Americans are up in arms over the outrageous overdraft fees that are being charged by banks today. You know how it goes…your account runs out of money, and your bank just punches you in the face with overdraft fees until you replenish your account. Many of us have had that $40 cup of coffee ($4 coffee and $36 overdraft fee). Banks, including Chase, reorder your transactions on any given business day to make sure that bigger purchases clear before smaller purchases. The result: tons of overdraft fees on small purchases. Banks are clearly taking advantage of people who chose not to practice the art of financial awareness.

But don’t get it twisted. I’m not the guy to yell at the blanks, my job is to yell at YOU. I’m not going to ask the banks to stop bailing you out of dumb financial situations. You need to take responsibility for your actions. That being said, I would rather banks simply have your debit card decline, opposed to extend overdraft protection. Here are Pete the Planner’s 5 Tips for Avoiding Overdraft Fees.

1. Know your banks policy- Sounds pretty obvious, but it’s likely that you aren’t operating on a fair playing field if you don’t know the rules. If you are aloud to opt out of overdraft protection, do it. I would rather you be embarrassed by a card decline, then get drilled with hundreds of dollars worth of stupid fees.

2. Count your transactions- Forget overdraft protection for a second, if you don’t know how many times you actually handover your debit card, then you have bigger problems to deal with. You shouldn’t use your debit card more than 10 times per week.

3. Use cash- Old fashion, I know. But it is the ONLY true way to not have overdraft fees. It is the abstinence of the financial world. Awkward….

4. Visit your online banking account frequently- I generally don’t advise that you hover over your money, but if you have an overdraft problem, then be sure to use online banking. Not even the dumbest people in the world would spend money that they see that they don’t have.

5. Communicate with your partner or spouse- Many overdraft fees happen when two people use the same checking account. Be sure to talk about your purchase habits regularly. Communication is the key to accountability, and accountability is what you need.

And don’t forget, don’t rely on the banks to help you. This is your money, and your financial life. You can do it.

Tips courtesy of….me. From my Fox News appearance on 9/29/2009

About Green Candy™

Green Candy™ (www.GreenCandy.com) is an online financial assessment tool that helps Gen Y-ers and Millennials get on the right financial track before the “debt hits the fan.” Introduced by radio personality, comedian and financial expert Pete the Planner (www.PeteThePlanner.com), Green Candy’s ™ various “pods” allow users to assess their financial health and competency in common areas such as Debt, Budgeting, Investing, Charity, Risk Management and Major Purchases, as well as in areas unique to Gen Y. A subsequent series of targeted worksheets, podcasts, tip sheets, and action plans guides them to the financial promise land. Green Candy™: Get in control before the debt hits the fan.

About Pete the Planner

Pete the Planner (www.PeteThePlanner.com) is expert financial planner Peter Dunn’s super-saving alter ego. Peter is an award-winning comedian and rising star in the financial world. Named one of “Indy’s Best and Brightest” in finance in 2007 and media in 2009 by KPMG, Peter was also declared one of NUVO magazine’s “30 under 30 to Watch in the Arts” for comedy. Peter is the author of What Your Dad Never Taught You About Budgeting (2006) and is the host of the popular radio show Skills Your Dad Never Taught You on News Talk 1430 (WXNT). He blogs regularly at www.petetheplanner.com/blog. Pete appears regularly on Fox News and Fox Business as well as various CBS stations. His newest book, 60 Days to Change, is due out in November.

Be sure to watch Pete the Plannet in Fox News at 2:45 PM est today. I’ll be talking about the huge uproar over Overdraft fees. Find out who is to blame.

Tell your friends. Tell your family. Tell your clergy (sorry, I got carried away)

I am obsessed with spending addictions this week. I don’t know why. I talked about it on my radio show, I talked about it on Your Time with Kim Iverson, and I talked about it on The Smiley Morning Show. Many people are compulsive spenders, but that doesn’t mean that they are addicted. I interviewed Harvard trained psychotherapist, Carleton Kendrick, on my radio show. He said that even though a spending addiction is not a physiological addiction, it’s still a serious issue.

I have compiled a list of symptoms that you should consider when trying to self-diagnose.

1. Do you lie to cover up your purchases? Lying about money is a serious problem, and can really damage your relationships.

2. Are your relationships struggling? This could be a sign of your halitosis, but then again it could be a side-effect of your terrible spending habits.

3. Do you just store the stuff you buy? Spending addiction is about the purchase, not about what you purchasing. Therefore, many times addicts will buy things that they don’t  even need. Thus, storage.

