James Guess: The Legal Lowdown on Credit Cards 2009

BY JAMES “BIRD” GUESS

Credit cards do not put people in debt, financial decisions that people make is what put them in debt! On May 22, 2009, President Obama signed The Credit Card Holder’s Bill of Rights Act into law, which could potentially help people become debt free quicker.

This new legislation will dramatically help the roughly 50% of American consumers who have charged nearly $1 trillion, and carry an average balance of $8,000. Twenty percent of those who carry a balance are paying more than 20% interest on that balance.

Most of the new legislation will not become effective until early 2010, but it will finally use some common-sense methods regarding interest rates. For example, it prohibits lenders from increasing interest rates on existing balances (stuff you already charged) unless you are more than 60 days late on your bill.

And if you actually fall behind on paying your credit card bill and the rate is increased, the lender must restore the lower rate if you have paid your bill on time after six months. Also, borrowers are required to have periodic payment history reviews by their lenders and have their rates decreased if indicated by the review. This may be hard to actually enforce since it goes against the lender’s interest (no pun intended).

Furthermore, the law will require borrowers to receive at least 45 days notice before their interest rates are increased on new purchases, regardless if the customer is late or delinquent. This will help borrowers make better decisions and give them more time to create a plan before they are penalized with a higher interest rate.

Also, the notorious “pay to pay” concept will be disallowed. How are you going to charge me for paying my bill? No more will customers be charged for paying their credit card by mail, phone, or electronic transfer, except for live person or expedited services.

One of the most effective pieces of this law is the part that requires lenders to tell borrowers how long it will take, and how much interest would have been paid if only the minimum monthly payments are made.

Let’s face it! We live in a payment plan world, where most consumers do not care how much they pay for things, all they want to know is whether or not they can afford the monthly payments. Hopefully, borrowers will realize it is not worth paying for something twice and being in debt twice as long by making minimum monthly payments.

The Credit Card Holder’s Bill of Rights also has additional protections for students and gift cards as well. And no more over the limit fees, unless you decide you want to be allowed to go over the limit. Why would you? For more information and the complete bill of rights law visit www.govtrack.us and search for bill H.R. 627. 

Create Wealth, Enjoy Life!


James “Bird” Guess
President & Founder
$chool of Money & Wealth LLC

www.SchoolofMoneyandWealth.com
www.JamesBirdGuess.com
www.TheBlackEconomy.com

Keep Your Heads Up Spruce: Failing the TAKS, Does Not Mean Failing LIFE!

By James “Bird” Guess

So we know that only 10 percent of Spruce graduates were college ready in reading and math last year, and the school has been rated academically unacceptable for the past four years. Anything else?

Oh wait, the kids don’t care about education and their parents did not either, so they are simply repeating the cycle, they live in a severely economically disadvantaged community, the kids fight frequently and there is no hope. If students do not pass the TAKS Test this spring, Spruce could potentially be closed like similar schools in Austin or Houston, or be restructured into all boys or girls schools.

Let’s get all the negative statistics and comments off our chest and focus on what really matters: Empowering the students, parents and the COMMUNITY!

For far too long the students have ingested nothing but negativity regarding their failing test scores, potential school closing, and how they may become failures in life. This is a recipe for student disaster. And if the students feel they are failures, they will soon act as failures and pursue alternatives to high school, which has made them bitter and uncomfortable instead as a place of learning, growth and inspiration.

We must understand that students at Spruce and other predominantly Black and Hispanic schools must endure special social and economic burdens that many White students in suburban school districts do not have to worry about.

Imagine coming from home school and not seeing your mother because she is working a second job or your father because he is incarcerated. What’s the result? No emotional support and no one to check or go over your homework and share what you’ve learned.

Imagine as a student being pressured by their parents to obtain part-time employment to help pay the bills to keep the lights on and food on the table. What’s the result? Education becomes less of a priority and students accept low-skilled occupations in return for immediate money to help pay for living expenses.

If we do not act to inspire these students to do their best, then the community will continue to be negatively impacted because the students will not be prepared to successfully manage life. Crime will increase, poor decision-making will be considered normal, and education will be viewed as an unnecessary burden, instead of a vehicle for success.

As educators, we must understand that education in the truest sense of the word is “developing students to reach their full potential and preparing them to successfully manage real-life.” Although the TAKS Test may help prepare students for college, it is incapable of measuring the two most important factors that determine academic and college success – determination and strong learning habits!

Since students at Spruce encounter special social and economic situations the need special classes on financial education, and real-life decision-making rather than tricky TAKS questions that most students say are “boring, irrelevant and too much pressure to pass.”

