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After the stock market closed on Friday, my portfolio was at an all-time high. That was likely also the case for a lot of investors living in the United States who are similar to me: earning income, investing in the stock market with a buy-and-hold strategy for the future, and leaving money invested during the stickier economic times.

Continuing to invest in the stock market throughout the recent recession was an essential part of long-term success with investing. Not all investors had this luxury, as the recession hit hard. Many workers lost their job and their income at the same time investing in the stock market was crucial for eventually receiving those promised long-term average returns.

According to a new survey, more than half of Americans don’t own stocks or stock-based investments like mutual funds.

But should this be surprising? Should stock owners look at those who do not own stocks with judgment or from a perspective of superiority? Is the lack of ubiquitous investing a result of ineffective financial education?

CNN calls the data reflective of an “alarming trend for America’s financial future” and for some reason compares the number of stock market investors with the number of daily coffee drinkers. After all, if Americans simply invested in stocks with the money spent on daily coffee drinks, the country would supposedly be wealthier — and sleepier.

Despite the proliferation of the 401(k) retirement plan as a replacement for employer pensions and the increasing tendency for employers to automatically enroll new employees in 401(k) plans, stock market investing still hasn’t penetrated the psyche of a majority of those living and working in the United States.

Most auto-enrollment settings will default to a money market index, probably because the employer doesn’t want the liability of choosing a riskier investment without the required education and an opt-in confirmation for investing in the stock market. There is also a view that the 401(k) plan was flawed from the start, giving a huge cash cow to Wall Street when millions of employees throughout the United States could be enrolled in programs that generate high fees for the financial industry.

This is not the right time to have this discussion.

The overall conversation in society about finances changes with the tenor of the times. From 2008 to 2010 or so, the idea of frugality had something of a renaissance. Commentators and financial experts extolled the virtues of saving money, being prepared for emergencies, and living life frugally. Let’s cut unnecessary expenses like cable television and get used to accepting any job available. When unemployment is high, we can question the value of higher education, even though the data always show that more education leads to lower unemployment and higher lifetime income.

During that recession, those Americans who didn’t save money during the better times were judged as poor managers of their own finances. Money management was now cool, with Mint.com and mobile apps for couponing rising to prominence.

Since that time, the stock market has skyrocketed, with the S&P 500 increasing 186.2% since March 6, 2009. Now commentators are criticizing Americans for not being invested in stocks at that time to take advantage of the best buying opportunities we might see for decades — at the same time the country was reeling in unemployment.

March 6 represented the bottom of the market as measured by the vast stock market index. But you wouldn’t have known that the future for stocks was so bright if you looked at what the media was reporting. Here’s the New York Times on March 6, 2009:

As government data revealed that 651,000 more jobs disappeared in February, a sense took hold that growing joblessness may reflect a wrenching restructuring of the American economy.

The unemployment rate surged to 8.1 percent, from 7.6 percent in January, its highest level in a quarter-century. In key industries — manufacturing, financial services and retail — layoffs have accelerated so quickly in recent months as to suggest that many companies are abandoning whole areas of business.

“These jobs aren’t coming back,” said John E. Silvia, chief economist at Wachovia in Charlotte, N.C. “A lot of production either isn’t going to happen at all, or it’s going to happen somewhere other than the United States. There are going to be fewer stores, fewer factories, fewer financial services operations. Firms are making strategic decisions that they don’t want to be in their businesses.”

Most economists now assume American fortunes cannot improve before the last months of the year…

The monthly snapshot of the national employment picture revealed an even bleaker picture as the government revised upward the job losses in December and January. The economy has shed at least 650,000 jobs for three straight months, the worst decline in percentage terms over that length of time since 1975…

“The people who do what I do in the Detroit area are a dime a dozen,” said Kim Allgeyer, 46, a machine toolmaker in Westland, Mich., who was laid off in January from a company that makes assembly lines for the automakers. Unable to find another full-time job, he is subsisting on day labor and one-week stints for contractors. “Who’s going to put me to work?” he asked. “Where’s the work at? It’s just a great big black hole.”