If you think you have a spending problem, you should really seek help.

About Green Candy™

Green Candy™ (www.GreenCandy.com) is an online financial assessment tool that helps Gen Y-ers and Millennials get on the right financial track before the “debt hits the fan.” Introduced by radio personality, comedian and financial expert Pete the Planner (www.PeteThePlanner.com), Green Candy’s ™ various “pods” allow users to assess their financial health and competency in common areas such as Debt, Budgeting, Investing, Charity, Risk Management and Major Purchases, as well as in areas unique to Gen Y. A subsequent series of targeted worksheets, podcasts, tip sheets, and action plans guides them to the financial promise land. Green Candy™: Get in control before the debt hits the fan.

About Pete the Planner

Pete the Planner (www.PeteThePlanner.com) is expert financial planner Peter Dunn’s super-saving alter ego. Peter is an award-winning comedian and rising star in the financial world. Named one of “Indy’s Best and Brightest” in finance in 2007 and media in 2009 by KPMG, Peter was also declared one of NUVO magazine’s “30 under 30 to Watch in the Arts” for comedy. Peter is the author of What Your Dad Never Taught You About Budgeting (2006) and is the host of the popular radio show Skills Your Dad Never Taught You on News Talk 1430 (WXNT). He blogs regularly at www.petetheplanner.com/blog. Pete appears regularly on Fox News and Fox Business as well as various CBS stations. His newest book, 60 Days to Change, is due out in November.

Guest blog by Jim Huller, President of Maximum Wealth Advisors

If Sweden Can Do It, Why Can’t We?

About the only thing being discussed these days in Washington is the bitter fight over healthcare reform, meanwhile another looming problem not getting the attention it deserves is Social Security.  This side of Hurricane Katrina, it’s easy to forget that a re-elected President Bush set out to use his “political capital” to take on reform of this destined to implode program.

Most politicians would rather not take on the “third rail” of American politics, nevertheless, if we don’t make changes soon there will be no Social Security for the millions of young people who are now paying into the system and would like to receive something in their retirement.  For a look at what could be a template for Social Security Reform in the US, I wanted to highlight what Sweden did in the 90’s to take on its similar dilemma.  While Sweden is thought of as a liberal nation, legislators on both sides came to the conclusion that private accounts were the best answer.

You might not know this, but Sweden was the first nation in the world to put a government-run retirement system into place.  The old system was a tax-financed, pay-as-you-go entitlement program, like what we have with Social Security.   Unfavorable demographics began wearing on the plan, so the choice basically came down to raising taxes/cut benefits or give workers private retirement accounts – sound familiar?

While making needed changes, Sweden has put in a safety net that guarantees a minimum amount individuals receive, a floor if you will on expected benefits.  As the transition occurs, older workers receive payments from both plans.  Workers pensions will be based on the amount of taxes they have paid into the system, giving them an incentive to work.  The end result is a plan that lowers taxes, reduces government spending, and provides for a more stable system.

Sweden has abolished the death tax and has a lower corporate tax rate than the United States.  If we want to shore up Social Security, and improve our economy shouldn’t we take a page from the Swedish playbook?  The longer we bury our heads in the sand, the worse we make it for ourselves.

I’m excited for the phrase Cash for Clunkers to go away. I want it to rest snugly between Shock and Awe and Wall Street vs Main Street in the cliche graveyard. If nothing else, I want to make sure it is nowhere near WAAAASSSSSSUUUUUP. But I digress. I was a big fan of Cash for Clunkers for a few different reasons, but I feel that there are going to be nasty side effects. 

But first, here’s why I liked it. The stimulus money that was supposed to…well…stimulate the economy was wasting away doing nothing until Cash for Clunkers came along. I know that it is hard to believe that the government struggled at spending money, but in fact, spending money to stimulate the economy is challenging. There is what the insiders like to call “red tape” (I’m kidding of course, everybody calls it that. I was watching a crappy news program last night, and the host said the phrase “what the insiders like to call inflation”. This was possibly the stupidest thing that I had ever heard, and I vowed to use it in a post). Anyway, Cash for Clunkers cut through the spending red tape. Although there was plenty of red tape involved with Cash for Clunkers, just ask a car dealer. 

