Credit Card Companies are Certainly Out to get You During This Crisis

By Dr. Boyce Watkins

www.DrBoyceMoney.com

In case you weren’t sure, credit card companies are not out to help you. If you are financially illiterate and uninformed, they are going to exploit you. If you are worried about the financial crisis, they are going to prey on your fear to get money out of you. They are also doing exactly what the rest of us are doing: trying to remain protected in a fragile economy.

The stimulus is stymied. The bailout is a failout. The stock market has consistently given a “thumbs down” to every piece of legislation passed in response to this crisis. Our economy is like the sick man who won’t respond to antibiotics. While the results of the latest package are yet to be seen, the truth is that no one is sure what will work. Every company is out to protect their assets and hold on to their cash, which means they no longer have much interest in loaning money to you.

Yes, this is true even if you have a good credit score, which is the ironic part.

Customers are opening their monthly statements to find that credit card companies have started to either ration credit (give less of it) or raise the interest rate being paid on outstanding debt. This doesn’t even count all the dirty tactics used, like using your payments to pay off low interest debt first, quietly getting rid of the grace period or charging interest on your balance from the prior two months vs. the current one. Even when you’ve been making payments on time for years, banks keep raising the bar to maximize shareholder wealth. When liquidity is scarce, those giving out water demand a higher cost per bottle. Additionally, higher default rates have justified the increase in interest rates, but higher interest rates increase the likelihood of default. It’s a nasty cycle, really.

Lawmakers are trying to intervene. Congressional hearings have taken place. Banks are being scolded by senators who keep telling them that this form of business practice is unethical and that they are gouging the American consumer. All this might be true, but what is also true is that you can’t force banks to loan you money. Also, it is very difficult, if not impossible, to legislate a strong economy.

If you have a less than stellar financial history, there is an even greater opportunity for your credit card company to raise your interest rates. If you have defaulted on other loans or are a slow payer in other areas, then they have no problem telling you to pay up or ship out. The days of easy money are long behind us, and companies are dramatically shifting their business practices.

The bottom line is that THEY’VE GOT YOU. They know that you’ve become addicted to the debt they so readily offered in the past, and this debt has become the lifeblood for the lifestyle to which you’ve chosen to become accustomed. They know that they can charge you a higher interest rate because you can’t do anything about it. Like a drug addict who is angry about paying more for his product, you really don’t have any other choice.

Well, maybe you do.

Here is one solution: tighten your economic belt. That means putting together a financial fitness plan today that consists of getting rid of as much debt as possible. I’ve mentioned in prior articles and on our website that paying off debt can be one of the best investments you make with your money. This is especially true if you have a stable job and are paying a high rate of interest to your credit card company.

So, the Dr. Boyce Challenge for this month is simple: Create a budget which includes the steady elimination of credit card debt. That means you should list every single expense you have for the entire month on one piece of paper or a spreadsheet. Don’t leave anything out. Count the money you want to use for getting your hair done, your nails, paying your mortgage, car note, whatever. Count everything. That will be your first step toward obtaining financial fitness.

As you create the budget, allocate at least 10% of your monthly after tax income toward reducing credit card debt. So, if you earn $3,000 per month after taxes,$300 per month should be allocated toward removing credit card debt, not including interest. So, if you owe $5,000 in credit card debt, you can remove this debt in roughly a year and a half. While $300 may seem like a lot of money to find in your budget, it’s there if you look hard enough. In fact, if you spend $10 per day on lunch and/or coffee, you can find the bulk of the money by taking your lunch to work. Make this one of the first bills you pay, not the last. The last bill is the one that only gets paid half the time. It’s easier to negotiate with creditors if you don’t need them so much. Take small steps toward finding your financial freedom.

Next month, we will move to step 2 of the Dr. Boyce Financial Challenge. While I confess that this change won’t be easy, I can promise that it will be worth it in the end. Be strong and remain focused, this is your opportunity to shine.

Dr Boyce Watkins is a Finance Professor at Syracuse University and author of “Financial Lipo 101: From financial fat to fitness”, to be released in April, 2009. For more information, please visit www.DrBoyceMoney.com.

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What Love Means to Me – A Tribute to Valentine’s Day

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To get financial advice from Dr. Boyce, please visit www.DrBoyceMoney.com.  To see video commentary from Dr. Boyce, please click here.

Dr. Boyce Watkins

www.BoyceWatkins.com

FYI: I should be on the NPR show "Tell Me More with Michel Martin", a journalist for whom I have tremendous respect.  We recorded today with Shelby Steele, a conservative scholar out at Stanford and another scholar named Jon Powell, at Ohio State.  The conversation is interesting, and I recommend you give it a listen.  You can learn more about the show at this link: http://www.npr.org/blogs/tellmemore/.

