Wallet Blog

Small Claims Court: How to Win Against Deadbeat Clients

John Kiernan — Wed, 22 May 2013 19:29:37 +0000

Posted by: John Kiernan

Many people —including yours truly— work as consultants on a contract basis. Typically, this is a straightforward business arrangement. Consultant does the work, client pays as dictated by the signed contract.

But some clients aren’t always so forthcoming, which means it might be time for a visit to small claims court. The filing fee ($15-$150) depends upon your state and the amount you’re claiming in damages. Likewise, the dollar-amount limits for claims range between $2,500 and $25,000 depending upon the state in which you work and reside. Nevertheless, the process is typically the same.

BEFORE STARTING THE LEGAL PROCESS

Before you take someone to small claims court, you need to objectively evaluate the likelihood of winning your case. Do you have a signed, written contract? Did you complete the work on time and within the terms of said contract? Can you prove that your client did not hold up his or her end of the bargain (i.e., are they in “breach of contract”)? And have you suffered economic loss (i.e., not being paid for the work completed) as a result of this breach of contract?

If you can answer —and prove— “yes” to all of these questions, hold your horses for a minute. Take the time to request payment again. Certified letters and emails are good ways to document that you have made a conscious effort to handle this breach of contract on your own.

You can also hire a mediator to help you and your client work through the issue. While this sounds like a hassle that will cost you valuable time and money, the small claims court judge will look favorably upon your efforts to collect the debt.

Additionally, you need to think about the likelihood that you’ll be able to collect the judgment should you win. If your client is broke, you might be better off closing the door on it and writing it off on your taxes as a bad debt. (Talk to your accountant about that.)

PREPARING FOR COURT

If you’ve determined that going to small claims court is likely to be worth your time, you will need to collect documents that support your argument. Typically, because the amount you’re trying to claim would pale in comparison to legal fees, people represent themselves in small claims court.

Items you will need to gather prior to filing suit include:

Your complete name and address
The complete name and address of each person/business you’re filing suit against. If the business is a partnership, you should name all individual partners and also the legal name of the company/corporation.
The amount of damages you intend to claim
A plainly written statement of your claim, including the relevant dates of your complaint
A copy of the signed written contract
Printouts of emails that show you did the work you were contracted to do
Evidence that you have tried to collect upon your debt5 via request or mediation

It’s helpful to organize these documents in a binder; I suggest putting a table of contents in the front, then your signed contract, and then documentation of your work, status updates, and attempts to collect, in chronological order.

FILING SUIT IN SMALL CLAIMS COURT

Normally, you’ll file suit in the county where 1) the defendant (person being sued) lives, or 2) where the services under dispute were performed. You can often find the small claims court listed in the phone book as “justices of the peace.” If you have questions, or need to know the filing fee required (this typically must be paid in cash, money order, or company check), ask the court clerk. Be polite!

Go to the court personally and ask to see the clerk in charge of filing small claims. Ask this person to prepare a small-claims statement; you will be required to swear under oath as to its veracity. You must file in person. Your filing fees can be added to the judgment amount, should you win your case.

The clerk will tell you how the court sets the trial date. You may be responsible for sending a certified, return-receipt letter to the defendant, giving notice of the trial date. Procedures differ in different courts. Within a couple of weeks, call the clerk to confirm that:

The defendant has been served
The date he/she was served
A trial date and time has been set
You have a case number

Write down all of this information. On your trial day, show up on time, dressed nicely, with your supporting documents. If the defendant doesn’t show up despite being properly served, you’re likely to win on default.

ONCE YOU’VE WON YOUR CASE

Just because you’ve won a judgment against your deadbeat client doesn’t mean that you’re in the clear. Typically, you must wait until a citation has been served upon the person you sued. You might need to send a letter to the defendant yourself. If this doesn’t result in a check in your mailbox (if it does, be sure to make a photocopy of the check before depositing it), you probably will have to wait between two weeks and 30 days before putting a lien on their property or asking the sheriff to assist you in collecting the judgment from their bank account. Is this a hassle? Sure. But it beats being stiffed.

Sequestration: So Much For The Tired & The Poor

Lynn B. Johnson — Mon, 13 May 2013 23:03:53 +0000

Posted by: Lynn B. Johnson

When sequestration’s automatic budget cuts went into effect on March 1 of this year, many were unclear as to how these cuts would affect daily life and social programs. We were told that although the sequester would reduce the federal budget deficit by $1.2 trillion dollars over 10 years —as required by the Budget Control Act of 2011, which was enacted in part to resolve the debt-ceiling crisis— the cuts would not go into effect immediately.

Well, it’s two months later and few people seem to be talking about where these cuts are headed, so Wallet Blog did some investigation.

It seems the Office of Management & Budget (OMB) was on to something last year when it reported that while “the sequestration itself was never intended to be implemented,” doing so would be “deeply destructive to national security, domestic investments, and core government functions.” Sequestration’s “harmful” cuts are evenly divided between defense and domestic spending. The defense cuts equal $42.7 billion. Domestic spending cuts are split between Medicare ($9.9 billion) and all other domestic cuts ($32.7 billion).