Much the same can be said for financial services, which gave up 44,000 jobs in February…

Retailers are shuttering stores as the era of easy money fueled by rising house prices and abundant credit gives way to a period in which millions of households are forced to confine their spending to their paychecks…

This reflected the general feeling in the United States. The future looked grim, and the only people who were investing when the outlook seemed to be so bad were those who had the fortitude (and the money) to keep investing throughout the downturn.

And now, we’re in the opposite position. I wouldn’t be quick to call the stock market’s position today a historic high, but we have had the benefit of a good bull market in stocks since March 6, 2009. The conversation has changed.

We’re not asking, “Why weren’t you saving money and watching your wallet these past several years?” We are asking, “Why haven’t you been investing in the stock market these past several years?”

In fact, this is what the new survey asked respondents. Among the majority of Americans who are not invested in stocks right now, more than half say they don’t have the money. Maybe this is true. There are still many people in the United States without jobs, many living paycheck-to-paycheck, many focusing on affording the basic necessities of life without putting their existence in jeopardy.

But there are also many who just don’t prioritize investing in stocks because the recession taught them that they need to prioritize saving and paying down debt over risky investments. Perhaps they got burned in the recession and don’t want the same thing to happen — another temporary recession in my lifetime is inevitable.

Now that the stock market completed its bounce back to former highs, the media wants to encourage more investing in the stock market. Reporters and financial experts couldn’t take that approach in 2009 without alienating the vast majority of readers who were struggling financially during the recession. Today, the surveys are about who is investing in the stock market (and those who aren’t are missing out). A few years ago, the surveys were about who is saving a good percentage of their income (and those who weren’t were missing out).

I can’t tell the future, but I do know this: When the world is telling you to invest in stocks, be cautious; when the world is telling you to be cautious, look for opportunities.

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Banks in the United States are undergoing a major transformation in credit card technology, a process similar to the one Europe successfully completed several years ago. Despite the technological advances in mobile payment that have already rendered plastic cards obsolete, the financial industry wants to replace every magnetic stripe credit card in every wallet.

When I received a business credit card in the mail last week, in an envelope anyone paying attention would recognize as a new credit card delivery, it featured a new security measure: a chip. The embedded computer chip stores information, like the magnetic strike, that ties the card to my identity and my bank account (and in this case, my business credit card account).

Credit card issuers are going through the process of replacing magnetic stripe credit cards with embedded chip cards because they are supposedly less prone to fraud. For instance, there’s a chance that using a chipped credit card would have prevented a different credit card number of mine from being stolen a few weeks ago and used in places which I had never visited.

But are these cards really less prone to fraud? No. Is the banking industry wasting millions of dollars replacing credit cards before they expire? Yes. Is the banking industry using this as a way to earn more money from retailers? Yes. Will the credit card issuers raise consumers’ fees to cover the increased cost of producing and distributing these cards? Probably.

Here’s why these chip-embedded credit cards are a waste of time, money, and effort for the industry and offer no more protection for the consumer.

1. The new cards still contain a magnetic stripe. If the magnetic stripe makes it easy for cards to be duplicated, the only way to eliminate that vulnerability is to eliminate the stripe! But without the magnetic stripe, billions of card readers currently in use by merchants would be rendered useless.

The banking industry wants retailers to “upgrade” all card readers to those that read chips at a significant cost to the retailers. But stripe readers will still be around for a while.

2. The new cards don’t require a PIN. In Europe, chip-and-PIN cards have a better chance of reducing fraud, because they can only be used with knowledge of a secret code. Because PIN transactions in the United States are less profitable for credit card issuers than signature transactions, issuers will stick with the more profitable signature requirement.

A PIN involves a second layer of protection, while a signature provides no protection at all. Signatures aren’t checked when credit card transactions are processed.

3. The credit card numbers are still stored digitally. Regardless of the card type — chip or magnetic stripe — all credit card numbers in the United States are fifteen or sixteen digits long with a simple algorithm to determine which numbers are valid and which are invalid. These numbers are stored in a database or a computer’s memory the same way.