I also got another call yesterday from "The Big O"...yes, you know who I am talking about.  Apparently, there is some interest in my Financial Lovemaking Book.  I'll keep you posted on that one, since I am not 100% sure if my demographic matches that of the Great Ms. Winfrey.  While I feel that Financial Lovemaking can work well for her audience, my alignment with the hip hop community may make for an awkward fit.  The fact that I engage in critical analysis (meaning that no one is 100% good or 100% bad) means that I sometimes make enemies in this game because of my refusal to kiss anyone's butt too much.  But I do give respect where it is due, and I consider Oprah to be an amazing role model for all of us.  The same goes for President Obama. 

In light of the fact that Valentine’s Day is coming, I was thinking about the whole idea of love.  I must also admit that I thought about love when I noticed the singer Chris Brown might have ruined his career in this mad situation with Rihanna (apparently, there may be some abuse in that relationship, I’m not sure).  Either way, I think that anyone who has been young and in a relationship understands how stupid and crazy things can happen.  I’ve never considered Chris Brown to be a bad person.  But he may have done a bad thing.

Seeing the huge loss that these two young people may have imposed on their lives (Chris and Rihanna), led me to reflect on love and what it means to me.  Here is my personal perspective on love….love it or hate it (haha).

What Love Should and Should Not Be

By Dr. Boyce Watkins

www.BoyceWatkins.com

I’ve lived a bit of life and made my share of mistakes.  But as a professor, I am trained to learn from poor choices and grow from them.  Most processes have a purpose and a pattern.  If you think hard enough and honestly confront your failures, triumphs and observations, you can usually walk away with a bit of insight.  The term “No pain, no gain”, can certainly be applied in the game of love, and I intend to gain from my own personal portfolio of blissful heartache.

So, I’ve come up with some “Rules of Love” out of respect for Valentine’s Day.  It’s not scientific and not a fit for everyone.  But it comes from the head, the heart and all the other body parts I can’t mention in this article.  So, at least you know it’s sincere.

Love should be RESPECTED: One of the silliest things I see in some relationships is that people seem to be most interested in chasing the person who loves them the least, while kicking their greatest admirers to the curb.  They choose the best option they can GET instead of the best option they’ve already GOT.  There is something that people love about a challenge.  It can be a natural instinct to equate kindness with weakness and easy access with a lack of value. Many of us are guilty of crying over the person who ignores us and ignoring the person who cries for us.  Someone who gives you their heart can also take it away, so we must respect those who’ve truly earned it.

Love should be EXPECTED:   Part of the reason that some of us spend our time chasing the loser who doesn’t love us is because deep down, we feel that someone who cares for us must be flawed or unworthy of our time.  On the other hand, it is easy to feel sorry for yourself when you see that the one you usually want doesn’t want you back.  The truth of the matter is that if someone disrespects the appreciation you are showing toward them, then they don’t deserve your love anyway.  You should love yourself enough to walk away from those who choose not to treat you as you deserve to be treated.

Love should be given to YOURSELF: Part of demanding the love that you deserve is engaging in the difficult art of SELF LOVE.  Many times, we look in the emotional mirror and see blemishes, flaws, faults, mistakes and the ugliest sides of who we are.   Rather than greeting the world with our heads held high, we keep our heads down and hope no one notices that we are not as good as everyone else.  Loving yourself is similar to learning to love another person:  there is a point where you must simply accept the flaws.   You must realize that you are no more defective and no more perfect than everyone else, and that you too deserve to be happy.  If you can’t love yourself, then it’s damn near impossible to truly love someone else, since you are only offering them what you perceive to be damaged goods.

Love is meant to be CELEBRATED:  I’ve admittedly never been able to fully grasp the concept of homosexuality, but I’ve never had a problem with gay marriage.  One thing I believe is that love was created by GOD: that includes love between a man and a woman, a man and a man or a woman and a woman.  There should not be religious, social or racial boundaries imposed on meaningful love, for we do not get to choose the shape, size or complexion of the package.  When God blesses someone with such a powerful connection, this love should be celebrated by all of us and not judged or held in contempt.   Melting someone’s halo of happiness by dousing it with a flood of hate is a counter-productive use of our time and a wasteful spiritual endeavor. 

Valentine’s Day is meant to be YEAR ROUND:  You should not need a special holiday to show someone you love them.  You should tell them something good, positive, and affirming every time you see them, because this will make that person feel good.  You should not need corporate America’s permission and some hyper-commercialized holiday as your excuse to show affection.   I encourage you to say ten nice things per day to people you care about, which may include complimenting them on their clothes, their hair, their personality, their beauty or their presence.  It will make them feel good and leave a lasting psychological impact.  Our words are “emotional money” and we should be consistently making donations.

