As of this past Sunday, January 27th retailers are now allowed to impose a surcharge, also known as a “swipe charge” or “checkout fee”, to any customers using a credit card to pay for their goods. This change came as a result of a settlement back in July 2012 between a group of United States Retailers and Visa, MasterCard and nine big banks.
Rest assured this change does not affect debit card purchases; so using your Connexus ATM/Debit Card is just as easy and free!
At Connexus, we know how fast small fees can add up. To avoid stockpiling these fees, review the information below and set yourself up for financial success!
- Debit Card purchases cannot be charged a surcharge regardless of whether you enter your PIN number or process the transaction as “credit” and provide a signature.
- Does not apply to prepaid gift cards
- Always carry multiple forms of payment to avoid surcharges
- Check with your favorite stores before shopping to see if they have implemented a surcharge.
- Retailers are required by law to post if and at what rate they have chosen to charge a “checkout fee”. The fee will be between 1.5-4%, but cannot exceed 4%. This is to cover the credit card processing fees retailers are charged by the credit card companies
- Understand that both Online and In-Store transactions apply if the store has implemented a “checkout fee”
- Know this only applies to Visa and MasterCard credit cards; American Express and Discover do not allow merchant surcharges
- Only 40 States Permit the Surcharge (CA, CO, CT, FL, KS, MA, ME, NY, OK and TX do not allow)
According to the National Retail Federation (NRF), none of the merchants they have spoken with plan to implement a surcharge, they all wish to keep customers’ costs down. However, we encourage you to know what you are paying for before you swipe!
If you are a Connexus Visa Credit Card holder you can view more information about the surcharge on Visa’s website. Please contact us with any questions or to discuss our checking account options today to avoid these potential fees.
6 Questions to Ask a Lender Before You Refinance Your Auto Loan
All auto loan refinances are not created equal.
Your refinance experience will vary depending on which lender you decide to do business with. Rates, fees, and requirements will differ from lender to lender as well as the type of service you receive. To help evaluate what a lender can offer, we compiled a list of 6 questions you should ask a lender before you refinance your auto loan.
By doing a little research, you’ll be able to make an apples-to-apples comparison between lenders or just make sure you feel good about the lender you’ve chosen to do your refinance.
1. Is my current loan – and vehicle – eligible for a refinance?
Some lenders will not refinance loans that are under a certain amount, such as $5,000. Why? There is a lot of work that goes into financing – or refinancing – a loan, and the lender will want to make sure that the loan amount (and ultimately the amount of interest paid) will not only offset that work but will be profitable to the lender.
Additionally, some lenders choose not to refinance recreational loans, motorcycles, commercial vehicles, or certain makes and models.
Finally, most lenders will not refinance a loan that they are currently funding, unless additional money is added to the loan.
2. What fees will I need to pay to refinance my vehicle?
Most lenders will not charge an application fee or processing fees. The most common fee associated with an auto loan refinance is the fee charged by the state to transfer the title from your previous lender to the one you refinance with. The amount of the fee will vary depending on the state you live in, but it will likely fall in the range of $5 – $65.
3. What rate will I qualify for?
While a lender may advertise a super-low rate, that rate may not apply to you. Rates are dependent on your credit score, the term of your loan, and possibly other services you have with that lender (such as a checking account or automatic payments).
Before assuming that you will get the rate advertised, ask the question. You may need to go through the application process and give your permission for a credit report to be run to get an exact quote, but the lender may be able to estimate your rate if they have a recent credit report and know what term you’re interested in.
4. How much money will I save by refinancing?
The amount of money you will save will depend on a number of factors:
- The payoff amount of your current loan
- The difference between your current rate and the rate you’ll receive with your refinance
- The loan term (Note: Extending your loan term from the term you have remaining on your current loan can provide you with lower monthly payments; however, the total amount you’ll end up paying will be more due to additional interest.)
