This fall, in the run-up to the midterm elections, a group of Catholic nuns, Protestant ministers and other religious leaders caravanned through South Dakota on what they called a “Love Your Neighbor Tour.” .

They stopped at grocery stores, restaurants, senior centers, libraries and other community gathering places to start conversations about health insurance. They heard story after story of family members, friends and neighbors struggling to afford quality health care.

The purpose of this tour: to build support for a ballot initiative to help more South Dakotans get the care they need.

Through such initiatives, citizens can circumvent elected officials who have become disconnected from their constituents.

In this year’s elections, voters in more than 30 states committed to this form of direct democracy. These voters raised taxes on the wealthy in Massachusetts and Los Angeles, funded universal preschool and child care in New Mexico, and clamped down on medical debt in Arizona.

In South Dakota, the “Love Your Neighbor” campaign won big. By a margin of 56 to 44, voters approved a proposal to force their state government to expand Medicaid eligibility, a move that will help about 42,500 working-class people get treatment.

These people earn too much to qualify for the state’s existing Medicaid program, but too little to access private insurance through the Affordable Care Act. Since 2010, the federal government has covered 90% of the costs when states expand Medicaid, but political leaders in South Dakota and 11 other states have refused to do so.

This isn’t the first time South Dakotans have used effective strategies of people-to-people organizing and ballot initiatives for the good of their neighbors.

In 2016, a bipartisan coalition with strong support from the faith community won a stunning victory against financial predators, winning 76% support for an election measure to impose a 36% cap on loan interest rates. on salary. Previously, those rates averaged around 600% in South Dakota, trapping many low-income families in a downward spiral of debt.

In this midterm election season, Nebraska offers another inspiring example of citizen action to circumvent out-of-touch politicians.

For 13 years now, Republicans in Congress have blocked efforts to raise the federal minimum wage, leaving it stuck at $7.25 since 2009. Nebraska’s entire congressional delegation — all Republicans — has always opposed the hikes minimum wage. Rep. Adrian Smith, for example, recently attacked President Biden’s $15 federal minimum proposal as “economically harmful.”

Nebraskans view the issue differently.

Voters there approved an increase in the state minimum wage to the same level Biden has proposed — $15 an hour — by 2026. The measure, which was accepted with 58% support, will mean bigger paychecks for about 150,000 Nebraskans.

US consumer debt is at an all-time high. According to the New York Fed Consumer Credit Panel, total household debt in the third quarter of 2022 reached $16.5 trillion.

Is there a way to crush your debt once and for all? Absolutely, but it requires avoiding bad financial habits that can put you further into debt.

Here are 12 of those dangerous habits and what to do instead.

6 awesome tips every Costco shopper should know

1. Spend money to follow others

Peer pressure is enormous. You may not feel a direct command to follow others in your social circle, but it can get sneaky. If one of your friends buys a new car, you might be tempted to buy one too.

Break this habit by realizing that you bear all the consequences of your expenses. In other words, it’s not your friends who will have to clean up the debt. This job is yours and yours alone. Better to avoid it altogether by living within your means.

2. Don’t automate savings

For most people, if it’s in their main checking account, it’s up for grabs. Spending all your money is a guaranteed way to keep living paycheck to paycheck.

Instead of continuing the cycle, break it by adjusting your payroll distribution. You can send a fixed amount to your main checking account and a percentage on savings. This will ensure that you are constantly building an emergency fund and avoiding further debt.

Payday loans are often sought after in emergency situations, but they are bad business: they can have interest rates of over 600%!

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3. Not having a coherent budget strategy

Not having a budget strategy is a dangerous habit. You don’t know how much you earn, how much you take out, or even how much you need to meet expected and unexpected expenses in life.

Once you have a budget, things that used to be “emergencies,” like car maintenance and property taxes, just become part of the budget.

The story continues

4. Not Tracking Expenses

Expenses tend to creep in, making it easy to end up with “more butterflies than money,” as the old saying goes.

It’s a dangerous habit when it comes to money, because if you have no idea of ​​your expenses, you can’t really plan for unforeseen events. This puts you in a difficult position where you may have to take out expensive loans or rack up credit cards, which will push you further into debt.

Pro Tip: Most of the best budgeting apps automatically analyze your expenses from a linked bank account to keep you up to date on your expenses.

5. Eat out every week

Checking out the best restaurants in your town is fun, but it can add up very quickly. Even the fast food groceries start piling up.

If you order weekly, that’s money wasting the ability to benefit you beyond a full belly for the evening.

A better approach is to eat within your budget, but pack lunches for work and cook most of your meals at home.

6. Pay the minimum on credit cards and loans

Paying the minimum on credit cards is a surefire way to stay in debt longer. This is because the minimum balance on credit cards is used primarily to pay interest and very little of the balance.

Pro Tip: By paying more, more of your payment goes to the original balance rather than just interest. You can also recover what you owe by switching to a low-interest credit card.

7. Buy more house than you can afford

What you get in mortgage terms and what you can actually comfortably afford each month are often two different numbers.

As a general rule, your mortgage should not exceed 28% of your take home pay from an affordability perspective.

In some markets, this may mean a lot less house than expected. But having the cash to handle repairs, saving for unexpected expenses, and always putting aside for retirement is far more important than having the biggest house on the block.

