Fresh Perspectives

Credit Card Fraud

I’ve done some research on the predatory practices of credit card companies.  Here a just a few:

1.      Under current rules, credit card companies can increase your rate, sometimes to over 30%, if you are late on ANY payment, even your electric bill.  This practice is called “universal default”.  It is nothing more than legal loan-sharking.

2.      Banks can go back a month and charge interest in balances you’ve already paid.  Credit card companies found this loophole in the Truth in Lending law.

3.      Credit card companies can apply your payment to the lowest interest portion of your balance.  For example, your credit card may have a zero percent balance transfer and a 12% APR for purchases. Some may also have cash advances at an even higher rate of 20% APR or more.  Credit card companies can increase the amount of their profits using the practice of paying the lowest interest portion first.

 

I’m hearing rumbles that the Federal Reserve (NOT to be confused with the Federal Government) is looking to initiate rules against such practices.  Don’t hold your breath waiting for the legislature to address these problems.  Many congressmen are tied in with the banking lobbyists, and they benefit greatly as a result.  We are no longer a government of the people; we are a corporate-run government.

 

It’s interesting to note that the CEO of Master Card, Robert Selander, made over $15,000,000 in salary, deferred compensation, stock options and other compensation in 2006.  Kenneth Chenault, CEO of American Express made over $26,000,000 in 2007.  I’m not opposed to CEO’s doing well financially; I AM opposed to using legalized predatory practices to help them get there.  And remember, store credit cards charge some of the highest interest rates, and most use a credit company like Citibank to handle the credit they offer to consumers.

 

The best thing we can do is to be smart consumers.  Don’t let credit card companies take advantage of you.  Many people get rich from the interest we pay.  The convenience of getting what you want right now is costly, so don’t let the legal loan sharks take away your hard-earned money!

Johnny Bunko

I recently finished a new book by Dan Pink, the author of "A Whole New Mind".  "Johnny Bunko" is written in the Japanese comic format known as manga.  I really enjoyed this book because it explodes several misconceptions, and it is a quick, informative read.

This is one of the great ones!

Check out the Johnny Bunko blog.

The Pitfalls of Plastic

 

Think about this:  If you have $25,000 in credit-card debt at an interest rate of 22%, and you make only minimum payments (2.5% of the running balance), it will take you 53 years to pay that debt off.  And you will pay a total of $67,590 in interest.  That’s staggering, and it gives us an idea of the malignancy of unsecured debt.

I’ve learned the hard way, folks!  6 years ago, I found myself in poor financial condition; overextended and swimming in credit card debt.  And it didn’t happen because of over-spending or shopping addiction; rather, it happened because of outside circumstances. I was also guilty of inattention.  What got my attention was a letter from a credit card company indicating that I was in default (1 day late with the payment), and my interest rate would now be 36%!  That’s when I put together a legitimate long range plan to get my finances in order.

Here are the elements of debt reduction and re-direction that worked for me:

1. Stop adding to the debt.  You really must understand the severity of the situation and then you need the discipline to stop the negative movement.  Remember that it is just business!  Try not to be overly emotional.
2. If you are in default on a payment, try to negotiate with the credit card company to lower the rate.  That didn’t work for me, so I negotiated a line-of-credit with another company at a rate of 15% with a fixed monthly payment.  That isn’t a great rate, but better than 36%, and the reduction of this debt was fixed by a monthly payment.  I always tried to pay more each month.  To negotiate this line-of-credit, I explained my situation and strategy to the representative at that company. Credit score?  Under 600 (poor).  I was losing sleep! 
3. Cut expenses and be frugal.  Shop for sundries at the dollar store, and cut all unnecessary expenses.  Look in every area of your life to reduce expenses.
4. Try to look for new ways to increase income, and use the income to pay down debt.  Unsecured debt is more expensive than the interest earned on savings, so at this point, pay off as much as possible rather than save.
5. Try not to get discouraged when the unexpected happens.  When it does, and you don’t have the reserves to handle the situation, use the lowest interest debt instrument you can to pay for unexpected expenses.  Believe me, sometimes it looks like you are not making progress.  In the long haul, however, you are moving ahead if you stick to the plan.
6. Try to leverage the equity in your home and refinance your mortgage at a fixed rate.  Here, dealing with a well-established bank is your best bet.  Stay away from shady mortgage brokers and on-line hucksters.  I refinanced in 2004 at a rate of 5.79% for 10 years using a large and established bank.  Remember that mortgage interest is tax deductible, unsecured interest is not.
7. Again, don’t add to the debt!  As of February 2008, my credit score is 750 and climbing.  And now I am saving money.  I sleep better too!