Some lenders, including Connexus Credit Union, can provide you with a no-hassle auto loan comparison to help you determine if it’s wise to refinance or if it’s smarter to stay with your current lender.
5. What options do I have for payments?
If you’re partial to making payments a certain way, you’ll want to make sure that option will be available to you at the lender you’ll be refinancing with. Additionally, some payment options (such as automatic biweekly payments) can save you even more money on your loan and may give one lender an advantage over another.
Some payment options include:
- In person payments
- Direct Deposit/Payroll Deduction (These can sometimes be scheduled biweekly which will give you the opportunity to make 26 annual payments instead of 12 annual ones. By choosing this option with a 5-year loan, you’ll actually be able to pay off your loan in 4 ½ years!)
- ACH/Automatic Payments from Another Financial
- Online Payments through Scheduled Transactions
- Mailed Payments
6. Are there any prepayment penalties?
If you chose to pay off your loan early, either by refinancing it with another lender or just making more aggressive payments along the way, the lender loses out on some of the interest they were counting on with your loan. As such, some lenders impose prepayment penalties to discourage this behavior or recoup some of the dollars they lose if you prepay.
Prepayment penalties come in a number of different forms. Some lenders set it up so that the first payments you make are interest-only payments. As such, even if you pay off your loan early, you’ve already made all of the interest payments. Other lenders require you to pay off all of the interest and the principal, no matter how quickly you pay off your loan. Third (and most common) is a penalty in which you are required to pay a percentage of the remaining balance.
Best advice for prepayment penalties? Ask up front and then check your contract or loan paperwork before you sign anything.
Do you have any advice you would give someone who is considering an auto loan refinance?
You’ve undoubtedly heard the late, great Andy Williams tell us that this is the “most wonderful time of the year.” And, many would certainly agree it is. However, all of the activities, expectations and expenses can quickly make it the most stressful time of the year as well.
So how to you keep peace, joy and love from turning into anxiety, pressure and worry? By taking a few moments to read this blog post and get some inspiration from our tips on how to make this holiday season the simplest, smartest and best you’ve ever had.
Tip 1: Remember Your Sense of Humor
Things go wrong all the time –but when you’ve got a lot going on, such as during the holidays, a little blip can quickly turn into an explosion of emotion – unless you add a little humor to the situation. When something goes wrong, stop, breathe and force yourself to smile. Surprisingly, sometimes that’s all it takes to diffuse that explosion, clear your head, and then move forward however you need to. (And remember, sometimes it’s the things that don’t go right that make the best stories in the future!)
Tip 2: Focus on What’s Most Important to You
What are you going to remember about the 2012 holiday season in 5 or even 10 years? Whatever it is, that’s what you should focus your time, money and energy on. Holidays can be filled with way too many expectations, both ones that others put on you and you put on yourself. It can also be another time you’ll be tempted to keep up with the Joneses. Resist those temptations, think about what’s most important to you and those closest to you, and then enjoy every second of building those memories.
Tip 3: You Don’t Have to Do it ALL
For those of you saying “Yes, I do!” I’m here to tell you – no, you don’t. Once you decide what is most important to you, that doesn’t mean you’re alone in accomplishing it all. If you’re hosting a dinner, don’t be afraid to ask others to bring a dish to pass or ask someone to come early to help you out. When you’re looking at a stack of presents that need to be wrapped, let your kids or your spouse help. Yes, the corners of the wrapping paper might not be as perfectly creased as they would be if you did it, but think of the time you’ll save. Plus, you may just create a fun new tradition.
Tip 4: Adapt a “Quality Not Quantity” Approach to Gift Giving
Often, when we start our gift planning, we have a certain dollar amount in mind for each person we buy for. And, while it is super important to set a budget, remember that’s it’s OK to go under budget – especially if you focus on giving meaningful gifts that will bring smiles to their faces or warm their hearts rather than gifts that have to equal a certain investment.