We’re actually getting off easy with only $85.3 billion in spending cuts this year since January’s “fiscal cliff” legislation postponed the sequester’s onset until March 1. All other years —until Congress and President Obama choose to agree on a resolution to end the cuts— we’ll have annual spending cuts of $109 billion.

UNEMPLOYMENT

The non-partisan Congressional Budget Office estimates these cuts will affect the creation or retention of nearly 750,000 jobs nationwide by the end of 2013 (including reductions in armed forces). Unfortunately, these cuts are also affecting the size of federally-funded extended unemployment benefits: states are required to cut monthly disbursement amounts by as much as 17.69% (California). If the typical weekly unemployment check is $300, these cuts will reduce that amount to as little as $246.93, depending upon where you live. This will also affect the economy as a whole, seeing as economists have estimated that every $1 in unemployment assistance nets a $2 return-on-investment through increased economic activity.

TAX FRAUD

While the sequester hasn’t forced the IRS to lay off workers (as was originally feared), the agency is mandating one work furlough day per pay period for its employees. This will undoubtedly hamper its efforts to combat fraud and offshore tax evasion, with billions of dollars on the line. The IRS closed more than 200,000 cases of identity theft during the first quarter of 2013 when at full strength; how could losing of days upon days of manpower each month not have negative repercussions?

CHILDHOOD EDUCATION

Even those who do not pay taxes will feel the heat. In February, the White House announced that up to 70,000 children “would be kicked off Head Start,” risking 10,000 teacher jobs as well as funding for up to 7,200 special education teachers, aides, and staff. Special education will lose $644 million, or 5% of its funding.

Incidentally, an amendment that would have reversed the sequester’s impact on special education– fell six votes short of passing in a March vote. Every Yea was a Democrat. Every Nay was a Republican. We can therefore only expect a surge in long, resource-sucking lawsuits as families fight to ensure their children receive the schooling they need.

HUNGER ABATEMENT

What about the hungry? In the next six months, an estimated 600,000 women and children will be dropped from the Women, Infants, and Children (WIC) food and nutrition service that supports low-income women and children up to age 5 with nutritious food. This will also result in the loss of at least 1,600 state and local jobs. Meals on Wheels and other federally assisted programs that feed needy seniors – many of whom are ill, frail, and/or homebound – will also have to reduce its output by some 4 million meals.

HEALING THE ILL

Already, sequestration cuts are being felt by the ill, who are in turn putting the heat on Congress. On April 2, Sen. Pat Toomey (R-Pa.) sent a letter to Department of Health and Human Services Secretary Kathleen Sebelius, urging her “to administer the [sequestration] cuts in a manner which protects beneficiary access to critical oncology services.” The cuts are causing private cancer clinics to turn down Medicare patients. Estimated cuts to the AIDS Drug Assistance Program could result in 7,400 fewer patients receiving their HIV medications.

So, if you’re thinking that sequestration is no big deal, please keep in mind that for many, these budget cuts are literally the difference between life and death.

Sequestration: So Much For The Tired & The Poor

Our Wealth Disparity & What it Means For Future Generations

Lynn B. Johnson — Thu, 02 May 2013 05:15:12 +0000

Posted by: Lynn B. Johnson

Last week, the Pew Research Center announced that between 2009 and 2011, the mean net worth of the wealthiest 7% of U.S. households increased by an estimated 28%. Meanwhile, the rest of us saw our net worth fall 4%.

This makes sense, right? After all, the richest people typically invest the bulk of their wealth in the stock and bond markets (and can afford to ride out economic valleys), while the less affluent are more likely to call their homes their primary investments.

Sub-prime loans and the myriad ways that foreclosures hurt the housing market —too many foreclosed homes equal a glut on the market, plus abandoned properties devalue neighboring homes— have taken an unrecoverable bite from the assets of households that make under $140,000 yearly. But the upper 7% of households have seen their mean wealth increase “almost 24 times that of those in the less affluent group in 2011,” according to Pew.

Part of this might have to do with the subprime derivatives that saw investors gain wealth each time a homeowner stopped paying a mortgage. And, while market investors took a hit in the mid-2000s, the S&P 500 has risen 60% since 2009, while housing prices remain 26% below the 2006 market peak.

So, the disparity between rich and poor is increasing. Why should we care? Because it’s affecting the next generation of Americans: our children.

According to The Great Divide series on NYTimes.com, the rich-poor gap in students’ test scores is nearly 40 percent greater than it was 30 years ago. In fact, the rich/poor gap between students’ SAT-type test scores is 125 points: nearly double the white/black gap of 70 points. NYTimes.com reporter Sean Reardon writes, “The academic gap is widening because rich students are increasingly entering kindergarten much better prepared to succeed in school than middle-class students. This difference in preparation persists through elementary and high school.”

