Entries Tagged 'credit' ↓

About The Financial Injustices Immigrants Face in America

This story about an unlucky Guatemalan made me so mad and sad that I had to write about it.

For 11 years, Pedro Zapeta, an illegal immigrant from Guatemala, lived his version of the American dream in Stuart, Florida: washing dishes and living frugally to bring money back to his home country. Two years ago, Zapeta was ready to return to Guatemala, so he carried a duffel bag filled with $59,000 — all the cash he had scrimped and saved over the years — to the Fort Lauderdale-Hollywood International Airport.

But when Zapeta tried to go through airport security, an officer spotted the money in the bag and called U.S. customs officials.

“They asked me how much money I had,” Zapeta recalled, speaking to CNN in Spanish.

He told the customs officials $59,000. At that point, U.S. customs seized his money, setting off a two-year struggle for Zapeta to get it back.

I am not a supporter of illegal immigration, but I think this hard working man was robbed in broad daylight. Currently he faces deportation and a Floridian judge has concluded his case and decided that the United States government is entitled to $49,000 of this man’s sweat equity. I personally didn’t know there was a law that says I can’t carry more than $10,000 of my own money out of the country without telling the government. If I did carry more than that amount, would the government also confiscate my money? Another thing I don’t understand is why didn’t they just inform him that he had to sign a form? He has not gone out of the airport and he should be able to obtain a form and fill it out. At first they detained him as a drug runner and held him on drug charges until he produced pay stubs proving he earned all the money through work. This means that even if Pedro declared his money the government probably would still have held him on bogus drug charges. How can any immigrant transport his/her own savings back to his country especially if it’s a country without a very secure banking system?

It makes me sad that Pedro is treated this way, and the fact is many immigrants in this country, whether legal or illegal, face many financial injustices. Here are a few of them that I am quite familiar with:

1. Taxes – In the CNN article it stated that Pedro never paid income taxes, but actually I think taxes were deducted from his pay because the Floridian Judge found that Pedro paid more taxes than he should. In the case file the judge states:

The Court rejects the United States’ argument regarding tax evasion or other law violations allegedly committed by Claimant. As noted above, Claimant has not been charged with any crimes, and the evidence indicates that some taxes were in fact paid, when perhaps they did not need to be paid.

Pedro’s income was very low and Florida does not have state income taxes, so he probably did not have to pay any federal income taxes if he did file. Like Pedro, a lot of immigrants pay more taxes to the United States coffers than they should. For example, if any immigrant is paying for social security and medicare taxes and intend to go back to their home countries then they will forfeit 100% of their money. A lot of immigrants are also not extremely knowledgeable about taxes and do not file their taxes either out of fear or ignorance. In fact, if they did file their taxes some of the lower income immigrants will get a return. I also think it’s an injustice that the Internal Revenue Service can classify you as an US person for tax purposes while the Immigration and Naturalizaion Service has not yet given you permanent residency or citizenship. Myself and others I know have been in this situation where we paid all the same taxes that a citizen pays without knowing whether or not we can actually stay in this country. I don’t think it’s fair that immigrants facing uncertainty about their ability to stay are paying for the social security benefits of the current American retirees.

2. Wages — Outsourcing and H1B visas are hotly debated topics in the United States. The immigrants and foreigners are almost always painted as the villains that steal jobs from hard working Americans. The fact is that corporations are always looking out for their own bottom line and wants to hire immigrants because they are more likely to accept a below average wage. No one denies that most of California’s agricultural workers are illegal immigrants and most of these immigrants are paid below minimum wage. Additionally, a lot of construction positions are filled by day workers who are illegal. In the Silicon Valley, an H1B visa is usually a way to keep a high tech worker working for a company for below average pay. It is pretty much legalized indentured servitude because the deal is that the foreign worker works for a company for six to seven years and hopefully earn the right to stay in the United States. When the internet bubble burst in the beginning of this decade many immigrant workers were laid off from their companies and had to go back to their own countries. California is an at-will state and that means a company can fire a worker at any time so an H1B worker isn’t always guaranteed their American dream. It is true that the law states when a company helps a worker obtain a green card they must pay the worker a certain wage, but there is a prevalent abuse of this law since the H1B worker can be fired at anytime and isn’t likely to complain about their wage. I have heard cases of companies that do not consider American workers because they know they can keep an H1B worker longer and pay them less. It is completely illegal, but it’s quite a common practice. In Pedro’s case, we do not see that his employers suffered any legal consequences for hiring an illegal immigrant. That seems like quite a double standard on the part of the United States government.

3. The Banking and Credit System — The banking and credit system in this country isn’t very friendly to immigrants who do not understand much English. From my experience, a lot of immigrants also have an inherent distrust of the banking system and end up keeping a lot of cash in their homes. Pedro actually kept all of his money in a sack around his home according to the judge’s case file. Usually you can’t open a bank account, investment account, or obtain loans without a valid social security number so illegal immigrants tend to keep simply cash. It’s very dangerous to do this but they have little other choice. The credit system is another odd beast. It seems that in the recent years it has been so lax that many immigrants were victimized by shady loan peddlers.