8. Shopping for every sale

Unfortunately, the science of retail is designed to take as much money as possible. Indeed, shopping around for every sale is a dangerous habit that can put you further into debt because it encourages spending.

This means that not all chords are really chords. Even if it is a 75% sale or clearance agreement, the costs can still add up. Stay home and don’t add items to your online shopping cart either.

9. Spending too much on a car

Just like spending to keep up with others, you can also spend too much on a car. It is a purchase with guaranteed value and requires care and maintenance.

Pro Tip: Buy a reliable and affordable car when the total cost of ownership is calculated. And try these tips to save money on car insurance.

10. Skip Car Maintenance Until It’s Too Late

That check engine light won’t go away just because you put a little duct tape on it. Unfortunately, when money is tight, it is difficult to find space for auto repairs. This is why having an emergency fund is so important.

While some small businesses now offer financing through third parties, the interest rates are not very good, which makes it even more difficult to deleverage.

Pro Tip: Set aside money for repairs throughout the year. Even if you don’t need a lot of repairs, the fund may be enough to repair your vehicle or buy a new one without stress.

11. Not monitoring your credit

If you don’t look at your credit, you are exposing yourself to fraud or even incorrect information.

Traditionally, the three major credit bureaus allowed one free credit report every year, but now consumers can check their credit report every week. This is a temporary benefit due to the ongoing COVID-19 pandemic.

This habit can push you further into debt, as your credit score has a direct impact on the interest rates you receive. The worse the score, the more you will pay for credit cards, loans and even apartments.

6 smart ways to crush your debt today

12. Let the bass devour your money

The bar can be an expensive place, with an average tab for just four glasses ranging from $80 to $100.

Add in the cost of parking or the taxi ride, plus any other bar stops you’ll make, and going out for a night on the town can put you in more debt than you think.

Entertainment is one of the biggest expense categories that can spiral out of control, but unlike rent or utilities, you can control it.

At the end of the line

Good financial habits open great doors. If you’re trying to achieve bigger goals, like buying a house or taking a better vacation, it all starts with developing good money habits and avoiding dangerous things.

Of course, that’s not the only part of the puzzle to solve. Eventually, you’ll have to manage your income, including raises, promotions, or even a side hustle.

Start by saving and investing money, and you’ll soon find that you have enough leeway to grow your bank account as well.

More from FinanceBuzz:

This article 12 Dangerous Habits That Can Push You Deeper Into Debt originally appeared on FinanceBuzz.

Credit cards are primarily a payment method, paid monthly. The importance of borrowings has diminished over the years.

By Wolf Richter for WOLF STREET.

Credit card balances include balances that accrue interest and balances that are paid in full by the due date such that no interest accrues. Many Americans use credit cards only as a method of payment (and to get the 1.5% cash back or whatever), not as a method of borrowing. Thus, credit card balances are much more a measure of spending than borrowing.

Fitch estimated that the total amount paid with credit cards in the United States reached $4.6 trillion in 2021. Only a tiny fraction of the expenses were not fully repaid and added to the debt carrying interest.

In the third quarter, credit card balances rose $38 billion from the previous quarter to $930 billion, according to the New York Fed’s Household Debt and Credit Report. This $930 billion includes transactions initiated roughly in September but fully repaid in October, which do not generate interest.

Credit card spending has been boosted by the resurgence in travel, with credit cards being used as a method of payment for hotels, airline tickets, rental cars, meals, and more. Soaring costs are further increasing the amounts that pass through credit cards. But cardholders fully refunded almost all of the new amounts paid by credit card during the quarter.

Households have a lot of debt, but the problem isn’t credit cards, it’s mortgages.

In a moment, we’ll look at credit card balances as a percentage of total consumer debt and as a percentage of disposable income, and we’ll look at delinquencies and third-party collections, and we’ll see that the burden of revolving credit is not more than a small fraction of what it was in previous years and decades, and delinquencies have started to rise, but are still below pre-pandemic lows, and third-party collections have dropped to new records.

During the pandemic, plummeting reservations for airline tickets, hotels, entertainment and sports venues, restaurant meals, etc., have led to a drop in the use of credit cards as payment , and that’s where the big dip happened; it shows the collapse of expenditure on services. It is now back to normal as service spending recovers.

And yet, outstanding credit card balances in the third quarter increased by only $43 billion, showing the universal use of credit cards as a method of payment, with balances paid in full each month, and in the extent to which credit cards are used as a method of borrowing. And that makes sense because borrowing with a credit card can be ridiculously expensive, with rates as high as 30%, but paying with a credit card can earn you a kickback.

“Other” consumer loans, such as personal loans, payday loans and Buy-Now-Pay-Later (BNPL) loans, increased by $21 billion, reaching $490 billion in the third quarter . Most of them bear interest, but not all of them: for example, BNPL loans can be subsidized by the trader. These loan balances are now back to their 2003 level, despite 19 years of population growth, rising incomes and runaway inflation.

What is amazing, in fact, is how down these balances are after 20 years of population growth, income growth and inflation:

Decrease in the amount of credit card debt.

Consumers have reduced their reliance on credit card debt over the years, although credit cards have largely replaced checks and cash as payment methods. In 2021, $4.6 trillion was spent on credit cards, yet over the same period credit card balances grew by only $40 billion.