Rarely in life do you work on something for years and then be required to take a test on it and if you fail the test erases everything you have accomplished in those years. As a successful entrepreneur, I can testify that the secret to success is learning from failure, and having relentless ambition.

After speaking to over 150 students from DISD schools, the TAKS Test clearly erodes academic ambition and if we don’t find an alternative, we will continue to fail our students and teachers, not because we don’t have a solution, but because we have stopped trying to develop an alternative learning and assessment solution.

James “Bird” Guess is the President & Founder of School of Money & Wealth.  His email address is james@schoolofmoneyandwealth.com


Game Sold Not Told: Madoff’s $65 Billion Ponzi Scheme

BY JAMES “BIRD” GUESS

Wall Street investor conman, Bernie Madoff, made off with billions of investor’s money and on December 10, 2008, he confessed to orchestrating an estimated $65 billion “ponzi scheme,” that is considered the largest act of investor fraud ever by a single person. On March 12, 2009, Madoff appeared in court and pled guilty to 11 felonies. He faces a maximum sentence of 150 years in prison, and will also have to pay mandatory restitution and fines estimated at $170 billion.

After prosecutors froze Madoff’s accounts and seized his business and personal assets, they accounted for only $830 million. Prosecutors are expected to investigate members of Madoff’s family as well. Former investors who contributed to Madoff’s investment funds, who profited and cashed out, may be asked to return some of their “false profits” to remaining investors in order to make them whole.

Despite the billions in losses, fines, and public outrage, Madoff did not implicate any other person who may have known or helped him pull off this sophisticated scam, instead he went out solo. What!! Are you telling me one man pulled off the largest investment scam in history by himself? Yeah right!

Federal investigators definitely have their work cut out for them, but I would not be surprised if some of them profited from it and knew the music would stop playing sooner or later. Beginning in 1992, The Securities and Exchange Commission (SEC) responsible for regulating the stock market and investment products, investigated Madoff’s firm eight times over 16 years, and his firm was cleared or paid small fines each time.

In 2005, financial analyst Harry Markopolos sent a detailed 17-page report to the SEC, accusing Madoff’s firm of operating The World’s Largest Fraudulent Hedge Fund. He even sent his report to the Wall Street Journal but editors declined to run the story. So lets not rule out that Madoff was aware of Markopolos’ report and could have compensated SEC investigators and editors of the Wall Street Journal to perpetuate his ponzi scheme.

What is a Ponzi scheme? It’s a scam named after Italian immigrant Charles Ponzi who in 1920 promised people 50% returns on their money in 45 days, and 100% returns in 90 days. The scheme operates by taking beginning investor’s money and using new investor’s money to pay off the beginning investors. For example, lets say I promised you that if you invested $100 with me, I would return $200 back in 30 days (100% profit).

Now all I ask is that you encourage more people to invest with me. Well, after you told your friend, he comes in one week later with his $100, and I will now use his $100 and the $100 you originally gave me to pay you the $200 I promised you in the beginning. Got it? I will encourage your friend to advertise for me as well and when new investors come in, I will use their money to pay him. Everything works so long as new cash continues to flow in, but eventually the music stops playing and the people who invested last will lose.


I can only imagine how the victims of Madoff’s ponzi scheme feel. So when it comes to your money, I strongly encourage you to always ask questions and continue reading and studying business, and finance so that no one can financially take advantage of you.

James Guess: Is The Game of American Capitalism Over?

By James Guess, Dallas South Contributor

Is it not ironic, that the game of free-market capitalism, the economic system responsible for creating the wealthiest country in the world, is now the culprit for the financial collapse of America’s $13 trillion economy?

Foreign leaders around the world have called out American style-capitalism as the reason for the worldwide economic slump. In hip-hop culture, there is a saying “don’t hate the player, hate the game,” but in this situation I must say, “we cannot hate the game, we must blame the players.”

So who’s to blame? We could start with the Federal Reserve, who kept money cheap by lowering interest rates below 2 percent from 2001-2004 and sparked sales of sub-prime mortgages. Beginning in 2001, sub-prime mortgages were a $200 billion industry, representing less than 10 percent of the mortgage market.

By 2004, the industry more than doubled to roughly $600 billion and its share of the mortgage market increased to 18 percent. However, former Federal Reserve Chairman Alan Greenspan was only trying to jumpstart the economy after 9/11, so I think he deserves a pass. Next up, borrowers with poor credit history promised to pay and agreed to the exotic mortgages issued by mortgage brokers only to default later. They deserve a partial pass because although many of them knew they could not afford the homes, brokers manipulated them into the deals and did not fully explain the terms of their loans.

