Ask Dr. Per Cap

Welcome to Ask Dr. Per Cap, a financial advice column to help you travel the winding road toward financial independence.

Dr. Per Cap draws upon his years of experience to provide financial advice on a range of personal finance topics. He has an honorary Ph.D. from the school of hard knocks and he draws upon his experiences – some good, some bad – to help you learn skills, tricks of the trade, and strategies to take control of your financial future.

Financial Advice

The Long & Short of It

I’ve had a handful of great teachers in my life, and not all were school teachers. I met one of my best when I was 19 – Pete, the boyfriend of my older sister. Pete taught me many valuable lessons, but perhaps the most important was his unique view of the world that he called the long line and the short line.

“Some people see colors. I see lines.” This was Pete’s reply when I once told him I was tired of always struggling to make my monthly rent and asked how was it that he never seemed to worry about money.

“At first glance, I don’t notice a person’s race or skin color. I also don’t pay attention to what type of job they have, whether they have a college degree, or the car they drive. I could care less about any of that stuff,” Pete continued. “What I see instead are two types of people standing in two different lines. The first line is dreadfully long. It stretches for miles, twisting and turning, packed with people. For whatever reason, most people are standing in this line and many are frustrated, unfulfilled, or bored because they are stuck waiting. They’re waiting for a paycheck, waiting for a job interview, waiting for a break, or just waiting for a change. You name it and they’re waiting for it. This long line barely moves because of all the people, many of whom will never get what they’re waiting for or, if so, not for a very, very long time.

“But the other line I see is much shorter and without so many people. It moves quickly with a lot fewer hassles and delays. The people are more relaxed and at ease than the long liners. They’re smiling and in good moods, and some are even laughing. It’s almost as if they are breezing through life. The reason is that these people know how to manage their money better than the people in the long line. They also have a knack for getting around hurdles and avoiding setbacks. Some are born with this knowledge; others develop it over time. But whatever their backgrounds, short liners have the ability to overcome financial challenges. And whether it’s getting a good deal on a car, handling an insurance claim, paying off a loan, or even starting a business, these folks have figured out how to come out on top financially.”

So let me ask you the same question Pete asked me that day: Which line are you in? If you’re like I was, you’re probably waiting in the long line. If so, don’t feel discouraged because my goal is to get you into that short line. It doesn’t matter how much money you have at this moment, what your credit score is, what kind of job you have, or how old you are. It doesn’t matter, because more than anything else, getting ahead financially is about creating an attitude, a mindset that allows you to see opportunities when others see obstacles. I haven’t always been in the short line, but I changed my attitude and learned some skills to get out of the long line, and so can you. In the coming months I’ll answer your questions on a wide range of financial topics and related issues that I think will make you look at the world in a whole new way and get you started on the path to financial wellness.

So ask yourself: Are you ready for the short line?

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email

Pick a Corner

Dear Dr. Per Cap: I’m worried about my finances. I can’t keep track of monthly bills, and I never know how much I have in my bank account. I owe a lot on my credit cards and just can’t keep up. I make a good salary and have a monthly per-capita payment that helps, but I’m still in debt. I keep trying to get organized but it is too much. What should I do? ~ Signed, Too Much

Dear Too Much:

When I was a kid I kept all of my toys in the basement.  I had shelves and a couple of toy boxes for storage, but sooner or later they’d all wind up on the floor.  Let’s face it; taking toys out is a lot more fun than putting them away.  Eventually I’d have to wade through a sea of action figures, Hot Wheels cars, plastic army men and Legos, which was no easy task for an eight-year-old.  I still remember the advice my older sister gave me one afternoon when a pile of toys stretched across the entire basement floor: “Just pick a corner and get started.  If you break the mess down into smaller pieces, it’ll be a whole lot easier.”  It was.

The same logic applies to taking control of your finances.  It’s not uncommon to feel overwhelmed with paying rent, balancing the checkbook, planning a budget, paying off the credit card, and checking credit reports.  Where’s a person supposed to start?  If you feel like you’re in so deep with your finances that it’s not even worth trying, it’s time to pick a corner.

Drawing up a monthly budget can be a real chore, and sticking to one can be even harder.  So why not try a simpler approach?  Using a pocket-sized notebook, write down all of your expenses for one week.  Fill up the gas tank, write it down.  Pay the cell phone bill, write it down.  Frybread sale at lunch, you got it!  Write down every dime you spend from Sunday through Saturday and then add it all up.  Adjusting to a budget can be a challenge, especially if you’ve never used one before. So this is a way to ease into it without biting off more than you can chew, just like you would if you were to go on a diet or start a new workout program.  You wouldn’t dream of running 10 miles on your first day, would you?

