For the month of May, I decided to join the 30-Day Budget Dare and put a strict budget in place to see if we could follow it.  We gathered some data from the past few months and estimated what our costs might be for this month.  After an hour of playing with the numbers to make sure it all balanced, our budget was finally built.

Fast forward two weeks (and change) to today and it’s already clear that we messed up.  Today is the 18th and we’ve already exceeded our budget in two categories: Groceries and household expenses.

There’s two easy ways to break your budget:  Little unplanned purchases and poor estimation. One, you can control within the month, and the other you have less control over.

For example, our household expense column looks like this:  $10.50, $2.94, $24.03, $10.86, $6.53, $10.54.  Little purchases here and there have pushed us 30% over budget in just half of a month.  Most of these things we didn’t need to spend money on right away and when we purchased it, we didn’t believe it would hurt our budget.  Because we were careless with the spending, we’ve met our first failure.

For groceries, we simply failed to properly plan for this month’s expenses.  Before setting the grocery budget, we should have examined the pantry and freezer.  When we estimated our expense for this month, we took the last four months into consideration.  Unfortunately, the number was low because we pulled heavily from our freezer and pantry and neglected to restock.  We budgeted $200 based on the first part of this year, but we’ve already spent $240 and have at least one more grocery trip before the end of the month.

I’m not surprised that we already “achieved” our first failure so short into the experiment, but I’m not disappointed.  Building a budget is a learning experience and one that you perfect over many months. We will take what we learned from this month and apply it in the coming months.  We will be more careful with our spending and build more “wiggle room” into our spending categories in the future.

Photo by: householdriot

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Photo by: nertzy

While retailers count on the holiday shopping season every year to start building their profit for the year, they do everything they can to keep you coming in year-round. Sometimes the deals they propose are actually bargains, but commonly they’re nothing more than a ploy to take your money. Keep you wits about you and examine the offers before taking the bait otherwise you may fall victim to their wiles.

“Future Purchase” Coupons

One of my biggest pet peeves with stores lately are the coupons that print at the register that are good for a certain percentage off a few days in the future. Craft stores, such as Michael’s, are notorious for this practice. I was just in there buying a birthday gift for my wife on Friday [Hi, honey!] and along with my receipt, I was presented a “20% off one regular priced item” coupon that was good for two days starting the following Wednesday.

They do this for one reason: To get you to return more frequently and give them more of your money. Yes, if you plan to be in there regularly anyway, these coupons can be a good deal. But if you are a casual shopper in that store, those coupons are barely worth the paper they’re printed on. They want you to feel like you’re losing out on something if you don’t cash it in, but don’t fall for their trap. A deal is only a deal if you were planning to spend money on it anyway. Otherwise, you’re just wasting your money buying stuff you didn’t plan to buy.

Store Credit Cards

It seems that just about every major retailer now has their own branded credit card. There are promotions galore for discounts for using those cards and cashiers are coached and paid bonuses to hawk it at every possible opportunity. They’re a great deal for the stores since they give them an opportunity to track your spending habits and encourage you to keep coming back by rewarding your “loyalty.” For you, they may or may not be such a great deal.

If you have good credit already and do a good job of managing your money and spending habits, signing up for a store credit card for the bonuses is not a bad deal. For example, I have a Lowe’s credit card that I use to get a 0% loan when I have a big purchase to make. And my wife has a Kohl’s and a JCPenney card for the rewards and pays off the balances every month (and most months those balances are $0). If you have poor credit, plan to need access to your credit soon, or you’re not that great about controlling your spending, a store credit card can be dangerous.

Direct Mail Incentives

This one falls directly in line with the store credit cards. When signing up for a credit card, you can’t avoid giving them your address and once the stores have your address, they will continually bombard you with fliers and sales ads to encourage you to return. Many times we’ll see two or three “Bonus 20% Off” coupons stuffed in our mailbox from various stores and almost all of them will proclaim that it’s a limited time offer. Apparently, they forgot that the coupon they sent last week and for each for the six preceding weeks was also a special, one-time-only, limited time offer.