If the difference persists through high school, then more rich than poor children will attend college. “Educational success is much more important than it used to be, even for the rich,” Reardon adds. And if the children of the rich are achieving higher scores than middle-class kids, then it will be the rich children who get the best educations —particularly as it becomes more apparent that the “rising costs of higher education are pricing the middle class out of college”— while the middle class slips to the lower class and the lower class is entirely out-priced and out-achieved.

What can be done to end this vicious cycle of wealth and test-score disparity? Free or lower-cost access to early childhood education would be a good start. My child’s half-day, five-day-a-week pre-K program costs $466 a month; it’s our largest bill besides our mortgage. Quick action to rectify the lack of educational resources for the 93% would help to even out test scores 15 years from now. And it will pay off: multiple journals have reported that for every $1 invested in Head Start programs, our nation reaps a return-on-investment of $7 to $9.

Check That Charity Before Opening Your Checkbook

Lynn B. Johnson — Thu, 25 Apr 2013 16:00:27 +0000

Posted by: Lynn B. Johnson

Americans like to help. In fact, total charitable contributions by individuals, corporations, and foundations was an estimated $298.42 billion in 2011, up 4% from 2010, according to a report from the Giving USA Foundation and the Center on Philanthropy at Indiana University.

Unfortunately, there are people who try to profit from tragedy. In 2009, the FTC launched the “Operation False Charity” initiative in conjunction with Attorney General offices and law-enforcement departments nationwide in order to crack down on “fraudulent telemarketers claiming to help police, firefighters, and veterans.” If you feel that you have been defrauded, you can file a complaint with the Federal Trade Commission.

Despite growing awareness and prosecution, however, the dust had hardly settled on the Boston Marathon bombing sites when reports appeared of fraudulent charities purporting to help those wounded in the attacks.

Tragedy and charities do go hand-in-hand, and it always feels good to help someone hurt in an act of God or act of terror, but it’s important to keep yourself —and your bank account— safe in the process

Hang up that Phone

The first way you can keep from being scammed by a fraudulent charity is to never, ever, ever donate money over the phone. The Federal Trade Commission suggests that when receiving a donation request over the phone, you should review information on the charity.

The BBB Wise Giving Alliance, a non-profit organization that falls under the same umbrella as the Better Business Bureau system, takes that one step further.

“When a telemarketer calls to solicit a donation from you, ask for them to send you some materials through the mail rather than providing your credit card information over the phone,” said Shawn Van Gorder, director of charity evaluation for the BBB Wise Giving Alliance. “This gives you a chance to take a look at their annual report or other documents before making your decision.”

Investigate the Organization

There are many ways to determine the veracity of a non-profit organization. One is the BBB Wise Giving Alliance, which posts evaluations of nationally soliciting charities based on a set of 20 standards for accountability. Local charities are sometimes evaluated by a BBB in that area; of 150 local Better Business Bureaus across the United States, 50 of them provide local charity reviews.

If the charity that is soliciting your donation does not have a Wise Giving Alliance evaluation, try your state Attorney General’s office. Each state’s Attorney General oversees charitable solicitations in that state. In order to solicit donations legally within a state, a non-profit organization must file paperwork with the AG.

The IRS website also has a searchable database of charities that have received tax-exempt status. Go to IRS.gov and search for “Publication 78.” Van Gorder warns, “This list lags behind, so there may be some new organizations that have been granted tax-exempt status but have not yet been added to the list.”

After destructive events such as the Sandy Hook shootings and Hurricane Katrina, the IRS does fast-track certain charities to approve them for soliciting, but Van Gorder says it may take a while before that information is available to the public.

Rely on the Ones you Know

Ultimately, you’re usually better off by donating your money to an organization you may have already donated to. Many national charities help in the face of tragic events or national disasters, including the American Red Cross and UMCOR. Sending a donation to an established non-profit that has experience with providing assistance during disasters is generally going to provide a bigger impact. You can use the BBB Wise Giving Alliance, your state’s Attorney General, or the IRS to do more background research on other charities deserving of your dollars. Be wary of new charities and do your research.

“I think the bottom line is that most non-profit organizations aren’t scams, but that doesn’t mean you should let your guard down,” Van Gorder said.

Break Out of Your Grocery Rut (and Save in the Process!)

Lynn B. Johnson — Thu, 18 Apr 2013 16:15:12 +0000

Posted by: Lynn B. Johnson

Some people shop at the same store at the same time on the same day, week in and week out. If this sounds like you, you’re missing out on some great bargains. Here are some ways to break out of your grocery rut and save money on your food budget.

Couponing? Nope.

Couponing is only a good deal if you’re actually going to use the item you’ll save money on. I don’t use coupons because typically they’re only good for processed food items that I don’t typically purchase. Instead of spending time going through every coupon in the newspaper, spend your time more wisely by leafing through every local grocery ad delivered to your mailbox. Even if you don’t typically shop at these stores, they might have just the thing you’re looking for that week.

You can also use technology to be more efficient in looking for savings. Food marketing institute data shows that more than half of all consumers (52%) ”use technology in their grocery shopping,” via online coupons or checking prices at multiple store Web sites before going shopping.

