I had such a crazy personal finances week last week that I just have to share some of it with you.
On Tuesday I went to the eye doctor for a checkup, sat down in the waiting room, picked up the current issue of Time magazine, looked at the cover, and was not sure if I felt better or worse. It said that every man, woman and child’s share of the national debs is $42,998.12.
I felt badly, on the one hand, because that seems like a lot of money. I felt a little better, on the other hand, because I have been using the number of approximately $154,000, as of this April 2015. The difference is that the author of the piece, James Grant, only uses the $13.9 trillion debt that the federal government owes to third parties, not the overall approximately $19 trillion debt that includes money it owes to itself — for example, to the Social Security Administration. Also, the number I have been using is the amount owed by every working taxpayer.
I found this breakdown in the article particularly discouraging. If the government was earning what the author says is the average annual American family income of $54,000, it would have the equivalent of $223,000 in credit card debt (remember this is on only $13.9 trillion), and it would be paying 62 percent of its pretax income to service its credit card debt at a 15 percent annual interest rate. This number is also discouraging to me, although many other countries are in worse shape. Our debt, (again the $13.9 trillion), is 74 percent of our Gross Domestic Product, with most economists believing that 90 percent is in the danger zone for a country.
We have talked a lot in this column about the reality of the national debt, which, in one way or another, our children and grandchildren will actually have to repay, at least to a significant extent when interest rates inevitably rise. I like Mr. Grant’s slogan for this election cycle, which we should all embrace regardless of how we lean politically:“Let’s Make America Solvent Again.”
Then I got home Wednesday afternoon. There was a voice mail message telling me that the IRS was filing a lawsuit against me, and to get more information about the case file, I should immediately call a 919 number. Now hopefully we all know by now that the IRS does not call, email, text or Facebook taxpayers about unpaid taxes without first sending them a bill or other written notice, with a copy to their authorized tax preparer, so I knew that I WAS BEING SCAMMED.
I called the number the next day, hoping to tell them that I was surprised that the IRS hadn’t caught up with me sooner, but a recording informed be that it was a nonworking number. DARN! A little Google research showed me that the number was from Siler City, North Carolina, where, of course, there is no national IRS facility, and that a number of other people had received that same call over the prior few days.
Bottom line: Don’t be one of those Americans who have paid out over a total of $14 million as a result of this or similar phone scams. THE IRS DOES NOT CALL YOU WITHOUT FIRST SENDING YOU A BILL OR WRITTEN NOTICE.
Here are some of the top phone scams according to creditcards.com: 1. Credit card rate reduction scams, where they require an upfront fee; 2. Free home security systems, but with expensive long-term monitoring contracts; 3. Free cruises, but they require your credit card information, allegedly for taxes and fees; and 4. Free government grants just for being a good citizen, but they require processing fees.
The bottom line for me is: The people you do, and want to do, business with don’t operate like this, so you should always be skeptical of any phone call that just doesn’t ring true. Also, I never thought that I would say this, but if you get a “that doesn’t seem right” call, do a little Googling.
Finally, I was at a city high school for a CARE presentation, doing my whole “Cash Is King” thing. I tell the students that I normally carry about $70 in cash with me all of the time, and that I pay for anything that costs less than that in cash. It is, as we have discussed in this column, about staying in touch with your hard-earned money, making better spending decisions and spending less. The teacher made the students fill out a sheet that included this question – “what did the Judge say that surprised you the most?” One student said: “Hhe carries ONLY $70 in cash.” That surprised me. What am I missing? At any rate, here is what I found: 42 percent of Americans carry $1 to $40 in cash; 30 percent carry $41-$99; 17 percent, $100-$199; and 11 percent, $200 or more.
Just remember that “Cash is King,” and I hope I don’t have too many more weeks like that one.
John Ninfo is a retired bankruptcy judge and the founder of the National CARE Financial Literacy Program.