80 percent of all small claims cases

The Coalition of Religious Communities reports that payday loan cases made up 80 percent of all small claims cases in the district court of Provo, Utah, between 2005 and 2010. The report further claims that payday loan cases make up 70 percent of justice court cases in Provo and 62 percent of all cases in Utah County. “The sheer number of cases adds to already severely backlogged court dockets,” the study concludes.

“We went to court one day, and in 35 minutes, they looked at almost 800 cases,” said Linda Hilton of the Coalition of Religious Communities.

One firm especially guilty, report says

Hilton says one large firm, Check City, has a particularly unfair policy. The company’s contract has a clause requiring all prosecutions to be handled in Provo, where it is headquartered. This causes an undue hardship for borrowers living in other parts of the state, claims Hilton.

A spiral of debt?

An editorial in the Daily Herald claims that, in essence, the taxpayers are paying for the collection agency of a controversial industry. The editorial goes on to surmise that the volume of cases supports the idea that people who are financially desperate enough to take out payday loans will continue getting into deeper debt.

“We had this feeling from the clients that were coming in that something was not right,” Hilton said. “But our experience here is that most people are in debt for months and months.”

Most cases default

Reannun Newton, a Provo City Justice Court administrator, disagrees. “Because most of them go to default, they process pretty quickly.” She went on to explain that, though the court may have several hundred payday loan cases a day, typically only about 10 people will show to contest them. “It is a lot of cases, but anyone who files a small claim has to pay a [$65] filing fee.”

Courts generate revenue

“Not only are these court cases not burdensome on city government or taxpayers, but the courts are generating revenue for cities and counties, thus benefiting local tax payers,” said Wendy Gibson, community relations director for Check City.

Taking it to the lawmakers

Republican Congressman Brad Daw of Orem claims to be looking at what other states are doing about payday loan regulation. He has suggested that limiting borrowers to one loan per paycheck might be one possibility. Linda Hamilton plans to take the Coalition’s report to lawmakers before this year’s session is out.

Sources

Desert News
Daily Herald

"Greatest Vitamin in the World" pitchman faces federal indictment. / Image: shannonkringen/Flickr/CC BY-SA

Well-known TV pitchman Don Lapre, who bills himself as “the king of infomercials,” has been indicted in Phoenix, Ariz. Federal prosecutors have charged Lapre with 41 counts, including conspiracy, mail fraud, wire fraud, promotional money laundering and transactional money laundering.

As seen on TV

Lapre, 47, was often seen on television infomercials between 2004 and 2007, claiming he turned his hard-luck life around with get rich quick schemes and enticing viewers to follow in his footsteps. He famously pitched how he made $50,000 a week from his one bedroom apartment. The campaign is perhaps best remembered by some for being parodied by David Spade on Saturday Night Live.

‘The Greatest Vitamin in the World’

The charges against Lapre were handed down last Wednesday by a federal grand jury in Phoenix. They stem from allegations that Lapre bilked 220,000 viewers out of $52 million by enticing them to invest in worthless online businesses through his company called The Greatest Vitamin in the World. Additionally, the charges claim Lapre was personally paid $2.2 million from the company between 2004 and 2007.

False claims of support

The infomercials promised investors that they would be backed by an expensive national advertising campaign and other services. However, federal prosecutors claim they were misled. Allegedly, after investing they were pressured to pay for additional advertising and services.

‘He will face justice’

“This indictment goes to show that if something sounds too good to be true, it probably is,” said U.S. Attorney Dennis K. Burke. “Mr. Lapre used incessant nationally televised infomercials to hawk his vitamins and worthless websites as a way to get rich quick without working hard. His scams swindled a sea of victims, but thanks to the efforts of the Postal Inspection Service and the IRS, he will face justice.”

Hundred of complaints received

The company was closed down in 2007 after the Phoenix Better Business Bureau, the Internet Crime Complaint Center and the U.S. Postal Inspector Service received hundreds of complaints.

Lapre is due to be arraigned in a Phoenix U.S. District Court on June 22. The charges could carry potential fines of $250,000 to $500,00 per count, as well as federal prison terms between five and 25 years.

Sources

Walletpop
USA Today
Daily Mail

Don Lapre hawks ‘tiny classified ads’