I promise that by taking this first simple step, you’ll learn something new about yourself and your spending habits – like how fast those Big Gulps add up!  But seriously, try this for a week or even a month before tackling a full-on budget or spending plan.  You’ll be used to keeping track of expenses by that time, and won’t feel so overwhelmed by the extra responsibility.  In fact you might even wonder how you ever managed to get along before.

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email

Creating a Budget

Dear Dr. Per Cap: I have no idea where to start to create a budget. It seems that before the month is over, I’m outta cash. More month than money! Can you help me keep track of my expenses? ~ Signed, Unbalanced

Dear Unbalanced:

Definitely!  Creating a budget is the way to go to get a handle on making your money last as long as your month. Creating a budget, however, can seem overwhelming. Getting started is the hardest part, but it gets easier with practice.

The first thing to do is figure out what your absolutely necessary or “required” monthly expenses are. These include things such as rent or mortgage payments, utility bills (electricity, gas, water service, phone service, etc.), food, medical expenses, child care, transportation or car payments, and insurance fees. You should also think about paying down debt and savings, so think about your credit card bills and what you can put into a savings account if possible.  Since some bills vary widely month to month, a good way to come up with an “average” monthly figure is to add up the most recent 12 months of bills (your electric power bill, for example), and then divide it by 12.

List all of these monthly expenses on a sheet of paper, with a line for each type of expense. At the bottom of the column, total it all up.  This is your basic monthly “nut” that you have to cover with your income.

Then also make a list of all your income sources over the course of a month.  Include your take-home pay and any other payments you may get each month (such as child support, per cap, alimony, disability payment, a second job, etc.).  Put these on a sheet of paper, too, and total them up.

Hopefully, when you compare the two totals, you’ll find that you have more income than you have in basic expenses.  Any extra income is generally “discretionary,” which means it’s your choice how you spend the extra each month.  It could go toward your savings account (which I highly recommend), or toward entertainment or other stuff you want for you or your family, such as clothes, furniture, a night on the town, etc.

If you find that you have more expenses than income, then you need to take some drastic steps.  The best approach is to see where you can cut some expenses, like eating out or going to the movies.  After all, the idea behind a budget is to make sure your expenses are less than your income. This allows you to start building up some savings and have more discretionary income to spend or save as you see fit.

If this is your case, take a hard look at where you spend your money – primarily your discretionary spending.  Do you really need a double mocha latte at Starbucks every morning, or would a regular cup of coffee at home be just fine? Are you spending too much money on “impulse items” that you really don’t want or need? Do you truly need a famous brand item if a less-expensive generic item would be OK?  Are there ways to cut back on your basic expenses too? A better rate on your insurance policies or even your rent, perhaps, or can you substitute generic medicines for brand names?

Little expenses, over the course of a month, can really add up. Try to pay close attention to where you are spending your money, and always have the idea in your head that you want to cut or reduce unnecessary spending.  Get a handle on what your real “needs” are and take care of them first, before your simple “wants.” That will help you begin to get your expenses in line with your income.

 One online resource that you can use to start budgeting can be found at this link: .

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email

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A Wild Ride

Dear Dr. Per Cap: I am turning 18 next week and will be getting my Minor’s Trust payment. I am psyched! I am thinking of getting a Cadillac Escalade or maybe just a Land Rover. I was wondering, what color do you think I should get it in - black or gunmetal grey? ~ Signed, Built for Speed

Dear Built for Speed,

Whoa there!  Let’s take a step back here and take a deep breath.  You have a lot more to think about than the color of your car. You’re about to receive a large amount of cash, and you want to make sure that money lasts longer than the new car smell. Otherwise it is just “easy come, easy go.”

This is a once in a lifetime opportunity, and you should make a plan for what you are going to do with your money before spending one dime.  The plan doesn’t have to be complicated either.   Maybe write a paragraph describing how you intend to spend your money over the next few years; or draw a pie chart with wedges that represent expenses and savings.  A good rule of thumb for a young person is to save at least 50%, but don’t be afraid to sock away more.  Then put your plan somewhere where you’ll see it every day; like your refrigerator door, bathroom mirror, or even the inside of your locker at school.

Now let’s talk about car buying. But I’m gonna have to apply the brakes here, too. Getting a new car can be fun, and a car is also a necessity for many people. But keep a few things in mind. First: a car is not an investment because it actually loses value, or depreciates, over time.   In fact some brand new cars can depreciate by as much as $2,000 the moment you drive them off the dealer’s lot!  So don’t assume your car will hold its value if you ever need to sell it.