The bottom line is this.  Getting out of unsecured debt isn’t impossible.  It takes spending discipline and a “never give up” attitude.  It is made more difficult by this superficial, media-driven, materialistic world, but the reality is that “things” never make us truly happy.  Think about just how long having the new car remains appealing; the excitement wears off in about a week! 

Here are some good links:

Credit Card Interest Calculator (my spreadsheet) (30 sec. on DSL)

National Consumer Law Center

Myvesta

Presentation Zen - Worth Waiting For!

My copy of Presentation Zen by Garr Reynolds arrived on Friday.  By Saturday evening, I had finished reading it, and I took notes along the way too.  This book was worth waiting for to say the least.  If enough people read it, the world of business presentations might be revolutionized!

This is much more than a "how to do" book; it is more appropriately a "how to think" book.  The writing is excellent and the supporting visuals are elegant.  The foreword by Guy Kawasaki is unexpected and effective.

This book didn't just change the way I think about presentations, it changed the way I look at our world.  Definitely worth reading, and a great reference tool!

Ego - Where Does it Fit In?

Just check out my book list and you’ll see that I’ve spent lots of time reading all types of books on management and leadership.  The main focus of many of these books is that people are a business’s greatest asset.  The real focus of many books on management involves understanding people; what motivates them and why they behave the way they do.  So that brings me to the subject of today’s blog entry; Ego.

The fact of the matter is that our ego is a motivating factor in our lives; it’s about the view we have of ourselves, and how we believe we are perceived by others.  Our ego runs deep inside of us and it drives our relationships. 

Have you ever met someone that has an inflated ego?  Dealing with someone like that leaves us with the thought that they are selfish and uncaring about the people around them.  Then you meet others that, for whatever reasons, have a view of themselves as inferior.  That extreme self-deprecating behavior is annoying too.

So let’s try to discover what a healthy ego really is, especially in relation to leadership.

I always tell people that when they come to work, they should leave their ego at the door.  We all know, of course, that our ego is part of us; it’s an inseparable part of who we are.  The problems in organizations occur when people’s what’s in it for me (WIIFM) feelings take precedence over the purpose of the organization.  Every organization has some purpose, some mission, and some reason for doing what they do.  Defining the reason that an organization is in existence is what we call a culture. 

Building a culture that people can buy into is the challenge of every organizational leader.  When the focus of that culture is shallow, like make profits for the stockholders, employees and other stakeholders don’t feel as if their contribution is worthwhile, and those feelings of WIIFM take over.  On the other hand, when the culture is defined in terms of people first, where customers/consumers are the focus, great things can happen.  The funny thing about organizations that define themselves first by people and then by money are that they make money anyway!  Richard St. John says it best in his book Eight to be Great; “Serve others something of value, because that is the way people truly get rich”.

So, a healthy ego involves caring about yourself AND others.  And when an organizational culture is built on a mentality of service, most people step up to the challenge, and overinflated egos become less of a problem. 

It’s the challenge of all organizational leaders to build an overarching culture that compels people toward a true mentality of service.  When you create that environment, the processes and mechanics involved in the operation have meaning, and people now can associate processes with results. 

It is a formula that works!

Self-Determination

Few people know about the services offered at Centers for Independent Living (CIL’s).  I’m a board member for NEPACIL, the Northeast Pennsylvania Center for Independent Living.  My current office of president has afforded me the opportunity to do an orientation training session for new and existing members.  Of course, when you prepare this kind of work, the learning experience for the facilitator is enormous!

The overarching concepts of CIL’s are what are known as “core services”. Those core services consist of 1) Advocacy, 2) Independent Living Skills, 3) Information and Referral and 4) Peer Counseling.  More than ½ of the employees and board members of CIL’s are disabled.  CIL’s operate under the “Consumer Directed Model”, meaning that people with disabilities (PWD) receiving services actually direct the way those services are delivered.  Funding for core services comes from the Office of Vocational Rehabilitation (OVR) under the Department of Labor and Industry. 