Sometimes these coupons will be a good deal. I cherish the times when Lowe’s decides to send me a $20 off coupon. But other stores, like Bed, Bath & Beyond send 20% off coupons nearly every week. When a store frequently sends you the same coupon it’s a sign that their prices are always drastically marked up and shopping there would the coupon will only get you near the regular price. When they’re rare, as in the case with Lowe’s, it can be seen as a reward and a true bonus to bring you back. Avoid the stores that always have a coupon in your mailbox and cherish those that make it a true incentive.

Layaway

Layaway is, in simple terms, “credit for people who don’t have credit.” Instead of paying for your purchases and leaving the store with your merchandise, you go to the layaway counter and give them a fraction of the total due for them to hold it for you. Later, you can come back and pay more, but you don’t get to take the items home until you’ve paid off the balance.

At the surface, it looks like an ok deal since you’re not paying finance charges, but really layaway is just an interest-free loan to the store and you get nothing in return until the entire loan is paid off. You’d be better served to save your money, earn a little interest on it, and buy the item outright when you’ve saved enough. Why give away your hard-earned money for nothing?

Tricky Return Policies

Once they have your money, stores will do nearly everything they can to keep it. While many stores have recently started easing return policies in a return to customer-service oriented practices, they had been getting trickier and more restrictive over the last few years. Target, for example, has been called out more than once for changing and tightening their return policies. While corporate claims this is to reduce losses from professional shoplifters, it also pains their real customers by making it difficult to get what they want for their money.

Before shopping at a store, be mindful of their policies. Depending on how you paid for the purchase (cash, check, credit card, etc), their return policies may vary. As always, keep your receipt because returns without a receipt are becoming more and more difficult and restrictive. And just because store policy says one thing, managers are often given a little wiggle room to deal with customers with real problems (and problem customers). If you think you’re being cheated, keeping your cool and asking for a manager is your best chance of getting your true money’s worth.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

I’m the kind of obsessive guy that gets wrapped up in whatever project I have in front of me and then forget all else. Eventually, I get so tied up in the details that I find myself getting sick of the project and want to put it away. I can’t tell you how many things I’ve gone into with a full head of steam and abandoned 3/4 complete because I pushed to hard to begin with.

Lately, I’ve been doing the same thing with debt elimination and growing my savings. I’ve pored over numbers and tried to finagle the world to fit into an efficient plan. That would work out great if debt elimination and savings growth were things I could do at my own pace. Since I can’t just create money at will and push my debt out the window, I’m forced to take a step back and watch things unfold without my direct intervention.

It’s frustrating, really. I can see where I want to be and I think I know how I can get there, but I can’t just start running for the goal because I am not in control. On every other type of project, the pace to completion has been completely up to my abilities. Now, I’m constrained by unseen outside forces that take their time and mess with my plans.

That means it’s time for me to take a step back again and evaluate myself and my goals as a whole. I’m definitely too impatient to let things work themselves out as it stands right now – why else would I be checking my data nearly every day? It’s gotten so bad that I’m spending less and less time enjoying the things that really matter in my life: my wife, my daughter, and our shared lives.

There are some things that you just can’t control in life. If you know debt elimination will take years, don’t keep your eyes fixed on the end goal because you will forget to look around at today. Take my advice: Enjoy the journey. Life isn’t a sprint or even a marathon – it’s something much more meaningful (and hopefully longer). If your mind is tied up in what life will be 20 years from now, how can you ever enjoy your life today?

I think I’ll be taking my own advice and reexamine my priorities. Debt elimination and savings are still important, but I think I’ll focus more on living and let the debt go away on its own.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Well, when all the other banks began discussing dropping their interest rates, I knew ING Direct would follow the trend before too long. Well, they finally did it today. Effective today, ING Direct’s Orange Savings Account now earns 2.75% APY (down from 3%) and the base rate for the Electric Orange Checking Account is now 1.5% APY for balances below $50,000.