Another reason that I liked Cash for Clunkers is that it spurred the debate about buying American. Hear me out. I have never understood the concept of buying a domestic car in lieu of an import. The argument for buying American is: we need to keep money in America, and quit supporting “the other side”. There are some major flaws in this line of thinking. First of all, there are Toyota and Honda plants all over the US that employ thousands of Americans (our neighbors). Second, there are thousands of Toyota and Honda dealerships all over the nation that also employ thousands of Americans (our neighbors). Therefore, I am not going to discriminate between providing a living for one of my neighbors vs another.

Okay. Here is why clunkers is jacked up. Eric Halovrson, the local CBS anchor on 24 Hour News 8, recently interviewed me for his blog post. This is what he wrote that I said (yes, I’m a terrible writer):

“Clunkers messed with the natural cycle of supply and demand.  Supply and demand will find its balance, therefore there will be a huge period of depressed demand.

 On the flipside (per your question) There has been a decrease in the supply of peoples’ disposable income. Therefore the natural balance will be found. That means they will be forced to spend less over the holidays, or they will increase their debt. Either result is an indirect side effect of cash for clunkers.”

A new article in the Wall Street Journal suggests that college students are borrowing more money than ever before. Students are not only borrowing more money, but more students are borrowing in general. Per the Journal, this is having more severe implications than just the obvious burden of debt. Students are not buying homes or starting families as soon as they use to. This is causing ripples in the macro-economy.

In addition to the debt concerns, the article suggests that colleges and universities are misreading the situation as a whole.

Also, the rising levels of borrowing may ironically be contributing to the accelerating cost of college, say some college-finance experts. Loans can give colleges an artificial sense of a family’s ability to pay tuition. To some extent, that false sense of security gets built into the assumptions schools make when setting prices, say experts. The idea is that as prices rise, families borrow more and more, spurring prices to rise further, which in turn requires more borrowing.

Ohhhh SNAP!!! I was right. In a blog earlier this week, I suggested that IU is missing the boat with their “tuition credits” solution. Their system gives a “discount” to full time B or better students. This practice is short sited, and it will only serve to put the average student at a bigger disadvantage. 

You don’t have to agree with me, but if you don’t…take it up with the WSJ.

And I’m out.

Over the last few years I have developed a series of hypothetical questions that I consistently ask myself. While this characteristic is congruent with someone that is on the verge of institutionalization, it is also responsible for my unique form of financial advice. If I am going to help my generation get a grasp on their money lives, then I need to recreate a process of financial discovery. I strongly believe that we, as a financial community, need to hit the reset button. We have been advising every single generation, for the last several decades, the exact same way.

But here is the (not so) harsh reality. Retirement and financial independence will he completely different for us than it is for our predecessors. The main culprit in this forced change is our: health. We are going to live a helluva lot longer than our parents. It is unrealistic to believe that we can work half our lives, only to not work the other half. I don’t want to be the one to break this to you (it should be someone like Oprah or Ryan Seacrest), but you are going to live to 100. You might as well photoshop wrinkles on your senior picture just to get used to it. You need to start switching your financial thinking to adjust to your newly discovered longevity.

Ah, yes…I had a point, and here it is. Why not put yourself on the road to retirement right now? This topic is immense enough to write a book, alas I’m going to condense it down to a couple of paragraphs. Our “retirement” is going to consist of doing a job that you are comfortable doing until the day you die. It’s all about redefining your passions, skills, and work ethic. You don’t want to work that 60 hour per week middle management job? Cool with me, just find something else that you want to do. The limiting factor, of course, is your income needs. Your career decisions have, and always will be dependent on your income needs. Unless you decide to eliminate that factor. 

I swear to you, dear friend, that I have a point, and it’s right around the corner. Stick with me. How much money would you need to make for you to walk away from your job and do something that you enjoy for the rest of your life? There are a number of factors that figure into your ability to answer this question:

1. Is your current job the final solution? It’s quite possible that your current job is a job that you’re passionate about. It is a job that you can continue to work some way, shape, or form into retirement. This would be great, and you are well on your way to understanding how our “retirement” will be different.

2. You should accept less. Do you want to know how you know whether you have answered the income question correctly? You should be willing and able to accept less money to do a job that you truly enjoy. Why? Because, as will be true when you retire, you will finally put your needs and wants into perspective once you have chosen your final career. In order to live the retirement lifestyle that we will be faced with, you will have to live on less money.

