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We at STAF, Inc. want to know how this advice website has improved your & your family's life
Let us know in your donation letter
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- Your help will ease human suffering and save lives -
Donation instructions: see below & Home Page
__________________________
STAF, Inc - until every family is doing well©
We at STAF, Inc. want to know how this advice website has improved your & your family's life
Let us know in your donation letter
___________________________
Save The American Family - STAF, Inc.
- not-for-profit -
- the leading new organization in all family & life success topics -
* Nationwide - Worldwide *
__________________
. World's # 1 free advice website Successo-Pedia©
for all family matters, success, health, wealth
& for the good life
____________________
with
Free Question & Answer service
__________________________________________________________
STAF, Inc. is a not-for-profit organization &
needs your donations
Donation instructions, see: Home page
As its name indicates, SAVE THE AMERICAN FAMILY - STAF, Inc. is helping families in all their challenges nationwide in The U.S. and in addition, STAF Inc.'s services are worldwide.
As a not-for-profit we do need your donations as cash funds and/or as your volunteer services.
For cash funds donations see the contact information in the home page.
Volunteering your time to serve people together with us communicate via email (info in home page).
Everyone's help is needed
Every person is welcome, whatever your background, every professional is welcome: pro-bono lawyers, social workers, doctors, office workers, etc. and also YOU are needed, nationwide & worldwide. Everyone can help somehow, e.g. anyone can help us to give out food from our vans to the homeless people. The need is endless. We also need the industry to donate their products - STAF, Inc. needs new vans and other vehicles - the American car makers are participating. We thank everyone for any help you are able to provide.
All our financial sources are used in our work to help the American Families and families worldwide in any necessary matter.
Part of STAF, Inc.'s income comes from high-level private services. Our private services are given by several worldwide leading specialists. In our private services there is a fee. The services are of the highest level possible - our unique guarantee given in our private services marks the quality.
Most of STAF, Inc.'s private services are given a double guarantee: lifetime result-guarantee with only a-one-time fee.
See tab (= page) "Services", close to the top the list of the double-guaranteed private services.
________________________________________________
- not-for-profit -
- the leading new organization in all family & life success topics -
* Nationwide - Worldwide *
__________________
. World's # 1 free advice website Successo-Pedia©
for all family matters, success, health, wealth
& for the good life
____________________
with
Free Question & Answer service
__________________________________________________________
STAF, Inc. is a not-for-profit organization &
needs your donations
Donation instructions, see: Home page
As its name indicates, SAVE THE AMERICAN FAMILY - STAF, Inc. is helping families in all their challenges nationwide in The U.S. and in addition, STAF Inc.'s services are worldwide.
As a not-for-profit we do need your donations as cash funds and/or as your volunteer services.
For cash funds donations see the contact information in the home page.
Volunteering your time to serve people together with us communicate via email (info in home page).
Everyone's help is needed
Every person is welcome, whatever your background, every professional is welcome: pro-bono lawyers, social workers, doctors, office workers, etc. and also YOU are needed, nationwide & worldwide. Everyone can help somehow, e.g. anyone can help us to give out food from our vans to the homeless people. The need is endless. We also need the industry to donate their products - STAF, Inc. needs new vans and other vehicles - the American car makers are participating. We thank everyone for any help you are able to provide.
All our financial sources are used in our work to help the American Families and families worldwide in any necessary matter.
Part of STAF, Inc.'s income comes from high-level private services. Our private services are given by several worldwide leading specialists. In our private services there is a fee. The services are of the highest level possible - our unique guarantee given in our private services marks the quality.
Most of STAF, Inc.'s private services are given a double guarantee: lifetime result-guarantee with only a-one-time fee.
See tab (= page) "Services", close to the top the list of the double-guaranteed private services.
________________________________________________
STAF, Inc.'s mission for your family's best:
Less suffering - more life™
________
To inspect STAF, Inc.'s first 4 pages in its original founding acceptance documents provided by the State of New York: click the green click: mission - STAF, Inc.'s purpose and its mission statements are in those 4 pages
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STAF, Inc. saves lives
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Trough out this website, STAF, Inc.'s editors give meaning to certain words or sayings
that may be unfamiliar to the speakers of English as their second language
This sub-tab guides in:
(1) perfect credit related issues
(2) investment & finances
(3) mortgages & other loans
(4) retirement topics
(5) social security & social service topics
(6) other related topics and if that is your desire:
(7) How to become & stay as a (multi-)millionaire
For investing and investments, in all topics listed above & in any other topics in this sub-tab
additional information & guidance in tab: Services, there in sub-tab: Investments & Finances
Additional car, car loans & other car topics in this tab & in sub-tab: Technology
___________
that may be unfamiliar to the speakers of English as their second language
This sub-tab guides in:
(1) perfect credit related issues
(2) investment & finances
(3) mortgages & other loans
(4) retirement topics
(5) social security & social service topics
(6) other related topics and if that is your desire:
(7) How to become & stay as a (multi-)millionaire
For investing and investments, in all topics listed above & in any other topics in this sub-tab
additional information & guidance in tab: Services, there in sub-tab: Investments & Finances
Additional car, car loans & other car topics in this tab & in sub-tab: Technology
___________
Before doing anything, study well all articles below
and apply the information in full
You will find all necessary information for
building & maintaining a good credit score
A complete guide for all credit related topics
_______
Apply and use this free resource:
Free Resource: Check your credit score and report card for free with Credit.com
Before getting the free score and the report card, study well all articles below
in order to know all your options and to know all you need to know
__________________________
and apply the information in full
You will find all necessary information for
building & maintaining a good credit score
A complete guide for all credit related topics
_______
Apply and use this free resource:
Free Resource: Check your credit score and report card for free with Credit.com
Before getting the free score and the report card, study well all articles below
in order to know all your options and to know all you need to know
__________________________
The 5 C's of Credit
Click each green for further info
The five key elements a borrower should have to obtain credit:
(1) character (integrity),
(2) capacity (sufficient cash flow to service the obligation),
(3) capital (net worth),
(4) collateral (assets to secure the debt), and
(5) conditions (of the borrower and the overall economy).
Usage Example: The 5 C's of credit are essential to have before being able to borrow money or acquire credit.
__________________________
Click each green for further info
The five key elements a borrower should have to obtain credit:
(1) character (integrity),
(2) capacity (sufficient cash flow to service the obligation),
(3) capital (net worth),
(4) collateral (assets to secure the debt), and
(5) conditions (of the borrower and the overall economy).
Usage Example: The 5 C's of credit are essential to have before being able to borrow money or acquire credit.
__________________________
Good Financial News
Click below (after these 3 first links) each four links to see how you now can get a totally free credit score info anytime and as often as you want/need - all in addition to the government sponsored click: Annual Credit Report = one free credit report from each credit bureau every 12 months:
(1) Equifax: 800-685-1111 (general) or 800-525-6285 (fraud); P.O. Box 740241, Atlanta, GA 30374;www.equifax.com
(2) Experian: 888-397-3742 (general and fraud); PO Box 2002, Allen, TX 75013, www.experian.com
(3) TransUnion: 800-888-4213 (general) or 800-680-7289 (fraud); P.O. Box 2000, Chester, PA 19022; www.transunion.com
________________
Click each four links below to see how you now can get a totally free credit score info anytime in addition to the click: Annual Credit Report
In addition you will get good-level financial information for multiple purposes.
These four companies next below finance their free operations based on advertisement.
Also study their home website, click each:
Credit Karmahttps://www.creditkarma.com/Credit Karma gives you access to all of your financial information — bank accounts, credit cards, bills, mortgages, loans, and, of course, your credit scores — all ...
Credit Sesamewww.creditsesame.com/
Get your free credit score with no credit card or trials required and use it to find the best mortgage, refinance and loan rates based on your financial goals.
Quizzle: Free Credit Score & Free Credit Reporthttps://www.quizzle.com/
Quizzle® is the only place on the web where you can get a free VantageScore® credit score and an Equifax® credit report - every six months. You won't find this ...Click - what is VantageScore
Mint - Personal Finance, Budgeting, Money Management, Financial ...Mint.com Mint does all the work of organizing and categorizing your spending for you. See where every dime goes and make money decisions you feel good about.
_____________________
Click below (after these 3 first links) each four links to see how you now can get a totally free credit score info anytime and as often as you want/need - all in addition to the government sponsored click: Annual Credit Report = one free credit report from each credit bureau every 12 months:
(1) Equifax: 800-685-1111 (general) or 800-525-6285 (fraud); P.O. Box 740241, Atlanta, GA 30374;www.equifax.com
(2) Experian: 888-397-3742 (general and fraud); PO Box 2002, Allen, TX 75013, www.experian.com
(3) TransUnion: 800-888-4213 (general) or 800-680-7289 (fraud); P.O. Box 2000, Chester, PA 19022; www.transunion.com
________________
Click each four links below to see how you now can get a totally free credit score info anytime in addition to the click: Annual Credit Report
In addition you will get good-level financial information for multiple purposes.
These four companies next below finance their free operations based on advertisement.
Also study their home website, click each:
Credit Karmahttps://www.creditkarma.com/Credit Karma gives you access to all of your financial information — bank accounts, credit cards, bills, mortgages, loans, and, of course, your credit scores — all ...
Credit Sesamewww.creditsesame.com/
Get your free credit score with no credit card or trials required and use it to find the best mortgage, refinance and loan rates based on your financial goals.
Quizzle: Free Credit Score & Free Credit Reporthttps://www.quizzle.com/
Quizzle® is the only place on the web where you can get a free VantageScore® credit score and an Equifax® credit report - every six months. You won't find this ...Click - what is VantageScore
Mint - Personal Finance, Budgeting, Money Management, Financial ...Mint.com Mint does all the work of organizing and categorizing your spending for you. See where every dime goes and make money decisions you feel good about.
_____________________
2015
The best credit card to build a good credit
- after a failure in the financial matters -
and the winner is:
Top pick for rebuilding your credit history;
strong choice for those with poor credit; includes 3-bureau credit reporting- see what it really means - the details below.
Best Card for Rebuilding Credit:
Click: Capital One Secured Mastercard
At the end of this info article the link to apply for this new card
that works out miracles as long as the cardholder pays the card payments monthly on time.
Bottom Line:
Top pick for rebuilding your credit history; strong choice for those with poor credit; includes 3-bureau credit reporting
Full Review:
Capital One® Secured Mastercard® is a click: secured credit card,
a good choice for individuals who (1) have no or limited credit history, or (2) have past or current credit issues.
We really like this card because it reports your payment history to all 3 credit bureaus, so you can build and improve your credit by paying your card on time each month.
(A typical (other) pre-paid card does not report your payments until you succeed changing that card to a normal credit card after paying it long enough as a prepaid card.)
Whether you choose to pay the minimum payment on your balance, or pay your card in full each month in order to avoid finance charges, the positive financial action will assist in boosting your credit.
Another big plus is the fact that no one will know that this new Capital One Secured Mastercard is a secured card, including the credit bureaus. It looks and works just like a regular credit card.
Highlights
Secured Credit Card
Helps Credit History
Fees and APR
(ARP = annual percentage rate if the balance is not paid in full every month)
Click: Apply for a Capital One® Secured Mastercard®
_______________________________
The best credit card to build a good credit
- after a failure in the financial matters -
and the winner is:
Top pick for rebuilding your credit history;
strong choice for those with poor credit; includes 3-bureau credit reporting- see what it really means - the details below.
Best Card for Rebuilding Credit:
Click: Capital One Secured Mastercard
At the end of this info article the link to apply for this new card
that works out miracles as long as the cardholder pays the card payments monthly on time.
Bottom Line:
Top pick for rebuilding your credit history; strong choice for those with poor credit; includes 3-bureau credit reporting
Full Review:
Capital One® Secured Mastercard® is a click: secured credit card,
a good choice for individuals who (1) have no or limited credit history, or (2) have past or current credit issues.
We really like this card because it reports your payment history to all 3 credit bureaus, so you can build and improve your credit by paying your card on time each month.
(A typical (other) pre-paid card does not report your payments until you succeed changing that card to a normal credit card after paying it long enough as a prepaid card.)
Whether you choose to pay the minimum payment on your balance, or pay your card in full each month in order to avoid finance charges, the positive financial action will assist in boosting your credit.
Another big plus is the fact that no one will know that this new Capital One Secured Mastercard is a secured card, including the credit bureaus. It looks and works just like a regular credit card.
Highlights
- Unlike a prepaid card, it builds credit when used responsibly, with regular reporting to the 3 major credit bureaus.
- Get free access to your credit score and learn how everyday decisions can affect your score using Capital One® Credit Tracker.
- Your minimum security deposit gets you a $200 credit line.
- You may qualify for a credit line increase based on your payment history and creditworthiness — no additional deposit required.
- Easily manage your account 24/7 with online access, by phone or using our mobile app.
- It's a credit card — accepted at millions of locations worldwide.
Secured Credit Card
- Guaranteed by your funds, which act as a "security deposit" in case you default on the loan extended by the credit card company.
- Security deposit will be refunded in full if your account is up-to-date and paid on time when you close out your card.
- Looks and works like any other credit card, so it won't be apparent to others that this is a secured card.
- You fund the card by depositing $49, $99 or $200 into a FDIC-insured account. Deposit amount is based on your credit history.
Helps Credit History
- Helps boost your credit history by reporting to all three credit bureaus every month so you can establish or rebuild your credit.
- Looks like any other credit card on the credit reports - there is no indication that you have a secured card.
- If you make your payments on time, you can help improve your credit score with good payment behavior.
Fees and APR
(ARP = annual percentage rate if the balance is not paid in full every month)
- $29 annual fee (2015)
- Purchase APR: 22.9% Variable APR.
- Balance Transfer APR: 22.9% Variable APR
- Balance Transfer Fee: No balance transfer fee.
- Terms and Conditions
Click: Apply for a Capital One® Secured Mastercard®
_______________________________
Question: How to get employed at Goldman Sachs?
The Goldman Sachs Group, Inc. is an iconic, widely known and acknowledged especially for distinctive excellence American multinational Wall Street investment banking firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients. click: Wikipedia (Click green below for further info)
Answer:
Employers hire college grads based
(1) not on just GPA, SAT and ACT score - see below the meanings of these 3-letter scores*),
but also
(2) on motivation,
(3) initiative, and
(4) how the new employee will blend into his department, and
(5) work well with fellow employees, and
(6) get along with his or her supervisor.
That is why internships and temporary employees working for a job shop are popular, to see if the new “employee” works out. Book knowledge gained in school is only one facet of getting hired and being successful on the job.
All employers value good ideas on saving the company money, in an era of constant budget cuts and frugality, what he or she can do for the firm to grow its products and services, and be a leader and motivator of others.
All managers, and executives are identified early, for employees who possess these skills.
And, of course, starting a business is important, too. Not everyone can work for these large firms. There needs to be enough start ups that hire and thus grow the economy.
Our often pampered and self centered teens, unless they have worked in high school and college, often don’t work out on the job, due to feeling that the company they are working for owe them, rather than the other way around.
Our nation’s work ethic may be floundering, perhaps due to our secondary schools and colleges not adequately preparing the CEO’s and entrepreneurs of tomorrow. Very few high schools teach economics, and if they do, it is voluntary. With more adults dropping out of the work force, we need to also rethink taxes and regulations on businesses (and electing politicians who are small business owners paying all those taxes!) which prevent them from hiring, and then selecting only the best who apply.
Students who also “coast” through high school and college, spending too much time on technology “toys”, or instead of cracking the math and science books, and are also in all year soccer and other sports. Parents are not helping!
And, if bright college grads can’t work at Goldman Sach’s, they can always start a rival investment company to compete! Hopefully, our free market economy will endure for many years. Hopefully!
The Goldman Sachs Group, Inc. is an iconic, widely known and acknowledged especially for distinctive excellence American multinational Wall Street investment banking firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients. click: Wikipedia (Click green below for further info)
- CEO: Lloyd Blankfein (2014)
- Founder: Marcus Goldman
- Founded: 1869, New York City, NY
- Headquarters: Manhattan, NY
Answer:
Employers hire college grads based
(1) not on just GPA, SAT and ACT score - see below the meanings of these 3-letter scores*),
but also
(2) on motivation,
(3) initiative, and
(4) how the new employee will blend into his department, and
(5) work well with fellow employees, and
(6) get along with his or her supervisor.
That is why internships and temporary employees working for a job shop are popular, to see if the new “employee” works out. Book knowledge gained in school is only one facet of getting hired and being successful on the job.
All employers value good ideas on saving the company money, in an era of constant budget cuts and frugality, what he or she can do for the firm to grow its products and services, and be a leader and motivator of others.
All managers, and executives are identified early, for employees who possess these skills.
And, of course, starting a business is important, too. Not everyone can work for these large firms. There needs to be enough start ups that hire and thus grow the economy.
Our often pampered and self centered teens, unless they have worked in high school and college, often don’t work out on the job, due to feeling that the company they are working for owe them, rather than the other way around.
Our nation’s work ethic may be floundering, perhaps due to our secondary schools and colleges not adequately preparing the CEO’s and entrepreneurs of tomorrow. Very few high schools teach economics, and if they do, it is voluntary. With more adults dropping out of the work force, we need to also rethink taxes and regulations on businesses (and electing politicians who are small business owners paying all those taxes!) which prevent them from hiring, and then selecting only the best who apply.
Students who also “coast” through high school and college, spending too much time on technology “toys”, or instead of cracking the math and science books, and are also in all year soccer and other sports. Parents are not helping!
And, if bright college grads can’t work at Goldman Sach’s, they can always start a rival investment company to compete! Hopefully, our free market economy will endure for many years. Hopefully!
*)
Click: What is a GPA Grade Point Average
Click: The ACT Test - American College Testing
Click: SAT - its name and scoring have changed several times, being originally called (1) the Scholastic Aptitude Test, then (2) the Scholastic Assessment Test, then the (3) SAT Reasoning Test, and now simply the (4) SAT
________
Click below for the original title article and its video - if the link has expired search with the article title
Click: What Does It Take for a New Graduate to Get Hired at Goldman Sachs
The Wall Street Journal article
Source:
Goldman Sachs
WSJ
STAF, Inc. research
____________________________________________________
Click: What is a GPA Grade Point Average
Click: The ACT Test - American College Testing
Click: SAT - its name and scoring have changed several times, being originally called (1) the Scholastic Aptitude Test, then (2) the Scholastic Assessment Test, then the (3) SAT Reasoning Test, and now simply the (4) SAT
________
Click below for the original title article and its video - if the link has expired search with the article title
Click: What Does It Take for a New Graduate to Get Hired at Goldman Sachs
The Wall Street Journal article
Source:
Goldman Sachs
WSJ
STAF, Inc. research
____________________________________________________
Important info of everyone
Held Captive by Flawed Credit Reports
For further info, click green throughout the article
When companies are found to have violated the law and harmed consumers, they typically pay a penalty to regulators and agree to reform their practices.
Whether or not they actually follow through on those vows, however, is another matter entirely.
The consumer credit reporting industry is a case in point. These companies collect and distribute information about consumers’ credit history to lenders, employers and others with an interest in these matters. The reports can make or break a consumer’s mortgage application, car lease or, in the case of military personnel, a security clearance.
But inaccuracies often show up in consumers’ credit reports, and these errors have real consequences, like increasing borrowing costs or barring people from financing a home or renting an apartment. And once an error is found, getting it fixed can take months of exasperating work.
Because of these problems, credit-reporting bureaus have been sued repeatedly by regulators and consumers and have paid millions in fines and settlements. And yet the inaccuracies continue, consumers and their lawyers say, making them wonder if these companies view the penalties they pay as simply a cost of doing business.
Patricia Armour, 73, of Olive Branch, Miss., said she spent two years trying in vain to correct information on her Experian credit report. A second mortgage that had been discharged when she filed for bankruptcy in 2007 popped up as an unpaid debt of around $40,000 in 2011, she said. Even though she repeatedly supplied proof of the discharge to Experian, she said, it refused to fix the error.
“I sent them everything, and I got nowhere,” Ms. Armour said in an interview last week. “They wrote a letter saying there was nothing they could do because their records were correct. I was at my wits’ end.”
Only after she called the Mississippi attorney general’s office did Experian correct her report.
The three largest credit reporting companies — Equifax, Experian Information Solutions and TransUnion — issue more than three billion consumer reports a year and maintain files on more than 200 million Americans. Under the Fair Credit Reporting Act, these agencies are supposed to have procedures assuring “maximum possible accuracy” of consumers’ information. The law allows consumers to check the reports for errors and requires credit bureaus to investigate consumers’ error claims. The agencies are also supposed to deliver to creditors all information relating to those errors so they can be corrected.
That’s what the act says, anyway. But in a lawsuit filed last month against Experian, Jim Hood, the Mississippi attorney general, said the reality was quite different.
“Experian has, over more than two decades, engaged in an unyielding pattern and practice of violating state and federal law,” the complaint said. The company has paid tens of millions of dollars in judgments and settlements to consumers across the country, the complaint added, but it has “refused to take the steps necessary to conform its conduct to the law.”
Officials in Mr. Hood’s office spent more than a year interviewing former employees and reviewing complaints about Experian from state residents. Investigators found that the company routinely mixed up reports of consumers who have the same name, allowed erroneous information to be included on credit reports and would not correct the errors that consumers had identified. The company also failed to investigate disputed data as required, the complaint said, and accepted creditors’ findings about the disputed information even if it was contradicted by canceled checks or other proof.
The results of these practices were dire for many consumers, the suit said. Some were denied credit or forced to pay higher rates for loans they did receive; others lost job opportunities.
A spokeswoman for Experian said the company rejected the allegations in the Mississippi lawsuit. “This lawsuit is clearly designed to be sensational,” the spokeswoman said in a statement. “To say we ‘knowingly’ — as the A.G. (= Attorney General) claims — put errors on reports is false. Contrary to the allegations, credit reports are used millions of times every day to accurately and quickly assess risk in lending and speed the process of making credit readily available to consumers.” She added that Experian believes its database is 98 percent accurate, and that it invests heavily to help improve the number.
That may be, but there is no doubt that erroneous information on credit reports remains an enormous problem. Last year, the F.T.C. - Federal Trade Commission found that 5 percent of consumers — or an estimated 10 million people — had an error on one of their credit reports that could have resulted in higher borrowing costs.
The F.T.C., which oversees the industry along with the Consumer Financial Protection Bureau, has been busy bringing cases in this arena. Since 2000, it has filed 18 enforcement actions against reporting bureaus; 13 were district court actions that generated $25.7 million in penalties.
Consumers have also won in the courts, on occasion. Last year, an Oregon consumer was awarded $18.4 million in punitive damages by a jury after she sued Equifax for inserting errors into her credit report. But the fines, settlements and judgments paid by the larger companies are not even close to a rounding error. Experian generated $4.8 billion in revenue for the year ended March 2014, and its after-tax profit of $747 million in the period was more than twice its 2013 figure.
Examine these companies’ business models and it’s easy to see why they are resistant to change. For starters, consumers are not the primary source of revenue for the reporting bureaus — credit providers are. They pay for the information every time a consumer applies for a loan, lease or mortgage. Because consumers are not their true customers, the bureaus have little incentive to treat them well.
The Mississippi complaint says former Experian employees told investigators they were pressured to meet “production” quotas and given no more than five minutes to handle each consumer call. These employees also described internal competitions for speedy call-handling, bonuses for meeting quotas and probation for those with low production numbers.
Another barrier to better treatment: Consumers are captive to the Big Three credit bureaus, whose reports are ubiquitous. This means consumers cannot hold the rating bureaus accountable by choosing to do business with other companies.
The problems with this business model are identical to those of mortgage loan servicers, an industry that ran roughshod over borrowers for years and where companies have paid billions in regulatory penalties.
Thirty-three other state attorneys general are investigating the three major credit bureaus. And both the F.T.C. and the consumer protection bureau have rating companies on their radar screens. Rightly so. Companies that are recidivists can be liable for civil penalties of $16,000 a violation per day, according to the F.T.C.
But as long as the companies can shrug off such penalties and keep consumers in their grip, not much about the business is likely to change. As a result, regulators and other overseers will have to raise their game.
(1) NYT (article)
(2) U.S. Government
(3) STAF, Inc. research
____________________
Held Captive by Flawed Credit Reports
For further info, click green throughout the article
When companies are found to have violated the law and harmed consumers, they typically pay a penalty to regulators and agree to reform their practices.
Whether or not they actually follow through on those vows, however, is another matter entirely.
The consumer credit reporting industry is a case in point. These companies collect and distribute information about consumers’ credit history to lenders, employers and others with an interest in these matters. The reports can make or break a consumer’s mortgage application, car lease or, in the case of military personnel, a security clearance.
But inaccuracies often show up in consumers’ credit reports, and these errors have real consequences, like increasing borrowing costs or barring people from financing a home or renting an apartment. And once an error is found, getting it fixed can take months of exasperating work.
Because of these problems, credit-reporting bureaus have been sued repeatedly by regulators and consumers and have paid millions in fines and settlements. And yet the inaccuracies continue, consumers and their lawyers say, making them wonder if these companies view the penalties they pay as simply a cost of doing business.
Patricia Armour, 73, of Olive Branch, Miss., said she spent two years trying in vain to correct information on her Experian credit report. A second mortgage that had been discharged when she filed for bankruptcy in 2007 popped up as an unpaid debt of around $40,000 in 2011, she said. Even though she repeatedly supplied proof of the discharge to Experian, she said, it refused to fix the error.
“I sent them everything, and I got nowhere,” Ms. Armour said in an interview last week. “They wrote a letter saying there was nothing they could do because their records were correct. I was at my wits’ end.”
Only after she called the Mississippi attorney general’s office did Experian correct her report.
The three largest credit reporting companies — Equifax, Experian Information Solutions and TransUnion — issue more than three billion consumer reports a year and maintain files on more than 200 million Americans. Under the Fair Credit Reporting Act, these agencies are supposed to have procedures assuring “maximum possible accuracy” of consumers’ information. The law allows consumers to check the reports for errors and requires credit bureaus to investigate consumers’ error claims. The agencies are also supposed to deliver to creditors all information relating to those errors so they can be corrected.
That’s what the act says, anyway. But in a lawsuit filed last month against Experian, Jim Hood, the Mississippi attorney general, said the reality was quite different.
“Experian has, over more than two decades, engaged in an unyielding pattern and practice of violating state and federal law,” the complaint said. The company has paid tens of millions of dollars in judgments and settlements to consumers across the country, the complaint added, but it has “refused to take the steps necessary to conform its conduct to the law.”
Officials in Mr. Hood’s office spent more than a year interviewing former employees and reviewing complaints about Experian from state residents. Investigators found that the company routinely mixed up reports of consumers who have the same name, allowed erroneous information to be included on credit reports and would not correct the errors that consumers had identified. The company also failed to investigate disputed data as required, the complaint said, and accepted creditors’ findings about the disputed information even if it was contradicted by canceled checks or other proof.
The results of these practices were dire for many consumers, the suit said. Some were denied credit or forced to pay higher rates for loans they did receive; others lost job opportunities.
A spokeswoman for Experian said the company rejected the allegations in the Mississippi lawsuit. “This lawsuit is clearly designed to be sensational,” the spokeswoman said in a statement. “To say we ‘knowingly’ — as the A.G. (= Attorney General) claims — put errors on reports is false. Contrary to the allegations, credit reports are used millions of times every day to accurately and quickly assess risk in lending and speed the process of making credit readily available to consumers.” She added that Experian believes its database is 98 percent accurate, and that it invests heavily to help improve the number.
That may be, but there is no doubt that erroneous information on credit reports remains an enormous problem. Last year, the F.T.C. - Federal Trade Commission found that 5 percent of consumers — or an estimated 10 million people — had an error on one of their credit reports that could have resulted in higher borrowing costs.
The F.T.C., which oversees the industry along with the Consumer Financial Protection Bureau, has been busy bringing cases in this arena. Since 2000, it has filed 18 enforcement actions against reporting bureaus; 13 were district court actions that generated $25.7 million in penalties.
Consumers have also won in the courts, on occasion. Last year, an Oregon consumer was awarded $18.4 million in punitive damages by a jury after she sued Equifax for inserting errors into her credit report. But the fines, settlements and judgments paid by the larger companies are not even close to a rounding error. Experian generated $4.8 billion in revenue for the year ended March 2014, and its after-tax profit of $747 million in the period was more than twice its 2013 figure.
Examine these companies’ business models and it’s easy to see why they are resistant to change. For starters, consumers are not the primary source of revenue for the reporting bureaus — credit providers are. They pay for the information every time a consumer applies for a loan, lease or mortgage. Because consumers are not their true customers, the bureaus have little incentive to treat them well.
The Mississippi complaint says former Experian employees told investigators they were pressured to meet “production” quotas and given no more than five minutes to handle each consumer call. These employees also described internal competitions for speedy call-handling, bonuses for meeting quotas and probation for those with low production numbers.
Another barrier to better treatment: Consumers are captive to the Big Three credit bureaus, whose reports are ubiquitous. This means consumers cannot hold the rating bureaus accountable by choosing to do business with other companies.
The problems with this business model are identical to those of mortgage loan servicers, an industry that ran roughshod over borrowers for years and where companies have paid billions in regulatory penalties.
Thirty-three other state attorneys general are investigating the three major credit bureaus. And both the F.T.C. and the consumer protection bureau have rating companies on their radar screens. Rightly so. Companies that are recidivists can be liable for civil penalties of $16,000 a violation per day, according to the F.T.C.
But as long as the companies can shrug off such penalties and keep consumers in their grip, not much about the business is likely to change. As a result, regulators and other overseers will have to raise their game.
- CFPB > Consumer Financial Protection Bureau www.consumerfinance.gov/
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____________________
Tips for Avoiding Money Scams
For Any Age but Especially for The Elderly
Seniors increasingly report that they have been duped by someone to hand over some of their hard earned savings.
Many more do not report these crimes out of embarrassment. Sometimes, a bank employee, caregiver, or other person will recognize the problem.
Elderly Scams
The above list outlines common scams, but be aware that new scams happen every day. Here are some general tips to keep you or a family member safe. If you are a caregiver, you may want to talk to your family member about these ideas:
Related articles:
Click: Legal and Financial Matters
Click: Avoiding Conflict with Money
Sources:
(1) www.sageminder.com
(2) STAF, Inc.
_______________________________________
For Any Age but Especially for The Elderly
Seniors increasingly report that they have been duped by someone to hand over some of their hard earned savings.
Many more do not report these crimes out of embarrassment. Sometimes, a bank employee, caregiver, or other person will recognize the problem.
Elderly Scams
- The Needy Relative: This is where a con artist will find out the name of a young relative, like a nephew for example, of the senior. He or she will pose as a lawyer or doctor and explain that the poor nephew is in trouble and needs bond money or money for an emergency surgery. They will ask the senior to not call anyone else in the family because it is a sensitive or confidential matter and urge the person to wire money.
- The Credit Card Company: This scam has been used many times and because seniors often trust that they will be treated fairly in the marketplace, they are particularly susceptible. A person will call and state that there is a concern about the senior’s credit card – maybe the number appears to have been stolen and used online to buy something. He will ask the senior to verify the number on the card by reading the number, codes, and expiration dates. At that point, the con artist has everything he needs to go shopping online….
- The Windfall: In this scam, a caller will explain that a prize has been won, an inheritance came through, or some error in the person’s favor has occurred. To process the check, however, the con man will need the senior to send in some fee to cover the costs of transferring the prize. The transfer money is paid, and the senior never collects the windfall. This type of scam often takes place in the mail through a letter as well.
- Investment Scams: Some will encourage “down” money to begin an investment that will make a senior “thousands.” The down money will be paid and the return on the investment never comes. This type of scam typically involves someone grooming the person over time to trust that this is a solid and real business offer.
- Insurance or Funeral Scam: Someone may come to the door and actually show the person official looking documents to prove ownership of a funeral, a burial plot or life insurance. The person is told to pay in cash or in money order so that they won’t have to explain it to their family members who may become upset by the idea of end-of-life planning. Of course, no such insurance, plot, or funeral service actually exist.
The above list outlines common scams, but be aware that new scams happen every day. Here are some general tips to keep you or a family member safe. If you are a caregiver, you may want to talk to your family member about these ideas:
- If it sounds too good to be true, then it usually is.
- Legitimate investments, purchases, and even legal or medical crises usually do not require a person to keep the matter confidential from other family members.
- Real situations would never call for a need to use a money order or wire transfer rather than a standard check.
- Never give personal information over the phone such as your birth date, social security number, or credit card numbers. A credit card company that calls you would not need to ask for your credit card number over the phone.
- If someone comes to the house to sell you something, ask for them to come at another time when another family member can help read contracts and verify the legitimacy of the paperwork.
- If you or a loved one have trouble saying no, remember that you can always buy time by:
- asking to have time to think it over
- asking for the person to call back or come back when someone else can help you make decisions.
- The most vulnerable seniors are those who live alone or who are having memory or other cognitive deterioration. If you have concerns about someone’s ability to handle their finances responsibly, you may want to pursue a durable power of attorney so that he or she cannot be taken advantage of. If you are concerned about fraud coming in through the mail, make an effort to go through mail together.
Related articles:
Click: Legal and Financial Matters
Click: Avoiding Conflict with Money
Sources:
(1) www.sageminder.com
(2) STAF, Inc.
_______________________________________
Start your road
to riches here
It is important that you:
Study first this first presentation in full
& apply the information
This is a copy of a live webinar
Also used in a live seminar
Quotation
"Knowledge is no power - only applied knowledge is power"
(Dr Christian, STAF, Inc.)
Next below guidance for:
(1) how to manage debt;
(2) how to become a millionaire or a multi-millionaire starting with $50 a month;
(3) how to choose the 4 - 5 credit cards that are "a must to have" to (a) build an excellent, top credit score, (b) to get all important, free benefits these credit cards offer (notice: not all cards have these free benefits)
Because we know you can do it,
it is our passion at the STAF, Inc.
to guide you and your family
to become a
millionaire family
or perhaps a
multi-millionaire family
and keep holding on your million(s)
_________________________
Written & edited by Dr. Christian von Christophers, Ph.D., N.D., D.D.
President, STAF, Inc.
Dr. Christian is the founder of Successology® (Reg.U.S.Pat.Off.1991)
-the new science for success-
and the founder of
World's # 1 free advice website Successo-Pedia©
_____________________
Managing Debt
Savings Formula
Starting to Invest Wisely
Building an Excellent Credit Score
__________
Become a Millionaire - Yes You Can
- starting almost from zero, as millions of others did -
__________
The best way to manage debt is not to create any personal debt at all.
To be free is to owe no one. It can be done.
You can learn to do it. Millions of individuals have learned to do it.
Learn to save, then to invest safely & wisely
and step-by-step becoming a (multi)millionaire.
You can start with $50 a month and grow from there.
Teach these principles to you children - study this seminar with them
(1) Apply the principles you learn from this advice website &
(2) learn to use the principles of the automatic millionaire &
(3) combine them and you will become a millionaire
click: Amazon.com: David Bach: Books, Biography, Blog -
Click: The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich
__________________
STAF, Inc.
&
World's # 1 free advice website Successo-Pedia©
will guide you & your family
______________
When it comes to the best personal finance management,
old wisdom states : "Owe no one".
E.g.: Take a mortgage and you end paying for your house 2 - 3 times more than saving first and buying in cash.
The same with the cars. The same with everything. Why waste 65 % of your life work & savings when you can have the same with paying only the real price which is only 35 % of the financed price?
It takes less time than you may know to make your money grow to 5, 6, 7 figures when you see the effort of learning (1) to save, (2) to invest & (3) to keep investing wisely.
Take seminars for financing & investments (internet, live seminars - use wisdom, warning: some seminar leaders are not competent).
Read David Bach's book "Automatic Millionaire" & apply the info -
click: Amazon.com: David Bach
Study this website guidance and Mr. David Bach's guidance in his book, combine and apply both.
If any questions contact STAF, Inc. with a question - use email: [email protected]
Study this webinar together with your children and teach them to start investing as early as 7 (sometimes even earlier).
Guide your child to use the allowance money based on the principles in this webinar.
All principles you learn in this guidance website are valid worldwide
STAF, Inc. will guide you to find the connections
where ever you may live in the U.S. or worldwide.
______
Quotation "Knowledge is no power, only applied knowledge is power"
(Dr. Christian, STAF, Inc.)
_______________________
How to use no-fee credit cards
to build an excellent credit score
Important info for you, for everyone - study and apply
"Only applied knowledge is power"
(the quotation above the title)
Some info about the habits of our millennials,
the habits we at the STAF, Inc. regard as a not-a-good way to use your money.
First
the good way to use your money
When you use your money
(1) to buy what you have to buy anyway (daily, monthly, etc. necessities) and
(2) use a fee-free credit card or two to pay for them and then pay the credit card invoice always in full every month, you can build (1) automatically and (2) without any special effort and (3) free an excellent credit score.
On the other hand, NOT to use 1 - 4 fee-free credit cards in this manner for an easy-way building a superior credit score (even something as high as only a few % of the whole population can/will have as their credit score), is an ignorant way of looking at the financial facts in our today's world.
Based on the recent statistics the millennials (also known as "millennial generation" or "generation Y") have not learned to use the fee-free credit cards for a free, effective building of an excellent credit score, important in our modern life. The millennials are the individuals with the birth years ranging from the early 1980's to the early 2000's.
(1) 63 % of the millennials have NO credit cards, (2) 23 % have one credit card, (3) 6 % have two cards, (4) 2 % have three cards - Comparatively, only 35 % of adults 30 and over don't have credit cards
(Statistics source: Bankrate.com)
Success Principle #1 (Certain principles are repeated several times in this guide - the purpose is to have you learning the key-success facts and to apply them)
A credit card (actually 4 different credit cards: Visa, Master-Card, American Express, Discover) is a good way to build an excellent credit. The fifth card is acceptable but not necessary (info further below).
Start with one card: Visa or Master Card - find a no-fee card (search the web).
Then add up (as your cash flow allows) with 3 different no-yearly-fee cards and one AX = American Express, your 4th card; AX has a yearly fee (AX has also a fee-free card but it does not look like the respected green AX card does). The more you have respected items and behave accordingly, the better service you will get in anything and in any situation, the more you can save and/or the more you can make money.
The "famous" original green AX is actually a charge card (AX has some cards similar to a credit card). A charge card demands you to pay all balances every month (exceptions exist but not to pay monthly in full will negatively affect your credit score).
A credit card gives a monthly minimum payment and transfers the unpaid amount to the future months with an additional interest fee. Never carry a balance - ALWAYS pay in full every card on time every month. Not to pay all your bills on time and not to pay every month all your credit cards in full will ruin your efforts to build an excellent credit score. Use your credit cards ONLY that much as you can ALWAYS pay immediately in full when the invoice comes.
A good credit score is used in many situations in life and a bad credit score can and will take away good opportunities (below some examples).
Success Principle # 2
You must pay all credit card balances monthly on time to -zero-. Never carry a balance, never.
Use your credit cards only that much as you can pay in full each month. Never, never carry a balance.
Also, you must pay all your other bills on time (never be late in any payment). (If some additional time is really needed at the beginning of your starting to apply these principles, you can call the bill/invoice sender and change the payment day BUT: that is bad, bad, bad - avoid it; all is recorded and goes to your credit report and can ruin your good credit score building.) Learn and discipline yourself to buy ONLY what you can pay immediately when the bill comes. This is one of the main keys to building an excellent credit score, important in life: BE NEVER LATE IN ANY PAYMENT, NEVER.
Use your credit cards (when several, in a rotating manner, one different each month to build usage to all your 4 cards) only to buy food & every day necessities. When you use your credit card(s) to buy what you have to buy anyway and can afford buying them and pay in full the monthly invoice(s), it is an easy and a free method to build up an excellent credit score.
Do not use any of your credit cards for impulse buying (search the web with "impulse purchase").
Use the credit cards ONLY and ONLY to buy what you NEED to buy anyway - then your correct use of your 4 credit cards
is an effective, no cost way to build an excellent credit score.
Notice: the credit score is NOT only for credit - it is used (a few examples): (1) in hiring for a new job,
(2) in renting an apartment or a house or (3) buying a property (2+3: condo, co-op or house especially if the house is in a good/highstyle area, (4) buying a car (with a loan), (5) the insurance companies decide the premium size based on the credit score OR some companies deny the application from a person with a low credit score, (6) in getting into a elite college or (7) into an elite club, it is (in #6 and # 7 sometimes also the credit scores of the applicant's parents are checked)
(8) used in deciding what rate you pay for your mortgage or other loans - the better the credit score the lower the interest rate (avoid loans - and if you have pay the bills on time) and often (9) some good deals are only available for individuals with a good credit score. Sorry to say, the credit score (10) "defines your value as a human being in our modern world". Even (11) before getting married people often check the partner's credit score, (12) Many doors will open when you have an excellent credit score, many doors will stay closed when you don't have an excellent credit score.
By using the 4 credit cards as instructed in this guide you will build and maintain an excellent credit score and you will be treated by everyone as a"king of the hill" and the doors will be opened for you to a new success in life.
The detailed facts relating to the credit score are in other locations in this tab - find the titles, read the articles & apply the information.
As pointed out, a good credit score is not only for credit - it is used for several purposes in our daily life. A good credit score shows that you are a responsible individual - the key to success in any activity in life. Any financial success in life always comes by taking actions that keep your credit score high.
If you have no credit (never had taken credit or used credit cards) or you have a low credit score, the easiest way to build your good credit score is to use 4 credit cards as instructed in this guide. But: to use them only the way it is guided in this text.
It makes four when you have one of each of these: Visa, Master Card, American Express, Discover - the fifth can be another Visa, MC or AX Gold.
We'll show you how you use them.
How to choose your 4-5 credit cards
Some cards are credit cards, some charge cards.
The difference: a credit card allows you to carry a balance with an extra interest.
A charge card: the balance is paid in full monthly.
To build an excellent credit score (important in many situations in life) you need to handle every card as a charge card and pay in full immediately when the invoice comes.
DO NOT create standing (no), staying debt (no), do not take loans (no) - learn to pay everything with a credit card (not with a debit card - a debit card does not count for building a good credit score) and then pay every month the FULL balance immediately when the invoice comes.
Always have all of these 4 basic cards:
Visa, Master Card, American Express, Discover. The 5th card can be e.g. another Visa or MC. However, choose these 4 - 5 cards in such a manner that you will get the important, FREE benefits listed below with red paragraph titles
The credit cards have many different benefits to stimulate their use. The benefits can be valuable.
(Again: buy with credit cards only what you really need and nothing else - this is important to remember.)
Credit cards give free valuable benefits - the benefits will save you plenty of money
- never pay for any extra benefit - use only credit cards that have some free benefits and choose and combine your 4 - 5 cards in such a way that you will get all major benefits listed below.
You will notice: the credit card benefits will save you plenty of money.
Many credit cards (not all do) offer rewards and benefits packages, such as
(1) free enhanced product warranties at no cost, (2) free loss/damage coverage on new purchases, (3) various insurance protections, for example, free rental car insurance, free common carrier accident protection, and free travel medical insurance.
(4) Credit cards can also offer reward points which may be redeemed for cash, products, or airline tickets. As you see you could save in different situations when you use and select your credit cards wisely.
Carefully compare and choose your 4 - 5 cards in such a way that you will have all these above listed benefits FREE in your use.
ONCE MORE: Use your credit cards only for what you would otherwise need to buy: food, clothing, gas, any daily life necessities, and NOTHING else. Then you cannot run into debt - pay monthly every account in full and on time. Before the payment deadline check personally by phone that your payment has arrived and is credited correctly. Talk to the customer service person and always state: "I always pay in full and am never late - that's the reason for my call to confirm that no mistakes have occurred in crediting my full payment on time". Using credit cards wisely and as guided here you will never run into debt, never be late, you will collect the possible free benefits from the credit cards company AND build an excellent credit score in 1 - 2 years and further improve you credit score within years. Your excellent credit can help also help you to get a better job with a higher salary - it can also help in promotions. As said, never use your credit cards more than you can pay in full within the next due period. Have several cards and the ones this text advises to have. DO NOT apply for any store credit cards, use only the cards introduced on this guidance text. Always pay also all other bills on time because many companies will report the bill payment history to the credit companies (like phone companies, utility companies, etc.).
When your credit score starts getting good, the credit card companies will start sending you more and more offers to take additional cards. Be very careful and do not fall into their good offers too easily.
Why not?
(1) Too many credit cards will and can lower your credit score - a good credit score is one of the most valuable things in our modern life. Anyone's credit score can easily be found out - anyone can. The credit score is the same as your value as a human being - whether it is right or wrong to measure any person according to the credit score. Your credit score is used in hiring new employees. You save and get better deals with a good credit score.
A good credit score means much more than getting more credit. A person with a good credit score is more respected.
Your good credit score leads you to a higher success level in life. Many marriage partner candidates check each other's credit score before saying "I do".
(2) Realize also that closing an existing credit card can lower your credit score;
(3) Pay every bill cycle in full, keep no balance - that helps to have a good score.
(4) Use less than 35 % of available credit on each card - going higher can hurt our credit score.
How to know what to do and what not to do? See below the next line:
NOTICE: in this tab you can find all answers and guidance to every question relating to a good credit score - study step-by-step this whole tab - and apply the information - worth more a million dollars for you.
Guide your children also study this whole tab as soon as they can understand the content - help them & guide them. More details below how to teach your children to have & keep an excellent credit score.
It is a must to study this whole tab - takes time BUT it may guide you to become a millionaire (or even more).
When you guide all your children to study this whole tab you give them one of the best gift for life.
Handle these topics in a weekly family meeting with even the babies & toddlers present - then all goes into the smallest one's subconscious mind and will come up later as an interesting topic for them to learn more. Already in the womb the babies learn. In your weekly meeting rotate the leader of that week's meeting - that's how your children will learn leader skills for the school and can shine already at a young age. Teach your children to save from their weekly allowance.
The first thing to start handling your money safely and become a (multi-)millionaire
is to create
a budget
(weekly/monthly/yearly - depending on how often you have money coming in)
Guide your children also create a weekly/monthly/yearly budget; the budget principles are the same for everyone.
To live by the budget is the key element in developing financial success.
Percentage of U.S. adults
(1) who have NO budget is 27 % - that's not the whole truth:
(2) have a budget but don't always stick to it is 39 % (not far from half of the population) - not having and not sticking to it are both the same = no budget = 66 % of the population = close to 70 % of the population. This 70 % is about the same number of the adult population that is always short of cash - and live a life less enjoyable (3) percentage of U.S. adults who have a budget and stick to it is 34 %
The about 35 % with a budget and sticking to it is about the same number of adult population living happily and enjoying a financial freedom leading to happier marriages, to more successful child raising and overall to less sicknesses and less suffering.
These numbers are about the same worldwide in all developed countries.
Lessons learned:
(1) Learn to create a budged and stick to it.
(2) Learn to save and stick to it.
(3) Plan your money use within a monthly budget. Do not do impulse buying.
Budget is
Click the green for further info:
An itemized forecast of an individual's or company's income and expenses expected for some period in the future. With a budget, an individual is able to carefully look at how much money they are taking in during a given period, and figure out the best way to divide it among a variety of categories. When making a personal budget, an individual will typically designate the appropriate amount of money to fixed expenses such as rent, car payments, or utility
bills, and then make an educated estimation for how much money they will spend in other categories, such as groceries, clothing, or entertainment. By keeping track of where one's money goes, one may be less likely to overspeend, and more likely to meet their financial goals.
Usage Example: Maintaining a budget helps you keep track of your expenses, save for future spending and goals and reach any set financial success.
The parents savings formula goes like this:
(1) 10 % monthly of your salary automatically to your savings account - do not touch that amount;
(2) 5 % monthly of your salary to your church or other charity of your choice (10 % when you become a millionaire)
(3) 10 % monthly of your salary to pay your old debts - when all debts paid, deposit this 10 %
in # (6) = savings account for your investment funds;
(4) 65 % monthly of your salary to pay for that month's living, food, recreation, etc. expenses;
(5) 5 % monthly of your salary for a separate combined emergency funds & clothing, etc. purchases
(6) 5 % monthly of your salary to your savings account as your future wise investment funds account
If you get paid weekly or bi-weekly follow the same %-formula as is above. If you are paid based on longer projects the same formula applies. If your children get their allowance paid weekly, the same principles for their income also.
If you can squeeze from # (4) and have some cash left, deposit it at the end of the month in # 1 account (= savings account).
In #3: When you have paid all your debts, deposit this 10 % monthly into your # (6) investment funds account.
For your weekly/bi-weekly/monthly (etc.) income ask your employer to automatically deposit your regular savings amount in your savings account (if it fits your employment situation) - then you are safe with that part.
You, as the parent, pay your children's savings part (from their allowance) directly to their savings account in a similar manner; this is how they learn for life.
When you children learn these principles already at a young age you can be sure that they will end to become
(multi-)millionaires in their lives. You would give them an excellent gift for life.
Please notice:
Immediately when your children are old enough teach & train each of them to use the same savings formula as you are using as the parent.
This is how they become financially wealthy adults. The principle is the same as your system is even though their starting amounts will be much smaller.
The main thing is that they learn to use the formula early in their life.
Have your children studying the information and guidance in this website and practice with them every step/
Each of your children will open a bank account to make the same deposits, have a debit card (when the bank allows) to do the same investments as you (or what investment they want) and otherwise use the same formula.
If they have some money left in any category in any month they will deposit the remaining money in their savings or their investment account.
Even though the children may not have debts teach them to see that the savings account for paying debts needs to exist if there will be debts.
Checking accounts and other info
You need to have at least one checking account (find a bank that gives a free checking) to pay some expenses of your choice using a check. (Can be risky, because your bank account number shows on the check.)
Immediately when the bank allows teach your children to open and use their checking account.
In the same way when they are old enough, have them opening a fee-free (or low-fee) credit card.
Teach everything you do to your children.This is how they can create a good credit score early in their life.
These your children also to see the difference between a debit card and a credit card and how to use them safely.
Another way to pay your bills are your credit cards. No debit card payments; do NOT pay anything with your debit card, only use it for emergency - debit card payments are not reliable and do not count for building your excellent credit score. Negative is that the money goes from your bank account out immediately and IF someone made a mistake, it can take weeks, even months, to get the money back to your bank account - time & effort lost.
The credit cards, if a mistake happens, are safer: the amounts are first billed, you see the amounts in the next invoice and if there is a mistake you have NOT paid anything of that monthly invoice, yet.
Then you must dispute that wrong amount immediately by calling your credit card company. In most cases the disputed amount will be returned as a temporary deposit to your credit card account and will stay there if you are right in your disputing the amount or will be billed again if you are wrong. Also you may dispute only a part of the billed amount if that happens to be the mistake.
If you have any doubts, in a disputed case you must call again to your credit card company and ask what you must send in as a payment for that month. Always mail your monthly payment for your credit card as early as you just can (= immediately when the invoice arrives) and check before the due date that the credit card company has received AND credited your payment on your account.
You must see these extra efforts (mistakes happen) so you can be sure you are building an excellent credit score.
Check carefully your every bank account statement AND your monthly credit card invoice. Save the purchase receipts well and compare the invoice amount with your receipt amount; sometimes the dishonest merchants can charge you more in the invoice - and mistakes can happen.
Another safe way to pay anything is to use U.S. Postal service money orders - they cost but they are safe because your bank account# does not show on them. The recipients can deposit the U.S. Postal service money orders into his/her/the company's checking account or cash in any U.S. post office. Other money orders have less places to cash; that's why the U.S, Postal money orders are more convenient. Also they never expire and you can always check yourself who and when cashed the money order = additional evidence for payment received.
NOTICE: ONCE MORE - Use credit cards to pay for everything you would need to buy anyway AND BUY NOTHING ELSE with your credit cards.
Never (1) use any credit card to finance anything and (2) never buy anything you could not immediately pay in cash in your pocket or anything you would not afford = what you would not normally buy.
The credit cards have many different benefits to stimulate their use. The benefits can be valuable.
(Placed above once - here repeated that you will better remember using your free benefits and build them up as much as you can - STILL: buy with credit cards only what you really need and nothing else - this is important to remember.)
Credit cards give free valuable benefits - the benefits will save you plenty of money
- never pay for any extra benefit - use only credit cards that have some free benefits and choose and combine your 4 - 5 cards in such a way that you will get all major benefits listed below.
You will notice: the credit card benefits will save you plenty of money.
Many credit cards (not all do) offer rewards and benefits packages, such as
(1) free enhanced product warranties at no cost, (2) free loss/damage coverage on new purchases, (3) various insurance protections, for example, free rental car insurance, free common carrier accident protection, and free travel medical insurance.
(4) Credit cards can also offer reward points which may be redeemed for cash, products, or airline tickets. As you see you could save in different situations when you use and select your credit cards wisely.
Carefully compare and choose your 4 - 5 cards in such a way that you will have all these above listed benefits FREE in your use.
ONCE MORE: Use your credit cards only for what you would otherwise need to buy: food, clothing, gas, any daily life necessities, and NOTHING else.
DO NOT IMPULSE BUY ANYTHING - THAT HABIT IS WASTE OF YOUR MONEY and can ruin your plan to become a (multi-)millionaire. Planning and discipline to follow the plan are the keys for success in anything in life including in finances. Impulse buying disrupts the normal decision making models in consumers' brains.
The logical sequence of the consumers' actions is replaced with an irrational moment of self gratification. Impulse items appeal to the emotional side of consumers. Some items bought on impulse are not considered functional or necessary in the consumers' lives. Preventing impulse buying involves techniques such as setting budgets before shopping and taking time out before the purchase is made
click: Impulse purchase
Rotate monthly the use of your 4 - 5 cards - then all be in use enough and you reap the rewards plus build automatically an excellent credit score.
Aim to use only fee-free or very low-fee credit cards - search the internet. Fee-free means there is no yearly membership fee or it is very low. E.g., the American Express card has a fee but it is an important card to have. Aim to a GOLD AX. Use only credit cards with a grace period = no interest paid between the purchase date and due date.
As stated several times (because this is important): Always pay the credit card bill(s) immediately when the monthly statements arrives in mail. Pay by sending a check via mail - only in an emergency use debit card. Mail you payment in 2 days after you received your monthly statement. The credit card companies save the info how fast you pay = the faster and in full, the better - then you are getting the BEST deals and you will save additionally.
Do not pay on the internet except perhaps in a real emergency situation - warning - its too risky; ID thefts.
Check always (call) that your payments has arrived to the card issuer on time a few days before the due date - if not, pay the bill (temporarily, not repeatedly) in full with your debit card. The extra, possible double- payment stays there paying for the next bill. The credit card company monitors how fast you pay (counts to your good credit score). When you pay early the credit card company makes a note on your account and helps in any emergency. Always mail the check immediately (in 2 days) when the bill comes - it builds a good credit score.
Some important hints
that can & will have psychological negotiation power in an emergency or when negotiating anything with your credit card company.
Every time you mail a payment check or a money order (= U.S. Postal Service money order as guided in this text), pay extra $1 or $2 more - then (when suitable) you can say, as needed to impress in negotiations: "I have (1) never been late in any payment and (2) every time I have paid the invoice in full and (3) paid even some little extra more than the invoice amount was and (4) repeat #1: I have NEVER, ever been late in any payment, not in one, ever, never late." (5) Then you say also: "Not only that, I have always mailed the full payment check immediately when your invoice comes."
That all sounds impressive and improves your chances getting the results in any possible, future negotiations with your credit card company.
The credit card companies increase your credit limit automatically when you are never late.
No matter how big your limit, never buy anything else with your card than ONLY what you would any way buy as daily necessities.
The higher the percentage you use your credit limit the LOWER your credit score is.
Use ONLY up to about 25 - 35 % (no more) of any of your credit card credit limit - gives you the best credit score.
However, you need to use every card in a rotating manner (= this month 1 - 2 cards, next month 1 - 2 different, and the 5th then when its month "rotates in". This means you must use your cards regularly. If you do not use your card "enough" = regularly at least somewhat, your credit card company will cancel and close your credit card and that can affect negatively (=lowers) your credit score.
(This warning is repeated often in this webinar - that's how important it is in building an excellent credit score)
NEVER USE YOUR CREDIT CARDS MORE THAN YOU CAN PAY
IMMEDIATELY IN FULL WHEN THE INVOICE ARRIVES
Otherwise you risk building debt AND ruin your financial health
AND potentially perhaps your mental, emotional & bodily health
ALSO this next 25-35 % info is repeated often in this webinar as are some other important principles - all needed in building an excellent credit score:
It is also important NOT to use any credit card more than only
up to 25 - 35 % of their credit line.
Keep 4 - 5 different credit cards (no more) and use each of them monthly rotating their use.
Select the 4-5 credit cards wisely to get all free benefit some cards offer (guidance given above).
Once more: never carry a balance in any of your credit or charge cards - never.
Definition of 'Charge Card'
A card that charges no interest but requires the user to pay his/her balance in full upon receipt of the statement, usually on a monthly basis. While it is similar to a credit card, the major benefit offered by a charge card is that it has much higher, often unlimited, spending limits (all depending on your credit score and proven spending & paying capabilities).
Definition of 'Credit Card'
A credit card that will charge interest on a carried balance and does not require to pay in full each month.
Use only credit & charge cards that have a grace period.
Definition of 'Grace Period'
A period in which a debt may be paid without accruing further interest or penalty.
As the guidance above is: never carry a balance.
Use your credit cards as if they were charge cards. Otherwise you fail and cannot build an excellent credit score important in many situations in life, e.g., in good reputation, in getting hired when searching for a higher paying work (the employers check your credit score).
Use any credit or charge card only in such a way that you for sure can pay it IMMEDIATELY WHEN THE INVOICE COMES - yes, immediately today, not even tomorrow BUT today when the monthly invoice comes.
In order to become a (multi-)millionaire
you need to learn to handle your finances
in the manner you learn in this
World's #1 free guidance website Successo-Pedia©
____________________________________________
Managing Debt
Q: Can I Buy My Own Debt for Pennies on the Dollar?
Notice: The laws change - STAF, Inc. & Successo-Pedia© advice website keeps you updated
Click green for further info
In the first place DO NOT create standing, staying debt, do not take loans - learn to pay everything with a credit card (not with a debit card - a debit card does not count for building a good credit score). You want to use credit cards to pay for everything you buy because credit cards have many different benefit to stimulate their use. The benefits can be valuable: free travel. Debit cards have almost no benefits. Use only fee or very low-fee credit cards - search the internet. Also use only credit cards with a grace period = no interest paid between the purchase date and due date.
Always pay the credit card bill(s) immediately when the monthly statements arrives in mail.
Check always (call) that your payments has arrived on time a few days before the due date - if not, pay the bill in full with your debit card. The extra payment stays there paying for the next bill.
The credit card company monitors how fast you pay (counts to your good credit score). When you pay early, in an emergency (= mail lost, delayed of the weather, etc.) the credit card company makes a note on your account and extends the due date. Always mail the check immediately when the bill comes - it builds a good credit score.
NEVER USE A CREDIT CARD MORE THAN
YOU CAN PAY IMMEDIATELY WHEN THE INVOICE ARRIVES.
It is also important NOT to use any credit card more that only up to 25 - 35 % of their credit line.
Keep 4 - 5 credit cards (no more) and use each of them monthly rotating their use.
During the past few years, there has been a growing awareness of how unpaid debts get bought and sold. The fact that debts can be purchased for steep discounts by investors and collection companies — who then work to collect the full balances owed — has lead to some meaningful discussions, and increased scrutiny of debt buying, and debt collection practices in general. So much so that California recently passed new laws governing how debt buyers go about collecting.
There have also been some interesting efforts to raise public awareness of debt resale markets, and a petition was even started to support the idea that people should be able to buy their own debts. So what gives? If debt buyers can buy your debt at basement prices, why can’t you? Or can you?
Why Would You Want to Buy Your Own Debt?
Some pretty obvious benefits would be:
Debt-Buying Basics
Companies in the market to buy debts vary in size and capital structure. No matter the company size, the goal is the same. Debt buyers invest good money in order to pursue collecting on bad debt.
Larger companies buy up huge portfolios of debt directly from your creditors, such as credit card lenders. Meanwhile, smaller or specialized companies who are buying up debts may not have access to purchase directly from credit originators. These smaller companies often rely on debt “re-sales” in order to get their stock of debts to collect. And it’s in the resale of debts where the lowest prices are often found.
The prices paid for debts that your lender has deemed uncollectable will vary. The fresher the debt is (timely payments only recently stopped coming in), the higher the price debt buyers pay. Freshly charged-off credit card debts (typically a minimum of six months of nonpayment) have been sold for 15 or more cents on the dollar in recent years. But the older debts — say a year or more since any payment was made — fetch lower prices. And debts that have already been sold once or twice, or that are a couple years old, are the types of debt you generally hear about going for pennies on the dollar (sometimes even less than a penny).
With that said, the resale of debts is highly controversial.
Debt Sales Are Changing
OCC - The Office of the Comptroller of the Currency click: OCC: Home Page, acting as a primary regulator over national banks, voiced concern about how credit card debts are sold, and to whom banks sell their debts. Some of those concerns had immediate impacts on debt sales, with some large banks going so far as to cease selling defaulted credit card debts (at least temporarily). More particularly, the OCC questioned the safety and soundness aspects of banks selling any debts to debt buyers who are known to resell those debts later on. So while you cannot “buy” your own debts on the cheap in the resale market, continuing developments may mean others won’t be able to, either.
Some debt buyers already publicly state they do not resell debts.
Midland Funding LLC click: Midland Funding LLC | Midland Credit Management is one of largest debt buyers in the nation. They state openly in their consumer pledge that “We will not resell accounts to third parties in the ordinary course of our business.”
Another larger debt buyer, Portfolio Recovery Associates click: Portfolio Recovery Associates, Inc. ,
has similarly stated publicly that it does not resell debts that it purchases. I expect other debt buyers to follow suit, if they have not already, in order to conform to the adjustments being made by credit card banks.
Limiting the resale of debts will lead to more transparent and predictable paths for solving consumer debt collection issues. This includes: Problems with multiple collection items for the same account on credit reports; the ease with which you can identify any legitimate debt owner; or even how you can resolve collection disputes. This limitation could also mean that basement prices on credit card debt resales are in jeopardy.
While you cannot buy your own debt, you can often click: get your debt discounted with lenders, collection agencies and debt buyers. How much of a discount is always subject to different variables. Some of the coming changes to collections and debt buying markets will certainly have an effect on those discounts. But after witnessing roughly 20 years of what amounts to a debt collection free-for-all, where a guy who has a little capital to invest, a phone, and a kitchen table to sit at, can buy debts and dial for dollars, I welcome change.
Click green below for further info
Managing Debt
Click green or colored areas for further info
Source: (1) credit.com, (2) STAF, Inc.
_______________________
Possible Investment Services
-
three here to check out if they are for your needs
Automated Investment Services Company Wealthfront
Now Manages Over $538M In Assets,
Up 450 Percent Over The Past Year - October 2014 info - check the updated info on the company's website
Introduction also to three other similar companies:
(1) Betterment, (2) Personal Capital, (3) SigFig
Automated investment services company Wealthfront has made its name over the past two years as an alternative to traditional financial advisory services like Fidelity for individuals, who are just starting to pull their savings together. Today the company, the brainchild of former Benchmark Capital founder Andy Rachleff, is announcing that it manages over $538 million assets, making it the largest and fastest-growing software-based financial advisor.
To put things into perspective, Wealthfront began 2013 with just $100 million assets under management, growing over 450 percent in just one year. It took Wealthfront almost a year to reach $67 million in assets under management, and in December alone Wealthfront added over $67 million in assets.
Wealthfront COO Adam Nash tells us that employees from companies like Google, Facebook, Twitter and LinkedIn have turned to Wealthfront to have software manage their investments in lieu of a traditional advisor. He adds that because managing money is based on trust, this worth of mouth has been extremely successful so far. “And products don’t go viral unless they provide value,” he explains.
For background, Wealthfront goes beyond just automating investing–the company’s fees are set up to undermine the models of incumbent investment services like Fidelity, Schwab, and any other mutual fund investor or financial advisor. It also comes with features like tax-loss harvesting for any account worth at least $100,000. If you make a profit on parts of that account’s portfolio, it’ll reinvest it and avoid taxes on the gains by doing so.
The company says its clients vary in age between 19 and 93, with over 55 percent of users under age 35. The average Wealthfront client invests $80,000 to $100,000, but the minimum continues to be $5,000. The firm’s largest accounts stretch to well above $5 million. Additionally, Wealthfront is free for accounts under $10,000, and 20 percent of Wealthfront clients have a liquid net worth of less than $50,000. Over 16 percent of clients’ liquid net worth is in excess of $1 million.
Unsurprisingly, the client base tends to be tech-heavy. The companies where Wealthfront has the most clients are, in order, Google, Facebook, LinkedIn, Microsoft, Twitter, Palantir, VMware, Apple, Intuit and Cisco.
Nash says the company is going to continue to double down on product development in 2014, and “continue to acquire and delight customers.” It’s important to note that there are a number of competitors in the space who are looking to become the next-generation financial advisory platform of choice, including Betterment, Personal Capital, and SigFig.
For investing check out these websites:
(1)
Betterment.com-InvestingAdwww.betterment.com/
(888) 894-3272
Automated investing in diversified portfolios of ETFs. Start today!
(2)
PersonalCapital.com - Personal CapitalAdwww.personalcapital.com/Fully Secure, Personal & Objective. Sign Up for Free & Start Today!
Try Our 401K Fee Analyzer · Track Your Net Worth · Free Financial Tools
Designed to take all your investments into account. – money.msn.com
Personal Capital has 292 followers on Google+
(3)
SigFig - The easiest way to manage & improve your ...https://www.sigfig.com/
What SigFig Does for Your Portfolio. SigFig's projected performance over 20 years (based on an initial investment of $100,000). Learn More about Nobel ... Jobs - Contact - Family of mobile apps - Log In
________________________________________
to riches here
It is important that you:
Study first this first presentation in full
& apply the information
This is a copy of a live webinar
Also used in a live seminar
Quotation
"Knowledge is no power - only applied knowledge is power"
(Dr Christian, STAF, Inc.)
Next below guidance for:
(1) how to manage debt;
(2) how to become a millionaire or a multi-millionaire starting with $50 a month;
(3) how to choose the 4 - 5 credit cards that are "a must to have" to (a) build an excellent, top credit score, (b) to get all important, free benefits these credit cards offer (notice: not all cards have these free benefits)
Because we know you can do it,
it is our passion at the STAF, Inc.
to guide you and your family
to become a
millionaire family
or perhaps a
multi-millionaire family
and keep holding on your million(s)
_________________________
Written & edited by Dr. Christian von Christophers, Ph.D., N.D., D.D.
President, STAF, Inc.
Dr. Christian is the founder of Successology® (Reg.U.S.Pat.Off.1991)
-the new science for success-
and the founder of
World's # 1 free advice website Successo-Pedia©
_____________________
Managing Debt
Savings Formula
Starting to Invest Wisely
Building an Excellent Credit Score
__________
Become a Millionaire - Yes You Can
- starting almost from zero, as millions of others did -
__________
The best way to manage debt is not to create any personal debt at all.
To be free is to owe no one. It can be done.
You can learn to do it. Millions of individuals have learned to do it.
Learn to save, then to invest safely & wisely
and step-by-step becoming a (multi)millionaire.
You can start with $50 a month and grow from there.
Teach these principles to you children - study this seminar with them
(1) Apply the principles you learn from this advice website &
(2) learn to use the principles of the automatic millionaire &
(3) combine them and you will become a millionaire
click: Amazon.com: David Bach: Books, Biography, Blog -
Click: The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich
__________________
STAF, Inc.
&
World's # 1 free advice website Successo-Pedia©
will guide you & your family
______________
When it comes to the best personal finance management,
old wisdom states : "Owe no one".
E.g.: Take a mortgage and you end paying for your house 2 - 3 times more than saving first and buying in cash.
The same with the cars. The same with everything. Why waste 65 % of your life work & savings when you can have the same with paying only the real price which is only 35 % of the financed price?
It takes less time than you may know to make your money grow to 5, 6, 7 figures when you see the effort of learning (1) to save, (2) to invest & (3) to keep investing wisely.
Take seminars for financing & investments (internet, live seminars - use wisdom, warning: some seminar leaders are not competent).
Read David Bach's book "Automatic Millionaire" & apply the info -
click: Amazon.com: David Bach
Study this website guidance and Mr. David Bach's guidance in his book, combine and apply both.
If any questions contact STAF, Inc. with a question - use email: [email protected]
Study this webinar together with your children and teach them to start investing as early as 7 (sometimes even earlier).
Guide your child to use the allowance money based on the principles in this webinar.
All principles you learn in this guidance website are valid worldwide
STAF, Inc. will guide you to find the connections
where ever you may live in the U.S. or worldwide.
______
Quotation "Knowledge is no power, only applied knowledge is power"
(Dr. Christian, STAF, Inc.)
_______________________
How to use no-fee credit cards
to build an excellent credit score
Important info for you, for everyone - study and apply
"Only applied knowledge is power"
(the quotation above the title)
Some info about the habits of our millennials,
the habits we at the STAF, Inc. regard as a not-a-good way to use your money.
First
the good way to use your money
When you use your money
(1) to buy what you have to buy anyway (daily, monthly, etc. necessities) and
(2) use a fee-free credit card or two to pay for them and then pay the credit card invoice always in full every month, you can build (1) automatically and (2) without any special effort and (3) free an excellent credit score.
On the other hand, NOT to use 1 - 4 fee-free credit cards in this manner for an easy-way building a superior credit score (even something as high as only a few % of the whole population can/will have as their credit score), is an ignorant way of looking at the financial facts in our today's world.
Based on the recent statistics the millennials (also known as "millennial generation" or "generation Y") have not learned to use the fee-free credit cards for a free, effective building of an excellent credit score, important in our modern life. The millennials are the individuals with the birth years ranging from the early 1980's to the early 2000's.
(1) 63 % of the millennials have NO credit cards, (2) 23 % have one credit card, (3) 6 % have two cards, (4) 2 % have three cards - Comparatively, only 35 % of adults 30 and over don't have credit cards
(Statistics source: Bankrate.com)
Success Principle #1 (Certain principles are repeated several times in this guide - the purpose is to have you learning the key-success facts and to apply them)
A credit card (actually 4 different credit cards: Visa, Master-Card, American Express, Discover) is a good way to build an excellent credit. The fifth card is acceptable but not necessary (info further below).
Start with one card: Visa or Master Card - find a no-fee card (search the web).
Then add up (as your cash flow allows) with 3 different no-yearly-fee cards and one AX = American Express, your 4th card; AX has a yearly fee (AX has also a fee-free card but it does not look like the respected green AX card does). The more you have respected items and behave accordingly, the better service you will get in anything and in any situation, the more you can save and/or the more you can make money.
The "famous" original green AX is actually a charge card (AX has some cards similar to a credit card). A charge card demands you to pay all balances every month (exceptions exist but not to pay monthly in full will negatively affect your credit score).
A credit card gives a monthly minimum payment and transfers the unpaid amount to the future months with an additional interest fee. Never carry a balance - ALWAYS pay in full every card on time every month. Not to pay all your bills on time and not to pay every month all your credit cards in full will ruin your efforts to build an excellent credit score. Use your credit cards ONLY that much as you can ALWAYS pay immediately in full when the invoice comes.
A good credit score is used in many situations in life and a bad credit score can and will take away good opportunities (below some examples).
Success Principle # 2
You must pay all credit card balances monthly on time to -zero-. Never carry a balance, never.
Use your credit cards only that much as you can pay in full each month. Never, never carry a balance.
Also, you must pay all your other bills on time (never be late in any payment). (If some additional time is really needed at the beginning of your starting to apply these principles, you can call the bill/invoice sender and change the payment day BUT: that is bad, bad, bad - avoid it; all is recorded and goes to your credit report and can ruin your good credit score building.) Learn and discipline yourself to buy ONLY what you can pay immediately when the bill comes. This is one of the main keys to building an excellent credit score, important in life: BE NEVER LATE IN ANY PAYMENT, NEVER.
Use your credit cards (when several, in a rotating manner, one different each month to build usage to all your 4 cards) only to buy food & every day necessities. When you use your credit card(s) to buy what you have to buy anyway and can afford buying them and pay in full the monthly invoice(s), it is an easy and a free method to build up an excellent credit score.
Do not use any of your credit cards for impulse buying (search the web with "impulse purchase").
Use the credit cards ONLY and ONLY to buy what you NEED to buy anyway - then your correct use of your 4 credit cards
is an effective, no cost way to build an excellent credit score.
Notice: the credit score is NOT only for credit - it is used (a few examples): (1) in hiring for a new job,
(2) in renting an apartment or a house or (3) buying a property (2+3: condo, co-op or house especially if the house is in a good/highstyle area, (4) buying a car (with a loan), (5) the insurance companies decide the premium size based on the credit score OR some companies deny the application from a person with a low credit score, (6) in getting into a elite college or (7) into an elite club, it is (in #6 and # 7 sometimes also the credit scores of the applicant's parents are checked)
(8) used in deciding what rate you pay for your mortgage or other loans - the better the credit score the lower the interest rate (avoid loans - and if you have pay the bills on time) and often (9) some good deals are only available for individuals with a good credit score. Sorry to say, the credit score (10) "defines your value as a human being in our modern world". Even (11) before getting married people often check the partner's credit score, (12) Many doors will open when you have an excellent credit score, many doors will stay closed when you don't have an excellent credit score.
By using the 4 credit cards as instructed in this guide you will build and maintain an excellent credit score and you will be treated by everyone as a"king of the hill" and the doors will be opened for you to a new success in life.
The detailed facts relating to the credit score are in other locations in this tab - find the titles, read the articles & apply the information.
As pointed out, a good credit score is not only for credit - it is used for several purposes in our daily life. A good credit score shows that you are a responsible individual - the key to success in any activity in life. Any financial success in life always comes by taking actions that keep your credit score high.
If you have no credit (never had taken credit or used credit cards) or you have a low credit score, the easiest way to build your good credit score is to use 4 credit cards as instructed in this guide. But: to use them only the way it is guided in this text.
It makes four when you have one of each of these: Visa, Master Card, American Express, Discover - the fifth can be another Visa, MC or AX Gold.
We'll show you how you use them.
How to choose your 4-5 credit cards
Some cards are credit cards, some charge cards.
The difference: a credit card allows you to carry a balance with an extra interest.
A charge card: the balance is paid in full monthly.
To build an excellent credit score (important in many situations in life) you need to handle every card as a charge card and pay in full immediately when the invoice comes.
DO NOT create standing (no), staying debt (no), do not take loans (no) - learn to pay everything with a credit card (not with a debit card - a debit card does not count for building a good credit score) and then pay every month the FULL balance immediately when the invoice comes.
Always have all of these 4 basic cards:
Visa, Master Card, American Express, Discover. The 5th card can be e.g. another Visa or MC. However, choose these 4 - 5 cards in such a manner that you will get the important, FREE benefits listed below with red paragraph titles
The credit cards have many different benefits to stimulate their use. The benefits can be valuable.
(Again: buy with credit cards only what you really need and nothing else - this is important to remember.)
Credit cards give free valuable benefits - the benefits will save you plenty of money
- never pay for any extra benefit - use only credit cards that have some free benefits and choose and combine your 4 - 5 cards in such a way that you will get all major benefits listed below.
You will notice: the credit card benefits will save you plenty of money.
Many credit cards (not all do) offer rewards and benefits packages, such as
(1) free enhanced product warranties at no cost, (2) free loss/damage coverage on new purchases, (3) various insurance protections, for example, free rental car insurance, free common carrier accident protection, and free travel medical insurance.
(4) Credit cards can also offer reward points which may be redeemed for cash, products, or airline tickets. As you see you could save in different situations when you use and select your credit cards wisely.
Carefully compare and choose your 4 - 5 cards in such a way that you will have all these above listed benefits FREE in your use.
ONCE MORE: Use your credit cards only for what you would otherwise need to buy: food, clothing, gas, any daily life necessities, and NOTHING else. Then you cannot run into debt - pay monthly every account in full and on time. Before the payment deadline check personally by phone that your payment has arrived and is credited correctly. Talk to the customer service person and always state: "I always pay in full and am never late - that's the reason for my call to confirm that no mistakes have occurred in crediting my full payment on time". Using credit cards wisely and as guided here you will never run into debt, never be late, you will collect the possible free benefits from the credit cards company AND build an excellent credit score in 1 - 2 years and further improve you credit score within years. Your excellent credit can help also help you to get a better job with a higher salary - it can also help in promotions. As said, never use your credit cards more than you can pay in full within the next due period. Have several cards and the ones this text advises to have. DO NOT apply for any store credit cards, use only the cards introduced on this guidance text. Always pay also all other bills on time because many companies will report the bill payment history to the credit companies (like phone companies, utility companies, etc.).
When your credit score starts getting good, the credit card companies will start sending you more and more offers to take additional cards. Be very careful and do not fall into their good offers too easily.
Why not?
(1) Too many credit cards will and can lower your credit score - a good credit score is one of the most valuable things in our modern life. Anyone's credit score can easily be found out - anyone can. The credit score is the same as your value as a human being - whether it is right or wrong to measure any person according to the credit score. Your credit score is used in hiring new employees. You save and get better deals with a good credit score.
A good credit score means much more than getting more credit. A person with a good credit score is more respected.
Your good credit score leads you to a higher success level in life. Many marriage partner candidates check each other's credit score before saying "I do".
(2) Realize also that closing an existing credit card can lower your credit score;
(3) Pay every bill cycle in full, keep no balance - that helps to have a good score.
(4) Use less than 35 % of available credit on each card - going higher can hurt our credit score.
How to know what to do and what not to do? See below the next line:
NOTICE: in this tab you can find all answers and guidance to every question relating to a good credit score - study step-by-step this whole tab - and apply the information - worth more a million dollars for you.
Guide your children also study this whole tab as soon as they can understand the content - help them & guide them. More details below how to teach your children to have & keep an excellent credit score.
It is a must to study this whole tab - takes time BUT it may guide you to become a millionaire (or even more).
When you guide all your children to study this whole tab you give them one of the best gift for life.
Handle these topics in a weekly family meeting with even the babies & toddlers present - then all goes into the smallest one's subconscious mind and will come up later as an interesting topic for them to learn more. Already in the womb the babies learn. In your weekly meeting rotate the leader of that week's meeting - that's how your children will learn leader skills for the school and can shine already at a young age. Teach your children to save from their weekly allowance.
The first thing to start handling your money safely and become a (multi-)millionaire
is to create
a budget
(weekly/monthly/yearly - depending on how often you have money coming in)
Guide your children also create a weekly/monthly/yearly budget; the budget principles are the same for everyone.
To live by the budget is the key element in developing financial success.
Percentage of U.S. adults
(1) who have NO budget is 27 % - that's not the whole truth:
(2) have a budget but don't always stick to it is 39 % (not far from half of the population) - not having and not sticking to it are both the same = no budget = 66 % of the population = close to 70 % of the population. This 70 % is about the same number of the adult population that is always short of cash - and live a life less enjoyable (3) percentage of U.S. adults who have a budget and stick to it is 34 %
The about 35 % with a budget and sticking to it is about the same number of adult population living happily and enjoying a financial freedom leading to happier marriages, to more successful child raising and overall to less sicknesses and less suffering.
These numbers are about the same worldwide in all developed countries.
Lessons learned:
(1) Learn to create a budged and stick to it.
(2) Learn to save and stick to it.
(3) Plan your money use within a monthly budget. Do not do impulse buying.
Budget is
Click the green for further info:
An itemized forecast of an individual's or company's income and expenses expected for some period in the future. With a budget, an individual is able to carefully look at how much money they are taking in during a given period, and figure out the best way to divide it among a variety of categories. When making a personal budget, an individual will typically designate the appropriate amount of money to fixed expenses such as rent, car payments, or utility
bills, and then make an educated estimation for how much money they will spend in other categories, such as groceries, clothing, or entertainment. By keeping track of where one's money goes, one may be less likely to overspeend, and more likely to meet their financial goals.
Usage Example: Maintaining a budget helps you keep track of your expenses, save for future spending and goals and reach any set financial success.
The parents savings formula goes like this:
(1) 10 % monthly of your salary automatically to your savings account - do not touch that amount;
(2) 5 % monthly of your salary to your church or other charity of your choice (10 % when you become a millionaire)
(3) 10 % monthly of your salary to pay your old debts - when all debts paid, deposit this 10 %
in # (6) = savings account for your investment funds;
(4) 65 % monthly of your salary to pay for that month's living, food, recreation, etc. expenses;
(5) 5 % monthly of your salary for a separate combined emergency funds & clothing, etc. purchases
(6) 5 % monthly of your salary to your savings account as your future wise investment funds account
If you get paid weekly or bi-weekly follow the same %-formula as is above. If you are paid based on longer projects the same formula applies. If your children get their allowance paid weekly, the same principles for their income also.
If you can squeeze from # (4) and have some cash left, deposit it at the end of the month in # 1 account (= savings account).
In #3: When you have paid all your debts, deposit this 10 % monthly into your # (6) investment funds account.
For your weekly/bi-weekly/monthly (etc.) income ask your employer to automatically deposit your regular savings amount in your savings account (if it fits your employment situation) - then you are safe with that part.
You, as the parent, pay your children's savings part (from their allowance) directly to their savings account in a similar manner; this is how they learn for life.
When you children learn these principles already at a young age you can be sure that they will end to become
(multi-)millionaires in their lives. You would give them an excellent gift for life.
Please notice:
Immediately when your children are old enough teach & train each of them to use the same savings formula as you are using as the parent.
This is how they become financially wealthy adults. The principle is the same as your system is even though their starting amounts will be much smaller.
The main thing is that they learn to use the formula early in their life.
Have your children studying the information and guidance in this website and practice with them every step/
Each of your children will open a bank account to make the same deposits, have a debit card (when the bank allows) to do the same investments as you (or what investment they want) and otherwise use the same formula.
If they have some money left in any category in any month they will deposit the remaining money in their savings or their investment account.
Even though the children may not have debts teach them to see that the savings account for paying debts needs to exist if there will be debts.
Checking accounts and other info
You need to have at least one checking account (find a bank that gives a free checking) to pay some expenses of your choice using a check. (Can be risky, because your bank account number shows on the check.)
Immediately when the bank allows teach your children to open and use their checking account.
In the same way when they are old enough, have them opening a fee-free (or low-fee) credit card.
Teach everything you do to your children.This is how they can create a good credit score early in their life.
These your children also to see the difference between a debit card and a credit card and how to use them safely.
Another way to pay your bills are your credit cards. No debit card payments; do NOT pay anything with your debit card, only use it for emergency - debit card payments are not reliable and do not count for building your excellent credit score. Negative is that the money goes from your bank account out immediately and IF someone made a mistake, it can take weeks, even months, to get the money back to your bank account - time & effort lost.
The credit cards, if a mistake happens, are safer: the amounts are first billed, you see the amounts in the next invoice and if there is a mistake you have NOT paid anything of that monthly invoice, yet.
Then you must dispute that wrong amount immediately by calling your credit card company. In most cases the disputed amount will be returned as a temporary deposit to your credit card account and will stay there if you are right in your disputing the amount or will be billed again if you are wrong. Also you may dispute only a part of the billed amount if that happens to be the mistake.
If you have any doubts, in a disputed case you must call again to your credit card company and ask what you must send in as a payment for that month. Always mail your monthly payment for your credit card as early as you just can (= immediately when the invoice arrives) and check before the due date that the credit card company has received AND credited your payment on your account.
You must see these extra efforts (mistakes happen) so you can be sure you are building an excellent credit score.
Check carefully your every bank account statement AND your monthly credit card invoice. Save the purchase receipts well and compare the invoice amount with your receipt amount; sometimes the dishonest merchants can charge you more in the invoice - and mistakes can happen.
Another safe way to pay anything is to use U.S. Postal service money orders - they cost but they are safe because your bank account# does not show on them. The recipients can deposit the U.S. Postal service money orders into his/her/the company's checking account or cash in any U.S. post office. Other money orders have less places to cash; that's why the U.S, Postal money orders are more convenient. Also they never expire and you can always check yourself who and when cashed the money order = additional evidence for payment received.
NOTICE: ONCE MORE - Use credit cards to pay for everything you would need to buy anyway AND BUY NOTHING ELSE with your credit cards.
Never (1) use any credit card to finance anything and (2) never buy anything you could not immediately pay in cash in your pocket or anything you would not afford = what you would not normally buy.
The credit cards have many different benefits to stimulate their use. The benefits can be valuable.
(Placed above once - here repeated that you will better remember using your free benefits and build them up as much as you can - STILL: buy with credit cards only what you really need and nothing else - this is important to remember.)
Credit cards give free valuable benefits - the benefits will save you plenty of money
- never pay for any extra benefit - use only credit cards that have some free benefits and choose and combine your 4 - 5 cards in such a way that you will get all major benefits listed below.
You will notice: the credit card benefits will save you plenty of money.
Many credit cards (not all do) offer rewards and benefits packages, such as
(1) free enhanced product warranties at no cost, (2) free loss/damage coverage on new purchases, (3) various insurance protections, for example, free rental car insurance, free common carrier accident protection, and free travel medical insurance.
(4) Credit cards can also offer reward points which may be redeemed for cash, products, or airline tickets. As you see you could save in different situations when you use and select your credit cards wisely.
Carefully compare and choose your 4 - 5 cards in such a way that you will have all these above listed benefits FREE in your use.
ONCE MORE: Use your credit cards only for what you would otherwise need to buy: food, clothing, gas, any daily life necessities, and NOTHING else.
DO NOT IMPULSE BUY ANYTHING - THAT HABIT IS WASTE OF YOUR MONEY and can ruin your plan to become a (multi-)millionaire. Planning and discipline to follow the plan are the keys for success in anything in life including in finances. Impulse buying disrupts the normal decision making models in consumers' brains.
The logical sequence of the consumers' actions is replaced with an irrational moment of self gratification. Impulse items appeal to the emotional side of consumers. Some items bought on impulse are not considered functional or necessary in the consumers' lives. Preventing impulse buying involves techniques such as setting budgets before shopping and taking time out before the purchase is made
click: Impulse purchase
Rotate monthly the use of your 4 - 5 cards - then all be in use enough and you reap the rewards plus build automatically an excellent credit score.
Aim to use only fee-free or very low-fee credit cards - search the internet. Fee-free means there is no yearly membership fee or it is very low. E.g., the American Express card has a fee but it is an important card to have. Aim to a GOLD AX. Use only credit cards with a grace period = no interest paid between the purchase date and due date.
As stated several times (because this is important): Always pay the credit card bill(s) immediately when the monthly statements arrives in mail. Pay by sending a check via mail - only in an emergency use debit card. Mail you payment in 2 days after you received your monthly statement. The credit card companies save the info how fast you pay = the faster and in full, the better - then you are getting the BEST deals and you will save additionally.
Do not pay on the internet except perhaps in a real emergency situation - warning - its too risky; ID thefts.
Check always (call) that your payments has arrived to the card issuer on time a few days before the due date - if not, pay the bill (temporarily, not repeatedly) in full with your debit card. The extra, possible double- payment stays there paying for the next bill. The credit card company monitors how fast you pay (counts to your good credit score). When you pay early the credit card company makes a note on your account and helps in any emergency. Always mail the check immediately (in 2 days) when the bill comes - it builds a good credit score.
Some important hints
that can & will have psychological negotiation power in an emergency or when negotiating anything with your credit card company.
Every time you mail a payment check or a money order (= U.S. Postal Service money order as guided in this text), pay extra $1 or $2 more - then (when suitable) you can say, as needed to impress in negotiations: "I have (1) never been late in any payment and (2) every time I have paid the invoice in full and (3) paid even some little extra more than the invoice amount was and (4) repeat #1: I have NEVER, ever been late in any payment, not in one, ever, never late." (5) Then you say also: "Not only that, I have always mailed the full payment check immediately when your invoice comes."
That all sounds impressive and improves your chances getting the results in any possible, future negotiations with your credit card company.
The credit card companies increase your credit limit automatically when you are never late.
No matter how big your limit, never buy anything else with your card than ONLY what you would any way buy as daily necessities.
The higher the percentage you use your credit limit the LOWER your credit score is.
Use ONLY up to about 25 - 35 % (no more) of any of your credit card credit limit - gives you the best credit score.
However, you need to use every card in a rotating manner (= this month 1 - 2 cards, next month 1 - 2 different, and the 5th then when its month "rotates in". This means you must use your cards regularly. If you do not use your card "enough" = regularly at least somewhat, your credit card company will cancel and close your credit card and that can affect negatively (=lowers) your credit score.
(This warning is repeated often in this webinar - that's how important it is in building an excellent credit score)
NEVER USE YOUR CREDIT CARDS MORE THAN YOU CAN PAY
IMMEDIATELY IN FULL WHEN THE INVOICE ARRIVES
Otherwise you risk building debt AND ruin your financial health
AND potentially perhaps your mental, emotional & bodily health
ALSO this next 25-35 % info is repeated often in this webinar as are some other important principles - all needed in building an excellent credit score:
It is also important NOT to use any credit card more than only
up to 25 - 35 % of their credit line.
Keep 4 - 5 different credit cards (no more) and use each of them monthly rotating their use.
Select the 4-5 credit cards wisely to get all free benefit some cards offer (guidance given above).
Once more: never carry a balance in any of your credit or charge cards - never.
Definition of 'Charge Card'
A card that charges no interest but requires the user to pay his/her balance in full upon receipt of the statement, usually on a monthly basis. While it is similar to a credit card, the major benefit offered by a charge card is that it has much higher, often unlimited, spending limits (all depending on your credit score and proven spending & paying capabilities).
Definition of 'Credit Card'
A credit card that will charge interest on a carried balance and does not require to pay in full each month.
Use only credit & charge cards that have a grace period.
Definition of 'Grace Period'
A period in which a debt may be paid without accruing further interest or penalty.
As the guidance above is: never carry a balance.
Use your credit cards as if they were charge cards. Otherwise you fail and cannot build an excellent credit score important in many situations in life, e.g., in good reputation, in getting hired when searching for a higher paying work (the employers check your credit score).
Use any credit or charge card only in such a way that you for sure can pay it IMMEDIATELY WHEN THE INVOICE COMES - yes, immediately today, not even tomorrow BUT today when the monthly invoice comes.
In order to become a (multi-)millionaire
you need to learn to handle your finances
in the manner you learn in this
World's #1 free guidance website Successo-Pedia©
____________________________________________
Managing Debt
Q: Can I Buy My Own Debt for Pennies on the Dollar?
Notice: The laws change - STAF, Inc. & Successo-Pedia© advice website keeps you updated
Click green for further info
In the first place DO NOT create standing, staying debt, do not take loans - learn to pay everything with a credit card (not with a debit card - a debit card does not count for building a good credit score). You want to use credit cards to pay for everything you buy because credit cards have many different benefit to stimulate their use. The benefits can be valuable: free travel. Debit cards have almost no benefits. Use only fee or very low-fee credit cards - search the internet. Also use only credit cards with a grace period = no interest paid between the purchase date and due date.
Always pay the credit card bill(s) immediately when the monthly statements arrives in mail.
Check always (call) that your payments has arrived on time a few days before the due date - if not, pay the bill in full with your debit card. The extra payment stays there paying for the next bill.
The credit card company monitors how fast you pay (counts to your good credit score). When you pay early, in an emergency (= mail lost, delayed of the weather, etc.) the credit card company makes a note on your account and extends the due date. Always mail the check immediately when the bill comes - it builds a good credit score.
NEVER USE A CREDIT CARD MORE THAN
YOU CAN PAY IMMEDIATELY WHEN THE INVOICE ARRIVES.
It is also important NOT to use any credit card more that only up to 25 - 35 % of their credit line.
Keep 4 - 5 credit cards (no more) and use each of them monthly rotating their use.
During the past few years, there has been a growing awareness of how unpaid debts get bought and sold. The fact that debts can be purchased for steep discounts by investors and collection companies — who then work to collect the full balances owed — has lead to some meaningful discussions, and increased scrutiny of debt buying, and debt collection practices in general. So much so that California recently passed new laws governing how debt buyers go about collecting.
There have also been some interesting efforts to raise public awareness of debt resale markets, and a petition was even started to support the idea that people should be able to buy their own debts. So what gives? If debt buyers can buy your debt at basement prices, why can’t you? Or can you?
Why Would You Want to Buy Your Own Debt?
Some pretty obvious benefits would be:
- Unlike a debt collector, you would not report a collection account that shows up on your credit report.
- You would not buy your own debt and add interest if your original contract allowed for it.
- You certainly would not sue yourself.
Debt-Buying Basics
Companies in the market to buy debts vary in size and capital structure. No matter the company size, the goal is the same. Debt buyers invest good money in order to pursue collecting on bad debt.
Larger companies buy up huge portfolios of debt directly from your creditors, such as credit card lenders. Meanwhile, smaller or specialized companies who are buying up debts may not have access to purchase directly from credit originators. These smaller companies often rely on debt “re-sales” in order to get their stock of debts to collect. And it’s in the resale of debts where the lowest prices are often found.
The prices paid for debts that your lender has deemed uncollectable will vary. The fresher the debt is (timely payments only recently stopped coming in), the higher the price debt buyers pay. Freshly charged-off credit card debts (typically a minimum of six months of nonpayment) have been sold for 15 or more cents on the dollar in recent years. But the older debts — say a year or more since any payment was made — fetch lower prices. And debts that have already been sold once or twice, or that are a couple years old, are the types of debt you generally hear about going for pennies on the dollar (sometimes even less than a penny).
With that said, the resale of debts is highly controversial.
Debt Sales Are Changing
OCC - The Office of the Comptroller of the Currency click: OCC: Home Page, acting as a primary regulator over national banks, voiced concern about how credit card debts are sold, and to whom banks sell their debts. Some of those concerns had immediate impacts on debt sales, with some large banks going so far as to cease selling defaulted credit card debts (at least temporarily). More particularly, the OCC questioned the safety and soundness aspects of banks selling any debts to debt buyers who are known to resell those debts later on. So while you cannot “buy” your own debts on the cheap in the resale market, continuing developments may mean others won’t be able to, either.
Some debt buyers already publicly state they do not resell debts.
Midland Funding LLC click: Midland Funding LLC | Midland Credit Management is one of largest debt buyers in the nation. They state openly in their consumer pledge that “We will not resell accounts to third parties in the ordinary course of our business.”
Another larger debt buyer, Portfolio Recovery Associates click: Portfolio Recovery Associates, Inc. ,
has similarly stated publicly that it does not resell debts that it purchases. I expect other debt buyers to follow suit, if they have not already, in order to conform to the adjustments being made by credit card banks.
Limiting the resale of debts will lead to more transparent and predictable paths for solving consumer debt collection issues. This includes: Problems with multiple collection items for the same account on credit reports; the ease with which you can identify any legitimate debt owner; or even how you can resolve collection disputes. This limitation could also mean that basement prices on credit card debt resales are in jeopardy.
While you cannot buy your own debt, you can often click: get your debt discounted with lenders, collection agencies and debt buyers. How much of a discount is always subject to different variables. Some of the coming changes to collections and debt buying markets will certainly have an effect on those discounts. But after witnessing roughly 20 years of what amounts to a debt collection free-for-all, where a guy who has a little capital to invest, a phone, and a kitchen table to sit at, can buy debts and dial for dollars, I welcome change.
Click green below for further info
Managing Debt
Click green or colored areas for further info
Source: (1) credit.com, (2) STAF, Inc.
_______________________
Possible Investment Services
-
three here to check out if they are for your needs
Automated Investment Services Company Wealthfront
Now Manages Over $538M In Assets,
Up 450 Percent Over The Past Year - October 2014 info - check the updated info on the company's website
Introduction also to three other similar companies:
(1) Betterment, (2) Personal Capital, (3) SigFig
Automated investment services company Wealthfront has made its name over the past two years as an alternative to traditional financial advisory services like Fidelity for individuals, who are just starting to pull their savings together. Today the company, the brainchild of former Benchmark Capital founder Andy Rachleff, is announcing that it manages over $538 million assets, making it the largest and fastest-growing software-based financial advisor.
To put things into perspective, Wealthfront began 2013 with just $100 million assets under management, growing over 450 percent in just one year. It took Wealthfront almost a year to reach $67 million in assets under management, and in December alone Wealthfront added over $67 million in assets.
Wealthfront COO Adam Nash tells us that employees from companies like Google, Facebook, Twitter and LinkedIn have turned to Wealthfront to have software manage their investments in lieu of a traditional advisor. He adds that because managing money is based on trust, this worth of mouth has been extremely successful so far. “And products don’t go viral unless they provide value,” he explains.
For background, Wealthfront goes beyond just automating investing–the company’s fees are set up to undermine the models of incumbent investment services like Fidelity, Schwab, and any other mutual fund investor or financial advisor. It also comes with features like tax-loss harvesting for any account worth at least $100,000. If you make a profit on parts of that account’s portfolio, it’ll reinvest it and avoid taxes on the gains by doing so.
The company says its clients vary in age between 19 and 93, with over 55 percent of users under age 35. The average Wealthfront client invests $80,000 to $100,000, but the minimum continues to be $5,000. The firm’s largest accounts stretch to well above $5 million. Additionally, Wealthfront is free for accounts under $10,000, and 20 percent of Wealthfront clients have a liquid net worth of less than $50,000. Over 16 percent of clients’ liquid net worth is in excess of $1 million.
Unsurprisingly, the client base tends to be tech-heavy. The companies where Wealthfront has the most clients are, in order, Google, Facebook, LinkedIn, Microsoft, Twitter, Palantir, VMware, Apple, Intuit and Cisco.
Nash says the company is going to continue to double down on product development in 2014, and “continue to acquire and delight customers.” It’s important to note that there are a number of competitors in the space who are looking to become the next-generation financial advisory platform of choice, including Betterment, Personal Capital, and SigFig.
For investing check out these websites:
(1)
Betterment.com-InvestingAdwww.betterment.com/
(888) 894-3272
Automated investing in diversified portfolios of ETFs. Start today!
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Save time and money. - Our PortfolioFully diversified ETF portfolio.
12 different global asset classes. - PricingLow cost.
No trade fees. - Questions?Get in touch with
our team of experts.
(2)
PersonalCapital.com - Personal CapitalAdwww.personalcapital.com/Fully Secure, Personal & Objective. Sign Up for Free & Start Today!
Try Our 401K Fee Analyzer · Track Your Net Worth · Free Financial Tools
Designed to take all your investments into account. – money.msn.com
Personal Capital has 292 followers on Google+
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Investment, All In One Place. - Safety and SecurityAll Financial Advisories Are Kept
Confidential and Private. - Read more about usOur Site Contains Details On
Our Offers And Programs. - Learn About InvestingOur Advisors Provide Valuable
Insight Into Your Investing Op
(3)
SigFig - The easiest way to manage & improve your ...https://www.sigfig.com/
What SigFig Does for Your Portfolio. SigFig's projected performance over 20 years (based on an initial investment of $100,000). Learn More about Nobel ... Jobs - Contact - Family of mobile apps - Log In
________________________________________
Finding out your credit score is getting easier
Date: March 2014
This article has the latest info how to get your credit score free any time when in the past you had to pay for it
except you could get once a year one free credit score info from each of the three major credit bureaus
Equifax, Experian and Trans Union
Further below you will find additional articles relating to credit score
- the articles have fully valid info, just add this article info and you are covered and up-to-date
Click green for further info
Credit bureaus typically charge consumers to see their scores and reports. But there are more ways to get this information at no cost.
Credit scores are the three-digit figures that lenders consult to help determine whether to approve consumers for credit cards, mortgages and other products, as well as what interest rate to charge. The higher the score, the more favorable the terms are likely to be for the borrower.
Consumers who know their credit scores can use the information to their advantage. If the score is low, for example, they can hold off on applying for a loan until the score has improved. If the score is high, they can try to negotiate a better interest rate by pitting one lender's offer against another's.
Consumers and regulators have pushed for greater transparency surrounding credit scores, which lenders have in many cases treated as secret. Last month, the Consumer Financial Protection Bureau called on credit-card companies to provide consumers with the scores, a move the federal agency said could encourage borrowers to improve their credit.
Recently, more credit-card issuers have begun sharing information about credit scores. In March 2014, Capital One will begin making credit scores available to most of its credit-card customers when they access account information online.
In February 2014, Discover Financial Services started making credit scores available to all its credit-card customers both on monthly statements and online. Another credit-card issuer, Barclaycard US, a division of London-based Barclays, has been making credit scores available to most of its customers online and plans to expand the service to all its cardholders by year-end.
Lenders are also providing information online for their customers about factors that can affect those credit scores, such as high outstanding loan balances or late payments.
But the benefits for consumers may be limited. The scores the lenders are sharing are often only one of many factors they use in making lending and interest-rate decisions. Moreover, there are many different credit scores available, and lenders use various scores depending in part on what type of loan the applicant is seeking.
Capital One, for example, is providing consumers a score created by TransUnion, a major credit bureau. But the bank says it doesn't use this score when approving new applicants or making changes to the interest rates customers pay or other card terms
Discover and Barclays are sharing a score from FICO, an analytics software company based in San Jose, Calif. Cardholders can consult the score to determine whether their request to increase their line of credit, for example, could be approved.
But while Discover and Barclays use FICO scores to make lending decisions, they and most other card-issuers either weigh additional factors or use a FICO score as one data point in creating their own private score.
Furthermore, there are more than 50 different types of FICO scores available to lenders, says John Ulzheimer,
a consumer-credit expert at CreditSesame.com, a credit-management site, and a former manager at FICO. Different lenders may consult different scores, depending on the circumstances.
Not knowing the exact score a lender uses can lead to confusion for borrowers who may be expecting a better interest rate. Even a one-point difference between two credit scores can result in a lower or higher interest rate, says Odysseas Papadimitriou, chief executive at WalletHub.com, a credit-card comparison site.
Consumers should instead pay attention to their credit reports, which are used to create credit scores. Most consumers have a credit report at each of the three main credit bureaus, Equifax, Experian and TransUnion.
The reports include their loans, balances and payment history, including missed payments. A clean credit history often suggests a high credit score and a high likelihood of getting approved, Mr. Ulzheimer says.
Consumers should check their credit reports to look for errors that could negatively affect their score. The credit reports of one in four consumers contained an error that could change a credit score, according to findings released last year by the Federal Trade Commission.
Credit bureaus typically charge consumers to see their scores and reports. But there are more ways to get this information at no cost.
Based on federal law, consumers can check their credit report at each of the three major credit bureaus free once every 12 months, through a website called AnnualCreditReport.com.
At least seven states, including Colorado, Georgia and New Jersey, allow consumers additional opportunities to check their reports without charge.
Several websites, including CreditKarma.com, CreditSesame.com and Quizzle.com, offer free credit scores and free credit reports from one of the three main bureaus. The firms often make money from lenders, which pay referral fees if consumers apply for loans through the websites.
This past week, CreditKarma.com announced an $85 million investment from Google, an investment fund backed by Google, and three other firms.
The website is the first consumer-credit company the Google fund has invested in.
Click green for further info
Source:
(1) WSJ
(2) Credit.com
(3) STAF, Inc.
______________________________
Date: March 2014
This article has the latest info how to get your credit score free any time when in the past you had to pay for it
except you could get once a year one free credit score info from each of the three major credit bureaus
Equifax, Experian and Trans Union
Further below you will find additional articles relating to credit score
- the articles have fully valid info, just add this article info and you are covered and up-to-date
Click green for further info
Credit bureaus typically charge consumers to see their scores and reports. But there are more ways to get this information at no cost.
Credit scores are the three-digit figures that lenders consult to help determine whether to approve consumers for credit cards, mortgages and other products, as well as what interest rate to charge. The higher the score, the more favorable the terms are likely to be for the borrower.
Consumers who know their credit scores can use the information to their advantage. If the score is low, for example, they can hold off on applying for a loan until the score has improved. If the score is high, they can try to negotiate a better interest rate by pitting one lender's offer against another's.
Consumers and regulators have pushed for greater transparency surrounding credit scores, which lenders have in many cases treated as secret. Last month, the Consumer Financial Protection Bureau called on credit-card companies to provide consumers with the scores, a move the federal agency said could encourage borrowers to improve their credit.
Recently, more credit-card issuers have begun sharing information about credit scores. In March 2014, Capital One will begin making credit scores available to most of its credit-card customers when they access account information online.
In February 2014, Discover Financial Services started making credit scores available to all its credit-card customers both on monthly statements and online. Another credit-card issuer, Barclaycard US, a division of London-based Barclays, has been making credit scores available to most of its customers online and plans to expand the service to all its cardholders by year-end.
Lenders are also providing information online for their customers about factors that can affect those credit scores, such as high outstanding loan balances or late payments.
But the benefits for consumers may be limited. The scores the lenders are sharing are often only one of many factors they use in making lending and interest-rate decisions. Moreover, there are many different credit scores available, and lenders use various scores depending in part on what type of loan the applicant is seeking.
Capital One, for example, is providing consumers a score created by TransUnion, a major credit bureau. But the bank says it doesn't use this score when approving new applicants or making changes to the interest rates customers pay or other card terms
Discover and Barclays are sharing a score from FICO, an analytics software company based in San Jose, Calif. Cardholders can consult the score to determine whether their request to increase their line of credit, for example, could be approved.
But while Discover and Barclays use FICO scores to make lending decisions, they and most other card-issuers either weigh additional factors or use a FICO score as one data point in creating their own private score.
Furthermore, there are more than 50 different types of FICO scores available to lenders, says John Ulzheimer,
a consumer-credit expert at CreditSesame.com, a credit-management site, and a former manager at FICO. Different lenders may consult different scores, depending on the circumstances.
Not knowing the exact score a lender uses can lead to confusion for borrowers who may be expecting a better interest rate. Even a one-point difference between two credit scores can result in a lower or higher interest rate, says Odysseas Papadimitriou, chief executive at WalletHub.com, a credit-card comparison site.
Consumers should instead pay attention to their credit reports, which are used to create credit scores. Most consumers have a credit report at each of the three main credit bureaus, Equifax, Experian and TransUnion.
The reports include their loans, balances and payment history, including missed payments. A clean credit history often suggests a high credit score and a high likelihood of getting approved, Mr. Ulzheimer says.
Consumers should check their credit reports to look for errors that could negatively affect their score. The credit reports of one in four consumers contained an error that could change a credit score, according to findings released last year by the Federal Trade Commission.
Credit bureaus typically charge consumers to see their scores and reports. But there are more ways to get this information at no cost.
Based on federal law, consumers can check their credit report at each of the three major credit bureaus free once every 12 months, through a website called AnnualCreditReport.com.
At least seven states, including Colorado, Georgia and New Jersey, allow consumers additional opportunities to check their reports without charge.
Several websites, including CreditKarma.com, CreditSesame.com and Quizzle.com, offer free credit scores and free credit reports from one of the three main bureaus. The firms often make money from lenders, which pay referral fees if consumers apply for loans through the websites.
This past week, CreditKarma.com announced an $85 million investment from Google, an investment fund backed by Google, and three other firms.
The website is the first consumer-credit company the Google fund has invested in.
Click green for further info
Source:
(1) WSJ
(2) Credit.com
(3) STAF, Inc.
______________________________
This article is for every person worldwide
Protect your finances
Gold Set for Massive Rally
Interview with Jim Rickards:
Epoch Times: Mr. Rickards, please tell us about your new book, “The Death of Money,”
James Rickards: It’s both a prequel and a sequel to “Currency Wars,” my first book. It’s a prequel in a sense that “Currency Wars” opened with two chapters that describe a financial war game that took place in a top-secret weapons laboratory in 2009.
Click Currency war
That was the first time the Pentagon had ever done a war game where the only weapons could be financial instruments—stocks, bonds, derivatives, currencies.
How did I get involved in it? I start out talking about earlier involvement in national security matters and that led up to the war game. That part is the prequel.
The sequel is that in “Currency Wars” I also had a lot of history. There were five chapters of history and I thought that was very important.
If you are going to talk about gold with the reader, a lot of times if you jump right into gold, people think you are sort of a nut. I find if you tell the story through history people can see gold in a context, and when you talk about it, it doesn’t seem quite so strange.
In my new book, “The Death of Money,” there is no reason to repeat the history—that’s all in “Currency Wars”—so it’s more forward leaning, and talks more about the future of the international monetary system, a coming collapse.
And not just a collapse, because a lot of people are running around talking doom and gloom, the end of the dollar and all that. I might even agree with that, but I don’t think it has a lot of content.
What I try to do is provide a more in-depth analysis describing what will come next, what the future international monetary system will look like.
I point out that the international monetary system has already collapsed three times within the last 100 years—1914, 1939, and 1971—and that another collapse would not be at all unusual. But it’s not the end of the world. It’s just that the major powers sit down and reform the system. I talk about what that reformation will look like.
So that’s the sequel or the continuation of the story looking over the horizon. Some stuff that is before “Currency Wars” and some stuff that is after. And other content on the contemporary situation in Europe and China, so I hope people enjoy it.
Epoch Times: What about gold?
Mr. Rickards: Gold has a number of vectors. It is technically set up for a massive rally. Let me separate the fundamentals from the technicals.
Fundamentally my target price for gold is in the range of $7,000 to $9,000 per ounce. That’s not something that will happen straight away, but it’s not a 10-year forecast either. It’s a three- to five-year forecast, for the price to rise by about five to six times.
Epoch Times: What is the analysis based on?
Mr. Rickards: It’s based on a collapse of confidence in the dollar and other forms of paper money. To restore confidence you have two means: You either flood the world with liquidity from the International Monetary Fund in the form of Special Drawing Rights [SDRs, a form of money issued by the IMF], or we return to a gold standard.
The flooding of the market with SDRs would be highly inflationary, so that by itself would drive gold to a higher level. If they go back to a gold standard they will have to take a non-deflationary price.
People say there is not enough gold in the world. The answer is there is always enough gold in the world. It’s just a question of the price. Now, at $1,300 an ounce, there is not enough gold to support world trade and finance. But at $10,000 per ounce, there is enough gold. It’s not about gold, it’s about the price.
If you go back to a gold standard you have to avoid the blunder that England made in 1925, by going back to the gold standard at the wrong price, which proved to be highly deflationary, and contributed to the Great Depression.
I’ve done the math on that and the non-deflationary price for a gold standard today is about $9,000 per ounce.
Epoch Times: What is your target price based on?
Mr. Rickards: It’s based on supporting the paper money supply with gold. That would be using M1 [paper notes, coins, and checking accounts] as the monetary base, with a 40 percent backing. If you were to use M2 [M1 plus savings accounts and money market funds] with a 100 percent backing, that would be $40,000 per ounce.
Epoch Times: Gold investors would make a killing!
Mr. Rickards: It wouldn’t mean gold would be worth any more [in real terms]; it would just mean the dollar has collapsed. But yes, you get more dollars for the ounce. Let’s call that the three- to five-year forecast.
For the year ahead, those fundamentals are unlikely to play out in a year. But the technicals can play out. Technically, gold is set up for a major rally based on the decline in floating supply.
Epoch Times: Does that have to do with the gold crash last year?
Mr. Rickards: There was 500 tons removed from the GLD [Spider Gold Trust ETF] warehouse by the bullion banks. That was a massive physical overhang removed from the market. People don’t really understand how the GLD ETF works. When people are buying the GLD, they are not buying or selling gold; they are buying and selling shares.
The gold sits in a warehouse and is only available to authorized participants. If you look at the list of authorized participants and look at the list of bullion banks, they are pretty much the same people: Goldman Sachs, Citigroup, JPMorgan, Morgan Stanley, Deutsche Bank, HSBC, etcetera.
Those banks have the ability to buy up shares, take the shares, cash them in, and get physical gold. And they were doing that and they were sending that gold to Shanghai to support trading and leasing on the Shanghai gold exchange. So when you take 500 tons and dump it on the market, that’s about 20 percent of the annual mining supply. It’s a massive physical injection.
The other factor is just outright manipulation, which is very visible in Comex future prices. I’ve seen some statistical analysis that demonstrates market manipulation beyond the shadow of a doubt.
Epoch Times: A double whammy …
Mr. Rickards: So the point is that between central bank manipulation through Comex futures and bullion banks dumping the physical, and by cleaning out the GLD warehouse, and also the Comex warehouse for that matter, there is a massive amount of gold that came on the market over and above normal supply trends, putting massive selling pressure on the Comex.
So that was a bad combination, but the problem is that it’s not sustainable.
Epoch Times: So what now?
Mr. Rickards: You can’t loot the warehouse twice. Once you take all the gold out, you can’t take it out again. JPMorgan’s vault is low, Comex’s vault is low, the GLD’s vault is low.
Epoch Times: Where is gold going?
Mr. Rickards: One of the big movements right now is gold moving from places like UBS, Credit Suisse, and Deutsche Bank to private storage such as G4S, ViaMAT, and Brink’s. That doesn’t increase the supply of gold at all. But what it does do is it decreases the floating supply available for trading.
If I have my gold at UBS, UBS typically has the right of rehypothecation. But if I take my gold and move it over to ViaMAT, it’s just sitting there and it’s not being traded or rehypothecated.
So, if I move gold from UBS to ViaMAT, there’s no more or less gold in the world. I’m still the owner, and it’s the same amount of gold. But from a market perspective, the floating supply has decreased.
The biggest player in that is China. China is buying thousands of tons of gold secretly through deception and using military intelligence assets, covert operations, etcetera.
Epoch Times: So why will gold rally then?
Mr. Rickards: There is a total supply of gold in the world. But to corner a market or squeeze a market, you don’t need to buy all the gold, you just need to buy the floating supply. Think of all the gold in the world, it’s about 170,000 tons. Think of a little sliver on top of it that is the floating supply available for trading.
Gold that’s in the Comex or JPMorgan or GLD vaults is available for trading. Gold purchased by the Chinese will not see the light of day again for the next 300 years, and is not available for trading. So with the gold going from West to East, and from GLD to China, the total amount of gold is unchanged, but the floating supply is declining rapidly.
This means that the paper gold that sits on top of the floating supply is becoming more and more unstable and vulnerable to a short squeeze, because there is not enough physical gold to support it. So that’s likely to collapse at one point and lead to a short squeeze and heavy buying.
Epoch Times: Mr. Rickards, thank you very much for the interview.
James Rickards is the author of the national bestseller “Currency Wars” and the forthcoming book “The Death of Money.” He is a portfolio manager at West Shore Group and an adviser on international economics and financial threats to the Department of Defense and the U.S. intelligence community.
Source: The Epoch Times - STAF, Inc. endorses Click The Epoch Times
Links
Protect your finances
Gold Set for Massive Rally
Interview with Jim Rickards:
Epoch Times: Mr. Rickards, please tell us about your new book, “The Death of Money,”
James Rickards: It’s both a prequel and a sequel to “Currency Wars,” my first book. It’s a prequel in a sense that “Currency Wars” opened with two chapters that describe a financial war game that took place in a top-secret weapons laboratory in 2009.
Click Currency war
That was the first time the Pentagon had ever done a war game where the only weapons could be financial instruments—stocks, bonds, derivatives, currencies.
How did I get involved in it? I start out talking about earlier involvement in national security matters and that led up to the war game. That part is the prequel.
The sequel is that in “Currency Wars” I also had a lot of history. There were five chapters of history and I thought that was very important.
If you are going to talk about gold with the reader, a lot of times if you jump right into gold, people think you are sort of a nut. I find if you tell the story through history people can see gold in a context, and when you talk about it, it doesn’t seem quite so strange.
In my new book, “The Death of Money,” there is no reason to repeat the history—that’s all in “Currency Wars”—so it’s more forward leaning, and talks more about the future of the international monetary system, a coming collapse.
And not just a collapse, because a lot of people are running around talking doom and gloom, the end of the dollar and all that. I might even agree with that, but I don’t think it has a lot of content.
What I try to do is provide a more in-depth analysis describing what will come next, what the future international monetary system will look like.
I point out that the international monetary system has already collapsed three times within the last 100 years—1914, 1939, and 1971—and that another collapse would not be at all unusual. But it’s not the end of the world. It’s just that the major powers sit down and reform the system. I talk about what that reformation will look like.
So that’s the sequel or the continuation of the story looking over the horizon. Some stuff that is before “Currency Wars” and some stuff that is after. And other content on the contemporary situation in Europe and China, so I hope people enjoy it.
Epoch Times: What about gold?
Mr. Rickards: Gold has a number of vectors. It is technically set up for a massive rally. Let me separate the fundamentals from the technicals.
Fundamentally my target price for gold is in the range of $7,000 to $9,000 per ounce. That’s not something that will happen straight away, but it’s not a 10-year forecast either. It’s a three- to five-year forecast, for the price to rise by about five to six times.
Epoch Times: What is the analysis based on?
Mr. Rickards: It’s based on a collapse of confidence in the dollar and other forms of paper money. To restore confidence you have two means: You either flood the world with liquidity from the International Monetary Fund in the form of Special Drawing Rights [SDRs, a form of money issued by the IMF], or we return to a gold standard.
The flooding of the market with SDRs would be highly inflationary, so that by itself would drive gold to a higher level. If they go back to a gold standard they will have to take a non-deflationary price.
People say there is not enough gold in the world. The answer is there is always enough gold in the world. It’s just a question of the price. Now, at $1,300 an ounce, there is not enough gold to support world trade and finance. But at $10,000 per ounce, there is enough gold. It’s not about gold, it’s about the price.
If you go back to a gold standard you have to avoid the blunder that England made in 1925, by going back to the gold standard at the wrong price, which proved to be highly deflationary, and contributed to the Great Depression.
I’ve done the math on that and the non-deflationary price for a gold standard today is about $9,000 per ounce.
Epoch Times: What is your target price based on?
Mr. Rickards: It’s based on supporting the paper money supply with gold. That would be using M1 [paper notes, coins, and checking accounts] as the monetary base, with a 40 percent backing. If you were to use M2 [M1 plus savings accounts and money market funds] with a 100 percent backing, that would be $40,000 per ounce.
Epoch Times: Gold investors would make a killing!
Mr. Rickards: It wouldn’t mean gold would be worth any more [in real terms]; it would just mean the dollar has collapsed. But yes, you get more dollars for the ounce. Let’s call that the three- to five-year forecast.
For the year ahead, those fundamentals are unlikely to play out in a year. But the technicals can play out. Technically, gold is set up for a major rally based on the decline in floating supply.
Epoch Times: Does that have to do with the gold crash last year?
Mr. Rickards: There was 500 tons removed from the GLD [Spider Gold Trust ETF] warehouse by the bullion banks. That was a massive physical overhang removed from the market. People don’t really understand how the GLD ETF works. When people are buying the GLD, they are not buying or selling gold; they are buying and selling shares.
The gold sits in a warehouse and is only available to authorized participants. If you look at the list of authorized participants and look at the list of bullion banks, they are pretty much the same people: Goldman Sachs, Citigroup, JPMorgan, Morgan Stanley, Deutsche Bank, HSBC, etcetera.
Those banks have the ability to buy up shares, take the shares, cash them in, and get physical gold. And they were doing that and they were sending that gold to Shanghai to support trading and leasing on the Shanghai gold exchange. So when you take 500 tons and dump it on the market, that’s about 20 percent of the annual mining supply. It’s a massive physical injection.
The other factor is just outright manipulation, which is very visible in Comex future prices. I’ve seen some statistical analysis that demonstrates market manipulation beyond the shadow of a doubt.
Epoch Times: A double whammy …
Mr. Rickards: So the point is that between central bank manipulation through Comex futures and bullion banks dumping the physical, and by cleaning out the GLD warehouse, and also the Comex warehouse for that matter, there is a massive amount of gold that came on the market over and above normal supply trends, putting massive selling pressure on the Comex.
So that was a bad combination, but the problem is that it’s not sustainable.
Epoch Times: So what now?
Mr. Rickards: You can’t loot the warehouse twice. Once you take all the gold out, you can’t take it out again. JPMorgan’s vault is low, Comex’s vault is low, the GLD’s vault is low.
Epoch Times: Where is gold going?
Mr. Rickards: One of the big movements right now is gold moving from places like UBS, Credit Suisse, and Deutsche Bank to private storage such as G4S, ViaMAT, and Brink’s. That doesn’t increase the supply of gold at all. But what it does do is it decreases the floating supply available for trading.
If I have my gold at UBS, UBS typically has the right of rehypothecation. But if I take my gold and move it over to ViaMAT, it’s just sitting there and it’s not being traded or rehypothecated.
So, if I move gold from UBS to ViaMAT, there’s no more or less gold in the world. I’m still the owner, and it’s the same amount of gold. But from a market perspective, the floating supply has decreased.
The biggest player in that is China. China is buying thousands of tons of gold secretly through deception and using military intelligence assets, covert operations, etcetera.
Epoch Times: So why will gold rally then?
Mr. Rickards: There is a total supply of gold in the world. But to corner a market or squeeze a market, you don’t need to buy all the gold, you just need to buy the floating supply. Think of all the gold in the world, it’s about 170,000 tons. Think of a little sliver on top of it that is the floating supply available for trading.
Gold that’s in the Comex or JPMorgan or GLD vaults is available for trading. Gold purchased by the Chinese will not see the light of day again for the next 300 years, and is not available for trading. So with the gold going from West to East, and from GLD to China, the total amount of gold is unchanged, but the floating supply is declining rapidly.
This means that the paper gold that sits on top of the floating supply is becoming more and more unstable and vulnerable to a short squeeze, because there is not enough physical gold to support it. So that’s likely to collapse at one point and lead to a short squeeze and heavy buying.
Epoch Times: Mr. Rickards, thank you very much for the interview.
James Rickards is the author of the national bestseller “Currency Wars” and the forthcoming book “The Death of Money.” He is a portfolio manager at West Shore Group and an adviser on international economics and financial threats to the Department of Defense and the U.S. intelligence community.
Source: The Epoch Times - STAF, Inc. endorses Click The Epoch Times
Links
- Currency Wars: The Making of the Next Global Crisis: James ...www.amazon.com › ... › Money & Monetary Policy
Amazon.com
“Rickards . . . has written one of the scariest books I've read this year. Though I was tempted at first to dismiss him as alarmist, his intelligent reasoning soon ... - Book Review: James Rickards' "Currency Wars" - Forbeswww.forbes.com/.../book-review-james-rickards-currency-wars/
Forbes - Mar 12, 2012 - In laying out the issues of real money compellingly, James Rickardsadds intelligently to the policy debate. - James G. Rickards - Wikipedia, the free encyclopediaen.wikipedia.org/wiki/James_G._Rickards
James G. Rickards is an American lawyer, economist, and investment banker ...Rickards' first book, Currency Wars: The Making of the Next Global Crisis, was .. - iTunes - Books - The Death of Money by James Rickardshttps://itunes.apple.com/us/.../the-death-of-money/id666466961?...
Get a free sample or buy The Death of Money by James Rickards on the iTunes Store. You can read this book with iBooks on your iPhone, iPad, or iPod touch. __________________________________________________________________
Notice - Important:
STAF, Inc.'s editors have placed several good-credit-articles in this blog because
credit and all related info is one of the most important topics for every person.
We have aimed to put the most relevant, practical information in this site.
Study slowly and well every article in order to build a strong protective knowledge for life.
Some articles have additional topic links inside the text or listed at the end of the text.
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In this STAF, Inc.'s website, in tab = site "services" and there in the sub-tab "Investments" you
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Article 1 of 2 (Article 2 of 2 next below)
Benefits of Living with no Credit Card debt or other Debt
Important, life-saving information
for every person in the U.S. and for everyone worldwide
Article 1 of 2
Click green for further info
Living with credit card balances month after month, carrying a car loan for five or more years, resigning ourselves to long-term student debt and a lifetime of mortgage payments have become so common, it almost seems that’s how things are supposed to be.
But what if we chose a different road?
Though financial, personal and career factors can make the idea of “choice” seem novel or far-fetched,
YOU CAN change YOUR spending patterns and start a journey toward a debt free life.
If you’re tired of dreading the walk to the mailbox, exhausted from living on a budget that’s stretched thin by interest and fees, or worried about the stress that chronic debt is putting on your relationships,
here are some incentives for you to change your ways.
Some benefits of living with not credit card debts:
1. Avoiding interest
According to CreditCards.com, the average interest rate on new credit card offers is 14.95 percent.
The average credit card debt for those who carry a balance is about $5,000. That’s a lot of interest that Americans are building into their lives and into their monthly budgets. Keep in mind, those numbers are just averages.
For folks with bad credit histories, interest rates can be significantly higher, and some households carry much larger balances from month to month.
Becoming debt-free lets you avoid all that
Interest has a way of sapping our budgets and (much too easily) becoming a way of life. Over time, interest on credit cards and other unsecured debt can cost consumers thousands and leave them with little tangible benefit.
2. Saving more
The statistics compiled by the Federal Reserve, the IRS, and U.S. Census Bureau in 2013 showed that
(1) 25 percent of households have no savings at all and (2) the average retirement nest egg is only $35,000.
Avoiding interest and fees on debt leaves more money in our pockets.
It’s not a huge leap to assume those able to dodge long-term debt have more choices about how to direct their income and a greater opportunity to save. Not having to shoulder monthly bills inflated by interest can let us more aggressively save for college, retirement, a home purchase, or an emergency.
When we reframe how we think about interest and redefine it as a “tax” on debt (a tax that’s paid to private corporations, no less) then it becomes a bit less palatable and harder to swallow long-term.
3. Being able to seize investment opportunities
Living debt-free carries a very powerful but often-ignored benefit: being able to spend when the moment is right. Those without lingering debt can seize investment opportunities in situations where timing and speed matter. It’s a painful twist of logic, but it’s true: Not having cash can be expensive. It’s not just the interest that costs us; it’s the price of lost opportunity.
4. Having the freedom to make lifestyle changes
Chronic, long-term debt can limit our choices in life. It can keep us saddled to a place we no longer love, stuck in a relationship that no longer works, tied to a job that no longer inspires us — personal costs that few interest rates can equal. But making conscious choices and taking disciplined action to avoid debt at nearly all cost can begin to change this losing equation.
Being able to predict our expenses, plan for savings, and slowly build the resources to fund change in our lives is empowering. And, arguably, it all starts with avoiding debt.
5. Living with less worry
Not measured by any statistic or reflected in any report is the peace of mind that living debt-free provides. Unburdened by interest and late fees, free from the shuffle of trying to stay ahead while that interest compounds, not bothered by fears of repossession and dings to credit scores (not to mention everything a bad credit score means these days) is a real quality-of-life benefit.
For consumers who’ve embraced a lifetime of constant debt supported by easy credit, the Zen-like state of living debt-free can take some getting used to.
Again, it’s important to note that in our post-recession economic reality, many families have no choice but to live in at least a temporary state of indebtedness. Long-term unemployment, stagnant wages, upside-down mortgages and other factors make debt simply unavoidable for some. But if there’s one thing that tough economic times can teach us, it’s that even prosperity can be a precarious, unsafe thing.
With that truth in mind, living debt-free and having minimal exposure during extreme economic swings is just smart strategy. And when you consider the very real benefits that a debt-free life can offer, the idea becomes even more compelling.
Click green for further info
Source: MoneyTalks (Article 2 of 2 next below)
_______________________
==========================================================================================================================================================
(Article 1 of 2 next above)
This person did get rid of all debts to live happy, fulfilling, secured life
Do the same and live happily ever after
Article 2 of 2
In this article one lady shows
How living debt free gave her a much better life
and explains how she got rid of all her debts
She lives now fully debt free - This is heaven (says she)
Do the same as she did and live in heaven while you live still in this world.
(1) Apply in your life the information you'll get from this website and this tab - (2) teach it to your children early starting about at 2 years of age - (3) get them involved, have them "helping" you in your calculations and plans - (4) teach your children to become and stay debt free - then you will give them one of the best gifts for life.
Click green for further info
I’ve reached a great place to be: If my job were to disappear, I have enough money to live what I consider an acceptable lifestyle for the rest of my life. It is my very own earthly heaven.
Peace - happiness - security - yet, I can afford all I want and more. You can, too - do what I did. You can. Start today.
I’ve based this on computations using several online retirement calculators, along with some assumptions about my future. While lacking a crystal ball, I’m confident I could pull it off. That’s pretty good for a 58-year-old single woman, and definitely bucking the trend (click)
So I’m saying happy financial independence day to myself.
How did she get there? She offers several steps to achieve financial freedom. The details below.
Minimize debt
I have zero debt. I carried a credit card balance for a month once or twice, if memory serves, many years ago.
Now I live strictly by the rule that if I can’t afford to pay for something today, I can’t afford it.
Credit cards for me are strictly a convenience offering benefits like extended warranties and rewards.
I’ve purchased only one new car in my life and that was many years ago. The rest have been well-researched used models. The next one will be purchased with cash.
The house is paid off – a 30-year mortgage ditched in about 11 years. Extra payments against the principal each month, plus money from a small inheritance, retired that debt. You can’t imagine how good a feeling that was and still is.
Watch your spending
Some people need to track every dime they spend. I generally don’t because I make saving a top priority, and my needs consume far less than I earn. Born without the shopping gene, my wants are few, and when I do buy, I shop for quality, a good price, and with an appreciation of how my purchases will enhance my enjoyment of life.
When you shop you can use credit cards (without fee or with a low fee) that give free benefits - BUT: always pay the credit card bill immediately in FULL when the statement arrives. NEVER buy more than you can pay in full without hurting some other of your finances.
Some friends say I’m the most frugal person they know, and that’s fine with me. Being frugal comes in handy when you’re faced with an unexpected loss of income. When I’ve been there, it wasn’t a hardship to cut spending on food, ditch paid TV, and turn the thermostat down in the cold months. Oh, yes, and watch every dime. Tracking spending becomes much more important when there’s not much coming in.
Invest wisely
To save enough for retirement, you need to invest. But, for the average person, investing is a scary business.
I reduce the complexity by investing in low-cost mutual funds. I seek advice from people whose judgment has earned my trust. Now that I’m self-employed, I use a solo 401(k) to contribute a large percentage of my income to retirement funds.
Confession: Although I started saving early, I didn’t start early enough. If it weren’t for the fact that I worked for seven years for a company that at the time had a generous profit-sharing plan, my retirement funds wouldn’t be as healthy as they are now.
Click: www.fi.com to download Our Free Guide For Investors with $500k+ Portfolios
Earn as much as possible
I remember the days when journalists used typewriters. Now my work is online-based. That requires embracing new technology.
Maintaining competitiveness in the job marketplace also requires perfecting essential skills no matter what line of work you’re in. Your skills aren’t worth much if no one has any use for them. (I once knew a guy who repaired typewriters for a living when personal computers were becoming popular. I wonder what became of him.)
If the job that employs your skills has gone away or doesn’t pay much, find other ways to generate income. Pick up some part-time jobs or start a simple business with low overhead, like dog walking or pet sitting. Been there, done that. The key is not to touch the retirement funds.
Another confession: I sometimes did a lousy job of negotiating salary. Don’t be afraid to ask for what you’re really worth.
Focus on the future
As a single woman living in a two-income world, I knew I had to make smart long-term choices. I’ve always purchased modest, older but comfortable homes with mortgage payments that weren’t a stretch. In my later years, I purposefully chose to move to an area of the country I love (north-central Montana) where the cost of living is low.
To properly focus on the future, you also have to figure out what you value in life. For instance, travel is very important to me. In order to have enough money for retirement and also enjoy trips here and abroad, I knew I had to live modestly and save.
Visualize your goals
Goals can be large and small, short term or distant. They’re an expression of your personality and your commitment to yourself. Think about what motivates you. If the vision of you ending up as a bag lady provides the will to increase your 401(k) savings, go with it. If you happily envision yourself on a beach in Sicily, that will work too.
So, you may ask, why don’t I retire now? Here’s why:
- I don’t want to. I still enjoy working.
- Working more years will increase what I can collect in Social Security monthly payments.
- I also plan to further increase that amount by delaying when I collect Social Security until age 70.
- I’d feel more comfortable with an even larger financial cushion. Stuff happens.
