I Know the Banker who Gave Away $60 million. He's a Mensch!

Leonard Abess, the Miami banker who gave away $60 million to employees, has been a boldface name in my stories over the the years. As a Miami-based beat reporter in the banking and finance sector, I have had several opportunities to interview Abess.

Last year, Abess sold a large stake in his family's bank (a well-run institution), for a ton of money. Abess recently shared some of the profits from that sale with employees and even former employees. As a result, some long-time employees received a surprise six-figure bonus from Abess.

It's traditional for reporters to remain objective about the subjects on which we write. And I've kept an objective distance from Abess as I've covered his bank. But I will say that I've often been impressed with his business ethics and his commitment to social causes. He's a mensch, and he's an organic gardener. Kudos to the employees at City National Bank of Florida. Kudos to the Abess Family!

I wrote this story last year for Florida Trend magazine about Leonard Abess:

A Surprise Sale for City National Bank

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Money From the Wall: Child's View of ATMs & Credit Cards

Money doesn't grow on trees, it comes out of a wall. That's how one child explained finance to his parents, who are friends of mine. Savvy about money, my friends were a bit alarmed about their 9-year-old son's view of money. During a recent car ride, the father told me how he's trying to give his son small doses of fiscal reality.

The Scenario: The wake-up call rang when the 9-year-old proudly announced that he wasn't going to work for a living.

Father: Why not?

Son: I'm going to get one of those plastic cards that you have. When I need something, I'm just going to use the plastic card and sign my name.

The Aftermath: The father, who works in the finance industry, reviewed his shopping and spending transactions. He realized that his son -- an elementary school student -- had closely watched his parents make purchases at restaurants, stores and other locations. From a child's view, the transactions seemed simple: Show the plastic card and receive stuff for free. Why work for money when you have a plastic card?

The Solution: When the next credit-card bill arrived, the father opened the bill with his nine-year-old. Here's their step-by-step financial lesson:

• The Account Numbers: The father pulled out the family credit card and asked his son to find the numbers on the plastic card. To make the connection between the credit-card statement and the plastic card, he asked the child to match the numbers on the plastic bill with the account numbers on the bill.


• The Balance Check: The father showed the 9-year-old the monthly credit-card balance. Well-schooled in math, the child was shocked by the large dollar figure. To drive the point home, the father explained that all of the things that had been purchased with the plastic card had to be paid for each month with real money from the family's bank account.


• The Bank Lesson: The father explained he wrote checks to pay monthly bills, including the plastic bill. That lesson took a while because the son argued that checks were just paper and he could just sign his own papers to pay for the plastic. Next: The dad tried to explain how the banking system worked.

After listening to a lesson about credit, interest and banking, my friend's child nodded and came up with another solution.

"I'll get another plastic card," he told his father: "I'll get the plastic card that makes money come out of a wall."

I'm sure that the father offered a very thoughtful and detailed explanation about automated teller machines, but our car ride ended before he finished telling the story. Meanwhile, I had a lot to think about anyway. I wondered what kind of unspoken messages about money, spending and family finance that I have delivered to my children.

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Previous Posts

Mutiny: Rebellion Against Used Party Clothes: Frugal Event Planning Guide Pt.2

Frugal Lessons from Luxury Shoppers: 3 Basic Questions Before Paying

Fourth Grader Joins Flea Market, Hires 4 Employees, Sells Crafts and Prints Money
Full-Time Teacher, Weekend Cook: Part-Time Jobs To Pay Bills

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Sharon Harvey Rosenberg is the author of The Frugal Duchess of South Beach: How to Live Well and Save Money... Anywhere!, which will be published in the Spring of 2008 by DPL Press.

Out of Balance: Overdraft Fees Sting Consumers for $17.5 billion

Ouch. Overdraft fees are a major ripoff and banks are rigging the system to get more bang out of our bucks. That's the word from a new survey. This guest post features details:

"U.S. banks and credit unions are using abusive overdraft loans to generate $17.5 billion in fees each year, according to a major new study, entitled “Out of Balance,” from the nonprofit Center for Responsible Lending (CRL).

The study finds that financial institutions are deliberately using overdraft systems that are designed to generate more overdrafts from customers, resulting in enormous fees for banks and credit unions.

“Some of our largest financial institutions are hiding behind a smokescreen of misleading terms and murky practices that encourage costly overdrafts,” said Eric Halperin, director of the CRL Washington, D.C. office. “Banks should protect customers’ funds, not plunder them with high fees and harmful practices.”

As the report explains: “In a system enormously out of balance, consumers pay $17.5 billion in fees for $15.8 billion in abusive overdraft loans.” In addition, the report finds that debit card overdrafts are now the single largest source of overdraft fees.The $17.5 billion in fees is an increase over CRL’s 2005 estimate of $10.3 billion in overdraft fees.