3. You should regularly ask yourself the “how much to quit” question, and the dollar amount should consistently decrease. Look, I already know that I’m asking a lot of you. I’m asking you to accept less money in a time when everyone is looking for more money. And now I’m asking you to settle for less money every time that you ask yourself this question. I believe that you will finally have the right mindset to act on this hypothetical, once that your income needs start to decrease. You will have accepted this concept as reality, and you are closer to being prepared to live it. 

I consistently ask myself this major question. And I can honestly tell you that my income needs have consistently decreased. If you are currently in a career that doesn’t “do it for you”, then start asking the tough questions. The hardest part isn’t even decreasing your income needs. The real challenge is finding what you truly love, once you find that you will easily be able to decrease your income needs (or wants).

About Green Candy™

Green Candy™ (www.GreenCandy.com) is an online financial assessment tool that helps Gen Y-ers and Millennials get on the right financial track before the “debt hits the fan.” Introduced by radio personality, comedian and financial expert Pete the Planner (www.PeteThePlanner.com), Green Candy’s ™ various “pods” allow users to assess their financial health and competency in common areas such as Debt, Budgeting, Investing, Charity, Risk Management and Major Purchases, as well as in areas unique to Gen Y. A subsequent series of targeted worksheets, podcasts, tip sheets, and action plans guides them to the financial promise land. Green Candy™: Get in control before the debt hits the fan.

About Pete the Planner

Pete the Planner (www.PeteThePlanner.com) is expert financial planner Peter Dunn’s super-saving alter ego. Peter is an award-winning comedian and rising star in the financial world. Named one of “Indy’s Best and Brightest” in finance in 2007 by KPMG, Peter was also declared one of NUVO magazine’s “30 under 30 to Watch in the Arts” for comedy. Peter is the author of What Your Dad Never Taught You About Budgeting (2006) and is the host of the popular radio show Skills Your Dad Never Taught You on News Talk 1430 (WXNT). He blogs regularly at www.petetheplanner.com/blog. Pete appears regularly on Fox News and Fox Business as well as various CBS stations. His newest book, 60 Days to Change, is due out in September.

You know that something works well when it’s success creates new problems. Cash for Clunkers, the government’s new economic stimulus program, is a roaring success. In fact, it’s so much of a success that it may end months early based on the $1 billion cap that the government has placed on the program.

Here are the basics. If you have a car that is less than 25 years old, gets 18 mpg or less, and you have owned and had it insured for at least 12 months, then you can trade that “clunker” in towards the purchase of a NEW car. The government will give the dealer $4500 to go towards the purchase of your new car. The dealer must then destroy your new car. They have to kill your engine so that a low MPG car will be taken off the streets. The program ends on 10-31-09, or whenever the $1 billion cap is reached. 

Now, let’s dig a little deeper.

Since the program provides only (why in the hell am I typing only) $1 billion, that means that roughly 222,222 cars will be sold using this program. That is $1 billion divided by $4500 (credit received). Estimates are that 100k cars have been purchased within this system within the first 3 days. Pay attention now, it’s time to use your high school math. At the current pace, the program will hardly make it to next week. But here is where things get really scary. The dealerships must file the car deals with the government in order to get reimbursed the $4500 that they are fronting on the car deal. And since the program is progressing so rapidly, the program may end prior to the dealerships getting reimbursed. Oh, and it’s first come first serve.

Pete the Planner (yes, I went 3rd person on you) has always maintained that you should buy a used car based on its true value vs depreciation. However, this new program easily makes some new cars a better value than used cars. I would strongly encourage anyone one is in the market for a car that meets the Cash for Clunkers criteria, to act quickly. And by quickly, I mean finish reading this, and start doing your research online right now. 

Congrats to the government for getting one right. 

About Green Candy™

Green Candy™ (www.GreenCandy.com) is an online financial assessment tool that helps Gen Y-ers and Millennials get on the right financial track before the “debt hits the fan.” Introduced by radio personality, comedian and financial expert Pete the Planner (www.PeteThePlanner.com), Green Candy’s ™ various “pods” allow users to assess their financial health and competency in common areas such as Debt, Budgeting, Investing, Charity, Risk Management and Major Purchases, as well as in areas unique to Gen Y. A subsequent series of targeted worksheets, podcasts, tip sheets, and action plans guides them to the financial promise land. Green Candy™: Get in control before the debt hits the fan.