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Source: MoneyTalks
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Article 1 of 3 (Article 2 of 3 next below)
Everyone needs this info to stay up-to-date with a new computer era money
The Bitcoin Ideology
Click green for further info Click: Images for bitcoin
On a bitcoin image you'll see that a bitcoin has on it this partially Latin text:
Libertas - Aequitas - Veritas - In Cryptography We Trust
meaning:
Freedom - Equity - Truth - In Secured Communication We Trust
Cryptography is the practice and study of techniques for secure communication in the presence of third parties
(called adversaries)
In cryptography, an adversary (rarely opponent, enemy) is a malicious entity whose aim is to prevent the users of the cryptosystem from achieving their goal (primarily privacy, integrity, and availability of data). An adversary's efforts might take the form of attempting to discover secret data, corrupting some of the data in the system, spoofing the identity of a message sender or receiver, or forcing system downtime.
Etymology of the word 'Bitcoin'
Etymology = the study of the origin of words and the way in which their meanings have changed throughout history
The word bit is a colloquial (= used in ordinary or familiar conversation) expression referring to specific coins in various coinages (= coins collectively = the volume of coinage in circulation) throughout the world
Bitcoin
A digital or virtual currency that uses peer-to-peer technology to facilitate (= make easier) instant payments. Bitcoin is a type of alternative currency known as a cryptocurrency (crypto = short for cryptography; cryptography = the art of writing or solving codes), which uses cryptography for security, making it difficult to counterfeit. Bitcoin issuance and transactions are carried out collectively by the network, with no central authority. The total number of Bitcoins that will be issued is capped at 21 million to ensure they are not devalued by limitless supply. They are divisible to 8 decimal places; Bitcoin fractions are called satoshis (= see below in the 2nd article). Users store their Bitcoins in a digital wallet, while transactions are verified by a digital signature known as a public-encryption key.
Investopedia explains 'Bitcoin'
The first Bitcoin specification and proof-of-concept was published in 2009 by an individual or individuals under the pseudonym Satoshi Nakamoto. Satoshi left the project toward the end of 2010, leaving the motivation behind setting up Bitcoin an enduring mystery.
Bitcoins are created through a “mining” process that involves complex number crunching by the computers in this network; this process currently creates 25 Bitcoins every 10 minutes. The limit of 21 million is expected to be reached in the year 2140, after which the total number of Bitcoins will remain unchanged.
A basic premise underpinning the Bitcoin is that because it is decentralized and not issued by government, it is supposedly free from interference and manipulation, in stark contrast to the world’s fiat currencies.
However, these same features confer significant disadvantages on the Bitcoin. It is a complex product that is difficult to understand, making its widespread acceptance doubtful. Since it is a virtual currency, it cannot be stored in physical form. As a result, if you have not stored a backup copy of your Bitcoin holdings, your digital hoard can be wiped out by something as mundane as a computer crash. Its anonymity has also made it a favored currency for illegal activities such as tax evasion, smuggling and weapons procurement*). Additionally, Bitcoin prices are very volatile thanks to rampant speculation.
*) Procurement is the acquisition of goods, services or works from an outside external source. It is favorable that the goods, services or works are appropriate and that they are procured at the best possible cost to meet the needs of the purchaser in terms of quality and quantity, time, and location. Corporations and public bodies often define processes intended to promote fair and open competition for their business while minimizing exposure to fraud and collusion.
Article 1 of 3
(Article 1 of 3 next above)
Click: Images for bitcoin
On a bitcoin image you'll see that a bitcoin has on it this partially Latin text:
Libertas - Aequitas - Veritas - In Cryptography We Trust
meaning:
Freedom - Equity - Truth - In Secured Communication We Trust
Cryptography is the practice and study of techniques for secure communication in the presence of third parties
(called adversaries)
In cryptography, an adversary (rarely opponent, enemy) is a malicious entity whose aim is to prevent the users of the cryptosystem from achieving their goal (primarily privacy, integrity, and availability of data). An adversary's efforts might take the form of attempting to discover secret data, corrupting some of the data in the system, spoofing the identity of a message sender or receiver, or forcing system downtime.
The Bitcoin Ideology
IF you’ve only recently tuned in to the seemingly endless conversation about bitcoin, you could be forgiven for thinking that the digital currency is little more than the latest Wall Street fetish or a juiced-up version of PayPal. After all, so many headlines in the last few weeks have focused on its market price and the cool stuff you can get with it: Bitcoin breaks $1,000! Bitcoin plunges by a half! Bitcoin has a banner Black Friday! Use bitcoin to buy a ride on Richard Branson’s starship!
But all the talk about bitcoin’s value (or lack thereof) obscures the fact that it was never really meant as an investment nor primarily as a way to purchase sex toys or alpaca socks — let alone a brand-new Lamborghini. One could argue that bitcoin isn’t chiefly a commercial venture at all, a funny thing to say about a kind of online cash. To its creators and numerous disciples, bitcoin is — and always has been — a mostly ideological undertaking, more philosophy than finance.
“The ideas behind it — that’s what attracted me,” said Elizabeth Ploshay, a regular writer for Bitcoin magazine, which describes its mission as being “the most accurate and up-to-date source of information, news and commentary about bitcoin.” And if the magazine has a mission, so, too, does the subject that it covers. As Ms. Ploshay explained it, bitcoin isn’t merely money; it’s “a movement” — a crusade in the costume of a currency. Depending on whom you talk to, the goal is to unleash repressed economies, to take down global banking or to wage a war against the Federal Reserve.
For those with an uncertain understanding of its history, bitcoin entered the world on Jan. 3, 2009, when a shadowy hacker — or team of hackers — working under the name Satoshi Nakamoto released an ingenious string of computer code that established a system permitting people to transfer money to one another online, directly, anonymously and outside government control, in much the way that Napster once allowed the unrestrained transfer of music files. In a 500-word essay that accompanied the code, Nakamoto suggested that the motive for creating bitcoin was anger at the financial crisis: “The root problem with conventional currencies is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”
It was fundamentally a political document and, as such, it attracted followers among libertarian and anarchist groups who saw in bitcoin a means of removing the money supply from the grasping hands of government. In blog posts and at bitcoin conferences around the globe, these evangelists began to spread its gospel. It is only in the last few months, as bitcoin has attracted the attention of political parties, regulators and speculative investors that the narrative of bitcoin as a tool for change has been drowned out by a simpler story line: that of bitcoin as a kind of crypto-credit card — or, even more, as a digitized casino game.
“Price is the least interesting thing about bitcoin,” said Roger Ver, an early investor who is often called, in a typical movement phrase, the Bitcoin Jesus. “At first, almost everyone who got involved did so for philosophical reasons. We saw bitcoin as a great idea, as a way to separate money from the state.”
While the bitcoin hype has inspired Ron Paulian dreams of evading inflation and undermining the Federal Reserve, the currency has also gained cachet among less conspicuously conservative adherents, like the founders of BitPesa, a start-up firm in Nairobi, Kenya, that plans to help Africans abroad send money to their families at home. According to the World Bank, $1.3 billion in remittances is sent each year to Kenya, a process that costs about $110 million in fees. By using bitcoin’s peer-to-peer technology to avoid banks and wire-transfer companies like Western Union, BitPesa hopes to reduce these fees by a third, saving ordinary Africans $74 million annually.
You know you’re talking to a true bitcoin believer if you hear the word “disruption.” But that’s how bitcoin is seen within the broader movement: as an unruly tool with potentially transformative effects on entrenched businesses like retail payment and asset management.
“Right now in the United States, bitcoin is mainly considered a get-rich-quick scheme with a little financial privacy thrown in,” said Jon Matonis, the executive director of the Bitcoin Foundation, the self-proclaimed center of the decentralized crusade. “But its larger implications down the road are major disruptions to certain legacy industries.”
Mr. Matonis added that the ideology of bitcoin was wide enough to accommodate people on all points on the spectrum — “from libertarian capitalists to socialists.” It not only has a following among the anti-central bank crowd, he said; it has also proved attractive to communitarians like the residents of the Kreuzberg neighborhood in Berlin, which now boasts the highest density of businesses accepting bitcoin in the world.
There are even those who see bitcoin as the ultimate alternative to the global banking system. Ryan Singer, a co-founder of the bitcoin exchange Tradehill, based in San Francisco, compared the currency to email, conjecturing that it would gradually supplant traditional banking, just as digital messaging displaced handwritten letters. “When kids wake up to the fact that they don’t need their parents’ help to create a bitcoin wallet,” Mr. Singer said, “when they can use bitcoins for free international transactions, at any hour, in every major city on the planet, then you’ll know that something has changed.”
Perhaps the best proof of bitcoin’s ideological underpinnings is that a schism has emerged in recent weeks between moderate elements in the movement who sense the necessity of cooperating with officialdom, and a more uncompromising faction that wants to keep bitcoin free from any government regulation. The hard-line bloc is exemplified by the crypto-anarchist developers of a bitcoin product called Dark Wallet, which is scheduled to be introduced next year and will include extra protections to ensure that bitcoin transactions remain secure, anonymous and difficult to trace.
“We see this as part of the total sublation (= The act of taking or carrying away; removal) of the state,” said Cody Wilson, Dark Wallet’s director, who gained fame earlier this year when he published online the blueprints to a pistol that could be manufactured with a 3-D printer. “I know I sound like some kind of weird Jehovah’s Witness, but we’ve only just begun. We admit that we are ideologues.”
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Source: (1) Investopedia, (2) NYT & Alan Feuer - Alan Feuer he is a metropolitan reporter for The New York Times,
(3) Staf. Inc. Click: Images for bitcoin
(The picture shows that a bitcoin has a partially Latin text on it -
for the meaning of it see above next to the title of the article 1 of 3)
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Article 2 of 3 (Article 1 of 3 next above)
Another Bitcoin Mystery: How Will the IRS Tax It?
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Click: Images for bitcoin
(The picture shows that a bitcoin has a partially Latin text on it -
for the meaning of it see above next to the title of the article 1 of 3)
Despite a recent plunge, bitcoin has had a banner year. Now comes the hard part—figuring out the taxes on it.
For the uninitiated, bitcoin is the most prominent of several "virtual currencies"—money that exists only online and isn't backed by any government. Released in 2009 by an unknown person or group going by the name Satoshi Nakamoto, bitcoin is maintained by a decentralized network of computers, called "miners," that process and verify transactions. As of Friday afternoon, the value of all bitcoins in circulation was nearly $8 billion, according to CoinDesk.
This year the price of a bitcoin has risen from about $13.50 to about $650 on some exchanges, down from a November high of about $1,200 just before concerns arose that China will crack down on the virtual currency.
Experts say, however, that there's no agreement on a host of fundamental questions for U.S. taxpayers holding or using virtual currencies. "People who invested in bitcoin or used it to buy goods or services this year have gains or losses, but no rules for reporting them," says Omri Marian, a professor of law at the University of Florida in Gainesville. "What should they do in April?"
Among the pressing issues: When should bitcoin be considered a commodity, a currency or a capital asset for tax purposes? Are bitcoin transactions similar to barter? Is bitcoin subject to the same stringent tax rules as secret offshore accounts? And how will U.S. officials keep bitcoin, which is even more anonymous than cash, from being used to promote tax evasion or money laundering?
So far, the Internal Revenue Service hasn't ruled on or addressed such issues directly. An agency spokesman released the following statement: "The IRS continues to study virtual currencies and intends to provide some guidance on the tax consequences" of transactions involving them. The agency is also "aware of the potential tax compliance risks posed by virtual currencies," he added.
Meanwhile, bitcoin investors and users should be aware of some thorny basic issues. If bitcoin is a capital asset like a stock, says David Shapiro, a principal at PricewaterhouseCoopers in Washington, then long-term capital gains and losses—those on assets held for more than a year—would qualify for a top federal rate of about 24%. But losses above $3,000 could only be deducted against other capital gains.
If, on the other hand, bitcoin counts as a currency (like euros or yen), then gains will be taxed at federal rates on ordinary income up to 43.4%, Mr. Shapiro says, and losses will be fully deductible against ordinary income like wages.
In its preliminary filing, the Winklevoss Bitcoin Trust—a public fund registered by brothers Cameron and Tyler Winklevoss, of Facebook fame—said it intends to treat bitcoin as a capital asset instead of a currency, unless the IRS rules otherwise.
Clearly, someone could have a taxable gain or loss in bitcoin when it is sold or given away. But there could also be a taxable gain or loss when bitcoin is used simply to purchase goods or services, says Mindi Lowy, a tax director at PricewaterhouseCoopers in New York. "The fact that using bitcoin to buy something could trigger taxes will come as a surprise to typical consumers," she says. Most people, after all, don't think of spending money as an act that could generate taxable gains or losses.
Taxpayers may also have difficulty tracking a bitcoin's "cost basis," which is the price used as the starting point for measuring taxable gain or loss, says Ms. Lowy. Unlike with assets such as stock or mutual funds, there's no institution keeping bitcoin records, and taxpayers may not even know they need to do so themselves.
Also up in the air: whether offshore-account reporting rules apply to bitcoin. Taxpayers with $10,000 or more in non-U.S.-based financial accounts often have to report the accounts to the U.S. even if they don't generate income, or else they risk severe penalties.
A spokesman for FinCen, the U.S. Treasury Department unit charged with preventing financial crimes, says this question is "under consideration and will be made in consultation with the IRS," but it's unclear when.
click: Welcome To FinCEN.gov
The IRS could face a bigger headache if bitcoin and its kin replace tax havens as the venue of choice for tax evaders, Mr. Marian says.
"Virtual currencies possess the traditional benefits of tax havens: anonymity and no tax," he says. While rules now taking effect are putting pressure on governments and financial institutions to end offshore tax evasion, he adds, "virtual currencies pose a threat to this recent success because they don't depend on banks or governments."
Mr. Marian says that he and many other specialists are "stumped" as to how the IRS will rule on bitcoin. He says his own sense is that it's a commodity similar to gold, because there's a finite supply and it's a store of value. He adds that some bitcoin transactions may be akin to barter—which has its own tricky tax rules.
In the absence of guidance, advisers are telling clients that bitcoin income, gains and losses should be declared to the IRS.
"If you take a reasonable position, they probably will accept it," says Jonathan Horn, a certified public accountant in New York. He plans to advise his clients to file foreign account disclosures if they meet certain thresholds and hold bitcoin through an entity that isn't located in the U.S.
Taxpayers who have bitcoin and flout the tax rules, Mr. Horn warns, "are opening themselves to penalties, interest and possible fraud prosecution."
Click green for further info
Source: (1) WSJ, (2) STAF, Inc. Click: Images for bitcoin
(The picture shows that a bitcoin has a partially Latin text on it -
for the meaning of it see above next to the title of the article 1 of 3)
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Article 3 of 3 (Articles 1-2 of 3 next above)
In a bunker in Iceland,
computers are whirring - and extracting an invisible currency
Into the Bitcoin Mines
to whir= a sound of buzzing or vibration
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On the flat lava plain of Reykjanesbaer, Iceland, near the Arctic Circle, you can find the mines of Bitcoin.
To get there, you pass through a fortified gate and enter a featureless yellow building. After checking in with a guard behind bulletproof glass, you face four more security checkpoints, including a so-called man trap that allows passage only after the door behind you has shut. This brings you to the center of the operation, a fluorescent-lit room with more than 100 whirring silver computers, each in a locked cabinet and each cooled by blasts of Arctic air shot up from vents in the floor.
These computers are the laborers of the virtual mines where Bitcoins are unearthed. Instead of swinging pickaxes*), these custom-built machines, which are running an open-source Bitcoin program, perform complex algorithms 24 hours a day. If they come up with the right answers before competitors around the world do, they win a block of 25 new Bitcoins from the virtual currency’s decentralized network. *) click Images for pickaxe or click: Pickaxe
The network is programmed to release 21 million coins eventually. A little more than half are already out in the world, but because the system will release Bitcoins at a progressively slower rate, the work of mining could take more than 100 years.
The scarcity — along with a speculative mania that has grown up around digital money — has made each new Bitcoin worth as much as $1,100 in recent weeks.
Bitcoins are invisible money, backed by no government, useful only as a speculative investment or online currency, but creating them commands a surprisingly hefty real-world infrastructure.
“What we have here are money-printing machines,” said Emmanuel Abiodun, 31, founder of the company that built the Iceland installation, shouting above the din of the computers. “We cannot risk that anyone will get to them.”
Mr. Abiodun is one of a number of entrepreneurs who have rushed, gold-fever style, into large-scale Bitcoin mining operations in just the last few months. All of these people are making enormous bets that Bitcoin will not collapse, as it has threatened to do several times.
Just last week, moves by Chinese authorities caused the price of a Bitcoin to drop briefly below $500. If the system did crash, the new computers would be essentially useless because they are custom-built for Bitcoin mining.
Miners, though, are among the virtual-currency faithful, believing that Bitcoin will turn into a new, cheaper way of sending money around the world, leaving behind its current status as a largely speculative commodity.
Most of the new operations popping up guard their secrecy closely, but Mr. Abiodun agreed to show his installation for the first time. An earnest young Briton, with the casual fashion taste of the tech cognoscenti, he was a computer programmer at HSBC in London when he decided to invest in specialized computers that would carry out constant Bitcoin mining.
The computers that do the work eat up so much energy that electricity costs can be the deciding factor in profitability. There are Bitcoin mining installations in Hong Kong and Washington State, among other places, but Mr. Abiodun chose Iceland, where geothermal and hydroelectric energy are plentiful and cheap. And the arctic air is free and piped in to cool the machines, which often overheat when they are pushed to the outer limits of their computing capacity.
The operation can baffle even those entrusted with its care. Helgi Helgason, a burly, bald Icelandic man who oversees the data center that houses the machines, said that when he first heard that a Bitcoin mining operation was moving in he expected something very different. “I thought we’d bring in machines and put bags behind them and the coins would fall into them,” said Mr. Helgason, with a laugh.
Since then, the education he has received about Bitcoins has been enlightening, but only to a point.
“It’s a strange business,” he said, “and I can’t say that I understand it.”
Until just a few months ago, most Bitcoin mining was done on the home computers of digital-money fanatics. But as the value of a single Bitcoin skyrocketed over the last few months, the competition for new coins set off a race that quickly turned mining into an industrial enterprise.
“Even if you had hardware earlier this year, that is becoming obsolete,” said Greg Schvey, a co-founder of Genesis Block, a virtual-currency research firm. “You are talking about order-of-magnitude jumps.”
The work the computers do is akin to guessing at a lottery number. The faster the computers run, the better chance of guessing that right number and winning valuable coins. So mining entrepreneurs are buying chips and computers designed specifically — and only — for this work. The machines in Iceland are worth about $20,000 each on the open market.
The energy required to run these computers is huge, and has led to criticism that Bitcoin mining is wasteful, not to mention socially useless. But Mr. Abiodun prides himself on using renewable power, at least in Iceland.
When Mr. Abiodun first heard about Bitcoin mining in 2010, he thought it was a scam. Begun in 2009 as the imaginative creation of an anonymous programmer (or group of programmers) known as Satoshi Nakamoto, it was initially little more than a tech world curiosity. As early users connected their computers into the network, they became a part of the decentralized infrastructure that hosts Bitcoin’s open-source program. The computers joining the network immediately began capturing virtual coins. The network’s protocol was designed to release a new block of Bitcoins every 10 minutes until all 21 million were released, with the blocks getting smaller as time goes on. If the miners in the network take more than 10 minutes to guess the correct code, the Bitcoin program adapts to make the puzzle easier. If they solve the problems in less than 10 minutes, the code becomes harder.
Mr. Abiodun’s opinion of Bitcoin changed in January, when he saw the price rising. He installed a free application on his home computer that linked him into the Bitcoin network and set it to mining, harnessing the power of his graphics card, which is the part of a normal computer best suited to doing the code work.
Mr. Abiodun’s computer was in the guest room of his house in southeast London. Working at HSBC during the day and tinkering with his Bitcoin system at night, he realized if he wanted to make any money, his computer would have to run around the clock.
The constant computing, however, overheated the graphics card and pushed the computer’s exhaust fans into overdrive. When he added another graphics card, then a new computer, the room became too noisy for guests to sleep, and the windows had to be kept open to release the heat. That did not make his wife, Gloria, who was pregnant at the time, very happy.
“It just created a scenario where there was no way our parents would come over to stay,” he said. “I did offer to put her parents in a hotel, but that didn’t go down well.”
Mr. Abiodun’s wife finally gave him an ultimatum — either the computers had to go, or he did. At the same time, he was making money, and friends were asking if they could invest in his mining operation.
In February, Mr. Abiodun used the investors’ money to buy machines from a start-up dedicated solely to manufacturing specialized mining computers. The competition for those computers is so intense that he had to pay for them and wait for delivery.
When the delays became lengthy, however, he went on eBay and paid $130,000 for two high-powered machines, which he set up in June in a data center in Kansas City, Kan.
This was the beginning of Mr. Abiodun’s company, Cloud Hashing, which rents out computing power to people who want to mine without buying computers themselves. The term hashing refers to the repetitive code guessing that miners do.
Today, all of the machines dedicated to mining Bitcoin have a computing power about 4,500 times the capacity of the United States government’s mightiest supercomputer, the IBM Sequoia, according to calculations done by Michael B. Taylor, a professor at the University of California, San Diego. The computing capacity of the Bitcoin network has grown by around 30,000 percent since the beginning of the year.
“This whole new kind of machine has come into existence in the last 12 months,” said Professor Taylor, who is studying mining hardware. In the chase for the lucky code that will unlock new Bitcoins, mining computers are also verifying and assigning unique identifying tags to each Bitcoin transaction, acting as accountants for the virtual currency world.
“The network is providing the infrastructure for making sure the currency is being transferred between people according to the rules,” Professor Taylor said, “and making sure people aren’t creating currency illegally.”
Even before Mr. Abiodun’s machines in Kansas City were up and running, it was clear that they wouldn’t be enough. So he ordered about 100 machines from a start-up in Sweden and, in October, had them moved to the facility in Iceland. In just a few months, that installation has generated more than $4 million worth of Bitcoins, at the current value, according to the company’s account on the public Bitcoin network.
At the end of each day, the spoils are divided up and sent to Cloud Hashing’s customers. Last Wednesday, for example, the entire operation unlocked 225 Bitcoins, valued at around $160,000 at recent prices. Cloud Hashing keeps about 20 percent of the capacity for its own mining.
The unregulated Bitcoin-mining industry is ripe for abuse, and ventures that sound similar to Cloud Hashing have turned out to be scams. Mr. Abiodun’s company has proved itself real, but it is still unclear if it is a good deal for customers. Cloud Hashing charges $999 to rent a tiny portion of the company’s computing power for one year. That’s an expensive price for the computing capacity they are getting, but Mr. Abiodun argues that it’s a good value because individual miners would not be able to buy his modern machines outright. It’s a little like buying a fractional ownership in a private jet; you might not want responsibility for the jet itself, and it’s out of your price range anyway. He also says he provides the maintenance and keeps away thieves and hackers.
Some Cloud Hashing customers have also complained on Internet forums that it can be hard to get a response from the company when something goes wrong. But this has not stopped new contracts from pouring in. Cloud Hashing now has 4,500 customers, up from 1,000 in September.
Mr. Abiodun acknowledges that the company has not been prepared to deal with its rapid growth. He said he had used $4 million raised from two angel investors to add customer service representatives to offices in Austin, Tex., and London. Cloud Hashing is now preparing to open a mining facility in a data center near Dallas, which will hold more than $3 million worth of new machines being produced by CoinTerra, a Texas start-up run by a former Samsung chip designer.
The higher energy costs — and required air-conditioning — in Texas are worth it for Mr. Abiodun. He wants his operation to be widely distributed in case of power shortages or regulatory issues in one location. But he is also expanding his Icelandic operation, shipping in about 66 machines that have been running for the last few months near their manufacturer in Ukraine.
Mr. Abiodun said that by February, he hopes to have about 15 percent of the entire computing power of the Bitcoin network, significantly more than any other operation.
Inside the Iceland data center, which also hosts servers for large companies like BMW and is guarded and maintained by a company called Verne Global, strapping Icelandic men in black outfits were at work recently setting up the racks for the machines coming from Ukraine. Gazing over his creation, Mr. Abiodun had a look that was somewhere between pride and anxiety, and spoke about the virtues of this Icelandic facility where the power has not gone down once.
“We don’t want downtime — ever, never,” he said. “Not with what we paid. Not with Bitcoin.”
Click: Images for bitcoin On a bitcoin image you'll see that a bitcoin has on it this partially Latin text:
Libertas - Aequitas - Veritas - In Cryptography We Trust
meaning:
Freedom - Equity - Truth - In Secured Communication We Trust
Click green for further info
Source: (1) NYT (2) STAF, Inc.
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Notice: Some of the following about 15 articles next below
(1) have the whole text and it is fully readable = you can study the full science info with facts,
(2) it is still being edited to add the colors, to make the titles font bigger and center all material visually more pleasant)
(3) In 1 - 2 days all will be finalized
(This is a technical error caused by some disturbances on the web provider's technology - all these articles have already once before edited in their final forms.)
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Important information for every person in the U.S. and worldwide
Study Part A & Part B and apply the information
Quotation "Knowledge is no power, only applied knowledge is power"
(Dr. Christian, STAF, Inc.)
PART A - Part B next below
4 Bills You Should Never Autopay
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Setting up automatic payments is a convenient way to stay on top of bills every month. It can save you time and money, but for expenses that fluctuate or creep up, you may want to skip it. Consider manually paying these four expenses.
Certain Cell Plans
Unless you have an unlimited cell plan, it may not be wise to put the payments on autopilot. If your kids love downloading the latest games, ringtones or music, you could get hit with an unwelcome surprise at the end of the month. If you don’t have enough in the bank to cover it, you'll incur some hefty overdraft fees. To put this in perspective, a Nielsen survey found that teens send or receive, on average, more than 3,300 texts per month.
- Nielsen - What People Watch - What People Buywww.nielsen.com/Nielsen, a leading global information and measurement company, provides market research, insights & data about what people watch & what people buy.Nielsen Careers - Contact Us - About Us - Top Tens & Trend
Utilities
When it comes to utilities, like water or electricity, making manual payments allows you to keep better tabs on energy usage. With automatic payments you might neglect to see a spike in the water bill and recognize, say, there’s a leak under the sink.
Gym Membership
How often are you really hitting the gym or yoga studio? Studies show we tend to overestimate how many times we’ll really work out each month. In fact, researchers at the University of California Berkeley found that members who opt for an unlimited monthly contract pay, on average, $70 and attend fewer than five times each month. By automating your fitness membership, it’s really easy to lose track of whether you’re really getting your money’s worth. It may be cheaper to buy a five- or 10-class package that never expires.
University of California, Berkeley
Subscriptions
Finally, subscriptions, from magazines to beauty sample boxes, can turn into sneaky, forgotten charges when we automate the renewals. A study by Billguard.com, a service that tracks your payments for free, found that “cost creep” *) is a top billing concern with subscriptions that often goes unnoticed. Instead, restart the membership yourself when the company sends you the notice. You can take a moment to consider the costs, plus you’ll notice if the rates increase – even an extra few dollars in those service charges add up quickly.
*) Cost creep -- E.g.: The initial purchase price might have been $9.99 for the first three months, but then it becomes $19.99 a month thereafter. Then the merchant tacks on an annual $99.99 membership fee.Then you want to crawl through the phone and choke someone.
Definition for the word 'creep' = an unwanted and negative characteristic or fact occur or develop gradually and almost imperceptibly (= not easily noticeable)
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Source: Credit.com + Financially Fit
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PART B (Article PART A next above)
Important information for every person in the U.S. and worldwide
Study Part A & Part B and apply the information
Quotation "Knowledge is no power, only applied knowledge is power"
(Dr. Christian, STAF, Inc.)
Click green topic below - then come back to this locati0n for additional important info - read this article below first
The Top 6 Sources of Grey Charges
Those sneaky credit card charges that require our time, attention, persistence and aggravation to squelch are called grey charges. These insidious leaks cause millions of people to lose billions of dollars each year.
Merchants have perfected the art of grey charges by capitalizing on the fact that we don’t pay attention to the fine print and we often don’t pay much attention to our statements, either. But by being aware of these scammy sales techniques, you can avoid getting stuck in a vicious circle of grey charges.
Here are the top six sources of grey charges:
#1 Unknown subscriptions. When you process an online transaction, you might check or uncheck a box in regard to an offer or discount. A few months later, you start getting charged for services you never wanted or ordered.
#2 Zombie subscriptions. After you recognize a grey charge for an unknown subscription, you might get the charge removed—only to find out, months later, that it’s back from the dead. Now you’re being charged again.
#3 Auto-renewals. When you’re signing up for a service that bills you monthly, quarterly or annually, a forthright retailer will let you know when your renewal date is coming and will inform you of upcoming charges. But shady companies don’t say a word and re-charge you without notification, sticking you with the bill even after you complain—all because you were “too late.”
#4 Negative-option marketing. Sometimes, when you think you’re buying just one product, you inadvertently buy a suite of services you never wanted.
#5 Free to paid. When you’re getting something “for free” and you have to cough up your credit card, there is always a catch. That catch usually comes in the form of ongoing charges that are difficult to remove.
#6 Cost creep. The initial purchase price might have been $9.99 for the first three months, but then it becomes $19.99 a month thereafter. Then the merchant tacks on an annual $99.99 membership fee.Then you want to crawl through the phone and choke someone.
Stay out of trouble by keeping these tips in mind:
- Pay attention. Nothing is free.
- Monitor your purchases. Know what you’re getting into.
- Check statements biweekly. Look for grey charges
- Sign up for BillGuard to watch your statements. It’s free, easy and effective.
Below links to additional beneficial & important information - click, visit, study, apply & succeed (click green)
Robert Siciliano is a personal security expert & advisor to BillGuard and is the author of 99 Things You Wish You Knew Before Your Identity Was Stolen. See him knock’em dead in this identity theft prevention video. Disclosures.
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Source: Billguard.com
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Article 1 of 3 (Article 2 -3 of 3 next below)
Can a Bad Debt Get You Deported?
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Can your unpaid debts get you deported or barred from entering the U.S.?
Or hurt your green card application? Or complicate your citizenship applicati0n?
* The answers below in this article
Our reader, who goes by the screen name “Chica,” says she came to the U.S. with her mother-in-law, who received treatment for cancer in the U.S. As is typical in these situations, there were two sets of bills: one from the physicians and another from the hospital. Chica says they made payments regularly, and then left the U.S. When she checked on the bills recently, though, she discovered that the hospital had sent a balance of $9,900 to collections.
She’s not trying to get out of paying. In fact, she says, “We’ve always followed the rules.” But she is confused about how to handle this bill now that it’s with a collection agency. More important, she is worried about whether this medical debt will affect her — or her mother-in-law’s — ability to re-enter the U.S. in the future.
She wants to know what impact it could have on future visas and visits.
“We love America,” she adds. “It has (the) best health care, and (we) love the friendliness of (people). We plan on visiting again and again. We’ve never been in that situation before and I am really worried about all this, and bad debt …”
The good news, for our reader and for others in this situation, is that bad debt generally won’t impact your ability to enter the U.S. or stay here. In fact, except in rare circumstances, you can’t be deported because you can’t pay your debt.
How the Government Sees Your Debt
“Normally, the United States does not look at credit” when considering visa applications, says Washington D.C.-based click: immigration attorney Dimo Michailov.
If a bad debt winds up in the court system, it is usually a civil proceeding that does not have to be disclosed. If criminal activity were involved, it would be a different matter, he says. As a general rule, though, being unable to pay your debts is not a criminal matter.
If Chica or her mother-in-law had worked in the U.S. and had click: unpaid taxes due, that could be a factor if they tried to apply for a green card (permanent residency) or U.S. citizenship, Michailov said. Similarly, unpaid child support can create problems for a foreign national in the U.S. “Non-payment of child support is a crime in certain circumstances,” says Michailov, “and this can make a non-immigrant or immigrant foreign national subject to removal proceedings or barred from entering the U.S. in the future.”
But generally, unpaid consumer debts aren’t a problem for those trying to get or maintain a visa, or even apply for U.S. citizenship.
Still, Chica and her mother-in-law aren’t trying to skirt their debt, and if they want to receive services at that hospital in the future, it will be helpful for them to resolve these debts. If they can’t afford to pay in full, they may want to consider for a lump sum that is less than the total amount owed.
Since they are out of the U.S. (and pretty much out of the reach of our legal system) the collector may be happy to settle the debt and be done with it. (Detailed settling etc. info below in article 2 of 3 settling the debt with the collection agency)
Otherwise, they will need to work out a payment schedule to pay off the balance. Either way, they will want to get the agreement in writing and make sure to keep a careful record of their payments. In the future, they may want to try to negotiate cash rates with medical providers if they can afford to pay upfront.
Because they are not residents of the U.S., they don’t have to worry about these bad debts affecting their credit scores. If Chica decides to make the U.S. her home in the future, she’ll want to consider building credit as an immigrant. By then, she should have a better understanding of how our credit system works.
- 10 Tips for Negotiating With Your Creditors
- How Your Debt Impacts Your Credit
- 5 Steps to Reduce Your Debt
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Source: Credit.com
(Article 2 -3 of 3 next below)
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Article 2 of 3 (Article 1 of 2 next above)
Six Important Things You Need to Know
About Debt Collectors
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If you are getting calls and letters from debt collectors and want to resolve the debt, you need a plan. Your first priority should be developing a strategy that makes sense for you financially. You need to know your monthly budget and the amount of money you can commit to resolving collection accounts. And if you have more than one account in collections, you also need to know that not all debt collectors are the same.
1. You Can Work With the Original Creditor…
You can often work out some form of payment by calling your creditor directly, or by working with a nonprofit credit counseling agency. But when credit card payments go more than six months without a payment (sometimes sooner), calling your creditor often means being routed to a third-party debt collector. If your creditor tells you they cannot work directly with you; has not sold your account off to a bad debt buyer; and has already charged off your account, you will typically have to work with the debt collector they sent your account to.
Your strategy to resolve a debt can be adjusted depending on what kind of debt you have, and the type of collector you are dealing with.
2. …Or a Third-Party Debt Collector
The collection industry is large. There are thousands of companies, big and small, working to collect billions of dollars of debt each year. Your strategy to resolve overdue bills can be adjusted depending on what kind of debts you have (medical debts, utility bills, etc.), and the type of collector you are dealing with.
Debt collectors that work directly with your credit card lender are typically going to be larger contingency collection agencies. They make calls and send you collection notices in an attempt to collect. All of which is motivated by the fact that they will get paid based on what they get you to pay. A common earned contingency fee is 15% of the balance they collect.
3. Debt Collectors Have Limits
All collection agencies have to follow federal and state laws when communicating with you. These laws protect you and limit things like when they can call, and what the collector can say. But contingency debt collectors also have limits set by your creditor. One of those limits is time.
Credit card lenders sending accounts out to an agency for collection do so with a “best collected by” date. When the date expires, your account is pulled back by the creditor, and the collector loses the ability to earn a fee. These collection contracts can be for as little as 60 days, or for several months. This fact is useful for you in the following ways:
- There is indeed a sense of urgency for the contingency collector. That pressure they are putting on you to pay is also the pressure they have to beat the clock before they lose your account.
- This type of collector is graded on their performance (how much and how often they collect), by your creditor. The agency cares about their performance because they want to receive future accounts to collect on from your creditor.
- Individual collectors at the agency are often motivated by monthly quotas and performance rewards of their own.
4. You Can Reach Out to Your Debt Collectors
You usually know who you are dealing with by the most recent collection calls and letters you have received. While you can contact the last known collector, I often recommend you call your original creditor and verify with them who they have the account placed with. Simply call the regular number on the back of your credit card (or on your original statement). Your call may get routed to the recovery department at the bank, but don’t expect to resolve anything with them at this point. They have a contract with the debt collector, and will provide you the name and contact phone number to the agency. Try to verify the balance owed on your account during a call like this.
Making contact with you is one of the hardest things for a debt collector to do. When they do get someone live on the phone, they know they need to make the most of it. Not just because people avoid collection calls, but their agency also may be running out of time to collect from you. This is one of the reasons why debt collectors have earned the reputation of being pushy and abrupt.
When you pick up a call, or make one to a debt collector, their goal is going to be to get some form of payment, or commitment to pay, during virtually every call.
5. Your Collector Wants to Work With You
How you ultimately resolve a debt with a contingency debt collector is going to depend on: your monthly cash flow that can be used to make payments; the parameters the collector has to work with on their end; and even by the date on the calendar.
Setting up a payment arrangement you can afford given your monthly budget is not all that difficult. And if the collector can get you set up with a payment, they often get to retain the account while your payments are being made. This means your interests and the collector’s are aligned when you are actively looking for a solution.
If you have multiple debts you are struggling to pay, are nervous or uncomfortable talking to a debt collector about payment options, or just want expert help, there are resources available.
I asked a nonprofit credit counseling group about what they would advise people do before tackling accounts in this stage of collection. Christopher Viale, President and CEO of Cambridge Credit Counseling had this to say:
Before committing any part of your monthly budget to paying down collection accounts, it’s important to have a complete understanding of what your household budget actually is and what you can truly afford. We speak to people every day who make promises to debt collectors that they simply cannot keep. A budgeting session with one of our counselors is free and it can really help you get a full understanding of what you can and cannot afford before making any type of payment commitment.
6. Monthly Payments Aren’t the Only Option
In many instances, if you cannot commit to a monthly payment, debt collectors are authorized to accept settlements. What your debt can be settled for when dealing with a debt collector is a moving target. The amount you can save from negotiating a lower payoff will have to fit within the collector’s guidelines in most cases. And you need the money available to pay any deal you negotiate in a single lump sum, or over a short period of time.
You may be surprised by how simple it can be to call a collector and come to an agreement to resolve your account. If you cannot reach a deal that works for you on the first try, don’t get discouraged. Try calling around the last week of the month. My experience shows that more affordable agreements are often available when a collector’s or agency’s monthly goals are not meeting expectations.
You can also time your efforts to resolve accounts with a debt collector using the “best collected by” expiration date. In one of your first calls with a collection agency you could ask “I am trying to come up with a plan to resolve my debt. I do not have a plan put together yet, but will be calling back when I do. Can you tell me the balance owed on the account now? And also, so I know who to call back, how long will you have this account for?” Not all debt collectors will tell you how long they will have your account, but many do. Knowing these dates can be useful for two reasons:
- You can set up payments with the collector before they lose your account. This prevents your account from going to another collector, or worse, being sued later.
- You can time your negotiations for a lower payoff with the performance goals of the collection agency.
There are certainly other details to consider when dealing with debt collectors. But the basics of resolving debts at this stage of collection are not complicated. If your personal finances are still too wobbly to commit to paying off collection accounts, don’t allow yourself to get pressured by a debt collector. The “best collected by” date will expire and the debt will go back into the collection pipeline. If you are committed to trying to avoid bankruptcy, there will be options to manage your debt all along the way.
Click green for further info Source: Credit.com (Article 3 of 3 next below)
____________________________ ========================================================================================================================================================== Article 3 of 3 (Articles 1 - 2 of 3 above) What to Do if You Can’t Pay Your Tax Bill
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While tax time isn’t something most of us look forward to, some do anticipate a “reward” in the form of a refund check. But if you discover you owe the IRS money, it’s another story. Click green for further info If you find you owe taxes, and you can afford to pay the tax due, it’s best to just write a check and get it over with. But if you don’t have that kind of cash lying around, take a look at other options.
What isn’t an option
Not filing is not an option. If you don’t file your return by the deadline, you might face a failure-to-file penalty. If you don’t pay by the due date, you could face a failure-to-pay penalty. It’s better to file your return and avoid the first penalty, even if you can’t pay right away.
Keep in mind that if you owe $10,000 or more and can’t pay it right away, the IRS may file a Notice of Federal Tax Lien. Tax liens are reported to the major credit bureaus, and are considered very negative information so your credit scores can drop significantly as a result.
Under the federal Fair Credit Reporting Act, tax liens can be reported longer than any other type of negative information — seven years from the date they are paid. However, under the click: IRS Fresh Start initiative, you may be able to get a tax lien withdrawn and removed from your credit reports once you pay it, or enter into an installment agreement, which we’ll discuss in a moment. That’s all the more reason to find a way to work with the IRS rather than avoid paying.
If you owe tax debt, the IRS can also take serious enforced collection action, such as taking money from your bank accounts, wages, or other income. In general, they have many more options available to collect your tax debt than do other companies you may owe money to.
Charge it
You can click: use a credit card to pay your taxes whether you file electronically or file a paper return. Credit card payments can be submitted via tax software when filing electronically. Credit card payments can also be made over the telephone and by filing online.
The IRS does not set or collect any type of fee for credit card payments, but the private sector companies the IRS has authorized to process these payments impose convenience fees. The tax payment is sent to the U. S. Treasury and the convenience fees are listed separately on the cardholder’s credit card statement.
For the 2012 filing season, five companies are authorized by the IRS to accept credit card charges from both electronic and paper filers. Each company offers both phone and Internet payment services and charges a convenience fee ranging from 1.88% to 2.36% of the amount paid.
The question is, “Should you pay your taxes with your credit card?” See next article below
The disadvantage of charging your taxes is that you may have to pay the convenience fee plus interest to your card issuer while you pay off the balance. And the higher balance on your credit report can affect your credit scores. The advantage, though, is that you will have paid your debt to the IRS. Credit card issuers don’t have the same collection powers the IRS does.
Note that if your credit card issuer sends you promotional checks, you can use one of these to pay your taxes. You won’t receive bonus points or other offers, and there may be a convenience fee charged by the card issuer. But depending on the offer, the interest rate may be lower than the interest rate for purchases. If your issuer does charge a fee for one of these checks, it doesn’t hurt to ask if the fee can be waived.
Line up a loan
Whether it’s a personal loan, a home equity line of credit, or a loan from your retirement account, there are times when it makes sense to borrow to pay off the IRS. As with any loan, you want to understand the interest rate, fees and payment terms to make sure you can afford it. You may also want to keep in mind that a loan to pay taxes can affect your credit scores.
Request a monthly payment plan from the IRS
If you can pay your full tax bill over time (in six years or less in most cases), you may want to ask the IRS for an installment agreement. With an installment plan, you make regular monthly payments until your tax bill is resolved. Like other options, you can only request an installment agreement if all required tax returns have been filed.
If you owe $50,000 or less in combined tax, penalties and interest, you can use the IRS Online Payment Agreement (OPA) to request your installment agreement, or call the number on the bill or notice you received. A fill-in Request for Installment Agreement, Form 9465, is available online that can be mailed to the address on the bill.
If you owe more than $50,000 in combined taxes, penalties, and interest you may still qualify for an installment agreement, but you may have to complete a Collection Information Statement, Form 433F. Call the number on the bill or mail the Request for Installment Agreement, Form 9465 and Form 433F to the address on the bill.
The fee for a direct debit installment agreement, where payments are deducted directly from a taxpayer’s bank account, is $52. It is $105 for a standard agreement or payroll deduction agreement and $43 if your income is below a certain level.
When you file your request for an installment agreement you will have to pay what you can afford immediately and pay the rest over a reasonable period of time. You will have to specify the amount you can pay and the day you wish to make your payment each month. Online requests are usually confirmed in ten days, while written requests may take longer. The IRS will respond to let you know if your request is approved, denied, or if additional information is needed.
Here is the good news: If your tax debt is less than $10,000, your request will automatically be approved as long as you have filed all your tax returns on time for the past five years and have paid the tax due without using an installment agreement, the IRS has determined you cannot pay the full amount you owe immediately and you have given them the information they need to determine that, and you agree to pay your tax bill in full within three years and comply with all tax laws.
And installment agreements aren’t reported to credit reporting agencies.
Here is the bad news: Even if your installment agreement is accepted, and you make the proposed payments on time, the IRS may still file a Notice of Federal Tax Lien to secure the government’s interest in your property against other creditors. And if you are due a tax refund while you are paying a tax debt on an installment plan, your tax refund will be taken (“offset”) to pay the debt more quickly.
In addition to the upfront fee for one of these plans you will also pay interest — currently figured at around three percent per year, compounded daily — plus a late payment penalty. This penalty, usually 0.5 percent of the balance due per month, drops to 0.25 percent when the IRS approves the agreement for an individual taxpayer who filed the return on time and did not receive a levy notice.
Request a short-term extension
If you cannot pay in full immediately but can pay within the next four months due to a hardship, you may be eligible for a short-term extension of time to pay of up to 120 days. (An extension to pay is not the same as an extension to file.) There is no fee for an extension to pay. You can file a completed Form 1127 along with a statement explaining why paying now would be a financial hardship for you.
Tax attorney Scott Estill, author of Tax This: An Insider’s Guide to Standing Up to the IRS, warns that the IRS does not approve the majority of these requests. Looking at the form with its warnings and requirements, including a detailed list of your assets and itemized spending and income for the past three months, is enough to scare most taxpayers off this option. Most taxpayers will instead request either an installment agreement or an offer in compromise, or find another way to pay.
Request an offer in compromise
An Offer in Compromise (OIC) is an agreement between a taxpayer and the IRS that resolves the taxpayer’s tax debt. The IRS has the authority to settle or “compromise” federal tax liabilities by accepting less than full payment under certain circumstances. These include doubt that the assessed tax is correct and doubt that you could ever pay the full amount owed. But it’s not an easy way to pay less than you owe. In 2011, for example, the IRS rejected almost three times as many OIC applications as it approved.
When you see ads claiming you can “settle your tax bill for less than you owe,” they are usually referring to an offer in compromise. Be careful, though, of promises to settle your tax bill for pennies on the dollar. The IRS warns that some companies are collecting excessive fees from consumers who will never qualify for these programs. You can complete all the paperwork on your own by following the instructions found on the IRS website.
However, recently the IRS has announced new rules designed to make it easier for taxpayers to resolve their tax debt with an Offer in Compromise. That doesn’t mean it’s simple; but it will be easier for some taxpayers to settle because the IRS will accept less than before in certain cases.
When submitting an application for an OIC, the taxpayer must include a $150 application fee, along with an initial payment. There are exceptions to this requirement for low-income taxpayers, or offers filed when there is doubt as to liability only.
When you file your offer (excluding doubt as to liability offers) you must specify whether you are filing a lump sum or periodic payment offer. In the case of a “lump sum” (which means five or fewer installments) you must pay 20 percent of the offer amount with the application.
If you file a “periodic payment offer” (which means six or more installments) you must pay the first proposed installment payment with the application and pay additional installments while the IRS is evaluating the offer.
If your application is declined, the IRS will keep that money and apply it to your tax debt.
If you are a low-income taxpayer, or you are filing a doubt as to liability offer only, the $150 application fee is waived, and you do not need to make a partial payment. A low-income taxpayer is an individual whose income falls at or below poverty levels based on guidelines established by the U.S. Department of Health and Human Services (HHS). Additional paperwork is required.
Look forward
In addition to taking care of previous tax liabilities, make sure you adjust your withholding or increase your estimated tax payments so you aren’t in the same situation next year.
Click green for further info Source: Credit.com (Articles 1 - 3 of 4 above) ____________________________________
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Should You Pay Your Taxes With a Credit Card?
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While some are vaguely aware that there are ways to pay taxes with their credit cards, few really understand the benefits and drawbacks of these options.
Here are the basics. Build and maintain a high credit score - you will save then plenty of money and save human suffering. With a high credit score you will always pay less for "anything", you will keep getting special offers only meant for people with a high credit score. This STAF, Inc.'s Credit & Credit Cards tab will give you all information you need to build an excellent credit score. This information is valid nationwide in the U.S. and worldwide in every country.
5 BASIC RULES FOR FINANCIAL SUCCESS & FOR BUILDING A HIGH CREDIT SCORE
(1) Charge on your credit card(s) ONLY the amount(s) you for sure can pay back IN FULL 2 - 1 weeks before the payment due date;
(2) Charge as much you want on your card(s) for the purpose that you (1) will build up benefits from using the credit card(s) and (2) that you will build an excellent &high credit score - always pay in full your credit card(s) 2 - 1 week before the due date.
(3) Never use any credit card for financing anything, only that amount you can pay in full today as if you would pay in cash.
(4) Use your credit cards ONLY to build a perfect, top credit score (and card use benefits). When you have never been late in your payments and payed 2-1 week before the due date you build an excellent credit score in a few years - and then: keep it. It is as valuable as your mental-physical health is - it is the health of your credit and your whole life.
(5) Take a habit to mail a payment check (or pay online) within 1-2 days of the credit card bill arrival.
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How to pay taxes with a credit card -NOT A GOOD IDEA -
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Pay only with your credit card if you can pay the credit card in full 2-1 weeks before the next payment due date. Otherwise NEVER pay anything with any of your credit card. There is always other ways of finding other suitable financing. Negotiate with your debtor. Ask advice from your bank or Credit Unions (become a member of a Credit Union).
The IRS is happy to receive payment in the form of a check, but they do not directly accept credit cards. Instead, they have authorized a handful of private companies to accept payment on their behalf. And while this service is convenient, it comes at a cost. Authorized processors charge a fee of between 1.88% and 2.35% of the amount remitted to the IRS. In addition, some state and local governments will also accept taxes paid with a credit card. DO NOT PAY YOUR TAXES WITH A CREDIT CARD - ONLY ADDITIONAL FEES - FIND OTHER FINANCING.
To choose from an authorized payment processor, visit the IRS credit card payment site.
Related Article: The First Thing You Must Do Before Paying Off Debt
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Paying taxes with a credit card versus a debit card
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In addition to credit cards, taxpayers can also use their debit cards to remit payment to the IRS through the same authorized payment processors. And rather than being charged a percentage of their payment, payments using a debit card only incur a flat fee of about $2- $3 per payment. Therefore, taxpayers who are only using a payment processor for convenience alone will want to use a debit card instead of a credit card, so long as their payment is above approximately $100.
When it makes sense to use a credit card (STAF, Inc. says: NEVER if you cannot handle the re-payment in full (right now if you had to pay now) - a few rare situations exist to use the credit card as a benefit - see below
With a credit card fee of at least 1.88%, most taxpayers will save money by simply mailing a check to the IRS. But there are some rare situations where payments using a credit card can make sense. First, those who have a card with a 0% APR promotional financing offer can avoid interest for as long as 18 months. This may be the best option for cardholders who are unable to pay their tax bill immediately. (As long as you then can pay IN FULL to the credit card company when the time to pay will arrive.
Also, there are very few credit cards that offer rewards greater than the fees the processors charge, but they do exist. For example, the Capital One Venture Rewards card offers double miles for each dollar spent, and each mile is worth one cent as a statement credit towards any travel related expense. So by paying a 1.88% credit card fee, cardholders still earn a small, .12% reward on their tax bill. For example, a $2,000 tax payment would result in a net gain of $2.40 worth of rewards.
[Free Resource: Check your credit score and report card for free before applying for a credit card]
And finally, paying taxes with a credit card can be an easy way to meet the minimum spending requirements necessary to receive a credit card’s sign-up bonus. For instance, new applicants for the Starwood Preferred Guest card from American Express earn 10,000 points after their first purchase, and another 15,000 points after spending $5,000 within six months. If cardholders are unable to spend $5,000 in that time, incurring the credit card fee to pay taxes might be worthwhile as the additional 15,000 points that can be worth hundreds of dollars in rewards. Even then, these strategies only makes sense when cardholders avoid interest by paying their statement balance in full.
Why it’s a bad idea to use a credit card
Unless cardholders are using a 0% APR promotional financing offer, it makes no sense to use a credit card as a means of financing a tax payment. This is because the IRS offers its own financing options with lower interest rates. For instance, their current rate is 3% - 7 %, although it can be adjusted each quarter. This is far below the standard interest rates of any credit card, especially when the credit card processing fee is considered. And while these installment plans do have a setup fees, they still offer more savings for most cardholders compared to credit card fees and interest.
By understanding the process of paying taxes with a credit card, taxpayers can make the best decision when it comes time to fulfill this essential obligation. Click green for further info Source: Credit.com & STAF, Inc.'s editors ______________________________________ ==========================================================================================================================================================
Five Things You Should Never Put on a Credit Card - IMPORTANT - Click green for further info
BASIC RULES FOR FINANCIAL SUCCESS & FOR BUILDING A HIGH CREDIT SCORE
(1) Put on credit card ONLY what you could pay on that same day back in full (if you had to)
(2) Use your credit card(s) ONLY to build an excellent credit score - that will save you plenty of human suffering and save you plenty of money (when, e.g., getting special price deals on "anything" - deals that are offered only to people with high credit scores).
(3) Always pay your credit card(s) 2 - 1 week before the due date (even that timing matters in building a high credit score). (4) Every one, no matter what income size, can build an excellent credit score - all info and advice is in this STAF, Inc.'s website in this tab: credit & credit cards.
Credit cards are powerful financial instruments, but cardholders must use them carefully to avoid becoming trapped in a cycle of debt. At the same time, it can be difficult for cardholders to contemplate a huge expense knowing that a bank has already extended them sufficient credit to just charge it.
A credit card is often the worst means of finance.
Credit card debt is unsecured and typically carries a higher interest rate than a car or home loan. And unlike a home mortgage or student loan, credit card debt is never tax deductible.
Of all the things that be financed with a credit card, here are the five worst:
1. College tuition - NO Many adults can trace their debts back to their college years when they didn’t fully appreciate how difficult it would be to pay off credit card charges, especially after interest starts to compound. And in many cases, college graduates aren’t able to land a job as soon as they hoped, or they have insufficient income to start paying off their debt.
Rather than using a credit card, higher education can be funded through low-interest student loans, scholarships, grants, and part-time jobs. And if these sources are inadequate, students can consider a less expensive school or delay enrollment until they have more savings.
2. Taxes - NO
When taxpayers find themselves with an unexpectedly large liability, it can be tempting to just charge it. And conveniently, the IRS makes it easy to use a credit card to make payments through one of several companies that they authorize to accept money on their behalf.
However, there are several reasons why you shouldn’t. First, the payment processors will collect a fee of between 1.88%-2.35%. Also, the IRS will allow you to set up a payment plan with a more competitive interest rate. IRS underpayment interest rates change each quarter, but are at 3% - 7 %, far better than any credit card’s standard interest rate. And finally, taxpayers should seek to have their withholding adjusted to ensure that they are not underpaying taxes in the future.0
3. A big wedding - NO When couples chose to host a lavish event, it is easy to understand why some people think that the wedding industry is going too far. Planning a wedding is not easy, but couples need to live within their means and avoid financing the occasion with their credit cards. It is a special day for newlyweds, but it is not worth it when they are forced to begin their lives together underneath a mountain of debt.
4. Vacations - NO People take vacations to take a break from their everyday lives and to reduce stress. But when travelers finance their trips with their credit cards, they will only be returning to the difficulties caused by their debt. Going camping, staying at hostels, and visiting family and friends are just a few of the ways that people can have a getaway that fits within their means. And if that is not your idea of a dream trip, contribute to a vacation fund each month until you reach your goal, and use your savings to finance a vacation.
5. Medical bills - NO Treatment costs for the uninsured can be staggering, but that is no reason to turn to credit cards as a means of finance. Ideally, the uninsured should shop around before seeking treatment, but that is not always possible. But even after receiving the bill, most providers will be able to adjust their rates and offer payment plans with little or no interest.
It is one thing to earn rewards by making a charge to a credit card that can be immediately paid off, but it is another matter to use credit cards as a means of finance. By understanding why it almost never makes sense to finance some charges with a credit card, you can make the best decisions when presented with a major expense. Click green for further info Source: Credit.com _____________________________________________ ==========================================================================================================================================================
Tools That Can Help You Get Out of Credit Card Debt
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First one comment from the public - perhaps this is the best advice for all of us: "Discipline - that's what's needed. Don't buy things you don't need - don't try to keep up with the Jones' - stay within your means. If you need to buy something relatively "major," like appliances - find stores that offer 0% financing - unlike Sears and other companies who would rather charge you anywhere from 18-24% on your money. Discipline - that's what's needed." (End of advice/opinion quote from the public)
If you are having trouble paying off credit card debt, you need help. Paying off a large balance can be one of the most difficult challenges in personal finance, but there are some resources and strategies that can help you. Here are a few of the tools out there that make the task of paying off your debt a little easier.
1. Balance Transfer Credit Cards
One of the most important tools for getting out of debt can be credit cards with 0% APR balance transfer offers. Once an applicant is approved for a card with one of these offers, he or she can transfer their existing balances to their new account. The cardholders will no longer incur interest on their existing balances, but most of these offers will add a 3% balance transfer fee to their new balance. These offers last between six and 18 months until the card’s standard interest rate applies.
The benefit is that cardholders no longer incur interest charges on their new balance, and all of their payments count against the principal. And with no interest charges, the balance can be paid down more quickly. On the other hand, some cardholders can see this temporary break from interest payments as an excuse not to pay down their debt until a later time.
2. Interest-Free Financing Offers
Like balance transfer offers, many credit cards offer new applicants the chance to save money by offering 0% APR financing on new purchases. These cards allow customers to continue to receive the convenience and security of their credit cards, without being charged interest on all their purchases. When these savings on interest are used to pay off debt, the result is that cardholders can pay off their balances more quickly.
3. Low-Interest Credit Cards
After cards with 0% APR promotional financing offers, credit cards with low interest rates are the next best way to reduce interest payments. For example, the winner of our Best Credit Cards in America series for low interest rate cards had an APR of just 6.25% at publishing time. Nevertheless, applicants will have to have excellent credit in order to be approved for the best offers.
4. Credit Card Repayment Calculators
Thanks to the CARD Act of 2009, banks are now required to issue monthly statements that show cardholders how long it will take them to pay off their balance if they only make the minimum payment, and how much cardholders can save if they pay their balance off in only three years.
This information is great to know, but credit card users in debt might need more full-featured tools in order to create a plan to pay off their balance as soon as possible.
One of the tools that can be used to get out of debt sooner is the Blueprint program, offered on several Chase credit cards, including Chase’s Slate, Freedom, Sapphire, Sapphire Preferred, and Ink. According to Tom O’Donnell, Sr. Vice President at Chase, “Blueprint was created to see what we can do to improve the customer’s ability to manage their balances.” (Call your credit card provider to find out about the Blueprint program.)
Blueprint has several different features that help cardholders pay off their debt. They can schedule a payoff date, and calculate the monthly payment required to reach that goal; pay off a large purchase over a specified period of time; pay off some purchases in full, while carrying a balance on other purchases in order to reduce interest charges; and track their expenditures to help control spending.
For those who don’t have Chase cards that are eligible for the Blueprint program, there are other tools available to help cardholders calculate what they need to pay each month to get out of debt sooner. For example, the Federal Reserve offers a Credit Card Repayment Calculator on its website. In addition, Credit.com offers its own Credit Card Payoff Calculator that shows how long it will take cardholders to pay off their balance, and lets them input their own interest rates and payment amounts
- 6 Smart Credit Card Strategies
- How Secured Cards Can Help Build Credit
- Tips for Paying Off Credit Card Debt Click green for further info Source: Credit.com ____________________________________
Important info of some secrets relating to a good credit score
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The highest credit score that has ever crossed John Stearns' desk was 834. It belonged to his accountant who was refinancing his house with Stearns, a mortgage banker with American Fidelity Mortgage Services in Wisconsin.
"All three of his were over 800," says Stearns, noting that mortgage lenders require three credit scores to be pulled for an application. "And his wife's, too."
Stearns kept his accountant's credit report for a year, analyzing how he had achieved such a high score. The key, Stearns says, was his accountant used very little of his available credit on his credit cards.
"I can't forget that score," he says. "I'm jealous."
Getting an 850 FICO credit score is the grown-up version of a perfect SAT score (1) SAT Registration - College Board's SAT Exam Info sat.collegeboard.org/ (2) SAT Scores
It's a personal finance milestone and helps fuel demand for credit score monitoring services and credit score estimators. Other than bragging rights, the effort to attain perfection is unnecessary for finances -- and possibly futile.
No lender distinguishes between a 780 and 850, for example, and the accomplishment is fleeting. Unlike an exam that is scored once, a credit score is calculated anew each time a request is made and reflects changes on your credit report, which is continually updated.
"Even if you got an 850, there's no guarantee you would stay there," says John Ulzheimer, the credit expert for CreditSesame.com. "You can't just ring the bell and say, 'I got it' because it could change this afternoon."
Is it even possible?
Even Ulzheimer, a nationally renowned credit expert who has worked at FICO (click: FICO - Wikipedia, and Equifax, has never personally gotten a perfect FICO score. He once got a 990 VantageScore (click: VantageScore
the highest possible score for that version. (VantageScore recently changed its score range to 300-850, just like FICO's, with its third-generation scoring model.)
"I don't obsess about it," he says.
An informal survey of a dozen mortgage professionals yielded no stories of perfect scores, either, which begs the question if it's even possible. It is, says Frederic Hyunh(click: Frédéric Huynh, a senior principal scientist at FICO. The company didn't offer any examples or anecdotes, but it did release a study last year on characteristics of high credit score achievers, defined as those with scores more than 785. Among the findings:
- Two-thirds have less than $8,500 in total debt balances, excluding mortgages.
- Ninety-six percent have no missed payments on their credit reports.
- High achievers use an average of 7 percent of their available credit on credit cards.
The rule of thumb is to use less than 20 percent of your available credit on your credit cards. The highest achievers use even less -- just 7 percent or charging only $70 on a card with a $1,000 limit. That could make the difference between a good credit score and a great one, says Dick Lepre (click: Dick Lepre, a loan agent with RPM Mortgage in California (click: RPM Mortgage. "I have seen people with perfect payment histories, but they had five credit cards with $100,000 limits, and all the balances were more than 90 percent of the limit," Lepre says. "That hurt their scores."
Does it matter?
Lepre is quick to point out that a perfect credit score is not necessary to get the lowest mortgage rates. In fact, borrowers need a 740 to secure the best home loan rates. Auto lenders and credit card issuers often set even lower bars -- credit score-wise -- for the best rates on their loan products. The requirements vary by lender.
In general, lenders aren't looking for perfect credit scores; the lenders are looking for scores that indicate that you manage your debts well. As long as you meet their thresholds, you will qualify for the best rates.
For example, Rod Griffin, director of public education at Experian, recently got the best rates available for a mortgage even though his credit scores ranged from the high 700s to just above 800.
"As we say in Texas, that was plenty good enough," he says.
The ever-changing perfect credit score
Here's another wrench in getting the perfect FICO credit score: 850 may not be it after all. Lenders and credit reporting agencies can tweak FICO credit score ranges, even though the 300 to 850 range remains the most common, says Anthony Sprauve, spokesman for myFICO.com, the consumer education division of FICO.
For example, the range for TransUnion's Precision 2003 FICO Risk Score
TransUnion Risk Models - Easy Access Online -- which, like other FICO credit scores, measures the likelihood of a 90-day delinquency within 24 months -- goes as high as 950. The range for its Classic 95 FICO Risk Score is 403 to 834.
That means Stearns' accountant may have actually achieved a perfect credit score, if the right model was used.
"That's interesting," Stearns says. "I would be amazed."
*) click green for important, further info
- FICO Credit Score Chart:
- How credit scores are calculated - myFICOwww.myfico.com/crediteducation/whatsinyourscore.aspx
- Understand how credit scores are calculated through this simple FICO credit score chart.
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Source: (1) Bankrate, (2) credit.com, (3) STAF, Inc's Radio/TV Shows
More From Bankrate.com
- Money woes after divorce
- Small biz and credit score
- Credit report red flags
- No matter what is said above in this article learn how to build a top-level credit score - it is a blessing in today's life.
- High score (1) saves you cash and (2) saves you time. ____________________________________________
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PART A (PART B next below)
4 Credit Cards That Regularly Offer Big Sign-Up Bonuses
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Recently, Chase began offering its Southwest Rapid Rewards credit cards with a 50,000 points sign-up bonus, instead of the previous 25,000 points. And as fantastic as this offer is, it wasn’t a huge surprise. That is because I have seen Chase and Southwest repeat this offer a number of times during the past few years. Like a department store that frequently holds big sales, this card is one of several cards that regularly feature an increased sign-up bonus.
FICO to Offer Barclaycard Holders Credit Scores for Free
(news in November 2013 - for how long, not told)
See article PART B below
A certain percentage of credit card users will apply for a card that offers a nice sign-up bonus, even if it isn’t as generous as previous offers. Therefore, it makes makes sense that banks can minimize the expense of offering their most exceptional bonuses by only doing so only during part of the year. At the same time, the more savvy credit card users will wait until the best offers are available before completing an application.
Here are some other cards that, from my observation over the years, have offered increased credit card sign-up bonuses from time to time.
Gold Delta SkyMiles Card From American Express
This card currently offers 30,000 Delta SkyMiles as a sign-up bonus offer, but I have seen it frequently offer as much as 50,000 miles.
British Airways Card From Chase
The standard sign-up bonus for this card is 50,000 Avios points in the British Airways Executive Club program. Nevertheless, this card has been offered with a 100,000 point bonus at least three times in the past.
Starwood Preferred Guest Card From American Express
The standard offer for this card promises 25,000 points in the Starwood Hotels preferred guest program. But be patient, this card typically features 30,000 point offers at least once a year.
Citi AAdvantage Visa Card
This card currently offers 30,000 AAdvantage miles with American Airlines, yet from time to time, offers appear online for 50,000 miles.
How to Receive the Largest Sign-Up Bonus Possible
First, it takes a little research. Perform a search on the card that you are considering, and see if you find reports of larger sign-up bonuses being offered in the past. If so, you can choose to wait and see if a similar offer returns, although there is no guarantee.
For those with less patience, another option is to apply for the card with the lower offer. Then, if a higher offer appears, you can request that the bank match the new offer retroactively. In fact, banks have been known to do so, especially when the new offer appears within a few months of the cardholder’s account being opened.
If you have received a rewards credit card with sign-up bonus, and a larger one has been offered, contact the credit card issuer. Let them know that you were excited to receive the card, but you are disappointed that you didn’t get the best offer. Ask them if they could apply the new offer to your account, which is often referred to as an “offer code”. Even if your request is initially denied, try calling back again or making the request in writing through the bank’s secure online messaging center.
Banks love to play the game of changing the amount of a card’s sign-up bonus throughout the year, but you can play along as well. By waiting for the best sign-up bonus, or requesting it retroactively, you can earn the most credit card rewards available.
Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.
Credit.com
- The First Thing to Do Before Applying for a Credit Card
- How to Get a Credit Card With Bad Credit
- 6 Smart Credit Card Strategies
Click green for further info
Source: Credit.com
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PART B
FICO*) to Offer Barclaycard Holders Credit Scores for Free
Notice: The majority of Barclaycards don’t have an annual fee
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Starting 2014, the company is giving free FICO scores to customers of its Barclaycard-branded cards and those with Frontier Airlines and Carnival Cruise Lines Carnival.com - It will add other partner programs in 2014.
Click green for further info
*)FICO, owner of the credit-scoring formula most widely used by U.S. lenders, is giving some consumers access to their credit scores for free, even before they apply for a loan.
The offering starts today for credit-card holders of two companies: Barclaycard US, a unit of London-based Barclays Plc (BARC), and First Bankcard of Omaha, Nebraska-based First National Bank of Omaha, FICO said in a statement. San Jose, California-based FICO, formerly known as Fair Isaac Corp. (FICO), is talking to other banks about giving the scores for free, said Anthony Sprauve, the firm’s senior consumer credit specialist.
“This is just the beginning,” Sprauve said in an interview. “In 2012 we sold 10 billion FICO scores to lenders and we’re prepared to make all of those scores available to consumers.”
FICO scores, which are used in lending decisions such as applications for credit cards and interest rates on home loans, range from 300 to 850. Consumer advocacy groups and lawmakers including U.S. Senator Bernie Sanders, a Vermont independent, have pushed for more access to credit information, Chi Chi Wu, a staff attorney at the National Consumer Law Center in Boston, said an interview before today’s announcement.
“Consumers should have the right to get their credit score for free before they apply for credit,” Wu said.
Many Americans “may not be fully aware of the significance of their credit score or know what they can do to correct serious errors,” Sanders said in a statement in March as he introduced legislation on the topic.
Credit ReportsPreviously, consumers who wanted to see their scores typically had to buy them through FICO’s website for $19.95 or sign up for a free trial subscription to its monthly score-monitoring service, unless they were denied credit or received less money than they sought in a loan application.
Credit scores differ from credit reports, which are provided by Equifax Inc. (EFX), Experian Plc (EXPN) and TransUnion Corp. The three agencies are required to give consumers a free copy of their credit report upon request once every 12 months. They also can sell people a credit score, which may be an “educational score” that differs from the one used by lenders, Wu said.
FICO isn’t paying the banks or receiving compensation from them for the free-score offering, Sprauve said. Banks purchase FICO’s algorithm and data from the three credit-reporting agencies used to generate credit scores, he said.
‘Financial Health’“Having people aware of their current credit score is important to financial health,” Paul Wilmore, managing director of consumer markets at Barclaycard US, said in an interview. Its customers will be able to go online to see their FICO scores and sign up for free alerts whenever they change.
The majority of Barclaycards don’t have an annual fee, Wilmore said. The company is giving free FICO scores to customers of its Barclaycard-branded cards and those with Frontier Airlines and Carnival Cruise Lines. It will add other partner programs in 2014.
First Bankcard, a provider of co-branded credit cards, serves more than 400 financial firms and partners.
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Source: Bloomberg News, 11/4/13
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Important info for how to avoid scammers - plenty of them around
There are other types of scammers: mail, Nigerian 411/419, etc. . click: 'Nigerian' 411/419 email scam - Idaho State University - - further advice for them in other locations in this website -
Signs You Are Talking to a Debt Collection Scammer
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Consumers are forking over hundreds, even thousands, of dollars to debt collection scammers. Our reader Ashley wrote:
“They told me that my loan had gone into default and if I did not pay the $398 they would send a sheriff to my job or home to serve me with court papers and I would be ‘behind bars’ for 6 months. I got scared … They told me to go to Walgreens and get a Vanilla reload network card and call them and give them the 10-digit number on the back. So … I did it.”
Ashley was scammed, just like thousands of consumers across the country have been. Don’t let it happen to you. Here are nine tip-offs that you are dealing with a debt collection scammer.
1. He claims to be calling from a courthouse or threatens a lawsuit.
If you are actually sued for a debt, you won’t get a call. Instead, you will be served with a legal notice (typically a complaint and summons) that contains instructions for responding. A variation on this scam is when someone calls and says that a lawsuit will be filed immediately if you don’t pay. That can also be a red flag: Under the federal Fair Debt Collection Practices Act, collectors can’t threaten to take action they can’t legally take or don’t intend to take.
If you are sued, you must be given time to respond.
2. She says you’ll be arrested, prosecuted for check fraud or even jailed.
You can’t be arrested simply because you can’t pay a debt. (There are times when consumers are arrested in conjunction with debts, but it is because they failed to appear in court when summoned, or failed to pay legal fines.) As the Better Business Bureau’s Kathleen Calligan notes, “A bad debt is not a criminal matter — it’s a civil matter.”
3. He impersonates law enforcement.
The caller may even offer to give you his or her “badge number.” This is almost a certain sign of a scam: Local law enforcement is not going to call you to try to collect a personal debt, and the FBI certainly won’t. If they claim to work with the sheriff’s office or FBI, tell them you will call them back at the published number for that agency. No doubt you’ll find out they were lying.
4. She has a heavy accent.
While an accent isn’t by itself a sign that you are (or aren’t) talking to a collection scammer, many are based overseas. The phone number that appears on caller ID may make it seem that they are calling from the United States, but that’s because that number is spoofed (faked). One commenter on our blog, who worked briefly for one of these outfits in India, suggested asking the caller to hum a few bars of our national anthem.
5. He is collecting an old payday loan you aren’t sure you owe.
Just applying for a payday loan online puts you at risk because some of these sites are designed to collect personal information for identity theft purposes. Because these scammers have such detailed information from the borrower – including Social Security number, place of employment, etc. – it’s easy to think the debt is legitimate. But that doesn’t mean it is.
6. She says she’ll tell your friends, relatives or employers about your debt.
These crooks are hoping to either embarrass you or scare your relatives into paying the debt for you. But federal law forbids collectors from discussing personal debts with anyone other than a co-signer or spouse. They can call other people only to locate a debtor; once the debtor has been found, those calls are supposed to stop.
7. He insists you pay immediately via Western Union or a prepaid card.
These are favored payment methods of scammers because they can’t be easily traced and the funds are available almost immediately. There’s no opportunity for the debtor to stop payment, as there would be with a check, for example.
8. She stonewalls when you request information.
Ask for the debt collection agency’s name, address and phone number. If the caller provides it, check to see if the information is legitimate. If in doubt, contact your state attorney general’s office to find out if the firm must be licensed to collect debts in your state, and if so, whether it is. If the caller won’t provide you with contact information, the conversation should end there.
9. He refuses to send you written notice of the debt by postal mail.
This is a key thing to look out for. Federal law requires that a collector to notify you in writing of the debt within five days of contacting you the first time. If the collector hasn’t sent you anything by mail, ask them to do so. Email is not an acceptable substitute; insist on this written notice. Once you’ve received it, you have 30 days to dispute the debt and request verification.
A number of readers of the Credit.com blog have experienced more than one of the tactics from this list. Ron wrote:
I have just had this happen and they got my work phone # through my company cell phone. He (the Law enforcement official) as he represented himself, would not give his company info or address. When I asked for written verification, he refused and said the police were on the way to get me. He had a similar conversation with my boss the night before… I am a criminal justice major and I have to say that it shook me up.
If you encounter a collector who engages in any of these tactics, take time to investigate whether the caller is for real. If you let yourself be pressured or rushed into paying, you may wind up paying a crook.
Click the green title below - if the link has expired search the web with the title
The Top 10 Debt Collection Rights
The First Thing You Must Do Before Paying Off Debt
What's a Bad Credit Score?
Source: From the Experts at Credit.com
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Everyone, including YOU, can learn from this article to avoid scam
There are all kinds of crooks on the internet - here is one website selling stuff - but: what can happen then ... bad things.
STAF, Inc. will help the family in this article to clear the situation and have their credit cleaned. The internet is a blessing and it is a curse - the criminals are lurking in every corner - sometimes we do not see them. To give one's credit/debit card & other info to a stranger has always potential red flags hanging. This is a real report of what can happen. If the web holder has no money, to get compensation is tough. Some states have victims' funds, some charities do also. The lawyer's fees can be paid by the state funds - search the web and consult a competent lawyer. Warning: sorry to say, many lawyers are not the most honest either, nor are all very competent. STAF, Inc. can help as necessary.
There are also other legal things for all of us to learn from this article - most importantly: ALWAYS read the small text.
Always read the small text in any document- ALWAYS
Woman gets $3,500 fine and bad credit score for writing negative review of business
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Jen Palmer’s husband bought her some Christmas gifts from KlearGear.com. When the merchandise still hadn’t arrived a month later, PayPal closed the transaction and refunded her money.
Palmer tried to contact the company to inquire about the order, but couldn't get in touch with anyone. Frustrated, she wrote a critical review of the company on RipoffReport.com and moved on.
But as KUTV reports, KlearGear.com resurfaced three years later and has turned Palmer’s life upside down, slapping her with a $3,500 fine and reporting her to the nation’s three major credit agencies.
"This is fraud," Palmer told the station. "They're blackmailing us for telling the truth."
Here’s what happened. Tucked away in the agreement language almost no one ever reads, was a clause stating that anyone who buys something from the website agrees to never publicly criticize the website.
The exact language reads:
"In an effort to ensure fair and honest public feedback, and to prevent the publishing of libelous content in any form, your acceptance of this sales contract prohibits you from taking any action that negatively impacts kleargear.com, its reputation, products, services, management or employees."
However, on some review sites individuals claim that the clause only went into effect in 2013, meaning that Palmer should be exempt from the fine policy. Interestingly, review sites also contain a number of mixed to negative customer reviews but only this one mention of the company actually issuing a fine to a customer.
And the actual language from the clause has since been removed from Kleargear's website.
In fact, the company may be facing some heat for bragging about it's own reviews. The Better Business Bureau has issued an alert against KlearGear saying the company has falsely claimed to have received an A+ rating from the BBB. "The BBB became aware that the company's website is displaying a BBB Accredited Business logo and BBB Rating A+," reads a statement on the BBB website. "However, the company is not an accredited BBB business and the BBB rating is not A+."
As of November 28, 2012, the BBB became aware that the company's website is displaying a BBB Accredited Business logo and BBB Rating A+; however, the comapny is not a BBB accredited business and the BBB rating is not A+. - See more at: http://www.bbb.org/western-michigan/business-reviews/novelties-retail/kleargear-in-grandville-mi-38143064#sthash.w85vkPeA.dpuf
As of November 28, 2012, the BBB became aware that the company's website is displaying a BBB Accredited Business logo and BBB Rating A+; however, the comapny is not a BBB accredited business and the BBB rating is not A+.
Still, someone from the company contacted Palmer’s husband via email and told him he had 72 hours to remove her critical review from the site Ripoff Report, or face the $3,500 fine. Her review read in part, "There is absolutely no way to get in touch with a physical human being" at the site, adding that they have, "horrible customer service practices."
Nonetheless, Jen Palmer actually contacted Ripoff Report but that site demands $2,000 to remove a post.
Naturally, Palmer refused to pay the fee. Then, she found out that not only had Klear Gear imposed its arbitrary fine, but they had reported the “failure to pay” status to the major credit bureaus.
And the credit bureaus haven’t been helpful either, refusing to remove the mark from her husband's credit score. Jen Palmer says that she and her husband are now receiving rejection letters from lenders as a result of the negative mark on their credit score.
So, the Palmers now find themselves at the mercy of three unresponsive entities: the website that fined them for exercising their First Amendment rights, the review site that refuses to remove her post and the credit bureaus, which are taking the side of the website over a customer who may be the victim of corporate fraud. In the meantime, KUTV has put the Palmers in contact with a media relations representative at Experian, in an attempt to resolve the situation.
"I have the right to tell somebody else these guys ripped me off," Palmer said.
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Source: Internet news _________________
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Article 1 of 2
(see article 2 of 2 next below titled "Understanding Your Debt Collector's Rights")
Haunted By Bad Credit? 5 Ways to Fight Back
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Zombie debts that just won’t die. Judgments that haunt you for years, or decades even. Tax liens that block you from buying a home or financing a car. Medical debts that seem to come at you from all sides. Student loans that follow you to the grave.
While these scenarios may sound as overblown as the buildup to a horror flick, for the consumers who are dealing with them, they are very real. And very scary.
If you’re haunted by bad credit, you may feel helpless. But there are almost always ways to fight back. Here are five of them:
1. Face Your Fears
In every scary movie, someone walks straight into danger: the basement, the attic or the dark woods. While we think they are idiots for walking straight into a trap, the person who is being targeted by whatever evil lurks there feels there is no other choice. They know they can’t simply run and hide.
If you’re dealing with credit problems, you have to face your worst fears if you hope to make them go away. That means you may have to pick up the phone and talk to that debt collector or credit card company, for example. And you’ll definitely need to get your free credit reports and check your free credit score to assess the damage. When you do, you may be surprised to find it’s not as bad as you thought.
2. Negotiate
In Season 3 of “The Walking Dead,” Rick and the Governor negotiate to end hostilities if Michonne is handed over. But the Governor isn’t negotiating in good faith. Instead, he plans a slaughter after she is turned over. His plot is foiled, and Michonne escapes.
While negotiating with someone who doesn’t plan to keep up their end of the deal is a losing proposition, when it comes to your debts, many companies will be happy to work something out. They want to get paid, and they know that many of the clients with past-due debts can only do so much.
If you can’t afford to pay off those unpaid debts that are keeping you up at night, talk to the collector or creditor about a payment plan, or a lump-sum settlement for less than the full balance.
Just be sure to get the terms of the deal in writing to prevent any “misunderstandings” later. You don’t want to hear months — or years — later about a debt you thought had been resolved.
3. Strike Back
Everyone knows the way to stop a vampire is by driving a wooden stake through their heart. In “The Vampire Diaries,” it’s a little more complicated; it takes a stake from a white oak to kill an Original.
When it comes to your debts, federal law provides for specific ways click: to stop collection actions. You can dispute the debt and request verification, and the collector must investigate and respond before resuming collection. You can remind collection agents that the statute of limitations has expired, if you believe the debt is too old. Or you can send a collector a click:“cease contact letter” at any time and they must stop contacting you, except to notify you of legal action they will be taking. (If you are dealing with an overseas scam collector, legitimate tactics won’t work, so you may have to get creative and try harassing them the way they do consumers.)
4. Wait It Out
The “newborns” in Twilight are bloodthirsty young vampires who wreak havoc until they mature and learn to control themselves. (Some do this better than others.) If they abstain from human blood, eventually their eyes become honey-gold and they can blend into society.
The first few years after financial problems, your credit scores will be a wreck and you may worry that you will never be part of the credit mainstream again. But over time, it does get better. As negative information gets older, it will have less of an impact on your scores, provided you pay all your bills on time going forward, and avoid the temptation of running up debt you can’t handle.
Eventually, all negative items will cease to be reported and you’ll have a fresh start. This usually takes seven to 10 years, though certain information such as unpaid tax liens or judgments can be reported longer than that.
5. Use the Ultimate Weapon
The Elder Wand in the Harry Potter books is believed to be the most powerful wand in existence. When used by its true master, it is said that he or she cannot be defeated .
In the world of debt, bankruptcy is the ultimate weapon.
STAF Inc.'s advice: BUT IT IS THE WORST OF ALL - BAD-BAD-BAD, FOR THE REST OF YOUR LIFE -
if needed, contact STAF, Inc. and we will guide you hخw to avoid bankruptcy and how to get rid of your debts in a legally correct and safest manner - you can live in the U.S. or anywhere in the world, STAF, Inc. will help you - our operations are U.S. wide & worldwide. It = bankruptcy - can wipe out debts, stop collectors in their tracks and can even force some creditors — such as lenders on underwater mortgages — to negotiate. For millions of people, it is the tool that allowed them to get back on their feet financially.
(yes, BUT AT WHAT "PRICE" SHAME-SHAME-SHAME - tougher to get employed, you never get rid of any bankruptcy action even though it will sooner or later disappear from your credit report (still it will لاث in the "secret" files available for the industry and employers willing to pay for that info - in addition: more an more employers and other forms ask "Did you ever file for a bankruptcy?" - that alone hurts if you only filed and would have, perhaps, cancelled the filing before going through the whole legal process. DO NEVER, EVER FILE FOR A BANKRUPTCY - there are ALWAYS better, safer solutionsة
If you go to a barber and ask the barber "Do I need a haircut?" - what do you think the barber is going to say? Of course, he will not throw you out from his/her store - the barber says "Yes, you do need a haircut (even though you may have only one hair on your head" - What do you think the bankruptcy lawyer (who needs your fee) will say to you if/when you ask
More from Credit.com
From the Experts at Credit.com
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Article 2 of 2
Understanding Your Debt Collection Rights
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You just gave a telemarketer your credit card number. Or you owe a bank money for your new car or family home. Maybe you are falling a bit behind on your payments, or maybe someone else claims you are falling behind - but you're not. You may be receiving phone calls from the bank, credit card company or collection agency. Sound familiar? No fun, is it?
There are things you can do to make sure you are a bit more in control of those pesky debt collectors. Read our summary of the Fair Debt Collection Practices Act, passed by Congress to protect consumers like you from illegal debt collection activities today.
Find Out Where You Stand
You can check your credit score each month using Credit.com's free Credit Report Card. This completely free tool will break down your credit score into sections and give you a grade for each. You'll see, for example, how your payment history, debt and other factors affect your score, and you'll get recommendations for steps you may want to consider to address problems. In addition, you'll also find credit offers from lenders who may be willing to offer you credit. Checking your own credit reports and scores does not affect your credit score in any way.
15 U.S.C. §§ 1692 - 1692o
This information was updated as of June 2, 2005 and is believed to be accurate as of this date. We assume no responsibility to update this information.
The Fair Debt Collection Practices Act (the Act) was passed by Congress to protect consumers by making some debt collection activities illegal. Some of those practices and activities which are illegal are described below. (15 U.S.C. § 1692e.)
Definitions used on this page:
If you owe money or use a credit card, you are a Consumer. ( 15 U.S.C. § 1692a(3).) Consumer also means your spouse, parent, if you are a minor, guardian, executor or administrator. (15 U.S.C. § 1692c(d).)
If you owe a Debt, you owe money to a Creditor for anything that you owe for personal, NOT business or commercial purposes. (15 U.S.C. § 1692a(5); § 1692c(d).)
If you ever fall behind in paying your Creditor you may be contacted by a Collector. A Collector might be an individual, an attorney, or a company, who ordinarily receives a payment from your Creditor for collecting on your overdue payments. A third party Collector collects Debts owed to someone else - your Creditor. (15 U.S.C. §1692a(6).)
How it works: Click green title for further info
Can Collectors contact you? If, so, when can they contact you?
Can Collectors contact your family, friends or work-place?
Can you stop the Collector from contacting you?
What if you have an attorney?
What should a Collector tell you about the Debt?
What if don't you think you owe money to the Creditor?
What if the amount is incorrect?
What if you owe multiple debts?
What happens during the 30-day dispute period?
What can a Collector say? What they may not say.
What to do if you think a Collector broke the law?
Click green for further info
Source: From the Experts at Credit.com
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In this tab all needed information for how to build and keep
an excellent credit score is given in every detail.
You will find everything fully explained. Apply the info.
The next article below is an example of what one must not do
Cop Charged With Using False Reports
to Boost Credit Scores
Warning: giving wrong information to gain benefits is a crime and can ruin a person's credit for life and can lead to a criminal history and a difficult life. Filing a false police report is also a crime.
Play in an honest manner - that is always safe
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A Michigan woman has been accused of filing false reports of identity theft as a way to boost people’s credit scores. She and a Detroit police officer who allegedly filed the false police reports face felony charges for the scheme, which supposedly raised some clients’ credit scores by as much as 100 points.
The police officer, 40-year-old Tamboura Jackson, is accused of filing a false report to improve his own credit. Should he be convicted, Jackson may eventually find himself with no credit, as it is quite difficult to maintain a credit history while incarcerated.
The charges Jackson and 34-year-old Lisa Curtis face carry some hefty sentences: up to 20 years for felony racketeering and bribery, 20 years for criminal enterprise-racketeering, 14 years for uttering and publishing and 14 years for forgery. Curtis was charged with one count of bribery of a public official (four years), while Jackson was charged with accepting that bribe (10 years).
As reported by the Detroit News, the operation is said to have started in 2009, when Curtis, a businesswoman, told dozens of her clients she could improve their credit score by filing false police reports, which would say identity theft led to fraudulent credit card charges. Curtis would construct the identity theft stories and give them to Jackson, along with a bribe of between $50 and $200, to file the reports with the credit bureau Experian and request the debts in question be removed from the credit histories.
Clients allegedly paid Curtis between $200 and $1,000 to boost their credit scores, but are believed to be unaware of the requests being sent to Experian.
Both of the accused were arraigned last week and held on $10,000 bond, each. Jackson has been suspended without pay. As for the false police report he filed to improve his own credit history, the report said another officer had signed it without knowing about the alleged scheme.
Identity theft — assuming it’s not fabricated — can devastate one’s credit score, which is why it’s important for consumers to monitor their credit for suspicious activity. A good way to stay on top of this is to monitor your credit scores and your credit reports regularly. Credit.com’s Credit Report Card is one tool that which offers monthly insights into a consumer’s debt profile and credit score. Any sudden changes in your score could indicate fraud.
Of course, if a consumer checks his or her credit report and finds a less-than-pleasing picture with legitimate debts, there are ways to rebuild credit. Solutions include paying down debt, using less of one’s available credit, making timely payments and diversifying credit. Note: Criminal activity, such as filing false police reports, is not among these options.
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Source: From the Experts at Credit.com
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Why Judges Are Scowling at Banks
scowl = (1) noun: an angry or bad-tempered expression, (2) verb: be angry, show anger
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LAST week, for the first time since the financial crisis, the government faced off in court against a major bank over lending practices during the mortgage mania. Lawyers for the Justice Department contend that Countrywide Financial, a unit of Bank of America, misrepresented the quality of mortgages it sold to Fannie Mae and Freddie Mac, the taxpayer-owned mortgage finance giants, starting in 2007. Fannie and Freddie incurred gross losses of $850 million on the defective loans and net losses of $131 million, the government said.
Bank of America disagrees. Its lawyers say that Countrywide did not defraud Fannie or Freddie.
This case is undoubtedly big, but it is only one of many mortgage-related matters inching through the judicial system. And what is notable about some of the lower-profile matters is the tone and tack that federal judges are taking in their rulings. District court judges are not generally known as flamethrowers, but some seem to be losing patience with the banks.
For decades leading up to the foreclosure debacle, plaintiffs’ lawyers say, judges generally took the side of lenders when borrowers came to court complaining of problematic lending or predatory loan servicing. Many judges still do. But some are getting tough, perhaps having seen too many examples of dubious bank behavior.
“Maybe the judges are tired of the diet of baloney sandwiches the banks have been feeding them,” said April Charney, a foreclosure defense lawyer who for years represented troubled borrowers at Jacksonville Area Legal Aid in Florida. She is now in private practice.
Two recent rulings — one in New York involving Bank of America and one in Massachusetts involving Wells Fargo — serve as examples. In the Wells Fargo case, a ruling on Sept. 17 by Judge William G. Young of Federal District Court was especially stinging. In it, he required Wells Fargo to provide him with a corporate resolution signed by its president and a majority of its board stating that they stand behind the conduct of the bank’s lawyers in the case.
The case involved a borrower named Joseph Henning who fell behind on his mortgage, which he received from Wachovia, an entity later absorbed by Wells Fargo. In a suit filed against Wells Fargo in May 2009, Mr. Henning contended that the loan was predatory.
Judge Young agreed with the bank’s argument that federal laws pre-empted the state-law remedies Mr. Henning was seeking. But he did so reluctantly, calling it a win based “on a technicality.”
Then he chastised the bank. “The disconnect between Wells Fargo’s publicly advertised face and its actual litigation conduct here could not be more extreme,” the judge wrote. “A quick visit to Wells Fargo’s Web site confirms that it vigorously promotes itself as consumer-friendly,” he continued, “a far cry from the hard-nosed win-at-any-cost stance it has adopted here.”
If Wells Fargo does not supply the corporate resolution within 30 days of the ruling, the case will go to a jury trial, the judge said.
Mary Eshet, a spokeswoman for Wells Fargo, called the judge’s remarks in the ruling “inflammatory and unsubstantiated,” and added: “We believe Judge Young should follow the law which he recognizes and finalize his own judgment in this case.” The bank is asking an appellate court to require the judge to enter his dismissal order without the corporate resolution.
Valeriano Diviacchi, the lawyer for the borrower, said he had never seen a ruling requiring a corporate resolution as Judge Young’s did. Mr. Diviacchi said that he didn’t know why the judge made the ruling but that the judge appeared to want the case to be heard by a jury of Mr. Henning’s peers, people who may have had their own experiences with questionable bank practices.
“Judge Young is one of the few judges who will refer matters to juries — even when a cause of action does not entitle a party to a jury right — because he believes in it as a foundation of the justice system and a democratic society,” Mr. Diviacchi said.
The second case arose after Edwin Ramos and Michelle Ava Stouber-Ramos filed for bankruptcy and had the first and second mortgage on their Tampa, Fla., condominium discharged by the court. That kind of discharge protects a borrower from any attempts to collect the debts as a personal liability.
Bank of America received notice of the discharge in September 2010. But in spring 2012, the bank began sending letters to the Ramoses, saying their $26,991 second mortgage was “seriously delinquent” and demanding that they pay the amount owed immediately. Otherwise, the bank said, it would proceed with “collection action.”
According to Michael H. Schwartz, a lawyer in White Plains who represented the borrowers, Mr. Ramos started getting three phone calls a day from the bank, demanding repayment. When Mr. Ramos advised the bank’s representatives that the debt had been expunged in a bankruptcy proceeding, he was told “too bad,” according to a court filing.
The phone calls and letters continued even after Mr. Schwartz went back to court to ask that Bank of America be sanctioned for illegal attempts to collect the debt. During this time, Bank of America sold the servicing rights on the first mortgage to another company, which soon began sending its own demand letters to the Ramoses.
This month, the matter came before Robert D. Drain, a federal bankruptcy judge in New York. Judge Drain found Bank of America in contempt of the debt discharge order protecting the Ramoses and required the bank to pay Mr. Schwartz’s legal bills in the case. The judge also ordered the bank to pay $10,000 a month in sanctions to the Ramoses until it stopped making the repayment demands.
Judge Drain acknowledged that it wasn’t a lot of money to Bank of America. But, he said, he hoped that its lawyers would get the message. “This is not just a stupid mistake” by the bank, the judge said. “This is a policy.”
A Bank of America spokeswoman said the bank was working to resolve the court’s issues and “researching and investigating what transpired.”
But Mr. Schwartz said the Ramos case was just one of several in which he represented homeowners who were pursued by Bank of America over discharged debts. In another of his cases, court filings show that a homeowner received 105 phone calls and four threatening letters from the bank. “I believe the bank has made a conscious decision that it is less expensive to pay sanctions than to change its internal processes,” he said. “This problem is nationwide.”
Judges who take a more aggressive stance against the banks in such cases are doing what they can to hold these institutions accountable. It may not seem like a lot, but it is progress.
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Source: NYT
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Save big when you choose a 15-year loan
If you want to pay down your mortgage at a faster rate,
here are some tips to help you speed the payment process
Choosing a shorter term could really pay off at faster rate
"A shorter term mortgage comes with a lower interest rate, which means you pay less in overall interest. This reduces the overall cost of home ownership," David Bakke, editor at Money Crashers, a website devoted to career and finance advice, says. So let's explore refinancing to a shorter-term mortgage and what it could mean for you.
The Most Popular Short-Term Mortgage: 15-Year Loan
Even though fixed-rate mortgages come in a variety of sizes, the one that's been trending for the past few years is the 15-year, fixed-rate mortgage.
In fact, according to the "2013 Second Quarter Refinance" report by Freddie Mac,
Click green: Freddie Mac Homewww.freddiemac.com/Freddie Mac works with mortgage lenders to help people get lower housing costs and better access to home financing. Site contains news, products, services ....one of the nation's largest lenders, 31 percent of those who refinanced in the second quarter of 2013 shortened their mortgage term. And, the 15-year, fixed-rate loan was a popular one.
And while shorter-term mortgages often mean higher monthly payments, Bakke says that because of the historically-low interest rates, people can actually lower their monthly mortgage payment while lowering their overall term from 30 to 15 years (depending on what their existing rate is).
"One possible disadvantage to a shorter term mortgage is a higher monthly payment, but this really depends upon your current loan's rate of interest. If it's rather high, it's possible to get into a shorter term mortgage and lower your payment at the same time," he says.
Own Your Home Sooner and save more than half of your interest payments: better rate & half of the time
When people explore the massive savings in interest a shorter-term mortgage could provide over the life of their loan, compared with a 30-year mortgage, they often forget that an equally attractive result is achieving home ownership in half the time.
"A shorter-term loan is a great idea for someone planning for retirement. Getting a mortgage paid off before you retire is an excellent strategy to make financial management during retirement more feasible," he says.
Jim Duffy, a mortgage banker with Cole Taylor Mortgage in Atlanta, Georgia, says this is the main reason he's done many more 15-year, and even 10-year, mortgages in the past few years.
"Baby boomers are seeing retirement just around the corner, and today's low interest rates make it possible for them to get a shorter-term mortgage and enjoy their retirement, even on a fixed income," he says.
More Security
Do you like your home? Are you planning to stay in it through retirement? A shorter-term mortgage could help ease your mind about how you're going to pay your mortgage once your income shifts.
And who can disregard the emotional value of your home, especially if your home is filled with cherished memories of sons catching their first baseball in the front yard, daughters having sleepovers, and holiday family gatherings.
Duffy says wanting to stay put during retirement is another reason a lot of his clients have switched to a short-term mortgage: They're working now, and would rather pay a little more every month while they're earning income in exchange for the ability to stay in their home during retirement.
"Then, they don't have to move to a smaller place or apartment because they can't afford their mortgage on a fixed income," he says. "It's a real sense of security."
Source: Internet news
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5 Ways to Improve Your Chances of
Getting Approved for a Mortgage
Article 1 of 2
Article 2 of 2 next below
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Applying for a mortgage isn't anybody's idea of a good time. But that doesn't mean it has to be a miserable, much less unfruitful, experience.
With this in mind, I surveyed a handful of highly regarded mortgage brokers to learn what prospective borrowers should do before applying for a mortgage. What follows are the five most frequently cited actions that will markedly increase your chances of being approved.
1. Reduce credit card balances to no more than 35% of the limit
This is a point I heard multiple times in my conversations with mortgage brokers. If there's one thing besides a poor credit score that causes loan denials, it's having too much existing debt.
There are two general rules to know in this regard. First, as Matt Hodges of Presidential Mortgage Group told:
the current balance on your credit card should not exceed 35% of the limit.
And second, you should try to minimize your debt-to-income ratio. "A high DTI simply means that you don't make enough money to borrow what you're asking for," said James Adair of PDX Home Loan in Portland, Ore. For Fannie Mae and Freddie Mac, the acceptable limit is in the 45% to 50% range.
2. Make sure assets used for the transaction are seasoned for at least 60 days
This is another point that came up time and again. While you look at all of your assets the same, a loan officer won't.
Take cash as an example. While you may have $20,000 in hard currency hidden under your mattress -- what better asset is there than cash? -- a bank won't consider it in your favor unless its source can be verified and it's been sitting in a bank account for at least 60 days.
"Bank guidelines now require that any large, non-paycheck deposits (typically over $500) need to be sourced, with a paper trail (invoices, supporting bank statements, etc.), and an explanation letter," said Dakota Gale of Green Mortgage Northwest in Portland, Ore. "This can be a huge amount of work for you as the client, and can potentially delay your loan. So before you deposit that 1099 contractor check or a gift from Mom, ask your loan officer what the best way to proceed is!"
3. Compile the necessary financial documents ahead of time
"Your loan officer is going to ask for a lot of things," Gale went on. "Copies of your driver's license, address, and work history, pay stubs, W2s, and tax returns for the last two years, recent bank statements, naming rights for your next child ... these are all fair game -- OK, maybe not the last one."
The point being, the mortgage application process is indeed a process. And as a result, the better prepared you are for it, the better your chances are of getting approved.
"Put together a package of clearly labeled PDFs with relevant financial documents in separate files that you can easily deliver to mortgage professionals in order to shop around for the best rate," Gale advises. "Great loan officers will drive the process forward, but you can help things along by being prepared."
4. Get your credit checked well ahead of time
Although this probably goes without saying, it's important to point out that not only is it important to check your credit, but, as Hodges told me, it's also critical to do so in a timely enough fashion so that "simple errors can be corrected prior to the time-crunch to close your loan."
In terms of credit scores themselves, the ideal benchmark is 740, as the middle of the three major consumer credit agencies. "When a credit score is in 20-point increments lower than 740, the loan is more likely to incur late payments or default," says Hodges. "Agencies are compensated for that risk by increasing the cost to the borrower through either points or rate or both."
The one caveat is that you should avoid filing any credit disputes unless it's absolutely necessary. "That $75 parking ticket that went to collections where you SWEAR you weren't parked in the yellow? Just pay the bill, get documented proof that you did, and be done with it," Gale said. "Otherwise, you risk having the credit bureaus create a big headache for you and your loan."
5. Educate yourself on the loan process
Last but not least, you should educate yourself on the loan process itself.
Think of it as a purchase of money -- that is, separate and distinct from the purchase of a home -- with the cost being the interest rate and points. If you want to minimize the cost and avoid being taken advantage of, you have to know what you are doing.
In addition to researching and shopping around for the right mortgage broker, you should take a few hours to get an idea about what the going interest rate is for a mortgage. You can get this on Freddie Mac's website, as well as at places such as Mortgage News Daily.
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Article 2 of 2 (Article 1 of 2 next above)
Click green Here for a list of the five most common reasons
that mortgage applications get denied
For first-time homebuyers, the process of getting a mortgage can be daunting.
The worst part is the lingering feeling you get when you're waiting to learn whether you've been approved. Even if you pick a good lender and gather all the necessary documents, it still may not be enough.
With this in mind, I asked a handful of highly recommended mortgage brokers to share the five most common reasons mortgage applications get denied. While some of the reasons won't come as a surprise, others are less obvious and may very well save you from making a critical mistake.
1. Poor or no credit history
This is far and away the most common reason mortgages are denied.
"Today's mortgage market is pressured by secondary markets, and regulators who have become overwhelmingly specific on scores," Gus Floropoulos of New York's Quontic Bank. "If your credit score is below a specific threshold, you will not obtain the loan."
What affects a credit score? "Inability to demonstrate positive repayment on other debts, late payments, past bankruptcy, and past foreclosure can all affect your score," said James Adair of PDX Home Loan in Portland, Ore.
Does this mean you're simply out of luck if your score falls below the requisite threshold?
Not necessarily, says Matt Hodges of Presidential Mortgage Group in Charlottesville, Va. "I recently had a closing occur, on time, with a client who had a 619 middle credit score. While it fell below our conventional and FHA guidelines, I was able to improve the client's credit score with some pay-downs of debt prior to closing."
But one thing to keep in mind is that your credit score isn't just checked at the beginning of the process; it's reaccessed throughout.
It's for this reason that Bob Van Gilder of Finance One Mortgage urges homebuyers to avoid buying big-ticket items like a car or furniture on credit in the time period between submitting your mortgage application and closing on a house: "Credit is checked during the process, and loans are audited by the lender before closing. If new payments show up, those payments may kick it into the 'decline' bucket."
2. Exhausted debt-to-income ratio
The second most cited reason mortgage applications are denied is that the prospective borrowers already have too much debt relative to their income.
"This simply means that you don't make enough money to borrow what you're asking for," Adair says.
The problem, according to Floropoulos, is that "people either are buying something they cannot afford, or don't show enough on paper even if they can afford it. It's a combination of lack of income and overextended existing personal household debt."
So how much is too much? "The agencies have targets of allowable debt-to-income. For Fannie Mae and Freddie Mac, that is 45% to 50% debt load based on gross monthly income. For FHA, the total debt load can reach 56.99%," Hodges says.
3. Not enough "qualifying income"
In the world of mortgage finance, not all income is created equal. More specifically, the only type that counts toward your debt-to-income ratio is "qualifying income."
"This is a huge area where borrowers can get surprised by how much less they qualify for than expected," Adair told me. "Lots of people make money, but it can't all be counted toward 'qualifying' for one reason or another -- unreported cash income, commissions or bonuses without a two-year history, certain kinds of self-employment income that is tax sheltered, etc."
With this in mind, it's important to keep track of where your income comes from. "Bank guidelines now require any large, non-paycheck deposits (typically over $500) to be sourced, with a paper trail (invoices, supporting bank statements, etc.) and explanation letter," noted Dakota Gale of Green Mortgage Northwest in Portland, Ore.
"This can be a huge amount of work for you as the client, and can potentially delay your loan," Dakota continued. "Before you deposit that 1099 contractor check, or a gift from Mom, ask your loan officer what the best way to proceed is!"
Along these same lines, most brokers I spoke with emphasized the importance of communication. "The more that's disclosed at the beginning of the process, the easier it is to avoid specific problems that may arise," Floropoulos says.
4. Too much "layered risk"
This was a point Hodges made that I found particularly insightful. While the mortgage approval process is largely quantitative and objective, there is nevertheless a qualitative and subjective piece to it.
"Even if the automated underwriting engine -- either Fannie's delegated underwriter or Freddie's loan prospector -- gives you an 'accept' or 'approve' finding, an underwriter can still downgrade that decision based on multiple negative factors," Hodges says.
The things that would cause an underwriter to do so include "payment shock (much higher mortgage than rent payment), short period on a job, self-employment, limited credit history, funds for closing coming as a gift rather than being saved, and/or limited reserves post-close."
5. Changing your horse midstream
Growing up in an agricultural community, one of the things you learn is that, for obvious reasons, you never want to change your horse midstream. It turns out that the same can be said of the mortgage application process.
The fewer things that change between when you apply for a mortgage and close on a house, the better. While I've already noted that this applies to making big-ticket purchases on credit in the intervening time period, it applies to other things as well.
One example Van Gilder gave was losing or changing your job. Another involved changing the terms of your loan: "Say the original contract called for a 20% down payment, but then the borrower decides to keep more assets liquid to pay for incidentals (a fridge, new counters, etc.). If they were tight to qualify in the first place, then the additional mortgage insurance could cause their debt ratios to exceed the allowable limit."
Keep these things in mind
Applying for a loan isn't anybody's idea of a good time. However, if you take advice like this into consideration, you can make it less of a burden than it otherwise would be.
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Facts You Should Know About Mortgages, but Probably Don't
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At first glance, the mortgage market seems simple enough. It's just a bunch of banks making loans, right?
Wrong.
If a person were so inclined, they could write a multivolume treatise*) on the complexities of the market for home loans in the United States.
*) treatise = a written work dealing formally and systematically with a subject, synonyms:
disquisition, essay, paper, work, exposition, discourse, dissertation,thesis, monograph, opus, oeuvre, study,
critique;
But for both of our sakes, I'll spare you. I've instead queried a handful of experts in the field to uncover what, in their minds, are the most important things people should know about the mortgage market, but don't.
1. Banks don't make the rules
Bankers are often considered the bad guys -- and to a certain extent, I suppose that's fair given their role in the financial crisis.
When it comes to mortgages, however, it's important to recognize that they don't make the rules. "The regulators and the government-sponsored entities [Fannie Mae and Freddie Mac] make the rules," Gus Floropoulos of New York's Quontic Bank told me. "We are simply structuring the deal to fit the guidelines they say are acceptable."
This applies to everything from loan-to-value ratios, down payment requirements, and credit scores. The point being, says Floropoulos, "don't shoot the messenger."
2. Banks also don't dictate interest rates
Along these same lines, it's important to appreciate that banks have little to no control over interest rates.
Since the beginning of the 1970s, most home loans in the United States have been securitized by banks, packaged into mortgage-backed securities, and then sold to institutional investors.
Few if any conforming mortgages actually stay on a typical bank's balance sheet -- though Wells Fargo (NYSE: WFC ) has proven to be a notable exception to this rule of late.
The net result is that interest rates are set in the MBS*) market, not by banks. "These securities trade daily like any other type of bond or stock," Floropoulos went on to note, and it's the price investors are willing to pay for them that dictates the underlying interest rates. *) MBS = click: Mortgage-Backed Security - MBS Definition | Investopedia
3. Banks ain't doing this mortgage thing for free
The fact that banks don't make the rules or set interest rates shouldn't be interpreted to mean that they're in the mortgage business merely out of the goodness of their hearts.
As Bob Van Gilder, a mortgage broker at Finance One Mortgage, told me (emphasis added): "Interest is paid in arrears*) on your mortgage. When you make your payment on November 1, you are actually paying for the previous month's interest and only a small piece of principal." *) in arrears = behind in paying money that is owed
4. Being late on your payment won't ruin your credit
Given the horror stories of homeowners being unjustly foreclosed upon over the last few years, you may be surprised to learn that being late on your mortgage payment won't automatically ruin your credit.
"While your payment is due on the first of the month, it's not officially delinquent until after the 15th," explained Van Gilder. "You will have a late charge after the 15th, but it's not reportable to credit bureaus as a late payment."
Suffice it to say, this isn't an excuse to be late on your mortgage payment. I'm noting it rather to provide peace of mind in the event that you forget to pay your mortgage until a couple of weeks after the first of the month.
5. Not everybody pays the same rate
Even though conforming mortgages are often alike with respect to their terms and duration -- thus, the term "conforming" -- the same cannot be said for the rate mortgagees pay.
Known as risk-based pricing, people who are perceived to be at bigger risk of default are charged more for their mortgage.
"If you have a higher risk transaction, due to low down payment, low credit scores, high loan to value, etc., you will pay proportionally more than someone else," Matt Hodges, a sales manager with Presidential Mortgage Group said.
It's for this reason many mortgage professionals encourage prospective homeowners to reduce debt and clean up their credit histories prior to applying for a mortgage, as opposed to afterwards.
The bottom line
Getting a mortgage can be daunting, but rest assured that millions have gone before you, and millions will follow in your footsteps. If you're smart, you'll do your research ahead of time and bridge the knowledge gap between yourself and your lender. I hope this article serves as a jumping-off point in this regard.
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Source: credit.com
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Ways You May Be Throwing Money Away
Without Realizing It
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According to a recent study published in Science magazine, if you're poor and mismanage your money,
(1) you may be very capable of making good financial decisions;
But you're trapped in a vicious circle:
(2) The inevitable problems that come with being poor are likely affecting your judgment, which means you're making bad decisions, which end up making you even more poor.
You are NOT a dimwit. You're just stressed (dimwit= a stupid or silly person)
With that in mind, if you're financially struggling - or know someone who is - here are three ways people end up throwing money away when making common financial decisions:
(1) buying a house;
(2) buying a car and;
(3) investing in a retirement plan.
They're all generally good ideas, of course, but just because you're doing something smart doesn't mean you're doing it right at that specific moment suitable for your situation.
(1) Stretching to take out a mortgage.
Few personal finance experts will say it's stupid to buy a house - but they will tell you that you can buy one too early in life, before you're financially ready. Many people also buy too big of a house.
"I can't tell you how many people I've seen get swept up in the romantic notion that they need to own a home or that they need to own a more expensive home, only to later regret it when they end up with a beautiful place but no money," says Scott Halliwell, a certified financial planner with USAA*), a national financial services company based in San Antonio that mostly serves military members and their families.
*) USAA Military Home, Life & Auto Insurance | Banking & Investinghttps://www.usaa.com/
With competitive home, life and auto insurance rates, as well as convenient online banking and investment services, USAA proudly serves millions of military ...
[Read: 5 Financial Decisions That Sound Smart But Are Really Dumb - if the link has expired search the web with the title]
Halliwell says too many people try to buy a house before they've learned to budget.
These 3 red flags, he says, should alert you that you aren't financially ready:
(1) if you don't yet have an emergency fund;
(2) you can't save up for a sizable down payment (20 percent is standard) or;
(3) you're trying to find another way to buy a house, such as taking on a high interest rate in place of having that down payment.
He has a point, especially considering that a house comes not only with a monthly mortgage that you'll likely be paying for the next 30 years - but also homeowners insurance, yard maintenance, appliances and furniture to buy and the inevitable home repairs. Most lenders say your house payment shouldn't be more than 30 percent of your income, so if you're searching for a way to buy a house that is going to be, say, 40 or 50 percent of your income, you might want to do some serious reconsidering.
Halliwell adds: "We always talk about how much money someone can save if they just stop drinking fancy coffee. The truth is, coffee doesn't do anywhere near the damage this move can."
(2) Buying a too-expensive car. If you're not paying attention, the car you're buying may not seem all that expensive. The auto finance manager may suggest that instead of three years, you pay for six, and that $531 monthly payment for an $18,000 car decreases to $282, obscuring the fact that you'll end up paying far more in the long run, especially if you aren't getting a good interest rate.
For instance, if your car's interest rate is around 4 percent, which is average these days, paying the loan over six years instead of three means you'll pay $1,145 more just in interest. That might be worth it for the lower payments. But let's say you have bad credit and you're paying a high interest rate. Buying an $18,000 car at 18 percent (a typical interest rate if your credit score is, say, 550 and you're buying a used car) and paying it over three years means you'll shell out approximately $5,000 just in interest. Spreading the loan over six years means your interest alone will climb to $11,000. Your $18,000 car is actually a $29,000 car.
[Read: 6 Money-Saving Strategies That May Cost You In the Long Run - if the link has expired search the web with the title]
Of course, it can be easy to rush into buying a car, especially if your current vehicle is on life support. But not only should you make use of the many monthly loan payment calculators for car-buying on the Web, remember to research how a new or new-to-you car will affect your insurance and your auto's gas mileage.
"We're certainly a nation in love with automobiles, and I'm right there with the crowd," Halliwell says. "Even so, I'm forever amazed at the number of $40,000 to $50,000 cars and trucks I see on the road every day. The payments on those loans are huge by average financial standards, and the cars are often worth thousands less than the purchase price within days of buying them."
Many experts suggest ensuring that the car you buy is no more than 1/10th of your gross annual income. So if you make $70,000 a year, you shouldn't buy more than a $7,000 car. Even if that doesn't seem realistic, it's a good blueprint to try to follow. After all, six years is a long time to lock yourself into paying for a car, which depreciates the moment it is driven off the lot.
"I regularly get questions from people about what they can do to fix their auto loan situation when only three years into their six-year loan term, their circumstances change and they can no longer afford the payment," Halliwell says. "Unfortunately, in many cases, they owe thousands more on the loan than the vehicle is worth, so they're often stuck."
(3) Withdrawing money from your retirement plan for anything other than retirement.
Yes, times are still tough for some people, but short of dredging up money to save your house from going into foreclosure or raising ransom money for a kidnapper, most financial gurus will tell you
to stay away from your 401(k) or individual retirement account.
[See: 12 Money Mistakes Almost Everyone Makes - if the link has expired search the web with the title]
"Too many people take money out of a qualified plan or IRA to pay for everyday expenses. The Department of Labor has a word for this: 'leakage,'" says Kenn Tacchino, professor of taxation and financial planning at Widener University in Chester, Penn.
How devastating can it be? Tacchino says that when he is in the classroom, he offers his students this example:
"A 25-year-old is getting married and he wants to buy a $5,000 engagement ring. He is in the 28 percent marginal bracket and he will pay a 10 percent penalty to take the money from his IRA. He will need to take out $8,064 to buy the ring and pay the taxes. He throws caution to the wind and takes out the $8,064. Five thousand goes to buy the ring, and $3,064 goes to taxes. Had he kept the money and earned an 8 percent rate of return, he would have had over $195,000 at 65 for retirement. That's quite a ring!"
More From US News & World Report - click green for further info - if the link has expired search the web with the title
- 10 Ways to Cut Your Spending This Week
- How Bad Behavior Affects Your Bottom Line
- 3 Ways to Get Your Customer Service Complaint Resolved Source: US News & World Report ________________________________________________ ====================================================================================================================================================================
- The Future of Credit Cards Is Overseas for Investment Purposes - Buying Their Stocks
- With the worldwide trend away from cash and checks and toward electronic forms of payment, companies that issue credit cards and provide payment services should have a bright future ahead of them, especially those with lots of international exposure.
- American Express (NYSE: AXP ) , despite its name, actually derives about 30% of its revenue from international sources , which is one of the main things differentiating it from competitors such as Discover Financial Services (NYSE: DFS ) and Capital One Financial (NYSE: COF ) . So, why do we care about American Express' international business, and what could it mean for the future?
The major credit card companies
When most people hear the term credit cards, they immediately think of companies such as Visa & MasterCard, so why aren't these businesses explored in this discussion? Unlike the others, Visa and MasterCard don't directly issue credit cards. Rather, they provide financial institutions with branded cards, and then facilitate electronic funds transfers throughout the world.
I'm more interested in the companies that directly issue credit cards. While they are more risky than companies like Visa, which generally gets a fixed percentage of a merchant's sales, credit card issuers have more potential upside.
Capital One, for example, is a bank holding company that specializes in credit cards but also offers home loans, auto loans, and other banking products. One of the largest direct issuers of cards, Capital One has credit card receivables of more than $78 billion. Trading at a relatively low valuation of just 9.5 times earnings, and right at its book value, Capital One does seem to be very fairly priced.
The lack of international exposure, however, is of some concern. A very small percentage of Capital One's credit card business is European, and most of this is cards issued to consumers with very poor credit ratings, which carry high annual percentage rates and high default rates.
Discover issues cards to about 50 million cardholders. While Discover's business is almost completely in the United States, it has an interesting growth strategy that makes it worth a look. The company recently launched a joint venture with PayPal, which is owned by eBay (NASDAQ: EBAY ), whereby Discover provides a "mobile wallet" to PayPal's millions of customers.
Essentially, customers get a Discover-branded card linked to their PayPal account for shopping at physical retailers (traditionally, PayPal was an online form of payment). As this service has recently launched, it's worth watching to see how much it impacts Discover's bottom line.
A little about American Express
And now on to American Express, which not only issues cards, but provides payment, travel, and expense services all over the world. About half of American Express' business (51%) comes from its U.S. credit card business, which has grown tremendously as a result of excellent partnership arrangements, such as with Delta SkyMiles. The rest of AmEx's business comes from its global network and merchant services (17%), global commercial services (15%), and its international card services (16%), which is the area of the most growth potential.
What these percentages imply is that more than 76% of the company's credit card business comes from within the U.S. With electronic payments and charge cards still relatively new concepts in much of the developing world, and with AmEx already seen as a world leader, it has the most to gain as the rest of the world completes the same transition to electronic payments as the U.S. has over the past decade and a half.
A good buy?
While at first glance American Express doesn't look quite as cheap as the other companies mentioned, it offers an excellent value relative to its growth potential. While the long-term potential of credit cards and electronic payments in the developing world remains to be seen, in the near term, the consensus calls for earnings growth of about 12% annually over the next three years.
The company has a return on equity of almost 24%, well above the industry average. Return on equity, or ROE, is considered a good measure of how efficiently a company creates profits for its shareholders. Generally, an ROE of 15%-20% is considered to be very good.. To put this in perspective, Capital One has an ROE of 11.1%, which is typical for a banking company in today's market.
So, even though at first glance, American Express stocks may seem a bit expensive, it also offers higher potential for profit over the long term.
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Source: By Matthew Frankel | More Articles
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Why Are Credit Card Interest Rates So High?
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Credit card debt in America currently stands at over $850 billion. Only mortgage ($7.86 trillion) and student loan ($999.3 billion) debt totals are larger according to the Federal Reserve.
Related: How to Avoid Credit Card Debt
There’s some good news is though. American credit card debt dropped $2.7 billion in June. That’s 16.5 percent below its July 2008 peak. Today, cardholders are making more of an effort to avoid high interest rates and pay down balances.
But why are credit card interest rates so high compared to home mortgage rates? We’ll tell you…in this Just Explain It.
Don’t expect credit card rates to mirror the interest you pay on a car loan or mortgage. Credit card rates will continue to be higher because it’s a risky product. Unlike car loans and mortgages, credit cards aren’t tied to actual collateral. So, if you default on your car or home loan, the bank will take them from you. On the other hand, if you fail to pay back your credit card loan, the bank gets stuck absorbing the loss.
Besides the risk factor, other conditions can determine credit card rates.
1. Credit card rates are attached to the economy, which hasn’t been so great recently, and the prime rate – which is based on the Fed Funds Rate set by the Federal Reserve. Since the Fed funds rate is close to zero, the prime rate has been pretty low recently. A poor economy usually leads to higher lender prices. And that’s what we’re seeing now. Banks worry about borrowers losing their jobs and missing payments.
2. Your profile also has a lot to do with the rate you’re charged. Borrowers with a low debt-to-income ratio and whose credit score is above 720 have a better chance at locking in lower rates. Cards like the First Command Bank Platinum Visa and the First Federal Bank offer preferred borrowers interest rates of 6.25 and 7.15 percent.
If you’re in the market for a new credit card -- depending on the card – the advertised interest rate could be as low as 11 percent or as high as 26 percent. The national average is currently 14.96 percent. For example, Wells Fargo’s (WFC) Cash Back card offers a zero percent introductory rate to new customers. After 12 months, the variable Annual Percentage Rate, or APR, kicks in and your rate could climb to anywhere between 12.15 and 25.99 percent.
A credit card interest rate of 22.99 percent isn't unheard of these days. High-interest-rate cards are usually for customers who have poor credit. Some cards can carry rates as high as 36 percent, but most experts say customers should walk away from sky-high fees.
Consumers with "bad" credit might be able to land a reasonable APR if they go with a product from a credit union. New members of an Atlanta-based credit union can apply for charge cards with a 9.9 percent interest rate attached to them as long as their FICO score is above 680. That rate climbs to 12 percent with a score of 600.
But the best way to avoid credit card interest fees all together is to pay off the balance each month. If you spend what you can afford, it’s like an interest-free loan.
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Source: credit.com
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How to Avoid Credit Card Debt
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Roughly one in five Americans (= 20 % of the population) believe carrying credit card debt from month to month is "a responsible way to manage his or her finances," according to a recent online poll by the National Foundation for Credit Counseling.
Many financial experts would say they're wrong.
Carrying that kind of debt means paying more for items than they actually cost, in the form of interest and, in the case of a late payment, extra fees. If the debt is constantly growing, it can also mean that eventually the borrower will no longer be able to afford to maintain the cards, which can damage his or her ability to take out other forms of credit.
"If they have a high balance relative to their credit line, their credit score will go down," says Gail Cunningham, a vice president of the National Foundation for Credit Counseling. It can also mean that when a real emergency comes up, such as suddenly needing to buy new car tires or facing health care costs, the person has no ability to cover those costs because he or she has used up their available lines of credit.
[Read: How to Survive an Unemployment Spell.]
That's why financial experts generally recommend either paying off credit card bills in full each month, or at least figuring out how to pay down the balances with the goal of eventually paying them off. Among the 1,630 respondents in the NFCC survey who said their financial health has improved since the recession, six in ten said they pay off their credit card balance every month.
They're part of a bigger shift toward financially responsible behavior. In a report released this month from Aite Group and Chase Blueprint, two-fifths of the 1,242 respondents said they are saving more now than they did during the recession, and more than half also said they know more about financial matters today than they did during the recession. "We've seen consumers tell us that their financial literacy has improved over the last several years, some of that probably out of necessity," says Tom O'Donnell, senior vice president of quality for Chase. That means understanding the financial products they're using and any fees attached to them, he adds.
Meanwhile, credit card debt levels have been trending downward over the last five years, says Amy Cutts, chief economist at Equifax, a credit bureau. "With credit cards, balances continue to decline. ... We're seeing a continued trend of consumers using their credit cards differently than they have in the past and going on a debt diet," she says.
Consumers who describe themselves as having financial plans seem to be the ones who are most likely to have control of their credit card spending. New research released last week from the Consumer Federation of America and the Certified Financial Planner Board of Standards found that about one in five household "decision-makers" consider themselves to be big-time financial planners. Another two-fifths of the roughly 1,000 respondents were more basic planners. The survey found that the bigger planners were more likely to save and manage their debt well.
"Those who plan do better and feel better than those who do not. Planning has a purpose - it gives people more confidence to manage their finances in the short and long term," said Kevin Keller, chief executive officer of the CFP Board in a conference call about the findings.
[Read: How to Stop Overspending.]
For some people, the debt build-up is because they spend more than they earn, a pattern that can lead to financial destruction. "Debt has become a way of life for many people," Cunningham says, and she warns that anyone caught in an endless debt cycle needs to figure out why so they can stop. "You need to stop charging and start paying down debt - that is the only way you're ever going to get control of your spending," she says.
Not all credit card debt is created equal, however. Barbara Nusbaum, a New York-based psychologist and consultant for the financial security company Genworth, says taking on credit card debt as part of a bigger plan sometimes can be a smart move. "Education is an important [reason], but you have to be doing it mindfully. Maybe you don't go to the school with a name but a school that will get you what you need," she says. Health care costs and clothes for a job interview could also be smart credit card purchases, she says, because you're investing in your future.
If you're looking for alternatives to your mounting pile of credit card bills, here are five ideas:
1. Earn more money.
"There are only three answers to bringing spending in line with income: increase income, decrease expenses or both," Cunningham says. She suggests taking on a part-time job in the retail industry, which hires many temporary workers in preparation for the holiday season. "Do something you like - work at a bookstore if you're interested in books, and dedicate all of that income to paying down debt," she adds.
2. Think more positively.
Nusbaum says many people get trapped in a cycle of debt that's compounded by the fact that they feel awful about it. "Credit card debt is almost like a black mark on someone. ... Because you feel so badly about yourself, you feel even more shame. One of the ways to move away from that is to say, 'It's not me that's bad ... I have debt, but I can work on this,'" she says. She suggests writing down the negative thoughts in your head and then, next to them, listing more positive alternatives. Instead of, "I'm terrible with money," you can write, "I've fallen down on these bills. I want to get better."
[See: 10 Things to Watch When Interest Rates Go Up]
3. Become a Zen master of personal finance. click:
What is a Zen Master? - Zen master - Wikipedia
After freeing yourself of the anxiety around money, Nusbaum suggests boosting your financial prowess. "You don't have to be good at all of this ... you can either acquire skills through financial planners, books or websites, or you can go to somebody who can supplement what you know," she says. "Have a day of reckoning where you pull out all of your bills and list your outstanding debt," she adds.
4. Celebrate your success.
"It's critical for consumers to understand the progress that they're making and recognize when they achieve something successful," O'Donnell says. If consumers know they are getting closer to paying off their credit card debt, then they feel more motivated to continue, he says. "It turns into a good feeling so they'll do it again," he adds.
5. Save up more cash so you can be your own creditor.
Consumers who have emergency funds stashed away so they can rely on their own money, and not credit cards, when unexpected expenses pop up are better prepared to weather financial storms, Cunningham says. She suggests saving at least 10 percent of your current income in order to provide that cushion.
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- 10 Ways to Start Earning Extra Money Now Click green for further info - Source: US News & World Report
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Credit Card Use Strategies for Seasonal Spending
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Just as we can predict the arrival of winter each year, many Americans can foresee their increased spending needs throughout the holiday season. And of course, increased holiday spending on credit cards will mean higher payments, more interest charges, or both.
Yet consumers who know in advance that they will soon be charging more on their credit cards can manage their expenses in several different ways. Here are four of the most popular options:
1. Pay statement balances in full each month
Cardholders will always be better off when they can limit their holiday spending to an amount that they can pay off each month in full and on time. Doing so has several benefits: First, there is no need to worry about high interest rates being charged, because no interest is accrued at all, so cardholders will never pay it. In addition, cardholders enjoy an interest-free grace period on all their charges that is 20-50 days long, depending on when in their statement cycle they made the charge.
2. Keep the same cards normally used
Cardholders who fail to anticipate the need to carry a balance may just keep the credit cards they normally use, and incur interest charges at the standard rate. Credit card debt is unsecured, and the standard interest rates can be high.
3. Find a 0% APR promotional balance transfer offer after the holidays
Once credit card users find themselves over their heads in debt, many will apply for an interest-free balance transfer offer early in the new year. While these offers will allow them to suspend interest payments for 6-18 months, nearly all of these cards charge a 3% balance transfer fee levied on the amount transferred.
4. Apply for a promotional financing offer before the holidays
Credit card users who anticipate future debt can apply for a credit card that offers interest-free financing on new purchases for a limited time. In this way, cardholders can carry a balance, while avoiding both interest charges and balance transfer fees. And since these offers can last as long as 18 months, cardholders could potentially finance their purchases in this holiday season and the next.
Which option makes the most sense?
The best way to manage credit card use is to pay off each statement balance in full each month. This means that your credit card is merely being used as a method of payment, not a means of finance.
Yet many credit card users carry a balance on one or more of their credit cards each month, and they are even more likely to do so during the holidays. For these cardholders, it will make sense to look for a promotional financing offer before the holidays for new purchases, rather than incur a 3% balance transfer fee necessary to receive interest-free financing on previous purchases. Furthermore, most offers that include interest-free financing on new purchases also have a 0% APR balance transfer offer. So cardholders can use one of these cards to finance their holiday purchases and to consolidate their existing debts.
The best way to use a promotional financing offer
Credit cards with promotional financing offers can be used to stretch out payments on existing debt, while justifying new purchases based on interest-free financing. Unfortunately, those who use these offers as an incentive to spend more and postpone paying off their balances can find themselves trapped in a cycle of debt for years to come.
On the other hand, cardholders can use these limited time offers as a means to focus their efforts on consolidating and paying off their debts before the promotional financing period expires. Credit card users can strive to pay a portion of their debt each month so that their entire balance is paid before the promotional rate expires and the standard rates apply. By applying for a promotional financing offer before the holiday season, cardholders save money on interest payments and work toward ending the cycle of debt.
By anticipating their holiday spending needs in advance, credit card users can choose the best strategy for their individual needs.
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Source: credit.com
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Student loans
Loan Monitor Is Accused of Ruthless Tactics on Student Debt
Click: Educational Credit Management Corporation - ECMC
Stacy Jorgensen fought her way through pancreatic cancer. But her struggle was just beginning.
Before she became ill, Ms. Jorgensen took out $43,000 in student loans. As her payments piled up along with medical bills, she took the unusual step of filing for bankruptcy, requiring legal proof of “undue hardship.”
The agency charged with monitoring such bankruptcy declarations, a nonprofit with an exclusive government agreement, argued that Ms. Jorgensen did not qualify and should pay in full, dismissing her concerns about the cancer’s return.
“The mere possibility of recurrence is not enough,” a lawyer representing the agency said. “Survival rates for younger patients tend to be higher,” another wrote, citing a study presented in court.
There is $1 trillion in federal student debt today, and the possibility of default on those taxpayer-backed loans poses an acute risk to the economy’s recovery. Congress, faced with troubling default rates in the past, has made it especially hard for borrowers to get bankruptcy relief for student loans, and so only some hundreds try every year. And while there has been attention to aggressive student debt collectors hired by the federal government, the organization pursuing Ms. Jorgensen does something else: it brings legal challenges to those few who are desperate enough to seek bankruptcy relief.
That organization is the Educational Credit Management Corporation - ECMC, which, since its founding in Minnesota nearly two decades ago, has been the main private entity hired by the Department of Education to fight student debtors who file for bankruptcy on federal loans.
Founded in 1994, just after the largest agency backstopping federal student loans collapsed, Educational Credit is now facing concerns that its tactics have grown ruthless. A review of hundreds of pages of court documents as well as interviews with consumer advocates, experts and bankruptcy lawyers suggest that Educational Credit’s pursuit of student borrowers has veered more than occasionally into dubious terrain. A law professor and critic of Educational Credit, Rafael Pardo of Emory University, estimates that the agency oversteps in dozens of cases per year.
Others have also been highly critical.
A panel of bankruptcy appeal judges in 2012 denounced what it called Educational Credit’s “waste of judicial resources,” and said that the agency’s collection activities “constituted an abuse of the bankruptcy process and defiance of the court’s authority.”
Representative Steve Cohen, a Tennessee Democrat who has introduced a bill to limit predatory tactics, said, “The government should hold its agents to the highest standards, and I don’t know that we’ve been doing that.”
He added that the government has a special responsibility to use “a standard that’s reasonable.”
The case that caused the bankruptcy judges to accuse the agency of abuse concerned Barbara Hann, who took a particularly drawn-out beating from Educational Credit. In 2004, when Ms. Hann filed for bankruptcy, Educational Credit claimed that she owed over $50,000 in outstanding debt. In a hearing that Educational Credit did not attend, Ms. Hann provided ample evidence that she had, in fact, already repaid her student loans in full.
But when her bankruptcy case ended in 2010, Educational Credit began hounding Ms. Hann anew, and, on behalf of the government, garnished her Social Security — all to repay a loan that she had long since paid off.
When Ms. Hann took the issue to a New Hampshire court, the judge sanctioned Educational Credit, citing the lawyers’ “violation of the Bankruptcy Code’s discharge injunction.”
Educational Credit went on to appeal the sanctions twice, earning a reprimand from Judge Norman H. Stahl of the United States Court of Appeals for the First Circuit, who agreed with the bankruptcy judges that the agency “had abused the bankruptcy process.”
Asked for comment, Educational Credit responded that the case was not related to undue hardship and that it was based on “complicated issues of legal procedure.”
Another case dating from 2012 involved Karen Lynn Schaffer, 54, who took out a loan for her son to attend college. Her husband, Ronney, had a steady job at the time.
But Mr. Schaffer’s hepatitis C began to flare up, and he was found to have diabetes and liver cancer. He became bedridden and could no longer work.
Ms. Schaffer said she did her best to cut expenses. She began charging her adult son rent, got loan modifications for her mortgages and cut back on watering the yard and washing clothes to save on utilities. She woke up at 4 every morning to take care of her husband before leaving for a full day at a security job.
But Educational Credit said Ms. Schaffer was spending too much on food by dining out. According to Ms. Schaffer, that was a reference to the $12 she spent at McDonald’s. She and Mr. Schaffer normally split a “value meal,” a small sandwich and fries.
“I was taking care of Ron and working a full-time job, so lots of times I didn’t have time to fix dinner, or I was just too darn tired,” Ms. Schaffer said in an interview. The lawyers also suggested she should charge her son for using their car, require him to pay more in rent and rent out the other room in their house.
Asked for comment, Educational Credit said that Ms. Schaffer “did not meet the legal standard for undue hardship,” and that she declined an income-based payment plan. Her lawyer argued that the plan would treat any forgiven loans as taxable income at the end of the repayment period so it was not a viable option.