Immigration is an important source of people and income for this country and I do not understand why it is so hard for the United States to accept all the hard working honest immigrants. My personal experience with immigration is so bizarre and dramatic that it deserves another few blog posts. If you speak to me in person you’d think that I was just another young American born Chinese woman, but the truth is that for a long time I was so jealous of all my friends who were born here. I got my green card just two year ago after growing up in America for the last fifteen years. In many ways, I am more American than I am Chinese, but when I read stories like Pedro’s it just makes me sick how immigrants are treated in this country.

Financial Football — A Game Review

So tonight on the way home I heard about a game called “Financial Football”. The plug is this: “Visa and the National Football League have teamed up to help students across the country learn financial concepts — with Financial Football. Students tackle financial questions like professionals in this fast-paced, quiz-style game divides classrooms into two teams that compete by answering finance-themed questions to earn yardage and score touchdowns.” When I heard this I thought, wow, what a horrible idea for a game. What kind of kids would play a game called Financial Football? Additionally, it seems like a game that’s geared towards boys since most girls I know aren’t really into football. It was really funny because the news report ended with a man saying, “many people in the NFL are on their way to leaving their careers penniless because they do not know how to manage their money, and we’re hoping that this game will teach kids about finances.” Anyway, curiosity got the best of me and I looked up the game online. Apparently I could play it online.

The game starts off with choosing your teams. I picked the Patriots and the Raiders. Then the “Kickoff” starts and a series of finance related trivia questions are thrown at you. You only have ten seconds to answer each, and some of them were not very easy to answer in ten seconds. For example, one question asked how much interest would you receive if you had $100 and it compounded yearly for 2 years at 10% a year. I got the correct answer of $21, but it’s not super easy to answer in 10 seconds. Some of the questions are so long that it’s hard to read it all in the strict time limit. I was surprised that the questions covered a very wide range of topics including insurance, mortgages, interest rates, credit cards, and simple economics. It even had a question about the rule of 72. However, this is my favorite question out of the entire game:

When do you get the social security money taken from your paychecks back?

A. 10 years

B. At the end of the year.

C. When you retire

D. Never

At first I picked C and the game said that was wrong, and then I picked D, and that was the correct answer. I’m glad to see that Visa is being brutally honest with the children of America.

I didn’t agree with some of the questions and answers in the game. For example, one question asked which investment was the riskiest and listed corporate bonds, corporate stocks, and money markets. Their correct answer was corporate stocks, but actually I think some junk corporate bonds are much worse. Besides that, I think this is a good game for parents to play against their children even thought I am not very fond of the football elements throughout the game. It also contains too much trivial information such as whose face is on which coin. The radio newsclip said that teachers are using Financial Football to teach middle school students, and I’m not sure a lot of these fast paced question and answer sessions will stick. Hopefully some of the good things in this game will be absorbed into the young minds of the future. Anyway, if you’re bored, try your hand at some Financial Football and tell me what you think.

Thoughts on the Maxed Out Movie (Contains Spoilers)

So the hubby and I signed up for a Netflix trial since we no longer pay for cable TV. The trial includes unlimited DVDs and also an instant watch option to watch movies and TV on Netflix’s viewer. It’s quite funny but Netflix recommended that I watch Maxed Out, which is a documentary on debt in America. So I took the bait and clicked the “Play” button. After watching it a while I felt like I have seen it before, and I was right. Quite a few juicy and informational parts of the movie came from the award winning Frontline episode The Secret History of Credit Cards, which is available for free at PBS. Both programs featured lengthy interviews with the dewy eyed and passionately outspoken Elizabeth Warren, who is a Harvard Law School professor who researches bankruptcy. I think she’s very interesting, and I first heard of her when I saw the book The Two-Income Trap: Why Middle-class Parents are Going Broke. Her research is quite eye opening and I guess that’s why she’s a featured interviewee.

After an hour into the movie, I felt that Maxed Out was a bit more disorganized than the Frontline report and focused more on individual credit nightmares. For example, the movie showcased several people who committed suicide over their debt. It was sad to see the families of these people retelling the tragic deaths of their loved ones, but I’m not sure how helpful that is to people who are trying to learn about credit cards and debt. Another woman was charging her mortgage onto her credit cards and eventually lost her home and I didn’t know if I pitied her or wanted to slap her. The movie also had a banker-educator figure named Mr. Money, who was teaching two youngsters about credit. That part was quite funny because the movie makers juxtaposed Mr. Money’s sage advice with the actual actions of the banks.

Maxed Out did point out that the United States government is making some horrible choices and increasing the national debt instead of attempting to reduce it. The federal government actually ran out of money a few times in recent history and that’s quite alarming. I want my tax dollars to be spent wisely, but that’s basically a cry in the dark. I suppose the only thing I can do is to save as much of my after tax income as possible.

So in conclusion, I have to say that Maxed Out was an eye opening but rather depressing movie focusing on individual credit card debt. What I took away from the movie is that consumers are not educated enough about credit cards and fall into the traps of high interest rates and ridiculous fees. The government is basically owned by the banks and consumers are at a disadvantage so we have to empower ourselves with knowledge. If you want to learn about the credit card industry you should definitely watch The Secret History of Credit Cards at PBS which contains an awesome interview with Ben Stein. I am really waiting for someone to make a documentary focusing on housing foreclosures and subprime lending because I want to understand how that happened.

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