About Pete the Planner

Pete the Planner (www.PeteThePlanner.com) is expert financial planner Peter Dunn’s super-saving alter ego. Peter is an award-winning comedian and rising star in the financial world. Named one of “Indy’s Best and Brightest” in finance in 2007 by KPMG, Peter was also declared one of NUVO magazine’s “30 under 30 to Watch in the Arts” for comedy. Peter is the author of What Your Dad Never Taught You About Budgeting (2006) and is the host of the popular radio show Skills Your Dad Never Taught You on News Talk 1430 (WXNT). He blogs regularly at www.petetheplanner.com/blog. Pete appears regularly on Fox News and Fox Business as well as various CBS stations. His newest book, 60 Days to Change, is due out in September.

According to an article recently published in the New York Times, credit card companies have begun accepting cents on the dollar to settle your consumer debts. While this appears to be the consumer “bailout” that everyone has been looking for, I maintain that it is an escalation of financial impetuousness. People are so enraged at all things institutional, that they are willing to stiff the first institution that they come across. And the credit card companies are stepping up by letting non-paying consumers off the hook.

Let’s face the reality of the situation (for the first time ever). People buy crap that they can’t afford. Whether the purchases are necessary or not is irrelevant. They spent money that they didn’t have, and now, with this trend, they are not being forced to answer for their irresponsibility. As a person who, like everyone else on the planet, has made a poor financial decision, this is infuriating. People should pay their debts. I am not against welfare programs in general, but I am against this. And the crazy thing is that the “welfare” is coming from card companies themselves. The card companies have determined that enough of us are deadbeats that they are just willing to give up, and let us out of our obligations. 

As a personal finance expert, I find this entire situation offensive. Don’t get me wrong, there is supposed to be a happy ending for everyone. But the happy ending comes from the discipline and hard work in paying off your debt. This very practice of settling debt will be incredibly detrimental to my entire generation. There is glory in learning the hard way. The easy way out will bring people immediate relief, but will leave them with long term financial malaise. 

What do you think?

About Green Candy™

Green Candy™ (www.GreenCandy.com) is an online financial assessment tool that helps Gen Y-ers and Millennials get on the right financial track before the “debt hits the fan.” Introduced by radio personality, comedian and financial expert Pete the Planner (www.PeteThePlanner.com), Green Candy’s ™ various “pods” allow users to assess their financial health and competency in common areas such as Debt, Budgeting, Investing, Charity, Risk Management and Major Purchases, as well as in areas unique to Gen Y. A subsequent series of targeted worksheets, podcasts, tip sheets, and action plans guides them to the financial promise land. Green Candy™: Get in control before the debt hits the fan.

About Pete the Planner

Pete the Planner (www.PeteThePlanner.com) is expert financial planner Peter Dunn’s super-saving alter ego. Peter is an award-winning comedian and rising star in the financial world. Named one of “Indy’s Best and Brightest” in finance in 2007 by KPMG, Peter was also declared one of NUVO magazine’s “30 under 30 to Watch in the Arts” for comedy. Peter is the author of What Your Dad Never Taught You About Budgeting (2006) and is the host of the popular radio show Skills Your Dad Never Taught You on News Talk 1430 (WXNT). He blogs regularly at www.petetheplanner.com/blog. Pete appears regularly on Fox News and Fox Business as well as various CBS stations. His newest book, 60 Days to Change, is due out in August.

Has anything on your car ever broke? It’s pretty frustrating isn’t. You buy a $25k-$50k item and you would like to think that the car will last longer than its warranty. Do you know what is even more frustrating? Discovering that the car was built to break. This concept is called planned obsolescence.

Planned obsolescence is a concept that came into prominence in the 1920s. The practice became even more prominent during the manufacturing boom after World War II. Manufacturers found a way to ensure future production orders by making products that break after a predetermined amount of time. They rode a fine line between pissing you off when the item breaks, and being there with the next best thing. Why do you think a new iPhone comes out every 6 months with just a couple of new features? It’s because your other iPhone is slowly breaking, and you will need to eventually replace it.

We have grown to accept that our stuff breaks. This feeling has actually created our desire to always have the next great thing. We have become upgraders. Your telling me that we can take pictures of other galaxies from space, but we can’t manufacture a tire that can drive more than 60,000 miles. I call BS. Your telling me that we can’t manufacture a travel coffee mug that can simply not leak after 10 uses? BS. The crazy thing is that while the original problem can be blamed on manufacturers, the consumer is now the reason that we are in this nasty situation. 

What is the solution? Don’t become an upgrader, and check out a short movie on this topic. The Story of Stuff.

Don’t forget to listen to the radio show this Sunday morning at 11am on 1430 WXNT as we discuss this topic.