Next, remember the words a wise man once told me: “You start paying for a car after you buy it.” (Would you believe the wise man was actually my high school wrestling coach? Yep!)   And my coach was right because as soon as the ink dries on your sales contract, and you’ll be spending more money on stuff like insurance, gas and maintenance.

The third thing to think about is that those car dealers are smart, and know how to separate people from their money – they are good at their job. So be a savvy shopper and maybe take an experienced friend or family member with you when you are looking around for the perfect car, to make sure the car salesman doesn’t take you for a ride.

Ok, so now that you have the road map in front of you, and you have your plan, think about what car best suits your needs – do you need good gas mileage, a big truck bed, or is reliability the most important thing?   Next, if your budget can afford it, you can think about your wants too – a kickin’ stereo, rims, sunroof, tint, etc. Then shop around, and take your time. And before you know it, you’ll be zooming around town in your dream car – and still have money in the bank for later. So sit back, relax, and enjoy the ride!

PS: Oh, yeah, and I vote for the color red.

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email

Wait a Minute

Dear Dr. Per Cap: I have been shopping a lot lately and have run up all of my credit cards. I love to shop but I can’t afford all these bills. What should I do? ~ Signed, Shopaholic

Dear Shopaholic:

Ask yourself this question: Do you control your money or does it control you?  There are a lot of reasons why people shop. Feeling down? How about some retail therapy, as they call it – shop ‘till ya drop. You might feel better for a while, but the party’s over when you get that credit card bill. And then all of a sudden your money is controlling you – you are working overtime just to pay your bills.

But there is a solution – think about other ways to get that shopping fix without dropping a lot of money at a store. Me, I never met a yard sale or flea market I didn’t like. But there are other things you can do too.

Ever go shopping without money?  I do it all the time and it’s one of the best ways I know to avoid those impulse purchases that cause people to dip into savings and add to those pesky credit card balances.

Here’s how: next time you go to the mall, leave the billfold at home.  That’s right – no cash, no debit cards, and definitely no credit cards.  Now shop till you drop!  Try on clothes, test out the latest electronics, take a stroll through the food court, do anything you like, just don’t spend any money.  You’ll probably come across a few items you think you really want and be disappointed that you don’t have the money to buy them, but that’s the whole point.  Just promise yourself that you’ll wait at least two days before you come back and buy anything. This will give you time to think about just how important those purchases really are to you.  If after two days you find that you still want them, go ahead and make the purchases.  But on the other hand, if you discover after two days that you don’t feel that strongly, hold off for another two days before asking yourself again how important they are.  Who knows? You might wind up forgetting about the stuff all together and be really glad you saved your money.  Either way, even if you do go back to the mall, you’ll still avoid a few impulse purchases for those items that you realize you never truly wanted in the first place.

And that means a larger balance in your bank account, fewer charges on your credit card, and more dollars in your pocket.  What’s not to love about shopping without money?

So next time you are heading out to the mall, stop and think – is there another way to pursue your love of shopping without letting your money control you?

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email

Lender of Last Resort

Dear Dr. Per Cap: What about those credit card offers you get when you are at a department store? The ones that promise a discount on your purchase? Is there a trick to them? Someone told me they affect your credit score. ~ Signed, Wondering

Dear Wondering:

“Apply today and get 10 percent off your purchase.” Sound familiar? Seems like every store you go into these days wants to sign you up for a credit card.

You might want to think twice though before taking advantage of what might appear as a convenient discount. An in-store application for credit can actually hurt your credit worse than if you apply for a credit card through the mail or online (see below), and here’s why: It looks like you’re desperate for money.

To the three credit bureaus – Equifax, Transunion and Experian – banks that offer in-store credit are considered lenders of last resort. Unlike a credit card you can apply for at your local bank or credit union, an in-store application sends the message that you don’t have enough money or pre-existing credit to make your purchase, so you’re relying on the store for help even if you already have plenty of available credit or cash in hand. This doesn’t seem completely fair, but that’s how the credit-reporting system works.

The solution: next time plan ahead before signing up for a new credit card just to save a few dollars at the checkout counter. You can keep an eye out for sales, check newspapers and magazines for coupons, or shop for discounts online. Bottom line: you probably don’t really need a new credit card anyway.

So just what goes into figuring your credit score?

35 % Payment History: Paying your bills on time as agreed is the most important factor making up your credit score.

30% Current Debt: Your existing debt is almost as important as your payment history. So try to keep a low balance-to-limit ratio on loans and credit cards.

15% Credit History: The longer your track record is for borrowing money, the better.

10% Types of Credit: Three separate lines of credit look best, both from loans and credit cards.

10% Credit Applications: Every time you apply for credit, it dings your score a few points, and stay clear of the in-store applications mentioned above that can really do a number on your score.

