On this episode of The Next Level Lifestyle Show I’ll kick things off by telling you about a fast-ball that the credit card companies are throwing at you and millions of credit consumers, the practice is called Universal Default and while you might not have ever heard the term, you’ve probably felt the effects of it. I’m going to explain what it is, what it means to you and what you can do about it.
Next you’re Going Beyond Money to clean up any money messes that might be showing up on your credit report, by getting the free, no-string attached credit report you’re entitled to and learning why it’s important to know what each individual report is saying about you.
In the debut of Love & Money, the topic is financial har- money, and I’ll help you identify just the right formula for a successful financial partnership - you won’t want to this piece, it could be the answer to your financial peace of mind.
And that’s not all… because in the Financial Family Tree segment I’ll discuss what role your attitude towards money plays in the legacy you’ll leave your children, grandchildren and other family members and friends.
Then I’ll reveal the hidden costs of stress and how reducing it could boost your bank account in Lessons in Lifestyle Design
It’s going to be a great show so be sure to turn up the volume and pay close attention because Catch The Message is coming up right after I share a little insight on one of my favorite phrases…
Universal default is the term for a practice used in the financial industry when a bank or lending institution changes the terms of an existing loan from the standard terms to a set of terms or rates given to consumers who have missed payments on a loan or in some other way failed to follow the agreements for repayment.
The problem with this practice is not that it exists, the issue comes from lenders and credit card companies using it when they find out that you have defaulted with another lender, even though your payment record with them is spotless.
In the mid-1990s there was increasing deregulation of the credit card the industry and lenders didn’t hesitate to insert universal default language into the already hard to read and understand fine print of credit card agreements for new and existing credit consumers.
10 years later more than half of the banks that issue credit cards had universal default language as part of their terms and agreements, however most didn’t enforce it regularly or systematically.
But starting in 2003, Congress has considered several bills to curb abusive credit card practices, including universal default provisions, in fact the Office of the Comptroller of Currency issued a stern advisory letter to the credit card industry regarding several of the most egregious practices its involved in.
Not surprising, the credit card companies have not responded to the letter because it would mean a loss of billions of dollars in free money at the expense of the end user.
But, recently Democratic Senator Carl Levin called five of the major credit card issuers to the mat on the universal default practice and in no uncertain terms posed an ultimatum - you change your behavior on your own or we will force you to.
Citigroup, America’s second-largest banking group by market worth - took the challenge seriously and became the first bank to voluntarily eliminate its universal default provision which went into effect immediately.
I talked about the practice of universal default...and now I want to help you secure and understand your credit report because it could very well become a money mess that plays a large role in whether you find yourself on the receiving end of a hefty interest rate increase.
Credit reporting is a lucrative business but it’s not an exact science and with the three major credit reporting bureaus in competition over your credit information there’s even more that you have to be aware of as a credit consumer because believe it or not, you may actually have three separate credit histories as well as three different credit scores because not every one of them will have the same information on you.
Trans Union, Experian and Equifax are the 3 major credit reporting agencies that determine who gets credit and how much.
Regardless of how frustrating, and even ridiculous it might seem to have to contact each credit bureau separately for access to your credit history, it is vital that you invest the time and if necessary the resources in doing this.
The Federal Trade Commission suggests that consumers check their credit report at least once a year - however if you have any issues with getting approved for credit or are disputing information you’ll want to access your report at least two times a year or as often as once every three months until the issues are resolved.
To encourage individuals to follow this advice, as of 2004, each credit consumer in the United States can access one free copy of their credit report per year.
There is only one source for a truly free, I’m talking no strings attached credit report online and you can get access to it at:
I want to jump right into the topic of this segment because whether you’ve been married for years, are considering walking down the isle soon, or are simply in a committed relationship, I think these “vows” are worth repeating to your significant other.
The reality is you were probably attracted to your financial opposite, and often the things that we find “intriguing” about our partners when we first meet are the very things that make us crazy down the road.
If this is you, first know that you’re not alone and second know that the cliché “misery loves company” isn’t one that I’m going to repeat now because as much as you love your partner I know that you don’t love the “company” of frustration that money disagreements can bring.
If you want to invite ‘financial har-money’ into your life I encourage you to make these money vows:
#1: Pay Yourself Before Paying Your Bills
No one likes to feel as if every dime that’s earned is already allocated to a bill (even if it is) so if you cannot allocate a part of your paycheck that is automatically deducted and deposited into your savings account, then at the very least adopt the “keep the change rule” of saving.
This means that you and your spouse commit to a community change holder that you dump all of your change in at the end of the day, make a plan to count the change (almost every grocery store has a CoinStar machine that will do it for you) and know what you’re going to do with the money at each milestone.
You could set a goal to apply fifty percent of it to your highest balance credit card and put the rest in savings, or use it to start an emergency in house cash fund, this really comes in handy when you’ve forgotten to go to the ATM. You can even earmark it as your hot date fund and use the money for movies, dinner out and other fun activities.
I want to talk about leaving a legacy for your family, after all the idea of passing down wealth from generation to generation has been happening from the beginning of time and while it hasn’t always been about money that’s largely what we think of when the term legacy comes to mind.
The legacy I’d like to address isn’t as much monetary as it is mentality. The question is not are you going to leave a financial legacy or will there be a financial legacy to leave.
Rather the question is, do you realize that regardless of your financial state you are actually leaving a legacy for your children, grandchildren, family members and friends?
You see the way that you handle your money will be the financial legacy you leave.
Everything from your emotional reactions and attachments to money, to the way you spend and or save money are all part of the legacy that you are laying the foundation for leaving your family for generations to come.
Consider the type of legacy that was given to you how did you learn about saving, budgeting, credit and debt?
Most of us learned about money from our parents or in the home in which we were raised.
The majority of us, myself included, learned more from what we observed, from what was not always said out loud, but was communicated in body language and mood more then from anything else.
I trust that whoever taught you about money did the best they could with what they knew at the time, given that their money legacy was the story that had been passed down to them as well or was shaped by their environment.
Lessons In Lifestyle Design: Episode #2 - Segment #5
It turns out that stress not only effects your overall physical health but it also negatively affects your financial well being according to a recent Money magazine article, in fact, Dr. Michael Parkinson, head of the American College of Preventative Medicine warns that,
“There’s a hidden epidemic of stress in America, and we’re going to go broke if we don’t figure out how to manage it.”
If you’re wondering how exactly is stress linked to inevitable financial strain then just consider this:
If you have regular aches, general pain and discomfort due to stress and you use over the counter medication to temporarily relieve the symptoms it can cost you a couple hundred dollars a year
Couple the fact that stress also weakens your immune system over time and you could be facing the added expense of doctors visits or hospitals when the over the counter fixes stop working
A non medical, but equally serious form of stress is clutter.
Not only is it a stress inducer but its also a time, money and energy drainer.
People in cluttered homes spend extra time virtually every day looking for everything from lost items such as:
