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The Myth of Ownership

This article was written by in Consumer. 23 comments.


Who really owns all of your stuff? It’s comforting to think that everything that we have in our possession, acquired by legal means, belongs to us. That’s not always the way it works, however.

The myth of ownership is expected to apply to people who buy their possessions with credit and can’t afford to keep up with the debt payments. Default on your car loans, and the bank will come and repossess the car — that the bank owns, not the driver. Ignore your mortgage payments for long enough, and the bank will foreclose on your house. The typical American dream of owning a piece of property is rarely achieved because so few families truly own their homes.

Putting aside debt, there are situations when even full ownership doesn’t guarantee you can keep what is yours. The myth of ownership applies even when no debt is involved.

The first example is the process of escheatment by your state. Property considered abandoned can be claimed by the state in which you live or in which the property resides. Savings accounts and insurance policies are some of the more common financial items escheated. If a bank or insurance company can’t contact the owner, they will hand over the funds to the state.

The owner has a chance to recover the funds from the state, but it involves a process initiated by the owner who may not even be aware that the property exists. If you think there might be something of yours out there, start the process here. Most unclaimed property will remain unclaimed — and the states count on this when they plan their budgets and spending plans.

The Supreme Court of the United States has ruled that states can exercise eminent domain in any situation where the state can prove that doing so would provide an economic benefit, and states can transfer that power to a private entity to exercise on its behalf. The result is that even homeowners who have no debt could find that the state will encourage them to leave. The state would offer reimbursement, but would act without the owner’s consent. Traditionally, highways and utilities are the reasons cited for seizure through eminent domain, but in the current legal environment, homes could be seized to make way for malls and sports arenas.

Eminent domain is one of the biggest examples of how our property doesn’t necessarily belong to us. On a smaller scale, New Jersey is now going after unused gift cards. Merchants and gift card issuers like Visa and American Express love unused gift cards. They’ve received the cash and haven’t had to provide any product. They have the most to lose by the state’s legislative decision to require issuers to forfeit the balance on unused cards after a relatively short time period. This decision was overturned in court, but the state is appealing that decision.

When our property can be relatively easily be taken from us by the state, is it really our property?

Hat tip: Darwin’s Money

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Inactive Savings Accounts Can Be Turned Over to Your State

This article was written by in Banking. Add a comment.

The state will take your money if you’re not vigilant. I received a warning the other day that I’m in danger of having the funds in one of my savings accounts handed over to the state of New Jersey. I’ll explain why in a moment.

First, I should explain that rather than keeping a simplified financial situation like the one I praise in Seven Zen Principles to Guide Your Money and Your Life, I have savings accounts at fourteen different banks. (I took a minute to count them for verification.) My balance sheet is this long because I open accounts somewhat compulsively to audition and review them on Consumerism Commentary. Therefore, my situation shouldn’t be common. I would say most people have savings accounts at only one or two banks.

With fourteen accounts, even if they are listed and updated frequently in Quicken, it can be difficult to manage your money. If you don’t move money around in each account, the bank is required to turn your cash over to the state, a process called escheatment. The rules are different in each state, but in my state of New Jersey, accounts I own are considered inactive or dormant after a period of two years with no activity.

Earning and receiving interest every month isn’t considered activity. Interest credits have been the only line items in my E*TRADE bank account since I opened it in January 2009. The bank is required to inform me that my account will be released to the state in six months unless I initiate a transaction. I received a letter from E*TRADE the other day stating that.

Since there has been no activity in your account(s) listed above for at least six months, the account(s) has/have been classified as inactive. After 24 months, inactive accounts will be considered dormant. As stated in our Account Agreement, if any of your E*TRADE accounts remain dormant for a specified period of time (as determined by each state), we may be required by law to turn over any funds in your account(s) to the state.

I remedied the problem quickly by transferring a good portion of my money in this account back to my very active electronic checking account at ING Direct. If I were to take no action by next January, E*TRADE would forward my cash to the state as abandoned property. At that point, I could go through the process of claiming the money, but it would be a hassle.

Savings accounts are not the only types of property that can be escheated. Any property where the holder can’t get in touch with the owner is fair game. That includes brokerage accounts, savings accounts, and checking accounts that have been inactive, as well as real property, safety deposit boxes, and insurance policies.

Even an automated monthly transfer doesn’t stop an account from becoming inactive for the purposes of escheatment, so monitor your accounts.

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The $155 That Almost Wasn’t

This article was written by in Tips. 4 comments.

It was only back in April that Flexo wrote about MissingMoney.com. I had heard about it once before through a friend on Twitter who said he’d had some success and so I figured, “What have I got to lose?” They don’t charge anything, it’s just a convenient way to get at some abandoned money that should be yours in the first place.