Greedy brokers also had huge incentives from earning commissions and fees and indeed performed sleight of hand on borrowers applications and documentation to make sure they received financing. But they were only selling mortgage products the banks offered — so next please. Introducing the credit rating agencies, who approved the sub-prime loans that Wall Street “securitized” and resold as mortgage-backed securities to investors around the world. No due diligence was performed by the rating agencies and since they are paid by the investment banks for grading their products, repeat after me, “conflict of interest,” – Flagrant foul!

Finally, Wall Street investment and commercial banks relaxed their credit standards and began buying lower quality loans, only to resell them to eager investors, hungry for higher returns. Banks knew they were issuing and selling poor quality loans from borrowers who had a history of defaulting or not paying their bills on time. They created products like the stated income loan, in which a borrower actually states how much money they make and the amount of their assets without documentation to prove it.

Why would banks create such a risky product? Because they were able to easily combine multiple loans, repackage them, and ultimately sell the loans and transfer all of the risk to the buyers. It was like playing “mortgage musical chairs,” and banks knew they would always have a chair once the music stopped – “double technical, ejection!”

While economist and political pundits are calling President Obama’s stimulus and bank rescue plan an indirect socialist scheme, I strongly disagree. Socialism, an economic mentality suggests that a government manage and plan the economy and ultimately control the production of products and services and make certain that wealth is evenly distributed to all citizens.

I do not think that the Obama administration referee’s want full control of all the players in the game of American capitalism. However, I think the administration does understand that some of the players have indeed cheated in a way that has compromised the integrity of the game and they must now review and amend the rules. And no, the game of American capitalism is not over, we just need to amend the rules and add a few more referees.

Obamanomics: A Breakdown of how President Obama Plans to Repair America’s Shattered Economy

By JAMES “BIRD” GUESS

obamanomics1

Obamanomics: The Financial Breakdown of How President Barack Obama Plans to Repair America’s Shattered Economy

In an attempt to repair the economy and potentially create up to 3.5 million jobs, President Obama has proposed an economic stimulus plan that would cost taxpayers $825 billion. The House of Representatives recently approved the plan, and now it awaits a vote in the Senate. The terms will more than likely be negotiated and revised to satisfy both House and Senate politicians. President Obama is hoping to have a final version of the plan on his desk by mid-February so he can sign it into law and immediately start the spending spree.

Why does President Obama believe spending $825 billion will help repair the economy? Well, President Obama’s plan is based on an economic philosophy called “Keynesian economics,” which states when an economy is in a downturn and consumers are not spending, the government should spend money to make up for the decline and create jobs. The people who obtain these government sponsored jobs will spend the income they receive on other products and services, and in return help create more jobs and more spending. As a result of the increase in spending, businesses will create more jobs and hire people to produce additional products and services. The cycle continues, and the economy strengthens as these employees spend their income as well.

Roughly 60 percent of the $825 billion stimulus will be used for spending on education, infrastructure, energy, health care, aid to the poor and unemployment. The remaining 40 percent will be used to provide tax credits for payroll taxes, higher education and housing. These tax credits will reduce the total amount of taxes a person must pay, and are fully refundable if a person does not owe any taxes.

Below is an outline of how most of the $825 billion stimulus will be spent:

Tax Cuts = $275 billion

• Payroll tax credits will be provided, and an individual could receive a credit of $500 maximum, and a married couple $1,000 maximum. This particular tax credit will benefit working American families who make $75,000 or less.

• Higher education tax credit will be $2,500 for the first four years of college. It will replace the Hope and Lifetime Learning Credits.

• First time homebuyers credit will be 10 percent of the purchase price of the house with a maximum of $7,500. This particular credit will apply to homes purchased between April 8, 2008 and July 1, 2009, and is an interest free loan that must be repaid in equal payments over 15 years beginning the second year after the credit is received.

Education = $141.6 billion

• School districts will receive $62 billion through a variety of different programs to help upgrade school buildings and facilities.

• $39 billion will be allocated for State Governments who provide financial assistance to school districts, public colleges and universities to prevent reductions in educational services.

• $15.6 billion will be given to states for meeting educational performance initiatives.