Branch Out

Don’t limit your search to one store, especially since most people are going to the grocery more than once per week these days. The average person made 2.2 weekly trips to the store in 2012, up from 1.7 in 2011, according to the Food Marketing Institute. Besides, you’re likely to pass by more than just your preferred grocer in your day-to-day travels. Local-owned stores are a great place to find good deals. Also, if you’re local to a smaller chain store like Trader Joe’s or Aldi (my new favorite), these are great places to find inexpensive produce. Aldi has also started upping their organic offerings.

Pay Cash

You should definitely scope out any cash-only grocery stores in your area. We have one in Cleveland called “Marc’s.” They only take cash or Discover card —quaint, huh?— but they have the cheapest bananas and some of the best deals on meat in town.

Editor’s Note: Merchants who accept credit cards typically don’t assess surcharges on plastic payments in order to cover the cost of processing them. The base prices that everyone pays, regardless of payment type, typically reflect that added cost. That means if you pay with cash at such establishments, you’re essentially subsidizing plastic users, without earning any rewards. The average cash-using household thereby gives $250 each year to their more credit card friendly counterparts.

Scope Your Store

Nearly every grocery store has a rack of price-slash items. Get to know where this is and look there first. It might not hold a typical item, but a $3 bottle of children’s gummi vitamins at the beginning of cold-and-flu season quickly pays for itself. Likewise for boxes of pie crust or muffin mix. You might also find a similar rack in your produce section — a great place to purchase veggies for tonight’s dinner, or stew ingredients for your freezer.

Don’t Be Snobby

You’d be surprised at how many stores have at least one aisle of grocery items these days. Drug stores and even gas stations can be great sources for low-cost items; I’ve found particularly impressive deals on canned fish (clams, tuna) at my local CVS and Rite-Aid stores. Additionally, I used to live near a convenience mart that had the lowest milk prices in town. If you limit your scope, you’re spending unnecessarily.

Buy Bulk and In Season

Most vegetables can be flash-cooked, cooled, and frozen for future use. If your local store is running a ridiculous sale on in-season produce, take advantage! Individually frozen fruits can be used later for pie. My mother-in-law has taken even this a step further by purchasing a food dehydrator; now, she grows more produce than she could ever eat fresh, but dehydrates it and then reconstitutes it with water or broth when she needs a side dish. Very, very clever.

Keep an Open Mind

Expert cooks —or resourceful smartphone users— can save money by evaluating special on-sale ingredients. A can of light coconut milk and some green curry paste are the base for a delicious Thai entrée. Bookmark some Web sites for recipes —I like Allrecipes.com and JustaPinch.com— and then when you’re shopping, enter the ingredient into the search bar. Viola! Inexpensive and exotic dinner, if you’re willing to stretch a bit.

Cooking at home is less expensive and more personally satisfying than ordering take-out. Grocery shopping is the first step. Incorporate it into your daily life and you’re likely to enjoy a wider variety of food at a much lower total cost.

Home Warranties: Worth the Price?

Lynn B. Johnson — Wed, 10 Apr 2013 19:14:30 +0000

Posted by: Lynn B. Johnson

A home warranty/home protection plan is a service contract that protects many of the appliances or systems (heating, plumbing, air conditioning) in your house in case they fail. They can serve as a security blanket of sorts to homeowners, particularly if you’re purchasing a home that is older or hasn’t had much in the way of upkeep over the past number of years. Plans are often offered on an annual basis and can cost much less than it otherwise would to fix a home system or replace a home appliance should one of those cease to function.

There are many, many home warranty companies, and you can read reviews about them as well as request a free quote online. Some warranties only cover appliances, and some only cover systems. If you want both areas covered, be sure to note that when you ask for your quote.

“Home warranty plans can be a great source of security for buyers feeling uneasy about taking care of property, but they can also be helpful for sellers,” said Karen Nordstrom, a realtor with Howard Hanna Real Estate in Shaker Heights, OH. “Our company uses Home Security of America, Inc. (HAS), which allows sellers to include the home warranty in the listing if they sign it as part of the listing agreement. In this case, they’re covered during the listing period until the home closes, and then the buyer picks up the coverage for the full year. So a seller could have it for nine months, and then it transfers to the buyer for an additional 12 months, all for the same price. It’s a great marketing tool, but it also covers the seller’s home in case items covered by the plan cease working during the time that their home is on the market.”

Typically, when you call your home warranty company to make a claim, they will schedule a contractor —typically a third-party, local company specializing in repairs of the system or appliance you’re having trouble with— to come out and evaluate the problem.

When my husband and I bought our first home last year, it hadn’t been well maintained for more than five years. The seller included a home warranty plan with the home. It cost $459.00 for the HMS Home Warranty by HomeSure Services, and our deductible would be $100 per claim.

Here’s the rub: many home-warranty programs will not cover certain parts or failings. You need to read your contract very carefully before calling to make a claim. It’s no fun to pay a $100 deductible, due during the first visit of the contractor, only to learn that your warranty does not cover the broken part of your appliance or system.