I’m disappointed by this change, but it’s not enough to prompt me to start shopping for a new bank. These changes are just part of the new reality of being in the money business. Even with dropping their rates a quarter point, it’s still more than six times better than the rate offered by my local brick-and-mortar bank. Overall, I’m satisfied with ING Direct and will continue to use them and promote their products since they’re the easiest to use and ING Direct is the safest online bank.

Thankfully, they are still offering their $25 bonus referral program. By using one of the links on my ING $25 Bonus Referral page and opening an account with a $250 minimum deposit, you’ll be awarded a bonus $25 and I will receive $10 for referring you. That’s an immediate 10% return on your money on top of their generous savings rate.

If you don’t have $250 available to open an account right away, you can still open an account and take advantage of their strong interest rate by using the following link:

ING DIRECT makes $aving money simple! Open your account online today and start earning 2.75% variable APY. No Fees and No Minimums!


(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Photo credit: Stuck in Customs

As the dust settled from yesterday’s near-implosion of the stock market, we saw the end result of a pointless panic and rush on the markets. In all, nearly $1.2 trillion in value was lost through the mindless selling across all sectors. If you didn’t sell then – and I hope you didn’t – it’s certainly too late to sell now.

So what to do now that you’re stuck with a portfolio that dropped at least 7% in one maddeningly painful day of trading? Sit on it and rejoice! In fact, you should be seeing this as an opportunity to buy. And today, that’s what they did.

Monday’s markets sunk by 7% to 10%, but on Tuesday the markets rallied back around 5% – erasing half of the loss from Monday. That doesn’t mean the roller coaster ride is over, but it does signal that people didn’t completely lose their minds yesterday when the House decided not to pass the (poorly-conceived) bailout bill.

Of course, Congress is going to try again. While I believe any bailout is a bad idea, hopefully they’ll take this failure as an opportunity to fix the deficiencies in the current bill. Until then, the markets will continue to churn, so just hold on tight and enjoy the ride. There’s no getting off now!

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

A few of my fellow personal finance bloggers have either recently bought a house or are in the process of trying to buy one. That spurred me to think about when I bought my current house two years ago and the thought process I’ve gone through while debating whether to finish my basement. What has occurred to me is that people are getting a lot of sound, but unreasonable advice from a number of places.

I’ve heard time and again about how buying a house can be one’s largest investment and they’re correct. And, like all investments, they say one should check their emotions at the door and look hard at the numbers. That is where we start to disagree.

Unless you are buying investment property that you will never live in, buying a house is far more than numbers on paper. Yes, you still have to ensure that you can afford the house and be mindful of its value relative to the houses around it, but those numbers only tell you part of the story.

If you are buying a house to live in, that house suddenly becomes a home and it begins to take on a life of its own. Your house is an important component of your family and will play a role in many of your decisions, quarrels, blessings, and joys in the years you live there. In that light, your house isn’t just a shelter, it’s a companion and a family member.

Looking beyond the numbers, you have to ask yourself if you have faith that this house can provide you what you need and provide well enough to burden yourself with the risk to acquire it? As with all investments, there is some risk involved so you have to weigh it against the rewards. Even with buying property with a 30-year fixed interest mortgage, you risk being injured and being unable to work, you risk losing your job, you risk losing your principal due to downturns in the housing market. Does the house provide you with the space, tools, and future to justify risking your hard-earned money?

When we were looking for a new house, we were looking for one that would serve our needs for as long as we lived there – a house that we wouldn’t have to move from because our lives changed. For our house, the price was right, the location was right, but the exterior and interior needed work. After we determined that we could afford the house and the changes that would need to be made, we sat down and began the emotional process of deciding if the house was a good fit to join our family. In the end, we decided that it would accommodate us well and it was worth the effort to do what was needed to make it our home.

