Personal Finance Blog

Tips And Stories To Help You With Managing Money

You Write The Check and Then What?

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Checks are electronically scanned as part of the process.
Checks are electronically scanned as part of the process.
Americans are writing fewer checks than ever as more of them handle their money matters electronically. Even so, some 18.3 billion checks were processed in a single year in 2012. Many people still feel checks give them more control over their personal finances.

Ever wonder what happens to a check after you pass it on to a merchant, family member, utility or whatever?

What happens depends to a large extent on who receives it, with different routes if it is handed to an individual vs. a business. Though some businesses and individuals still deposit checks with a financial institution in person, most are processed electronically, economic experts report.

Electronically Processed Through Scanning Devices

The checks are fed through a scanning device that takes pictures front and back. The image, along with metadata and account number, is then forwarded to the paying bank. Today’s scanners are designed with optical character recognition that reads the information on the bottom of the check and the handwritten or printed amount of the payment. Even small scanners can process about 45 checks per minute. Larger ones handle hundreds or even thousands in the same time frame.

For such a small piece of paper, a check contains a significant amount of information, at least nine pieces of data in most cases. They include the date on which it is written, the recipient, the amount of payment in both figures and words, a memo to specify what it is intended for, which is optional, your signature, the routing number, checking account number and the number of this single check.

The line of information at the bottom of the check includes numbers and symbols that give the bank routing and transit numbers, the customer account information and individual check numbers. In the business, it is known as the MICR line, an acronym for “magnetic ink character readable.”

Smart Phone Apps

Many smartphones have apps that can turn a paper check into an electronic image. They take pictures, via the phone camera, front and back of the check, and transmit the pictures to the bank when the check is deposited.

When a bank receives the image, the check can be processed or cleared, through the Federal Reserve Bank’s national clearinghouse, a regional clearinghouse or a direct connection between two financial institutions.

The number of checks processed in this manner has increased significantly. In 2006, 43 percent of them were scanned and electronically handled. By 2012, the figure was almost 100 percent.

What If You Lack Sufficient Funds To Back The Check?

It will be processed, again electronically, and returned to the back on which it was written. More than 127 million “bouncers” were returned to the bank of origin in 2006. Again, by 2012, the number had fallen by almost half, with just 66.4 million returned unpaid.

Although electronic banking will likely continue to make inroads into check transactions, it’s still a great way to handle your money affairs.

Living Wage Laws Difficult To Enforce

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For the cities that endorse the Living Wage Law, ensuring compliance is difficult.
For the cities that endorse the Living Wage Law, ensuring compliance is difficult.

A number of cities have bowed to pressure from labor advocates and enacted “living wage” laws, some of them phasing in plans that will top out at $15 per hour.

A living wage is the minimum income necessary for a worker to meet their basic needs. It was designed to fight poverty, but the ripple effects that come after cities actually adopt the Living Wage Laws are numerous.

Ensuring that employers actually follow the new guidelines is difficult. State and federal laws don’t require employers to provide data proving that they are in compliance, oversight agencies say. The data is most often contained in payment check stubs, but employers are not required to share the information.

Cities That Use Living Wage Laws

Among cities that have adopted the wage increases are Santa Fe and Albuquerque, New Mexico, San Francisco, California, and Washington D.C. The issue is on the agendas of many state legislatures and city governments as the press for better wages heats up.

Complaints

Enforcers generally rely on worker complaints to initiate actions against employers who do not conform, but the employees are reluctant to complain for fear of reprisals, so many instances of non-compliance go unnoticed. Labor groups estimate that a quarter of the country’s workers who fall under the guidelines are not receiving the legislated wages. But if one employee complains, enforcers use it as leverage to investigate pay records for all of the business’ employees on the supposition that the problem affects more than the single complainant.

Recommendations For Enforcement

Haeyoung Yoon of the National Employment Law Project calls the problem “pervasive and rampant” in an Associated Press news article. The project recommends higher fines against non-compliant employers and more stringent enforcement. The costs of enforcement are high, but could be recouped through fines, she said.

Some employers don’t understand the new laws, but others sidestep the provisions by requiring workers to work unpaid or off the clock to make up the difference. Others raise the wage, but cut the benefits.

Law Suits

Hospitality and transportation workers serving in SeaTac, Washington are granted the Living Wage Law. This community however needed courts to enforce compliance and have filed more than a dozen class-action suits this year in behalf of workers. The total amount of contested wages, related benefits and possible penalties could add up to $62.5 million.

Compulsive Shopping May Be Sign Of Trouble

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How do you know if you have a problem with compulsive shopping?
How do you know if you have a problem with compulsive shopping?
If you start shopping and can’t quit, there could be serious complications ahead. Losing control of shopping habits indicates an impulse control disorder that is similar to addictive disorders, but without the drugs.