For example: last year, when my husband and I were making our home wheelchair-accessible, our contractor discovered black mold in the bathroom due to a leaky shower pan. We called our home-warranty company to make a claim, and they sent a local plumber out to evaluate the damage. We had to write a $100 deductible check to his company (I’m guessing this is how home-warranty companies curry favor with local contractors), only to be told that the damage would not be covered, because our home warranty did not cover 1) shower pans or 2) water damage.

Later that year, however, my clothes dryer broke. This was an appliance that came with the house. A little smarter from our deductible debacle, I scoured the warranty plan to determine the likelihood that the dryer repair would be covered. The problem was my dryer wasn’t producing hot air. The warranty specifically listed “clothes dryer heating elements.” Then I looked at the items not covered. Most of the items not covered for clothes dryers had to do with the door mechanisms. I was pretty confident that wasn’t the problem, so I called the home warranty company. They sent out a technician and I paid him the $100. He took my dryer apart and spent at least an hour diagnosing the problem, and then realized he didn’t have the part in stock, so he’d have to come back. All told, he spent 2.5 hours fixing my clothes dryer. My hundred-dollar deductible definitely paid off.

Nevertheless, why spend $100 when you don’t have to? My washing machine died mid-load during Thanksgiving break. It wouldn’t spin, agitate, or drain. I typed these symptoms into my trusty search engine and came up with the DIY forum “Repair Clinic.” The symptoms came up with a failed lid switch; even better, it gave me the directions for how to fix the problem. My husband and I did a lid-switch override after taking the housing off the washing machine and got it to drain. Then, after learning that the new lid switch would cost upward of $40 via our local parts clearinghouse, I did an eBay search. The good people at Seneca River Trading, Inc., first helped me ensure I was ordering the correct lid-switch for my particular washing machine model, and then sold me the switch for $11.70 including shipping. It arrived within 48 hours and it was easy to pop out the old switch and put in the new one. In fact, the most difficult part of the repair was re-housing the cover onto the machine. Viola! Saved nearly $90 and earned the satisfaction of completing a successful home-appliance repair.

Score: One for the home warranty company, one for anti-home-warranty, and one for me and my cleverness. I’ll take it. This year when my warranty expires, I’m going to get a few quotes to see how the coverage differs between companies, but I’m expecting I’ll get a warranty with one of them.

As Nordstrom said, “Home warranties aren’t for every buyer, but they give the assurance to the buyer for particularly the first year when they aren’t as familiar with their new home’s appliances and systems. It saves a lot of drama at the beginning period of owning a property, and some homeowners renew their plan year after year.”

Springtime… when a consumer’s fancy turns to thoughts of Yard Sales!

Lynn B. Johnson — Wed, 03 Apr 2013 14:27:23 +0000

Posted by: Lynn B. Johnson

Happy April, everyone! It may be 37 degrees where I live, but the sky is blue, the snow is gone, and I’m itching for yard-sale season to begin. I’ve hosted and attended a number of these consumer extravaganzas over the years… here are some tips for hosting as well as attending a yard sale that I’ve amassed along the way.

Hosting a Yard Sale

Factors that go into hosting a yard sale include planning, advertising, setting up, and day-of logistics.

PLANNING

Start by finding out if your town requires you to purchase a yard-sale permit. You can typically call City Hall for this information or do a quick Web search.

When it comes to planning a yard sale, the more, the merrier. See if your neighbors want to join forces or host sales concurrently.

If you and your neighbors are collaborating on a sale, see if they want to visit some yard sales with you a couple of weekends in advance so you can get ideas for your own sale. Otherwise, go by yourself and take a few notes.

If you’re collaborating with neighbors, agree on times to start and end the sale. Keep in mind that people often show up early in order to poach the best stuff.

The real preparation for a yard sale doesn’t start until you begin combing through every closet and drawer in your home to figure out what you want to sell. The best way to do this is to remove everything from said closet and drawer and only put back the things you’re sure you want to keep. If you pay for a storage unit, clear that out first. Imagine the money you could save on monthly rent to store your unused stuff!

Price your items as you collect them. Do not rely on colored dots and a colored-dot code on a big sign; these are amateur hour. Use hang-tags or sticky tags with the prices clearly marked in medium-line black pen. If you’re selling large items (furniture, etc.), mark the prices on a piece of 8.5×11” white paper. Use masking tape so as not to ruin the finish of any furniture.

ADVERTISING

Purchase a classified ad in your paper. If your neighbors are joining you, include “multi-family” in your ads. Usually, if you put a classified ad in your paper, they’ll give you a yard-sale kit with free 8.5×11 signs. These can be modified into helpful bulletin-board ads.

For street signs you’ll really want large, bright poster board signs written in wide-tip black marker.

Post your bulletin-board flyers in the following areas:

Coffee shops
Grocery stores
Churches
Teacher’s lounges

Be sure to remove these signs after your sale is over or else you’ll wind up with a bunch of perturbed would-be shoppers interrupting your weekend after all your junk is gone.

