Q: My husband and I have not been very good stewards with regards to our money in the past. At this point, I am planning to take over the finances in order to get us on a budget that includes covering monthly expenses, tithing, saving, and debt repayment. I also intend to bring my husband and I together on a regular basis in prayer with regards to our finances.

Please help me understand what the right thing to do is.

A: I appreciate your question on tithing. The great thing is that your heart is in the right place. Keep in mind that there are a lot of opinions on this topic. This is what I believe. God wants us giving back 10% of what we earn. Many will debate the 10% as an Old Testament commandment and not relevant to the New Testament church. However, I believe that we should tithe, which means a tenth. If you are not tithing, you might be in such a situation that you cannot just start giving 10%. This might be a gradual process to get a plan in place where you are giving a tenth.

I look at what we do with our paychecks each month from 3 different areas: God’s portion, non-negotiable items, and discretionary spending.

The non negotiable items are items that if not paid would cause you harm. That would be electricity, food, mortgage, debt payments, etc. If you don’t make these non-negotiable payments, things are turned off or taken away from you or you don’t survive.

Discretionary spending is spending money on everything else. These are all expenditures that we could do without.

I don’t believe that God ever wanted us to not live up to the responsibilities that we have created in our life. The goal is to decrease those responsibilities as much as possible. We have a responsibility to pay back debt, make car payments, pay mortgages, etc. So when you are just starting to tithe you have to look beyond the non-negotiable responsibilities to get the money to start. This can be a tough choice.

Keep in mind that discretionary spending is cable, telephone, kid’s expenses, and everything else that is not tied to a commitment.

Start building up to the 10% until you get it to that level. With every percent that you increase your tithe, make that non-negotiable.

Some say have faith and tithe 10% then trust God to take care of the mortgage and the debt payments. God gave us common sense not to put ourselves in harms way. Being diligent in this process will require a lot of faith. Just be honest with yourself and with God about what you are doing without in order to make the tithe. When starting out on this journey of obedience, you are going to have to sacrifice. If you start out giving $50 a month and you find it easy, I think that the point is being missed.

The good news is that God will bless you in ways you never dreamed…and no I am not specifically talking about money. It is enough that God will bless you and show you a part of your relationship with Him like never before.

We all make mistakes with money and it is easy to get ourselves in these situations. The steps that you take going forward are the ones that make the most difference. It is where your heart is today and tomorrow and not about where it was yesterday.

Tags: Bob Brooks, Debt, debt repayment, Deceptie Money, expenses, finances, God, income, money, New Testament, Old Testament, Prudent Money, sacrifice, saving, tithing

ASK Bob Q and A

Currently my 401(k) portfolio has the following distribution. This was done after reading your advice on the coming recession/crisis in July and I have limited my losses to ~12% for the year.  After reading your advice this morning, how can I still make my financial goal for the retirement? 

I am 56 and have half of what I need to retire currently. Since I have 9 years, I need to grow it at 8% annual return to double what I have now. If I stay where I am currently, the best I can do is about 4%, which is 1.4X rather than 2X what I need. I am discounting what I will invest every year in this calculation. That will be kids college fund -They will be in college at this time.

That is a great question.  The key is not to lose big chunks of money.  You have accomplished that so far.  You want to be in position to really get invested when this bear market finishes up.  Unfortunatey, I think that we have a ways to go before that happens.  However, when it does you are going to be in a position of making up for 50% plus losses.  You can make up for lost time due to the strength of the rally that should be coming out of this bear market.  That is how you play it.  Keep watching my writings – when I start to see something positive I will start writing about it.

Tags: 401(k), bear market, Bob Brooks, Deceptive Money, Prudent Money

A Recent Ask Bob

Bob,

It has been a while since I got in touch with you. I wanted to let you know that Discover card sued me on 08-29-08.  I got a lawyer and explained my situation to him and sent him a copy of the settlement letter  and bank statement showing that I had sent Discover Card the money they had settled for.  He found couple mistakes that the court had made, the court changed the date of the jury couple times, and on 10-29-08 the case was dismissed.

