Beating Broke

Personal Finance from the Broke Perspective

Propaganda Alert: Visa Direct Deposit Prepaid

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There I was driving home from work, when an ad on the radio catches my attention.  It was an ad for a Visa Direct Deposit Prepaid card.  Apparently not satisfied with a plethora of prepaid cards that are terrible for users (some are O.K., just not most), Visa would now like you to believe that it’s the next best thing to sliced bread to have your paycheck direct deposited to a prepaid visa card.  Yeah, you read that right.

Prepaid Direct Deposit

The radio ad is the voice of a woman, and she talks about how she has her paycheck direct deposited to a Visa prepaid card.  She goes on to talk about how she doesn’t have to drive all the way downtown and stand in a line at her bank to cash the check.  Not content to simply portray the card as a time saver, the ad goes on for the woman to say that because she’s not driving all the way downtown and standing in line, she now has so much more time with her daughter.  Now, the prepaid direct deposit card is not only a time saver, but a family bringer-togetherer.  No, that’s not an actual word/phrase.  I don’t care.

I have a friend from college that used to make fun of infomercials by saying that all they really did was demonstrate how terribly impossible common everyday tasks can be and then show you a miraculous new gadget to “fix” that impossibility. The problem is that most of those every day tasks aren’t all that impossible.  Most able-bodied humans can do them easily without any help from the gadget.  It loses a little something without his “demonstration” of the whole situation.  Obviously, the tactic works though, or we wouldn’t have those infomercials.

Welcome to the Infomercial-ization of Prepaid Cards

Not that we haven’t seen some of this done before.  Heck, the level of celebrity endorsements of prepaid cards with outrageous fees is still amazing to me.  But, this goes a level further.  They aren’t just banking (see what I did there?) on your needing a card with Justin Bieber’s face on it anymore.  No, they’re going right for your heartstrings.  After all, what parent among us doesn’t desire to spend more time with our children?  And this card can deliver it to you!  (You should read that last sentence in your best Billy Mays voice.  R.I.P. Billy.)  In fact, maybe they need the Sham-Wow guy to do the next voice-over for a commercial!

Visa Direct Deposit Prepaid : Solution to a Problem that Doesn’t Exist

Visa Direct Deposit Prepaid Card

Much like those infomercials, the problem that they claim the card fixes just doesn’t exist.  Direct deposit isn’t a new service.  Most employers offer it.  In fact, most actually require it now.  It’s just easier for them.  No lost checks to try and track down.  No delay in mailing a check from a payroll service.  And, most of the time, if they direct deposit the check, it gets deposited into a checking account.  And, do you know what most of those checking accounts have attached to them as a service?  A debit card!  It’s exactly like a prepaid visa card, but without most of the fees!  Mine has no fees.  I’m not sure there are many places that do have fees, in fact.

Maybe I’m wrong.  Maybe there’s a whole population of the country who’ve been waiting patiently for someone to come along and solve this very problem.  Maybe they still bank at an institution that keeps their account records on old green ledger books.  If that’s so, I’d like to introduce them to the amazing egg shell separator that I’ve created.  Yes, it looks exactly like the lip of a mixing bowl.  But, it doesn’t have the added bulk of the bowl!  It’s just a convenient shard sized device that helps you separate your egg shells without having to have the whole mixing bowl there!  Yes, I came up with the idea when the bowl I was cracking eggs into suddenly grew heavy in my arm and fell to the ground, breaking into lots of small pieces.  And one of those pieces was the prototype for the amazing egg shell separator!

What do you think?  Am I wrong?  Was there a need for a product like this?  Or is Visa just pulling on emotional strings to get more cards in peoples’ wallets?

original img credit: classic visa (the inception of the “we’ve got you covered” campaign) : london underground ad (1988) by torbakhopper, on Flickr

What is Financial Independence

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In my post “Are we Doing Personal Finance Wrong“, I talked a little bit about “Financial Freedom”.  Of all the comments that the post got, that was the one thing that was mentioned most of all.  Which, to me, means it bears some further discussion.

Financial freedom, or financial independence, can be defined a little bit differently depending on the person doing the defining.  Like most personal finance, it’s highly dependent on the values of the person.  What I define financial independence as might be a whole lot different from what you define it as.  I think, no matter who is defining it, the real keystone is the word freedom or independence.  We all want freedom and independence.  Some autonomy from the rat race.  The idea of having the financial ability to declare our independence is alluring.