Supporters of the agency’s tactics say they are necessary to hold borrowers accountable. “For every dollar that the aggressive debt-collection firm fails to recoup, that’s a dollar that someone else is going to have to pay,” said G. Marcus Cole, a law professor at Stanford University.
Professor Cole added that if it were easy to discharge student loans in bankruptcy, lenders would simply not lend money to students without clear assets or prospects. “We need a standard like that to be able to allow students who can’t afford an education to be able to borrow,” he said.
The Educational Credit Management Corporation is the product of a scandal that almost brought down the government’s student loan program two decades ago. In 1990, the Higher Education Assistance Foundation, the nation’s largest student loan guarantee agency for federal loans, announced that it had become insolvent, evidence that no one was paying very close attention to where student loans went, and whether they were ever paid off.
“The high default rates had a particularly high impact with the press,” said Frank Holleman, deputy secretary of education at the time.
Lawmakers began arming the Department of Education with a set of unprecedented collection tools, including the ability to garnish debtors’ wages and Social Security, and appropriate their tax rebates.
The changes helped cut default rates from a high of 22 percent in 1990 to around 10 percent in the 2011 fiscal year.
But critics of Educational Credit said it had stepped over a line between legitimate efforts to collect on defaulted loans and legal harassment.
“We should be outraged when a student-loan creditor like E.C.M.C. can use bulldog tactics to scare away someone who has a legitimate claim for relief,” said Professor Pardo, who has analyzed hundreds of adversary proceedings involving the nonprofit. “Part of the outrage is that ultimately E.C.M.C. is defending the federal government’s interest.”
Professor Pardo called the agency’s tactics a “war of attrition, death by a thousand cuts.”
Asked to respond, Educational Credit issued a statement saying that its practices strictly follow federal law and that it strives to avoid lengthy court proceedings by working with borrowers to help them apply for income-based repayment plans. When appropriate, it said it “consents to a discharge as an undue hardship.” It acknowledged that some cases are “close calls.”
Chris Greene, a spokesman for the Department of Education, said that the department offers flexible repayment options and believes that Educational Credit complies with the law and government policies. He said that if there was evidence of wrongdoing, the department would investigate.
One of the places where Educational Credit has had the biggest impact has been to shape the meaning of the phrase “undue hardship,” the standard required since the 1970s for relief from student debt. In 2009, for example, the agency persuaded the United States Court of Appeals for the Eighth Circuit to adopt stricter standards. One argument it made was that if student borrowers seeking bankruptcy could qualify for a repayment plan tied to their incomes they were, by definition, ineligible for relief.
The dissenting judge, Kermit E. Bye, said the decision “improperly limits the inherent discretion afforded to bankruptcy judges when evaluating requests” for relief. He also said the new standards subjected debtors to a higher burden of proof than was actually required by law.
These and other changes have been regretted by others as well.
“We thought we were doing God’s work,” said David A. Longanecker, a former Department of Education official, referring to efforts to strengthen collection. “We didn’t realize the full extent to which our actions would lead to some activities that would be unfair to borrowers.”
Source: NYT
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A loan pool to help clients help family float*)
school & other bills
Date: July 2013
Trough out this website, STAF, Inc.'s editors give meaning to certain words or sayings
that may be unfamiliar to the speakers of English as their second language
to float = to arrange for a loan
NEW YORK (Reuters) - College expenses are on a lot of people's minds now that interest rates on U.S. government-backed student loans have doubled to 6.8 percent.
One financing option for clients who want to help relatives pay for school but don't want to give a handout is a family loan pool, a trust for dispersing low-interest student loans to their kin.
Financial advisers may be hesitant to employ a strategy that isn't widely used and could stir up family feuds if someone defaults. If properly structured, however, the pool can bring a family closer together.
That's been the experience of George Lewis, a lawyer based in Quincy, Illinois. His family's loan pool, established by his grandmother about 50 years ago, was profiled in The New York Times last fall, 2012. After publication, Lewis received about 20 phone calls from people asking for advice on how they could set up a pool of their own.
"We've experienced the extended family really remaining much closer than we could have otherwise," Lewis said.
Rod Zeeb, chief executive of The Heritage Institute, a Portland, Oregon-based organization that trains advisers on multigenerational planning, said he's seeing increasing interest in family loan pools as interest rates on loans and tuition costs rise.
Advisers can use this momentum to educate clients on ways to properly construct intra-family loans.
"Any time you can bring a new idea to a client, even if you don't do the work, you get credit for it," Zeeb said.
SETTING IT UP
Family loan pools are similar to family banks, which typically take the form of a trust or limited liability company. But family loan pools are more narrow in scope, since family banks can sometimes take equity stakes in ventures and make grants as well as loans.
Under a loan pool, a family sets up a trust and bequests an initial sum into it. They then establish rules for how family members qualify for the loans, how long they have to pay them back and what happens if they default.
The family appoints one or more trustees who review the applications to determine who should get the loan. Later in life, those who benefited from the loan pool can contribute.
Tax and legacy planning experts say families should charge interest on the loans equal at least to the so-called applicable federal rate (AFR) approved by the Internal Revenue Service. The rate is currently about 1.2 percent for three- to nine-year loans. Charging interest helps takes care of any tax issues.
A pool could work well for a family that runs a business together, because they're used to separating money and personal issues. It's not a good fit for families who can't respect that wall, and might, say, goad a borrower about missed payments at Thanksgiving.
Families should expect to pay several thousand dollars to set up the trust that will house the loan pool. They can also hire a multigenerational planning expert to address other issues, like what to do about defaults and how to break up the pool if it gets unwieldy after several generations.
"The danger if you do this on the cheap is you could fracture family relationships," said Timothy Belber, a Denver-based adviser to wealthy families on their legacy plans.
GROUND RULES
Three years ago Belber helped set up a family loan pool for two brothers in Alaska. The brothers put $1 million into the pool and appointed themselves, Belber and an accountant to a committee that reviews the loan applications and makes recommendations to the trustee, who has final approval.
To get a loan, students have to write up a formal proposal about what they want to study and how they plan to pay the money back. Currently three of the eight family members eligible for a loan have taken one. They are still in school, so repayment hasn't become an issue.
For defaults, the Alaskan family can rely on the shame factor: The trustee sends out a quarterly report detailing the status of the loans. The family also has a process to renegotiate the payment schedule.
Georgia resident and business professor Roy Richards is in the process of setting up a family loan pool in honor of his parents, which will benefit their grandchildren. He's hoping it creates a legacy.
"The idea of having something that keeps us somewhat knit together is a wonderful prospect," Richards said.
Source: Reporting by Jennifer Hoyt Cummings; Editing by Lauren Young and Prudence Crowther
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Americans Save This Little Each Year
Americans are notoriously terrible savers and
typically save less than 5% of their disposable personal income each year
Only one in four Americans has adequate emergency savings or at least six months of savings, that percentage has not changed much in the past couple of years
because of stagnant income and high household expenses
The American consumer is woefully lacking in saving for both emergencies and their retirement
E.g. in Japan & Germany people save up to 25 % of their yearly income
Click green below to compare the European Union household numbers in each EU country
Annual data - Eurostatepp.eurostat.ec.europa.eu › European Commission › Eurostat Annual key indicators by Member States (405 kb) Annual key indicators by Member States. Households: saving rate, investment rate, gross debt-to-income ...
A survey conducted by Harris Interactive found that Americans would rather stay debt-ridden and often put their physical appearance ahead of their financial state. A whopping 72% of Americans would rather keep their current debt than gain 25 pounds and be completely debt free. The June 2013 survey was conducted online among 2,021 Americans ages 18 and older.
Nearly two-thirds of adults (64%) think about their physical appearance more than their debt. 68% of women were more likely to agree with this statement than men (61%). The survey also revealed that 70% care more about their physical health than their financial health.
"We've become somewhat of a country of excess and the ability to borrow has been so cheap and easy," said Ken Lin, founder and CEO of Credit Karma, a San Francisco-based financial management site which tracks consumers' debt and assets and compares it to others. "The abundance of credit in the U.S. has given consumers a lot of reasons to spend instead of saving. Our spending behavior is very much keeping up with the Joneses. You really need to have a lot of self discipline."
Most Americans wait too long to start saving for retirement, said Greg McBride, senior financial analyst for Bankrate.com.
"Americans like their stuff," he said. "It is a lot of materialism."
[Read: The Sneaky Reason You May be Overpaying on Your Electric Bill]
The household savings rate 30 to 40 years ago was 10% compared to 4% now.
"People don't save enough," McBride said. "Savings is unfortunately not the priority that it used to be."
Incomes have also not kept up with expenses compared to 30 to 40 years ago since consumers are now buying larger houses, families own more than one car and there are TVs in every room, he said.
Individuals now have more "burdens for future healthcare costs and retirement," McBride said.
"The need for savings is even greater," he said.
Only one in four Americans has adequate emergency savings or at least six months of savings, and that percentage has not changed much in the past couple of years because of stagnant income and high household expenses, McBride said. Long-term unemployment is more of an issue now compared to a few decades ago.
"People now recognize they are not having a whole lot of success in moving the needle," McBride said.
[Read: This is Why You're More Vulnerable to Identity Theft Than You Realize]
Consumers should force themselves to live on less money and have a portion of their paycheck direct deposited into a savings account.
"You have to prioritize your savings," McBride said. "That is the essence of building wealth. If you want to build wealth, you have to spend less than you make."
In addition to examining your expenses and looking for ways to cut back, shopping around for car and home insurance can save you hundreds of dollars. Refinancing your mortgage still remains an option.
"Track your spending and know where every dollar is going." he said. "That is where you are going to maximize your savings opportunities."
A recent National Foundation for Credit Counseling (NFCC) online poll revealed that
close to one in five consumers or (18%) believe that carrying credit card debt over from month to month
is a responsible way to manage his or her finances
"This data suggests that not only are many Americans are using credit cards to fund a lifestyle their income can't support, but they are comfortable doing so," said Gail Cunningham, spokesperson for the NFCC.
One way to add money to your budget is to adjust your withholding allowances, she said. The average income tax refund in recent years is near $3,000. This means that people could have an extra $250 each month. To find out the proper number of allowances to claim, go to www.IRS.gov and type "withholding allowances" in the search box. A worksheet will come up that the employee can complete and be told the right number of deductions for his individual situation.
"People always tell me that they can't afford to save," Cunningham said. "My answer is that you can't afford not to."
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Source: Credit.com
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Mortgage & other loans
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Investing in Gold ?
Every investor deserves to know the truth
The cold gold factors below
revealed by a leading Harvard Economics Professor
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THERE ISN’T A LOT OF GOLD
The World Gold Council estimates that all the gold ever mined amounts to 174,100 metric tons
If this supply were divided equally among the world’s population, it would work out to less than one ounce a person
Warren E. Buffett has a good way to illustrate how little gold there is. He has calculated that if all the gold in the world
were made into a cube, its edge would be only 69 feet long. So the cube would fit comfortably within a baseball infield
Date: July 27, 2013
Budging* (Just a Little) on Investing in Gold
*) To budge is to move or change something a little
An example of budge is to get someone to alter their beliefs slightly
Another example of budge is get a large rock to move a tiny bit
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Trough out this website, STAF, Inc.'s editors give meaning to certain words or sayings
that may be unfamiliar to the speakers of English as their second language
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By N. GREGORY MANKIW - N. Gregory Mankiw is a professor of economics at Harvard
Click green for further info
A friend posed that question to me a few weeks ago, after watching gold’s wild ride over the last few years. The price of gold was less than $500 an ounce in 2005, but soared to more than $1,800 in 2011, before falling back to about $1,300 recently. He wasn’t sure what to make of it all.
My instinct was to say no. Like most economists I know, I am a pretty boring investor. I hold 60 percent stocks, 40 percent bonds, mostly in low-cost index funds. Whenever I see those TV commercials with some actor hawking gold coins, I roll my eyes. Hoarding gold seems akin to stocking up on canned beans and ammo as you wait for the apocalypse in your fallout shelter.
But I was also wary of imposing my gut instinct on my friend, who was looking for a more reasoned judgment. I knew that some investors saw gold as a key part of a portfolio. The author Harry Browne, the onetime Libertarian presidential candidate, recommended a permanent 25 percent allocation to gold. In 2012, the Federal Reserve reported that Richard Fisher, president of the Federal Reserve Bank of Dallas, had more than $1 million of gold in his personal portfolio.
So, before answering my friend’s question, I dived into the small academic literature on gold as a portfolio investment. Here is what I learned:
THERE ISN’T A LOT OF IT The World Gold Council estimates that all the gold ever mined amounts to 174,100 metric tons. If this supply were divided equally among the world’s population, it would work out to less than one ounce a person.
Warren E. Buffett has a good way to illustrate how little gold there is. He has calculated that if all the gold in the world were made into a cube, its edge would be only 69 feet long. So the cube would fit comfortably within a baseball infield.
Despite its small size, that cube would have substantial value. In a recent paper released by the National Bureau of Economic Research (N.B.E.R), Claude B. Erb and Campbell R. Harvey estimated that the value of gold makes up about 9 percent of the world’s market capitalization of stocks, bonds and gold. Much of the world’s gold, however, is out of the hands of private investors. About half of it is in the form of jewelry, and an additional 20 percent is held by central banks. This means that if you were to hold the available market portfolio, your asset allocation to gold would be about 2 percent.
ITS REAL RETURN IS SMALL Over the long run, gold’s price has outpaced overall prices as measured by the Consumer Price Index — but not by much. In another recent N.B.E.R. paper, the economists Robert J. Barro and Sanjay P. Misra reported that from 1836 to 2011, gold earned an average annual inflation-adjusted return of 1.1 percent. By contrast, they estimated long-term returns to be 1.0 percent for Treasury bills, 2.9 percent for long-term bonds and 7.4 percent for stocks.
Mr. Erb and Mr. Harvey presented a novel way of gauging gold’s return in the very long run: they compared what the Roman emperor Augustus paid his soldiers, measured in units of gold, to what we pay the military today.
They report remarkably little change over 2,000 years. The annual cost of one Roman legionary plus one Roman centurion was 40.9 ounces of gold. The annual cost of one United States Army private plus one Army captain has recently been 38.9 ounces of gold.
To be sure, military pay is a narrow measure, but this comparison offers some support for the view that, on average, gold should keep pace with wage inflation, which, thanks to productivity growth, runs slightly ahead of price inflation.
ITS PRICE IS HIGHLY VOLATILE*) Gold may offer an average return near that of Treasury bills, but its volatility is closer to that of the stock market. *) volatile = changeable - inconstant
That has been especially true since President Richard M. Nixon removed the last vestiges of the gold standard. Mr. Barro and Mr. Misra report that since 1975, the volatility of gold’s return, as measured by standard deviation, has been about 50 percent greater than the volatility of stocks.
Because gold is a small asset class with meager returns and high volatility, an investor may be tempted to avoid it altogether. But not so fast. One last fact may turn the tables.
IT MARCHES TO A DIFFERENT BEAT An important element of an investment portfolio is diversification, and here is where gold really shines — pun intended — because its price is largely uncorrelated with stocks and bonds. Despite gold’s volatility, adding a little to a standard portfolio can reduce its overall risk.
How far should an investor go? It’s hard to say, because optimal portfolios are so sensitive to expected returns on alternative assets, and expected returns are hard to measure precisely, even with a century or two of data. It is therefore not surprising that financial analysts reach widely varying conclusions.
In the end, I abandoned my initial aversion to holding gold. A small sliver, such as the 2 percent weight in the world market portfolio, now makes sense to me as part of a long-term investment strategy. And with several gold bullion exchange-traded funds now available, investing in gold is easy and can be done at low cost.
I will continue, however, to pass on the canned beans and ammo.
N. Gregory Mankiw is a professor of economics at Harvard.
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Source: Appeared first in The NYT
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About Mutual Funds
Click the green link to learn more about mutual funds - are they for you?
Helpful info & Practical, Detailed Guidance
(1) for every house owner or (2) for you planning to buy or build a house
1: 5 Projects That Lower Your Homes Value - 2: "5 Home Features You Should Skip" - 3: "Top 5 First-Time Homebuyer Mistakes" - 4: "Do Not Buy a House Without Checking These 5 Things - 5: "Build a House in 30 Days for $300K Less
Article 1 of 5 Articles 1 - 5 of 5 next below
5 Projects That Lower Your Home’s Value
If any given link has expired search the web with the title
Most upgrades, renovations, and home improvement projects raise a home’s resale value.
But in this article these five renovations can do just the opposite.
That is, must be pointed out, if you're planning on selling in the next five years. “If you’re going to stay in your home for a long time, do whatever makes you happy — surround yourself with Pepto Bismol pink if that's what you like,” she tells Destination Home. But if resell value matters, here’s what to avoid:
Converting bedrooms into other spaces: If potential homebuyers "see it’s a four-bedroom house, they want to go to the open house and see four bedrooms. You have to take the guesswork out,” says Soto. If you do convert a room, there's one feature you should absolutely never mess with. Watch the video to find out what that is.
Hot tubs: Soto thinks inheriting someone else’s hot tub is a turn-off — and she’s not alone. “You’d be surprised how many potential buyers find them to be a little gross.” And once a hot tub is installed, it's not an easy feature to remove from a deck or backyard.
Colored trim and textured walls: It seems like any potential homebuyer would see these features and know they can easily paint over them, but not so fast, says Soto. “I would much rather paint walls than trim any day — it's a beast of a job,” she says. And textured walls are "a mess to sand down and remove. The fad is over anyway, so just let it go.” If you feel your trim is outdated, see the video for Soto’s tips on what to do.
Children's theme bedrooms: Spending hundreds of dollars on a mural for your child's wall is throwing money away. Not only will they outgrow it in a matter of years, but “you're never going to get that money back when you sell, so just keep it neutral,” posits Soto.
Too much landscaping: Conventional wisdom says you want your yard to look as nice as possible, but heed Soto’s warning: you want to “keep up with the Joneses — but don’t exceed them.” To a potential buyer, gorgeous, overdone landscaping screams high-maintenance.
If any given link has expired search the web with the title
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Article 2 of 5 3 0f 5 next below
5 Home Features You Should Skip
The path to home ownership is fraught with challenges, not least of which is finding the right house. To help narrow down your search we met up with home designer and architect Barry Wood, who can be seen on HGTV’s "Hidden Potential." He gave us a list of home features that may appear to be amenities, but are actually red flags.
Wood warns us of the hidden costs and headaches that may be associated with them.
1. Fireplaces
They're appealing and cozy, but Wood warns, “Fireplaces are dirty and can have a lot of issues, especially if they're old. The chimney has all sorts of mortar joints that can crack, the flue can crack — that’s a huge fire code and safety issue.”
2. Oil Heat
It may be the predominant type of heating this country has used for the past century, but according to Wood, it’s going to cost you. Check out the video to see how it compares to gas heating, as well as the other problems you may run into.
3. Built-In Mirrors
A wall of mirrors may be a little '70s, but what's more, they're costly and difficult to remove, presenting safety issues for the average DIY-er.
Related: Property Brothers: Don’t Buy a House Without Checking These 5 Things
4. South-Facing Windows, Doors and Skylights
From the blazing midday sun driving up energy expenses to costly leaks, Wood lays out what to look for in the above video.
5. Wall-to-Wall Carpet
Wood says when you see carpet throughout a home, you don’t know what’s underneath — and it's usually nothing. This means you may have to put in new floors, which comes with a hefty price tag that Wood puts at $6,000 to $15,000 for an average-sized home.
If any given link has expired search the web with the title
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Article 3 of 5 4 of 5 next below
Top 5 First-Time Homebuyer Mistakes
Shane Ede and his wife of Jamestown, North Dakota, say that when they bought their first house in 2004, they were totally unprepared. With a combined income of just $45,000 and student loan debt topping $60,000, the Edes had an unfavorable debt-to-income ratio. But with no pre-qualification process or an experienced mortgage professional to stop this blunder, the couple managed to buy a three-bedroom house that was way out of their budget. They then spent the next two years barely scraping by — and they’re not alone.
While lending practices and standards have varied in the years since, one important point remains: first-time homebuyers can make a lot of mistakes during the process of finding and financing a home. That’s according to Trevor Curran, a loan officer with Powerhouse Solutions, who says he’s seen a lot of those mistakes first-hand during his two decades of working in the business.
In this episode of Destination Home, Curran shares the top five mistakes people make when purchasing a home. Check out the video for his insights into each. They include:
1. Making the wrong moves when managing credit. Think you should pay off all your credit cards and debt to qualify? Think again. Watch the video for Curran’s advice on the counterintuitive use of credit cards and what your loan officer could be looking at.
2. Thinking you’re pre-approved when you’re not. Curran says pre-qualification is an important first step while navigating homebuying — but an instant credit report and a quick chat with your loan officer does mean you're "pre-approved."
3. Using "just any" loan officer. Mortgage loan originators (as they're called in the biz) are not created equal, according to Curran. The difference in loan officer can result in everything from headaches during the process to loan terms that aren’t favorable for the purchaser.
4. Using pension or retirement fund money in a way that works against you. It can impact your debt-to-income ratio when you apply for a mortgage.
5. Buying the wrong house. According to Curran, “If you’re looking at a foreclosure, you’re buying someone else’s headache and competing with cash buyers. If you’re buying a short sale, you’re going to wait a long time for approval and you may not get the price you think you’re getting for the house.” In short, make sure the "deal" you’re getting is really worth the trouble.
If any given link has expired search the web with the title
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Article 4 of 5
Do Not Buy a House Without Checking These 5 Things
When Mia Fitzharris and her husband of Long Island, New York got an incredible deal on an extreme fixer-upper home, they knew going in it had problems. But even still, they were in for an unwelcome surprise when an inspector told them the damages would cost up to $225,000 to repair, and included irreparable problems with a foundation which they had been hoping to keep.
“It’s a much bigger job than we were expecting to do,” Fitzharris, a Yahoo! employee, tells Destination Home in the episode above. “What we originally thought was going to be a gut renovation is now going to be a complete tear down, starting from scratch.”
As Mia’s story demonstrates, hidden house flaws found too late in the purchasing process can dash homeowners’ dreams and budgets.
So in the accompanying video, we sat down with Jonathan and Drew Scott, who transform extreme fixer-uppers and educate viewers about it on their HGTV shows
CLICK: Property Brothers,
CLICK: Brother vs. Brother,
CLICK: Buying and Selling.
They filled us in on their essential checklist of five things every homebuyer ought to look for to avoid buying a lemon. At the same time, we sent an inspector over to Mia’s house to see what these problems actually look like.
Check out the video above to see how to spot these five major problems and hear explanations for why missing them can cost you big time. (For example, a termite infestation can end up costing tens of thousands of dollars.)
The checklist includes: mold, pests, outdated fixtures and wiring, cosmetic headaches like painted over wallpaper and poorly done DIY flooring, and drainage problems.
From toxic mold to sloping sod that can cause floods – we show you how to spot them.
Related: click: Buying Your Dream Home: How to Avoid a Nightmare
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Article 5 of 5 Articles 1 -4 of 5 next above
Build a House in 30 Days for $300K Less
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When Art Sine wanted to build a custom home outside of New York City, he says he began working with an architect on plans that would be to his specification, built the traditional way. But when the price tag was adding up to $725,000 — and possibly as much as $900,000 when he factored in upgrades, with no guarantees it wouldn’t go over budget — his dream home became out of reach.
However, he found a different way to build his dream house for a budget under $500,000, in a timeline of four months and with no surprise costs (in fact, he says invoices came in under-budget).
How? He opted for a modular home, better known as “pre-fab” (short for pre-fabricated). Not to be confused with mobile or manufactured homes, or even tract housing, modular homes are built in a factory and designed to fit together a little like legos. This option has come a long way from the “kit” houses popularized by Sears & Roebuck in the 1940s — and one of the biggest improvements is that they're now highly customizable.
Related: click: Six Fabulous Pre-Fabricated Homes
Check out the accompanying Destination Home episode to see what they look like and how they're put together.
While pre-fab is considered by some to be low-quality and cookie-cutter, those we spoke with in the industry say these days, those assumptions are completely unfounded.
“It kind of goes back to a misconception from decades ago that a modular home and a trailer home are the same thing,” says Donna Peak of National Association of Homebuilders' Building Systems Councils. “There’s a stigma that the industry has unfairly faced.”
Meanwhile, Peak says these days most, if not all, modular companies do customization on some level.
In the accompanying video, we speak to John Colucci of Westchester Modular Homes who contends modular home quality is higher than traditional homes. He also explains how modular homebuilders are able to erect these homes in as little as 30 days, on a budget that averages 5% to 10% less than what you’d spend otherwise. From start to finish — if you include the design process, permitting and finishing work — a modular home can be move-in ready in as little as four to five months, easily half the time spent on a traditional stick-built home. The video also features BluHomes, a modular company that builds architect deigned and energy efficient homes nationally.
Related: Would you Buy an Ikea Home?
This way of building is not free of complaints. You can find instances of slack building standards and quality problems, and a wide variation among manufacturers, so make sure to do your homework if you’re building a home. But judging from the testimonials of the homeowners and builders we interviewed for this story, pre-fab these days sounds pretty fabulous.
Additional shot footage provided by: click: BluHomes.com
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Property tax liens
Important info for every present & future property owner to avoid big losses
Notice: In some states a yearly property tax is also paid for every car
You can lose your house, your car, etc. taxed property IF you do not pay your taxes
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Man Owned a Fully Paid House Worth 200K
One Day He Was Left with Nothing
House Gone - Taken Away
This man owed $134 in property taxes
The District sold the tax lien to an investor who foreclosed
on his $197,000 house and sold it
He and many other homeowners like him were left with nothing
Tax lien = lien of which a tax collector may avail (= use) himself in default of taxes analogous (= similar) to a judgement default = nonpayment, failure to pay A judgement lien = a court ruling that gives a creditor the right to take possession of a debtor's real property if the debtor fails to fulfill his or her contractual obligations
What is a lien?
click: Lien Definition | Investopediawww.investopedia.com/terms/l/lien.asp
A lien is the legal right of a creditor to sell the collateral property of a debtor who fails to meet the obligations of a loan contract. A lien exists, for example, when an individual takes out an automobile loan. The lien holder is the bank that grants the loan, and the lien is released when the loan is paid in full. Another type of lien is a mechanic's lien, which can be attached to real property if the property owner fails to pay a contractor for services rendered.
If the debtor never pays, the property can be auctioned off to pay the lien holder.
The article
Left with Nothing
On the day Mr. Bennie Coleman lost his house, the day armed U.S. marshals came to his door and ordered him off the property, he slumped in a folding chair across the street and watched the vestiges of his 76 years hauled to the curb.
Movers carted out his easy chair, his clothes, his television. Next came the things that were closest to his heart: his Marine Corps medals and photographs of his dead wife, Martha. The duplex in Northeast Washington that Coleman bought with cash two decades earlier was emptied and shuttered. By sundown, he had nowhere to go.
All because he didn’t pay a $134 property tax bill.
The retired Marine sergeant lost his house on that summer day two years ago through a tax lien sale — an obscure program run by D.C. government that enlists private investors to help the city recover unpaid taxes.
Bennie Coleman was ousted from his house two years ago in a flurry of foreclosures that swept the poor neighborhoods of Ward 7.
The retired Vietnam veteran bought the tidy brick duplex in Northeast for $57,500 with life insurance money that he received when his wife died of breast cancer in 1988.
Known in his working-class neighborhood as “Tops,” he spent two decades in the house without a mortgage. But in recent years, Coleman began showing signs of dementia — he would forget to pay bills or buy food. His next-door neighbor would often bring him plates of chicken and carrots.
In 2006, he forgot to pay a $134 tax bill, prompting the city to place a lien on the home and add $183 in interest and penalties. His son paid the $317 bill in 2009, records show, but that wasn’t enough.
The Maryland company that had bought the lien had already gone to court to put a foreclosure in motion. To lift the lien, the company’s lawyer was demanding steep legal fees and expenses— $4,999.
The letter Bennie Coleman's son wrote to the court in 2008 for help.
Coleman’s son couldn’t pay and wrote to the court for help: “I would hate for him at his age to lose his home.”
One payment was made for $700 in 2009, but when no additional payments followed, the court approved the foreclosure in June 2010.
His son couldn’t be reached for comment. In the summer of 2011, federal marshals showed up at the door when Coleman refused to leave.
“He had no clue what was going on,” said neighbor Patricia Johnson. “I went over and told my mom, ‘Looks like they are going to get Tops out.’ ”
That night, he slept in a chair on the front porch.
The court later appointed a conservator, who told The Post that Coleman was incapable of responding to the emergency unfolding in his life, including showing up in court to fight for his house.
“He had no chance,” said attorney Robert Bunn. “He has dementia. He did not understand the ramifications*) of what was going to happen to him.” *) = a consequence of an action or event, esp. when complex or unwelcome
On an overcast morning earlier this year, Coleman walked past his old house on the way to the corner store. But he said he could not look at it — the memories were too painful.
The Maryland company that took Coleman’s house sold it for $71,000 two months after evicting him. The company was owned by Steven Berman, who was convicted in 2008 in the Maryland bid-rigging case. He declined to comment. The law firm for Berman’s company said it was willing to reduce Coleman’s bill to $3,500 but could not reach him.
The tax office would not comment on the case, saying only that the lien would “not have been sold if the tax sale were today” because it was less than $1,000, the agency’s current threshold.
Coleman said he thought he would stay in his house for many more years, sipping cold drinks on the porch and talking to neighbors over the fence. Now, he’s in a group home one mile from the home that is no longer his.
On an overcast morning earlier this year, he walked past the old house, now boarded up, on the way to the corner store to buy margarine and a bag of sugar. He looked back briefly, then turned away.
“I have nothing,” he said.
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For decades, the D.C. District placed liens on properties when homeowners failed to pay their bills, then sold those liens at public auctions to mom-and-pop investors who drew a profit by charging owners interest on top of the tax debt until the money was repaid.
But under the watch of local leaders, the program has morphed into a predatory system of debt collection for well-financed, out-of-town companies that turned $500 delinquencies into $5,000 debts — then foreclosed on homes when families couldn’t pay, a Washington Post investigation found.
As the housing market soared, the investors scooped up liens in every corner of the city, then started charging homeowners thousands in legal fees and other costs that far exceeded their original tax bills, with rates for attorneys reaching $450 an hour.
How you could lose your home - in any state, in any county Property owners in the D.C. District risk losing their homes over relatively small amounts in unpaid property taxes. Here’s a look at the process.
In a 10-month investigation, The Washington Post chronicled years of breakdowns and abuses in a program that puts at risk one of the most fundamental possessions in American life.
Every Wednesday, homeowners plead their cases at D.C. Superior Court, where they are pitted against industry lawyers who have filed for more than 7,000 foreclosure cases in the past eight years alone. Families pace the hallways waiting for their names to be called in last-ditch efforts to rescue their homes.
“This is highway robbery,” said Brenda Adjetey, who showed up in court last week to protect her home in Southeast Washington after her $1,100 tax bill nearly quadrupled because of legal fees charged by the investor.
Tax lien purchasers defend the industry, saying that most people who buy liens are local investors just trying to earn interest — not take homes — and that the law gives owners six months to repay their debts before a foreclosure case can be filed.
“This is an opportunity to make some money, but it is also an opportunity for the city to get paid and to help its citizens,” said Richard Cockerill, a veteran bidder from Virginia.
In a written statement, the tax office added, “Property owners are given multiple opportunities to pay both before and after the tax sale.”
Officials also said the tax office has made improvements to the program in recent years, including additional warnings to homeowners before liens are sold, and the office recently stopped selling liens on houses for less than $1,000.
But officials acknowledge that limit was set to manage the caseload and is not a permanent policy change.
At a public hearing this past October, housing advocates presented a list of reforms to the D.C. Council, including capping the fees charged by purchasers and offering payment plans to struggling homeowners. But the changes were never made.
“That’s a failure on the part of government,” said Stephen Fuller, director of the Center for Regional Analysis at George Mason University. “This has punitive consequences. People have been damaged.”
If you don't pay your taxes, the District sells a lien for the tax debt to an investor, usually a company. The investor gets a lien.
$2,500 - The typical lien amount, just a fraction of the property's value 13,000 - Tax liens the D.C. District has sold from 2005 to 2012
Note: The District no longer sells tax liens for delinquent tax bills under $1,000. Lien amounts include property taxes, penalties and interest. The District doesn’t track legal fees charged to homeowners. The estimates of legal fees is besed on a Post study of more than 200 cases. The foreclosure and court cases are through mid-2013.
Source: Data from D.C. Office of Tax and Revenue and D.C. Superior Court
Families have been forced to borrow or strike payment plans to save their homes.
Others weren’t as lucky. Tax lien purchasers have foreclosed on nearly 200 houses since 2005 and are now pressing to take 1,200 more, many owned free and clear by families for generations.
Investors also took storefronts, parking lots and vacant land — about 500 properties in all, or an average of one a week. In dozens of cases, the liens were less than $500.
Coleman, struggling with dementia, was among those who lost a home. His debt had snowballed to $4,999 — 37 times the original tax bill. Not only did he lose his $197,000 house, but he also was stripped of the equity because tax lien purchasers are entitled to everything, trumping even mortgage companies.
“This is destroying lives,” said Christopher Leinberger, a distinguished scholar and research professor of urban real estate at George Washington University.
Officials at the D.C. Office of Tax and Revenue said that without tax sales, property owners wouldn’t feel compelled to pay their bills.
“The tax sale is the last resort. It’s also the first resort — it’s the only way in the statute to collect debt,” said deputy chief financial officer Stephen Cordi.
But the District, a hotbed for the tax lien industry, has done little to shield its most vulnerable homeowners from unscrupulous operators.
Foreclosures have upended families in some of the city’s most distressed neighborhoods. Houses were taken from a housekeeper, a department store clerk, a seamstress and even the estates of dead people. The hardest hit: elderly homeowners, who were often sick or dying when tax lien purchasers seized their houses.
One 65-year-old flower shop owner lost his Northwest Washington home of 40 years after a company from Florida paid his back taxes — $1,025 — and then took the house through foreclosure while he was in hospice, dying of cancer. A 95-year-old church choir leader lost her family home to a Maryland investor over a tax debt of $44.79 while she was struggling with Alzheimer’s in a nursing home.
Other cities and states took steps to curb abuses, such as capping the fees, safeguarding houses owned by the elderly or scrapping tax sales altogether and instead collecting the money themselves.
“Where is the justice? They’re taking people’s lives,” said Beverly Smalls, whose elderly aunt lost her home in Northeast Washington. “It’s just not right.”
Liens are generally sold the year after a homeowner fails to pay a tax bill, for the same amount as the debt. Homeowners receive several warnings before their liens are put up at annual auctions.
Once a lien is sold, owners have six months to repay the investor with interest. If that does not happen, the investor can move to foreclose.
For years, the auctions came and went with little fanfare, drawing local investors who would plunk down a few hundred dollars to buy up liens in neighborhoods they knew well. Most were looking to earn the interest, and if there was a foreclosure, it was handled by the tax office.
But the work overwhelmed the agency, and in 2001, city leaders made a critical change: They told investors to head directly to court to file a foreclosure case.
The move empowered investors to start charging legal fees and court costs — a game changer that allowed them to turn minor delinquencies into insurmountable debts.
Companies from Florida, Illinois, Maryland and New York came to town, prepared to spend millions.
In 2007, more than 150 purchasers spent five days competing for 2,000 liens, first on properties downtown near the Capitol, then Georgetown, followed by Dupont Circle, Chinatown and finally the neighborhoods near the Anacostia River, long stricken by poverty.
When it was over, just six companies had swept the bidding, snaring two-thirds of the liens, which totaled $5 million, on properties worth more than $666 million.
One of those purchasers was under federal investigation at the time for rigging tax auctions in Maryland, where he was suspected of scheming to win liens — then demanding excessive fees from homeowners. Lawyers for a second firm would also come under investigation in the same case.
Their companies and others bought into every ward of the District in 2007, including Deanwood, one of the city’s oldest predominantly African American neighborhoods. On long stretches of Dix Street, where the recession hit hard and lingered, 33 liens were sold between 2005 and 2008, on properties scattered amid food banks and “Cash 4 Gold” signs.
Across the city, the rate of foreclosure cases has nearly doubled in the past five years — in a single week in January, tax lien companies filed more than 180 cases. Of the 13,000 liens sold since 2005, more than half have ended up in court.
With no caps on fees, families have paid a steep price, facing bills for legal fees and court costs often more than triple their original tax debts, The Post found. Rates for the attorneys hired by the tax lien companies have reached $450 an hour.
Even the smallest expenses have been passed on — including the paper that ordered property owners to court at 25 cents per page. One attorney billed for preparing the bill itself — $25.
Time and again, the bills came without receipts or breakdowns justifying the costs.
“I just don’t know what he’s trying to charge me for,” said longtime community activist Barbara Morgan, 80, standing outside the courtroom earlier this year with a $2,700 legal bill that doubled the tax debt on her home of 50 years. “It’s ridiculous.”
Local judges have taken purchasers to task. One was so critical of the fees charged by Aeon Financial of Chicago, he slashed them in half last year. Aeon wanted $6,300 in fees for a $1,680 tax lien.
A senior attorney billed at $450 an hour. A junior attorney charged $325. Legal assistants tacked on $110 an hour. Plus, there was $800 in expenses, including $27.60 for “dismissal costs.”
“Unreasonable,” Judge Joseph E. Beshouri said in his ruling.
In 2009, D.C. Attorney General Peter J. Nickles also stepped in, seeking an injunction against Aeon over fees that he called “unlawful” and “predatory.”
“Aeon’s excessive attorney’s fee demands are likely to result in at least some homeowners not being able to redeem homes,” according to the motion.
In one case, Steve Segears, who lives in the house his father bought after World War II, was charged $5,500 in fees by Aeon, nearly double his $2,900 tax bill.
“Enough is enough,” Michael J. Wilson, Segears’s attorney, wrote to the court. “The Aeon juggernaut keeps rolling along by demanding payment of unreasonable and extortionate attorneys’ fees and other alleged expenses, including those which have not actually been ‘incurred.’ ”
Aeon did not respond to repeated calls and letters seeking comment.
Other places acknowledged abuses years ago and took steps to guard against them. New York City won’t allow tax liens to be sold on homes owned by low-income seniors and the disabled, as well as veterans. Some counties in Michigan have scrapped tax lien sales altogether and collect the money themselves. Maryland, fearing that taxpayers were being gouged, limits the legal fees to $1,500.
Most homeowners are in no position to fight and rely on the government to protect them from unfair practices, said Howard Liggett, former director of the National Tax Lien Association, who has spoken out nationally against excessive fees.
But D.C. leaders have not provided key protections, including caps on fees.
“It’s embarrassing,” said Liggett, who is familiar with the District’s tax auctions and bidders. “You’re always going to have unscrupulous [investors]. You’ve got to self-police.”
Threatened with mounting fees, some families simply gave up. In court files and interviews, they described large bills and long battles with lawyers while interest grew on their tax debts.
“We just didn’t have the money to fight these people,” said Michael McRae, who tried unsuccessfully to save his brother’s house from a tax-lien firm from Florida.
In the past eight years, investors have foreclosed on a condominium just a few blocks from the U.S. Capitol and another just down the street from the Embassy of Peru, a single-family home near Rock Creek Park and dozens of houses in poor neighborhoods along the Anacostia River.
The Post found investors have taken nearly 200 homes since 2005, assessed at $39 million. They sold most of them, sometimes within weeks, after paying off any back taxes or city fines.
One of the most aggressive investors was Heartwood, whose lawyers were investigated and disbarred as a result of Maryland’s criminal bid-rigging case. Formerly a subsidiary of Florida’s BankAtlantic Bancorp, Heartwood has taken more than 20 houses through foreclosure and sold them all, including a brick duplex in Northeast Washington with a $535 lien for $169,610.
One of the houses was owned by Michael McRae’s brother, Thomas, a flower-shop owner, who was in and out of a coma and under hospice care while Heartwood was pressing to take his house over what began as a $1,025 tax debt. Thomas McRae died in June 2006 — three months after a judge approved the foreclosure.
Family members found out and fought back, saying no one told them about the lien or foreclosure.
Heartwood eventually paid the family $80,000 to settle the case and quickly sold the brick house on a bustling corner of Sherman Avenue NW for $175,000. Longtime neighbors still recall how Thomas McRae had filled the sidewalk with flowers.
“We’re just regular people, and we don’t have $200,000 to fight a big organization from Florida,” his brother said.
In a written statement, the tax office said the $1,025 tax bill was “not a small debt.” A spokesperson for Heartwood declined to discuss the foreclosure cases but said the company is no longer buying tax liens in the District and Maryland.
Property tax liens have been, for decades, existing and sold in every state in the U.S. and still are.
Pay your property taxes - otherwise your house can/will be sold - sometimes for $50 dollars - wrong is wrong-
This abuse must be ended. Your own duty is to pay the tax bill. If you cannot pay, contact a lawyer, negotiate with your county.
Free lawyers are in the "Legal Services" system and in some other similar organizations round the country.
Search the web, ask your church, or ask you city of county hall for legal service information, etc.
Do not ignore your tax payments - be active
You can always fight back and find a solution to keep your house
Click green for further info
Source: The Washington Post
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school & other bills
Date: July 2013
Trough out this website, STAF, Inc.'s editors give meaning to certain words or sayings
that may be unfamiliar to the speakers of English as their second language
to float = to arrange for a loan
NEW YORK (Reuters) - College expenses are on a lot of people's minds now that interest rates on U.S. government-backed student loans have doubled to 6.8 percent.
One financing option for clients who want to help relatives pay for school but don't want to give a handout is a family loan pool, a trust for dispersing low-interest student loans to their kin.
Financial advisers may be hesitant to employ a strategy that isn't widely used and could stir up family feuds if someone defaults. If properly structured, however, the pool can bring a family closer together.
That's been the experience of George Lewis, a lawyer based in Quincy, Illinois. His family's loan pool, established by his grandmother about 50 years ago, was profiled in The New York Times last fall, 2012. After publication, Lewis received about 20 phone calls from people asking for advice on how they could set up a pool of their own.
"We've experienced the extended family really remaining much closer than we could have otherwise," Lewis said.
Rod Zeeb, chief executive of The Heritage Institute, a Portland, Oregon-based organization that trains advisers on multigenerational planning, said he's seeing increasing interest in family loan pools as interest rates on loans and tuition costs rise.
Advisers can use this momentum to educate clients on ways to properly construct intra-family loans.
"Any time you can bring a new idea to a client, even if you don't do the work, you get credit for it," Zeeb said.
SETTING IT UP
Family loan pools are similar to family banks, which typically take the form of a trust or limited liability company. But family loan pools are more narrow in scope, since family banks can sometimes take equity stakes in ventures and make grants as well as loans.
Under a loan pool, a family sets up a trust and bequests an initial sum into it. They then establish rules for how family members qualify for the loans, how long they have to pay them back and what happens if they default.
The family appoints one or more trustees who review the applications to determine who should get the loan. Later in life, those who benefited from the loan pool can contribute.
Tax and legacy planning experts say families should charge interest on the loans equal at least to the so-called applicable federal rate (AFR) approved by the Internal Revenue Service. The rate is currently about 1.2 percent for three- to nine-year loans. Charging interest helps takes care of any tax issues.
A pool could work well for a family that runs a business together, because they're used to separating money and personal issues. It's not a good fit for families who can't respect that wall, and might, say, goad a borrower about missed payments at Thanksgiving.
Families should expect to pay several thousand dollars to set up the trust that will house the loan pool. They can also hire a multigenerational planning expert to address other issues, like what to do about defaults and how to break up the pool if it gets unwieldy after several generations.
"The danger if you do this on the cheap is you could fracture family relationships," said Timothy Belber, a Denver-based adviser to wealthy families on their legacy plans.
GROUND RULES
Three years ago Belber helped set up a family loan pool for two brothers in Alaska. The brothers put $1 million into the pool and appointed themselves, Belber and an accountant to a committee that reviews the loan applications and makes recommendations to the trustee, who has final approval.
To get a loan, students have to write up a formal proposal about what they want to study and how they plan to pay the money back. Currently three of the eight family members eligible for a loan have taken one. They are still in school, so repayment hasn't become an issue.
For defaults, the Alaskan family can rely on the shame factor: The trustee sends out a quarterly report detailing the status of the loans. The family also has a process to renegotiate the payment schedule.
Georgia resident and business professor Roy Richards is in the process of setting up a family loan pool in honor of his parents, which will benefit their grandchildren. He's hoping it creates a legacy.
"The idea of having something that keeps us somewhat knit together is a wonderful prospect," Richards said.
Source: Reporting by Jennifer Hoyt Cummings; Editing by Lauren Young and Prudence Crowther
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Americans Save This Little Each Year
Americans are notoriously terrible savers and
typically save less than 5% of their disposable personal income each year
Only one in four Americans has adequate emergency savings or at least six months of savings, that percentage has not changed much in the past couple of years
because of stagnant income and high household expenses
The American consumer is woefully lacking in saving for both emergencies and their retirement
E.g. in Japan & Germany people save up to 25 % of their yearly income
Click green below to compare the European Union household numbers in each EU country
Annual data - Eurostatepp.eurostat.ec.europa.eu › European Commission › Eurostat Annual key indicators by Member States (405 kb) Annual key indicators by Member States. Households: saving rate, investment rate, gross debt-to-income ...
A survey conducted by Harris Interactive found that Americans would rather stay debt-ridden and often put their physical appearance ahead of their financial state. A whopping 72% of Americans would rather keep their current debt than gain 25 pounds and be completely debt free. The June 2013 survey was conducted online among 2,021 Americans ages 18 and older.
Nearly two-thirds of adults (64%) think about their physical appearance more than their debt. 68% of women were more likely to agree with this statement than men (61%). The survey also revealed that 70% care more about their physical health than their financial health.
"We've become somewhat of a country of excess and the ability to borrow has been so cheap and easy," said Ken Lin, founder and CEO of Credit Karma, a San Francisco-based financial management site which tracks consumers' debt and assets and compares it to others. "The abundance of credit in the U.S. has given consumers a lot of reasons to spend instead of saving. Our spending behavior is very much keeping up with the Joneses. You really need to have a lot of self discipline."
Most Americans wait too long to start saving for retirement, said Greg McBride, senior financial analyst for Bankrate.com.
"Americans like their stuff," he said. "It is a lot of materialism."
[Read: The Sneaky Reason You May be Overpaying on Your Electric Bill]
The household savings rate 30 to 40 years ago was 10% compared to 4% now.
"People don't save enough," McBride said. "Savings is unfortunately not the priority that it used to be."
Incomes have also not kept up with expenses compared to 30 to 40 years ago since consumers are now buying larger houses, families own more than one car and there are TVs in every room, he said.
Individuals now have more "burdens for future healthcare costs and retirement," McBride said.
"The need for savings is even greater," he said.
Only one in four Americans has adequate emergency savings or at least six months of savings, and that percentage has not changed much in the past couple of years because of stagnant income and high household expenses, McBride said. Long-term unemployment is more of an issue now compared to a few decades ago.
"People now recognize they are not having a whole lot of success in moving the needle," McBride said.
[Read: This is Why You're More Vulnerable to Identity Theft Than You Realize]
Consumers should force themselves to live on less money and have a portion of their paycheck direct deposited into a savings account.
"You have to prioritize your savings," McBride said. "That is the essence of building wealth. If you want to build wealth, you have to spend less than you make."
In addition to examining your expenses and looking for ways to cut back, shopping around for car and home insurance can save you hundreds of dollars. Refinancing your mortgage still remains an option.
"Track your spending and know where every dollar is going." he said. "That is where you are going to maximize your savings opportunities."
A recent National Foundation for Credit Counseling (NFCC) online poll revealed that
close to one in five consumers or (18%) believe that carrying credit card debt over from month to month
is a responsible way to manage his or her finances
"This data suggests that not only are many Americans are using credit cards to fund a lifestyle their income can't support, but they are comfortable doing so," said Gail Cunningham, spokesperson for the NFCC.
One way to add money to your budget is to adjust your withholding allowances, she said. The average income tax refund in recent years is near $3,000. This means that people could have an extra $250 each month. To find out the proper number of allowances to claim, go to www.IRS.gov and type "withholding allowances" in the search box. A worksheet will come up that the employee can complete and be told the right number of deductions for his individual situation.
"People always tell me that they can't afford to save," Cunningham said. "My answer is that you can't afford not to."
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Source: Credit.com
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Mortgage & other loans
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Get Started Now! Bad Credit Ok!
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FHA - Federal Housing Administration/U.S. Department of Housing and ...www.fha.gov/
HUD - United States Department of Housing and Urban Development,
a division of the U.S. federal government
________________________________________________ Important, important, important info & links for winning the crooked mortgage banks How to deal with any mortgage complication - Mortgage Servicers Still Causing Problems, CFPB Says CFPB = Consumer Financial Protection Bureau
- CFPB > Consumer Financial Protection Bureauwww.consumerfinance.gov/ Date: August 2013 As needed find an experienced real estate litigator lawyer to sue your mortgage banks & servicers - get compensated for your losses & suffering
- Homeowners continue to find frustration with mortgage servicers that collect and process monthly mortgage payments, according to a report issued by the CFPB - Consumer Financial Protection Bureau. Among the findings of a nationwide review: the agency found some servicers are “sloppy” about transferring paperwork when loans are sold, misapply payments and occasionally cause homeowners to pay their property taxes late.
- “click green for important info: Today’s report highlights both the mortgage servicing problems throughout the industry and the challenges of making sure that nonbanks are following federal law,” said CFPB Director Richard Cordray. “Fixing both is a priority for us.”
- When homebuyers begin paying their mortgages, they are often sent on a maddening paperwork carousel, as lenders sell the loan to a mortgage servicing firm, which can sell the loan to still another servicer within a few months, and so on. Lenders say servicers add efficiency to the market and allow them to concentrate on approving loans, but consumers are often left wondering where to send their mortgage payments, and if the payments are applied correctly.
- The CFPB is now charged with regulating the servicer marketplace, including so-called nonbanks that perform typical banking functions but aren’t regulated by traditional federal banking agencies.
Wednesday’s report didn’t release the names of misbehaving servicers, but was instead designed to nudge firms to take “corrective actions.”
True Tales of Mortgage Servicers
Some tales included in the report sound harrowing. One servicer decided to delay property tax payments from December to January for thousands of mortgage holders, without telling the consumers, causing them to miss out on a crucial federal tax deduction. The unnamed servicer is being forced to compensate the borrowers, the report said.
At another servicer, examiners found excessive delays in processing borrower requests for private mortgage insurance cancellation, the report said.
Bureau examiners also found that many servicers did not have the proper compliance management systems in place to ensure the firm was correctly applying federal laws. Many firms didn’t have complete audit trails to show they were properly managing paperwork and responding to consumer complaints, for example.
The sloppy paperwork issue has been a thorn in the side of consumers trying to qualify for loan modifications or other kinds of mortgage relief. Examiners found homeowners looking for relief ran into a host of red tape, including:- Inconsistent waivers of certain fees or interest charges;
- Long application review periods;
- Missing denial notices;
- Incomplete and disorganized servicing files;
- Incomplete written policies and procedures;
- Lack of quality assurance on underwriting decisions.
- Examiners are also making sure firms are ready to comply with a host of new servicing rules set to take effect in January, most designed to give consumers more warning when interest rates are about to reset or they are at risk of foreclosure. (c.)“The CFPB’s goal is to help ensure a financial services marketplace that operates in accordance with federal consumer financial law and works well for both consumers and the businesses that serve them,” the report said.
More from Credit.com Click green for further information:- The Little-Known Way to Cut Your Mortgage Payment
- How Soon Can I Get a Mortgage After Credit Problems?
- The Smart Way to Pay Off Your Mortgage
- For important info click blue and green below
- (1) click:Today’s report highlights = CFPB Supervisory Highlights
- (2) A good summary of those rules click: can be found here
- = CFPB Mortgage Services Standards
- CFPB > Consumer Financial Protection Bureauwww.consumerfinance.gov/Our vision is a consumer finance market place that works for American consumers, responsible providers, and the economy as a whole __________________________________________________________
Investing in Gold ?
Every investor deserves to know the truth
The cold gold factors below
revealed by a leading Harvard Economics Professor
_________________
THERE ISN’T A LOT OF GOLD
The World Gold Council estimates that all the gold ever mined amounts to 174,100 metric tons
If this supply were divided equally among the world’s population, it would work out to less than one ounce a person
Warren E. Buffett has a good way to illustrate how little gold there is. He has calculated that if all the gold in the world
were made into a cube, its edge would be only 69 feet long. So the cube would fit comfortably within a baseball infield
Date: July 27, 2013
Budging* (Just a Little) on Investing in Gold
*) To budge is to move or change something a little
An example of budge is to get someone to alter their beliefs slightly
Another example of budge is get a large rock to move a tiny bit
_______
Trough out this website, STAF, Inc.'s editors give meaning to certain words or sayings
that may be unfamiliar to the speakers of English as their second language
________________________
By N. GREGORY MANKIW - N. Gregory Mankiw is a professor of economics at Harvard
Click green for further info
A friend posed that question to me a few weeks ago, after watching gold’s wild ride over the last few years. The price of gold was less than $500 an ounce in 2005, but soared to more than $1,800 in 2011, before falling back to about $1,300 recently. He wasn’t sure what to make of it all.
My instinct was to say no. Like most economists I know, I am a pretty boring investor. I hold 60 percent stocks, 40 percent bonds, mostly in low-cost index funds. Whenever I see those TV commercials with some actor hawking gold coins, I roll my eyes. Hoarding gold seems akin to stocking up on canned beans and ammo as you wait for the apocalypse in your fallout shelter.
But I was also wary of imposing my gut instinct on my friend, who was looking for a more reasoned judgment. I knew that some investors saw gold as a key part of a portfolio. The author Harry Browne, the onetime Libertarian presidential candidate, recommended a permanent 25 percent allocation to gold. In 2012, the Federal Reserve reported that Richard Fisher, president of the Federal Reserve Bank of Dallas, had more than $1 million of gold in his personal portfolio.
So, before answering my friend’s question, I dived into the small academic literature on gold as a portfolio investment. Here is what I learned:
THERE ISN’T A LOT OF IT The World Gold Council estimates that all the gold ever mined amounts to 174,100 metric tons. If this supply were divided equally among the world’s population, it would work out to less than one ounce a person.
Warren E. Buffett has a good way to illustrate how little gold there is. He has calculated that if all the gold in the world were made into a cube, its edge would be only 69 feet long. So the cube would fit comfortably within a baseball infield.
Despite its small size, that cube would have substantial value. In a recent paper released by the National Bureau of Economic Research (N.B.E.R), Claude B. Erb and Campbell R. Harvey estimated that the value of gold makes up about 9 percent of the world’s market capitalization of stocks, bonds and gold. Much of the world’s gold, however, is out of the hands of private investors. About half of it is in the form of jewelry, and an additional 20 percent is held by central banks. This means that if you were to hold the available market portfolio, your asset allocation to gold would be about 2 percent.
ITS REAL RETURN IS SMALL Over the long run, gold’s price has outpaced overall prices as measured by the Consumer Price Index — but not by much. In another recent N.B.E.R. paper, the economists Robert J. Barro and Sanjay P. Misra reported that from 1836 to 2011, gold earned an average annual inflation-adjusted return of 1.1 percent. By contrast, they estimated long-term returns to be 1.0 percent for Treasury bills, 2.9 percent for long-term bonds and 7.4 percent for stocks.
Mr. Erb and Mr. Harvey presented a novel way of gauging gold’s return in the very long run: they compared what the Roman emperor Augustus paid his soldiers, measured in units of gold, to what we pay the military today.
They report remarkably little change over 2,000 years. The annual cost of one Roman legionary plus one Roman centurion was 40.9 ounces of gold. The annual cost of one United States Army private plus one Army captain has recently been 38.9 ounces of gold.
To be sure, military pay is a narrow measure, but this comparison offers some support for the view that, on average, gold should keep pace with wage inflation, which, thanks to productivity growth, runs slightly ahead of price inflation.
ITS PRICE IS HIGHLY VOLATILE*) Gold may offer an average return near that of Treasury bills, but its volatility is closer to that of the stock market. *) volatile = changeable - inconstant
That has been especially true since President Richard M. Nixon removed the last vestiges of the gold standard. Mr. Barro and Mr. Misra report that since 1975, the volatility of gold’s return, as measured by standard deviation, has been about 50 percent greater than the volatility of stocks.
Because gold is a small asset class with meager returns and high volatility, an investor may be tempted to avoid it altogether. But not so fast. One last fact may turn the tables.
IT MARCHES TO A DIFFERENT BEAT An important element of an investment portfolio is diversification, and here is where gold really shines — pun intended — because its price is largely uncorrelated with stocks and bonds. Despite gold’s volatility, adding a little to a standard portfolio can reduce its overall risk.
How far should an investor go? It’s hard to say, because optimal portfolios are so sensitive to expected returns on alternative assets, and expected returns are hard to measure precisely, even with a century or two of data. It is therefore not surprising that financial analysts reach widely varying conclusions.
In the end, I abandoned my initial aversion to holding gold. A small sliver, such as the 2 percent weight in the world market portfolio, now makes sense to me as part of a long-term investment strategy. And with several gold bullion exchange-traded funds now available, investing in gold is easy and can be done at low cost.
I will continue, however, to pass on the canned beans and ammo.
N. Gregory Mankiw is a professor of economics at Harvard.
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Source: Appeared first in The NYT
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About Mutual Funds
Click the green link to learn more about mutual funds - are they for you?
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- Why wealthy investors don't own mutual funds - MarketWatchwww.marketwatch.com/.../why-wealthy-investors-dont-own-mutual-fun...
Sep 14, 2012 - You'd never pay extra to a driver who might — or might not — get youwhere you need to go. Yet most mutual funds do exactly that. They start at ... - Investing in Mutual Funds - Money 101, Lesson 6 - Money Magmoney.cnn.com/magazines/moneymag/money101/lesson6/index.ht
Learn how to invest in mutual funds with this guide from Money. ... Even if you don'tsell your fund shares, you could still end up stuck with a big tax bite. If a fund ... - Funds Roundup: What Mutual Fund Companies Don't Tell You; How ...blogs.barrons.com/focusonfunds/.../funds-roundup-what-mutual-fund-c...
Nov 19, 2012 - Your Monday reading in 20 words or less: Three respected financial advisers tell Barron's how they use ETFs — and when they don't. - [PDF] Mutual Funds: A Guide for Investors - Securities and Exchange ____________________________________________________ The Siren*) Call of the Adjustable-Rate Loan The Siren call = the enticing (= attractive or tempting; alluring) appeal of something alluring but potentially dangerous People tend to look at what's cheapest at the beginning - but: that ARM rate could triple *) Siren (sī`rən), in Greek mythology, one of three sea nymphs, usually represented with the head of a woman and the body of a bird. Daughters of Phorcus or of Achelous, the Sirens inhabited an island surrounded by dangerous rocks. They sang so enchantingly that all who heard were drawn near and shipwrecked. Jason and the Argonauts were saved from them by the music of Orpheus, whose songs were lovelier. Odysseus escaped them by having himself tied securely to a mast and by stopping the ears of his men. ___________________ As if first-time home buyers were not having enough trouble getting into the market, now they have to contend with rising interest rates. After dipping to record lows earlier this year, rates on fixed-rate mortgages have risen considerably in recent months. Though still low by historical standards, the increased rates create yet another hurdle for first-time buyers already contending with higher home prices and tight credit. First-timers typically account for around 40 percent of home purchases, but as of May their share had dwindled to 28 percent, according to a National Association of Realtors report. The upsurge in rates has breathed new life into adjustable-rate mortgages, or ARMs, which contributed to the housing-market collapse by trapping borrowers in loans they could not afford. The renewed appeal of ARMs lies in the teaser rates offered in the opening years of the loan. The initial rate on a five-year adjustable-rate mortgage, for example, ranged from 3 percent to 3.5 percent as of last week, depending on the lender, while 30-year fixed rates were closer to 4.5 percent.ARMs can be a smart option for borrowers, under certain circumstances and with a thorough understanding of the terms. Buyers must be prepared for what could happen to their monthly payment once that alluring teaser rate expires. “People tend to look at what’s cheapest,” said Marc Schwaber, a New York City-based mortgage professional. “But that ARM rate that starts in the threes could eventually end up in the nines.”Here are some pros and cons to consider when deciding between a fixed- and an adjustable-rate mortgage. Fixed-Rate Mortgage
- This is your grandfather’s mortgage, the financing vehicle created after the Great Depression to make homeownership accessible to the average working American. A 30-year term is still the most common.
One of the chief benefits of the fixed-rate loan is its predictability. Because the interest rate is fixed for the life of the loan, the borrower’s monthly payment for principal and interest will be the same in Year 20 as in Year 1. (The total payment, though, will fluctuate because of changes in property taxes and insurance, which are usually paid incrementally as part of the monthly mortgage.)
“You should be in a fixed-rate loan if you’re on a fixed salary, you plan to stay in the house a long time, or you don’t want the risk of an ARM,” said Peter Grabel, a senior mortgage loan originator at Luxury Mortgage, in Stamford, Conn.
The trade-off for stability is a long period of paying interest, with the amount of interest declining over time as your principal balance declines. And equity is slow to accumulate on a 30-year loan, because the borrower pays much more interest than principal in the early years. Opting for a 15-year term, which carries a lower interest rate, can alleviate those disadvantages. But, of course, the shorter term means a significantly higher monthly payment.
A fixed-rate loan does not make good financial sense for those who are able to take advantage of the lower ARM rates, Mr. Grabel said. Among his examples for ARM candidates are borrowers likely to get a big raise or inheritance in the near future, those with enough assets to pay off the mortgage if they had to, and those who plan to move within 10 years.
“You’re paying a premium for a 30-year fixed,” he said. “It’s the safest, but it’s like, how much life insurance would you buy?” Adjustable-Rate Mortgage - Adjustable loans, which are usually amortized over a 30-year term, carry greater risk for the borrower, because the rate may rise after an initial period of fixed interest. Lenders offer various options for the length of that initial period, with 3, 5, 7 and 10 years being the most common. Rates are lower on the shorter ARMs, but “most people want the longest ARM these days as it’s the next best thing to a 30-year fixed,” Mr. Grabel said.
After that initial period ends, the rate adjusts periodically based on an index like the Cost of Funds Index, or Cofi, or the London interbank offered rate, known as Libor. Lenders set the new rate by taking the index rate and adding a few percentage points, called the margin. So as the index rises or falls, so does your payment.
Mr. Schwaber advises borrowers to find out which index applies to the ARM they are interested in, and then do some quick Internet research to look at how it has performed in the past. HSH.com tracks the performance of a variety of ARM indexes.
A standard, or hybrid, ARM adjusts annually. These loans are usually expressed as 3/1 or 5/1 ARMs, in which the first number represents the years of fixed interest, and the second stands for how often the rate can adjust after that. So, for a 5/1 ARM with a loan amount of $300,000 and an initial rate of 3 percent, the payment for the first five years would be $1,265. In the sixth year, the rate would adjust according to the index and margin. Assuming the rate rose by 2 percent, to 5 percent, the new payment for that year would be $1,559.
Still, the length of time between rate changes may be longer or shorter, depending on the loan, so borrowers should ask about the time frame. Another key consideration is the lifetime cap on the loan. This is the maximum percentage by which the interest rate can increase over the duration of the loan. For example, if the initial fixed rate is 3.5 percent, and the lifetime cap on the loan is six percentage points, then the interest on that loan can never rise above 9.5 percent.
“Consumers need to think about how frequently the interest rate can change, and the maximum amount it can change,” said T. J. Freeborn, a mortgage professional with Discover Home Loans. “They need to think, if the rate goes up X amount, can I still afford that monthly payment? You need a good relationship with your mortgage banker, so there aren’t surprises down the path about what your reset period will look like.”
Using an ARM can save the borrower thousands in interest payments during the teaser period, because the rate is lower than that of a fixed-rate product. And for the most qualified buyers, ARM rates on jumbo loans, or loans above $417,000, are even lower than rates on conforming loans.
According to Mr. Grabel’s calculations, on a $417,000 loan, a seven-year ARM with an initial rate of 3.625 percent would save the borrower more than $20,000 in the first 10 years compared with a 30-year loan at a rate of 4.375 percent.
His estimate assumes, however, that the initial ARM rate stays the same in Years 8, 9 and 10. And given that ARM indexes, too, are at historic lows, that may be an overly optimistic assumption going forward. “People have to understand that when you have low interest rates, the only way to go is up,” said Donald Frommeyer, the president of the National Association of Mortgage Brokers. “So those payments could change.” Refinancing might be an option, but if interest rates are up significantly, a new mortgage might not provide much relief. Borrowers who are not in a position to take that risk should stick with fixed-rate products. And, as Mr. Frommeyer pointed out, if the days of fixed rates in the threes are over, a fixed rate around 4.5 percent is still “a pretty great rate for a house” — especially compared with the double-digit interest rates of the 1980s. Click green for further info - Source: NYT - _________________________________
The Grab Reflex When emotions get stronger than wise reasoning leading to financial losses How Fights Over Fixtures Can Derail a Cl0osing - This is a story of a funnier side in closing a real estate deal - BUT it can lead to losses and ridiculous fights To be aware of this human "Grab Reflex" helps to negotiate wiser Even at their smoothest, residential real estate closings are not for the faint of heart. At stake is nothing less than the roof over the buyer’s head, but the repercussions can be primal when, just before the culmination of a deal worth hundreds of thousands or, in many instances, millions of dollars, weeks of negotiations unravel when the buyer and seller suddenly squabble over who gets custody of something as inconsequential as a $150 ceiling fan.
- “It’s the real estate version of road rage,” said Paula Del Nunzio of Brown Harris Stevens.
There is a chronic dynamic at work here. Sellers are wary of having parted too cheaply with a profound investment, their residence. Buyers are leery of having paid too dearly and often are already punch-drunk from the trauma of the financial frisking endured during co-op board inquisitions or mortgage applications.
With the stage preset for regret and recrimination, and with lawyers at the ready to advocate in different directions at the drop of a dollar sign, nothing brings the process to a screeching standstill like a quibble over an inanimate item — a dusty chandelier, a sputtering air-conditioner, a wobbly Ikea shoe rack — that incomprehensibly assumes trophy status in the calculations of both buyer and seller.
“Closings are such a heightened emotional event,” said Lindsay Barton Barrett of the Corcoran Group. But their immediate prelude can be just as hazardous. “You can literally have a multimillion-dollar deal fall apart at the last minute, in my case over a dining-room table,” she recalled.
That transaction died when the buyers demanded that the seller throw in his custom-made table gratis to seal a hard-fought deal. “My seller was insulted, and it killed the deal. He said the table made him do it.” (The duplex quickly sold to a less demanding buyer.)
Streamlined negotiations, thy nemesis is an eight-foot-tall fiberglass resin replica of the Statue of Liberty bought as a husband-to-wife birthday gift on Canal Street 25 years ago and a family member ever since. For the prior decade, the statue had been the silent guardian of the east terrace of an East 58th Street penthouse triplex that went to contract, after a million-dollar reduction, for $2.4 million last November. The terrace statuary had, through the years, served as a measuring stick that recorded the ever-escalating heights of the sellers’ grandchildren; as such, it possessed sentimental value on the scale of a priceless heirloom.
When the cash buyer indicated that she wanted to acquire the penthouse fully furnished and to close within two weeks, the husband/seller, Chuck Mintzer, dutifully compiled a short list of excluded items but neglected to add Lady Liberty. By definition, this oversight lumped her in with the furnishings that were staying put, and the buyer was intransigent.
Pearl Mintzer was apoplectic after she found out that the statue was destined to become the property of the buyer and, after berating her husband for his insensitivity, threatened to halt the sale. She was perfectly sanguine about leaving her custom-made purple leather sofa with aqua piping behind, but the prospect of parting with her $750 statue floored her.
“I loved that statue and told my husband I didn’t care if the deal fell apart,” Ms. Mintzer said.
The deal, according to the listing broker, Tom Postilio of CORE, nearly did collapse, and he and his partner at CORE, Mickey Conlon, feverishly scoured the Internet for another eight-foot-tall fiberglass resin replica of the Statue of Liberty, rejoicing when they came across one for $1,200. “We couldn’t believe we were having this conversation about finding a statue online, but I said to Mickey: ‘I’m not letting this deal die. We’ll buy a statue and send it as a closing gift.’ ”
The trouble was, neither party would accept a replica of the replica. Ultimately, Ms. Mintzer wrote a letter to the buyer begging her to understand how important the statue was to her. The buyer relented and agreed to do without a Lady Liberty; the statue and the Mintzers relocated to New Hope, Pa.; the deal actually closed.
“We were absolutely thrilled to be able to keep her,” Ms. Mintzer said.
According to Scott Claman, a real estate lawyer and a partner in the New York City firm Giddins Claman, squabbles over objects at the penultimate point of contract negotiations are far from uncommon. “We refer to it at the office as ‘Post-Traumatic Deal Syndrome,’ ” Mr. Claman said. “But if you can make it through a closing and nobody sues each other, that’s the universal sign of happiness in New York City.”
Elaine Clayman, an agent at Brown Harris Stevens, turned to Mr. Claman for guidance when negotiations over a $4.5 million duplex at St. James Tower on East 54th Street went awry after a buyer-seller standoff over a $35,000 sculpture, a jagged metal work that wrapped around the curve of a winding staircase.
“It never could have hung anywhere else,” Ms. Clayman said, “because a passer-by would have been impaled on it if it was mounted on a flat wall. As it was, it almost killed the deal. Both sides wanted the piece of art, so it was a slow-moving, excruciating negotiation. They did finally reach an agreement, but believe it or not, it then turned out the condo didn’t ‘exist’ as a known entity in the building or in city records.”
After a few months of research, Mr. Claman was able to finesse the provenance of the duplex, a combination with an adjacent apartment. He registered the necessary paperwork with the city; the sale finally closed for $4 million. “We both got gray hair from that deal,” Ms. Clayman said. But not the buyer: she got the sculpture.
In 2010, Shii Ann Huang of the Corcoran Group suffered through a bellicose tussle over a nondescript ceiling fan in the master bedroom of a $700,000 two-bedroom at a white-brick co-op in Murray Hill. Ms. Huang represented the buyers, who had justifiably assumed the fan was a fixture that was included in the purchase price.
“There was no mention of it until we were close to closing,” she said, “and the sellers told my clients they would give them the ceiling fan for $300. My buyers put their foot down and said no.” The meeting was adjourned; the closing suddenly wasn’t so close. It seemed the fan had created a stalemate.
Ms. Huang said she and the broker representing the seller ponied up the $300 themselves to resolve the dispute and seal the deal. A few months later, her clients invited her to the apartment to display the renovations they had done, and she noticed that the fan was gone. “They had thrown it away,” she said. “So the whole fight was really over nothing. There is something psychological that goes on at closings where people feel they’ve got to get something extra.”
Rory Bolger, a broker with Citi Habitats, wound up footing the bill for two chandeliers after a deal on a $599,000 unit on East 86th Street started to unravel last December. The trouble began when the seller, a daughter who was handling the details on behalf of her ailing father, decided she wanted the dining-room chandelier. “It was this sort of medieval-looking cast-iron chandelier that had belonged to her parents,” Mr. Bolger said, “and though she initially seemed O.K. about leaving it, after her father died, she changed her mind.”
The buyer, however, wanted a dining-room chandelier in place when she took possession, and when Mr. Bolger suggested that she select one and he would buy it, she presented him with a request for two fixtures. “They were very modern, nothing at all like the one that was there,” he said. “It ended up costing me about $500, but it was just too minor of an item to leave a bad taste in anybody’s mouth.” The sale closed in June with both sides satisfied.
The iron chandelier now hangs in the dining room of the daughter, Susan Milisits, a social worker who remembers her parents buying it for $35 in the Village in the 1960s. “It still had candle drippings on it and wasn’t electrified,” she said, “but my parents had it wired and it had hung over their dining-room table wherever they’d lived, first in Brooklyn, and for the last 15 years at the apartment on 86th Street.
“It had sentimental value to me,” she continued, “and Rory really came to the rescue and took the sting out of the whole experience. It was probably leading to some high drama if he hadn’t stepped in.”
“The principle of the thing” is the typical explanation offered by the warring parties: on the eve of a closing, even a humble medicine cabinet can become the locus of a nasty dispute.
Nadine A. Adamson had just returned to the city in 2009 after four years in London and, with her husband and young son, went house-hunting in Brooklyn and found the perfect town house on Downing Street in Clinton Hill. The seller was an antiques dealer, and both sides quickly agreed to a price of $1.042 million. But negotiations soured when the seller refused to include a bathroom medicine cabinet.
“It was an old wooden cabinet with a mercury-glass mirror,” said Ms. Adamson, now an agent with Brown Harris Stevens, “and it was attached to the wall and should have been mine. But he threw such a fit that I let him take it. He said he’d shaved in front of it for 41 years and wouldn’t sell me the house unless I gave it to him. I was desperate for the house, so I let it go.” It remains a sore point.
In the opinion of Steven Matz, a partner at the real estate law firm Katz & Matz, the cabinet probably should have gone with the town house. By his definition, the best way to ascertain what is or isn’t a fixture requires an imaginary exercise. “You take the home or apartment and put it in the palm of your hand and turn it upside down and shake it very hard, and whatever does not fall to the ground is a fixture.”
Mr. Matz said he had attended closings that stalled over things as mundane as the purloined towel and toilet-paper holders at a Fifth Avenue co-op (then again, maybe they were solid gold), and a missing light bulb at a $10 million Park Avenue co-op: “But it was a special German halogen light bulb, and technically it was the seller’s responsibility to have it in working order.”
According to Ms. Del Nunzio, “Typically what the buyer and seller are fighting about is not the towels or the mantelpiece the seller wants to remove at the last minute, but rather these items become a focal point for their anxiety.”
And then there’s the $1.18 million sale of a charming duplex at West 67th Street where a mantelpiece truly took a star turn in the negotiations, just as it had in the Corcoran listing, where it was mentioned no fewer than three times. The prospective buyers, Kate and Eric Jones, were instantly enamored of the original brick fireplace, antique mahogany mantel and curvaceous mahogany staircase, and made an offer at first sight.
Matters progressed smoothly until they visited the apartment for a preclosing walk-through and, to their shock, saw the wooden mantelpiece lying on the living room floor like a beached whale. The seller, one half of a divorcing couple, had ripped down the mantel, intending for it to move out with her. Through their agent, Jessica Cohen of Douglas Elliman Real Estate, the buyers lodged a protest.
“The mantelpiece was a material part of the quaint character that had endeared my buyers to the property,” Ms. Cohen said. “So the seller had to return it. It was actually funny to see.”
But it was more complicated than that, Ms. Jones said. When the husband learned what was holding up the closing, he removed his ex-wife’s expensive bike from the basement storage room. “He told her he was going to hold it for ransom and that she wouldn’t get it back unless she put the mantel back up,” she said. After a few tense weeks, the mantel was restored and the closing took place. But that’s not quite the end of the story.
“While all this was going on, we decided to have an appraiser take a look at the mantel,” Ms. Jones said. “It turned out it wasn’t a real antique and wasn’t really worth much at all.”
They have since ripped it out and given it away. Click green for further info - Source: NYT __________________________________________________________________________________
Helpful info & Practical, Detailed Guidance
(1) for every house owner or (2) for you planning to buy or build a house
1: 5 Projects That Lower Your Homes Value - 2: "5 Home Features You Should Skip" - 3: "Top 5 First-Time Homebuyer Mistakes" - 4: "Do Not Buy a House Without Checking These 5 Things - 5: "Build a House in 30 Days for $300K Less
Article 1 of 5 Articles 1 - 5 of 5 next below
5 Projects That Lower Your Home’s Value
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Most upgrades, renovations, and home improvement projects raise a home’s resale value.
But in this article these five renovations can do just the opposite.
That is, must be pointed out, if you're planning on selling in the next five years. “If you’re going to stay in your home for a long time, do whatever makes you happy — surround yourself with Pepto Bismol pink if that's what you like,” she tells Destination Home. But if resell value matters, here’s what to avoid:
Converting bedrooms into other spaces: If potential homebuyers "see it’s a four-bedroom house, they want to go to the open house and see four bedrooms. You have to take the guesswork out,” says Soto. If you do convert a room, there's one feature you should absolutely never mess with. Watch the video to find out what that is.
Hot tubs: Soto thinks inheriting someone else’s hot tub is a turn-off — and she’s not alone. “You’d be surprised how many potential buyers find them to be a little gross.” And once a hot tub is installed, it's not an easy feature to remove from a deck or backyard.
Colored trim and textured walls: It seems like any potential homebuyer would see these features and know they can easily paint over them, but not so fast, says Soto. “I would much rather paint walls than trim any day — it's a beast of a job,” she says. And textured walls are "a mess to sand down and remove. The fad is over anyway, so just let it go.” If you feel your trim is outdated, see the video for Soto’s tips on what to do.
Children's theme bedrooms: Spending hundreds of dollars on a mural for your child's wall is throwing money away. Not only will they outgrow it in a matter of years, but “you're never going to get that money back when you sell, so just keep it neutral,” posits Soto.
Too much landscaping: Conventional wisdom says you want your yard to look as nice as possible, but heed Soto’s warning: you want to “keep up with the Joneses — but don’t exceed them.” To a potential buyer, gorgeous, overdone landscaping screams high-maintenance.
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Article 2 of 5 3 0f 5 next below
5 Home Features You Should Skip
The path to home ownership is fraught with challenges, not least of which is finding the right house. To help narrow down your search we met up with home designer and architect Barry Wood, who can be seen on HGTV’s "Hidden Potential." He gave us a list of home features that may appear to be amenities, but are actually red flags.
Wood warns us of the hidden costs and headaches that may be associated with them.
1. Fireplaces
They're appealing and cozy, but Wood warns, “Fireplaces are dirty and can have a lot of issues, especially if they're old. The chimney has all sorts of mortar joints that can crack, the flue can crack — that’s a huge fire code and safety issue.”
2. Oil Heat
It may be the predominant type of heating this country has used for the past century, but according to Wood, it’s going to cost you. Check out the video to see how it compares to gas heating, as well as the other problems you may run into.
3. Built-In Mirrors
A wall of mirrors may be a little '70s, but what's more, they're costly and difficult to remove, presenting safety issues for the average DIY-er.
Related: Property Brothers: Don’t Buy a House Without Checking These 5 Things
4. South-Facing Windows, Doors and Skylights
From the blazing midday sun driving up energy expenses to costly leaks, Wood lays out what to look for in the above video.
5. Wall-to-Wall Carpet
Wood says when you see carpet throughout a home, you don’t know what’s underneath — and it's usually nothing. This means you may have to put in new floors, which comes with a hefty price tag that Wood puts at $6,000 to $15,000 for an average-sized home.
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Article 3 of 5 4 of 5 next below
Top 5 First-Time Homebuyer Mistakes
Shane Ede and his wife of Jamestown, North Dakota, say that when they bought their first house in 2004, they were totally unprepared. With a combined income of just $45,000 and student loan debt topping $60,000, the Edes had an unfavorable debt-to-income ratio. But with no pre-qualification process or an experienced mortgage professional to stop this blunder, the couple managed to buy a three-bedroom house that was way out of their budget. They then spent the next two years barely scraping by — and they’re not alone.
While lending practices and standards have varied in the years since, one important point remains: first-time homebuyers can make a lot of mistakes during the process of finding and financing a home. That’s according to Trevor Curran, a loan officer with Powerhouse Solutions, who says he’s seen a lot of those mistakes first-hand during his two decades of working in the business.
In this episode of Destination Home, Curran shares the top five mistakes people make when purchasing a home. Check out the video for his insights into each. They include:
1. Making the wrong moves when managing credit. Think you should pay off all your credit cards and debt to qualify? Think again. Watch the video for Curran’s advice on the counterintuitive use of credit cards and what your loan officer could be looking at.
2. Thinking you’re pre-approved when you’re not. Curran says pre-qualification is an important first step while navigating homebuying — but an instant credit report and a quick chat with your loan officer does mean you're "pre-approved."
3. Using "just any" loan officer. Mortgage loan originators (as they're called in the biz) are not created equal, according to Curran. The difference in loan officer can result in everything from headaches during the process to loan terms that aren’t favorable for the purchaser.
4. Using pension or retirement fund money in a way that works against you. It can impact your debt-to-income ratio when you apply for a mortgage.
5. Buying the wrong house. According to Curran, “If you’re looking at a foreclosure, you’re buying someone else’s headache and competing with cash buyers. If you’re buying a short sale, you’re going to wait a long time for approval and you may not get the price you think you’re getting for the house.” In short, make sure the "deal" you’re getting is really worth the trouble.
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Article 4 of 5
Do Not Buy a House Without Checking These 5 Things
When Mia Fitzharris and her husband of Long Island, New York got an incredible deal on an extreme fixer-upper home, they knew going in it had problems. But even still, they were in for an unwelcome surprise when an inspector told them the damages would cost up to $225,000 to repair, and included irreparable problems with a foundation which they had been hoping to keep.
“It’s a much bigger job than we were expecting to do,” Fitzharris, a Yahoo! employee, tells Destination Home in the episode above. “What we originally thought was going to be a gut renovation is now going to be a complete tear down, starting from scratch.”
As Mia’s story demonstrates, hidden house flaws found too late in the purchasing process can dash homeowners’ dreams and budgets.
So in the accompanying video, we sat down with Jonathan and Drew Scott, who transform extreme fixer-uppers and educate viewers about it on their HGTV shows
CLICK: Property Brothers,
CLICK: Brother vs. Brother,
CLICK: Buying and Selling.
They filled us in on their essential checklist of five things every homebuyer ought to look for to avoid buying a lemon. At the same time, we sent an inspector over to Mia’s house to see what these problems actually look like.
Check out the video above to see how to spot these five major problems and hear explanations for why missing them can cost you big time. (For example, a termite infestation can end up costing tens of thousands of dollars.)
The checklist includes: mold, pests, outdated fixtures and wiring, cosmetic headaches like painted over wallpaper and poorly done DIY flooring, and drainage problems.
From toxic mold to sloping sod that can cause floods – we show you how to spot them.
Related: click: Buying Your Dream Home: How to Avoid a Nightmare
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Article 5 of 5 Articles 1 -4 of 5 next above
Build a House in 30 Days for $300K Less
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When Art Sine wanted to build a custom home outside of New York City, he says he began working with an architect on plans that would be to his specification, built the traditional way. But when the price tag was adding up to $725,000 — and possibly as much as $900,000 when he factored in upgrades, with no guarantees it wouldn’t go over budget — his dream home became out of reach.
However, he found a different way to build his dream house for a budget under $500,000, in a timeline of four months and with no surprise costs (in fact, he says invoices came in under-budget).
How? He opted for a modular home, better known as “pre-fab” (short for pre-fabricated). Not to be confused with mobile or manufactured homes, or even tract housing, modular homes are built in a factory and designed to fit together a little like legos. This option has come a long way from the “kit” houses popularized by Sears & Roebuck in the 1940s — and one of the biggest improvements is that they're now highly customizable.
Related: click: Six Fabulous Pre-Fabricated Homes
Check out the accompanying Destination Home episode to see what they look like and how they're put together.
While pre-fab is considered by some to be low-quality and cookie-cutter, those we spoke with in the industry say these days, those assumptions are completely unfounded.
“It kind of goes back to a misconception from decades ago that a modular home and a trailer home are the same thing,” says Donna Peak of National Association of Homebuilders' Building Systems Councils. “There’s a stigma that the industry has unfairly faced.”
Meanwhile, Peak says these days most, if not all, modular companies do customization on some level.
In the accompanying video, we speak to John Colucci of Westchester Modular Homes who contends modular home quality is higher than traditional homes. He also explains how modular homebuilders are able to erect these homes in as little as 30 days, on a budget that averages 5% to 10% less than what you’d spend otherwise. From start to finish — if you include the design process, permitting and finishing work — a modular home can be move-in ready in as little as four to five months, easily half the time spent on a traditional stick-built home. The video also features BluHomes, a modular company that builds architect deigned and energy efficient homes nationally.
Related: Would you Buy an Ikea Home?
This way of building is not free of complaints. You can find instances of slack building standards and quality problems, and a wide variation among manufacturers, so make sure to do your homework if you’re building a home. But judging from the testimonials of the homeowners and builders we interviewed for this story, pre-fab these days sounds pretty fabulous.
Additional shot footage provided by: click: BluHomes.com
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Property tax liens
Important info for every present & future property owner to avoid big losses
Notice: In some states a yearly property tax is also paid for every car
You can lose your house, your car, etc. taxed property IF you do not pay your taxes
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Man Owned a Fully Paid House Worth 200K
One Day He Was Left with Nothing
House Gone - Taken Away
This man owed $134 in property taxes
The District sold the tax lien to an investor who foreclosed
on his $197,000 house and sold it
He and many other homeowners like him were left with nothing
Tax lien = lien of which a tax collector may avail (= use) himself in default of taxes analogous (= similar) to a judgement default = nonpayment, failure to pay A judgement lien = a court ruling that gives a creditor the right to take possession of a debtor's real property if the debtor fails to fulfill his or her contractual obligations
What is a lien?
click: Lien Definition | Investopediawww.investopedia.com/terms/l/lien.asp
A lien is the legal right of a creditor to sell the collateral property of a debtor who fails to meet the obligations of a loan contract. A lien exists, for example, when an individual takes out an automobile loan. The lien holder is the bank that grants the loan, and the lien is released when the loan is paid in full. Another type of lien is a mechanic's lien, which can be attached to real property if the property owner fails to pay a contractor for services rendered.
If the debtor never pays, the property can be auctioned off to pay the lien holder.
The article
Left with Nothing
On the day Mr. Bennie Coleman lost his house, the day armed U.S. marshals came to his door and ordered him off the property, he slumped in a folding chair across the street and watched the vestiges of his 76 years hauled to the curb.
Movers carted out his easy chair, his clothes, his television. Next came the things that were closest to his heart: his Marine Corps medals and photographs of his dead wife, Martha. The duplex in Northeast Washington that Coleman bought with cash two decades earlier was emptied and shuttered. By sundown, he had nowhere to go.
All because he didn’t pay a $134 property tax bill.
The retired Marine sergeant lost his house on that summer day two years ago through a tax lien sale — an obscure program run by D.C. government that enlists private investors to help the city recover unpaid taxes.
Bennie Coleman was ousted from his house two years ago in a flurry of foreclosures that swept the poor neighborhoods of Ward 7.
The retired Vietnam veteran bought the tidy brick duplex in Northeast for $57,500 with life insurance money that he received when his wife died of breast cancer in 1988.
Known in his working-class neighborhood as “Tops,” he spent two decades in the house without a mortgage. But in recent years, Coleman began showing signs of dementia — he would forget to pay bills or buy food. His next-door neighbor would often bring him plates of chicken and carrots.
In 2006, he forgot to pay a $134 tax bill, prompting the city to place a lien on the home and add $183 in interest and penalties. His son paid the $317 bill in 2009, records show, but that wasn’t enough.
The Maryland company that had bought the lien had already gone to court to put a foreclosure in motion. To lift the lien, the company’s lawyer was demanding steep legal fees and expenses— $4,999.
The letter Bennie Coleman's son wrote to the court in 2008 for help.
Coleman’s son couldn’t pay and wrote to the court for help: “I would hate for him at his age to lose his home.”
One payment was made for $700 in 2009, but when no additional payments followed, the court approved the foreclosure in June 2010.
His son couldn’t be reached for comment. In the summer of 2011, federal marshals showed up at the door when Coleman refused to leave.
“He had no clue what was going on,” said neighbor Patricia Johnson. “I went over and told my mom, ‘Looks like they are going to get Tops out.’ ”
That night, he slept in a chair on the front porch.
The court later appointed a conservator, who told The Post that Coleman was incapable of responding to the emergency unfolding in his life, including showing up in court to fight for his house.
“He had no chance,” said attorney Robert Bunn. “He has dementia. He did not understand the ramifications*) of what was going to happen to him.” *) = a consequence of an action or event, esp. when complex or unwelcome
On an overcast morning earlier this year, Coleman walked past his old house on the way to the corner store. But he said he could not look at it — the memories were too painful.
The Maryland company that took Coleman’s house sold it for $71,000 two months after evicting him. The company was owned by Steven Berman, who was convicted in 2008 in the Maryland bid-rigging case. He declined to comment. The law firm for Berman’s company said it was willing to reduce Coleman’s bill to $3,500 but could not reach him.
The tax office would not comment on the case, saying only that the lien would “not have been sold if the tax sale were today” because it was less than $1,000, the agency’s current threshold.
Coleman said he thought he would stay in his house for many more years, sipping cold drinks on the porch and talking to neighbors over the fence. Now, he’s in a group home one mile from the home that is no longer his.
On an overcast morning earlier this year, he walked past the old house, now boarded up, on the way to the corner store to buy margarine and a bag of sugar. He looked back briefly, then turned away.
“I have nothing,” he said.
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For decades, the D.C. District placed liens on properties when homeowners failed to pay their bills, then sold those liens at public auctions to mom-and-pop investors who drew a profit by charging owners interest on top of the tax debt until the money was repaid.
But under the watch of local leaders, the program has morphed into a predatory system of debt collection for well-financed, out-of-town companies that turned $500 delinquencies into $5,000 debts — then foreclosed on homes when families couldn’t pay, a Washington Post investigation found.
As the housing market soared, the investors scooped up liens in every corner of the city, then started charging homeowners thousands in legal fees and other costs that far exceeded their original tax bills, with rates for attorneys reaching $450 an hour.
How you could lose your home - in any state, in any county Property owners in the D.C. District risk losing their homes over relatively small amounts in unpaid property taxes. Here’s a look at the process.
In a 10-month investigation, The Washington Post chronicled years of breakdowns and abuses in a program that puts at risk one of the most fundamental possessions in American life.
- Of the nearly 200 homeowners who lost their properties in recent years, one in three had liens of less than $1,000.
- More than half of the foreclosures were in the city’s two poorest wards, 7 and 8, where dozens of owners were forced to leave their homes just months before purchasers sold them. One foreclosed on a brick house near the Maryland border with a $287 lien and sold it less than eight weeks later for $129,000.
- More than 40 houses were taken by companies whose representatives were caught breaking laws in other states to win liens.
- Instead of stepping in, the D.C. tax office created more problems by selling nearly 1,900 liens by mistake in the past six years — even after owners paid their taxes — forcing unsuspecting families into legal battles that have lasted for years. One 64-year-old woman spent two years fighting to save her home in Northwest after the tax office erroneously charged her $8.61 in interest.
Every Wednesday, homeowners plead their cases at D.C. Superior Court, where they are pitted against industry lawyers who have filed for more than 7,000 foreclosure cases in the past eight years alone. Families pace the hallways waiting for their names to be called in last-ditch efforts to rescue their homes.
“This is highway robbery,” said Brenda Adjetey, who showed up in court last week to protect her home in Southeast Washington after her $1,100 tax bill nearly quadrupled because of legal fees charged by the investor.
Tax lien purchasers defend the industry, saying that most people who buy liens are local investors just trying to earn interest — not take homes — and that the law gives owners six months to repay their debts before a foreclosure case can be filed.
“This is an opportunity to make some money, but it is also an opportunity for the city to get paid and to help its citizens,” said Richard Cockerill, a veteran bidder from Virginia.
In a written statement, the tax office added, “Property owners are given multiple opportunities to pay both before and after the tax sale.”
Officials also said the tax office has made improvements to the program in recent years, including additional warnings to homeowners before liens are sold, and the office recently stopped selling liens on houses for less than $1,000.
But officials acknowledge that limit was set to manage the caseload and is not a permanent policy change.
At a public hearing this past October, housing advocates presented a list of reforms to the D.C. Council, including capping the fees charged by purchasers and offering payment plans to struggling homeowners. But the changes were never made.
“That’s a failure on the part of government,” said Stephen Fuller, director of the Center for Regional Analysis at George Mason University. “This has punitive consequences. People have been damaged.”
If you don't pay your taxes, the District sells a lien for the tax debt to an investor, usually a company. The investor gets a lien.
$2,500 - The typical lien amount, just a fraction of the property's value 13,000 - Tax liens the D.C. District has sold from 2005 to 2012
Note: The District no longer sells tax liens for delinquent tax bills under $1,000. Lien amounts include property taxes, penalties and interest. The District doesn’t track legal fees charged to homeowners. The estimates of legal fees is besed on a Post study of more than 200 cases. The foreclosure and court cases are through mid-2013.
Source: Data from D.C. Office of Tax and Revenue and D.C. Superior Court
Families have been forced to borrow or strike payment plans to save their homes.
Others weren’t as lucky. Tax lien purchasers have foreclosed on nearly 200 houses since 2005 and are now pressing to take 1,200 more, many owned free and clear by families for generations.
Investors also took storefronts, parking lots and vacant land — about 500 properties in all, or an average of one a week. In dozens of cases, the liens were less than $500.
Coleman, struggling with dementia, was among those who lost a home. His debt had snowballed to $4,999 — 37 times the original tax bill. Not only did he lose his $197,000 house, but he also was stripped of the equity because tax lien purchasers are entitled to everything, trumping even mortgage companies.
“This is destroying lives,” said Christopher Leinberger, a distinguished scholar and research professor of urban real estate at George Washington University.
Officials at the D.C. Office of Tax and Revenue said that without tax sales, property owners wouldn’t feel compelled to pay their bills.
“The tax sale is the last resort. It’s also the first resort — it’s the only way in the statute to collect debt,” said deputy chief financial officer Stephen Cordi.
But the District, a hotbed for the tax lien industry, has done little to shield its most vulnerable homeowners from unscrupulous operators.
Foreclosures have upended families in some of the city’s most distressed neighborhoods. Houses were taken from a housekeeper, a department store clerk, a seamstress and even the estates of dead people. The hardest hit: elderly homeowners, who were often sick or dying when tax lien purchasers seized their houses.
One 65-year-old flower shop owner lost his Northwest Washington home of 40 years after a company from Florida paid his back taxes — $1,025 — and then took the house through foreclosure while he was in hospice, dying of cancer. A 95-year-old church choir leader lost her family home to a Maryland investor over a tax debt of $44.79 while she was struggling with Alzheimer’s in a nursing home.
Other cities and states took steps to curb abuses, such as capping the fees, safeguarding houses owned by the elderly or scrapping tax sales altogether and instead collecting the money themselves.
“Where is the justice? They’re taking people’s lives,” said Beverly Smalls, whose elderly aunt lost her home in Northeast Washington. “It’s just not right.”
Liens are generally sold the year after a homeowner fails to pay a tax bill, for the same amount as the debt. Homeowners receive several warnings before their liens are put up at annual auctions.
Once a lien is sold, owners have six months to repay the investor with interest. If that does not happen, the investor can move to foreclose.
For years, the auctions came and went with little fanfare, drawing local investors who would plunk down a few hundred dollars to buy up liens in neighborhoods they knew well. Most were looking to earn the interest, and if there was a foreclosure, it was handled by the tax office.
But the work overwhelmed the agency, and in 2001, city leaders made a critical change: They told investors to head directly to court to file a foreclosure case.
The move empowered investors to start charging legal fees and court costs — a game changer that allowed them to turn minor delinquencies into insurmountable debts.
Companies from Florida, Illinois, Maryland and New York came to town, prepared to spend millions.
In 2007, more than 150 purchasers spent five days competing for 2,000 liens, first on properties downtown near the Capitol, then Georgetown, followed by Dupont Circle, Chinatown and finally the neighborhoods near the Anacostia River, long stricken by poverty.
When it was over, just six companies had swept the bidding, snaring two-thirds of the liens, which totaled $5 million, on properties worth more than $666 million.
One of those purchasers was under federal investigation at the time for rigging tax auctions in Maryland, where he was suspected of scheming to win liens — then demanding excessive fees from homeowners. Lawyers for a second firm would also come under investigation in the same case.
Their companies and others bought into every ward of the District in 2007, including Deanwood, one of the city’s oldest predominantly African American neighborhoods. On long stretches of Dix Street, where the recession hit hard and lingered, 33 liens were sold between 2005 and 2008, on properties scattered amid food banks and “Cash 4 Gold” signs.
Across the city, the rate of foreclosure cases has nearly doubled in the past five years — in a single week in January, tax lien companies filed more than 180 cases. Of the 13,000 liens sold since 2005, more than half have ended up in court.
With no caps on fees, families have paid a steep price, facing bills for legal fees and court costs often more than triple their original tax debts, The Post found. Rates for the attorneys hired by the tax lien companies have reached $450 an hour.
Even the smallest expenses have been passed on — including the paper that ordered property owners to court at 25 cents per page. One attorney billed for preparing the bill itself — $25.
Time and again, the bills came without receipts or breakdowns justifying the costs.
“I just don’t know what he’s trying to charge me for,” said longtime community activist Barbara Morgan, 80, standing outside the courtroom earlier this year with a $2,700 legal bill that doubled the tax debt on her home of 50 years. “It’s ridiculous.”
Local judges have taken purchasers to task. One was so critical of the fees charged by Aeon Financial of Chicago, he slashed them in half last year. Aeon wanted $6,300 in fees for a $1,680 tax lien.
A senior attorney billed at $450 an hour. A junior attorney charged $325. Legal assistants tacked on $110 an hour. Plus, there was $800 in expenses, including $27.60 for “dismissal costs.”
“Unreasonable,” Judge Joseph E. Beshouri said in his ruling.
In 2009, D.C. Attorney General Peter J. Nickles also stepped in, seeking an injunction against Aeon over fees that he called “unlawful” and “predatory.”
“Aeon’s excessive attorney’s fee demands are likely to result in at least some homeowners not being able to redeem homes,” according to the motion.
In one case, Steve Segears, who lives in the house his father bought after World War II, was charged $5,500 in fees by Aeon, nearly double his $2,900 tax bill.
“Enough is enough,” Michael J. Wilson, Segears’s attorney, wrote to the court. “The Aeon juggernaut keeps rolling along by demanding payment of unreasonable and extortionate attorneys’ fees and other alleged expenses, including those which have not actually been ‘incurred.’ ”
Aeon did not respond to repeated calls and letters seeking comment.
Other places acknowledged abuses years ago and took steps to guard against them. New York City won’t allow tax liens to be sold on homes owned by low-income seniors and the disabled, as well as veterans. Some counties in Michigan have scrapped tax lien sales altogether and collect the money themselves. Maryland, fearing that taxpayers were being gouged, limits the legal fees to $1,500.
Most homeowners are in no position to fight and rely on the government to protect them from unfair practices, said Howard Liggett, former director of the National Tax Lien Association, who has spoken out nationally against excessive fees.
But D.C. leaders have not provided key protections, including caps on fees.
“It’s embarrassing,” said Liggett, who is familiar with the District’s tax auctions and bidders. “You’re always going to have unscrupulous [investors]. You’ve got to self-police.”
Threatened with mounting fees, some families simply gave up. In court files and interviews, they described large bills and long battles with lawyers while interest grew on their tax debts.
“We just didn’t have the money to fight these people,” said Michael McRae, who tried unsuccessfully to save his brother’s house from a tax-lien firm from Florida.
In the past eight years, investors have foreclosed on a condominium just a few blocks from the U.S. Capitol and another just down the street from the Embassy of Peru, a single-family home near Rock Creek Park and dozens of houses in poor neighborhoods along the Anacostia River.
The Post found investors have taken nearly 200 homes since 2005, assessed at $39 million. They sold most of them, sometimes within weeks, after paying off any back taxes or city fines.
One of the most aggressive investors was Heartwood, whose lawyers were investigated and disbarred as a result of Maryland’s criminal bid-rigging case. Formerly a subsidiary of Florida’s BankAtlantic Bancorp, Heartwood has taken more than 20 houses through foreclosure and sold them all, including a brick duplex in Northeast Washington with a $535 lien for $169,610.
One of the houses was owned by Michael McRae’s brother, Thomas, a flower-shop owner, who was in and out of a coma and under hospice care while Heartwood was pressing to take his house over what began as a $1,025 tax debt. Thomas McRae died in June 2006 — three months after a judge approved the foreclosure.
Family members found out and fought back, saying no one told them about the lien or foreclosure.
Heartwood eventually paid the family $80,000 to settle the case and quickly sold the brick house on a bustling corner of Sherman Avenue NW for $175,000. Longtime neighbors still recall how Thomas McRae had filled the sidewalk with flowers.
“We’re just regular people, and we don’t have $200,000 to fight a big organization from Florida,” his brother said.
In a written statement, the tax office said the $1,025 tax bill was “not a small debt.” A spokesperson for Heartwood declined to discuss the foreclosure cases but said the company is no longer buying tax liens in the District and Maryland.
Property tax liens have been, for decades, existing and sold in every state in the U.S. and still are.
Pay your property taxes - otherwise your house can/will be sold - sometimes for $50 dollars - wrong is wrong-
This abuse must be ended. Your own duty is to pay the tax bill. If you cannot pay, contact a lawyer, negotiate with your county.
Free lawyers are in the "Legal Services" system and in some other similar organizations round the country.
Search the web, ask your church, or ask you city of county hall for legal service information, etc.
Do not ignore your tax payments - be active
You can always fight back and find a solution to keep your house
Click green for further info
Source: The Washington Post
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Want to own your home faster? Learn what these homeowners did to pay off their mortgage in just six years
How these savvy homeowners
paid off their home in just 6 years
Paying off your mortgage in just six years seems impossible, doesn't it? It's definitely not easy, but one Texas couple was able to do it.
And the biggest benefit of doing so is perhaps the savings, says Adiany Barboza, a licensed real estate broker with Abbey Road Realty, LLC in Orlando, Florida.
Barboza says that many consumers don't realize the true cost of a mortgage. Depending on your interest rate and the amount you took a mortgage out for, you could end up paying more than double the amount of your mortgage in just interest over time, she says.
"That alone should be enough motivation to pay the mortgage earlier," Barboza explains.
And that was enough motivation for Crystal Stemberger and her husband, Len, who paid off their mortgage in only six years.
How did they do it?
Stemberger says (1) finding a low-priced, $114,000 foreclosed home was key to their success. The low initial price of their home, which was a 1,750 square feet, two-story property near Houston, Texas, allowed them to put 20 percent down, and get a 15-year mortgage at 5.375 percent for a $91,200 loan, she explains. That meant their monthly payment was just $740 a month. At that time, Stemberger worked in an office and earned $32,500 a year. Her husband, a public school science teacher, earned a salary of $42,500.
But the couple was driven to pay off their mortgage early, and they took every action necessary to do so.
To start, "We started the process by overpaying from day one," explains Stemberger. Even though their mortgage payment was $740 per month, they paid $900 total from their very first payment, with the extra $160 going towards the principal.
(2) Another key to the couple's success was that they weren't afraid to refinance.
Less than four years after getting the original mortgage, Stemberger and her husband refinanced their remaining loan amount of $66,000 to another 15-year mortgage.
"Chase offered us a no-cost refinance to a 4.5 percent interest rate," she says. This allowed them to save money by getting a lower interest rate, without having to pay closing costs for the new loan. Refinancing also allowed them to lower their monthly mortgage payment to $505.
But because the couple was determined to pay off their mortgage quickly, they decided to continue paying $900 a month, an extra $395 more than necessary. They were able to do this because of her husband’s new job as a school librarian, and the success of an online business that Stemberger launched. Their gross income totaled $120,000 for the year.
(3) Another thing that helped the couple pay off their mortgage faster was renting out a spare bedroom for $500 a month. They used this strategy on and off for a total of two and half years.
And while this might not be an option for everybody, Stemberger says it "helped us pay off our principal even faster."
(4) They also made larger payments towards the principal whenever they had enough money saved up.
And it was all worth it when they finally paid off their home just a few months ago in April 2013.
"We ended up paying off our [entire] mortgage in about six years on the dot," she explains. "That was an amazingly happy day."
Source: credit.com
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A Simple Way to Save: Banish Late Fees
Click green for further actions
A $5 late penalty from your phone company here, $2.50 for overdue library books there. It's easy to forget that late fees really do add up, and avoiding them is more than just a way to save a few bucks. If you're living paycheck to paycheck, or just have the sense that your money should be going a little further, avoiding late fees can almost be a full-blown financial strategy.
For those who haven't thought a lot about late fees, here's more than you probably ever wanted to know.
Why late fees are charged. As you suspect, companies do it because they can. "You are most likely to be charged a late fee by a firm that does not have serious competition for your business," says Rick Scott, an assistant professor of finance at Saint Leo University in Saint Leo, Fla. He cites the usual suspects: mortgage, rent, utilities, government services, car loans and credit cards. The latter do it, Scott says, knowing that "if you can't pay them on time, you are unlikely to be able to get another card."
How late fees can add up. If you habitually pay bills late and shrug off late fees as a cost of living and staying afloat, consider what a hefty price you're paying. As a general rule, most businesses charge anywhere from 10 to 15 percent of the monthly bill for a late fee. If you pay, say, $2,500 a month in mortgage or rent, a car loan, electric and other utilities, you could easily be spending $2,750 with late fees but budgeting to spend $2,500. No wonder you're behind.
Late fees are most damaging with credit cards. Late fees can really pile up if you have a lot of credit cards, says Gail Cunningham, a spokesperson for the National Foundation for Credit Counseling. She puts it this way: "The average consumer who comes to the NFCC for financial counseling has six credit cards. If they can't make at least the minimum payment on time, that comes out to 6 times $35 equals $210." Every month. In late fees.
Put another way, "if a credit card holder with a $1,000 average monthly balance is late three times a year, and pays a late fee of $35 each time, his or her effective interest rate increases by at least 10.5 percent. This is on top of the quoted interest rate charged by the card issuer," says Donna Dudney, an associate professor of finance at the University of Nebraska-Lincoln.
Wait, it gets worse. "Late payments are reported to the credit bureaus, which will adversely impact your credit score. Even one late payment can decrease your score and affect you for months and even years," says Katie Ross, education and development manager of American Consumer Credit Counseling, a nonprofit headquartered in Auburndale, Mass.
And if you miss one payment - or certainly more than one - you'll generally find your interest rate hiked, "which would be disastrous if you are living on a very tight budget," Ross says.
She adds that if a credit card payment is more than 30 days late, your late fee problem may show up on your credit report and remain there for the next seven years. That, of course, will affect your credit score, which affects the interest rate on car loans, mortgages and future credit cards.
With credit cards, there is another late fee trip-wire to consider, especially if you're someone who consistently makes minimum payments, warns Katie Moore, a Detroit-based financial counselor with GreenPath Debt Solutions, a nationwide nonprofit that helps consumers with credit card debt, housing debt and bankruptcy.
Sometimes late fees can take a chunk out of your monthly minimum payment, Moore says. "For example, your minimum payment on a credit card with a $1,000 balance might be $40. If you pay it late, a $25 late fee may be applied. The problem here is if you paid $40 and $25 is applied to the late fee, only $15 of the $40 payment is applied to the principle and interest."
Meaning? Someone who pays a credit card bill late every month, and only pays the minimum, is paying almost half of their bill to late fees.
How can you avoid late fees? You have several options.
-- Look for a bank or credit card that promotes no late fees. There are a few out there, as some credit cards and banks are realizing they might be able to attract customers by getting rid of late fees. For instance, Citi Simplicity is the only credit card, according to Citi Simplicity, that never charges late fees, penalty fees or an annual fee. So what happens if payments are never made? A company spokesperson who didn't want to be identified said information would eventually be sent to the credit bureaus - so no late fee doesn't mean never make a payment, but if you continually miss the deadline, there is no fee and the interest rate won't rise.
-- Talk your way out of the fee. Sure, everyone suggests this, but Gary Frisch, a public relations professional and regular bill payer in Laurel Springs, N.J., takes the advice to new levels. "I've called as many as three times before finding someone who will credit me the fee. Or speak to a supervisor, and stress your loyalty and long history as a customer or card holder," Frisch says, but he adds: "Threatening to cancel your card usually does no good, because the rank-and-file rep or supervisor probably doesn't care, and once you go down that route, you might be cutting off your nose to spite your face."
-- Set up automatic withdrawals. But be careful. If you're living paycheck to paycheck, you could easily find yourself in overdraft at the bank, which can be even more expensive than a late fee.
-- Always pay everything on time. Well, that is one way, yes.
Click green for further info
How these savvy homeowners
paid off their home in just 6 years
Paying off your mortgage in just six years seems impossible, doesn't it? It's definitely not easy, but one Texas couple was able to do it.
And the biggest benefit of doing so is perhaps the savings, says Adiany Barboza, a licensed real estate broker with Abbey Road Realty, LLC in Orlando, Florida.
Barboza says that many consumers don't realize the true cost of a mortgage. Depending on your interest rate and the amount you took a mortgage out for, you could end up paying more than double the amount of your mortgage in just interest over time, she says.
"That alone should be enough motivation to pay the mortgage earlier," Barboza explains.
And that was enough motivation for Crystal Stemberger and her husband, Len, who paid off their mortgage in only six years.
How did they do it?
Stemberger says (1) finding a low-priced, $114,000 foreclosed home was key to their success. The low initial price of their home, which was a 1,750 square feet, two-story property near Houston, Texas, allowed them to put 20 percent down, and get a 15-year mortgage at 5.375 percent for a $91,200 loan, she explains. That meant their monthly payment was just $740 a month. At that time, Stemberger worked in an office and earned $32,500 a year. Her husband, a public school science teacher, earned a salary of $42,500.
But the couple was driven to pay off their mortgage early, and they took every action necessary to do so.
To start, "We started the process by overpaying from day one," explains Stemberger. Even though their mortgage payment was $740 per month, they paid $900 total from their very first payment, with the extra $160 going towards the principal.
(2) Another key to the couple's success was that they weren't afraid to refinance.
Less than four years after getting the original mortgage, Stemberger and her husband refinanced their remaining loan amount of $66,000 to another 15-year mortgage.
"Chase offered us a no-cost refinance to a 4.5 percent interest rate," she says. This allowed them to save money by getting a lower interest rate, without having to pay closing costs for the new loan. Refinancing also allowed them to lower their monthly mortgage payment to $505.
But because the couple was determined to pay off their mortgage quickly, they decided to continue paying $900 a month, an extra $395 more than necessary. They were able to do this because of her husband’s new job as a school librarian, and the success of an online business that Stemberger launched. Their gross income totaled $120,000 for the year.
(3) Another thing that helped the couple pay off their mortgage faster was renting out a spare bedroom for $500 a month. They used this strategy on and off for a total of two and half years.
And while this might not be an option for everybody, Stemberger says it "helped us pay off our principal even faster."
(4) They also made larger payments towards the principal whenever they had enough money saved up.
And it was all worth it when they finally paid off their home just a few months ago in April 2013.
"We ended up paying off our [entire] mortgage in about six years on the dot," she explains. "That was an amazingly happy day."
Source: credit.com
_________________________________________________________
==========================================================================================================================================================
A Simple Way to Save: Banish Late Fees
Click green for further actions
A $5 late penalty from your phone company here, $2.50 for overdue library books there. It's easy to forget that late fees really do add up, and avoiding them is more than just a way to save a few bucks. If you're living paycheck to paycheck, or just have the sense that your money should be going a little further, avoiding late fees can almost be a full-blown financial strategy.
For those who haven't thought a lot about late fees, here's more than you probably ever wanted to know.
Why late fees are charged. As you suspect, companies do it because they can. "You are most likely to be charged a late fee by a firm that does not have serious competition for your business," says Rick Scott, an assistant professor of finance at Saint Leo University in Saint Leo, Fla. He cites the usual suspects: mortgage, rent, utilities, government services, car loans and credit cards. The latter do it, Scott says, knowing that "if you can't pay them on time, you are unlikely to be able to get another card."
How late fees can add up. If you habitually pay bills late and shrug off late fees as a cost of living and staying afloat, consider what a hefty price you're paying. As a general rule, most businesses charge anywhere from 10 to 15 percent of the monthly bill for a late fee. If you pay, say, $2,500 a month in mortgage or rent, a car loan, electric and other utilities, you could easily be spending $2,750 with late fees but budgeting to spend $2,500. No wonder you're behind.
Late fees are most damaging with credit cards. Late fees can really pile up if you have a lot of credit cards, says Gail Cunningham, a spokesperson for the National Foundation for Credit Counseling. She puts it this way: "The average consumer who comes to the NFCC for financial counseling has six credit cards. If they can't make at least the minimum payment on time, that comes out to 6 times $35 equals $210." Every month. In late fees.
Put another way, "if a credit card holder with a $1,000 average monthly balance is late three times a year, and pays a late fee of $35 each time, his or her effective interest rate increases by at least 10.5 percent. This is on top of the quoted interest rate charged by the card issuer," says Donna Dudney, an associate professor of finance at the University of Nebraska-Lincoln.
Wait, it gets worse. "Late payments are reported to the credit bureaus, which will adversely impact your credit score. Even one late payment can decrease your score and affect you for months and even years," says Katie Ross, education and development manager of American Consumer Credit Counseling, a nonprofit headquartered in Auburndale, Mass.
And if you miss one payment - or certainly more than one - you'll generally find your interest rate hiked, "which would be disastrous if you are living on a very tight budget," Ross says.
She adds that if a credit card payment is more than 30 days late, your late fee problem may show up on your credit report and remain there for the next seven years. That, of course, will affect your credit score, which affects the interest rate on car loans, mortgages and future credit cards.
With credit cards, there is another late fee trip-wire to consider, especially if you're someone who consistently makes minimum payments, warns Katie Moore, a Detroit-based financial counselor with GreenPath Debt Solutions, a nationwide nonprofit that helps consumers with credit card debt, housing debt and bankruptcy.
Sometimes late fees can take a chunk out of your monthly minimum payment, Moore says. "For example, your minimum payment on a credit card with a $1,000 balance might be $40. If you pay it late, a $25 late fee may be applied. The problem here is if you paid $40 and $25 is applied to the late fee, only $15 of the $40 payment is applied to the principle and interest."
Meaning? Someone who pays a credit card bill late every month, and only pays the minimum, is paying almost half of their bill to late fees.
How can you avoid late fees? You have several options.
-- Look for a bank or credit card that promotes no late fees. There are a few out there, as some credit cards and banks are realizing they might be able to attract customers by getting rid of late fees. For instance, Citi Simplicity is the only credit card, according to Citi Simplicity, that never charges late fees, penalty fees or an annual fee. So what happens if payments are never made? A company spokesperson who didn't want to be identified said information would eventually be sent to the credit bureaus - so no late fee doesn't mean never make a payment, but if you continually miss the deadline, there is no fee and the interest rate won't rise.
-- Talk your way out of the fee. Sure, everyone suggests this, but Gary Frisch, a public relations professional and regular bill payer in Laurel Springs, N.J., takes the advice to new levels. "I've called as many as three times before finding someone who will credit me the fee. Or speak to a supervisor, and stress your loyalty and long history as a customer or card holder," Frisch says, but he adds: "Threatening to cancel your card usually does no good, because the rank-and-file rep or supervisor probably doesn't care, and once you go down that route, you might be cutting off your nose to spite your face."
-- Set up automatic withdrawals. But be careful. If you're living paycheck to paycheck, you could easily find yourself in overdraft at the bank, which can be even more expensive than a late fee.
-- Always pay everything on time. Well, that is one way, yes.
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- 7 Hidden Smartphone Expenses
- 10 Ways to Avoid Airline Fees Click green for further info - Source: US News & World Report ___________________________ Platinum Card and Text Alert, via Pawnshop
- Pawnshop = A store which offers loans in exchange for personal property as equivalent collateral. If the loan is repaid in the contractually agreed time frame, the collateral may be repurchased at its initial price plus interest. If the loan cannot be repaid on time, the collateral may be liquidated by the pawn shop through a pawnbroker or secondhand dealer through sales to customers. Emmett Murphy, a spokesman for the pawnbrokers’ association, said about 85 percent of loans were paid off, and pawnbrokers would much rather see a loan repaid than deal with selling a pawned item.
- Karen, 59, use he word “love” to describe her banking relationship, lauding the ease of cashing her bimonthly paycheck, the convenience of text alerts about her balance and the features on the platinum card that she was upgraded to in July. But she is not getting all this from a bank. She is getting this array of services from a pawnshop — part of an industry that has long had a reputation of taking advantage of vulnerable customers handing over prized possessions in exchange for cash.
As banks zero in on more affluent customers who promise twice the revenue of their lower-income counterparts, close branches in poor areas and remain stingy with credit, pawnshops are revamping their image and stepping into the void to offer financial services.
“The way the banks have tightened up so much on making small loans and making equity loans, we’ve kind of evolved into, I like to call it the poor man’s bank,” said Robbie Whitten, chief executive of Money Mizer Pawn and Jewelry of Columbus, Ga.
There are, however, plenty of potential drawbacks, consumer advocates say.
Some loans from pawnshops can come with interest rates as high as 25 percent. And fringe financial operations, the consumer advocates say, can imperil lower-income customers’ ability to save for the future. Without a traditional checking or savings account, borrowers often pay more for basic financial transactions like cashing checks, paying bills and wiring money, financial counselors say. And because pawnshops do not seek or report matters affecting credit scores, pawnshop banking makes it hard for customers to build credit history.
“Consumers need to be aware that the products don’t always carry the same protections as those you would get from a bank,” said Tom Feltner, director of financial services at the Consumer Federation of America Consumer Federation of Americawww.consumerfed.org/
Consumer advocacy organization lobbying on issues such as health, insurance, financial services, agriculture, food safety, housing, firearms, product safety, and.....
How fast the pawnshop industry is growing is unclear, but the industry association estimates there were 10,000 pawnshops in early 2012, the latest figures available, compared with about 6,400 in 2007. That expansion is, in part, fed by the rising number of Americans whose tarnished credit effectively bars them from the mainstream financial system. The growth has attracted the attention of the Consumer Financial Protection Bureau*), a recently formed regulator that has been scrutinizing pawnshops, along with other nonbank lenders like payday loan operators. *) CFPB > Consumer Financial Protection Bureauwww.consumerfinance.gov/
Our vision is a consumer finance market place that works for American consumers, responsible providers, and the economy as a whole.
EZCorp, a publicly traded operator of pawnshops, reported that total loan balances swelled 22 percent to $44 million in its most recent quarter. EZCORP Financial Services: Market Leading Loan and Cash ...www.ezcorp.com/ EZCORP Financial Services, formed in 1989, is a market leader in specialty consumer finance as well as short-term cash solutions.- Investor Relations - About EZCORP - Careers - Products & Services Another publicly traded lender, Cash America International, told investors in June that the company’s fortunes were growing as more “traditional consumer lenders are exiting the market. As a result, pawnshops are offering services like check cashing, Western Union money transfers, bill payment and prepaid cards to customers who are “getting forgotten in the banking system,” said Jerry Whitehead of the Pawnshop Consulting Group. Pawnshop Consulting Group, Inc.www.pawnshopconsultinggroup.com/ We provide comprehensive consulting and support services in the Pawn and Alternative Financial Service industries. Pawnshop Consulting Group is a ...
- The services are not, generally, big moneymakers for the shops. The main attraction is that they bring in traffic, and many of those shoppers go on to buy items from the pawnshop or to take out a pawn loan themselves — and that is where the stores make their money.
The basic business of pawnshops is, of course, a financial service. If a man walks in and hands over, say, a watch, the shop will lend him money based on a percentage of the item’s value. The customer has a set period of time to pay that back, usually one to four months. If he pays it back in time, and pays the interest, he gets the item back. If he does not, the pawnshop sells the item.
Pawn loans are so profitable simply because of the high interest rates pawnshops can charge. Interest rates vary by state and range from 2.5 percent to 25 percent a month, the industry group the National Pawnbrokers Association estimates. So a 30-day loan on a $150 item would give a pawnshop a profit of up to $37.50, while a four-month loan could mean a profit of $150. Pawnshops may also charge fees for things like storage and lost tickets.
Yet for many customers who have been denied credit because of checkered financial histories, an instant loan from a pawnshop can feel like something of a miracle — at least at first — consumer advocates say.
But the high interest rates can plunge borrowers already on precarious financial footing deeper into debt, consumer advocates say.
Emmett Murphy, a spokesman for the pawnbrokers’ association*), said about 85 percent of loans were paid off, and pawnbrokers would much rather see a loan repaid than deal with selling a pawned item.
- National Pawnbrokers Associationwww.nationalpawnbrokers.org/
Information about services, location of members, how to join, and contact form.Calendar of Events - Join NPA Now - NPA Staff - Member Benefit - La Familia Pawn and Jewelry, a chain based in Winter Park, Fla., that focuses on Hispanic customers, began offering bill-paying services this summer and will add Western Union and prepaid debit cards soon, mostly because customers wanted convenience, said its chief financial officer, Woody Whitcomb.
“Some customers actually asked if we could be their bank, which we can’t, because we’re not licensed to take deposits,” Mr. Whitcomb said.
La Familia charges $1.50 for each bill paid and uses the standard Western Union rates, but the point is to get customers using its much more profitable pawn loans.
“The pawn business will always be our bread and butter,” he said, “but if we can give customers other reasons to come into our stores, that will increase traffic.”
David Sanchez, 38, who lives in Hanes City, Fla., says he uses his local La Familia shop as “an interim banking system.” For money between paychecks, he regularly pawns a gold chain in return for a $100 loan for 30 days, with a $25 fee at the end — even though he has a checking account and a credit card. Now, he is paying bills and cashing checks at La Familia. “I really do not go into my bank,” Mr. Sanchez said.
Pawn America, a Minnesota chain*), has gone a step further in emulating banks: building financial centers with a separate entry that abut most of its pawnshops. Go in one way, and you can hock your ring. Enter the adjoining room, and you see “nice, private teller windows, and that’s our financial center. You’re going to be served by somebody wearing a white shirt, a tie, very professional,” said Chuck Armstrong, chief legislative officer. Our History - Pawn Americawww.pawnamerica.com/our-history/ 1995 – 1999 Pawn America expands to six more Minnesota locations in ... does NOT compare itself to other pawn stores, but to large retail chains such as BEST ...
- And its services look awfully similar. Under its Payday America operation*), customers can get a one-year line of credit of up to $1,000 without putting down an item. And this year, it introduced a platinum version of its prepaid debit card with express-lane checkout, 5 percent cash back on purchases or 5 percent extra on loans, and free check cashing.
- Payday America: Cash Advance & Payday Loanwww.paydayamerica.com/
At Payday America, we provide two easy ways to get a cash advance. You can use your checking account or have Payday America provide an account for you. - Ms. Ballard, of St. Paul, is a Pawn America customer who received the platinum card in July. She said she was initially wary*) of the industry. *)wary of = On guard; watchful: Characterized by caution
“The first time I went to a pawnshop, I looked around to see who was looking at me go in,” she said. Now, though, despite her bank checking account, she cashes her paychecks at Pawn America rather than using direct deposit. And she loves her new platinum card.
She has other financial products, she said, and, “I would give them all up but that one.” Click green for further info Source: NYT ___________________________________________________________________________________
Article 1 of 2 Article 2 of 2 next below
Smishing: A Serious Identity Theft Scheme
Click green for further info
Smishing is an identity theft scheme that involves sending consumers text messages containing a link to a fraudulent website or a phone number in an attempt to collect personal information. This scheme is becoming increasingly popular and consumers should know how to determine if they are being targeted by these criminals and how to ensure that their mobile devices are secure.
Earlier this month, the Better Business Bureau warned consumers of mishitting which has become prevalent in the age of the smartphone. Many mobile phone users keep their personal data, like bank account information, stored on their smartphones, but this information can be accessed by criminals through phishing and other scams. One example of a phishing scam is a criminal sending an alert from a bank asking the cellphone user to follow a link to verify account information, the BBB said, such as “reactivate your ATM card” by entering a PIN.
T-Mobile was also warning its customers of the scheme. Criminals could pose as T-Mobile through a text message, scamming users to enter personal information. However, the cellphone provider said it would “never ask you to ‘confirm’ or ‘verify’ your sensitive personal information in an unsolicited SMS text message,” so users should know immediately that any text message is a scam. Like the BBB, T-Mobile said users should not reply to such text messages, not click on any link in them and contact the business that the criminal is posing to represent.
Take Action, Avoid Falling For the Scam
Consumers should also send these scam text messages to 7726 (SPAM) to cellphone carriers to have the number blocked, the BBB said. If the smishing scam included the name of a bank, contact the bank to notify them of the text.
Like phishing, short message service (SMS) text messages, or “smishing,” makes consumers think their financial accounts may be compromised, and therefore they follow the fake URL or call a fraudulent phone number even if they suspect it is a scam. But identifying the scam is a consumer’s first defense from becoming a victim of the crime.
Consumers should be wary of any message that comes from “5000″ or any other number that is not a cell number, Network World reported. A message that is asking a consumer to respond quickly can be a scam, and consumers should stop and think it over before taking action. “Remember that criminals use this as a tactic to get you to do what they want,” the article stated.
More from Credit.com
- 3 Times It's Crucial to Monitor Your Credit Keep closer tabs on your credit if you are: (1) Splitting up, (2) building or rebuilding your credit, (3) Worried about identity theft
- Can You Check Your Child's Credit Report?
- 5 Things to Do Immediately If Your Identity Is Stolen Click green for further info Source: Credit.com _______________________________ Junk Mail Poses Identity Theft Risks Article 2 of 2 Article 1 of 2 next above “The nature of this crime and the effect it can have on its victims makes it even more important to shred personal information, even those papers or labels that may seem harmless,” Gottfried said. “Identity thieves have no scruples in what they can and will do. Dumpster divers truly do exist and it’s up to you to be proactive.” Junk mail: It seems like it never stops. From various credit card application forms to coupons to a local pizzeria, these pieces of mail that are often tossed straight into the trash are not only an annoyance but a threat to your personal information.
- Pre-approved credit card offers are especially dangerous, as they are an easy target for identity thieves. Criminals can steal the incoming mail and actually apply for the credit card using your information.
Cut Down on the Junk
However, U.S. consumers can opt out of receiving these applications in the mail by calling 888-5-OPTOUT. Signing up with the Do Not Call Registry is another way to protect yourself from identity theft, as unsolicited phone calls and text messages can also pose a risk to consumers.
While stopping all junk mail isn’t likely to happen, you can cut down on the number of advertisements, “free” vacation and product offers and other advertisements by registering at Dmachoice.org. This site will stop member of the Direct Marketing Association from mailing you coupons and other spam mail, the BBB reported (see BBB link at the end of this article)
Shred Before Throwing Junk Mail Away
Many consumers may not think twice about simply throwing junk mail away. But those credit card applications and other pieces of mail contain personal information, such as your address. It would be smart to shred these documents before discarding them.
“Most of the time, I walk from my mailbox directly to the recycling bin,” wrote Lisa Scottoline in a column for Philly.com. “In fact, if the mail were addressed to my recycling bin, that would save a lot of time.”
However, many advise against going straight to the trash with this mail. The Better Business Bureau of Northern Indiana recently held a “Shred it Day” to encourage local residents to shred all materials, including spam mail, that contains personal information.
Andrew Gottfried, a U.S. Postal Inspector, told Fort Wayne TV station WANE, that identity theft is a serious problem and Americans need to take the proper steps to protect against it.
“The nature of this crime and the effect it can have on its victims makes it even more important to shred personal information, even those papers or labels that may seem harmless,” Gottfried said. “Identity thieves have no scruples in what they can and will do. Dumpster divers truly do exist and it’s up to you to be proactive.”
More from Credit.com Click blue below for further info- 3 Times It's Crucial to Monitor Your Credit
- 5 Things to Do Immediately If Your Identity Is Stolen
- 4 Ways Identity Theft Can Affect Your Credit Source: credit.com BBB - United States and Canada BBB Consumer and Business Reviews ...www.bbb.org/
The Better Business Bureau of the United States and Canada offers consumers and businesses resources including business and charity reviews, complaints, ...
________________________________________________ - The 10 most easily stolen ATM & credit card PINs How safe are your debit and credit cards? Click green for further info Identity theft and fraud affect millions of Americans every year. And depending on how much thought you put into your personalized PIN, you could be at a greater risk than you realized.
So what constitutes a safe PIN number? A new study from DataGenetics lists the top 10 most-used PINs. And because they are the most commonly used PIN numbers, they are by default the least safe PINs.
According to Forbes, the United States and Mexico are home to the greatest number of credit and debit card thefts around the globe. Forty-two percent of Americans say they have suffered from some form of card fraud, a study from Aite Group and ACI Worldwide shows.
The Department of Justice says that about 10 percent of all Americans suffer from credit card fraud each year and another 7 percent have their debit cards hacked or stolen. More than $5.5 billion in theft is attributed to credit card fraud each year.
The DataGenetics study says that credit and debit card thieves are able to successfully guess more than 25 percent of stolen card PINs within 20 attempts.
And no surprise: the worst PINs are those that are overly simple or sequenced, i.e. “1234.”
WTOP notes that the best PIN numbers are those “with no special significance.” And in the case of the study, Data Genetics said the least used PIN is “8068.”
The 10 most-used PINs:- 1234
- 1111
- 0000
- 1212
- 7777
- 1004
- 2000
- 4444
- 2222
- 6969
- Monitor your financial accounts regularly in order to identify suspicious activity Victims of a data breach should re-set user credentials on an affected site and contact the companies that manage their financial accounts immediately The largest cybercrime ring ever A Russian man pleaded not guilty last week to stealing more than 160 million credit card numbers as part of the largest cybercrime ring ever prosecuted in the U.S., Reuters reported.
- Dmitriy Smilianets, along with other alleged hackers in Russia and the Ukraine, is accused of engaging in a series of attacks that cost companies more than $300 million. Companies breached include NASDAQ, JetBlue, J.C. Penney, Dow Jones, Wet Seal, 7-Eleven and Heartland Payment Systems Inc.
Smilianets, 29, of Moscow, is also accused of selling the credit card numbers — $10 for an American number, $50 for a European number, according to Reuters.
In September 2012, Smilianets was extradited to the U.S., and he entered his not-guilty plea on Aug. 12 in federal court in Newark, N.J.
He faces decades in prison if convicted: 30 years for conspiracy to commit wire fraud, 30 years for wire fraud, five years for conspiracy to gain unauthorized access to computers and five years for gaining unauthorized access to computers.
Consumers should monitor their financial accounts regularly in order to identify suspicious activity, because not only is credit card fraud a pain, it can negatively impact your credit scores. Victims of a data breach should re-set user credentials on an affected site and contact the companies that manage their financial accounts immediately.
______________________________________________
Important
legal info for every card user
What to Do If You're Sued
By Your Credit Card Company
You must act quickly - See below how
You can have part of the debt wiped off or have otherwise beneficial repayment terms “Settling quickly means you can avoid a judgment damaging your credit report.”
Important 3 lines just next below
Notice (most people do not know this): Consumer law attorneys usually (1) offer a free or low-cost consultation, and (2) may take your case at no cost to the consumer (= you) even sue your creditor since the creditor or collection agency will be required to pay your lawyer's fees if it turns out they are breaking the law
_________________________________
Click green for further info
Whether the notice comes in the mail, or is delivered to your doorstep, being told that you are being sued for a credit card debt can be terrifying. For many people, the first reaction is to shut down and ignore the situation. “The tragedy…is not that the consumer was sued but that most never respond,” says Steve Rhode, founder of GetOutofDebt.org who is also working on a research project about lawsuits filed over consumer debts.
If a debtor ignores the lawsuit, however, the creditor will get a judgment against the debtor, which in turn will provide the creditor with additional powers to collect the debt, including seizing bank accounts or garnishing wages, in some states. (Note that in this story we are talking about situations where a credit card company itself sues you – not when a debt collector sues you.)
How to react when you are sued by your credit card company depends on a number of things — including, first and foremost, whether you acknowledge that you owe the debt in question.
You Know You Owe
If you know you owe the debt and the amount is correct, there are a few different ways this can unfold.
If you can scrape together some cash – perhaps with a loan from a friend or family member, for example, then one option is to pay or settle the debt immediately. “A reduction in balance owed or beneficial repayment terms are entirely possible outcomes,” says Rhode.
But you must act quickly.
“Once sued for collection, get immediately involved in the solution,” says debt settlement expert Michael Bovee, founder of the Consumer Recovery Network. In his experience, consumers will typically have to come up with 60% – 100% of the amount owed to stop the lawsuit, though smaller settlements are possible in some situations.
If you are able to resolve the debt at this point, you must get written documentation from the creditor acknowledging your payment and stating that the lawsuit will be dropped.
