Diamonds and Dogs #16

Apr 1, 2013 by

In each post of the Money Counselor “Diamonds & Dogs” series, I pick three items—an article, a website, a video, an image—that in my humble opinion would be especially valuable—the Diamonds—in helping Money Counselor readers make better money choices. And to balance the three Diamonds, I pick just one lame item—the Dog.

money idea gems3 Diamonds

  • If you have a pulse (and maybe even if you don’t), you’ve likely received junk mail solicitations from credit card issuers. In “The Target for Predatory Lending,” Johnny Moneyseed rants—complete with photos and named names—over a particularly noxious form of credit solicitation he received. It’s an entertaining and cautionary read.
  • In his post “Should You Invest in a Bad 401(k) or 403(b)?“, Michael of Financial Ramblings examines a topic I’ve never considered: Do the benefits of an employer sponsored tax-deferred retirement plan make participation wise, even if your employer’s particular plan stinks for one reason or another? If you’ve rationalized not contributing to a 401(k) or 403(b) due to high fees, lousy investment options, or other reasons, walk through Michael’s analysis with him—it’ll be worth your while.
  • I’m in disharmony with one element of Robert’s “The Shocking Truth About Professional Financial Advice” on his blog The College Investor: I’m not shocked. Read Robert’s three Truths about financial advice before you take any.
Translating what real estate agents mean

 lame money adviceA Dog

Payday loans, refund anticipation loans, car title loans—seems there’s no end to the creativity of those eager to lend money to the desperate or financially uneducated at sky high, often triple digit, interest rates. Now there’s a relatively new entrant to this slimy industry: Lawsuit loans.

Let’s say you’ve suffered the misfortune of being T-boned in your car by a texting teenager who ignored a traffic signal. That nice attorney fellow who made the humanitarian gesture of visiting you in hospital is now pursuing a five-figure settlement on your behalf. He perceives you’re in immediate need of cash (who isn’t?) while he turns the screws on the teenager’s insurance company’s attorneys, so he recommends a business he happens to be aware of that does “lawsuit funding.” You get cash now and repay it with your settlement check. But look closely at the terms offered by the “lawsuit funder” and a little simple math will reveal that you’d be paying fees that amount to APRs as high as 100% or more.

Predictably, the lawsuit funding industry argues it’s merely performing a public service: In a article, Kelly Gilroy, executive director of the American Legal Finance Association (representative for 31 lawsuit funding companies) is quoted: “We help people who are waiting for a settlement or a judgment, people who need to make ends meet as they wait for a fair outcome of their case.”

Evidently many state legislators are skeptical of lawsuit funding companies’ stated motivations: Since the start of this year, twenty bills have been introduced in ten states to regulate the industry, including in some cases banning the practice.

Nominations Please

Do you have a nomination for a Diamond or Dog? Send it to me please. I’ll give you credit if I use it in a “3 Diamonds and a Dog” post.

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