Author Archives: Khooppres

Say NO To Refund Anticipation Loans

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The process of filing one’s taxes is filled with great anticipation for some.  If you are making a beeline to your mailbox or your company’s website to obtain your W-2, you are likely in the group of taxpayers that expect a sizeable tax refund.  Additionally, there’s a high probability that you may utilize a tax preparation service and apply for a Refund Anticipation Loan (RAL).

According to the Consumer Federation of America (CFA), a RAL is a costly bank loan that is secured by a taxpayer’s expected refund, and carries an effective annual interest rate (APR) of approximately 149%.  This is almost five times worse than the default rate on most credit cards.  Believe me, I understand the desire to get your refund quickly, but you should never take out a loan to obtain money that’s owed to you.  Additionally, you should know that if the IRS reduces your refund for any reason, the entire amount of the RAL must be paid in full – hence, you will have to pay back the money out of pocket.

In the past, the IRS helped lenders minimize the chance of taxpayers receiving a RAL that would not be covered by their refund through the use of a debt indicator service.  This service was similar to a credit check; it revealed whether or not a taxpayer’s refund would be paid or used to cover government debts (e.g., taxes, outstanding child support, etc.).  In August 2010, the IRS announced that it would stop providing the debt indicator service.  While this news will not eliminate RALs, it will make them more difficult to get, and the associated fees will be even higher than they were before.

So, who are RALs targeted to?  According to the CFA, RALs are particularly targeted to low-income working families that claim the Earned Income Tax Credit (EITC).  In fact, over half of all RAL borrowers are EITC recipients – individuals that cannot afford to pay exorbitant fees to obtain their money.  Additionally, during a national survey commissioned by the CFA, it was concluded that RAL users are more likely to rent instead of own their homes; utilize high cost financial services, such as rent-to-own, payday loans and pawnshop loans; and a significant number of them are African American females. 

Given the information above, I urge you to consider doing something different this year.  There are services available to help you get your money quickly, and without the excessive fees that are associated with RALs.  Included below are quick, cost-effective methods for obtaining your tax refund:

  • On January 13, 2011, the U.S. Department of Treasury announced a pilot project to offer 600,000 low-cost, prepaid debit cards to families who may not have a bank account.  Consumers that receive the Treasury letter can quickly obtain the card to use for receiving this year’s tax refund
  • Open a savings account if you don’t have one, visit the I-CAN! E-File site (www.icanefile.org) or the IRS site (www.irs.gov), and file your taxes for FREE on your own! 
  • Visit a Volunteer Income Tax Assistance (VITA) or AARP Tax-Aide site.  They will e-File your taxes for you.  Tax-Aide sites save taxpayers money by eliminating the cost of RALs and tax preparation fees.  To find a location near you, call (1-800-906-9887) or visit www.irs.gov

Now that you know better, you should choose to make better choices. After all, why pay for something that you can get for free? As you prepare to file this year’s taxes, commit to the following:

  1. Stay away from RALs and consider utilizing one of the tax preparation services noted above
  2. Open a savings account if you don’t have one.  According to a study conducted by Insight Center for Community Economic Development, people of color are almost five times less likely than Whites to have a bank account
  3. Deposit the fees that you would have paid on a RAL into your savings account to begin your nest egg.  According to CFA, the average fees for an RAL (including tax preparation fees) are  approximately $300

Remember, small steps can lead to significant change!

What A Difference A Day Makes

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I’m sure that you’ve heard about Ted Williams by now.  If not, Google “ted williams” to get a recant of his awe-inspiring story.  As I’ve followed the news, I have been struck by how quickly life happens.  I’ve also thought about how the decisions we make each day can position us for success or activate a derailment in our lives.

This story really pulled at my “heart strings”.  If we’re truthful, every one of us knows someone like Ted Williams.  In fact, there’s likely a little bit of Ted Williams in each of us; past failures or poor decisions paralyze us from stepping out and using our talents to pursue our dreams.  What dream have you deferred because of past mistakes?