In 2003, credit card balances and other loans combined (the red and green lines in the chart above) accounted for more than 16% of total consumer debt, which also includes mortgages, auto loans and student loans. During the pandemic, this figure fell to 8%. In the third quarter, credit card balances and other consumer debt reached 8.6% of total consumer debt, roughly within the range of the pre-pandemic low in 2014.

Debt burden as a percentage of disposable income.

In 2003, credit card balances and “other” consumer debt accounted for 14% of disposable income (income from all sources minus taxes and social contributions). And then over the years it fell steadily as the burden of credit card balances and “other” consumer loan balances fell relative to disposable income. In the first quarter of 2021, it fell to an all-time low of 6% as disposable income ballooned with stimulus funds. In Q3 2022, it rose to 7.6%, roughly within the range of pre-pandemic lows:

Delinquencies increase, remain at or below pre-pandemic lows.

Stimulus funds delivered directly to consumers during the pandemic – stimulus checks, PPP loans, additional unemployment benefits, etc. – as well as the sums that consumers did not have to pay – mortgage forbearance, bans on eviction, etc. dough, and many who had fallen behind on their credit cards have caught up. Others were able to enter their credit card arrears into forbearance programs, and the outstanding balance was marked “current”.

That’s all over, and credit card balances that are becoming unpaid — 30+ days past due — have been growing all year. In the third quarter, they reached 5.2% of total balances, which is in the same range as during the pre-pandemic lows of early 2016.

“Other” consumer loans, such as personal loans, that are becoming delinquent reached 5.8% of total “other” balances and remain well below pre-pandemic lows:

Third-party collections fell to new all-time lows.

The percentage of consumers with third-party collections fell to 5.7%, the lowest on record, and down from 14.6% of all consumers following the unemployment crisis of the Great Recession.

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Catholic Charities of Central and Northern Missouri is now helping families recover — financially.

The nonprofit launched a financial wellness program over the summer.

Just last week, his first participating family managed to refinance a payday loan into a manageable payment program.

But the change didn’t happen overnight, according to Kathy Frese, the association’s financial stability specialist.

Modeled after a similar program at Catholic Charities of Northeast Kansas, the wellness program aims to break a circular cycle of predatory lending.

“(Catholic Charities of Northeast Kansas has) a great resource for me to get the program started,” Frese said.

According to the Catholic Charities Financial Wellness webpage, the program aims to help families take control of their daily and monthly finances, gain the ability to absorb financial shocks (or weather emergencies that cause financial hardship), get on track to achieve financial goals, and create financial freedom to make choices that allow them to enjoy their lives.

A Catholic Charities donor helped develop the needed partnership with Mid-America Bank, which could provide loans to eligible customers and repay existing payday loans.

“People entering the program must show they have the ability to repay the loan,” Frese said. “The first family was a referral through the pantry. We started by meeting with them – talking about their finances.”

She had to get some basic information from the client and know what results the client wanted. Frese had to develop a financial image for the family.

“We have to do it based on their goals. Their original goal when they came to me was, ‘We want to be able to save and buy a house.'”

It was going to be tough, Frese said.

Catholic Charities had to help the family pay off their debt. One problem was that the family was facing a high interest loan. The program is intended to help overcome these barriers, she said.

The family met the nonprofit’s requirements before Catholic Charities and Mid-America Bank could refinance their payday loan, which carried an interest rate of 300%.

“When I went last week to pay off the loan, it was clearly posted on the counter – 300% interest,” Frese said. The current prime rate is 7%. “Our program is prime plus 3%. That’s a pretty big amount if you want to get that rate.”

The program limits the loan to $2,700, which must be repaid within 18 months.

But the program does not stop once the client has won the chance to receive the loan.

Frese must guarantee to the bank that the customer can support this loan payment. Clients participate in monthly case management with her during the loan program.

“I give them tools to track their spending. We give them advice based on what they value,” she continued.

Sometimes, she says, just taking a few hours to think about a financial decision may be all a person needs to decide they might have alternatives.

“We’re talking about having these debts – what are we doing to start reducing them?” asked Frese. “We’re starting to come up with a plan through monthly coaching. If they write it down every time before they spend money, they might think twice about making that purchase.”

Customers now have access to resources they never knew existed. The Consumer Financial Protection Bureau has a variety of resources and tools that Frese has used to help people.

During the first meetings with clients, she presents them with a questionnaire on financial well-being. It sets benchmarks for the program.

“Six months later, we can see if we’ve made a difference and if we’ve improved,” she said.

Frese said she was struck by the financial lessons parents gave her clients. They basically told customers that when they reached a certain age, they were adults and had to fend for themselves.

“One comment that struck me was that they said, ‘My parents didn’t teach me any of these things,'” Frese said.

She said a “sink or swim” approach doesn’t work for people trying to get their financial house in order.

“We want to put them in place to be successful,” Frese said. “We don’t want to put them in a position where they struggle.”

RESEARCH by a leading credit management company found that 76% of students are worried about making ends meet while in college, and 41% are considering quitting smoking.

Lowell’s research on student debt habits found that more than three-quarters of students (77%) develop personal debt, excluding tuition fees and student loans, while in class.