In addition to core-funded services, CIL’s usually handle services under other government programs.  These might include the Department of Aging, Department of Human Services, Department of Public Welfare, etc.  But every program is operated under the consumer directed model, so self-determination ribbons through them all.

From my involvement in the NEPACIL, I can tell you that CIL’s cannot operate under core funding only.  So these non-profits are always looking for, and competitively bidding on, service contracts from sources outside of core funding.  And they do this while maintaining the focus on the mission of self-determination.  It is not easy.

As you can imagine, the services provided to PWD under these programs are life-enhancing and life-changing!  CIL’s facilitate community based living for PWD.  They do this utilizing “waiver” programs which, simply put, waive federal Medicaid rules so that states can redirect institutional funds to community programs.  It is a shame that federal monies for PWD are largely skewed toward institutions when community-based programs are less expensive and better for the consumer. 

The bottom line is this; CIL’s change people’s lives.   They are a very different kind of non-profit organization.  I’m proud to be part of it.

How do we get US schools back in the game?

I’ll take the risk of sounding simplistic and say this; I believe that many of the problems with US schools can be summed up in one word, “incentive.”

Our US public schools are run by government bureaucracies that lack incentives. Anyone who has spent time dealing with a government agency knows that efficiency isn’t a priority. Why? It’s because people within government aren’t stakeholders. Their attitude is dependent on their own personal sense of service. And, if the job is done poorly, the bureaucracy continues anyway. There is no competition and no urgency toward improvement.

I believe that for our schools to compete, we need incentives, urgency, and a connection to the businesses we serve. Our schools are detached from their “customers.” As a result, we generally fail to produce people who are prepared for work. If you're a business owner, you know what I am talking about.

We operate schools on government mandates like No Child Left Behind. These mandates create negative incentives; “if you don’t do such and such, this will happen….” And the problem gets only a partial fix.

Experience has shown that mandates and curriculum changes fix the symptom, not the cause.

So what can we change about the US public school system?

In other countries, the schools are to varying degrees removed from government, and industry plays a more central role. The system creates incentives because industry is a stakeholder. It works better because there’s a connection created between the school and the “customer.” So the discipline in business and industry is reflected in schools, and better prepared workers result.

We desperately need to change the way we do it in the US!

I’ve worked many years at a school that is under a separate arm of government called career education. It’s mandated to operate with industry involvement, but remains under the control of the government bureaucrats. Since we teach job-related skills, however, the teachers aren’t the same as those working the academic side. Many career teachers are people from industry with a training background. They usually aren’t as insulated from business and industry as other teachers might be.

And even within the school bureaucracy, there are many teachers have what I call “the soul of a teacher.” They positively affect the lives of their students every day. We just need more of them, and we need incentives so that others step up. The system is the problem, not the people!

Getting industry involved won't in itself fix the school system, we know that! But I think it is a good start and would promote other incentives.

Jack Welch (CEO of GE) said “bureaucracy frustrates people, distorts their priorities, limits their dreams and turns the entire enterprise inward”. I couldn’t agree more.

Restaurant Accessibility; An Opportunity for Business Growth

Compliance with the ADA is a concern for any business which serves the public.  It’s estimated that 20% of Americans are considered disabled, with an estimated $175 billion of disposable income.  From that standpoint the ADA actually creates some opportunities for the restaurant industry.  Here are 10 things you can do to make the most of these opportunities;

1.       Understand the laws.  The US Department of Justice web site has an area concerning business compliance that explains the intentions of the law.  It is not as ominous as you may think.

2.       Make “readily-achievable” changes to your facility so that it is as accessible as possible.  You can’t sell your services to people who can’t get in the door.  Ramping with zero-step access can usually be accomplished without a large expense.  Think creatively, and remember to keep transitions as smooth as possible.  Also, if possible look for creative ways to make restroom(s) larger and accessible.  For example, combining 2 adjacent restrooms for 1 unisex restroom may be the most optimal and least expensive way to make them accessible.