If you find yourself in a legal situation over a credit card debt, I always get an attorney.  Credit card companies and debt collectors are way more interested in those lawsuits that go unrepresented.  Unfortunately, that is most of them.  As this case illustrates, there are typically many mistakes in these cases.

Tags: Bob Brooks, Deceptive Money, Prudent Money

Tags: ask Bob, Bob Brooks, Christian Values, Deceptive Money, Dr. Corsi, elections, financial future, partisan politics, political authors, politics, Prudent Money, Senator McCain, Senator Obama, voters, Washington

Dear Bob,

Bob, I disputed this with the credit bureaus, but they returned with an answer also adding another $2,000 to the debt. They have defamed my name and assassinated my character in the credit world. My attorney told me to send them a letter and get aggressive with them. My question is – what department would I send this letter to at Bank of America? I know to send it where it is recorded on my credit report, but what department? God Bless You and Your’s, Bob!!!

These are tough situations. First and foremost, this is an identity theft case. The proper sequence of events needs to be followed as a means for protection when identity theft occurs. In an identity theft case, you are a guilty victim. You are a victim and you are guilty until proven innocent, which is up to you.

Then you need to watch your credit report like a hawk. The minute something shows up, it is important to put a detailed case together and dispute the item. If any type of legal situation occurs because of the identity theft, don’t just assume it will go away because you know you are an identity theft victim. Get an attorney immediately and fight it.

As this listener describes in this painful story, the events can get quickly out of control. Unfortunately in his case, it has gotten way out of control and might be tough to crawl out. I always encourage anyone to fight for their rights. At the same time, you have to be realistic as to the time, stress, and energy you spend. Fighting the mistakes of a company such as Bank of America might end up being fruitless.

Copyright © 2008 Prudent Money and Bob Brooks. All rights reserved.

Tags: Bank of America, Bob Brooks, credit bureaus, credit card, credit report, debt collectors, Deceptive Money, Identity Theft, Prudent Money

Dear Bob,

I was 2 days late on my credit card bill. My interest rate went from 3% to 24%. That means my monthly payment went from $30 to $175. I all ready contacted the credit card company and they are not willing to do anything, they said after 45 days maybe. I am have been disabled for the past 2 years, on a work related injury, and we are on a strict budget, yet they said that they have to follow policy.

I am unable to make the payments. I have contacted a company to help but they said that I should stop payment on all my credit cards. I am current on all to this date, but for the previous mentioned, we cannot make the payment. What course of action should I take since they are not willing to work with us? We have been current on the bill since 2005 and this is the first time that the payment went out late.

What a potential disaster. This is a great email with a good ending. However, it could have been a disaster. First, anytime you go to one of these credit solutions companies, they are going to tell you to go ahead and wreck your credit. This is some of the most irresponsible advice given to this listener from this company.

His credit was good. He was just late on a payment. Had he followed their advice, he would have done 7 ½ years of damage and been dealing with debt collectors for a long time.

The key in any situation like this one is to stay current with the payment regardless of the interest rate. If at any point you default, the consequences are much worse. It always makes sense to do whatever you have to do to keep paying and look for alternatives.

Fortunately, his alternative was to go to http://www.penfed.org/ where he was able to transfer the balance to a 5.9% for life credit card. That quickly solved his problem.

Remember, a good credit score gives you all of the options in the world.

Copyright © 2008 Prudent Money and Bob Brooks. All rights reserved.

Tags: Bob Brooks, credit, credit card company, Credit Score, credit solutions company, debt colecotrs, Deceptive Money, interest rates, Prudent Money

Email #1

Bank of America allowed someone to take out a credit card in my name signing themselves on as an ‘authorized user’. I knew nothing of the card. BOA filed a lawsuit against me, and then withdrew it when they knew they would lose the case. They sold the file to 3 different debt collectors, which also withdrew when sent the court documents. Bob, I disputed this with the credit bureaus, but, they returned with an answer also adding another $2,000 to the debt. They have defamed my name and assassinated my character in the credit world. God Bless You Bob!!!