If a hacker is able to access a database of credit card numbers, those customers are vulnerable regardless of the type of credit card they own.

4. Chip duplicators already exist. These devices may be more expensive than credit card duplicators with magnetic stripe technology, but they’ve been in use in Europe for as long as chip-and-PIN credit cards have been around. If a hacker does retrieve your credit card number from a database, he or she can print a credit card with a chip that duplicates that card for in-person use.

5. Fraud is moving online. Even with a chip, when you want to use your credit card for a transaction over the internet, you’ll still need to type your card number into a website. Companies that do not protect those databases (or for some reason accept credit card information over an unencrypted connection) will allow your credit card number to be exposed regardless of whether the physical credit card has a magnetic stripe or a chip.

Perhaps the chip-embedded credit card is a small piece of overall “security theater.” Consumers will feel more protected because their plastic contains something new and novel, but there’s no real improvement for the avoidance of fraud. In fact, by feeling more confident about using plastic, some consumers may feel emboldened to use the credit card in a situation where they might not be safe.

The production and distribution of credit cards with the chip seems to be nothing but a bridge between today’s current method for payments and newer card-less technology that is all ready becoming more widespread. Mobile payments like Apple Pay represent the future, and plastic with or without a chip is getting in the way. The obstacle here is that the banking industry controls the plastic, and outside companies control mobile payment schemes.

To eliminate fraud in the payments industry or to reduce it by a significant amount, the industry must eliminate static credit card numbers. Some banks all ready offer software that will address this issue for online purchases. Consumers can click a button to receive a single-use credit card number that they can use for a transaction of a certain amount, and after that transaction is processed, the credit card number will no longer be valid.

Other technology replaces credit card numbers or accompanies the numbers with a token — another code, but secure and unknown to the purchaser and the retailer — which must be verified through a separate system to confirm the transaction is valid. This token is unique for every transaction.

The unique identifier, whether a separate credit card number for each transaction or a token, is the only way to significantly reduce credit card fraud. Until these are required for every transaction and the magnetic stripe is eliminated, fraud problems will continue to grow.

The chip-embedded card is no solution. When Europe switched to a chip-and-PIN credit card, which in theory should be safer than a card with a chip that doesn’t require a PIN like these in the process of being released in the United States, fraud increased.

This is not a solution. This is a way for banks to force retailers to buy expensive equipment. The financial industry wants to shift the burden of fraud to the retailers. Today, banks pay for unauthorized use of a stolen credit card or credit card number. The companies are now telling retailers that if they don’t upgrade their devices to handle chip-embedded credit cards, those retailers will be responsible for paying for fraudulent transactions — even though the chip does little to prevent fraud.

In addition, retailers pay higher fees per transaction for processing chip-embedded cards, just like they pay higher fees for processing cash back rewards cards and other premium credit cards over basic credit cards and debit cards with PINs.

Well, there’s always cash. Until you want to buy something online, anyway.

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Accumulating money is not a real goal for anyone’s life. Growing wealth is not the point. People don’t work hard because they want to see their bank balance grow; those of us who track our finances and chart our net worth over time aren’t trying to compete in some financial competition.

I imagine there are individuals who do have an approach to money wherein the increase of the bank balance is the ultimate goal. But this approach misses the point. Perhaps these savers and earners haven’t given enough thought to why they want to grow their wealth, other than believing that society dictates that they do so — or they idolize people in the media who flaunt their wealth.

Money exists to be used in some kind of transaction — that’s all. So there’s no point in accumulating money just for money’s sake.

This is a concept I’ve covered on Consumerism Commentary in the past, but I bring it up again because it’s always relevant, and maybe it’s good to have reminders once in a while.

I don’t write about my own business much on this website. My business is based in the act and process of blogging. Consumerism Commentary has been my business. And while I think it would be fun to write about it more, as any business owner would like to write about his own business, I wanted to avoid that. If my business was a store I had planned with a friend, I would write about that here.