This is especially true in cases where you are settling the debt for less than you owe. Otherwise, the creditor may say your settlement was a “payment” and still sue you for the balance.
“Be certain you are agreeing to a settlement that will also result in the dismissal of the lawsuit,” Bovee insists. “Settling An quickly means you can avoid a judgment damaging your credit report.”
If you know the amount is correct, but you can’t afford to pay or settle it, it’s a good idea to talk with a bankruptcy attorney to find out whether filing for bankruptcy is your best option for dealing with the debt that you can’t afford. If it turns out that bankruptcy isn’t a good option, the attorney can explain to you what may happen once there is a judgment against you.
Next, relating to a bankruptcy idea, a comment
by Dr. Christian von Chrisophers, Ph.D., N.D, D.D, STAF, Inc.'s founding President:
Notice: An old saying: "If you ask the barber if you need a haircut, the barber is going to say: "Yes, definitely you need
a haircut" (even though you may have only one hair on your head - the barber needs your money).
What do you think the bankruptcy lawyer is going to say? He is the "barber" in his/her field and needs your money.
Be careful - meet 2 - 3 different bankruptcy lawyers: male/female - not in the same office building - in a different section of your town, village, etc. - and compare.
Sleep at least one night or more, perhaps 3, over your final decision.
A bankruptcy is a BAD thing - avoid it in every possible way. There will be another solution for you - there always is, probably a much better one. Negotiate a settlement, fast, before the judgment is given - then your credit is not getting hurt. A bankruptcy hurts you 7 - 10 years (depending on the State) and even after that because most creditors, employers, banks (they might not even let you open a checking account (try a Credit Union then and perhaps anyway - Credit Unions may give you a much better deal with your checking account).
You will be asked "did you EVER file for a bankruptcy?" Notice: "did you ever file....?" - even though you may cancel your filing and not go through the bankruptcy, it will/can hurt you for the rest of your life.
If you lie in your answer, get credit, get hired, etc. and something happens that you could not avoid (sickness, unemployment, accident, etc.) you can be sued for losses because you lied - you might even be sued criminally. Better be honest - it always pays off positively. AVOID BANKRUPTCY - DO NOT DO IT.
- end of comment -
The article continues here
There Must Be Some Mistake
What if you don’t believe you owe the amount they are trying to collect? Maybe you disputed a purchase but the creditor refused to correct it. Perhaps you believe you were a victim of fraud. Or maybe your balance has just ballooned with bogus charges. Robert Brennan, a Southern California consumer law attorney, explains:
Look at the amount that is being collected and the amount that is being reported (on credit reports) as delinquent. When accounts go into collections, the collections departments frequently tack on fees, penalties and interest which do not belong there.
If you see your $2,500 balance suddenly balloon to $5,000, or higher (not uncommon), write a certified letter to the credit card company asking for a detailed accounting of the penalties, fees and interest, along with a copy of the original contract that permits the card company to charge these items for a defaulted account. Sometimes the card company will give you the info; most times they will not. If the card company cannot verify the proper amount of the debt, then it can only credit-report the amounts which it can verify, which is usually the principal-plus-interest at time of default. It may not be a big case, but consumers who fall victim to this type of false credit reporting can probably use the Fair Credit Reporting Act to pressure the card companies to at least lower the demand to the principal-plus-interest at time of default.
Fighting Back
If you think something is amiss*) – you are being harassed or the amount you owe has been inflated, for example — you may want to talk with a consumer law attorney with experience in credit and collection issues.
*) amiss = wrong - incorrect - improper - erroneous - false
William Howard, a Florida consumer protection attorney with Morgan & Morgan points out that in a few states, including Florida and California in particular, there is a “collection harassment law that allows you to sue
“Any Person” (including the original creditor or credit card issuer) directly for harassment such as: collecting one penny not owed, collecting fees they are NOT entitled to such as attorney fees or higher interest, too many calls, calling at work, etc.”
Consumer law attorneys usually offer a free or low-cost consultation, and may take your case at no cost to the consumer( = you) since the creditor or collection agency will be required to pay your lawyer's fees if it turns out they are breaking the law.
While a lawsuit for a debt isn’t something anyone wants to have to deal with, try to keep it in perspective, and focus on resolving it one way or another.
“My advice is to not look at the suit as a negative,” says Rhode. “But as a positive opportunity to negotiate with the lender to work out a solution that might be affordable and beneficial to both parties.”
AGAIN: When you face a lawsuit, always act FAST, immediately - it will help YOU and make a big, positive difference.
Click green for further info
- The First Thing You Must Do Before Paying Off Debt
- 5 Ways to Get Out of Debt: Which Will Work for You?
- 9 Ways to Turn the Tables on Debt Collectors Source: credit.com _____________________________________________________________ Article 1 of 2 Read this article & apply the info in your situation A-Must-To-Study-Article An $18 Million Lesson to Equifax, a credit reporting company, in Handling Credit Report Errors Date: August 2, 2013 Click green for further info Even after sending more than 13 letters to Equifax over the course of two years, Julie Miller could not get the big credit bureau to remove a host of errors that it inserted into her credit report. That indifference should surprise no one who has ever tried to deal with any of the three big credit reporting agencies, Equifax, TransUnion and Experian. “You feel trapped, like you are in a box,” said Ms. Miller, a 57-year-old nurse who works in a dermatologist’s office. “You have no control over this, and you can’t call them up and say, ‘You’re fired.’ ”So she tried suing. That worked. A jury in Federal District Court in Portland, Ore., last week awarded her a whopping $18.4 million in punitive damages, which, according to consumer lawyers, is the largest individual case on record.
- If you think this has taught Equifax and the other credit reporting companies a lesson, you are a lot more optimistic than close observers of the industry. They say that despite the huge judgment, little is going to change for the millions of Americans who discover errors in their credit reports.
The credit bureaus are willing to tolerate these errors — and settle with consumers out of court — as a cost of doing business, according to credit experts and lawyers who work on these cases.
“Their business model is to keep doing the same thing over and over again,” said Justin Baxter, the lead lawyer on Ms. Miller’s case. “They can buy off a number of consumers with small dollar amounts and get rid of the vast majority of cases. To Equifax, that’s the cost of doing business.”
Ms. Miller made every effort to fix her report, exactly as consumers are advised to do. She initiated the company’s dispute processabout seven times, and in most instances, Equifax would spit back a form letter saying it needed more proof of her identity. So she sent her pay stub and her phone bill. When that didn’t work, she sent her pay stub and her driver’s license. And when that failed, she sent her W-2 form and an insurance bill — at least three times.
But nothing ever changed: Ms. Miller, a model financial citizen who once had the credit score to prove it, had become mixed up with another, much less creditworthy Julie Miller. After she was denied a line of credit from KeyBank, she discovered 38 collection accounts on her credit report, none of which belonged to her, along with an inaccurate Social Security number and birth date. Her financial life was no longer her own.
Mixed files, as they are known in the credit industry, most frequently involve people who share common names with individuals who have similar Social Security numbers, birth dates or addresses. These errors are notorious for being among the most difficult to fix, credit experts said, and require human intervention to untangle the mess. But given the huge number of disputes, the process to address them is largely automated. And that is the excuse the industry advances to consumers who get stuck in its web.
The bureaus often outsource thousands of disputes daily to workers overseas. Those workers, often overwhelmed by the sheer volume of cases, are largely told to translate the problem into a two- or three-digit code that defines the gist of the problem (account not his/hers, for instance) and feed it into a computer.
But that process won’t untangle a mixed credit report. The reason files become mixed to begin with can be traced back to the computer formula the bureaus use to match credit data to a specific person’s credit report. It allows credit data, say a late payment on a credit card, to be inserted into a person’s file even if the identifying information isn’t an exact match. In other words, the system might add a late payment to the credit report of someone like Julie Miller even if the Social Security number is off by two digits or a birth date is off by two years, but enough of the other identifying information matches. That’s roughly what happened to Ms. Miller.
Partial matches aren’t always wrong, of course. Solid estimates on the number of mixed files are hard to find, though a 2004 study from the Federal Trade Commission said that partial matches occurred in about 1 to 2 percent of credit files, citing data from the bureaus. That might not sound like much, but when you consider that there are 200 million individuals with credit files at each of the big three bureaus, that translates to two million to four million consumers.
Other estimates put the number of actual mixed files at less than 0.2 percent to nearly 5 percent. The F.T.C.’s report said that mixed files were not always harmful to consumers because most credit account information was positive.
To that I say: Consumers with mixed files are supposed to take comfort in the fact that their credit report doppelgängers, on the whole, are likely to pay their bills?
There is a reason the bureaus operate this way. They would rather err on the side of including too much information in your credit report than leave information out, according to consumer lawyers and advocates. They also need to account for typos and small errors that can cause the credit agencies to leave out information — both good and bad credit behavior. Financial services firms are paying the bureaus to receive the most complete financial profile possible, even that means sacrificing a bit of accuracy. (The F.T.C.’s report said that lenders might actually prefer to see all potentially derogatory information about a potential borrower, even if it can’t all be matched with certainty.)
“The bureaus would rather accept the possibility of some mixed-file risk rather than the possibility that a debtor who owes a debt gets away with it,” said Leonard Bennett, a consumer lawyer in Newport News, Va., who said he has about 20 active mixed-file cases in any given month.
The dispute process is supposed to catch the people who fall through the cracks. But as people like Ms. Miller can attest, it doesn’t always work. The Fair Credit Reporting Act, the law that governs the big bureaus, requires the agencies to provide a reasonable investigation. Ms. Miller’s lawyer said their litigation revealed that there was no investigation at all. (It’s worth noting that Ms. Miller had problematic credit reports at the other two bureaus, but those agencies resolved the matter.)
“They testified that they get something like 10,000 disputes a day, so they don’t have the time to look at each one,” Mr. Baxter said. “Whether it is because the person has too many disputes to process or they choose not to, that is where the system falls apart.”
What else could she have possibly done? I asked the credit bureaus. Equifax declined to comment, and would only say that it was “very disappointed in the jury verdict” and was exploring its options, including an appeal. The other two agencies didn’t offer much guidance either, though TransUnion pointed out that the credit reporting industry resolved 70 percent of consumer disputes within 14 days.
Ms. Miller, however, had to endure repeated phone calls from debt collectors, who threatened to sue. She couldn’t co-sign a credit line for her son who was in his freshman year of college, and she said she put off refinancing her mortgage. It also meant that she couldn’t co-sign a car loan for her disabled brother. And plans to build a workshop on their property, which required a loan, would have to wait.
The jury’s giant award to Ms. Miller is generous and goes a long way toward compensating her for those lost opportunities. But lawyers say the initial awards are often reduced after being reviewed by the trial judge. An out-of-court settlement for the typical mixed-file case might be $50,000 to $250,000, depending on the case, while settlements for other errors may be far less.
Will Ms. Miller’s award have any lasting effect on the industry? Mr. Bennett, the consumer lawyer, is one of the optimists. “This case will change the calculus,” he said. “If they have to pay $2.5 million every time one of these folks gets to court, they might have to reconsider their procedures.”
It’s more likely, though, that the Consumer Financial Protection Bureau, which began overseeing the large credit bureaus last September, will have more impact. It has broad authority to perform on-site examinations, check records and examine how disputes are handled. Consumer advocates have long suggested that the credit agencies tighten up the way they match up data with consumers reports and strengthen the dispute process.
“Big punitive penalties may help force the bureaus to upgrade their 20th-century algorithms and incompetent dispute reinvestigation processes,” said Ed Mierzwinski, consumer program director at the United States Public Interest Research Group. “But C.F.P.B.’s authority to supervise the big credit bureaus is one of the most significant powers Congress gave it.”
Nearly every expert I spoke with conceded that Ms. Miller had few options. “She had two choices, and they both stunk,” said John Ulzheimer, a credit expert who has served as an expert witness on more than 140 credit-related lawsuits. “She could live with it, or she could hire an attorney.”
Video: How to fix mistakes on your credit report STAF, Inc.'s advice: #1 - Use a lawyer who is well familiar with the credit reporting business and in case you do not get the results and when the lawyer estimates he can help you. When you win your case the party you are suing has to pay your lawyer's fees plus the lawyer gets part of your possible settlement money Click green for further info - Source: NYT
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Article 2 of 2 (Article 1 of 2 next above) Study this article - important for every person 10 things credit bureaus won’t say They’ve got your score number. And they’re not afraid to use it Consumer advocates contend that the dispute system is broken ________________ Credit bureaus recommend that consumers check their credit reports at least once a year You can do this for free at annualcreditreport.com and file a dispute if they notice any errors - Expect ignorance and delays - use a lawyer if necessary - when the party you sue is wrong that party pays your lawyer's fees __________ Click green for further info
- 1. “We track a lot more than just your credit.”
Credit bureaus are well known for tracking consumers’ credit history, including tabulating such details as whether they pay their bills on time and how much debt they carry. And as evidenced by the recent case of Julie Miller, who was awarded $18 million after she sued Equifax — one of the three main credit reporting bureaus — for failing to correct major mistakes in her credit report, the information they compile can sometimes be riddled with errors.
But the bureaus also maintain information that has nothing to do with credit, from consumers’ home addresses to their employment records. While that data isn’t used to calculate credit scores, lenders can access this personal information and use it to help evaluate borrowers who are applying for credit — even to justify denying them a loan altogether. Individuals who change addresses often, for instance, may be presumed less financially stable and harder to track down if unpaid debts ever need to be collected, says Louis Hyman, a consumer-credit historian and assistant professor at Cornell University. Similarly, those who change jobs every few months could be viewed as more likely to miss payments, he says.
The credit bureau industry says it needs this identifying information to develop accurate credit report databases. Norm Magnuson, a spokesman for the Consumer Data Industry Association - CDIA, which represents credit bureaus, says storing consumers’ addresses helps bureaus identify the correct credit report to give lenders when a consumer applies for credit. (Questions to the three main bureaus about industry practices were directed to the CDIA.) Social Security numbers by themselves often won’t suffice, he says, because some consumers apply for credit without providing that information. He says the CDIA cannot speak to such lender underwriting practices though they are regulated by laws that protect consumers.
Consumers’ salary information can also be up for grabs. Equifax, one of the three national credit bureaus, maintains a private database of salary records on more than 33% of U.S. adults — information it acquired when it purchased a data-mining company in 2007 — and it can sell this data to eligible lenders, including mortgage and car finance companies, that are trying to gauge a consumer’s ability to repay a loan. This year, seven members of Congress sent a letter to Equifax asking for proof that its subsidiary isn’t breaking laws that protect personal privacy. (The other two major bureaus, Experian and TransUnion, say they don’t collect salary information.)
Timothy Klein, a spokesman for Equifax, says the company provides salary information only when permissible under the Fair Credit Reporting Act, which went into effect in 1970 and regulates how consumer information can be distributed. A company statement to congressional members stated that it’s in “compliance with all applicable consumer protection laws.” Also, he says, the company will only provide this data to lenders if the consumers first agree to it.
Lenders have to ask consumers for permission to verify their employment or income, typically by including language authorizing that disclosure in the loan application, says Klein. If the consumer declines, he says, it’s up to the lender to determine whether to offer a loan without income information.
2. “Selling your secrets is how we make our money.”
Each of the three major credit bureaus, Equifax, Experian andTransUnion, maintains more than 200 million files on consumers, according to the Consumer Financial Protection Bureau- CFPB — tracking about 63% of the U.S. population. And the bureaus sell some of that information to lenders. Selling data is a primary revenue source for the credit bureau industry, which had U.S. revenue of about $4 billion in 2011, according to the CFPB. Bureaus also sell data to other companies, including insurers and debt collectors, as well as to consumers, says John Ulzheimer, president of consumer education at SmartCredit.com, a credit-monitoring site.
That’s largely how credit card solicitations end up in consumers’ mailboxes. Card issuers pay credit bureaus for the contact information of individuals who meet specific criteria, like a certain minimum credit score. Similarly, mortgage lenders pay bureaus for a list of consumers within a specific credit score bracket and mortgage balance so that they can contact them with refinancing offers. Nessa Feddis, senior vice president with the American Bankers Association - ABA, says the process helps lenders find customers who are likely to be interested in and qualified for the loans they’re offering.
Video: How to fix mistakes on your credit report
STAF, Inc.'s advice: use a lawyer if you do not get results - when the party you sue is wrong that party pays your lawyer's fees
Lenders also pay the bureaus for updates on existing customers: Some card issuers will pull credit scores on their cardholders to determine if they’ve become riskier, says Ulzheimer. They can use a lower credit score as a basis for cutting a customer’s credit line or increasing their interest rate on new purchases, he says. (They can also check to see if their customers have become less risky, in which case they can make more credit available.) Feddis, of the ABA, says every transaction on a credit card represents a new loan, so lenders check on their customers to make sure they’re still eligible for revolving credit and likely to be able to repay the loan.
To be sure, the Fair Credit Reporting Act states that credit bureaus can provide consumers’ information to companies that plan to make a firm offer of credit. Magnuson of the CDIA says the credit bureaus are careful about who has access to their systems, and they vet the lenders’ intended uses of credit reports. He adds that consumers can benefit from this dissemination, because they stand to receive loan offers that are less expensive than what they may currently have. Individuals who’d like to avoid solicitations can remove their name from the lists that credit bureaus sell by visiting OptOutPrescreen.com - 3. “What we know could cost you a new job.”
Blemishes on a credit report don’t just make it tougher to get a loan — they can also make it more difficult to get a job. Federal law permits employers to pull job applicants’ credit reports and to use the information within them as grounds for not hiring someone. In fact, roughly 47% of employers say they pull credit reports on some or all job applicants, according to the Society for Human Resource Management - SHRM. If a credit background check reveals negative information, employers say, certain credit problems, such as outstanding judgments, accounts in debt collection and bankruptcy, are most likely to make them decide not to extend a job offer, according to a separate SHRM survey. The assumption is that a bad credit report might indicate poor work habits and decision-making.
Opponents of the practice question whether there’s a connection between a poor credit file and work performance. “Things that might make you have bad credit have nothing to do with whether you’re a liability,” says Hyman.
Job applicants have to be informed if their credit report will be reviewed. (At least seven states prohibit companies from conducting credit checks on many job applicants.) Under the Fair Credit Reporting Act, which regulates how consumer credit information is handled, companies must get permission from applicants in writing to check their credit reports. While applicants can deny the employer permission, they might want to consider instead explaining the circumstances that led to their credit problems, says Ulzheimer, since that may improve their chance of getting the job.
4. “Good thing no one’s reporting on our mistakes. Oh, wait.”
When errors appear in credit reports, the impact on those borrowers can be severe. Negative information, like missed payments or a foreclosure, can send the borrower’s credit score (which is calculated based on the details in the credit report) into a tailspin. That, in turn, will make it harder to get approved for credit, increase the chances of ending up with higher interest rates on loans, and even make it tougher to rent an apartment (many landlords check consumer credit) or, again, get a job.
This month, the Federal Trade Commission - FTC released a study showing that one in five consumers has an error in at least one of their three credit reports. Some 13% of consumers had credit report errors that impacted their credit scores, while 5% had errors that could lead to paying more or being denied credit.
A variety of mishaps can lead to errors — most of which consumers have no involvement in. That includes cases of identity theft and instances when creditors identify the wrong person as owning debt, like the account holder’s spouse, according to testimony by the National Consumer Law Center at a Senate hearing in December. That same month, a report by the CFPB found that almost 40% of consumers’ disputes relate to debt collections.
The credit bureau industry, however, says the FTC data confirms that few errors of consequence occur. The CDIA’s Magnuson says the bureaus work with lenders to reduce errors, and that in most cases, consumers aren’t disputing that an account is theirs but rather have an issue with how their lender is reporting an account, such as the balance or whether they missed a payment. 5. “You all look so much alike… ”When consumers order their credit reports, they have to provide their full name, Social Security number, date of birth and address. But credit bureaus often use fewer pieces of information to match account activity — like a report from a lender that a person has applied for a new line of credit — to borrowers’ credit reports. In many cases, they’ll only use seven out of the nine digits of the borrower’s Social Security number, says Chi Chi Wu, a staff attorney with the National Consumer Law Center, a nonprofit focused on consumer advocacy.
This practice becomes problematic when people have similar names and Social Security numbers, because it can lead to “mixed credit profiles,” when credit information relating to one consumer is placed in someone else’s file (also the main issue behind the $18 million lawsuit filed against Equifax). Critics claim the bureaus have been aware of this issue for years. In the 1990s, the FTC began requiring the bureaus to take better steps to prevent mixed files. But mixed files are an ongoing problem, says Ulzheimer. This includes “ownership” disputes, like when a debt collector attributes an account to the wrong borrower. In the last three months of 2011, 33% of credit disputes related to claims by a consumer that an account in their file did not belong to them, either because of an error or identity theft, according to the CFPB.
If the erroneously-applied information in the credit report is negative, of course, that will result in a lower credit score for the person whose actual name is on that file. “It’s one of the worst types of errors that can occur,” says Wu.
Magnuson says the credit bureaus are careful in matching data. He adds that a 100% match wouldn’t solve such concerns and says it would force bureaus to omit account activity from credit reports whenever there’s a small mistake in, say, the last two digits of a Social Security number, even if most of the identifying information is correct.
6. “… it’s tough to tell you apart from someone pretending to be you.”
In many cases, consumers only find out they’re victims of identity theft when they pull up their credit report and spot a fraudulent account, says Jay Foley, partner at identity-theft consulting firm ID Theft Info Source. In fact, identity theft is a cause of credit disputes, according to the CFPB.
While lenders have mechanisms in place to stop identity thieves, they’re not always successful. In those cases, when thieves apply for credit under a consumer’s name, the lender pulls that unsuspecting person’s credit report, tells the credit bureaus to add the loan account to that report, and then communicates missed payments to the bureaus, tarnishing the credit score tied to that account. Then, when consumers find out they’ve been a victim of identity theft — rather than the burden of proof being on the credit agency or lender — they have to provide the credit bureaus with evidence of their innocence.
Consumer advocates say the credit bureaus share some of the blame for these cases. Wu, of the NCLC, says the bureaus’ loose matching procedures contributes to identity theft problems. If bureaus matched all the information, including the person’s full name and full Social Security number, fewer identity thefts would occur, she says. The credit bureau industry disagrees, saying that the duty to verify someone’s identity is with the lender. The CDIA’s Magnuson says that credit bureaus have identity verification systems to protect consumers and that bureaus’ databases are not the entry point for identity theft or the sole source for its prevention.
Consumers can take some steps to avoid becoming victims of identity theft. For instance, they can place fraud alerts on their credit reports for free by contacting the credit bureaus. Lenders will then have to try to verify an applicant’s identity before issuing credit. Many banks also sell identity-theft services — costs can run $10 or more a month — that mostly involve daily credit monitoring, including flagging new accounts opened in a consumer’s name and sending alerts to that individual.
Consumers who learn a fraudulent account has been opened in their name should consider filing a police report and sending a letter with a copy of that report to the credit bureau and the lender who approved that account. In such cases, lenders will usually get fraudulent accounts removed from a credit report within 90 days, says Foley. 7. “Your ‘credit dispute’ doesn’t quite capture our attention. ”Credit bureaus recommend that consumers check their credit reports at least once a year- (you can do this for free at annualcreditreport.com) and file a dispute if they notice any errors But consumer advocates contend that the dispute system is broken No matter how many papers and other documentation consumers submit to the bureaus, the bureau will apply a two- or three-digit code that offers a brief summary of the dispute, such as “not his/hers” or “disputes amounts,” according to the NCLC. The bureaus will send that code and a one-page form to the creditor involved in the dispute. “We’ve seen [court] cases where the consumer attached canceled checks, letters from [lenders], and court judgments saying this is wrong and none of that gets sent,” says Wu. (The CDIA says it’s in the early testing stages of sending consumers’ documentation to lenders.)
A CFPB report found that the bureaus resolve an average of only 15% of consumer disputes internally, while the remaining 85% are passed on to the lenders or creditors. It added that “the documentation consumers mail in to support their cases may not be getting passed on to the data furnishers for them to properly investigate.”
Magnuson of the CDIA says that lenders are the most qualified to respond to questions of accuracy and that the dispute system is designed to “quickly and accurately deal with consumer disputes, which is what consumers want.” He says the bureaus serve as a point of contact for consumers and act as a clearinghouse for access to lenders who will make the final determination.
But experts say when lenders are forwarded consumers’ discrepancy claims, some will just review their own records with the bureau’s to make sure they match — though both could be wrong. Wu says lenders will use this as a basis to reject the consumer’s claim. The American Bankers Association says lenders conduct investigations but that how deep they go depends on the nature of the consumer’s dispute.
8. “But bypass us on a dispute, and it’ll cost you.”
If consumers believe a credit bureau wrongly dismissed their dispute, they have the right to take the case to court based on the Fair Credit Reporting Act. But if consumers bypass the bureaus and contact the lender with their dispute, they won’t have the right to go to court if that lender claims there’s no error. The CDIA says that while writing the law, Congress recognized that exposing lenders to such lawsuits could result in an unintended consequence: Lenders might stop providing credit-related data about consumers to credit bureaus, which in turn would harm consumers whose reports and scores wouldn’t reflect that they pay their bills on time and are in good credit standing.
Ulzheimer says the law leaves consumers in a difficult spot but recommends that they stick to dealing with the bureaus so that they don’t give up their legal right to a court case should they need it. He suggests they keep all their communications with the bureaus in writing and make copies of all the letters they receive and documentation they submit. That will help them build evidence in case they need it in court 9. “By the time you’re done fighting us, your toddler could be a teen. ”Upon receiving a consumer’s dispute, credit bureaus legally have between 30 and 45 days to respond with their findings. But if the bureau, following the lender’s investigation, doesn’t agree that there’s an error, borrowers can be stuck fighting that decision for years. The NCLC, for instance, says it has worked with attorneys representing consumers who were trying to resolve such issues in court for up to 10 years. The CDIA, for its part, cites a 2011 credit-industry-funded study by the nonprofit Policy and Economic Research Council, which works on public and economic policy matters, which found that 95% of consumers are satisfied with the result of their disputes.
Consumer advocates contend there are few options for consumers, and they often require waiting to recover their true credit history for many years. Individuals who decide not to fight the bureaus will be stuck with the error for seven to 10 years — that’s the amount of time it takes for negative credit events, such as bankruptcies and foreclosures, to be automatically removed from a credit report. 10. “Be careful what you pay for. ”For a price ranging from $7 to $20, credit bureaus and other companies will sell consumers their credit score. But in some cases, consumers are paying to see an “educational score” — one that’s based on their credit activity and can give them an idea of where they stand as borrowers — rather than the actual score a lender will see when reviewing their loan application.
One out of five consumers who purchase their credit score will likely receive a score that is “meaningfully different” than the one a lender would get, according to a CFPB study released in September. As a result, the CFPB says, they may end up with loan terms that are different from what they expected, and they could waste time applying for a loan that they’re not qualified for. The CDIA, which represents the credit bureaus, says that no single score is used by all lenders and that as an educational tool, credit scores can help consumers better understand their creditworthiness relative to others.
While consumers tend to think of one credit score, there are actually many different types of scores, each with its own mix of payment history, debt and other factors, which the bureaus are selling. Equifax, Experian and TransUnion each have at least one score of their own, and then there’s also the so-called VantageScore, which was created by the three bureaus. Though lenders have access to many scores, the FICO score — a measure of credit risk that ranges from 300 to 850 and is calculated based on the data in credit reports from the three major credit bureaus — remains the most widely used in 90% of consumer and mortgage loan decisions, according to CEB TowerGroup, a financial services research firm. Consumers can purchase their FICO score on MyFico.com, FICO’s consumer division. Click green for further info
Source: MarketWatch _____________________________________________________
What to Say to Pesky Debt Collectors
pesky - annoying - bothersome
You have the right to tell debt collectors to stop contacting you altogether
Doing so doesn't nullify the debt, but it can stop real or perceived harassment
Very important information below
If you've ever been the target of persistent debt collectors, then you know how intimidating the calls can be. They often come at inconvenient times (even though they aren't supposed to) and keep coming until they reach their intended target and achieve their goal of collecting funds.
The Consumer Financial Protection Bureau (CFPB ), which is charged with overseeing consumer financial products and services, has set those debt collectors in their sights. The bureau just released two bulletins for the industry, reminding debt collectors to avoid misleading consumers about how paying off debts will impact their credit worthiness, credit reports and credit scores.
The bureau also started accepting complaints about debt collection problems from consumers in 2013. After receiving a complaint, the bureau asks companies to respond within 15 days with the intention of resolving the problem within 60 days. (The Federal Trade Commission has also focused on debt collection recently, with a $3.2 million penalty against Expert Global Solutions, a debt collection agency, for harassing people.)
Click: How to Make a Financial Comeback
To help consumers interact with debt collectors directly, the bureau (= The Consumer Financial Protection Bureau (CFPB ) has released new tools: Fill-in-the-blank letter templates designed to help get pesky debt collectors off your back. The templates can be customized, and they include examples telling the debt collector to stop all communication and one directing the debt collector to go directly through a lawyer.
CFPB reminds consumers that they have the right to tell debt collectors to stop contacting them altogether. Doing so doesn't nullify the debt, but it can stop real or perceived harassment.
"Dear debt collector," one template begins. "I am responding to your contact about a debt you are attempting to collect. You contacted me by [phone/mail], on [date]. You identified the debt as [any information they gave you about the debt]. Please stop all communication with me and with this address about this debt." The letter continues with more language disputing the debt.
Click: Is Financial Education Worth the Cost?
Such templates, though relatively straightforward, can be helpful to consumers, who are often overwhelmed and confused by debt collectors' phone calls.
Gerri Detweiler, credit expert and author of "Debt Collection Answers: How to Use Debt Collection Law to Protect Your Rights," also recommends these tips:
-- Never admit that you owe the debt or agree to pay the debt without first getting written proof that you actually owe it.
-- Never give the debt collector any personal information about bank accounts, your employment situation or assets.
-- Never be tricked into thinking the debt collector is your friend. Sometimes debt collectors act friendly to get consumers to tell them things they shouldn't.
-- Always maintain good records of all of your interactions with the debt collector, including letters and phone calls.
Click: Your Credit Score Will Soon Get More Scrutiny
The CFPB (= The Consumer Financial Protection Bureau)
is poised to take on more financial topics in the coming months.
CFPB's head, Richard Cordray, was confirmed for a five-year term in July 2013, which gives the bureau more leadership stability as it tackles more financial services issues on behalf of consumers. Last year, it started supervising consumer reporting agencies, which collect information on consumers' credit worthiness. It's currently accepting consumer complaints related to student loans, vehicle or consumer loans, mortgages, money transfers, bank accounts and credit cards, in addition to debt collection and credit reporting.
The bureau's goals, according to its strategic plan, include preventing financial harm, promoting good practices, spreading information about consumer markets and behavior, and empowering consumers "to live better financial lives."
Click: CFPB > Consumer Financial Protection Bureau www.consumerfinance.gov/
Our vision is a consumer finance market place that works for American consumers, responsible providers, and the economy as a whole.
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Source: US News & World Report _______________________________________________________________________________________
For you & for every person nation/worldwide
5 Financial Corners
You Should Never Cut
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We’re always looking for ways to save money and stretch our dollars to their fullest potential. There is plenty of advice out there on where to cut corners, but sometimes it’s actually better to bite the bullet and fork over the extra cash now to save in the long run. Some expenses are annoying, but are solid investments in our future.
So the idiom goes: penny wise and pound foolish. Here are five financial corners you should never cut.
1. Insurance
Insurance is an important financial safeguard against accidents. First, auto insurance is important because car accidents can cause expensive automobile damage and physical injuries. If you cause a 10-car pile-up without insurance, your bill for property damage and medical injuries could force a bankruptcy. Paying the insurance premium is much cheaper than just banking on your driving skills and hoping for an accident-free life.
Click: Personal Budgeting Tips
Second, health insurance works the same way. Medical bills can quickly add up and lead to significant debt, which is why it’s important to have coverage before you get sick. Additionally, health insurance actually promotes good health habits because you’re more likely to go to the doctor for routine checkups. Third, home insurance will cover the cost of damage to your house and belongings in the event of a natural disaster or accident, like a pipe bursting in the winter. You should get the gist*): By surrendering the money now, you will pay far less later.
*) The substance or essence of a speech or text: "she noted the gist of each message".
2. Medical Care
Poor or deferred medical care is like gambling with your life. The United States has some of the best hospitals and doctors in the world, so take advantage of these resources. Competent doctors are able to provide thorough screening during checkups, catch illnesses and diseases before they become life threatening, and monitor your overall health. Poor medical care can even be more expensive for two reasons. First, you could be misdiagnosed, which racks up expensive and unnecessary bills. Second, an unqualified physician could overlook a warning sign about a health concern, which could cost you your life. Next time you look to WebMD for quick medical answers, pick up the phone and call your doctor. Even if it’s minor, it’s worth the time and copay.
5 Ways to Increase Your Income
3. Credit Card Bills
Credit card responsibility is an important personal finance lesson that can be learned the hard way by incurring overwhelming debt. To avoid the stress of debt, pay your credit card bill in full each month. If you decide to just pay the minimum, you will be slammed with exorbitant interest charges. Additionally, missing credit card payments will negatively impact your credit score, which will make it more difficult to obtain loans to buy a home or car in the future. Your credit card bill is in your control, so always spend within your means. Even if it means not charging an extravagant dinner now, you’ll be thankful later.
4. Retirement Savings
We all dream of someday not working the 9-5 Monday through Friday grind, instead enjoying leisurely mornings filled with coffee and newspapers and stress free evenings of relaxation. So when retirement rolls around, you should be financially prepared so you don’t have to move in with your children. This means it’s important to put money away now for the future. Many companies offer 401k programs. However, you can supplement this with an IRA or Roth IRA for extra savings. Financial advisors recommend saving 10 percent to 15 percent of your income each year and the earlier you start the better. Even if you can really use the extra cash now, try to minimize other expenses so you can afford to retire at a time that you choose.
Click: 4 Financial Mistakes You Make in the Summer
5. Your Mattress
The National Sleep Foundation recommends seven to nine hours of sleep per night for adults, which is approximately one-third of your life. If you’re a self-proclaimed “I only need 5 hours of sleep” type of person, those better be the best five hours of sleep you’ve ever slept so that you don’t crash later in the day. So, don’t be stingy about buying a mattress. Bad mattresses cause back, neck, and shoulder pain and sleep deprivation. According to a study conducted in 2008 by The Better Sleep Council, sleep deprivation also causes memory problems, decreased productivity, and poor judgment. It’s okay to indulge yourself in a luxurious mattress because after all, it’ll pay for itself.
Click green for further info
5 Financial Corners
You Should Never Cut
Click green for further info
We’re always looking for ways to save money and stretch our dollars to their fullest potential. There is plenty of advice out there on where to cut corners, but sometimes it’s actually better to bite the bullet and fork over the extra cash now to save in the long run. Some expenses are annoying, but are solid investments in our future.
So the idiom goes: penny wise and pound foolish. Here are five financial corners you should never cut.
1. Insurance
Insurance is an important financial safeguard against accidents. First, auto insurance is important because car accidents can cause expensive automobile damage and physical injuries. If you cause a 10-car pile-up without insurance, your bill for property damage and medical injuries could force a bankruptcy. Paying the insurance premium is much cheaper than just banking on your driving skills and hoping for an accident-free life.
Click: Personal Budgeting Tips
Second, health insurance works the same way. Medical bills can quickly add up and lead to significant debt, which is why it’s important to have coverage before you get sick. Additionally, health insurance actually promotes good health habits because you’re more likely to go to the doctor for routine checkups. Third, home insurance will cover the cost of damage to your house and belongings in the event of a natural disaster or accident, like a pipe bursting in the winter. You should get the gist*): By surrendering the money now, you will pay far less later.
*) The substance or essence of a speech or text: "she noted the gist of each message".
2. Medical Care
Poor or deferred medical care is like gambling with your life. The United States has some of the best hospitals and doctors in the world, so take advantage of these resources. Competent doctors are able to provide thorough screening during checkups, catch illnesses and diseases before they become life threatening, and monitor your overall health. Poor medical care can even be more expensive for two reasons. First, you could be misdiagnosed, which racks up expensive and unnecessary bills. Second, an unqualified physician could overlook a warning sign about a health concern, which could cost you your life. Next time you look to WebMD for quick medical answers, pick up the phone and call your doctor. Even if it’s minor, it’s worth the time and copay.
5 Ways to Increase Your Income
3. Credit Card Bills
Credit card responsibility is an important personal finance lesson that can be learned the hard way by incurring overwhelming debt. To avoid the stress of debt, pay your credit card bill in full each month. If you decide to just pay the minimum, you will be slammed with exorbitant interest charges. Additionally, missing credit card payments will negatively impact your credit score, which will make it more difficult to obtain loans to buy a home or car in the future. Your credit card bill is in your control, so always spend within your means. Even if it means not charging an extravagant dinner now, you’ll be thankful later.
4. Retirement Savings
We all dream of someday not working the 9-5 Monday through Friday grind, instead enjoying leisurely mornings filled with coffee and newspapers and stress free evenings of relaxation. So when retirement rolls around, you should be financially prepared so you don’t have to move in with your children. This means it’s important to put money away now for the future. Many companies offer 401k programs. However, you can supplement this with an IRA or Roth IRA for extra savings. Financial advisors recommend saving 10 percent to 15 percent of your income each year and the earlier you start the better. Even if you can really use the extra cash now, try to minimize other expenses so you can afford to retire at a time that you choose.
Click: 4 Financial Mistakes You Make in the Summer
5. Your Mattress
The National Sleep Foundation recommends seven to nine hours of sleep per night for adults, which is approximately one-third of your life. If you’re a self-proclaimed “I only need 5 hours of sleep” type of person, those better be the best five hours of sleep you’ve ever slept so that you don’t crash later in the day. So, don’t be stingy about buying a mattress. Bad mattresses cause back, neck, and shoulder pain and sleep deprivation. According to a study conducted in 2008 by The Better Sleep Council, sleep deprivation also causes memory problems, decreased productivity, and poor judgment. It’s okay to indulge yourself in a luxurious mattress because after all, it’ll pay for itself.
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- 10 Steps to a Financially Organized Life
- 11 Financial Lessons to Avoid Learning the Hard Way
- Financial Tracking & Budgeting Tips
- Personal Budgeting Tips Source: Manilla.com ________________________________
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- On Wall Street, business as usual thrives on investor ignorance - It is not in its interest to have more astute (= sharp) clients “Never give a sucker an even break or smarten up a chump" — W.C. Fields in You Can’t Cheat an Honest Man
Click: Timelessness of W.C. Fields' Art and Humorwww.wcfields.com
- Here are 10 ways to see if you’ve been suckered into becoming a Wall Street chump.
- You’re a chump if you believe that there is an investment that yields high returns with little or no risk. The astonishing amount of money lost in financial scams is often the result of suckers believing promises of unrealistically high performance in investments that they don’t understand.
- You’re a chump if you’ve been fooled into believing that your financial success depends upon finding a smart money manager or guru who knows what lies ahead in the capital markets. Don’t be suckered into mistaking predictions for insight. Wall Street’s fortunetellers have exchanged their crystal balls for charts and graphs and call themselves economic analysts. It’s easy for them to proclaim certainty in an uncertain world when they have no skin in the game. The future is unpredictable. Anyone who makes predictions is a fool and anyone who listens to them is a sucker.
- You’re a chump if you don’t understand that Wall Street gets rich at your expense. In 1940, Fred Schwed wrote the book “Where are the Customer’s Yachts?” This investment classic captures the essence of how Wall Street transfers dollars from customers’ pockets to their own. It should be required reading for all investors.
- You’re a chump if you’re searching for mutual fund managers who consistently outperform their peers. S&P has just released its semiannual Persistence Scorecard which tracked the subsequent performance of top-half mutual funds over the three and five year periods ending March 31. The number of funds that maintained top half performance over three and five consecutive 12-month periods is below what we would expect from random chance alone. The obligatory disclaimer “past performance is no guarantee of future results” appears in every mutual fund advertisement, just below the chart that boasts about the fund’s past performance. Past performance can be used to compare the relative risk between two different investments but don’t be suckered into believing that you can buy yesterday’s performance.
- You’re a chump if you think that “I want the highest rate of return possible” is a legitimate financial goal. “I want to retire at 65 at my current standard of living, inflation adjusted for a 25 year retirement” is a legitimate goal because it has a calculable dollar value and a target date.
- Only a sucker believes that active managers add value over the long term. According toS&P, 75% of large-cap domestic stock mutual funds, 90% of midcap funds and 83% of small-cap funds under performed their benchmark S&P index for the five years ending Dec. 31, 2012. Rather than adding value, most managers subtracted value. By owning a portfolio of tax efficient, low turnover, low cost index funds you’ll receive 99.8% of the returns of the stock and bond markets and remove the fruitless task of manager chasing from your to-do list.
- You’re a chump if you believe that you can be a successful stock picker. It is virtually impossible for any investor to identify undervalued stocks, no matter what the E-Trade baby says. Owning individual stocks adds unnecessary individual company risk to a portfolio. You’re a sucker if you believe that your financial adviser can do what most professional money managers cannot do — find stocks that will outperform the market.
- You’re a chump if you use the words investment and short-term gain in the same sentence. Wall Street’s mouthpieces offer endless stock recommendations and short-term market outlooks. Having a comprehensive and comprehensible investment strategy, one that is based on academic research and focused on the long-term is more important than anyone’s investment outlook.
- You’re a chump if you accept specific, personal financial advice from someone who doesn’t know your financial goals, risk tolerance, insurance needs, employee benefits or tax bracket. An impersonal relationship with an adviser who creates a portfolio containing a hodgepodge of mutual funds and investment products isn’t financial planning –- it is retailing.
- Wall Street is about to give you a new opportunity to become a chump. The same week that Bloomberg Businessweek had a cover story exposing hedge funds as one of the most over promising and under delivering investments of recent times, the SEC eliminated its long-standing ban on hedge fund advertising. Soon, you’ll be offered the opportunity to lose money hand over fist just like the superrich. Forewarned is forearmed.
Be it resolved — chumps no more from this day forward. ________________________________________ - You’re a chump if you believe that there is an investment that yields high returns with little or no risk. The astonishing amount of money lost in financial scams is often the result of suckers believing promises of unrealistically high performance in investments that they don’t understand.
- Source: GeorgeGeorge Sisti
- About GeorgeGeorge Sisti, CFP, is a certified financial planner practitioner and the founder of On Course Financial Planning, a fee-only Registered Investment Advisor firm. George graduated with a BS in Mathematics from the State University of New York at Stony Brook in 1971. After graduation, he served 6 years as a pilot in the United States Air Force, based at McChord AFB, WA. Since 1978, he has been a pilot for a legacy US airline. George established On Course Financial Planning in 2004 to help families gain the peace of mind that comes from knowing that they will be able to retire at the time of their choosing and not have to worry about running out of money in retirement. He has been a member of the Financial Planning Association since 2004. He can be contacted through his website: oncoursefp.com
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The Future of Credit Cards
Date: May 2013
At a recent conference devoted to travel and credit card rewards, executives from Chase, Barclaycard, US Bank, Capital One and American Express were on hand to share their views on the future of credit cards — and there was a broad consensus on where the industry is going in the next few years.
Here are four of the biggest credit card trends on the horizon that emerged from the discussion:
1. Banks are leveraging Big Data. When you think about it, credit card issuers don’t just collect money, they also collect massive amounts of data. They know who you are, how much money you make, and where you spend it. The next step is for them to provide offers that are directly relevant to customers. Think of the way that your grocery store uses a loyalty program to track your spending and offer you coupons at checkout, but then imagine that model extended across multiple merchants. That is what is implied by Big Data.
2. Card issuers will capitalize on mobile devices. Closely tied to their push to capitalize on their data, banks see a future where they can present these offers to their customers in real time. By combining location information and spending data, banks can present customers offers that they can act on when away from their computers. The question then becomes, will cardholders value these offers, or find them to be a nuisance? Banks are betting that the more relevant they are, the less of an issue they will be.
Banks also hope to offer cardholders not just deals and offers, but valuable information to help them manage their spending. In a follow-up interview I had with Shane Holdaway, Managing Vice President of US Cards for Capital One, he described a future where his bank would offer information to consumers about how they spend, and how to spend smarter. In his vision, your credit card becomes a budgeting tool rather than just a method of payment and finance.
3. Banks will offer more products to the unbanked and underbanked. Do you know any adult who does not have a bank account? The FDIC Household Survey concluded that 8.2% of U.S. households are unbanked (meaning they don’t have a checking or savings account), and more than 20% are underbanked (meaning they have a checking or savings account, but use non-bank means of credit, like payday loans) — and those numbers are growing. Sonali Chakravorti, Vice President of Membership Benefits for American Express, stated that in partnering with Walmart on the BlueBird prepaid card, American Express was looking at the next generation of customers who don’t even want a bank account. While it remains to be seen, the next generation might find bank accounts as relevant as land lines, compact discs, and print publications.
4. Expect less junk mail, but more social media marketing. Matthew Massaua, Senior Director US Card for Barclaycard, made the point that credit card marketing is changing to meet the times. According to Massaua, social media marketing of credit cards is growing while direct mail marketing is starting to decline. In fact, Barclaycard has lead the way in integrating social media with its credit card products by introducing its innovative Ring card .
David Gold, General Manger of Partnerships for Chase Card Services, highlighted the importance of new media to the credit card industry. In fact, he noted that he wakes up every day worried about what will be written online about his products by bloggers who focus on how many cents they can get out of of each point. Others on the panel also admitted following blogs and other online outlets closely. So when you read a site like this, you can be sure that the banks are listening, too.
The industry will undergo an evolution, not a revolution
Change is coming, but it won’t be overwhelming. When asked about the pace of change in the industry during the next two years, four of the five panelists characterized the industry as going through more of an evolution than a revolution. Only Bob Daly, Senior Vice President of US Bank, would hint at some major change his bank could introduce within the next two years. Whether he was trying to out-psych his competitors, or he has something extraordinary up his sleeve, only time will tell!
It was interesting, and educational, to hear credit card industry executives share their thoughts on the future. By understanding where credit cards are going, you won’t be surprised when you get there.
Consumers trying to cut their debt obligations may want to first focus on reducing their credit card balances , which tend to carry far higher interest rates than other types of loans. They therefore can more quickly add to their balances if these debts are not addressed.
More from Credit.com
Click the following links - good information (if the link has expired, search the web with the title)
- The Simplest Credit Cards in America
- What Not to Do With Your Credit Card Rewards _____________________________________
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Prepaid cards are no longer for subprime customers. New, largely fee-free structures make them the choice for those looking for an alternative to a traditional bank account, as well as those who don't want to risk running up a balance on a credit card.
What was once a relatively simple business model in which banks took deposits and used those deposits to generate income is mostly gone. The friendly community bank where you knew the tellers by name aren't the same institutions anymore.
A study on prepaid cards by creditcardmenu.com highlights the fee-for-everything banking model that consumers hate, as well as their battle with debt where banks are doing little to help.
The new role of prepaid cards
Prepaid cards are taking on a new role as more consumers look for alternatives to the traditional bank account. These cards, the fastest-growing payment type, no longer serve only consumers with damaged credit. Because that was once the target market, these cards often charged high fees and came with terms that made them unpopular with consumer finance experts.
That has changed. To attract customers who would log a larger number of transactions, these cards now come with few or no fees and features that rival the best of debit and credit cards.
Prepaid cards introduced in the past year look and feel a lot like credit cards without the risk of amassing debt. Some even have bill-pay features and direct deposit so they can easily take the place of a savings account and debit card.
Who can benefit?
The report highlights three types of people who can benefit from prepaid cards:
- Those who tend to build up large monthly bank fees from ATM withdrawals, service fees and over-the- limit fees.
- Consumers who don't want to risk overspending with a credit card.
- Parents who want to teach their children basic financial literacy while providing an alternative to cash.
How to pick a prepaid card
Like any credit card product, do a side-by-side comparison of the numerous cards on the market. Since the interest rate isn't a consideration, review the fee structure. Because the best cards have few or no fees, don't consider any card that is fee-laden. The report lists four cards that have no monthly fee and numerous benefits.
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Source: credit.com
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The Benefits and Pitfalls
of Sharing a Credit Card
Important info - for every person with credit cards
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Is adding another person, or "authorized user," to your credit card account a smart financial move? There are advantages and pitfalls - and not necessarily a right answer for every person faced with such a decision.
On one hand, it can help a young person or someone lacking credit to begin building a good credit profile. On the other hand, there's a chance the authorized user will not be as responsible as you'd like, and can ruin your personal credit profile.
Understanding how credit card issuers handle authorized user accounts can address these concerns. With the proper steps, you can protect your credit profile while also helping others improve their credit.
What shows up on an authorized user's credit report?
Many consumers know that adding another user will help build credit, but they don't know how it will appear on an authorized user's credit report.
Normally, a credit card company will report the total credit limit of the account on the authorized user's credit reports. However, these are not individual credit limits - they are shared between the primary cardholder and all authorized users - and the account balance is reported the same way for everyone on the account.
For example, if there is a $5,000 balance on an account with a $10,000 credit limit, this is what will show up on the credit reports for you and secondary users, regardless of who contributed to that balance.
Therefore, any late payments or defaults recorded on the credit card account will be reported for everyone and have a negative impact on their credit scores.
How spending limits make a big difference.
Many credit card issuers allow primary cardholders to establish spending limits on each authorized user account. Taking the time to set such spending limits will go a long way to safeguarding your pristine credit history from being tarnished by an authorized user.
For example, if you put a $1,000 spending limit on an authorized user, his or her card can only charge up to that amount, even if the total credit limit on the account is $10,000. But the way the account balance is reported to credit bureaus will not change. It's possible a balance greater than the spending limit will be recorded on an authorized user's credit report.
In the event the primary cardholder racks up a high balance, the credit profile of authorized users will suffer as well because the credit limit is shared. So if your balance is $9,500 on a credit line of $10,000, the other user won't be able to spend more than $500, even if you set a spending limit of $1,000 for him or her.
With the ability to set spending limits, primary cardholders may be more comfortable with adding an authorized user. If anything, authorized users may be worried that primary cardholders will overspend and thereby reduce their limit.
The effects of closing an authorized user account.
After the credit profile of an authorized user is capable of standing on its own, it may be time to consider closing the authorized user account.
When the closure occurs, the account will be marked "paid as agreed," and no further data will be reported to credit bureaus. Note, however, that some banks may completely wipe out the account. In this case, it would be wise for authorized users to open their own credit card account before closing their authorized user account.
Unfortunately, the former authorized user will experience a dip in his or her credit scores because they've lost access to that old credit line, which is factored into the credit score formula.
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Source: credit.com
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It’s Time for High Schools to Teach Kids
How to Manage Money,
& Marriage, Family, Child Rearing, Correct Nutrition, Investments topics
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Growing up, students are told by their teachers, elected officials, and parents that without a college degree, they will be stuck working in low-end clerical or service jobs with minimal compensation.
The school of their dreams is, however, happy to provide some assistance. So after diligently completing a financial aid form (FAFSA)*), high school seniors realize they can borrow their way to a college degree with no payments due until after graduation.
*) FAFSA = The Free Application for Federal Student Aid (known as the FAFSA) is a form that can be prepared annually by current and prospective...en.wikipedia.org/wiki/FAFSA
At the age of 18, you can sign a contract, serve in the military, vote, and obligate yourself to tens of thousands of dollars in student loan debt; yet you don’t have to demonstrate competence in basic banking, check book balancing, investments or compound interest to graduate from high school.
Politicians decry predatory behavior on the part of credit card companies, but is easy access to a government student loan package any less predatory? At least credit card debt can be discharged in bankruptcy.
Every high school has graduation requirements that are meant to set kids up for the next stage of their lives. To get a diploma, most kids need to pass physical education, math, science, foreign language, U.S. history, English, and social studies classes.
Sadly, very few schools have any meaningful personal finance requirement. The classes offered rarely prepare student on how to evaluate a school’s financial aid package or help them determine whether that pricey four-year college is really worth the time and expense.
There are some striking similarities between the current student loan situation and the recent mortgage and housing debacle. In both cases, the federal government has encouraged, through lax regulation and generous terms, significant borrowing on the part of individuals who are poorly prepared to understand the consequences of their decisions.
The result in both cases has been rampant increases in the cost of the pursued object. It remains to be seen whether the current student loan situation will present a similar drag on the economy as the mortgage and housing crisis once did.
It does seem fair to say that someone burdened with student loan debt won’t be qualifying for a mortgage anytime soon.
The common thread to both of these issues is the stunning lack of financial literacy amongst the population—especially graduating high school students.
At around $1.1 trillion, student debt now exceeds auto loans and credit cards as the largest source of household debt, not including home mortgages. Rather than have Congress discuss ways to reduce the cost of these loans, perhaps it might be wiser to let the market determine the cost.
Maybe the borrower should be required to present a business plan to the lender, including the degree sought, the expectation of employment, and the expected time frame of repayment. The lender can then respond with a yes or no, with an interest rate appropriate to the “risk” involved to the lender, which is not unlike any other loan.
High schools need to step up and realize that financial literacy is a critical skill in today’s economy.
Todd Freeman, CFP.ChFC,AIF is a registered representative with Cambridge Investment Research, Inc., a broker dealer, member FINRA/SIPC. The subject matter and opinions in this article are those of Todd Freeman and are not those of Cambridge. Cambridge and TakePart are not affiliated.
Related stories:
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- Should Student Loan Documents Come With Warning Labels?
- Is the Government Making Billions Off of Student Loans?
- Can Millennials Make Student Loans a 2014 Campaign Issue?
- This Is Why We Can’t Let Student Loan Interest Rates Double on July 1st
- Federal Student Loan Debt Nearing $1 Trillion, Depressed Yet?
Source:
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Important information for every credit card user
How to avoid 'gray charges' on credit card bills
Date: July 26, 2013
What is a "grey charge"? - see below
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A multibillion-dollar business has grown up around "gray charges" - extra credit card charges for products and services consumers never wanted or meant to sign up for. Some experts say these charges are deceptive and misleading, if not illegal. There are other legal points - study this article and avoid unnecessary fees.
An example of a gray charge is a trial offer that expires and is automatically converted to a full membership or subscription. Consumers incur these charges often because they fail to read the fine print in service agreements.
Gray charges totaled $14.3 billion in 2012, according to a study released Thursday, 7/25/13, by the credit card usage monitoring company BillGuard in conjunction with the research firm Aite Group. Credit card issuers, the report says, spent an estimated $562 million in customer service time to deal with disputes and process charge-backs.
Here are the answers to key questions about how gray charges work and what you can do to avoid them.
Q. How many people get these sorts of charges on their bills?
A. To get to more than $14 billion, total, a lot. Aite Group calculated that 35 percent of credit card users will get at least one of these charges in a year.
Q. How can merchants charge me for these products and services?
A. In reality, you agreed to the charges by clicking a box when signing up for a purchase or free trial online. What makes it a gray charge is the general lack of awareness. Most consumers do not wade through volumes of terms and conditions, even though they click a box saying they did.
Also, there is the seemingly intentional silence that comes following the change of your account status from a free trial to one that incurs charges.
"The propensity (= an inclination or natural tendency to behave in a particular way) for more and more folks to shop online allows merchants to put out these sort of sales agreements," says Mary Anne Keegan, BillGuard's chief marketing officer. "The merchants that are trying to do good with their consumers have really good communications."
Those companies will send you an email that your trial is expiring and that you're being converted to a paying member or subscriber, she says. That way you have a chance to cancel before the charges start.
Q. Why are people overlooking these charges instead of disputing them?
A. Many charges are in the $10-$20 range, explains Ron Shevlin of Aite Group. Even though some are much higher - the average is $61 - the smaller changes often get skipped over by someone glancing at a crowded credit card bill.
"When you think about calling your bank to get $10 back it becomes a challenge most people don't want to undertake," Keegan says. She points out, however, that some $10 charges can recur every month, and that can add up.
Q. I didn't sign up for any free trials. Does that mean I won't get any of these charges?
A. While the free-to-paid scenario is the largest category of gray charges, there are plenty of others. Among them: auto-renewing subscriptions you believed to be expiring, a confusing offering from a third party at the time of another purchase and subscriptions or service charges that continue even after you have canceled them.
Q. Can I just dispute the charges?
A. Sometimes you can prevail (= prove more powerful than opposing forces; be victorious), but not always.
"Not every gray charge is reversible," Keegan says. Why? Because in many cases the consumer agreed to the terms, even if they don't recall or didn't realize what they were agreeing to. In some cases, such as when you have canceled a subscription and keep getting charged, you have an easier case to make.
Q. What should I do if I discover gray charges on my credit card statement?
A. You should lodge a dispute with your credit card issuer for those charges that you did not initiate. You also should contact the merchant that placed the charges to try to get them to reverse the charges.
Q. What can I do to make sure I don't get these charges?
A. You can read the terms and conditions before you agree to them and make a note to yourself to cancel any trial of a service prior to your account converting to a paid one. A lot of the work is spotting charges when they do occur.
"Consumers are at a serious disadvantage because they are willingly providing their credit cards to merchants who already have systems in place to keep charging their cards with little repercussion (= an unintended consequence occurring some time after an event or action, esp. an unwelcome one)," says Robert Siciliano, a fraud expert.
Q. Aren't these charges fraudulent?
A. For the most part, no. Some, however, do appear to cross the line. While BillGuard came up with the term "gray charges," state and federal officials have been battling these sort of marketing tactics for years.
After a U.S. Senate investigation that started in 2009 revealed misleading practices by three marketing companies working with 450 partner websites, Congress passed the Restore Online Shoppers' Confidence Act (signed into law in 2011). However, that law specifically addresses manipulative marketing tactics that follow a previous transaction - for example, a "special offer just for you" with an additional charge attached, which a consumer might click on after purchasing a concert ticket.
Also, state attorneys general regularly bring cases against companies that generate a lot of complaints for duping consumers who signed up for trial offers and ended up with unexpected charges. Still, most of these charges fall into, well, a gray area.
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Source: A study, released 7/25/13, by Credit card usage monitoring company BillGuard in conjunction with the research firm Aite Group
Click: BillGuard® | The Smart Inbox For Your Moneyhttps://www.billguard.com/
BillGuard is the fastest, smartest way to track your spending and save money
Click: Aite Group, LLC Home Pagewww.aitegroup.com/
Aite Group is an independent research and advisory firm focused on business, technology, and regulatory issues and their impact on the financial services ...
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Do You Have to Pay Taxes on Credit Card Rewards?
Yes - study the details below in this article
Click green for further details Date: July, 2013
All year round, there is an endless stream of sign-up bonuses for bank accounts and credit cards. Anyone who has ever received a bonus for opening a new checking or savings account will know that these bonuses must be reported when tax time arrives because the bank will send a Form 1099 for the bonus amount. But what about those frequent flyer miles and cash back bonuses that you receive when you sign up for a new credit card or spend with a credit card? Do you know whether you have to pay taxes on credit card rewards?
It makes sense to classify miles, points and cash back as “free gifts” — items that you’d never think that you would have to pay taxes on. However, you might have to pay taxes on these rewards, and it all depends on how you receive them.
“If you receive noncash gifts or services for making deposits or for opening an account in a savings institution, you may have to report the value as interest,” the IRS says in Publication 550 Investment Income and Expenses. “For deposits of less than $5,000, gifts or services valued at more than $10 must be reported as interest. For deposits of $5,000 or more, gifts or services valued at more than $20 must be reported as interest.” The cost to the bank is the value that must be reported.
In 2012, the LA Times reported on a case where a Citibank customer received a tax form because he received 25,000 American Airlines miles for signing up for a checking and savings account package. He was surprised when he was required to pay taxes on $625 worth of miles (each mile was valued at 2.5 cents). Citi reiterated that it was following the rules and that the customer had to pay taxes on the miles.
How to Know If You Owe
With deposit accounts, it’s relatively easy to know whether or not you’ll get a tax form for your account bonuses because the bank states it in the fine print, often at the bottom of promotional bank deal webpages or letters. An example would be a bank promotion in which a customer who opens a new checking account and posts a direct deposit will collect a $100 bonus. Such incentives for opening a new brokerage account or retirement accounts will also be taxed.
For credit cards, however, no such fine print exists. You are not making a deposit to earn the credit card bonus. Rather, you’re most likely required to spend a certain amount on purchases during a specified period of time to earn the bonus.
For instance, you may be required to spend $500 on card purchases in three months to earn 20,000 bonus miles.
The IRS offers no official guidance on such credit card sign-up bonuses or the regular rewards that are earned as a result of card spending. The lack of guidance contributes to the confusion when it comes time to prepare your tax return. But, there is a general rule adopted by the tax-preparation community.
“For most of these rewards that are given to consumers, the IRS treats them as discounts rather than income,” says tax preperation service TurboTax. “If you think about it, it’s not as if any of these companies are offering you cash for nothing; more often than not it’s used as incentive for you to purchase something. And since a discount isn’t taxable, there’s no need to keep track of all your cash back rewards to prepare your tax return.”
To the many consumers who tend to accumulate hundreds, or even thousands, of dollars’ worth of credit card rewards on an annual basis, this news could bring a sigh of relief.
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Source: Credit.com
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If You Can’t Pay Off Your Student Loans,
Your College May Sue You
A new trend is taking shape in higher education
Students across the country are already saddled with student debt
If their colleges sue them, they can add legal fees and some extra worry onto the pile
See the other 2 articles next below - important info
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Every night thousands of people go to bed stressed about their student loan debt.
A recent report by the Federal Reserve Bank of New York shows that outstanding student loan debt in the United States stands at $956 billion. It also states that more student loan borrowers are currently falling behind on their payments.
Now there's one more worry to throw into the mix.
Some colleges and universities—Yale, the University of Pennsylvania, and George Washington University—are suing former students for less than $10,000 because they have defaulted on Perkins loans.
A Federal Perkins Loan, or Perkins Loan, is a need-based student loan offered by the U.S. Department of Education to assist American college students in funding their post-secondary education. The program is named after Carl D. Perkins, a former member of the U.S. House of Representatives from Kentucky.
Universities, like Yale and Penn, that have multibillion-dollar endowments, are generating bad will by attempting to collect what are, effectively, pennies from students...
Bloomberg reports that students defaulted on $964 million in Perkins loans in the year that ended June 2011. Currently, about 80 percent of student loans are guaranteed by the government.
According to the Department of Education website, the Federal Perkins Loan Program “provides low interest loans to help needy students finance the costs of postsecondary education.” About 1,000 postsecondary institutions offer them.
Universities, like Yale and Penn, that have multibillion-dollar endowments, are generating bad will by attempting to collect what are, effectively, pennies from students...
The loan program is funded by ongoing activities, "such as collections by the school on outstanding Perkins loans made by the school," the website states. Students often receive these loans in addition to other student loans and scholarships. They must sign a promissory note in order to receive a Perkins loan, which has an interest rate of about five percent—considerably lower than other student loans.
But still, interest builds and defaults occur—and so do the lawsuits.
"Suing students is a bad idea," Joann Weiner, an economics professor at George Washington University, says. "Universities, like Yale and Penn, that have multibillion-dollar endowments, are generating bad will by attempting to collect what are, effectively, pennies from students who don't have the financial means to repay their student loans."
Student loans are as risky as house loans, but students, eager for a higher education, will often apply for them with very little knowledge of the long-term consequences or consideration. They may not know, for instance, that student loans cannot be wiped away by filing bankruptcy.
According to the website FindLaw, the Department of Education can take many measures in order to collect on a student loan, including:
- Take tax refunds
- Garnish paychecks
- Take federal benefits (Social Security retirement benefits and Social Security disability benefits)
- Revoke a professional license (attorneys, medical professionals, teachers, and state officers)
- File a lawsuit
10 Shocking Truths You Need to Know About Student Loan Debt
The Perkins Loan, although self-sustaining through student loan collections, once received about $65 million a year from the federal government. That stopped in 2008.
Litigation for these loans, however, is only indicative of the long-needed overhaul for the student loan system.
The Institute of Higher Education Policy (IHEP) released a study in January about student aid reform. It recommended 13 federal policy recommendations to improve fiscal aid, including maintaining the Pell Grant program as the centerpiece of need-based aid, and making it an entitlement; tying campus-based aid to student debt repayment levels and degrees awarded; and making income-based repayment the default option for student loan repayment.
The reform is much needed since lawsuits with decades of consequences are likely to continue unless reform happens.
"At a time when the cost of education at these private universities exceeds the median family income, it doesn't make sense to try to collect funds from former students who don't have the means to repay," Weiner says. "Students likely don't default without considering the long-term implications—this action could prevent them from getting any kind of financial assistance and perhaps even a job."
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Source: Internet News
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Get Rid of Student Loan Debt Without Paying for It
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Sixty percent of 2012 college graduates went into debt to finance their bachelor's degrees, borrowing an average of $26,500, according to an annual report released in October 2013 by the College Board. Students who pursue a master's or professional degree often add tens of thousands of dollars to that tab.
Graduates may be able to legally bypass some student loan payments, thanks to loan forgiveness programs. "I was able to use AmeriCorps to repay some of my loans and had all of my Perkins loans forgiven," Tori Whaley told U.S. News via Facebook, referring the national volunteer program.
Doctors, nurses, teachers and even librarians can benefit from state and federal initiatives, which typically help graduates pay a portion of their loans if they agree to work in high-need areas for a set number of years. These areas often include rural communities, as well as schools and medical clinics serving low-income families and underserved minority groups such as Native Americans.
"60+ Ways To Get Rid of Your Student Loans (Without Paying Them)," an e-book from American Student Assistance, a nonprofit that helps students manage college loan debt, catalogs many of the programs available.
Certain loan forgiveness programs may only be available to graduates who borrowed loans after a certain date, says Whaley, who earned a master's in special education from the Peabody College of Education and Human Development at Vanderbilt University in 2009.
"I started school and took out my first loan in 1996. So, despite working for 7 years as a special education teacher in low income communities, I was not able to receive that benefit," she wrote.
[Find out more about click: law school loan forgiveness.]
Health care professionals may be well versed on forgiveness programs such as the National Health Service Corps and the NURSE Corps, for example, but other niche programs exist to help medical professionals ease their loan burden.
Licensed dentists, psychiatrists and doctors specializing in general medicine, geriatrics or family medicine can qualify for up to $40,000 in loan forgiveness though the Indian Health Service Loan Repayment Program.
Graduates must commit to work for a minimum of two years at a practice serving American Indian and Native Alaskan communities in order to receive the funds, according to the U.S. Department of Health and Human Services.
States such as Alaska, California, Georgia and Kansas also offer loan forgiveness options for medical professionals. Most of these programs require graduates work in underserved areas, such as rural communities.
[Learn what to consider before consolidating your student loans.]
Doctors committed to healing four-legged patients can get help with their student loans, too.
Nathan Glaza, a veterinarian in northern Kentucky, receives $3,000 every six months to put towards his nearly $135,000 in student debt, thanks to the Kentucky Large/Food Animal Veterinary Incentive Program.
Slim job prospects for large animal vets at existing clinics prompted the Kentucky native to move home and start his own practice after graduating from the Auburn College of Veterinary Medicine. With student loan payments of $1,300 a month, every little bit helps, he says.
"It helps that I know there's a little bit of leeway there that I can pay off the loan debt, or knock them down a little bit, then focus on something else," he says. "Either getting a house over my head, or buying some equipment that will help out in whatever cases I'm seeing and help provide better medicine around here."
Kentucky's program pays up to $18,000 towards outstanding student loans for veterinarians who work with large animals or those bred for food, such as cattle, pigs and sheep. Veterinary technicians who graduate from a two-year program may also apply for the incentive. Preference is given to state residents, according to the program's website, but new graduates who want to work in the state can also apply.
Minnesota has a similar program for graduates of the College of Veterinary Medicine at the University of Minnesota. Graduates must work for five years in a rural areas designated by the state. As with many programs, limited funds are available, so graduates must apply for the loan forgiveness.
[Discover scholarships to study veterinary medicine.]
In addition to state-based programs, the U.S. Department of Agriculture's Veterinary Medicine Loan Repayment Program will pay qualified vets up to $25,000 per year. Graduates must work for at least three years in a designated vet shortage area, such as northeastern Montana, Sioux County in Nebraska or Steuben County in New York.
Seventy-five veterinarians, with an average debt load of nearly $110,000, received funding through this program for fiscal year 2011, according to the U.S. Department of Agriculture. The program awarded $7.25 million in loan repayment assistance during that time frame.
More interested in politics than poultry? Not a problem.
Maryland residents can also get help through the Janet L. Hoffman Loan Assistance Program if they work for the state government, a local municipality or a nonprofit agency in the state. To be eligible, applicants must work with low-income and underserved residents. The program also has an income restriction.
Borrowers in any state who took out a Perkins loan can have some or all of the debt cancelled if they work in a qualified area for up to five years. Firefighters, speech pathologists, librarians and special education teachers are just a few of the professions eligible for the Perkins program, which typically designates graduates work in low-income or underserved areas to qualify.
Loan forgiveness is never a guarantee, so students shouldn't rack up debt in the hopes the slate will eventually be wiped clean, advise the authors of the American Student Assistance e-book. "Always borrow the bare minimum you need, and think of any potential forgiveness benefits as a (very) happy bonus."
Trying to fund your education? Get tips and more in the U.S. News Paying for College center.
-------------
Comment by the public
With one $ trillion dollars in student debt presently outstanding, bringing up overly generous ways of reneging on that debt is virtuous, I guess. However; if the student debt is not paid it simply gets added to the national debt which is already out of control. When I went to college there were no government backed student loans. You worked, found the money somehow, or you did not go. I tended bar for my food. I dusted hallways for my room. I flew fire control zones for my beer money. I hocked my car jack for gas money. Tuition was, as I recall, about $ 100 per semester. Did anyone notice that when the government got into this business tuition costs went sky-high. Resulting in professor and instructional pay increasing at triple the CPI. It is incumbent on borrowers to pay back their debts. That used to be the American way.--------------
Source: (1) U.S. News & World Reports (2) STAF, Inc.
_________________________________________________________
Click green for further info
Sixty percent of 2012 college graduates went into debt to finance their bachelor's degrees, borrowing an average of $26,500, according to an annual report released in October 2013 by the College Board. Students who pursue a master's or professional degree often add tens of thousands of dollars to that tab.
Graduates may be able to legally bypass some student loan payments, thanks to loan forgiveness programs. "I was able to use AmeriCorps to repay some of my loans and had all of my Perkins loans forgiven," Tori Whaley told U.S. News via Facebook, referring the national volunteer program.
Doctors, nurses, teachers and even librarians can benefit from state and federal initiatives, which typically help graduates pay a portion of their loans if they agree to work in high-need areas for a set number of years. These areas often include rural communities, as well as schools and medical clinics serving low-income families and underserved minority groups such as Native Americans.
"60+ Ways To Get Rid of Your Student Loans (Without Paying Them)," an e-book from American Student Assistance, a nonprofit that helps students manage college loan debt, catalogs many of the programs available.
Certain loan forgiveness programs may only be available to graduates who borrowed loans after a certain date, says Whaley, who earned a master's in special education from the Peabody College of Education and Human Development at Vanderbilt University in 2009.
"I started school and took out my first loan in 1996. So, despite working for 7 years as a special education teacher in low income communities, I was not able to receive that benefit," she wrote.
[Find out more about click: law school loan forgiveness.]
Health care professionals may be well versed on forgiveness programs such as the National Health Service Corps and the NURSE Corps, for example, but other niche programs exist to help medical professionals ease their loan burden.
Licensed dentists, psychiatrists and doctors specializing in general medicine, geriatrics or family medicine can qualify for up to $40,000 in loan forgiveness though the Indian Health Service Loan Repayment Program.
Graduates must commit to work for a minimum of two years at a practice serving American Indian and Native Alaskan communities in order to receive the funds, according to the U.S. Department of Health and Human Services.
States such as Alaska, California, Georgia and Kansas also offer loan forgiveness options for medical professionals. Most of these programs require graduates work in underserved areas, such as rural communities.
[Learn what to consider before consolidating your student loans.]
Doctors committed to healing four-legged patients can get help with their student loans, too.
Nathan Glaza, a veterinarian in northern Kentucky, receives $3,000 every six months to put towards his nearly $135,000 in student debt, thanks to the Kentucky Large/Food Animal Veterinary Incentive Program.
Slim job prospects for large animal vets at existing clinics prompted the Kentucky native to move home and start his own practice after graduating from the Auburn College of Veterinary Medicine. With student loan payments of $1,300 a month, every little bit helps, he says.
"It helps that I know there's a little bit of leeway there that I can pay off the loan debt, or knock them down a little bit, then focus on something else," he says. "Either getting a house over my head, or buying some equipment that will help out in whatever cases I'm seeing and help provide better medicine around here."
Kentucky's program pays up to $18,000 towards outstanding student loans for veterinarians who work with large animals or those bred for food, such as cattle, pigs and sheep. Veterinary technicians who graduate from a two-year program may also apply for the incentive. Preference is given to state residents, according to the program's website, but new graduates who want to work in the state can also apply.
Minnesota has a similar program for graduates of the College of Veterinary Medicine at the University of Minnesota. Graduates must work for five years in a rural areas designated by the state. As with many programs, limited funds are available, so graduates must apply for the loan forgiveness.
[Discover scholarships to study veterinary medicine.]
In addition to state-based programs, the U.S. Department of Agriculture's Veterinary Medicine Loan Repayment Program will pay qualified vets up to $25,000 per year. Graduates must work for at least three years in a designated vet shortage area, such as northeastern Montana, Sioux County in Nebraska or Steuben County in New York.
Seventy-five veterinarians, with an average debt load of nearly $110,000, received funding through this program for fiscal year 2011, according to the U.S. Department of Agriculture. The program awarded $7.25 million in loan repayment assistance during that time frame.
More interested in politics than poultry? Not a problem.
Maryland residents can also get help through the Janet L. Hoffman Loan Assistance Program if they work for the state government, a local municipality or a nonprofit agency in the state. To be eligible, applicants must work with low-income and underserved residents. The program also has an income restriction.
Borrowers in any state who took out a Perkins loan can have some or all of the debt cancelled if they work in a qualified area for up to five years. Firefighters, speech pathologists, librarians and special education teachers are just a few of the professions eligible for the Perkins program, which typically designates graduates work in low-income or underserved areas to qualify.
Loan forgiveness is never a guarantee, so students shouldn't rack up debt in the hopes the slate will eventually be wiped clean, advise the authors of the American Student Assistance e-book. "Always borrow the bare minimum you need, and think of any potential forgiveness benefits as a (very) happy bonus."
Trying to fund your education? Get tips and more in the U.S. News Paying for College center.
-------------
Comment by the public
With one $ trillion dollars in student debt presently outstanding, bringing up overly generous ways of reneging on that debt is virtuous, I guess. However; if the student debt is not paid it simply gets added to the national debt which is already out of control. When I went to college there were no government backed student loans. You worked, found the money somehow, or you did not go. I tended bar for my food. I dusted hallways for my room. I flew fire control zones for my beer money. I hocked my car jack for gas money. Tuition was, as I recall, about $ 100 per semester. Did anyone notice that when the government got into this business tuition costs went sky-high. Resulting in professor and instructional pay increasing at triple the CPI. It is incumbent on borrowers to pay back their debts. That used to be the American way.--------------
Source: (1) U.S. News & World Reports (2) STAF, Inc.
_________________________________________________________
Congress to College Grads: You’re On Your Own
When the facts change STAF, Inc.'s editors place the new information
Click green for further info
George Carlin would have had a field day with the student loan pricing circus currently on display in Congress. To paraphrase one of his epic rants, they care about you while you’re in college, but after you graduate you’re on your own.
A perfect example is the most recently announced bipartisan student loan deal in the Senate. It proposes to peg — truly the operative word in this case — student loan rates to the 10-year Treasury note, plus surcharges of 2.05% to 4.6% for the various loan programs, with lifetime interest rate caps that range from 8.25% to 10.25%. This despite the fact that the borrowing the government undertakes to fund these loans is bench marked against Treasuries that are shorter than one year in duration.
To give you a better sense for how significant that disparity is and its implications for student borrowers, at the time of this writing, the difference between the 3-month and 10-year Treasuries was 2.44%, which increases to 4.49% for student loans after the 2.05% surcharge is added. The way the math works, that spread translates into a 24.3% present value profit — $24.30 for every $100 of undergraduate loans the government finances under this scenario if fully implemented today.
The Profits Behind the Student Loan Deal
That’s $24.3 billion for every $100 billion in student loans; $243 billion if all $1.1 trillion of education debt were financed this way. And for what? To cover administrative costs? Surely not, especially when you consider that Sallie Mae — the largest student lender in the country — is able to squeeze out a profit from just a 0.2% interest rate add-on.
So where’s all that money going?
The profits from this bipartisan student loan “deal” would be used to offset the deficit. In other words, as far as Congress is concerned, higher education represents an economic opportunity more than it does the realization of an American Dream ideal.
But what if Carlin was wrong about the folks in D.C.? What if they really did care about our kids’ longer-term health and welfare?
They would have the courage to right the myriad wrongs in this broken system by addressing each aspect of the problem. That means creating a student loan deal that tackles not only new student loans, but existing loans and the cost of higher education as a whole. For example:
How Congress Should Deal With New Loans
They’re not.
Click green for further info
Source: Credit.com Article 2 of 2 next below
_________________________________________________________________________
The First Thing to Do Before Paying Student Loans
Important information
How to build for a College freshman an excellent, high credit score
and make it last for a lifetime
Every freshman & his/her parents will benefit from reading & applying this article info
The Risks and Rewards of Credit Cards in College
Freshman college students have a track record of getting into trouble with credit cards
Click green for further info
Too often, it can take them years to pay off their debt and they will incur thousands of dollars of interest charges as they do.
So it’s no wonder that so many students and their parents have become extremely wary of credit card use in college.
But is their fear warranted? Can college students responsibly use and even benefit from having credit cards?
Consider the Risks
First let’s take a look at the risks of using credit cards in college:
Advantages of Using Credit Cards in College
A Third Option
Fortunately, parents can help their children build credit by making them authorized users on their accounts (though you should set ground rules), rather than have a student apply for a card in their own name. This additional option may be best for students who need a card for emergencies, but are not ready to manage their own accounts.
College students can leave their course of study as “undecided” for a few years, but they will have to choose whether or not to hold a credit card. By considering all of the advantages and drawbacks of credit card use, college students and their parents can make the best decisions about these important financial instruments.
Click green for further info:
Source:
Credit.com
____________________________________________________________
10 Common Credit Card Complaints
Click green for further info
Credit cards are not terribly complex products, but they can be terribly misunderstood. Although many cardholders are satisfied with their cards, some customers report endless frustration.
Here are ten of the most common credit card complaints we hear from readers, and some simple suggestions to avoid these issues.
1. I have to pay an annual fee
There may have been a time when most credit cards did not charge an annual fee, but that hasn’t been the case recently. Nevertheless, some cardholders who still expect to use a card without an annual fee are are upset when they are charged one.
Solution: There are still plenty of ways to avoid annual fees or to find a card without one.
2. My bank added foreign transaction fees when I was abroad
Few things are as frustrating as paying your bank a foreign transaction fee, when your rewards card should be paying you.
Solution: First, try calling your bank and asking for the fee to be waived. That might work once or twice, but in the long term, you should find a card without these fees.
See How Your Debt Profile Compares
Get a consolidated view of your debt, PLUS a free credit score & report card. Our experts will give you tips on how to better manage your debt, and a Credit Report Card that’s always free and updated every 30 days.
Click: Get Started. It's Free.
3. My interest rate is too high
Credit card purchases represent unsecured debt, and they have higher interest rates than car loans or home mortgages. In fact, most credit cards have interest rates between 10% and 20% APR, which accumulates very quickly.
Solution: For those with good credit, there are plenty of low-interest rate cards available. Otherwise, there are still many ways to have your bank cut your interest rate.
4. My application was rejected
It is always hard to take rejection, especially when a bank unexpectedly denies your credit card application.
Solution: Few people realize that the bank’s first decision is not final, and they can ask to be reconsidered.
5. I can’t redeem my rewards
Figuring out some credit card reward programs can be nearly as confusing as deciphering the federal tax code. Worse, many programs have been devalued in the past year.
Solution: There are two ways to go here. One is to spend some time learning about your credit card programs in order to earn the most valuable rewards. The other is to give up on complicated loyalty programs and switch to a simple cash back card.
6. It’s hard to get through to customer service
There are several reasons why cardholders would need to contact their bank, but few things are more aggravating than being put on hold forever.
Solution: You may find faster service by composing a secure message through your bank’s website. But if you are still not satisfied with your bank’s customer service, find another bank or join a credit union. These days, many credit cards are advertising fast access to customer service representatives.
7. I’ll never be able to pay off my credit card debt
Too many credit card users get tangled up in a web of debt that can seem unrelenting.
Solution: One of the best tools to reduce debt are cards with 0% APR balance transfer offers.
But if that doesn’t work, it may be best to take a break from credit cards and look at some of the latest prepaid cards.
8. There are fraudulent charges on my bill
Credit cards are great for most users, but they can also be highly valued by those who would commit fraud.
Solution: Federal laws require that banks investigate and remove fraudulent charges, but you have to spot them. Taking the time to examine each statement, and spotting any errors or fraud, is the price we must pay to enjoy the convenience and security of these products.
9. I got hit with a late fee
Late fees are a great source of profit for credit card issuers, but a huge waste of money for cardholders.
Solution: Always contact your bank and ask to have the late fee removed.
You might also consider a card with no late fees, but just don’t use that as an excuse to pay late.
10. I get too many offers in the mail
For all of our complaints about credit cards, it is still a highly competitive market. So competitive that many of us find offers for new credit cards in our mailboxes nearly every day.
Solution: Contact the three major credit bureaus and ask to have your name removed from pre-approved offers. Visit www.optoutprescreen.com or call 1-888-5OPTOUT (1-888-567-8688).
Click green for further info
Source: credit.com
_________________________________________________________
How You Can Eliminate Your Credit Card’s Annual Fee
Click green for further info
Nobody likes paying an annual fee to use a credit card, but many of the top reward cards require it. But what if there was a way to keep your account while having your annual fee waived? In fact, many cardholders have been successful in doing just that. Do you want to join them? Here’s how:
1. Wait for the best offers. Avoiding annual fees starts the moment you apply for a card. Some cards with annual fees will feature offers that waive these fees for one year for new applicants.
Looking for Credit Cards with No Annual Fee? Compare them Here
2. Look for a card with a generous sign-up bonus. Annual fees are no fun, but be sure to put them in context. For example, Chase is currently offering their Southwest Airlines Rapid Rewards Plus Visa card with a $69 annual fee. But consider that new cardholders earn 50,000 points after spending $2,000 on their card within two months. Since these points are worth over $800, the annual fee is a trivial expense by comparison.
Free Resource: Worried About How Credit Cards Are Impacting Your Credit Score?
3. Negotiate your fee when it comes time to renew your card. Many credit card users do not realize that these fees are not set in stone. Banks spend hundreds of dollar in advertising and marketing costs to acquire each customer, and they don’t want to lose your business over an annual fee. So before you accept this fee, contact your bank and ask them to waive it. Mention that you are considering cancelling your account and using a competing card, and you will likely be transferred to another department that specializes in making offers that will retain existing customers.
Ideally, the bank will waive its annual fee, but there are a few other possibilities. In some cases, the bank will refund a portion of the fees, while others may offer you some amount of reward points or miles to retain your business.
4. Cancel your card. If your bank refuses to negotiate on your annual fee, you can always just call their bluff and cancel your card. Then you can actually try a competing product with a waived annual fee or no fee at all. But if you still miss your old card, don’t worry. The bank will happily welcome you back with another sign-up bonus, so long as you wait about 12-18 months.
While it is tempting to imagine that annual fees are an inescapable part of some reward credit cards, there are ways around paying them. By employing all of these techniques to avoid these fees, you can earn plenty of rewards without paying the price.
Credit Cards: Research and Compare No Annual Fee Credit Cards at Credit.com
Click green for further info
Source: Credit.com
___________________________________________________________________
When the facts change STAF, Inc.'s editors place the new information
- Article 1 of 2 (Article 2 of 2 next below)
Click green for further info
George Carlin would have had a field day with the student loan pricing circus currently on display in Congress. To paraphrase one of his epic rants, they care about you while you’re in college, but after you graduate you’re on your own.
A perfect example is the most recently announced bipartisan student loan deal in the Senate. It proposes to peg — truly the operative word in this case — student loan rates to the 10-year Treasury note, plus surcharges of 2.05% to 4.6% for the various loan programs, with lifetime interest rate caps that range from 8.25% to 10.25%. This despite the fact that the borrowing the government undertakes to fund these loans is bench marked against Treasuries that are shorter than one year in duration.
To give you a better sense for how significant that disparity is and its implications for student borrowers, at the time of this writing, the difference between the 3-month and 10-year Treasuries was 2.44%, which increases to 4.49% for student loans after the 2.05% surcharge is added. The way the math works, that spread translates into a 24.3% present value profit — $24.30 for every $100 of undergraduate loans the government finances under this scenario if fully implemented today.
The Profits Behind the Student Loan Deal
That’s $24.3 billion for every $100 billion in student loans; $243 billion if all $1.1 trillion of education debt were financed this way. And for what? To cover administrative costs? Surely not, especially when you consider that Sallie Mae — the largest student lender in the country — is able to squeeze out a profit from just a 0.2% interest rate add-on.
So where’s all that money going?
The profits from this bipartisan student loan “deal” would be used to offset the deficit. In other words, as far as Congress is concerned, higher education represents an economic opportunity more than it does the realization of an American Dream ideal.
But what if Carlin was wrong about the folks in D.C.? What if they really did care about our kids’ longer-term health and welfare?
They would have the courage to right the myriad wrongs in this broken system by addressing each aspect of the problem. That means creating a student loan deal that tackles not only new student loans, but existing loans and the cost of higher education as a whole. For example:
How Congress Should Deal With New Loans
- Pricing would be linked to comparable-duration government borrowing. If the government borrows one-year money to fund 10-year loans, the students should be charged on that basis. It’s called match funding, and it represents the fairest way to price a loan.
- The math behind the administrative surcharges would be fully disclosed.
- Repayment terms would be extended to 20 years, and borrowers would continue to have the ability to accelerate the repayment of their debts at any time without penalty.
- Student borrowing would be capped at the average first-year salary levels for recent college graduates, as reported by the National Association of Colleges and Employers. That, coupled with a longer loan duration, would ensure the average borrower’s ability to live within his or her post-college means (because the repayments should consume less than 10% of pretax income).
- The government’s relief programs would be expanded to include all student loans without regard for origination channel (public, private or public-private hybrid) and payment status (current vs. past due) so that no borrowers are left behind as a result.
- Subcontracted loan-servicing companies would be held accountable for preventing delinquencies in the first place instead of being rewarded for curing the defaults that could have been averted.
- The bankruptcy code would be revised to permit the discharge of all privately owned education debt — including Federal Family Education Loan Program loans that were originated by the private lenders — because there’s no surer way to encourage good faith negotiations between lenders and borrowers than when the lender knows its uncollateralized borrower has the ability to pull the plug.
- The tax code would be revised to exempt student debts that have been forgiven just as it was for mortgages immediately following the economic collapse.
- The credit bureaus would be directed to expunge consumer payment histories for student loans once they’ve been modified because there’s more than enough blame to go around for this mess.
- The combination of all these measures will have a dampening effect on institutional cash flow because fewer students will be able to afford today’s tuition prices. Congress would help the colleges adapt to the new reality by offering incentives for sector consolidations to drive out the wasteful redundancies that currently exist.
- Congress would also provide incentives to help the colleges transform the values of their sideline businesses (housing, food services and entertainment) into much-needed investment capital for upgraded educational content and its delivery.
They’re not.
Click green for further info
Source: Credit.com Article 2 of 2 next below
_________________________________________________________________________
The First Thing to Do Before Paying Student Loans
- Important - Important - Important
- Article 2 of 2
- Click green for further info
- Remember that first week of college or university, when you wondered how you’d ever make it through? If you’re like most students, simply trying to map out your course schedule probably felt overwhelming. There there were forms to fill out, books to buy, and lots (and we mean lots) of coursework.
Hopefully, you had a good adviser to help give you through the process.
Similarly, if you are out of school, trying to navigate your options for paying back your student loans may seem just as daunting. You probably have several loans with different repayment terms. Some may be federal loans and others may be private loans. How do you prioritize them, along with all the other financial demands — housing, food, transportation, etc. — you are facing?
When it comes to your student loan debt, think of your credit reports and scores as your adviser. They are there to provide some necessary context for your emerging financial life. As you begin to pay back your student loans, refinance them, defer them or opt for forbearance, you’ll need to understand the impact of your choices over time.
- So the first thing you should do, then, even before starting to pay off your student loans, is begin to monitor your credit reports and credit scores.
- There are a few ways you can do this. First, each year you can get a free copy of each of your three credit reports from AnnualCreditReport.com. In addition, Credit.com provides users with a free credit tool that breaks down the information in your credit report using letter grades, and provides you with free credit scores too.
The information you find here can help guide you in three ways:
See the big picture.
- In school, you couldn’t just pick any class that sounded interesting. Unless you wanted to stay in school forever, you also had to make sure you fulfilled your requirements for your major and for graduation.
When it comes to your student loans, you can’t just look at each loan individually; you also must get a handle on your total student loan debt, which is likely made up of multiple loans. Your credit report will likely list all of these loans, so you can see how much you owe in total. You can also check the National Student Loan Data System to make sure you haven’t missed any of your federal loans.
But that’s just the start. You likely have other debts, and those are important to include in your debt repayment plan as well.
- You should find most, if not all, of your debts — including your car payment, credit card balances, and your mortgage if you have one — listed on your credit reports. This will give you a much more complete picture of your overall debt situation.
If you discover your debt is more than you can manage, you may want to talk with a credit counseling agency or find out if you are eligible for the Income Based Repayment program.
Prioritize your payments.You may want nothing more than to pay off your student loans fast. But in some cases it makes sense to pay off other debts more aggressively first. This is where your credit score comes in handy. Along with your score, you should get information about which factors are most influencing your score.
For example, let’s say you get your free Credit Report Card from Credit.com and you see that you’re not getting a good grade for the category that includes the debt you are carrying. (Your debt makes up nearly one third of your credit score.)
Now let’s say you have a credit card with a small limit; say $500, and your balance is $400. It’s likely that relatively small balance is having a much greater impact on your score than your much larger student loan balances.
Why? Because you are close to the limit on that card and the high balance is affecting your “utilization.” (Student loans are installment loans, not revolving accounts, and that factor is not a concern there.) Pay it down as fast as you can and you may see your score go up. But if you put that same amount of money toward your student loan, your score may not budge.
You didn’t learn that in school, did you?
Monitor your credit. If you pay them on time, your student loans should help your credit scores, even if the amounts are relatively large.
- But if you miss a payment on one of these loans — or any other — your credit scores will suffer.
- Even one late payment can drop your credit scores by 50 points or more. And if you’re taking on more debt, you’ll probably see that reflected in a lower score.
By reviewing your free credit score each month, you’ll see whether your credit is improving. If it is, keep doing what you’re doing, and if it’s not, you know you’ve got your homework cut out for you!
Click green for further info
- Source: credit.com
- _________________________________________________________________
Important information
How to build for a College freshman an excellent, high credit score
and make it last for a lifetime
Every freshman & his/her parents will benefit from reading & applying this article info
The Risks and Rewards of Credit Cards in College
Freshman college students have a track record of getting into trouble with credit cards
Click green for further info
Too often, it can take them years to pay off their debt and they will incur thousands of dollars of interest charges as they do.
So it’s no wonder that so many students and their parents have become extremely wary of credit card use in college.
But is their fear warranted? Can college students responsibly use and even benefit from having credit cards?
Consider the Risks
First let’s take a look at the risks of using credit cards in college:
- Overspending. Students who are new to credit card use are especially susceptible to overspending.
- Like all credit card holders, students can choose the terrible strategy of “charging it” and worrying about the payments later. When the bills come, college students may be counting on future income, or even their parents, to bail them out. Finally, peer pressure to go along with the crowd can also be more effective in the college environment.
- Debt. The close cousin of overspending is debt.
- Sadly, credit card debt is habit-forming and the practices that students begin in college can remain with them long after graduation.
- Interest and fees. Once credit card users fail to pay their entire balance in full, they will owe interest on all their purchases from the day of each transaction. And when payments are not made on time, late fees and penalty interest rates can spiral out of control.
Advantages of Using Credit Cards in College
- Generating a credit history. Sometimes, college students successfully avoid debt, yet graduate with little credit history. For example, Tovah Ellner, who works at a commercial real estate brokerage in Denver, rarely used her sole credit card while attending the University of Colorado at Boulder. “Even while studying economics and business administration, no one told me about any of the benefits of using credit cards,” she said. “And when I graduated and started working, I still didn’t have enough of a credit history to be approved for the reward cards I wanted.” Students may also want to build a credit history in order to qualify for a car loan or a home mortgage after graduation.
- Building good habits. Just as college students can build bad habits when they get into debt, they also have the opportunity start (glick: using credit cards responsibly. With a limited budget, and some parental guidance, the college years can be a time for young adults to prepare themselves for “the real world” beyond graduation.
- Convenience and security. Like all credit card users, college students will want to have access to a method of payment that protects them against fraud and theft to a greater degree than cash, checks, or a debit card can. Furthermore, parents sending their children to school away from home will often want them to have a access to a credit card in case of emergencies.
A Third Option
Fortunately, parents can help their children build credit by making them authorized users on their accounts (though you should set ground rules), rather than have a student apply for a card in their own name. This additional option may be best for students who need a card for emergencies, but are not ready to manage their own accounts.
College students can leave their course of study as “undecided” for a few years, but they will have to choose whether or not to hold a credit card. By considering all of the advantages and drawbacks of credit card use, college students and their parents can make the best decisions about these important financial instruments.
Click green for further info:
Source:
Credit.com
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10 Common Credit Card Complaints
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Credit cards are not terribly complex products, but they can be terribly misunderstood. Although many cardholders are satisfied with their cards, some customers report endless frustration.
Here are ten of the most common credit card complaints we hear from readers, and some simple suggestions to avoid these issues.
1. I have to pay an annual fee
There may have been a time when most credit cards did not charge an annual fee, but that hasn’t been the case recently. Nevertheless, some cardholders who still expect to use a card without an annual fee are are upset when they are charged one.
Solution: There are still plenty of ways to avoid annual fees or to find a card without one.
2. My bank added foreign transaction fees when I was abroad
Few things are as frustrating as paying your bank a foreign transaction fee, when your rewards card should be paying you.
Solution: First, try calling your bank and asking for the fee to be waived. That might work once or twice, but in the long term, you should find a card without these fees.
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3. My interest rate is too high
Credit card purchases represent unsecured debt, and they have higher interest rates than car loans or home mortgages. In fact, most credit cards have interest rates between 10% and 20% APR, which accumulates very quickly.
Solution: For those with good credit, there are plenty of low-interest rate cards available. Otherwise, there are still many ways to have your bank cut your interest rate.
4. My application was rejected
It is always hard to take rejection, especially when a bank unexpectedly denies your credit card application.
Solution: Few people realize that the bank’s first decision is not final, and they can ask to be reconsidered.
5. I can’t redeem my rewards
Figuring out some credit card reward programs can be nearly as confusing as deciphering the federal tax code. Worse, many programs have been devalued in the past year.
Solution: There are two ways to go here. One is to spend some time learning about your credit card programs in order to earn the most valuable rewards. The other is to give up on complicated loyalty programs and switch to a simple cash back card.
6. It’s hard to get through to customer service
There are several reasons why cardholders would need to contact their bank, but few things are more aggravating than being put on hold forever.
Solution: You may find faster service by composing a secure message through your bank’s website. But if you are still not satisfied with your bank’s customer service, find another bank or join a credit union. These days, many credit cards are advertising fast access to customer service representatives.
7. I’ll never be able to pay off my credit card debt
Too many credit card users get tangled up in a web of debt that can seem unrelenting.
Solution: One of the best tools to reduce debt are cards with 0% APR balance transfer offers.
But if that doesn’t work, it may be best to take a break from credit cards and look at some of the latest prepaid cards.
8. There are fraudulent charges on my bill
Credit cards are great for most users, but they can also be highly valued by those who would commit fraud.
Solution: Federal laws require that banks investigate and remove fraudulent charges, but you have to spot them. Taking the time to examine each statement, and spotting any errors or fraud, is the price we must pay to enjoy the convenience and security of these products.
9. I got hit with a late fee
Late fees are a great source of profit for credit card issuers, but a huge waste of money for cardholders.
Solution: Always contact your bank and ask to have the late fee removed.
You might also consider a card with no late fees, but just don’t use that as an excuse to pay late.
10. I get too many offers in the mail
For all of our complaints about credit cards, it is still a highly competitive market. So competitive that many of us find offers for new credit cards in our mailboxes nearly every day.
Solution: Contact the three major credit bureaus and ask to have your name removed from pre-approved offers. Visit www.optoutprescreen.com or call 1-888-5OPTOUT (1-888-567-8688).
Click green for further info
Source: credit.com
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How You Can Eliminate Your Credit Card’s Annual Fee
Click green for further info
Nobody likes paying an annual fee to use a credit card, but many of the top reward cards require it. But what if there was a way to keep your account while having your annual fee waived? In fact, many cardholders have been successful in doing just that. Do you want to join them? Here’s how:
1. Wait for the best offers. Avoiding annual fees starts the moment you apply for a card. Some cards with annual fees will feature offers that waive these fees for one year for new applicants.
Looking for Credit Cards with No Annual Fee? Compare them Here
2. Look for a card with a generous sign-up bonus. Annual fees are no fun, but be sure to put them in context. For example, Chase is currently offering their Southwest Airlines Rapid Rewards Plus Visa card with a $69 annual fee. But consider that new cardholders earn 50,000 points after spending $2,000 on their card within two months. Since these points are worth over $800, the annual fee is a trivial expense by comparison.
Free Resource: Worried About How Credit Cards Are Impacting Your Credit Score?
3. Negotiate your fee when it comes time to renew your card. Many credit card users do not realize that these fees are not set in stone. Banks spend hundreds of dollar in advertising and marketing costs to acquire each customer, and they don’t want to lose your business over an annual fee. So before you accept this fee, contact your bank and ask them to waive it. Mention that you are considering cancelling your account and using a competing card, and you will likely be transferred to another department that specializes in making offers that will retain existing customers.
Ideally, the bank will waive its annual fee, but there are a few other possibilities. In some cases, the bank will refund a portion of the fees, while others may offer you some amount of reward points or miles to retain your business.
4. Cancel your card. If your bank refuses to negotiate on your annual fee, you can always just call their bluff and cancel your card. Then you can actually try a competing product with a waived annual fee or no fee at all. But if you still miss your old card, don’t worry. The bank will happily welcome you back with another sign-up bonus, so long as you wait about 12-18 months.
While it is tempting to imagine that annual fees are an inescapable part of some reward credit cards, there are ways around paying them. By employing all of these techniques to avoid these fees, you can earn plenty of rewards without paying the price.
Credit Cards: Research and Compare No Annual Fee Credit Cards at Credit.com
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Source: Credit.com
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When the Outside Weather is hot:
Cheap & Wise & Healthy ways to keep cool
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During the summer months, and some parts of our world year-round, when the heat often sends beads of sweat trickling down your back, there’s nothing quite like entering the cool paradise of an air-conditioned room.
But when you’re paying for that paradise, the air conditioning seems like less of a miracle and more of a burden. The average U.S. household electric bill for June through August is expected to total $395 this summer, according to the U.S. Energy Information Administration. That’s a hefty bill for some cool space.
It doesn’t have to be. There are plenty of creative tricks to save money on air-conditioning. You’ve probably heard of buying a programmable thermostat, maintaining your HVAC unit, replacing filters and taking cold showers—and you’ve probably done them all.
Try going a step further and implementing some real cost-saving measures that cost less than relying entirely on your energy-guzzling air conditioner.
#1: Plant shady trees by windows
“Tree shading of a house is one of the most effective means of cutting air conditioning use,” saidPeter Brown, director of residential services for the New Homes program for Earth Advantage Institute, an Oregon-based organization advocating for more energy-efficient home building.
Deciduous trees, which lose their leaves in the fall, are some of the most energy-efficient trees to plant, Brown said.
The east and west sides of your home are the best spots to plant deciduous trees, because those directions get hit the hardest by the beaming summer sun.
Planting the right trees in the right places can save around 30 percent on your bill.
#2: Using window film to conserve energy
Window films are a thin sheet of material stuck to your windows that block infrared light while still letting visible light in. By not allowing the infrared light in, the amount of heat pouring into a room from the sun is minimized and that haunting energy bill becomes a little less scary.
Gila, a company selling the films, says that they can save you 30 percent on cooling costs.
Knowing which rooms get the most sun is important before deciding to install window film.
“This product would make sense on all sides of the house except the north,” Brown said.
Before installing window films, be sure the manufacturer made a credible claim that their product will result in a lower SHGC, or solar heat gain coefficient, rating for the window, Brown said.
#3: Solar shades or screens keep heat out
“Providing window shading is an excellent way to eliminate or reduce dependency on air conditioning,” Brown said.
The majority of sunlight striking an unprotected glass window passes through it and goes right into the home. Only a small percentage is reflected. Solar screens reduce the amount of sunlight striking the window by absorbing or reflecting the sunlight away from the glass.
Mount the shades on the outside of the window to block the heat before it enters the home. For greater efficiency consider using dual shades, which are highly reflective white on one side and heat absorbing dark on the other side.
#4: Use your windows to your advantage
Window exhaust fans use less electricity than air conditioners and still cool a room, but usually only at night. By placing one of these fans in the window, the cooler night air outside air will be drawn in and circulated throughout your home.
Also consider simply keeping windows open when outside temperatures are lower than the level at which you would set your thermostat.
“At night open windows or skylights at the highest parts of your house, and one or two on the first floor and let nature do its thing,” Brown said.
#5: Consider an evaporative cooler
Evaporative coolers, also known as swamp coolers, are efficient when used correctly--and in the proper climates.
Unlike air conditioners, which recirculate the same air, evaporative coolers provide a steady stream of fresh air into the house. They operate by having a window slightly open, which allows warm indoor air to escape, and replaces it with air the evaporator cools. There are small coolers for windows, or big coolers for outside installation.
They cost half as much to install and use around a quarter as much energy as air conditioners. However, the maintenance is more demanding and they are they are only suitable for low-humidity areas.
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Source: Yahoo, Home
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5 Things About Credit Cards
Most Parents Are Not Telling Their Children
The parents should teach these facts
It is our responsibility as adults & parents to teach responsible credit card use so
as our children grow into adults they understand both the hazards, and benefits of credit card use
Important info
Like every 5-year-old, my son seems to have little understanding that the goods in the store cost money. Despite my explanations, she appears to believe that we can throw anything into our shopping cart, swipe my credit card, and have nothing else to worry about.
While the responsibility of using a credit card only begins at the cash register, it is one of the only visible times that credit cards are used in front of our children. Here are five aspects of credit card use that are rarely seen or spoken about:
1. Interest costs a lot.
The majority of credit card users in America routinely carry a balance on their cards. And when they do, that means that each and every purchase is incurring interest from the day it is charged until the day it is paid off. And since credit card interest rates are not small, typically running between 10% and 20% APR, most cardholders are ultimately paying a lot more for their purchases than what the receipt says.
2. Fees can be an unexpected surprise each month.
Even without interest charges, cardholders are faced with a number of fees that they hardly recognize themselves, let alone share with their children. Common ones include annual fees, foreign transaction fees, balance transfer fees, late fees and cash advance fees.
3. Some people are paying off college credit card debt long after graduation.
When students need to pay for tuition, books, or expenses, but are out of cash, their credit cards are frequently used to fill the gap. But when their dream job doesn’t arrive promptly after graduation, credit card debt can linger for years. Often it is in their 20s that young adults finally realize the true costs of credit card use.
4. Credit cards can make people spend more - mostly up to 30 -4 0 % more
Credit cards entice their users to spend more in three ways. First, they offer the ability to finance unaffordable purchases. In addition, reward cards offer points, miles and cash back for spending. And finally, credit cards’ ease of use encourages cardholders to effortlessly make charges theymight have thought twice about if they needed to use cash or write a check. Why don’t adults tell children about these things? They might not even realize it themselves.
5. Credit cards can offer great benefits, but I don’t want my kids to get into trouble.
In contrast to the other problems with credit cards, adults may keep quiet about all the benefits they receive from credit cards. Certainly, it is possible for cardholders to avoid interest, fees, debt and overspending while earning valuable rewards. But since so many are unable to successfully achieve this mastery, adults can be wary of encouraging credit card use. Wrong - better to teach the facts in a safe manner and learn to avoid unnecessary fees & interests.
Credit card use is not a dirty habit that should be shrouded (= cover; in this: handle) in secrecy. Actually, it is our responsibility as adults to teach responsible credit card use so as our children grow into adults they understand both the hazards, and benefits of credit card use.
Click green for further info
Source: Credit.com
__________________________________________________________
Most Parents Are Not Telling Their Children
The parents should teach these facts
It is our responsibility as adults & parents to teach responsible credit card use so
as our children grow into adults they understand both the hazards, and benefits of credit card use
Important info
Like every 5-year-old, my son seems to have little understanding that the goods in the store cost money. Despite my explanations, she appears to believe that we can throw anything into our shopping cart, swipe my credit card, and have nothing else to worry about.
While the responsibility of using a credit card only begins at the cash register, it is one of the only visible times that credit cards are used in front of our children. Here are five aspects of credit card use that are rarely seen or spoken about:
1. Interest costs a lot.
The majority of credit card users in America routinely carry a balance on their cards. And when they do, that means that each and every purchase is incurring interest from the day it is charged until the day it is paid off. And since credit card interest rates are not small, typically running between 10% and 20% APR, most cardholders are ultimately paying a lot more for their purchases than what the receipt says.
2. Fees can be an unexpected surprise each month.
Even without interest charges, cardholders are faced with a number of fees that they hardly recognize themselves, let alone share with their children. Common ones include annual fees, foreign transaction fees, balance transfer fees, late fees and cash advance fees.
3. Some people are paying off college credit card debt long after graduation.
When students need to pay for tuition, books, or expenses, but are out of cash, their credit cards are frequently used to fill the gap. But when their dream job doesn’t arrive promptly after graduation, credit card debt can linger for years. Often it is in their 20s that young adults finally realize the true costs of credit card use.
4. Credit cards can make people spend more - mostly up to 30 -4 0 % more
Credit cards entice their users to spend more in three ways. First, they offer the ability to finance unaffordable purchases. In addition, reward cards offer points, miles and cash back for spending. And finally, credit cards’ ease of use encourages cardholders to effortlessly make charges theymight have thought twice about if they needed to use cash or write a check. Why don’t adults tell children about these things? They might not even realize it themselves.
5. Credit cards can offer great benefits, but I don’t want my kids to get into trouble.
In contrast to the other problems with credit cards, adults may keep quiet about all the benefits they receive from credit cards. Certainly, it is possible for cardholders to avoid interest, fees, debt and overspending while earning valuable rewards. But since so many are unable to successfully achieve this mastery, adults can be wary of encouraging credit card use. Wrong - better to teach the facts in a safe manner and learn to avoid unnecessary fees & interests.
Credit card use is not a dirty habit that should be shrouded (= cover; in this: handle) in secrecy. Actually, it is our responsibility as adults to teach responsible credit card use so as our children grow into adults they understand both the hazards, and benefits of credit card use.
Click green for further info
Source: Credit.com
__________________________________________________________
11 Financial Lessons
to Avoid Learning the Hard Way
It’s important to track the percentage of your credit line that you’re using each month. You should only be using about 10 - 15 percent of your limit,
according to MyFico.com. Using more than that could result in drastically lowering your credit score.
Click green for further info
Creating a personal financial management plan can seem complicated or even intimidating, especially if you’ve made it less of a priority over the years. But it’s important to identify and understand these financial lessons now so that you can avoid unnecessary, yet potentially detrimental, money mistakes over the long term.
1. You should have a solid get-out-of-debt plan.
The average U.S. household has more than $15,000 in credit card debt, more than $33,000 instudent loan debt, and nearly $150,000 in mortgage debt, according to statistics from NerdWallet.com. If you fall into any (or all) of those categories, it’s essential to create a concrete plan to pay your debts in the shortest possible amount of time. The first step is to identify how much debt you have and make your monthly payments on time. Use an online debt calculator to determine how much you should pay each month in order to get out of debt faster, helping you to pay less interest over the long term.
2. Paying the minimum balance can result in monstrous interest payments.
For many people, paying the minimum balance is the only viable option when it comes to paying down debts. But if you’re able, try to pay more than the minimum balance when it comes to something like your student loans. When you only pay the minimum balance due, only a very small percentage is going toward the principal balance, and the rest will go toward interest. When it comes to something like credit card payments, pay off the balance in full each month if you can. If you’ve already acquired large amounts of credit card debt and paying off the balance in full is virtually impossible, try to pay more than the minimum amount due and make the payments on time.
6 Personal Finance Rules to Live By
3. An emergency fund could save you time, money and a headache down the road.
It’s crucial to create an emergency fund to be financially prepared in the unfortunate event of an emergency, such as unexpected medical expenses, a family problem or a natural disaster. While we hope these events will never happen, it’s important to be ready so that you can deal with the situation at hand without stressing about how to pay for it.
4. You can improve your credit by tracking your spending.
So simple and yet so rarely practiced. It’s easy to get into the habit of spending more than you have or more than you should, especially if you’re using credit cards. Try to make a habit of using a debit card or cash when making purchases. Track your spending online or using a bill organizing and account management service, such as a Manilla.com, which helps you manage all of your bills, balances and other personal accounts in one place.
5. Late bill payments come with consequences.
Paying your bills late can result in hefty late and penalty fees and can even lower your credit score in some cases. Use Manilla’s text and email bill pay reminders so that you always pay your bills on time and completely avoid late fees.
6. Even just loosely budgeting will benefit your financial standing.
Creating a budget doesn’t have to involve complicated charts, graphs and spreadsheets. Identify how much money you have coming in and going out each month. Take the total of your monthly expenses and subtract it from your monthly income. That simple formula will allow you to be aware of how much money you can spend each month so you always know where you stand. This will help you avoid overspending, stay out of or lower your debt, and help you increase your savings for short- and long-term goals.
[More from Manilla.com: Dave Ramsey on How to Get Out of Debt]
7. Homeownership isn’t for everyone.
The idea of owning a home is exciting in theory, but it’s not necessarily the right move for everyone. The first step in determining if you should purchase a home is to ask yourself if you are financially prepared. That means you’ll need to have enough saved to put down a 20 percent down payment on the home. Plus, you’ll need to qualify for a mortgage, and in order to do that, you’ll likely need to have savings, a minimal debt-to-income ratio and stable income.
8. Buying a car is sometimes better than leasing one.
Although leasing a car oftentimes costs less money up front, it’s not always the most financially sound option in the long run. Not only will the value of a car automatically depreciate immediately upon leaving the dealership, but leasing can also come with insurance issues, limited mileage and pricy monthly payments that don’t go away. Before deciding to buy or lease, do research to identify the best option for you.
9. Vacations don’t have to cost an arm and a leg.
Even in a dismal economy, it’s important to spend time with family and friends, enjoy life, and treat yourself once in a while. A common misconception is that you need a lot of money to go on vacation. Fortunately for most of us, that isn’t the case. Start planning about three to six months before you go on your trip (or even earlier for bigger vacations). The earlier you start planning, the more time you have to save and the more time you have to get the best rates on airfare and lodging. Determine how much your vacation will cost, and set a savings goal. Take advantage of points and mileage programs that your hotel and airlines offer — they can help you save on your next trip. Finally, try using daily deals sites and third-party travel sites to see any discounted vacation promotions available to you.
[More from Manilla.com: Manilla Mini: Tips for Organizing Vacation Planning]
10. Your credit utilization ratio does matter.
It’s important to track the percentage of your credit line that you’re using each month. You should only be using about 10 - 15 percent of your limit, according to MyFico.com. Using more than that could result in drastically lowering your credit score.
11. Not everyone retires at age 65.
Not everyone retires at the golden age of 65, but if you’re late to the savings game, it’s still not impossible. The best thing to do is to start saving in your 20s or 30s. But if you’re in your 40s or 50s or 6os , contribute as much as possible to your retirement savings as you can by cutting back on other costs — consider downsizing to a smaller home if it makes sense for you, pay off your debts so you’re paying less in interest and lowering your overall expenses, and reduce unnecessary insurance expenses (e.g., collision coverage on an older vehicle).
Click green for further info
Source: Credit.com
_____________________________________________________________
to Avoid Learning the Hard Way
It’s important to track the percentage of your credit line that you’re using each month. You should only be using about 10 - 15 percent of your limit,
according to MyFico.com. Using more than that could result in drastically lowering your credit score.
Click green for further info
Creating a personal financial management plan can seem complicated or even intimidating, especially if you’ve made it less of a priority over the years. But it’s important to identify and understand these financial lessons now so that you can avoid unnecessary, yet potentially detrimental, money mistakes over the long term.
1. You should have a solid get-out-of-debt plan.
The average U.S. household has more than $15,000 in credit card debt, more than $33,000 instudent loan debt, and nearly $150,000 in mortgage debt, according to statistics from NerdWallet.com. If you fall into any (or all) of those categories, it’s essential to create a concrete plan to pay your debts in the shortest possible amount of time. The first step is to identify how much debt you have and make your monthly payments on time. Use an online debt calculator to determine how much you should pay each month in order to get out of debt faster, helping you to pay less interest over the long term.
2. Paying the minimum balance can result in monstrous interest payments.
For many people, paying the minimum balance is the only viable option when it comes to paying down debts. But if you’re able, try to pay more than the minimum balance when it comes to something like your student loans. When you only pay the minimum balance due, only a very small percentage is going toward the principal balance, and the rest will go toward interest. When it comes to something like credit card payments, pay off the balance in full each month if you can. If you’ve already acquired large amounts of credit card debt and paying off the balance in full is virtually impossible, try to pay more than the minimum amount due and make the payments on time.
6 Personal Finance Rules to Live By
3. An emergency fund could save you time, money and a headache down the road.
It’s crucial to create an emergency fund to be financially prepared in the unfortunate event of an emergency, such as unexpected medical expenses, a family problem or a natural disaster. While we hope these events will never happen, it’s important to be ready so that you can deal with the situation at hand without stressing about how to pay for it.
4. You can improve your credit by tracking your spending.
So simple and yet so rarely practiced. It’s easy to get into the habit of spending more than you have or more than you should, especially if you’re using credit cards. Try to make a habit of using a debit card or cash when making purchases. Track your spending online or using a bill organizing and account management service, such as a Manilla.com, which helps you manage all of your bills, balances and other personal accounts in one place.
5. Late bill payments come with consequences.
Paying your bills late can result in hefty late and penalty fees and can even lower your credit score in some cases. Use Manilla’s text and email bill pay reminders so that you always pay your bills on time and completely avoid late fees.
6. Even just loosely budgeting will benefit your financial standing.
Creating a budget doesn’t have to involve complicated charts, graphs and spreadsheets. Identify how much money you have coming in and going out each month. Take the total of your monthly expenses and subtract it from your monthly income. That simple formula will allow you to be aware of how much money you can spend each month so you always know where you stand. This will help you avoid overspending, stay out of or lower your debt, and help you increase your savings for short- and long-term goals.
[More from Manilla.com: Dave Ramsey on How to Get Out of Debt]
7. Homeownership isn’t for everyone.
The idea of owning a home is exciting in theory, but it’s not necessarily the right move for everyone. The first step in determining if you should purchase a home is to ask yourself if you are financially prepared. That means you’ll need to have enough saved to put down a 20 percent down payment on the home. Plus, you’ll need to qualify for a mortgage, and in order to do that, you’ll likely need to have savings, a minimal debt-to-income ratio and stable income.
8. Buying a car is sometimes better than leasing one.
Although leasing a car oftentimes costs less money up front, it’s not always the most financially sound option in the long run. Not only will the value of a car automatically depreciate immediately upon leaving the dealership, but leasing can also come with insurance issues, limited mileage and pricy monthly payments that don’t go away. Before deciding to buy or lease, do research to identify the best option for you.
9. Vacations don’t have to cost an arm and a leg.
Even in a dismal economy, it’s important to spend time with family and friends, enjoy life, and treat yourself once in a while. A common misconception is that you need a lot of money to go on vacation. Fortunately for most of us, that isn’t the case. Start planning about three to six months before you go on your trip (or even earlier for bigger vacations). The earlier you start planning, the more time you have to save and the more time you have to get the best rates on airfare and lodging. Determine how much your vacation will cost, and set a savings goal. Take advantage of points and mileage programs that your hotel and airlines offer — they can help you save on your next trip. Finally, try using daily deals sites and third-party travel sites to see any discounted vacation promotions available to you.
[More from Manilla.com: Manilla Mini: Tips for Organizing Vacation Planning]
10. Your credit utilization ratio does matter.
It’s important to track the percentage of your credit line that you’re using each month. You should only be using about 10 - 15 percent of your limit, according to MyFico.com. Using more than that could result in drastically lowering your credit score.
11. Not everyone retires at age 65.
Not everyone retires at the golden age of 65, but if you’re late to the savings game, it’s still not impossible. The best thing to do is to start saving in your 20s or 30s. But if you’re in your 40s or 50s or 6os , contribute as much as possible to your retirement savings as you can by cutting back on other costs — consider downsizing to a smaller home if it makes sense for you, pay off your debts so you’re paying less in interest and lowering your overall expenses, and reduce unnecessary insurance expenses (e.g., collision coverage on an older vehicle).
Click green for further info
Source: Credit.com
_____________________________________________________________
What Really Influences Your Credit Score?
The Path to a Good Credit Score
Click green for further info
It seems like a very straightforward question that deserves an equally straightforward answer, but the biggest credit-scoring question consumers want answered is anything but simplistic.
Consumers want to know, of course, “What influences my credit score?”
The short answer is: Your credit behaviors reflected in your credit files at the three largest credit reporting companies — Equifax, Experian and TransUnion – influence your credit score. This includes information such as your payment history on loans and credit cards, your credit limit used on credit cards, and your total outstanding loan and balances.
But the longer and more accurate answer is that what influences your credit score is likely not exactly the same as what influences another person’s, because each consumer uses credit differently and each has different accounts and histories. How certain characteristics are weighted in particular can vary considerably. In other words, just as no fingerprint is exactly the same, every credit file is unique.
The Many Moving Parts of Credit
As we were developing our latest model, VantageScore 3.0, our developers reviewed some 900 characteristics. Through extensive testing, to obtain the most predictive score, our latest model includes about 140 of these characteristics. While it is highly unlikely that any one credit report would contain all of these characteristics, the point is that there are many moving parts that come together on a credit report, which then influences the credit score.
Traditionally, credit score developers have provided a pie chart when asked what impacts a consumer’s credit score. Pie charts are easy to understand, but they tend to oversimplify things. Pie charts have led to the mistaken belief that the percentage of the pie representing a certain behavior is the exact percentage amount of that behavior in calculating a score for everyone. In reality, the actual weighting of behaviors such as making timely (or late) payments, or maintaining a low (or high) balance, differs from one person to the next because of differences in the credit reports.
For example, if a person had no recently opened credit accounts, his or her payment history might be weighted more heavily in the absence of other information. On the other hand, if a consumer recently opened 10 credit accounts, then his or her payment history might be weighted to a lesser extent.
We’ve thought at length about how to help consumers better understand this concept and what really influences their credit score, and we believe it is more accurate to provide directional guidance, as explained in the infographic below. The graphic is based on our latest model, VantageScore 3.0. Take special note of the recommendations to the right side of the bars. To see the infographic, click: What Really Influences Your Credit Score? (In case the link has expired, search the web with the title (the article was published on July 3, 2013 )
The Path to a Good Credit Score
Most people know to pay their bills on time in order to have a healthy credit profile. In fact, 90% of consumers considered “prime,” which are consumers likely to receive the best terms and interest rates for loans, pay all their debts on time.
Even a single missed payment can cause your credit score to drop by as much as 100 points in the case of a mortgage, and it can take a year and half to recover fully. If you did miss a payment, it’s not the end of the world. The older negative information is, the less it counts against your credit score, so be sure to pay the delinquent bill as soon as possible and keep current on all your other accounts. You will see your score rise relatively quickly.
Consumers with long histories of making on-time payments on multiple credit accounts are statistically less likely to experience a credit default, which is when someone becomes 90 days or more late on a payment. In fact, prime consumers have an average of 13 loans, and the oldest loan is more than 15 years old.
Of course there are millions of prime consumers with less than 13 loans and loans that are not 15 years old, so the message is to keep a mix of different accounts and don’t get into the habit of opening and closing loans frequently. Opening accounts on a frequent basis does not help your credit score. On average, a prime consumer’s newest account is more than 3 years old. The rule of thumb is to only open new accounts when necessary and be careful not to become over-extended.
Another rule to having a good credit score is to keep balances low. It’s best to keep credit card balances below 30% of the maximum a credit card lender extends to you. Overall, having credit card debt isn’t necessarily such a bad thing so long as you aren’t maxing out on a single account. For example, prime consumers actually have an average credit card debt of $6,000.
Ultimately, this is an effort to help you, the consumer, better understand what impacts credit scores. We’re interested in your feedback. Does this provide you the information you need to understand how to manage your credit accounts more effectively? Email to STAF, Inc. - see the Home Page of this website.
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Source: credit.com
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The Path to a Good Credit Score
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It seems like a very straightforward question that deserves an equally straightforward answer, but the biggest credit-scoring question consumers want answered is anything but simplistic.
Consumers want to know, of course, “What influences my credit score?”
The short answer is: Your credit behaviors reflected in your credit files at the three largest credit reporting companies — Equifax, Experian and TransUnion – influence your credit score. This includes information such as your payment history on loans and credit cards, your credit limit used on credit cards, and your total outstanding loan and balances.
But the longer and more accurate answer is that what influences your credit score is likely not exactly the same as what influences another person’s, because each consumer uses credit differently and each has different accounts and histories. How certain characteristics are weighted in particular can vary considerably. In other words, just as no fingerprint is exactly the same, every credit file is unique.
The Many Moving Parts of Credit
As we were developing our latest model, VantageScore 3.0, our developers reviewed some 900 characteristics. Through extensive testing, to obtain the most predictive score, our latest model includes about 140 of these characteristics. While it is highly unlikely that any one credit report would contain all of these characteristics, the point is that there are many moving parts that come together on a credit report, which then influences the credit score.
Traditionally, credit score developers have provided a pie chart when asked what impacts a consumer’s credit score. Pie charts are easy to understand, but they tend to oversimplify things. Pie charts have led to the mistaken belief that the percentage of the pie representing a certain behavior is the exact percentage amount of that behavior in calculating a score for everyone. In reality, the actual weighting of behaviors such as making timely (or late) payments, or maintaining a low (or high) balance, differs from one person to the next because of differences in the credit reports.
For example, if a person had no recently opened credit accounts, his or her payment history might be weighted more heavily in the absence of other information. On the other hand, if a consumer recently opened 10 credit accounts, then his or her payment history might be weighted to a lesser extent.
We’ve thought at length about how to help consumers better understand this concept and what really influences their credit score, and we believe it is more accurate to provide directional guidance, as explained in the infographic below. The graphic is based on our latest model, VantageScore 3.0. Take special note of the recommendations to the right side of the bars. To see the infographic, click: What Really Influences Your Credit Score? (In case the link has expired, search the web with the title (the article was published on July 3, 2013 )
The Path to a Good Credit Score
Most people know to pay their bills on time in order to have a healthy credit profile. In fact, 90% of consumers considered “prime,” which are consumers likely to receive the best terms and interest rates for loans, pay all their debts on time.
Even a single missed payment can cause your credit score to drop by as much as 100 points in the case of a mortgage, and it can take a year and half to recover fully. If you did miss a payment, it’s not the end of the world. The older negative information is, the less it counts against your credit score, so be sure to pay the delinquent bill as soon as possible and keep current on all your other accounts. You will see your score rise relatively quickly.
Consumers with long histories of making on-time payments on multiple credit accounts are statistically less likely to experience a credit default, which is when someone becomes 90 days or more late on a payment. In fact, prime consumers have an average of 13 loans, and the oldest loan is more than 15 years old.
Of course there are millions of prime consumers with less than 13 loans and loans that are not 15 years old, so the message is to keep a mix of different accounts and don’t get into the habit of opening and closing loans frequently. Opening accounts on a frequent basis does not help your credit score. On average, a prime consumer’s newest account is more than 3 years old. The rule of thumb is to only open new accounts when necessary and be careful not to become over-extended.
Another rule to having a good credit score is to keep balances low. It’s best to keep credit card balances below 30% of the maximum a credit card lender extends to you. Overall, having credit card debt isn’t necessarily such a bad thing so long as you aren’t maxing out on a single account. For example, prime consumers actually have an average credit card debt of $6,000.
Ultimately, this is an effort to help you, the consumer, better understand what impacts credit scores. We’re interested in your feedback. Does this provide you the information you need to understand how to manage your credit accounts more effectively? Email to STAF, Inc. - see the Home Page of this website.
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Source: credit.com
________________________________________________
Americans Giving Up Passports Jump Sixfold
as Tougher Rules Loom
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Americans renouncing U.S. citizenship surged sixfold in the second quarter from a year earlier as the government prepares to introduce tougher asset-disclosure rules.
Expatriates giving up their nationality at U.S. embassies climbed to 1,131 in the three months through June from 189 in the year-earlier period, according to Federal Register figures published today. That brought the first-half total to 1,810 compared with 235 for the whole of 2008.
The U.S., the only nation in the Organization for Economic Cooperation and Development that taxes citizens wherever they reside, is searching for tax cheats in offshore centers, including Switzerland, as the government tries to curb the budget deficit. Shunned by Swiss and German banks and facing tougher asset-disclosure rules under the Foreign Account Tax Compliance Act, more of the estimated 6 million Americans living overseas are weighing the cost of holding a U.S. passport.
"With the looming deadline for Fatca, more and more U.S. citizens are becoming aware that they have U.S. tax reporting obligations," said Matthew Ledvina, a U.S. tax lawyer at Anaford AG in Zurich. "Once aware, they decide to renounce their U.S. citizenship."
Fatca requires foreign financial institutions to report to the Internal Revenue Service information about financial accounts held by U.S. taxpayers, or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest. It was estimated to generate $8.7 billion over 10 years, according to the congressional Joint Committee on Taxation.
Delaying Implementation
The 2010 Fatca law requires banks to withhold 30 percent from "certain U.S.-connected payments" to some accounts of American clients who don't disclose enough information to the IRS. While banks can sign agreements to report to the IRS individually, many are precluded from doing so by privacy laws in their jurisdictions.
The Treasury Department last month announced that the IRS will delay the start of Fatca by six months until July 1, 2014, to give foreign banks time to comply with the law. The extension of the act follows a previous one-year delay announced in 2011.
Financial institutions including Canada's Toronto-Dominion Bank (TD) and Allianz SE of Germanyhave expressed concerns that Fatca is too complex.
The latest delay comes after the Swiss government agreed in February to simplifications that will help the country's banks implement Fatca.
Penalty Threat
"The United States wishes to ensure that all income earned worldwide by U.S. taxpayers on accounts held abroad can be taxed by the United States," the Swiss government said on April 10.
Since 2011, Americans, who disclose their non-U.S. bank accounts to the IRS, must file the more expansive 8938 form that asks for all foreign financial assets, including insurance contracts, loans and shareholdings in non-UNN.S. companies.
Failure to file the 8938 form can result in a fine of as much as $50,000. Clients can also be penalized half the amount in an undeclared foreign bank account under the Banks Secrecy Act of 1970.
The implementation of Fatca from July next year comes after UBS, Switzerland's largest bank, paid a $780 million penalty in 2009 and handed over data on about 4,700 accounts to settle a tax-evasion dispute with the U.S. Whistle-blower Bradley Birkenfeld was sentenced to 40 months in a U.S. prison in 2009 after informing the government and Senate about his American clients at the Geneva branch of Zurich-based UBS AG.
Compliance Costs
The additional compliance costs for companies to ensure that Americans they hire are filing the correct U.S. tax returns and asset-declaration forms are at least $5,000 per person, said Ledvina.
For individuals, the costs are also rising. Getting a mortgage or acquiring life insurance is becoming almost impossible for American citizens living overseas, Ledvina said.
"With increased U.S. tax reporting, U.S. accounting costs alone are around $2,000 per year for a U.S. citizen residing abroad," the tax lawyer said. "Adding factors, such as difficulty in finding a bank to accept a U.S. citizen as a client, it is difficult to justify keeping the U.S. citizenship for those who reside permanently abroad."
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Source: Bloomberg News
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Rethink Your Retirement Income
Are you saving too much?
Here's how to look beyond the formulas
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The only hard-and-fast rule for how much retirement income you will need is that there is no hard-and-fast rule.
The financial industry's typical rule of thumb—which states that retirees need to save enough to be able to replace 75% to 85% of their preretirement income every year after they stop working—isn't really useful for many people.
New research shows that many retirees can live well on less than that but others rack up higher expenses through travel, expensive hobbies or medical costs that can't be avoided.
The 75%-to-85% ratio may work for younger workers who have no way of knowing precisely what their incomes or expenses will be as they head into retirement.But if you're closer to the finish line, it's crucial that you figure out for yourself how much you personally will need in "replacement income"—or the percentage of your working income you'll need in retirement—so you can get a better idea of whether your savings, any pensions and Social Security can provide it.
"You really need to fine-tune it," says Cindy Levering, a retired actuary who serves on a retirement-research committee for the Society of Actuaries, a professional group in Schaumburg, Ill. "There are so many things that are specific to the individual, it's hard to generalize."
The actual replacement rate swings widely by household, with many people overestimating the real costs of retirement by as much as 20%, says David Blanchett, head of retirement research at Morningstar in Chicago, which issued a report on retirement income earlier this month.
The best way to determine your actual costs? Sharpen your pencil. When Bud Bierly, a 62-year-old retired school administrator in Athens, Ga., decided to figure out when he could afford to retire, he worked with financial planner Christian Koch, of Atlanta. Together, they calculated that Mr. Bierly and his wife could live on about 75% of their preretirement income—even including mortgage payments, which many retirees don't have, and some travel.
Mr. Bierly says they didn't leave anything to chance. "We did not take the conventional approach," he says. The couple added up their expenses, including contributions to health savings accounts and long-term-care insurance premiums. Then they compared those costs with their pensions, Social Security and annuities.
"We had so many pieces of the puzzle to put in place," but after crunching the real numbers, "we felt like we could meet all of our obligations," Mr. Bierly says.
Want to figure out how much of your own paycheck you would need in retirement? Here are some of the most important factors to keep in mind.
• Your savings habits
If you're a dutiful saver, or if you have children who will be at home until you're practically retired, the paycheck you need after you quit working could be significantly smaller than the one required to pay your bills now.
And remember: Whatever you put away for retirement while working effectively lowers your preretirement income and, in turn, affects your retirement-income calculations.
Say you're putting 15% of your paycheck into a retirement piggy bank today. That's 15% of your income that you won't need to factor in when you start tapping those savings to pay for living expenses.
The same thing applies to the portion of your salary currently going to Social Security and Medicare taxes. Altogether, "that could be 20% off the top that's gone," Mr. Blanchett says. Lowering your needed income that significantly also could lower your income-tax rate in retirement, creating more savings.
Other expenditures, large and small, may also be lower in retirement: train tickets and other commuting costs, gas, car wear-and-tear, dry-cleaning bills, lunches out, child care and college savings, for example. And with more Americans having children in their 40s, the end of tuition payments could coincide with the start of retirement.
On the flip side, if your job covers things like flying first class, golf-club memberships, meals at trendy restaurants, newspaper and magazine subscriptions, an on-site gym or other perks, having to pay your own way could increase your costs, Mr. Blanchett says.
• Inflation and life expectancy
"Pretty much every paper you read about retirement assumes that spending increases every year by [the rate of] inflation," Mr. Blanchett says. But when he analyzed government retiree-spending data, he found otherwise: Between the ages of 65 and 90, spending decreased in inflation-adjusted terms.