Tip 5: Don’t Be Afraid to Say No
This can be very difficult, but it may be the key to your sanity this holiday season. Have you been invited to participate in a work gift exchange that you’re not interested in or can’t afford? Politely decline. Did someone ask you to contribute more toward a gift than you’re comfortable with? Discuss a more reasonable amount. Are you fortunate enough to be invited to many gatherings this season? If saying yes to all of them will make you feel frazzled and overextended, politely decline some of the invitations.
Tip 6: Realize There’s a Difference Between Traditions and Habits
The holidays are a wonderful time for tradition. By definition, a tradition is the handing down of customs or beliefs. The holidays are also a time for habits. And, by definition, a habit is a settled or regular tendency or practice that is usually hard to give up. Think about the holiday habits that you have – things you do every year because you’ve always done them – but not necessarily because they have any special meaning for you. Do you send out 50 Christmas cards every year because you think you have to – but yet the sending creates more stress than joy? How about cookies? Do you really need to make the same 12 dozen you always do even though you know you’ll end up eating half yourself? If you have a holiday habit that no longer brings you joy – or even stresses you out – give yourself permission to make this the year the habit ends.
Tip 7: Take Inventory
Black Friday is just a few days away, and if you’re like most Americans, you’ll be hitting the stores this weekend. Before you have the urge to pick up wrapping paper, cards, bows, etc. just because they’re on sale, take a look at what you already have. The same applies to gifts. Re-gifting is alive and well. If you have unopened items that you’ve been storing because you either didn’t have the energy to take them back or thought that you may use them “someday,” maybe this is the year they find a new home.
Tip 8: Make Time for Gratitude
One way to control the chaos and materialistic temptations of the holidays is by making time for gratitude. This holiday season, before you go to bed each night, take a few quiet moments and think about three things you have to be thankful for. This simple practice will help you to keep things in perspective, and it’s also something you can continue after the holiday season as well.
Tip 9: Be Honest With Yourself About Your Money Situation
What will the consequences be for spending more than you can afford? Does the meaningfulness of the holidays need to correspond with a large dollar amount? While gift giving isn’t something most of us can eliminate (or even want to eliminate) it is OK to prioritize your spending.
Tip 10: Take Care of Yourself
Eat right, get sleep, and take time to exercise. This is important for any time of year, but during the holidays, sometimes you have to put forth conscious effort to make sure you do these things. If you’re overtired, hungry or sluggish, you’ll have a hard time enjoying the peace and joy of the season that’s surrounding you.
What tips do you have for making this holiday season simpler, smarter and better?
Sometimes debt can seem overwhelming, and all you want is a way out. Mortgages, auto loans, personal loans, medical bills, credit cards, student loans, etc. – they all add up to big dollar amounts. Can you believe that the total consumer debt owed by Americans is a staggering $11.4 trillion? Plus, $1 trillion of that debt is delinquent.
Despite these very large numbers, Americans are more committed than ever to reducing their debt. Some choose to develop an aggressive repayment plan. Others seek advice from a credit counselor. And still others consider debt settlement or debt consolidation.
Debt settlement and debt consolidation actually have the same purpose – to get you out of debt faster. However, this is where the similarity ends. If you’re considering either of these two options as a way to get out from under a pile of debt, we encourage you to read further and become more informed about the pros and cons of each.
The goal of debt settlement is to reduce the total amount of money that you owe your creditors. Sometimes viewed as an alternative to bankruptcy, debt settlement can either be negotiated one-on-one between you and your creditor, or with the assistance of a debt settlement attorney or company. With a debt settlement, the negotiated settlement amount will either be due in a lump sum or within a very short period of time (less than a year) once the settlement has been made.
The biggest advantage to debt settlement is that it reduces the amount of debt you owe. By negotiating a lower amount, you can pay off your debt faster and reallocate your money to pay off other debts or build savings.
The disadvantages of debt settlement are much more numerous.