With the upheaval in the financial markets, people are keeping a closer eye on their money and where it goes. (And that’s something they should have been doing all along…) Likewise, you should be money-smart when shopping for a new home. When deciding on whether you can afford a house, you must decide with your wallet and not your heart; but don’t check your emotions at the door. Once your wallet has had its say, listen to your heart and see what it thinks as well.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

As I was driving into work yesterday, I noticed the gas station that I pass had raised their price to $4.39/gal, up from $3.99 the night before. Then, by the time I was driving back home, the price had settled back to $4.09. Now, the Illinois Attorney General is looking into possible price gouging throughout the state.

After times of disaster, commodities such as gasoline are at risk for sudden and dramatic price increases regardless of if the supply is at risk. Remembering back to 9/11, the price for gas jumped to over $5 by afternoon. Whether the shop owner is feeling particularly opportunistic or panicky that their supply line may dry up, price hikes such as that are likely to be illegal.

So how do you avoid being gouged at the pump and at the grocer? All it takes is a little planning and a cool, level head.

Stock Up Early

In the case of a hurricane, you know well in advance that it will be affecting you soon. Of course, so do the people who set the prices for the goods you intend to buy. If you shop as soon as you hear about a potential disaster, you’re less likely to be affected by unfair price increases. That’s not to say you should go and raid the stores, but stocking up your pantry, fridge and freezer with 2 weeks’ worth of food should be more than enough.

Better yet, if you maintain a pantry full of non-perishable supplies, you may be able to avoid buying at inflated prices altogether. Not only will full shelves save you money in a disaster, they’ll also save for you year-round.

Don’t Buy For a Day

When the disaster has hit, it’s too late to think about getting any good deals. Your best bet is avoid purchasing anything (especially items with volatile prices) for a day or longer afterward. While the prices came down quickly after 9/11, it took much longer for prices to stabilize after Katrina. The longer you can go without, the better chance that the normal supply routes will have reopened and prices will have started to go back to normal.

Buy In Limited Quantities

If you have no choice but to buy, only buy what’s needed. Hoarding doesn’t help anyone, especially at the panic-induced elevated prices. Put a few gallons of gas in your car, if you must, but only enough to get you through the worst of it – you can always buy more later.

Gouging sucks and is an unfair practice driven by greed when unscrupulous shop owners choose to profit on panic. But by keeping a level head and planning ahead for any disaster, you can avoid the worst of the situation.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Yesterday, I encouraged parents to not pay for their children’s college education. By leaving the simple detail of “how to pay for it” up to you, the student, it lets you take ownership and responsibility for your education and your own future. But without Mom and Dad and maybe Grandma doling out the cash, you’re going to have to be smart about how to pay for that education you desire. Here are some of the most straight-forward ways to pay for your education:

Grants

If you come from a low-income family, are a minority, are a woman, are a non-traditional student (outside of the 18-24 age range), or have some other distinct quality, you may qualify for a grant to pay for your education. Grants come in many forms, each with their own requirements and rules. Some require you to maintain a specific course load, some require a minimum GPA, and some are simply free-and-clear money for you to use for school. Regardless of your family’s income, your age, your gender, your skin color, etc., you should investigate if you qualify for a grant. Unlike loans and scholarships, grants are “free money” for school and normally don’t have to be paid back.

Scholarships

Before you even enter high school, you should be applying for as many scholarships as you can. It doesn’t matter if it’s a $100 scholarship or $100,000, your odds are infinitely (well, not quite) better than winning the lottery even for the most exclusive of scholarships. Most full scholarships are academically-based, but there is still a lot of money up for grabs if you’re not a straight-A student.

Believe it or not, but competition for the smaller scholarships is limited, if not non-existent. According to MSN Money, small and local organizations offer scholarships for which few apply.