I searched for myself in the three different states in which I’ve lived and found an entry tied to an old street address of mine for “More than $100″. I had to continue the process on a different site for that State, but since all they really needed was my name, it wasn’t that much of a hassle, and I never felt I was being scammed.

clear-visionIn my case the funds I was missing out on were submitted by Daimler Chrysler, which means it had something to do with the aftermath of totaling my car back in 2001. Ultimately, in order to claim the missing money, I needed to mail (or submit via a form on a Web page) some proof that I used to live at that address. Something like a utility bill or a bank statement. I don’t keep those sorts of things any longer than I have to, which to me means, “throw away as soon as you’re not using them anymore.”

However, crashing your car isn’t just an event, it’s a process that can go on, at a minimum, for weeks. A lot of paperwork is generated. I started keeping everything in a folder so I could prove the facts of the case at a moment’s notice. I figured seven years is a good amount of time to hang on to something that important, so in 2008, while pruning the filing cabinet, I very nearly got rid of the folder. Luckily, something stopped me, and a few months later, I was able to scan and e-mail the actual police report that described the accident, and included my address.

A couple of weeks later I got a check for $155. Naturally, I deposited it and made a $155 payment to one of my two remaining credit cards. If I’d received that money when I was supposed to in 2001… well, I can’t say exactly what I would’ve done with it, but some of it probably would’ve gone toward beer.

(Photo by C.P. Storm)

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50 Tips to Help Establish Your Emergency Fund

This article was written by in Saving. 13 comments.

One of the first steps to cleaning up one’s financial situation before embarking on the journey to become financially independent is the establishment of an emergency fund. An emergency fund, in its most basic form, is an accessible savings account where you keep cash for true emergencies, like the loss of a job or a medical emergency. Financial advisers and writers often suggest that emergency funds should contain enough cash to cover all expenses in a three to six month period.

Beyond the basics, I suggest at least five separate components to an complete emergency plan. Getting to that point presents challenges for many people. When one is starting out, it can be difficult to assemble the basis for eventual financial freedom.

Here are 50 tips for the beginner who may be pressed for money.

  1. Open a high-yield online savings account with as little as one dollar.
  2. Sign up for direct deposit.
  3. Empty your pocket change into a jar every night.
  4. Bring your coin jar to the bank every month.
  5. Add to your jar every time you swear.
  6. Have a garage sale.
  7. Whenever you purchase groceries with a coupon, deposit your savings into the bank.
  8. Downgrade your telephone service.
  9. Bring your own lunch to the office.
  10. Ask for a raise (with substantiation).
  11. Drink soda rather than alcohol when you’re dining out.
  12. Drink water rather than soda when you’re dining out.
  13. Switch to store-brand food items.
  14. Switch to generic medication.
  15. Cut back or eliminate your addiction to smoking.
  16. Be aware of your ECRD Factor.
  17. Create an automate deposit to your savings account.
  18. Divert your raise into the bank
  19. Don’t consider your emergency fund part of your spending money and keep it hidden.
  20. Celebrate America Saves Week every week
  21. Tutor a young student in a subject you know.
  22. Get a part-time job at your favorite book store or coffee shop.
  23. Use a cash back rewards credit card and deposit your rebates directly into your emergency fund.
  24. Call the cable company and cancel your service (or agree to a better deal).
  25. Save gas by not driving faster than 65 miles per hour.
  26. Stop using credit cards if you pay interest.
  27. Cancel your Netflix subscription.
  28. Fire your gardener and do the work yourself.
  29. Visit the library rather than your local bookstore.
  30. Stock up on non-perishable groceries when they are on sale.
  31. Consolidate your student loans.
  32. Cancel magazine subscriptions.
  33. Reuse any items you can rather than buying new, and pocket the difference in your emergency fund.
  34. Delay vacations until your emergency fund is complete.
  35. Sign up for online bill payment if your bank offers the service for free.
  36. Shop around to ensure all your your financial accounts do not charge you extraneous fees.
  37. Always know how much you have in the bank so your accounts will never be overdrawn.
  38. Consider switching your land line phone service to an internet (voice over IP/VOIP) service.
  39. Use public transportation rather than driving when possible.
  40. Work a few extra hours at your day job.
  41. Call your insurance provider and ask for an updated quote.
  42. Shop around for a new insurance provider.
  43. Troll the web for abandoned and unclaimed property owed to you.
  44. Negotiate in any retail environment. The more you try, the less you’ll spend (and the more you can save for emergencies).
  45. If you travel, join AAA; the discounts will often pay for the membership fee.
  46. Don’t be an early adopter of new technology.
  47. Cancel your gym membership.
  48. Check your three free credit reports each year from annualcreditreport.com, the official website, for accuracy.
  49. Consider adopting a frugal philosophy, at least until the emergency fund is in place.
  50. While paying attention to small, repetitive expenses, don’t ignore larger decisions like your car, house, and wedding. With smart choices on big-ticket items, you could fully fund an emergency account with the savings.

With a goal to be financially independent, the first step is securing a cash cushion, accessible in emergencies. During this funding phase, it may be beneficial to make sacrifices that in other situations you would not make. A slight decrease in quality of life in the short term will likely outweigh long-term financial devastation when a future emergency arises.

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