The use of credit comes mainly from the use of credit cards, overdrafts, buy it now programs and payday loans.

John Pears, CEO of Lowell, said: “College should be an exciting and rewarding experience, but for young people who leave home and can’t depend on family money, it can also be costly.

“Getting into debt while in college can be worrisome, especially if you don’t have a regular source of income or a guaranteed job for graduation. We want students to know that they are not alone when it comes to struggling with college debt.

“If you are concerned about your situation, help and support are available. A list of independent organizations that can offer support is available on our website.

Just under one in ten students rely on payday loans for small amounts of money with an extremely high APR.

The study suggested that students who rely on this form of borrowing could end up with permanent debt problems, especially if they intend to pay them back with student loans or scholarships.

With a 0% overdraft, many students are drawn to what may seem like “free” money. However, after college, many banks expect students to pay off their overdraft within 1-3 years, putting even more pressure on graduates to find jobs in a market. competitive work.

Naturally, the top spending priorities are weekly groceries, rent, and bills, but despite financial pressure, 34% of students said they were likely to spend money on nights out , take-out or dining out.

Excluding tuition fees and student loans, graduates leave university with an average debt of £2,332, taking 3.8 years to pay it off in full.

About 15% of graduates finished university with over £5,000 in extra loans. Of all those surveyed, 16% took four years or more to pay off the personal debt they had accumulated while in college.

Sheldon Allen, President of the University of Reading Students’ Union, said: “We are working with the university to address a range of priorities in [the cost of living crisis]. We believe that every student should be able to have a low-cost hot meal on campus and that students should be supported if they encounter difficulties.

“To work on resolving the crisis, we are collaborating with the university and have launched a new UoR/RUSU Cost of Living Task Force. The task force is co-chaired by me and Elizabeth McCrum, Vice Chancellor for Education and Student Experience. It brings together key people from across the university community to tackle these issues and work to further support students with the cost of living.

To access support visit: www.lowell.co.uk/help-and-support/independent-support

If this guy was white…

Most people have no idea what’s going on behind the discs. Despite the bluster, the silver flash, the real life of these rappers is not depicted.

They are in danger.

In an underground economy.

It’s the rock and roll of old. A cash business, but much more dangerous.

Not that I knew that much until I read Joe Coscarelli’s book, “Rap Capital: An Atlanta Story”: https://amzn.to/3Ns7PMl and spoke to him for the podcast: https ://bit.ly/3haAadK

First, we have a huge incarceration problem in America, which disproportionately targets black men. It’s amazing how many of these eventually famous rappers go in and out of prison. And if you think racism is outdated, you need to be on the Supreme Court. There are places in Georgia where rappers are on their toes due to notorious white police crackdowns on petty crimes.

As for the pay…

Everything looks simple from the outside. There are record company royalties and concerts. But it’s much more complicated than that. There’s tons of cash gigs the IRS not only misses rich CEOs but also rappers, who themselves are sometimes incredibly rich because of this economy, where you show up at a club to rap for follow and… you can do several concerts per night. That’s another amazing thing about Coscarelli’s book, how rich some of these rappers are.

Not that a career is guaranteed. It’s one thing to have a hit, it’s another to maintain it.

And it’s not just the underground economy that’s involved, but also the Fortune 500. They know that rappers have the most credibility, not to mention popularity, with the target audience, so they go into business with them. . It used to be that you had to have a certain number of visits before companies called you, but now they’re involved from the start.

And so many acts are disposable. And find themselves where they come from. Never mind the fact that many do not.

And while rockers and old swaggers are still trying to figure out the internet, it was embraced by the hip-hop community right from the start. Rappers knew that you had to give to receive, like a drug dealer. They knew it was about getting the big money, not the little one. Ergonomic Mixtapes. These recordings endeared them to an audience that bonded with them. There was a lot of money on the road, if you had fans.

And cultural.

And, culture involves a lot of posturing and violence.

And white people and the mainstream media might report it, but they don’t denounce it.

It’s taken for granted that rappers get shot. Why?

Well, we could go to the source and ask why black people don’t have more opportunities. Coscarelli writes about college graduates who end up doing manual labor. But affirmative action is taboo, because someone might gain an advantage that has been incorporated into a majority group. I mean you have to attack the problem at some point.

And let’s be clear, it’s not what you learn at Harvard or Yale, it’s the people you meet, who are part of your network. JD Vance was a hick until he went to Yale Law School, built relationships, worked with Peter Thiel, and ended up writing a twisted book he used as a platform to run for Senate from Ohio. Where is the concomitant advantage for blacks?

Believe me, the upper middle class knows all the tricks. But even the middle class has no idea, that the best educational institutions are blind to need, and if you can get in and you’re broke, you don’t have to pay a dime.

America’s information deficit, right there.

So think of all the people who profit from rapping. White-run labels, TV and streaming companies, the aforementioned Fortune 500, but none of them lift a finger to counter the violence in the culture, they don’t even bother to speak out against it.

This is racism incarnate.

As for George Floyd… All the companies that have supported black people… that was then and this is now, the end result is far from major, it’s the same as ever.

So if a white rapper had been shot, there would have been front-page stories about his family, their devastation. And there would be investigative articles in the media asking how this could happen. How this honest citizen of good family got suffocated. Yeah, they were coating the background of the deceased, were they reading an obituary where they said the person was an arrogant punk?

And all the government leaders would come together and talk about action.

Meanwhile, where are the stories about Takeoff’s family? Where is the deep dive into his past life?

AND WHERE IS THE OUTRAGE!

We can start with gun control… But it seems to go the other way. I would think twice before moving to Texas, where anyone can carry a gun without a license. Rave me about the supposed economic benefits all day long, they don’t mean much when you’re dead.

The truth is that white people and the mainstream community don’t care if another black person dies. Just one less mouth to feed. Yeah, that’s how they see it, that black people are taking it, always wanting more, the government has to stop supporting them.

While they’re at it, why don’t they take out all that money the government disproportionately gives to red states, huh?

And an advanced society watches over those at the bottom of the economic ladder. In most western countries. But welfare was stifled under the Clinton administration and the idea that black women just have babies and are supported by the government is wrong. You think someone should take your money, that you should pay less tax, but when there’s a natural disaster, you want federal help right away.

Yes, there must be a scapegoat. And blacks are number one.

Even if their schools are not up to standard. The right says that you have to choose the school, close the bad schools, only there is not enough room in the good schools for all the disadvantaged! And in truth, it is only a ruse to advance the cause of religious schools, which are not free, and if you are not a believer…

And don’t equate every rapper with Kanye. They’re not that rich and they’re not that crazy. They are just trying to survive.

So we have to take the guns off the streets. Enough of throwing our hands in the air. When your kid gets shot, you go crazy, and someone else’s kid?

And how about a denigration of violence. Why are gangs and violence portrayed as cool? A lot of kids join gangs not because they’re cool, but just to survive. And since the police are ineffective, the gangs and others take the law into their own hands. And since opportunities are scarce, kids sell drugs, for that quick cash, I mean how long are they going to live anyway?

That’s what amazed me in “Hoop Dreams”. They threw a big birthday party for the player because living to be eighteen is such a feat. Do we feel the same as white people? That just staying alive is something to celebrate?

And often they find the perpetrators and lock them up, but that’s not really a deterrent, because they don’t think they have much of a future to begin with. And honor and image are everything, as if we were living in the feudal past.

All those talent agencies and apparel companies can drop Kanye like he’s hot, but how about dropping those involved in violence. Believe me, if you take away the few opportunities, it will change the culture.

As for clubs and strippers and making it rain…

Everyone can choose how they want to live their life but we flood these great athletes with money that they have no education on how to spend and then they blow it up and end up broke and eventually dead with CTE. But gamers are disposable, just like rappers. Hell, most NFL players don’t even have guaranteed contracts! Get hurt and you’re out. We don’t care about you. Life is hard. Meanwhile, the bad actor billionaire owner continues to rape and plunder not only in business, but also in his personal life.

It’s a way to demonstrate your status, by earning money and spending it.

Now, in truth, on TikTok there are all these videos that talk about money, about the economics of buying a new car, about investing. Maybe newcomers will see them, but we don’t even teach economic skills in school, because if we did, salespeople couldn’t laugh at these customers. Dollar stores, payday loans… They’re obnoxious, but if you’re broke, sometimes you don’t have a choice.

Somehow, America has flipped, and it’s white people who are at a disadvantage. What’s a poor boy to do? Don’t play in a rock and roll band, BUT BECOME A RAPPER! It is one of the few potentially well-paying jobs for an underprivileged youth, other than drug dealing.

But we demonize these people, because we take advantage of their backs.

Come on, black people are way above their weight when it comes to culture. And, unfortunately, this culture of gun violence impacts not only them, but also white people, BECAUSE IT’S SEEN TO BE COOL!

Let me tell you, when you’re dead, nothing is cool. Finito. It’s finish. The challenge is to stay alive. Shit, the government should give a million dollars to every rapper who hits 40. Better yet, a guaranteed income for all, including blacks.

But no one wants to PAY FOR IT! I don’t understand, you want to live in Venezuela? I’ve been there, the wealthy people live in the hills in houses surrounded by concrete walls topped with barbed wire.

You think you are immune, but you are not. We live in a big society. And you are part of it, and you are vulnerable. If you don’t take care of your siblings, raise them, it will impact you negatively.

But then you have all those executives who say they’ve made their billions and don’t recognize that without customers they’d have NOTHING!

Consumers are kings. But that’s not how our society sees it. We worship the rich and criticize the poor, ignoring what goes on in their brains.

And when it comes to hip-hop, it’s all about creativity. You don’t get to the top by accident. So why can’t we recognize it, except in award shows that nobody watches anyway?

Certainly, everything fades almost instantly these days. But in the aftermath of Takeoff’s death, I haven’t seen any official elected commentary on it. I didn’t see any outcry. At best, there was a shrug.

And that’s not right.

Something has to give. And if you don’t fix the underlying problem, it will affect you.

Come on, is anyone outraged that this guy was shot?

I suppose not.

Brookings Institution, the influential Washington DC-based think tank, has challenged promises regarding crypto’s oft-heralded claim to improve financial inclusion. In his report on behalf of Brookings, Tonantzin Carmona challenged the potential of digital assets to improve everyday access to financial services.

