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Notes from 20/20’s Special “Flat Broke”

Written by Brett McKay

20/20 did a special tonight on America’s debt crisis. The broke it down into three parts: Spenders and savers, debt collecting, and cyberbegging. Here are some of the highlights of the show.

Spenders and Savers
This segment focused on two families living on opposite ends of the financial spectrum. The Peterson Family are big spenders. They’ve racked up over $60,000 in credit card, hundreds of thousands of dollars in time shares, and a few mortgages on their house. Despite their money problems, this year the family has gone on more vacations than any time in their marriage. They’re on the brink of bankruptcy.

In order to help them, 20/20 brought financial planner Robert Pagliarini, author of the book The Six Day Financial Makeover. He set up a plan for the Peterson family that included selling their house and time shares. I wonder if the family will follow through with it.

Watching this family, I couldn’t believe that people could just rack up debt like that. They never regretted a single lavish purchase they made because they figure they’ll probably be dead tomorrow. I don’t get it.

Lesson from the Peterson’s: DON”T USE CREDIT CARDS! Cut the darn things up (don’t cancel them; it hurts your credit score) and start paying with cash. Take it easy on the big purchase items. If you can’t afford it, don’t buy it. Duh.

The Economides are the cheapest family in America. At least that’s what they titled their book. They earn less than $35,000 a year, have seven kids, cars, but no debt. They’ve accomplished this by buying everything used and planning grocery store trips so they’re economical as possible. They carry around walkie talkies in the store to report on the good deals to each other. They also buy expired lunch meat. I’m going to have to do this again.

Lesson from the Economides: PLAN, PLAN, PLAN. Take advantage of coupons; every cent counts. Buy whatever you can used.

Debt Collectors
This segment was a perfect torts hypo for Intentional or reckless infliction causing severe emotional distress by extreme or outrageous conduct (See? I learned something in law school). They interviewed a former debt collector about the techniques they used to get money from people. Tactics included persistence calls with death threats, threats to reveal their debt to neighbors, and just plain emotional abuse. It was heartbreaking to see the crap that some of the debt collectors could drag people through.

Of course John Stossel had to bust out his libertarian stick to show that we should be thankful for debt collectors. He points out that the bad debt collectors are a minority. The tactics they use are illegal. He then goes on to argue that if it weren’t for debt collectors, prices would go up because companies would lose money on default payments. He also made a point that most of the clients of debt clients are small businesses. I always figured debt collectors were for big companies. Overall, I think Stossel made some good points. At least he got me thinking about things.

Lesson learned from debt collectors: keep only two credit cards, negotiate lower rates, and if for some unfortunate reason you become the victim of thug debt collectors, contact the FTC, your lawyer, and tape the culprit berating you.

Cyberbegging is a hot topic, especially in the blogsphere. Paypal donation buttons are popping up on blogs everyday. One law student started a blog to raise money to pay for his student loans. (However, one should note that he’s converted the site into way of raising scholarships for other students and raising awareness about student debt.) Cyber Beg is a popular site where one can list their financial need like they would list an item on craigslist. The crazy thing is that people give money.

The segment discussed how an admitted shopaholic, Karyn Bosnak, got herself out of $20,000 worth of designer handbag and belt debt by asking complete strangers on the net. It worked. She wrote a book about it and made even more money. A movie deal is forthcoming.

They also discussed how Dustin Diamond (aka Screech from Saved by the Bell) used cyberbegging to save his house. His sex tape, “Screeched”, has been picked up by a major porn distributor and he’s raking in the dough. (That makes two former Saved By the Bell alum who’ve gone on to make porn. Don’t do it Lisa Turtle! Resist!)

My first reaction is disgust. These people have no shame. Both Bosnak and Screech say what they did is creative, not shameful. Right… when was the last time you heard someone praise the creativeness of panhandlers and bums? That’s right never. Screech and Bosnack… you’re bums. Jason Ryan Dorsey, author of My Reality Check Bounced: The Twentysomething’s Guide to Cashing In On Your Real-World Dreams, discussed how Screech’s and Bosnak’s attitudes are common among twenty somethings. They’re not responsible with how they spend money, so they don’t want to be responsible for paying it.