• States will be able to access a $25 billion federal fund in hopes of preventing layoffs of public employees and teachers

Health care = $111.1 billion

• $87 billion will be used to help states pay for Medicaid, which provides health care for low-income residents

• $20 billion will be made available to computerize medical records and to prevent medical negligence

• $4.1 billion will be provided for preventive medical care

Financial aid for the poor and unemployed = $102 billion

• 43 billion will be made available to increase unemployment benefits and job training

• $39 billion will be provided for health insurance and Medicaid coverage for the unemployed

• $20 billion will be used to increase food-stamp benefits by 13%

Infrastructure = $90 billion

• $30 billion will be provided for highway construction projects

• $10 billion will be provided for rail and transit projects

• $31 billion will be provided to renovate federal and public buildings to meet energy efficient standards

• $19 billion will be provided for water projects

In conclusion, many have asked and continue to wonder if all the government spending and tax cuts will actually work and result in a stronger economy It appears it will take a few years before the majority of the stimulus trickles its way down through the economy, but it will still create jobs and restore much needed confidence in America’s shattered economy.

GOD’s Financial Favorites

 

BY JAMES “BIRD” GUESS

“Remember the Lord your God, for it is He who gives you the ability to produce wealth”

– Deuteronomy 8:18

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What does the Bible have to say about money? Many people may consider the Bible to be only a book detailing Jesus’ teachings and the principles of Christianity, while ignoring other real-life issues of money and wealth.

You may be surprised to know, according to Biblical historians Craig Hill and Earl Pitts, the New Testament contains approximately ten times as many verses regarding money and credit as it does salvation and faith.

The New Testament contains 215 verses on faith, 218 verses on salvation, and 2084 verses discussing stewardship and accountability for money and finance. It appears that money and wealth is an important issue addressed in the Bible, and must continue to be addressed by all Christians. Could it simply mean that GOD wants you to get your money right?

In these trying economic times, when we are asked to handover 10% of our income to support “GOD’s house,” some Christians may cringe when they have to dig deep into their pockets or pull out their checkbooks to pay tithes. You should consider tithes the greatest investment of all time because true enough, the more you give the more blessings you will receive in your life. What if you have been giving faithfully for a while and are still in a financial hole, having issues with credit, and living paycheck-to-paycheck? 

Congratulations! You are one of GOD’s Favorites. You are encountering financial or emotional hardships, but most importantly, you must endure.

There is a story about a young entrepreneur who was once homeless. After obtaining a job as a janitor, one night he found a copy of Think & Grow Rich in a dumpster and read it repeatedly. Twelve months later, after saving enough capital, he decided to start his first business; it was an immediate success. In fact, every business he created eventually became profitable.

Although most businesses fail within the first five years, he somehow made over one million dollars in that critical fifth year. He felt like a business genius and often referred to himself as a self-made millionaire. However, the following year was the most financially challenging he had ever witnessed, since being broke and homeless years ago.

Suddenly, the economy had fallen into a severe recession and sales of his products decreased almost 90%, as most of his customers loss their jobs and cutback on their purchases.  At first, he considered it a natural flow of the business cycle and expected it to pass after a few months, but once the months turned into a year and news reports continued to describe the economic forecast as the worst in decades, his financial fear grew.

With his business generating little revenue, he sold his luxury vehicles, moved into an apartment and raided his life savings just to stay afloat every month, hoping and praying for an economic miracle. He also attended church for the first time in years and told himself he did not have to pay tithes because his business was suffering huge losses.

After church service was over, he made his way toward the Pastor and asked if he could speak to him in private, the Pastor agreed. He told the Pastor how he started out homeless, pulled himself up by his bootstraps, and became a self-made millionaire in a few short years.

He also asked the Pastor that if GOD was all knowing, and loves us and we are considered GOD’s children, how could GOD allow his business to be destroyed, and for him to lose everything he had to show for over the years? The Pastor paused for a moment, smiled at him and stated “GOD’s favorites are the ones who have hard times.”

The Pastor then said, “you may have not realized it, but when you were referring to yourself as a self-made millionaire, GOD became jealous, for he is a jealous GOD, and decided to show you that if what you say is true, then become a millionaire again, this time without GOD’s help.” The young man had a puzzled grin on his face.

The Pastor started again saying, “GOD took everything from you, just so you and he both could see what was truly inside you! Some people accept GOD’s challenge, endure their situation, and they grow letting the world know that their success was due to GOD’s grace. While others think their success was all due to their money, intelligence and hard work and they flaunt those thoughts to the world not even mentioning GOD.”

“What should I do now,” the young entrepreneur asked. “Well, you must do what GOD asks of you, and that is to believe and have unconditional faith in his word,” answered the Pastor.

Several months went by and business was still slow. The economy was still in shambles, but the young entrepreneur continued to attend church and even borrowed money from his business credit card just to pay his tithes every week.