A few simple Google searches can find thousand of scholarship opportunities for you; but be careful who you share you information with. There are a lot of scammers out there and you should never give your information to anyone you don’t trust and never pay for consideration for a scholarship. I remember using a free scholarship search service called FastWeb and got great results.

Student Loans

Once you’ve filed your Free Application for Federal Student Aid (FAFSA) form, you have access to federal student loans, including the Stafford Loans, Perkins Loans, PLUS Loans, and many other forms of financial aid. Loans are a perfectly acceptable way to pay for school, but the goal is to minimize the amount of money you must borrow. By getting all the grants and scholarships you can before taking loans, you will save yourself a great deal of money later.

Student loans afford you many financial opportunities that other types of debt do not. As long as you are in school, your debt is deferred so you don’t have to worry about paying until around 6 months after graduation – normally plenty of time to find a stable job. Once the debt starts coming due, you can also investigate consolidating your loans so you only have to worry about one payment, one interest rate (which can be lower than the original loan’s), and more time in which to repay. And when it comes time to do your own taxes post-graduation, the interest you pay on your qualified student loan is tax-deductible.

Summer Jobs and Paid Internships

No, a summer job won’t cover you for the rest of the year, but it will give you a nice cash infusion to at least help feed you through the school year. Most schools have a job placement program that works directly with regional and national employers to help students find summer jobs that pay well and help you use what you’re learning in school.

Some schools also offer placement into paid summer internships or longer-term co-ops that also give you course credit. My university required engineering students to seek out a semester + summer co-op in their discipline, so I used the opportunity to work with a software company (pre-dot-com bust). I got paid an equivalent of $35,000 a year, plus a housing stipend that more than covered my rent, and I also earned four non-graded credit hours. If you’re a junior in need of a break from school and some extra money, check if your school has a similar program.

ROTC and Military Service

While some might find this suggestion unpalatable, it is a great way to pay for school and a great way to serve your country and it can open up otherwise-unreachable job opportunities for you. By accepting a short-term obligation to the military, they will help or completely pay for your schooling through a variety of scholarships and grants. You can choose to enlist and fulfill your commitment before going to school, sign up for ROTC while in college, or receive payment for your schooling and then serve as an officer upon graduation. Remembering back to my friends who were in the Air Force ROTC, I definitely would have considered signing up if I didn’t already have a scholarship.

Once your obligations are met, you can either choose to continue serving or leave the military for civilian work. I know from friends through church and work that the benefits, training, and respect for veterans opens up a whole new class of employment opportunities to those who have served – ones well in excess of $100,000/year.

Part-Time Schooling and Tuition Reimbursement

When you’re going to school full-time, studying is your job. You’re paying for the best education you can afford and if you’re “wasting” your time earning a relatively small amount of money when you could otherwise be investing your time in your studies, you’re only robbing your future. But on the flip side, there’s nothing wrong with going to school part-time and working at the same time. By taking a shorter schedule, you can devote less time to your studies and that will give you the opportunity to pay for you education as you go. Not only that, your employer may offer a benefit of tuition reimbursement if the degree you’re seeking will help you in your job.

Of course, by taking only a few courses each semester you will stretch out your education and it will take you longer to graduate, but if you want the education and there’s no other way to pay for it, it’s a perfectly reasonable alternative.

Don’t Worry About the Money

Don’t worry about how to pay for college – there’s always a way. Instead, focus your energy on your studies so you get the most out of your time and your money while you’re at school. It’s important to have fun in college, but it’s much more important that you get the best education you can afford; the money will come later in the form of better job opportunities and higher and faster raises.

What About You?

Did I miss anything here? Can you think of other ways to pay for college? Think I’m wrong and parents should pay for the education? Share your opinion in the comments!

Photo credit: Srevatsan

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

If you’re looking for ways to pay your way through college, take a look at this follow-up article for some ideas.

