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Archive for October, 2011

How To Avoid Scams When Seeking Debt Relief

This is a guest post from Kevin @ DebtEye.  Kevin is the Co-Founder of DebtEye, which helps consumers find the best option when it comes to debt relief. 

Being in debt is stressful and can wear you down.  It can keep you up at night while you’re trying to figure out a way to pay off the debt.  Over the past few years, debt relief companies have been targeting vulnerable consumers who are desperately trying to figure out a way to get out of debt.  You’re an easy target because you would do anything to avoid bankruptcy.

It’s important for anyone who is seeking help from a third party to tread with caution before they pull the trigger.  Signing up with the wrong company can leave you deeper in the hole from where you first started.  Most of these debt relief companies advertise on the TV & Radio which can be heard on late night infomercials.  These companies have deceptive marketing tactics to get you in the door by sugar coating the program.  Here are 4 things to watch out for when seeking help from a third party company

  1. Who are you really talking to:  When you speak to a representative, ask yourself if you’re speaking with a salesperson or a certified credit counselor.  Most debt settlement companies you speak with are sales people who know NOTHING about the debt relief space except debt settlement itself.  The problem with this is that they are specifically trained to have every rebuttal to sway you from other programs.  Their goals aren’t aligned with the consumer’s best interest. 
  2. Transparency:  When speaking with a company, make sure they are completely transparent with the fees.  Ask them to provide with you with the total amount of fees for the program.  Most debt settlement companies will charge you anywhere from 15-18% of your debt amount, or 25-30% of what they save you.  You need to be fully aware how much of your payment every month is going toward a designated escrow account and how much are going toward their fees.
  3. Refund Policy:  What if you decide to file bankruptcy halfway through the program?  What if you have an unforeseen emergency situation where you need to access your funds?  Be sure that the debt relief company has a 100% money back guarantee for services they have not performed.  On top of that, any funds in your escrow account is YOUR money and you should have access to it 24/7.
  4. How are they selling the program:  Anything that sounds too good to be true probably is.  This should definitely raise a red flag.  Debt settlement isn’t the most glamorous program out there.  This type of program is not right for everyone.  There are a lot of downsides to the program, and if the company is sugar coating the program, definitely be cautious!  One example might be, “Creditors don’t like to sue you because they’d rather work out an arrangement with us instead of spending money in courts.”  If you call a debt relief company, I guarantee you that you will hear this statement 80% of the time!

At the end of the day, you should do your due diligence and use your best judgment.  The best route to go is to do your own research online to figure out what the best program is.  There is no “one size fits all” in the debt relief world.

CFM comment:  I am away in Honduras on a mission trip so don’t be offended if I don’t quickly respond to your comments.  I will be gone through the 30th and internet access will be incredibly limited.  Thanks to Kevin for helping me maintain my posting schedule while I am away.

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Be the first to comment - What do you think?  Posted by Cash Flow Mantra - October 21, 2011 at 11:00 am

Categories: Credit/Debt   Tags: , , , ,

An Update on My Intel Dividend Trade

Note:  I am leaving for Honduras on a mission trip tomorrow at 4:30 am and will be gone until October 30 with limited ability to communicate so don’t be offended if I don’t respond to any comments or emails during that time.

If you have been reading and following this blog for the past few months, you may recall that I decided to purchase Intel stock for my retirement accounts because of the positive comments that I have read on various dividend blogs.  I am really starting to think long and hard about the value of dividend investing but am also very interested in options and have been trading them for the past several years.  It got me to wondering if I could enhance the dividend yield by selling covered calls and investing in my usual fashion with options but using the dividends as a ballast to maintain some overall portfolio stability.  Toward this end, I am tracking the results of my Intel trading using my options technique and comparing it to a buy and hold dividend strategy as might be employed by one of the dividend bloggers.

My Trades So Far

Well, I first purchased INTC at an initial price of $20.30 in August.  I must say that I am impressed with the performance of the stock over the past couple months.  Even on those days when the market was down, Intel stock held in there and was even positive on some of the big negative days for the market.  I would be doing quite well if I had simply bought and held.

As it was, I sold some covered calls and ended up having to purchase those calls back in order to keep my Intel position intact.  As a result of these various rolls, my basis has increased from the initial purchase price.  The most recent adjustment forced me to purchase October $21 calls and sell November $23 calls.  I was able to do this last week but my overall cost is now $21.55.  I will have to wait until November to see what happens to the stock to see whether or not I will be able to decrease that cost.  As you can see, I am trailing the simple buy and hold technique.

Point is to Not Lose Money

I am not surprised one bit by these results as my options trading technique is designed to avoid losses rather than participate in extensive gains.  I have tracked this vs buy and hold since I started in 2007 and that is always the case.  I will trail the returns when stocks are increasing, but I will also beat the return when the stock declines.  It is my belief that it is better to avoid large losses and get singles and doubles rather than hit a few home runs but strike out repeatedly.

You see, I stink at stock picking.  My analysis is always off and stocks that should go up end up declining so I had to come up with something that would mitigate my poor selections.  If you follow my trading at Options Dude, you know that SLW and ONXX haven’t been the best choices to own.  And yet, I am still close to breaking even with them and may soon profit in the next several months.