Credit Score. When you work with a debt settlement company, the first thing they will have you do is send your payments to them instead of your debtors. While reputable debt settlement companies will put this money in a savings account that they will draw from once negotiating a settlement amount, your payments will not go to your creditors until that settlement is determined. Therefore, you are not making any payments toward your loan(s) during the time that settlement is being negotiated – and that time frame can range from a few months to a couple years.
During the time that you’re not making payments, your creditors are reporting late payments to the credit agencies, and your credit score will drop. Oftentimes, a credit score will drop 100 points or more before the settlement process is complete. Having a low credit score will put you at a disadvantage for future loans, and it will take 2-3 years of excellent credit management to rebuild your score.
Tax Implications: Once a settlement has been negotiated, the difference between what you originally owed and your settlement amount is considered taxable income.
Fees. If you work with a debt settlement company, you will likely pay them fees equaling 14-18% of the debt that you want settled. Plus, while the settlement is being negotiated, the amount that you owe will continue to rise because of interest, late payment fees, and other penalties.
Chance of Fraud. Unfortunately, there is no federal regulation when it comes to debt settlement. As such, there are many fraudulent debt settlement companies looking to take advantage of people in desperate financial situations. The FTC has put together some guidelines for choosing a reputable debt settlement agency as well as a list of what should be disclosed to consumers looking to settle.
Legal Repercussions: Creditors will not stop trying to collect your money just because you’re trying to settle. As such, the longer it takes you or the agency you’re working with to negotiate your settlement, the more likely the creditor will take legal action against you.
Debt consolidation is much different than debt settlement. When you choose debt consolidation, the amount you owe will stay the same; however, you choose to have multiple debts merged together into one debt consolidation loan.
The benefits of debt consolidation include:
Simplified Payments. When you have multiple bills, you have multiple payments – and multiple payment amounts and dates to remember. When you consolidate your debt into a debt consolidation loan, you are now dealing with just one loan and one monthly (or biweekly) payment.
A Lower Interest Rate. One of the biggest reasons that people consolidate debt is to take advantage of a lower interest rate. If you have many higher-rate debts, consolidating them into a lower-rate debt consolidation loan can save you thousands in interest over the term of your loan.
More Affordable Payments: Even though the amount of your debt will remain the same, a lower interest rate will equate to a lower payment.
Debt consolidation does not come without warnings, though. Here are a few things to beware of if you choose a debt consolidation:
Using your Home as Collateral. Some lenders will offer debt consolidation loans that need to be “secured” – meaning you have to use something, such as your home, as collateral. A secured loan certainly isn’t a bad thing; however, missing payments on a secured loan is. If you default on a secured loan, you could lose your collateral.
Not Taking on More Debt. If you consolidate your debt and begin enjoying lower monthly payments, there may be the temptation to take on more debt as opposed to using your “extra” money to pay off other debt, make more aggressive payments toward your debt consolidation loan, or put the money into savings. The purpose of a debt consolidation loan is to help you get out of debt – not make it easier for you to take on new debt.
An Extended Term. If you take out a debt consolidation loan, one of the benefits is that you’ll pay less interest on your debt over the loan run. However, this only applies if the term of your debt consolidation loan is less than the term of the loans that you’re consolidating. Since it’s common to consolidate credit card debt – which is revolving and doesn’t necessarily come with a term – it will be important to talk to your lender to make sure that your payment amount and term is saving you money in the long run.
For more information on Connexus Credit Union’s debt consolidation options, please visit their website.
Today’s guest blog post was written by Laura Edgar, a senior writer for NerdWallet.com, an unbiased personal finance website committed to promoting financial literacy.
If you’re in debt, it’s easy to feel overwhelmed. It’s not like you can just stop spending money, after all. Despite what you might be feeling, you’re not trapped. You just need a sustainable action plan for repaying your debt. Achieving financial freedom won’t be easy. However, with a little bit of patience, self-restraint and help from the experts, it’s within reach. We promise. Here are four easy steps and some sound advice to help you.
