Little Foxes

July 7, 2008

Since my watch has broken I find that I don’t spend near as much time looking down at my wrist. You see, looking at my watch had become a response to even the mildest bit of stress. What was meant to make me more efficient had actually become a hindrance to me. So I’ve found that I really don’t miss it all that much. I find myself in less of a rush, and I’ve found a great conversation starter in “Do you have the time?”

What are some other things that we “can’t do without” which in reality hinder us almost as much they help? Facebook comes to mind. I’ve recently become hooked on that. From a personal finance perspective lots of things pop into my head. New cars for one. Why pay thousands more for new car when a used cars are widely available. Or consider cell phone costs. I just don’t see how having a Blackberry Curve will make me $1,000 per year more efficient. But I would sure feel hip and with it while I surf PCU Mobile on it.

Here’s my point. Looking for ways to save money and prosper financially sometimes requires counter-cultural steps. Don’t just follow the crowd and give all your money away just to experience the same thing as everybody else.

There’s a proverb that reads…

“Catch for us the foxes, the little foxes that ruin the vineyards, our vineyards that are in bloom.”

(Song of Solomon 2:15)

What are the “little foxes” in your monthlyFox image payments or expenses that ruin your budget? Is it a high car payment or a 2nd mortgage? Maybe its a shopping fix? (guys have those too) Or a gas guzzling SUV? What conveniences can you do without that will make a substantial difference in your budget over time. Hmm… Cable TV?


Two Perspectives… maybe three.

January 24, 2008

Update 2-17-2008: A revised edition of this post appeared in the Danville Register & Bee opinion section today. Here is a link to that column.

You may have heard that in Virginia the General Assembly is considering putting a cap on the interest rates that can be charged by payday lenders in our commonwealth. There have been several articles about the subject to appear in our local paper, the Danville Register & Bee, as well as other places as well.

An Op-Ed article in The New Dominion magazine says that ads by payday lenders are misleading. It gives some very reasonable responses to the claims of payday lenders made in their advertising and lobbying.

The Register & Bee Opinion Section says that there are no alternatives to it in our area, and that if payday lenders are forced out of business, something will need to step up and fill the gap left by their absence.

I’d like to make a response to the idea that there are currently no alternatives to payday lenders in the Dan River Region. But first, here’s a question I’d like to throw out: What did people who depend on payday lenders do before there were payday lenders?

Now, there are alternatives to payday lending in our area. There are nine credit unions from Martinsville to Danville to South Boston. Of the two that I’ve worked for I can say with certainty that they have a strong desire to serve their members no matter how dire their financial situation might be. At my two credit unions personal loans are granted for as little as $500. True, that might be more than what some payday lending customers need, but what is not needed can simply be paid back on the loan the same day. I’ve never heard of a credit union charging an early-payment penalty. Perhaps a better alternative is to use that “extra” money to kick-start a savings account. Then divert a portion of the loan repayment towards adding to that savings account. This would help establish the habit of saving money which in turn will reduce the need to borrow in the future. The same small loan amounts also apply to vehicle loans. The two credit unions I’m intimately familiar with are not opposed to refinancing older vehicles if it is truly helpful to the borrower.

But, then there is the argument that not many people can join a credit union. This is just a lack of awareness. “I wonder if there’s a credit union I can join?” is not a question that the average person asks. The fact is that anyone from Martinsville to Danville to South Boston can join at least one credit union without having any family connections. When you consider the fact that a member’s immediate family can also join, it’s not far reaching to say that the average person in our community can join 2-3 credit unions. Without my employment connection I can join 5 locally. (That’s because I married a wonderful Danville gal!)

So why aren’t people asking that question, “I wonder if there’s a credit union I can join?” I believe it is because the general public thinks they are just like banks. But that’s just not the case. I once knew someone with 20+ years experience at a bank who came to work at a local credit union. This person was overwhelmed at the difference between the credit union and banking worlds. The idea that we’re here to do what’s best for the credit union member instead of what’s best for Trustees and Shareholders was a totally new concept. It’s like you really don’t understand it until you do it. The same is true for credit union members. They really don’t understand the difference until they experience it for themselves.

Finally here’s a Register & Bee Letter to the Editor which is from someone who depends on payday lending. It’s short so here it is in it’s entirety.