So remember, next time you are in line at the department store and they ask you to apply for a credit card, think long and hard about whether it is really worth it. A little savings today might have a big impact on your credit score tomorrow!

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email

It’s YOUR Money!

Dear Dr. Per Cap: It’s tax time and I have a lot of money coming to me. I was thinking of taking out a loan against my tax refund because why should I wait if I don’t have to? ~ Signed, Tired of Waiting

Dear Waiting: How you would feel if you loaned someone $2,000 and they waited a year to pay you back? Then, to make matters worse, they only gave you $1,700?

Sound ridiculous?  Most of us would probably think so, but if you’re like millions of Americans who pay to have their taxes prepared every year, this might be what is happening to you.  Here’s how.

The refund you receive after filing your tax return often comes from having more money withheld from your paychecks throughout the year than you actually owe in taxes.  And for many, this overpayment of tax amounts to thousands of dollars.  Now you might prefer overpaying to avoid owing the IRS additional money at the end of the year.  That’s fine as long as you understand that your refund is not free money or a bonus, as some mistakenly believe.  But rather, money (that belongs to you) that the government “holds” during the year and then pays back the following year.  It’s really like giving a loan to the U.S. government … but Uncle Sam does NOT pay interest on it.

I made the mistake one year of taking out a loan against my tax refund so I could my money sooner. When all the dust settled, I figured out I had paid $400 to someone just to get my money one week faster. Those tax preparation fees and loan fees really add up!

So watch out for those high fees that many tax preparation businesses charge to complete fairly simple returns (close to $300 in some cases).  If you choose a high-interest refund anticipation loan that promises a faster refund than direct deposit, then you’ll pay even more.

Does this sound like free money to you?

If you don’t like people getting a cut of your free money, consider consumer friendly tax-preparation options such as Volunteer Income Tax Assistance (VITA).  VITA sites serve many Native communities and will prepare your taxes for free if you meet certain income requirements.  And finally, stay clear of those loans against your tax refund. With direct deposit or the IRS debit card, you’ll get your money quickly in 5-7 days anyways. You shouldn’t have to pay extra to get at your free money!

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email

Hungry Coyotes

Dear Dr. Per Cap: My tribe just finalized a major land claims settlement with the federal government. Some of the money will be given out to tribal members as per capita payments. I am looking forward to getting about $50,000 in a few months or so. The problem is I really need the money now. Someone called me and told me they can give me the full amount now, minus some processing fees, if I just sign a few forms. Is this a good deal? ~ Signed, Hanging in There

Dear Hanging in There,

Hmmmm, something about that sounds suspicious. Not to put too fine a point on it, but I think there are some hungry coyotes circling. The fact is, recipients of large settlements are regularly targeted by professional scammers who know about these payments and may encourage you to sign up for all kinds of financial products, including loans against your settlements or early upfront payments. But beware – things are not always as they seem!

Early payments, or loans against the payments, are usually not a good idea. This is because there are often very high fees and interest rates associated with these products.  So read the fine print, get someone you trust to read the forms, and get advice before signing anything. Sometimes these offers for advance payments are outright scams, so be on the lookout for anything that appears fishy or too good to be true.  If you feel you have already been a victim of a scam, call the Federal Trade Commission at 877-382-4357.

Another thing to keep in mind is that there might be a significant tax penalty associated with receiving an early payment. Often times, your settlement payment is tax-free, but if you get an early payment through one of these brokers, you may have to pay taxes on the payment – more lost money. So be cautious.

But the big issue is why you feel the need to get the money now. Times are tough all over, and many of our families are struggling financially. But think about whether you can hang in there, or take a loan from another source, because there is no reason to lose money if you don’t have to.

Congratulations on getting the federal government to honor its treaties and pay restitution for past misdeeds. Your tribe has earned this money. This is a historical event, and is mostly likely a one-time opportunity. I hope things turn out for your family, and you can continue to hang in there until you get your settlement!

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email

A Good Habit

Dear Dr. Per Cap: I can’t save money!  No matter how much I think about it and really want to do it, I just can’t seem to put anything aside out of my paycheck. What’s up with that? ~ Signed, Buffalo Nickel

Dear Buffalo Nickel:

Living paycheck to paycheck and not saving a dime is a habit – a bad one!  You need to replace it with a good one.

How about the habit of paying yourself first?

On your paycheck stub, there are always deductions made before you get your “net” pay or take-home pay.  They are things like federal and state taxes, insurance premiums, charity donations you chose to make through your company’s payroll deduction, and perhaps other things.  All of these items are getting “paid first” before you ever collect your take-home pay.

So make yourself first, too, by way of setting aside money for YOUR savings.

You can do that in a few ways, or use a combination of them.

