#243: Your Choices Determine Your Path (Friday, August 26)

I am not the aunt or godmother that'll do arts and crafts with the kids. I can't solve a Rubix cube in a few minutes. I suck at video games, I don't know how to ride a bike and my magic tricks never work. But I'm great at money management, and that's what I hope to impart on my nieces, nephews, godchildren and the like.

I want them to know at a very young age, as I did, the value of money and that their financial choices will help to determine their lot in life. Just consider these 3 scenarios from children in my life:

1. I started to open a 529 for Child #1; the mom said she'd rather do it through work so she could do direct deposit. Three follow-ups later, Child #1's mom still hadn't made a move. It's been a dozen years...and Child #1 doesn't have a plan.
2. Learning my lesson, I opened a 529 plan for Child #2. I told the parents that I had done so, and gave them the information so they could contribute. Five years later, I'm still the only person contributing to the plan, and they don't have another account.
3. I also opened a 529 plan for Child #3 and shared the information with the parents. They made contributions and linked up their cards. Now when any of us shop (or when I dine at certain restaurants and pay with my card), a portion of our purchases goes directly into Child #3's account. The account value is already higher than that of the 529 account opened five years prior with the same amount.

Three set of parents, three different choices...but each will have an impact on their child's attitude about money and also on the child's future (Child #1 won't have a college fund to help pay for books, tuition and other expenses.).

Think about your choices...

#242: Whispers & Screams (Friday, August 19)

"Listen to the whispers before you hear the screams." -Reverend Run

I once heard Reverend Run use that quote in the context of relationships, but I think it can be applied to any situation. He was basically trying to say that when you don't address the little things, they turn into big things.

It's an appropriate quote for our current economy: the housing crisis, the debt crisis, the job market...they all began as whispers. Even consumer practices that we've now come to accept as commonplace (ATM fees, paying for checked baggage on airplanes, no meals on airplanes) all began as whispers.

So, it was with great alarm that I watched a report on CBS yesterday about banks "testing" debit card fees. Wells Fargo is testing a $3 debit card fee in some areas, and JP Morgan Chase and a couple of other banks have already implemented these fees in certain areas. It was only a few months ago that I talked about banks testing exorbitant fees to non-customers who use their ATMs.

This is eerily reminiscent of when the airline industry started their testing, a tiny little whisper which got very little resistance from consumers who were willing to forgo certain conveniences for a lower ticket price. Now we have to deal with the screams: numerous fees that cancel out the lower ticket prices we originally thought we were getting anyway.

If you're one of the increasing number of people who rely on their debit cards rather than carry cash, then this may ultimately affect you. (Once one bank tests the fee and do not get consumer push back, other banks will start to implement it too.) Listen to the whisper: be proactive and monitor whether your bank is testing a similar fee and be vocal about it.

#241; Beneath the Surface (Friday, August 12)

The other day my friend got an email offer to try American Express' prepaid card, which offers access to American Express benefits with no fees except for ATM withdrawals. Before getting the email, she'd been considering one of the Rush prepaid Visa cards, which may charge fees (monthly fee, requesting a paper statement, bill pay fee, etc.) that vary depending on the services you choose.

So it's a no-brainer right? Who wouldn't want access to Amex benefits (they're the chosen card for U.S. Tennis Open, Tribeca Film Festival and many other exclusive events) and the prestige often associated with the name, even if it's on a prepaid card?

But if you're being offered a prepaid card rather than a credit card, chances are there may be issues with your credit. And if you're having credit issues, then you need to look beneath the surface of these two cards to the one that will be more beneficial in the long run. So that's what I recommended to my friend.

We discovered that despite the fees of the Rush card (which can be mitigated by using it only for essential services) it could actually help build credit in the long run since they'll report bill payments to credit reporting agencies. So the fee could actually be justified. In contrast the Amex prepaid card doesn't monitor or track payments, so it's probably better for people who are seeking the prestige and access that Amex can provide.

Sometimes you have to look deeper than what's presented on the surface.

#240: A Thin Line (Friday, August 5)

I got a lot of feedback from last week's Good Friday. One in particular is an issue that is somewhat related to business with family and friends. My friend Dave writes:

"Interesting Good Friday post about family and friends in business. I'm in IT, and my friends and some family always ask me to look at their computers. Should I be charging them? I feel like a bad friend asking for money but it takes up a lot of my time. What is a good way to bring up payment between friends."

This can be a sticky issue. The key is to not take advantage of your friends' goodwill by constantly asking for their help with the expectation that it will be free. Paying a friend for their help can also let them know that you respect their talent and time. Here are some tips to consider to keep things fair and balanced:

• Generally speaking, if you ask a friend for help and the task is how they make their living, they should be paid. For example, asking your friend who's a mechanic to look at your car; or your friend who's an accountant to help you with your taxes.
• It's considered polite to offer payment for the help and let the person decide whether or not to accept it.
• If you're in dire straits and cannot afford a monetary payment, you should explain your situation and either: 1) Offer to trade services if you have a specialized service they may be able to use; 2) Offer a non-monetary compensation, such as making the person dinner; or 3) Offer to make payment at a later date.
• Services between friends and family are typically charged at a discount, however you should use your discretion as every situation is different.