Writing about blogging as a business just didn’t seem right for this website, because I’d be “blogging about blogging.” The only people who may be interested in that are other bloggers, and Consumerism Commentary reaches a much wider audience than “other bloggers.”

Therefore I’ve stayed away from writing about how I earned money from my business, how I built that business, and how I eventually sold that business for an amount of money that would be potentially life-changing. And it’s a shame I’ve avoided the topic, because it’s really interesting, and I think other people, both those who consider themselves bloggers and those who don’t, would like to hear more about it.

I took the opportunity to write about my experiences and what I’ve learned from turning a hobby into a business for the new Plutus Awards website.

(For those of you who don’t know, The Plutus Awards is an award ceremony I founded. The awards highlight the best in financial media and products. It was born from my own enjoyment of running awards ceremonies, something that started in college with my creation of awards with superlative and funny awards for members of my university’s marching band, with the ceremony at an annual banquet.)

This epic article was influenced by questions I get all the time from other bloggers who want to find a way to earn consistent income from their websites. Of course I’m happy to answer any questions privately, but I haven’t had an outlet in which I’ve felt comfortable sharing all the details.

And the massive more-than-4,000-word article just touches the surface — I could write a book about what I experienced over the past twelve years with my unintentional business.

I expected to receive some criticism from the article. I wrote about how I focused primarily on this hobby-turned-business and didn’t seek work/life balance between my work and social life. One reader felt sorry for me, as if I had missed out on something in pursuit of the almighty dollar. I probably took more offense to the reader’s remark than I should have.

There are probably some things that I’ve missed out on in life. I guess I could have spent more time watching movies with friends. I guess I could have tried harder to start a family. But I don’t think my life is any less whole right now.

But for me in the year 2000, earning a tiny salary from a nonprofit and living in one of the most expensive areas of the country, I had to do something about my financial situation. Life wasn’t about the money, but I needed to start paying attention to my finances, and I needed to figure out how to get my life moving in the right direction.

When you have no money and you begin thinking about what the future consequences will be, money starts to plays an important role in your life. The trick is being able to prevent yourself from seeking money above all else. You can prevent that by keeping larger goals in mind, by thinking about what the point of having money is. It’s more than just “freedom.” What would you do with “freedom” if you had it?

For me, it was starting a foundation. In 2000, I knew that if I had enough money, I’d start a foundation that focused on arts education. It might have been a little naive to have that as my plan, but the idea isn’t too far-fetched.

And if you’ve read How I Built a Seven-Figure Blog, you know that I didn’t start a business to reach that goal. I didn’t start a business at all. I focused my blogging, something I had already been doing for years, on a topic I wanted to learn more about — personal finance and money management. All I wanted to do was get better at managing the money I had.

After several years as an adult ignoring my finances, I had to make my life about money, at least a little bit, in order to improve my situation. Having been born into a middle class family in the wealthiest country in the world, I had been failing at maintaining that level. My situation, goals, and needs would have been different had I been born in poverty or to a wealthy family.

Now that I’m in a different financial situation, after seeing that hobby turn into a successful business that I later sold, perhaps it’s easy to say that life isn’t about money. When you have enough in the bank to be secure — you don’t have to rely on income from an employer, for example — it’s easier to focus on the grander goal.

Speaking of which, I’m happy that I’m able to reach some of my bigger goals before the age of forty. Remember that arts foundation I’d dreamed about? Well, I’ve changed my approach, but I’m still in the general vicinity.

I’m establishing a scholarship at my undergraduate university for music interns. Did my music education degree relate to how I’ve built my “career” over the last decade? Not directly, and that’s why it might not make sense to people why I want to give back to my university. But my experiences at my college did shape me and my approach to life.

But more importantly, I was required to take an internship for my minor that got me started with the organization that allowed me to get into a financial mess in the first place. The stipend through my scholarship should help students be able to afford to take the best internship opportunities without having to worry about how they’re going to earn a living while working for little or no money.