Factors That May Increase Behavior

A multiplicity of social and cultural factors may enter the picture by increasing the addictive behavior. One is today’s easy access to credit and society’s general focus on material things. People are encouraged to accumulate possessions now and pay later. Online shopping and television stations that focus on sales day and night add to the possibility.

What Are The Signs That Your Shopping Is Out Of Control?

Spending and shopping to offset disappointment, anger, discomfort or fear tops the list. If you are stressed by your own habits to the point of emotional distress, be concerned. Arguing with a spouse or other significant person over spending is a clue. Also on the list are feeling lost without credit cards, buying items on credit that you wouldn’t buy if you were paying cash, getting a “rush” from spending, experiencing guilt, shame or embarrassment after a spree, lying about how much you spend, thinking excessively about money or spending time trying to reconcile your accounts and bills.

How Do You Know If You Have A Problem?

Four or more of the above indicate a problem. You might get a feeling or happiness and power while spending, but you have to keep shopping to maintain that feeling. The brief but intense emotional high doesn’t last long.

Consequences Of Addiction

Researchers have related compulsive spending with interpersonal difficulties, occupational consequences, and family/financial problems. Anxiety and depression may be more troublesome as spending gets out of hand. Borrowing money to cover credit buying exacerbates the problem. Too often, the extent of an addict’s spending doesn’t become apparent until the debt becomes overwhelming. Then a drastic change in lifestyle becomes an absolute necessity, and the emotional effects come home to roost.

How To Get Help

If you suspect you may have gone too far in your spending, contact a certified addictions counselor. Your regular physician may be able to help in locating one. Check your state health agency or a local hospital to see if they can direct you to the help you need. The American Psychiatric Association also has resources that are useful.

Better at this stage of things to spend a little time rather than any more money.

Political Campaigns Spawn Economic Fallout

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Political uncertainty causing economic angst.
Political uncertainty causing stagnant economy.
The rancorous 2016 election campaigns are having a negative effect on the country’s economy, the experts are concluding.

Manufacturing

Manufacturing has taken a dip, with the smallest improvement in sales since 2009 and the companies are blaming the political uncertainties for the difficulties. The Markit Economics manufacturing index fell to 50.8 in April, the lowest it has been since September 2009.

American Households

American households also seem to be retrenching as consumer confidence slides to the lowest level since last September. The unusual and more confrontational nature of the debates, rampant dissatisfaction with the major parties and the uncertainty of where the country would head under pending leadership all are factors.

Business Spending And Investing

Some businesses are delaying spending and investment decisions until there is more clarity about what might be on the minds of the various candidates vis a vis business regulation. Policies that might make a difference in bottom lines are still pending.

Presidential Nominees Positions

Donald trump, likely Republican presidential nominee, has thrown out such possibilities as putting big tariffs on Chinese imports, while Democratic front runner Hillary Clinton has waffled on some of the positions she has championed in the past that were pro-business.

Other Indicators

This sort of flux in political positions has caused a lull of sorts in business activity, economic experts say. Among other indicators, orders for business equipment were down by almost 3 percent in February. The Federal Reserve also has noted signs of increasing unease about the political situation as it makes surveys for the Beige Book. Eight mentions of the campaign were made in the three reports that have been published by the central bank so far this year. In 2012, the last general election year, there were two such mentions. In 2008, there were none.

consumer Angst

The University of Michigan’s monthly confidence survey also indicates more consumer angst about the direction of the country’s politics. The economy may be stagnant as it waits the outcome of the November balloting.

Plan Ahead For Retirement

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What you should already be doing in planning for your retirement.
What you should already be doing in planning for retirement.
The decisions you make early in life can make a huge difference in what your retirement cushion will look like. Waiting until you are about to head out the door of your employment is way too late to start thinking about it.

Stay Married

It’s common to hear from both parties to a divorce that he /she “lost everything” in the process. That isn’t mathematically possible, but it’s safe to say that it’s rare that either partner benefits financially when there is a split. If you fall into the divorce pit (and some 50 percent of American couples do) remember to calculate the future needs of retirement as you divvy up the goods. Applying some sound common sense in the relocation process will help. Wiping out the entire proceeds from a divorce while setting up independently may leave little for the retirement years. A smaller living space, fewer immediate “wants,” a more economical car may be good alternatives.

Spend Less Than You Make

This bit of wisdom has been bandied about forever, but not enough Americans pay attention. Debt is simply impatience expressed through money. If you save the amount of a monthly payment for as many months as the purchase takes, you can pay cash and avoid interest.

Live Frugally

Used vehicles serve well for every day getting where you’re going. Mow your own lawn, make your own repairs when possible, make eating out a rare option. Just keep thinking about how good life will be when you are retired if you don’t spend it all when you aren’t.

Invest

Take what is left when you have lived frugally and put it into a savings plan that will offer some tax advantages. An investment counselor is a good idea if you aren’t really savvy about the market. Making changes in your savings program just for the sake of change may be counter-productive. It can be tricky. Before you sign up for something new, think first if it will fit into the long-standing plans you have been pursuing.