What is Financial Independence, for me.

Financial IndependenceMy definition of financial independence is likely pretty similar to most.  In it’s most broad sense, I define it as the ability to not be swayed by financial needs.  Breaking it down a bit more, it means not “needing” a job just to make ends meet.  It means not “needing” a job to keep a roof over my head.  It also means having the ability to take advantage of opportunities to improve my situation.  Whether that means having the cash on hand to be able to buy or start a business, buy a rental property, or just take a month off to travel or learn something new isn’t all that relevant.  It’s that I have that ability.

Something that needs to be said here is that at one point, not that very long ago, I thought of it as being synonymous with “independently wealthy”.  Which may or may not be true depending on your definition of independently wealthy.  For sure, I don’t believe that it matches up with the definition I had back then.  Back then, I would have told you that independently wealthy meant retirement and not doing a dang thing.  Sitting on the beach all day, every day, being utterly non-productive.  That definition has changed.  A lot.  Financial independence, if it’s synonymous with independently wealthy, doesn’t mean that you don’t work, but that you have the financial freedom to do the work you want to do.  Because you are free from the “need” part of the financial equation, you have the ability to do the work that you feel called to do without regard for how much it pays, whether it’s part-time or full-time, or whether it’s a short term project or not.

What is Financial Independence, for you.

As I mentioned above, your definition might differ slightly (or a lot) from mine.  Maybe, for you, it really does mean sitting on a beach somewhere, doing nothing.  Maybe it means not having to work and spending all your time volunteering instead.

However our definitions might differ is somewhat irrelevant.  Our personal definitions still mean that it’s something worth pursuing to each of us.  And, if our end-game is to be financially independent, I still don’t think we’re doing personal finance right.  I still don’t think we’re even close.  I think we need to break away from the systems we have, find the ones that work for our personal finances, and then achieve our financial independence.

Achieving your Financial Independence.

Breaking away from the systems we have for personal finance won’t be easy.  Heck, our definition of financial independence will probably change along the way and require a new system again.  But, achieving that financial independence should be our primary goal.  Not retirement.  Not our childrens’ college education.  And certainly not saving up cash to pay for that big SUV.  Our primary goal in our personal finance should be achieving financial independence.  Once we’ve achieved that, retirement, education, and big trucks will come.  And they’ll come without sacrificing anything.

The Path to Financial Independence.

Much like our definitions differ, so too will our path to financial independence differ.  Undeniably, I think that the first landmark on that path has to be the complete and utter destruction of all debt.  Before we worry about anything else, we have to be free of the yoke of debt.  Joan Otto, the community manager at Man Vs. Debt, wrote about this recently specifically referencing retirement accounts.  Take a minute or two and read it.  Then, pay special attention to the comments.  Aside from a few people, almost all of the comments are people who think she’s off her rocker.

Is she off her rocker?  Or is she just developing a new system for her personal finance that leads towards her financial independence?  It takes a certain amount of courage to admit to the thoughts and ideas that she does in that post.  (I should know, see: Why I’m Withdrawing from an IRA)  But, then try and remove what you’ve been taught about retirement and saving from your mind for a minute and re-read section 4 of her post.  She’s not being irrational.  In fact, I’d argue that she’s being overly rational.  I think I’ll have to write more about that in another post, but the Vulcan, logic loving, part of me thinks she is right.

Our paths to financial independence will vary.  Some of those people in the comments of Joan’s article will achieve it using the current system.  Many of them will have started saving early, and found ways to drastically save.  But, will they have the liquidity available to make a move on an opportunity in the 30’s, 40’s, or even 50’s?  Or will it have to wait until they’re past “retirement” age and have penalty free access to their nest eggs?

Find your path.  Start the journey, and achieve your financial independence.

Have you already started on your journey?  Have you found your path?  Have you achieved your financial independence?  There are many of us here, including myself, that are new to the journey or haven’t even begun yet that could benefit greatly from your story.  Will you share it with us?

img background credit:Fireworks at Swindon by Stephen_Gunby, on Flickr

Are We Doing Personal Finance Wrong?

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As you can probably imagine, as a personal finance writer, I think about personal finance quite a bit.  Often enough that I write several articles a week on the subject.  I don’t consider myself an expert, but I do think that I know a great deal about it.  And I’m beginning to wonder if we aren’t going about it in the wrong way.