This will help level the playing field, so the best internships can go to more than just the wealthiest students who can afford avoiding work for a semester.

In addition, I’m also starting a foundation — but this will be related to financial media, like the Plutus Awards. I’ll be announcing more information about that soon.

So I’ve written quite a bit about the work side of my life, and lest anyone thing I don’t have perfect balance between work and non-work aspects of my time on this planet, there’s been a lot going on. Last month, I mentioned my apartment received storm damage. The landlord is still trying to repair the apartment — this is over a month after the incident — and I decided to exercise a clause in my lease that allows me to leave.

There is a world of choice available to me right now. I could do virtually anything. But, I made a commitment to work with a music group based in Princeton, New Jersey throughout the rest of the summer, so I won’t be leaving. I am signing a seven month lease, moving just over the border to Yardley, Pennsylvania, to an affordable but smaller apartment.

I’m downsizing, getting rid of some furniture and other items I’ve accumulated over the years. The lease will get me through this year’s Plutus Awards, and once that is over, I’ll be ready to think about leaving the area, spending the winter on the west coast with my girlfriend and family, and giving myself the opportunity to travel more.

Of course, I’ll need to “balance” these changes with working on my new projects.

Unless I decide to stop and live off my investments for the rest of my life. I’m just not ready to retire, though.

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For a few years, a ring of criminals believed by the U.S. government to be based in India have been involved in a pervasive tax scam. Callers impersonate IRS officials, connect with American taxpayers, and convince many that they have an outstanding bill for tax payments.

The scam has been so pervasive that it has generated more than $15 million from panicked taxpayers.

CNN offers a story from a recent victim of the scam:

One of those victims was former NFL player Frank Garcia, who is now a sports radio host in Charlotte, North Carolina. When he got the call, it sounded so authentic, he left the radio station in a panic, scramming to get the money they wanted.

“The only thing running through my head is, I’m going to jail. I’m gonna be on television, in handcuffs, for tax evasion,” he recalled. “I had to follow specific steps not to be arrested. That the authorities had been contacted and in fact, they are on the way and will be there in 30 minutes.”

Garcia says he spent five hours driving to various stores around Charlotte, depositing $500 each time into a PayPal account set up by the woman on the phone. He ended up losing about $4,000.

Public figures tend to be more anxious than most people about being guilty of a crime. The destruction of a career in the public eye and a happy life is easy given the public taste for scandal and the American system of justice through trial by media.

And when you believe you might be in major trouble, the ability to think rationally sometimes disappears. To a reader, the idea that the IRS would have a PayPal account to collect past due tax bills sounds fishy, if not ridiculous. But in the heat of the moment, when you’re being threatened with jail time, you just want to problem to go away, and all possible resolutions sound legitimate.

the prevalence of media warnings about the scam has certainly helped slow down the perpetrators’ attack on taxpayers. I’ve even seen warnings on my local news broadcasts (but it probably won’t be totally effective and pervasive until reality show producers incorporate scam warnings into their shows).

Money offers a few tips, summarized below, for preventing yourself from being a victim of this scam, so while knowledge does help, as I’ve already mentioned, under stress logical reasoning often fails.

Scammers spoof caller I.D. The call may be coming from somewhere on the other side of the world, but the caller I.D. might say it’s coming from a number with a 202 area code (Washington, D.C.).

In reality, the IRS does not call taxpayers, and the organization especially doesn’t call taxpayers to inform them of an overdue tax bill. If a taxpayer truthfully owes tax, the IRS sends a bill, and offers instructions for the taxpayer to respond.

But I get how people can fall for this. Sometimes the U.S. Postal Service isn’t reliable. Sometimes you accidentally discard legitimate mail, mistaking it for junk mail. A caller can easily convince someone that they had sent notices through the mail which, from their perspective, were ignored.

Scammers ask for immediate payment. The real IRS doesn’t ask for payment over the phone, and are not in the business of setting up PayPal accounts to receive the funds or of instructing taxpayers to purchase prepaid debit cards. The IRS takes personal checks sent to official addresses and electronic payments through a government gateway, the Electronic Federal Tax Payment System (EFTPS) or DirectPay. That’s it.