Carmona cited US Treasury reports that responded to President Biden’s executive order asking government agencies to come up with regulatory frameworks for digital assets. The Treasury has described digital assets as risky for disadvantaged populations in its report “Crypto-Assets: Implications for Consumers, Investors, and Businesses.” He concluded that digital assets have failed to live up to their promised potential for include traditionally excluded populations.

Portions of disadvantaged populations use digital assets. A survey conducted at the University of Chicago showed that 44% of American digital asset traders are African American and Latino. The Federal Reserve also admits that a growing number of underbanked individuals are using digital assets.

However, Brookings notes that the groups that could benefit from greater financial inclusion do not overlap with digital assets as much as crypto proponents seem to think.

Brookings identifies the crypto problem of competing narratives

According to the Brookings Institution report, digital asset marketers are using two narratives that may complement each other on the surface, but compete on deeper levels.

The first story posits that digital assets can provide an alternative method of conducting transactions. People who don’t find it easy to visit banks or use digital banking apps could, for example, download a Bitcoin wallet instead. Unlike banks, digital assets can process transactions around the clock.

The second story suggests that digital assets are a way to create wealth. Proponents of this narrative will typically use the slang term “HODL” and suggest that their favorite crypto will retain or increase the value. A few in this camp support DeFi applications for depositing digital assets to earn interest. This narrative discourages the use of digital assets for day-to-day transactions, instead emphasizing their investment attributes.

Naturally, those interested in greater financial inclusion might ask which option would-be users of digital assets would prefer, if proponents could come up with methods as convenient as swiping a debit card. Can users use digital assets to transact or create wealth? How can the crypto community solve problems if they can’t even agree on a goal?

In the first place, buying crypto almost always requires a bank account. While some exchanges may allow customers to purchase digital assets with a prepaid debit card, many top exchanges, like Coinbase, require customers to log into a bank account.

Many underbanked or unbanked people cite factors such as their inability to maintain a minimum balance, high bank fees, or distrust of banks. These people can already find alternatives like prepaid debit cards that are convenient and easy to use for daily transactions ⏤ without the need for a bank account.

Blockchains of digital assets generally cannot handle high transaction throughput. Any blockchain with transactions per second on par with Visa or Mastercard generally sacrifices decentralization almost entirely, opting for an oligopoly that agrees to pay for large data center infrastructures.

Developers are trying different scaling solutions, but none of them can scale a decentralized blockchain like Bitcoin to the level of Visa. This limitation can slow or even prevent digital assets from replacing banks and credit cards.

Crypto as a wealth-building tool shows little promise

Second, digital assets are not a tool for creating wealth for billions of people who don’t have money to invest in the first place. Strong price fluctuations make digital assets an uncertain way to build wealth. Many people are in debt or have no funds to invest.

Brookings also mentions other historical ways in which digital assets cannot overcome barriers for traditionally disadvantaged populations in the United States. Past efforts to give families an economic advantage included the Homestead Act of 1862, which promised acres of land to people willing to resettle, and the GI Bill of 1944, which promised free education and help to start a business or purchase a home for eligible veterans. However, most of the benefits went to white men and excluded minorities and indebted populations.

This caused the problem of unequal generational wealth. White families have a median wealth level of $188,200 – largely attributable to owning real estate. Hispanic families have a median of $36,100. African American families have an average wealth level of $24,100.

People who grew up in poorer families have more obstacles in obtaining favorable credit terms to start a business or access higher education. Digital assets would be need to fix these issues improve their image as a tool for improving financial inclusion.

Brookings outlines the many hidden fees in crypto

Third, Brookings recommends digital asset advocates build much better on- and off-ramps for international currencies. Proponents have promoted digital assets as a quick and inexpensive way to manage international remittances.

They announced that a sender using digital assets could send thousands of dollars across national borders for mere pennies instead of losing a percentage of the money sent to money transfer services like Western Union. The recipient could receive local currency in minutes instead of days.

However, like money transfer services, fees and banking rules still apply. Some users in countries whose banking system prohibits connections to crypto exchanges have to seek out rare and expensive crypto ATMs to convert digital assets into cash.

If recipients preferred to keep their crypto balance without converting to fiat, they would need to source rare providers to spend a digital asset within their local community. International remittances of digital assets still face fiat on and off rampsplus exchange and transaction fees.

Consumer protection is still lacking

Fourth, the lack of consumer protection can be a problem. In June 2022, Fortune magazine warned that Celsius Network customers may not have the usual consumer protections in the event of bankruptcy.

On July 28, 2022, the Federal Reserve announced that it and the FDIC had co-signed a letter demanding that Voyager Digital cease advertising that it had deposit insurance with the FDIC. The subsequent collapse of Voyager highlighted the lack of consumer protections in the digital asset space.

Brookings has warned that future pushes for financial inclusion could lead to the same predatory practices such as subprime mortgages, payday loans, and check cashing services that tend to replace closed bank branches in inner city neighborhoods. Similarly, crypto ATMs are starting to appear in convenience stores in low-income communities, and they can extort fees of up to 20%.

In light of these issues, Brookings suggested that there are already better ways to improve financial inclusion ⏤ and they does not require crypto. An obvious tactic might, for example, remove systemic barriers to opening a bank account through legislation.