  • If you signed up for direct deposit into your checking account, you can probably arrange with your bank to automatically divert a portion of it into a savings account each time a paycheck deposit is made. You can choose the amount, and the bank will help you set up a savings account if you don’t already have one.
  • If your company has a retirement plan, sign up to funnel some of your pay into that plan each paycheck.  These are usually invested for you in some way so your money may even grow over time. At some companies, your funds might be matched at a certain level with “free money” provided by your employer. Take advantage of that. It truly is free and should not be left on the table.
  • If neither of those options is available, then make a conscious effort to do it yourself.  If you actually cash a paper check every payday, then take some of it and put it into a savings account right away, or at least stash it in the cookie jar or mattress at home.  If you have direct deposit, take the time to actually transfer a consistent amount into your savings account each and every paycheck.

The key is to just get used to doing it.  By repeatedly doing this, you’ll get into the habit of regularly setting aside some savings and paying yourself first.  You don’t have to start with a big amount. You can make it nearly painless by starting with a small amount that you won’t even notice, then increase that amount as you get more used to saving money while finding other ways to save on expenses.

Finally, if you don’t think you can spare even a small amount into your savings each paycheck, here’s an exercise that will help you find out that you CAN spare it.  For a week or even a month, carry a notepad with you and write down each and every expenditure you make and what it’s for, whether it’s paying the rent or buying a cup of coffee, paying on your credit card bill or plugging a parking meter. After a week or a month, look at where you are spending your money and how much of it you are spending.  No doubt you’ll see places where you can easily save a few bucks, or even a lot more, without much effort. Stop spending on those things you decide are unnecessary and begin putting that amount into savings each pay period. Remember: pay yourself first, and make savings a habit!

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email

Going Overboard

Dear Dr. Per Cap: I’ve been stung with some charges to my bank account for occasionally spending more than I have in the account.  These “overdraft” costs really foul me up. How can I avoid overspending my checking account so I don’t get charged these extra fees? ~ Signed, Dinged

Dear Dinged:

I remember once when I was younger I wrote a check for an ice cream cone - $1.75. I still remember that number because my check bounced and I had a $30 overdraft fee. $31.37 for an ice cream cone - no ice cream is that good!

There’s a lot of information about ways to avoid overdrawing your bank account and incurring those stiff bank fees.  I’ll summarize some approaches here.

First, if you consistently overdraw your account you are probably living paycheck to paycheck, and that’s not a good thing.  You need to take control of your finances as best you can.

 One way to start is to be sure to write down every expenditure you make in your checkbook register if those funds are coming out of your bank account.  This includes any checks written on that account, any debit card transactions that are linked to your account, and any automatic payments that are withdrawn from the account.  A few times a month, take the time to subtract expenses in your register and add any deposits, so you always have a fairly up-to-date idea of exactly how much money you have there.  And, each and every month, take the time to fully reconcile your checkbook register when you receive your monthly bank statement.  It’s a chore, but it really helps keep track of how much you have.

With that knowledge, you need to be disciplined enough to NOT overspend your account.  If you know you only have $40 left in checking, don’t write a check or use your debit card for something costing more than that. In fact, it’s always a good idea to leave a bit of a “buffer” in your account, too. And don’t try to guess at the timing of when a check might clear your bank or when a deposit might be made. A wrong guess could trigger overdraft fees.

If you don’t have overdraft protection, your debit card will likely be “declined” if you are over your limit.  That can be a little embarrassing, but it’s better than incurring the extra fees. Checks, however, are a different story.  Your check might be accepted even if you don’t have enough funds in your account, but it might “bounce” and incur a fee for the overdraft or “insufficient funds.”

A couple of other ways to avoid overdrawing your account:

  • Alerts – Some banks allow you to set up automatic “alerts” when your bank balance falls to a certain amount. These are usually texted to your phone or emailed to you. You can decide on the level that triggers the alert.
  • Linking Accounts – You can “link” your checking account to a savings account. That way if you overdraw your checking, it will automatically pull the funds from your savings account. There still might be a “transfer fee” between accounts, but those are generally lower than overdraft fees.

Finally, if all else fails, you can try the “envelope budget system” where you carry a fixed amount of cash in envelopes that are designated for specific categories, such as groceries, gas, bus fare, entertainment and so on. Once the cash is gone, you are done spending. Period. And then you avoid getting dinged!

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email

Control Yourself!

Dear Dr. Per Cap: Just shoot me now! I’m always buying things on impulse. It happens while waiting in line at the grocery store, while surfing the web, or even walking through a store on my way to the food court for lunch. I usually feel bad afterwards, but my budget feels even worse. What can I do? ~ Signed, Grabby

Dear Grabby:

Welcome to the club!  You are not alone in your impulsive habit of buying things you really don’t need or even want. Lots of people do it. And it is so much easier nowadays when you can just swipe your credit card.