Most models would assume that someone spending $50,000 the first year of retirement would need $51,500 the second year (if the inflation rate were 3%). But Mr. Blanchett found that the increase is closer to 1%, which has big implications over decades, "because these changes become cumulative over time," he says.
Life expectancy is another tough factor to predict. Rather than using a 30-year retirement for both members of a couple, Mr. Blanchett estimated the probability of a retiree living to different ages, based on the Society of Actuaries 2000 Annuity Table.
He then combined those probabilities with a Monte Carlo simulation—a process in which hundreds or thousands of potential scenarios are tested—to estimate the probability of both members of the couple being alive and running out of money.
Under those conditions, Mr. Blanchett found, a couple could safely withdraw 5% of their combined savings each year in retirement—rather than the standard 4% traditionally recommended by financial planners—with the same probability that they wouldn't run out of money while in retirement. And if they are willing to assume that their spending will go down, as Mr. Blanchett found, they could withdraw even more than 5% a year in retirement.
If longevity—or its opposite—is common in your family, you should take that into account when deciding how much you can tap each year. And count on greater financial needs for, say, a younger spouse retiring early to spend time with a much older spouse.
• Lifestyle: the wild card.
Lifestyle choices lead to the largest swings in retirees' spending, financial planners say.
One retiree who works with Todd Schneider, a Dallas-area investment adviser, budgeted $40,000 for golf-related travel his first year of retirement. But the bill came to a whopping $69,000.
Other costs can be more insidious, Mr. Schneider says. He now conducts detailed interviews with new clients to find out about their personal habits. "You have to be a real detective," he says.
Among the questions he asks, and anyone facing retirement may want to consider: Are you going to have a vacation house? Do you drink wine? How much do you spend on it? Do you have pets? Collect art? Go to many movies? Gamble in casinos? Give lots of gifts to your kids, or charity?
"I don't find most people stop giving once they retire. Sometimes they're giving more," Mr. Schneider says. "And people's hobbies are going to be more expensive as they have more time. We try to put in perspective for them what their goals are for the next year, three years, 10 years and the rest of their life, so they can put the brakes on if they need to."
Food may not cost you as much as it does while you're working. Although much has been made in recent years about retirees' fine-dining habits, with a number of retirement communities adding foodie-focused restaurants and wine cellars, economists have found in at least three separate studies that spending on food drops significantly in retirement—by anywhere from 5% to 17%.
Meanwhile, the quantity and quality of the food retirees are eating is the same as when they were working, the studies found. How is that possible? One group of researchers attributes the decline in food costs to the additional time that retirees have to cook at home and shop for bargains.
• What's optional.
When you're considering how you want to spend your money in retirement, from cruises to grandchildren's preschool tuition or a kitchen renovation, remember that those are luxuries, not necessities.
Conventional retirement-planning tools, when calculating income projections, often count retirement dreams—golf, cruises, dining out, boating or restoring antique cars, for example—as necessities, says Laurence Kotlikoff, a Boston University economist. He contends that most retirees need only 50% of their preretirement income to maintain their living standard.
Planning for shocks.
Expensive illnesses, long-term care and extreme longevity can suddenly throw retirees' estimated income needs out of whack.
When the Society of Actuaries interviewed middle-class retirees in focus groups earlier this year, "they were managing very carefully, adjusting their spending where they needed to and trying not to draw down" their savings, Ms. Levering says. "But they were not planning for shock events."
Rather than planning for higher spending, the actuaries recommend delaying retirement by a few years, or scaling back work gradually, while creating a bigger cushion, the group said in a research report released Dec. 9.
But note that many surveys have found retirees who wanted to keep working were pressured to take buyouts or suffered health problems that forced them to retire.
An alternative suggested by T. Rowe Price Group in Baltimore is a transitional phase of work for people in their 60s, during which they spend much of the money they would have saved for retirement on travel or other activities they are eager to start.
It still makes sense, though, for such workers to contribute enough to workplace retirement plans to capture any matching contributions offered.
And what if you wind up raising a grandchild? Mr. Schneider has worked with several retirees who have adopted their grandchildren, substantially increasing their living costs, not only for education but also energy and food, he says.
As a result, Mr. Schneider asks new clients as part of their interview whether they have any relatives with tenuous finances whom they would take care of in a bind.
• Where you live.
Property taxes, state and local income taxes, and any taxes on investments play a big part in how much income you'll need in retirement—and they could vary significantly based on geography.
"If they move to Florida, they're not going to have any state income tax. If they live in New York with a state pension, the income is tax-free, and for private pensions, the first $20,000 is tax-free," says Beth Blecker, chief executive of Eastern Planning in Pearl River, N.Y.
Comparing tax-friendly states for retirees is tricky, since property-tax rates might be low while income taxes are high, or vice versa. Also, some states give retirees breaks on Social Security or pension income, while others don't.
Click: Wolters Kluwer's CCH unit, a tax-information provider, breaks out the various taxes in each state in a chart at click: cch.com/wbot2013/010retire.asp. It expects to update the information for each year by the late January of the next year.)
The other big factor: Whether you'll have a mortgage bill. If you plan to pay off your house when you retire, then you won't need as much income to cover that expense.
Keep in mind that if you relocate from a more expensive region, where housing, taxes and other costs are higher, to a cheaper one, your utility bills may fall as well.
In Georgia, the Bierlys bought a house that should be paid off in the next few years. After that, Mr. Bierly says, "we'll be debt-free, and our money will go that much farther."
Source: WSJ & U.S. gov.
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A Rich Retirement: How to Get the Biggest Social Security Check
Date: September 18, 2013
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Important information for retirement
According to the Employee Benefit Research Institute, only two-thirds of Americans have saved for retirement and most have saved less than $25,000. The average retiree depends on Social Security for 70 percent of his or her income.
Click: Employee Benefit Research Institute | EBRIwww.ebri.org/Organization committed to original public policy research and education on economic security and employee benefits. Site contains press releases and ...
Unfortunately, Social Security just isn't equipped to fully support our ever-aging population. There are 78 million baby boomers edging toward retirement. Keep in mind, when Social Security was launched in 1940, a 21-year-old male had a 50/50 chance of living to the age of 65. Today, that same 65-year-old who had a 50/50 chance of being six feet under now has the same mortality and health as a 54-year-old did in 1947. And better health means a longer lifespan: A male reaching retirement age in 2013 is expected to live to an average of 85, a woman to 87.
The result? Experts say that a retirement crisis is looming. Before "too frail to work, too poor to retire" becomes the refrain, we need to change the way we're approaching saving for retirement in this country. First, people need to realize that Social Security is not a pension plan -- or even a retirement program. It's a supplemental retirement program. The other legs of your "retirement stool" -- defined contribution plans and any pensions or personal savings -- need to be stronger to compensate.
You can start collecting Social Security anytime from age 62 to 70, but the later you start, the bigger your benefit. Just how much bigger depends on when you were born. People born from 1943 to 1954 have a "normal" or "full" retirement age of 66. They get 25 percent less than their normal benefit if they cash in at 62 and 32 percent more than their normal benefit if they wait until 70. (People born later have a slightly higher "normal" retirement age and take a somewhat bigger hit for claiming their benefits early and a somewhat smaller bonus for waiting until 70.)
Say you turned 62 in June 2013 and earned $50,000 a year. You could collect about $1,011 a month as a single if you retire at 62, or $1,420 a month (in today's dollars) at your full retirement age of 66 in 2015, or $1,972 a month (again in today dollars) starting in 70 in 2019. If you're earning $150,000, the comparable monthly amounts would be $1,840 at 62, $2,501 at 66, and $3,370 at 70.
While those benefit amounts sound dramatically different, in theory the system is neutral -- meaning if you live to an average age, you'll end up with roughly the same total benefit no matter when you claim.
But that's not really true. The most obvious example is that women live longer, but benefits aren't adjusted by sex. So women are more likely to live past the "break-even age" -- that is, the age at which waiting to collect a bigger check pays off.
There is no pat answer to decide when to start collecting Social Security benefits, but there are a few guiding rules. First, if you're still working, don't claim benefits before your full retirement age. This is the rule thumb that nearly every expert can agree on. You shouldn't claim early while you're still employed unless you truly need the money to survive, because it comes with hefty penalties. Until you reach the full retirement age, for each $2 you earn in 2013 above $15,120, you lose $1 of your annual Social Security benefits. By contrast, after 66, benefits don't get cut no matter how much you earn. If you're working, try to wait. Also, don't take the money early thinking you'll make more by investing it: If you invested the money, you would need to earn more than 7 percent annually to equal what you'd make by delaying benefits until full retirement age.
A common concern is whether Social Security will even exist by the time someone is eligible to receive it, and it's a valid one: The trustees who oversee Social Security say the program's trust funds will run dry in 2033, leaving the program with only enough revenue to pay about 75 percent of benefits. Already, the program is paying out more in benefits than it collects in payroll taxes.
And people frequently aren't confident that they've saved enough on their own to retire comfortably. It's no wonder that a recent survey of Baby Boomers found that 61 percent of respondents fear outliving their retirement more than death. Think about that for just a second. People would sooner die than outlive their retirement. This uncertainty is coloring a lot of people's decision to cash in on Social Security while they know they still can. A recent survey by BMO Retirement Institute found 83 percent of retirees were influenced to start their benefits because they were concerned about the viability of the program.
Click: Retirement Institute - BMO.comwww.bmo.com/wealthinstitute
The next guiding rule: Don't take Social Security until you're sure you want it. Up until December 2011, the Social Security Administration had a "do-over" strategy that had allowed seniors to file for benefits and then later repay them, without interest, to get a bigger check. In effect, you got eight years -- from 62 to 70 -- to change your mind about taking early benefits. You could even use a do-over as a way to get an interest free loan from the government. But since December 2011, you have only 12 months to change your mind after initially filing for benefits.
Finally, part of being a smart financial planner is answering tough questions like "How long do you expect to live?" A calculator on the Social Security website will give you your average life expectancy. It predicts a woman turning 62 this coming year will live to an average of 85.5 and a man of the same age to 83.4. But what about your health and your genes? There are a bunch of websites that calculate your life expectancy while taking into account your health, family history, exercise, eating, drinking and driving habits and even social relationships. If you're not in great health and you want to get some of your tax dollars back, it can make sense to start claiming Social Security as early as possible.
Deciding when to collect get a little more complicated if you're married. When a married person claims benefits, they're eligible for what they've earned or up to half of their living spouse's full retirement benefit, whichever is higher. A low earning spouse who is relying on spousal benefits takes an even bigger early claiming hit than a primary wage earner -- if he or she claims benefits at 62, they get just 35 percent of the primary earner's full retirement age check, instead of 50 percent. On the other hand, there are no extra benefits for waiting past full retirement age to claim that spousal check. That means this is the one case where no matter how you slice it, waiting past the "full retirement age" of 66 doesn't net you an extra dime.
The catch is that a spouse can't claim benefits until the earner makes a claim. So let's say a high-earning husband and non-working wife both turn 66 this year. The best financial plan is for the husband to begin claiming his benefits so his wife can collect. But not so fast! We already covered that he'll receive a bigger benefit if he waits until he's 70. He can still wait and cash in on that delayed payday by requesting that his claim and his benefits be immediately suspended. That way, he then can continue to wait for a bigger benefit, while his wife is now eligible to claim her spousal benefits.
It's tricky, but if you familiarize yourself with the basic rules, you'll be okay. Another thing to remember for married people: If one partner dies, the survivor can claim the deceased spouse's check instead of his or her own, assuming the deceased spouse's check is bigger. The general rule of thumb for married couples is that at least one partner (usually the higher earning one) should delay benefits well past 66. This is "longevity insurance" for you both.
One final thing to remember: Regardless of when you take Social Security and when you stop working, you need to enroll in Medicare when you first become eligible at 65, or you could face financial penalties in the form of higher premiums.
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- A Rich Retirement: Don't make these savings mistakes
- A Rich Retirement: Are you saving enough?
- A Rich Retirement
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When Should You Claim Social Security?
Deciding when to claim Social Security benefits is, without a doubt, one of the most confusing and complex pieces of the entire retirement planning process. In fact, most individuals should consider hiring a professional to get advice on retirement planning in general, and Social Security benefits in particular. Here are some basic guidelines to consider as you decide when to claim Social Security:
Monthly payments vary a lot. You can start taking Social Security benefits at age 62, which shouldn't be confused with age 59 1/2, at which you can take penalty-free withdrawals from tax-advantaged retirement savings accounts like IRAs and 401(k)s. But taking the benefit as soon as you can will lower your monthly payment amounts throughout retirement.
The government attempts to even out Social Security payments over time by basing payments on the average life expectancy. If you take benefits at 62 and live until 77, you'll get about the same amount of money as if you took benefits at 70 and lived until 77. If you live longer than average, though, your total benefits can vary dramatically depending on when you start taking them.
Figuring out exactly how much you can get per month from Social Security is the easy part. The official Social Security Administration retirement estimator can tell you about how much you can expect to get based on your actual earnings. The nearer you are to retirement, the more accurate this calculator will be, and it can show you your retirement earnings based on different scenarios. For example, a person who could get $750 a month at age 62 could get $1,000 a month at 66 or $1,320 a month at 70.
It depends, in part, on your retirement savings. When deciding when to claim Social Security, you'll want to factor in your retirement savings, either in the form of pensions, tax-advantaged accounts or other investments. In some cases, it's better to withdraw from your retirement savings while delaying Social Security. In other cases, it makes more sense to draw on Social Security first, while leaving your retirement savings largely alone until you're older.
Keep in mind that many of your retirement accounts, including the 401(k) and traditional IRA, will be subject to required minimum distributions. So you'll have to withdraw at least some of the money by the time you're 70 1/2.
Those who have enough investments to cover their expenses in early retirement so they can delay taking Social Security are better off waiting to draw on Social Security, according to calculations by the Schwab Center for Financial Research. On the flip side, Social Security alone may not be enough for you to cover your expenses later in life, so you don't want to set yourself up to run out of the money you've saved, either.
Your break-even age. Life expectancy has a lot to do with when it's best to take Social Security. As noted above, the government tries to balance Social Security payments so that whether you take them early or delay them, you'll get about the same amount of money by age 77, an American's current life expectancy.
However, if you expect to live a lot longer than 77 or die much earlier than that, you may benefit from taking your Social Security later or earlier, respectively. For instance, if you wait to take Social Security at your normal retirement age of 66, as opposed to age 62, you'll only have to live until 77 or 78 to break even, according to Schwab calculations. Break-even ages rise the later you wait to take Social Security.
Consider your decisions as a married couple. There are several different strategies for maximizing Social Security checks as a married couple:
--Claim and suspend. If one spouse has made much more than the other over a lifetime and the higher-earning spouse wants to keep working, this can be a good strategy. Basically, the higher-earning spouse will claim Social Security benefits at full retirement age, but suspend payments indefinitely. The lower-earning spouse can then claim a spousal benefit, while the higher-earning spouse's suspended payments increase his or her Social Security benefit over time.
-- Claim and claim again. If both spouses have made similar salaries over their lifetimes, this strategy can be helpful, especially if you can handle lower checks during the early retirement years. For this strategy, both spouses retire. One takes Social Security, while the other claims spousal benefits, putting off his or her own Social Security withdrawals until 70, significantly boosting the second spouse's eventual Social Security checks.
--Maximizing survivor benefits. When planning Social Security as a married couple, it's important to get the surviving spouse the most money possible after one spouse dies. Waiting until full retirement age to collect Social Security will increase your spouse's survivor's benefit, so it's usually a good idea to wait until at least full retirement age to claim benefits.
Deciding to keep working. If you want to take Social Security benefits while still working part time or full time, you can. But you will get reduced benefits if you make over a certain amount - around $15,120 for 2013. For every $2 you make over that amount, your Social Security benefit will be reduced by $1. Once you reach full retirement age, your benefit will be reduced by $1 for every $3 you make over $40,080.
Some individuals choose to take Social Security payments while they're still working, so that they can invest the extra money to hopefully get a better return. This can work out in your favor, if the market and your investing strategy give you an excellent return. But this is a risky proposal, and most investment professionals don't advise it unless you can really afford to lose the money.
The bottom line. When it comes to deciding when to take Social Security benefits, the bottom line is that it's a highly personal decision. It depends on whether you're single or married, how long you might live, whether you want to continue working and how much you've already saved for retirement.
The key is to understand all your choices, and how those various choices will affect your overall income potential during retirement. It's often helpful to find a financial adviser you trust, and work with that adviser to decide when you should take Social Security benefits based on all of these different factors.
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Source:
More From US News & World Report
or keep the mortgage and retire with a bigger nest egg?
Click green for further info
More Americans approaching retiring face what some describe as worrisome levels of debt, especially mortgage and credit card debt.
Consider: More than half (55%) of the American population age 55 to 64 carry a home mortgage, and about the same fraction (50%) have credit card debt, according to a paper presented at the 15th Annual Joint Meeting of the Retirement Research Consortium held earlier in August in Washington, D.C.
What’s more, that debt isn’t going away after retirement. Among people age 65 to 74, almost half had mortgages or other loans on their primary residences, and more than a third held credit card debt according to the paper,
Click: Debt and Debt Management among Older Adults.
And that debt can be a problem, especially for those who are less financially literate, according to the authors of the paper, Annamaria Lusardi, a professor at The George Washington School of Business, and Olivia Mitchell, a professor at The Wharton School, University of Pennsylvania.
Such debt can be hard to pay off during retirement, especially in the absence of earned income. Plus, in the worst of cases, such debt can lead to bankruptcy according to Lusardi, who, along with Mitchell, is the co-author of “Financial Literacy: Implications for Retirement Security and the Financial Marketplace.”
Given the problems that debt can cause in retirement, we thought it worth asking the following questions:
What’s the better tactic?
(1) To aggressively pay down one’s mortgage down before retirement and stop or perhaps reduce one’s savings for retirement?
(2) To keep saving for retirement and retire with mortgage debt?
(3) Or should you split the difference—save a bit less for retirement and pay down one’s mortgage a bit more aggressively?
It depends
Well, as with most things having to do with money, the answer depends on your personal situation. “My answer would be that it depends on the facts and circumstances,” said Mitchell.
Not surprisingly, many agree with Mitchell that it’s impossible to decide without crunching the numbers whether it’s wise to pay down your mortgage before retiring at the expense of saving less retirement. “I do not think there is a general advice to give without knowing more about personal circumstances,” said Lusardi.
And Kathleen Mealey, a financial counselor with Cabot Money Management, is in the same camp. To begin to answer the question, she said you need to assess how ready you are for retirement today given your current savings and your goals and plans for the future.
Others share that point of view. “The question is not a simple one to answer as there are a number of variables that would come into play,” said Mike Kenney, a consultant with Nationwide Financial.
Those variables include current income, current savings, current tax rates, your Schedule A itemization before and during retirement, whether you have access to a Health Savings Account, your retirement income needs with and without a mortgage, your mortgage balance, the number of years remaining on your mortgage, and interest rates and opportunities to refinance—among many other factors.
Earlier this year, a survey showed that most people think paying off their mortgage was among the smartest financial decisions they ever made—along with starting to save when they were young.
Tax consequences must be weighed
The tax consequences of pursuing one tactic or the other must also be considered. “They are tax advantages to pension contributions and interest payments on mortgages are tax deductible so one has to compare these advantages,” Lusardi said.
Mealey agreed, saying that contributing to a 401(k) and deducting interest payments from a mortgage could be beneficial, especially if it puts you in a lower tax bracket. “If the answer will be a combination of both 401(k) contributions and paying off mortgage, work at keeping tax brackets low,” Mealey said.
A word of warning: You are likely to lose much of the benefits of deducting mortgage interest payments the closer you are to paying it off in full. Also, consider this fact: You do get a tax deduction with your 401(k) contribution. But the deduction only defers your taxes, noted Michael Kitces, publisher of Nerd’s Eye View, partner and director of research for Pinnacle Advisory Group, and a RetireMentor at MarketWatch.
What’s the higher return on investment?
Mealey and others also suggested that you pursue the tactic that offers the highest return on your investment. “What is the mortgage interest rate and length of time remaining?” she asked. “Compare this with the 401(k) investment options. If the long-term rate of return on the 401(k) plan will be higher than the mortgage and there is a comfort level with the risk involved, it may not be advantageous to pay off the mortgage.”
For some, this is a no-brainer. “With low interest rates that are fixed for a number of years, a retiree can possibly have a better return on the money in a long-term objective portfolio than the 3 or 4% interest payment,” said Michael Callahan, president of Edu4Retirement.
On the other hand, if you aren’t earning much on your retirement investments, if you have low or negative returns, it might make sense to pay down your mortgage, Mitchell said.
“If one is holding assets in a money market mutual fund earning 0.5% while paying 5% on his or her mortgage, paying down that mortgage may be a clever strategy,” said Lusardi.
At the margin, choosing to not pay down your mortgage and invest in your 401(k) instead is the equivalent of choosing to invest with leverage since you’re keeping a loan and buying stocks.
Should You Ever Take Out A Loan To Make A 401(k) Contribution?
Reasons to not pay down mortgage
That said, there are some general rules to follow.
For instance, Kenney suggests that you not pay down your mortgage unless you already have has ample assets to cover all retirement income needs and/or are making the full allowable contribution to their 401(k). “The likely outcome of paying off a mortgage early is increased taxation on earned income now, though this would not apply with a Roth 401(k), and increased taxation due to the loss of a potential deduction later,” Kenney said.
Mitchell suggested that one’s house is a nondiversified, and potentially quite risky, asset. “In this light, hastening to pay off the mortgage may be the wrong thing to do,” she said.
Reasons to pay down mortgage
In some cases, however, it might make sense to pay down your mortgage. For instance, if your mortgage rate is variable and you think interest rates are rising, that makes paying the mortgage off more appealing, Mitchell said.
And some people believe that the “right thing to do” is to pay off the mortgage since it helps them sleep better at night, she said.
Others share that opinion. “The answer to the question will change with each person based on their current status, time frame, and risk tolerance,” said Mealey. “No matter what the numbers may show, a critical piece to is to understand (your) view on debt. Sometimes no matter how strong the math, the true answer is what allows (you) to sleep well at night.”
Besides being able to sleep better at night, having your mortgage paid off pays off in other ways. You’ll be able to qualify for a reverse mortgage, said Callahan.
Reasons to keep saving for retirement
There’s one big reason to keep saving for retirement, advisers said. If you employer matches your contribution to your 401(k) in some form or fashion, that’s “automatic return right away,” Mitchell said. What’s more, since many employers take the contribution out of your paycheck, “if you don’t see it, you won’t spend it, making that relatively easy,” said Mitchell.
Another expert, meanwhile, is fond of having cash in the bank or money in the market rather than a paid-off mortgage. “To me, cash is king,” said Callahan. “If you can amortize the payment of the mortgage you have options by having the retirement savings on hand. You can always pay off the mortgage if the cash is available.”
Plus, he said, it forces a better financial plan while working since past decisions need to be completed while future decisions need planning and commitments. And, Callahan said, having a mortgage “may keep people working longer so that they won’t overestimate the value of their retirement savings.”
Paying down your mortgage before retirement will also help you lower your expenses in retirement. And that’s especially important since housing represents more than 30% of the expenses for average American 65 and older.
Lowering expenses is a really critical issue in retirement. “With finite resources, keeping expenses low is essential,” said Callahan. “Owning a home is very expensive. Upkeep…is not cheap.” Read Housing, health-care costs are retirement killers.
Are you financially literate enough to retire with debt?
According to Lusardi and Mitchell’s research, early boomers, as compared with previous generations at the same age, bought more expensive homes and got close to retirement with higher mortgage debt than other generations. Plus, they also have higher credit card debt.
“This means that, in addition to decide how to decumulate their wealth, this generation will also have to manage their debt well into retirement and these decisions are not that easy and do require some basic financial literacy,” Lusardi said.
What’s the answer for you?
The bottom line, at least for Mitchell however, is this: “I’d say do both—and keep working longer.”
STAF, Inc. agrees: work as long as you can because your benefits may be much better AND you keep your mental health
in good condition.
Click green for further info
Source: MarketWatch by Robert Powell
Robert Powell is a MarketWatch Retirement columnist. He has been a journalist covering personal finance issues for more than 20 years.
___________________________________________________
Article 1 of 2 Article 2 of 2 next below (FHA - HUD loans)
How Your Credit Can Drive Up the Cost of a Mortgage
Click green for further info
Planning on getting a home loan anytime soon? Before you do, you should know that there are two types of loans that are inherently higher in cost than their traditional mortgage counterparts — and we’re not talking subprime or private money, either.
Bottom line, if your credit score is below 680 or you have credit blemishes or little equity, it can drive up the cost of a mortgage. This is why it’s so important to know what your credit score is before you shop for a mortgage. (One helpful — and free — resource is Credit.com’s Credit Report Card, which gives you your credit score and breaks down the components of your credit report to show you where you’re doing well, and which areas of your credit you need to work on to build your credit.)
FHA loans and conventional loans are the meat and potatoes of today’s mortgage market. These product types represent the lion’s share of nearly all loan applications. So why are these so pricey? Simply put, because a lower credit score means higher risk, the lender will charge a lower-credit borrower more to insure the loan against default. Let’s look at how it works out.
FHA Loan Nuts & Bolts
An FHA loan has two forms of mortgage insurance (this is what insures the lender against your defaulting on the loan). One is an upfront mortgage insurance premium (UFMIP) financed and amortized over the loan term, which is based on 175 basis points of the loan amount. An additional monthly mortgage insurance premium is also applied using 135 basis points of the loan amount.
On a $400,000 home loan for example, that’s an extra $486 per month for the benefit of carrying a loan insured by the Federal Housing Administration.
Calculating the Mortgage Insurance Payments
Two scenarios with a loan amount of $400,000, with different credit scores:
1. 740 credit score, with 5% down — mortgage insurance based on 76 basis points
2. 640 credit score, with 5% down — mortgage insurance based on 120 basis points
Monthly Mortgage Insurance:
$400,000 × .0076 ÷12 = $253.33 per month for 740 credit score
$400,000 × .0120 ÷12 = $400 per month for 640 credit score
Notice that it’s $147 per month more for the same loan with a lower credit score! By reducing the loan-to-value (by putting more money down, for example), a person with a lower credit score could receive a lower percentage of mortgage insurance on a conventional loan. However, even someone with a higher loan to value, and a higher credit score will typically secure a less pricey home loan. Generally, conventional loans are lower-cost compared to a loan insured by the FHA.
Choosing Between Pricey Home Loans
Consider the following when determining your mortgage options:
• What is my credit score? Can I improve it?
• What type of down payment do I have? (Note: Any home loan with less than 20% down will require monthly mortgage insurance, making the loan pricier.)
• Can I put more money down? In other words, buy less house, apply for less debt.
• Can I afford a higher monthly mortgage payment?
• Is my monthly income enough to meet all of my monthly debt payments and a proposed new mortgage payment?
No matter what your situation is, a qualified mortgage professional should be able to help you navigate the pros and cons of some of the pricier loans available in the market to determine which course of action is best suitable for you.
Click green for further info
Source: Credit.com
_______________________________________
Article 2 of 2
FHA Mortage Loans
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FHA & HUD web links at the end of this article
FHA loans are insured by the Federal Housing Administration
under
Housing and Urban Development (HUD)
The FHA does not make these loans, the lender does. The FHA insures the lender against default. FHA loans are quite popular due to expanded loan qualifying standards. These loans offer nontraditional credit qualifying unlike conventional mortgages. The FHA insures the loan being made against a primary residence refinance or purchase.
FHA Loan Benefits:
FHA loans are also another terrific opportunity for refinancing purposes. Doing debt consolidation? Cashing out on your home equity? How about a low appraisal situation? In many cases an FHA loan can help a current homeowner take advantage of today’s low fixed mortgage rates while the same time saving thousands of dollars in interest.
FHA Loan Highlights:
Click: Get FHA mortgage - Low Rates Now Available - FHA.comwww.fha.com/
Click: HUD/U.S.www.hud.gov/ Government agency oversees home mortgage lending practices
_______________________________________________________
Each article has something new and important than the other articles do not have
Thus, study all articles to get as many facts as you possibly can
When Should You Claim Social Security?
Deciding when to claim Social Security benefits is, without a doubt, one of the most confusing and complex pieces of the entire retirement planning process. In fact, most individuals should consider hiring a professional to get advice on retirement planning in general, and Social Security benefits in particular. Here are some basic guidelines to consider as you decide when to claim Social Security:
Monthly payments vary a lot. You can start taking Social Security benefits at age 62, which shouldn't be confused with age 59 1/2, at which you can take penalty-free withdrawals from tax-advantaged retirement savings accounts like IRAs and 401(k)s. But taking the benefit as soon as you can will lower your monthly payment amounts throughout retirement.
The government attempts to even out Social Security payments over time by basing payments on the average life expectancy. If you take benefits at 62 and live until 77, you'll get about the same amount of money as if you took benefits at 70 and lived until 77. If you live longer than average, though, your total benefits can vary dramatically depending on when you start taking them.
Figuring out exactly how much you can get per month from Social Security is the easy part. The official Social Security Administration retirement estimator can tell you about how much you can expect to get based on your actual earnings. The nearer you are to retirement, the more accurate this calculator will be, and it can show you your retirement earnings based on different scenarios. For example, a person who could get $750 a month at age 62 could get $1,000 a month at 66 or $1,320 a month at 70.
It depends, in part, on your retirement savings. When deciding when to claim Social Security, you'll want to factor in your retirement savings, either in the form of pensions, tax-advantaged accounts or other investments. In some cases, it's better to withdraw from your retirement savings while delaying Social Security. In other cases, it makes more sense to draw on Social Security first, while leaving your retirement savings largely alone until you're older.
Keep in mind that many of your retirement accounts, including the 401(k) and traditional IRA, will be subject to required minimum distributions. So you'll have to withdraw at least some of the money by the time you're 70 1/2.
Those who have enough investments to cover their expenses in early retirement so they can delay taking Social Security are better off waiting to draw on Social Security, according to calculations by the Schwab Center for Financial Research. On the flip side, Social Security alone may not be enough for you to cover your expenses later in life, so you don't want to set yourself up to run out of the money you've saved, either.
Your break-even age. Life expectancy has a lot to do with when it's best to take Social Security. As noted above, the government tries to balance Social Security payments so that whether you take them early or delay them, you'll get about the same amount of money by age 77, an American's current life expectancy.
However, if you expect to live a lot longer than 77 or die much earlier than that, you may benefit from taking your Social Security later or earlier, respectively. For instance, if you wait to take Social Security at your normal retirement age of 66, as opposed to age 62, you'll only have to live until 77 or 78 to break even, according to Schwab calculations. Break-even ages rise the later you wait to take Social Security.
Consider your decisions as a married couple. There are several different strategies for maximizing Social Security checks as a married couple:
--Claim and suspend. If one spouse has made much more than the other over a lifetime and the higher-earning spouse wants to keep working, this can be a good strategy. Basically, the higher-earning spouse will claim Social Security benefits at full retirement age, but suspend payments indefinitely. The lower-earning spouse can then claim a spousal benefit, while the higher-earning spouse's suspended payments increase his or her Social Security benefit over time.
-- Claim and claim again. If both spouses have made similar salaries over their lifetimes, this strategy can be helpful, especially if you can handle lower checks during the early retirement years. For this strategy, both spouses retire. One takes Social Security, while the other claims spousal benefits, putting off his or her own Social Security withdrawals until 70, significantly boosting the second spouse's eventual Social Security checks.
--Maximizing survivor benefits. When planning Social Security as a married couple, it's important to get the surviving spouse the most money possible after one spouse dies. Waiting until full retirement age to collect Social Security will increase your spouse's survivor's benefit, so it's usually a good idea to wait until at least full retirement age to claim benefits.
Deciding to keep working. If you want to take Social Security benefits while still working part time or full time, you can. But you will get reduced benefits if you make over a certain amount - around $15,120 for 2013. For every $2 you make over that amount, your Social Security benefit will be reduced by $1. Once you reach full retirement age, your benefit will be reduced by $1 for every $3 you make over $40,080.
Some individuals choose to take Social Security payments while they're still working, so that they can invest the extra money to hopefully get a better return. This can work out in your favor, if the market and your investing strategy give you an excellent return. But this is a risky proposal, and most investment professionals don't advise it unless you can really afford to lose the money.
The bottom line. When it comes to deciding when to take Social Security benefits, the bottom line is that it's a highly personal decision. It depends on whether you're single or married, how long you might live, whether you want to continue working and how much you've already saved for retirement.
The key is to understand all your choices, and how those various choices will affect your overall income potential during retirement. It's often helpful to find a financial adviser you trust, and work with that adviser to decide when you should take Social Security benefits based on all of these different factors.
Click green for further info
Source:
More From US News & World Report
- 12 Ways to Increase Your Social Security Payments
- 10 Things Everyone Should Know About Social Security
- What Older Workers Don't Know About Social Security _____________________________________________________________________________
- 8 Retirement Planning Mistakes to Avoid News Date: July 2013 Click green for further info
- In a recent survey, only 13 percent of respondents told the Employee Benefit Research Institute they’re very confident they’ll be able to afford a comfortable retirement. Meaning, 87 percent of respondents weren’t sure they’ll be able to continue their quality of life after leaving the workforce.
- Those are scary numbers, but you can eliminate much of the worry by avoiding the common retirement planning mistakes people make.
- Retirement Planning Mistakes You Should Avoid
Preparing for retirement takes a lot of planning, and you have to watch out for pitfalls.
1. Failing to plan
In another section of the survey, only 23 percent of respondents told the Employee Benefit Research Institute they were very confident they’re doing a good job of financially preparing for retirement. Failing to plan is one of the biggest mistakes you can make. If you don’t have a plan, spend a weekend hashing one out. Here are some questions to ask yourself: - 2. Starting too late
- I started saving for my retirement at 18 because my parents convinced me to sign up for my company’s 401(k) plan. At the time, it was just a few bucks a month, but that seed money has had time to grow. If I’d started now, I would have missed out on 11 years of compound interest.
Bottom line: The sooner you start saving, the bigger your pot of money will be when you’re ready to quit work.
3. Not taking advantage of 401(k)’s
If your company offers a 401(k) plan and you’re not contributing, you’re making a huge mistake. Contributions to your 401(k) come out of your paycheck before taxes, meaning it’s a portion of your income that you won’t pay taxes on now. And many employers have a match program, meaning they’ll match your contributions up to a certain percentage, which is free money.
Talk to your human resources office about your company’s 401(k) plan and sign up ASAP.
4. Not understanding the risks
Stocks come with risks, but if that’s causing you to shy away from stocks entirely, you’re depriving your retirement account of an opportunity to grow. On the flip side, you could be taking on too much risk. If you have an aggressive retirement plan loaded with high-risk stocks, you might end up losing a big chunk right before you retire.
Stacy, in a post for beginning stock investors, offers this advice:
I suggest subtracting your age from 100, and putting no more than the resulting percentage of your long-term savings into stocks. So if you’re 25, 100 minus 25 equals 75 percent in stocks. If you’re 75, you’d only use stocks for 25 percent of your savings.
But as I also said, that’s just a rule of thumb. If you’re nervous, you’ve invested too much.
5. Relying on Social Security
If you’re relying on Social Security to keep you solvent in your golden years, you might be setting yourself up for disaster. Use the Social Security Administration’s Retirement Estimator to see an estimate of your Social Security benefits. Also sign up to see your Social Security statement online.
Odds are, it won’t be enough. The maximum Social Security benefit this year for someone who retires at full retirement age is $2,533 and only $1,923 if you take early retirement at age 62.
6. Underestimating health care costs
If you assume your health care costs will be covered after you qualify for Medicare at age 65, you might be in for a rude awakening when you retire. Fidelity Investments says a couple retiring in 2013 will need $220,000 on average to cover health care costs in retirement. That’s not including nursing home or other types of long-term care.
Fidelity adds that “retirees now spend more on health care than they do on food.”
7. Borrowing from your future
You can borrow from your 401(k), but that doesn’t mean you should. I worked for a company that actually encouraged people to borrow from their 401(k)’s to cover expenses like a new house or car. You will have to pay it back, but in the meantime your retirement funds won’t be growing as much as they otherwise would if you had left that money in the account.
8. Cashing out early
If you quit your job, you may be tempted to cash out your 401(k), but do so and you’ll not only owe taxes on the amount but you’ll face a 10 percent penalty. If you cash out your 401(k) before your retirement, you’ll have to pay taxes on any money you collect. Instead, roll your 401(k) into an IRA and stay tax-free.
Click green for further info - Source: This article was originally published on MoneyTalksNews.com ________________________________________________________________________________
or keep the mortgage and retire with a bigger nest egg?
Click green for further info
More Americans approaching retiring face what some describe as worrisome levels of debt, especially mortgage and credit card debt.
Consider: More than half (55%) of the American population age 55 to 64 carry a home mortgage, and about the same fraction (50%) have credit card debt, according to a paper presented at the 15th Annual Joint Meeting of the Retirement Research Consortium held earlier in August in Washington, D.C.
What’s more, that debt isn’t going away after retirement. Among people age 65 to 74, almost half had mortgages or other loans on their primary residences, and more than a third held credit card debt according to the paper,
Click: Debt and Debt Management among Older Adults.
And that debt can be a problem, especially for those who are less financially literate, according to the authors of the paper, Annamaria Lusardi, a professor at The George Washington School of Business, and Olivia Mitchell, a professor at The Wharton School, University of Pennsylvania.
Such debt can be hard to pay off during retirement, especially in the absence of earned income. Plus, in the worst of cases, such debt can lead to bankruptcy according to Lusardi, who, along with Mitchell, is the co-author of “Financial Literacy: Implications for Retirement Security and the Financial Marketplace.”
Given the problems that debt can cause in retirement, we thought it worth asking the following questions:
What’s the better tactic?
(1) To aggressively pay down one’s mortgage down before retirement and stop or perhaps reduce one’s savings for retirement?
(2) To keep saving for retirement and retire with mortgage debt?
(3) Or should you split the difference—save a bit less for retirement and pay down one’s mortgage a bit more aggressively?
It depends
Well, as with most things having to do with money, the answer depends on your personal situation. “My answer would be that it depends on the facts and circumstances,” said Mitchell.
Not surprisingly, many agree with Mitchell that it’s impossible to decide without crunching the numbers whether it’s wise to pay down your mortgage before retiring at the expense of saving less retirement. “I do not think there is a general advice to give without knowing more about personal circumstances,” said Lusardi.
And Kathleen Mealey, a financial counselor with Cabot Money Management, is in the same camp. To begin to answer the question, she said you need to assess how ready you are for retirement today given your current savings and your goals and plans for the future.
Others share that point of view. “The question is not a simple one to answer as there are a number of variables that would come into play,” said Mike Kenney, a consultant with Nationwide Financial.
Those variables include current income, current savings, current tax rates, your Schedule A itemization before and during retirement, whether you have access to a Health Savings Account, your retirement income needs with and without a mortgage, your mortgage balance, the number of years remaining on your mortgage, and interest rates and opportunities to refinance—among many other factors.
Earlier this year, a survey showed that most people think paying off their mortgage was among the smartest financial decisions they ever made—along with starting to save when they were young.
Tax consequences must be weighed
The tax consequences of pursuing one tactic or the other must also be considered. “They are tax advantages to pension contributions and interest payments on mortgages are tax deductible so one has to compare these advantages,” Lusardi said.
Mealey agreed, saying that contributing to a 401(k) and deducting interest payments from a mortgage could be beneficial, especially if it puts you in a lower tax bracket. “If the answer will be a combination of both 401(k) contributions and paying off mortgage, work at keeping tax brackets low,” Mealey said.
A word of warning: You are likely to lose much of the benefits of deducting mortgage interest payments the closer you are to paying it off in full. Also, consider this fact: You do get a tax deduction with your 401(k) contribution. But the deduction only defers your taxes, noted Michael Kitces, publisher of Nerd’s Eye View, partner and director of research for Pinnacle Advisory Group, and a RetireMentor at MarketWatch.
What’s the higher return on investment?
Mealey and others also suggested that you pursue the tactic that offers the highest return on your investment. “What is the mortgage interest rate and length of time remaining?” she asked. “Compare this with the 401(k) investment options. If the long-term rate of return on the 401(k) plan will be higher than the mortgage and there is a comfort level with the risk involved, it may not be advantageous to pay off the mortgage.”
For some, this is a no-brainer. “With low interest rates that are fixed for a number of years, a retiree can possibly have a better return on the money in a long-term objective portfolio than the 3 or 4% interest payment,” said Michael Callahan, president of Edu4Retirement.
On the other hand, if you aren’t earning much on your retirement investments, if you have low or negative returns, it might make sense to pay down your mortgage, Mitchell said.
“If one is holding assets in a money market mutual fund earning 0.5% while paying 5% on his or her mortgage, paying down that mortgage may be a clever strategy,” said Lusardi.
At the margin, choosing to not pay down your mortgage and invest in your 401(k) instead is the equivalent of choosing to invest with leverage since you’re keeping a loan and buying stocks.
Should You Ever Take Out A Loan To Make A 401(k) Contribution?
Reasons to not pay down mortgage
That said, there are some general rules to follow.
For instance, Kenney suggests that you not pay down your mortgage unless you already have has ample assets to cover all retirement income needs and/or are making the full allowable contribution to their 401(k). “The likely outcome of paying off a mortgage early is increased taxation on earned income now, though this would not apply with a Roth 401(k), and increased taxation due to the loss of a potential deduction later,” Kenney said.
Mitchell suggested that one’s house is a nondiversified, and potentially quite risky, asset. “In this light, hastening to pay off the mortgage may be the wrong thing to do,” she said.
Reasons to pay down mortgage
In some cases, however, it might make sense to pay down your mortgage. For instance, if your mortgage rate is variable and you think interest rates are rising, that makes paying the mortgage off more appealing, Mitchell said.
And some people believe that the “right thing to do” is to pay off the mortgage since it helps them sleep better at night, she said.
Others share that opinion. “The answer to the question will change with each person based on their current status, time frame, and risk tolerance,” said Mealey. “No matter what the numbers may show, a critical piece to is to understand (your) view on debt. Sometimes no matter how strong the math, the true answer is what allows (you) to sleep well at night.”
Besides being able to sleep better at night, having your mortgage paid off pays off in other ways. You’ll be able to qualify for a reverse mortgage, said Callahan.
Reasons to keep saving for retirement
There’s one big reason to keep saving for retirement, advisers said. If you employer matches your contribution to your 401(k) in some form or fashion, that’s “automatic return right away,” Mitchell said. What’s more, since many employers take the contribution out of your paycheck, “if you don’t see it, you won’t spend it, making that relatively easy,” said Mitchell.
Another expert, meanwhile, is fond of having cash in the bank or money in the market rather than a paid-off mortgage. “To me, cash is king,” said Callahan. “If you can amortize the payment of the mortgage you have options by having the retirement savings on hand. You can always pay off the mortgage if the cash is available.”
Plus, he said, it forces a better financial plan while working since past decisions need to be completed while future decisions need planning and commitments. And, Callahan said, having a mortgage “may keep people working longer so that they won’t overestimate the value of their retirement savings.”
Paying down your mortgage before retirement will also help you lower your expenses in retirement. And that’s especially important since housing represents more than 30% of the expenses for average American 65 and older.
Lowering expenses is a really critical issue in retirement. “With finite resources, keeping expenses low is essential,” said Callahan. “Owning a home is very expensive. Upkeep…is not cheap.” Read Housing, health-care costs are retirement killers.
Are you financially literate enough to retire with debt?
According to Lusardi and Mitchell’s research, early boomers, as compared with previous generations at the same age, bought more expensive homes and got close to retirement with higher mortgage debt than other generations. Plus, they also have higher credit card debt.
“This means that, in addition to decide how to decumulate their wealth, this generation will also have to manage their debt well into retirement and these decisions are not that easy and do require some basic financial literacy,” Lusardi said.
What’s the answer for you?
The bottom line, at least for Mitchell however, is this: “I’d say do both—and keep working longer.”
STAF, Inc. agrees: work as long as you can because your benefits may be much better AND you keep your mental health
in good condition.
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Source: MarketWatch by Robert Powell
Robert Powell is a MarketWatch Retirement columnist. He has been a journalist covering personal finance issues for more than 20 years.
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Article 1 of 2 Article 2 of 2 next below (FHA - HUD loans)
How Your Credit Can Drive Up the Cost of a Mortgage
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Planning on getting a home loan anytime soon? Before you do, you should know that there are two types of loans that are inherently higher in cost than their traditional mortgage counterparts — and we’re not talking subprime or private money, either.
Bottom line, if your credit score is below 680 or you have credit blemishes or little equity, it can drive up the cost of a mortgage. This is why it’s so important to know what your credit score is before you shop for a mortgage. (One helpful — and free — resource is Credit.com’s Credit Report Card, which gives you your credit score and breaks down the components of your credit report to show you where you’re doing well, and which areas of your credit you need to work on to build your credit.)
FHA loans and conventional loans are the meat and potatoes of today’s mortgage market. These product types represent the lion’s share of nearly all loan applications. So why are these so pricey? Simply put, because a lower credit score means higher risk, the lender will charge a lower-credit borrower more to insure the loan against default. Let’s look at how it works out.
FHA Loan Nuts & Bolts
An FHA loan has two forms of mortgage insurance (this is what insures the lender against your defaulting on the loan). One is an upfront mortgage insurance premium (UFMIP) financed and amortized over the loan term, which is based on 175 basis points of the loan amount. An additional monthly mortgage insurance premium is also applied using 135 basis points of the loan amount.
On a $400,000 home loan for example, that’s an extra $486 per month for the benefit of carrying a loan insured by the Federal Housing Administration.
Calculating the Mortgage Insurance Payments
Two scenarios with a loan amount of $400,000, with different credit scores:
1. 740 credit score, with 5% down — mortgage insurance based on 76 basis points
2. 640 credit score, with 5% down — mortgage insurance based on 120 basis points
Monthly Mortgage Insurance:
$400,000 × .0076 ÷12 = $253.33 per month for 740 credit score
$400,000 × .0120 ÷12 = $400 per month for 640 credit score
Notice that it’s $147 per month more for the same loan with a lower credit score! By reducing the loan-to-value (by putting more money down, for example), a person with a lower credit score could receive a lower percentage of mortgage insurance on a conventional loan. However, even someone with a higher loan to value, and a higher credit score will typically secure a less pricey home loan. Generally, conventional loans are lower-cost compared to a loan insured by the FHA.
Choosing Between Pricey Home Loans
Consider the following when determining your mortgage options:
• What is my credit score? Can I improve it?
• What type of down payment do I have? (Note: Any home loan with less than 20% down will require monthly mortgage insurance, making the loan pricier.)
• Can I put more money down? In other words, buy less house, apply for less debt.
• Can I afford a higher monthly mortgage payment?
• Is my monthly income enough to meet all of my monthly debt payments and a proposed new mortgage payment?
No matter what your situation is, a qualified mortgage professional should be able to help you navigate the pros and cons of some of the pricier loans available in the market to determine which course of action is best suitable for you.
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Source: Credit.com
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Article 2 of 2
FHA Mortage Loans
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FHA & HUD web links at the end of this article
FHA loans are insured by the Federal Housing Administration
under
Housing and Urban Development (HUD)
The FHA does not make these loans, the lender does. The FHA insures the lender against default. FHA loans are quite popular due to expanded loan qualifying standards. These loans offer nontraditional credit qualifying unlike conventional mortgages. The FHA insures the loan being made against a primary residence refinance or purchase.
FHA Loan Benefits:
- Are you buying your first home and don’t have a big down payment?
- Do you presently have an FHA loan with a high interest rate?
- Maybe you’re considering buying another primary residence and want to stay little more liquid?
FHA loans are also another terrific opportunity for refinancing purposes. Doing debt consolidation? Cashing out on your home equity? How about a low appraisal situation? In many cases an FHA loan can help a current homeowner take advantage of today’s low fixed mortgage rates while the same time saving thousands of dollars in interest.
FHA Loan Highlights:
- Purchase a home with as little as 3.5% down
- Refinance up to 98% of the value of your home
- Refinance a current FHA loan out an appraisal
- Refinance cash out up to 85% of the value of your home
- Less than perfect credit scenarios permitted
- Previous short sale ok (certain terms apply
- Previous bankruptcy ok (certain terms apply)
- Previous foreclosure ok (certain terms apply)
- Co-signors are permitted
- FHA Loans are assumable
- Seller can contribute up to 6% of the purchase price for home buyer’s closing costs
- Chose from 30-, 15-year fixed rates
- FHA Loans contain two forms of mortgage insurance an upfront premium and the monthly premium
- Principle and interest payment will not change over the length of loan
- Mortgage insurance can be removed after 60 months and 20% equity
- Mortgage payment will actually drop when mortgage insurance is removed
- No prepayment penalties
Click: Get FHA mortgage - Low Rates Now Available - FHA.comwww.fha.com/
Click: HUD/U.S.www.hud.gov/ Government agency oversees home mortgage lending practices
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My Teens Are Shunning Credit Cards
to shun = to avoid deliberately; keep away from
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STAF, Inc.'s comment:
Credit cards can make these following activities easier and safer: (1) renting a car - (some car rental companies may request to have a credit card) - also a free car rental insurance comes with most credit cards, (2) reserving a hotel room and paying the hotel bill, (3) reserving a flight ticket, (4) buying on line, etc. Disputing a bill is easier and faster with a credit card than with a debit card.
The credit cards have valuable points & perks the debit cards do not have. The credit cards are building good credit and high credit score when the monthly balance is paid always on time and preferably immediately after the bill arrives - a fast payer is a credit worthy person.
Keep the monthly use of your credit cards under 20 % of the whole available balance and pay in full every month you have a bill.
If you have several credit cards use them all at least one this month, the other one the next month, etc.
For the above reasons and for some additional reasons you will find in this web page, STAF, Inc. definitely suggests to have 1 - 2 credit cards in a student's us and 2 - 4 cards in full adult's use.
No-fee cards exist, search the web.
My younger son has never had a credit card and he doesn't plan to get one. According to a recent article by CNNMoney, his inexperience with the ways of plastic is not that unusual. Like many younger Americans, he relies on debit cards as well as gift cards. Evidently the number of young people ditching credit cards has doubled since the recession. In fact, 16 percent of people ages 18 to 29 didn't have a credit card by the end of 2012 compared to 8 percent in 2007, CNN reported. My son doesn't need a credit card. He doesn't want to accumulate debt like older people. He has a plan for becoming financially independent which doesn't entail credit card dependence.
Building up his savings
My 18-year-old son is able to put money into savings because he isn't trying to pay off student loan debt or credit card debt. According to CNN, the average credit card debt of his peers has declined from $3,073 to $2,087. With no minimum payment to make on a credit card, he has more money to build up an emergency savings account.
Living at home
My son is also saving money by living at home as he completes his education at a nearby college. When he has become established in his career, he will have the money saved for a house. In order to get a low mortgage rate, experts say a person has to have a high credit score. Without credit card debt, he should have a good debt-to-income ratio. Consumers 18 to 29 with an excellent FICO score of 760 or higher has gone up from about 8 percent in 2005 to 11 percent in 2012, CNN reported.
Avoiding the malls
I can't remember the last time my son stepped foot into a mall. When he shops online, he does so to buy practical items such as ink cartridge for the printer. He knows how to search for bargains. He recently got a great deal on a weight-lifting set by shopping Craig's List. My son spends more time on homework than he does on watching television. It's easier for him to remain a credit card virgin because he doesn't participate too much in the consumer society.
Paying cash for college
I've noticed more of my sons friends are trying to figure out ways of getting through college without taking out a lot of student loan debt. They are working part-time and attending community college. Since our sons didn't' take out any college loans, we feel less financially stressed as parents. We can afford to help pay for our son's tuition because he chose to go to an affordable college.
My son tells me he doesn't plan to ever get a credit card. A credit card doesn't seem relevant to him since he can pay for everything with a debit card. He can use not only a debit card that is attached to his checking and savings account, but a debit card through a discount brokerage firm. As a parent, I encourage him to be part of a credit-card free world where everyone buys only what they can afford to buy and learns to wait for the rest.
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Source: Finance news
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Young Americans are ditching credit cards
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The number of young Americans who are living without credit cards has doubled since the recession, according to new research.About 16% of consumers ages 18 to 29 didn't have a single credit card by the end of 2012 -- up from 8% in 2007, according to data that credit score provider FICO collected from the credit files of millions of consumers.
As a result, credit card debt has declined by about a third among this age group -- from an average $3,073 to $2,087 per person.
After watching older generations -- like their parents -- get hit hard by the recession, many younger Americans are shying away from credit and opting for debit cards instead, according to FICO.
Prepaid cards have also become attractive alternatives, said John Ulzheimer, president of consumer education at SmartCredit.com.
"[T]here has been very aggressive marketing of prepaid debit cards over the past few years targeting young people and minorities," he said. "So it's not a surprise that more young people are using prepaid debit cards over credit cards."
In addition, the CARD Act, which took effect in 2010 and requires consumers under age 21 to have a co-signer or to earn enough income to make full payments, has also made it harder for this group to qualify for credit cards, FICO found.
Along with credit card debt, overall debt has fallen among this younger group. Even with the surge in student loan debt, this younger group has seen an even more rapid decline in other debts like mortgages. And this shedding of debt has translated into higher credit scores, with the number of consumers 18 to 29 years old with excellent FICO scores of 760 or higher jumping from 8.6% in 2005 to 11.2% last year.
Related: How to talk about money before saying 'I do'
Older Americans are another story, however. While they also lowered their credit card debt, they racked up more auto and mortgage debt.
Consumers 40 and over therefore have more overall debt today than they did in 2005. And as a result, FICO scores have fallen 1.7 percentage points among the 40 to 49 age group, 1.8 percentage points for those ages 50 to 59 and 3.8 percentage points for consumers 60 and older.
"Parents are having to take on more debt to help their kids make ends meet," said Ulzheimer. "And, thanks again to the CARD Act, more parents are being asked to co-sign for their younger non-working children who want a credit card."
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Source: NEW YORK (CNNMoney)
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Credit Card Debt Forecast Signals Ominous Warnings to Consumers
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It's déjà vu. Déjà vu, from French, literally "already seen", is the phenomenon of having the strong sensation that an event or experience currently being experienced has been experienced in the past, whether it has actually happened or not.
While the Great Recession didn't stop our debt-loving ways, U.S. consumers showed steady - albeit modest - improvements in their spending and saving habits until the first quarter of 2013. Yet after a disappointing first quarter, Americans are expected to end the year with nearly $47 billion in new credit card debt to add to the roughly $82 billion incurred during 2011 and 2012 combined.
So, where do we go from here? There are a couple scenarios. We could continue to spend beyond our means until debt levels become unsustainable, charge-off rates bounce back from record lows, credit availability tightens and the economic recovery is put in jeopardy. Or, we can come to the realization pre-recession spending was buoyed by income levels affected by the housing bubble and readjust our perception of necessities, budgeting and paying off debt. Which would you prefer?
It's pretty much a no-brainer, but that doesn't mean the process will be easy. Reining in spending requires making tough choices and breaking bad habits. However, the current credit card landscape lends itself to consumer improvement.
More specifically, credit card offers with a zero introductory annual percentage rate are abundant and becoming increasingly attractive. According to data by CardHub.com, the average credit card offering zero percent interest on new purchases has an introductory rate of around 10 months - 2.53 percent longer than offers that were on the market at the end of 2012. The same is true of the average zero percent balance transfer term on credit card offers.
When considering the average indebted household owes a balance of $6,591, according to CardHub's 2013 credit card study, a middle-of-the-road balance transfer card could be worth as much as $1,000 in avoided fees and finance charges.
High-end outliers can be worth even more. For example, the Slate Card from Chase offers zero percent interest rate for the first 15 months and charges neither an annual fee, nor a balance transfer fee. Suppose you have an average credit card balance and a card with a 17 percent interest rate. If you can afford to pay $275 per month to your credit card company, the Slate Card could help you climb out of debt in a quick fashion.
However, transferring a balance to a credit card alone won't solve one's debt problems. Consider these tips for getting your personal finance house in order and keeping it in shape moving forward:
1. Maximize your credit standing. Good credit cards on the market like the Slate Card from Chase require an applicant has an above-average credit score to qualify. Since some of these cards provide zero percent interest on new purchases for up to 18 months and hundreds of dollars in initial rewards bonuses, it pays to have good credit. You can estimate where you currently stand, but the credit-building process will be the same regardless of your starting point. The best approach is to open a credit card that has no annual fee and make on-time payments to get positive information flowing into your credit report on a monthly basis.
2. Click: Build an emergency fund. Setting up a financial safety net should be a high priority. Without one, you may be a major emergency expense or an income disruption away from running into serious financial trouble - even if you do manage to get debt-free. A number of experts recommend people have an emergency fund equal to their minimum monthly expenses times at least three months (preferably six months). You can work your way toward that goal by making incremental monthly deposits.
3. Stick to a budget. Recent debt trends make sense when you consider only two in five American consumers maintain a budget, according to the National Foundation for Credit Counseling. To properly manage spending, you need to know where your money is going. As such, review credit card and bank statements, make a list of your monthly expenses and do away with frivolous or unnecessary spending.
4. Utilize the "island approach." The island approach is a strategy that involves using separate accounts for different types of transactions. At its most basic, this would entail having one credit card for revolving debt and another for everyday expenses. Isolating debt and ongoing spending can make budgeting and sticking to a debt-payoff plan easier.
5. Pay off amounts owed. Many consumers rack up more than one type of debt. Instead of making equal payments across balances, consider making the minimum payment required to stay current on all but focus on paying down your most expensive form of debt. Attributing the lion's share of your designated monthly installments to the balance with the highest interest rate, and repeating this strategy until you're debt-free can save you time and money on your journey out of credit card debt.
Odysseas Papadimitriou is the CEO of CardHub.com, a credit card comparison website where you can find information on free balance transfer credit cards.
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Source: U.S. News
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How Far Below My Means Should I Live?
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Most people have heard the expressions that a person should live within their means or live below their means. To get ahead financially, I am aware of the fact that we need to bring in more money than we spend. In addition, we need to save and invest the extra money each month. However, I take various factors into consideration when trying to figure out exactly how far below my means I need to live. Some experts recommend living on 70 percent of one's income and saving 30 percent. I save a different percentage every month depending on my circumstances.
Paying extra on the mortgage
I want to live far enough below my means that I can "afford" to pay a little extra on my mortgage every month. In order to pay our mortgage off in another 7 years, I'd have to pay an extra $250 a month toward our mortgage. However, I'm not in that much of a rush to pay it off since we just entered our 40s. As long as I can pay an extra $50 to $250 a month toward our mortgage, I feel as though I'm on track to reach my goals. Even though I could downsize to a tent in my sister's backyard, I don't make the choice to live that far below my means.
Maxing out a retirement account
Some experts suggest maxing out one's retirement accounts. However, I believe I can live below my means without maxing out my 401(k) and Roth IRA accounts. I do think it's smart to pay myself first by having 10 percent of my income taken out of my paycheck and invested into my company-sponsored retirement account. As long as I save 10 percent, I feel as though that's living far enough below my means. I could retire early, but I don't want to have to live so far below my means in order to have that much in retirement.
Building up an emergency account
Many financial gurus recommend having an emergency account that will cover 6 to 8 months of living expenses. I don't think I need to put aside that much money in order to feel safe during an economic downturn. After all, I've already survived the Great Recession. A member of Generation X, I graduated from college when none of my peers could land jobs. As long as I can save $100 a month toward my emergency account, I'm satisfied.
Saving money for short-term goals
At the moment, my husband and I do not have any long-term financial goals other than retirement and to pay off the mortgage. But we do have a lot of short-term financial goals. We want money put aside for vacations, new appliances, continuing education, clothing and entertainment. We don't to dip into our emergency fund for anything other than medical expenses and expenses related to hurricane damage or other unexpected disasters. We save about $200 a month for our short-term financial goals.
Even though a lot of financial experts offer cookie cutter advice for everyone about living below their means, I think everyone has to set their own financial priorities. Sometimes I scrimp and save for several months, while other times I loosen up on my spending. For me, the secret to staying out of debt has been to just always save at least a little more than what I spend. And, I try to devote at least a few months out of the year to a more aggressive savings plan because the future is predictable in that I know I'll always need money to pay for things.
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How I Double My Savings with Help of Friends
Aspiring to be Comfortable, but not Rich
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Source: Finance news
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According to a recent CNBC article,
it's still less expensive to rent than to own
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Renting is still cheaper than owning—by an average of $6,000 a year in 2010, according to a report released by the Bureau of Labor Statistics. But the BLS's study also turned up a curious side effect of the housing crisis: as rates fell after the recession, homeowners paid less in mortgage and interest, while rents continued to rise.
This anomaly has occurred only twice since 1986, when the bureau began keeping records on housing expenses. The last time a rise in rents outpaced home borrowing costs was in 2004, when interest rates fluctuated in the wake of the 2001 downturn. "The decrease in interest rates in 2004 and again in 2010 had no discernable effect on rent," the BLS report notes.
Landlords, in other words, don't appear to have passed on their savings on borrowing costs to their tenants.
The study compared homeowners' and renters' housing-related expenses in 2010 versus 1986 — both times of recovery, but with big differences. Twenty-five years ago, the country was four years past an unemployment peak of 9.7 and a recent housing boom was slowing gradually. In 2010, unemployment was still above 9 percent, and housing was still suffering the after-effects of a bubble.
Yet home ownership has grown some 36 percent in the intervening years, with some 67 percent of the BLS's "consumer units" owning a home in 2010. They spent an average of $18,503 on housing overall, while renters spent $12,843.
Maintenance and utility bills represent the bulk of the difference. While paying some $1,600 more to maintain their houses, homeowners also paid $1,654 for electricity on average that year, to renters' average of $952.
Homeowners also paid more for telephone service. While both groups paid more than $700 a year on average on cellphones, homeowners spent twice as much for landlines than renters did—suggesting that two years ago landlines had already become dispensable for those staying in a residence for a short time.
If homeowners profited unequally from declining interest rates, the study found that housing is still taking a larger share of their expenditures than it did during the Reagan recovery.
While spending about the same overall in today's dollars, homeowners spent 11 percent more for their housing than they did in 1986, while pulling back on clothing (down 41 percent) and food (down 14 percent). While homeowners spent less overall on transportation, they spent 15 percent more on gas and oil for their cars.
Renters, who are paying 16 percent more for housing than they did a quarter-century ago, have had to reduce their clothing and food spending as well, though by smaller percentages.
As might be expected, the most significant added expense for both homeowners and renters was health-care, in both direct expenses and in what each group paid for insurance. Health-care premiums cost homeowners $943 on average in 1986 and $2,413 in 2010, a 145 percent increase. Renters paid 124 percent more.
The report doesn't say whether homeowners' increased spending on their houses was a matter of choice or a function of higher market prices. One possible indicator: spending on non-food entertainment was up from 1986 to 2010 by 11 percent—the only discretionary category that homeowners spent more on. Which suggests that after paying for houses and soaring insurance premiums consumers needed a good, stiff drink.
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Source: CNBC news
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The five benefits I have as a renter
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With the values of homes going up in my neighborhood, I should be as pleased as pie to be a homeowner. But sometimes, I get nostalgic thinking back on the fun I had living in different parts of the country as a renter. I could never have had the flexibility to move as often as I did if I had to sell a home each time. According to a recent CNBC article, it's still less expensive to rent than to own. Homeowners and renters are spending more money on housing costs in general these days. I can think of 5 financial reasons I miss being a renter instead of a homeowner.
Paying no property taxes
One of the things I don't like about being a homeowner is paying property taxes. Because our property tax bill is different each year, our mortgage payment goes up or down each year. I had the misconception that if I had a fixed rate mortgage, my mortgage payment would stay the same every month. Our home owner's insurance also affects our mortgage payment each year. When I rented, I never had a landlord raise my rent. Maybe I was just lucky.
Having someone else fix things
Another benefit of being a renter is not having the responsibility to fix anything. A downside is that I had landlords who came into the apartment to fix things without calling first. Still, I never had to worry about replacing appliances and having the carpet cleaned. Since I bought my home about 7 years ago, I've had to replace the refrigerator and dishwasher. The repairman had to come out to fix the clothing washer twice as well as the sliding glass door, garbage disposal and plumbing.
Enjoying the outdoors
When I was a renter I could enjoy the outdoors without having to do any of the hard labor such as mowing or weeding. With so many poisonous snakes in Florida, it's not fun to have to do all the yard work or pay someone else to do it. Paying for a lawn service can be costly. As a renter, I could enjoy the manicured lawn and landscaping without lifting a finger. I had more time to play tennis or go swimming.
Using amenities for free
As a renter, I never had to pay extra to use the hot tub, swimming pool, tennis courts or exercise room at the apartment complex. Now that I am a homeowner, I pay for the amenities in the form of my homeowner's association fees. Some homeowners in Florida also pay CDD (community development district) fees on top of their homeowner's association fees. Most landlords have to charge the going rate for a rental property even if it's costing them more money to pay for the HOA and CDD fees. Essentially, a renter is getting many amenities for free because the property owner has to absorb the costs.
Having money in savings
When I was a renter, I had more money in savings because I didn't have to spend it all on a down payment for my house as well as the real estate commission and closing costs. If I could have back the money I spent when I bought my condo and later my current single-family home, I'd be rich. I could have invested the money in the stock market instead of paying for the mortgage interest and closing costs.
Even though I regret buying a home, I have decided to stick it out until my mortgage is completely paid off. I estimate it will take me another 8 to 10 years to pay off my mortgage by paying $200 to $250 extra every month. Once my home is paid off, I will enjoy the real benefits of owning a home because I'll actually own my house. Until then, I still think about how much better off I was as a renter.
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It's Not What You Make, but What You Keep
Remodeling our Empty Nest Will Save Us $50,000
Doubling my Savings With the Help of Friends
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Source: finance news
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Owning a Home Isn’t Always a Virtue
Important for every person to study this article
By Robert J. Shiller is Sterling Professor of Economics at Yale
Date: July 17, 2013
COURAGING homeownership has been considered a national goal at least since “Own Your Own Home Day” was introduced in 1920 by various business and civic groups as part of a National Thrift Week. The newly popular word “homeownership” represented a goal and a virtue for every good citizen — to get out of the tenements and into one’s own home. Homeownership was thought to encourage planning, discipline, permanency and community spirit.
In the aftermath of the subprime mortgage crisis, our national commitment to homeownership is sure to be questioned as we consider what to do about Fannie Mae and Freddie Mac, the enterprises that are meant to increase the supply of money available for mortgagesand are now under government conservatorship; the Federal Housing Administration, which directly subsidizes homeownership; and the Federal Reserve’s quantitative easing program, which was intended to lower interest rates. For both political and economic reasons, any or all of these encouragements for homeownership — not to mention the mortgage interest deduction — could be sharply curtailed.
Which is why this is a good time to ask a basic question: In today’s world, is it wise for the government to subsidize homeownership?
In answering it, we have to look at the big picture by considering all the presumed advantages of owning a home, including the encouragement of thrift that animated the founders of “Own Your Own Home Day.”
Consider Switzerland, which by several accounts has had one of the lowest rates of homeownership in the developed world. In 2010, only 36.8 percent of Swiss homes housed an owner-occupant; in the United States that same year, the rate was 66.5 percent. Yet Switzerland is doing just fine, with a gross domestic product that is 4 percent higher, per capita, than that of the United States, according to 2011 figures produced at the University of Pennsylvania.
It’s not that the Swiss inherently prefer renting. A 1996 survey asked a sample of Swiss whether, if they could freely choose, they would rather be homeowners or renters. Eighty-three percent said homeowners.
CERTAINLY, many of us have a basic drive to create our own habitats. We enjoy personalizing our living spaces, inside and out. But there are also important practical advantages to renting to consider — especially when asking if government should support or discourage homeownership.
For example, renters are more mobile. That means they are more likely to accept jobs in another city, or even on the other side of a large metropolis. In addition, it’s hardly wise to put all of one’s life savings into a single, highly leveraged investment in a home — as millions of underwater borrowers today can attest.
So why the difference in American and Swiss homeownership rates? According to a 2010 study, “Why Do the Swiss Rent?” by Steven C. Bourassa at the University of Louisville and Martin Hoesli at the University of Geneva, tax policy provides much of the explanation. For example, owner-occupants in Switzerland pay income tax on what is known as the imputed rent they derive from living in their own homes — yes, they pay tax on the rent they could be charging themselves. This imputed rent is estimated by looking at market rents for similar properties.
In the United States, taxation of imputed rent was struck down by the Supreme Court in 1934. (Britain tried such a tax but abandoned it in 1963.) And, given the likely resistance to any new tax, it is highly unlikely that the idea could re-emerge anytime soon, however sensible it might be. But we do have the option of cutting back on government incentives to own rather than rent.
Beyond tax policy, we need to look at landlord-tenant law. Mr. Bourassa and Mr. Hoesli contend that Switzerland’s law in this area is relatively attractive, compared with those of other countries. In the United States, it is administered by 50 separate states, so treatment of renters is confusing to national economic commentators. The law, of course, should offer congenial ways to resolve disputes between landlords and tenants. But it should also ensure that people’s various concerns about renting — about possible evictions and rent increases, for example, — are handled well.
There was a revolution in American landlord-tenant law in the 1960s and ’70s, focusing on the inequities facing minority groups. But since 1972, there has been no major update of the Uniform Residential Landlord and Tenant Act issued by the National Conference of Commissioners on Uniform State Laws. Perhaps there should be another revolution in this body of law, focused on making renting more rewarding to people of every background and income level.
Last week, it was good to see that one agenda item for the commissioners, meeting in Boston, was to discuss proposals to revise the law to make the rental process work better.
We should also remember that a goal of “Own Your Own Home Day” was to emphasize thrift. And it is still true today that most people don’t save enough. In a 2011 paper, James M. Poterba of M.I.T., Steven F. Venti of Dartmouth and David A. Wise of Harvard showed that retirement saving in most American households was inadequate and that most households nearing retirement in 2008 had most of their wealth in home equity.
Many people don’t save much unless a regular schedule of mortgage repayment, which builds home equity, enforces it. The 2011 paper argued that the home-equity portion of saving tends to be conserved until very late in life after retirement, thus providing insuranceagainst the risk of living longer than expected.
THUS, encouraging homeownership in the past encouraged better saving plans. And yet the Swiss, without such encouragement, manage to have a high household saving rate. Our national policy needs to take away much of the enormous subsidy to homeownership — but if and when it does so, it will have to find some other way to promote proper saving.
By Robert J. Shiller is Sterling Professor of Economics at Yale
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Source: NYT
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Buying a ‘flipped’ home? Be careful
More flipped properties on the market; buyers need to be careful
Date for this article is August 2013 - the basic information for house flipping is the same
no matter what year it is you are reading this
Definition of 'Flipping'
A type of real estate investment strategy in which an investor purchases properties with the goal of reselling them for a profit. Profit is generated (1) either through the price appreciation that occurs as a result of a hot housing market and/or (2) from renovations and capital improvements. Investors who employ these strategies face the risk of price depreciation in bad housing markets.
Home buyers always need to have an eye out for shoddy renovation work and defect coverups before purchasing a home. But when it’s a “flipped” home they’re considering, it’s wise to be even more careful, making sure the investor didn’t cut corners while prepping the home for sale.
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Home buyers always need to have an eye out for shoddy renovation work and defect coverups before purchasing a home. But when it’s a “flipped” home they’re considering, it’s wise to be even more careful, making sure the investor didn’t cut corners while prepping the home for sale.
These days, a greater number of single-family homes are being flipped, or bought and resold within six months. In the first half of the year, flips were up 19% from a year ago and up 74% from the first half of 2011, according to data from RealtyTrac, a foreclosure listings and housing data website.
Click: RealtyTracwww.realtytrac.com/ Top Foreclosure Listings - RealtyTrac has the largest database of foreclosures, auction and bank-owned homes for investors & home buyers, Government ...
Current flipping activity is at its highest since RealtyTrac began tracking it in 2007.
While he doesn’t have data to support it, Daren Blomquist, vice president at RealtyTrac, said it’s likely that activity was higher from 2002 to 2006, before the housing crash, as home prices were growing by double digits in many markets and investors looked to cash in. But unlike a decade ago, Blomquist said, today’s flippers don’t have easy access to financing, and many have to purchase properties with cash or hard money loans.
Despite the greater financing hassles, there is money to be made by investors who flip these homes, many of whom believe they can make better returns investing in property than in the stock market, said Daniel LeMier, a professional engineer who does residential engineering and foundation remediation work in Denver. After all, many markets are in need of housing inventory, and people who can rehab rundown homes can add to the for-sale stock.
“A lot of these guys who buy these homes to remodel and flip them do a good job,” said Bill Jacques, president of the American Society of Home Inspectors, as well as a home inspector in Charleston, S.C. But, “there’s always going to be the person to put lipstick on a pig and sell it. They try to honey up these houses and paint them, put some new light fixtures in and make people think they’re in new and good shape.”
Click: American Society of Home Inspectors, ASHIwww.ashi.org/ Oldest and largest professional organization for home inspectors in North America.
How do you make sure you don’t buy a home that has been renovated cosmetically, with serious underlying issues beneath the fresh paint? Below are some tips.
Find out who did the work
Make sure the person or company who did the renovations has been in the business for a while and has a good reputation, said David Hicks, co-president of HomeVestors of America, a company that trains and supports franchises specializing in buying and rehabbing residential properties. HomeVestors advertises using the phrase “We Buy Ugly Houses.”
Click: HomeVestors.com - HomeVestors Official Sitewww.homevestors.com/The We Buy Ugly Houses® Company. Sell Your House Fast for Cash!
“It’s just like anything. If you’re buying from a builder, you would check out the builder,” he said.
But the real-estate listing may not name the flipper, so you might have to go to the county assessor’s office to find out who had the last deed on the house, LeMier said. Once you have that, you can start researching to see if it’s a reputable business.
You’ll probably also want to avoid novices.
“Larger investment groups doing rehab work…they will spend the money to do it correctly. Smaller investors are on a tight budget, and when they find a problem some of them will do everything they can do to spend as little as necessary,” LeMier said.
Hire a home inspector
An experienced home inspector will be able to spot some of the common shortcuts that flippers tend to take when revamping a home on the cheap. Many of the homes that are being flipped are in some state of disrepair or have a substantial amount of deferred maintenance.
Deferred maintenance is the practice of postponing maintenance activities such as repairs on both real property (i.e. infrastructure) and personal property (i.e. machinery) in order to save costs, meet budget funding levels, or realign available budget monies. .. click: http://en.wikipedia.org/wiki/Deferred_maintenance
Home buyers always need to have an eye out for shoddy renovation work and defect coverups before purchasing a home. But when it’s a “flipped” home they’re considering, it’s wise to be even more careful, making sure the investor didn’t cut corners while prepping the home for sale.
Click green for further info
Source: MarketWatch
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Renting Beats Owning, But Both Take a Bigger Slice
Renting is still cheaper than owning—by an average of $6,000 a year in 2010, according to a report released by the Bureau of Labor Statistics. But the BLS's study also turned up a curious side effect of the housing crisis: as rates fell after the recession, homeowners paid less in mortgage and interest, while rents continued to rise.
This anomaly has occurred only twice since 1986, when the bureau began keeping records on housing expenses. The last time a rise in rents outpaced home borrowing costs was in 2004, when interest rates fluctuated in the wake of the 2001 downturn. "The decrease in interest rates in 2004 and again in 2010 had no discernable effect on rent," the BLS report notes.
Landlords, in other words, don't appear to have passed on their savings on borrowing costs to their tenants.
The study compared homeowners' and renters' housing-related expenses in 2010 versus 1986 — both times of recovery, but with big differences. Twenty-five years ago, the country was four years past an unemployment peak of 9.7 and a recent housing boom was slowing gradually. In 2010, unemployment was still above 9 percent, and housing was still suffering the after-effects of a bubble.
Yet home ownership has grown some 36 percent in the intervening years, with some 67 percent of the BLS's "consumer units" owning a home in 2010. They spent an average of $18,503 on housing overall, while renters spent $12,843.
Maintenance and utility bills represent the bulk of the difference. While paying some $1,600 more to maintain their houses, homeowners also paid $1,654 for electricity on average that year, to renters' average of $952.
Homeowners also paid more for telephone service. While both groups paid more than $700 a year on average on cellphones, homeowners spent twice as much for landlines than renters did—suggesting that two years ago landlines had already become dispensable for those staying in a residence for a short time.
If homeowners profited unequally from declining interest rates, the study found that housing is still taking a larger share of their expenditures than it did during the Reagan recovery.
While spending about the same overall in today's dollars, homeowners spent 11 percent more for their housing than they did in 1986, while pulling back on clothing (down 41 percent) and food (down 14 percent). While homeowners spent less overall on transportation, they spent 15 percent more on gas and oil for their cars.
Renters, who are paying 16 percent more for housing than they did a quarter-century ago, have had to reduce their clothing and food spending as well, though by smaller percentages.
As might be expected, the most significant added expense for both homeowners and renters was health-care, in both direct expenses and in what each group paid for insurance. Health-care premiums cost homeowners $943 on average in 1986 and $2,413 in 2010, a 145 percent increase. Renters paid 124 percent more.
The report doesn't say whether homeowners' increased spending on their houses was a matter of choice or a function of higher market prices. One possible indicator: spending on non-food entertainment was up from 1986 to 2010 by 11 percent—the only discretionary category that homeowners spent more on. Which suggests that after paying for houses and soaring insurance premiums consumers needed a good, stiff drink.
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Source: Bureau of Labor Statistics
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Renting is still cheaper than owning—by an average of $6,000 a year in 2010, according to a report released by the Bureau of Labor Statistics. But the BLS's study also turned up a curious side effect of the housing crisis: as rates fell after the recession, homeowners paid less in mortgage and interest, while rents continued to rise.
This anomaly has occurred only twice since 1986, when the bureau began keeping records on housing expenses. The last time a rise in rents outpaced home borrowing costs was in 2004, when interest rates fluctuated in the wake of the 2001 downturn. "The decrease in interest rates in 2004 and again in 2010 had no discernable effect on rent," the BLS report notes.
Landlords, in other words, don't appear to have passed on their savings on borrowing costs to their tenants.
The study compared homeowners' and renters' housing-related expenses in 2010 versus 1986 — both times of recovery, but with big differences. Twenty-five years ago, the country was four years past an unemployment peak of 9.7 and a recent housing boom was slowing gradually. In 2010, unemployment was still above 9 percent, and housing was still suffering the after-effects of a bubble.
Yet home ownership has grown some 36 percent in the intervening years, with some 67 percent of the BLS's "consumer units" owning a home in 2010. They spent an average of $18,503 on housing overall, while renters spent $12,843.
Maintenance and utility bills represent the bulk of the difference. While paying some $1,600 more to maintain their houses, homeowners also paid $1,654 for electricity on average that year, to renters' average of $952.
Homeowners also paid more for telephone service. While both groups paid more than $700 a year on average on cellphones, homeowners spent twice as much for landlines than renters did—suggesting that two years ago landlines had already become dispensable for those staying in a residence for a short time.
If homeowners profited unequally from declining interest rates, the study found that housing is still taking a larger share of their expenditures than it did during the Reagan recovery.
While spending about the same overall in today's dollars, homeowners spent 11 percent more for their housing than they did in 1986, while pulling back on clothing (down 41 percent) and food (down 14 percent). While homeowners spent less overall on transportation, they spent 15 percent more on gas and oil for their cars.
Renters, who are paying 16 percent more for housing than they did a quarter-century ago, have had to reduce their clothing and food spending as well, though by smaller percentages.
As might be expected, the most significant added expense for both homeowners and renters was health-care, in both direct expenses and in what each group paid for insurance. Health-care premiums cost homeowners $943 on average in 1986 and $2,413 in 2010, a 145 percent increase. Renters paid 124 percent more.
The report doesn't say whether homeowners' increased spending on their houses was a matter of choice or a function of higher market prices. One possible indicator: spending on non-food entertainment was up from 1986 to 2010 by 11 percent—the only discretionary category that homeowners spent more on. Which suggests that after paying for houses and soaring insurance premiums consumers needed a good, stiff drink.
Click green for further info
Source: Bureau of Labor Statistics
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Think You Can't Buy a House? Try the One You Rent
Click green for further info .
Click: A Step-by-Step Guide to Homebuying
If you have never owned a home before, or owned a home in the past, or previous circumstances require you to rent a home now, and you’re hoping to buy a house again, there’s one possibility you might not have considered: purchasing the home you’re currently renting. That’s right — make a purchase offer to your landlord to buy the home you presently live in. The blanket belief your landlord doesn’t want to sell simply may not be true. By communicating your intention to purchase the house directly from your landlord, the transaction becomes easier for both parties.
Advantages to Buying a House You’re Already Renting
- No competition, just you and the seller.
- Both parties benefit because the seller enjoys reduced selling costs without using a listing broker.
- Can be completed with or without a real estate agent.
- More time to perform on sales contract.
- No need to search for more homes as you may have already customized the home to your liking.
1. Get Pre-approved.
If you’re serious about buying a home, especially in today’s credit market, emphasis is placed on your ability to perform on a real estate sales contract. Unless you have your purchase offer in cold hard cash in the bank, you’ll need mortgage financing. Find a mortgage lender that has experience and the ability to close a loan transaction from buyer and seller — both with and without real estate agent representation. This way, down the road if you or the seller decide to bring a real estate professional in on the transaction, you can still secure financing. To attain a proper loan pre-approval, you’ll need to provide supporting financial documentation to a mortgage lender, as well as give them a loan application and permission to obtain a copy of your most recent credit report.
2. Make an Offer.
Bring an offer in writing to your landlord and present to them a fair market price for what you think the home is worth. There are two ways to accomplish this. You can bring a real estate agent into the transaction so they can make the offer on your behalf. Or, depending on the nature of your relationship with your landlord, a one-page document — stating the sales price, terms of the transaction between you and the seller, signed and dated by both parties — is sufficient formortgage loan financing.
3. Get Into Contract.
Chances are you have lived in the home for some time and you already have a feel for what life is like at the property. As an informed buyer you’ll want to obtain a pest inspection, and a home inspection — if you feel it is necessary — is typically recommended. The only required fee is an appraisal, costing around $400-$500. An appraisal is needed to determine whether the sales price meets the actual valuation of the home. Your mortgage lender will lend on the appraised value or the sales contract, whichever is lower.
Considerations for this:
- If the appraised value is equal to the purchase price, then you meet the lending guideline.
- If the appraised value is above the purchase price, the lender will make the loan on the sales contract and you purchase home equity moving forward.
- If the appraised value is lower than the purchase price, you can choose to pay the difference or the purchase price can be reduced to match appraised value.
Getting a mortgage does require providing thorough supporting financial documentation, as well as acceptable debt ratios, credit score and liabilities. Successfully closing the escrow loan is simply a function of having enough income coming in every month to offset your monthly liabilities. Liabilities lenders look for are things such as child support, alimony and typical liabilities that show up on a consumer credit report such as credit card debt, car loans and student loans.
Lending Tips:
- You’ll need a credit score of at least 620 or above.
- Your income will need to be approximately 55% higher then all your liability payments and total new housing payment. Put another way, take a house payment you can afford, add your present minimum payment obligations, then divide this figure by 0.45%. This will provide the minimum income you’ll need to be generating every month to take on that payment as a function of your current obligations. If you have no liabilities, take your monthly income, multiply it by 0.45% and that’s the total house payment you qualify for — including principal and interest, monthly property taxes, monthly fire insurance and potentially monthly mortgage insurance (incumbent upon your down payment amount and the loan program you’re using).
- The down payment amount varies, unless you’re buying a home in a rural area that allows for no minimum down payment, you’ll most likely be looking at a down payment of approximately 3.5%.
- Be prepared to show all supporting financial documentation, including all pages of personal income tax returns and any applicable filed income tax extensions.
Comment from the public to this article:
"No need to get agents involved in a private sale like the one described. I bought my son's house from him and we paid an attorney 400 bucks to draw up a contract."
Source: Credit.com
Click green for further info
More from Credit.com
- The First Thing to Do Before Buying a Home
- How Can I Get a Mortgage After Credit Problems? ________________________________________________________
Necessary Information for Every Mortgage Payer
How to Handle Extra Payments When You Have 2 Mortgages
Article 1 of 3 (2 - 3/3 next below)
By Dr. Jack M. Guttentag, emeritus*) finance professor at The Wharton School
NEW YORK (TheStreet) -- It's a good news/bad news situation. The bad news is you've been struggling with payments after taking out a second mortgage some time back. The good news is that you're prospering and ready to make extra payments to trim your debt.
So which loan should you focus on? The original mortgage or the second one?
The answer is simple: The top priority should be reducing the loan with the highest interest rate. Unfortunately, many homeowners get this wrong because of common misconceptions about how mortgages work, says Jack M. Guttentag, emeritus finance professor at The Wharton School.
Many borrowers believe incorrectly that they should pay down the older loan first, because more of each payment goes to principal rather than interest, Guttentag says on his website, click: TheMortgageProfessor.
The most common type of mortgage is the 15- or 30-year "fully amortizing mortgage," or FAM. The interest rate and monthly payment are fixed for the life of the loan. But each payment is divided, with a portion going to interest charges and a portion to the loan balance or principal. In the early years of the loan, most of the payment is interest, with very little to principal. In later years it's the other way around.
Suppose, for example, you took out a $100,000 mortgage at 4.5%, about today's average. For each of the 360 months, you'd pay $507 for interest and principal. In the first month, that would cover $375 in interest, $132 in principal. In the 359th month it would be $3.78 for interest, $503 for principal.
Guttentag says that many people believe, incorrectly, that this is something of a scam, with the lender getting paid the lion's share of its interest upfront, earlier than it should. According to this reasoning, making extra payments on a relatively young loan just pays interest and doesn't significantly reduce the debt.
But the conspiracy theory is wrong. In fact, each month's interest payment is figured by applying the interest rate to the remaining debt. Interest charges are big in the early years because that's when the debt is largest. As the debt gets smaller, the interest charge gets smaller. That allows more of the total payment to go to principal.
And, in fact, when you make an extra payment, all of the money goes to principal, none to interest. So an extra $100 payment reduces the debt by $100. That saves you the interest charges on that $100, for a savings of $4.50 a year with a 4.5% loan. Escaping this interest payment is like earning 4.5% a year on that $100.
If the loan charged 6%, reducing the principal by 6% would be the same as earning 6% on the $100. So, if you had two loans, one charging 4.5% and the other 6%, you'd get more bang for your buck by paying down the 6% loan first.
Of course, with a fully amortizing mortgage, making extra payments won't reduce the size of your future monthly payments. Instead, it will allow you to pay the debt off early, saving you years of interest charges. Use the prepayment feature on this Mortgage Loan Calculator to see the effect.
The strategy gets a little more complicated if the second mortgage has a variable rate, which is common with a home equity line of credit. With this type of second mortgage, you don't know what interest rate you'll be charged in the future, since the rate is reset every month.
If you had a fixed-rate mortgage plus a HELOC (see article 2 of 2 below) with a lower but variable rate, you'd have to make your best guess about what the HELOC would charge in the future. If you thought the HELOC would soon have a higher rate than the fixed loan, it would makes sense to direct your extra payments to the HELOC. But if you thought that risk was some years off, it would pay to direct the extra payments to the fixed loan, since it would charge more for the foreseeable future.
Source: Article 1 of 2 - Dr. Jack M. Guttentag, emeritus*, finance professor at The Wharton School*) emeritus = of the former holder of an office, esp. a professor - Having retired but retaining his title as an honor
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Article 2 of 3
Home Equity Line Of Credit - HELOC
Definition of 'Home Equity Line of Credit - HELOC'
A line of credit extended to a homeowner that uses the borrower's home as collateral. Once a maximum loan balance is established, the homeowner may draw on the line of credit at his or her discretion. Interest is charged on a predetermined variable rate, which is usually based on prevailing prime rates.
Once there is a balance owing on the loan, the homeowner can choose the repayment schedule as long as minimum interest payments are made monthly. The term of a HELOC can last anywhere from less than five to more than 20 years, at the end of which all balances must be paid in full.
Investopedia explains 'Home Equity Line Of Credit - HELOC'
Several factors can lead to strong growth rates in this type of borrowing:
-Increased retail sales channels, which have brought HELOCs to the masses. Most of these sales channels come from local banking institutions.
-Rising home values, which increase the amount of equity available to homeowners
-Prevailing low interest rates coupled with moderate inflation
-The fact that mortgage interest is often tax-deductible, making it more attractive than alternative borrowing methods
Because HELOC interest is variable, homeowners must be aware of prevailing interest rates -a spike can cause repayment balances to rise rapidly.
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Source: Article 2 of 2: Investopedia
Also see: Can You Afford a Second Home? (click green)
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Article 3 of 3 (Articles 1 - 2/3 next above)
How an off-hand comment of 4-letter word saved a homeowner and can save you and your house also
After 2 refinance rejections,
HARP saved my underwater mortgage
HARP = The Home Affordable Refinance Program
Click green below:
HARP Refinance Program 1-(866) 930 2685 www.harp-programs.org
Discover HARP Home Loan Options. Request More Information Today
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Doing the HARP through my existing bank, however, only required sitting down at a title agency office
to go through paperwork that had been put together for me. Also, the bank and title agency fees associated with refinancing were rolled into the new mortgage, so I barely noticed them at all
A home inspection was not needed (saves several hundreds of dollars)
Click green for further info
Owning a house was an intimidating prospect for me, but when the opportunity to buy came along, I just couldn't pass it by. Shortly after graduating from the University of Arizona, I got a job as a purchasing agent, earning more than I ever had before. Soon after I stumbled upon a cozy house with big yards located less than a mile from campus. It made great sense, I thought: I loved Tucson and the home would be central to work and entertainment. With the university nearby, it would always be easy to find a roommate to help with the mortgage payment.
Brimming with financial confidence, I bought the house in July 2006. The interest rate at the time looked good (from my naïve perspective) at 6.75 percent and the mortgage amount of $136,000 didn't seem insurmountable. I felt comfortable with the monthly payment of $1,223.79, even though it was more than three times as much as I'd ever paid in rent. It was a stretch but doable, since I was certain I'd always have a roommate paying $425. And for a couple of years I felt like I had made the wisest financial decision possible by buying a house.
That feeling quickly vanished, though, in 2008. When the Great Recession hit, I was immediately laid off -- and subsequently dropped into two years of what I can only describe as a survival mindset. Unemployment benefits helped a bit before they ran out. I picked up every job I could -- landscaping, temp work with the U.S. Census Bureau, peeling labels off disks for 10 hours at a time, you name it -- and I still ended up with credit card debt in order to stay current on my mortgage payments. Finally, I went back to school briefly to become an emergency medical technician, got a job as an EMT, and things stabilized … but it then took me another two years of pouring money toward my credit card debt. And it was around this time, in 2010, when a family friend who worked in real estate pointed out that rates had dropped and I should consider refinancing.
I threw myself at the mountain of paperwork and excitedly ordered the home inspection that would be needed. It wasn't until after the refinancing was soundly rejected that I winced at the $400 I spent on a home inspection -- apparently, my home was underwater. It had been valued at only $90,000, which was a shock considering I still owed close to the original $136,000 on the mortgage. I had been so focused on my struggles for employment, I hadn't realized how severe the impact of the recession had been on my local housing market. The neighborhood didn't look any different. It was baffling and discouraging, and I gave up thinking about refinancing for a good while. All the feelings of being intimidated by owning a house came back with a vengeance (= revenge, punishment inflicted or retribution exacted for an injury or wrong).
In 2011 my girlfriend, who had been doing her best to comfort me, introduced me to a mortgage assistance nonprofit that suggested that I try to get a mortgage adjustment. It was an interesting idea, but it required claiming some sort of hardship, which could especially have been proven by having fallen behind in mortgage payments. And so, I was simultaneously proud and annoyed that with all the work I'd scrambled for and debt I'd accrued, I hadn't missed a single mortgage payment. An adjustment wasn't a viable option for me, but the nonprofit employee I met with made a small offhand comment that unintentionally introduced me to my ultimate solution: HARP.
The Home Affordable Refinance Program was designed for people like me. I was up-to-date on my payments; I had a great credit score of 772 and a steady job as an EMT; and I had worked hard to pay down almost all of my credit card debt -- yet, my home was underwater, leaving me cut off from both refinancing and mortgage adjustments.
HARP allowed the bank that held my mortgage to sidestep all that, though, and offer me a great new interest rate of
4 percent and an amazing new mortgage payment of $853.46.
With a roommate (I was right years ago that living next to a university would make it easy to always find renters) paying my mortgage now is cheaper than renting. On top of that, since I was able to do it directly through the bank I'd already been working with, the paperwork and time put into the refinance was practically nothing compared to my previous attempts, which had required compiling piles and piles of application paperwork, expensive faxing, a $400 home inspection, and long phone calls.
Doing the HARP through my existing bank, however, only required sitting down at a title agency office
to go through paperwork that had been put together for me. Also, the bank and title agency fees associated with refinancing were rolled into the new mortgage, so I barely noticed them at all. The only downside is that the 30-year term of the mortgage has been renewed, in a sense, but the thousands of dollars saved in the long run will be quite worth it.
Despite all the challenges I've experienced as a homeowner, I finally feel confident in owning a house and do believe it will ultimately be one of my best decisions.
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Source: By Frank Harris, Internet news provider
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A Little-Known Way to Cut Your Mortgage Payment
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For consumers purchasing or refinancing a home with less than 20% equity or 20% down, there's a little-known fee that will apply to the total mortgage payment, effectively inflating the monthly outlay.Mortgage insurance is paid by the homeowner to insure the lender against future mortgage payment default. Mortgage insurance, also dubbed as PMI (an acronym for private mortgage insurance), can easily be several hundred dollars per month depending on the loan program. This added premium makes the cost of home ownership more expensive. However, there is a way to cut your mortgage payment using single-pay mortgage insurance.
Quick Facts About Mortgage Insurance
First, keep in mind that "loan to value" (LTV) is the amount of money being lent against the value of the house. It's computed by taking the loan amount, divided by home value. It's a critical factor in home lending.
When refinancing:
- Mortgage insurance must be removed by the lender by law at 75% loan to value/25% home-equity.
- Mortgage insurance may be removed by the lender at 80% loan to value/20% home-equity (subject to individual mortgage company discretion).
- A loan can be refinanced anytime if the lender denies the consumer's request to remove the mortgage insurance.
- Mortgage insurance will be required with less than 20% down, every time.
- The average monthly mortgage insurance is based on 70 basis points of the loan amount. For example, on a $200,000 loan, that's $1,400 per year, $116.17 per month respectively
- More money down creates lower loan to value, lowering amount of basis points for determining my calculation, thus reducing mortgage insurance payment
What Is Single-Pay Mortgage Insurance Anyway?
It is, in short, an added fee, but with a favorable upside.
Most people hate the idea of paying an extra monthly fee without any direct benefit to them. Consumers don't directly receive a benefit from paying mortgage insurance (despite tax deductibility in some cases), other than the ability to secure lower equity financing.
Single-pay mortgage insurance allows a consumer to pay upfront a portion of the future mortgage insurance premiums at a discount at the close of escrow rather than financing these monies into their house payment. This improves the ability to qualify by means of a lower debt-to-income ratio, a lower monthly mortgage payment, and a lower cost loan.
Let's say a consumer is looking at a loan for $300,000, using 70 basis points of the loan amount to estimate monthly mortgage insurance, $175 per month or $2,100 annually. $2,100 a year for five years adds up fast… $10,500 to be exact!
The single-pay choice (using an average 1.75% of the loan amount) would translate in this case to $5,250 that's paid one time at closing. In other words, in exchange for more upfront overhead, the house payment is reduced by $175 per month. A consumer would recuperate these monies within just a little more than two years.
Single-Pay Mortgage Insurance Pros & Cons
Pros:
- Lower cost of funds
- Reduced mortgage payment
- Expedient recuperation of savings
- Increases borrowing power
- Higher upfront overhead required. An average of approximately 1.75% of the loan amount would be paid at closing.
- The loan would have to be kept for at least the amount of time necessary to recuperate paying upfront overhead, paying off the loan earlier negates the benefit.
- The option isn't offered by all mortgage companies, so ask your lender upfront if they offer single pay mortgage insurance as an option to keeping your new payment lower.
Single-pay mortgage insurance offers consumers any easier more flexible way to secure financing and keep the long-term mortgage payment more manageable against a household budget. If folks have the equity or cash available, single-pay mortgage insurance makes securing higher loan-to-value financing more manageable as a PMI payment would never be required.
More from Credit.com Click green
- The First Thing to Do Before Buying a Home
- How Can I Get a Mortgage After Credit Problems?
- The Biggest Mortgage Mistake You Can Make Click green for further info - Source: credit.com _______________________________________________
4 Home Improvements That Will Save You Money
Judging by the TV commercials, most home improvements are a blast *). You waltz into a store, throw a bunch of new faucets and buckets of paint in your shopping cart, without sweating about the cost, then transform your dingy kitchen into something out of, well, a TV commercial.
*) (here) Slang A highly exciting or pleasurable experience or event, such as a big party - has many other meanings
Frequently, those TV spots are spot-on. It is fun to have a new kitchen or to show off your newly installed hardwood floors to your friends and family. But it's all too easy to forget about home improvements that will only get you a polite nod when showing them off - and yet if you ignore them, they could cost you serious money.
8 Energy-Efficient Home Improvements That Save Money
So if you're a homeowner with some extra cash this month, look around. There's plenty you can do.
The basement
Particularly if you live a humid climate, you could install a dehumidification system, suggests John Isch, co-chair of the American Institute of Architects Custom Residential Architects Network. This is a much more sophisticated operation than your basic humidifier and will get rid of the humidity in the basement, and some are designed for the entire house.
It may not sound like much of an improvement at first, especially if your family and visitors aren't complaining about the humidity in your home, but even if it isn't noticeable, the humidity may well be there. As Dawn Zuber, another American Institute of Architects member, points out, if the humidity is removed, the house will feel cooler - which may mean you use the air conditioning less.
A dehumidifier may also protect your collectibles. "I run one in my basement and as long as it takes the humidity out of the air, it's keeping all the junk I am storing downstairs from decaying," Zuber says.
Typical cost: Expect to spend at least $1,000, depending on the system.
Typical savings: It is impossible to say, and it may not be worth the cost. But consider how often you use your air conditioner and how much the stuff in your basement is worth.
The attic
If you're interested in only heating and cooling the parts of the house that you live in, and not, say, the drafty attic you rarely visit, Zuber suggests homeowners seal up the air in the upper part of their homes.
"Have someone go up in the attic and seal any penetrations between the ceiling and the attic, like where the pipes and vents go through, and add spray foam insulation to the rim joists in their basements or crawl spaces," Zuber says. "This is the area above the concrete or concrete block wall, where the floor framing meets the exterior wall. Adding attic insulation also provides a nice return on investment if there's less than 10 inches of existing insulation."
Why is that important? The thinner the walls, the faster heat passes through. The more insulation you have, the longer your house stays warm in the winter, and in the summer, it'll stay cooler longer, since the heat from outside can't get inside as quickly.
If you're really into this project, Zuber suggests hiring an energy auditor or home energy rater to test your house and recommend the most cost-effective insulation and air sealing techniques.
Typical cost: A can of spray foam insulation only costs about $6. Of course, if you hire an energy auditor or home energy rater, plan on spending $400 to $500. And if you send a professional handyman up to the attic with a can of $6 spray foam insulation, you may want to add another $100 to your cost.
Typical savings: Again, it's hard to quantify, but if all you have to spend is $6 on a can of spray foam insulation, and you find even one gap to fill, you'll probably come out ahead.
10 Easy Ways to Keep Energy Costs Down
Cracks under windows and doors and holes near the foundation
Unfortunately, there probably aren't just cracks and gaps in your attic - your basement may have them, too, and there may be spaces around your windows and doors where air is getting in. (If you want to, you could spend a good month or two, and quite a bit of cash, sealing up all the cracks in your house.)
Dean Bennett, who owns Dean Bennett Design and Construction, Inc., a design and building firm in Castle Rock, Colo., suggests looking for gaps in the walls of your basement. "It's very common to have these gaps in houses that are more than 15 years old," Bennett says. "Construction techniques did not involve sealing between the sill*) and foundation very well. Now, they use a layer of foam between the two." *) sill = threshold - windowsill - doorstep
If you live in an older home, Bennett says you can do yourself a favor by doing a "close visual check" for any holes around your basement or foundation. He says filling in the holes could help prevent hot summer air or cold winter air from filtering into your home - not to mention mice and other critters.
Advertisements will tell you to replace your current windows and doors with energy-efficient ones, and maybe you need to. But many home improvement experts will tell you that if there's a draft, it may be adequate to simply weather-strip your doors and windows.
In fact, "the biggest home-energy and money wasters are windows and doors because of the heat they let out and cool air they let in, depending on the season," says Andrea Thomas, Wal-Mart's senior vice president of sustainability*). *) sustainability is the capacity to endure = (verbs) to last, to bear, to stand - to tolerate - to sustain - to undergo
Typical cost: The can of spray foam insulation to use in your basement runs about $6. As for weather stripping, the price varies, but a 10-foot strip of rubber window weather stripping can be found at many stores for less than $10.
Typical savings: If you weather-strip, Thomas says the average homeowner can save $160 every year in heating and cooling costs.
A Step-by-Step Guide to Homebuying
Decks.
Have a wooden deck? Don't forget to put a new coat of stain on it, once every three years, according to Bennett. "It will weatherproof it as well as make it look better," he says.
Typical cost: Deck stain can cost anywhere from $40 to several hundred dollars. Add a couple hundred dollars if you hire a professional to do it. And if you want to replace a deck, Bennett points out that those made of composite materials don't require staining.
Typical savings: A wood deck that is stained regularly can last 20 to 30 years, Bennett says. "If you never do it, you'll shorten the life of your wood deck by 50 percent or more."
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Source: US News & World Report
- 10 Ways to Live Green On a Budget
- How to Prepare Your Home for a Summer Storm
- 10 Ways to Cut Your Spending This Week
This Old House general contractor Tom Silva shares eight tips
to selecting and working with a qualified contractor
Top 8 pro tips on how to hire a contractor
Click green for further info
1. Get recommendations.
Start with your friends and family and then check in with the National Association of the Remodeling Industry for a list of members in your area. You can also talk with a building inspector, who'll know which contractors routinely meet code requirements, says This Old House general contractor Tom Silva, or pay a visit to your local lumberyard, which sees contractors regularly and knows which ones buy quality materials and pay their bills on time.
2. Do phone interviews.
Once you've assembled a list, Tom recommends that you make a quick call to each of your prospects and ask them the following questions:
• Do they take on projects of your size?
• Are they willing to provide financial references, from suppliers or banks?
• Can they give you a list of previous clients?
• How many other projects would they have going at the same time?
• How long have they worked with their subcontractors?
The answers to these questions will reveal the company's availability, reliability, how much attention they'll be able to give your project and how smoothly the work will go.
3. Meet face to face.
Based on the phone interviews, pick three or four contractors to meet for estimates and further discussion. A contractor should be able to answer your questions satisfactorily and in a manner that puts you at ease. Tom says that it's crucial that you two communicate well because this person will be in your home for hours at a time. On the other hand, don't let personality fool you. Check in with your state's consumer protection agency and your local Better Business Bureau to make sure contractors don't have a history of disputes with clients or subcontractors.
4. Investigate the facts.
Now that you've narrowed your list, put your research to use. Call up former clients to find how their project went and ask to see the finished product. But Tom says you shouldn't rely on results alone. Even more important, visit a current job site and see for yourself how the contractor works. Is the job site neat and safe? Are workers courteous and careful with the homeowner's property?
Looking for a contractor for your next home project? Click to find the right one now.
5. Make plans, get bids.
You have your short list of contractors whose track records seem clean and whose work ethic looks responsible. Now it's time to stop looking back at past work and start looking forward to your project. A conscientious contractor will want not only a complete set of blueprints but also a sense of what homeowners want out of a project and what they plan to spend. To compare bids, ask everyone to break down the cost of materials, labor, profit margins and other expenses. Generally materials account for 40 percent of the total cost; the rest covers overhead and the typical profit margin, which is 15 to 20 percent.
6. Set a payment schedule.
Payment schedules can also speak to a contractor's financial status and work ethic. If they want half the bid up front, they may have financial problems or be worried that you won't pay the rest after you've seen the work. For large projects, a schedule usually starts with 10 percent at contract signing, three payments of 25 percent evenly spaced over the duration of the project and a check for the final 15 percent when you feel every item on the punch list has been completed.
7. Don't let price be your guide.
"Throw out the lowball bid," says Tom. "This contractor is probably cutting corners or, worse, desperate for work"—hardly an encouraging sign in a healthy economy. Beyond technical competence, comfort should play an equal or greater role in your decision. The single most important factor in choosing a contractor is how well you and he communicate. All things being equal, it's better to spend more and get someone you're comfortable with.
8. Put it in writing.
Draw up a contract that details every step of the project: payment schedule; proof of liability insurance and worker's compensation payments; a start date and projected completion date; specific materials and products to be used; and a requirement that the contractor obtain lien releases (which protect you if he doesn't pay his bills) from all subcontractors and suppliers. Insisting on a clear contract isn't about mistrust, Tom assures us. It's about insuring a successful renovation.
Finally, remember that as soon as a change is made or a problem uncovered, the price just increased and the project just got longer. The four most expensive words in the English language? "While you're at it ... "
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Source:
This Old House is an American home improvement magazine and television series aired on the American television station Public Broadcasting Service (PBS) which follows remodeling projects of houses over a number of weeks. This Old House is produced by WGBH Productions. Warner Bros. Domestic Television distributes reruns of the series to commercial television stations.
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Are Credit Cards Vital to the Economy?
Consumers have largely tried to cut their dependence on credit cards since the recession began.
However, the vast majority of Americans believe credit cards are important for the continued health of the economy and the American small business sector.Today, more than seven in 10 adults say that the economy is at least somewhat dependent upon their continued credit card use, and more than three in four believe the same of small businesses, according to a new survey from Ipsos Public Affairs for the American Bankers Association. Likewise, close to four in five feel credit cards help local economies because they provide more payment options.
Interestingly, though many have tried to cut their debts and reduce credit spending, about three-quarters also say that the ability to use credit cards makes it easier for consumers to pay in person, and 70 percent believe credit cards are one of the few ways to make purchases online, the report said. Another four in five say cards are vital to helping consumers make important payments when they don’t have the cash on hand.
Currently, more than three-quarters of Americans say they have at least one credit card, and 57 percent report using that account at least once a week, the survey found. Half use them to cover everyday expenses like groceries or gasoline, while close to three in 10 use them to cover discretionary purchases like summer vacations or toys for their kids. However, some of those polled said they only use them for purchases of more than $100, or for unexpected purchases — at 25 and 21 percent, respectively.
Slightly more than one-fifth of those polled also noted that they use their cards as short-term, no-interest loans when they are able to pay off their balances at the end of every month, the report said. Another 18 percent each use them only when they don’t have the cash on hand, or to accrue bonus points.
Credit cards can be great financial tools when used properly — such as keeping spending low and paying off balances in full at the end of every month — but with the often-high interest rates they carry, consumers can get into a bit of trouble when they rack up too much debt on their cards.
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Source: Credit.com
___________________________
Large Majority of Americans View Credit Cards
as Important to the U.S. Economy
and to Small Businesses
Majorities See Specific Benefits for Consumers and Retailers as Well
Date: June 04, 2013
New York, NY – Nearly three quarters (72%) of adults feel that credit cards are important to the U.S. economy and more than three quarters (77%) believe credit cards are important to small businesses, according to a new poll of over 1,000 adults conducted by Ipsos Public Affairs on behalf of the American Bankers Association.
Moreover, nearly eight in ten (78%) believe that credit cards help local economies by giving consumers and local retailers more payment options.
Importance of Credit Cards to the Economy
More than three in four adults (78%) believe that credit cards help small businesses start and grow by offering them the financial resources they need to succeed, such as a line of credit and an easy way of accepting payments.
Credit cards are also seen as being important or beneficial to retailers in terms of how transactions are conducted. Over eight in ten respondents (83%) say that credit cards generate more sales for retailers by giving consumers additional options for payment outside of cash and checks, and seven in ten (72%) say that they make it easier for retailers to process payments in person at the checkout line.
Importance of Credit Cards to Consumers
Majorities of adults also view credit cards as beneficial and important to consumers. Three in four (74%) say that credit cards make it easier for consumers to pay in person at the checkout line, and nearly as many (70%) say that credit cards are one of the only ways consumers can pay for online purchases.
Moreover, eight in ten (80%) say that credit cards help consumers make necessary purchases, like paying for doctor’s visits, when they don’t have cash on hand.
Patterns of Credit Card Use
Three quarters (76%) of Americans have at least one credit card (not including ATM or debit cards). Over half (57%) of those with at least one credit card say that they personally use a credit card at least once a week. Many cardholders tend to use their cards for basic purchases; half (50%) report using their cards for everyday expenses like groceries and gas. Others tend to use them for indulgences like summer vacations or toys for kids (29%), while about one in five reserve them for larger or unexpected expenses, such as only for large expenses over $100 (25%) or in case of an emergency (21%).
Motivations for Using Credit Cards
Americans’ top reason for using a credit card varies, illustrating the diverse set of features credit cards provide consumers. One in five cardholders (21%) say that using a credit card as a short-term loan with no interest (providing they pay off their balance each month) is their primary reason for using their cards. Nearly as many say that credit cards allow them to make purchases for which they do not have the cash immediately available (18%) or that they like accumulating and using points (18%).
These are some of the findings of an Ipsos poll conducted April 16 – April 18, 2013. For the survey, a national sample of 1,208 adults aged 18 and older from Ipsos’ U.S. online panel were interviewed online. Weighting was then employed to balance demographics and ensure that the sample's composition reflects that of the U.S. adult population according to Census data and to provide results intended to approximate the sample universe. A survey with an unweighted probability sample of 1,208 and a 100% response rate would have an estimated margin of error of +/- 3 percentage points 19 times out of 20 of what the results would have been had the entire adult population of adults in the United States had been polled. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.
For more information on this news release, please contact:
Rebecca Sizelove
Associate Vice President
Ipsos Public Affairs
New York, NY
212-584-9253
[email protected]
About Ipsos Public Affairs
Ipsos Public Affairs is a non-partisan, objective, survey-based research practice made up of seasoned professionals. We conduct strategic research initiatives for a diverse number of American and international organizations, based not only on public opinion research, but elite stakeholder, corporate, and media opinion research.
Ipsos has media partnerships with the most prestigious news organizations around the world. In the U.S., UK and internationally, Ipsos Public Affairs is the media polling supplier to Reuters News, the world's leading source of intelligent information for businesses and professionals, and the Hispanic polling partner of Telemundo Communications Group, a division of NBC Universal providing Spanish-language content to U.S. Hispanics and audiences around the world.
Ipsos Public Affairs is a member of the Ipsos Group, a leading global survey-based market research company. We provide boutique-style customer service and work closely with our clients, while also undertaking global research.
To learn more visit: www.ipsos-na.com
About Ipsos
Ipsos is an independent market research company controlled and managed by research professionals. Founded in France in 1975, Ipsos has grown into a worldwide research group with a strong presence in all key markets. In October 2011 Ipsos completed the acquisition of Synovate. The combination forms the world’s third largest market research company.
With offices in 85 countries, Ipsos delivers insightful expertise across six research specializations: advertising, customer loyalty, marketing, media, public affairs research, and survey management.
Ipsos researchers assess market potential and interpret market trends. They develop and build brands. They help clients build long-term relationships with their customers. They test advertising and study audience responses to various media and they measure public opinion around the globe.
Ipsos has been listed on the Paris Stock Exchange since 1999 and generated global revenues of €1,789 billion (2.300 billion USD) in 2012.
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Consumers Cut Debt Again
Many consumers have made significant efforts to get their finances back on track in the last few years, and that trend continued into the first quarter of the year, as average balances on credit cards, and rates of late payments on them, both declined once again.
The national delinquency rate on credit card accounts — defined as accounts 90 days or more behind on payments – slipped to 0.69 percent through the end of March, down from 0.73 percent in the same period the year before and 0.85 percent from just three months prior, according to the latest statistics from the credit monitoring bureau TransUnion. Meanwhile, the average amount of debt held by all consumers on these accounts slipped to $4,878, down 4.75 percent on a quarterly basis (from $5,122) and 1.69 percent annually (from $4,962).
“We traditionally see credit card delinquencies and balances decline during the first three months of the year as many people pay down their holiday shopping balances or use their tax refunds to pay off their debts,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. “In addition to the seasonal quarter-over-quarter drop, the year-over year improvement in credit card delinquencies is indicative of how consumers continue to value their credit card relationships.”
The states with the highest average credit card balances were Alaska, Colorado, North Carolina and Connecticut, ranging from $5,498 to $6,789 per borrower, the report said. Meanwhile, Iowa, at $3,810, led the nation in lowest balances, while North and South Dakota and Wisconsin rounded out the top four.
South and North Dakota also finished tied for first, with Montana, in national lows for delinquency rates at just 0.43 percent, the report said. Minnesota was close behind at 0.44 percent. Meanwhile, Mississippi came in with the highest such rate, at 1.11 percent, but was the only one in the country with late payments above 1 percent. Alabama (0.94 percent), Arkansas (0.89 percent) and Georgia (0.87 percent) were also among the highest nationwide.
Many consumers may be concentrating on shedding debts and also keeping them down going forward as a result of financial hardships suffered during and following the recession. This may be particularly true of younger adults who were discouraged from getting involved in credit card use in the first place because of these difficulties.
Source: credit.com
_____________________________________________________________________
To our nation:
Improve Credit Score Transparency
or risk Another Financial Crisis
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Credit scores are vitally important in many areas of your financial life, ranging from getting loans and credit cards to saving on insurance rates, finding an apartment, or even getting your next job. Because of their importance, it's essential to improve credit score transparency to the point at which everyday borrowers will not only know where they stand on their credit but the reasons why their credit scores rise and fall over time.
What we do know
Credit-reporting agencies aren't entirely opaque about what goes into their credit score calculations.
For instance, Fair Isaac (NYSE: FICO ) , the company behind the popular FICO score, offers a detailed explanation of what goes into every person's score. A strong payment history without delinquencies or late payments carries the most weight, making up 35% of the FICO score, while 30% comes from how the amounts you owe compare to the total credit you have available to you. Smaller percentages of the score come from other areas, including the length of your credit history, the amount of new credit you've taken out recently, and how wide a mix of different types of credit you have outstanding.
Fair Isaac is also upfront about what it doesn't consider in its scoring. Legally protected information like race, religion, or marital status can't be used to determine credit scores, and Fair Isaac chooses not to consider age, employment history, where you live, or whether you're in a credit-counseling program, among other things.
Other bureaus have their own scores, such as the VantageScore product from Experian, TransUnion, and Equifax (NYSE: EFX ) . VantageScore uses its own categories, with payment histories getting a 32% weight, credit availability and use 23%, total debt 15%, length of credit history 13%, recent credit history and inquiries 10%, and available credit 7%.
These formulas make the scoring process seem extremely complicated, giving only a glimpse at the overall process of coming up with a credit score. Exactly what goes into the point total is still a mystery, hidden as proprietary trade secrets of the companies involved.
Why you need to know
The reason that credit-reporting bureaus need to improve credit score transparency is that in some cases, every point counts. Consider:
Don't give up
A decade ago, having free access to a credit report seemed like a pipe dream, yet legislation now makes such disclosures mandatory on an annual basis. With the same drive and determination, consumers can demand that credit-reporting agencies improve credit score transparency to the point at which everyone will understand the ins and outs of the key financial metrics governing their financial lives.
Making the right financial decisions today makes a world of difference in your golden years, but with most people chronically under-saving for retirement, it's clear not enough is being done. Don't make the same mistakes as the masses.
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Source:
By Dan Caplinger
____________________________________________________________
Article 1 of 2 (Article 2 of 2 next below)
You may have noticed that we at STAF, Inc. provide for the same sounding topic several articles written by
different professionals. The reasons: (1) every article will have something new the other articles do not have,
(2) An old wisdom states: "In multiple counselors there is success." (The Bible)
Good credit is such an important matter
that it demands effective attention and correct care
Will Cosigning Hurt My Credit?
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STAF, Inc.: Avoid any co-signing (except with your spouse if your marriage is strong & steady)
For other co-signing demand trustworthy, reliable material guarantee
If you've ever been asked by a friend or family member to cosign on a loan, you might have wondered whether it could hurt your credit. This is a very important question to ask, and it's a decision you have to weigh carefully, as the effect of cosigning a loan can vary with each situation.
In a strict sense, the answer is no. The fact that you are a cosigner in and of itself does not necessarily hurt your credit. However, even if the cosigned account is paid on time, the debt may affect your credit scores andrevolving utilization, which could affect your ability to get a loan in the future.
For example, let's say the cosigned account is a credit card. If your friendcarries a large balance, as the cosigner you may have lower credit scores because of the high revolving utilization of the cosigned account.
Read more: Can You Really Get Your Credit Score for Free?
Here's another example, a worst-case scenario. Let's say you cosign for a friend on an auto loan. If your friend stops making payments, the delinquency or repossession records would damage your credit score. You would be held legally responsible for repayment of the cosigned debt
In the sense that the cosigned account may give you a greater diversity of credit accounts (one of the components of credit scores), it's actually possible that the cosigned account could help you get a loan in the future. For example, you would probably benefit if the cosigned account were a mortgage that is paid on-time every month.
Read more: 5 Credit Rules Everyone Should Follow
If you're having trouble deciding whether to cosign, think about what likely effect the cosigned account will have on your credit scores. If you're at all concerned about your friend or family member's ability to pay, and are not in a position to cover all of his debt in the event that he starts defaulting, don't cosign. It is best to only cosign with a close friend or relative that you know is trustworthy.
The 11 Most Common Credit Questions
Remember: The cosigned account will affect your credit report and scores no matter what because ultimately you are just as responsible for the debt as your friend or family member. If you are a cosigner on someone else's account, it's very important that you check your credit reports (you can get them for free once per year from each of the three major credit reporting agencies through AnnualCreditReport.com). And by monitoring your credit score regularly -- which you can do for free once a month using Credit.com's Credit Report Card -- any unexpected changes in your score could point to potential problems with that account. By being aware of potential problems with the cosigned account, you'll be better able to help prevent even greater damage to your credit.
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Source: Column by Credit.com staff - June 28, 2013
(Article 2 of 2 next below)
_________________________________________________________
Article 2 of 2 (Article 1 of 2 next above)
Can You Force Your Ex to Pay a Loan You Co-Signed?
STAF, Inc.'s comment:
Serious Warning
Divorces by nature are rarely ever pleasant
they can (and will) ruin your children's future and ruin the future of both spouses
Avoid divorce - you and your spouse can - How?
The right, happiness bringing solution starts on the next line
When you got married in a traditional manner (as most do = met, dated, fell in love, proposal, valuable ring, wedding) you saw so much effort and invested so much time & money in this process that you both had to have real love between the two of you.
Real love never dies
If you break your real love you both will be miserable the rest of your lives
and your children will suffer - see below (at the end of this article) the 12 life-destroying matters every child is facing in a separation or divorce situation
In addition to unnecessarily destroying you as a couple
do you really want to also destroy your children's future?
Avoid divorce - instead take STAF, Inc.'s result-bringing private or group counseling called Restoring Any Marriage©
Our trained counselors' title is Marriage Restorer© - all new title use developed by STAF, Inc.
Both STAF, Inc.'s services, private & group, are given a unique lifetime result-guarantee with one-time fee only. No one anywhere gives a similar guarantee.
STAF, Inc.'s private & group services are available
in our offices or nationwide - worldwide via modern internet technology.
See in this website tab: Services, sub-tab: Restoring Any Marriage©
The article next below: Can You Force Your Ex to Pay a Loan You Co-Signed?
At the end of the article the 12-life-destroying matters every child is facing in a separation or in a divorce situation
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When you’re going through a divorce, protecting your credit is probably one of the last things on your mind.
However, as the following question from one of our readers illustrates, it’s definitely something that couples should consider during divorce negotiations:
I am a co-signer whose borrower (ex-wife) has left a $17,000 loan on me and has totally ignored even giving them her address. It is a private loan through Chase and the interest rate is 9% or more. I have been paying. The IRS will not let me deduct the amount I pay. Is there anything I can do? How do I make the borrower accountable?
Unfortunately, as a co-signer, you’re both on the hook. There’s really no way out of it unless your ex-wife agrees to refinance the loan entirely in her name. It’s a catch-22*), and one of the primary dangers of co-signing. It’s also the primary reason why divorce often ends up trashing both spouses’ credit reports.
*) catch-22 = A tricky or disadvantageous condition; a catch
At this point, if you stop paying, and your ex-wife refuses to make the payment, you’ll both suffer the damage to your credit reports and scores. In an ideal situation, you’d be able to negotiate with her so that she contributes something toward the debt, but as far as making her accountable — she already is. It’s just that you’re saving her credit, as well as your own, by making the payments for both of you.
As far as claiming the interest as a deduction on your taxes goes, the IRS won’t allow you to because you’re listed as the co-signer and not the primary borrower on the loan. One way to address this would be to convince your ex-wife to agree to refinance the loan into your name — probably not the resolution you’re looking for, but it is an option. Another option would be to try contacting the lender and requesting that your role be changed to that of joint or primary borrower, rather than the co-signer. Each lender varies, and they may require you to refinance the loan outright, but it’s worth checking with them directly. Even then, because your ex-wife is the primary borrower on the loan, she’ll have to agree to the change.
Divorces by nature are rarely ever pleasant, but in an ideal situation, both parties would evaluate their joint debts and address any co-signed or jointly held accounts as part of the divorce proceedings. The best way to handle these types of accounts would be to close them and re-establish individual accounts in one or the other party’s names. This isn’t always an option and for this to happen, both parties have to be open to communicating and divvying*) up the debts, which rarely happens unless a divorce is amicable. *) = divvying = Divide up and share: "they divvied up the proceeds"
For one, both parties have to be open to communicating and divvying up all joint or co-signed debts. Secondly, with larger debts — like joint mortgages, for example, refinancing may not be an option financially. In which case, financial responsibility is left to whoever the judge decrees as the responsible party.
The big misconception with divorce decrees lead many couples to assume that whatever the judge says is legally binding, essentially releasing one or the other party from legal liability on a particular debt — it doesn’t. As far as the lender is concerned, if both parties are on the loan, both parties are still legally liable for the loan — regardless of what the judge outlines in the divorce decree. In which case, if the decreed party misses a payment, pays late, or defaults on the debt — both parties’ credit will suffer.
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Source: Credit.com
In a family separation & divorce
both spouses will experience (1) health challenges leading to a shorter life span and (2) to added financial difficulties.
Any traditionally done marriage turned dysfunctional can be healed. Giving up as the first solution is not reasonable for anyone. A separation and a divorce are serious child abuse.
Every child experiencing a parental separation or divorce faces serious life threatening disasters
- the most important listed here:
(1) overall increased risks to health & welfare; (2) 5 times more likely to commit suicide; (3) 32 times more likely to run away; (4) 20 times more likely to have behavioral disorders; (5) 14 times more likely to commit rape; (6) 9 times more likely to drop out of school; (7) 10 times more likely to abuse alcohol and drugs; (8) 20 times more likely to end up in prison; (9) increased learning difficulties; (10) increased risk of divorce when grown; (11) increased out of wedlock pregnancies; (12) Latest discovery by the researchers: highly increased risk of having a stroke during his/her life time.
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5 Credit Rules Everyone Should Follow
Click green for further info
Managing credt correctly requires a certain amount of discipline. If you let your spending get out of control or take on too many loans, you could face big money troubles. That’s why, when it comes to borrowing, it’s important to have some guidelines. Here are five credit rules every consumer should follow so their finances and their credit score remains intact.
1. Make payments on time
Stellar payment histories are key when it comes to establishing a good credit score. They account for the largest percentage of all components used to calculate most credit scoring models and one missed bill will certainly cost you. As this FICO study illustrates, a recent late payment can cause as much as a 90-110 point drop on a FICO score of 780 or higher. Missed bills can also do big damage to your wallet since balances are typically subject to penalty annual percentage rates and late payment fees.
To avoid both pitfalls, it’s a good idea to set up auto pay on car, student or home loans so you don’t miss a payment. In terms of credit cards, while it’s always a good idea to pay off everything you owe, make sure at least minimum payments are made before the monthly bill’s due date.
Additionally, “if you have problems paying bills on time, don’t get a credit card,” says Karen Carlson, director of education for non-profit agency In Charge Debt Solutions.
2. Don’t bump against your credit limit
Following payment history, credit utilization ratios — essentially how much credit you have available to you versus how much you are actually using — play a big role in shaping credit profiles. To keep scores from taking a dive, it’s important to avoid bumping up against credit limits. Instead, try to only utilize 25% or less of all your available credit at any given time, says Deatra Riley, financial education manager for non-profit credit counseling organization CredAbility.
And don’t let anyone fool you into thinking you need to carry balances to give your score a boost.
“I have never seen a credit scoring model award points for that,” Carlson says. “It’s really about the account being paid as agreed.”
3. Always consider your credit score
Whether adding or subtracting to your credit profile, it’s important to consider what effect the move is going to have on your credit score. Of course, to do so, you’ll need to know what your credit score actually is. Consumers should check their credit reports at least once a year. You can do this for free by visiting www.annualcreditreport.com. You can also monitor your score for free with the Credit Report Card.
As a best practice, you should also pull your credit report right before applying for a new loan. If the score turns out to be less than stellar, you may want to focus on building it before you add any credit cards or installment loans. If your credit score is in good shape, be sure to reap the benefits.
“Be creditworthy when the opportunity arises,” Carlson says, so you can get the best interest rates on each line of credit. You’ll also be eligible to score the best rewards credit cards.
4. Understand the terms and conditions associated with all your loans
Terms and conditions vary from product to product, so it’s important to read through every single loan or credit card contract before you go ahead and sign on the dotted line. According to Brent Neiser, senior director at the National Endowment for Financial Education, you should be sure to check what interest rates are being offered and when they will be applied. You also want to thoroughly read through fee structures so you have a good sense of the costs associated with each line of credit.
Additionally, ask “what are the incentives?” Neiser says.
If you’ve haven’t combed through a contract before accepting a loan, you will need to ultimately make time to read through the fine print. Riley also suggests printing out contracts and keeping them in a “safe, secure place” so they can be easily accessed should you encounter an issue.
5. Charge in accordance with your budget
A credit card can be a powerful payment method, since it allows you to earn points on purchases and may also get you access to exclusive perks and discounts. But special offers can easily be rendered moot if you don’t control your spending and end up with a mountain of interest-incurring debt instead. To avoid winding up in dire financial straits, Carlson suggests using credit cards in accordance with a written budget.
“This is the [rule] most people don’t follow,” she says, since it’s very easy to think of a credit card as a financial lifeline. However, you need to be sure to only charge items you could pay for even if the line of credit wasn’t at your disposal.
You also need to make sure this budget contains a savings plan.
“Don’t use a credit card as a replacement for your emergency fund,” Carlson says. “Credit is a wonderful tool to meet the needs of positive events.
It’s not a tool for negative events.”
Click green for further info
Source: credit.com
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Achieving Perfection – the Highest Credit Score
If you’ve ever applied for a car loan, mortgage loan or even a credit card, you probably know how crucial your credit score is to qualifying and getting approved. The higher your credit score, the better your interest rate and terms will be, and the less you’ll pay over the life of the loan. It can also save you hundreds, if not thousands, of dollars throughout your lifetime.
But your credit score can impact a lot more than whether or not you qualify for a loan or a credit card. Credit scores are also used to determine whether or not you’ll be approved for an apartment, how much you’ll pay on your insurance premiums and even how much of a deposit you’ll have to pay to obtain a cell phone or have other utilities connected.
With the influence your credit score has on almost every aspect of your financial life, it’s not surprising that many consumers ask the question: “What is the highest credit score possible?”
There Is No “One” Universal Credit Score
This should be an easy enough question to answer, assuming we were talking about one universal credit score. However, despite the way credit scores are marketed to consumers as being “one” universal score, there are actually many different credit scores, built by many different companies and used by many different lenders. Not to mention the fact that you have three different credit reports at three different credit reporting agencies, and no two bureaus score your credit reports identically. Simply, they all vary. And in order to know the highest credit score possible, you’d need to know which credit score or credit score model you’re using.
There are many, many credit scores on the market today, but for the purpose of this example, we’re going to focus on the FICO credit score. Created by Fair Isaac, the FICO score is the most well-known — and the most widely used — credit score in the industry. If your FICO score is high, you can pretty much rest assured that your credit is in good shape — regardless of the scoring model used.
The FICO score ranges from 300 to 850, with a FICO score of 850 being the highest score you can obtain. Your FICO score is calculated from the information contained within your credit report and analyzes five key categories to determine your score:
• Your Payment History — 35% of your score
• How Much You Owe — 30% of your score
• Length of Credit History — 15% of your score
• New Credit, Inquiries — 10% of your score
• Types of Credit — 10% of your score
[Credit Score Tool: Get your free credit score and credit report card from Credit.com]
The concept of achieving a high FICO score isn’t as complicated as you might think. And based on these five categories and percentage weights, if you stick to three core fundamentals, your credit score will take care of itself. All you have to do is remember and practice these three basic principals:
1. Pay your bills on time, every time — no matter what.
2. Watch your debt balances. Don’t over extend yourself on credit cards, and keep your balances as low as possible.
3. Only apply for credit when you really need it.
The other two categories, length of credit history and types of credit will happen organically. As time passes, your credit history will mature and age. When you’re ready to purchase a home or a car, you’ll take care of the ‘credit mix’ category by adding a mortgage, or an auto installment loan to diversify your credit mix. By simply following these three basic principals, your FICO score will shine.
Achieving a Perfect 850
“That’s great,” you say, “but I want to achieve that perfect 850. I want the satisfaction of knowing that I’m one of the credit elite.” That’s a fantastic goal, but the one thing consumers need to keep in mind when working towards that perfection — especially with credit scores — is that it’s a lot easier to wreck a perfectly great credit score by trying to attain that perfect 850.
Credit score models are complicated mathematical algorithms. They are developed by statisticians and have hundreds, if not thousands, of possible characteristics built into each model. Each model varies, and we won’t even get into the different scorecards that may be involved within each model. The point is: aiming for perfection without understanding the complexities of the scoring model can oftentimes cause you to do more damage than good. There are many horror stories we’ve heard where someone has tried various unproven strategies to build their scores from the high 700s to the 800s, only to find their strategy backfires and hurts their scores in the process.
Aim for a high score. But if your score is already in the high 700s or low 800s, focusing on reaching that 850 may cause you to damage the excellent scores you already have. Remember, the goal isn’t perfection. The goal is to get the best deals and best interest rates available when you finance a loan or apply for credit.
The 5 Things That Affect Your Credit Score
Lenders Want High Scores, Not Perfect Scores
Lenders are really looking for a “good credit risk.” That is, someone who will pay back the loan and pay it back on time. In fact, perfection is subjective and depends on the lender. When it comes to qualifying for a loan, or any other credit product, the goal is to get the best interest rates and terms offered by your lender. Typically a FICO score of 760 or higher is golden, giving you access to the best interest rates and terms a lender has to offer. This means that even if you have a score of 800, you’re still qualifying for the same deal as someone with a 760, or an 850 for that matter.
Characteristics of FICO High Achievers
According to a recent infographic published by myFICO, the consumer division of Fair Isaac, a FICO score of 785 or higher puts you in FICO’s top 25 percent of “High Achievers.” While not perfect 850s, FICO High Achievers are the credit elite. If you’re set on achieving the highest credit score, or as close to perfection as possible, here are a few key high achiever characteristics to help guide you on your journey.
FICO High Achievers:
• Consistently make on-time payments on all of their credit obligations, with 96% showing no missed payments whatsoever on their credit reports.
• Avoid maxing out their credit cards and keep low balances, using an average of 7% of their available credit limits.
• Carry an average of seven credit cards, which include both open and closed accounts.
• Have an average of four open credit accounts with balances, including both credit cards and traditional loan accounts.
• Rarely open new accounts, with their oldest credit account being opened an average of 25 years ago. The most recent account opening averages 28 months old, and an average credit account of 11 years old.
Don’t know your FICO score? Sign up for Credit.com’s free Credit Report Card and you’ll get a free credit score along with an estimated FICO and VantageScore credit score.