The Federal Reserve is also working on an instant payment service called FedNow, which it plans to launch in mid-2023. Carmona also hinted that the Federal Reserve could offer central bank accounts directly to individuals and businesses, instead of limiting it to primary account-approved financial institutions.

All in all, the Brookings Institution recommends that policymakers take a closer look at promoting greater financial inclusion without the use of crypto.

For more informed news, follow us on Twitter and Google News or listen to our investigative podcast Innovated: Blockchain City.

A Fifth Circuit ruling that the Consumer Financial Protection Bureau’s funding structure is unconstitutional quickly turns into an enforcement headache for the agency.

At least two companies targeted by the CFPB’s enforcement actions have already flagged the decision to ask other courts to dismiss the actions on constitutional grounds. Others will use the U.S. Court of Appeals for the Fifth Circuit ruling in settlement negotiations and battles over civil investigative claims until ruling appeals are exhausted, lawyers say who represent the companies.

“Very few companies will settle with the CFPB, except for one small change,” said Alan Kaplinsky, senior counsel at Ballard Spahr LLP, which represents companies fighting the agency.

The CFPB has previously signaled that the Fifth Circuit ruling, which is not the first such legal threat the agency has faced, will not slow its efforts. Nevertheless, having to wrestle with the decision in enforcement action will cause delays and drain office resources.

The CFPB said in a statement Monday that it “will continue to fulfill its statutory mission to enforce federal law and protect Americans from predatory financial institutions.”

“Illegal practices are still illegal, and the CFPB will hold companies accountable when they break the law,” the agency said.

Trans Union argued that a CFPB lawsuit regarding alleged breaches of a 2017 Consent Order regarding deceptive marketing and sales practices, as well as the Consent Order itself, should be dismissed based on of the Fifth Circuit’s ruling, in a filing Oct. 20 in federal district court in Chicago.

Online lender CashCall Inc., which has been locked in a legal battle with the CFPB since 2013 over a case alleging the company provided illegal payday loans through a tribal lender, has asked the court to US Appeal for Ninth Circuit Leave to Challenge the CFPB. ability to bring the case to a filing on October 21.

The Fifth Circuit’s decision shows “there is a substantial, non-frivolous issue of the most serious constitutional magnitude regarding the CFPB’s authority to take formal action, including its pursuit of this enforcement action against CashCall.” , the company said in the filing.

Ongoing investigations could be stalled by battles over document requests and civil subpoenas, potentially forcing the CFPB into court where it will have to overcome constitutional challenges to obtain documents, Kaplinsky said.

As per usual

The office led by its director, Rohit Chopra, is not expected to become less aggressive, despite the unfavorable ruling. Besides enforcement, the agency is moving forward on several high-profile rules, including one on sharing personal consumer data and collecting small business loan data.

“In fact, it may spur Director Chopra to act more quickly and to act on a wide range of issues sooner than expected,” Consumer Bankers Association President and CEO Lindsey Johnson said in a note. of October 21 to member firms obtained by Bloomberg Law.

The CFPB survived other major legal challenges before it opened in July 2011.

Opponents of the CFPB initially challenged the validity of the bureau’s actions following the vacation appointment of Richard Cordray, the agency’s first director, in January 2012. Once Cordray was officially confirmed, opponents of the agency have turned their attention to its single-director leadership structure, including removal for cause. protections.

This fight ultimately ended in the Supreme Court, which ruled that the CFPB’s leadership structure was unconstitutional, but denied the chance to eliminate the agency. Instead, the Supreme Court eliminated protections against the CFPB director’s removal for cause.

Those fights have also not stopped the agency’s law enforcement efforts, agency observers said.

“They have a lot of muscle memory about how to function in the midst of existential threats,” said Jenny Lee, partner at Reed Smith LLP and former CFPB attorney.

The bureau will have the added work of defending its funding structure in investigations and enforcement actions, said Jeff Ehrlich, former deputy director of enforcement for the CFPB. Some companies, however, may feel the risks of litigation are too great to sustain a fight, Ehrlich said.

“It can slow down the work of the office, as it did when the single director issue was in dispute in many cases,” Ehrlich, now a partner at McGuireWoods LLP. Early legal battles “didn’t stop us,” Ehrlich said.

On October 20, the Federal Trade Commission (FTC) issued an Advance Notice of Proposed Rulemaking, seeking public comment on the harms resulting from what it calls “junk fees.” that’s to say, allegedly unnecessary, unavoidable or unexpected charges that inflate costs while adding little value. The term also encompasses “hidden charges”, which are charges for goods or services that are misleading or unfair, including because they are disclosed only at the last stage of the consumer’s purchase process or not everything. Although the FTC has been active in taking enforcement action against alleged “junk fees,” it generally does not have the authority to seek sanctions against first-time offenders or the ability to obtain a financial compensation for consumers in cases where “junk fees” violate the FTC. prohibition of unfair or deceptive practices. This new rule would change that.

According to the FTC, these so-called “junk fees” are prevalent in a variety of industries: “Junk fees manifest themselves in markets ranging from auto financing to international calling cards and payday loans. Examples of fees the FTC is questioning include “mobile cramming” fees, connection and maintenance fees on prepaid phone cards, account fees, fees that decrease the amount a borrower receives from a loan, miscellaneous charges from fuel cards, car dealership fees, undisclosed fees for funeral services, hotel “resort” fees, hidden fees for academic publications, income from poorly disclosed auxiliary insurance and membership programs.

