Money Rules to Break
William J. Lynott
I have come to relish one part of my hard-won fiscal education
over all others, it's the discovery that some rules are made
to be broken.
Don't get me
wrong. I'm not talking about the rules that most of us try to
live by: the Golden Rule, not breaking in line at the supermarket,
coming to a full stop at stop signs. Those rules hold potential
benefits for everyone.
The rules I'm
talking about are the ones imposed by commercial enterprises
that benefit no one except the people who attempt to impose them.
Rules like that survive because so many of us are intimidated
when we are told, "You can't do that. It's against our rules."
If you're inclined
to slink away when you hear such admonitions, read on and suffer
no more. Here are a few examples of the rules I love to break.
I daresay that once you get the hang of it, you'll enjoy breaking
Rule #1: You Break It, You Bought It
A few years ago
while browsing in a gift shop, I was startled to hear the sound
of glass crashing to the floor. A frisky youngster had accidentally
knocked a glass vase to the floor where it shattered like, well,
glass. The storeowner sternly pointed to a sign on the wall that
read, "You break it, you bought it."
sorry," he told the distraught customer, "but you owe
me $49.95." With hands trembling, she pawed through her
purse and came up with fifty dollars.
In fact, this
mother should have held on to her money, for the truth is that
she was not obligated to pay. Accidents in a retail store are
a part of the cost of doing business and breakage that isn't
covered by insurance is a legitimate tax deduction. Storeowners
can try to shift financial responsibility to customers, but courts
are unlikely to recognize such a rule.
So, If you accidentally
break something while shopping, remember that you have no obligation
to pay. I suggest you offer your earnest apologies while keeping
your hand firmly fixed on your wallet.
f you feel responsible
for your bumbling and want to pay to ease your conscience, fine.
But ask for evidence of the items total cost to the retailer,
not its selling price. To allow the store to generate a profit
from your accident would disqualify you from membership in the
Rule Breaker's Hall of Fame.
Rule #2: If You Miss a CD Grace Period,
Banks are especially
skilled at intimidating the acquiescent. Recently, I allowed
a bank to automatically rollover a CD. As a good customer, I
assumed I would be given the best available interest rate C the
one anyone walking in off the street would get. By the time I
discovered the horrendously poor rate the bank had applied, the
grace period for making changes had expired.
When I called
the bank, a customer service representative said nothing could
be done. The renewal had taken effect and the money couldn't
be withdrawn without my paying a penalty.
As a confirmed
rule breaker, I didn't accept this answer and asked to speak
with a manager. He never even mentioned this "rule."
Within minutes, a change was made granting me a "promotional"
rate almost 50% higher than the one I had been given.
There was a lesson
here for me about putting my faith in the bank. The fact that
the adjustment was made so easily left me thinking I had caught
the bank with its fingers in my cookie jar.
Rule #3: Your Insurance Agent Knows
are also imaginative creators of rules. Take the "dwelling
coverage on your homeowner's insurance. That's what the company
will pay you if your home burns down. You won't find much information
in your policy about how this figure, and the premium you pay
for coverage, is computed.
But that doesn't
mean that you should let them get away with all of their "rules."
Take the matter of your homeowner's insurance.
Chances are the
"limit of liability" on your homeowner's policy has
been creeping up gradually over the years. That figure -- the
limit of liability -- is what the company will pay you if your
home burns to the ground.
An inquiry about
this to your insurance agent may well bring you an answer similar
to the one my agent offered me: "It's all done automatically.
It works the same for everyone."
When my next
premium notice arrived, my interest in the subject was renewed.
There it was, another substantial increase in my limit of liability
and, of course, in my premium. I called my agent again and explained
that the new coverage was, in my opinion, considerably more than
the home would bring if I sold it. He, in turn, explained to
me that if my home burned down, the company would pay me this
full amount to cover the cost of rebuilding, which would be more
than it would cost to buy an existing home.