Unfair bank practices identified in the CRL report include:

(1) posting charges against a checking account quickly while intentionally delaying the posting of deposits,

(2) lowering account balances by re-ordering debits to clear higher-dollar items first, and

(3) failing to warn a customer during debit card point-of-sale or ATM transactions if they are about to overdraw their account so that they may cancel the transaction if they choose

The Center for Responsible Lending is a national nonprofit, nonpartisan research and policy organization dedicated to protecting home ownership and family wealth by working to eliminate abusive financial practices. "

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Previous Posts
Today:
Guest Post: Don't Waste Money on Insurance for Rental Cars

Yesterday:
Hearts, Diamonds & Dollars: Tips from Warren Buffett & Cotton Threads
The Car Repair Fund & Other $$$ Goals for 2008
How to Sell Plasma TVs!?! Beware of Free CDs w/Biz & Tax Tips

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Digg

Pennies & Finance: What a Former Bank Teller Taught Me About Money

I'm impatient with pennies. I round up; I round down. But I should pay attention to the money-saving power of a penny, a former bank teller told me during a recent conversation. In fact, it's important to balance accounts down to the penny in order to detect hidden errors and other oversights, the teller said.

Here Are Three Reasons Why Pennies Matter:

1) Counting pennies boosts accuracy. Wealth is in the details and exact amounts are important. Fractions count on large accounts on Wall Street. Likewise, small change also matters in our personal finance.

2) Pennies add up. There's power in accumulation.

3) Above all, penny calculations pay hidden dividends. For example, while reconciling accounts down to the penny, other unrelated errors are often caught, the teller explained. For example, transposed numbers, omitted line entries and other mistakes are often detected when accounts are balanced down to the penny.

Bottom Line: The process of counting pennies is an exercise in financial fact-checking. It's a form of proof-reading.

And that's why tellers count their stash down to the penny each night. My goal: I plan to be more careful with pennies as I count my change and manage my accounts.


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Avoid These Bank & Credit Card Fees: The Link to My Latest Miami Herald Column

Banks, credit-card companies and other financial services companies continue to find new ways to charge fees. That's the word from bankrate.com. I recently interviewed an analyst from that research firm.

Our interview resulted in my latest column in the Miami Herald. Here's a snippet from that column:

Foreign Currency Surcharge: Check your credit-card statement after traveling abroad. Some institutions add a 3 percent surcharge to overseas purchases. The fee has become a ''lighting rod'' for consumer complaints, McBride says, because the fee comes with no additional services. He gives high marks to Capital One for skipping the fee. Others such as Washington Mutual and Household Finance have foreign currency surcharges of only 1 percent.

-- source: The Frugal Duchess in the Miami Herald.

Here is the link to the full article.
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The Frugal Duchess Booktique
The Frugal Duchess of Beauty Store
Book Shop of Fear
The Poetry & Drama Queen
Frugal Jazz & Blues

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Posts I Liked Last Week

Frugal Weddings, DIY holiday baskets and financial role models are on the lineup today as I look at some of my favorite posts from other bloggers. I could spend hours reading, because there's a lot of great info out there.

Get Rich Slowly offers this excellent primer and behind the scenes look at the nuts and bots of blogging. He spends about 40 hours a week on his blogging habit. I enjoyed this piece very much. I've just bookmarked it.


Blueprint for Financial Prosperity has a fun piece about why he hates paper checks. He taps into some strong arguments for doing away with old school checks: stamps are expensive, your account number is on the check. It's a great read.

Single Ma offers an insightful piece that addresses this question: "Are personal finance bloggers role models?" I appreciate her honesty. We're on the same page:

I have a limited income.
I like to shop.
I have debt.
I have made bad financial decisions.
I do not possess any special skills or abilities.
I am not an expert.
Most importantly (gotta CYA), I am NOT a licensed financial adviser.---Single Ma

Binary Dollar provides wonderful tips about
planning weddings and saving money. Lots of good frugal options: don't wed on Saturdays or in June; get married in the morning and skip the over-the-top dress. I was married in June, but we picked a Sunday service at noon and I wore my sister's dress, with a few modifications.

I'd love to chat with the author for a future print column.

No Limits Ladies has a cute, fun piece about DIY holiday gift baskets. She reads upscale catalogues and then duplicates the idea with items from the supermarket. Really, really fun piece.


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The Frugal Duchess Boutique
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Nickel's Checks & My Cheap Check Bonus

Sometimes the checks really are in the mail. There are many frugal ways to order them. Even large discount retailers such as Costco, Wal-Mart and Sam's Club have check-printing services.

The variety of check-printing options came to my attention during a phone interview with ''Nickel,'' the author of Five Cent Nickel, (www.fivecentnickel.com) a popular website. Nickel faced several obstacles when seeking new checks at a bargain.

That's how my latest column in the Miami Herald begins. I was inspired to write that column by this piece from FiveCentNickel. I had fun chatting with Nickel. (Nickel: Great interview!Thanks for taking the time.)

Here's my personal PS: I also lucked out in the check-ordering business. I initially read Nickel's post because I needed to order checks. I was down to the last few and was seeking out a frugal and safe way to order replacement checks. I was about to order from one of the big discount retailers mentioned by Five Cent Nickel.

But my order was pre-empted by my bank. They sent me a batch of free checks. Why? The bank was changing some in-house routing numbers to comply with a new system. The bonus for me: totally free checks, no shipping charges.

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The Frugal Duchess Boutique
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