Love should be REFLECTIVE:  The hardest way to get what you want is to selfishly pursue it, take it or relentlessly absorb it.  That’s like waiting for your paycheck and never showing up for work.  If you are in a truly loving situation, you get what you want by REFLECTING IT.   If you WANT more success out of life, you GIVE more hard work.  If you WANT better grades, you GIVE more time to the library.  If you WANT more appreciation from your partner, you GIVE more attention and affection.  If you choose to share your love with someone who deserves it, then they will give the love right back to you, with interest.  Like a healthy economy, the cycle will become recursive and productive trade increases the value of each partner’s “Life Portfolio”.   In pleasure, pain and everything in between, to get more, you must give more.  You must also make payments in the currency deemed most valuable to your partner.  There’s no way around that fact.

Love should be PRACTICED:  Love is not just a feeling, an emotion, a whim or something that makes your skin shiver.  Loving someone is a DELIBERATE ACT and a series of habits designed to sustain and maintain the relationship you have with one another.  The work of the greatest writers in history was not always driven by inspiration and a desire to write…..sometimes, it was the act of sitting down each day and forcing themselves to write which eventually inspired them to do their greatest work.  In other words, love is a series of proactive habits, choices and behaviors that correlate with your desire to have a meaningful and stable relationship with another person.  It’s not something you just randomly “fall into” and “out of”…..it is something you choose to do.

Love should be CONTEMPLATED: When it comes to dating, I tell my daughter and God daughters the following: “If a man is not someone you can see raising your children, then don’t even go out on the first date.”  They look at me like I’m crazy, but the point is simple:  While you cannot easily choose to release yourself from the psychological grips of love, you have some ability to choose who you are going to fall in love with in the beginning.  Most of us don’t meet someone and decide that we are going to be with this person for years.  There is always the first glance, the first date, the first kiss, the first touch, and before you know it, you’re stuck in a situation that doesn’t make any sense to you.  So, if you don’t start with point A, you can never reach point Z.  This makes the most sense when you can see that point Z is not the place you want to visit with this particular person.

Love should be REMEMBERED: A big challenge for many young or single people (and even those who are married) is that we spend our time chasing the love and affection that is most intriguing to our hormones, while ignoring the love that is most tried and true.  A man might spend hours on the phone with a pretty lady who doesn’t even like him, but simultaneously ignore his grandmother who would gladly give her life for him.  Valentine’s Day is not just the day you send “sweets to your sweetie”.  It is also the day you shower love on your mother, brother, sister, father, best friend, homeboy, children, grand parents and all the people who will love you long after your sweetie has become sweet on someone else.   In the city of love, new buildings are shiniest and most appealing.  But the older buildings are the sturdiest and most enduring.  

Love is LIFE:  Not only does the act of love create and sustain life, it is also the greatest part of our journey through life.  We may or may not remember or be inspired by our professional or educational achievements, but we have an immediate and powerful emotional reaction when we reflect on the love we’ve experienced over the years.  Thinking about children, family or ex-lovers can create an emotional response that can’t be matched by a corporate job or advanced degree.  I tell my students that one of the most important decisions they will ever make is who they choose to spend their lives with.  I’ve seen many people drive themselves down the path to hell by choosing to share their love with someone who deserves it the least.  Like the most amazing roller coaster, the journey of love is long, complicated, exciting, scary and fulfilling.  So, while we’re on this journey, we should make sure we turn on the GPS.

Happy Valentine’s Day and I hope this day inspires you to find the love that exists in your life.  It’s all around you if you learn to look for it.  Even in an economy like this one, the love in your life can make you a billionaire. 

Dr. Boyce Watkins is a Professor at Syracuse University.  For more information, please visit www.BoyceWatkins.com.    

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Duke Lacrosse: Heroes or Thugs?

by Dr. Boyce Watkins
www.BoyceWatkins.com

I recently noticed that the Duke Lacrosse team, the same guys caught in the middle of the rape fiasco that occurred a couple of years ago, were knocked out of the NCAA tournament. The upset by Johns Hopkins ended a season that will surely allow these young men to be remembered as heroes. Granted, their comeback from the depths of despair after the rape scandal in 2006 is quite remarkable. Also, Duke is a great school, a place that my little brother was planning to attend. However, we might want to put the “heroism” of Duke University athletes into perspective, for we don’t want to get carried away.

I was quite vocal about the Duke lacrosse situation in 2006, and I don’t regret one word of my commentary. When a young black student at another university accused the athletes of rape at a party, there was quite a bit of legitimate racial tension in the Raleigh-Durham area, as well as across the nation. I did not stand up in defense of the young black woman’s story, nor did I accuse the athletes of anything that was not yet proven in the court of law. I wasn’t there when the event allegedly took place, since I don’t hang out at drunken stripper parties.