This fact doesn’t change for taxes owed from previous years, even if you settle with the IRS for a lesser amount.

Even to taxpayers falling for the scam, it sounds like the callers are working somewhat outside the “system,” especially when they agree to settle. So an alternative form of payment might not raise any red flags.

Scammers threaten to arrest or deport their victims. The IRS wouldn’t do that. But it’s hard to believe this is not an IRS tactic when we know from media reports that tax evasion is a crime that results in arrest and deportation. If the scammers make victims believe that they could be guilty of tax evasion, the fear of being arrested is in their mind before the scammers “confirm” that will be the result of failing to pay.

And if you happen to be an immigrant fearing deportation, either because you are in the country illegally or believe it’s easy to be mistaken for someone in the country illegally, the threat of deportation could be so frightening (especially if you are escaping a dangerous home country) that you’re willing to do anything to remain in the United States.

Here’s what happens when you really do owe back taxes.

First, if you earn a paycheck from an employer and haven’t filed your taxes, the IRS will eventually catch on, and you will be expected to pay what you owe if you haven’t already through paycheck withholding. If you have paid taxes every year you owe taxes, but haven’t paid enough, you will still be expected to pay the remainder of what you owe.

The IRS will send you a notice in the form of a bill, identifying how much the government believes you owe and give you a deadline to pay. You will owe penalties and interest beginning with the date that tax payment was due, and that will be included on the bill.

If you disagree with the IRS assessment, you can call the IRS at 800-829-1040 to discuss the matter. But if you do owe the money, you will have to come up with some solution to pay. That solution could be paying immediately, as the IRS requests, agreeing to an installment plan, where you can pay the taxes over a period of time, or coming up with an offer in compromise.

The offer in compromise is available to people with a financial hardship, but the IRS must determine it would never be able to receive the full amount of tax owed.

If none of the above can resolve the issue, the IRS can resort to filing a federal tax lien, a legal claim to your property. The IRS may issue a levy, seizing your wages or bank accounts. These can continue until your tax bill is paid in full or the IRS can no longer legally seek repayment. You can lose your house, your retirement funds, and your income.

Because these consequences are so dire, it’s understandable that people are on edge when they receive a call purportedly from the IRS and therefore vulnerable to this widespread and successful scam.

Have you received one of these calls from someone claiming to be from the IRS? What happened on the phone call?

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How the Financial Media and Stock Market Analysts Manipulate You

by Luke Landes
BBY XRT

Best Buy, the big box retailer that most shoppers have abandoned sometime in the last decade and a half in favor of Amazon.com, announced better-than-expected earnings for the last three months of 2014, which includes the all-important holiday season. The announcement sent the financial media into a frenzy, as many had all but dismissed Best ... Continue reading this article…

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Which Money Script Do You Live By?

by Luke Landes
Couch

Your money script is a story you tell yourself about money. This story, the way you approach your finances, an outlook on a certain segment of your life, can have a significant effect on your behavior. In the growing field of financial psychology, the money script is a key element for clients and patients. Financial ... Continue reading this article…

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Three Overlooked Tools for Repairing Credit

by Luke Landes
Sue the creditor

This is a guest article by Neal Frankle. Neal is a Certified Financial Planner® in Los Angeles. He is also the senior editor for WealthPilgrim.com, MCMHA.org and CreditPilgrim.com. Your credit report is like a financial passport. If it’s clean you’ll find the doors to the financial world wide open. Your credit journey will be carefree ... Continue reading this article…

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Should All Financial Advisers Be Held to a Fiduciary Standard?

by Luke Landes
Money

Over the last year, a friend of mine has been trying to convince me to move my financial assets. I currently have a taxable investment account at Vanguard, and my portfolio consists of a mix that includes a domestic stock index fund, an international stock index fund, and tax-advantaged municipal bond funds. This friend believes ... Continue reading this article…

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