Well, how is that for yet another Bank of America story and a good example why it is so important to stay on top of your identity and guard it. Unfortunately, Bank of America keeps coming across the radar in the Ask Bob section.

Email #2:

My husband and I got behind on a Bank of America credit card several years ago. We then set up a payment plan (auto withdraw from our checking account) every month for two years and we made the payments on time every month. However, they said we were late every month and had dinged our credit each and every month for two years. We recently checked my husband’s credit score (not so good) which is how we found out about the mistake, and realized they had put late payments on his credit. We have proof that the payments were made via bank statements. What we need now is a credit dispute letter. Please let us know if you can help us.

Email #3:

From June 2006 to October 2007, I had payments taken electronically taken out of my account to pay off a Bank of America credit card. I paid them $226.50 every two weeks for about a year or more. I received a statement in the mail from a debt collector saying I still owe Bank of America credit card $310.36. I paid off this debt with the other creditor last October. How can I prove that I paid off this debt? I have tried to call the debt collector who represents Bank of America credit card, but they could not find me in their system. How is that even possible? Help me!

Email #4:

Unfortunately, I ran into a problem with a credit card at Bank of America and it went into collections. The Bank of America collections department now calls me 15 to 20 times a day. They are calling my friends and telling them that I defaulted on my account. They are rude and harass me when I answer the phone. How can I get this to stop?

Email #5:

I defaulted on a credit card with Bank of America. I owe them $2,000. My parents have a bank account at Bank of America in which I am the trustee. Bank of America went into my parents’ bank account and withdrew the $2,000. Now, checks have bounced and my parents have a problem. They are overseas missionaries. I have no idea what to do.

These are emails that I have received through Ask Bob concerning Bank of America and how they are treating their customers. I wonder what standards they are referring to with their slogan, “Higher Standards.”

Copyright © 2008 Prudent Money and Bob Brooks. All rights reserved.

Tags: Bank of America, Bob Brooks, credit bureaus, credit card, debt collectors, Deceptive Money, Prudent Money

Recent Ask Bob Question:

I received a grant check for $4950 in the mail. The letter stated that I did not have to pay it back. I would have to only pay a 10% commission fee which is $495.

There was no phone number listed on the check. The letter stated that I would have to go to their website to find out how to send the 10% commission.

I was instructed to purchase a Green Dot Card for the amount of the commission of $495. This is like a cash card. Once the agent receives the card, the cash will be easily obtainable.

Their website: www.AwardChecks.com
The Agent name is: Al Synder

The letter also stated after I send the 10% commission, I would receive a second check for $4950 the next day via overnight air mail. They did say that I had to have this 10% commission taken care of by 5 business days or the deal is off. That’s would be a grand total of $9900 free money.

Usually when something sounds too good to be true it usually is. There may be someone else this has happened to. It is a hurtful thing for someone to get caught up in something like this. Please share with your radio listeners.

This is a scam that many people fall for. It starts with an individual receiving a check that states some grant money has been reserved in their name. The check that is sent by the scammer is a legitimate check from a legitimate bank. Unfortunately, the individual will quickly learn that the check was either a counterfeit check or the account was closed. It is at that point that the $495 is long gone and the individual never received any grant money.

The scammer wants that Green Dot card, which is essentially a cash card, in his possession before that 5 day period so that he can get the money and invalidate the check.

So, how do you know when you are about to be scammed?

There are 4 rules to avoid being scammed:

1) Never give information to anyone who initiates the conversation. If someone calls you, shows up at your house, sends you a letter, and requests updated or new information, don’t give it to them.

2) Only give information when you initiate the conversation. If you call the card company, you know that you are calling your credit card company. You can have confidence if you initiated the call or went to the place of business.

3) If contacted through email with a request to update information, always refuse. Legitimate companies don’t require customers to update information through email.

4) Finally and most importantly, if it sounds too good to be true, it is too good to be true.

Follow those 4 rules, and you will greatly reduce your chances of being scammed.