Source: Credit.com
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I Can't Get My Free Credit Report on The Internet - What to do?
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Consumers are entitled to a free copy of their annual credit reports from each of the three major credit reporting agencies, as mandated by the Fair and Accurate Credit Transactions (FACT) Act. (click green areas) FDIC: Credit Reports and Scoreswww.fdic.gov/consumers/consumer/alerts/facta.htmlCredit Reports and Scores. The FDIC has created this webpage to inform consumers about the new Fair and Accurate Credit Transactions Act's ... FDIC: Federal Deposit Insurance Corporationwww.fdic.gov/
As with many things, the Internet simplifies this process, and the bureaus tend to encourage consumers to use the online platform, rather than call or mail in a request.
It’s pretty painless: Go to AnnualCreditReport.com, make a few clicks, enter your information, answer some security questions and boom — you have your free credit report, one of the best ways to monitor your credit.
But it’s not always that simple. Every once in a while, a person’s identity can’t be sufficiently verified by the security questions, or a fraud alert or credit file freeze could also occasionally impede online delivery — and the website will tell them they have to mail in proper documentation to obtain their credit report.
Shortcomings of Internet Security
When it comes to the security questions the online system uses to verify your identity, the point is to make sure your sensitive information doesn’t get into the wrong hands. However, sometimes a consumer can’t remember how much an old mortgage cost, or maybe it seems like there are two possible answers to the multiple choice question. So instead of the quick checkup on the Web, a person has to send his or her personal information — including a Social Security number — in the mail and wait several days for the report to come back.
Not everyone is crazy about sticking their Social Security number in an envelope, slapping a stamp on it and mailing it across the country.
“The tricky thing is that balancing act,” said Norm Magnuson, vice president of public affairs for the Consumer Data Industry Association. It’s the trade association that counts among its members Experian, Equifax and TransUnion, the three major credit reporting bureaus that furnish reports through AnnualCreditReport.com. Magnuson described the difficulty with security questions: “You want to make it difficult enough so that not everyone can guess what it might be, but you also want it to be easy enough that people can answer.”
The Cost of ‘Free’
Getting the security questions wrong is most likely why someone would be denied online access to a credit report. Each bureau has different standards for what constitutes “passing” the security test, but the process following a failed quiz is the same: send your information in the mail with some identity-verifying documents, and you’ll get a credit report. (Though consumers can make an initial request via phone, it’s not an option after a failed attempt online.)
But what about the cost of mailing your information? Sure, a stamp only costs 46 cents (for now), but that’s not the most secure way to send your Social Security number to a credit bureau.
“We recommend you send certified mail when you do send information to us,” said Rod Griffin, director of public education at Experian. Certified mail is a service of the U.S. Postal Service that requires a signature to be delivered. It costs $3.10.
USPS Senior Public Relations Representative Darleen Reid said registered mail is the most secure way to send something. That starts at $11.20, but she also recommended sending certified mail and adding a return receipt (record of the delivery) for an additional dollar or two.
Though the report itself costs nothing, it takes a little money to request it. That’s the price of security, though it could be frustrating for someone legitimately trying to obtain his or her credit report, only to be denied online access because of an honest mistake.
“Consumers aren’t required to send their request by certified mail, so they don’t have to pay for special shipping,” Griffin said. “We encourage people to request their credit report online, and for the vast majority of people there is no problem in delivering the report. We only request that they write and provide identifying documents when we cannot sufficiently verify the individual’s identity. The reason for doing so is to protect them from fraud.”
Identifying documents are things like tax forms, pay stubs, a copy of a driver’s license — there are a variety of options.
“You can choose the ones that you’re most comfortable sending,” said Demitra Wilson, senior director of public relations for Equifax. She also recommended sending information by certified mail.
In a culture where instant access to online information is expected of most services, “snail mail” can be a pain, but the added effort doesn’t outweigh the importance of monitoring your credit. Pulling your credit reports should be done in addition to checking your credit score regularly, as changes in your score can alert you to potential problems. There are services that allow you to monitor your credit score for free, and Credit.com provides a tool that gives you your credit score as well as your credit profile.
Paying a few dollars for extra precautions when sending your information is worth it if it helps you avoid identity theft. If you’re constantly denied online access to your annual credit report, make sure you’re checking your reports closely for incorrect information, and reach out to the bureaus for customer service.
Click green areas for further info
Source: Credit.com
More from Credit.com
Consumers have largely tried to cut their dependence on credit cards since the recession began.
However, the vast majority of Americans believe credit cards are important for the continued health of the economy and the American small business sector.Today, more than seven in 10 adults say that the economy is at least somewhat dependent upon their continued credit card use, and more than three in four believe the same of small businesses, according to a new survey from Ipsos Public Affairs for the American Bankers Association. Likewise, close to four in five feel credit cards help local economies because they provide more payment options.
Interestingly, though many have tried to cut their debts and reduce credit spending, about three-quarters also say that the ability to use credit cards makes it easier for consumers to pay in person, and 70 percent believe credit cards are one of the few ways to make purchases online, the report said. Another four in five say cards are vital to helping consumers make important payments when they don’t have the cash on hand.
Currently, more than three-quarters of Americans say they have at least one credit card, and 57 percent report using that account at least once a week, the survey found. Half use them to cover everyday expenses like groceries or gasoline, while close to three in 10 use them to cover discretionary purchases like summer vacations or toys for their kids. However, some of those polled said they only use them for purchases of more than $100, or for unexpected purchases — at 25 and 21 percent, respectively.
Slightly more than one-fifth of those polled also noted that they use their cards as short-term, no-interest loans when they are able to pay off their balances at the end of every month, the report said. Another 18 percent each use them only when they don’t have the cash on hand, or to accrue bonus points.
Credit cards can be great financial tools when used properly — such as keeping spending low and paying off balances in full at the end of every month — but with the often-high interest rates they carry, consumers can get into a bit of trouble when they rack up too much debt on their cards.
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Source: Credit.com
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Large Majority of Americans View Credit Cards
as Important to the U.S. Economy
and to Small Businesses
Majorities See Specific Benefits for Consumers and Retailers as Well
Date: June 04, 2013
New York, NY – Nearly three quarters (72%) of adults feel that credit cards are important to the U.S. economy and more than three quarters (77%) believe credit cards are important to small businesses, according to a new poll of over 1,000 adults conducted by Ipsos Public Affairs on behalf of the American Bankers Association.
Moreover, nearly eight in ten (78%) believe that credit cards help local economies by giving consumers and local retailers more payment options.
Importance of Credit Cards to the Economy
More than three in four adults (78%) believe that credit cards help small businesses start and grow by offering them the financial resources they need to succeed, such as a line of credit and an easy way of accepting payments.
Credit cards are also seen as being important or beneficial to retailers in terms of how transactions are conducted. Over eight in ten respondents (83%) say that credit cards generate more sales for retailers by giving consumers additional options for payment outside of cash and checks, and seven in ten (72%) say that they make it easier for retailers to process payments in person at the checkout line.
Importance of Credit Cards to Consumers
Majorities of adults also view credit cards as beneficial and important to consumers. Three in four (74%) say that credit cards make it easier for consumers to pay in person at the checkout line, and nearly as many (70%) say that credit cards are one of the only ways consumers can pay for online purchases.
Moreover, eight in ten (80%) say that credit cards help consumers make necessary purchases, like paying for doctor’s visits, when they don’t have cash on hand.
Patterns of Credit Card Use
Three quarters (76%) of Americans have at least one credit card (not including ATM or debit cards). Over half (57%) of those with at least one credit card say that they personally use a credit card at least once a week. Many cardholders tend to use their cards for basic purchases; half (50%) report using their cards for everyday expenses like groceries and gas. Others tend to use them for indulgences like summer vacations or toys for kids (29%), while about one in five reserve them for larger or unexpected expenses, such as only for large expenses over $100 (25%) or in case of an emergency (21%).
Motivations for Using Credit Cards
Americans’ top reason for using a credit card varies, illustrating the diverse set of features credit cards provide consumers. One in five cardholders (21%) say that using a credit card as a short-term loan with no interest (providing they pay off their balance each month) is their primary reason for using their cards. Nearly as many say that credit cards allow them to make purchases for which they do not have the cash immediately available (18%) or that they like accumulating and using points (18%).
These are some of the findings of an Ipsos poll conducted April 16 – April 18, 2013. For the survey, a national sample of 1,208 adults aged 18 and older from Ipsos’ U.S. online panel were interviewed online. Weighting was then employed to balance demographics and ensure that the sample's composition reflects that of the U.S. adult population according to Census data and to provide results intended to approximate the sample universe. A survey with an unweighted probability sample of 1,208 and a 100% response rate would have an estimated margin of error of +/- 3 percentage points 19 times out of 20 of what the results would have been had the entire adult population of adults in the United States had been polled. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.
For more information on this news release, please contact:
Rebecca Sizelove
Associate Vice President
Ipsos Public Affairs
New York, NY
212-584-9253
[email protected]
About Ipsos Public Affairs
Ipsos Public Affairs is a non-partisan, objective, survey-based research practice made up of seasoned professionals. We conduct strategic research initiatives for a diverse number of American and international organizations, based not only on public opinion research, but elite stakeholder, corporate, and media opinion research.
Ipsos has media partnerships with the most prestigious news organizations around the world. In the U.S., UK and internationally, Ipsos Public Affairs is the media polling supplier to Reuters News, the world's leading source of intelligent information for businesses and professionals, and the Hispanic polling partner of Telemundo Communications Group, a division of NBC Universal providing Spanish-language content to U.S. Hispanics and audiences around the world.
Ipsos Public Affairs is a member of the Ipsos Group, a leading global survey-based market research company. We provide boutique-style customer service and work closely with our clients, while also undertaking global research.
To learn more visit: www.ipsos-na.com
About Ipsos
Ipsos is an independent market research company controlled and managed by research professionals. Founded in France in 1975, Ipsos has grown into a worldwide research group with a strong presence in all key markets. In October 2011 Ipsos completed the acquisition of Synovate. The combination forms the world’s third largest market research company.
With offices in 85 countries, Ipsos delivers insightful expertise across six research specializations: advertising, customer loyalty, marketing, media, public affairs research, and survey management.
Ipsos researchers assess market potential and interpret market trends. They develop and build brands. They help clients build long-term relationships with their customers. They test advertising and study audience responses to various media and they measure public opinion around the globe.
Ipsos has been listed on the Paris Stock Exchange since 1999 and generated global revenues of €1,789 billion (2.300 billion USD) in 2012.
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Consumers Cut Debt Again
Many consumers have made significant efforts to get their finances back on track in the last few years, and that trend continued into the first quarter of the year, as average balances on credit cards, and rates of late payments on them, both declined once again.
The national delinquency rate on credit card accounts — defined as accounts 90 days or more behind on payments – slipped to 0.69 percent through the end of March, down from 0.73 percent in the same period the year before and 0.85 percent from just three months prior, according to the latest statistics from the credit monitoring bureau TransUnion. Meanwhile, the average amount of debt held by all consumers on these accounts slipped to $4,878, down 4.75 percent on a quarterly basis (from $5,122) and 1.69 percent annually (from $4,962).
“We traditionally see credit card delinquencies and balances decline during the first three months of the year as many people pay down their holiday shopping balances or use their tax refunds to pay off their debts,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. “In addition to the seasonal quarter-over-quarter drop, the year-over year improvement in credit card delinquencies is indicative of how consumers continue to value their credit card relationships.”
The states with the highest average credit card balances were Alaska, Colorado, North Carolina and Connecticut, ranging from $5,498 to $6,789 per borrower, the report said. Meanwhile, Iowa, at $3,810, led the nation in lowest balances, while North and South Dakota and Wisconsin rounded out the top four.
South and North Dakota also finished tied for first, with Montana, in national lows for delinquency rates at just 0.43 percent, the report said. Minnesota was close behind at 0.44 percent. Meanwhile, Mississippi came in with the highest such rate, at 1.11 percent, but was the only one in the country with late payments above 1 percent. Alabama (0.94 percent), Arkansas (0.89 percent) and Georgia (0.87 percent) were also among the highest nationwide.
Many consumers may be concentrating on shedding debts and also keeping them down going forward as a result of financial hardships suffered during and following the recession. This may be particularly true of younger adults who were discouraged from getting involved in credit card use in the first place because of these difficulties.
Source: credit.com
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To our nation:
Improve Credit Score Transparency
or risk Another Financial Crisis
Click green for further info
Credit scores are vitally important in many areas of your financial life, ranging from getting loans and credit cards to saving on insurance rates, finding an apartment, or even getting your next job. Because of their importance, it's essential to improve credit score transparency to the point at which everyday borrowers will not only know where they stand on their credit but the reasons why their credit scores rise and fall over time.
What we do know
Credit-reporting agencies aren't entirely opaque about what goes into their credit score calculations.
For instance, Fair Isaac (NYSE: FICO ) , the company behind the popular FICO score, offers a detailed explanation of what goes into every person's score. A strong payment history without delinquencies or late payments carries the most weight, making up 35% of the FICO score, while 30% comes from how the amounts you owe compare to the total credit you have available to you. Smaller percentages of the score come from other areas, including the length of your credit history, the amount of new credit you've taken out recently, and how wide a mix of different types of credit you have outstanding.
Fair Isaac is also upfront about what it doesn't consider in its scoring. Legally protected information like race, religion, or marital status can't be used to determine credit scores, and Fair Isaac chooses not to consider age, employment history, where you live, or whether you're in a credit-counseling program, among other things.
Other bureaus have their own scores, such as the VantageScore product from Experian, TransUnion, and Equifax (NYSE: EFX ) . VantageScore uses its own categories, with payment histories getting a 32% weight, credit availability and use 23%, total debt 15%, length of credit history 13%, recent credit history and inquiries 10%, and available credit 7%.
These formulas make the scoring process seem extremely complicated, giving only a glimpse at the overall process of coming up with a credit score. Exactly what goes into the point total is still a mystery, hidden as proprietary trade secrets of the companies involved.
Why you need to know
The reason that credit-reporting bureaus need to improve credit score transparency is that in some cases, every point counts. Consider:
- In the mortgage loan arena, big lenders Bank of America (NYSE: BAC ) , Citigroup(NYSE: C ) , and Wells Fargo (NYSE: WFC ) have had to rein in their credit standards substantially in the aftermath of the financial crisis, as bank regulators want to ensure that the events that brought the financial system to the brink of collapse never repeat. As a result, single points that push you above or below key credit-score thresholds are instrumental in determining whether you'll be able to buy the home you want and get financing at a fair rate.
- In other areas, it's even less clear what your credit score means. For instance, in employment situations, just coming up with a baseline threshold is itself a matter of subjective judgment. Without the details on exactly where you stand on your score, you might never know that you didn't get a job because of your credit history.
Don't give up
A decade ago, having free access to a credit report seemed like a pipe dream, yet legislation now makes such disclosures mandatory on an annual basis. With the same drive and determination, consumers can demand that credit-reporting agencies improve credit score transparency to the point at which everyone will understand the ins and outs of the key financial metrics governing their financial lives.
Making the right financial decisions today makes a world of difference in your golden years, but with most people chronically under-saving for retirement, it's clear not enough is being done. Don't make the same mistakes as the masses.
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Source:
By Dan Caplinger
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Article 1 of 2 (Article 2 of 2 next below)
You may have noticed that we at STAF, Inc. provide for the same sounding topic several articles written by
different professionals. The reasons: (1) every article will have something new the other articles do not have,
(2) An old wisdom states: "In multiple counselors there is success." (The Bible)
Good credit is such an important matter
that it demands effective attention and correct care
Will Cosigning Hurt My Credit?
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STAF, Inc.: Avoid any co-signing (except with your spouse if your marriage is strong & steady)
For other co-signing demand trustworthy, reliable material guarantee
If you've ever been asked by a friend or family member to cosign on a loan, you might have wondered whether it could hurt your credit. This is a very important question to ask, and it's a decision you have to weigh carefully, as the effect of cosigning a loan can vary with each situation.
In a strict sense, the answer is no. The fact that you are a cosigner in and of itself does not necessarily hurt your credit. However, even if the cosigned account is paid on time, the debt may affect your credit scores andrevolving utilization, which could affect your ability to get a loan in the future.
For example, let's say the cosigned account is a credit card. If your friendcarries a large balance, as the cosigner you may have lower credit scores because of the high revolving utilization of the cosigned account.
Read more: Can You Really Get Your Credit Score for Free?
Here's another example, a worst-case scenario. Let's say you cosign for a friend on an auto loan. If your friend stops making payments, the delinquency or repossession records would damage your credit score. You would be held legally responsible for repayment of the cosigned debt
In the sense that the cosigned account may give you a greater diversity of credit accounts (one of the components of credit scores), it's actually possible that the cosigned account could help you get a loan in the future. For example, you would probably benefit if the cosigned account were a mortgage that is paid on-time every month.
Read more: 5 Credit Rules Everyone Should Follow
If you're having trouble deciding whether to cosign, think about what likely effect the cosigned account will have on your credit scores. If you're at all concerned about your friend or family member's ability to pay, and are not in a position to cover all of his debt in the event that he starts defaulting, don't cosign. It is best to only cosign with a close friend or relative that you know is trustworthy.
The 11 Most Common Credit Questions
Remember: The cosigned account will affect your credit report and scores no matter what because ultimately you are just as responsible for the debt as your friend or family member. If you are a cosigner on someone else's account, it's very important that you check your credit reports (you can get them for free once per year from each of the three major credit reporting agencies through AnnualCreditReport.com). And by monitoring your credit score regularly -- which you can do for free once a month using Credit.com's Credit Report Card -- any unexpected changes in your score could point to potential problems with that account. By being aware of potential problems with the cosigned account, you'll be better able to help prevent even greater damage to your credit.
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Source: Column by Credit.com staff - June 28, 2013
(Article 2 of 2 next below)
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Article 2 of 2 (Article 1 of 2 next above)
Can You Force Your Ex to Pay a Loan You Co-Signed?
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Divorces by nature are rarely ever pleasant
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If you break your real love you both will be miserable the rest of your lives
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The article next below: Can You Force Your Ex to Pay a Loan You Co-Signed?
At the end of the article the 12-life-destroying matters every child is facing in a separation or in a divorce situation
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When you’re going through a divorce, protecting your credit is probably one of the last things on your mind.
However, as the following question from one of our readers illustrates, it’s definitely something that couples should consider during divorce negotiations:
I am a co-signer whose borrower (ex-wife) has left a $17,000 loan on me and has totally ignored even giving them her address. It is a private loan through Chase and the interest rate is 9% or more. I have been paying. The IRS will not let me deduct the amount I pay. Is there anything I can do? How do I make the borrower accountable?
Unfortunately, as a co-signer, you’re both on the hook. There’s really no way out of it unless your ex-wife agrees to refinance the loan entirely in her name. It’s a catch-22*), and one of the primary dangers of co-signing. It’s also the primary reason why divorce often ends up trashing both spouses’ credit reports.
*) catch-22 = A tricky or disadvantageous condition; a catch
At this point, if you stop paying, and your ex-wife refuses to make the payment, you’ll both suffer the damage to your credit reports and scores. In an ideal situation, you’d be able to negotiate with her so that she contributes something toward the debt, but as far as making her accountable — she already is. It’s just that you’re saving her credit, as well as your own, by making the payments for both of you.
As far as claiming the interest as a deduction on your taxes goes, the IRS won’t allow you to because you’re listed as the co-signer and not the primary borrower on the loan. One way to address this would be to convince your ex-wife to agree to refinance the loan into your name — probably not the resolution you’re looking for, but it is an option. Another option would be to try contacting the lender and requesting that your role be changed to that of joint or primary borrower, rather than the co-signer. Each lender varies, and they may require you to refinance the loan outright, but it’s worth checking with them directly. Even then, because your ex-wife is the primary borrower on the loan, she’ll have to agree to the change.
Divorces by nature are rarely ever pleasant, but in an ideal situation, both parties would evaluate their joint debts and address any co-signed or jointly held accounts as part of the divorce proceedings. The best way to handle these types of accounts would be to close them and re-establish individual accounts in one or the other party’s names. This isn’t always an option and for this to happen, both parties have to be open to communicating and divvying*) up the debts, which rarely happens unless a divorce is amicable. *) = divvying = Divide up and share: "they divvied up the proceeds"
For one, both parties have to be open to communicating and divvying up all joint or co-signed debts. Secondly, with larger debts — like joint mortgages, for example, refinancing may not be an option financially. In which case, financial responsibility is left to whoever the judge decrees as the responsible party.
The big misconception with divorce decrees lead many couples to assume that whatever the judge says is legally binding, essentially releasing one or the other party from legal liability on a particular debt — it doesn’t. As far as the lender is concerned, if both parties are on the loan, both parties are still legally liable for the loan — regardless of what the judge outlines in the divorce decree. In which case, if the decreed party misses a payment, pays late, or defaults on the debt — both parties’ credit will suffer.
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Source: Credit.com
In a family separation & divorce
both spouses will experience (1) health challenges leading to a shorter life span and (2) to added financial difficulties.
Any traditionally done marriage turned dysfunctional can be healed. Giving up as the first solution is not reasonable for anyone. A separation and a divorce are serious child abuse.
Every child experiencing a parental separation or divorce faces serious life threatening disasters
- the most important listed here:
(1) overall increased risks to health & welfare; (2) 5 times more likely to commit suicide; (3) 32 times more likely to run away; (4) 20 times more likely to have behavioral disorders; (5) 14 times more likely to commit rape; (6) 9 times more likely to drop out of school; (7) 10 times more likely to abuse alcohol and drugs; (8) 20 times more likely to end up in prison; (9) increased learning difficulties; (10) increased risk of divorce when grown; (11) increased out of wedlock pregnancies; (12) Latest discovery by the researchers: highly increased risk of having a stroke during his/her life time.
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5 Credit Rules Everyone Should Follow
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Managing credt correctly requires a certain amount of discipline. If you let your spending get out of control or take on too many loans, you could face big money troubles. That’s why, when it comes to borrowing, it’s important to have some guidelines. Here are five credit rules every consumer should follow so their finances and their credit score remains intact.
1. Make payments on time
Stellar payment histories are key when it comes to establishing a good credit score. They account for the largest percentage of all components used to calculate most credit scoring models and one missed bill will certainly cost you. As this FICO study illustrates, a recent late payment can cause as much as a 90-110 point drop on a FICO score of 780 or higher. Missed bills can also do big damage to your wallet since balances are typically subject to penalty annual percentage rates and late payment fees.
To avoid both pitfalls, it’s a good idea to set up auto pay on car, student or home loans so you don’t miss a payment. In terms of credit cards, while it’s always a good idea to pay off everything you owe, make sure at least minimum payments are made before the monthly bill’s due date.
Additionally, “if you have problems paying bills on time, don’t get a credit card,” says Karen Carlson, director of education for non-profit agency In Charge Debt Solutions.
2. Don’t bump against your credit limit
Following payment history, credit utilization ratios — essentially how much credit you have available to you versus how much you are actually using — play a big role in shaping credit profiles. To keep scores from taking a dive, it’s important to avoid bumping up against credit limits. Instead, try to only utilize 25% or less of all your available credit at any given time, says Deatra Riley, financial education manager for non-profit credit counseling organization CredAbility.
And don’t let anyone fool you into thinking you need to carry balances to give your score a boost.
“I have never seen a credit scoring model award points for that,” Carlson says. “It’s really about the account being paid as agreed.”
3. Always consider your credit score
Whether adding or subtracting to your credit profile, it’s important to consider what effect the move is going to have on your credit score. Of course, to do so, you’ll need to know what your credit score actually is. Consumers should check their credit reports at least once a year. You can do this for free by visiting www.annualcreditreport.com. You can also monitor your score for free with the Credit Report Card.
As a best practice, you should also pull your credit report right before applying for a new loan. If the score turns out to be less than stellar, you may want to focus on building it before you add any credit cards or installment loans. If your credit score is in good shape, be sure to reap the benefits.
“Be creditworthy when the opportunity arises,” Carlson says, so you can get the best interest rates on each line of credit. You’ll also be eligible to score the best rewards credit cards.
4. Understand the terms and conditions associated with all your loans
Terms and conditions vary from product to product, so it’s important to read through every single loan or credit card contract before you go ahead and sign on the dotted line. According to Brent Neiser, senior director at the National Endowment for Financial Education, you should be sure to check what interest rates are being offered and when they will be applied. You also want to thoroughly read through fee structures so you have a good sense of the costs associated with each line of credit.
Additionally, ask “what are the incentives?” Neiser says.
If you’ve haven’t combed through a contract before accepting a loan, you will need to ultimately make time to read through the fine print. Riley also suggests printing out contracts and keeping them in a “safe, secure place” so they can be easily accessed should you encounter an issue.
5. Charge in accordance with your budget
A credit card can be a powerful payment method, since it allows you to earn points on purchases and may also get you access to exclusive perks and discounts. But special offers can easily be rendered moot if you don’t control your spending and end up with a mountain of interest-incurring debt instead. To avoid winding up in dire financial straits, Carlson suggests using credit cards in accordance with a written budget.
“This is the [rule] most people don’t follow,” she says, since it’s very easy to think of a credit card as a financial lifeline. However, you need to be sure to only charge items you could pay for even if the line of credit wasn’t at your disposal.
You also need to make sure this budget contains a savings plan.
“Don’t use a credit card as a replacement for your emergency fund,” Carlson says. “Credit is a wonderful tool to meet the needs of positive events.
It’s not a tool for negative events.”
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Source: credit.com
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Achieving Perfection – the Highest Credit Score
If you’ve ever applied for a car loan, mortgage loan or even a credit card, you probably know how crucial your credit score is to qualifying and getting approved. The higher your credit score, the better your interest rate and terms will be, and the less you’ll pay over the life of the loan. It can also save you hundreds, if not thousands, of dollars throughout your lifetime.
But your credit score can impact a lot more than whether or not you qualify for a loan or a credit card. Credit scores are also used to determine whether or not you’ll be approved for an apartment, how much you’ll pay on your insurance premiums and even how much of a deposit you’ll have to pay to obtain a cell phone or have other utilities connected.
With the influence your credit score has on almost every aspect of your financial life, it’s not surprising that many consumers ask the question: “What is the highest credit score possible?”
There Is No “One” Universal Credit Score
This should be an easy enough question to answer, assuming we were talking about one universal credit score. However, despite the way credit scores are marketed to consumers as being “one” universal score, there are actually many different credit scores, built by many different companies and used by many different lenders. Not to mention the fact that you have three different credit reports at three different credit reporting agencies, and no two bureaus score your credit reports identically. Simply, they all vary. And in order to know the highest credit score possible, you’d need to know which credit score or credit score model you’re using.
There are many, many credit scores on the market today, but for the purpose of this example, we’re going to focus on the FICO credit score. Created by Fair Isaac, the FICO score is the most well-known — and the most widely used — credit score in the industry. If your FICO score is high, you can pretty much rest assured that your credit is in good shape — regardless of the scoring model used.
The FICO score ranges from 300 to 850, with a FICO score of 850 being the highest score you can obtain. Your FICO score is calculated from the information contained within your credit report and analyzes five key categories to determine your score:
• Your Payment History — 35% of your score
• How Much You Owe — 30% of your score
• Length of Credit History — 15% of your score
• New Credit, Inquiries — 10% of your score
• Types of Credit — 10% of your score
[Credit Score Tool: Get your free credit score and credit report card from Credit.com]
The concept of achieving a high FICO score isn’t as complicated as you might think. And based on these five categories and percentage weights, if you stick to three core fundamentals, your credit score will take care of itself. All you have to do is remember and practice these three basic principals:
1. Pay your bills on time, every time — no matter what.
2. Watch your debt balances. Don’t over extend yourself on credit cards, and keep your balances as low as possible.
3. Only apply for credit when you really need it.
The other two categories, length of credit history and types of credit will happen organically. As time passes, your credit history will mature and age. When you’re ready to purchase a home or a car, you’ll take care of the ‘credit mix’ category by adding a mortgage, or an auto installment loan to diversify your credit mix. By simply following these three basic principals, your FICO score will shine.
Achieving a Perfect 850
“That’s great,” you say, “but I want to achieve that perfect 850. I want the satisfaction of knowing that I’m one of the credit elite.” That’s a fantastic goal, but the one thing consumers need to keep in mind when working towards that perfection — especially with credit scores — is that it’s a lot easier to wreck a perfectly great credit score by trying to attain that perfect 850.
Credit score models are complicated mathematical algorithms. They are developed by statisticians and have hundreds, if not thousands, of possible characteristics built into each model. Each model varies, and we won’t even get into the different scorecards that may be involved within each model. The point is: aiming for perfection without understanding the complexities of the scoring model can oftentimes cause you to do more damage than good. There are many horror stories we’ve heard where someone has tried various unproven strategies to build their scores from the high 700s to the 800s, only to find their strategy backfires and hurts their scores in the process.
Aim for a high score. But if your score is already in the high 700s or low 800s, focusing on reaching that 850 may cause you to damage the excellent scores you already have. Remember, the goal isn’t perfection. The goal is to get the best deals and best interest rates available when you finance a loan or apply for credit.
The 5 Things That Affect Your Credit Score
Lenders Want High Scores, Not Perfect Scores
Lenders are really looking for a “good credit risk.” That is, someone who will pay back the loan and pay it back on time. In fact, perfection is subjective and depends on the lender. When it comes to qualifying for a loan, or any other credit product, the goal is to get the best interest rates and terms offered by your lender. Typically a FICO score of 760 or higher is golden, giving you access to the best interest rates and terms a lender has to offer. This means that even if you have a score of 800, you’re still qualifying for the same deal as someone with a 760, or an 850 for that matter.
Characteristics of FICO High Achievers
According to a recent infographic published by myFICO, the consumer division of Fair Isaac, a FICO score of 785 or higher puts you in FICO’s top 25 percent of “High Achievers.” While not perfect 850s, FICO High Achievers are the credit elite. If you’re set on achieving the highest credit score, or as close to perfection as possible, here are a few key high achiever characteristics to help guide you on your journey.
FICO High Achievers:
• Consistently make on-time payments on all of their credit obligations, with 96% showing no missed payments whatsoever on their credit reports.
• Avoid maxing out their credit cards and keep low balances, using an average of 7% of their available credit limits.
• Carry an average of seven credit cards, which include both open and closed accounts.
• Have an average of four open credit accounts with balances, including both credit cards and traditional loan accounts.
• Rarely open new accounts, with their oldest credit account being opened an average of 25 years ago. The most recent account opening averages 28 months old, and an average credit account of 11 years old.
Don’t know your FICO score? Sign up for Credit.com’s free Credit Report Card and you’ll get a free credit score along with an estimated FICO and VantageScore credit score.
Source: Credit.com
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I Can't Get My Free Credit Report on The Internet - What to do?
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Consumers are entitled to a free copy of their annual credit reports from each of the three major credit reporting agencies, as mandated by the Fair and Accurate Credit Transactions (FACT) Act. (click green areas) FDIC: Credit Reports and Scoreswww.fdic.gov/consumers/consumer/alerts/facta.htmlCredit Reports and Scores. The FDIC has created this webpage to inform consumers about the new Fair and Accurate Credit Transactions Act's ... FDIC: Federal Deposit Insurance Corporationwww.fdic.gov/
As with many things, the Internet simplifies this process, and the bureaus tend to encourage consumers to use the online platform, rather than call or mail in a request.
It’s pretty painless: Go to AnnualCreditReport.com, make a few clicks, enter your information, answer some security questions and boom — you have your free credit report, one of the best ways to monitor your credit.
But it’s not always that simple. Every once in a while, a person’s identity can’t be sufficiently verified by the security questions, or a fraud alert or credit file freeze could also occasionally impede online delivery — and the website will tell them they have to mail in proper documentation to obtain their credit report.
Shortcomings of Internet Security
When it comes to the security questions the online system uses to verify your identity, the point is to make sure your sensitive information doesn’t get into the wrong hands. However, sometimes a consumer can’t remember how much an old mortgage cost, or maybe it seems like there are two possible answers to the multiple choice question. So instead of the quick checkup on the Web, a person has to send his or her personal information — including a Social Security number — in the mail and wait several days for the report to come back.
Not everyone is crazy about sticking their Social Security number in an envelope, slapping a stamp on it and mailing it across the country.
“The tricky thing is that balancing act,” said Norm Magnuson, vice president of public affairs for the Consumer Data Industry Association. It’s the trade association that counts among its members Experian, Equifax and TransUnion, the three major credit reporting bureaus that furnish reports through AnnualCreditReport.com. Magnuson described the difficulty with security questions: “You want to make it difficult enough so that not everyone can guess what it might be, but you also want it to be easy enough that people can answer.”
The Cost of ‘Free’
Getting the security questions wrong is most likely why someone would be denied online access to a credit report. Each bureau has different standards for what constitutes “passing” the security test, but the process following a failed quiz is the same: send your information in the mail with some identity-verifying documents, and you’ll get a credit report. (Though consumers can make an initial request via phone, it’s not an option after a failed attempt online.)
But what about the cost of mailing your information? Sure, a stamp only costs 46 cents (for now), but that’s not the most secure way to send your Social Security number to a credit bureau.
“We recommend you send certified mail when you do send information to us,” said Rod Griffin, director of public education at Experian. Certified mail is a service of the U.S. Postal Service that requires a signature to be delivered. It costs $3.10.
USPS Senior Public Relations Representative Darleen Reid said registered mail is the most secure way to send something. That starts at $11.20, but she also recommended sending certified mail and adding a return receipt (record of the delivery) for an additional dollar or two.
Though the report itself costs nothing, it takes a little money to request it. That’s the price of security, though it could be frustrating for someone legitimately trying to obtain his or her credit report, only to be denied online access because of an honest mistake.
“Consumers aren’t required to send their request by certified mail, so they don’t have to pay for special shipping,” Griffin said. “We encourage people to request their credit report online, and for the vast majority of people there is no problem in delivering the report. We only request that they write and provide identifying documents when we cannot sufficiently verify the individual’s identity. The reason for doing so is to protect them from fraud.”
Identifying documents are things like tax forms, pay stubs, a copy of a driver’s license — there are a variety of options.
“You can choose the ones that you’re most comfortable sending,” said Demitra Wilson, senior director of public relations for Equifax. She also recommended sending information by certified mail.
In a culture where instant access to online information is expected of most services, “snail mail” can be a pain, but the added effort doesn’t outweigh the importance of monitoring your credit. Pulling your credit reports should be done in addition to checking your credit score regularly, as changes in your score can alert you to potential problems. There are services that allow you to monitor your credit score for free, and Credit.com provides a tool that gives you your credit score as well as your credit profile.
Paying a few dollars for extra precautions when sending your information is worth it if it helps you avoid identity theft. If you’re constantly denied online access to your annual credit report, make sure you’re checking your reports closely for incorrect information, and reach out to the bureaus for customer service.
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Source: Credit.com
More from Credit.com
- How to Get Your Free Annual Credit Report
- What's a Bad Credit Score?
- The Basics to Understanding Your Credit Report
This article is placed here to remind:
keep your good credit
- no matter what -
A bad credit will ruin anyone's life, bad credit can cost more than the amount of the credit.
Good opportunities, new work, marriage or other relationship, your self-esteem and much more, may be lost temporarily or forever. Too may people take a good credit score and good credit too lightly. Never file for a bankruptcy - find another solution (do not ask a bankruptcy lawyer what to do - he is a bankruptcy lawyer and makes his money on bankruptcy business - of course he/she will guide you to have a bankruptcy. Realize: If you ask a barber if you need a hair cut the barber will say "yes, you do need" - even though you have only hair on your head.
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Article 1 of 3 2 of 3 is next below
The Long Shadow of Bad Credit in a Job Search
THE first couple of times Alfred J. Carpenter was turned down for a job, he didn’t know what to think.
He been laid off early in the recession and then had the bad fortune of tearing tendons in his knee just when he didn’t have health insurance. The job market was terrible and he had been out of work for more than a year. But the managers at the first two shoe stores to which he applied in the summer of 2010 seemed to be taken by his résumé. He had sold shoes for six years at Salvatore Ferragamo on Fifth Avenue and later at J. M. Weston, where a pair of men’s dress shoes can cost $2,000. The manager at one shop was already discussing salary. The other, he said, invited him to fill out the paperwork normally done on the first day on a job.
“Who does that if they’re not planning on hiring you?” Mr. Carpenter asked.
Yet neither job materialized. One manager, he said, “basically hung up on me.”
A friend at Bergdorf Goodman, the high-end clothier, secured him an interview for an opening in the shoe department. But when Mr. Carpenter confided to his friend that his finances were a mess, “he tells me, ‘Oh, you’ve got bad credit? They’ll never hire you.’ ” Sure enough, a week or two later, Mr. Carpenter said, he received a notice from Bergdorf informing him that while running a credit check, the store found information that played a role in its hiring decision. It was a so-called adverse action letter that by law a business conducting a credit report is supposed to send to an applicant.
Mr. Carpenter kept applying for jobs and kept checking off the box granting his would-be employer permission to look into his past. And he kept being turned down. There was the recession and there may have been dozens of applicants for each of these jobs. But while Bergdorf was the only company to follow up a job rejection with an adverse action letter, Mr. Carpenter became convinced that his credit report was a curse.
“No one lets me explain, ‘Hey, I had this freak injury when I didn’t have health insurance,’ ” he said. “It’s black and white: ‘You have these bad marks on your record, you don’t get hired.’ ” Down to his last $200, he applied for and was granted food stamps and federal housing assistance.
“There’s no reason,” he said, “a strong, able guy like me should have to go on welfare.”
PEOPLE tend to think of banks and other lenders as the main users of credit reports. But over the last several decades, credit reporting bureaus have been selling their services to a much wider range of buyers.
“Credit reports are really seeping into the soil,” said Sarah Ludwig, co-director of the Neighborhood Economic Development Advocacy Project, a New York-based nonprofit. “It’s taken an outsized role in employment, housing and insurance.”
For those seeking a job, it can lead to what Chi Chi Wu, a staff lawyer at the National Consumer Law Center in Boston, calls “a bizarre, Kafkaesque experience.”
“Someone loses their job,” Ms. Wu said, “so they can’t pay their bills — and now they can’t get a job because they couldn’t pay their bills because they lost a job? It’s this Catch-22 that makes no sense.” It can also be a kind of backdoor job discrimination, Ms. Wu contends, given the numerous studies that demonstrate that those black, Latino or simply poor are more likely to have lower credit scores than those who are white and have means.
Experian, one of the big three credit reporting bureaus, states in its marketing materials, “Credit information provides insight into an applicant’s integrity and responsibility toward his or her financial obligations.”
But to Ms. Wu and others, a credit report says more about a person’s economic circumstances than his or her moral character. “Some people can go to daddy and say, ‘I can’t pay my bills, will you bail me out?’ ” Ms. Wu said. “And others can’t.”
Nearly half — 47 percent — of employers use credit checks when making a hiring decision, according to a 2012 survey by the Society for Human Resource Management. Most businesses use credit checks only to screen for certain positions, but one in eight, the survey found, does a credit check before every hire. “We’ve heard from dozens of people over the past several years who say they’re being denied jobs specifically because of a credit check,” Ms. Ludwig said. The people contacting her group, she said, are “mostly lower-wage workers,” especially those applying to big retail chains.
“Prohibiting the use of credit checks in employment is now our number one campaign,” Ms. Ludwig said. “Because it’s discriminatory. And because the last thing we need in a recession is another barrier to employment.”
Lawmakers in some jurisdictions have proved sympathetic to those arguments. Nine states have adopted legislation that curbs the use of credit reports to judge prospective hires — seven of them since the start of 2010. Representative Steve Cohen, Democrat from Tennessee, has sponsored federal legislation that would restrict their use. The New York Legislature and the New York City Council are considering strict new laws that would greatly limit an employer’s ability to do credit screening.
Advocates and lawmakers are already seeing the impact of their efforts. The Society for Human Resource Management started polling members about use of credit reports as a pre-employment tool in 2004. Over the years, the numbers were consistent: six in 10 businesses indicated that they used them. But in its most recent survey in 2012, that number fell to just below five in 10. That decline no doubt is the result, in part, of new state prohibitions and the attention the issue has received in the last few years, said Kate Kennedy, a spokeswoman for the society. But she also notes that her association has been educating its members in the importance of looking at “how relevant a credit check is for a particular position.”
That is bad news for the big three credit reporting bureaus: Experian, TransUnion and Equifax. But how bad is anyone’s guess. None of the three reveal what portion of overall revenue is derived from employment-related credit checks. Even if they did, the number would only offer a partial picture, said Terry W. Clemans, executive director of the National Consumer Reporting Association, an industry trade group based in Roselle, Ill. “There are several hundred companies out there that specialize in employment screenings,” he said.
Mr. Clemans saw the rapid increase of employment screening through the 1990s and into the 2000s, and considers the rising concern about its use in the last few years “hysteria.” “Credit is one data point that businesses are using to get an overall feel,” Mr. Clemans said. “Does this consumer have a lifestyle that fits the job? Is this someone who I can trust?” It is not the only factor.
“People are assuming because they checked that box agreeing to a consumer report and they were late in paying their Visa bills, that’s why they didn’t get a job,” Mr. Clemans said. It’s easier to blame the credit bureaus, in other words, than to accept that you weren’t the best possible candidate.
STEVEN BURMAN is the founder and president of Credit Advocates, a nonprofit in New York that helps consumers who have credit problems. In the past, people who were rejected for bad credit for a job in financial services might show up for help, but by and large his clients were trying to secure a home loan.
“What’s changed over the last four or five years is now I’m hearing from all these people who are concerned about finding work,” he said. And instead of stockbrokers, Mr. Burman is seeing “regular people looking for blue-collar low-wage jobs” such as security guard or retail clerk.
The problem is most pronounced among women he counsels at a homeless shelter in the Bronx. Those clients are almost all out-of-work single mothers. “They all want to do the right thing,” he said. “But they have terrible credit and none of them can get jobs because of it. It’s a vicious cycle.”
Despite his sympathy for his clients, Mr. Burman told me that he never makes a full-time hire at Credit Advocates without first pulling that person’s credit report. An employee dealing with bill collectors could be a distracted worker, he said. And how financial problems are explained could offer insights into an applicant’s character: Does he take responsibility for debts, or does she blame problems on someone or something else?
“I see it as the start of a dialogue,” he said.
Besides, a credit check is relatively inexpensive. A basic employment screening package can cost $19 to $50 per applicant. “If you have five people and can’t make up your mind, why not pull credit reports?” Mr. Burman asked.
The millions of Americans who saw their credit damaged during the financial crisis in 2008, however, might find Mr. Burman’s rationale unfair.
Gustavo Panesso, a man in his 50s who lives in Queens, was driving to his orientation to be a sales associate at the J. Crew store in Rockefeller Center in August 2010, he said, when his cellphone rang. “It was the man who was supposed to be my supervisor,” Mr. Panesso said. “He tells me, ‘Gustavo, I regret to say that we’re going to have to cancel your orientation because there was a problem with your credit report.’ ”
In Mr. Panesso’s case, the trouble was related to a pair of credit cards he had co-signed for his sister; she had lost her job a few years earlier and the cards were in default. He tried explaining the situation to his would-be bosses, and even hired a lawyer, “but they told me unless I cleared up this discrepancy, we can’t hire you.”
Moreover, credit reports are often inaccurate. In February, the Federal Trade Commission released a report indicating that one in four consumers was likely to find at least one mistake in his or her credit report.
Mr. Panesso was rejected for jobs at several more big national retail chains. But J. Crew, he said, was the only business to send him an adverse action letter. Did that mean the others rejected his application for other reasons? It’s impossible to know for sure.
Amy Traub, a senior policy analyst at the liberal-leaning policy group Demos, and the author of “Discredited: How Employment Credit Checks Keep Qualified Workers Out of a Job,” a report released in March, says that the law requiring an adverse action letter is rarely enforced. “We found that many employers don’t” send them, Ms. Traub said.
Mr. Panesso now picks up odd jobs when he can find them. “Quite frankly,” he said, “I gave up.”
ALFRED CARPENTER, the shoe salesman, can relate. Now a fit man in his 50s, he lives in Bensonhurst, Brooklyn, where he grew up. After graduating with a two-year associate’s degree from Kingsborough Community College, he worked his way up in the shoe business, landing at Ferragamo. In a good year, he said, he would earn $60,000 to $70,000.
In his mid-30s, he quit Ferragamo to study acting. But after two years of trying to catch his big break, he ran out of money and, in 1999, he returned to selling shoes. In 2007 he took a job at Paul & Shark, a store specializing in yachting clothes. In August 2007, four months after he started, Mr. Carpenter was laid off. Not appreciating the size of the economic cataclysm that was about to rock the globe, he decided to take several months off before looking for another job.
“I figured with my résumé, I’d get another job easy,” he said. He also decided he wasn’t going to waste money buying health insurance. “I’m a healthy guy,” he said. “And it was too expensive.”
One day, playing in his regular Saturday morning roller hockey game, he ripped the tendons in one knee. The medical bills — the ambulance, the surgery, rehabilitation — piled up. “Every time I’d open my mailbox,” Mr. Carpenter said, “there’d be another six or seven bills.” A clerk in the hospital’s billing department suggested that he could wipe out his nearly $50,000 in medical costs by filing for bankruptcy.
Sitting at a metal table in his kitchen, he held up the final bankruptcy notice. “This is the cause of all my problems,” he declared. “Without this, I could’ve worked anywhere in the city. I would have had a hundred jobs.”
Mr. Carpenter would try talking to the employers who turned him down. “Was it the bankruptcy?” he would ask. But he never got a satisfying answer, just hemming and hawing. “I could hear it in their voice,” Mr. Carpenter said. After a while, he tried pre-emptively bringing up the bankruptcy in interviews, but that only led to more awkwardness.
Luckily, Mr. Carpenter said, he still lived in the rent-controlled apartment in which he grew up. The monthly rent was $600 and he was able to split the cost with a roommate once things turned bad. The federal assistance amounted to $400 or so a month. But even then he feared ending up homeless, worried that he would never find another job.
“I tell the woman my story during intake,” Mr. Carpenter said about his visit to apply for food stamps and other aid. “And she goes, ‘We hear that story all the time, about the credit.’ She said, ‘Yeah, we know, if you’ve got bad credit, you’re not getting a job.’ ”
SOME jobs require a credit check by law. Depending on the state, that includes positions as teachers, police officers, firefighters and day care operators, said Ms. Kennedy at the human resource society.
Most of the state laws curbing the use of credit reports as an employment screen carve out exceptions for people applying for supervisory positions or executive positions inside a financial institution. Mr. Cohen’s House bill creates exemptions for those seeking a national security clearance.
But what about everyone else?
Companies that use credit reports as an employment screen seem generally reluctant to talk about how or why they use them. Bergdorf Goodman declined to comment, as did several other retailers who rejected Mr. Carpenter for a position. A J. Crew representative said that the company stopped reviewing credit reports in 2012.
“Employers are looking for a sense of responsibility,” said Richard Mellor, a vice president at the National Retail Federation. “They want to see that an individual pays their bills on time and takes responsibility for what they buy.”
The Web site of a pre-employment screening company, Info Cubic, says, “A credit report can be an important indicator of financial responsibility for employees with fiduciary or cash handling responsibilities, access to expensive equipment, other people’s property, or otherwise placed in a position of financial trust.”
Experian’s pitch is more ominous: “Every time you hire a new employee you put a lot on the line,” says a company brochure. “The wrong decision could jeopardize your firm’s assets, reputation, or security.”
Consumer advocates say that there is little evidence for the industry’s claims of a connection between a credit report and an employee’s trustworthiness. One study published in 2008 in the International Journal of Selection and Assessment suggested a correlation between a person’s financial history and workplace theft. But a 2011 study in the Journal of Applied Psychology found no link between a person’s credit score and what it called “deviant” behavior like workplace theft. (It did, however, find a correlation between a low credit score and an agreeable personality.)
Critics also have the testimony of the TransUnion official who told the Oregon Legislature in 2010, “We don’t have any research to show any statistical correlation between what’s in somebody’s credit report and their job performance or their likelihood to commit fraud.”
“As a researcher, I’d like to think that if about half of all employers are doing this, they must have some real evidence that it’s valuable,” said Ms. Traub of Demos. “But in this case that evidence is really lacking.”
MR. CARPENTER finally landed a job at the end of 2011. He caught a break after he confided his troubles to a friend in the shoe business. The friend, too, had credit problems but had found work at a Manhattan shoe store. Mr. Carpenter secured a job there and, last fall, he moved to another store where the pay was better. “I’m happy,” he said, but he also feels shellshocked.
“I have this accident and mess up my credit,” Mr. Carpenter said, “and now I’m the guy people don’t see as trustworthy.”
Source: NYT
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Article 2 of 3 Article 1 of 3 next above
Necessary info for a better credit score & a better life
How to raise your credit score
Tips for those who have bad credit — or no credit
There are several other articles in this page - they all have additional information - thus, study them all and apply
Quotation "Multiple counselors bring success" (The Bible)
We’d all like to land lower-interest mortgages, higher-paying jobs and nicer apartments. And we know that getting and maintaining a good credit score is essential to attaining those goals.
But what if you have no credit, or worse yet, bad credit?
“Obviously, neither of these situations is ideal,” says Bill Hardekopf, chief executive of Lowcards.com, a credit-card comparison site. “In both cases, it’s going to take you some time to build up your credit score.”
Good credit must be earned. It’s no easy task to prove to lenders that you are trustworthy and financially responsible enough to pay your bills in a timely manner — that you aren’t one of those people who walk away from a pile of debt because you lost your job or got lazy about sending payments. Even some rich, successful people have lousy credit.
Lenders use sophisticated algorithms to determine how you really handle debt. Do you pay bills on time? Is your debt-to-credit ratio at an acceptable level? Do you overuse one credit card?
If you’re a risky bet, they know — it’s all spelled out in the algorithms. If you have no credit, they don’t have a clue. But according to Odysseas Papadimitriou, chief executive of CardHub.com, a marketplace for credit, prepaid and gift cards, that’s a good thing, because they’re more likely to take a chance on you than on that guy with the black mark next to his name.
“With no credit, lenders are willing to give you the benefit of a doubt,” he says. “Especially if you are also a student, because of your increased future earning potential.”
But if you have lousy credit? No one is going to give you the benefit of the doubt, he says.
Hardekopf thinks the treatment of those with bad credit scores is sometimes unfair because there are countless reasons a person’s number can plummet. After years of perfect payment cycles, for instance, you may have hit a rough patch (during the depths of the recession, perhaps) but are now recovering.
“If you went bankrupt or were completely negligent at paying back your bills, that might be a deeper hole to dig out of,” he says.
The good news is that you can build or rebuild your credit score if you put your mind to it --
and mind your p’s and q’s *) along the way.
*) Mind your Ps and Qs is an English expression meaning "mind your manners", "mind your language", "be on your best behaviour" or similar.
“It is a slow process, but it is well worth the time and effort since so much in our financial lives depends on this very important credit score,” Hardekopf says.
Here are some tips on managing your debt and raising your credit score:
- Make a budget and stick to it. You can’t begin to build a credit score if you aren’t keeping tack of the ebb and flow*) of dollars in your budget. Rank your expenses by order of importance: debt payments, emergency fund contributions and other savings, and trim the fat. “Once you develop your budget,” Papadimitriou says, “stick to it, or else you’ll have wasted your time.” *) Definition of EBB AND FLOW = a condition or rhythm of alternate forward and backward movement or of alternate decline and renewed advance "the ebb and flow of battle", "the ebbs and flows of business"
- Pay your bills on time . Payments that are late, even if only by a day, are a big neon minus sign on your credit score.
- Pay off debt quickly and cheaply. The snowball method is as old as the debt trap that credit cards created. Use the majority of your monthly debt-repayment budget to pay down the balance on the card with the highest interest rate. But don’t ignore the others. Make the minimum payments of those and then move down the line, ticking off the cards — and not reusing them — as you pay them off.
- Keep balances low on credit cards and other revolving debt. Lenders like to see the debt-to-credit ratios at 20% to 25% of the available credit. And that’s per card. They don’t like it when one card is maxxed out and others are low or empty.
- Don’t close unused cards. Closing unused cards will not help raise your score. This goes back to the debt-to-credit ratio. The more available credit you have with the least amount of debt on the books, the better you look.
- Use credit cards. But pay them off monthly as soon as the bill comes - paying early is a good sign for building a higher credit score and a better credit. It’s your best line of defense.
- Don’t apply for a bunch of new credit cards. For one, opening cards all at the same time will hurt because your score gets dented each time there’s a credit check on it. Lenders also are weary of a rapid build-up in credit. They think you’re preparing for a personal apocalypse.
Source: Jennifer Waters is a MarketWatch columnist based in Chicago.
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Article 3 of 3 2 of 3 is next above
Great resume, lousy credit
How job seekers with damaged credit can improve their odds
For some job seekers, repeated rejection by potential employers may be traceable to an unlikely source: their credit report.
Regulators are cracking down on some of the methods companies are using to screen candidates (two major companies this week were accused of using background checks to discriminate against black applicants.) But employers’ use of credit checks during the hiring process is legal and fairly common.
Some 47% of employers conduct credit checks on job candidates, according to a 2012 survey by the Society for Human Resource Management. And one in seven job seekers has been denied work as a result of credit checks, according to a survey by Demos, a liberal think tank.
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Topic: Potential employers are checking your credit
Jonnelle Marte discusses how to handle a bad credit history during a job search.
Employers are more likely to check the credit histories of applicants for positions with financial responsibilities, for senior executive positions and for jobs with access to highly sensitive employee information, according to SHRM (= Society for Human Resource Management). Other companies initiate credit checks when they’re worried about theft and embezzlement, the survey found. “People under financial pressure may not make the best decisions,” says J.T. O’Donnell, chief executive of Careerealism.com, a career-advice and job-search site. Red flags include missed payments, delinquencies, foreclosures and liens.
Read article: Best and worst careers to go into debt for
So what should job seekers do if they know something on their credit report might raise some eyebrows?
First, applicants should be aware of what information is included in the reports: details of credit card obligations, mortgage debts and car loans, as well as stats on on-time payments, missed payments and duration of account ownership. And: even those who are certain they’ve never missed a payments should check their reports for mistakes: one in five consumers has an error in at least one of their three credit reports, according to a study released by the Federal Trade Commission in 2013. “Some people think they have great credit but maybe there was a mistake or a flaw” that could hinder their job search, says Miriam Salpeter, a job search and social media consultant based in Atlanta.
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Topic: Gaming your way into your next job
ConnectCubed taps into the world of gaming and rethinks the job recruitment process. WSJ's Diana Jou has the story.
Consumers are entitled to three free credit reports a year, one from each of the major credit bureaus, Equifax, Experian and TransUnion, through the government’s site AnnualCreditReport.com. (Employers don’t get access to credit scores, which lenders typically factor in when approving or declining access to credit.) Errors should be reported directly to the credit bureaus.
But what if the report is accurate or the dispute has yet to be resolved? Job hunters who are being asked to authorize a credit check—employers must get signed permission before pulling a credit report—should be up front about any issues they know will turn up, says O’Donnell. Without disclosing too many details, job applicants should briefly acknowledge that they might have fallen behind on bills while they were in between jobs or after facing a medical emergency, but should focus on how they are making progress, says O’Donnell.
It may also help to show how you’re working to improve your credit, says Joseph Montanaro, a financial planner with USAA. Make timely payments on any loans and credit cards, even if it is just the minimum amount, he suggests. “If you’re squirreling aside money to make a big payment and falling behind, you could be shooting yourself in the foot,” he says. If possible, people should take on freelance or part-time work while job hunting. And job seekers should be patient if they’re rejected for a few jobs while they’re working to repair their credit: “It’s not an overnight exercise,” says Montanaro.
To be sure, while credit can sometimes be an obstacle, it is rarely the most important factor in the hiring process, career pros say. Employers will put more weight on a person’s previous work experience, if they are a good fit for the job and the company and the candidate’s expertise, according to SHRM. And job seekers should keep in mind that companies don’t normally request a credit check until they’re interested in a candidate, says O’Donnell.
Source: WSJ
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This is a must-to-know information
10 things credit bureaus won’t say
They’ve got your number. And they’re not afraid to use it
1. “We track a lot more than just your credit.”
Credit bureaus are well known for tracking consumers’ credit history, including tabulating such details as whether they pay their bills on time and how much debt they carry. But the bureaus also maintain information that has nothing to do with credit, from consumers’ home addresses to their employment records.
While that data isn’t used to calculate credit scores, lenders can access this personal information and use it to help evaluate borrowers who are applying for credit — even to justify denying them a loan altogether. Individuals who change addresses often, for instance, may be presumed less financially stable and harder to track down if unpaid debts ever need to be collected, says Louis Hyman, a consumer-credit historian and assistant professor at Cornell University. Similarly, those who change jobs every few months could be viewed as more likely to miss payments, he says.
The credit bureau industry says it needs this identifying information to develop accurate credit report databases. Norm Magnuson, a spokesman for the Consumer Data Industry Association, which represents credit bureaus, says storing consumers’ addresses helps bureaus identify the correct credit report to give lenders when a consumer applies for credit. (Questions to the three main bureaus about industry practices were directed to the CDIA.) Social Security numbers by themselves often won’t suffice, he says, because some consumers apply for credit without providing that information. He says the CDIA cannot speak to such lender underwriting practices though they are regulated by laws that protect consumers.
Consumers’ salary information can also be up for grabs. Equifax, one of the three national credit bureaus, maintains a private database of salary records on more than 33% of U.S. adults — information it acquired when it purchased a data-mining company in 2007 — and it can sell this data to eligible lenders, including mortgage and car finance companies, that are trying to gauge a consumer’s ability to repay a loan. This year, seven members of Congress sent a letter to Equifax asking for proof that its subsidiary isn’t breaking laws that protect personal privacy. (The other two major bureaus, Experian and TransUnion, say they don’t collect salary information.)
Timothy Klein, a spokesman for Equifax, says the company provides salary information only when permissible under the Fair Credit Reporting Act, which went into effect in 1970 and regulates how consumer information can be distributed. A company statement to congressional members stated that it’s in “compliance with all applicable consumer protection laws.” Also, he says, the company will only provide this data to lenders if the consumers first agree to it.
Lenders have to ask consumers for permission to verify their employment or income, typically by including language authorizing that disclosure in the loan application, says Klein. If the consumer declines, he says, it’s up to the lender to determine whether to offer a loan without income information.
2. “Selling your secrets is how we make our money.”
Each of the three major credit bureaus, Equifax, Experian andTransUnion, maintains more than 200 million files on consumers, according to the Consumer Financial Protection Bureau — tracking about 63% of the U.S. population. And the bureaus sell some of that information to lenders. Selling data is a primary revenue source for the credit bureau industry, which had U.S. revenue of about $4 billion in 2011, according to the CFPB. Bureaus also sell data to other companies, including insurers and debt collectors, as well as to consumers, says John Ulzheimer, president of consumer education at SmartCredit.com, a credit-monitoring site.
That’s largely how credit card solicitations end up in consumers’ mailboxes. Card issuers pay credit bureaus for the contact information of individuals who meet specific criteria, like a certain minimum credit score. Similarly, mortgage lenders pay bureaus for a list of consumers within a specific credit score bracket and mortgage balance so that they can contact them with refinancing offers. Nessa Feddis, senior vice president with the American Bankers Association, says the process helps lenders find customers who are likely to be interested in and qualified for the loans they’re offering.
Lenders also pay the bureaus for updates on existing customers: Some card issuers will pull credit scores on their cardholders to determine if they’ve become riskier, says Ulzheimer. They can use a lower credit score as a basis for cutting a customer’s credit line or increasing their interest rate on new purchases, he says. (They can also check to see if their customers have become less risky, in which case they can make more credit available.) Feddis, of the ABA, says every transaction on a credit card represents a new loan, so lenders check on their customers to make sure they’re still eligible for revolving credit and likely to be able to repay the loan.
To be sure, the Fair Credit Reporting Act states that credit bureaus can provide consumers’ information to companies that plan to make a firm offer of credit. Magnuson of the CDIA says the credit bureaus are careful about who has access to their systems, and they vet the lenders’ intended uses of credit reports. He adds that consumers can benefit from this dissemination, because they stand to receive loan offers that are less expensive than what they may currently have. Individuals who’d like to avoid solicitations can remove their name from the lists that credit bureaus sell by visiting OptOutPrescreen.com.
3. “What we know could cost you a new job.”
Blemishes on a credit report don’t just make it tougher to get a loan — they can also make it more difficult to get a job. Federal law permits employers to pull job applicants’ credit reports and to use the information within them as grounds for not hiring someone. In fact, roughly 47% of employers say they pull credit reports on some or all job applicants, according to the Society for Human Resource Management. If a credit background check reveals negative information, employers say, certain credit problems, such as outstanding judgments, accounts in debt collection and bankruptcy, are most likely to make them decide not to extend a job offer, according to a separate SHRM survey. The assumption is that a bad credit report might indicate poor work habits and decision-making.
Opponents of the practice question whether there’s a connection between a poor credit file and work performance. “Things that might make you have bad credit have nothing to do with whether you’re a liability,” says Hyman.
Job applicants have to be informed if their credit report will be reviewed. (At least seven states prohibit companies from conducting credit checks on many job applicants.) Under the Fair Credit Reporting Act, which regulates how consumer credit information is handled, companies must get permission from applicants in writing to check their credit reports. While applicants can deny the employer permission, they might want to consider instead explaining the circumstances that led to their credit problems, says Ulzheimer, since that may improve their chance of getting the job.
4. “Good thing no one’s reporting on our mistakes. Oh, wait.”
When errors appear in credit reports, the impact on those borrowers can be severe. Negative information, like missed payments or a foreclosure, can send the borrower’s credit score (which is calculated based on the details in the credit report) into a tailspin. That, in turn, will make it harder to get approved for credit, increase the chances of ending up with higher interest rates on loans, and even make it tougher to rent an apartment (many landlords check consumer credit) or, again, get a job.
The Federal Trade Commission released a study showing that one in five consumers has an error in at least one of their three credit reports. Some 13% of consumers had credit report errors that impacted their credit scores, while 5% had errors that could lead to paying more or being denied credit.
A variety of mishaps can lead to errors — most of which consumers have no involvement in. That includes cases of identity theft and instances when creditors identify the wrong person as owning debt, like the account holder’s spouse, according to testimony by the National Consumer Law Center at a Senate hearing in December. That same month, a report by the CFPB found that almost 40% of consumers’ disputes relate to debt collections.
The credit bureau industry, however, says the FTC data confirms that few errors of consequence occur. The CDIA’s Magnuson says the bureaus work with lenders to reduce errors, and that in most cases, consumers aren’t disputing that an account is theirs but rather have an issue with how their lender is reporting an account, such as the balance or whether they missed a payment.
5. “You all look so much alike…”
When consumers order their credit reports, they have to provide their full name, Social Security number, date of birth and address. But credit bureaus often use fewer pieces of information to match account activity — like a report from a lender that a person has applied for a new line of credit — to borrowers’ credit reports. In many cases, they’ll only use seven out of the nine digits of the borrower’s Social Security number, says Chi Chi Wu, a staff attorney with the National Consumer Law Center, a nonprofit focused on consumer advocacy.
This practice becomes problematic when people have similar names and Social Security numbers, because it can lead to “mixed credit profiles” (when credit information relating to one consumer is placed in someone else’s file). Critics claim the bureaus have been aware of this issue for years. In the 1990s, the FTC began requiring the bureaus to take better steps to prevent mixed files. But mixed files are an ongoing problem, says Ulzheimer. This includes “ownership” disputes, like when a debt collector attributes an account to the wrong borrower. In the last three months of 2011, 33% of credit disputes related to claims by a consumer that an account in their file did not belong to them, either because of an error or identity theft, according to the CFPB.
If the erroneously-applied information in the credit report is negative, of course, that will result in a lower credit score for the person whose actual name is on that file. “It’s one of the worst types of errors that can occur,” says Wu.
Magnuson says the credit bureaus are careful in matching data. He adds that a 100% match wouldn’t solve such concerns and says it would force bureaus to omit account activity from credit reports whenever there’s a small mistake in, say, the last two digits of a Social Security number, even if most of the identifying information is correct.
6. “… it’s tough to tell you apart from someone pretending to be you.”
In many cases, consumers only find out they’re victims of identity theft when they pull up their credit report and spot a fraudulent account, says Jay Foley, partner at identity-theft consulting firm ID Theft Info Source. In fact, identity theft is a cause of credit disputes, according to the CFPB.
While lenders have mechanisms in place to stop identity thieves, they’re not always successful. In those cases, when thieves apply for credit under a consumer’s name, the lender pulls that unsuspecting person’s credit report, tells the credit bureaus to add the loan account to that report, and then communicates missed payments to the bureaus, tarnishing the credit score tied to that account. Then, when consumers find out they’ve been a victim of identity theft — rather than the burden of proof being on the credit agency or lender — they have to provide the credit bureaus with evidence of their innocence.
Consumer advocates say the credit bureaus share some of the blame for these cases. Wu, of the NCLC, says the bureaus’ loose matching procedures contributes to identity theft problems. If bureaus matched all the information, including the person’s full name and full Social Security number, fewer identity thefts would occur, she says. The credit bureau industry disagrees, saying that the duty to verify someone’s identity is with the lender. The CDIA’s Magnuson says that credit bureaus have identity verification systems to protect consumers and that bureaus’ databases are not the entry point for identity theft or the sole source for its prevention.
Consumers can take some steps to avoid becoming victims of identity theft. For instance, they can place fraud alerts on their credit reports for free by contacting the credit bureaus. Lenders will then have to try to verify an applicant’s identity before issuing credit. Many banks also sell identity-theft services — costs can run $10 or more a month — that mostly involve daily credit monitoring, including flagging new accounts opened in a consumer’s name and sending alerts to that individual.
Consumers who learn a fraudulent account has been opened in their name should consider filing a police report and sending a letter with a copy of that report to the credit bureau and the lender who approved that account. In such cases, lenders will usually get fraudulent accounts removed from a credit report within 90 days, says Foley.
7. “Your ‘credit dispute’ doesn’t quite capture our attention.”
Credit bureaus recommend that consumers check their credit reports at least once a year (they can do this for free at annualcreditreport.com) and file a dispute if they notice any errors. But consumer advocates contend that the dispute system is broken. No matter how many papers and other documentation consumers submit to the bureaus, the bureau will apply a two- or three-digit code that offers a brief summary of the dispute, such as “not his/hers” or “disputes amounts,” according to the NCLC. The bureaus will send that code and a one-page form to the creditor involved in the dispute. “We’ve seen [court] cases where the consumer attached canceled checks, letters from [lenders], and court judgments saying this is wrong and none of that gets sent,” says Wu. (The CDIA says it’s in the early testing stages of sending consumers’ documentation to lenders.)
A CFPB report released in December found that the bureaus resolve an average of only 15% of consumer disputes internally, while the remaining 85% are passed on to the lenders or creditors. It added that “the documentation consumers mail in to support their cases may not be getting passed on to the data furnishers for them to properly investigate.”
Magnuson of the CDIA says that lenders are the most qualified to respond to questions of accuracy and that the dispute system is designed to “quickly and accurately deal with consumer disputes, which is what consumers want.” He says the bureaus serve as a point of contact for consumers and act as a clearinghouse for access to lenders who will make the final determination.
But experts say when lenders are forwarded consumers’ discrepancy claims, some will just review their own records with the bureau’s to make sure they match — though both could be wrong. Wu says lenders will use this as a basis to reject the consumer’s claim. The American Bankers Association says lenders conduct investigations but that how deep they go depends on the nature of the consumer’s dispute.
8. “But bypass us on a dispute, and it’ll cost you.”
If consumers believe a credit bureau wrongly dismissed their dispute, they have the right to take the case to court based on the Fair Credit Reporting Act. But if consumers bypass the bureaus and contact the lender with their dispute, they won’t have the right to go to court if that lender claims there’s no error. The CDIA says that while writing the law, Congress recognized that exposing lenders to such lawsuits could result in an unintended consequence: Lenders might stop providing credit-related data about consumers to credit bureaus, which in turn would harm consumers whose reports and scores wouldn’t reflect that they pay their bills on time and are in good credit standing.
Ulzheimer says the law leaves consumers in a difficult spot but recommends that they stick to dealing with the bureaus so that they don’t give up their legal right to a court case should they need it. He suggests they keep all their communications with the bureaus in writing and make copies of all the letters they receive and documentation they submit. That will help them build evidence in case they need it in court.
9. “By the time you’re done fighting us, your toddler could be a teen.”
Upon receiving a consumer’s dispute, credit bureaus legally have between 30 and 45 days to respond with their findings. But if the bureau, following the lender’s investigation, doesn’t agree that there’s an error, borrowers can be stuck fighting that decision for years. The NCLC, for instance, says it has worked with attorneys representing consumers who were trying to resolve such issues in court for up to 10 years. The CDIA, for its part, cites a 2011 credit-industry-funded study by the nonprofit Policy and Economic Research Council, which works on public and economic policy matters, which found that 95% of consumers are satisfied with the result of their disputes.
Consumer advocates contend there are few options for consumers, and they often require waiting to recover their true credit history for many years. Individuals who decide not to fight the bureaus will be stuck with the error for seven to 10 years — that’s the amount of time it takes for negative credit events, such as bankruptcies and foreclosures, to be automatically removed from a credit report.
10. “Be careful what you pay for.”
For a price ranging from $7 to $20, credit bureaus and other companies will sell consumers their credit score. But in some cases, consumers are paying to see an “educational score” — one that’s based on their credit activity and can give them an idea of where they stand as borrowers — rather than the actual score a lender will see when reviewing their loan application.
One out of five consumers who purchase their credit score will likely receive a score that is “meaningfully different” than the one a lender would get, according to a CFPB study released in September. As a result, the CFPB says, they may end up with loan terms that are different from what they expected, and they could waste time applying for a loan that they’re not qualified for. The CDIA, which represents the credit bureaus, says that no single score is used by all lenders and that as an educational tool, credit scores can help consumers better understand their creditworthiness relative to others.
While consumers tend to think of one credit score, there are actually many different types of scores, each with its own mix of payment history, debt and other factors, which the bureaus are selling. Equifax, Experian and TransUnion each have at least one score of their own, and then there’s also the so-called VantageScore, which was created by the three bureaus. Though lenders have access to many scores, the FICO score — a measure of credit risk that ranges from 300 to 850 and is calculated based on the data in credit reports from the three major credit bureaus — remains the most widely used in 90% of consumer and mortgage loan decisions, according to CEB TowerGroup, a financial services research firm. Consumers can purchase their FICO score on MyFico.com, FICO’s consumer division.
Source: Credit.com
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STAF, Inc. places several articles on the similar sounding topic by different writers
That's because every article has some details the other articles do not have - even though the title may be the same, you still get some good advice for having a higher credit score - it will save you money and it will help you to be more successful financially. Thus, read every article to gain the best information - and then: apply the information.
We’d all like to land lower-interest mortgages, higher-paying jobs and nicer apartments. And we know that getting and maintaining a good credit score is essential to attaining those goals.
But what if you have no credit, or worse yet, bad credit?
“Obviously, neither of these situations is ideal,” says Bill Hardekopf, chief executive of Lowcards.com, a credit-card comparison site. “In both cases, it’s going to take you some time to build up your credit score.”
Good credit must be earned. It’s no easy task to prove to lenders that you are trustworthy and financially responsible enough to pay your bills in a timely manner — that you aren’t one of those people who walk away from a pile of debt because you lost your job or got lazy about sending payments. Even some rich, successful people have lousy credit.
Lenders use sophisticated algorithms to determine how you really handle debt. Do you pay bills on time? Is your debt-to-credit ratio at an acceptable level? Do you overuse one credit card?
If you’re a risky bet, they know — it’s all spelled out in the algorithms. If you have no credit, they don’t have a clue. But according to Odysseas Papadimitriou, chief executive of CardHub.com, a marketplace for credit, prepaid and gift cards, that’s a good thing, because they’re more likely to take a chance on you than on that guy with the black mark next to his name. (See also: 10 things credit bureaus won’t say.)
“With no credit, lenders are willing to give you the benefit of a doubt,” he says. “Especially if you are also a student, because of your increased future earning potential.”
But if you have lousy credit? No one is going to give you the benefit of the doubt, he says.
Hardekopf thinks the treatment of those with bad credit scores is sometimes unfair because there are countless reasons a person’s number can plummet. After years of perfect payment cycles, for instance, you may have hit a rough patch (during the depths of the recession, perhaps) but are now recovering.
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What's the worst thing for your credit score?We were all taught as children that patience is a virtue. What no one told us is that it's good for our credit scores too, Chuck Jaffe argues on Lunch Break. Photo: Getty Images.
“If you went bankrupt or were completely negligent at paying back your bills, that might be a deeper hole to dig out of,” he says.
The good news is that you can build or rebuild your credit score if you put your mind to it — and mind your p’s and q’s along the way.
“It is a slow process, but it is well worth the time and effort since so much in our financial lives depends on this very important credit score,” Hardekopf says.
Here are some tips on managing your debt and raising your credit score:
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That's because every article has some details the other articles do not have - even though the title may be the same, you still get some good advice for having a higher credit score - it will save you money and it will help you to be more successful financially. Thus, read every article to gain the best information - and then: apply the information.
We’d all like to land lower-interest mortgages, higher-paying jobs and nicer apartments. And we know that getting and maintaining a good credit score is essential to attaining those goals.
But what if you have no credit, or worse yet, bad credit?
“Obviously, neither of these situations is ideal,” says Bill Hardekopf, chief executive of Lowcards.com, a credit-card comparison site. “In both cases, it’s going to take you some time to build up your credit score.”
Good credit must be earned. It’s no easy task to prove to lenders that you are trustworthy and financially responsible enough to pay your bills in a timely manner — that you aren’t one of those people who walk away from a pile of debt because you lost your job or got lazy about sending payments. Even some rich, successful people have lousy credit.
Lenders use sophisticated algorithms to determine how you really handle debt. Do you pay bills on time? Is your debt-to-credit ratio at an acceptable level? Do you overuse one credit card?
If you’re a risky bet, they know — it’s all spelled out in the algorithms. If you have no credit, they don’t have a clue. But according to Odysseas Papadimitriou, chief executive of CardHub.com, a marketplace for credit, prepaid and gift cards, that’s a good thing, because they’re more likely to take a chance on you than on that guy with the black mark next to his name. (See also: 10 things credit bureaus won’t say.)
“With no credit, lenders are willing to give you the benefit of a doubt,” he says. “Especially if you are also a student, because of your increased future earning potential.”
But if you have lousy credit? No one is going to give you the benefit of the doubt, he says.
Hardekopf thinks the treatment of those with bad credit scores is sometimes unfair because there are countless reasons a person’s number can plummet. After years of perfect payment cycles, for instance, you may have hit a rough patch (during the depths of the recession, perhaps) but are now recovering.
Click to Play
What's the worst thing for your credit score?We were all taught as children that patience is a virtue. What no one told us is that it's good for our credit scores too, Chuck Jaffe argues on Lunch Break. Photo: Getty Images.
“If you went bankrupt or were completely negligent at paying back your bills, that might be a deeper hole to dig out of,” he says.
The good news is that you can build or rebuild your credit score if you put your mind to it — and mind your p’s and q’s along the way.
“It is a slow process, but it is well worth the time and effort since so much in our financial lives depends on this very important credit score,” Hardekopf says.
Here are some tips on managing your debt and raising your credit score:
- Make a budget and stick to it. You can’t begin to build a credit score if you aren’t keeping tack of the ebb and flow of dollars in your budget. Rank your expenses by order of importance: debt payments, emergency fund contributions and other savings, and trim the fat. “Once you develop your budget,” Papadimitriou says, “stick to it, or else you’ll have wasted your time.”
- Pay your bills on time . Payments that are late, even if only by a day, are a big neon minus sign on your credit score.
- Pay off debt quickly and cheaply. The snowball method is as old as the debt trap that credit cards created. Use the majority of your monthly debt-repayment budget to pay down the balance on the card with the highest interest rate. But don’t ignore the others. Make the minimum payments of those and then move down the line, ticking off the cards — and not reusing them — as you pay them off.
- Keep balances low on credit cards and other revolving debt. Lenders like to see the debt-to-credit ratios at 20% to 25% of the available credit. And that’s per card. They don’t like it when one card is maxxed out and others are low or empty.
- Don’t close unused cards. Closing unused cards will not help raise your score. This goes back to the debt-to-credit ratio. The more available credit you have with the least amount of debt on the books, the better you look.
- Use credit cards. But pay them off monthly. It’s your best line of defense.
- Don’t apply for a bunch of new credit cards. For one, opening cards all at the same time will hurt because your score gets dented each time there’s a credit check on it. Lenders also are weary of a rapid build-up in credit. They think you’re preparing for a personal apocalypse.
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5 Credit Card Fees You Should Never Pay
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Mark Twain once said “Everybody talks about the weather, but nobody does anything about it.” But when it comes to credit card fees, there is actually a lot that credit card users can do to reduce or eliminate them. In fact, conscientious cardholders can avoid paying these fees altogether when they choose the right cards and use them wisely.
Here are the top five credit card fees, and how to avoid them.
1. Annual fee. It is true that many credit card issuers now charge an annual fee, but there are still plenty of free products available. And even when a card does have an annual fee, there are several clever ways to avoid paying it.
2. Foreign transaction fees. Of all the credit card fees, this might be among the more controversial ones. Credit card issuers exchange currency at interbank exchange rate, which is the best possible rate. And actually, they impose these charges on any transaction processed outside the U.S., even if it’s in U.S. dollars. Nevertheless, most banks choose to tack on a 3% foreign transaction fee to all of these charges. Thankfully there are now many cards without this fee, and several banks that never charge it. For example, Capital One, Discover, and the Pentagon Federal Credit Union (PenFed) have eliminated this fee on all of their products. All you need is just one of these cards to use in foreign countries, and you are good to go.
3. Late fees. In most cases, cardholders must take responsibility to make their payments on time in order to avoid this fee. Setting up automatic payments makes it impossible to forget a payment while paying electronically avoids the risk of having a check lost in the mail. In addition, there are a few cards that boast of no late payment fees. But be careful, it is important to know that ‘No Late Fees’ isn’t an excuse to pay late.
4. Cash advance fees. Most cards have a cash advance fee of 3% with a minimum of $5 or $10. And beyond cash advance fees, a higher APR will be charged on the cash withdrawal, and there is no grace period. To avoid paying this fee, never use a credit card for a cash advance. In fact, it is best to avoid this possibility by not creating a PIN code with your credit card.
5. Balance transfer fee. Most credit cards that feature 0% APR promotional financing on cash advances also have a 3% balance transfer fee. There are two ways to avoid this fee. First, consider the Chase Slate, the only card from a major issuer that has a promotional balance transfer offer and no balance transfer fee. But most of these offers also feature interest-free financing on new purchases. If you absolutely must finance a purchases with a credit card, use a 0% offer on new purchases before you do, and not a balance transfer offer afterwards.
Credit card fees may always be with us, but we don’t have to pay them. By taking the right steps to avoid paying unnecessary fees, you can enjoy these powerful financial instruments for free.
Consumers aiming to cut their debt obligations may want to first focus on reducing their credit card balances , which tend to carry far higher interest rates than other types of loans. They therefore can more quickly add to their balances if these debts are not addressed.
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Source: Credit.com
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The AARP Credit Card: Not Just for Retirees
&
Other Credit Cards with Special Benefits
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Credit cards are kind of like cars. Most drivers stick to popular models like the Honda Accord or the Toyota Camry, while others seek out high performance cars that are more exotic. Likewise, the market for credit cards is so vast, that it is worth considering some cards that you might not be aware you could even get.
One of the more unexpected cards with great rewards out there is the AARP card from Chase. When people think of the American Association for Retired Persons (AARP), they probably think of the commercials that feature senior citizens. In fact, people of all ages can join the AARP as an associate member, if only to apply for this card. The new AARP Visa offers 3% cash back from purchases at gas stations and at restaurants, and 1% cash back on all other charges. There is no annual fee for this card, and new applicants earn $100 cash back after spending $500 within the first three months of opening an account.
Here are four more surprising credit cards with great rewards:
Capital One Spark Cash
Spark is a business card, but there is nothing stopping cardholders from using it for any purpose they wish. This card features an outstanding 2% cash back on all purchases, and like all Capital One products, there is never any foreign transaction fees. There is no annual fee the first year, and a modest $59 fee after that.
Citi Forward
This card doesn’t offer the best all-around rewards program, but it does have some amazing bonus categories. Cardholders earn five Thank You Points for every dollar spent at restaurants and on entertainment. What does Citi consider entertainment? It includes book stores, record stores, restaurants, motion picture theaters, and video entertainment rental stores. But since purchases from Amazon.com are considered to be from a “book store,” cardholders can receive five points per dollar on anything sold by Amazon.com. There is no annual fee for this card.
Lufthansa Miles and More World MasterCard From Barclays Bank
Few credit card users realize that foreign airlines can offer credit cards to Americans that are issued by banks here in the United States. The Lufthansa Miles and More card features an excellent sign-up bonus of 20,000 miles after a cardholder’s first purchase, and another 30,000 miles after spending $5,000 on the card within 90 days. So why get this card instead of one from a domestic airline? Lufthansa requires only 35,000 miles for a round trip, business class award within the United States. So when Lufthansa miles are redeemed for flights on its partner United, it results in a domestic first class seat. In contrast, United charges 50,000 of its miles for the same seat. There is a $79 annual fee for this card.
Asiana Airlines American Express Card From Bank of America
Another gem from a foreign airline is this card from the South Korean carrier Asiana. It offers double miles for all gas and grocery purchases, which is nice. But even nicer is the way Asiana allows customers to redeem awards. Awards on Star Alliance partners are distance-based, and travelers are allowed four multi-day stopovers along their trip. A trip of 10,000 miles requires only 80,000 points for a business class award. Therefore, cardholders can travel from the northeast U.S. to most of Europe, and visit four additional cities along the way. In contrast, United Airlines requires 100,000 miles for a business class ticket to Europe, and only allows a single stopover. There is a $99 annual fee for this card, but new applicants receive 10,000 miles after their first purchase.
There is a whole world of unusual credit cards out there that are just waiting for savvy customers to take them for a spin. And unlike owning an exotic car, having an exotic credit card will never result in unexpected maintenance costs.
Consumers planning to cut their debt obligations may want to first focus on reducing their credit card balances , which tend to carry far higher interest rates than other types of loans. They therefore can more quickly add to their balances if these debts are not addressed.
Click green for further info
More from Credit.com
&
Other Credit Cards with Special Benefits
Click green for further info
Credit cards are kind of like cars. Most drivers stick to popular models like the Honda Accord or the Toyota Camry, while others seek out high performance cars that are more exotic. Likewise, the market for credit cards is so vast, that it is worth considering some cards that you might not be aware you could even get.
One of the more unexpected cards with great rewards out there is the AARP card from Chase. When people think of the American Association for Retired Persons (AARP), they probably think of the commercials that feature senior citizens. In fact, people of all ages can join the AARP as an associate member, if only to apply for this card. The new AARP Visa offers 3% cash back from purchases at gas stations and at restaurants, and 1% cash back on all other charges. There is no annual fee for this card, and new applicants earn $100 cash back after spending $500 within the first three months of opening an account.
Here are four more surprising credit cards with great rewards:
Capital One Spark Cash
Spark is a business card, but there is nothing stopping cardholders from using it for any purpose they wish. This card features an outstanding 2% cash back on all purchases, and like all Capital One products, there is never any foreign transaction fees. There is no annual fee the first year, and a modest $59 fee after that.
Citi Forward
This card doesn’t offer the best all-around rewards program, but it does have some amazing bonus categories. Cardholders earn five Thank You Points for every dollar spent at restaurants and on entertainment. What does Citi consider entertainment? It includes book stores, record stores, restaurants, motion picture theaters, and video entertainment rental stores. But since purchases from Amazon.com are considered to be from a “book store,” cardholders can receive five points per dollar on anything sold by Amazon.com. There is no annual fee for this card.
Lufthansa Miles and More World MasterCard From Barclays Bank
Few credit card users realize that foreign airlines can offer credit cards to Americans that are issued by banks here in the United States. The Lufthansa Miles and More card features an excellent sign-up bonus of 20,000 miles after a cardholder’s first purchase, and another 30,000 miles after spending $5,000 on the card within 90 days. So why get this card instead of one from a domestic airline? Lufthansa requires only 35,000 miles for a round trip, business class award within the United States. So when Lufthansa miles are redeemed for flights on its partner United, it results in a domestic first class seat. In contrast, United charges 50,000 of its miles for the same seat. There is a $79 annual fee for this card.
Asiana Airlines American Express Card From Bank of America
Another gem from a foreign airline is this card from the South Korean carrier Asiana. It offers double miles for all gas and grocery purchases, which is nice. But even nicer is the way Asiana allows customers to redeem awards. Awards on Star Alliance partners are distance-based, and travelers are allowed four multi-day stopovers along their trip. A trip of 10,000 miles requires only 80,000 points for a business class award. Therefore, cardholders can travel from the northeast U.S. to most of Europe, and visit four additional cities along the way. In contrast, United Airlines requires 100,000 miles for a business class ticket to Europe, and only allows a single stopover. There is a $99 annual fee for this card, but new applicants receive 10,000 miles after their first purchase.
There is a whole world of unusual credit cards out there that are just waiting for savvy customers to take them for a spin. And unlike owning an exotic car, having an exotic credit card will never result in unexpected maintenance costs.
Consumers planning to cut their debt obligations may want to first focus on reducing their credit card balances , which tend to carry far higher interest rates than other types of loans. They therefore can more quickly add to their balances if these debts are not addressed.
Click green for further info
More from Credit.com
- The First Thing to Do Before Applying for a Credit Card
- 5 Things You Should Never Put on a Credit Card
- Credit Cards to Rebuild Credit: How to Pick One Source: Credit.com _____________________________________________________________________
This is an opinion by
Click green Aaron U. Bolin, Ph.D.
based on his personal experiences
Aaron U. Bolin, Ph.D. Born and raised in northern Illinois, Aaron completed his doctoral work
in Industrial Organizational Psychology at Northern Illinois University in 2002
He is also certified as a Project Management Professional (PMP), a Senior Professional in Human Resources (SPHR),
and a Lean Six Sigma Black Belt (LSSBB)
__________________
Opinion by Aaron U. Bolin, Ph.D.
First Person: Be Careful of Swallowing the Student Loan Lies
Student Loans Are Economic Servitude and
Part of Predatory Lending Partners
As American students now cumulatively owe about $1 trillion in student loan debt, here is the first-person accounts from those who are still paying and those who have lessons to share - here's one story
FIRST PERSON
In 1996, I graduated from Rockford College with a degree in psychology with roughly $50,000 in student loan debt. At the time, minimum wage was $4.75 per hour, and a person with a high school diploma could command an entry-level wage for a full-time job of $8 to $10 per hour. I had a college degree and a strong GPA, so I entered the job market with high expectations.
After a series of job offers with a starting salary around $11 per hour, I realized my mistake. I had bought the lie. I was a mark, I was a sucker, and now I was a slave to Sallie Mae. Sallie Mae, the lender for my student loans, owned me.
Just to be clear, the lie was that if I went to college and worked hard then I would be rewarded with a high-paying job that would more than cover the cost of tuition. I remember sitting in a high school auditorium with my entire senior class back in 1992. Mr. So-and-So had been brought in to hammer home the lie with a slick presentation. (Keep in mind that the presentation was back in the days when slides were projected using transparency film on an overhead projector, but I digress). Mr. So-and-So capped his presentation with a glorious statistical fact: People with college degrees make up the gap in earnings for the time the spent in school in an average of five years and earn more than a million additional dollars in cumulative lifetime earnings that people with only a high school diploma.
Two decades later, my 16-year-old daughter is getting advertisements in the mail from colleges telling the same lie: "Don't think about it," they insist. "School will pay for itself." The lie has been updated slightly; the estimate of cumulative lifetime earnings for people with a college degree has been inflated so that it still eclipses the cost of college tuition.
I am in my late 30s now. I deferred my loan payments until finishing a graduate degree in 2002. I have been paying Sallie Mae ever since. The funny thing is that I owed Sallie Mae around $50,000 nine years ago. After making more than 100 consecutive monthly payments, I still owe Sallie Mae around $50,000.
In my mind, the check I write each month as a student loan payment goes to pay for a really nice luxury car. I never get to see the car or drive it, though, because a mid-level Sallie Mae executive drives it back and forth to his country club to play golf with an administrator from my college.
I am grateful for my education, but the true cost of financing it was intentionally hidden from me. My college and the student loan company conspired together in a predatory lending partnership.
They said, "Sign here and you will be rich."
As an 18- to 22-year-old kid, I believed them and signed.
Source: Aaron U. Bolin, Ph.D.
________________________________
Click green Aaron U. Bolin, Ph.D.
based on his personal experiences
Aaron U. Bolin, Ph.D. Born and raised in northern Illinois, Aaron completed his doctoral work
in Industrial Organizational Psychology at Northern Illinois University in 2002
He is also certified as a Project Management Professional (PMP), a Senior Professional in Human Resources (SPHR),
and a Lean Six Sigma Black Belt (LSSBB)
__________________
Opinion by Aaron U. Bolin, Ph.D.
First Person: Be Careful of Swallowing the Student Loan Lies
Student Loans Are Economic Servitude and
Part of Predatory Lending Partners
As American students now cumulatively owe about $1 trillion in student loan debt, here is the first-person accounts from those who are still paying and those who have lessons to share - here's one story
FIRST PERSON
In 1996, I graduated from Rockford College with a degree in psychology with roughly $50,000 in student loan debt. At the time, minimum wage was $4.75 per hour, and a person with a high school diploma could command an entry-level wage for a full-time job of $8 to $10 per hour. I had a college degree and a strong GPA, so I entered the job market with high expectations.
After a series of job offers with a starting salary around $11 per hour, I realized my mistake. I had bought the lie. I was a mark, I was a sucker, and now I was a slave to Sallie Mae. Sallie Mae, the lender for my student loans, owned me.
Just to be clear, the lie was that if I went to college and worked hard then I would be rewarded with a high-paying job that would more than cover the cost of tuition. I remember sitting in a high school auditorium with my entire senior class back in 1992. Mr. So-and-So had been brought in to hammer home the lie with a slick presentation. (Keep in mind that the presentation was back in the days when slides were projected using transparency film on an overhead projector, but I digress). Mr. So-and-So capped his presentation with a glorious statistical fact: People with college degrees make up the gap in earnings for the time the spent in school in an average of five years and earn more than a million additional dollars in cumulative lifetime earnings that people with only a high school diploma.
Two decades later, my 16-year-old daughter is getting advertisements in the mail from colleges telling the same lie: "Don't think about it," they insist. "School will pay for itself." The lie has been updated slightly; the estimate of cumulative lifetime earnings for people with a college degree has been inflated so that it still eclipses the cost of college tuition.
I am in my late 30s now. I deferred my loan payments until finishing a graduate degree in 2002. I have been paying Sallie Mae ever since. The funny thing is that I owed Sallie Mae around $50,000 nine years ago. After making more than 100 consecutive monthly payments, I still owe Sallie Mae around $50,000.
In my mind, the check I write each month as a student loan payment goes to pay for a really nice luxury car. I never get to see the car or drive it, though, because a mid-level Sallie Mae executive drives it back and forth to his country club to play golf with an administrator from my college.
I am grateful for my education, but the true cost of financing it was intentionally hidden from me. My college and the student loan company conspired together in a predatory lending partnership.
They said, "Sign here and you will be rich."
As an 18- to 22-year-old kid, I believed them and signed.
Source: Aaron U. Bolin, Ph.D.
________________________________
How to Pay Student Loans You Can't Afford Paying
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Student loan forbearance or deferment are popular options for those who are finding it hard to pay student loans, but borrowers may be making an expensive mistake when they enroll in one of these programs.
First, here’s a brief overview of the four main income-based repayment programs. Keep in mind these apply to federal loans, not private loans. With private loans, you are at the mercy of the lender, as they aren’t required to offer any of these options.
Deferment
While your loan is in deferment, you do not have to make student loan payments. If you have a subsidized loan, no interest will accrue during the deferment. With an unsubsidized loan, interest will accrue. Interest not paid during deferment is “capitalized” which means it is added to the balance, and interest will be charged on interest.
Forbearance
If you don’t qualify for deferment to pay student loans, you may be eligible for forbearance, which allows you to make no payments, or reduced payments, for up to a year. Interest will accrue on your subsidized and unsubsidized loans (including all PLUS loans) and unpaid interest will be capitalized.
Income-Based Repayment (IBR)
If you qualify for IBR, your maximum monthly payments will be 15% of discretionary income, using a specific formula. Under the newer Pay As You Earn (PAYE) program available to recent borrowers, the cap is 10% of discretionary income. Payments can be as low as $0 if you are unemployed. Balances will be forgiven after 10, 20 or 25 years, depending on the program you are in and whether you work in a qualified public service job.
With subsidized loans in IBR, the government will pay up to three consecutive years of interest that accrues but is not repaid. With unsubsidized loans, interest accrues. In both cases, interest is capitalized if you are determined to no longer have a “partial financial hardship,” or if you drop out of IBR.
Income-Contingent Repayment (ICR)
Under this plan, borrowers’ monthly payments are pegged to income, family size and the amount owed. After 25 years, any remaining balance is forgiven. (Or after 10 years for public service loan forgiveness.) Accrued interest is capitalized annually.
Short-Term Gain, Long-Term Pain
Deferment or forbearance may seem like a blessing if you are not able to make your student loanpayments, but they may wind up being a curse. While they may offer a reprieve for someone facing a short-term financial hardship, they don’t offer long-term relief from overwhelming debt.
Our reader Robyn explained that she borrowed about $20,000 in student loans:
I worked and paid…paid and worked. Took a couple of forbearance(s). Upon restarting payment, I had to pay $500.00… Sallie Mae suggested a consolidation. I did it. Then the loan total rose to $55,000. Interest $27,000.
“Deferment and forbearance is like putting a Bandaid on a stab wound,” warns Joshua Cohen, also known as The Student Loan Lawyer. “What happens in 12 months when that deferment (or forbearance) ends?”
Some of the fault may lie with servicers who find it easier and faster to push those options instead ofIBR. Borrowers may be “pressured to go into forbearance without even being told about their options,” warns Lauren Asher, president of The Institute for College Access and Success. She points to a memo that discussed how three-quarters of delinquent borrowers whose loans are handled by four large companies were “cured” by putting their loans into deferment, while only 24% had made payments on their loans.
That means the majority ended up with at least as much debt as when they went into default — and quite likely more — if their loans accrued interest, which is likely as Asher notes that 82% of borrowers with subsidized Stafford loans also have unsubsidized loans. Our reader D. Kranz commented on the Credit.com blog:
One thing that would help is if they would stop the capitalization of interest when the loans are deferred or placed in forbearance… All this is doing is moving us backwards…Why can’t they waive the interest on students or even have it at an affordable rate 1-2% and no capitalization? Even finance companies don’t capitalize.
The reason IBR, ICR — and now PAYE — may be more effective is that borrowers may get reduced payments now and then also be eligible for loan forgiveness in the future. In other words, there is a light at the end of the tunnel.
In the past, Asher notes, it was more difficult to apply for IBR and so borrowers would take the easiest route (usually deferment), which was also the one usually recommended when they reached out to their lender for help. But hopefully that’s changing.
Borrowers now have access to an online portal where they can find out which student loanrepayment programs they are eligible for. Once you sign in, explains Asher, you can “any of the income driven repayment options. You don’t even have to know which one you qualify for. You can even draw the IRS data (from your tax returns) into the form.”
All of these programs are largely off-limits to parents who took out Parent PLUS loans, with one exception: when Parent PLUS loans are consolidated with a Federal Direct Consolidation Loan, they become eligible for ICR. The formula for determining ICR eligibility is complicated, Cohen warns: “There’s a square root in it.” But for some, it can be a tremendous benefit. “It’s possible the term can be shorter than 25 years,” he notes.
Still Out of Reach?
Still, even the low payments offered under IBR can be out of reach for some borrowers. Our reader, Liz, for example, is struggling with cancer and about $97,000 in student loan debt. She wrote, “As someone with an older loan that requires 15% of one’s income, not the 10%, at a lower income level this is also too onerous.”
Usually, though, borrowers can use IBR to pay student loans if they very carefully manage their spending. “A lot of times they think they can’t afford (the payment under IBR), but it’s often the budget,” observes Cohen.
And what other choice to do borrowers have? Until it is easier for borrowers who are deeply in debt to discharge student loans in bankruptcy, this is often the only hope they have of ever seeing a zero balance.
Need Help on Your Student Loans?
If you’re struggling to pay student loans, research these programs immediately. Try the tools offered at the government’s student loan website, and talk to the company servicing your loan. But if your lender pushes forbearance, don’t assume that’s the only — or best — option. “No one can predict the future but forbearance can be very costly,” Asher says. “It’s far too costly to use for a long-term strategy.”
If you are still having trouble understanding or evaluating your options, you may want to talk with a consumer law attorney with expertise in these programs. These attorneys often charge affordable fees, knowing their clients are in a financial bind.
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Source:
Credit.com
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How Subsidized Loans Work
Subsidized Student Loans and Housing
Subsidized loans are loans for which the borrower does not pay interest. Interest would normally be charged periodically according to the annual percentage rate (APR). However, with a subsidized loan the interest is paid by another party.
Who Subsidizes Loans? Anybody can subsidize a loan. Depending on the type of loan, it might be a government organization, a charity, or other group. For subsidized Stafford Loans (a form of student loan), the US government pays interest while students are in school.How do I Qualify for Subsidized Loans?Depending on the source of your loan, you’ll need to see if you qualify. Some housing loans (like some first time home buyer loans) require that you live in a certain area and earn less than a specified dollar amount. Student loans may be subsidized if you can demonstrate financial need – based on your income and resources compared to the cost of attending a school.
Student Loan Details
In addition to demonstrating financial need, you’ll need to meet some other criteria to have a subsidized student loan. The loans are only subsidized while you’re:
- Enrolled at least half time
- During certain deferment periods
- During a grace period
More Resources
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How to Build Credit - Why it is Important to Build Credit
The Need to Build Credit
If you do not have a credit history, lenders do not know whether or not they should give you money. Without any credit history, they can’t tell if you are a responsible debt-payer or a bad risk. You need to build credit in order to prove your creditworthiness.
You prove your creditworthiness when the credit bureaus have proof that you've consistently used credit responsibly. The result is high credit scores.Who Needs to Build Credit?
Anybody without a history of using credit needs to build credit. You never know when the need for a loan will arise, and it is a lot easier to get a loan with a solid credit history. Young adults who are just starting to learn about financial responsibilities need to build credit, and recent immigrants to the U.S. also find themselves without a credit history.
Ways to Build Credit
It is actually pretty easy to build credit. Try one or all of the following ideas:
- Ask your bank or credit union about a secured credit card. You can make a deposit to your account and have a credit limit in the amount of your deposit. The bank takes little risk and you build credit slowly (avoid Secured Credit Card Problems).
- Use a co-signer on your first few credit accounts. Lenders will consider the co-signer’s existing credit. The co-signer essentially ‘vouches’ for you while you build credit. Note that this is a big responsibility – you can cause major headaches for the co-signer if you don’t pay as agreed (see How Co-Signing Works for details).
- Use retailer programs for modestly large purchases like furniture. For example, you may buy a television on the “$40/Month Payment Plan”. Gas station cards may work as well. These programs can be easier to qualify for and they certainly help you build credit. Be sure that the retailer will report your loan to the major credit reporting companies.
- Get a credit card with any reputable institution that will give you one. Again, you have to make sure they’ll report your timely payments to the credit reporting companies. Of course, you have to always pay at least the minimum before the due date.
Risks of Building Credit
Remember that credit can be a useful tool, but it can also get you in trouble. After you build credit, you may be inundated with offers. Banks, credit card companies, and others will want to loan you money because they'll know you're a good borrower. Don't take them up on every offer -- only borrow money when it truly benefits you.
After you build credit, you need to continually monitor it. The US Government requires the credit bureaus to provide a free credit report to you annually, and you should take advantage of that right.
Click green for further info
Source: Credit.com
____________________________________________________
Article 1 of 2 Article 2 & of 2 next below
Every 6 month do the half-year financial situation study
instead of one at the beginning of the year
While the annual free creditreport doesn't include your credit score,
free services such as those offered at CreditSesame.com and CreditKarma.com
can provide an estimate of your credit score
Consumers often aim high when setting financial New Year's resolutions. Some resolve to pay off six figures' worth of student loan debt, while others hope to sock away 10 percent of their net income into an individual retirement account. Impulsive investors may vow to ignore the stock market's day-to-day changes and focus on the long term.
But even those with realistic goals often don't make it far.
Of the 45 percent of Americans who make New Year's resolutions, only 8 percent achieve them, according to recent data by online investment company Betterment.com. In fact, 25 percent of people give up before the first week is over.
Fortunately, those who have veered off-course can still achieve their monetary resolutions by December 31. The half-year mark is a great time to examine these financial behaviors and adjust your (1) spending,
(2) saving and (3) investing strategies.
Paying down credit card debt.
Step one to gauging where your finances stand is assembling an inventory of how much you owe and to whom. The average credit card debt per borrower in the United States is currently around $4,900, according to a May 2013 report by TransUnion. Users who can't make their minimum monthly payments will see their credit score plummet quickly. Even those who make the minimum payments risk lowering their score if they maintain a high credit utilization ratio, or the ratio of the credit-card balance to the credit limit, which experts say should be kept under 15 percent. Consumers with poor credit have trouble qualifying for low interest rates on credit cards. In addition, mortgage and auto loan lenders pull an applicant's credit report before deciding whether to offer a loan.
What It's Really Like to Live on a Shoestring Budget - Read this article & its commenting article - The articles next below
John Ulzheimer, president of consumer education at SmartCredit.com, says one strategy for paying off credit card debt is to start paying off debt on the card with the highest interest rate, as money owed on that account grows faster each month. Ulzheimer says other consumers prefer to pay off the card with the lowest amount of debt first because they feel receiving one less bill each month will motivate them to continue paying off their credit card debt.
Executing either approach will nurse a credit score back to health, but it will take time, as history on an account remains on one's credit report for seven to 10 years.
Even if you never carry a balance, it's important to check your credit report for errors. Consumers are legally entitled to one free credit report every 12 months at AnnualCreditReport.com. While the report doesn't include your credit score, free services such as those offered at CreditSesame.com and CreditKarma.com can provide an estimate of your credit score.
Earning credit card rewards. Responsible credit card users should look into getting a rewards card that best matches their spending habits. While many issuers are offering competitive rates, there are some standouts. Odysseas Papadimitriou, chief executive officer of the credit card comparison website CardHub.com, likes the Chase Sapphire Preferred card, which offers $500 in travel rewards or a $400 statement credit for spending at least $3,000 during the first three months. He also likes the Blue Cash Preferred card from American Express, which gives 6 percent cash back at supermarkets up to a $6,000 annual spending limit in that category, 3 percent at gas stations and department stores and 1 percent on everything else.
Planning for retirement. If you aren't taking advantage of an employer-sponsored retirement account, reconsider. Money contributed to a 401(k) is tax-deferred, and around a third of employers match up to 3 percent of employee salaries, according to a 2011 survey by trade publication PlanSponsor.com. As such, maxing out your 401(k) is one of the best ways to build your nest egg, says Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial.
Click: Why Gen X Lost Big in the Great Recession - If the link has expired search the web with the title - study the added links
Every 6th month Modifying your investing strategies. Now may be a good time to rebalance your portfolio - a practice in which investors periodically adjust their mix of investments to keep them in line with their target asset allocation. "As the market rises, we get complacent and just leave our money where it is, and we don't think about whether there are better places to invest that money," says Philip Hogg, a certified financial planner in Chicago.
Other consumers make the mistake of reacting to the market's daily shifts, says Adam Sherman, chief executive officer at Firstrust Financial Resources in Philadelphia. "Even if you're tracking your account [activity] live on your BlackBerry, I wouldn't get caught up in the day-to-day noise," Sherman says. If you have a tendency to make impulse trades, consider conducting in-depth studies of your investment portfolio in June and December, and commit to making stock trades only after those analyses.
Sticking to a budget. If you haven't already, create a budget using an online tool like Mint.com to track your monthly expenditures. From there, develop a plan to cut costs on discretionary living expenses that are straining your wallet. (Many consumers spend excessively on dining out and weekend entertainment - invest more instead - visit cheaper places with your spouse - if you are married, a weekly date night is a MUST to keep you love up & HOT: movies, cheaper restaurants (occasionally luxury places, perhaps on your anniversary day - every now and then visit together with your spouse & your children a casino and eat in the buffet, see a show, have some drinks (children watched by a reliable baby wathcer)
Joe Heider, a certified financial planner at Rehmann Financial in Cleveland, Ohio, says consumers should ideally save 10 percent of their net income each month, but even saving 2 percent would be a significant improvement for many Americans.
STAF, Inc.'s comment: MONTHLY(set automatic payment plans) (1) 10 % in charity, (2) 10 % or more in new savings, (3) 10 % to pay old debts (if any) until paid, (4) live on the 70 % left. With higher income the savings & investment ratio can percent wise be much higher - of this 70 % part of the money (# 4) will be set as a separate emergency fund as its own account with a direct payment monthly
Building a rainy-day (as (1) SANDY- EAST U.S. or (2) tornado / hurricane/ etc., emergency fund into your budget provides financial protection from unanticipated events, like a major house or car repair or medical expense.
As such, financial planners say it's crucial to put a portion of your savings into an emergency fund you can easily access that would cover three to six months' worth of living expenses if you were to lose your job.
Click: 50 Smart Money Moves - If the link has expired search the web with the title - study the added links
Shopping smarter with coupons. Coupon expert and syndicated columnist Jill Cataldo says spending just 30 minutes a week compiling coupons can help stretch your budget. Consumers can find coupons easily on websites such as RetailMeNot.com and Coupons.com, on mobile apps like Grocery iQ and in newspaper inserts. Cataldo recommends consumers hone their coupon shopping skills at the store they frequent the most, rather than try to find coupons for every retailer they visit. "You don't have to save $60 or $70 the first week out," she says. "Just saving $10 to $20 a week adds up [to] between $40 and $80 in savings each month."
Shop for Manager's Specials in the store - earn big savings - find out what day is what
Manager's specials are off-date products mostly (or otherwise discounted) - they are still usable and eatable
Scoring a salary hike. Everyone would welcome a raise, and you can increase your chances of landing one by displaying what you've done to deserve it. With midyear reviews coming up, now is a good time to broach the subject, says Margaret McLean Walsh, a career coach in New York City. Talk with your boss to get a clear picture of what success looks like. "Be specific, so you get feedback you can work with," Walsh says. Exceeding those expectations and continuing to show your worth to the company will help you gain your boss's favor and position you for success come December, which is when most companies plan for 2014 salaries.
If the link has expired search the web with the title - study the added links
click: The Tipping Bible: Who to Tip and How Much
__________________________________
Every 6 month do the half-year financial situation study
instead of one at the beginning of the year
While the annual free creditreport doesn't include your credit score,
free services such as those offered at CreditSesame.com and CreditKarma.com
can provide an estimate of your credit score
Consumers often aim high when setting financial New Year's resolutions. Some resolve to pay off six figures' worth of student loan debt, while others hope to sock away 10 percent of their net income into an individual retirement account. Impulsive investors may vow to ignore the stock market's day-to-day changes and focus on the long term.
But even those with realistic goals often don't make it far.
Of the 45 percent of Americans who make New Year's resolutions, only 8 percent achieve them, according to recent data by online investment company Betterment.com. In fact, 25 percent of people give up before the first week is over.
Fortunately, those who have veered off-course can still achieve their monetary resolutions by December 31. The half-year mark is a great time to examine these financial behaviors and adjust your (1) spending,
(2) saving and (3) investing strategies.
Paying down credit card debt.
Step one to gauging where your finances stand is assembling an inventory of how much you owe and to whom. The average credit card debt per borrower in the United States is currently around $4,900, according to a May 2013 report by TransUnion. Users who can't make their minimum monthly payments will see their credit score plummet quickly. Even those who make the minimum payments risk lowering their score if they maintain a high credit utilization ratio, or the ratio of the credit-card balance to the credit limit, which experts say should be kept under 15 percent. Consumers with poor credit have trouble qualifying for low interest rates on credit cards. In addition, mortgage and auto loan lenders pull an applicant's credit report before deciding whether to offer a loan.
What It's Really Like to Live on a Shoestring Budget - Read this article & its commenting article - The articles next below
John Ulzheimer, president of consumer education at SmartCredit.com, says one strategy for paying off credit card debt is to start paying off debt on the card with the highest interest rate, as money owed on that account grows faster each month. Ulzheimer says other consumers prefer to pay off the card with the lowest amount of debt first because they feel receiving one less bill each month will motivate them to continue paying off their credit card debt.
Executing either approach will nurse a credit score back to health, but it will take time, as history on an account remains on one's credit report for seven to 10 years.
Even if you never carry a balance, it's important to check your credit report for errors. Consumers are legally entitled to one free credit report every 12 months at AnnualCreditReport.com. While the report doesn't include your credit score, free services such as those offered at CreditSesame.com and CreditKarma.com can provide an estimate of your credit score.
Earning credit card rewards. Responsible credit card users should look into getting a rewards card that best matches their spending habits. While many issuers are offering competitive rates, there are some standouts. Odysseas Papadimitriou, chief executive officer of the credit card comparison website CardHub.com, likes the Chase Sapphire Preferred card, which offers $500 in travel rewards or a $400 statement credit for spending at least $3,000 during the first three months. He also likes the Blue Cash Preferred card from American Express, which gives 6 percent cash back at supermarkets up to a $6,000 annual spending limit in that category, 3 percent at gas stations and department stores and 1 percent on everything else.
Planning for retirement. If you aren't taking advantage of an employer-sponsored retirement account, reconsider. Money contributed to a 401(k) is tax-deferred, and around a third of employers match up to 3 percent of employee salaries, according to a 2011 survey by trade publication PlanSponsor.com. As such, maxing out your 401(k) is one of the best ways to build your nest egg, says Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial.
Click: Why Gen X Lost Big in the Great Recession - If the link has expired search the web with the title - study the added links
Every 6th month Modifying your investing strategies. Now may be a good time to rebalance your portfolio - a practice in which investors periodically adjust their mix of investments to keep them in line with their target asset allocation. "As the market rises, we get complacent and just leave our money where it is, and we don't think about whether there are better places to invest that money," says Philip Hogg, a certified financial planner in Chicago.
Other consumers make the mistake of reacting to the market's daily shifts, says Adam Sherman, chief executive officer at Firstrust Financial Resources in Philadelphia. "Even if you're tracking your account [activity] live on your BlackBerry, I wouldn't get caught up in the day-to-day noise," Sherman says. If you have a tendency to make impulse trades, consider conducting in-depth studies of your investment portfolio in June and December, and commit to making stock trades only after those analyses.
Sticking to a budget. If you haven't already, create a budget using an online tool like Mint.com to track your monthly expenditures. From there, develop a plan to cut costs on discretionary living expenses that are straining your wallet. (Many consumers spend excessively on dining out and weekend entertainment - invest more instead - visit cheaper places with your spouse - if you are married, a weekly date night is a MUST to keep you love up & HOT: movies, cheaper restaurants (occasionally luxury places, perhaps on your anniversary day - every now and then visit together with your spouse & your children a casino and eat in the buffet, see a show, have some drinks (children watched by a reliable baby wathcer)
Joe Heider, a certified financial planner at Rehmann Financial in Cleveland, Ohio, says consumers should ideally save 10 percent of their net income each month, but even saving 2 percent would be a significant improvement for many Americans.
STAF, Inc.'s comment: MONTHLY(set automatic payment plans) (1) 10 % in charity, (2) 10 % or more in new savings, (3) 10 % to pay old debts (if any) until paid, (4) live on the 70 % left. With higher income the savings & investment ratio can percent wise be much higher - of this 70 % part of the money (# 4) will be set as a separate emergency fund as its own account with a direct payment monthly
Building a rainy-day (as (1) SANDY- EAST U.S. or (2) tornado / hurricane/ etc., emergency fund into your budget provides financial protection from unanticipated events, like a major house or car repair or medical expense.
As such, financial planners say it's crucial to put a portion of your savings into an emergency fund you can easily access that would cover three to six months' worth of living expenses if you were to lose your job.
Click: 50 Smart Money Moves - If the link has expired search the web with the title - study the added links
Shopping smarter with coupons. Coupon expert and syndicated columnist Jill Cataldo says spending just 30 minutes a week compiling coupons can help stretch your budget. Consumers can find coupons easily on websites such as RetailMeNot.com and Coupons.com, on mobile apps like Grocery iQ and in newspaper inserts. Cataldo recommends consumers hone their coupon shopping skills at the store they frequent the most, rather than try to find coupons for every retailer they visit. "You don't have to save $60 or $70 the first week out," she says. "Just saving $10 to $20 a week adds up [to] between $40 and $80 in savings each month."
Shop for Manager's Specials in the store - earn big savings - find out what day is what
Manager's specials are off-date products mostly (or otherwise discounted) - they are still usable and eatable
Scoring a salary hike. Everyone would welcome a raise, and you can increase your chances of landing one by displaying what you've done to deserve it. With midyear reviews coming up, now is a good time to broach the subject, says Margaret McLean Walsh, a career coach in New York City. Talk with your boss to get a clear picture of what success looks like. "Be specific, so you get feedback you can work with," Walsh says. Exceeding those expectations and continuing to show your worth to the company will help you gain your boss's favor and position you for success come December, which is when most companies plan for 2014 salaries.
If the link has expired search the web with the title - study the added links
click: The Tipping Bible: Who to Tip and How Much
__________________________________
Article 2 of 2
What It's Really Like to Live on a Shoestring Budget
Who said you can’t feed a family of seven on $4,200 a year?
That's $600/month for 7 person-family - that's $85/month for one person
Finding it hard to keep your money in your pocket? With today's tight job market, rampant student debt, and high unemployment rate, many Americans are in a constant struggle to live within their means. Had you grown up in the Economides household, however, you'd know what it's like to live on tight budget.
Steve and Annette Economides, authors of America's Cheapest Family Gets You Right on the Money: Your Guide to Living Better, Spending Less, and Cashing in on Your Dreams, may be the definition of shoestring budgeters. The couple acquired frugal-living habits after marrying in 1982. Although Steve was only making $13,000 a year at a printing company, Annette wanted to be home to raise the kids. To make it work, the couple used creative methods to live off one income, such as Annette learning how to sew to make her own maternity clothes. They found that, even on limited financial resources, they could still afford some of the discretionary expenses they longed for; all it took was discipline. "We had to save three months to go out to dinner at Benihana, but we got there," says Annette.
By keeping a tight strap on their wallets, Steve says they never had to lean on credit to support their lifestyle. That may be hard for many consumers to picture, as the average U.S. household today with at least one credit card owes nearly $15,950 in credit-card debt, according to recent data compiled by CreditCards.com.
The Economides never borrowed money, except when they took out a mortgage on their first house in 1985. By continuing to use the same spending principles—"less is more" means more money flows into their savings pool—the Economides paid off the home after nine years. Having crammed five children into the 1,400-square-foot living space, the family had saved up enough to buy a larger house.
[See Boomer Retirement Advice to Kids: Don't Do What I Did.]
Thanks to their clever spending strategies, the Economides kept their household of seven financially stable on a shoestring budget. Here's how they did it:
Keeping the fridge and pantry full, but the trash can light. The average family of three spends $6,129 a year on food—close to 13 percent of their budget, according to The Food Institute, a research and trade association. With seven mouths to feed, the Economides only spent approximately $4,200 annually on food. "We take stock of what we have and make sure to check the food ads and coupons that come out in the paper or online each week," Steve says.
Curbing the number of trips they make to the supermarket was also a critical component to their strategy. When the children were young, they went grocery shopping once a month. As the kids got older and began eating more produce, they upped their visits to twice a month—still significantly less than the average American, who goes two to three times a week. However, Annette says visiting the grocery store less doesn't sit well with many shoppers. "People think, 'If I don't go to the store every week, I'll miss all the sales.' The truth is you'll miss some, but you don't want to put yourself in the position very often where you're tempted to buy food you don't need," she says.
Moreover, the Economides believe the more consumers go grocery shopping, the more likely they are to fill their carts with impulse purchases. In fact, in his book Why We Buy: The Science of Shopping, grocery industry researcher Paco Underhill says 60 to 70 percent of supermarket purchases are unplanned.
[Read: Are You Sabotaging Your Portfolio?]
While restricting your grocery shopping to only essentials foods is important, Steve says holidays are a great time to stock up on certain items. His family plans some of their purchases around seasonal sales. Before Thanksgiving, for example, items such as turkeys, yams, or cranberry sauce are marked down. Corned beef is often a bargain before St. Patrick's Day. Also, ribs, hamburgers, and hot dogs are great buys in the days leading up to Memorial Day.
Annette offers another approach for stocking up: "If you know your consumption rate and have a way to store the items, vacuum-sealed meats will save for a year, so you may want to buy in bulk if there's a great deal."
Shopping at all the right places. The Economides use a number of traditional hotspots for snagging deals, such as garage sales, church rummage sales, and consignment shops. When their son needed a tuxedo to wear for the community band's concert, they found one at a thrift shop for $30. Steve says there's often more bargaining room with local residents than online vendors, as many people are willing to reduce their asking price for a good neighbor.
Nonetheless, the family does a large majority of their shopping online. Like other consumers, they visit popular websites such as Craigslist.com and eBay.com, but use a slightly different approach—basing their timing for purchasing certain products on when a deal crops up for the item they need. For example, when their printer's toner cartridge was low, Annette held off on replacing it until she spotted a new one on eBay for $40, about $30 off the retail price. They also used bricks they bought on Craigslist when re-landscaping their backyard.
[See Skip the Store: Buy These Items Online to Save Time and Money.]
"We realized that if you want something and you don't have the money for it, there's always someone who's getting rid of that thing you want," Annette says, emphasizing she never buys an item online at retail price. "If you're patient, you'll find it."
The bottom line: Whether you're on a shoestring budget or looking to put away some extra savings, these strategies are easy to implement. "It's such a lifestyle that we don't even think about it anymore; we just do it. We save our tin foil that we use for our baked potatoes. We save our paper grocery bags and reuse those," Annette says. "We have very little trash."
Click green for further info
Source: Internet news
_______________________________________________
What It's Really Like to Live on a Shoestring Budget
Who said you can’t feed a family of seven on $4,200 a year?
That's $600/month for 7 person-family - that's $85/month for one person
Finding it hard to keep your money in your pocket? With today's tight job market, rampant student debt, and high unemployment rate, many Americans are in a constant struggle to live within their means. Had you grown up in the Economides household, however, you'd know what it's like to live on tight budget.
Steve and Annette Economides, authors of America's Cheapest Family Gets You Right on the Money: Your Guide to Living Better, Spending Less, and Cashing in on Your Dreams, may be the definition of shoestring budgeters. The couple acquired frugal-living habits after marrying in 1982. Although Steve was only making $13,000 a year at a printing company, Annette wanted to be home to raise the kids. To make it work, the couple used creative methods to live off one income, such as Annette learning how to sew to make her own maternity clothes. They found that, even on limited financial resources, they could still afford some of the discretionary expenses they longed for; all it took was discipline. "We had to save three months to go out to dinner at Benihana, but we got there," says Annette.
By keeping a tight strap on their wallets, Steve says they never had to lean on credit to support their lifestyle. That may be hard for many consumers to picture, as the average U.S. household today with at least one credit card owes nearly $15,950 in credit-card debt, according to recent data compiled by CreditCards.com.
The Economides never borrowed money, except when they took out a mortgage on their first house in 1985. By continuing to use the same spending principles—"less is more" means more money flows into their savings pool—the Economides paid off the home after nine years. Having crammed five children into the 1,400-square-foot living space, the family had saved up enough to buy a larger house.
[See Boomer Retirement Advice to Kids: Don't Do What I Did.]
Thanks to their clever spending strategies, the Economides kept their household of seven financially stable on a shoestring budget. Here's how they did it:
Keeping the fridge and pantry full, but the trash can light. The average family of three spends $6,129 a year on food—close to 13 percent of their budget, according to The Food Institute, a research and trade association. With seven mouths to feed, the Economides only spent approximately $4,200 annually on food. "We take stock of what we have and make sure to check the food ads and coupons that come out in the paper or online each week," Steve says.
Curbing the number of trips they make to the supermarket was also a critical component to their strategy. When the children were young, they went grocery shopping once a month. As the kids got older and began eating more produce, they upped their visits to twice a month—still significantly less than the average American, who goes two to three times a week. However, Annette says visiting the grocery store less doesn't sit well with many shoppers. "People think, 'If I don't go to the store every week, I'll miss all the sales.' The truth is you'll miss some, but you don't want to put yourself in the position very often where you're tempted to buy food you don't need," she says.
Moreover, the Economides believe the more consumers go grocery shopping, the more likely they are to fill their carts with impulse purchases. In fact, in his book Why We Buy: The Science of Shopping, grocery industry researcher Paco Underhill says 60 to 70 percent of supermarket purchases are unplanned.
[Read: Are You Sabotaging Your Portfolio?]
While restricting your grocery shopping to only essentials foods is important, Steve says holidays are a great time to stock up on certain items. His family plans some of their purchases around seasonal sales. Before Thanksgiving, for example, items such as turkeys, yams, or cranberry sauce are marked down. Corned beef is often a bargain before St. Patrick's Day. Also, ribs, hamburgers, and hot dogs are great buys in the days leading up to Memorial Day.
Annette offers another approach for stocking up: "If you know your consumption rate and have a way to store the items, vacuum-sealed meats will save for a year, so you may want to buy in bulk if there's a great deal."
Shopping at all the right places. The Economides use a number of traditional hotspots for snagging deals, such as garage sales, church rummage sales, and consignment shops. When their son needed a tuxedo to wear for the community band's concert, they found one at a thrift shop for $30. Steve says there's often more bargaining room with local residents than online vendors, as many people are willing to reduce their asking price for a good neighbor.
Nonetheless, the family does a large majority of their shopping online. Like other consumers, they visit popular websites such as Craigslist.com and eBay.com, but use a slightly different approach—basing their timing for purchasing certain products on when a deal crops up for the item they need. For example, when their printer's toner cartridge was low, Annette held off on replacing it until she spotted a new one on eBay for $40, about $30 off the retail price. They also used bricks they bought on Craigslist when re-landscaping their backyard.
[See Skip the Store: Buy These Items Online to Save Time and Money.]
"We realized that if you want something and you don't have the money for it, there's always someone who's getting rid of that thing you want," Annette says, emphasizing she never buys an item online at retail price. "If you're patient, you'll find it."
The bottom line: Whether you're on a shoestring budget or looking to put away some extra savings, these strategies are easy to implement. "It's such a lifestyle that we don't even think about it anymore; we just do it. We save our tin foil that we use for our baked potatoes. We save our paper grocery bags and reuse those," Annette says. "We have very little trash."
Click green for further info
Source: Internet news
_______________________________________________
Article 1 of 2 (Article 2 of 2 next below)
How to Get a Car Loan
Click green for further info
I bought my first car from my parents. It had lots of miles and no frills — not even air conditioning — but the price was right and they sold it to me cheaply enough that I could pay cash. My second car, though, was a gray Mustang convertible I found in the classifieds (no Craigslist back then). For that one, I had to get a car loan, so I turned to my local bank. I didn’t really have a clue what I was doing, but they walked me through the process.
If you are thinking about getting your first vehicle loan, you may feel a bit overwhelmed as well. Here’s how the process of getting a car loan works.
Step One: Check Your Credit
Your credit score will play a key role in the rate you’ll pay for your loan. While that may sound obvious to someone who has applied for one of these loans before, if you are a first-time car buyer, you may not realize how important your credit score is when it comes to getting a loan. A high credit score can help you get a low car loan rate, which in turn saves you money on interest.
Your credit score is based on the information in your credit reports, so to make sure that your credit score is accurate it’s a good idea to also get your credit reports. You can check them for free at AnnualCreditReport.com once a year.
It’s also a good idea to get your free credit score to see where you stand (and you can do that using Credit.com’s Credit Report Card). Just understand that you probably won’t see the same credit score the auto lender will see. There are many different credit scores available, and auto lenders typically use scores customized for auto lenders.
Step Two: Pick Your Payment
Your job here is to figure out how much you can realistically afford to spend each month on a car payment without straining your budget. Once you know that amount, you can plug it into a car loan calculator to find out the total you can afford to spend.
Car loans typically come in 3-, 4-, 5- and 6-year terms. The longer the term of the loan, the lower the monthly payment. But a longer car loan also means you are likely to be “upside down” for a longer period of time. To be upside down (or “underwater”) on a loan means you owe more than the vehicle is worth.
Don’t forget to factor in insurance and maintenance costs. While those won’t be included in your monthly payment, you’ll have to come up with those funds as well. If you have trouble paying them, you may find it hard to keep up with your car payment, so you want to make sure you are prepared for the total cost. An insurance agent can help you estimate the cost of insuring the types of vehicles you are considering buying.
Step Three: Get Pre-Approved
You can shop for an auto loan online, as well as through a local credit union or bank. You don’t have to limit yourself to the financial institution where you do your banking, and it’s fine to check with a few different sources. You want to see what kind of loan, and for what amount, they can offer. Whichever one offers you the best deal, that’s the one you can get financing through.
If you qualify for a loan, you’ll get a “pre-approval” that will be good for a certain period of time and up to a certain amount of money. It’s sort of like having a blank check to buy your vehicle. You can always spend less than the amount for which you are pre-approved, but you can’t spend more, unless you want to make up the difference in cash or by trading in your current vehicle. If you do buy a vehicle for less than the amount for which you have been pre-approved you won’t get the difference back in cash; you’ll just get a smaller loan.
Don’t have great credit? You may still be able to get pre-approved for a car loan with bad credit, but your interest rate will be higher. If you have no credit history, you can either ask someone to co-sign or consider a lender that will work with borrowers with no credit.
Try to do all your car loan shopping within a 14-day period. That’s because some credit scoring models will penalize you if there are too many inquiries into your credit history. But none of them will do so if those inquiries are within a two-week window.
Step Four: Choose Your Vehicle
Once you are pre-approved, you can get serious about shopping for your vehicle. One of the good things about being pre-approved is that you can focus your efforts on negotiating the best deal for the car or truck you want to buy, rather than having to negotiate financing as well.
If the dealer can beat the terms you’ve been offered for a loan, you may want to take it. Just be careful: the dealer may try to talk you into a longer loan that will reduce your monthly payment, but will cost you more in the long run.
If you are going to buy a used car from a private party, make sure the loan you apply for covers that option. Also make sure you understand the restrictions on used car loans. You may not be able to buy a vehicle older than five years or with more than 75,000 miles, for example. And keep in mind the interest rate for these vehicle loans may be a little higher.
Step Five: Finalize the Paperwork
Once you’ve chosen your vehicle and negotiated the price, the auto dealer’s financing department will coordinate with the lender to finalize the sale. They will very likely try to get you to buy add-ons, such as an extended warranty, VIN etching, paint or fabric protection etc. Be sure to research these ahead of time so you don’t feel pressured into making an uninformed decision.
If you buy a used car from a private party, your lender should walk you through the process of finalizing the sale.
Step Six: Start Paying Your Car Loan
After the sale is finalized, you will get information about the payment schedule for your loan. Most lenders will send a coupon book you can use for mailing in your payments, along with information on how to access your account online. Even if you plan to pay your loan by mail or at a local branch of your financial institution, it’s a good idea to sign up for the online service so you can check your balance and payments if you need to, and so you’ll be able to make payments online if you are traveling, for example.
Almost every car loan allows you to prepay without a penalty, so if you decide to pay off your loan faster you can do that. Just be sure to check with your lender to make sure your additional payments are processed correctly.
More from Credit.com click green:
18 secrets real-estate insiders wish you didn't know
Click: Search for loan officers in the National Mortgage Licensing System and Registry
Click green for further info
(1)
It’s likely the biggest purchase of your life, but there are some things the professionals in the real-estate and residential services businesses preferred you didn’t know. The list starts with the lack of strict licensing controls in many professions to the ways architects and contractors cut corners. Thought you could at least trust your home inspector? Think again. (They’re only obligated to check for defects they can see – i.e., no looking for leaky pipes, termites and warped floor boards.) For a roadmap on how to deal with the pros, click through and uncover the 18 secrets that will help make you a smarter home buyer, seller and owner.
(2)
Real-estate agent: "My fees are negotiable."
Agents like to make it sound as if their fees are engraved in stone, but that's rarely the case. During the housing bubble, as the number of real-estate agents sharply increased, so did the competition for listings. One agent says he lowered his fee a full percentage point just to give himself an edge. But even in the wake of the recent crash, you have a good chance of negotiating a better deal; that same surplus of agents is still out there competing for even fewer listings.
The real-estate agent we spoke with, who asked not to be named, has some suggestions for the best conditions to induce brokers to lower their fees: "If somebody's willing to commit to me for selling one place and buying another," or "If you're in a particularly desirable neighborhood with a house that will bring a lot of traffic" for an open house. And with a lot of smaller brokers, he says, "all you need to do is ask and they'll lower the commission."
(3)
Real-estate agent: "You can probably do this without me."Agents like to create a lot of mystique about selling homes, insisting that the process is complicated and best left to professionals. Not so, say homeowners who have sold their homes themselves (about 20% to 25% do so each year). William Supple, publisher of the sale-by-owner real-estate magazine Picket Fence Preview and author of "How to Sell Your Own Home," says that "properly priced and advertised, a house sells itself." Supple adds that sellers should plant a yard sign and post online ads for the property on local sites aligned with print publications (call current advertisers to see if a site is effective).
Just be sure you price your home well. The way most self-sellers hurt themselves, Supple says, is in setting either an unreasonably high or tragically low asking price. "Hire an independent appraiser for $200," he suggests, "and he will tell you (the parameters of) what to charge."
(4)
Real-estate agent: "I know zilch (= nothing) about zoning."
Real-estate agents love to suggest big ideas to prospective buyers — say, removing trees to enhance a view or squeezing a rental unit out of a roomy garage — meant to happen once the deal is done and they're out of the picture. But just because it sounds like a good idea doesn't mean it's legal.
"We had a client who bought a dilapidated house with a beautiful piece of property on a marshland," recalls New York City-based architect Mary Langan. "The broker told him that he could fix the house up however he wanted, insisting that this was a sleepy little town where nobody would care what he did." Langan says that the client built a $15,000 shed in the backyard, took down some trees and had some of the marshland filled in — only to have the town insist he put things back because of environmental zoning regulations. The moral of the story: Before you buy into your broker's creative thinking, check withyour local zoning commission about what you can and cannot do on a given piece of property.
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Home inspector: "Your idea of a home inspection isn't necessarily the same as mine."You've found the home of your dreams. But cautious consumer that you are, you want ahome inspector to take a look at it before you buy. That way, you'll be forewarned about any defects or problems, right? Not necessarily. A home inspector's job is to conduct a visual examination of the physical condition of the house and certain systems within it. The key word here is "visual." That means home inspectors don't have to remove carpets to make sure the floors aren't warped, or drill into walls to check for insulation, for example,.
Most homes have imperfections, and inspectors probably won't catch everything. They're looking for major defects — electricity that's not grounded, air-conditioning or heating systems that are operating in an unsafe manner.
There are things an inspector can't do. "You can't see what's buried under insulation in the attic, you can't check the pipes that are underground," says Barry Stone, a certified home inspector in San Luis Obispo County, Calif., and known as The House Detective.
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Home inspector: "I'm not climbing up on your roof."Amazingly, the visual examination rule applies even to the roof. The American Society of Home Inspectors, a professional organization whose guidelines have been adopted as the industry standard, says its member inspectors must "observe" the roof, but it doesn't say they actually have to go up there.
Even some veteran home inspectors think inspectors should closely check the roof. "A really bad roof can look good from the ground. When you see it at an acute angle, you don't always see the defect. But when looking straight down, you can see it better," Stone says. An inspector can make excuses for not getting to the roof, saying it's fragile or slippery. But there are often ways around those hurdles. Stone says you could set up a ladder to look at the roof without actually walking on it. Or if you stand far enough away from the house, you can get a better perspective by using high-powered binoculars.