According to the FTC, the fees it plans to regulate fall into the following categories:

• Unnecessary charges for worthless, free or counterfeit products or services.
  • Consumers may be subject to fees for products or services that cost businesses nothing, are available free of charge, or should be included in the purchase price.
• Unavoidable charges imposed on captive consumers.
  • Consumers may be forced to pay unwanted fees because they have no way of avoiding or opting out of them, either because they are dealing with a monopolistic company or because they have already invested money in the product or service and can’t easily walk away.
• Surprise fees that secretly drive up the purchase price.
  • According to the FTC, this happens when companies unexpectedly prey on undisclosed fees, hide fees in the fine print, add fees at the end of a purchase process, or use digital dark models or other deceptions to perceive them.

The FTC invites comment on, among other things, the prevalence of each of the above practices and the costs and benefits of a rule that would require the initial inclusion of all mandatory charges whenever consumers are offered a price for a good or a service. Once the notice is published in the Federal Registerconsumers can submit their comments electronically.

This proposed rule isn’t the only new rule the FTC is considering attacking fees. As discussed here, in June 2022, the FTC issued a proposed motor vehicle dealership regulation rule. The proposed rule would create a host of new compliance challenges for motor vehicle dealers, including a new national standard for price advertising, disclosure triggers for payments, additional paperwork for selling add-on products, prohibition of “no benefit” additions on products and additional record keeping requirements. The deadline for comments expired on September 12.

The FTC and other regulators have also challenged the charges through enforcement action, and this notice follows the FTC’s announcement of charges against a car dealership for discriminating against certain groups of car buyers in the way he imposed additional charges in the automobile. vehicle sales. We discuss this regulation here.

FTC Chairman Lina Khan explained the reasoning behind the proposed new rule in her statement: “These types of additional or redundant fees may mislead consumers or prevent them from knowing the true cost of a purchase as long as ‘they haven’t already invested a lot of time and energy.” Chairman Khan also claimed that “junk fees” also have negative ramifications for other business owners. “These fees don’t just harm businesses. consumers, they can also force honest businesses to compete on an unfair playing field.A business selling a widget for $25 could lose sales to a business selling a comparable widget for $20 plus a six dollar widget certification added at the end.

If you’ve ever stood in line at a bar or a drinks cart, you’ve probably felt frustrated. This is exactly what sparked the idea of ​​PourMyBeverage, originally known as PourMyBeer.

The company uses innovative technology to solve this near universal problem. Learn about their system and the company’s journey in this week’s Small Business Spotlight.

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What the company does

Offers beverage pouring systems.

Founder and CEO Josh Goodman told Small Business Trends, “We’ve invented a way for patrons in bars, restaurants, hotels, stadiums and golf courses to access and pay for drinks as they go. measure. This method of dispensing is 400% more efficient than any other beverage vending method and requires 50-70% less staff than traditional beverage vending methods.

Business niche

Provide reliable and durable solutions.

Goodman says, “Our systems have never been replaced, while we have replaced approximately 20% of our competitors’ systems that they have sold. This is due to better designed hardware and software, combined with a commitment to not let our customers down. »

How the company started

After a negative experience in a traditional bar.

Goodman explains: “One evening in a bar in Baltimore, it took me 20 minutes to get a drink and the idea occurred to me: ‘I have the right to pump my own gasoline, why can’t I not serve me my own beer? I obsessed over this for a few weeks and wrote a business plan, then built my own prototype and learned how to write code to allow customers to pour their own beers.

Biggest win

Close deals and grow over time.

Goodman says, “Initially, it was about closing the first deals to allow the company to survive even its first year. Later I would say it was our first $500,000 month and we could hire more people to keep up with the growth. The most recent major victory should be the conclusion of the agreement with Coca Cola partners EuroPacific to buy 25% of our company. This partnership has opened many more doors that would not have been opened otherwise.

The greatest risk

Make a big investment with a new partner.

Goodman adds, “In November 2014, with few options, I took out one of those payday loans that you have to pay back daily, I cashed in all my remaining 401k + Dunkin shares to place a $100 deposit. $000 from the Austrian engineering company to manufacture our own proprietary Self-Pour technology. I had never sent so much money anywhere, let alone overseas. I trusted them and needed a product by April 2015. I figured if it didn’t work, at least I would come out in a blaze of glory. Fortunately, he did.

Lesson learned

Find trusted partners.

Goodman explains: “From 2010 to 2013, I worked with shady business partners in Ireland. They never had my best interests in mind, but I was blinded by my enthusiasm to continue down this path. Although I have learned a lot during this time, dealing with people whose morals and values ​​are not aligned is never worth it.

How they would spend an extra $100,000

Taking their mobile concept.

Goodman says: “I would build 2 self-pouring trailers for the events so we can prove how much more effective this is than expecting concertgoers to line up for 20 minutes for a drink. .

fun fact

Their specialty is not beer.

Goodman says, “Although we started our business as PourMyBeer, the number one selling product in the country every month through our system isn’t beer, it’s margaritas on tap. Our best location sells over $60,000/month in margaritas on tap. »

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Image: For MyBeer

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