But there are ways to trick yourself out of that nasty habit and save your budget some anguish. It still requires some disciplined self-control, but there’s hope.

One of the simplest tricks is to “take a pause.” If you see something you think you want or need, promise yourself you’ll think about it for two or three days – or weeks – before actually buying it. (It’s usually better if you take longer.) In many cases the impulse will be long gone after your pause, and you’ll decide you don’t want it.  If you still strongly feel the need to have it after your waiting period, then you can buy it with a clear conscience.

Another trick is to write out a list of the things you need and/or want.  Keep it with you. When you feel an urge to buy, check your list.  If the item isn’t on it, that’s your cue to forget it and walk away, especially if the purchase would delay buying of something already on your list. If the item is on your list and it’s a good deal, feel free to purchase it.  You’ve already given it the appropriate amount of thought.

Another gimmick is to stay out of stores (including Internet stores) unless and until you really need to buy something, and then stay focused on buying only what you went there for. Killing time by wandering around retail stores isn’t helpful; you’ll probably see something that you think you need but really don’t. Why subject yourself to needless temptation?

Another trick that you should try is this – freeze your credit cards in a block of ice. Really. It will give you time to think about whether you really want or need to buy something. If you do, then go ahead and thaw it out and fire it up.

As for sales and clearances, you really have to exercise some self-control.  Just because something is on sale does NOT mean you should buy it … unless you really need it. This is another good time to pull out your list.  If you see something on sale or clearance that is on your list, you are good to go.  If it’s not on the list, then again, that’s your cue to walk away.

Try some of these simple techniques to help you control the urge to splurge. Your bank account will thank you!

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email

Gold Diggers on the Prowl!

Dear Dr. Per Cap: I’m a member of a tribe that pays a sizeable monthly per cap.  Within the last five years the checks have really gone up, and our community is blessed to have this windfall; however, there have been problems, too.  Specifically, we are starting to see freeloaders looking to marry tribal members so they can live off their per caps.  Even worse, one of these gold diggers has her hooks into my younger brother.  It’s so obvious to the family that she is only using him for his money, but he just can’t see it.   She quit her job two weeks after they started dating and during the past six months he’s bought her two cars, a diamond necklace, and more clothes than she can fit in her closet!   The wedding is only two months away, but how can I make him understand that money can’t buy love? ~ Signed, a Concerned Sister

Dear Concerned Sis,

Wow…..this is a tough one.  Let me begin by saying that I feel your pain and unfortunately, you’re not the first person I’ve had express this concern.  The sad reality is that money can bring out the vulture in people.  Moreover, I’m not even going to try to assess the emotional and psychological aspects of your brother’s relationship because I’m not that kind of doctor.  Money ailments are the only thing I’m licensed to treat, and the best remedy I can offer your brother is a legal document called a prenuptial agreement.  A prenup is a binding agreement between two future spouses that states exactly how the couple’s assets such as a home, cars, cash, and the Pendleton blanket collection will be divided in the event things don’t work out.  And considering the fact that the divorce rate in the United States is just over 50% it’s definitely something to consider.  How do you think Donald Trump has managed to hang onto his millions through all of his divorces?  What’s also important is that a prenup protects the interests of both parties in a marriage (which is something your brother might want to tell his fiancé if she objects).  And to be fair let me also say that women aren’t the only ones digging for gold.  I’ve seen plenty of guys on the hunt for a per cap princess too.

Some people have strong feelings about prenuptial agreements, and haven’t we all heard the old saying that true love doesn’t come with conditions?  Well maybe so, but I’m thinking the person who came up with that line wasn’t sitting on a pile of cash like your brother.  So sit down with him and take a laid back approach.  It’s probably best not to tell him all of that stuff about his future wife being a gold digger, because he won’t want to hear it.  But you can plant a bug in his ear about the financial risks he faces if the marriage goes south.   An attorney can draft up a basic prenuptial agreement for about $1,000.   And even though it’s no guarantee that he won’t lose any money in a divorce, it’s a whole lot better than nothing.  My guess is this woman will hit the road faster than the Lone Ranger when she’s asked to sign the prenup, and hopefully your brother can cut his losses and move on.  But look on the bright side.  Maybe she’ll be ok with it too…….yeah, right!

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email


Your Savings Account

Dear Dr. Per Cap: Some of my friends have suggested that I open a savings account, but I don’t know how to do that.  I looked into it online a little bit, but it just seems kinda confusing.  Can you help? ~ Signed, Save Me

Dear Save Me:

Congratulations!  Opening your first savings account is a big step toward taking control of your personal financial matters. And don’t worry, because it’s not difficult to do.

