Bottom Line
It’s all a matter of trust (What you keep - Part 14)
Independently verifying payments to lenders and lien holders a big step in protecting your assets

By Steve Freidell
Land Line contributor

 

What does trust mean to you? Whom do you trust the most? You’re probably thinking of your spouse, parent, doctor, attorney and, if you’re lucky, your mechanic.

Trust is an important part of your overall financial health. Trust the wrong people and you could easily be led astray. But trusting the right people can bring a peace of mind that you wouldn’t otherwise have. So how do you know who to trust? Trust is something that must be earned.

Think back to those people you really trust. Most likely when you encountered a problem or dilemma they went the extra mile to help you, right? They were under no requirement to perform in a manner that placed your wishes first, but they did nonetheless. It is this type of relationship that you value, protect and call on frequently in times of need.

Carefully placed trust can propel you forward. Misplaced trust can create excess baggage for you to haul around.

A while back, I read an article in Land Line Magazine by Clarissa Kell-Holland who pointed out the dangers drivers encountered as a result of placing their trust in lease-purchase agreements through Arrow Trucking based in Tulsa, OK.

Many were caught off guard when this company abruptly “suspended operations” and quickly learned that payments made for truck lease purchases were never sent to the finance company that held the liens on the trucks.

This activity has not been limited to trucking. Just look at the billions of dollars – in many cases, entire life savings – swindled by the likes of  Bernie Madoff and other financial con men. Con men, as their name implies, prey on confidence – on trust.

People all too often place complete trust where it isn’t warranted. For instance, it’s always a good idea to request independent verification of payments made, money invested, bills paid off and contracts fulfilled. Because your financial well-being depends on your money not being wasted, these companies must document your assets or payments of liabilities.

Lease-purchase participants can protect themselves by requesting an annual letter or confirming with the finance company that all payments were appropriately applied.

You should always try to establish online accounts with such companies so that you can periodically verify that your payments through your employer or lend lease sponsors are being received and that a payroll deduction authorization has been properly established.

Also inquire periodically about the following: online credit card payments because of the high rate of interest and fees charged; mortgage payments that are automatically deducted from your checking account; and car and truck payments. Any investments should be verified through online independent inquiries.

No one is going to watch out for you except you. You need to require people to earn your trust. Trust is a valuable commodity, which should not be easily granted.

Even when you believe you can trust someone, it’s your duty to independently verify this from time to time. When it comes to your finances, it’s nothing personal, and a trusted adviser shouldn’t have a problem with verification.

When you do find a trustworthy relationship, stay with it. It may be tempting to save a few bucks with a competitor, but a solid foundation of trust is far more valuable in the long run.

You cannot obtain a debt-free life if you make payments or investments only to find out that they were never properly accounted for. Sound financial practices demand this kind of due diligence.

It’s never too late to begin making these checks a regular practice – perhaps quarterly, monthly, semiannually, or annually depending on the circumstances and the level of trust bestowed on the person or organization.

Try establishing a regular checklist to verify your obligations, investments, etc.

Remember, you wouldn’t drive your truck on cruise control alone, so don’t treat your finances the same way. LL


This material has been prepared for informational purposes only; it is not intended to provide and should not be relied upon for accounting, legal or tax advice.

Steve Freidell has assisted clients in their cash management, trading, and portfolio management of fixed income securities since 1975. Steve started his career at the First National Bank of Kansas City and later served as first vice president with Commerce Bank, where he served his clients for 25 years. In 2006, he joined the DeWaay organization, the financial management company used by OOIDA. Steve Freidell may be reached at steve_freidell@ooida.com.