SETTING UP AND SELLING OUT

Think about liability – if you have a box of kitchen utensils, keep a separate box for any old knives you’re hoping to sell. If you have something that’s broken, throw it out. Also, post a sign that says “ALL SALES FINAL.”

It’s OK to have a “free” box, too, especially if you have little toys that wouldn’t be of much value but that you want to get out of your house (this is where Happy Meal toys go to die).

Borrow more tables than you think you’ll need. Neighbors, churches, and clubhouses can all be good sources for folding tables.

When possible, hang clothing on a garment rack. Make sure all clothing is free and unwrinkled. Infant and small-children’s clothes may be folded neatly on tables: group them by outfit or by type of clothing (sweaters, pants, etc.).

Get plenty of change at the bank the day before: quarters and dollar bills are king. People who show up in the earlier part of the day are more likely to try to pay with twenty-dollar bills. Be prepared. It’s best to carry your money in a fanny pack so it’s safe and close when you need it.

Rope a couple of friends into helping you. Tell them you’ll buy them a pizza lunch with your earnings.

As items are purchased off your tables, consolidate merchandise and collapse empty tables so your sale continues to look well-stocked.

Do not bring anything you didn’t sell back into your house. Post it to Freecycle or take it to your local charity shop.

Attending a Yard Sale

There are two factors to keep in mind when you’re readying yourself to attend yard sales: planning and quality control.

Plan your map-of-attack ahead of time, so you spend the least amount of money on gas as possible.

Pre-measure the areas of your home you’d like to fill with yard-sale furniture, so you don’t get stuck with something that doesn’t fit. Keep those dimensions with your maps and directions.

Wear closed-toe shoes rather than flip-flops, so your feet don’t get wet from the morning dew.

If the seller says an appliance works, ask to plug it in and test it. If they refuse to let you do this, pass on it.

Beware of buying baby furniture at a yard sale; many cribs and baby gates have been recalled for safety issues.

Bring a measuring tape/yardstick so you can measure the furniture you’d like to purchase.

Bring a friend, set a budget, bring small bills and coins, and have fun!

“For Me, For You, For Later”: Financial Foundations from Elmo and Friends

Lynn B. Johnson — Thu, 28 Mar 2013 00:00:13 +0000

Posted by: Lynn B. Johnson

In an era when the 400 richest Americans account for the same amount of collective wealth as 62% of the nation’s entire population combined and the United States is the fourth most wealth-unequal country in the world, something is grievously wrong with the way income is earned, saved, and distributed. Fortunately, someone has come to the rescue of our next generation, encouraging them to “spend, save, and share” the money they earn. Who is this economic powerhouse preaching to our kids?

Elmo, of course.

Sesame Workshop has produced a package of financial information for children, their parents, and caregivers. “For Me, For You, For Later: First Steps to Spending, Sharing, and Saving™” is a bilingual multimedia kit produced with funds from PNC Bank and PNC Grow Up Great. It was “created to help families share experiences in developing financial basics that will impact their children now and in the future.” The kit is available at libraries, and the information is also posted online.

The kit contains a DVD, a parent/caregiver guide, and an activity book for children. I watched the DVD with my four-year-old and he was entranced. Part of that is because he wants to be Elmo when he grows up –and also because he was the one who found the kit at the library– but the easy-to-follow storyline captured his interest as well.

Elmo has a dollar to spend. He wants to purchase a Stupendous Ball, but that costs $5. Not willing to spend his dollar on the less-expensive Stinky Ball, he consults with Luis. Luis tells Elmo that people get money by working and starts him on the path to employment by letting him help fix an ice-cream machine.

(“I wish I had a job to save money,” my son commented. Me too, honey.)

Luis also gives Elmo a jar in which to save his money, advising the furry monster, “If you save your money and don’t spend it, you’ll have enough to buy the Stupendous Ball.”

Parents can contrast this lesson with the fact that only 58% of consumers reported having savings in 2012, according to the National Foundation for Credit Counseling’s 2012 Consumer Financial Literacy Survey.

Elmo spends the next few days helping his friends with chores and getting paid for his effort. Ultimately, the dollar he gets in the mail from his Nana puts him to his goal. He has saved five dollars and is ready to purchase the Stupendous Ball.

Right before the transaction occurs, Cookie Monster appears, distraught. Cookie was on his way to the bakery to buy a cookie for a dollar, but was so hungry that he ate the dollar, instead. Now he has no money to purchase a cookie.

Elmo to the rescue! Elmo shares a dollar with Cookie Monster. This is on-trend: charitable giving increased by nearly 4% from 2010 to 2011, according to the Center on Philanthropy at Indiana University’s 2012 report.

Elmo no longer has the money to purchase the Stupendous Ball, but the Fantastic Ball is his favorite color and only costs $4. Elmo purchases the toy and the video ends.

After the story, there are five segments about different aspects of financial transactions. Here’s a basic overview:

Miss Beth, a human, helps Elmo to learn about how to use three different jars to store his money: one each for saving, spending, and sharing. A sheet included in the activity packet includes Spanish/English signs that can be colored and then affixed to each of these money jars.