You probably already have a checking account, which many would consider their basic “day to day” bank account. You can easily take money out of it to pay bills (by writing checks, using a debit card, or by taking cash out at an ATM), and easily put money into it by having paychecks deposited on a regular basis or by making your other deposits.

A savings account isn’t much different, except it usually pays a small amount of interest that is added to your account each month.  And depending on the type of savings account you have, there might be some other restrictions to keep in mind. In any case, these accounts provide a safe and secure place for you to store your money and, hopefully, really start to “grow” your money by regularly adding additional dollars to your savings account while collecting the interest payments each month.

Many people find that it’s easy and convenient to open a savings account at the same bank or credit union where they already have their checking account. That way they see both accounts on the same monthly bank statement, they can deal with the same people if they need assistance, and they can easily transfer funds between accounts as needed. But you don’t have to use the same bank or credit union.  You can usually open an account anywhere. In today’s web-wired world, you can even open an online savings account without ever having to go into a building.

When opening an account, you’ll need to fill out forms with some personal information, so be sure to bring along your driver’s license, Social Security number, and your checkbook.  When you open the account, they’ll ask you to make your first deposit, which you can do by writing a check or handing them cash.

There are many types of savings accounts, so research the various options or discuss them with your banker when you meet.  Some have requirements for minimum balances that must be maintained or you could face a penalty, some might charge fees, some might pay higher interest rates, and some might even allow you to write checks directly on the account.

But, since this is your first savings account, the “basic” account is probably the right choice for you. As you become a savvy saver over time, you can always upgrade or change your savings account to meet your changing wants and needs.

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email


Avoiding Payday Loans

Dear Dr. Per Cap,
I have a “payday loan” and now I can’t seem to get my head above water. What can I do to get outta this mess? ~ Signed, Nothing Left

Dear Nothing Left,

At first glance, those payday loan stores appear to offer easy money. I could tell you the story about my aunt Sue who took out a payday loan one month so she could have money to go play Bingo. Well, you probably know how that turned out. Three months and a couple hundred dollars in fees later, I paid it off for her for her birthday. She agrees that was not the best use of our money!

Payday loans are rarely a solution to financial problems. These loans are designed to trap you in a cycle of debt – it’s true. The fees are so high that while the loan might help you make it to payday, by the time you get there you will probably find yourself short on money and need to take out a new loan. And then they got ya. And once they got ya, they look forward to seeing you every two weeks to collect those loan fees, which can really add up.

Everyone experiences financial emergencies at some point or another and a payday loan might look like a good option. And usually those people at the payday loan store are happy to help. But remember there are a lot of more affordable options available to you – ones that don’t come with high interest rates and high fees. Consider these:

  1. Use your credit card, if you have one. Even for a cash advance, it will be less expensive than a payday loan.
  2. Ask family or close friends for a loan to float you to the next payday.
  3. Go to a local credit union, small bank or Community Development Financial Institution (CDFI) and borrow money at a more reasonable cost.
  4. Practice saving and budgeting your money if you can - it helps to have savings to get you through a tough time.

Just keep in mind that if you taking out a payday loan it probably indicates a bigger problem – getting your expenses to match your income. You probably signed up for one of these loans to make ends meet for regular day-to-day expenses or to pay for a sudden “crisis” expense. In any case, it now has you in its grip, and it’s not a pretty sight.

So if you have a payday loan, pay it off as soon as possible. And while you are doing that, let’s look at the bigger picture to get your expenses in line with your income. That will help you avoid the need to borrow money in the future and, hopefully, keep you out of the grip of high-interest payday loans.

You need to create a budget – I covered that in one of my previous columns. Budgets are the best way to see and understand 1) how much money you have coming in and, 2) how much is going out each month. It also helps you see just what you are spending your money on. If you have more coming in than going out, that’s good! Start saving and investing that extra money (and pay down any debt you owe first, such as that payday loan).

But my guess is the opposite is true – you have more going out than coming in each month. That means you’ll have to find ways to cut back expenses in order to live within your means. By tracking where you spend your money, it will give you some good ideas where you can cut back or eliminate altogether. These can be very hard choices: Can you take your lunch to work instead of eating out? Can you watch DVDs instead of going to the movies? How can you reduce or eliminate bills for phone, cable TV, electricity, water or natural gas? Do you really need more expensive “name brands” or will generics or less-costly alternatives be acceptable? Can you cut back on “impulse” purchases? To improve the income side of your budget, can you get a part-time or second job?