What concerned me about the situation was not the lies that may have been told by the victim. I assume she was lying, since she disappeared and her story fell apart like a Sean Hannity argument. Perhaps she was paid or threatened to remain quiet, but we will never know what happened. I also had no problem with the punishment of Mike Nifong, the District Attorney who seemed to presume guilt before actually proving it.

What I had a problem with is that everyone continues to miss an important piece of this picture. The athletes on the Duke Lacrosse team are NOT great American heroes. At best, their behavior was that of drunken thugs who were fortunate enough to be able to hire good attorneys to get them out of trouble. I have friends in “the hood” who behave this way, some of whom are still in prison for things they didn’t do. There is a Bill Cosby argument to be made which states that staying out of trouble means avoiding situations most likely to get you into trouble.

Heroes don’t drink till they puke every weekend. Heroes don’t hold parties with booze and strippers till all hours of the night. After all was said and done, I hope that these men were not given the green light to continue the same egregious behavior that got them into trouble in the first place. That would be sending the wrong message to these young men.

But the kids on the Duke Lacrosse team are not alone. I find myself consistently shocked at some of the behavior I see on many college campuses. While we consider college campuses to be havens of the elite, I can simply say that I know men who’ve gone to prison who don’t behave in such a deplorable fashion. The fact that individuals like George Bush are products of this tradition explains a lot about the brilliant policies of our great nation. It also explains why Bill O’Reilly has a loyal audience. I can’t use this culture to explain the drug abuse and illegal behavior of the caricature known as Rush Limbaugh, since he never graduated from college. In fact, according to Rush’s own mother, “he flunked everything, even a modern ballroom dancing class”. I’m honestly not surprised.



After spending my life on major college campuses for the last 18 years, I can only ask this question: Who IN THE HELL decided that it was normal to drink every weekend until you pass out? Who decided that this behavior is simply a “part of college life”, with kids not being taught the first thing about personal responsibility? I’m sorry, but in the real world, people who engage in excessive alcohol consumption destroy their livers, are far more likely to get raped, are more likely to be caught in violence, are at risk of driving and killing their best friends and put the rest of us in jeopardy. I’m not cool with that.

The U.S. Surgeon General has identified binge drinking on college campuses as a major health problem. I have middle aged alcoholic friends who took their first drink on a college campus. What concerns me the most is that the parents of these students and administrators around them are not stepping up to the plate and forcing these kids to chill out. Even well-intended administrators are ham strung by overzealous parents who believe their children can do no wrong. Perhaps they should call Bill Cosby in on this one, since there is a lot of bad parenting going on.
I know cops and prosecutors who claim that parents are one of the primary reasons that arrested college students don’t usually learn lessons from their audacious behavior. The next time I hear someone criticizing parenting in the black community, I am going to tell them to look to our elite campuses as the greatest examples of irresponsible parenting. I’m no bible thumper and I’m surely not a conservative, but I grew up with good role models who taught me the importance of common sense.

When I read about the Duke Lacrosse party, that is what I saw: another episode of college campus culture teaching young men and women to be comfortable behaving as menaces to society. Over 1,700 college students die each year from unintentional alcohol-related accidents. Roughly half of all college women are sexually assaulted during college, with at least half of these incidents involving alcohol. Individuals who consistently promote this kind of behavior on campus are no heroes of mine. But I don’t blame the students, I blame their parents and the adults who refuse to tell them the truth. If my son were at that party engaging in this kind of embarrassing behavior, I would (keeping it honest, in the words of my grandmother) “whoop his black ass”. Only men who host drunken stripper parties have to worry about strippers accusing them of rape.

I grow weary of appearing on shows in which I am asked to defend the behavior of black males, when I see students on college campuses behaving in ways that should make their families ashamed. I long for the day that a man like Bill O’Reilly takes a break from judging the values of the black community and turns that same self-righteous eye toward the Ivy League and private university thugs-in-training who think it’s ok to begin the quest toward alcoholism right after freshman orientation. But of course, the racism and elitism of America lead us to only see flaws in the oppressed. That is what my book, “What if George Bush were a Black Man?” was all about.


So, my tough love for the lacrosse players at Duke University is this: Congratulations on coming back from your setback. You were lucky, because prisons are full of men who never got a second chance. I’m sorry the stripper you hired lied to the police after your liquor and stripper-fest was over. But you shouldn’t be hiring strippers at the age of 19, and you should never have been in that situation. Now that we’ve had this conversation, you are free to go out in the world and truly become heroes.

Dr. Boyce Watkins is a Finance Professor at Syracuse University and author of “Everything You Ever Wanted to Know About College”. For more information, please visit www.BoyceWatkins.com.