Personal Finance: Are you a pretender?

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Michelle Singletary
Thursday, March 4, 2010; 8:46 AM

A pretender is someone who buys a BMW when they really have a Ford Fusion budget.

Are you acting rich when you know you're broke or living paycheck to paycheck? If you want guidance on how to live rich instead of just acting like it, join me today for a live chat at noon ET. My guest will be Thomas J. Stanley, author of "Stop Acting Rich...and Start Living Like a Real Millionaire." The book was February's Color of Money Book Club pick.

Stanley will be taking questions on how to truly live like a millionaire. Submit a question now or during the chat.

CARD Act Impact

Last week we talked about changes to "universal default," one of the many reforms under the Credit CARD Act of 2009.

This week, I'm highlighting the section of the legislation that deals with young adults and credit. This is a change that is long overdue, since many young people sign up for credit cards during their college years. They get off on the wrong foot financially because they have no idea what they are getting themselves into.

The following are CARD Act provisions that directly impact young adults:

-- If you are under 21, you'll have to prove you can make payments on the credit card. If you can't, you'll have to get a cosigner in order to open a credit card account. (And parents don't do it. Don't cosign. Let your baby stand up on his or her own financial feet.)

-- If you are under 21, have a card with a cosigner and want an increase in the credit limit, your cosigner must agree to it in writing.

-- Companies can no longer entice students to sign up for a credit card with freebies when the pitch is made on or near a college campus or at events sponsored by a school.

-- An institution of higher education has to disclose any contract or other agreement it has with a card issuer or creditor when marketing a credit card.

To learn more about the CARD Act, read the Post roundup and this federal government page.

A Financial Blizzard

The back-to-back snowstorms in February had a tough financial impact on many people, especially those with children in day care.

"It's a trickle-down effect: The parents lose jobs; the providers lose children in day care," said Phyllis Waters, president of the Professional Child Care Provider Network of Prince George's County.

"So go the fragile economics of child care in the Washington region and beyond, with the eternal tension between what families can afford and what it costs to operate a day-care center," writes the Post's Donna St. George in Snowstorms throw delicate economics of childcare off balance (March 2).

As St. George writes, the storms highlighted the problem with day care in this country.

"Many parents cannot afford to pay any more for their child care -- with costs rivaling their rent or mortgage payments -- and many workers cannot afford to make any less, with their wages near the poverty level," she writes.

I'm not sure what the solution is. Day care is expensive and yet the workers are still earning low wages. And it's not as if the owners are pocketing huge amounts of money. Most of the expenses for in-home or day-care centers go to salaries, St. George reports.

2010 Tax Tips

Need help preparing your tax form? Or should I say do you want free help? Well, free help is available. The IRS sponsors the following community-based, volunteer tax return preparation programs:

-- Volunteer Income Tax Assistance Program offers free tax help to people who earn less than $49,000.

-- The Tax Counseling for the Elderly Program offers free tax help to taxpayers who are 60 and older.

There are more than 12,000 IRS-provided tax preparations locations around the country. Site information for local volunteer tax preparation is also available by calling the IRS's toll-free number: 1-800-906-9887. To locate the nearest AARP Tax-Aide site, call 1-888-227-7669 (888-AARPNOW) or visit

Here's some more information from the IRS.

Color of Money Question of The Week

Last week, I asked: "How are the credit card changes affecting you?" After highlighting one of many changes under the new CARD Act of 2009, I wanted to know your thoughts on the reform that is intended to provide consumers with transparency and fairness.

Here are some of your responses:

Marie Furmanski, of Valparaiso, Ind., says her experience has been negative so far.

"Citibank raised my interest rate over four percentage points--and therefore my monthly payment--by over 20 percent in preparation for the new laws," she wrote. "I contacted them stating that I had been paying on time and requested a review of my interest rate and they refused stating the new laws. In the past they were willing to review my account and work with me regarding the interest rate."

Judy Matysik of Minneapolis, Minn. isn't pleased either. She's happy the CARD Act has some important consumer protections, but it's hurting her bottom line.

"I have three major credit cards, each of which hiked up my interest rate in advance of the law," she wrote. "So basically I'm helping credit card issuers recoup the money they would usually get from late fees and penalties they will no longer be able to charge."

On the other hand, Teresa Woods of Omaha, Neb. appreciates the new reform.

"Not only is it awesome that they will pay off the interest-bearing balance first, my statement now tells me how long it will take to pay off."

"These changes are welcomed," wrote Terry Vann Ellis of Washington, D.C. "I just wished that they had occurred instantly and thus not given the credit card companies time to adjust and sock it to us."

For Celia Karac of Purchase, N.Y., The Act provides a lesson in financial discipline. She wrote: "I actually think the credit card act is going to make me behave better with money and credit as I won't be able to overextend myself anymore."

Upcoming events

I continue to get inquiries from many of you about where I'll be speaking, especially if I'm having any discussions about my new book, "The Power to Prosper: 21 Days to Financial Freedom."

On March 9 at 7 p.m., I'll be teaching part two of a three-part bible study based on "The Power to Prosper" at the First Baptist Church of Glenarden, located at 600 Watkins Park Drive, Upper Marlboro, Md. 20774. Call 301-773-3600 for more details.

The first session of the series was unbelievable. I had the 1,800 plus attendees list their non-mortgage debt - credit card, student loan, tax, car loan, etc. -- on index cards. I'll be revealing the total debt figure at the next session, but I will say this. It was a figure that blew me away. And I'm not easily surprised when it comes to the amount of debt individuals are carrying in this country.

If you live in the Washington metro area, come by and learn more about the 21-day financial fast challenge. You can also watch the bible study live online at

Here are the dates for several other events where I'll be speaking:

-- March 13, 2 p.m.: Book signing at Borders bookstore, located at 4420 Mitchellville Road, Bowie, Md. 20716. 301-352-5560.

-- March 20, 10 a.m.: Financial workshop at Greater Mount Nebo AME Church, located at 1001 Old Mitchellville Road, Bowie, Md. 20716. 301-249-7545.

-- March 27, 1 p.m.: Book signing at Barnes & Noble located at 7851 L. Tyson's Corner Center, McLean, Va. 22102. 703-506-2937 (This is a rescheduled event canceled because of inclement weather).

Tia Lewis contributed to this e-letter.

You are welcome to e-mail comments and questions to Please include your name and hometown; your comments may be used in a future column or newsletter unless otherwise requested.

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