Do What Enables Sleep

I trade the way I do because it helps me sleep at night.  I don’t worry about a company going bankrupt because I have protective puts on everything I own.  I don’t worry about a flash crash for the very same reason.  I could care less what happens to my stocks while I am away for ten days in a Central American country since I know that I will be able to retain 90+% of my capital no matter what happens.  My portfolio simply cannot be wiped out.  I sleep at night.

You may choose dividend stocks to help you sleep or index funds or ETFs or bonds or CDs or cash.  Whatever it is, that is fine.  I simply offer up my alternative want to compare it to buying and holding.

Even though I am trailing now, INTC will consolidate and trade sideways.  Then I will make money and decrease my basis.  Intel stock may very well fall at which point I will again make money on the covered calls.  Only time will tell what works out better.  Nevertheless, I will still collect the dividends and be enjoying those as well.  It may be another month or two before an update since there is really little that happens until options expiration draws near.  Until that time, be sure to ask any questions you may have.  They give me great ideas for posts.

 

4 comments - What do you think?  Posted by Cash Flow Mantra - October 19, 2011 at 5:00 am

Categories: Investing   Tags: , , , , , , ,

My Three Pound Budget Buster

I wasn’t going to mention this, but since Crystal over at Budgeting in the Fun Stuff has a dog with serious allergies, I thought I would add my little rant to the pet pity party.  My mother-in-law had pugs for a long time so I know how crazy those dogs can be.  But I suppose I should really start at the beginning.

It all started when our 7 year old cockapoo got killed in a tragic car accident.  It happened about 14 months ago.  My wife and a couple of the kids were on the way home from the groomer with the window down.  They were at the entrance to the neighborhood and who knows what goes through a dog’s head (maybe he recognized the area), but he jumped out the window into oncoming traffic.  There was no way for the car to avoid him.  My wife scooped him up and rushed him to the vet, but you can guess that it was moot.  He was dead at the scene as they say.

Of course, the family was devastated so the search began for another cockapoo.  No big deal.  During this whole escapade, the kids (maybe with some encouragement from my wife?  Not exactly sure how it all happened) got the idea that getting two cockapoos and having puppies would be some great adventure.  So that is what happened.

The First Litter

Fast forward to this summer when, in August, the first litter of 4 puppies was born.  We got 3 boys and 1 girl who are mostly black.  The little girl went to some friends but the others are ending up for sale, although one puppy will be going to a fund raising auction at my daughter’s school.

Puppy #3 is the one being donated and is also the runt of the litter.  Well, he is the one that just happened to be underfoot when my 12 year old son stepped backwards while taking them outside to do their business.  Fortunately, he says he didn’t step down all the way, but the damage was done.  Puppy #3 didn’t look too hot afterwards.  He was breathing hard and making some funny noises.

At the vet, he was found to have broken ribs (5 of them) with a bruised lung.  He was gulping a lot of air while struggling to breathe which made his belly big (I learned that at the hospital).  He looked like he had swallowed a grapefruit.

First Vet

This is what we found out at the first vet which is our local vet.  Unfortunately, they close for the evenings and puppy #3 needed to be closely monitored over night.  So after paying the first vet bill of $400+ for xrays, blood work, pain medicine, exam, etc, I transported him in a little cardboard box to the animal hospital on the north side of town.

They confirmed the diagnosis and at least didn’t feel like he needed an abdominal ultrasound for his big belly (at $200) but felt that he was gulping air.

ICU Care and Oxygen

It turns out that the puppy had to stay for almost 48 hours at the animal hospital plus had to stay in the ICU with oxygen therapy that first night.  I took the kids to visit and he looked so pitiful in a little oxygen aquarium looking device.  He looked bad enough that I thought he might not make it, and the vet was unwilling to commit to what he thought as well.

The next day, he was breathing a little better but still wasn’t really interested in eating or drinking.  He was off oxygen but everyone involved felt that it would be better for him if he stayed in the hospital another night.  At least now, it seemed like he would survive.

We took him home the next day after paying $900+ to the hospital for 48 hours of care.  Ouch!  But, I am pleased to report that he improved greatly while at home and as I write this just 7 days after the initial accident, he is running around and acting just like nothing ever happened.  We have allowed him to spend a little time playing with Puppy #1 who is not much bigger but have been keeping him away from the other dogs due to the size difference.

Even though I don’t have an emergency fund per se (I need to work on this), I was able to take care of paying the cost.  But it still hurts to have to deal with the expense.  I had hoped to put that money toward some debt.  At least my son isn’t too bothered by it.  He felt really bad initially and that first night in the ICU but at least the puppy is doing well.  I told him that it isn’t that much different in cost from when his sister wrecks the car and we pay the insurance deductible of $1000.  I think that helped him feel better.

So, there is my pet rant.

Readers:  Feel free to add to the rant and expense of raising pets.

 

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13 comments - What do you think?  Posted by Cash Flow Mantra - October 17, 2011 at 5:00 am

Categories: Spending   Tags: , , , ,

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