If there is just no way you can get ahead of your expenses, it might be time to seek the help of an accredited nonprofit credit counselor or counseling agency. To learn more about payday loans and lenders, the Corporation for Enterprise Development has some great consumer information at As well, First Nations Development Institute has several publications on payday lenders and a Financial Skills Workbook to learn more about taking care of your money at

Good luck!

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email

Enough Already

Dear Dr. Per Cap: Every time per cap rolls around, I’ve got a bunch of people hitting me up for loans, favors and handouts.  I help a lot of them out because I care and was raised not to be stingy.  However, lately it’s been really getting out of hand.  My cousin is dealing with the same thing, and has loaned over $15,000 to friends who I don’t think will ever pay him back.  What should I do? ~ Signed, Everybody’s Best Friend

Dear Everybody’s Best Friend,

First off, it’s really cool that you’ve got such a generous heart and want to share your wealth with others.  Don’t ever lose that good-natured spirit.  That said there’s got to be a limit to your generosity or you’ll wind up like your cousin who’s burning through his a-de-la (that’s a Cherokee word for money) quicker than Kim Kardashian goes through husbands.  What was that last guy’s name again?

But seriously, the issue here is that you just don’t know how to tell people “No.”   So you know what?  Don’t!  Yep, don’t say no to people, and have someone else do it for you.  I had a chance to listen to a pro football player a few months ago talk to a group of Native youth who were all bout to receive a large minor’s trust payment.  He’s in a similar boat, being a young athlete with loads of cash and all, and he actually commented on this very same issue.  His solution has been to direct all requests for loans and financial favors to his mother.  That way when somebody comes asking for help with a down payment on a new car, he tells them: “Hey sorry, but my mother handles all my money.  You’ll have to ask her.”  This way he doesn’t feel guilty about telling people no, and guess what?  Turns out folks are a lot less comfortable asking his mom for money than they were asking him, so the requests have really dropped off too.

My advice is to find a person who you can trust to handle all of those requests for money in the same way the baller’s mom handles his.  A mature and responsible relative is probably your best bet, but for gosh sakes don’t ask your cousin!

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email

Medical Bill Mix-Up

Dear Dr. Per Cap: My husband and I are interested in purchasing a new home through the HUD-184 Native American Mortgage Program.  We both have good jobs and have always worked hard to maintain our credit, but when I pulled our credit report last month it shows a $1,500 outstanding medical collection.  It’s from the private hospital where our daughter was born two years ago.  Indian Health Service had originally told us they would pay it, but now they’re telling us they can’t.  We can probably afford to pay it if necessary, but it’s just not fair.  I’ve heard an unpaid collection like this will prevent us from qualifying for a mortgage.  Is that true? ~ Signed, Mixed Up

Dear Mixed Up,

I feel your frustration, I really do.  I assist a lot of Native families in New Mexico who have credit issues, and I can tell you that a large number have medical collections from Indian Health Service referrals or non-IHS emergency room visits that don’t get paid.  It’s nothing personal.  But sadly with fewer federal dollars going to fund Indian health every year, IHS in some states just doesn’t have enough money to pay all of its bills.  It is not always the fault of IHS - it can also be the patient’s responsibility to notify IHS of an impending bill in a timely manner, such as the 72 hour deadline for reporting a non-IHS ER visit. But problems with IHS do happen, and it is important to know what to do to fix it.

I agree that it is not fair that you and your husband should have to pay that $1,500, and fortunately you probably won’t have to.  Unlike a conventional mortgage (in which pretty much any unpaid collection will result in a denial) the 184 loan is a lot more lenient when it comes to medical collections.  So here’s what you need to do: contact either the billing department at your IHS service unit or its Contract Health Services department and request Proof of Third Party Responsibility.  This will usually be in the form of a letter from IHS stating that it is responsible for your debt but it is unable to pay due to a lack of funds.

Upon furnishing this document the underwriter will disregard the medical collection account from your mortgage application, and provided there are no other credit issues such as recent late payments on credit cards, high loan balances, or any outstanding non-medical collections, the credit piece of your application should be strong enough to get the green light.  Now bear in mind that the medical collection account will still be listed on your credit report so be sure to send copies of the IHS letter to the big three credit bureaus (Equifax, Experian, and Transunion) so they can include it as a consumer statement on your credit report.  That way if you later apply for, say, an auto loan or credit card, a lender can fairly acknowledge the situation and hopefully disregard the delinquent account.

On a final note, there’s a lot more to buying a home in Indian Country than just having good credit.  You might also need to consider stuff like land and title documents from the Bureau of Indian Affairs, tribal enrollment status, and insurance, to name a few. There is too much detail to go into here, but I will talk more about those things in a later column.

For now good luck with the home purchase, and make sure you invite me to your housewarming party!

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email