In another segment, “Helping Others,” Elmo learns that you don’t have to spend a lot of money to help less fortunate people. Elmo helps Miss Beth finish a care package for a needy child by drawing a cheery card.

“Learning to Wait” lets children know that “saving is a kind of waiting” that can really pay off.

“Making Choices” enforces the idea that children already make many choices each day – such as which clothes to wear, what to eat for breakfast, and which playground activities to participate in – and explains that choosing things to buy is no different. At the end of this segment, Elmo chooses to buy two apples for $1, in order to share one with Miss Beth.

The Spanish/English bilingual activity book includes coloring pages and games about how the Sesame Street characters make wise financial choices. The Guide for Parents and Caregivers helps grown-ups guide children toward wise money decisions by “building a strong foundation” so your child can “become a financially responsible adult.”

All in all, the kit is a terrific resource –one that every parent should look for or click to. It makes me wonder, though, when “the poorest 47% of Americans have no wealth,” how these children are going to get the money to learn how to share, save, and spend. Maybe Sesame Workshop can tackle that topic next time; I’m guessing Oscar the Grouch might be the star of that show… maybe alongside the Koch brothers, or the Walton siblings.

Getting Paid as a Caregiver Without Jeopardizing Medicaid Eligibility

Lynn B. Johnson — Wed, 20 Mar 2013 19:33:18 +0000

Posted by: Lynn B. Johnson

The most recent figures show that 48.9 million people in the U.S. have served as adult caregivers, with 86% of them providing for a relative in need. Not only do these people have to contend with the myriad difficult and thankless tasks associated with caregiving, but most also have to work outside jobs in order to pay the bills. In all, more than 70% of caregivers effectively work two jobs.

As you might expect, that burden ultimately proves unsustainable for many, as nearly one-third of working caregivers choose early retirement, take a leave of absence from their job, or give up working entirely. What’s more, two-thirds adjust their work hours or take time off in order to provide care.

So, while caregiving is obviously important work, it can have a decidedly negative effect on your paycheck. That’s why 15%of caregivers have reported a “high degree” of financial hardship.

What, then, is a caregiver to do?

Well, the trick is to figure out a way to get paid as a family caregiver without ultimately jeopardizing your loved one’s future Medicaid eligibility. Medicaid agents can choose to conduct a “five-year look back” to determine eligibility, and cash given to caregivers can be considered a gift that must be paid back before Medicaid will kick in.

This is something that I know a bit about, having provided care to my mother for years until her condition made it unsafe for her to live in our home. Mom had sold her home in California when she came to live nearer to us, so she had some financial resources available. But her care was a more than full-time job that prevented me from otherwise working outside of the home.

It was a quandary: She had the means to pay me for the care, which would solve both of our problems, but I didn’t want to jeopardize her eligibility for Medicaid.

So, I worked with a Geriatric Care Manager (GCM) to determine whether there might be a way around the Medicaid eligibility issue. He didn’t make any promises (and I won’t either), but the steps we took have thus far prevented Mom’s care payments from affecting her Medicaid eligibility.

Here’s how we went about things:

At our GCM’s behest, we hired an elder-law attorney – someone well-versed in legal issues common to senior citizens. You can find one in your area by asking your GCM for a recommendation or visiting the National Academy of Elder Law Attorneys, Inc., and clicking the “Find an Attorney” button. Keep in mind that it’s best if your GCM has a professional relationship with your attorney because they’ll likely be working closely together.

Once we selected an attorney, he contacted our GCM with two requests: 1) an assessment of the care my mother would require in our home, and 2) a survey of what that care would cost if provided by a local agency.

The attorney then utilized the care assessment to develop a service contract. This was a four-page document that set forth the:

Parties involved: Names of the caregiver and care recipient

Purpose of the agreement: Determining the “terms and conditions” under which the care recipient’s care, room, and board would be provided

Services to be performed by the employee: How the caregiver would provide for the care recipient’s Activities of Daily Living, meals, materials/supplies, and transportation

Hours of work and schedule: 24 hours/day, unless during respite care periods

Incompetence of Employer: Necessity of working with the care recipient’s Durable Power of Attorney for financial decisions and her Health Care Proxy for health-care decisions, should the care recipient become unable to handle her personal or financial affairs

Compensation: Hourly rate of pay, consistent with the home-care agency hourly rate as determined in our GCM’s survey

Termination of Contract: Either party could terminate during a cancellation period of “ninety days from the date of signing this agreement,” or with 90 days notice.

Governing law, entirety of agreement and partial invalidity: the agreement was governed by the laws of our state.

This was half of what my mother required to keep Medicaid from thinking that her payments to me were gifts rather than compensation for services.

Once the service contract was in place and signed, we chose a payroll company to manage the payments and to ensure that I would receive a W2. I would not recommend the agency we chose because they messed up everything they possibly could. If you can afford it, I’d recommend hiring an accountant for at least the first few months of your agreement to make sure the payroll company is handling withholding, Social Security, and other payments properly.