Before you get started: things to consider
Cut yourself a little slack. Making a good repayment plan is tough, and you’ll be much more successful if you’ve got an expert in your corner. Many reputable organizations offer free financial counseling, so why not take advantage? Make sure you pick a program that’s been approved by the United States Department of Justice. They have a complete list of approved organizations on their website.
If you’re feeling especially overwhelmed, you may want to consider consolidating your loans. This allows you to condense multiple loans into one with a smaller payment and a lower rate.
Step 1: Know what you’re up against
How much do you owe, exactly? “A lot” is not a good enough answer. It’s time to take a debt inventory. Gather your statements and make a list or spreadsheet that includes the following in information for each debt:
• Name of the lending organization and their phone number
• Reason for the loan
• The principal owed (total amount of money you borrowed)
• The interest rate
• The minimum monthly payments and the loan payoff date
This will help you visualize your payment schedule and create a budget. Seeing everything in one place will also help you remember what you need to pay.
Here’s a sample spreadsheet:
|Who You Owe||For What||Phone||Principal||Interest||Minimum Monthly Payment||Payoff Date|
|Department of Education||Student Loans||(800) 4-FED-AID||$4,695||5.60%||$110||4/15/2015|
|Chase||Credit Card||(800) 432-3117||$2,273||19.24%||$60||15th of every month|
|Total Debt||$6,968||Total Payment||$1,170|
Step 2: Start at the top
Rank your debts by highest interest rate or highest balance. Whichever you choose, tackle that debt individually until it’s gone, then move on to the next one. Tackling your biggest debts first will reduce the overall amount you have to pay. We don’t recommend the debt-snowball method, which encourages you to pay off small loans first as “motivation” to tackle bigger ones. Paying off your debt is motivating regardless, so why make it more expensive than it needs to be?
Step 3: Prioritize your other purchases
Debt payments aren’t your only priority, especially if you don’t want to fall farther behind. You still need to pay your utility bills, buy groceries and keep up with your rent. Be sure to make any legal payments, like child support, a priority as well. The only thing worse than being in debt is being in jail, too.
Step 4: Save a little bit
“What? I’m in debt; I can’t afford to save anything!” you might find yourself saying. Nevertheless, it’s still a good idea to put part of your income (even a very, very small part) in a savings account every month. You have a lot to pay now, but you’ll get into more trouble later if you don’t start building an emergency fund.
Debt. It’s been called the new four letter word. And for good reason.
While having some debt – perhaps because of a mortgage, auto loan, or some credit card expense – can be necessary and even healthy, when misused it can become unmanageable and downright scary.
So how do you know if your amount of debt is healthy or scary? In our latest blog post, we’ll outline 5 common characteristics of people who have too much debt. Take a look and see if any of these sound like you.
1. Your debt to income ratio is over 36%.
Your debt to income ratio is the ratio between the amount of your recurring monthly debt (such as your mortgage, auto loan, and credit card payments) and your gross monthly income. When you’re thinking about the amount of debt that you have, it’s best to think about it in terms of this ratio rather than measuring it by a set dollar amount.
Here’s why: Because of differences in income, $10,000 of credit card debt may be a problem for someone with an annual income of $30,000; however, that same amount of debt may be manageable for someone with an annual income of $90,000 – especially if they are actively paying it off.
To calculate your debt to income ratio, take the total amount of your monthly recurring debt and divide it by your monthly gross income. Note: Do not include expenses such as groceries, entertainment, gas, etc., as part of your monthly recurring debt. Only include debt that would show up on your credit report.
Most lenders will consider you “overextended” when your debt to income ratio is over 36%. If you’re overextended you may find that you are living paycheck to paycheck or are having trouble paying for other things like groceries, gas and other life expenses. Plus, when you have a debt to ratio over 36%, you may find it difficult to obtain additional loans from reputable lenders.