This may sound
logical, but the bottom line is that I was still insuring my
home for more than its actual worth and paying higher premiums
than necessary to replace it if it were lost.
When I said this
to my agent, allowed that an adjustment could be made and lowered
my coverage right on the telephone to the market value of my
home. My premium was reduced on the spot by $80 per year.
Yes, I know.
If my home burns down, I'll only get fair market value for it.
But as it happens, that's fine with me. If your home is insured
for more than its market value, you may want to have a talk with
your insurance agent, too.
Rule #4: Return This Warranty Card
warranty card that came with the last household appliance you
bought? Did you think you would lose your warranty coverage if
you failed to fill out and return it? That's what the manufacturers
hope you'll think. The truth is your warranty coverage remains
the same whether you return the card or not.
The real reason
manufacturers use these forms is to gather marketing data about
consumers: age and income bracket, how they heard about the product,
where they shop, and so on.
So, the next
time you instructed to "fill out and return this card,"
you've found another rule to break.
Keep in mind,
though, that the manufacturers do need your name and address
to contact you in the event of a recall. That's why I usually
do return these cards, but with only my name, address, model
and serial number filled in.
Rule #5: Social Security Number Required
been hearing about the new crime of stolen identity. That's when
a scam artist obtains enough information about you to make credit
purchases in your name - even commit crimes for which the police
may come looking for you. And what's the easiest way for
a criminal to obtain that information? By getting his or her
hands on your Social Security number.
hat's why you
should refuse to divulge your number to anyone except government
agencies or banks or other institutions that manage your money
and must report to the IRS. Do not provide it to anyone else.
If you withhold it when applying for credit and you are rejected,
be sure to ask why you have been turned down. Federal law requires
that you be told the reason.
It is not illegal
for credit issuers to request this number or to reject you for
failing to provide it. But you want to know if this is what happened.
If it is, take your business elsewhere. If you give in to this
demand, the risk is all yours.
Rule #6. Contractors Get Paid Up
Not all questionable
rules are imposed by big companies. Contractors such as housepainters,
carpenters and remodelers have one of their own: Pay one-third
of the cost of the project upon signing of the contract.
Not me. After
a few painful experiences, I learned that once a contractor has
your money, it's too easy for him to get sidetracked by a bigger,
more profitable job and put yours on hold. So now I have my own
rule: I'll pay the one-third, but only after the materials are
delivered and the job is started.
I've never had
a contractor refuse to do business with me once I politely explained
the reason for my rule. He can still delay the start date for
the project, but at least he isn't enjoying my money while he
Rule #7: Just Sign on the Dotted
from Family Circle,
May 2002 & Reader's Digest August 2002
place for finding breakable rules is in contracts. You should
never sign ANY contract without reading it carefully.
What's that you
say? You rarely if ever get involved with signing contracts.
Oh yes you do.
ust about everything
you affix your signature to these days is a contract. Whether
it's called a lease, a bill of sale, or a rental agreement, it's
a legal contract. Once you sign it, you are obligated to abide
by its terms, even if you didn't understand them, and even if
the terms are "unfair."
Once you get
into the habit of reading contracts before you sign them, you'll
find lots of provisions that you don't like. When you call attention
to them, you may be told: "That's our standard contract,
we can't change it."
Leases are a
good example. If you're a desirable tenant, the landlord may
agree to reasonable changes in the terms of a lease. Instead
of renting a house "as is," for example, you might
get the landlord to make certain improvements. If the landlord
refuses to eliminate clauses you find unreasonable, you would
be wise to find another house to rent. It's better than signing
a lease that would keep you awake nights worrying.
The time to examine
a contract for questionable clauses is not when you get home
and settle in to read it after you've signed it. Read it thoroughly
before you sign. A
friend of mine who leases cars for his business says he has never
signed a lease without making at least one change in the wording
or scratching out at least one phrase.
Try it. You'll
Copyright (c) 2002 by William J. Lynott
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