This service contract helped our caregiving relationship in a couple of ways. First, it gave me peace of mind that our working relationship was documented in such a way that it would be obvious to anyone that I was serving as my mother’s employee. While there have been few consistencies within the Medicaid-application process, I have felt confident that my mother and I did everything within our power to define the checks she paid me as compensation rather than gifts. Additionally, it helped my mother to know that I was contractually obligated to meet her care, room, and board requirements. As her mind started to slip, it was helpful to have a contract I could refer to when she became anxious about her future care.

Again: I cannot promise that if you follow this, you won’t have problems with Medicaid down the road. I can only tell you that it does not seem to have caused any problems with our own five-year look back process with Medicaid.

Laid off = Back to School? Not so fast…

Lynn B. Johnson — Tue, 12 Mar 2013 19:25:39 +0000

Posted by: Lynn B. Johnson

Going to school is a typical fallback position when you’ve lost a job. My dad always says, “Time spent pursuing education is never wasted.” And a few new initials after your name will make you more desirable once you’re back on the job market, right?

Maybe, maybe not.

The past 10 years has seen a record number of people earning degrees in higher education. As of March 2011, 30.4 percent of U.S. adults aged 25 and older had earned a bachelor’s degree: the most ever in our nation’s history. Additionally, nearly 11 percent of adults had attained a graduate degree. These numbers are particularly striking when compared with the statistics from 10 years ago: 26.2 and 8.7 percent, respectively. That’s a more than 4-percent jump for bachelor’s degree holders in a mere 10-year period!

It doesn’t take a genius to figure out that the economic downturn might have something to do with this huge leap in the improved education of our nation’s adults. In addition to indoctrinating high-school students about the importance of a college degree for career success, unemployed and underemployed adults often see additional education as a chance to hone skills and become a more in-demand employee. Student loans typically have low-interest rates, and many universities offer fellowships for non-traditional or returning students. If you are unemployed, you might even qualify for a federal grant.

That is, until the sequester hit. Now the cuts are coming. Estimated cuts for higher-education funding include:

$49 million in cuts to federal work-study grants
$37 million reduced from supplemental educational opportunity grants for low-income undergraduate students
Pell grants are protected from cuts in fiscal year 2013, but no protection has been guaranteed beyond that

A couple of things that aren’t expected to be cut are student-loan rates and processing times. Education Secretary Arne Duncan warned during his sequester testimony that cuts to the Student Aid Administration could slow processing of the Free Applications for Federal Student Aid (FAFSA), which “could mean that many students would not receive financial aid determinations and awards in time to make enrollment decisions.”

Sequestration “will also require a 7.6 percent increase to federal student loan origination fees,” according to the National Association of Student Financial Aid Administrators. This would increase undergraduate Stafford Loan fees from 1.0 percent to 1.076 percent and PLUS loans to 4.304 percent from 4 percent.

Perhaps even more troubling is what the glut of new graduates is likely to do to the job market. I have witnessed this through my husband’s attainment of a PhD in English and his subsequent forays into the job market. It used to be that you could get a job as an assistant professor —the introductory level— and then write a book that would help you move up the academic ladder. Now, however, there are so many people clambering for these jobs in English departments that colleges and universities will hardly look at you unless you’ve already signed a book deal; the competition really is that fierce. In November 2010, the National Science Foundation reported that 49,562 people earned doctorates in the United States in 2009; the highest number ever recorded. At the same time, however, only 62.6 percent had a “definite commitment” for any type of employment.

In addition to an enormous field of candidates, there are few teaching positions available that make a terminal degree worthwhile. These days, more than 75 percent of instructors in higher education are either graduate students or adjunct faculty. Colleges love adjunct faculty because they’re 1) non-union and 2) cheap labor. Such instructors are lucky if they earn $2400 instructing a typical one-semester class. They get the bulk of the jobs and are doing the bulk of the work.

Can you pay off a $100,000+ student loan for your PhD by teaching at a rate of $2000-$2400 per class? Sure, if you can teach six classes per semester, which is about the workload required for a living adjunct wage. Can you find six classes per semester to teach? Not likely.

Other professions are experiencing similar woes. Adults with newly minted law degrees are learning that the days of working with a firm as a junior associate —essentially getting on-the-job training while a client foots the bill— are now limited, as law-firm clients have tightened the purse strings and even severed relationships in favor of bringing in one person to serve as in-house counsel, rather than having an entire firm on retainer. This has significantly impacted the number of jobs available for new law school graduates; typically, those who are hired are the ones who received significant outside training via internships. Few law schools require internships as a graduation requirement, though, so you’ll have to hustle for opportunities while still in school.

Before you start filling out your FAFSA form, take an objective and measured look at the situation for better-educated people in your field of work and study. Chances are they’re living as hand-to-mouth as you are, but they have student loans to worry about on top of it all. The wise person in this situation will evaluate the return-on-investment and determine whether it’s truly smarter to pursue more education or just to find another job.