I guess one could make an argument that ad’s or pay per post are forms of cyberbegging. I concede that I’m making money by just writ ting my thoughts, but it’s pocket change. I’m lucky if I get .20 a day. However, I think I’ve earned this money. I work hard trying to find content, writing up posts, and marketing my site so people will know about it. I think a dollar a week isn’t too much to ask in return. Same goes for pay per posters. They have to look into the product and spend time writing a quality post about it. They deserve the money they get.

Lesson learned from cyberbeggers: Get a real job!

Overall, it was a good show. I thought they could have spent more time disusing the frugal family. Check out the 20/20 site for more details.

20/20 Special “Flat Broke: Begging and Borrowing in America”

Written by The Frugal Law Student

Today at 9PM CT, 20/20 will be doing a special on the topic of debt in America. Should be an interesting show.

Mitigate your law school debt by consulting

Written by Mrs. FLS

Get Rich Slowly has an excellent post on becoming a consultant in order to pay off debt quickly. The idea sounds very intriguing to me and is one that I might take up in order to mitigate my crippling student debt.

What is a consultant?

Consulting is just a fancy way of saying trading your knowledge for pay. You could be a blog consultant, an organizing consultant, a wedding consultant, ect. Andrea, the author of the post on Get Rich Slowly, says it’s easy to get into consulting. First, take a personal inventory of your skills, interests, and talents. Second, find people who could use that information and are willing to pay for it. The second part sounds hard, but I think it might be easier then most people think. Just telling your friends or family members that you’re offering your services can bring in several clients.

How much money can you make consulting?

It varies, but Andrea suggests that consultants charge from anywhere from $35-$300 an hour. It depends on what kind of information you’re providing. Some people are willing to pay more for certain types of information.

How much time does it take?

One of the beauties of consulting is that you set your own hours. You can work as little or as much as you want. Because of its flexibility, consulting is the perfect side job for law students. I think most students could find 10 or 15 hours a month that they could dedicate to consulting. Weekends are the perfect time to do it.

If you were to work 10 hours a month and charged $35 an hour for your services, that’s $350 a month that can go to paying off student loans.

Your experiences

I want to know if any of you have tried your hand at consulting. I’m looking to get into it, so I would like to see what others’ experience has been with it. I’d appreciate any suggestions or tips that you all might have. I’ve put Free Agent Nation on hold at the library and am looking forward to reading it. If you have any other books that you might suggest, drop me a line.

Law School Debt Round Up

Written by Mrs. FLS

Graffiti for Scholarships

Written by Brett McKay

There’s a site called Graffitipad that’s hoping to raise money to provide 60 $1,000 scholarships to college students for the next five years. They’re doing it by selling pixels for $.49 each in which a company or person can put their mark. It’s like The Million Dollar Homepage (why didn’t I think of that?!) but going to the fight against student debt. Bravo!

Young and In Debt: Week 3

Written by Mrs. FLS

This week in USA Today’s series of Young and In Debt focuses on Kimberly Halbach. Kimberly is an MBA student with over $30,000 in student loans. Not only will she incur more debt from grad school, but she plans on perusing a law degree when she finishes her MBA, thus incurring more debt.

She does have a job that pays $30,000 a year, but still she’s having a hard time paying the bills. She says she would like to save money for the future, but is having a hard time doing so right now.

This week’s financial planner, Melissa Eckstein, was impressed with Kimberly’s handle of her finances using the envelope budgeting system. However, she did make some suggestions for Kimberly and young people like her.

  • Use cash, not credit cards
  • Track spending with a budget
  • Payoff one debt at a time
  • Increase 401k savings gradually, even if it’s just 1%
  • Start an emergency fund
  • Give yourself some wiggle room with your budget or you won’t stick with it.

Click here to see the whole article.