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Home inspector: "I've been known to cause more damage than I find."It can happen to anyone — you bump into the china cabinet and Grandma's plate falls down. Some might say that causing some damage in a home is an occupational hazard that comes with being a home inspector. Technically, the inspection consists of a visual examination of the home, but that's not entirely realistic. "We have to touch stuff," says Bruce Ramsey, a home inspector in Raleigh, N.C.
True, a thorough house checkup requires hands-on poking and prying — and a little cosmetic damage is a small price to pay for knowing what shape your dwelling is in. But an inspector who damages woodwork or light fixtures should offer to pay for the repair.
"You're kind of like a guest in the house," says Harold Heimer, owner of Heimer Engineering, an engineering firm that performs home inspections in the New York and Long Island area. Inspectors generally shouldn't be taking things apart, but someone might need to move things around.
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Homebuilder: “I’ll build your house on marshmallow.”Population growth and urban sprawl mean there’s not much residential land left in many areas— and what there is may not be ideal. Shortly after John Duffy and his family moved into their $234,000 home in Highlands Ranch, Colo., long cracks started showing up in the walls, and the porch started pulling away from the house. After badgering his builder for the soil report, Duffy learned his lot was a hot spot for potential swell. Writer Homes, the builder, was ordered to pay Duffy $544,000. John Palmeri, Writer’s attorney, says the company offered to fix the house, but “they were bent on going to court.”
The Duffy family isn’t alone. In fact, a number of homes today are being built on “expansive soil” — earth that swells when it rains — without adequate safeguards. How common is the practice? About 50% of homes in Southern California are built on expansive soil, according to Patrick Catalano, founder of The Law Firm of Catalano and Catalano in San Francisco and San Diego, which specializes in real-estate and construction defect litigation.
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Homebuilder: “I won’t just cut corners — I’ll sever them.”Substandard work has always existed in homebuilding, but the collapse of the housing market and the increased costs of constructionare making the problem worse, says Jonathan Alpert, a retired Tampa, Fla., attorney who represented homebuyers. Alpert says he’s handled cases in which builders didn’t seal roofs, in which two-inch concrete slabs were used instead of the four-inch slabs specified, and in which sewage pipes were cross-connected to drinking-water pipes.
In some cases, builders are skipping steps dictated by municipal building codes. In one Sarasota, Fla., gated community called Turtle Rock, four families cut open their houses in 1998 to ferret out the source of some mold growth. What they found, in addition to wet lumber, were several code violations, including missing hurricane straps, which are steel plates that tie the wood frame together and connect to the concrete base. Says Brian Stirling, the structural engineer hired by the homeowners to investigate: “If we’d had a strong storm, they would have had some serious problems.” Like what? “Like losing their top floor.” In 1999, the builder, U.S. Home, agreed to buy back the four houses and said it would make county-supervised repairs on 12 others in the subdivision. “We dispute the extent of the problems,” says the builder’s attorney, Fred Zinober. But by settling the case, he says, “U.S. Home did the right thing.”
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Homebuilder: “Your warranty may be worthless.”Many homebuilders tout 10-year warranties as protection against future problems. But thesehome warranties are often extremely limited in coverage, particularly after the second year. “It gives people a false sense of security,” says Brent Lemon, a Dallas attorney who represents homebuyers. “Most of these basically require that the house fall down on top of you before they kick in.” Consider the warranty offered by Denver, Colo.-based Home Buyers Warranty. It lists 71 exclusions and, like many, states that the home must be “unsafe, unsanitary or otherwise unlivable” to get structural-defect coverage. Em Fluhr, the warranty company’s CEO, says, “If (homebuyers) detect any worsening of the situation, they can submit another claim.”
The root of the problem with warranties is that builders characterize them too broadly when they say they’ll help protect homeowners who discover a structural problem, says Anne Stark, a Dallas attorney specializing in homebuyer complaints. “Structural-defect coverage often covers only catastrophic failure,” Stark says. “Builders will say you’ve got a great warranty, but then you wake up in the third year with cracks all over your house and you call the warranty company and they say, ‘Sorry, it’s not a structural failure.’” Some states, like Texas, are aiming to alleviate the problem: In 2003, it created the Texas Residential Construction Commission to help builders resolve disputes without litigation. “We require a warranty whether the builder wants to give it or not, and that warranty needs to meet the minimum level of state standards,” says Duane Waddill, executive director of the commission. “Even if the builder goes bankrupt, the buyer has additional protection.”
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Contractor: “My license is laughable.”When you hire a general contractor to build an addition onto your house, you probably assume you’re getting someone who has spent years learning his craft, giving him the proper credentials to saw a hole in the side of your den. In reality, you could be getting a madman with a toolbox who answers to no one. That’s because only 27 states have anystate-licensing requirements — and where regulations do exist, they vary. In California, one of the stricter states, aspiring contractors must have four years’ experience, prove their financial solvency and pass a written exam to become licensed, whereas in South Carolina, they need only two years of experience along with an exam and submission of financials. Maybe the disparity helps in part to explain why the Better Business Bureau received 1.1 million inquiries in 2006 from people seeking “reliability reports” on specific contractors — to ensure they were trustworthy enough to hire — ranking them third among industries for that request, according to the Council of BBBs.
(12)
Contractor: “I’ll be back when I feel like it.”So you found yourself a good contractor. Terrific — but here’s the bad news. When contractors are busy with multiple jobs, as the best in the business inevitably are, you can pretty much expect the schedule for completing your job will go out the window. “If the contractor’s got too many jobs going,” Pendleton says, “the workers might only be in your house for two hours when they should have been there all day.”
One way to guarantee that your job won’t stretch to Wagnerian lengths, he says, is to hire a contractor with a lead person or project manager, “a working supervisor who is on the job from beginning to end.” If the job drags, the contractor still has to pay that person, so it “becomes in the contractor’s interest to finish the job,” Pendleton says.
(13)
Contractor: “If it looks good, I don’t care if it’s done right.”Unless you have X-ray vision or the time to spend days watching your contractors in action, all you may ever know about your job is whether it looks good in the end. Evelyn Yancoskie, director of consumer affairs for Delaware County, Pa., knows of at least one family in her area who got a new roof that, indeed, looked just fine. But the roof was lacking a key element: an ice shield, a three-foot- wide rubber lining that’s crucial for a roof in this part of the country. “The contractor figures that nobody will miss it anyway,” Yancoskie says. “But if you get a cold winter, any water that gets into the gutters will freeze, back up onto the roof, and go underneath the shingles.”
Contractors may also cut corners by skimping on insulation, but packing it with care so that it looks filled in; leaving out plumbing lines and pumps that give you hot water fast; and using low-quality wood, but laying it beautifully so that you don’t notice. “Guys will use substandard plywood, shingles, siding,” says Mark Herr, former director of the New Jersey Division of Consumer Affairs. “In situations where homeowners aren’t likely to ask what’s going on, contractors use subpar materials.” Or just do a subpar job.
What can you do to prevent this sort of behavior? Check with your state’s department of consumer affairs
to see if, like New Jersey, it requires its contractors to be registered —meaning they’re insured, must use certain approved language in contracts, agree to list specifics about materials being used, provide start and end dates for a project, and generally operate with full disclosure about their practices. Otherwise, you should always get multiple estimates on a project and never settle on a contractor without checking references carefully.
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Landscaper: “My sprays are real killers, all right.”Sure, you want your lawn to be as green as Yankee Stadium’s outfield. But does your landscaper need to poison it in the process? Gloria Megee knows what harm grass-protecting pesticides can do. Several years ago, after a landscaper had sprayed pesticides on her Arlington, Va., housing development, Megee’s bichon frise, Monique, started to nibble the grass. Seconds later the dog was vomiting; she would experience seizures throughout the night. Monique eventually became riddled with skin cancer and tumors. The cause? Megee’s vet blamed it on the pesticides. “The poor dog’s paws were totally raw from walking on sprayed grass,” Megee says.
Indeed, research has linked pesticides to Parkinson’s disease, Hodgkin’s disease and liver cancer.
Rather than chemicals, some landscapers now use bug-eating birds, kelp spray and insects that prey on vegetarian pests, the ones that harm trees and plants. Says Steven Restmeyer, a landscaper who has practiced such techniques: “When landscapers deal with pesticides, they deal with liability and health issues, and they are replacing the natural process of the soil microbes that feed the plants.”
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Landscaper: “Don’t expect a refund if your garden croaks.”A month ago your landscaper planted new shrubs in your front yard. They looked great — for a day. Now they’re dry as a wheat field. The landscaper blames you for failing to water them enough, and you blame the landscaper for buying bush-league bushes. Who’s right? It doesn’t matter — the plants are dead, and don’t expect your landscaper to cheerfully reimburse you.
Jeff Herman, the owner of a landscaping company in Fair Lawn, N.J., says landscapers get no money-back guarantee from the nurseries on the plants and shrubs they buy for homeowners. While you’ll have little chance to get a refund on such things as rose bushes (they’re prone to bugs) or ground cover (ivy, for instance, which will die quickly if not watered), you should demand some kind of payback from the landscaper if it’s obvious you properly cared for the plantings. “Show your landscaper the grass around the dead plant,” says Hugo Davis, former president of the Kentucky Nursery and Landscape Association, a trade organization for landscapers and nursery owners. “If it’s green and thriving, well, then you did all the watering you needed to do.”
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Landscaper: “What I’m doing won’t necessarily make your home more valuable.”Debby Bright, a real-estate agent in Gilroy, Calif., estimates that homeowners can recoup 150 percent of their landscaping costs when they sell. But there’s a hitch: You need the right landscaping. Oleander bushes, for example, look great, but they’re poisonous and a turnoff to botanically knowledgeable house hunters.
Bright’s ideas for home enhancements include trees that block noise and shrubs that create a sense of privacy; you don’t want just a large, house-exposing lawn. While Bright points out that lattices and high hedges are more appealing than brick-and-cement walls, one quaint touch to avoid is climbing ivy. “It attracts roaches and termites,” Bright says. “You’ll think your landscaper’s ivy is very nice until you are about to sell your house, you have a termite inspection, and wind up spending $8,000 to resolve the pest problem.”
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Architect: “You may not need me at all.”Hiring an architect can add thousands to the cost of a home-improvement project, which is a lot of money when your project is relatively small — converting a garage to a game room, say, or expanding your kitchen.
Architects will argue that they offer expertise that will make any addition, however small, flow better with your house. But many experts say it’s often overkill. “If the project is entirely interior to the house, as long as you’re not moving windows or adding to the footprint of the house, you may not need an architect at all,” says Chris Sullivan, founder of C. C. Sullivan Strategic Communications, a communications-consulting firm for the architecture and construction fields.
The ultimate authority, however, is your local municipality’s housing department; some may require architect-stamped drawings in order to get a building permit, while others might let you give your drawings directly to a contractor. For small projects, you may be able to use an interior designer or, if you’re doing just one specific room, a kitchen-, bath-, or even basement-design specialist. To find a qualified designer near you, check out the web sites of the International Interior Design Association , the American Society of Interior Designers or the National Association of the Remodeling Industry.
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Architect: “My drawings aren’t really builder-ready.”Before you can start shopping for a contractor, you’ll need your architect’s finished drawings. But “finished” can be a subjective term. Tony Crasi, owner of Cuyahoga Falls, Ohio-based design and building firm Crasi and Co., says that one of the biggest problems in working with other people’s architects is that he sees “incomplete drawings, inaccurate drawings, drawings that have no chance of being built for the price the owner would like.”
Part of the problem can stem from an architect’s lack of residential design expertise, but it can also be the result of a homeowner not knowing what kinds of drawings to ask for. Unless you’re doing a very small project, be sure to request drawings that contain enough detail to adequately convey your intentions. Ideally, these should also include “specifications,” which describe finishes and quality of workmanship. And discuss as many details with the architect as you can, down to the type of faucets you want in the bathroom. It may add to your fee, but the right drawings make it easier to estimate costs, preserve your wishes, and even determine liability if something goes wrong. “I don’t think you can put enough information in a set of plans,” Crasi says.
Source: SmartMoney.com:
________________________________________________________________
How to Get a Car Loan
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I bought my first car from my parents. It had lots of miles and no frills — not even air conditioning — but the price was right and they sold it to me cheaply enough that I could pay cash. My second car, though, was a gray Mustang convertible I found in the classifieds (no Craigslist back then). For that one, I had to get a car loan, so I turned to my local bank. I didn’t really have a clue what I was doing, but they walked me through the process.
If you are thinking about getting your first vehicle loan, you may feel a bit overwhelmed as well. Here’s how the process of getting a car loan works.
Step One: Check Your Credit
Your credit score will play a key role in the rate you’ll pay for your loan. While that may sound obvious to someone who has applied for one of these loans before, if you are a first-time car buyer, you may not realize how important your credit score is when it comes to getting a loan. A high credit score can help you get a low car loan rate, which in turn saves you money on interest.
Your credit score is based on the information in your credit reports, so to make sure that your credit score is accurate it’s a good idea to also get your credit reports. You can check them for free at AnnualCreditReport.com once a year.
It’s also a good idea to get your free credit score to see where you stand (and you can do that using Credit.com’s Credit Report Card). Just understand that you probably won’t see the same credit score the auto lender will see. There are many different credit scores available, and auto lenders typically use scores customized for auto lenders.
Step Two: Pick Your Payment
Your job here is to figure out how much you can realistically afford to spend each month on a car payment without straining your budget. Once you know that amount, you can plug it into a car loan calculator to find out the total you can afford to spend.
Car loans typically come in 3-, 4-, 5- and 6-year terms. The longer the term of the loan, the lower the monthly payment. But a longer car loan also means you are likely to be “upside down” for a longer period of time. To be upside down (or “underwater”) on a loan means you owe more than the vehicle is worth.
Don’t forget to factor in insurance and maintenance costs. While those won’t be included in your monthly payment, you’ll have to come up with those funds as well. If you have trouble paying them, you may find it hard to keep up with your car payment, so you want to make sure you are prepared for the total cost. An insurance agent can help you estimate the cost of insuring the types of vehicles you are considering buying.
Step Three: Get Pre-Approved
You can shop for an auto loan online, as well as through a local credit union or bank. You don’t have to limit yourself to the financial institution where you do your banking, and it’s fine to check with a few different sources. You want to see what kind of loan, and for what amount, they can offer. Whichever one offers you the best deal, that’s the one you can get financing through.
If you qualify for a loan, you’ll get a “pre-approval” that will be good for a certain period of time and up to a certain amount of money. It’s sort of like having a blank check to buy your vehicle. You can always spend less than the amount for which you are pre-approved, but you can’t spend more, unless you want to make up the difference in cash or by trading in your current vehicle. If you do buy a vehicle for less than the amount for which you have been pre-approved you won’t get the difference back in cash; you’ll just get a smaller loan.
Don’t have great credit? You may still be able to get pre-approved for a car loan with bad credit, but your interest rate will be higher. If you have no credit history, you can either ask someone to co-sign or consider a lender that will work with borrowers with no credit.
Try to do all your car loan shopping within a 14-day period. That’s because some credit scoring models will penalize you if there are too many inquiries into your credit history. But none of them will do so if those inquiries are within a two-week window.
Step Four: Choose Your Vehicle
Once you are pre-approved, you can get serious about shopping for your vehicle. One of the good things about being pre-approved is that you can focus your efforts on negotiating the best deal for the car or truck you want to buy, rather than having to negotiate financing as well.
If the dealer can beat the terms you’ve been offered for a loan, you may want to take it. Just be careful: the dealer may try to talk you into a longer loan that will reduce your monthly payment, but will cost you more in the long run.
If you are going to buy a used car from a private party, make sure the loan you apply for covers that option. Also make sure you understand the restrictions on used car loans. You may not be able to buy a vehicle older than five years or with more than 75,000 miles, for example. And keep in mind the interest rate for these vehicle loans may be a little higher.
Step Five: Finalize the Paperwork
Once you’ve chosen your vehicle and negotiated the price, the auto dealer’s financing department will coordinate with the lender to finalize the sale. They will very likely try to get you to buy add-ons, such as an extended warranty, VIN etching, paint or fabric protection etc. Be sure to research these ahead of time so you don’t feel pressured into making an uninformed decision.
If you buy a used car from a private party, your lender should walk you through the process of finalizing the sale.
Step Six: Start Paying Your Car Loan
After the sale is finalized, you will get information about the payment schedule for your loan. Most lenders will send a coupon book you can use for mailing in your payments, along with information on how to access your account online. Even if you plan to pay your loan by mail or at a local branch of your financial institution, it’s a good idea to sign up for the online service so you can check your balance and payments if you need to, and so you’ll be able to make payments online if you are traveling, for example.
Almost every car loan allows you to prepay without a penalty, so if you decide to pay off your loan faster you can do that. Just be sure to check with your lender to make sure your additional payments are processed correctly.
More from Credit.com click green:
- Can Your Credit Score Save You Money on a New Car
- Is There Any Chance of Lowering Your Car Payment
- The First Thing to Do Before Buying a Car
- Click green for further info
- Source: Credit.com ______________________________________________________________________________
18 secrets real-estate insiders wish you didn't know
Click: Search for loan officers in the National Mortgage Licensing System and Registry
Click green for further info
(1)
It’s likely the biggest purchase of your life, but there are some things the professionals in the real-estate and residential services businesses preferred you didn’t know. The list starts with the lack of strict licensing controls in many professions to the ways architects and contractors cut corners. Thought you could at least trust your home inspector? Think again. (They’re only obligated to check for defects they can see – i.e., no looking for leaky pipes, termites and warped floor boards.) For a roadmap on how to deal with the pros, click through and uncover the 18 secrets that will help make you a smarter home buyer, seller and owner.
(2)
Real-estate agent: "My fees are negotiable."
Agents like to make it sound as if their fees are engraved in stone, but that's rarely the case. During the housing bubble, as the number of real-estate agents sharply increased, so did the competition for listings. One agent says he lowered his fee a full percentage point just to give himself an edge. But even in the wake of the recent crash, you have a good chance of negotiating a better deal; that same surplus of agents is still out there competing for even fewer listings.
The real-estate agent we spoke with, who asked not to be named, has some suggestions for the best conditions to induce brokers to lower their fees: "If somebody's willing to commit to me for selling one place and buying another," or "If you're in a particularly desirable neighborhood with a house that will bring a lot of traffic" for an open house. And with a lot of smaller brokers, he says, "all you need to do is ask and they'll lower the commission."
(3)
Real-estate agent: "You can probably do this without me."Agents like to create a lot of mystique about selling homes, insisting that the process is complicated and best left to professionals. Not so, say homeowners who have sold their homes themselves (about 20% to 25% do so each year). William Supple, publisher of the sale-by-owner real-estate magazine Picket Fence Preview and author of "How to Sell Your Own Home," says that "properly priced and advertised, a house sells itself." Supple adds that sellers should plant a yard sign and post online ads for the property on local sites aligned with print publications (call current advertisers to see if a site is effective).
Just be sure you price your home well. The way most self-sellers hurt themselves, Supple says, is in setting either an unreasonably high or tragically low asking price. "Hire an independent appraiser for $200," he suggests, "and he will tell you (the parameters of) what to charge."
(4)
Real-estate agent: "I know zilch (= nothing) about zoning."
Real-estate agents love to suggest big ideas to prospective buyers — say, removing trees to enhance a view or squeezing a rental unit out of a roomy garage — meant to happen once the deal is done and they're out of the picture. But just because it sounds like a good idea doesn't mean it's legal.
"We had a client who bought a dilapidated house with a beautiful piece of property on a marshland," recalls New York City-based architect Mary Langan. "The broker told him that he could fix the house up however he wanted, insisting that this was a sleepy little town where nobody would care what he did." Langan says that the client built a $15,000 shed in the backyard, took down some trees and had some of the marshland filled in — only to have the town insist he put things back because of environmental zoning regulations. The moral of the story: Before you buy into your broker's creative thinking, check withyour local zoning commission about what you can and cannot do on a given piece of property.
(5)
Home inspector: "Your idea of a home inspection isn't necessarily the same as mine."You've found the home of your dreams. But cautious consumer that you are, you want ahome inspector to take a look at it before you buy. That way, you'll be forewarned about any defects or problems, right? Not necessarily. A home inspector's job is to conduct a visual examination of the physical condition of the house and certain systems within it. The key word here is "visual." That means home inspectors don't have to remove carpets to make sure the floors aren't warped, or drill into walls to check for insulation, for example,.
Most homes have imperfections, and inspectors probably won't catch everything. They're looking for major defects — electricity that's not grounded, air-conditioning or heating systems that are operating in an unsafe manner.
There are things an inspector can't do. "You can't see what's buried under insulation in the attic, you can't check the pipes that are underground," says Barry Stone, a certified home inspector in San Luis Obispo County, Calif., and known as The House Detective.
(6)
Home inspector: "I'm not climbing up on your roof."Amazingly, the visual examination rule applies even to the roof. The American Society of Home Inspectors, a professional organization whose guidelines have been adopted as the industry standard, says its member inspectors must "observe" the roof, but it doesn't say they actually have to go up there.
Even some veteran home inspectors think inspectors should closely check the roof. "A really bad roof can look good from the ground. When you see it at an acute angle, you don't always see the defect. But when looking straight down, you can see it better," Stone says. An inspector can make excuses for not getting to the roof, saying it's fragile or slippery. But there are often ways around those hurdles. Stone says you could set up a ladder to look at the roof without actually walking on it. Or if you stand far enough away from the house, you can get a better perspective by using high-powered binoculars.
(7)
Home inspector: "I've been known to cause more damage than I find."It can happen to anyone — you bump into the china cabinet and Grandma's plate falls down. Some might say that causing some damage in a home is an occupational hazard that comes with being a home inspector. Technically, the inspection consists of a visual examination of the home, but that's not entirely realistic. "We have to touch stuff," says Bruce Ramsey, a home inspector in Raleigh, N.C.
True, a thorough house checkup requires hands-on poking and prying — and a little cosmetic damage is a small price to pay for knowing what shape your dwelling is in. But an inspector who damages woodwork or light fixtures should offer to pay for the repair.
"You're kind of like a guest in the house," says Harold Heimer, owner of Heimer Engineering, an engineering firm that performs home inspections in the New York and Long Island area. Inspectors generally shouldn't be taking things apart, but someone might need to move things around.
(8)
Homebuilder: “I’ll build your house on marshmallow.”Population growth and urban sprawl mean there’s not much residential land left in many areas— and what there is may not be ideal. Shortly after John Duffy and his family moved into their $234,000 home in Highlands Ranch, Colo., long cracks started showing up in the walls, and the porch started pulling away from the house. After badgering his builder for the soil report, Duffy learned his lot was a hot spot for potential swell. Writer Homes, the builder, was ordered to pay Duffy $544,000. John Palmeri, Writer’s attorney, says the company offered to fix the house, but “they were bent on going to court.”
The Duffy family isn’t alone. In fact, a number of homes today are being built on “expansive soil” — earth that swells when it rains — without adequate safeguards. How common is the practice? About 50% of homes in Southern California are built on expansive soil, according to Patrick Catalano, founder of The Law Firm of Catalano and Catalano in San Francisco and San Diego, which specializes in real-estate and construction defect litigation.
(9)
Homebuilder: “I won’t just cut corners — I’ll sever them.”Substandard work has always existed in homebuilding, but the collapse of the housing market and the increased costs of constructionare making the problem worse, says Jonathan Alpert, a retired Tampa, Fla., attorney who represented homebuyers. Alpert says he’s handled cases in which builders didn’t seal roofs, in which two-inch concrete slabs were used instead of the four-inch slabs specified, and in which sewage pipes were cross-connected to drinking-water pipes.
In some cases, builders are skipping steps dictated by municipal building codes. In one Sarasota, Fla., gated community called Turtle Rock, four families cut open their houses in 1998 to ferret out the source of some mold growth. What they found, in addition to wet lumber, were several code violations, including missing hurricane straps, which are steel plates that tie the wood frame together and connect to the concrete base. Says Brian Stirling, the structural engineer hired by the homeowners to investigate: “If we’d had a strong storm, they would have had some serious problems.” Like what? “Like losing their top floor.” In 1999, the builder, U.S. Home, agreed to buy back the four houses and said it would make county-supervised repairs on 12 others in the subdivision. “We dispute the extent of the problems,” says the builder’s attorney, Fred Zinober. But by settling the case, he says, “U.S. Home did the right thing.”
(10)
Homebuilder: “Your warranty may be worthless.”Many homebuilders tout 10-year warranties as protection against future problems. But thesehome warranties are often extremely limited in coverage, particularly after the second year. “It gives people a false sense of security,” says Brent Lemon, a Dallas attorney who represents homebuyers. “Most of these basically require that the house fall down on top of you before they kick in.” Consider the warranty offered by Denver, Colo.-based Home Buyers Warranty. It lists 71 exclusions and, like many, states that the home must be “unsafe, unsanitary or otherwise unlivable” to get structural-defect coverage. Em Fluhr, the warranty company’s CEO, says, “If (homebuyers) detect any worsening of the situation, they can submit another claim.”
The root of the problem with warranties is that builders characterize them too broadly when they say they’ll help protect homeowners who discover a structural problem, says Anne Stark, a Dallas attorney specializing in homebuyer complaints. “Structural-defect coverage often covers only catastrophic failure,” Stark says. “Builders will say you’ve got a great warranty, but then you wake up in the third year with cracks all over your house and you call the warranty company and they say, ‘Sorry, it’s not a structural failure.’” Some states, like Texas, are aiming to alleviate the problem: In 2003, it created the Texas Residential Construction Commission to help builders resolve disputes without litigation. “We require a warranty whether the builder wants to give it or not, and that warranty needs to meet the minimum level of state standards,” says Duane Waddill, executive director of the commission. “Even if the builder goes bankrupt, the buyer has additional protection.”
(11)
Contractor: “My license is laughable.”When you hire a general contractor to build an addition onto your house, you probably assume you’re getting someone who has spent years learning his craft, giving him the proper credentials to saw a hole in the side of your den. In reality, you could be getting a madman with a toolbox who answers to no one. That’s because only 27 states have anystate-licensing requirements — and where regulations do exist, they vary. In California, one of the stricter states, aspiring contractors must have four years’ experience, prove their financial solvency and pass a written exam to become licensed, whereas in South Carolina, they need only two years of experience along with an exam and submission of financials. Maybe the disparity helps in part to explain why the Better Business Bureau received 1.1 million inquiries in 2006 from people seeking “reliability reports” on specific contractors — to ensure they were trustworthy enough to hire — ranking them third among industries for that request, according to the Council of BBBs.
(12)
Contractor: “I’ll be back when I feel like it.”So you found yourself a good contractor. Terrific — but here’s the bad news. When contractors are busy with multiple jobs, as the best in the business inevitably are, you can pretty much expect the schedule for completing your job will go out the window. “If the contractor’s got too many jobs going,” Pendleton says, “the workers might only be in your house for two hours when they should have been there all day.”
One way to guarantee that your job won’t stretch to Wagnerian lengths, he says, is to hire a contractor with a lead person or project manager, “a working supervisor who is on the job from beginning to end.” If the job drags, the contractor still has to pay that person, so it “becomes in the contractor’s interest to finish the job,” Pendleton says.
(13)
Contractor: “If it looks good, I don’t care if it’s done right.”Unless you have X-ray vision or the time to spend days watching your contractors in action, all you may ever know about your job is whether it looks good in the end. Evelyn Yancoskie, director of consumer affairs for Delaware County, Pa., knows of at least one family in her area who got a new roof that, indeed, looked just fine. But the roof was lacking a key element: an ice shield, a three-foot- wide rubber lining that’s crucial for a roof in this part of the country. “The contractor figures that nobody will miss it anyway,” Yancoskie says. “But if you get a cold winter, any water that gets into the gutters will freeze, back up onto the roof, and go underneath the shingles.”
Contractors may also cut corners by skimping on insulation, but packing it with care so that it looks filled in; leaving out plumbing lines and pumps that give you hot water fast; and using low-quality wood, but laying it beautifully so that you don’t notice. “Guys will use substandard plywood, shingles, siding,” says Mark Herr, former director of the New Jersey Division of Consumer Affairs. “In situations where homeowners aren’t likely to ask what’s going on, contractors use subpar materials.” Or just do a subpar job.
What can you do to prevent this sort of behavior? Check with your state’s department of consumer affairs
to see if, like New Jersey, it requires its contractors to be registered —meaning they’re insured, must use certain approved language in contracts, agree to list specifics about materials being used, provide start and end dates for a project, and generally operate with full disclosure about their practices. Otherwise, you should always get multiple estimates on a project and never settle on a contractor without checking references carefully.
(14)
Landscaper: “My sprays are real killers, all right.”Sure, you want your lawn to be as green as Yankee Stadium’s outfield. But does your landscaper need to poison it in the process? Gloria Megee knows what harm grass-protecting pesticides can do. Several years ago, after a landscaper had sprayed pesticides on her Arlington, Va., housing development, Megee’s bichon frise, Monique, started to nibble the grass. Seconds later the dog was vomiting; she would experience seizures throughout the night. Monique eventually became riddled with skin cancer and tumors. The cause? Megee’s vet blamed it on the pesticides. “The poor dog’s paws were totally raw from walking on sprayed grass,” Megee says.
Indeed, research has linked pesticides to Parkinson’s disease, Hodgkin’s disease and liver cancer.
Rather than chemicals, some landscapers now use bug-eating birds, kelp spray and insects that prey on vegetarian pests, the ones that harm trees and plants. Says Steven Restmeyer, a landscaper who has practiced such techniques: “When landscapers deal with pesticides, they deal with liability and health issues, and they are replacing the natural process of the soil microbes that feed the plants.”
(15)
Landscaper: “Don’t expect a refund if your garden croaks.”A month ago your landscaper planted new shrubs in your front yard. They looked great — for a day. Now they’re dry as a wheat field. The landscaper blames you for failing to water them enough, and you blame the landscaper for buying bush-league bushes. Who’s right? It doesn’t matter — the plants are dead, and don’t expect your landscaper to cheerfully reimburse you.
Jeff Herman, the owner of a landscaping company in Fair Lawn, N.J., says landscapers get no money-back guarantee from the nurseries on the plants and shrubs they buy for homeowners. While you’ll have little chance to get a refund on such things as rose bushes (they’re prone to bugs) or ground cover (ivy, for instance, which will die quickly if not watered), you should demand some kind of payback from the landscaper if it’s obvious you properly cared for the plantings. “Show your landscaper the grass around the dead plant,” says Hugo Davis, former president of the Kentucky Nursery and Landscape Association, a trade organization for landscapers and nursery owners. “If it’s green and thriving, well, then you did all the watering you needed to do.”
(16)
Landscaper: “What I’m doing won’t necessarily make your home more valuable.”Debby Bright, a real-estate agent in Gilroy, Calif., estimates that homeowners can recoup 150 percent of their landscaping costs when they sell. But there’s a hitch: You need the right landscaping. Oleander bushes, for example, look great, but they’re poisonous and a turnoff to botanically knowledgeable house hunters.
Bright’s ideas for home enhancements include trees that block noise and shrubs that create a sense of privacy; you don’t want just a large, house-exposing lawn. While Bright points out that lattices and high hedges are more appealing than brick-and-cement walls, one quaint touch to avoid is climbing ivy. “It attracts roaches and termites,” Bright says. “You’ll think your landscaper’s ivy is very nice until you are about to sell your house, you have a termite inspection, and wind up spending $8,000 to resolve the pest problem.”
(17)
Architect: “You may not need me at all.”Hiring an architect can add thousands to the cost of a home-improvement project, which is a lot of money when your project is relatively small — converting a garage to a game room, say, or expanding your kitchen.
Architects will argue that they offer expertise that will make any addition, however small, flow better with your house. But many experts say it’s often overkill. “If the project is entirely interior to the house, as long as you’re not moving windows or adding to the footprint of the house, you may not need an architect at all,” says Chris Sullivan, founder of C. C. Sullivan Strategic Communications, a communications-consulting firm for the architecture and construction fields.
The ultimate authority, however, is your local municipality’s housing department; some may require architect-stamped drawings in order to get a building permit, while others might let you give your drawings directly to a contractor. For small projects, you may be able to use an interior designer or, if you’re doing just one specific room, a kitchen-, bath-, or even basement-design specialist. To find a qualified designer near you, check out the web sites of the International Interior Design Association , the American Society of Interior Designers or the National Association of the Remodeling Industry.
(18)
Architect: “My drawings aren’t really builder-ready.”Before you can start shopping for a contractor, you’ll need your architect’s finished drawings. But “finished” can be a subjective term. Tony Crasi, owner of Cuyahoga Falls, Ohio-based design and building firm Crasi and Co., says that one of the biggest problems in working with other people’s architects is that he sees “incomplete drawings, inaccurate drawings, drawings that have no chance of being built for the price the owner would like.”
Part of the problem can stem from an architect’s lack of residential design expertise, but it can also be the result of a homeowner not knowing what kinds of drawings to ask for. Unless you’re doing a very small project, be sure to request drawings that contain enough detail to adequately convey your intentions. Ideally, these should also include “specifications,” which describe finishes and quality of workmanship. And discuss as many details with the architect as you can, down to the type of faucets you want in the bathroom. It may add to your fee, but the right drawings make it easier to estimate costs, preserve your wishes, and even determine liability if something goes wrong. “I don’t think you can put enough information in a set of plans,” Crasi says.
Source: SmartMoney.com:
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Article 1 of 2 (Article 2 next below)
How to qualify for the best mortgage rate
These factors altogether help determine your mortgage interest rate
Click: Search for loan officers in the National Mortgage Licensing System & Registry
Click green for further info
You see advertisements for those historically-low mortgage interest rates everywhere. So naturally, you figure it's time to refinance or apply for a new mortgage. But once your application is accepted, you realize your interest rate is one - or even two - percentage points higher than the national average. What happened?
In a nutshell, the lender thought you were a risk. That's because one way to look at your mortgage interest rate is that it's a representation of how much of a risk a lender believes you to be: the higher the risk, the higher the cost of borrowing the money.
The natural next question is: What makes for a low-risk mortgage applicant? Well, we spoke to some experts to find out. So read on to see what it takes to qualify for those super-low mortgage interest rates.
Criteria #1: Credit Score of 740 and above
When a lender is deciding whether or not to let you borrow tens or even hundreds of thousands of dollars, they kind of want to know that you'll pay it back. And for lenders, your credit score is an indicator of how risky lending you money might be - and therefore, how high or low your interest rate should be.
So what's in a credit score? Credit scores run from 300 to 850 - and the higher the better, according to myFICO. "You get better rates with a better credit score. The higher the score the better the rate," says Jim Duffy, a mortgage banker with Cole Taylor Mortgage.
But just how high does your score need to be to get the lowest interest rate? He says that to get the best rates you'll want a score of 740 or above.
"Anything below 740 and you're going to be paying a little bit extra," he says. And if you're wondering what that "extra" can amount to, it really depends on how low the score is. It can be as much as half a percent for a 620 score, but as little as an eighth of a percent or less for a score of 700, Duffy says.
Criteria #2: Debt-to-Income Ratio of 40 Percent or Less
You've heard the saying, "the more you make the more you spend," right? Well, that could be a problem for your interest rate if your spending is driving your debt-to-income ratio up. You're not sure what that is, you say? You might want to become familiar with it, because it's important to your potential lender.
Your debt-to-income ratio is basically the amount of your gross monthly income that goes toward paying debt, says Justin Pritchard, a financial planner who writes About.com's banking and loans column. So, say you and your spouse make a gross income of $6,000 per month and your debt is a total of $1,800 per month. Your debt-to-income ratio is 30 percent ($1,800/$6,000=.3). Pritchard says that your debt-to-income ratio typically needs to be 40 percent or lower to qualify for a mortgage, and lower percentages could mean lower rates.
Why? "Because lenders want to see that it's easy for you to pay off the loan," Pritchard says. "They want to know that you can suffer a setback, or get a pay cut, or take on more debt and still make your payments, versus somebody who's spending 50 percent of their monthly income just to pay off debt."
And if you're wondering what lenders consider as debt, a general rule is that it's anything that ends up on your credit report, says Duffy. Common things include credit card, auto loan, and personal loan debt. Your future mortgage payments (should you qualify for the loan), will also get factored in, he adds.
Criteria #3: Consistent Job Stability
Not surprisingly, lenders like stability. After all, they're deciding whether or not you can consistently pay a mortgage back, month after month, for years on end. So if you've been stable and consistent when it comes to your career, lenders could reward you with a lower rate.
And Pritchard says that the longer you've stuck with a career, the better, because it suggests stability. But don't fret if you've changed jobs a few times. As long as the positions are in the same industry and have been consecutive, you can still qualify for the best interest rates, says Chris L. Boulter, president of Val-Chris Investments, Inc., a California company specializing in residential and commercial loans.
So, how long is long enough to be working in the same industry? At least two years is a must, Pritchard says.
On the other hand, "If you've had a disruption [i.e., have been fired or unemployed for a month or more] in your career in the last two years, the likelihood of you being able to qualify for the most favorable rates is extremely low," Boulter says.
Criteria #4: At least 20 percent equity
If you think about equity from a lender's point of view, here's what you would see: the more equity the homeowner (you) has in their home, the less risk the lender assumes.
To see why, first let's define equity. It is the market value of your home minus any remaining mortgage balance. So, if your home is valued at $500,000 and your remaining mortgage balance is $400,000, you have 20 percent equity in your home. This essentially means that you own 20 percent of your home, and the lender owns 80 percent.
So how does this translate to risk? Basically, if the home's value declines by up to 20 percent, youwould lose money if and when you sell. But if the value of the home plummets 21 percent or more, thelender could potentially lose money instead, since the lender owns the rest of your home after that 20 percent.
In other words, if your home value went down by 21 percent and you sold the house or defaulted on the loan, you would lose $100,000, but the lender would also lose $5,000 (1 percent of $500,000 equals $5,000). So, if you only have 10 percent equity, your mortgage lender is "closer" to losing money because the market only has to decline by half as much (10 percent) before they are at risk.
And here's a newsflash: Lenders don't like to lose money.
So you need to have, in most cases, a minimum of 20 percent equity in your property to get the best interest rate, Boulter says.
On a purchase, this means making a 20 percent down payment. On a refinance, this means having 20 percent equity and only taking out a mortgage for 80 percent of the market value of your home.
Click green for further info
Source: Credit.com (Article 2 next below)
____________________________________________________________
How to qualify for the best mortgage rate
These factors altogether help determine your mortgage interest rate
Click: Search for loan officers in the National Mortgage Licensing System & Registry
Click green for further info
You see advertisements for those historically-low mortgage interest rates everywhere. So naturally, you figure it's time to refinance or apply for a new mortgage. But once your application is accepted, you realize your interest rate is one - or even two - percentage points higher than the national average. What happened?
In a nutshell, the lender thought you were a risk. That's because one way to look at your mortgage interest rate is that it's a representation of how much of a risk a lender believes you to be: the higher the risk, the higher the cost of borrowing the money.
The natural next question is: What makes for a low-risk mortgage applicant? Well, we spoke to some experts to find out. So read on to see what it takes to qualify for those super-low mortgage interest rates.
Criteria #1: Credit Score of 740 and above
When a lender is deciding whether or not to let you borrow tens or even hundreds of thousands of dollars, they kind of want to know that you'll pay it back. And for lenders, your credit score is an indicator of how risky lending you money might be - and therefore, how high or low your interest rate should be.
So what's in a credit score? Credit scores run from 300 to 850 - and the higher the better, according to myFICO. "You get better rates with a better credit score. The higher the score the better the rate," says Jim Duffy, a mortgage banker with Cole Taylor Mortgage.
But just how high does your score need to be to get the lowest interest rate? He says that to get the best rates you'll want a score of 740 or above.
"Anything below 740 and you're going to be paying a little bit extra," he says. And if you're wondering what that "extra" can amount to, it really depends on how low the score is. It can be as much as half a percent for a 620 score, but as little as an eighth of a percent or less for a score of 700, Duffy says.
Criteria #2: Debt-to-Income Ratio of 40 Percent or Less
You've heard the saying, "the more you make the more you spend," right? Well, that could be a problem for your interest rate if your spending is driving your debt-to-income ratio up. You're not sure what that is, you say? You might want to become familiar with it, because it's important to your potential lender.
Your debt-to-income ratio is basically the amount of your gross monthly income that goes toward paying debt, says Justin Pritchard, a financial planner who writes About.com's banking and loans column. So, say you and your spouse make a gross income of $6,000 per month and your debt is a total of $1,800 per month. Your debt-to-income ratio is 30 percent ($1,800/$6,000=.3). Pritchard says that your debt-to-income ratio typically needs to be 40 percent or lower to qualify for a mortgage, and lower percentages could mean lower rates.
Why? "Because lenders want to see that it's easy for you to pay off the loan," Pritchard says. "They want to know that you can suffer a setback, or get a pay cut, or take on more debt and still make your payments, versus somebody who's spending 50 percent of their monthly income just to pay off debt."
And if you're wondering what lenders consider as debt, a general rule is that it's anything that ends up on your credit report, says Duffy. Common things include credit card, auto loan, and personal loan debt. Your future mortgage payments (should you qualify for the loan), will also get factored in, he adds.
Criteria #3: Consistent Job Stability
Not surprisingly, lenders like stability. After all, they're deciding whether or not you can consistently pay a mortgage back, month after month, for years on end. So if you've been stable and consistent when it comes to your career, lenders could reward you with a lower rate.
And Pritchard says that the longer you've stuck with a career, the better, because it suggests stability. But don't fret if you've changed jobs a few times. As long as the positions are in the same industry and have been consecutive, you can still qualify for the best interest rates, says Chris L. Boulter, president of Val-Chris Investments, Inc., a California company specializing in residential and commercial loans.
So, how long is long enough to be working in the same industry? At least two years is a must, Pritchard says.
On the other hand, "If you've had a disruption [i.e., have been fired or unemployed for a month or more] in your career in the last two years, the likelihood of you being able to qualify for the most favorable rates is extremely low," Boulter says.
Criteria #4: At least 20 percent equity
If you think about equity from a lender's point of view, here's what you would see: the more equity the homeowner (you) has in their home, the less risk the lender assumes.
To see why, first let's define equity. It is the market value of your home minus any remaining mortgage balance. So, if your home is valued at $500,000 and your remaining mortgage balance is $400,000, you have 20 percent equity in your home. This essentially means that you own 20 percent of your home, and the lender owns 80 percent.
So how does this translate to risk? Basically, if the home's value declines by up to 20 percent, youwould lose money if and when you sell. But if the value of the home plummets 21 percent or more, thelender could potentially lose money instead, since the lender owns the rest of your home after that 20 percent.
In other words, if your home value went down by 21 percent and you sold the house or defaulted on the loan, you would lose $100,000, but the lender would also lose $5,000 (1 percent of $500,000 equals $5,000). So, if you only have 10 percent equity, your mortgage lender is "closer" to losing money because the market only has to decline by half as much (10 percent) before they are at risk.
And here's a newsflash: Lenders don't like to lose money.
So you need to have, in most cases, a minimum of 20 percent equity in your property to get the best interest rate, Boulter says.
On a purchase, this means making a 20 percent down payment. On a refinance, this means having 20 percent equity and only taking out a mortgage for 80 percent of the market value of your home.
Click green for further info
Source: Credit.com (Article 2 next below)
____________________________________________________________
Article 2 of 2 (Article 1 next above)
5 new barriers to getting a mortgage
Date: June 2013
It's tougher to get approved, but knowing the obstacles will help you prepare to buy a home
STAF, Inc.'s opinion & warning:
Think seriously if you really want to have a mortgage. If you have a reasonable place to live now and have a reliable work place, it would be economically wiser to wait and save the money and buy all cash - all depending on your age now. Any loan costs money. A house mortgage 15-30 years can make you pay as interest much more than most people realize. Cash is king, cash will give you better deals, it will give you, your spouse & your family piece of mind.
You may be willing to take some training to learn to invest one part of your cash and see if you can learn to make money with your investments. If you do, your cash will grow faster. Be careful - all investments can be risky and you may lose money.
Click: Search for loan officers in the National Mortgage Licensing System and Registry
Are you having trouble getting approved for a mortgage? Ever since the housing bubble burst, lenders have been subjecting mortgage and refinance applicants to stricter criteria. Here are five reasons why people are finding it more difficult to get approved these days.
1. Lender paranoia
Mortgage lenders naturally want to avoid repeating mistakes, so it's not surprising that they would look more closely at applicants' financial situations. But changes in the secondary mortgage market have made them extra cautious.
Greg Cook, a licensed California real-estate broker and mortgage banker, says that it used to be easy for lenders to get their loans insured by the Federal Housing Administration or guaranteed by Fannie Mae or Freddie Mac ( Find an FHA lender). Only in the case of fraud would these organizations require lenders to repurchase a mortgage.
"Now, if FHA feels the lender didn't follow guidelines, (it) can refuse to insure and the lender has to pony up the cash to replace the funds on (its) warehouse line," Cook says. "Multiple buybacks can bankrupt a small lender."
What's your home worth?
With lenders facing greater responsibility for the loans they originate, they have no choice but to be extremely cautious in approving borrowers.
2. Restrictions on eligible income
Do you earn income from a second job? While this money might be significant to you, providing some real breathing room in your monthly budget and stability in your finances, lenders might not care.
"Income from a second job is generally not allowed, unless it has been derived from the same source for 12 months or within the same exact field for 24 months without any more than a 30-day interruption," says Wendy Hooper, an Orange County, Calif., real-estate agent. "And it is usually not allowed at all if it is not documented on a W-2."
Read: click: Foreclosure limbo: What you should do
Unfortunately, many people receive the income from their second job in cash. Even if you deposit the cash in your bank account and declare the extra income on your W-2, lenders may not be willing to consider this income.
"Lenders are now requiring all bank deposits that are not direct-deposit payroll be verified," Cook says. "In our previous life, if the borrower's income supported deposits ... explanations weren't required. Because it's virtually impossible to verify cash deposits, loans are being denied."
3. Tighter income-verification standards
Lenders will now rigorously scrutinize any income that borrowers want to be considered in their ability to repay a loan. There are no stated-income or low-documentation loans for most borrowers anymore, which is bad news for self-employed borrowers.
But they aren't the only ones having trouble. Lenders' fears about cash deposits mean that people who work in an industry where being paid in cash is common, such as the restaurant business, might have trouble getting approved.
People who are expecting to have children should also proceed with caution, as a New York Times article pointed out.
Amy Tierce, a certified mortgage-planning specialist with Fairway Independent Mortgage in Needham, Mass., says that lenders are cautious because "often, babies are born and parents have a change of heart about working full time or working at all."
She says that borrowers on maternity leave will need to validate that they are on paid leave; borrowers not on paid leave can buy before the delivery while their income can be verified, buy when they are back at work or try to qualify on one partner's income.
Slide show: 17 secrets real-estate insiders wish you didn't know - if the link has expired search the web with the title
Tierce, who has been in the mortgage business for 20 years, explains, "Guidelines such as the one cited in The Times piece have been on the books forever." But in the past, buyers had more options to get around this guideline.
4. Greater scrutiny of credit reports
If you manage to get pre-approved, don't let your guard down. If you take any action that affects your credit score or any item on your credit report, you'll have to explain it to your lender.
Kevin C. Miller, the president and CEO of Dallas-based TexasLending.com, says, "Clients have to write letters for all inquiries on credit that may show up after they apply for a home loan, and the loan will now wait to close until the client can prove they have taken on no new debt due to the inquiry."
If you have to use a credit card at all, even for a tank of gas, you should pay off that amount immediately, Cook says.
5. Uninformed and/or inexperienced loan officers
Gone are the days when anyone who could fog a mirror could get approved. So if you want a mortgage, don't pick just any old loan officer. Find one with expertise. (Bing: Search for loan officers in the National Mortgage Licensing System and Registry)
Read: Mortgage shopping is getting safer
"The biggest issue for a consumer is to work with a good loan officer who really understands the realities of today's market, and who will know and prepare the borrower on what to expect," Tierce says. "A good originator will ensure that there are no surprises that will kill a transaction."
An easy way to get a sense of loan officers’ expertise is to ask them a few questions. Can they clearly articulate their responses, or do they seem to be talking in circles? Do their answers actually address your questions, or are they just talking? Are their explanations detailed or vague?
Asking a trusted family member, friend, co-worker or real-estate agent for a referral to a loan officer also remains a good way to find originators who know what they're doing.
Lending standards are so much tighter these days that even seemingly qualified borrowers are having trouble getting approved as banks try to avoid repeating mistakes. If it happens to you, don't be surprised and don't take it personally. By working with an experienced lender, being patient and perhaps making some changes to your financial situation, you can put yourself in a position to get approved.
Related content - Click green for further info:
5 new barriers to getting a mortgage
Date: June 2013
It's tougher to get approved, but knowing the obstacles will help you prepare to buy a home
STAF, Inc.'s opinion & warning:
Think seriously if you really want to have a mortgage. If you have a reasonable place to live now and have a reliable work place, it would be economically wiser to wait and save the money and buy all cash - all depending on your age now. Any loan costs money. A house mortgage 15-30 years can make you pay as interest much more than most people realize. Cash is king, cash will give you better deals, it will give you, your spouse & your family piece of mind.
You may be willing to take some training to learn to invest one part of your cash and see if you can learn to make money with your investments. If you do, your cash will grow faster. Be careful - all investments can be risky and you may lose money.
Click: Search for loan officers in the National Mortgage Licensing System and Registry
Are you having trouble getting approved for a mortgage? Ever since the housing bubble burst, lenders have been subjecting mortgage and refinance applicants to stricter criteria. Here are five reasons why people are finding it more difficult to get approved these days.
1. Lender paranoia
Mortgage lenders naturally want to avoid repeating mistakes, so it's not surprising that they would look more closely at applicants' financial situations. But changes in the secondary mortgage market have made them extra cautious.
Greg Cook, a licensed California real-estate broker and mortgage banker, says that it used to be easy for lenders to get their loans insured by the Federal Housing Administration or guaranteed by Fannie Mae or Freddie Mac ( Find an FHA lender). Only in the case of fraud would these organizations require lenders to repurchase a mortgage.
"Now, if FHA feels the lender didn't follow guidelines, (it) can refuse to insure and the lender has to pony up the cash to replace the funds on (its) warehouse line," Cook says. "Multiple buybacks can bankrupt a small lender."
What's your home worth?
With lenders facing greater responsibility for the loans they originate, they have no choice but to be extremely cautious in approving borrowers.
2. Restrictions on eligible income
Do you earn income from a second job? While this money might be significant to you, providing some real breathing room in your monthly budget and stability in your finances, lenders might not care.
"Income from a second job is generally not allowed, unless it has been derived from the same source for 12 months or within the same exact field for 24 months without any more than a 30-day interruption," says Wendy Hooper, an Orange County, Calif., real-estate agent. "And it is usually not allowed at all if it is not documented on a W-2."
Read: click: Foreclosure limbo: What you should do
Unfortunately, many people receive the income from their second job in cash. Even if you deposit the cash in your bank account and declare the extra income on your W-2, lenders may not be willing to consider this income.
"Lenders are now requiring all bank deposits that are not direct-deposit payroll be verified," Cook says. "In our previous life, if the borrower's income supported deposits ... explanations weren't required. Because it's virtually impossible to verify cash deposits, loans are being denied."
3. Tighter income-verification standards
Lenders will now rigorously scrutinize any income that borrowers want to be considered in their ability to repay a loan. There are no stated-income or low-documentation loans for most borrowers anymore, which is bad news for self-employed borrowers.
But they aren't the only ones having trouble. Lenders' fears about cash deposits mean that people who work in an industry where being paid in cash is common, such as the restaurant business, might have trouble getting approved.
People who are expecting to have children should also proceed with caution, as a New York Times article pointed out.
Amy Tierce, a certified mortgage-planning specialist with Fairway Independent Mortgage in Needham, Mass., says that lenders are cautious because "often, babies are born and parents have a change of heart about working full time or working at all."
She says that borrowers on maternity leave will need to validate that they are on paid leave; borrowers not on paid leave can buy before the delivery while their income can be verified, buy when they are back at work or try to qualify on one partner's income.
Slide show: 17 secrets real-estate insiders wish you didn't know - if the link has expired search the web with the title
Tierce, who has been in the mortgage business for 20 years, explains, "Guidelines such as the one cited in The Times piece have been on the books forever." But in the past, buyers had more options to get around this guideline.
4. Greater scrutiny of credit reports
If you manage to get pre-approved, don't let your guard down. If you take any action that affects your credit score or any item on your credit report, you'll have to explain it to your lender.
Kevin C. Miller, the president and CEO of Dallas-based TexasLending.com, says, "Clients have to write letters for all inquiries on credit that may show up after they apply for a home loan, and the loan will now wait to close until the client can prove they have taken on no new debt due to the inquiry."
- MSN Lifestyle: 12 ways to save money fast
If you have to use a credit card at all, even for a tank of gas, you should pay off that amount immediately, Cook says.
- On our blog, 'Listed': Soliders getting more mortgage help
5. Uninformed and/or inexperienced loan officers
Gone are the days when anyone who could fog a mirror could get approved. So if you want a mortgage, don't pick just any old loan officer. Find one with expertise. (Bing: Search for loan officers in the National Mortgage Licensing System and Registry)
Read: Mortgage shopping is getting safer
"The biggest issue for a consumer is to work with a good loan officer who really understands the realities of today's market, and who will know and prepare the borrower on what to expect," Tierce says. "A good originator will ensure that there are no surprises that will kill a transaction."
An easy way to get a sense of loan officers’ expertise is to ask them a few questions. Can they clearly articulate their responses, or do they seem to be talking in circles? Do their answers actually address your questions, or are they just talking? Are their explanations detailed or vague?
Asking a trusted family member, friend, co-worker or real-estate agent for a referral to a loan officer also remains a good way to find originators who know what they're doing.
- MSN Money: Is this the double dip?
Lending standards are so much tighter these days that even seemingly qualified borrowers are having trouble getting approved as banks try to avoid repeating mistakes. If it happens to you, don't be surprised and don't take it personally. By working with an experienced lender, being patient and perhaps making some changes to your financial situation, you can put yourself in a position to get approved.
Related content - Click green for further info:
- Pros and cons to refinancing
- Affording a home in 25 cities
- When 2 loans are cheaper than 1
- Mortgage 'musts' for home sellers
- No foreclosure for luxury owners
- Shop for the best mortgage rate ______________________________
Article 1 of 2 Article 2 is next below
Is Divorce Keeping You From Buying a Home?
Click: Search for loan officers in the National Mortgage Licensing System and Registry
Getting a mortgage is challenging enough — with strict underwriting requiring detailed explanations, sourcing of monies and debt ratios — but adding a divorce to the picture makes it even more technical for the divorced borrower.
The good news is despite most divorce situations, many can still successfully get a mortgage.
What to Plan For
By providing your mortgage company with the most accurate and true picture of your circumstances — starting with the loan application — you’re helping them to find the best way to structure your loan for a favorable credit decision.
The lender will also look at your divorce decree for any other undisclosed/non-credit report financial obligations such as child support, alimony/spousal support paid or received.
If: You receive income in the form of child support or alimony …
Then: This income can be used for qualifying for the mortgage, so long as there is a six-month history and the income is poised to continue for the next three years, determined by child support or an alimony agreement detailing the terms of the obligation for the party paying the debt.
If: You pay alimony or child support …
Then: This reduce yours borrowing ability as debts reduce income, and income is needed to offset a mortgage payment.
If: You are divorced even as long as 20 years ago …
Then: There is no statute of limitations on mortgage loan underwriting, so the full divorce decree will be required no matter how many years you have been divorced.
If: You own a house and are on a mortgage with an ex-spouse …
Then: As long as the divorce decree awards the other party with the home, and the other party is willing to provide supporting evidence that they make the mortgage payments on that home — by providing 12 months of bank statements and/or canceled checks — the total mortgage payment on that home can be omitted from the decision-making process on your new mortgage, which can improve your ability to qualify.
If: You and your ex make the mortgage payment from the same joint bank account and the divorce decree awarded the other party with the property …
Then: You are both 50-50 responsible because the money is “co-mingled” funds from the same place to pay the obligation. There is no way to support your position that one person is responsible for making the payment because it’s coming from a joint account.
If: The ex-spouse is responsible for making the mortgage that you are also on …
Then: Explore the possibility of having the ex-spouse refinance you off the mortgage obligation.
If: Your ex-spouse is refinancing you off a mortgage loan …
Then: A final closing statement called an HUD could be required by the lender you’re working with for procuring your loan to omit the payment from the other house.
If: You have a joint consumer credit such as credit cards, installment loans, auto loans or even student loans …
Then: Unless you can prove the other party is for responsible for the credit obligation (with 12 months of canceled checks or bank statements), those liabilities will be factored into your ability to qualify.
Tips If You’re Not Yet Divorced
It’s so important to create a marital settlement agreement prior to being divorced. This is a precursor to getting a divorce that could be a great asset in helping you qualify for home financing. Navigating the financial questions that inevitably come up during the separation or divorce can easily be taken care of by having a clear delineation in writing on whose property is whose.
Consumers planning a divorce in the future would also benefit by separating their finances. This means having separate bank accounts, and paying any obligations from these separate accounts. If you are trying to get a mortgage, or will be trying to get a mortgage, consider having a conversation with mortgage professional upfront, who can guide you through the complexities in the underwriting process during a divorce.
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Article 2 of 3 Article 1 next above
Getting a Divorce? Here’s How to Protect Your Credit
Note: A lender can’t discriminate against your application for credit if you are divorced
Source:
May 11, 2011 by Tom Quinn
Tom is Vice President of Scores at FICO (Fair Isaac), and has more than 25 years of experience in the credit industry with previous positions at FICO, Nomis Solutions, MDS (now known as Experian) and Citibank
Click green for further info
Click: Search for loan officers in the National Mortgage Licensing System and Registry
Going through a divorce is a painful experience on many levels. Adding to the stress are the many important decisions you need to make that will have both short- and long-term impacts. If you are planning to divorce or have finalized a divorce, decisions regarding personal finances—including your credit—are extremely important and need to be addressed with care and rational thought.
With most marriages, it is likely that you have merged most, if not all, of your finances and have joint credit. With credit, it is important to understand that you are contractually obligated to make the payments for any loan or line of credit you have—whether you’re the sole account-holder, or if you share it with your spouse.
[Article: A Subprime Pioneer’s Notes on the Financial Crisis She Predicted]
A divorce dissolves the marriage, but does not legally dissolve your shared credit obligations. I frequently get emails from people who are confused as they are getting calls from collectors about late payments on credit obligations that they “agreed” would be the responsibility of the ex-spouse. Or their spouse has substantially run up balances on credit cards before the divorce is finalized, and they are shocked to realize they are responsible for that debt.
You need to take proper actions and sever all credit ties with your ex-spouse, in fact you should start the process as soon as you feel separation is likely.
While the public record of a divorce is not considered by credit scores or by lenders when evaluating applications for credit, the outcome can have ramifications on your credit. Taking these steps if you are considering divorce (or have divorced) can help reduce potentially harmful effects on your credit rating.
If: You are divorced even as long as 20 years ago …
Then: There is no statute of limitations on mortgage loan underwriting, so the full divorce decree will be required no matter how many years you have been divorced.
Divorce decree = An official document issued by a court that dissolves a marriage relationship
See below Article 3 of 3 "Divorce Decree"
Source:
May 11, 2011 by Tom Quinn
Tom is Vice President of Scores at FICO (Fair Isaac), and has more than 25 years of experience in the credit industry with previous positions at FICO, Nomis Solutions, MDS (now known as Experian) and Citibank
_______________________________________
Article 3 of 4 Article 2 next above
Divorce Decree
A court decree that terminates a marriage; also known as marital dissolution
A divorce decree establishes the new relations between the parties, including their duties and obligations relating to property that they own, support responsibilities of either or both of them, and provisions for any children.
When a marriage breaks up, divorce law provides legal solutions for issues that the Husband and Wife are unable to resolve through mutual cooperation. Historically, the most important question in a divorce case was whether the court should grant a divorce. When a divorce was granted, the resolution of continuing obligations was simple: The wife was awarded custody of any children, and the husband was required to support the wife and children.
Modern divorce laws have inverted the involvement of courts. The issue of whether a divorce should be granted is now generally decided by one or both of the spouses. Contemporary courts are more involved in determining the legal ramifications of the marriage breakup, such as spousal maintenance, Child Support, and Child Custody. Other legal issues relating to divorce include court jurisdiction, antenuptial and postnuptial agreements, and the right to obtain a divorce. State laws govern a wide range of divorce issues, but district, county, and family courts are given broad discretion in fixing legal obligations between the parties.
In early civilizations, marriage and marriage dissolution were considered private matters. Marriage and divorce were first placed under comprehensive state regulation in Rome during the reign of Augustus (27 b.c.–a.d. 14). As Christianity spread, governments came under religious control, and the Roman Catholic Church strictly forbade divorce. The only exception to this ban was if one of the parties had not converted to Christianity before the marriage.
During the 1500s, the Protestant Reformation movement in Europe rejected religious control over marriage and helped to move the matter of divorce from the church to the state. European courts granted divorces upon a showing of fault, such as Adultery, cruelty, or desertion.
England struggled with the matter of divorce. From 1669 to 1850, only 229 divorces were granted in that country. Marriage and divorce were controlled by the Anglican Church, which, like the Roman Catholic Church, strictly forbade divorce. The Anglican Church allowed separations, but neither spouse was allowed to remarry while the other was still living.
The law of divorce in the American colonies varied according to the religious and social mores of the founding colonists. England insisted that its American colonies refrain from enacting legislation that contradicted the restrictive English laws, and a colonial divorce was not considered final until it had been approved by the English monarch. Despite these deterrents, a few northern colonies adopted laws allowing divorce in the 1650s.
Divorce law in the middle and northern colonies was often curious. Under one late-seventeenth-century Pennsylvania law, divorce seemed a mere afterthought: If a married man committed Sodomy or bestiality, his punishment was castration, and "the injured wife shall have a divorce if required." In Connecticut, divorce was allowed on the grounds of adultery, desertion, and the husband's failure in his conjugal duties. In the Massachusetts Bay Colony, a woman was allowed to divorce her husband if the husband had committed adultery and another offense. A man could divorce if his wife committed adultery or the "cruel usage of the husband."
After the Revolutionary War, divorce law in the United States continued to develop regionally. The U.S. Constitution was silent as to divorce, leaving the matter to the states for regulation. For the next 150 years, state legislatures passed and maintained laws that granted divorce only upon a showing of fault on the part of a spouse. If a divorce were contested, the divorcing spouse would be required to establish, before a court, specific grounds for the action. If the court felt that the divorcing spouse had not proved the grounds alleged, it would be free to deny the petition for divorce.
The most common traditional grounds for divorce were cruelty, desertion, and adultery. Other grounds included nonsupport or neglect, alcoholism, drug addiction, insanity, criminal conviction, and voluntary separation. Fault-based divorce laws proliferated, but not without protest. In 1901, author James Bryce was moved to remark that U.S. divorce laws were "the largest and the strangest, and perhaps the saddest, body of legislative experiments in the sphere of Family Law which free, self-governing communities have ever tried."
In 1933, New Mexico became the first state to allow divorce on the ground of incompatibility. This new ground reduced the need for divorcing spouses to show fault. In 1969, California became the first state to completely revise its divorce laws. The California Family Law Act of 1969 provided, in part, that only one of two grounds was necessary to obtain a divorce: irreconcilable differences that have caused the irremediable breakdown of the marriage, or incurable insanity (Cal. Civ. Code § D. 4, pt. 5 [West], repealed by Stat. 1992, ch. 162 [A.B. 2650], § 3 [operative Jan. 1, 1994]). In divorce proceedings, testimony or other evidence of specific acts of misconduct were excluded. The one exception to this rule was where the court was required to award child custody. In such a case, serious misconduct on the part of one parent would be relevant.
California's was the first comprehensive "no-fault" divorce law, and it inspired a nationwide debate over divorce reform. Supporters of no-fault divorce noted that there were numerous problems with fault-based divorce. Fault-based divorce was an odious event that destroyed friendships. It also encouraged spouses to fabricate one of the grounds for divorce required under statute. No-fault divorce, conversely, recognized that a marriage breakdown might not be the result of one spouse's misconduct. No-fault divorce laws avoided much of the acrimony that plagued fault-based divorce laws. They also simplified the divorce process and made it more consistent nationwide, thus obviating the need for desperate couples to cross state lines in search of simpler divorce laws.
In 1970, the Commissioners on Uniform State Laws prepared a Uniform Marriage and Divorce Act, which provides for no-fault divorce if a court finds that the marriage is "irretrievably broken" (U.L.A., Uniform Marriage and Divorce Act §§ 101 et seq.). Such a finding requires little more than the desire of one spouse to end the marriage. Many state legislatures adopted the law, and by the end of the 1970s, nearly every state legislature had enacted laws allowing no-fault divorce, or divorce after a specified period of separation. Some states replaced all traditional grounds with a single no-fault provision. Other states added the ground of irreconcilable differences to existing statutes. In such states, a divorce petitioner remains free to file for divorce under traditional grounds.
Most states allow the filing of a divorce petition at any time, unless the petitioner has not been a resident of the state for a specified period of time. Some states require a waiting period for their residents. The waiting period can range from six weeks to two or three years.
Illinois and South Dakota maintain the strictest divorce laws. In Illinois, a marriage may be dissolved without regard to fault where three conditions exist: the parties have lived apart for a continuous period of two years; irreconcilable differences have caused the irretrievable breakdown of the marriage; and efforts at reconciliation would be impracticable and not in the best interests of the family (Ill. Rev. Stat. ch. 750 I.L.C.S. § 5/401(a)(2)). In South Dakota, irreconcilable differences are a valid ground for divorce, which suggests some measure of fault blindness (S.D. Codified Laws Ann. § 25:4-2). However, irreconcilable differences exist only when the court determines that there are "substantial reasons for not continuing the marriage and which make it appear that the marriage should be dissolved" (§ 25:4-17.1).
In Minnesota, the statute covering dissolution of marriage reads like a primer on no-fault divorce. Minnesota Statutes Annotated, Section 518.05, defines dissolution as "the termination of the marital relationship between a husband and wife" and concludes that a divorce "shall be granted by a county or district court when the court finds there has been an irretrievable breakdown of the marriage relationship." "Irretrievable breakdown" is left undefined in the statute. In Texas, the no-fault statute is titled "Insupportability." This law provides that on petition by either party, "a divorce may be decreed without regard to fault if the marriage has become insupportable because of discord or conflict of personalities" that destroys the purpose of marriage and renders reconciliation improbable (Tex. Fam. Code Ann. § 3.01 [West]).
No-fault is not without its detractors. Some critics argue that strict, no-fault divorce can provide a cover for serious marital misconduct. By refusing to examine the marital conduct of parties in setting future obligations, some states prevent spouses, usually impoverished wives, from exposing and receiving redress for tortious or criminal conduct. In response to this problem, the vast majority of states have abolished statutes that prevent one spouse from suing the other. However, tort claims for marital misconduct are often treated with suspicion, and juries are seldom eager to settle marital discord. A marital tort claim is also subject to business judgment: If the case does not appear cost-effective, an attorney might be reluctant to accept it.
Fault has survived in some aspects of divorce proceedings. It was once relevant to a decree of divorce and irrelevant to such matters as child custody and property divisions. Under current trends, marital misconduct is irrelevant to the divorce itself, but it may be relevant to related matters such as child custody, child support and Visitation Rights, spousal maintenance, and property distribution.
A recent movement in a small number of states has sought to reintroduce fault as an element in divorce proceedings. In 1997, Louisiana approved a Covenant Marriage law that is designed to provide an alternative to the traditional method for obtaining a marriage license. La. Rev. Stat. Ann. §§ 9:272-75, 9:307-09 (West Supp. 2003). Under the covenant marriage law, couples who wish to obtain a marriage license must first enter pre-marriage counseling, and then must provide an Affidavit from a marriage counselor stating that they have completed this counseling. Once the couple is married, the covenant marriage does not differ from a traditional marriage until the potential dissolution of the marriage. Before partners to a covenant marriage may divorce, they must complete pre-divorce counseling and must provide an affidavit stating that the counseling has taken place. The statute is designed to make it more difficult to obtain a so-called "quickie" divorce.
The introduction of covenant marriage as an alternative to the traditional marriage agreement comes in the wake of several studies regarding the implications of divorce on children. Studies have shown that the economic standard of living for divorced women and children of a marriage decrease significantly after the divorce, while the standard of living for men increases. Likewise, other studies have shown that children of divorced parents are less likely to marry, have less education, and are more likely to abuse drugs and alcohol later in life.
In response to these and similar statistics, legislatures considered several means by which they could curb the climbing rate of divorce. Highly restrictive provisions on divorce, including the elimination of no-fault divorce, failed to pass any state legislature. Louisiana's covenant marriage law represents a compromise in that it leaves the decision to enter into such a marriage up to the couples. Several states in 1997 and 1998 considered enacting similar laws, but only Arizona and Arkansas have done so.
Covenant marriage laws also do not appear popular with couples in the three states that have adopted such laws. According to an article in the New York Times, only three percent of couples in Louisiana and Arizona have chosen to pursue this type of marital agreement, and studies show that tougher divorce laws have failed to gain popularity in those states. Moreover, several commentators have noted that the divorce rate in Louisiana and Arizona is not likely to decrease even with these laws in place.
Other states that have not enacted covenant marriage laws have considered other methods to discourage divorce. Several states have included provisions that encourage couples to seek pre-marital counseling before entering into the marriage. Unlike the covenant marriage laws, these provisions do not mandate such counseling, and they leave the decision to pursue counseling to the individual couples. The various statutes provide a number of incentives for seeking counseling, including, for example, reduction in the cost for a marriage license upon completion of counseling.
Historically, custody of the children of divorcing parents was awarded to the mother. Today, courts exercise their discretion in awarding custody, considering all relevant factors, including marital misconduct, to determine the children's best interests. Many parents are able to reach settlements on custody and visitation through mediation. Joint custody is a popular option among conciliatory spouses. Child custody is, however, a frequent battleground for less-than-conciliatory spouses.
In determining child-support obligations, courts generally hold that each parent should contribute in accordance with his or her means. Child support is a mutual duty. However, for pre-school children, the primary caretaker may not be obligated to obtain employment; in such cases, caretaking may be regarded as being in lieu of financial contribution.
All states have enacted some form of the Reciprocal Enforcement of Support Act, a uniform law designed to facilitate the interstate enforcement of support obligations by spouses and parents (U.L.A., Uniform Interstate Family Support Act of 1992). Such statutes prevent a nonsupporting spouse or parent from escaping obligations by moving to a different state. State laws also make nonsupport of a spouse or child a criminal offense, and uniform laws now give states the power to detain and surrender individuals who are wanted for criminal nonsupport in another state.
Property distribution is frequently contested in modern divorce proceedings. Commonly disputed property includes real estate, Personal Property, cash savings, stocks, bonds, savings
plans, and retirement benefits. The statutes that govern property division vary by state, but they generally can be grouped into two types: equitable distribution and Community Property. Most states follow the equitable-distribution method. Generally, this method provides that courts divide a divorcing couple's assets in a fair and equitable manner, given the particular circumstances of the case.
Some equitable-distribution states look to the conduct of the parties and permit findings of marital fault to affect property distribution. New Hampshire, Rhode Island, South Carolina, and Vermont have statutes that explicitly include both economic and marital misconduct as factors in the disposition of property. Connecticut, Florida, Maryland, Massachusetts, Missouri, Virginia, and Wyoming all consider marital conduct in property distribution. In Florida and Virginia, only fault relating to economic Welfare is relevant in property distribution. Alaska, Kentucky, Minnesota, Montana, and Wisconsin expressly exclude marital misconduct from consideration in the disposition of marital property.
Equitable-distribution states generally give the court considerable discretion as to the division of property between the parties. The courts consider not only the joint assets held by the parties, but also separate assets that the parties either brought with them into the marriage or that they inherited or received as gifts during the marriage. Generally, if the separate property is kept separate during the marriage, and not commingled with joint assets like a joint bank account, then the court will recognize that it belongs separately to the individual spouse, and they will not divide it along with the marital assets. A minority of states, however, support the idea that all separate property of the parties becomes joint marital property upon marriage.
As for the division of marital assets, equitable-distribution states look to the monetary and nonmonetary contributions that each spouse made to the marriage. If one party made a greater contribution, the court may grant that party a greater share of the joint assets. Some states do not consider a professional degree earned by one spouse during the marriage to be a joint asset, but do acknowledge any financial support contributed by the other spouse, and they let that be reflected in the property distribution. Other states do consider a professional degree or license to be a joint marital asset and have devised various ways to distribute it or its benefits.
States that follow community-property laws provide that nearly all of the property that has been acquired during the marriage belongs to the marital "community," such that the husband and wife each have a one-half interest in it upon death or divorce. It is presumed that all property that has been acquired during the marriage by either spouse, including earned income, belongs to the community unless proved otherwise. Exceptions are made for property received as a gift or through inheritance, and for the property that each party brought into the marriage. Those types of property are considered separate and not part of the community. Upon divorce, each party keeps his or her own separate property, as well as half of the community property. True community property systems exist in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington. Other states, such as Wisconsin, have adopted variations of the community-property laws.
Alimony, or spousal maintenance, is the financial support that one spouse provides to the other after divorce. It is separate from, and in addition to, the division of marital property. It can be either temporary or permanent. Its use originally arose from the common-law right of a wife to receive support from her husband. Under contemporary law, men and women are eligible for spousal maintenance. Factors that are relevant to an order of maintenance include the age and marketable skills of the intended recipient, the length of the marriage, and the income of both spouses.
Maintenance is most often used to provide temporary support to a spouse who was financially dependent on the other during the marriage. Temporary maintenance is designed to provide the necessary support for a spouse until he or she either remarries or becomes self-supporting. Many states allow courts to consider marital fault in determining whether, and how much, maintenance should be granted. These states include Connecticut, Georgia, Hawaii, Iowa, Kansas, Kentucky, Maine, Massachusetts, Missouri, Nebraska, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Virginia, West Virginia, and Wisconsin.
Like the entire body of divorce law, the issue of maintenance differs from state to state. If a spouse is found to have caused the breakup of the marriage, Georgia, North Carolina, Virginia, and West Virginia allow a court to refuse maintenance, even if that spouse was financially dependent on the other. North Carolina requires a showing of the supporting spouse's fault before awarding maintenance. Illinois allows fault grounds for divorce but excludes consideration of fault in maintenance and property settlements. Florida offers only no-fault grounds for divorce but admits evidence of adultery in maintenance determinations.
An antenuptial agreement, or Premarital Agreement, is a contract between persons who plan to marry, concerning property rights upon divorce. A postnuptial agreement is a contract entered into by divorcing parties before they reach court. Traditionally, antenuptial agreements were discouraged by state legislatures and courts as being contrary to the public policy in favor of lifetime marriage. An antenuptial agreement is made under the assumption that the marriage may not last forever, which suggests that it facilitates divorce. No state expressly prohibits antenuptial agreements, but, as in any contract case, courts reserve the right to void any that it finds Unconscionable or to have been made under duress.
State statutes that authorize antenuptial and postnuptial agreements usually require that the parties fulfill certain conditions. In Delaware, for example, a man and a woman may execute an antenuptial agreement in the presence of two witnesses at least ten days before their marriage. Such an agreement, if notarized, may be filed as a deed with the office of the recorder in any county of the state (Del. Code Ann. tit. 13, § 301). Both antenuptial and postnuptial contracts concerning real estate must be recorded in the registry of deeds where the land is situated (§ 302).
Jurisdiction over a divorce case is usually determined by residency. That is, a divorcing spouse is required to bring the divorce action in the state where he or she maintains a permanent home. States are obligated to acknowledge a divorce that was obtained in another state. This rule derives from the Full Faith and Credit Clause of the U.S. Constitution (art. IV, § 1), which requires states to recognize the valid laws and court orders of other states. However, if the divorce was originally granted by a court with no jurisdictional authority, a state is free to disregard it.
In a divorce proceeding where one spouse is not present (an ex parte proceeding), the divorce is given full recognition if the spouse received proper notice and the original divorce forum was the bona fide domicile of the divorcing spouse. However, a second state may reject the divorce decree if it finds that the divorce forum was improper.
State courts are not constitutionally required to recognize divorce judgments granted in foreign countries. A U.S. citizen who leaves the country to evade divorce laws will not be protected if the foreign divorce is subsequently challenged. However, where the foreign divorce court had valid jurisdiction over both parties, most U.S. courts will recognize the foreign court's decree.
The only way that an individual may obtain a divorce is through the state. Therefore, under the due process clause of the Fourteenth Amendment to the U.S. Constitution, a state must make divorce available to everyone. If a party seeking divorce cannot afford the court expenses, filing fees, and costs associated with the serving or publication of legal papers, the party may file for divorce free of charge. Most states offer mediation as an alternative to court appearance. Mediation is less expensive and less adversarial than appearing in public court.
In January 1994, the American Bar Association Standing Committee on the Delivery of Legal Services published a report entitled Responding to the Needs of the Self-Represented Divorce Litigant. The committee recognized that a growing number of persons are divorcing pro se, or without the benefit of an attorney. Some of these persons are pro se litigants by choice, but many want the assistance of an attorney and are unable to afford one. In response to this trend, the committee offered several ideas to the state bar associations and state legislatures, including the formation of simplified divorce pleadings and the passage of plainly worded statutes. The committee also endorsed the creation of courthouse day care for children of divorcing spouses, night-court divorce sessions, and workshop clinics that give instruction to pro se divorce litigants. Many such programs are currently operating at district, county, and family courts around the United States.
In the United States, divorce law consists of 51 different sets of conditions—one for each state and the District of Columbia. Each state holds dear its power to regulate domestic relations, and peculiar divorce laws abound. Nevertheless, divorce law in most states has evolved to recognize the difference between regulating the actual decision to divorce and regulating the practical ramifications of such a decision, such as property distribution, support obligations, and child custody. Most courts ignore marital fault in determining whether to grant a divorce, but many still consider it in setting future obligations between the parties. To determine the exact nature of the rights and duties relating to a divorce, one must consult the relevant statutes for the state in which the divorce is filed.
Further readings
American Bar Association Standing Committee on the Delivery of Legal Services. 1994. "Responding to the Needs of the Self-Represented Divorce Litigant." Chicago: American Bar Association.
Boumil, Marcia M., et al. 1994. Law and Gender Bias. Littleton, Colo.: Rothman.
Mather, Lynn. 2003. "Changing Patterns of Legal Representation in Divorce: From Lawyers to Pro Se." Journal of Law and Society 30 (March).
Phillips, Roderick. 1991. Untying the Knot. Cambridge, England: Cambridge Univ. Press.
Wadlington, Walter. 1990. Domestic Relations: Cases and Materials. 2d ed. Westbury, N.Y.: Foundation Press.
Warle, Lynn D. 1994. "Divorce Violence and the No-Fault Divorce Culture." Utah Law Review (spring).
Woodhouse, Barbara Bennet. 1994. "Sex, Lies, and Dissipation: The Discourse of Fault in a No-Fault Era."Georgetown Law Journal 82.
Cross-references Annulment; Family Law; Premarital Agreement.
Source: www.thefreedictionary.com/Divorce+Decree
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To obtain a copy of any of a divorce decree in the United States,
write or go to the vital statistics office in the state or area where the event occurred. To ensure that you receive an accurate record for your request and that your request is filled with all due speed, please follow these steps:
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Important info for mortgage handling
How Interest Rates Affect
The Mortgages & The Housing Market
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Mortgages come in two primary forms, fixed rate and adjustable rate, with some hybrid combinations and multiple derivatives of each. A basic understanding of interest rates and the economic influences that determine the future course of interest rates can help consumers make financially sound mortgage decisions, such as making the choice between a fixed-rate mortgage or adjustable-rate mortgage (ARM) or deciding whether to refinance out of an adjustable-rate mortgage.
In this article, we'll discuss the influence of interest rates on the mortgage industry, and how both will ultimately affect the amount you pay for your home.
The Mortgage Production Line
The mortgage industry has three primary parts or businesses: the mortgage originator, the aggregator and the investor.
The mortgage originator is the lender. Lenders come in several forms, from credit unions and banks to mortgage brokers. Mortgage originators introduce and market loans to consumers. They sell loans. They compete with each other based on the interest rates, fees and service levels that they offer to consumers. The interest rates and fees they charge consumers determine their profit margins. Most mortgage originators do not portfolio loans (they do not retain the loan asset). Instead, they sell the mortgage into the secondary mortgage market. The interest rates that they charge consumers are determined by their profit margins and the price at which they can sell the mortgage into the secondary mortgage market.
The aggregator buys newly originated mortgages from other institutions. They are part of the secondary mortgage market. Most aggregators are also mortgage originators. Aggregators pool many similar mortgages together to form mortgage-backed securities (MBS) - a process known as securitization. A mortgage-backed security is a bond backed by an underlying pool of mortgages. Mortgage-backed securities are sold to investors. The price at which mortgage-backed securities can be sold to investors determines the price that aggregators will pay for newly originated mortgages from other lenders and the interest rates that they offer to consumers for their own mortgage originations.
There are many investors in mortgage-backed securities: pension funds, mutual funds, banks, hedge funds, foreign governments, insurance companies, and Freddie Mac and Fannie Mae (government-sponsored enterprises). Since investors try to maximize returns, they frequently run relative value analyses between mortgage-backed securities and other fixed income investments such as corporate bonds. As with all financial securities, investor demand for mortgage-backed securities determines the price they will pay for these securities.
Do Investors Determine Mortgage Rates?
To a large degree, mortgage-backed security investors determine mortgage rates offered to consumers. As explained above, the mortgage production line ends in the form of a mortgage-backed security purchased by an investor. The free market determines the market clearing prices investors will pay for mortgage-backed securities. These prices feed back through the mortgage industry to determine the interest rates offered to consumers.
Fixed Interest Rate Mortgages
The interest rate on a fixed-rate mortgage is fixed for the life of the mortgage. However, on average, 30-year fixed-rate mortgages have a lifespan of only about seven years. This is because homeowners frequently move or will refinance their mortgages.
Mortgage-backed security prices are highly correlated with the prices of U.S. Treasury bonds. This means the price of a mortgage-backed security backed by 30-year mortgages will move with the price of the U.S. Treasury five-year note or the U.S. Treasury 10-year bond based on a financial principal known as duration. In practice, a 30-year mortgage's duration is closer to the five-year note, but the market tends to use the 10-year bond as a benchmark. This also means that theinterest rate on 30-year fixed-rate mortgages offered to consumers should move up or down with the yield of the U.S. Treasury 10-year bond. A bond's yield is a function of its coupon rate and price.
Economic expectations determine the price and yield of U.S. Treasury bonds. A bond's worst enemy is inflation. Inflation erodes the value of future bond payments - both coupon payments and the repayment of principle. Therefore, when inflation is high, or expected to rise, bond prices fall, which means their yields rise - there is an inverse relationship between a bond's price and its yield.
The Fed's Role
The Federal Reserve plays a large role in inflation expectations. This is because the bond market's perception of how well the Federal Reserve is controlling inflation through the administration of short-term interest rates determines longer-term interest rates, such as the yield of the U.S. Treasury 10-year bond. In other words, the Federal Reserve sets current short-term interest rates, which the market interprets to determine long-term interest rates such as the yield on the U.S. Treasury 10-year bond.
Remember, the interest rates on 30-year mortgages are highly correlated with the yield of the U.S. Treasury 10-year bond. If you're trying to forecast what 30-year fixed-rate mortgage interest rates will do in the future, watch and understand the yield on the U.S. Treasury 10-year bond (or the five-year note), and follow what the market is saying about Federal Reserve monetary policy.
Adjustable-Rate Mortgages
The interest rate on an adjustable rate mortgage might change monthly, every six months or annually, depending on the terms of the mortgage. The interest rate consists of an index value plus a margin. This is known as the fully indexed interest rate. It is usually rounded to one-eighth of a percentage point. The index value is variable, while the margin is fixed for the life of the mortgage. For example, if the current index value is 6.83% and the margin is 3%, rounding to the nearest eighth of a percentage point would make the fully indexed interest rate 9.83%. If the index dropped to 6.1%, the fully indexed interest rate would be 9.1%.
The interest rate on an adjustable-rate mortgage is tied to an index. There are several differentmortgage indexes used for different adjustable-rate mortgages, each of which is constructed using the interest rates on either a type of actively traded financial security, a type of bank loan or a type of bank deposit. All of the different mortgage indexes are broadly correlated with each other. In other words, they move in the same direction, up or down, as economic conditions change. Most mortgage indexes are considered short-term indexes. "Short-term" or "term" refers to the term of the securities, loans or deposits used to construct the index. Typically, any security, loan or deposit that has a term of one year or less is considered short term.
Most short-term interest rates, including those used to construct mortgage indexes, are closely correlated with an interest rate known as the Federal Funds Rate.
Forecasting Changes
If you're trying to forecast interest rate changes on adjustable rate mortgages, look at the shape of the yield curve. The yield curve represents the yields on U.S. Treasury bonds with maturities from three months to 30 years. When the shape of the curve is flat or downward sloping, it means that the market expects the Federal Reserve to keep short-term interest rates steady or move them lower. When the shape of the curve is upward sloping, the market expects the Federal Reserve to move short-term interest rates higher. The steepness of the curve in either direction is an indication of by how much the market expects the Federal Reserve to raise or lower short-term interest rates. The price of Fed Funds futures is also an indication of market expectations for future short-term interest rates.
Concluding Tips
An understanding of what influences current and future fixed- and adjustable-rate mortgage rates can help you make financially sound mortgage decisions. This knowledge can help you make a decision about choosing an adjustable-rate mortgage over a fixed-rate mortgage and can help you decide when it makes sense to refinance out of an adjustable rate mortgage. Below are a few final tips.
Don't believe everything you hear on TV. It's not always "a good time to refinance out of your adjustable-rate mortgage before the interest rate rises further." Interest rates might rise further moving forward. Find out what the yield curve is saying.
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Is Divorce Keeping You From Buying a Home?
- Note: A lender can’t discriminate against your application for credit if you are divorced
Click: Search for loan officers in the National Mortgage Licensing System and Registry
Getting a mortgage is challenging enough — with strict underwriting requiring detailed explanations, sourcing of monies and debt ratios — but adding a divorce to the picture makes it even more technical for the divorced borrower.
The good news is despite most divorce situations, many can still successfully get a mortgage.
What to Plan For
By providing your mortgage company with the most accurate and true picture of your circumstances — starting with the loan application — you’re helping them to find the best way to structure your loan for a favorable credit decision.
The lender will also look at your divorce decree for any other undisclosed/non-credit report financial obligations such as child support, alimony/spousal support paid or received.
If: You receive income in the form of child support or alimony …
Then: This income can be used for qualifying for the mortgage, so long as there is a six-month history and the income is poised to continue for the next three years, determined by child support or an alimony agreement detailing the terms of the obligation for the party paying the debt.
If: You pay alimony or child support …
Then: This reduce yours borrowing ability as debts reduce income, and income is needed to offset a mortgage payment.
If: You are divorced even as long as 20 years ago …
Then: There is no statute of limitations on mortgage loan underwriting, so the full divorce decree will be required no matter how many years you have been divorced.
If: You own a house and are on a mortgage with an ex-spouse …
Then: As long as the divorce decree awards the other party with the home, and the other party is willing to provide supporting evidence that they make the mortgage payments on that home — by providing 12 months of bank statements and/or canceled checks — the total mortgage payment on that home can be omitted from the decision-making process on your new mortgage, which can improve your ability to qualify.
If: You and your ex make the mortgage payment from the same joint bank account and the divorce decree awarded the other party with the property …
Then: You are both 50-50 responsible because the money is “co-mingled” funds from the same place to pay the obligation. There is no way to support your position that one person is responsible for making the payment because it’s coming from a joint account.
If: The ex-spouse is responsible for making the mortgage that you are also on …
Then: Explore the possibility of having the ex-spouse refinance you off the mortgage obligation.
If: Your ex-spouse is refinancing you off a mortgage loan …
Then: A final closing statement called an HUD could be required by the lender you’re working with for procuring your loan to omit the payment from the other house.
If: You have a joint consumer credit such as credit cards, installment loans, auto loans or even student loans …
Then: Unless you can prove the other party is for responsible for the credit obligation (with 12 months of canceled checks or bank statements), those liabilities will be factored into your ability to qualify.
Tips If You’re Not Yet Divorced
It’s so important to create a marital settlement agreement prior to being divorced. This is a precursor to getting a divorce that could be a great asset in helping you qualify for home financing. Navigating the financial questions that inevitably come up during the separation or divorce can easily be taken care of by having a clear delineation in writing on whose property is whose.
Consumers planning a divorce in the future would also benefit by separating their finances. This means having separate bank accounts, and paying any obligations from these separate accounts. If you are trying to get a mortgage, or will be trying to get a mortgage, consider having a conversation with mortgage professional upfront, who can guide you through the complexities in the underwriting process during a divorce.
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- The Biggest Mortgage Mistake You Can Make
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- Getting a Divorce? Here's How to Protect Your Credit
Article 2 of 3 Article 1 next above
Getting a Divorce? Here’s How to Protect Your Credit
Note: A lender can’t discriminate against your application for credit if you are divorced
Source:
May 11, 2011 by Tom Quinn
Tom is Vice President of Scores at FICO (Fair Isaac), and has more than 25 years of experience in the credit industry with previous positions at FICO, Nomis Solutions, MDS (now known as Experian) and Citibank
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Click: Search for loan officers in the National Mortgage Licensing System and Registry
Going through a divorce is a painful experience on many levels. Adding to the stress are the many important decisions you need to make that will have both short- and long-term impacts. If you are planning to divorce or have finalized a divorce, decisions regarding personal finances—including your credit—are extremely important and need to be addressed with care and rational thought.
With most marriages, it is likely that you have merged most, if not all, of your finances and have joint credit. With credit, it is important to understand that you are contractually obligated to make the payments for any loan or line of credit you have—whether you’re the sole account-holder, or if you share it with your spouse.
[Article: A Subprime Pioneer’s Notes on the Financial Crisis She Predicted]
A divorce dissolves the marriage, but does not legally dissolve your shared credit obligations. I frequently get emails from people who are confused as they are getting calls from collectors about late payments on credit obligations that they “agreed” would be the responsibility of the ex-spouse. Or their spouse has substantially run up balances on credit cards before the divorce is finalized, and they are shocked to realize they are responsible for that debt.
You need to take proper actions and sever all credit ties with your ex-spouse, in fact you should start the process as soon as you feel separation is likely.
- Check your credit report — Understand which credit accounts you are jointly responsible for with your spouse (mortgage, car loans, credit cards, etc.). Note, your credit report is based on your individual information (even if you are married) and will show credit obligations that are joint as well as individual to you and not your spouse. A student loan or a credit card you applied for individually for example, or credit you obtained before you married.
- Dissolve All Joint Accounts – If possible, you should pay off any existing balances and close the accounts. Check your credit report thereafter to make sure this has been completed and is being reported accurately. If that is not feasible, you should contact each lender and request that they change the credit contract so that only you or your ex-spouse is made responsible for the debt. Should the lender not agree to do so (for example, they determine that neither you or your ex-spouse qualifies to repay the debt alone), then be sure you or your ex-spouse continue to make the payments on any open, joint accounts. Failing to do so will likely hurt both of your credit histories because the late payments will show up in both credit reports.
- Establish Credit in Your Name – If you find that all your credit is joint with your spouse, it may be prudent to apply for credit (a credit card for example) individually before you dissolve all your joint accounts. Generally speaking, your likelihood of getting approved will be greater if you have existing credit where you are showing a good payment history.
- Note: A lender can’t discriminate against your application for credit if you are divorced.
- Document Everything — Make sure that all of your financial arrangements and agreements are documented.
While the public record of a divorce is not considered by credit scores or by lenders when evaluating applications for credit, the outcome can have ramifications on your credit. Taking these steps if you are considering divorce (or have divorced) can help reduce potentially harmful effects on your credit rating.
If: You are divorced even as long as 20 years ago …
Then: There is no statute of limitations on mortgage loan underwriting, so the full divorce decree will be required no matter how many years you have been divorced.
Divorce decree = An official document issued by a court that dissolves a marriage relationship
See below Article 3 of 3 "Divorce Decree"
Source:
May 11, 2011 by Tom Quinn
Tom is Vice President of Scores at FICO (Fair Isaac), and has more than 25 years of experience in the credit industry with previous positions at FICO, Nomis Solutions, MDS (now known as Experian) and Citibank
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Article 3 of 4 Article 2 next above
Divorce Decree
A court decree that terminates a marriage; also known as marital dissolution
A divorce decree establishes the new relations between the parties, including their duties and obligations relating to property that they own, support responsibilities of either or both of them, and provisions for any children.
When a marriage breaks up, divorce law provides legal solutions for issues that the Husband and Wife are unable to resolve through mutual cooperation. Historically, the most important question in a divorce case was whether the court should grant a divorce. When a divorce was granted, the resolution of continuing obligations was simple: The wife was awarded custody of any children, and the husband was required to support the wife and children.
Modern divorce laws have inverted the involvement of courts. The issue of whether a divorce should be granted is now generally decided by one or both of the spouses. Contemporary courts are more involved in determining the legal ramifications of the marriage breakup, such as spousal maintenance, Child Support, and Child Custody. Other legal issues relating to divorce include court jurisdiction, antenuptial and postnuptial agreements, and the right to obtain a divorce. State laws govern a wide range of divorce issues, but district, county, and family courts are given broad discretion in fixing legal obligations between the parties.
In early civilizations, marriage and marriage dissolution were considered private matters. Marriage and divorce were first placed under comprehensive state regulation in Rome during the reign of Augustus (27 b.c.–a.d. 14). As Christianity spread, governments came under religious control, and the Roman Catholic Church strictly forbade divorce. The only exception to this ban was if one of the parties had not converted to Christianity before the marriage.
During the 1500s, the Protestant Reformation movement in Europe rejected religious control over marriage and helped to move the matter of divorce from the church to the state. European courts granted divorces upon a showing of fault, such as Adultery, cruelty, or desertion.
England struggled with the matter of divorce. From 1669 to 1850, only 229 divorces were granted in that country. Marriage and divorce were controlled by the Anglican Church, which, like the Roman Catholic Church, strictly forbade divorce. The Anglican Church allowed separations, but neither spouse was allowed to remarry while the other was still living.
The law of divorce in the American colonies varied according to the religious and social mores of the founding colonists. England insisted that its American colonies refrain from enacting legislation that contradicted the restrictive English laws, and a colonial divorce was not considered final until it had been approved by the English monarch. Despite these deterrents, a few northern colonies adopted laws allowing divorce in the 1650s.
Divorce law in the middle and northern colonies was often curious. Under one late-seventeenth-century Pennsylvania law, divorce seemed a mere afterthought: If a married man committed Sodomy or bestiality, his punishment was castration, and "the injured wife shall have a divorce if required." In Connecticut, divorce was allowed on the grounds of adultery, desertion, and the husband's failure in his conjugal duties. In the Massachusetts Bay Colony, a woman was allowed to divorce her husband if the husband had committed adultery and another offense. A man could divorce if his wife committed adultery or the "cruel usage of the husband."
After the Revolutionary War, divorce law in the United States continued to develop regionally. The U.S. Constitution was silent as to divorce, leaving the matter to the states for regulation. For the next 150 years, state legislatures passed and maintained laws that granted divorce only upon a showing of fault on the part of a spouse. If a divorce were contested, the divorcing spouse would be required to establish, before a court, specific grounds for the action. If the court felt that the divorcing spouse had not proved the grounds alleged, it would be free to deny the petition for divorce.
The most common traditional grounds for divorce were cruelty, desertion, and adultery. Other grounds included nonsupport or neglect, alcoholism, drug addiction, insanity, criminal conviction, and voluntary separation. Fault-based divorce laws proliferated, but not without protest. In 1901, author James Bryce was moved to remark that U.S. divorce laws were "the largest and the strangest, and perhaps the saddest, body of legislative experiments in the sphere of Family Law which free, self-governing communities have ever tried."
In 1933, New Mexico became the first state to allow divorce on the ground of incompatibility. This new ground reduced the need for divorcing spouses to show fault. In 1969, California became the first state to completely revise its divorce laws. The California Family Law Act of 1969 provided, in part, that only one of two grounds was necessary to obtain a divorce: irreconcilable differences that have caused the irremediable breakdown of the marriage, or incurable insanity (Cal. Civ. Code § D. 4, pt. 5 [West], repealed by Stat. 1992, ch. 162 [A.B. 2650], § 3 [operative Jan. 1, 1994]). In divorce proceedings, testimony or other evidence of specific acts of misconduct were excluded. The one exception to this rule was where the court was required to award child custody. In such a case, serious misconduct on the part of one parent would be relevant.
California's was the first comprehensive "no-fault" divorce law, and it inspired a nationwide debate over divorce reform. Supporters of no-fault divorce noted that there were numerous problems with fault-based divorce. Fault-based divorce was an odious event that destroyed friendships. It also encouraged spouses to fabricate one of the grounds for divorce required under statute. No-fault divorce, conversely, recognized that a marriage breakdown might not be the result of one spouse's misconduct. No-fault divorce laws avoided much of the acrimony that plagued fault-based divorce laws. They also simplified the divorce process and made it more consistent nationwide, thus obviating the need for desperate couples to cross state lines in search of simpler divorce laws.
In 1970, the Commissioners on Uniform State Laws prepared a Uniform Marriage and Divorce Act, which provides for no-fault divorce if a court finds that the marriage is "irretrievably broken" (U.L.A., Uniform Marriage and Divorce Act §§ 101 et seq.). Such a finding requires little more than the desire of one spouse to end the marriage. Many state legislatures adopted the law, and by the end of the 1970s, nearly every state legislature had enacted laws allowing no-fault divorce, or divorce after a specified period of separation. Some states replaced all traditional grounds with a single no-fault provision. Other states added the ground of irreconcilable differences to existing statutes. In such states, a divorce petitioner remains free to file for divorce under traditional grounds.
Most states allow the filing of a divorce petition at any time, unless the petitioner has not been a resident of the state for a specified period of time. Some states require a waiting period for their residents. The waiting period can range from six weeks to two or three years.
Illinois and South Dakota maintain the strictest divorce laws. In Illinois, a marriage may be dissolved without regard to fault where three conditions exist: the parties have lived apart for a continuous period of two years; irreconcilable differences have caused the irretrievable breakdown of the marriage; and efforts at reconciliation would be impracticable and not in the best interests of the family (Ill. Rev. Stat. ch. 750 I.L.C.S. § 5/401(a)(2)). In South Dakota, irreconcilable differences are a valid ground for divorce, which suggests some measure of fault blindness (S.D. Codified Laws Ann. § 25:4-2). However, irreconcilable differences exist only when the court determines that there are "substantial reasons for not continuing the marriage and which make it appear that the marriage should be dissolved" (§ 25:4-17.1).
In Minnesota, the statute covering dissolution of marriage reads like a primer on no-fault divorce. Minnesota Statutes Annotated, Section 518.05, defines dissolution as "the termination of the marital relationship between a husband and wife" and concludes that a divorce "shall be granted by a county or district court when the court finds there has been an irretrievable breakdown of the marriage relationship." "Irretrievable breakdown" is left undefined in the statute. In Texas, the no-fault statute is titled "Insupportability." This law provides that on petition by either party, "a divorce may be decreed without regard to fault if the marriage has become insupportable because of discord or conflict of personalities" that destroys the purpose of marriage and renders reconciliation improbable (Tex. Fam. Code Ann. § 3.01 [West]).
No-fault is not without its detractors. Some critics argue that strict, no-fault divorce can provide a cover for serious marital misconduct. By refusing to examine the marital conduct of parties in setting future obligations, some states prevent spouses, usually impoverished wives, from exposing and receiving redress for tortious or criminal conduct. In response to this problem, the vast majority of states have abolished statutes that prevent one spouse from suing the other. However, tort claims for marital misconduct are often treated with suspicion, and juries are seldom eager to settle marital discord. A marital tort claim is also subject to business judgment: If the case does not appear cost-effective, an attorney might be reluctant to accept it.
Fault has survived in some aspects of divorce proceedings. It was once relevant to a decree of divorce and irrelevant to such matters as child custody and property divisions. Under current trends, marital misconduct is irrelevant to the divorce itself, but it may be relevant to related matters such as child custody, child support and Visitation Rights, spousal maintenance, and property distribution.
A recent movement in a small number of states has sought to reintroduce fault as an element in divorce proceedings. In 1997, Louisiana approved a Covenant Marriage law that is designed to provide an alternative to the traditional method for obtaining a marriage license. La. Rev. Stat. Ann. §§ 9:272-75, 9:307-09 (West Supp. 2003). Under the covenant marriage law, couples who wish to obtain a marriage license must first enter pre-marriage counseling, and then must provide an Affidavit from a marriage counselor stating that they have completed this counseling. Once the couple is married, the covenant marriage does not differ from a traditional marriage until the potential dissolution of the marriage. Before partners to a covenant marriage may divorce, they must complete pre-divorce counseling and must provide an affidavit stating that the counseling has taken place. The statute is designed to make it more difficult to obtain a so-called "quickie" divorce.
The introduction of covenant marriage as an alternative to the traditional marriage agreement comes in the wake of several studies regarding the implications of divorce on children. Studies have shown that the economic standard of living for divorced women and children of a marriage decrease significantly after the divorce, while the standard of living for men increases. Likewise, other studies have shown that children of divorced parents are less likely to marry, have less education, and are more likely to abuse drugs and alcohol later in life.
In response to these and similar statistics, legislatures considered several means by which they could curb the climbing rate of divorce. Highly restrictive provisions on divorce, including the elimination of no-fault divorce, failed to pass any state legislature. Louisiana's covenant marriage law represents a compromise in that it leaves the decision to enter into such a marriage up to the couples. Several states in 1997 and 1998 considered enacting similar laws, but only Arizona and Arkansas have done so.
Covenant marriage laws also do not appear popular with couples in the three states that have adopted such laws. According to an article in the New York Times, only three percent of couples in Louisiana and Arizona have chosen to pursue this type of marital agreement, and studies show that tougher divorce laws have failed to gain popularity in those states. Moreover, several commentators have noted that the divorce rate in Louisiana and Arizona is not likely to decrease even with these laws in place.
Other states that have not enacted covenant marriage laws have considered other methods to discourage divorce. Several states have included provisions that encourage couples to seek pre-marital counseling before entering into the marriage. Unlike the covenant marriage laws, these provisions do not mandate such counseling, and they leave the decision to pursue counseling to the individual couples. The various statutes provide a number of incentives for seeking counseling, including, for example, reduction in the cost for a marriage license upon completion of counseling.
Historically, custody of the children of divorcing parents was awarded to the mother. Today, courts exercise their discretion in awarding custody, considering all relevant factors, including marital misconduct, to determine the children's best interests. Many parents are able to reach settlements on custody and visitation through mediation. Joint custody is a popular option among conciliatory spouses. Child custody is, however, a frequent battleground for less-than-conciliatory spouses.
In determining child-support obligations, courts generally hold that each parent should contribute in accordance with his or her means. Child support is a mutual duty. However, for pre-school children, the primary caretaker may not be obligated to obtain employment; in such cases, caretaking may be regarded as being in lieu of financial contribution.
All states have enacted some form of the Reciprocal Enforcement of Support Act, a uniform law designed to facilitate the interstate enforcement of support obligations by spouses and parents (U.L.A., Uniform Interstate Family Support Act of 1992). Such statutes prevent a nonsupporting spouse or parent from escaping obligations by moving to a different state. State laws also make nonsupport of a spouse or child a criminal offense, and uniform laws now give states the power to detain and surrender individuals who are wanted for criminal nonsupport in another state.
Property distribution is frequently contested in modern divorce proceedings. Commonly disputed property includes real estate, Personal Property, cash savings, stocks, bonds, savings
plans, and retirement benefits. The statutes that govern property division vary by state, but they generally can be grouped into two types: equitable distribution and Community Property. Most states follow the equitable-distribution method. Generally, this method provides that courts divide a divorcing couple's assets in a fair and equitable manner, given the particular circumstances of the case.
Some equitable-distribution states look to the conduct of the parties and permit findings of marital fault to affect property distribution. New Hampshire, Rhode Island, South Carolina, and Vermont have statutes that explicitly include both economic and marital misconduct as factors in the disposition of property. Connecticut, Florida, Maryland, Massachusetts, Missouri, Virginia, and Wyoming all consider marital conduct in property distribution. In Florida and Virginia, only fault relating to economic Welfare is relevant in property distribution. Alaska, Kentucky, Minnesota, Montana, and Wisconsin expressly exclude marital misconduct from consideration in the disposition of marital property.
Equitable-distribution states generally give the court considerable discretion as to the division of property between the parties. The courts consider not only the joint assets held by the parties, but also separate assets that the parties either brought with them into the marriage or that they inherited or received as gifts during the marriage. Generally, if the separate property is kept separate during the marriage, and not commingled with joint assets like a joint bank account, then the court will recognize that it belongs separately to the individual spouse, and they will not divide it along with the marital assets. A minority of states, however, support the idea that all separate property of the parties becomes joint marital property upon marriage.
As for the division of marital assets, equitable-distribution states look to the monetary and nonmonetary contributions that each spouse made to the marriage. If one party made a greater contribution, the court may grant that party a greater share of the joint assets. Some states do not consider a professional degree earned by one spouse during the marriage to be a joint asset, but do acknowledge any financial support contributed by the other spouse, and they let that be reflected in the property distribution. Other states do consider a professional degree or license to be a joint marital asset and have devised various ways to distribute it or its benefits.
States that follow community-property laws provide that nearly all of the property that has been acquired during the marriage belongs to the marital "community," such that the husband and wife each have a one-half interest in it upon death or divorce. It is presumed that all property that has been acquired during the marriage by either spouse, including earned income, belongs to the community unless proved otherwise. Exceptions are made for property received as a gift or through inheritance, and for the property that each party brought into the marriage. Those types of property are considered separate and not part of the community. Upon divorce, each party keeps his or her own separate property, as well as half of the community property. True community property systems exist in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington. Other states, such as Wisconsin, have adopted variations of the community-property laws.
Alimony, or spousal maintenance, is the financial support that one spouse provides to the other after divorce. It is separate from, and in addition to, the division of marital property. It can be either temporary or permanent. Its use originally arose from the common-law right of a wife to receive support from her husband. Under contemporary law, men and women are eligible for spousal maintenance. Factors that are relevant to an order of maintenance include the age and marketable skills of the intended recipient, the length of the marriage, and the income of both spouses.
Maintenance is most often used to provide temporary support to a spouse who was financially dependent on the other during the marriage. Temporary maintenance is designed to provide the necessary support for a spouse until he or she either remarries or becomes self-supporting. Many states allow courts to consider marital fault in determining whether, and how much, maintenance should be granted. These states include Connecticut, Georgia, Hawaii, Iowa, Kansas, Kentucky, Maine, Massachusetts, Missouri, Nebraska, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Virginia, West Virginia, and Wisconsin.
Like the entire body of divorce law, the issue of maintenance differs from state to state. If a spouse is found to have caused the breakup of the marriage, Georgia, North Carolina, Virginia, and West Virginia allow a court to refuse maintenance, even if that spouse was financially dependent on the other. North Carolina requires a showing of the supporting spouse's fault before awarding maintenance. Illinois allows fault grounds for divorce but excludes consideration of fault in maintenance and property settlements. Florida offers only no-fault grounds for divorce but admits evidence of adultery in maintenance determinations.
An antenuptial agreement, or Premarital Agreement, is a contract between persons who plan to marry, concerning property rights upon divorce. A postnuptial agreement is a contract entered into by divorcing parties before they reach court. Traditionally, antenuptial agreements were discouraged by state legislatures and courts as being contrary to the public policy in favor of lifetime marriage. An antenuptial agreement is made under the assumption that the marriage may not last forever, which suggests that it facilitates divorce. No state expressly prohibits antenuptial agreements, but, as in any contract case, courts reserve the right to void any that it finds Unconscionable or to have been made under duress.
State statutes that authorize antenuptial and postnuptial agreements usually require that the parties fulfill certain conditions. In Delaware, for example, a man and a woman may execute an antenuptial agreement in the presence of two witnesses at least ten days before their marriage. Such an agreement, if notarized, may be filed as a deed with the office of the recorder in any county of the state (Del. Code Ann. tit. 13, § 301). Both antenuptial and postnuptial contracts concerning real estate must be recorded in the registry of deeds where the land is situated (§ 302).
Jurisdiction over a divorce case is usually determined by residency. That is, a divorcing spouse is required to bring the divorce action in the state where he or she maintains a permanent home. States are obligated to acknowledge a divorce that was obtained in another state. This rule derives from the Full Faith and Credit Clause of the U.S. Constitution (art. IV, § 1), which requires states to recognize the valid laws and court orders of other states. However, if the divorce was originally granted by a court with no jurisdictional authority, a state is free to disregard it.
In a divorce proceeding where one spouse is not present (an ex parte proceeding), the divorce is given full recognition if the spouse received proper notice and the original divorce forum was the bona fide domicile of the divorcing spouse. However, a second state may reject the divorce decree if it finds that the divorce forum was improper.
State courts are not constitutionally required to recognize divorce judgments granted in foreign countries. A U.S. citizen who leaves the country to evade divorce laws will not be protected if the foreign divorce is subsequently challenged. However, where the foreign divorce court had valid jurisdiction over both parties, most U.S. courts will recognize the foreign court's decree.
The only way that an individual may obtain a divorce is through the state. Therefore, under the due process clause of the Fourteenth Amendment to the U.S. Constitution, a state must make divorce available to everyone. If a party seeking divorce cannot afford the court expenses, filing fees, and costs associated with the serving or publication of legal papers, the party may file for divorce free of charge. Most states offer mediation as an alternative to court appearance. Mediation is less expensive and less adversarial than appearing in public court.
In January 1994, the American Bar Association Standing Committee on the Delivery of Legal Services published a report entitled Responding to the Needs of the Self-Represented Divorce Litigant. The committee recognized that a growing number of persons are divorcing pro se, or without the benefit of an attorney. Some of these persons are pro se litigants by choice, but many want the assistance of an attorney and are unable to afford one. In response to this trend, the committee offered several ideas to the state bar associations and state legislatures, including the formation of simplified divorce pleadings and the passage of plainly worded statutes. The committee also endorsed the creation of courthouse day care for children of divorcing spouses, night-court divorce sessions, and workshop clinics that give instruction to pro se divorce litigants. Many such programs are currently operating at district, county, and family courts around the United States.
In the United States, divorce law consists of 51 different sets of conditions—one for each state and the District of Columbia. Each state holds dear its power to regulate domestic relations, and peculiar divorce laws abound. Nevertheless, divorce law in most states has evolved to recognize the difference between regulating the actual decision to divorce and regulating the practical ramifications of such a decision, such as property distribution, support obligations, and child custody. Most courts ignore marital fault in determining whether to grant a divorce, but many still consider it in setting future obligations between the parties. To determine the exact nature of the rights and duties relating to a divorce, one must consult the relevant statutes for the state in which the divorce is filed.
Further readings
American Bar Association Standing Committee on the Delivery of Legal Services. 1994. "Responding to the Needs of the Self-Represented Divorce Litigant." Chicago: American Bar Association.
Boumil, Marcia M., et al. 1994. Law and Gender Bias. Littleton, Colo.: Rothman.
Mather, Lynn. 2003. "Changing Patterns of Legal Representation in Divorce: From Lawyers to Pro Se." Journal of Law and Society 30 (March).
Phillips, Roderick. 1991. Untying the Knot. Cambridge, England: Cambridge Univ. Press.
Wadlington, Walter. 1990. Domestic Relations: Cases and Materials. 2d ed. Westbury, N.Y.: Foundation Press.
Warle, Lynn D. 1994. "Divorce Violence and the No-Fault Divorce Culture." Utah Law Review (spring).
Woodhouse, Barbara Bennet. 1994. "Sex, Lies, and Dissipation: The Discourse of Fault in a No-Fault Era."Georgetown Law Journal 82.
Cross-references Annulment; Family Law; Premarital Agreement.
Source: www.thefreedictionary.com/Divorce+Decree
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Article 4 of 4 Article 3 next above
To obtain a copy of any of a divorce decree in the United States,
write or go to the vital statistics office in the state or area where the event occurred. To ensure that you receive an accurate record for your request and that your request is filled with all due speed, please follow these steps:
- Make your letters concise and to the point.
- Do NOT include more than one or two requests at once, and be careful not to write confusing details of your family lines.
- Type or print all names and addresses in your letter.
- Provide complete information on an individual and event for which you need documents. Include all names that may have been used, including nicknames, alternate spellings, etc. List dates and type of event as completely and accurately as possible. If you don't know the exact date, specify the span of years you wish searched and be prepared to pay for searches that span several years.
- Always provide an S.A.S.E., (Self Addressed Stamped Envelope).
- County offices have limited personnel and are often swamped with paper work. Genealogical queries are done as a service which is outside of their realm of responsibility. They ask therefore that you exercise patience and courtesy in your transactions with their offices.
- Be sure and include following information:
- date of request
- full name of husband (last name in caps)
- full name of wife (maiden name in caps)
- date of divorce or annulment
- place of divorce (city or town, county, state)
- the type of final decree
- relationship to parties
- the purpose for which the record is needed
- requestor's name & address
- requestor's driver's license number & state (some counties require it)
- requestor's signature
Click on the State or Territory in which the divorce occurred:
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Canal Zone
District of Columbia
Guam
Northern Mariana Islands
Puerto Rico
Virgin Islands
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Arkansas
California
Colorado
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Florida
Georgia
Hawaii
IdahoIllinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New MexicoNew York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
_____________________________________________
Important info for mortgage handling
How Interest Rates Affect
The Mortgages & The Housing Market
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Mortgages come in two primary forms, fixed rate and adjustable rate, with some hybrid combinations and multiple derivatives of each. A basic understanding of interest rates and the economic influences that determine the future course of interest rates can help consumers make financially sound mortgage decisions, such as making the choice between a fixed-rate mortgage or adjustable-rate mortgage (ARM) or deciding whether to refinance out of an adjustable-rate mortgage.
In this article, we'll discuss the influence of interest rates on the mortgage industry, and how both will ultimately affect the amount you pay for your home.
The Mortgage Production Line
The mortgage industry has three primary parts or businesses: the mortgage originator, the aggregator and the investor.
The mortgage originator is the lender. Lenders come in several forms, from credit unions and banks to mortgage brokers. Mortgage originators introduce and market loans to consumers. They sell loans. They compete with each other based on the interest rates, fees and service levels that they offer to consumers. The interest rates and fees they charge consumers determine their profit margins. Most mortgage originators do not portfolio loans (they do not retain the loan asset). Instead, they sell the mortgage into the secondary mortgage market. The interest rates that they charge consumers are determined by their profit margins and the price at which they can sell the mortgage into the secondary mortgage market.
The aggregator buys newly originated mortgages from other institutions. They are part of the secondary mortgage market. Most aggregators are also mortgage originators. Aggregators pool many similar mortgages together to form mortgage-backed securities (MBS) - a process known as securitization. A mortgage-backed security is a bond backed by an underlying pool of mortgages. Mortgage-backed securities are sold to investors. The price at which mortgage-backed securities can be sold to investors determines the price that aggregators will pay for newly originated mortgages from other lenders and the interest rates that they offer to consumers for their own mortgage originations.
There are many investors in mortgage-backed securities: pension funds, mutual funds, banks, hedge funds, foreign governments, insurance companies, and Freddie Mac and Fannie Mae (government-sponsored enterprises). Since investors try to maximize returns, they frequently run relative value analyses between mortgage-backed securities and other fixed income investments such as corporate bonds. As with all financial securities, investor demand for mortgage-backed securities determines the price they will pay for these securities.
Do Investors Determine Mortgage Rates?
To a large degree, mortgage-backed security investors determine mortgage rates offered to consumers. As explained above, the mortgage production line ends in the form of a mortgage-backed security purchased by an investor. The free market determines the market clearing prices investors will pay for mortgage-backed securities. These prices feed back through the mortgage industry to determine the interest rates offered to consumers.
Fixed Interest Rate Mortgages
The interest rate on a fixed-rate mortgage is fixed for the life of the mortgage. However, on average, 30-year fixed-rate mortgages have a lifespan of only about seven years. This is because homeowners frequently move or will refinance their mortgages.
Mortgage-backed security prices are highly correlated with the prices of U.S. Treasury bonds. This means the price of a mortgage-backed security backed by 30-year mortgages will move with the price of the U.S. Treasury five-year note or the U.S. Treasury 10-year bond based on a financial principal known as duration. In practice, a 30-year mortgage's duration is closer to the five-year note, but the market tends to use the 10-year bond as a benchmark. This also means that theinterest rate on 30-year fixed-rate mortgages offered to consumers should move up or down with the yield of the U.S. Treasury 10-year bond. A bond's yield is a function of its coupon rate and price.
Economic expectations determine the price and yield of U.S. Treasury bonds. A bond's worst enemy is inflation. Inflation erodes the value of future bond payments - both coupon payments and the repayment of principle. Therefore, when inflation is high, or expected to rise, bond prices fall, which means their yields rise - there is an inverse relationship between a bond's price and its yield.
The Fed's Role
The Federal Reserve plays a large role in inflation expectations. This is because the bond market's perception of how well the Federal Reserve is controlling inflation through the administration of short-term interest rates determines longer-term interest rates, such as the yield of the U.S. Treasury 10-year bond. In other words, the Federal Reserve sets current short-term interest rates, which the market interprets to determine long-term interest rates such as the yield on the U.S. Treasury 10-year bond.
Remember, the interest rates on 30-year mortgages are highly correlated with the yield of the U.S. Treasury 10-year bond. If you're trying to forecast what 30-year fixed-rate mortgage interest rates will do in the future, watch and understand the yield on the U.S. Treasury 10-year bond (or the five-year note), and follow what the market is saying about Federal Reserve monetary policy.
Adjustable-Rate Mortgages
The interest rate on an adjustable rate mortgage might change monthly, every six months or annually, depending on the terms of the mortgage. The interest rate consists of an index value plus a margin. This is known as the fully indexed interest rate. It is usually rounded to one-eighth of a percentage point. The index value is variable, while the margin is fixed for the life of the mortgage. For example, if the current index value is 6.83% and the margin is 3%, rounding to the nearest eighth of a percentage point would make the fully indexed interest rate 9.83%. If the index dropped to 6.1%, the fully indexed interest rate would be 9.1%.
The interest rate on an adjustable-rate mortgage is tied to an index. There are several differentmortgage indexes used for different adjustable-rate mortgages, each of which is constructed using the interest rates on either a type of actively traded financial security, a type of bank loan or a type of bank deposit. All of the different mortgage indexes are broadly correlated with each other. In other words, they move in the same direction, up or down, as economic conditions change. Most mortgage indexes are considered short-term indexes. "Short-term" or "term" refers to the term of the securities, loans or deposits used to construct the index. Typically, any security, loan or deposit that has a term of one year or less is considered short term.
Most short-term interest rates, including those used to construct mortgage indexes, are closely correlated with an interest rate known as the Federal Funds Rate.
Forecasting Changes
If you're trying to forecast interest rate changes on adjustable rate mortgages, look at the shape of the yield curve. The yield curve represents the yields on U.S. Treasury bonds with maturities from three months to 30 years. When the shape of the curve is flat or downward sloping, it means that the market expects the Federal Reserve to keep short-term interest rates steady or move them lower. When the shape of the curve is upward sloping, the market expects the Federal Reserve to move short-term interest rates higher. The steepness of the curve in either direction is an indication of by how much the market expects the Federal Reserve to raise or lower short-term interest rates. The price of Fed Funds futures is also an indication of market expectations for future short-term interest rates.
Concluding Tips
An understanding of what influences current and future fixed- and adjustable-rate mortgage rates can help you make financially sound mortgage decisions. This knowledge can help you make a decision about choosing an adjustable-rate mortgage over a fixed-rate mortgage and can help you decide when it makes sense to refinance out of an adjustable rate mortgage. Below are a few final tips.
Don't believe everything you hear on TV. It's not always "a good time to refinance out of your adjustable-rate mortgage before the interest rate rises further." Interest rates might rise further moving forward. Find out what the yield curve is saying.
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- Exploring The Current Account In The Balance Of Payments
- 4 Stages Of The Economic Cycle
- 5 Lessons From The Recession Source: Investopedia _______________________________________________________________________________
6 Scary Facts About Student Loans
That Will Depress Us
Date: May 25, 2013
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Republicans and Democrats are scrambling in Washington, D.C., to introduce legislation that will prevent federal student loan rates from doubling. Should Congress fail to act by July 1, the interest rate for subsidized Stafford loans will increase from 3.4 percent to 6.8 percent, a crisis situation for a country whose current students and graduates hold
$1.1 trillion in outstanding debt — an amount greater than the nation’s combined credit card debt.
It’s a scary prospect for students as their college education costs continue to skyrocket and show smaller and smaller certainties of payoff. Despite the diplomas they receive on graduation day, they attempt to take their first steps in a nation that is slowly recovering from its recession and still suffers from a 7.5 percent unemployment rate.
Joseph Stiglitz, a former senior vice president and chief economist at the World Bank and a former member and chairman of the Council of Economic Advisers, has spoken openly, and often critically about the student loan crisis. He explains: “Student debt has become an integral part of the story of American inequality … We now have a pay-to-play, winner-take-all game where the wealthiest are assured a spot, and the rest are compelled to take a gamble on huge debts, with no guarantee of a payoff.”
Grim enough for you? Unfortunately, we have 6 other facts about student loans that will depress you.
1. Seventy percent of the class of 2013 is graduating with debt
In addition, the average student in 2013 owes around $35,200, a number high enough to drop any jaw. The study by Fidelity Investments also highlights that a greater understanding of the total cost of college could have impacted how students addressed their college choices and savings strategies. Half of these students say they are surprised by how much debt they have accumulated, and 39 percent report they would have made different choices related to college planning had they better understood the debt consequences they are now facing.
2. Student debt has tripled between 2004 and 2013
Another bleak reality: even though U.S.consumers are slowly working their way out of debt, students are demonstrating an ability to do the opposite. From 2004 to 2013, consumer debt posted only a modest growth of 9 percent, with student debt actually tripling to $986 billion in that same time span. The loans that were supposed to help students move forward are now holding them back, and as college costs continue to rise, debt only promises to smother the next generation of students more.
3. More than 40 percent of 25-year-olds carry student debt
Once these students graduate, the troubles begin to mount. According to American Student Assistance, more than 40 percent of 25-year-olds carry student debt, up from about 26 percent in 2004. Why are they struggling so much? The same study reports that 48 percent of 25-34 year-olds say they’re unemployed or under-employed. With the depletion of available jobs in the U.S., a significant percentage of the recent college grads are unable to find work, no matter how much they forked over for their education.
4. About 17 percent of loans were delinquent at the end of last year
Another problem is of these loans falling into delinquency. About 17 percent of loans were delinquent at the end of last year, compared with less than 10 percent in 2004. When only loans in repayment are considered, about one-third are delinquent. Young people acknowledge that they need more information about delinquency and default, and cite that they didn’t full understand the contract they were signing. Bob King, president of the Kentucky Council for Postsecondary Education, the group overseeing public universities in the commonwealth, explains that students need more counseling about much they should and can borrow.
5. More and more borrowers are moving to delinquency from repayment
Another contributing component that isn’t helping matters is the fact that quarterly movement of borrowers to delinquency from repayment has accelerated to nearly 9 percent, up from 6.5 percent in 2005. Thank goodness, this is just what these borrowers need.
6. Burden is growing with time
Lastly, statistics report that time offers no respite for these students, and might actually make it worse. As of early 2012, borrowers in their 30′s have a delinquency rate (more than 90 days past due) of about 6 percent, while borrowers in their 40′s have a delinquency rate double that, at about 12 percent. Borrowers in their 50′s have a delinquency rate of 9.4 percent, and those over 60 have a delinquency rate of 9.5 percent.
Don’t Miss:Click: Here Are Some Surprising Findings About Hunger In America.
(if the link has expired search the web with the title
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Source: Wall Street CheatSheet
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6 Ways to Get the Most
Out of Social Security
Necessary info - study this & apply
Quotation "Knowledge is no power - only applied knowledge is power
(Dr. Christian, STAF, Inc.)
By far the most important factor in how much you collect from Social Security
is not how much you earn
but
(1) the later you start collecting your social security benefits the more you will get every month
(2) how long you stick around to collect benefits
The best way to maximize Social Security is
(1) to work to your later years & (2) to eat right, go to the gym, get your annual checkup
and in every other way take care of yourself
so you can continue to collect that monthly benefit through your 70s, 80s, 90s & longer
Click all green for further info
Social Security took a cut out of every paycheck we ever earned, and the money was used to pay benefits to our grandparents, parents and older siblings. Now, finally, it's our turn, and it's only natural that we want our benefits, too. Yet the rules for collecting Social Security are incredibly complicated, and vary depending on your marital status, how long you worked, where you worked and when you retire.
Meanwhile, we hear dire predictions that Social Security is running out of funds, benefits will be cut and eligibility rules may change. Nobody knows what the long-term future holds, but under the current program, which is not likely to change much in the near term, there are six proven strategies to make the most out of the program:
1. Work a long time. Social Security says it figures your benefit by calculating "your average indexed monthly earnings during the 35 years in which you earned the most." So, obviously, one way to maximize your benefit is to put in a full career, working for at least 35 years. Maybe that seems like a long time, but look at it this way: If you retire at full retirement age (66 for most of us), you can still get the maximum benefit even if you didn't start your career until you were 31, or if you began working at age 21 and took off 10 years to raise children.
2. Don't retire early. Workers are eligible to start taking Social Security benefits at age 62, but the amount you receive at 62 is discounted by about 25 percent.
Also, if you start Social Security before full retirement age (66 for most of us) and you earn more than $14,160 per year, the government starts temporarily withholding your benefits.
Conversely, if you work beyond full retirement age (= 66 for most of us), you receive a bonus of approximately 7 percent a year, up to age 70. There's no extra benefit to working past age 70.
3. Have a good job. Social Security sets a maximum amount of salary that is subject to the payroll tax, currently $113,700 per year, which is the same amount of earnings it will credit toward your benefit. This amount is adjusted for inflation. The maximum amount in 2000 was $76,200, and in 1990 is was $51,300. This is easier said than done, but the way to maximize your benefit is to earn the maximum amount set by Social Security throughout your career. If you were earning at least $51,300 in 1990, $76,200 in 2000 and $113,700 today, you're eligible to collect the maximum benefit from Social Security.
3. Don't retire early. Workers are eligible to start taking Social Security benefits at age 62, but the amount you receive at 62 is discounted by about 25 percent. Also, if you start Social Security before full retirement age, and you earn more than $14,160 per year, the government starts temporarily withholding your benefits. Conversely, if you work beyond full retirement age, you receive a bonus of approximately 7 percent a year, up to age 70. There's no extra benefit to working past age 70.
4. Don't earn too much in retirement. If you're married and file a joint tax return, yourSocial Security benefits are not taxed if your combined income falls below $32,000. Half is taxed if your income is between $32,000 and $44,000, and 85 percent of your benefits are taxed if your income exceeds $44,000. If you had a good career and didn't retire early, you'll likely be subject to the 85 percent rule. Don't get upset; that's the one progressive aspect of Social Security. But there is one way around it: don't get married. Two singles can earn up to $50,000, instead of $32,000, before their benefits are subject to federal income tax.
5. Live in a tax friendly state when retired. There's not much you can do to avoid federal taxes unless you take a vow of poverty, but you can do something about state tax. Most states do not levy income tax on Social Security benefits, including retirement havens like Florida, Arizona and the Carolinas. But about a dozen states do exact income tax on your Social Security benefits, including red states like Kansas and Utah as well as blue states like Connecticut and Vermont.
6. Stay in good health. By far the most important factor in how much you collect from Social Security is not how much you earned, but how long you stick around to collect benefits. You can work all your life, but if you die the day after you retire, all is lost. The best way to maximize Social Security is to eat right, walk in the parks & in the pure nature, go to the gym - personal trained can guide you to grow your muscles which will help in our strength & good health (our muscles will get smaller as we age), get your annual checkup and in every other way take care of yourself so you can continue to collect that monthly benefit through your 70s, 80s and 90s.
Source:
Tom Sightings is a former publishing executive who was eased into early retirement in his mid-50s. He lives in the New York area and blogs at Sightings at 60, where he covers health, finance, retirement, and other concerns of baby boomers who realize that somehow they have grown up.
More From US News & World Report (if the link has expired search the web with the title)
- 10 Things Everyone Should Know About Social Security
- 12 Ways to Increase Your Social Security Payments
- 10 Places to Retire on Social Security Alone _____________________________________________________________________________ =========================================================================================================================================================================================================================================================
by click:Alicia H. Munnell
0IB#13-15The brief’s key findings are:
- Due to increases in Social Security’s Delayed Retirement Credit, the effective retirement age is now 70, with monthly benefits reduced for earlier claiming.
- Benefit levels at 70 appear appropriate given that rising deductions for Medicare and greater benefit taxation have reduced Social Security’s net replacement rates.
- The shift to 70 should be feasible for many workers given increases in lifespans, health, and education.
- But vulnerable workers forced to claim early will have low benefits and will be particularly harmed by any further cuts.
- Policymakers need to inform those who can work that 70 is the new retirement age and devise ways to protect those who cannot work.
from the Center for Retirement Research at Boston College
______________
Why raise the full retirement age?
Social Security’s real retirement age is 70. How is it? Monthly benefits are highest at age 70 and are actuarially*) reduced for each year claimed before that age. Claiming at 62 instead of 70 lowers a hypothetical monthly benefit from $1,000 to $568. Age 70 became Social Security’s retirement age with the maturation of the Delayed Retirement Credit, which now provides an actuarially fair adjustment for benefits claimed after 66 (the current full retirement age). That means, assuming average life expectancy, people who take a lower benefit early would expect to receive about the same total amount in benefits over their lifetimes as those who wait for higher monthly benefits but start receiving them later.
*) actuary = a person who compiles and analyzes statistics and uses them to calculate insurance risks and premiums; actuarially = of or relating to the work of an actuary
(Next paragraph is STAF, Inc.'s opinion)
However, how do we know how long each of us will live. We are individuals with individual issues, thus is better to start taking the social security at the age of 70, except IF one is already sick and cannot work or anything else that may affect the decision making. If you are fully healthy, if your parents & relatives live(d) a long life, and you can work, work up to 70. In addition the longer you work (if you are physically & mentally in good shape) the longer you most likely will live, the longer your brains work ell, and the longer you are capable of enjoying good life. When healthy people retire early, they have a tendency to become much more passive - that is a fast road to an early grave. Working keeps you alive and healthy physically & mentally when you have that choice.
(End of STAF, Inc.'s opinion quote)
Policy changes will shrink many retirees’ benefits.
But nobody talks about age 70; all of the policy discussion is focused on the so-called full retirement age, which historically was 65, is now 66, and is scheduled to rise to 67 for those born in 1960 and after. The full retirement age used to be the age after which monthly benefits would not increase and lifetime benefits would decline. It signaled an official retirement age: Take these benefits now or you will lose out.
With the maturation of the Delayed Retirement Credit, which increases monthly benefits for those who claim after the full retirement age, the value of lifetime benefits does not decline after the full retirement age. It remains the same up to age 70. So the full retirement age no longer has any effect on lifetime benefits.
Increasing the full retirement age, however, does have an impact on the level of benefits. The reason is that the Social Security benefit formula is anchored to the full retirement age, and raising that age means reducing monthly benefits regardless of when an individual claims. For example, when the full retirement age moves from 66 to 67 as scheduled under current law, benefits for those claiming at each age will be about 7% lower than today. Benefits at 62 will continue to be 57 percent of benefits at 70, but they will be 7% lower for claims at each age.
Those advocating increases in the full retirement age are responding to the fact that, generally, we are living longer and can work longer. But increasing the full retirement age to, say, 70 (after we reach 67) would be equivalent to about a 20% reduction in benefits. And these cuts are across the board. If people can change their retirement plans in response to the lower benefits, and delay their claiming date by three years, they might not be that badly hurt. Yes, they would need to work longer and their lifetime benefits will be lower, but their monthly benefit will be unchanged.