3.       If you have a parking area, try to make the accessible spaces as close to the building as possible and on the flattest area.  One or more van-accessible spaces (with a designated side-drop area) is something often overlooked by a small business, but important from the standpoint of a customer who is disabled.

4.       Signage for the accessible entrance, disabled accessible restrooms, and paths of travel make it easier for customers to navigate and provides a comfort level for a person with a disability.

5.       Lay out tables with an eye toward wheelchair access for at least a few tables.  I’ve sometimes encountered difficulties with roll-under access to tables; many tables use a center post that causes difficulty for roll-under access.  Having a few well-placed tables that provide this capability makes it more comfortable for a person who uses a wheelchair.

6.       Provide some large-type menus for those of us who have visual difficulties.  Also, staff can read parts of the menu to patrons with vision difficulty when they aren’t accompanied by somebody to help.

7.       For customers who are deaf or hard of hearing, staff can use a simple pen and paper to communicate.  Don’t assume that people who are deaf can read lips.  Lip reading is difficult, and even someone accomplished at doing so isn’t 100% accurate.  A great website that can help you get an understanding about hearing loss is www.hearinglossweb.com.

8.       There are three simple things that make communicating with a patron who has a mental disability easier; a) use simple sentences, b) make choices clear and concise, c) talk directly to the person as you would any adult.

9.       Advertise the fact that your restaurant is accessible.  This provides a much greater comfort level for people with disabilities and it will increase patron volume.

10.   Dealing with people with disabilities requires understanding and empathy.  Train yourself and your staff about people with disabilities.  Check with your local Center for Independent Living; many times, they have training programs available.    

When it comes to disability access, the key phrase is “readily-achievable”.  Making your restaurant disability-friendly and letting people know about it creates opportunities for you to tap into increased volume and profits.  It is a way to take customer service to the next level.

Innovation in a Bureaucracy

My main job is business manager at a mid-sized public career school which enrolls students from local school districts. As with all public schools, we are simply an extension of the department of education bureaucracy. But as a career school that stresses hands-on learning, we need to large amounts of consumable materials. So the business office handles more than 800 purchase orders in the course of a school year.

The problem was simple; too much time was elapsing from order submission to material delivery. We needed to simplify the process.

Our first dip into innovation was digitizing the request form. That wasn't real innovation since it didn't account for process overview, so deploying system-wide innovation to the entire procurement chain was the next obvious step. As part of that innovation, orders are no longer prepared inside the accounting system software, reducing one repetitive process of re-typing the order. We developed an order form using Excel and the school’s e-mail infrastructure, with the the only interface to the accounting software being encumbering the funds. Since the PO form is digital and portable, it can be sent to a vendor in e-mail or by fax. The digital PO is stored centrally, and the inventory person checks off materials and approves invoices from this central file. Before, this step was done by both the inventory person and the payable secretary.

We also added a procurement card that works like a debit card but with zero fees and rebates paid for using it. It's administered by a school consortium that also handles our investments. Using this card, we eliminate some paper check processes, further subtracting from the bureaucracy.

Overall, this system has:

· decreased paperwork
· eliminated duplication
· decreased the delivery time-frame
· decreased errors
· promoted a better relationship with vendors
· given teachers more time teaching, less time doing procurement

We estimate a 30% increase in efficiency. But our original intent was helping teachers have more student interface with less bureaucracy. That has been accomplished, but innovation is never a one-time process.

Presentation Zen

Have you ever sat through a PowerPoint or Keynote presentation where a monotone presenter was reading the slides to you? Working in a bureaucracy (public school setting), most of the presentations I’ve seen were put together and delivered by bureaucrats. To me, even when the presentation is informational in nature, there is no need to be boring. Why attend a presentation about things you can just read for yourself?

In searching for some guideposts for good presentations, I found that some of the best work on the subject comes from Garr Reynolds. Garr is currently Associate Professor of Management at Kansai Gaidai University in Osaka, Japan with an extensive background in design. I spent an evening reading most of his blog, and found some important general guidelines for presentation delivery on his personal website.

Garr emphasizes that the core presentation comes from the presenter, not the visual aids. He is working on a book called “Presentation Zen”. I will definitely be getting it when published. Check him out!