A college education can be invaluable in today’s society. Nearly every parent wants their children to go to college so they can get a high-paying career but many think that it’s going to cost them an arm and a leg to put their children through school. While it would cost a considerable sum to fund your children’s education, you’ll give them a much better chance of success if you don’t pay their way.

I graduated in 2002 with zero student debt, but that wasn’t because my parents paid my way. In fact, they only had a couple thousand set aside by the time I graduated high school. Because I knew my parents weren’t going to pay for my education, I had to find my own way and I enjoyed a more successful school career for that.

It sounds heartless, but I won’t be paying for my children’s college education. Of course, I’ll stash away some money so I can help them when they need it, but it certainly won’t be enough to pay even a semester’s expenses. I want them to succeed, but I want their success to be their own – not something I bought for them. You, too, should take the same route and let your children take ownership and responsibility for their education.

Don’t Put a Penny in a 529

You have enough obligations to tend to beyond worrying about how to pay for your child’s education. You have to keep a roof over your head, food on your table, gas in your car, and a retirement fund to fill. Long gone are the days when a parent can count solely on their children and their government to care for them once they retire. Your 401(k) or IRA is vastly more important than a 529 as far as personal reward is concerned. You can always take out a loan to fund an education, but you can’t take out a loan to fund your retirement.

A 529 plan sounds like a good deal on the surface, but only if it’s growing faster than “guaranteed” investment vehicles and if you’re 100% sure your child will go to college. While your retirement fund has decades to grow and balance out any periods of sour markets, a 529 plan will be tapped within two decades of its initial funding. Depending on the market conditions (which are uncertain right now), you may end up giving your child less money by using a 529 than if you had invested in CDs or savings bonds. And if your child chooses to not pursue a college education, the earnings on the 529 investment will be subject to both income tax and an additional 10% federal tax penalty.

Foster Ownership of Their Education

From early in my education, my parents reinforced the idea that my effort would pay off in the future. They encouraged me to work hard in school, take the hardest classes I could handle, and garnish my schedule with a few extra-curricular activities.

At the same time, they discouraged me from taking any sort of job during the school year. Their opinion, which I share, is that when you’re in school, studying is your job. The little amount of money you make as a teenager earning minimum wage is a paltry sum compared to the payoff from a strong GPA and meaningful activities.

Because I knew my education was my ticket to my future, I focused all my energy on it and was rewarded with a full scholarship to a highly-respected state school.

Shop for Scholarships

Full scholarships can be hard to come by. The competition is fierce and it takes a high GPA and great ACT/SAT scores to hope to land one. Partial scholarships and grants, on the other hand, are far more plentiful and are a perfect way of helping to fund a college education.

Starting in junior high, I started applying for (and receiving) scholarships ranging from $1,000 and up. All it takes is a lot of patience and endurance, a lot of essay writing, and a touch of luck. There are a number of resources listing scholarships and grants, so I won’t bother to list them – just cast your net wide and apply to as many as you are qualified.

Don’t Fear the Loan

That’s right; let your children get student loans. If you consider a career as an appreciable asset, that student loan can open the opportunity to make more money in the future and it essentially pays for itself. Yes, a student loan can cause a few years worth of pain – we’re still paying off my wife’s student loans – but the value of the education far outweighs the cost.

Besides, since it’s their education, shouldn’t they be the ones paying for it? It’s great to be debt free, but having student loan debt isn’t a bad thing. In fact, having student loans can actually help their credit if they’re diligent about paying them off – which will open more opportunities for them later, such as better mortgage rates, more available jobs, etc.

Help Up; Don’t Hand Out

You may choose to let your children fund their own education, but sometimes their efforts won’t be quite enough to cover their expenses. In these situations, it’s completely appropriate to help your student though a rough spot. The goal is to let them take control and ownership of their life, but not to leave them high and dry. You don’t have to (and shouldn’t) fund their parties or outfit them with the dorm room of their dreams, but if they don’t have enough cash for books and food, it will be better for their education if you help them out rather than force them to get a job. As I said before, jobs are a distraction from their primary career as a student and should be avoided unless as a last resort.