2. You’re just making the minimum payments on your credit cards.
If this is how you approach most of your credit card payments, consider this example:
By paying just the minimum payment each month, it will take 28 YEARS for someone to pay off $10,000 of credit card debt with an 18% interest rate. Plus, during the course of those payments, that person will pay over $14,000 in interest.
If you’re someone who makes minimum payments all or most of the time, calculate just how much this will ultimately cost you by using Bankrate’s easy-to-use minimum balance calculator.
In addition to your credit card debt, also consider the terms you have on your mortgage and auto loans. You may be tempted to extend the term of these loans in order for you to benefit from a more manageable monthly payment; however, that may not be the best long-term solution when you consider the additional interest you’ll be paying. A better choice may be to be more aggressive with your payments or purchase a more affordable home or car.
3. You’re not actively saving money.
How much money are you putting into a savings account each payday? If your answer is “nothing” or “very little,” this is a warning sign of a debt problem. If all of your income is being put toward your loan and credit card payments as well as necessary expenses such as groceries, your kids’ school expenses, entertainment, gas, insurance, cell phone bills, etc. there is often not enough left for saving.
So then what happens when an unexpected expense comes up? If your car needs new tires before the snow flies or if an unexpected medical expense arises, how will you pay for it? By taking out another loan or adding onto an existing one?
Everyone should have some cushion. The goal for every individual is to have 6 months of income saved up in case of emergency. Now, that can be a very daunting number for someone who isn’t currently saving. For a moment, forget about that big number and set yourself a savings goal for every payday. When it comes to saving, something is always better than nothing … and if left alone, that something will turn into much more before you know it.
4. You’re occasionally late making payments.
Even worse than making just minimum payments is missing payments – even if it doesn’t happen often. Plus, the worse kind of payments to miss are those that are reported to the credit bureau on a regular basis, such as your mortgage, auto loan, credit cards (including department store cards) or other loans.
Payment history makes up the largest part of the calculation involved in determining your credit score – 35%. If you miss a payment, your credit score is directly – and negatively – affected. And, while it’s certainly possible to rebuild your credit by making sure all of your payments are on time, it’s not something that will improve overnight.
For more information on the importance of payment history as well as the other factors that go into the making of your credit score, visit our Financial Wellness web page.
5. You don’t know exactly how much debt you have.
Because the amount of your debt is always changing – and because it’s not always a pleasant thing to think about – it’s easy to lose track of just how much debt you have. Next week, we’ll be featuring a guest blog post from our friends at Nerd Wallet. Within this blog post will be easy steps for creating a debt repayment plan, and special attention will be paid to knowing how much debt you have.
While it would be glorious to live debt free, for most of us, a debt-free lifestyle is hard to imagine. Even if debt is part of your life, though, it doesn’t mean that it has to take over your life. If you’ve been able to identify with any of the characteristics we’ve listed above, now’s the time to act. We encourage to you to watch for next week’s blog post from Nerd Wallet, and if we at Connexus can be of any help in setting up additional payments toward your loans – or perhaps even starting a savings account for you – please give us a call at 800-845-5025.
Commercials aside, there are two main ways that TV shows influence us to spend money. Once way is through intentional advertising efforts like product placement (which we’ll talk more about a little later in this post). Other influence has less to do with advertising a certain company or product and more to do with exposure to certain lifestyles. When TV shows make characters, places or activities look attractive, we have the tendency to want to emulate those lifestyles and spend money to look, dress, or act like the characters we enjoy watching.
While it’s healthy to be exposed to different products, options and ways of life, sometimes they become so attractive to us that we can confuse want with need. This can especially be true with children. It’s important to be aware of this influence so you can guard against it and help your children make wise decisions as well.
Product placement is an advertising strategy used by companies to promote their products through placement – or mention – during TV shows (as well as movies, songs or books). The reason that advertisers have moved to product placement is two-fold. First, we as consumers get bombarded by ads, all day, every day while we drive to work, listen to the radio, or watch TV. This bombardment can make us almost immune to what’s around. Second, because of the new technology associated with TiVo, DVRs and the internet, we now can effortlessly skip through the commercials that were once the lifeblood of marketing efforts. One of the most obvious (and funny) examples of recent product placement has taken place on 30 Rock.