Support payday lending

To the editor:
In response to, “No rest for either side in payday lending debate,” (Dec. 30, page B5), I am praying the government will not close down the payday lenders in our city.
Without payday lenders, I don’t know what I would do. I have no insurance and I am a diabetic and I have to get loans from a payday lender in Danville to get help with my medications and my supplies.
If it wasn’t for them loaning me money until payday, I wouldn’t be able to feed my children or get the medical help that I need. I know there are some people out there that abuse these companies, but I am speaking for those of us who really need them because we can’t make ends meet on our small salaries and we can’t get help from the government agencies for medical supplies or food.
Please don’t close down the payday lenders.

Dry Fork

There definitely are legitimate points in this letter. Private insurance would be really expensive for a diabetic, and most small employers don’t offer health insurance. (Side note: I wonder what kind of employee benefits payday lenders offer?) There is that zone that many people fall into where they make too much for government assistance but their salary is not really enough to live comfortably. She’s probably a single parent too. Raising a family is hard, expensive work with two parents at home.

There are two things I’d like to know, three that I’m curious about. How did Melissa or people like her manage before payday lending became popular in our area? How much money in fees has Melissa has paid out to her payday lender? If she had half that money today what could it be used for? If Melissa reads this post I hope that she will contact one of the credit unions I’m about to list below. Perhaps they can help her get out of falling back on her payday lender and help her to get some savings started.

Here is a comprehensive list of credit unions in the Dan River Region along with who can join them. If you are stuck in that cycle of having to take out one payday loan after another, please look through this list and see if there is a credit union you can join. Remember to consider if anyone in your family can join one of them. If so then you could join through your family member.

  • Piedmont Credit Union – That’s us, we serve the Educational Community and lots of local companies and businesses. You can see exactly which companies we serve here. We’re always looking to expand the list so let me know if you would like me to contact your employer about offering the benefit of a local credit union.
  • Goodyear Danville Family CU – They serve anyone who works at the local Goodyear plant.
  • Danville City Employees FCU – Any City of Danville employee may join. (434)799-5027
  • Danville Regional Medical FCU – Any Danville hospital employee may join, as well as employees of other medical facilities which have started a relationship with the credit union.
  • URW Community FCU – They started off serving the United Rubber Workers Local 831 Union at our local Goodyear plant. Now membership is open to anyone who lives or works in Danville, Pittsylvania County, and Caswell County, NC.
  • Halifax County Community FCU – Anyone who lives in Halifax County may join. (434)575-7916
  • Danville Postal Employees CU – Anyone who works for the Danville Post Office can join. (434)793-4132
  • Martinsville Dupont Credit Union – Once the credit union that served the old DuPont plant in Martinsville. Now they welcome anyone who lives or works in Martinsville, Henry County, Patrick County, Franklin County, Pittsylvania County, and Danville.
  • Martinsville City Employees CU – Anyone who works for the City of Martinsville. (276)632-7775
  • Martinsville Postal Employees CU – Anyone who works for the Martinsville Post Office can join. (276)632-7775 (yeah it’s the same number as Martinsville City Employees CU, not a typo, they’re small and they share the same space and employees.)

Update 2-17-2008: A revised edition of this post appeared in the Danville Register & Bee opinion section today. Here is a link to that column.

Keeping your name out of the paper

October 24, 2007

This week the City of Danville published the names, addresses, and amounts owed of everyone in town with delinquent real estate taxes. Instead of joining in with the many voices who say that these people deserve public shame and embarrassment, I’d like to approach it differently. We should all exercise at least a modicum of compassion before passing judgment on people who we don’t know anything else about except that their taxes are past due. I seriously doubt that the majority of real persons on that list intentionally decided to not pay their taxes, though a few may have. Most people have good intentions when it comes to paying their bills, and in general just living their lives. For these people perhaps one thing lead to another and the tax bill simply got put off repeatedly until it was just too overwhelming to deal with. This is the case with so many otherwise good people who don’t have a good spending plan or budget to make sure all their bills get paid on time.

Here’s a simple tip to keep your name from appearing in the paper. Start a special savings account for the sole purpose of paying taxes. You know how many times you get paid between now and when the tax bill comes in. Figure out how much you need to save every payday in order to have the money available when you need it. Direct Deposits and Payroll Deposits can be setup to automatically send a portion of your paycheck to this special savings account so that when the bill comes at the end of the year, the money will be there to pay it. The same account could be used to save up to pay for homeowners insurance, school tuition, or anything that you only pay once or twice per year.

Another option is to take out a loan to pay taxes. That’s probably a good option if your name is already on the list! Either way you go, loan or savings, take the time to sit down and map out proactively how you plan to spend your money in the coming months. Then stick to your plan!