Let Them Choose Their Future

Not everyone chooses to go to college, and that’s ok. Neither you nor your child is a failure if they choose to forgo a college education. There are plenty of other opportunities out there that do not require a diploma and some are just as profitable as ones requiring the sheepskin. Going to college, by itself, will not make them successful – their success is almost entirely up to the way they live their life. If your son or daughter would be happier as a model, a mail carrier, a garbage collector, or a retail manager, it’s much better for them to be happy and make (potentially) less money than be stuck in a life path they hate.

Focus On Raising Good Kids Today

In the end, your children’s ability to succeed in life will rest completely on their shoulders. The best way you can help your children before, during, and after college is to focus on raising responsible, mature, and life-loving kids today. No college savings account, no diploma from a prestigious school, and no highly-profitable career path will help them in the future if they are irresponsible with their life and their money. Don’t worry about how to fund their college education, because there are far more important things to concern yourself with between now and then. Focus on raising good kids today and the future will find a way to work itself out when it comes.

Photo credit: J.Salmoral

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

In the days of feudal England and maybe before, rulers and governments have believed that it’s in the best interest of society (in other words, themselves) that no property ever go unowned and unprofitable. Thus, they decided to take ownership of any property that is otherwise unclaimed or abandoned. Upon the death of a landowner without heirs or if he committed a felony, the King would assume ownership for a year and a day before ownership reverted to the lord who originally granted the land. This process was known as escheatment. It proved to be a decent source of revenue for the monarchy. But what you may not know is that the process continues today in modern America.

Thousands of forgotten savings accounts, uncashed payroll checks, stocks, and even the contents of safe deposit boxes are taken over by the State every year. Most people never know that they’re missing money because their contact information was out of date and the notices went undelivered. Many of these people will never get that money back. Instead, it will sit in the State’s coffers along with over $32 billion worth of other people’s property.

I was informed this week about an ING DIRECT initiative to help consumers protect their property from escheatment. While the campaign is somewhat self-serving (when the State takes over an account, neither you nor the bank earns any interest or retains any benefit of the property), it is important that people be made aware of the risk associated with dormant and abandoned accounts. If you’re interested in learning more, you can visit their FAQ on Escheatment and learn about their campaign to change unclaimed property laws.

Escheatment is an ancient practice, but one that’s unlikely to change significantly. Altering the laws may help consumers, but escheatment isn’t just going to go away. Ideally, you should never give the State an opportunity to take your “unclaimed property” in the first place. By keeping track of your various bank and brokerage accounts, you’re less likely to lose any of your property. Your safest bet is to contact the managing company of each of your accounts once per year to let them know that you haven’t forgotten about your accounts and to visit each of your safe deposit boxes anually. Alternatively, if you make at least one transaction on each of your accounts each year, you should be safe from having your money taken by the State.

Unfortunately, even the most careful person can lose track of an account or two. If you believe you may be missing some money (or if you’re just curious, as I was), you should visit the National Association of Unclaimed Property Administrators site (http://www.unclaimed.org) to find the appropriate site for your state. You should search each state in which you worked or lived since missing money may be hidden just about anywhere. Getting your property back won’t necessarily be easy, but beware if you’re asked to pay a fee. Since you’re dealing with the government directly, you won’t get back any interest you would have earned, but you should receive back everything that was taken. If you’re asked to pay to have your property returned, be highly suspicious since you’re likely getting scammed.

Have you lost money to escheatment? I haven’t yet, but I know that my dead grandmother has property held by the State, but nobody knows who can claim it since I’m pretty sure she didn’t leave a will. I’m curious to hear from someone who has had to go through the claim process to see how painful it really is and how long you have to wait to have your property returned.

Photo by: teresia

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