The problem with Personal Finance

We rail on the Joneses constantly.  That, by itself, isn’t really a problem.  The Joneses just aren’t very smart with their money.  But, for all that we rail on them, we spend an inordinate amount of time trying to find ways that we can go about having things that are similar to what they have for less money.  And that is the problem. The Joneses have the fancy cable television package?  Try Netflix, Hulu, or Amazon Prime!  The Joneses have a fancy new car?  Try a newer off-lease car!  The payments are half what they pay, and the car is almost as nice!  The Joneses have a fancy house?  Try making it affordable by DIY, gardening, and renting out a few of the rooms!

We aren’t the Joneses.  We know that.  We know that we really don’t want to be the Joneses.  But, some part of our natural tendencies somehow pulls us back to them, time and again.  We strain hard to become less like them, and find ourselves back where they are.  That is the problem with personal finance.

Are we doing personal finance wrong?

Doing Personal Finance WrongMaybe the issue isn’t the Joneses.  Maybe, just maybe, it’s us.  I alluded a little to this recently (The Joneses and Jealousy), when I suggested that our tribal human history pulls us towards the leaders of our “tribe”, and that we should be looking for a new “tribe” that espouses the same values that we do.  I think that we all end up returning to our Joneses because we haven’t fully made that switch yet.  Because we’re afraid of what the rest of our tribe might think.  What our families might think.  Heck, what our spouses might think.  And, maybe all this frugality and saving aren’t really what we’re looking for.  After all, where does that lead us?  A cheaper version of the Joneses lifestyle?  Isn’t that what we’re pushing away from?

Changing personal finance

I think what we are really looking for, and what we are really jealous of the Joneses for is financial freedom.  It may only be perceived in the case of the Joneses, but it’s still there.  Freedom, financially, to be able to do the things we want to do, go the places we want to go, and have the things we want to have.  We emulate those who have those things without giving much thought to how they got there.  Maybe the Joneses did it through a boat load of debt.  We rail against debt.  Which only gets us so far.  So many of us struggle with even that part of it.  I know I have, and sometimes still do.  But, I can tell you with certainty, that had my perception of debt not changed drastically from where it was when I began this journey, I would be in a far worse place than I am now.  But, even that is only one small change in the way I think about personal finance.  Our entire perception has to change.

What’s the personal finance endgame?

What is it that we are really looking for.  We decide we want to change how we handle our finances, abandon the way of the Joneses, and make our way to a better life.  But, what is that better life?  If you’re thinking that a secure retirement is it, I think you’re wrong.  I think there’s a better way.  There has to be.  HAS TO BE.  There has to be a better way that doesn’t involve working for 40+ years, pinching every penny, saving every dime, only to end up at 65 or 70 with enough money to make sure you can pay for the medical bills your advanced age brings with it without having to live on welfare.  That can’t be all there is to personal finance, is it?  My word.  What if you retire at 65, and die at 66? I submit to you, that what we are really looking for is personal finance independence.  We don’t want to have to count on a job. We don’t want to count on a paycheck to (hopefully) cover the bills this month.

What is personal finance independence?

Here’s the tricky part.  I think it’s going to vary based on the individual.  What personal finance independence means to you is likely going to be a bit different from what it means to me.  Take, for example, Jacob.  Maybe you’ve heard of him, maybe you haven’t.  He writes a blog about early retirement.  He wrote a book all about it.  It’s got more scientific content than some of the science books I remember from school.  They guy is crazy smart about the subject.  But, when he says it’s early retirement extreme, he’s dead right.  If going to the measures that he went to in order to retire early is what is required, count me out.  In fact, it seemed for a long time that it was either extreme or not.  Nobody had really talked much about the in-between area.  Enter Mr. Money Mustache.  He, too, retired early.  And, while he has his extremities, it’s not quite the same thing.  It’s different for each and every person.  What one person thinks of as retirement isn’t what someone else will think of.  Heck, most of us have been so pre-conditioned to think that retirement should consist of afternoons golfing followed by bingo down at the VFW that it’s no surprise that we scoff at people like Jacob and MMM.

How do we get there?

Oh.  Well, the truth is, I just don’t know.  I think that, with a little help from the Jacobs and MMMs of the world, and a little trial and error, we can find our own personal finance independence.  I think that we can take what we learn, adapt it to our lives, and make something brilliantly wonderful out of it.  I know we can.  We just have to try.  We just have to change personal finance as we know it, and embrace something better.