Check it out:
Most product placement is more subtle, though. Take Coke’s presence during American Idol:
Or think about fellow music contest show The Voice in which Carson Daly drives a Kia when inviting contestants to the show, chats with them in the Sprint Lounge while the camera captures a slightly – but not too – faded shot of the Starbucks kiosk in the background.
What examples of product placement can you think of?
Reality TV isn’t reality. TV sitcoms aren’t reality. And spending money to live like the characters do on these shows shouldn’t be anyone’s reality. However, millions of Americans’ spending habits are influenced by the characters we love and we become convinced that if we dress, act or live like the people on the shows, we’ll create for ourselves the experiences that our favorite characters have. TV shows allow us to escape from reality – not necessarily set the stage for how we should be living. They can create unrealistic expectations and increase our sense of entitlement. Even if the characters are portrayed as being “everyday, regular people” their lifestyles are not. Let’s explore some examples:
Friends: While Monica and Rachel’s apartment was formerly Monica’s grandmother’s and “rent controlled,” there’s no way that these two women – one sometimes employed as a chef and one part-time employed as a waitress (at least in the beginning) – could afford to sustain the chic lifestyle portrayed in their New York City apartment, complete with two bedrooms AND a balcony.
iCarly or Victorious: As I mentioned earlier, children (including preteens and teens) are very susceptible to being influenced by TV. Two very popular shows on Nickelodeon are iCarly and Victorious and both feature teenagers as their main characters. In iCarly, the main character lives with her artist brother (although they are supported by a military dad who’s never shown), and they live comfortably in a 3-story Seattle apartment complete packed with technology. Victorious covers the extravagant lifestyles they give their characters a little more by setting their show in Hollywood. However, the actions the characters engage in are often far from relatable. Take the episode where the main character “Tori” was completely distraught because her current “pear phone” wouldn’t hold a charge. She refused to get a new one because she was convinced that the moment she did a new version of the phone would come out. And, the very day she did, that’s exactly what happened. And, when coming to school and telling everyone that she finally gave in and bought another phone, everyone in the school – from all of the students to the janitor – showed her their brand new phones – the new model – that they all seemed to have picked up that morning.
Now, most of us know that this is just for entertainment, but what message does that send to our kids? That anything but having the latest gadget or garment simply isn’t acceptable? That EVERYONE will be able to get – and afford – the latest contraption that hits the market, so they should too?
What can we do about it?
Allowing yourself or your children to be influenced by products and characters on TV can lead to very dangerous spending habits – and a mountain of debt. The average American family has over $10,000 in revolving (credit card) debt. And what is one of the biggest reasons we use credit cards? Because we’re convinced we need something that takes us beyond our means.
Remember – TV isn’t real- especially if it’s Reality TV: Consider Carrie Bradshaw from Sex in the City. A real-life journalist in New York City with 10 years of experience earns about $57,000 a year. That’s certainly not enough to maintain Carrie’s high-fashion wardrobe (Manolo Blahniks included), dinner out every night, and endless cosmos at trendy clubs every weekend – and still have enough left to pay the rent in her Manhattan apartment.
Think about the debt and how you’ll feel: So what happens if you bring out the credit card and try to emulate the characters you love by trying to live like them? You’ll spend more time being stressed about your credit card bills than enjoying the things you bought with them.
Differentiate between needs and wants: This is what it all comes down to. While you may be tempted to run out and buy something because someone who entertains you has made that item seem extra attractive, stop. Think. Is this something you need or want? And if it is something you want, can you afford it – without adding to your debt?
Talk to your kids: Because they are even more impressionable than you are, talk about how TV is there for entertainment and not to show you how other people really live – and how they should live, too.
What thoughts or examples do you have about how TV shows have influenced the way you or your children spend money?