Another person of interest in this story is Doral Chenoweth III, the videographer that showed compassion and took action.  How often do we discount people because of their circumstances?  Mr. Chenoweth had to first look beyond Mr. Williams’ outward appearance in order to have a conversation and uncover his gift.  We should all be mindful of our interactions with others.  After all, the person that you dismiss could very well be a bridge to your destiny. 

I’ve read the headlines about Mr. Williams’ criminal past, and I know some may think that he’s undeserving of this opportunity.  I believe that we’ve all been blessed with an opportunity at one time or another that we didn’t deserve.  Others may say, “What did he really do?  He was a panhandler that is now an overnight phenomenon!  He was not positioning himself for success!” I must disagree with you on this point.  Albeit unconventional, he promoted his gift.  His sign said the following:

“I have a God given gift of voice.  I am an ex-radio announcer who has fallen on hard times.  Please, any help will be greatly appreciated.  Thank you and God bless.”

How often do we promote our talents and skill sets?  In fact, many of us don’t believe in self-promotion.  And, if around others that do it, we perceive them as arrogant or cocky.  T. Harv Eker says it best, “successful people believe in self-promotion.”   

Personally, I pray that he succeeds.  He has been given an awesome gift, another chance.  If given the opportunity, are you ready for your big break?  I want to hear from you.  How do you feel about the instant fame of the man with the golden voice?

A New Year, A New Beginning

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The beginning of a new year is always a time of reflection and goal setting.  As we enter a new year, most people experience one of two emotions:  elation in achieving their goals, or dread because they didn’t.  As a society, we often view things as all or nothing.  The problem with this approach is that it doesn’t allow us to complete a fair assessment of our performance. 

Think back to when you were in school, most of us had letter or number grades; pass or fail grades were a rarity.  Yet, this is often how we measure ourselves on a daily basis.  The pass or fail approach to measuring success often leads to self sabotage because we berate ourselves when we fall short.  So if you are elated because you’ve had a great year and achieved your goals, let me join you in celebrating your success!  Rock on!  On the other hand, if you didn’t make the cut and are a bit depressed, this article is for you.

If you’re reflecting on your year and you’re not too happy with your performance, or are embarrassed because you did not achieve your goals, this is your heart to heart moment.  Let’s consider the following:

  • Did you make progress toward your goal?  For instance, your goal was to lose 20 lbs, but you lost 5 lbs.  A mile is comprised of 2,000 steps; what step are you on?  If you can honestly say that you are one step closer to your goal, cut yourself some slack and celebrate.  Focusing on the perceived failure will not help you succeed
  • Did you expect to succeed?  This is a tough question because we all know that the answer should be “yes”, but I ask that you search your heart and answer this honestly.  The definition of self-fulfilling prophecy states that what you predict or believe will happen becomes your reality.  In essence, if you believe that you can achieve your goals; your behavior aligns with your beliefs to ensure success
  • Was your goal a SMART goal (specific, measurable, attainable, realistic, and time-related)?  In the book, Rags to RICHES, we discuss goal setting.  Although the discussion is related to financial goals, the principles are universal.  Although one key ingredient to effective goal setting is ensuring that your goals are realistic, I urge you to dream big.  Don’t downsize your dream.  Remember, if you can believe it, you can achieve it.  If you understand that big dreams must be digested “one bite at a time”,  you can create the realistic stepping stones that will lead to your desired result

Ultimately, if you did not achieve the success you wanted in 2010, we’re now in 2011 – a new year, a new beginning.  If you continue to focus on what was not accomplished in 2010, you are wasting precious time because you cannot go back, but you can move forward.  As you make plans for 2011, celebrate every success no matter how small.  Remember, what you focus on expands.  Successful people speak well of themselves to themselves.  From a biblical perspective, there is nowhere in the Gospel that you can reference where Jesus puts himself down.  If He didn’t do it and we are made in His image, we should not do it either.

The New Year should be a time of celebration and great anticipation.  Don’t allow yourself to become a victim to your past.  Cindy Trimm, author of Commanding Your Morning, says it best:  “As your deepest driving desire is, so is your will; as your will is, so are your deeds; as your deeds are, so is your destiny.”  Remember that goal setting is not an all or nothing concept.  The New Year is a promise of a new beginning.  Embrace your new beginning and choose success.  Happy New Year!

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