His business conscience told him he was crazy to go into debt without foreseeing a return on his money. However, his Christian conscience reminded him that the “more ye give, the more ye shall receive.”

Later that same night, he considered closing his business and possibly obtaining a “9 to 5” job again, something he promised he would never do after becoming a financial success. As he walked in the night, he looked toward the sky as a tear raced down his face, and began praying and telling GOD that he would never forget his grace, his love and his house again.

He promised that he would start another business, one he was passionate about and pay his tithes before his operating expenses. After praying, he simply walked home, read his Bible and fell asleep.

The next morning his cell phone rang. It was his business banker telling him that his $100,000 line of credit had been approved since the government recently passed an $800 billion stimulus package. “YES!” he yelled into his cell phone almost dropping it, “lunch on me next week,” he told the banker. He knew that was all he needed to start another business, and now that the economy was projected to rebound, businesses and consumers would feel confident and start spending again, especially since the government promised to create 2 million jobs previously lost.      

Six months later, the young entrepreneur had his new business up and running and business was booming. The local newspaper heard of his new business and since it was one of only a few that was profitable during the recession, they decided to interview him. The editors were amazed as he told his story of business success and told him they would title the column, Self-Made Millionaire of the Recession. 

His eyes lit up as he stared at them with a sense of disgust. He stood up and said angrily, “if you call it that, forget it!” “What do you suggest we call it,” the head editor asked. He looked at all of them as he thought for a moment and said, “GOD-Made Millionaire of the Recession!”

James “Bird” Guess is the President & Founder of The School of Money & Wealth, his email address is james@schoolofmoneyandwealth.com               

James Guess: Dallas’ Forgotten Neighborhood: Why Education is Critical for West Dallas

BY JAMES “BIRD” GUESS

While Southern Dallas continues to receive the majority of attention from real- estate developers and city officials, West Dallas, an area of 23,000 residents waits anxiously in the economic background for change.

There is hope for this area of Dallas, although poor performing schools and an uneducated workforce have led to persistent poverty (44 percent of residents below poverty level), run-down real estate, and tenured drug dealers. It is no wonder that 66 percent of the residents age 25 or older lack a high school diploma and a jaw-dropping 95 percent have less than a college degree.

Four years ago, I clearly remember selling hip-hop clothing to the local residents from the trunk of my car at the Inwood/Hampton road car wash. It was there that I witnessed a community in chaos.

However, after delivering a speech to roughly 70 juniors and seniors of L.G. Pinkston High School last month, it was there, approximately a mile from that same car wash, that I witnessed that change is coming to West Dallas.

L.G. Pinkston has become a Career Pathways School, which allows students to earn college credit from their chosen field of Law, Public Safety, Health Science, Architecture, and Construction while still in high school. As I inspired the students with my personal story of fallen high school basketball star, to troublesome twenty year old, to successful entrepreneur, I saw curiosity and a willingness to learn in their eyes, instead of resentment and boredom.

“You are not going to talk to us about government are you,” stated a female Pinkston junior. “Of course not,” I replied, “I’m going to talk to you about money, wealth and how to cross over that Trinity River Bridge that separates you and West Dallas from the rest of the world into success.” She displayed a curious smile as she sat on the front row, waiting for the rest of the students to arrive.

As I asked questions regarding the concepts of supply and demand, and scarcity, and handed out money for the correct answers, I immediately captured every student’s undivided attention.

Ms. McCollister, Associate Principal-Teaching and Learning stated, “I cannot believe that you were able to get 70 Pinkston students’ attention that fast and for that long.” Having once had the mentality of those students, I decided to use a method I learned from Dale Carnegie: To capture and maintain their attention, I simply gave them what they wanted – relevant learning and an exciting way of delivering it!

Across the street from L.G. Pinkston High, Dallas County Community College District is building the El Centro College West Dallas Campus. A few blocks north, West Dallas Community Centers just opened the doors to its new headquarters. These organizations are anxious to help West Dallas’ youth develop dignity and self-respect, and to become adequate to meet life’s encounters in a reasonable manner.

With the Trinity River Project coming, land values continue to increase and emerging real estate development has sparked the building of $100,000 homes. The ingredients for the revitalization of West Dallas are apparent:

  • educational reform and access will create an educated workforce and jobs
  • higher incomes can lead to savings and capital to start businesses
  • real estate development and new homes will attract higher income residents.

Local community centers and schools reshaping the minds of the youth will help break the cycle of poverty, decrease high school dropout rates, and discourage community destructive behavior. For West Dallas, its been a longtime coming, but finally, change has come.