Beating Broke

Personal Finance from the Broke Perspective

Bank Makes an Error in Your Favor – What Do You Do?

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This article on CNN caught my eye the other day.  It’s about an “Accidental Millionaire” who discovered that a keying error by his bank resulted in him having a $10,000,000 line of credit instead of a $100,000 line of credit.  Instead of notifying the bank of the error, he withdrew 6.8 Million of it, disbursed the money into overseas accounts and then promptly fled the country.  About 2 and a half years later, he was caught and brought back to New Zealand to stand trial for his theft.

The whole thing brings up an interesting question though.  Obviously, the right thing to do would be to notify the bank of the error, so that it could be fixed and all could continue on their way.  And, I think it’s fair to say, most of us would do just that.  But, what if it was for such a high amount of money?  Sure, if the bank makes a $10,000 error, you’ll let them know.  But, what if they make a $10,000,000 error?  Just how tempting would it be to do just like this guy did, take the money out and put it into overseas accounts where it couldn’t be recovered by the bank, and make a run for it?  Even if you knew you could make it 2.5 years before getting caught, would it be worth it to live like a multi-millionaire for that amount of time?

Prison cells © by miss_millions

I think that the penalty would likely be high, and will likely involve some jail time, but would all that be worth living the rich life for a few years?

I can’t see where it would be for me, personally.  But, obviously, for this guy, the answer was that it would be worth it.  Or, maybe he truly thought he could get away and not get caught.  I’m not sure how one really thinks that they’ll be able to get away with something like that.   But, he obviously did, or at least thought the trade off was worth the possible penalty.

Me, I’ll settle for making my money the old fashioned way, and making it work for me.  The trade-off of not making it as fast as he did, but staying out of jail is well worth it.

What are your thoughts on that.  Would you trade a few years of living as a millionaire on the run be worth the possible penalties?

Suze Orman Releases Prepaid Card. Wait, What?

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Suze Orman, one of the most well known personal finance gurus in the media, announced a few days ago that she had created, and was releasing, a new prepaid debit card.  Prepaid debit cards, if you’re not familiar with them, are cards, like credit cards, where you prepay and then can only use the card for amounts up to what you’ve prepaid.  In most cases, they are marketed towards people who are unable to get credit cards because of bad credit.

Phil, from PT Money, blasted Suze for the card, on his site and on twitter.  I can’t say that I entirely disagree with him.  His problem with the card, and mine, is that prepaid cards should be a last resort for people who are unable to get a bank or Credit Union account that has a debit card attached to it.  What Suze is doing with this card, however, is pushing it to the general public who really have no use for it, and, by using it instead of a debit card from their bank or CU, are going to be lining the pockets of Bancorp (the bank behind the card) and Suze.  That’s shady, when you are claiming to be “America’s Most Trusted Personal Finance Expert”.  If she is an expert, she should know better. And, I think she does.  Which is why, instead of responding to PT (and others) on Twitter with a factual defense of the card, she had this to say:

Suze Orman Calls PT Money an Idiot
Suze Orman Calls PT Money an Idiot

Terrible way to take criticism, Suze.  To some degree, I discount her response because of the “sassy” way that she responds to questions and such on her shows, but I think she crossed the line here.  It’s one thing to tell the guy who calls in and asks if he should buy a new car when he’s 500k in debt an idiot, but another thing altogether when you’re calling a guy an idiot simply because he thinks your new prepaid card is a bad product.

Is the card a bad product? To Suze’s credit, unlike some prepaid cards that have had celebrity endorsers, this one has plenty of good things going for it.  It includes a credit watch program, and a free credit report with credit score.  It’s got a program to allow you to put money into a separate account for an emergency fund, free bill pay, and the ability to transfer money from one cardholder to another.

But, my Credit Union has all those things.  A $3/month fee on the card isn’t the worst of the cards, but it’s still a fee.  $36 a year to have access to your own money via a debit card?  Come on.  Again, my Credit Union does that, and they do it for free.  Yes, there are some who are unable to get a bank account.  And for those people, if you absolutely need to have access to a Visa/Mastercard card, then go for it.  But, despite what Suze is claiming, don’t expect it to improve your credit score.

There is no way that any of the credit agencies are going to take your activity on a prepaid card into account.  They’ve never taken your cash spending habits into account, and a prepaid card is no different than spending cash.  Would it be nice?  Absolutely.  Many of us who make most of our transactions on debit cards or with cash would agree.  But, it isn’t going to happen.  Your cash spending has nothing to do with your credit, so why would a credit score take that into account?

I just don’t see enough difference between this, and other similar cards to say that Suze went out on a limb here and created a product that is going to change the industry.  As a prepaid card, it’s decent.  There are better.  In the end, it’s still just a prepaid card that should be used as a last option when you can’t/won’t get a bank or credit union account with a debit card.

Read what some other Personal Finance Bloggers are saying:

Suze Orman’s “Approved Card” gets Denied; Thinks PF Bloggers are Idiots

Suze Orman’s new prepaid debit card: The Approved Card

My two cents on Suze Orman and her prepaid card

Young, Gullible, and Broke: Suze Orman’s debit card FAIL

Suze Orman’s prepaid debit card scam

Suze Orman’s Card is Not Approved by Me

Suze Orman’s Approved Prepaid Debit card is Bad for Consumers

Suze Orman Shows True Colors with Her Approved Prepaid Debit Card

And that’s just a smattering of the posts on the subject.  I have yet to come across one that is entirely positive about the card. What do you think? Do you think that Suze did a good thing here, or is it just another way to milk some money out of her followers?

Sell! Sell! Sell!

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Goodness!  Did you see what the markets did yesterday?  Down almost 400 points!  If you haven’t already, you had better join the rest of the world in getting out while you still can.  The era of easy gains in the stock market and guaranteed returns has officially ended, and it isn’t pretty.  It’s time to let go of the bull market ideals.  Do you know what happens to a bull in a room full of bears?  Here.  Let me show you.

pic 6236

Seriously. Those bears are going to eat you alive! Sell everything you got now. Take it out in gold, and head for the hills. Don’t forget the canned supplies and vegetable seeds for after the apocalypse that will follow!  Quit your job, pack your family up, and head for North Dakota.  We’ve got plenty of oil field jobs available. (see: Bakken formation) And with a bunch of liquid black gold running over your fingers, you won’t need to worry about the crashing stock market anyways!

Ok, obviously, this whole post is a little bit tongue-in-cheek, with the exception of the North Dakota part.  We really do have plenty of oil field jobs available.  Best economy in the U.S.A., in fact.   And, even if the post weren’t tongue-in-cheek, and you took it seriously, you really, really, should talk to a financial professional before making any thing resembling a sell everything move.  The whole post was all for the enjoyment of myself, MoneyMamba, and others who felt that there would be a whole plethora of posts by our colleagues touting the benefits of dollar cost averaging and long term views on the stock market.  They may be right, but sometimes you just have to poke a little fun. 😉

Despite my best efforts, I don’t know everything about finances, stock markets in particular, so please don’t construe this as advice.  It isn’t.

photo credit: VirtualErn