Copyright © 2008 Prudent Money and Bob Brooks. All rights reserved.

Tags: Bob Brooks, Deceptive Money, grant check, Prudent Money, Scam, Scammed

When there is a problem with a payment, companies are often times reluctant to help. One of the pieces of advice that I always give is to be persistent. It cannot hurt anything and might just get a problem resolved.

I wanted to share this Ask Bob Q&A from a listener. This is a perfect example of being persistent.

The Problem – A letter sent to TXU from a listener

I would like to appeal to TXU to delete the charge-off information reported on my credit report. I do not dispute that the balance owed was my responsibility. However, I am appealing to your graces. I have had excellent credit with TXU in the past. I always pay my debts. When I found out there was a balance due on February 25th, I immediately paid the balance due. I only found out about the debt when my credit union denied me for a signature loan.I am asking again; please delete the derogatory information (charge-off) from my credit report. It is very damaging. I do not deserve to have my credit reports damaged as such for the next seven years. I am aware of the credit reporting laws. Only the creditor who places the derogatory information on the credit reports can write a letter requesting the derogatory information to be deleted. The credit bureaus are not responsible as TXU keeping stating. Per the credit bureaus, they just need you to delete the information.

She goes on to give very detailed facts in her letter to TXU.

The Solution – A telephone call to the Executive Offices of TXU

I called today and spoke with a young lady by the name of Sally (different name). She was very nice and compassionate. She stated she would see what see can do and would call me back. She called me back, but said that her co-workers stated that since TXU was not at fault, then there is nothing TXU can/will do to remedy the situation. I was very nice and asked Sally if I can humbly appeal to her supervisor. She stated that I could and that since she agreed with me, she would plea my case to him. She said she would call me back. Well, she called be back after talking with him. She stated, “We got our money, and she paid it as soon as she found out about the debt, so why can’t we help her?” Her boss stated, “Well, if you feel comfortable doing it, do it.” Well, Christina called me back with good news and asked me for my fax number. Sally contacted the Credit/Collection Dept. of TXU. TXU faxed a letter to me stating that they are deleting the charge off. Praise God! God is awesome.

Thanks for all you do, Bob. You have been such a blessing. Please share with others whenever they have problems with utility companies to contact the Public Service Commission.

Way to Go TXU for doing the right thing!! Persistence does pay off.

Copyright © 2008 Prudent Money and Bob Brooks. All rights reserved.

Tags: ask Bob, Bob Brooks, credit bureaus, credit report, debts, Deceptive Money, Prudent Money, TXU

I’ve listened to some of your author interviews via podcast, and have really appreciated the great info, and picked up some of the books. Two questions:

QUESTION: I’m reading John Bogle’s book, “Common Sense Investing,” based on your interview, which really advocates a buy-and-hold index philosophy. His approach makes sense, but I can see from the graphs that if you sold at peaks (before the ten year lows), you would end up even better (some periods take ten years before they return to their previous peak value!). How do you reconcile this “market timing” vs. “buy and hold”? How do you feel about indexing vs. managed mutual funds?

ANSWER: Most financial writers will make blanket statements such as using index funds is a better strategy than using managed mutual funds. The truth of the matter is there are times when indexing works and there are times when managed funds are best. I would suggest that over the past three years, managed mutual funds were the better choice. However, in the late 90’s, index funds were tough to beat. In fact, indexing with the S&P could be very tough as we go through this credit crisis (which still has a long way to play out). The S&P 500 is greatly influenced by financial stocks. One other thing you have to be careful of is the financial writer or talk show host who has the answer and claims that it is the only way to go about doing something. Remember, there is no holy grail when it comes to investing. Those are good questions – I wish everyone would think through what they hear and challenge it.

For more information on market timing versus buy and hold investing, listen here.

For more information on an investment program that is more than just buy and hold investments, go here.

All contents copyright © 2007 Prudent Money and Bob Brooks. All rights reserved.

Tags: Bob Brooks, Buy and Hold, Common Sense Investing, index funds, John Bogle, managed mutual funds, Prudent Money, question and answer