The problem is that a significant portion of the roughly 40% of participants who claim benefits at age 62 are low-wage workers who cannot easily change their retirement plans. Many have health problems and/or outdated skills that make continued employment impossible. And, if they cannot retire later, their much- reduced benefits will be totally inadequate.
(Interestingly, those who retire at age 70 cannot replicate their previous monthly benefit by working longer, because the Delayed Retirement Credit is not applicable after 70. No matter what they do, they will see a reduction in their monthly as well as lifetime benefits. Right now, this is not a significant problem. The age-70 retirees today are largely lawyers, doctors, and Ph.Ds. But if larger numbers start retiring at 70, we can worry about this issue.)
This discussion is not to argue that Social Security benefits can never be cut. People are healthier, better educated, have less physically demanding jobs, and can work longer. They are also living much longer. So keeping benefits unchanged results in ever increasing costs.
But constantly reducing benefit levels by increasing the full retirement age is very hard on low-income, vulnerable people who cannot change their retirement date. If we want to cut benefits, it makes much more sense to directly change the benefit formula. Such an approach allows for larger cuts for the higher-paid than for those at the bottom of the earnings distribution.
More fundamentally, let’s start being clear and candid about changes aimed at getting people to work longer and those aimed at cutting program outlays.
The issues discussed in the above article post are covered in more detail in a click: new issue brief
from the Center for Retirement Research at click: Boston College
Please click the green above or below and study in full details the latest research facts - you need the facts
New issue brief Boston College
Click green for further info
Source: Boston College - Center for Retirement Research
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Social Security Benefits And Divorce
How Will A Divorce Affect Your Social Security Benefits?
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How much of a benefit can you receive? At most, your benefit will be 50% of what your ex-spouse would receive at their full retirement age, if this amount is larger than what you could receive based on your own work record.
1. If You Are Divorced – Your Social Security Benefits
If you are divorced, but your marriage lasted 10 years or longer, you can receive benefits on your ex-spouse's record (even if he or she has remarried).
You must also meet the following criteria:
If you collect benefits based on your ex-spouse’s record, it will not reduce or affect their benefit in any way.
If your ex-spouse has not applied for retirement benefits, but can qualify for them, you may still apply as long as you meet the other criteria, and have been divorced for at least two years.
2. Benefits For Your Divorced Spouse
If you are divorced, your ex-spouse can receive benefits based on your record (even if you have remarried), if they meet the criteria in the section above.
The benefit that your ex-spouse is entitled to receive based on your work record must be greater than the benefit he or she would receive based on their own work record.
Numerous ex-spouses may be entitled to receive benefits based on your record, if you were married to each for at least ten years. If they collect benefits based on your record, it will not affect your benefit.
If you have not applied for retirement benefits, but can qualify for them, your ex-spouse can receive benefits on your record if you have been divorced for at least two years.
3. If You Are the Worker's Surviving Divorced Spouse
If your ex-spouse is deceased, there are a few exceptions to the criteria in the sections above:
4. When Do Spouse’s and Divorced Spouse’s Social Security Benefits End?
This section of the social security website provides detailed criteria on all of the potential scenarios that could cause a spouse’s or divorced spouse’s social security benefits to end.
Of course it also spells out the exceptions to those scenarios, and often, even though the spouse benefit may end, you may simultaneously become eligible for a widow or widower’s benefit.
5. When Are You Entitled To A Divorced Spouse’s Social Security Benefit
You must be age 62. (If your ex-spouse is deceased, you may be eligible at age 60.)
Your ex- spouse must be entitled to receive social security benefits, but if they have not applied for retirement benefits, but can qualify for them, you may still apply on their earnings record as long as you meet the other eligibility criteria, and have been divorced for at least two years.
Source: Internet & About.com
Related Articles click green (if the link has expired search the web with the title)
How Will A Divorce Affect Your Social Security Benefits?
Click green for further info
How much of a benefit can you receive? At most, your benefit will be 50% of what your ex-spouse would receive at their full retirement age, if this amount is larger than what you could receive based on your own work record.
1. If You Are Divorced – Your Social Security Benefits
If you are divorced, but your marriage lasted 10 years or longer, you can receive benefits on your ex-spouse's record (even if he or she has remarried).
You must also meet the following criteria:
- You are currently unmarried.
- You are at least age 62.
If you collect benefits based on your ex-spouse’s record, it will not reduce or affect their benefit in any way.
If your ex-spouse has not applied for retirement benefits, but can qualify for them, you may still apply as long as you meet the other criteria, and have been divorced for at least two years.
2. Benefits For Your Divorced Spouse
If you are divorced, your ex-spouse can receive benefits based on your record (even if you have remarried), if they meet the criteria in the section above.
The benefit that your ex-spouse is entitled to receive based on your work record must be greater than the benefit he or she would receive based on their own work record.
Numerous ex-spouses may be entitled to receive benefits based on your record, if you were married to each for at least ten years. If they collect benefits based on your record, it will not affect your benefit.
If you have not applied for retirement benefits, but can qualify for them, your ex-spouse can receive benefits on your record if you have been divorced for at least two years.
3. If You Are the Worker's Surviving Divorced Spouse
If your ex-spouse is deceased, there are a few exceptions to the criteria in the sections above:
- If you remarry after age 60, and your ex-spouse is deceased, you may still be eligible for a benefit under their record.
- If your ex-spouse is deceased, you may apply for benefits based on their record at age 60.
- The only exception to the ten year length-of-marriage rule occurs if your ex-spouse is deceased, and you are caring for a disabled child, or child under the age of 16, who is also a child of theirs, who is receiving social security benefits based on their record.
4. When Do Spouse’s and Divorced Spouse’s Social Security Benefits End?
This section of the social security website provides detailed criteria on all of the potential scenarios that could cause a spouse’s or divorced spouse’s social security benefits to end.
Of course it also spells out the exceptions to those scenarios, and often, even though the spouse benefit may end, you may simultaneously become eligible for a widow or widower’s benefit.
5. When Are You Entitled To A Divorced Spouse’s Social Security Benefit
You must be age 62. (If your ex-spouse is deceased, you may be eligible at age 60.)
Your ex- spouse must be entitled to receive social security benefits, but if they have not applied for retirement benefits, but can qualify for them, you may still apply on their earnings record as long as you meet the other eligibility criteria, and have been divorced for at least two years.
Source: Internet & About.com
Related Articles click green (if the link has expired search the web with the title)
- 10 Social Security Facts About Benefits For An Ex-Spouse
- Restricted Application for Social Security Benefits
- When to Take Social Security for Married Couples - 5 Factors To Consider
- How Divorce Will Impact Your Social Security Benefits
- Key Differences Between Social Security Survivor Benefits and Social Securi... __________________________________________________________________________
- Why Women Are More Likely to Retire More Poor Than Men When it comes to retirement planning,
- many women have a distinct disadvantage compared with men
- Click green for further info The U.S. Department of Labor says we’re more likely to work part-time jobs that don’t qualify for benefits like a 401(k). Of the 62 million working women in the country, only 45 percent participate in a retirement plan, the department says.
Women are also more likely to quit jobs to raise children or take care of a family member. Women probably work fewer years than our male counterparts, meaning we’ll likely get fewer raises and earn lower pay. That means less money to put away for retirement.
Add to that the fact that women on average live longer than men, and you’re looking at a retirement shortfall. In a recent survey, half the women said they were worried about running out of money in their later years, says U.S. News & World Report.
What to do ?
1. Map out your future Creating a visual road map for your future will make retirement planning easier. To get started, ask yourself some questions:- When are you going to retire? At what age do you want to stop working? If you’re married, will you want to retire when your husband does? Will you need to stop work early to care for an aging parent?
- Do you plan to take time off from work? Many women drop out of the workforce to raise children. If that’s your plan, remember that you’ll likely end up making less money over the course of your career as a result.
- What do you want to do in retirement? If you plan to travel, you’ll need more money than someone who intends to stay close to home.
- How much money will you need? Online calculators can help you out. Check out these calculators from CNNMoney and AARP.
- Are you saving? If you’re not regularly setting aside money in a 401(k) or IRA, start now.
- How much savings do you have? And how does that compare with the amount you’ll need to support the retirement you want? Will your current rate of saving reach that goal? This calculator from MSN Money will help.
- How much debt do you have? Ideally, you’ll want to be debt-free when you retire.
- Track your spending. Are there expenses you can cut so that you can divert those funds to your retirement accounts? Do you really need cable TV? Do you need to live in such a large house?
- Retire the debts. Try a debt snowball if you have a lot of debt on credit cards. Can you do a balance transfer to a card with an introductory 0 percent interest rate? Stacy has advice about whether to pay off debt or save for retirement first. Download Our Free Guide For Investors with $500k+ Portfolios www.fi.com
5. Participate in work-related retirement plans If your employer offers a 401(k), contribute the maximum amount possible if you can. The contribution limit for 401(k)’s is much higher than for an IRA — $17,500 for a 401(k) and another $5,500 if you’re 50 or older vs. $5,500 plus another $1,000 for older workers for an IRA. If you’re self-employed, consider a solo 401(k).
6. Factor in your spouse For instance: - If your husband has a traditional pension, make sure it will continue to make payments to you if he dies before you do.
- If your husband has a 401(k) or similar plan at work, the money will automatically go to you upon his death unless another beneficiary has been designated.
- If you’re not working, make sure your spouse is contributing to an IRA on your behalf.
- Remember that if you’re divorced, you may be entitled to a percentage of what your former spouse collects from Social Security. (His payment won’t be reduced as a result.)
Finally, take care of your health. Since you’re expected to live longer, you’ll have a longer time to pay expensive health care costs if you develop chronic conditions like diabetes, dementia, Alzheimer's, cancer, heart problems, etc.
Source: Retirement planning
The Biggest Money Mistakes Couples Make
5 Money Questions to Ask Before You Marry
If you're planning to ask your special someone to walk down the aisle and to the ends of earth with you, just about every financial expert and a lot of long-time married couples will tell you first: Talk about money before marrying.
You may think you're a perfect match, but one of the biggest compatibility tests for couples is merging finances. And, sure, it may feel like talking about money will kill your romance, but - and not to sound like your mother - is it really that special of a relationship if discussing credit cards and spending habits could actually kill it?
So somewhere between proposing and saying, "I do," here are some key questions you and your significant other should be asking each other.
How much debt do you have? Definitely a romance buzz-killer, but you're going to be marrying this person and sharing their life. You should ask this question, and if you have a lot of debt, you should absolutely volunteer this information.
"In an age where student loans over $100,000 are not uncommon, the debt discussion is crucial. Entering a marriage with hidden debt can be a disaster and starts a marriage off with a lot of mistrust," says Anthony Criscuolo, a certified financial planner with Palisades Hudson Financial Group in Fort Lauderdale, Fla.
What's your credit score? Yes, the questions just get more fun. Still, you should ask this one, says Jon Ulin, managing principal at Ulin & Co. Wealth Management, a branch of LPL Financial in Boca Raton, Fla. And if things look really bleak and you believe your future spouse has a money problem, consider asking your beloved to get some financial counseling, Ulin suggests.
"If you feel that your future spouse will never become fiscally responsible and may end up crashing your own credit score, savings and retirement plans, you may want to put off getting married to this person," Ulin says. "I'm not saying that money is more important than love, but more often than not, how couples deal with money can lead to arguments and divorce if not handled effectively. When preparing to get married, you shouldn't assume or overlook anything."
What about our children? If you're thinking of becoming parents, and you haven't broken up over the debt and credit score questions, this is a good one to ask. "Most couples address the 'when' and 'how many' when it comes to discussing children, but kids are expensive and talking about the financial impact should also be considered," Criscuolo says. "Do both spouses want to pay for private schooling? Who will pay for college or grad school? Will one spouse stop working to take care of the kids?"
While we're at it, what's a fair allowance? And are we going to buy a TV for the kid's bedroom the first time he asks? How much money will our daughter get when the Tooth Fairy visits? OK, it is possible to go into overkill. Still, these can be fun questions to get a sense of where your partner stands, and if you're going into a marriage in which one or both of you already have kids, a lot of these questions are vital.
Click: Can You Afford a Baby?
If you're really concerned, or you're not enjoying these money discussions with your Romeo or Juliet, Galena Rhoades, a psychologist and a senior researcher at the Center for Marital and Family Studies at the University of Denver, suggests couples "practice communicating about money," zeroing in on "an issue that you will face together, like deciding whether to buy a house."
What about our parents? Easy to forget, but the type of spender or saver you want to marry probably picked up a lot of tips from his or her parents. "We see a huge influence on how our parents spent or saved and how we spend or save," says Rick Bee, a professor who teaches a course on stewardship and money at Biola University in La Mirada, Calif. "It's important to examine how you were raised and how you tend to spend and make changes now if change is needed."
Who is paying what? Angela Thompson, an assistant professor of sociology at Texas Christian University in Fort Worth, says you should also come up with answers to questions like: "How will money be handled in your household? Joint checking account? Separate checking accounts or a combination of the two? Who is in charge of paying bills and preparing taxes? Is it fair to have one person be responsible for paying the bills for the rest of your married life? On the other hand, what if one person is really organized and the other isn't? By default, does the organized person have to be the one to pay the bills?"
Click: 50 Smart Money Moves
And if you haven't already, Thompson says, this is the time to ask yourself a few questions. For instance, if you have a boyfriend or girlfriend with a gambling or shopping problem, is that a problem for you, and how are you prepared to live with that?
Some other good questions, offers Rhoades: "What kind of lifestyle do you see us living, and how much will it cost? What is your approach to saving and investing? Meaning, how important is saving for retirement? Our children's college? Are you a risk-taker?"
The point of asking a lot of questions isn't to map out your entire marriage, but to see if you both truly are financially compatible, or if you're actually two future clients for divorce lawyers. In fact, if you're marrying, Ulin suggests that in the months before you say, "I do," the most important person you should consult with as a couple isn't the wedding planner - it's a financial planner.
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Source: Credit.com
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The Biggest Money Mistakes Couples Make
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Managing your own money is hard enough; add another person to the equation and it becomes an obstacle course: Does it make sense to combine bank accounts after moving in together? Should you pay off your credit card debt before getting married? Does the higher earner need to cover more of the bills?
In Pictures: 12 Money Mistakes Almost Everyone Makes
Here are six common mistakes that couples make with their money—and how to avoid them, adapted from the new book Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back.
Not talking about finances.
Sure, discussing who pays for what and how much debt each person brings into the relationship is awkward—but also necessary. Before moving in together, talk about how you plan to share household expenses, whether the person with the higher salary will contribute more, how much credit card debt you have, and how you plan to share big-ticket items like cars. Also, take time to map out the logistics: Will you pay bills out of one shared bank account? Or keep all your money separate?
Don’t forget to bring up your long-term goals, too, which can make the discussion a little more romantic. Do you want to swim with dolphins in the Bahamas? Or backpack around Europe together? Agreeing on common goals makes it easier to save.
Combining accounts too early.
Putting all your money into one account might be the more romantic option (and prevent any debate over who picks up the tab at dinner), but it can also cause major problems in the event of a breakup. Couples who live together without first walking down the aisle face financial vulnerabilities with joint accounts that married couples don't.
Investments in shared assets, such as a home or car, can be lost during a messy breakup if only one person's name is on the title. Money or labor that went into redoing a former partner's kitchen may never be recouped. And while details vary by state, even assets such as joint savings accounts can go to the person who is first to make the withdrawal. Legalities aside, a lot of couples say they like the independence of having two accounts anyway, at least before they decide they’ve found their permanent soul mate.
For more money-saving tips, visit the U.S. News Alpha Consumer blog
Sharing credit cards, real estate, and other types of debt.
If you add your partner’s name to the title of your home, then they own it, too—even if you paid for the down payment and mortgage. “I see it happening too often—a couple gets together, says ‘I love you, let’s set up house and make this official’. . . and then [one person] signs away half of their equity,” says Sheryl Garrett, a certified financial planner based in Shawnee Mission, Kansas, and author of Money Without Matrimony. Couples also need to talk about who would get the first opportunity to purchase the house if they were to break up, at what price would they sell it, and how many days they would have to refinance the mortgage in their own name.
Signing on to someone’s car loan or credit card can create similar problems. If you break-up and the other person fails to make their payments, then you’re on the hook, too. Even if you’ve long gotten over the relationship, your credit might feel the after-effects for years.
Getting surprised by the marriage penalty.
Newlyweds who earn similar, high salaries often get an unwelcome surprise the year after they get married: They find themselves stuck with a mega-tax bill. That’s because the so-called marriage penalty still exists in the upper tax brackets. In 2010, for example, husbands and wives who each earn $68,650 and up in taxable income are at risk for paying more married than they did as singletons.
Earnings above that amount face a 28 percent tax, compared to 25 percent pre-marriage. Couples are most at risk when they bring home similar incomes. (The reverse is also true. When one person in the marriage brings home all or most of the money in a marriage, that couple usually gets a tax break.) The best way to prepare for this unwelcome wedding “gift” is to know it’s coming and to deduct more from your salary throughout the year to avoid a large bill on April 15.
Ignoring the risk of a break-up.
Talking about how you would split things up if you decided to go your separate ways can prevent bad surprises later. Unless children or major assets are involved, there’s usually no need to hire a lawyer. In fact, you can just write down the answers to these questions along with any others that apply: Who would stay in the apartment? Who would get the cats? The car? If you want to formalize the process, you can pay a nominal fee to download forms, such as a living-together guide and contract, at nolo.com.
Since unmarried couples don’t get to argue their case in divorce court, it could be your only protection in place if things go south. (The legal ramifications of common-law marriages, civil unions, and domestic partnerships vary by state.) Couples might also want to consider talking about any debts, past bankruptcy filings, and credit report problems, because even if you’re not legally liable for your girlfriend’s $50,000 student loan, it could end up affecting your quality of life if 10 percent of the household income goes toward paying it off each month.
Visit the U.S. News Personal Finance site for more insight and money management tips.
Putting one person in charge of money.
It’s normal to specialize in relationships—to delegate dinner planning to the best cook, and gardening to the one with a green thumb. But giving one person all of the money management responsibility can lead to an unbalanced relationship.
New York–based relationship therapist Bonnie Eaker Weil explains that no one should ever feel like he or she has to ask permission before buying something. “I call it ‘Mother, may I?’ You don’t want to get into that position where you’re the little girl, or you’re the little boy, and the other person is your parents. You want to have your own money, and certain things are guilt-free, and you just do what you want with it. If you want to buy a latte, or lipstick, or a facial, you do not have to ask permission, because it’s your own money,” says Weil. Plus, in the event of a break-up, you want to make sure you know where all your money is and how to manage it.
Source:
Credit.com
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5 Ways Sharing Finances Can Be Bad for Your Marriage
Combining accounts is weighted with significance, but it’s not always the right choice
Just because you are married doesn't mean all your money has to be joined by a matrimonial bond.
Most people combine their money, surveys show. Marriage therapist Beth Erickson says when couples pool their finances, "greater intimacy results." Her view is shared by many Americans, and Merrill Lynch's Affluent Insights Survey in February reported that 89 percent of married couples manage their money collaboratively.
But monetary union does not always translate to wedded bliss. The same Merrill Lynch survey reports that well over half of married couples (57 percent) have arguments over money. Too much sharing can cause problems, says Nick Scheumann, financial adviser at Hefty Wealth Partners in Auburn, Ind.
"It would be better if more people split it out," he says. "When it comes to commingled assets, a lot of married people can't handle it." Indeed, says the Merrill survey, money disputes are cited as a significant contributor to almost 1 in 3 divorces.
With two-career marriages becoming the norm, so too are cooperative, combined finances. Here are few key ways to manage that aspect of your relationship:
1. There's value in separate accounts. It's fundamental personal finance not to put all of your nest egg in one basket. If each person has a separate account, it adds flexibility and safety of diversified investments. For example, the Federal Deposit Insurance Corporation insures bank accounts up to $250,000 for each individual, married or not. So a married couple can insure far more—up to $500,000—if each person sets up a separate account. "It's very important when it comes to retirement assets to have separate accounts," says Scheumann. But watch out for extra fees if you do.
7 Ways to Turn $250,000 Into Retirement Income
2. Your credit score stays single. There is no such thing as a joint or married credit rating. Scores are only tied to individuals, not couples, and having a credit score of your own is a critical step in your financial life. The ability to borrow money is important if you become widowed or divorced, but also if you want to start a business or wish to be self-employed. Opening a bank account with checking services in your own name is the first step. Paying bills in your name, on time, builds your score.
3. Shared money means shared responsibility. The risk faced by married couples who pool money is that neither person takes full responsibility of the bottom line. It becomes "other people's money," which means it is easier to spend and harder to save, Scheumann says. "In commingled accounts, people tend to be a bit less disciplined than they are with individual accounts."
4. Marriage isn't always a tax benefit. You may pay more in taxes as a married couple than as a married single filer. There are income caps and limits for some deductions and credits. Medical expenses are deductible if they amount to more than 7.5 percent of your own income. If you have big medical costs and your spouse does not, the deduction can be lost as your combined income lowers the percentage. On the other hand, some tax benefits only apply to those filing jointly, including the student loan interest deduction. "You really need an accountant to figure out your own situation," Scheumann says. "It's complicated."
Click: How a Tax Refund Can Hurt Your Finances
5. Self-employed and small-business expenses can get lost in a joint filing. "It can be a real trap if you are running a business and not keeping your profits and losses separate," says Scheumann. His company is based in rural Indiana, where "farmers often have a really good cash flow but they don't make any money because they keep buying equipment and things." They tend to borrow to invest, and the ups and downs of the farm economy can be dangerous, as can many small businesses sectors. In such cases, the steady income of one spouse is offset by the tax deductions of the farm or small business. "All of those deductions might help cut tax bills, but they are real expenses," Scheumann says. "It's hard to get ahead that way."
oints accounts or individual accounts? As with marriage, couples' money-management strategies come in countless variations that can somehow still work. Marriage therapist Erickson says, "commingling funds both requires and builds trust and therefore is more advantageous for the couple and their family. Rigid separation of funds does the opposite."
While Scheumann agrees that communication and collaboration on how to spend money are essential, he says some financial independence in a marriage "demonstrates trust — and there is something very positive" about that arrangement. "I have successful clients who make it look easy," he says. "They split the money out and they have been married for many years. They trust each other and they seem to manage with less tension."
Click: Tax Tips: The Good, Bad and Ugly (But Legal)
Wells Fargo Advisors, in a recent commentary to clients, said there are benefits to both individual and shared accounts. "One solution to consider: Keep separate accounts and have a joint account that both individuals contribute to for covering household expenses."
Either way, says Erickson, "Money is a topic fraught with risk for couples. There is only one inviolable rule that unfortunately too many couples violate. They must be willing to talk about money, preferably before they marry."
Then, when that first anniversary dinner arrives, chatting about the fees you are avoiding on that joint bank account or whether you'll split the check might actually be romantic.
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Source: Credit.com
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5 Money Questions to Ask Before You Marry
If you're planning to ask your special someone to walk down the aisle and to the ends of earth with you, just about every financial expert and a lot of long-time married couples will tell you first: Talk about money before marrying.
You may think you're a perfect match, but one of the biggest compatibility tests for couples is merging finances. And, sure, it may feel like talking about money will kill your romance, but - and not to sound like your mother - is it really that special of a relationship if discussing credit cards and spending habits could actually kill it?
So somewhere between proposing and saying, "I do," here are some key questions you and your significant other should be asking each other.
How much debt do you have? Definitely a romance buzz-killer, but you're going to be marrying this person and sharing their life. You should ask this question, and if you have a lot of debt, you should absolutely volunteer this information.
"In an age where student loans over $100,000 are not uncommon, the debt discussion is crucial. Entering a marriage with hidden debt can be a disaster and starts a marriage off with a lot of mistrust," says Anthony Criscuolo, a certified financial planner with Palisades Hudson Financial Group in Fort Lauderdale, Fla.
What's your credit score? Yes, the questions just get more fun. Still, you should ask this one, says Jon Ulin, managing principal at Ulin & Co. Wealth Management, a branch of LPL Financial in Boca Raton, Fla. And if things look really bleak and you believe your future spouse has a money problem, consider asking your beloved to get some financial counseling, Ulin suggests.
"If you feel that your future spouse will never become fiscally responsible and may end up crashing your own credit score, savings and retirement plans, you may want to put off getting married to this person," Ulin says. "I'm not saying that money is more important than love, but more often than not, how couples deal with money can lead to arguments and divorce if not handled effectively. When preparing to get married, you shouldn't assume or overlook anything."
What about our children? If you're thinking of becoming parents, and you haven't broken up over the debt and credit score questions, this is a good one to ask. "Most couples address the 'when' and 'how many' when it comes to discussing children, but kids are expensive and talking about the financial impact should also be considered," Criscuolo says. "Do both spouses want to pay for private schooling? Who will pay for college or grad school? Will one spouse stop working to take care of the kids?"
While we're at it, what's a fair allowance? And are we going to buy a TV for the kid's bedroom the first time he asks? How much money will our daughter get when the Tooth Fairy visits? OK, it is possible to go into overkill. Still, these can be fun questions to get a sense of where your partner stands, and if you're going into a marriage in which one or both of you already have kids, a lot of these questions are vital.
Click: Can You Afford a Baby?
If you're really concerned, or you're not enjoying these money discussions with your Romeo or Juliet, Galena Rhoades, a psychologist and a senior researcher at the Center for Marital and Family Studies at the University of Denver, suggests couples "practice communicating about money," zeroing in on "an issue that you will face together, like deciding whether to buy a house."
What about our parents? Easy to forget, but the type of spender or saver you want to marry probably picked up a lot of tips from his or her parents. "We see a huge influence on how our parents spent or saved and how we spend or save," says Rick Bee, a professor who teaches a course on stewardship and money at Biola University in La Mirada, Calif. "It's important to examine how you were raised and how you tend to spend and make changes now if change is needed."
Who is paying what? Angela Thompson, an assistant professor of sociology at Texas Christian University in Fort Worth, says you should also come up with answers to questions like: "How will money be handled in your household? Joint checking account? Separate checking accounts or a combination of the two? Who is in charge of paying bills and preparing taxes? Is it fair to have one person be responsible for paying the bills for the rest of your married life? On the other hand, what if one person is really organized and the other isn't? By default, does the organized person have to be the one to pay the bills?"
Click: 50 Smart Money Moves
And if you haven't already, Thompson says, this is the time to ask yourself a few questions. For instance, if you have a boyfriend or girlfriend with a gambling or shopping problem, is that a problem for you, and how are you prepared to live with that?
Some other good questions, offers Rhoades: "What kind of lifestyle do you see us living, and how much will it cost? What is your approach to saving and investing? Meaning, how important is saving for retirement? Our children's college? Are you a risk-taker?"
The point of asking a lot of questions isn't to map out your entire marriage, but to see if you both truly are financially compatible, or if you're actually two future clients for divorce lawyers. In fact, if you're marrying, Ulin suggests that in the months before you say, "I do," the most important person you should consult with as a couple isn't the wedding planner - it's a financial planner.
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Source: Credit.com
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The Biggest Money Mistakes Couples Make
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Managing your own money is hard enough; add another person to the equation and it becomes an obstacle course: Does it make sense to combine bank accounts after moving in together? Should you pay off your credit card debt before getting married? Does the higher earner need to cover more of the bills?
In Pictures: 12 Money Mistakes Almost Everyone Makes
Here are six common mistakes that couples make with their money—and how to avoid them, adapted from the new book Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back.
Not talking about finances.
Sure, discussing who pays for what and how much debt each person brings into the relationship is awkward—but also necessary. Before moving in together, talk about how you plan to share household expenses, whether the person with the higher salary will contribute more, how much credit card debt you have, and how you plan to share big-ticket items like cars. Also, take time to map out the logistics: Will you pay bills out of one shared bank account? Or keep all your money separate?
Don’t forget to bring up your long-term goals, too, which can make the discussion a little more romantic. Do you want to swim with dolphins in the Bahamas? Or backpack around Europe together? Agreeing on common goals makes it easier to save.
Combining accounts too early.
Putting all your money into one account might be the more romantic option (and prevent any debate over who picks up the tab at dinner), but it can also cause major problems in the event of a breakup. Couples who live together without first walking down the aisle face financial vulnerabilities with joint accounts that married couples don't.
Investments in shared assets, such as a home or car, can be lost during a messy breakup if only one person's name is on the title. Money or labor that went into redoing a former partner's kitchen may never be recouped. And while details vary by state, even assets such as joint savings accounts can go to the person who is first to make the withdrawal. Legalities aside, a lot of couples say they like the independence of having two accounts anyway, at least before they decide they’ve found their permanent soul mate.
For more money-saving tips, visit the U.S. News Alpha Consumer blog
Sharing credit cards, real estate, and other types of debt.
If you add your partner’s name to the title of your home, then they own it, too—even if you paid for the down payment and mortgage. “I see it happening too often—a couple gets together, says ‘I love you, let’s set up house and make this official’. . . and then [one person] signs away half of their equity,” says Sheryl Garrett, a certified financial planner based in Shawnee Mission, Kansas, and author of Money Without Matrimony. Couples also need to talk about who would get the first opportunity to purchase the house if they were to break up, at what price would they sell it, and how many days they would have to refinance the mortgage in their own name.
Signing on to someone’s car loan or credit card can create similar problems. If you break-up and the other person fails to make their payments, then you’re on the hook, too. Even if you’ve long gotten over the relationship, your credit might feel the after-effects for years.
Getting surprised by the marriage penalty.
Newlyweds who earn similar, high salaries often get an unwelcome surprise the year after they get married: They find themselves stuck with a mega-tax bill. That’s because the so-called marriage penalty still exists in the upper tax brackets. In 2010, for example, husbands and wives who each earn $68,650 and up in taxable income are at risk for paying more married than they did as singletons.
Earnings above that amount face a 28 percent tax, compared to 25 percent pre-marriage. Couples are most at risk when they bring home similar incomes. (The reverse is also true. When one person in the marriage brings home all or most of the money in a marriage, that couple usually gets a tax break.) The best way to prepare for this unwelcome wedding “gift” is to know it’s coming and to deduct more from your salary throughout the year to avoid a large bill on April 15.
Ignoring the risk of a break-up.
Talking about how you would split things up if you decided to go your separate ways can prevent bad surprises later. Unless children or major assets are involved, there’s usually no need to hire a lawyer. In fact, you can just write down the answers to these questions along with any others that apply: Who would stay in the apartment? Who would get the cats? The car? If you want to formalize the process, you can pay a nominal fee to download forms, such as a living-together guide and contract, at nolo.com.
Since unmarried couples don’t get to argue their case in divorce court, it could be your only protection in place if things go south. (The legal ramifications of common-law marriages, civil unions, and domestic partnerships vary by state.) Couples might also want to consider talking about any debts, past bankruptcy filings, and credit report problems, because even if you’re not legally liable for your girlfriend’s $50,000 student loan, it could end up affecting your quality of life if 10 percent of the household income goes toward paying it off each month.
Visit the U.S. News Personal Finance site for more insight and money management tips.
Putting one person in charge of money.
It’s normal to specialize in relationships—to delegate dinner planning to the best cook, and gardening to the one with a green thumb. But giving one person all of the money management responsibility can lead to an unbalanced relationship.
New York–based relationship therapist Bonnie Eaker Weil explains that no one should ever feel like he or she has to ask permission before buying something. “I call it ‘Mother, may I?’ You don’t want to get into that position where you’re the little girl, or you’re the little boy, and the other person is your parents. You want to have your own money, and certain things are guilt-free, and you just do what you want with it. If you want to buy a latte, or lipstick, or a facial, you do not have to ask permission, because it’s your own money,” says Weil. Plus, in the event of a break-up, you want to make sure you know where all your money is and how to manage it.
Source:
Credit.com
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5 Ways Sharing Finances Can Be Bad for Your Marriage
Combining accounts is weighted with significance, but it’s not always the right choice
Just because you are married doesn't mean all your money has to be joined by a matrimonial bond.
Most people combine their money, surveys show. Marriage therapist Beth Erickson says when couples pool their finances, "greater intimacy results." Her view is shared by many Americans, and Merrill Lynch's Affluent Insights Survey in February reported that 89 percent of married couples manage their money collaboratively.
But monetary union does not always translate to wedded bliss. The same Merrill Lynch survey reports that well over half of married couples (57 percent) have arguments over money. Too much sharing can cause problems, says Nick Scheumann, financial adviser at Hefty Wealth Partners in Auburn, Ind.
"It would be better if more people split it out," he says. "When it comes to commingled assets, a lot of married people can't handle it." Indeed, says the Merrill survey, money disputes are cited as a significant contributor to almost 1 in 3 divorces.
With two-career marriages becoming the norm, so too are cooperative, combined finances. Here are few key ways to manage that aspect of your relationship:
1. There's value in separate accounts. It's fundamental personal finance not to put all of your nest egg in one basket. If each person has a separate account, it adds flexibility and safety of diversified investments. For example, the Federal Deposit Insurance Corporation insures bank accounts up to $250,000 for each individual, married or not. So a married couple can insure far more—up to $500,000—if each person sets up a separate account. "It's very important when it comes to retirement assets to have separate accounts," says Scheumann. But watch out for extra fees if you do.
7 Ways to Turn $250,000 Into Retirement Income
2. Your credit score stays single. There is no such thing as a joint or married credit rating. Scores are only tied to individuals, not couples, and having a credit score of your own is a critical step in your financial life. The ability to borrow money is important if you become widowed or divorced, but also if you want to start a business or wish to be self-employed. Opening a bank account with checking services in your own name is the first step. Paying bills in your name, on time, builds your score.
3. Shared money means shared responsibility. The risk faced by married couples who pool money is that neither person takes full responsibility of the bottom line. It becomes "other people's money," which means it is easier to spend and harder to save, Scheumann says. "In commingled accounts, people tend to be a bit less disciplined than they are with individual accounts."
4. Marriage isn't always a tax benefit. You may pay more in taxes as a married couple than as a married single filer. There are income caps and limits for some deductions and credits. Medical expenses are deductible if they amount to more than 7.5 percent of your own income. If you have big medical costs and your spouse does not, the deduction can be lost as your combined income lowers the percentage. On the other hand, some tax benefits only apply to those filing jointly, including the student loan interest deduction. "You really need an accountant to figure out your own situation," Scheumann says. "It's complicated."
Click: How a Tax Refund Can Hurt Your Finances
5. Self-employed and small-business expenses can get lost in a joint filing. "It can be a real trap if you are running a business and not keeping your profits and losses separate," says Scheumann. His company is based in rural Indiana, where "farmers often have a really good cash flow but they don't make any money because they keep buying equipment and things." They tend to borrow to invest, and the ups and downs of the farm economy can be dangerous, as can many small businesses sectors. In such cases, the steady income of one spouse is offset by the tax deductions of the farm or small business. "All of those deductions might help cut tax bills, but they are real expenses," Scheumann says. "It's hard to get ahead that way."
oints accounts or individual accounts? As with marriage, couples' money-management strategies come in countless variations that can somehow still work. Marriage therapist Erickson says, "commingling funds both requires and builds trust and therefore is more advantageous for the couple and their family. Rigid separation of funds does the opposite."
While Scheumann agrees that communication and collaboration on how to spend money are essential, he says some financial independence in a marriage "demonstrates trust — and there is something very positive" about that arrangement. "I have successful clients who make it look easy," he says. "They split the money out and they have been married for many years. They trust each other and they seem to manage with less tension."
Click: Tax Tips: The Good, Bad and Ugly (But Legal)
Wells Fargo Advisors, in a recent commentary to clients, said there are benefits to both individual and shared accounts. "One solution to consider: Keep separate accounts and have a joint account that both individuals contribute to for covering household expenses."
Either way, says Erickson, "Money is a topic fraught with risk for couples. There is only one inviolable rule that unfortunately too many couples violate. They must be willing to talk about money, preferably before they marry."
Then, when that first anniversary dinner arrives, chatting about the fees you are avoiding on that joint bank account or whether you'll split the check might actually be romantic.
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Source: Credit.com
________________________________________________
The 10 Worst Financial Decisions
You Can Make In Retirement
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- in case the link has expired, use the title in your web search
In an ideal world, we would start contributing to our retirement savings accounts the moment we receive our first paycheck from our first job. With the rumor mill of declining social security benefits, you can no longer rely on this form of funding in retirement. In this time of fiscal uncertainty, there are many financial decisions that can make or break you during your formative years. Below are the ten worst financial decisions you can make in retirement.
Assuming You Will Retire at a Specific Age
There are many factors that can influence the age at which you retire, some of which are not in your control. An unfortunate layoff, forced early retirement or unseen health issues can cause you to retire earlier than expected. If you are counting on the last few years of savings to set everything in order, you may find yourself with a lack of income in a tough job market. This is why it is absolutely imperative that you begin your retirement planning as soon as you can. On the other hand, just because you reach 62 or 65 doesn't mean that you should automatically retire. Take the time to do a cash flow analysis and speak with a financial planner to determine when you can comfortably retire.
Relying on the Advice of Friends and Family Instead of a Professional.
Everyone has a friend or family member who is a self-proclaimed financial genius. They may even provide great tips for saving, but it is still best to sit down with a professional who can directly assess your finances. Your friend may have done a great job with his or her own retirement, but this doesn't mean he or she understands your specific needs. In a worst-case scenario, he or she knows even less than you do and your retirement begins as the proud owner of a South American beet farm.
You don't need to be wealthy to sit down with a financial planner or retirement specialist. The earlier you begin creating a retirement plan, the easier it will be to manage in the future. The value of a professional who can integrate all of your income and savings into a cohesive plan cannot be understated.
Starting Social Security Too Early
Many people want to begin collecting their social security benefits when they turn 62 and first become eligible. What many people don't realize is that the amount of benefits you receive scales with the age that you begin receiving benefits. The longer you wait to start collecting, the greater your initial annual income. The payments received if you begin collecting at age 70 (when benefits no longer increase) are nearly double those you would receive if you begin at age 62.
Social Security benefits offer many advantages over other retirement options and great care should be taken to maximize the return. The payments adjust with inflation, are uninfluenced by the stock market, are subject to little or no income tax, and can be passed to your spouse upon death. Careful financial planning can allow you to delay the onset of the benefits and reap the rewards of a very secure, lifetime payment.
Overlooking Tax Consequences
One of the primary benefits of starting an IRA is that, when withdrawn correctly, the earnings are tax-free. If you don't understand the associated penalties for either removing money too early or too late, you can find yourself paying enormous tax penalties, which can severely affect your retirement. Almost all retirement options have very specific rules regarding fees for withdrawing money at the wrong time. If you are spread between taxable and non-taxable accounts, withdraw some from both to avoid a heavy tax hit by moving into a higher bracket. This is another reason why you should plan your financial future with a professional retirement specialist.
Not Updating Your Retirement Plan
Reaching retirement doesn't mean that it is time to abandon risk. Many retirees make the mistake of dumping higher risk equities from their portfolio in favor of low-risk bonds. The problem is that bonds don't provide the long-term potential required to sustain a retirement income for twenty-plus years. CDs and annuities can provide guaranteed revenue streams, but you trade growth for security. Don't be afraid to retain an asset allocation that is heavy on equities.
Failing to Understand Distribution
Take the time to understand when and how to remove and transfer funds from your retirement accounts to personal accounts. Initially, if you need to move money, it is best to move funds that are not subject to income tax so that you can avoid tax penalties. Withdrawing early from a 401(k) or improperly rolling into a new plan can incur tax penalties of up to 20%. Don't let a simple mistake or misreading impact the next 20 years of your life. The objective of your distribution strategy is to convert funds from pre-retirement accounts into post-retirement accounts that will provide your retirement income. Sitting down with a financial planner to prepare your distribution strategy is highly recommended.
Underestimating Future Healthcare Spending
The first unknown to consider is the potential length of your life. If you retire at age 65 and live until age 90, that's 25 years worth of income and expenses you need to account for. Medicare and Medicaid can help but there are many things they do not cover. You may even find yourself ineligible based on your net worth. The best way to reduce these potential costs is to remain active and healthy as you age. Preventative exercise in your 60s is a great investment for your 80s. You've worked hard to reach retirement and you should invest in your ability to enjoy it. A serious illness for yourself or your spouse could possibly destroy your savings. Fidelity estimates that a 65-year-old couple will incur $220,000 in medical expenses during retirement.
Failing to Diversify Your Risk
Many people who believe their personal savings and Social Security benefits will be enough to take care of their retirement. The addition of a 401k or IRA can give you a nice boost, but there is more you can do with your income. To protect yourself against the market, while providing the potential for strong returns, spread your investments across a range of risks. This is where a professional adviser can help structure your asset allocation to create a portfolio with a mix of low-risk bonds, CDs, and annuities as well as higher-risk stocks.
Retiring With Too Much Debt
You should make paying off high-interest credit cards a top priority when approaching retirement. It may not be possible to begin retirement entirely debt-free, but the interest payments on high-interest accounts will eat away at your savings. If you are in good health and can afford to work for a few more years, delaying your retirement may give you the breathing room to eliminate this debt. No one wants to spend his or her retirement paying off pre-retirement expenses.
Refusing to Downsize Lifestyle
Depending on the level of savings, retirees should expect to reduce their living income by 25% or more. Many people are tempted to immediately go on a vacation or make a big purchase, but these decisions can have a lasting effect on future savings. The two major areas that a retiree can address are his or her home and vehicles. Moving into a smaller house or to a less expensive region can take a large chunk out of your expenses. Reducing the family fleet to a single vehicle or acquiring a more fuel-efficient vehicle will also free up more income. This is the tradeoff you make for the free time that retirement allows.
Source: Investopedia
More From Investopedia
Click green for further info - in case the link has expired, use the title in your web search
You Can Make In Retirement
Click green for further info
- in case the link has expired, use the title in your web search
In an ideal world, we would start contributing to our retirement savings accounts the moment we receive our first paycheck from our first job. With the rumor mill of declining social security benefits, you can no longer rely on this form of funding in retirement. In this time of fiscal uncertainty, there are many financial decisions that can make or break you during your formative years. Below are the ten worst financial decisions you can make in retirement.
Assuming You Will Retire at a Specific Age
There are many factors that can influence the age at which you retire, some of which are not in your control. An unfortunate layoff, forced early retirement or unseen health issues can cause you to retire earlier than expected. If you are counting on the last few years of savings to set everything in order, you may find yourself with a lack of income in a tough job market. This is why it is absolutely imperative that you begin your retirement planning as soon as you can. On the other hand, just because you reach 62 or 65 doesn't mean that you should automatically retire. Take the time to do a cash flow analysis and speak with a financial planner to determine when you can comfortably retire.
Relying on the Advice of Friends and Family Instead of a Professional.
Everyone has a friend or family member who is a self-proclaimed financial genius. They may even provide great tips for saving, but it is still best to sit down with a professional who can directly assess your finances. Your friend may have done a great job with his or her own retirement, but this doesn't mean he or she understands your specific needs. In a worst-case scenario, he or she knows even less than you do and your retirement begins as the proud owner of a South American beet farm.
You don't need to be wealthy to sit down with a financial planner or retirement specialist. The earlier you begin creating a retirement plan, the easier it will be to manage in the future. The value of a professional who can integrate all of your income and savings into a cohesive plan cannot be understated.
Starting Social Security Too Early
Many people want to begin collecting their social security benefits when they turn 62 and first become eligible. What many people don't realize is that the amount of benefits you receive scales with the age that you begin receiving benefits. The longer you wait to start collecting, the greater your initial annual income. The payments received if you begin collecting at age 70 (when benefits no longer increase) are nearly double those you would receive if you begin at age 62.
Social Security benefits offer many advantages over other retirement options and great care should be taken to maximize the return. The payments adjust with inflation, are uninfluenced by the stock market, are subject to little or no income tax, and can be passed to your spouse upon death. Careful financial planning can allow you to delay the onset of the benefits and reap the rewards of a very secure, lifetime payment.
Overlooking Tax Consequences
One of the primary benefits of starting an IRA is that, when withdrawn correctly, the earnings are tax-free. If you don't understand the associated penalties for either removing money too early or too late, you can find yourself paying enormous tax penalties, which can severely affect your retirement. Almost all retirement options have very specific rules regarding fees for withdrawing money at the wrong time. If you are spread between taxable and non-taxable accounts, withdraw some from both to avoid a heavy tax hit by moving into a higher bracket. This is another reason why you should plan your financial future with a professional retirement specialist.
Not Updating Your Retirement Plan
Reaching retirement doesn't mean that it is time to abandon risk. Many retirees make the mistake of dumping higher risk equities from their portfolio in favor of low-risk bonds. The problem is that bonds don't provide the long-term potential required to sustain a retirement income for twenty-plus years. CDs and annuities can provide guaranteed revenue streams, but you trade growth for security. Don't be afraid to retain an asset allocation that is heavy on equities.
Failing to Understand Distribution
Take the time to understand when and how to remove and transfer funds from your retirement accounts to personal accounts. Initially, if you need to move money, it is best to move funds that are not subject to income tax so that you can avoid tax penalties. Withdrawing early from a 401(k) or improperly rolling into a new plan can incur tax penalties of up to 20%. Don't let a simple mistake or misreading impact the next 20 years of your life. The objective of your distribution strategy is to convert funds from pre-retirement accounts into post-retirement accounts that will provide your retirement income. Sitting down with a financial planner to prepare your distribution strategy is highly recommended.
Underestimating Future Healthcare Spending
The first unknown to consider is the potential length of your life. If you retire at age 65 and live until age 90, that's 25 years worth of income and expenses you need to account for. Medicare and Medicaid can help but there are many things they do not cover. You may even find yourself ineligible based on your net worth. The best way to reduce these potential costs is to remain active and healthy as you age. Preventative exercise in your 60s is a great investment for your 80s. You've worked hard to reach retirement and you should invest in your ability to enjoy it. A serious illness for yourself or your spouse could possibly destroy your savings. Fidelity estimates that a 65-year-old couple will incur $220,000 in medical expenses during retirement.
Failing to Diversify Your Risk
Many people who believe their personal savings and Social Security benefits will be enough to take care of their retirement. The addition of a 401k or IRA can give you a nice boost, but there is more you can do with your income. To protect yourself against the market, while providing the potential for strong returns, spread your investments across a range of risks. This is where a professional adviser can help structure your asset allocation to create a portfolio with a mix of low-risk bonds, CDs, and annuities as well as higher-risk stocks.
Retiring With Too Much Debt
You should make paying off high-interest credit cards a top priority when approaching retirement. It may not be possible to begin retirement entirely debt-free, but the interest payments on high-interest accounts will eat away at your savings. If you are in good health and can afford to work for a few more years, delaying your retirement may give you the breathing room to eliminate this debt. No one wants to spend his or her retirement paying off pre-retirement expenses.
Refusing to Downsize Lifestyle
Depending on the level of savings, retirees should expect to reduce their living income by 25% or more. Many people are tempted to immediately go on a vacation or make a big purchase, but these decisions can have a lasting effect on future savings. The two major areas that a retiree can address are his or her home and vehicles. Moving into a smaller house or to a less expensive region can take a large chunk out of your expenses. Reducing the family fleet to a single vehicle or acquiring a more fuel-efficient vehicle will also free up more income. This is the tradeoff you make for the free time that retirement allows.
Source: Investopedia
More From Investopedia
Click green for further info - in case the link has expired, use the title in your web search
- Mandatory Pension Savings: Should Employers And Employees Be Forced To Make Contributions?
- 6 Things You're Doing To Delay Your Retirement
- 6 Worst Financial Mistakes And Why You Made Them ______________________________________________________________________________ The Tax Break You May Be Missing Out On 2013 info - check the valid numbers for each new year Most workers are eligible to contribute up to $5,500 to an IRA in 2013 and get a tax deduction on the amount they save. A worker in the 25 percent tax bracket who contributes $5,500 to a traditional IRA this year would pay $1,375 less on his 2013 tax bill. But few people save enough to maximize this tax break.
- click: 10 Trendy 401(k) Plan Perks
A recent Fidelity Investments analysis of nearly 7 million IRAs found that the average IRA contribution was $3,920 for tax year 2012, down $10 from $3,930 in 2011. Average traditional IRA contributions ranged from $3,170 among 20-somethings to $4,840 for people in their 60s.
An Employee Benefit Research Institute analysis of just over 1.6 million IRA accounts found that the average amount contributed in 2011 was $3,723. An IRA contribution of $3,723 will save you $930.75 if you are in the 25 percent tax bracket or $558.45 if you pay a 15 percent income tax rate. Taxes won't be due on these traditional IRA contributions until you withdraw the money from the account.
People age 50 and older are eligible to contribute $1,000 more to IRAs than younger people, up to $6,500 in 2013. And the average IRA contribution does jump from $4,090 for 40-somethings to $4,780 among people in their 50s, Fidelity found. Once you turn age 70 1/2 you can no longer make traditional IRA contributions, but you can still save in a Roth IRA.
To completely max out an IRA, you would need to save about $458 per month, or $542 monthly if you are age 50 or older. Alternatively, you could also contribute the money as a lump sum or other installments of your choosing throughout the year. But less than half (47 percent) of people who participated in 2011 contributed the maximum amount, EBRI found.
Click: How to Tell if You Have a Lousy 401(k) Plan
The ability to claim a tax deduction for your traditional IRA contributions is limited if you are also eligible for a 401(k) or similar type of retirement account at work. The IRA tax deduction is phased out for couples with a modified adjusted gross income over $95,000 ($59,000 for singles) in 2013. And couples who earn $115,000 or more ($69,000 for singles) are not eligible for this tax deduction if they also have a retirement account at work. If you are not covered by a retirement plan but your spouse is, the deduction begins to be phased out once your joint modified AGI exceeds $178,000 and is eliminated when your AGI hits $188,000.
You can additionally claim a tax credit for your 2013 IRA contribution if your AGI is below $59,000 for couples, $44,250 for heads of household or $29,500 for singles and you are not a full-time student or dependent on someone else's tax return. The amount of the credit ranges from 10 to 50 percent of the amount you contribute to a retirement account up to $2,000 for individuals and $4,000 for couples. The maximum possible credit is $1,000 for individuals and $2,000 for couples.
Click: Why You Should Open a Roth IRA
IRA contributions for 2013 must be made by April 15, 2014. If you wait until April to deposit money in an IRA you can get nearly immediate tax savings, but you also miss out on a year's worth of tax-deferred investment growth. Click green for further info Source: U.S.News & World Report ________________________________________________________________
"What you should know about your retirement"
is the title of a booklet by the U.S. Department of Labor, Employee Benefits Security Administration
PART 1
(1) Get it from your local library or order it (and some other publications): call toll free 1-866-444-3272.
To view this and other publications, visit the agency's website at: www.dol.gov/ebsa
(2) For assistance from a benefits advisor, visit WBSA's website at www.dol.gov/ebsa and click on "Request Assistance" OR call toll free 1-866444-3272
All material will be made available in alternative format to persons with disabilities upon request:
Vice phone: (202) 693-8664 or TTY: (202) 501-3911
TTY(TDD (TTY))
Text Telephone / Teletype Terminal / TeleTYpewriter
Telecommunication Device for the Deaf
Text Telephones (TTY), also known as Telecommunications Device for the Deaf (TDD), are used by the deaf,
hard–of–hearing, and individuals with speech impairments to communicate.
There are more than 6 million deaf individuals in the United States, according to a Gallaudet University estimate.
A TTY is a special device (= text telephone) that lets people who are deaf, hard of hearing, or speech-impaired use the telephone to communicate, by allowing them to type text messages. A TTY is required at both ends of the conversation in order to communicate.
It can be used with both land lines and cell phones. Unlike text messaging, it is designed for synchronous conversation, like a text version of a phone call.
A modern digital cell phone must support a special digital TTY mode in order to be compatible with a TTY device.
See: (click green: Digital TTY/TDD
TDD can also stand for Time Division Duplex, a method for general two-way radio communication, unrelated to hearing-impaired applications.
See: (click green: TDD
PART 2
Printed guides for investors, e.g. a booklet
"Mutual Funds" (and others) contact
U.S. Securities and Exchange Commission Office of Investor Education and Advocacy, 100 F Street, NE, Washington, DC 20549-0213
Toll free: (800) 732-0330
Website: www.investor.gov
______________________________________
PART 3
TTY/TDD Communication Services for Federal Contact Centers
What It Is
Text Telephones (TTY), also known as Telecommunications Device for the Deaf (TDD), are used by the deaf, hard–of–hearing, and individuals with speech impairments to communicate. There are more than 6 million deaf individuals in the United States, according to a Gallaudet University estimate.
The process is similar to chat on computers, where one person types text to the other on these devices. Both individuals in the conversation must have a TTY at each end of the telephone line in order to communicate. Some TTYs can be connected to the phone line by placing the telephone handset in an acoustic coupler; others can connect directly to the phone line.
Why It's Important
Section 508 of the Rehabilitation Act of 1973 (29 U.S.C. 794d), as amended, requires that individuals with disabilities, who are seeking information or services from a federal agency, have access to—and use of—information and data that is comparable to that provided to members of the public who do not have disabilities. This requirement may be waived if an agency can demonstrate that the provision of such a service would impose an undue burden on the agency.
The use of TTYs enables the agency to comply with the law by extending its service offerings to people who are deaf, hard–of-hearing, or speech impaired.
How To Implement
There are a few ways you can serve people who are deaf, hard–of–hearing, or speech impaired through the use of TTYs:
- You can establish a separate TTY phone number, provide the necessary TTY/TDD equipment, and staff your center with TTY proficient agents to serve these customers. Your call volume and customer service goals will likely dictate whether you’ll answer the calls in real–time or call the callers back at a later time. For low call volume, you can provide a recorded text message informing the callers to leave their phone number for a callback later. For higher call volume, you’ll have to provide sufficient equipment and staff capacity to handle the incoming calls in real–time.
- You can educate and encourage your TTY callers to take advantage of the national"711" Telecommunications Relay Service, if your TTY call volume is low or if you don’t have TTY proficient agents. The relay service allows people to dial “711” to access all relay services anywhere in the United States, 24 hours a day, free of any surcharges to all callers within the country. The advantage of this arrangement is that you won’t have to set up and publicize a separate TTY phone number for your center, provide the necessary TTY equipment, and your agents can answer the calls in real–time just like they do for other callers.
Do TTY Numbers Need To Be Listed In Telephone Directories?
It is recommended that you not list your TTY number, unless you serve a large population of deaf, hard–of–hearing, and hearing–impaired individuals or have some other reasons to list both numbers. Listing the TTY number alongside a regular voice number tends to confuse the non–TTY callers who call the TTY number by mistake. Listing the additional number can also add to telephone directory listing charges that you incur on an ongoing basis. The TTY users can use the 711 relay service and your agents can tell them the direct–dial TTY number to use the next time.
Resources
Content Lead: Tonya Beres
Page Reviewed/Updated: November 6, 2012
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What's Your Retirement Number?
The quick-and-dirty formulas are meant to motivate you to save more
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Imagine planning for a vacation you'll be taking some 20, 30 or even 40 years from now. You don't know where it will be, how much it will cost or how long it will last, but you're tasked with saving a chunk of every paycheck toward that trip until the day you embark on it. You're not even sure how much to save or when you have saved enough. Crazy, huh?
Welcome to the world of retirement planning, in which everyone younger than retirement age is expected to anticipate future expenses, figure out the amount that will cover those costs throughout old age, and save like mad until they hit the magic number. Unlike previous generations, for whom employers did some of the saving in the form of pensions, current and future generations must sock away most or all of the savings themselves.
Click: 5 Costly Retirement Surprises
Not surprisingly, researchers, financial institutions and financial planners offer to help you set that amount, from multiples of final salary to percentages pegged to your preretirement income. But no one formula fits every person or life stage, says Steve Utkus, director of the Center for Retirement Research at Vanguard. "The further away you are from retirement age, the more uncertain the model."
Still, retirement formulas do help you focus on what you need to do, says Chuck Yanikoski, who developed RetirementWorks II, a financial-planning tool for people near or in retirement. Retirement benchmarks also keep you from overshooting or undershooting the mark. "A lot of people are stressed who don't need to be, and others are cheerfully heading into disaster," says Yanikoski. "Either way, you're better off knowing where you are."
Calculate your target
No matter what your age, you should have at least some idea of how much income you'll need in order to maintain your standard of living once you're out of the workforce. Retirement analysts generally set the number at 70% to 85% of preretirement household income. That's not because you'll be expected to skimp in your old age, but rather because some costs, such as payroll taxes, money set aside for retirement saving and work expenses, will disappear and others, such as your income taxes, could drop.
To keep it simple, Fidelity arrives at the 85% replacement rate by multiplying your final salary by eight. The calculation includes Social Security but doesn't factor in dual incomes; it assumes you'll retire at 67 and spend down your nest egg over 25 years. Fidelity also gives you savings mileposts: Save one times salary at age 35, three times salary at 45 and five times salary at 55. "The idea is to give people a rule of thumb so they know whether they're on track while they have time to make adjustments," says Jeanne Thompson, a Fidelity vice-president.
Click: 10 Things You Must Know About Traditional IRAs
Aon Hewitt, which provides bookkeeping services for 401(k) plans, sets a benchmark of 11 times final salary, and others use still other criteria. But the precise number isn't as important as the overall message. "These are all just calls to action to be an aggressive saver," says Utkus. "If you've only saved five times your salary and Fidelity or Vanguard says seven, you know to get on the stick."
If the quick-and-dirty formulas aren't precise enough for you, you'll have to do some fancy footwork. Arriving at a realistic figure to generate 70% to 85% of your preretirement income requires projecting how much your savings will earn before and during retirement, how old you'll be when you retire, the rate at which you'll withdraw your savings, and how much income you'll get from other resources, such as pensions and Social Security. If you're married, you need to calculate joint income and expenses as well as post-retirement distribution strategies. "We're all making assumptions and guesses about the future," says Rob Reiskytl, partner for retirement consulting at Aon Hewitt.
One obvious unknown is how long you'll live and, therefore, how long your money will have to last.
Men who make it to 65 can expect to live to 82, on average, and 65-year-old women can expect to live until age 85, according to the Society of Actuaries. Health, education and family history play a role in your own life expectancy (to see how, use the calculator at www.livingto100.com), but no one can predict the date of your demise. Unless your health or family history indicates otherwise, set the age in the low-to-mid nineties or even higher, advises Michael Kitces, a partner at Pinnacle Advisory Group, a wealth-management firm in Columbia, Md.
For an easy but somewhat more precise approach to figuring your nest egg, Kitces suggests multiplying your estimated preretirement household living expenses by 25, after subtracting whatever amount you'd get from Social Security and pensions. This calculation assumes you'll withdraw 4% in the first year you retire and adjust that figure annually for inflation—an amount some planners consider low enough to keep you from running out of money even if you live to your mid nineties. For instance, if you plan to live on $5,000 a month ($60,000 a year) in retirement and anticipate $3,500 a month in Social Security benefits for yourself and your spouse (including spousal benefits), your net amount is $1,500 a month ($18,000 a year) and your rule-of-thumb savings would be $18,000 times 25, or $450,000.
Click: 10 Least Tax-Friendly States for Retirees
You can get an estimate of your Social Security benefits by using the calculator at www.ssa.gov. For a look at how the variables affect your retirement-savings goal, see the retirement calculator at Kiplinger.com. Get an idea of how much to save at www.choosetosave.org by using the Ballpark Estimate in the worksheet or the interactive version.
Reassess the numbers
Relying on broad savings benchmarks is fine for most of your working life, but "as you get closer to retirement, you need to have a plan that takes into account the unique characteristics of your finances," says Dan Keady, director of financial planning at TIAA-CREF. Five years out, he says, "look at what you're actually planning."
You might be surprised to find that you're in better shape than you thought. For instance, if you're on target to pay off your mortgage by the time you retire, you may not need 80% of your income to maintain your standard of living or, if you live in a high-cost area and plan to move to a cheaper one, "maybe a 60% replacement rate is fine," says Keady. Health, travel plans, housing arrangements and marital status all play a role in how your money holds up. Meanwhile, as you age, your expenses are likely to go down: A 2012 report by the Employee Benefit Research Institute shows that household expenditures fall 19% by age 75 compared with age 65, 34% by age 85, and 52% by age 95.
In any event, by the time you're 60 or older, you should have a handle on the savings and income you'll be working with, says Yanikoski. "You've been dealt all your cards. From now on, the issue is how you play them." You could decide to reduce housing expenses—say, by moving to a less expensive home. Now is also the time to consider whether it makes sense to invest some of your savings in an annuity for lifetime income. If your savings look skimpy, plan to work longer.
As for your standard of living, "we're trying to set guidelines that expect the same lifestyle," says Reiskytl. "But in reality, you may have to back off a bit." Cutting expenses doesn't necessarily mean you'll have to change your standard of living dramatically, he says. "When you talk to retirees and ask them how it's going, they typically say it's fine. Behind the scenes, they may be making adjustments to live within their means."
Click for further info
- The 10 Most Tax-Friendly States for Retirees
- QUIZ: Are You Saving Enough for Retirement?
- 8 Great Places to Retire Abroad
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Five Really Dumb Money Moves You've Got to Avoid
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You know the smartest things to do with your money. But what are the worst moves? What should you avoid?
Weirdly enough, they are things that a surprising number of people are still doing—even though they probably know, in their heart of hearts, how foolish they really are.
More from WSJ.com: How to Save More For Retirement Without Really Trying
Any list is going to be incomplete. But here are five to avoid.
1. Reaching for yield
What this country needs is a good 5% certificate of deposit. Instead the collapse in interest rates, and the Federal Reserve's policy of keeping them down for as long as possible, is driving people crazy—especially people who need to generate income from their investments.
In these circumstances, people start to do really foolish things in the desperate hunt for higher interest rates. That includes taking on crazy amounts of risk, or investing in complex products they don't understand, in the hope of higher yields. The Fed is producing a bull market in scams, Ponzi schemes and associated rackets.
The Securities and Exchange Commission recently warned about an epidemic of bogus high-yield "corporate promissory notes" being marketed to investors by scam artists.
The Wall Street Journal's Jason Zweig highlighted the woes of those sold complex "reverse convertibles," a legal but complicated product with embedded risks. Eric Lewis, chief investment officer of Bedrock Capital Management in Los Altos, Calif., suggests that if you can't explain an investment to a friend, including what might go wrong, you should think twice.
A high-yield bond fund such as the iShares High Yield Corporate Bond exchange-traded fund, which lends money to risky companies, sports a yield of about 5%. That's the maximum yield you can earn without taking on much more risk.
2. Going into the poor house to send Junior to a country-club college
Over the past 40 years, the cost of tuition and fees at a private university has tripled—after accounting for inflation. The cost of a public university has quadrupled.
The cost of getting a bachelor's degree has become a scandal in this country. Students spend $160,000 on a four-year degree and the results are too often questionable.
Financial planners strongly advise parents against plundering their own retirement savings, which they are likely to need, to pay for this.
More from WSJ.com - CLICK: We Want to Be More Charitable. But How?
Admittedly, a degree has become a protection racket—you can't get a job without one, but there are fewer jobs for those with them. But the smart move for the budget-constrained is to get a bachelor's degree at a public university. The tuition and fees average less than $9,000 a year instead of $30,000 at a private college.
3. Owning stock in your employer
This is one of the silliest and riskiest moves any investor can make. If the company hits trouble, you get whacked twice. You can lose your job and your savings—all in one fell swoop. Ask anyone who worked for Enron…or Lehman Brothers.
The law, amazingly, actually encourages this crazy move. While employers' 401(k) plans are subject to punitive regulations, lest they allow you to take on too much "risk," employers are allowed to offer their own stock among the investment options. Many do.
The Employee Benefit Research Institute says that the percentage of 401(k) assets held in employers' stock has been halved since 2000, but the numbers are still alarming. Furthermore, it's the youngest workers—those best able to take a gamble—who are shunning their employers' company stock.
At companies where the 401(k) plan offers the option, workers aged 40 or over typically hold about 20% of their entire 401(k) account in the company's stock, according to EBRI data. Crazy.
4. Taking Social Security too early
If you can afford to delay taking your Social Security retirement benefit, do.
Someone earning $50,000 a year who starts claiming Social Security as soon as he or she is able, age 62, will typically collect a monthly check of about $1,000, according to the Social Security Administration.
If they wait until they are 70, that amount would double.
Taking Social Security too early, or without thinking through the consequences, is one of the biggest financial blunders people can make—roughly on a par with buying tech stocks in 2000 or a Las Vegas condo in 2006. The lure of getting money early can blind people to the big cost down the road.
More from WSJ.com: Plan for Bigger Travel Delays
Many retirees may not have much of a choice. Hard labor at low pay over a lifetime takes its toll on a person. Also, many companies all but force older workers into early retirements.
In any case, it doesn't take more than just a few years before the total money accrued with the higher, later benefits surpasses the total earned starting at the earlier retirement age.
But that understates the bigger issue. Social Security is insurance. For many retirees, the big risk isn't that they will run out of money before they turn 70, but after 85. According to the Centers for Disease Control, more than half of women currently age 65 will live to 85 or longer, and three out of eight men.
David Blanchett, head of retirement research for financial research firm Morningstar, says it makes sense for women, married couples and those with good health to wait longer for a bigger paycheck.
5. Buying long-term bonds
A surprising number of people still subscribe to the flawed and circular argument that bonds, including long-term government bonds, are "safe." In reality, bonds—especially long-term government bonds—are the rare example of a bubble that has been explicitly declared.
The Fed is openly printing money and using it to buy up such bonds, driving up the price and driving down the interest rates, in order to help the economy. There is no dispute about this. It's public policy.
A 30-year Treasury bond currently sports an interest rate of just 3.1%. That's barely half a percentage point above long-term inflation forecasts. Based on history, the yield should be at least 4.5%, or two percentage points above inflation.
Thirty-year Treasury inflation-protected securities, known as TIPS, sport a "real" or inflation-adjusted yield of 0.6% a year. Again, it should be 2%.
The only reason to buy such bonds in any quantity is to gamble on a 1930s-style depression and world-wide deflation. Such bonds are a gamble, not a safe haven.
Source: WSJ
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Additional 5 of the Worst Things
You Can Do With Your Money
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Financial blunders are made all the time and everywhere – at the grocery store, at the bank, in the housing market, in the stock market, with your children’s allowance. Some stem from a lack of knowledge or awareness, while others are the result of human behavior that often works against our own best interests. The worst mistakes you can make, though, usually involve those that seem harmless but end up impacting your overall wealth.
We spoke with financial advisers about the worst financial slip-ups people make and how much they can cost you. No doubt the opportunities to mishandle your money are endless, and this list is by no means exhaustive. But here are some money moves you should strive to steer clear of.
1. Spending an unexpected windfall. All of it.
Two-thirds of baby boomer households will likely receive some inheritance, with a median amount of $64,000, for a total prospective inherited amount of $8.4 trillion, according to research published in 2011 by the Center for Retirement Research at Boston College. A big challenge for many inheritors, though, is that they can be completely inexperienced with money. And with inexperience and poor – or no – planning, comes the potential for squandering a windfall.
Americans spend their inheritance shockingly fast, says Mackey McNeill, a CPA in Bellevue, Ky. “When people get a big amount of money that they didn’t earn, they feel like it’s so much money, they’ll never run out,” she says.
McNeill recounted the story of a client whose mother had died and left her about $500,000. “By the time she walked in my door, she only had half of it left," McNeill says. "She paid off some of her mortgage, bought a new car, donated some money and bought a big-screen TV for her son” while having the unrealistic expectation of being able to quit working and pay for her son’s college tuition. “You need to run the numbers before spending it," adds McNeill. "If they keep that capital and invest it, they can generate income for the rest of their lives."
2. Cashing out of your 401(k) when you leave your job
Among workers who left their jobs in 2012, 43% took a cash distribution, up slightly from 42% in 2010, according to yet-to-be-released data from Aon Hewitt, a human resources consultancy. And the smaller the balance in the plan, the more likely it is that participants will cash out when they leave. But taking money out of your plan before retirement is going to cost you; you’ll get hit with a 10% early-withdrawal penalty (if you’re younger than 59 ½) and get taxed on the sum. And possibly more serious, you lose the earnings that money could have generated.
Consider this example from Aon Hewitt of an employee who cashes out of three employer-sponsored 401(k)s over 30 years of working and retires at 65. Assume she saved 8% of her pay, got a 5% match per year, earned 3% annual salary increases on a starting salary of $50,000, and earned 7% in investment returns a year. After factoring in taxes, penalties and lost interest, she’d accumulate $189,000 in her account by age 65. If she didn’t touch the money at all, however, she’d have $872,000 – the cash-outs would have cost this saver almost 80% of her nest egg.
“I’d like to see folks roll over their 401(k) to an IRA upon leaving a job," says Sheryl Garrett, a CFP and founder of the Garrett Planning Network, a nationwide organization of fee-only financial advisers. "Rarely does it make more sense to roll the funds over to the new employer’s plan, presuming there is one.”
3. Stopping contributions to your 401(k) plan when the market – or your account – drops
These plans are the main investment vehicle that will fund the bulk of many Americans’ retirements. There’s a reason your 401(k) automatically takes money out of your check each time you get paid – if it were up to you to set aside 5% of your pay, you’d never do it. Employee participation in 401(k) plans increased dramatically after the passage of the Pension Protection Act of 2006, which made it easier for companies to auto-enroll their employees, according to a paper published by the Center for Retirement Research at Boston College last year.
The only real reason you would shut down your contributions is if you’ve got enough retirement savings already. “I still have people telling me they’ll stop contributing to their 401(k) because it’s going down," says Steve Burnett, CFP and financial adviser at Hanson McClain, a firm in Sacramento. "And the investments might be fine. You have to understand stock prices aren’t static; what you’re hoping for is over time, is that you acquire a mass of savings to live off.”
And you’ve heard it before – you’re giving up free money when you don’t contribute to your 401(k): the matching contribution from your company (if they offer it). Say you earn $60,000 a year and your company matches 50% of your contributions up to 6% of salary. Stop participating and you’re giving up $1,500 bonus (if you contributed 5% of your salary) or $3,000 (if you contributed 10% of your salary).
4. Succumbing to lifestyle inflation
A 10% salary bump shouldn’t always equate to a 10% increase in your shoe budget or upgrading to the pricier health club. Of course, a splurge is fine, but try to resist the temptation to adjust your lifestyle upwards – or succumb to what some pros call lifestyle inflation.
Taking a $2,000 vacation is a one-time expense. Moving into an apartment that costs $150 more per month is a new and “permanent” expense that becomes part of your lifestyle cost. If we’re not careful about raising the bar on lifestyle costs, we’re likely to ramp it up so high that eventually we’ll be unable to manage the occasional speed bumps that come our way, says Michael Kitces, a CFP and director of research at Pinnacle Advisory Group in Columbia, Md. “We also end up with a lifestyle that requires an extraordinary pile of money to afford in retirement,” he says.
5. Using home equity to invest in the stock market
If you’re a good way through paying down your home mortgage, and perhaps with rates so low, doesn’t it make sense to take some equity out of your house and sink it into the market? “I’m getting people who ask about this, saying ‘my home price is pretty stagnant – shouldn’t I take money out of my home and invest it?’” says Burnett.
The problem with this approach is that the stock market is at multi-year highs at the moment – exactly the wrong time to enter the market, as most pros will tell you. Homeowners should pay down the remaining mortgage so that, when they leave the workforce, they’re not burdened by it. “If you pay X amount on your mortgage for a certain number of months, you’ll get a certain outcome. If you invest in the market, it’s uncertain you’d make money,” says Burnett. “Most of our clients are retired, and the ones doing well are those who paid down their house and were debt free.”
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Source: The Exchange
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A Trader’s Crash Landing
This is an entertaining and cautionary tale, well worth your time
I can imagine parents out there who might give it to children pondering Wall Street careers
Of course, should it excite rather than frighten your budding Bud Fox,
you might consider urging an alternative career path
However, with real passion and honesty you can succeed in everything, also in Wall Street
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Remember Bud Fox, the callow, young go-getter portrayed by Charlie Sheen in the 1987 movie “Wall Street”? Ever wonder how Bud’s career would have gone had he lasted another 10 years or so? Frankly, me neither.
But I suspect that things might have turned out almost as badly as they did for Turney Duff, a callow, young hedge fund trader who writes of his own noteworthy flameout in a bracing new Wall Street memoir called “The Buy Side” (Crown Business, 320 pages).
Mr. Duff’s tale calls to mind books like “Bright Lights, Big City,” by Jay McInerney, and especially “Liar’s Poker,” by Michael Lewis — stories of wide-eyed newcomers confronted by the temptations of moneyed New York. As literature, it doesn’t rise to the same class. As spectacle, it easily trumps both.
Mr. Duff makes millions, pays brand-name rappers to perform at his birthday party and dates a glamorous singer. But instead of riding into the sunset, he ends up retreating to sumptuous hotel suites where he inhales piles of cocaine, swills Scotch and watches pornographic movies. By himself.
Along the way, by his own admission, Mr. Duff becomes a caricature of the arrogant young Wall Streeter that so much of America loves to hate. If “The Buy Side” is remembered for any single line, it will be the remark that Mr. Duff says he uttered one evening upon confronting a lengthy queue outside a downtown Manhattan nightclub. Barging past the bouncers, he announces: “I don’t stand in lines. I snort them.” He and his trading pals think the joke so hilarious that they later emblazon it on souvenir T-shirts.
A middle-class kid from Maine, Mr. Duff began his career in 1994, in the early years of the hedge fund era, when he arrived in New York as a fresh-faced journalism graduate from Ohio University. Unable to land a job in writing or anything else, he reaches out to an uncle on Wall Street, who arranges interviews with several of the big firms. Mr. Duff aces the one at Morgan Stanley by recapping the previous evening’s episode of “Melrose Place,” the interviewer’s favorite television show. Hey, so much for that diploma.
One of the book’s strengths is Mr. Duff’s self-awareness. He realizes what he became. At Morgan, where he spent five years as a desk assistant, he knew little about Wall Street and learned even less about investing, acknowledging that he was too lazy to read research. Where he thrived was after the closing bell, when he proved adept at staging office parties and leading his peers — and a few higher-ups — through the assorted watering holes he frequented.
His light-bulb moment comes one evening when he successfully introduces a group of pretty girls to a senior trader. “I realize I’m in my element,” he writes. “I feel in total control and at ease. Only in looking back can I see how seminal this moment is. I would never be able to stand out at my job. There I’m out-experienced, out-connected and out-degreed. But here, with a glass in hand, I have as good a chance as any to move and shake.”
Mr. Duff puts his social skills to good use when, unable to secure an actual trading job at Morgan, he moves to an up-and-coming hedge fund, the Galleon Group — the same Galleon Group that was eviscerated in Wall Street’s continuing insider-trading scandals.
As a “buy side” trader executing transactions for senior portfolio managers, he is a conduit to the “sell side” traders at the big Wall Street firms who actually carry out his trades. Mr. Duff’s decisions on how and where to allocate his trades make him of crucial importance to the sell-side traders, who earn commissions on them.
It is Mr. Duff’s portrait of how sell-side traders ardently romance their buy-side counterparts that is probably the book’s most memorable contribution to Wall Street literature. He takes everything they offer: booze, dinners, Super Bowl tickets, private jets to Las Vegas weekends, parties in South Beach, lots of cocaine and, while at Galleon, scads of tips that move stocks. One of his mentors, a trader named David Slaine, ended up cooperating with the government’s Galleon investigation, but the scandal proves peripheral to the book.
WHAT stays with you is the portrait of a young man who seemingly never met a temptation he could deny.
For a time, Mr. Duff rides high, earning million-dollar bonus checks, renting a TriBeCa triplex with drop-dead Hudson River views and eventually adding a girlfriend, a Long Island manse and a beloved daughter. But the drugs soon take hold, and his long downward spiral grows uglier at every turn. After two stays in rehabilitation facilities, he loses the trading job he took after leaving Galleon, then his relationship and the real estate. The financial crisis does the rest, and today, Mr. Duff says, he tries to make a living writing from a tiny apartment in Long Island City, Queens.
Mr. Duff proves a fine wordsmith; his prose is smooth, lean and rhythmic. Where the book misfires — badly — is when he tries to plumb the existential side of things, or to employ literary artifice. There is one cringe-worthy chapter about his girlfriend, where he begins every few paragraphs with a letter, “I,” then “I L,” and so on, which of course ends up spelling out “I LOVE YOU.” It made me want to throw the book across the room.
Almost as bad is his “Bud Fox” moment, the obligatory episode in these lost-in-Manhattan memoirs when the protagonist must replicate that memorable scene from Wall Street when Charlie Sheen, having sacrificed himself to Gordon Gekko and the gods of capitalism, stares out at the Manhattan skyline and asks, plaintively, “Who am I?”
Mr. Duff’s moment comes the morning after his 34th birthday party, when he wakes on the roof deck of his triplex, fires up a marijuana cigarette and realizes how hollow all his newfound wealth and party-hardy friends make him feel. “Why,” he wonders, “do I feel so empty?” My bet was all that cocaine; whatever the reason, I didn’t much care. I just wanted to smack the guy.
That said, this is an entertaining and cautionary tale, well worth your time. I can imagine parents out there who might give it to children pondering Wall Street careers. Of course, should it excite rather than frighten your budding Bud Fox, you might consider urging an alternative career path.
However, with real passion and honesty you can succeed in everything, also in Wall Street.
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Source: NYT
___________________
You Can Do With Your Money
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Financial blunders are made all the time and everywhere – at the grocery store, at the bank, in the housing market, in the stock market, with your children’s allowance. Some stem from a lack of knowledge or awareness, while others are the result of human behavior that often works against our own best interests. The worst mistakes you can make, though, usually involve those that seem harmless but end up impacting your overall wealth.
We spoke with financial advisers about the worst financial slip-ups people make and how much they can cost you. No doubt the opportunities to mishandle your money are endless, and this list is by no means exhaustive. But here are some money moves you should strive to steer clear of.
1. Spending an unexpected windfall. All of it.
Two-thirds of baby boomer households will likely receive some inheritance, with a median amount of $64,000, for a total prospective inherited amount of $8.4 trillion, according to research published in 2011 by the Center for Retirement Research at Boston College. A big challenge for many inheritors, though, is that they can be completely inexperienced with money. And with inexperience and poor – or no – planning, comes the potential for squandering a windfall.
Americans spend their inheritance shockingly fast, says Mackey McNeill, a CPA in Bellevue, Ky. “When people get a big amount of money that they didn’t earn, they feel like it’s so much money, they’ll never run out,” she says.
McNeill recounted the story of a client whose mother had died and left her about $500,000. “By the time she walked in my door, she only had half of it left," McNeill says. "She paid off some of her mortgage, bought a new car, donated some money and bought a big-screen TV for her son” while having the unrealistic expectation of being able to quit working and pay for her son’s college tuition. “You need to run the numbers before spending it," adds McNeill. "If they keep that capital and invest it, they can generate income for the rest of their lives."
2. Cashing out of your 401(k) when you leave your job
Among workers who left their jobs in 2012, 43% took a cash distribution, up slightly from 42% in 2010, according to yet-to-be-released data from Aon Hewitt, a human resources consultancy. And the smaller the balance in the plan, the more likely it is that participants will cash out when they leave. But taking money out of your plan before retirement is going to cost you; you’ll get hit with a 10% early-withdrawal penalty (if you’re younger than 59 ½) and get taxed on the sum. And possibly more serious, you lose the earnings that money could have generated.
Consider this example from Aon Hewitt of an employee who cashes out of three employer-sponsored 401(k)s over 30 years of working and retires at 65. Assume she saved 8% of her pay, got a 5% match per year, earned 3% annual salary increases on a starting salary of $50,000, and earned 7% in investment returns a year. After factoring in taxes, penalties and lost interest, she’d accumulate $189,000 in her account by age 65. If she didn’t touch the money at all, however, she’d have $872,000 – the cash-outs would have cost this saver almost 80% of her nest egg.
“I’d like to see folks roll over their 401(k) to an IRA upon leaving a job," says Sheryl Garrett, a CFP and founder of the Garrett Planning Network, a nationwide organization of fee-only financial advisers. "Rarely does it make more sense to roll the funds over to the new employer’s plan, presuming there is one.”
3. Stopping contributions to your 401(k) plan when the market – or your account – drops
These plans are the main investment vehicle that will fund the bulk of many Americans’ retirements. There’s a reason your 401(k) automatically takes money out of your check each time you get paid – if it were up to you to set aside 5% of your pay, you’d never do it. Employee participation in 401(k) plans increased dramatically after the passage of the Pension Protection Act of 2006, which made it easier for companies to auto-enroll their employees, according to a paper published by the Center for Retirement Research at Boston College last year.
The only real reason you would shut down your contributions is if you’ve got enough retirement savings already. “I still have people telling me they’ll stop contributing to their 401(k) because it’s going down," says Steve Burnett, CFP and financial adviser at Hanson McClain, a firm in Sacramento. "And the investments might be fine. You have to understand stock prices aren’t static; what you’re hoping for is over time, is that you acquire a mass of savings to live off.”
And you’ve heard it before – you’re giving up free money when you don’t contribute to your 401(k): the matching contribution from your company (if they offer it). Say you earn $60,000 a year and your company matches 50% of your contributions up to 6% of salary. Stop participating and you’re giving up $1,500 bonus (if you contributed 5% of your salary) or $3,000 (if you contributed 10% of your salary).
4. Succumbing to lifestyle inflation
A 10% salary bump shouldn’t always equate to a 10% increase in your shoe budget or upgrading to the pricier health club. Of course, a splurge is fine, but try to resist the temptation to adjust your lifestyle upwards – or succumb to what some pros call lifestyle inflation.
Taking a $2,000 vacation is a one-time expense. Moving into an apartment that costs $150 more per month is a new and “permanent” expense that becomes part of your lifestyle cost. If we’re not careful about raising the bar on lifestyle costs, we’re likely to ramp it up so high that eventually we’ll be unable to manage the occasional speed bumps that come our way, says Michael Kitces, a CFP and director of research at Pinnacle Advisory Group in Columbia, Md. “We also end up with a lifestyle that requires an extraordinary pile of money to afford in retirement,” he says.
5. Using home equity to invest in the stock market
If you’re a good way through paying down your home mortgage, and perhaps with rates so low, doesn’t it make sense to take some equity out of your house and sink it into the market? “I’m getting people who ask about this, saying ‘my home price is pretty stagnant – shouldn’t I take money out of my home and invest it?’” says Burnett.
The problem with this approach is that the stock market is at multi-year highs at the moment – exactly the wrong time to enter the market, as most pros will tell you. Homeowners should pay down the remaining mortgage so that, when they leave the workforce, they’re not burdened by it. “If you pay X amount on your mortgage for a certain number of months, you’ll get a certain outcome. If you invest in the market, it’s uncertain you’d make money,” says Burnett. “Most of our clients are retired, and the ones doing well are those who paid down their house and were debt free.”
Click green for further info
Source: The Exchange
____________________________________________________________________
A Trader’s Crash Landing
This is an entertaining and cautionary tale, well worth your time
I can imagine parents out there who might give it to children pondering Wall Street careers
Of course, should it excite rather than frighten your budding Bud Fox,
you might consider urging an alternative career path
However, with real passion and honesty you can succeed in everything, also in Wall Street
Click green for further info
Remember Bud Fox, the callow, young go-getter portrayed by Charlie Sheen in the 1987 movie “Wall Street”? Ever wonder how Bud’s career would have gone had he lasted another 10 years or so? Frankly, me neither.
But I suspect that things might have turned out almost as badly as they did for Turney Duff, a callow, young hedge fund trader who writes of his own noteworthy flameout in a bracing new Wall Street memoir called “The Buy Side” (Crown Business, 320 pages).
Mr. Duff’s tale calls to mind books like “Bright Lights, Big City,” by Jay McInerney, and especially “Liar’s Poker,” by Michael Lewis — stories of wide-eyed newcomers confronted by the temptations of moneyed New York. As literature, it doesn’t rise to the same class. As spectacle, it easily trumps both.
Mr. Duff makes millions, pays brand-name rappers to perform at his birthday party and dates a glamorous singer. But instead of riding into the sunset, he ends up retreating to sumptuous hotel suites where he inhales piles of cocaine, swills Scotch and watches pornographic movies. By himself.
Along the way, by his own admission, Mr. Duff becomes a caricature of the arrogant young Wall Streeter that so much of America loves to hate. If “The Buy Side” is remembered for any single line, it will be the remark that Mr. Duff says he uttered one evening upon confronting a lengthy queue outside a downtown Manhattan nightclub. Barging past the bouncers, he announces: “I don’t stand in lines. I snort them.” He and his trading pals think the joke so hilarious that they later emblazon it on souvenir T-shirts.
A middle-class kid from Maine, Mr. Duff began his career in 1994, in the early years of the hedge fund era, when he arrived in New York as a fresh-faced journalism graduate from Ohio University. Unable to land a job in writing or anything else, he reaches out to an uncle on Wall Street, who arranges interviews with several of the big firms. Mr. Duff aces the one at Morgan Stanley by recapping the previous evening’s episode of “Melrose Place,” the interviewer’s favorite television show. Hey, so much for that diploma.
One of the book’s strengths is Mr. Duff’s self-awareness. He realizes what he became. At Morgan, where he spent five years as a desk assistant, he knew little about Wall Street and learned even less about investing, acknowledging that he was too lazy to read research. Where he thrived was after the closing bell, when he proved adept at staging office parties and leading his peers — and a few higher-ups — through the assorted watering holes he frequented.
His light-bulb moment comes one evening when he successfully introduces a group of pretty girls to a senior trader. “I realize I’m in my element,” he writes. “I feel in total control and at ease. Only in looking back can I see how seminal this moment is. I would never be able to stand out at my job. There I’m out-experienced, out-connected and out-degreed. But here, with a glass in hand, I have as good a chance as any to move and shake.”
Mr. Duff puts his social skills to good use when, unable to secure an actual trading job at Morgan, he moves to an up-and-coming hedge fund, the Galleon Group — the same Galleon Group that was eviscerated in Wall Street’s continuing insider-trading scandals.
As a “buy side” trader executing transactions for senior portfolio managers, he is a conduit to the “sell side” traders at the big Wall Street firms who actually carry out his trades. Mr. Duff’s decisions on how and where to allocate his trades make him of crucial importance to the sell-side traders, who earn commissions on them.
It is Mr. Duff’s portrait of how sell-side traders ardently romance their buy-side counterparts that is probably the book’s most memorable contribution to Wall Street literature. He takes everything they offer: booze, dinners, Super Bowl tickets, private jets to Las Vegas weekends, parties in South Beach, lots of cocaine and, while at Galleon, scads of tips that move stocks. One of his mentors, a trader named David Slaine, ended up cooperating with the government’s Galleon investigation, but the scandal proves peripheral to the book.
WHAT stays with you is the portrait of a young man who seemingly never met a temptation he could deny.
For a time, Mr. Duff rides high, earning million-dollar bonus checks, renting a TriBeCa triplex with drop-dead Hudson River views and eventually adding a girlfriend, a Long Island manse and a beloved daughter. But the drugs soon take hold, and his long downward spiral grows uglier at every turn. After two stays in rehabilitation facilities, he loses the trading job he took after leaving Galleon, then his relationship and the real estate. The financial crisis does the rest, and today, Mr. Duff says, he tries to make a living writing from a tiny apartment in Long Island City, Queens.
Mr. Duff proves a fine wordsmith; his prose is smooth, lean and rhythmic. Where the book misfires — badly — is when he tries to plumb the existential side of things, or to employ literary artifice. There is one cringe-worthy chapter about his girlfriend, where he begins every few paragraphs with a letter, “I,” then “I L,” and so on, which of course ends up spelling out “I LOVE YOU.” It made me want to throw the book across the room.
Almost as bad is his “Bud Fox” moment, the obligatory episode in these lost-in-Manhattan memoirs when the protagonist must replicate that memorable scene from Wall Street when Charlie Sheen, having sacrificed himself to Gordon Gekko and the gods of capitalism, stares out at the Manhattan skyline and asks, plaintively, “Who am I?”
Mr. Duff’s moment comes the morning after his 34th birthday party, when he wakes on the roof deck of his triplex, fires up a marijuana cigarette and realizes how hollow all his newfound wealth and party-hardy friends make him feel. “Why,” he wonders, “do I feel so empty?” My bet was all that cocaine; whatever the reason, I didn’t much care. I just wanted to smack the guy.
That said, this is an entertaining and cautionary tale, well worth your time. I can imagine parents out there who might give it to children pondering Wall Street careers. Of course, should it excite rather than frighten your budding Bud Fox, you might consider urging an alternative career path.
However, with real passion and honesty you can succeed in everything, also in Wall Street.
Click green for further info
Source: NYT
___________________
Eight Ways to Spot Counterfeit Money
The new U.S. $100 bill is set to debut in October, 2013
Along with a sleeker, more high-tech look, the new bill has new security features designed to thwart counterfeiters. For instance, the new $100 has color-shifting ink that would be difficult for counterfeiters to duplicate. The Liberty Bell on the note will shift from copper to green when the bill is tilted.
These changes to the bill are part of an ongoing effort to help distinguish real from fake currency. “It is a constantly evolving process of putting more and more features on the bill to allow the common citizen to detect counterfeit,” said Ed Lowery, a special agent with the Secret Service.
More from 24/7 Wall St.: States with the Most Gun Violence
Most of the counterfeit notes that change hands are computer-generated, which are easily distinguishable from real bills. “The process utilized to manufacture genuine notes is so detailed that there are very few systems out there that can match that level of detail in the printing,” Lowery said. People who hold both a real bill and a counterfeit bill in their hands should be able to notice a difference in texture between the two notes. From there, they can go on to look at other factors that would separate the two bills, such as the watermark or serial number.
Making a counterfeit note has never been easier since technology is so readily available for counterfeiters to print fake money at home. However, these notes are usually of low quality and should be unable to pass muster with an informed merchant. Nevertheless, “most people don’t realize that they have counterfeit [money] until they try to make a deposit at the bank or [with] a merchant,” said Joe DeSantis, an assistant special agent with the Secret Service.
Bars and nightclubs are easy places to exchange counterfeit money since they are not well lit, said Jason Kersten, an expert on counterfeiting and the author of “The Art of Making Money: The Story of a Master Counterfeiter.” In order to combat this problem, many of these establishments are looking at notes with ultraviolet lights, which can help to detect phony bills.
More from 24/7 Wall St.: The Most Popular Home Improvements
Stopping counterfeits can often be as easy as knowing what to look for. To find out the features one should look for when trying to detect bad notes, 24/7 Wall St. talked to DeSantis, Lowery and Kersten, in addition to using information from the U.S. Secret Service’s “Know Your Money” campaign.
These are eight ways to spot counterfeit money - Click the green word "images" below to see he pictures
Note: In the images, the genuine bill is on the left.
1. Portrait
The portraits on counterfeit money can sometimes look different from the portraits on real bills. On a real bill, the portrait tends to stand out from the background. However, on a counterfeit bill, the portrait’s coloring tends to blend too much with the rest of the bill. In addition, the portrait tends to look “lifeless and flat” on counterfeit bills, according to the Secret Service. Both DeSantis and Lowery pointed out that this difference is due to the different printing processes between real and counterfeit money. They noted that real currency uses printing methods that cannot be replicated by anyone else.
2. Federal Reserve and Treasury Seals
A real dollar bill will have Federal Reserve and Treasury Seals that are “clear, distinct and sharp,” according to the Secret Service. The agency points out that the seals on a counterfeit bill “may have uneven, blunt, or broken saw-tooth points.” One way to detect a counterfeit is by looking at the coloring. If the color of the Treasury Seal does not match the color of the serial number, the bill is fake.
3. The Border
The outside border on real paper currency are “clear and unbroken,” according to the Secret Service. However, the agency notes the edges on a counterfeit bill can be “blurred and indistinct.” Because of the difference in printing methods between genuine and counterfeit bills, the border ink can sometimes bleed on a phony. However, he added this was n0t among the most common way to detect counterfeit.
4. Serial Numbers
Looking at the serial numbers is another way to detect counterfeit money. The Secret Service points out that the serial numbers on a note must be the same color as the Treasury Seal. The agency also notes that the numbers on counterfeit bills “may not be uniformly spaced or aligned,” although Kersten believes these counterfeit identifying marks are rare. One sure way, however, to spot counterfeit bills is if several bills have the same serial number. “Face it, if you are running off thousands of those things, you aren’t going to bother changing the serial numbers,” he said.
More from 24/7 Wall St.: Nine Most Common Airplane Accidents
5. The Paper
Real bills have tiny red and blue fibers embedded in the paper, and counterfeiters have tried to replicate those. Ink marks can be printed onto the paper to look like hairs, Kersten said. He also noted that people have used cat or human hair that is dyed red or blue to embed into the bill. At close inspection, however, it is clear that the hairs are on the surface of the fake bill and not embedded into the paper. “But most people don’t even look for the hairs anymore because you have to look really closely,” Kersten said. “That is why the government put bigger things to look for in [the bills].”
6. Starch
At many grocery and convenience stores, clerks will use an iodine-based counterfeiting pen. The pen reacts to the starch in the paper. If the bill is real, the ink turns yellow. But if the bill is counterfeit, it will turn a dark blue or black. “Most counterfeiters don’t bother to use starch-free paper. They just use paper that simulates the color, thickness and look of real currency,” Kersten said. “But if your counterfeiter is good, they will use starch-free paper.”
7. The Feel
The feel is probably the most common way that people detect counterfeit, Kersten said. Real currency has a “raised texture” to it because of the type of press used to produce the bills. Counterfeit bills feel flat because they are often made digitally or on an offset press. People who handle a lot of cash “can just notice that something doesn’t feel right,” Kersten said. From there, other factors can be used to determine whether a bill is counterfeit.
8. The Watermark
The watermark is the shadow of the portrait that appears when you hold the bill up to light. “That is one of the easiest ways for the common citizen to identify counterfeit versus genuine,” DeSantis said. Periodically, there are people who attempt to recreate the watermark, he added, but it tends to be of very poor quality. The people who do try to imitate the watermark use bleaching, Kersten said. People at stores usually only care that there is a watermark within the bill, he noted, but the watermark portrait must actually match the printed portrait to be genuine. If the link has expired search the web with the title
Click America’s Nine Most Damaged Brands
If the link has expired search the web with the title
Source: U.S. government - SecretService.gov
____________________________________________
The new U.S. $100 bill is set to debut in October, 2013
Along with a sleeker, more high-tech look, the new bill has new security features designed to thwart counterfeiters. For instance, the new $100 has color-shifting ink that would be difficult for counterfeiters to duplicate. The Liberty Bell on the note will shift from copper to green when the bill is tilted.
These changes to the bill are part of an ongoing effort to help distinguish real from fake currency. “It is a constantly evolving process of putting more and more features on the bill to allow the common citizen to detect counterfeit,” said Ed Lowery, a special agent with the Secret Service.
More from 24/7 Wall St.: States with the Most Gun Violence
Most of the counterfeit notes that change hands are computer-generated, which are easily distinguishable from real bills. “The process utilized to manufacture genuine notes is so detailed that there are very few systems out there that can match that level of detail in the printing,” Lowery said. People who hold both a real bill and a counterfeit bill in their hands should be able to notice a difference in texture between the two notes. From there, they can go on to look at other factors that would separate the two bills, such as the watermark or serial number.
Making a counterfeit note has never been easier since technology is so readily available for counterfeiters to print fake money at home. However, these notes are usually of low quality and should be unable to pass muster with an informed merchant. Nevertheless, “most people don’t realize that they have counterfeit [money] until they try to make a deposit at the bank or [with] a merchant,” said Joe DeSantis, an assistant special agent with the Secret Service.
Bars and nightclubs are easy places to exchange counterfeit money since they are not well lit, said Jason Kersten, an expert on counterfeiting and the author of “The Art of Making Money: The Story of a Master Counterfeiter.” In order to combat this problem, many of these establishments are looking at notes with ultraviolet lights, which can help to detect phony bills.
More from 24/7 Wall St.: The Most Popular Home Improvements
Stopping counterfeits can often be as easy as knowing what to look for. To find out the features one should look for when trying to detect bad notes, 24/7 Wall St. talked to DeSantis, Lowery and Kersten, in addition to using information from the U.S. Secret Service’s “Know Your Money” campaign.
These are eight ways to spot counterfeit money - Click the green word "images" below to see he pictures
Note: In the images, the genuine bill is on the left.
1. Portrait
The portraits on counterfeit money can sometimes look different from the portraits on real bills. On a real bill, the portrait tends to stand out from the background. However, on a counterfeit bill, the portrait’s coloring tends to blend too much with the rest of the bill. In addition, the portrait tends to look “lifeless and flat” on counterfeit bills, according to the Secret Service. Both DeSantis and Lowery pointed out that this difference is due to the different printing processes between real and counterfeit money. They noted that real currency uses printing methods that cannot be replicated by anyone else.
2. Federal Reserve and Treasury Seals
A real dollar bill will have Federal Reserve and Treasury Seals that are “clear, distinct and sharp,” according to the Secret Service. The agency points out that the seals on a counterfeit bill “may have uneven, blunt, or broken saw-tooth points.” One way to detect a counterfeit is by looking at the coloring. If the color of the Treasury Seal does not match the color of the serial number, the bill is fake.
3. The Border
The outside border on real paper currency are “clear and unbroken,” according to the Secret Service. However, the agency notes the edges on a counterfeit bill can be “blurred and indistinct.” Because of the difference in printing methods between genuine and counterfeit bills, the border ink can sometimes bleed on a phony. However, he added this was n0t among the most common way to detect counterfeit.
4. Serial Numbers
Looking at the serial numbers is another way to detect counterfeit money. The Secret Service points out that the serial numbers on a note must be the same color as the Treasury Seal. The agency also notes that the numbers on counterfeit bills “may not be uniformly spaced or aligned,” although Kersten believes these counterfeit identifying marks are rare. One sure way, however, to spot counterfeit bills is if several bills have the same serial number. “Face it, if you are running off thousands of those things, you aren’t going to bother changing the serial numbers,” he said.
More from 24/7 Wall St.: Nine Most Common Airplane Accidents
5. The Paper
Real bills have tiny red and blue fibers embedded in the paper, and counterfeiters have tried to replicate those. Ink marks can be printed onto the paper to look like hairs, Kersten said. He also noted that people have used cat or human hair that is dyed red or blue to embed into the bill. At close inspection, however, it is clear that the hairs are on the surface of the fake bill and not embedded into the paper. “But most people don’t even look for the hairs anymore because you have to look really closely,” Kersten said. “That is why the government put bigger things to look for in [the bills].”
6. Starch
At many grocery and convenience stores, clerks will use an iodine-based counterfeiting pen. The pen reacts to the starch in the paper. If the bill is real, the ink turns yellow. But if the bill is counterfeit, it will turn a dark blue or black. “Most counterfeiters don’t bother to use starch-free paper. They just use paper that simulates the color, thickness and look of real currency,” Kersten said. “But if your counterfeiter is good, they will use starch-free paper.”
7. The Feel
The feel is probably the most common way that people detect counterfeit, Kersten said. Real currency has a “raised texture” to it because of the type of press used to produce the bills. Counterfeit bills feel flat because they are often made digitally or on an offset press. People who handle a lot of cash “can just notice that something doesn’t feel right,” Kersten said. From there, other factors can be used to determine whether a bill is counterfeit.
8. The Watermark
The watermark is the shadow of the portrait that appears when you hold the bill up to light. “That is one of the easiest ways for the common citizen to identify counterfeit versus genuine,” DeSantis said. Periodically, there are people who attempt to recreate the watermark, he added, but it tends to be of very poor quality. The people who do try to imitate the watermark use bleaching, Kersten said. People at stores usually only care that there is a watermark within the bill, he noted, but the watermark portrait must actually match the printed portrait to be genuine. If the link has expired search the web with the title
Click America’s Nine Most Damaged Brands
If the link has expired search the web with the title
Source: U.S. government - SecretService.gov
____________________________________________
Good information - apply
The history of recorded stock market prices is
“the history of people making emotional mistakes”
If that observation this week from Adam Grimes -- chief investment officer of Waverly Advisors and author of “The Art and Science of Technical Analysis” – is correct, then it’s entirely possible that investors are looking at another moment of history, one of those points where fortunes are made or fumbled.It appears to be one of those times when investors will be able to look back and say, “Here is the decision that cinched (or ruined) my ability to retire on my own terms.”
A study released from BankRate.com noted that 76% of Americans say they are not more inclined to invest in the stock market right now, at a point where interest rates on savings accounts and certificates of deposits are at record lows but the stock market is at new highs. That’s the same percentage as a year ago, before the market had scaled new heights.
You could argue that it’s simply investors being cautious, feeling like a pullback or correction is inevitable and looking for a better time to deploy assets.
But you can’t argue that the actions of the Federal Reserve and chairman Ben Bernanke -- holding interest rates so low – essentially are a dare to investors to pursue stocks and other riskier assets in order to generate better returns. In this game of low-yield-or-dare, however, the numbers suggest that investors are lacking audacity.
“The memories of 2008 remain very fresh, and a lot of people felt burned not once but twice because they had the tech bust in 2000 and the financial crisis in ’08 and, after that, a lot of them swore off equities and so far they are holding to that,” said Greg McBride, senior financial analyst for BankRate.com.
The issue here is that investors are emotional, which leads to the wrong definition of risk.
They’re terrified of getting into the stock market because they see it as risky, so they cower in cash and bonds, thinking that it is safe.
In fact, it’s the other way around.
In the long run, investing too conservatively – especially if when combined with inadequate savings, and most financial advisers now say that even a 10%-of-income savings set-aside is insufficient – will leave you with a nest egg that is insufficient, that fails to maintain your buying power.
“Your risk in the long-term is not what happens in the short-term, day-to-day of the stock market,” said McBride. “Your risk in the long-term is that if you hunker down in conservative investments, you’re going to leave yourself well short of where you need to be.”
That raises a different concern.
Once that need to diversify and take on more risks becomes evident – or the feeling of falling further behind sets in – the investors on the sideline may just capitulate and come into the market, feeling that the higher the market goes the safer it becomes.
That, too, is the wrong answer, because new heights lead to new adjustments, retrenchments, retracements and corrections, increasing the potential for the twice-burned to get singed again, selling at the first sign of trouble.
In fact, that kind of emotional whipsaw is precisely what the smart money is counting on.
Richard Peterson of MarketPsych Data – who studies financial behavior – noted that investor reluctance is actually a bullish sign, with the market climbing the classic wall of worry. The problem is that the people who are most worried are the ones whose focus is on the wrong things, which ultimately will lead to the sub-optimal actions and sub-par returns.
“In the markets, if you invest when it feels good, the market will make you feel bad,” said Peterson. “You have to take risk when you don’t feel like taking risk … but to be able to stomach the pain and get into markets when it feels most difficult, that is what makes great traders.”
The traders don’t just see this playing out, they are counting on it, and planning to profit from it.
“I want those people trapped out of the market,” said Grimes. “I want them to have to scramble to buy. Their buying pressure [while giving in to emotions] when the market breaks to new highs is going to propel the market even higher. That, to me is another check in the bullish column.”
There’s nothing wrong with being prudent and conservative, well-diversified and savvy. Investors don’t need to rush headlong into the market, and should spread their equity stake over several asset categories as they accept the additional short-term risk that comes from being in the market.
But they should also be looking at their portfolios with an eye toward what their safety-first, save-what-I’ve-got-left strategy has cost them, not only in terms of the market’s rebound since the financial crisis, but for their long-term future.
“People look at the impact these moves have now, and they justify what feels good,” said McBride, “but they miss out on the impact this has over a lifetime. … If you bailed out in ‘08, you haven’t just missed out on the last four years, you have missed out on the impact this recovery would have over the rest of your lifetime.
“As Americans, people don’t save enough to reach their retirement goals based on the returns on very conservative investments,” McBride said. “You may not want to be in the stock market – now or ever – but you need the performance of equities… Now is the time when people will someday look back and say ‘I was risk averse, and that’s how I wound up well short of where I needed to get to with my finances. The question is whether you can see that happening to you now, and stop that behavior before it’s too late.”
Source:
Chuck Jaffe is a senior MarketWatch columnist. His work appears in many U.S. newspapers. Follow him on Twitter @MKTWJaffe.
____________________________________________________________
The history of recorded stock market prices is
“the history of people making emotional mistakes”
If that observation this week from Adam Grimes -- chief investment officer of Waverly Advisors and author of “The Art and Science of Technical Analysis” – is correct, then it’s entirely possible that investors are looking at another moment of history, one of those points where fortunes are made or fumbled.It appears to be one of those times when investors will be able to look back and say, “Here is the decision that cinched (or ruined) my ability to retire on my own terms.”
A study released from BankRate.com noted that 76% of Americans say they are not more inclined to invest in the stock market right now, at a point where interest rates on savings accounts and certificates of deposits are at record lows but the stock market is at new highs. That’s the same percentage as a year ago, before the market had scaled new heights.
You could argue that it’s simply investors being cautious, feeling like a pullback or correction is inevitable and looking for a better time to deploy assets.
But you can’t argue that the actions of the Federal Reserve and chairman Ben Bernanke -- holding interest rates so low – essentially are a dare to investors to pursue stocks and other riskier assets in order to generate better returns. In this game of low-yield-or-dare, however, the numbers suggest that investors are lacking audacity.
“The memories of 2008 remain very fresh, and a lot of people felt burned not once but twice because they had the tech bust in 2000 and the financial crisis in ’08 and, after that, a lot of them swore off equities and so far they are holding to that,” said Greg McBride, senior financial analyst for BankRate.com.
The issue here is that investors are emotional, which leads to the wrong definition of risk.
They’re terrified of getting into the stock market because they see it as risky, so they cower in cash and bonds, thinking that it is safe.
In fact, it’s the other way around.
In the long run, investing too conservatively – especially if when combined with inadequate savings, and most financial advisers now say that even a 10%-of-income savings set-aside is insufficient – will leave you with a nest egg that is insufficient, that fails to maintain your buying power.
“Your risk in the long-term is not what happens in the short-term, day-to-day of the stock market,” said McBride. “Your risk in the long-term is that if you hunker down in conservative investments, you’re going to leave yourself well short of where you need to be.”
That raises a different concern.
Once that need to diversify and take on more risks becomes evident – or the feeling of falling further behind sets in – the investors on the sideline may just capitulate and come into the market, feeling that the higher the market goes the safer it becomes.
That, too, is the wrong answer, because new heights lead to new adjustments, retrenchments, retracements and corrections, increasing the potential for the twice-burned to get singed again, selling at the first sign of trouble.
In fact, that kind of emotional whipsaw is precisely what the smart money is counting on.
Richard Peterson of MarketPsych Data – who studies financial behavior – noted that investor reluctance is actually a bullish sign, with the market climbing the classic wall of worry. The problem is that the people who are most worried are the ones whose focus is on the wrong things, which ultimately will lead to the sub-optimal actions and sub-par returns.
“In the markets, if you invest when it feels good, the market will make you feel bad,” said Peterson. “You have to take risk when you don’t feel like taking risk … but to be able to stomach the pain and get into markets when it feels most difficult, that is what makes great traders.”
The traders don’t just see this playing out, they are counting on it, and planning to profit from it.
“I want those people trapped out of the market,” said Grimes. “I want them to have to scramble to buy. Their buying pressure [while giving in to emotions] when the market breaks to new highs is going to propel the market even higher. That, to me is another check in the bullish column.”
There’s nothing wrong with being prudent and conservative, well-diversified and savvy. Investors don’t need to rush headlong into the market, and should spread their equity stake over several asset categories as they accept the additional short-term risk that comes from being in the market.
But they should also be looking at their portfolios with an eye toward what their safety-first, save-what-I’ve-got-left strategy has cost them, not only in terms of the market’s rebound since the financial crisis, but for their long-term future.
“People look at the impact these moves have now, and they justify what feels good,” said McBride, “but they miss out on the impact this has over a lifetime. … If you bailed out in ‘08, you haven’t just missed out on the last four years, you have missed out on the impact this recovery would have over the rest of your lifetime.
“As Americans, people don’t save enough to reach their retirement goals based on the returns on very conservative investments,” McBride said. “You may not want to be in the stock market – now or ever – but you need the performance of equities… Now is the time when people will someday look back and say ‘I was risk averse, and that’s how I wound up well short of where I needed to get to with my finances. The question is whether you can see that happening to you now, and stop that behavior before it’s too late.”
Source:
Chuck Jaffe is a senior MarketWatch columnist. His work appears in many U.S. newspapers. Follow him on Twitter @MKTWJaffe.
____________________________________________________________
How to Pay Off
A Mountain of Credit Card Debt
(1) Study this article (2) work at ReadyForZero which developed online tools to help people pay off debt
Credit card debt is a big problem in America today. One recent study found that 1 in 4 people have more credit card debt than savings. Households with credit card debt on average have about $15,000 in debt, and that makes it incredibly hard to make ends meet — let alone pursue dreams for the future.
Do you find yourself in that boat?
If so, don’t despair. The best time to start paying off credit card debt is right now. These tips will help you take control of your debt and start your journey to becoming debt free. These are lessons that I’ve learned through my own personal experience with credit card debt (and from working at ReadyForZero which developed online tools to help people pay off debt). Just remember, paying off debt is not a goal you can achieve immediately — it will take significant time and perseverance.
Related Article: The First Thing You Must Do Before Paying Off Debt
1. Understand the Risks of Credit Cards
Why are credit cards risky? For a few reasons: first, they make it easier to spend money that you don’t have. Research has shown that we feel more pain when we spend actual dollars than when we swipe a credit card to pay for a purchase. In other words, the credit card actually removes the discomfort of seeing hard-earned money leave your wallet. That’s why it can be so easy to get caught up in credit card debt.
Another potential problem with credit cards is minimum payments — which can keep you in debt for a very long time. Many people simply make those minimum payments while their balance barely shrinks (or perhaps continues to grow!) because of further spending and interest charges.
In fact, the third reason credit cards are risky is the interest. Some cards have high interest rates — up to 25 or 30 percent! Even if you have a lower interest rate, like 10%, that still means you’re losing money every month when you carry a balance. The interest can accumulate very quickly, which can also keep you in debt for a long time if you’re not careful.
For example, consider the story of a woman named Jennifer who paid off $37,000 in debt, and she said her problem began with a few innocent purchases on a credit card (including a desktop computer). “I pretty much just kept some kind of revolving credit card debt the whole time,” she said. Before she knew it, the debt had spiraled. But thankfully she was able to conquer it after learning some important strategies, including the ones below.
2. Make a Plan of Attack to Pay Off Your Credit Cards
Okay, so now you understand the risks of credit cards. But the question remains: how to pay off credit card debt? To do that, you’ll need a plan. Start by putting all your credit card statements on the table and writing a list of the current balances and interest rates. Make sure you put them in order — from the one with the highest interest rate to the one with the lowest interest rate.
Then craft your battle plan. You want to pay off the highest interest credit card first because that will save you the most money in the long run. So figure out how much you can pay in total (per month) and then load up all that extra money (after minimum payments) and aim it like a bazooka at the high-interest credit card.
Your plan will need to focus on the first card, and once that first debt is destroyed you’ll move onto to the second-highest card, and so on. This way, you’ll save yourself as many interest payments as possible.
Jennifer experienced a big change once she created her get-out-of-debt plan. As soon as she had her monthly goal in mind, she became very motivated and started working hard to make those higher payments every month.
3. Treat Credit Card Debt Like an Emergency
A third important lesson is that you should view credit card debt as an emergency. What this means is doing everything possible to get out of debt faster. A big factor in speeding up the process is to be an expert at budgeting. Make a budget and stick to it every month, while learning to save money in new ways. For example, if you spend a lot on food, try shopping at a different grocery store or limiting yourself to one restaurant meal per month. Or if you spend a lot on clothes, vow to stay away from clothing stores until you’re debt free. Whatever it takes, try to cut your monthly expenses.
These small choices will make a big difference in your debt repayment!
Another idea is to earn some extra income on the side, in addition to your main job. There are freelancing websites online now that allow anyone to apply for freelance jobs and you can spend a few hours a week doing things like typing, organizing, designing, writing, etc. and make some extra money to pay off debt faster.
Jennifer said that a key to paying off $37,000 of debt was making some major money-saving decisions. After thinking about ways to cut her expenses, she realized “If I got rid of this car it would help me pay off my debt a lot faster,” she said. So that’s what she did. She sold her car, and it sped up her progress.
4. Cultivate Your Motivation for Paying Off Credit Card Debt
How do you stay motivated? How do you keep plugging along week after week, month after month, even when it’s hard? We’ve found that the key is to keep your long-term goals in mind and to share your progress with friends and loved ones. You can write down your goal and even add a picture of something that motivates you — whether it’s a new house, a vacation, your retirement — and put it where you will see it every day. This will help you stick with it until you reach your goal!
And if you tell friends and family about your goal, they will almost always help you stay focused too!
Jennifer used both of these tactics. She got support from those around her, and she kept her goal at the forefront. “What I really wanted was freedom — to travel and to be able to grow my business in the way I want to,” she told us. We’re so glad she reached her goal, and we hope that these tips will help you reach your goals, too!
Click green for further info
Source: Credit.com
________________________________________________________________
A Mountain of Credit Card Debt
(1) Study this article (2) work at ReadyForZero which developed online tools to help people pay off debt
Credit card debt is a big problem in America today. One recent study found that 1 in 4 people have more credit card debt than savings. Households with credit card debt on average have about $15,000 in debt, and that makes it incredibly hard to make ends meet — let alone pursue dreams for the future.
Do you find yourself in that boat?
If so, don’t despair. The best time to start paying off credit card debt is right now. These tips will help you take control of your debt and start your journey to becoming debt free. These are lessons that I’ve learned through my own personal experience with credit card debt (and from working at ReadyForZero which developed online tools to help people pay off debt). Just remember, paying off debt is not a goal you can achieve immediately — it will take significant time and perseverance.
Related Article: The First Thing You Must Do Before Paying Off Debt
1. Understand the Risks of Credit Cards
Why are credit cards risky? For a few reasons: first, they make it easier to spend money that you don’t have. Research has shown that we feel more pain when we spend actual dollars than when we swipe a credit card to pay for a purchase. In other words, the credit card actually removes the discomfort of seeing hard-earned money leave your wallet. That’s why it can be so easy to get caught up in credit card debt.
Another potential problem with credit cards is minimum payments — which can keep you in debt for a very long time. Many people simply make those minimum payments while their balance barely shrinks (or perhaps continues to grow!) because of further spending and interest charges.
In fact, the third reason credit cards are risky is the interest. Some cards have high interest rates — up to 25 or 30 percent! Even if you have a lower interest rate, like 10%, that still means you’re losing money every month when you carry a balance. The interest can accumulate very quickly, which can also keep you in debt for a long time if you’re not careful.
For example, consider the story of a woman named Jennifer who paid off $37,000 in debt, and she said her problem began with a few innocent purchases on a credit card (including a desktop computer). “I pretty much just kept some kind of revolving credit card debt the whole time,” she said. Before she knew it, the debt had spiraled. But thankfully she was able to conquer it after learning some important strategies, including the ones below.
2. Make a Plan of Attack to Pay Off Your Credit Cards
Okay, so now you understand the risks of credit cards. But the question remains: how to pay off credit card debt? To do that, you’ll need a plan. Start by putting all your credit card statements on the table and writing a list of the current balances and interest rates. Make sure you put them in order — from the one with the highest interest rate to the one with the lowest interest rate.
Then craft your battle plan. You want to pay off the highest interest credit card first because that will save you the most money in the long run. So figure out how much you can pay in total (per month) and then load up all that extra money (after minimum payments) and aim it like a bazooka at the high-interest credit card.
Your plan will need to focus on the first card, and once that first debt is destroyed you’ll move onto to the second-highest card, and so on. This way, you’ll save yourself as many interest payments as possible.
Jennifer experienced a big change once she created her get-out-of-debt plan. As soon as she had her monthly goal in mind, she became very motivated and started working hard to make those higher payments every month.
3. Treat Credit Card Debt Like an Emergency
A third important lesson is that you should view credit card debt as an emergency. What this means is doing everything possible to get out of debt faster. A big factor in speeding up the process is to be an expert at budgeting. Make a budget and stick to it every month, while learning to save money in new ways. For example, if you spend a lot on food, try shopping at a different grocery store or limiting yourself to one restaurant meal per month. Or if you spend a lot on clothes, vow to stay away from clothing stores until you’re debt free. Whatever it takes, try to cut your monthly expenses.
These small choices will make a big difference in your debt repayment!
Another idea is to earn some extra income on the side, in addition to your main job. There are freelancing websites online now that allow anyone to apply for freelance jobs and you can spend a few hours a week doing things like typing, organizing, designing, writing, etc. and make some extra money to pay off debt faster.
Jennifer said that a key to paying off $37,000 of debt was making some major money-saving decisions. After thinking about ways to cut her expenses, she realized “If I got rid of this car it would help me pay off my debt a lot faster,” she said. So that’s what she did. She sold her car, and it sped up her progress.
4. Cultivate Your Motivation for Paying Off Credit Card Debt
How do you stay motivated? How do you keep plugging along week after week, month after month, even when it’s hard? We’ve found that the key is to keep your long-term goals in mind and to share your progress with friends and loved ones. You can write down your goal and even add a picture of something that motivates you — whether it’s a new house, a vacation, your retirement — and put it where you will see it every day. This will help you stick with it until you reach your goal!
And if you tell friends and family about your goal, they will almost always help you stay focused too!
Jennifer used both of these tactics. She got support from those around her, and she kept her goal at the forefront. “What I really wanted was freedom — to travel and to be able to grow my business in the way I want to,” she told us. We’re so glad she reached her goal, and we hope that these tips will help you reach your goals, too!
Click green for further info
Source: Credit.com
________________________________________________________________
How We Got Out of
$50,000 Worth of Debt in one year
This article is an inspiration for a new debt free life
Click green for further info
It’s taken 12 months for newlyweds Angela and Ted Jalad to go back to enjoying even the smallest of life’s splurges. Today they celebrate, as the California couple has erased a staggering $50,000 worth of debt in just one year’s time.
“We had just gotten married and we had all these bills. And so I thought to myself this isn’t a good way to start a new life together. And we realized we didn’t want to keep working our butts off just to keep paying off this debt,” says Angela.
Here’s the breakdown: As of January 2012, the couple had two personal loans consisting of consolidated credit card and student loan debt worth $15,000 each, plus a $20,000 car loan for a grand total of $50,000, close to the average annual income in America.
They knocked out the first personal loan by allocating their entire $8,000 tax refund toward it, as well as the proceeds from selling Angela’s car ($3,000) and Ted’s luxury watch ($1,000). They also used the $3,000 they’d saved since January and, by April 2012, they’d deleted a third of their debt.
To pay off the remaining $35,000, they lived on half of Ted’s $6,000 monthly paychecks and put Angela’s entire $1,500 monthly income toward the debt. By August, they’d wiped out the second personal loan and the car was finally paid off in December.
A spending allowance for Ted proved essential. He limited himself to just $100 a week in cash for gas, food and incidentals. Gone were their days of eating out. Their grocery list shrank to just 10 basic items they’d use for all three meals: eggs, milk, bread, salmon, chicken breast, broccoli, asparagus, Brussels sprouts, berries and oatmeal.
An even greater sacrifice came with the couple’s living arrangement, when they boomeranged back to live at home with Ted’s mom and dad. “We wanted to get our own place, but after we looked into our finances and realizing that we pay $700 to stay here and just to help with the mortgage and the utilities, we can save half or even more than half,” says Angela.
Their work schedules offered the perfect arrangement to save money, as well. With Ted working nights and Angela working days, they were less tempted to go out and spend on dining and entertainment, and managed to get by with just one car. Being homebodies, the couple skipped some vacation opportunities, including Paris and a cruise with family.
Now that their debt is behind them, Ted and Angela can focus on their future. This year it’s all about saving. In fact, they’ve already shored up roughly $10,000. “We don’t want to pressure ourselves to getting a number like [$50,000]. We want to relax a little bit, but we want to be smart about our choices still,” Angela says.
Source: Internet
______________________________________________________
$50,000 Worth of Debt in one year
This article is an inspiration for a new debt free life
Click green for further info
It’s taken 12 months for newlyweds Angela and Ted Jalad to go back to enjoying even the smallest of life’s splurges. Today they celebrate, as the California couple has erased a staggering $50,000 worth of debt in just one year’s time.
“We had just gotten married and we had all these bills. And so I thought to myself this isn’t a good way to start a new life together. And we realized we didn’t want to keep working our butts off just to keep paying off this debt,” says Angela.
Here’s the breakdown: As of January 2012, the couple had two personal loans consisting of consolidated credit card and student loan debt worth $15,000 each, plus a $20,000 car loan for a grand total of $50,000, close to the average annual income in America.
They knocked out the first personal loan by allocating their entire $8,000 tax refund toward it, as well as the proceeds from selling Angela’s car ($3,000) and Ted’s luxury watch ($1,000). They also used the $3,000 they’d saved since January and, by April 2012, they’d deleted a third of their debt.
To pay off the remaining $35,000, they lived on half of Ted’s $6,000 monthly paychecks and put Angela’s entire $1,500 monthly income toward the debt. By August, they’d wiped out the second personal loan and the car was finally paid off in December.
A spending allowance for Ted proved essential. He limited himself to just $100 a week in cash for gas, food and incidentals. Gone were their days of eating out. Their grocery list shrank to just 10 basic items they’d use for all three meals: eggs, milk, bread, salmon, chicken breast, broccoli, asparagus, Brussels sprouts, berries and oatmeal.
An even greater sacrifice came with the couple’s living arrangement, when they boomeranged back to live at home with Ted’s mom and dad. “We wanted to get our own place, but after we looked into our finances and realizing that we pay $700 to stay here and just to help with the mortgage and the utilities, we can save half or even more than half,” says Angela.
Their work schedules offered the perfect arrangement to save money, as well. With Ted working nights and Angela working days, they were less tempted to go out and spend on dining and entertainment, and managed to get by with just one car. Being homebodies, the couple skipped some vacation opportunities, including Paris and a cruise with family.
Now that their debt is behind them, Ted and Angela can focus on their future. This year it’s all about saving. In fact, they’ve already shored up roughly $10,000. “We don’t want to pressure ourselves to getting a number like [$50,000]. We want to relax a little bit, but we want to be smart about our choices still,” Angela says.
Source: Internet
______________________________________________________
Reducing Your Student Loan Debt
By Eric Reed
NEW YORK (MainStreet) —Have you ever wanted to change a stranger’s life? That was what happened to me one night over beers with some colleagues from firm. When our waitress overheard that we were all practicing attorneys, she mentioned that she was applying to law schools herself and asked if we had any advice.
“Yes,” my friend Kate said. “Don’t go.” Our waitress laughed. We did not.
ALSO SEE: Leaving The Law: A Risky Career Change Toward Passion
According to a recent article in the Chronicle of Higher Education as many as six out of ten lawyers urge young people to stay away from their profession, and in the four years since graduating myself, I’ve only ended one conversation by telling the applicant he’d made a good decision. Yet most of us continue to practice anyway, grinding away at the very job from which we so strongly urge others to save themselves. Why is that?
In a word, debt. Nationwide student loans are crushing young graduates, pushing back plans to buy homes, start families or take professional risks. According to the nonprofit group American Debt Assistance, nearly 37 million Americans have outstanding student loans, and the problem is growing. Debt manager Steve Blutza of the Chicago-based Heartland Financial Services says that he’s seeing student debt become an increasingly large section of his practice, particularly as more and more loans are privatized.
“If it’s federally guaranteed, we can pretty much guarantee they’ll walk away with a smile,” Blutza says of his work helping people with student debt. “Even if they’re in default, with federally guaranteed loans we can pretty much make them virgins again.” With private loans, however, “it’s a different ball game.”
So what can we do?
For many of us, the answer usually boils down to throwing more money in the hole and hoping to fill it up. This isn’t fun, or even necessarily economically efficient, but it’s clear and stops the collection calls for another few weeks. Happily there are better solutions out there than just pay and pray, ways to make your student loans maybe a little bit more manageable over the long haul.
ALSO SEE: Young Student Loan Borrowers Are Bagging the Home Mortgage and Auto Markets
Refinancing
Over the last several years the lending industry has taken a huge hit, and the upshot is that interest rates have plunged on everything from credit cards to mortgages. Even the Federal Reserve’s “prime,” the rate by which most of the marketplace is set, has dropped to historic lows. Unfortunately, and in many ways unsurprisingly, student borrowers have been largely left out of this windfall. We continue to pay approximately twice as much as the average mortgage, and we borrow at almost three times the rate of the government.
This is where refinancing can come in, a process by which you renegotiate the interest on a loan, or have a third party purchase it outright at a lower rate. Considering how much money gets sucked down by interest, the right refinancing package can save you thousands of dollars over the lifetime of a high value loan.
Unfortunately this can be tricky for student debt and won’t always be available. Right now the government doesn’t allow borrowers to renegotiate federal loans without consolidation, discussed below, but your private lender might. If a large portion of your debt comes from these third parties, it’s worth a phone call to find out what your options are. After all, what works for a speedboat can work for a medical degree, and a few points off that interest rate will make a very real difference in the long run.
Consolidation
Consolidation is similar to refinancing but with the bonus of added convenience.
With loan consolidation you roll all of your existing debts into one simple, if horrifying, monthly bill. Instead of having to keep track of multiple separate bills each month, and running the risk of late fees by missing one, you have just one payment to make. Potentially more important in the long run, consolidation can also help reduce your interest rate. Like refinancing, this tactic functionally replaces old debts by taking out a new one in their place, and sometimes that can come at a renegotiated rate. It’s a strong option for graduates looking to manage their debt, according to Butza.
The Department of Education addresses consolidation directly on its website. It has an established program that’s a common way for people to turn their pile of multiple debts into one, easier to manage system. Consolidating federal loans can also lower monthly payments by extending your plan to as long as 30 years, although that means you’ll end up paying more in interest over time. Still, if you’re more worried about making rent next month than the state of your 401k, a long payment plan might not seem so bad.
Income Based Repayment (IBR)
For a generation of students not quite ready to give up on their hopes of becoming a starving artist, or journalist as the case may be, IBR might just be the answer that far too many people overlook. As the name suggests, Income Based Repayment is a program that fixes payments to your earnings. The less you make the less you pay, and done right it can work wonders.
First, the caveats: IBR is not for everyone or every debt. You can only join if the monthly payments would be higher under a 10 year Standard Repayment Plan than with IBR; in other words, you have to fall below a certain income to qualify. It also only works for the Federal Direct Loan and Family Education Loan programs, so nothing private. Finally, any loans currently in default aren’t eligible for the program, so if you’ve fallen catastrophically behind you’ll need to catch up first.
Now here’s the good news. Under IBR your monthly payments get capped at 15% of discretionary income for the next 25 years, after which the entire debt is forgiven. “Discretionary” is a key word here, since payments weighted by income and family size will likely be somewhat less than 15% in reality. Interest accrues, but if your plan won’t pay both the principal and the interest the government subsidizes your interest payment.
Roberta Frick, Director of Student Finance at the University of Connecticut Law School, advises borrowers to consider not just how much they earn but what that income is relative to debt when evaluating IBR.
“[It’s for] when their expected income is going to be very law compared to their debt,” Frick said. “Even if a student makes $70,000 their first year out of law school, if they have $120,000 in debt, the income based repayment might be a good option.”
The fact that you can change plans annually helps this analysis, Frick said, since students can enter or leave the program as their circumstances change.
Still, no good thing comes for free. While pegging your monthly payments to income does make them considerably more manageable, remember that it will still take a quarter-century before those loans are gone for good. You’ll probably be paying off debt when your children enroll in college. That lengthy plan will also let a lot more interest add up over time, meaning more money that never touches former tuition. Finally, and I can’t stress this enough, it won’t help you out with any private lenders, so make sure your loans are federal before making a plan.
That said, IBR is an excellent program for people worried about how they’re going to follow their dreams without defaulting on their loans. You might not want to keep writing checks for the next 25 years, but as a way to ease the pressure next month it might be just what the doctor ordered.
Graduated Repayment
Under graduated repayment, your loan is restructured to a lower payment that increases steadily every two years. Payments are calculated based on your income, and can go as low as just the interest on the loan if need be. Like IBR, Graduated Repayment is a federal plan, so it only applies to public loans not private. It’s largely an unpopular program, according to Frick, as students opt more and more for either income based repayment or loan payment in full.
“Most people want to be [on the Standard Repayment Plan] obviously, because they can pay it off in ten years, but some people just can’t afford it,” Frick said, noting that she sees fewer and fewer people opt for graduated repayment.
Still, she noted, it’s an option worth at least considering for people who are in a difficult position but anticipate things getting better. It allows a borrower to keep on top of their interest, while at the same time making life easier with reduced payments.
Taxes
This is a small issue, but taxes still bear mentioning. According to the IRS, interest payments on a student loan are tax deductible up to $2,500. It may not mean much depending on what you pay in taxes these days, but it’s money on the table and a lot of people leave it there.
Lender Benefits
Last but not least, many lenders offer benefits for borrowers who subscribe to various payment programs. The most common are rewards for switching to electronic statements and automatic bill pay. Systems like this save the lender money, since they don’t have to print out mailers or track you down every month, and they try to pass some of that along as incentive for you to sign up.
Usually the perk is a small adjustment to your interest rate, nudging it down by a quarter of a percent or so. Don’t laugh it off. Those numbers might seem small today, but over the lifetime of a loan that quarter percent can mean real money back in your pocket.
Plus, it’s that much less junk mail on the table every Friday.
Overall, Blutza and Frick agree that the best way to manage your debt is to stay active and have a plan.
“When a student leaves here we do offer individual counseling sessions,” Frick said of her law school. “We go over how much they’ve taken out, and I ask them what their plans are.”
“Don’t put your head in the ground and [think] maybe they’ll overlook me,” Blutza said. “It’s similar to a health kind of comparison. If you see a problem you’re going to go to a doctor. Better to do it sooner rather than later.
ALSO SEE: Taking the Risk out of Your College Investment
By Eric Reed
NEW YORK (MainStreet) —Have you ever wanted to change a stranger’s life? That was what happened to me one night over beers with some colleagues from firm. When our waitress overheard that we were all practicing attorneys, she mentioned that she was applying to law schools herself and asked if we had any advice.
“Yes,” my friend Kate said. “Don’t go.” Our waitress laughed. We did not.
ALSO SEE: Leaving The Law: A Risky Career Change Toward Passion
According to a recent article in the Chronicle of Higher Education as many as six out of ten lawyers urge young people to stay away from their profession, and in the four years since graduating myself, I’ve only ended one conversation by telling the applicant he’d made a good decision. Yet most of us continue to practice anyway, grinding away at the very job from which we so strongly urge others to save themselves. Why is that?
In a word, debt. Nationwide student loans are crushing young graduates, pushing back plans to buy homes, start families or take professional risks. According to the nonprofit group American Debt Assistance, nearly 37 million Americans have outstanding student loans, and the problem is growing. Debt manager Steve Blutza of the Chicago-based Heartland Financial Services says that he’s seeing student debt become an increasingly large section of his practice, particularly as more and more loans are privatized.
“If it’s federally guaranteed, we can pretty much guarantee they’ll walk away with a smile,” Blutza says of his work helping people with student debt. “Even if they’re in default, with federally guaranteed loans we can pretty much make them virgins again.” With private loans, however, “it’s a different ball game.”
So what can we do?
For many of us, the answer usually boils down to throwing more money in the hole and hoping to fill it up. This isn’t fun, or even necessarily economically efficient, but it’s clear and stops the collection calls for another few weeks. Happily there are better solutions out there than just pay and pray, ways to make your student loans maybe a little bit more manageable over the long haul.
ALSO SEE: Young Student Loan Borrowers Are Bagging the Home Mortgage and Auto Markets
Refinancing
Over the last several years the lending industry has taken a huge hit, and the upshot is that interest rates have plunged on everything from credit cards to mortgages. Even the Federal Reserve’s “prime,” the rate by which most of the marketplace is set, has dropped to historic lows. Unfortunately, and in many ways unsurprisingly, student borrowers have been largely left out of this windfall. We continue to pay approximately twice as much as the average mortgage, and we borrow at almost three times the rate of the government.
This is where refinancing can come in, a process by which you renegotiate the interest on a loan, or have a third party purchase it outright at a lower rate. Considering how much money gets sucked down by interest, the right refinancing package can save you thousands of dollars over the lifetime of a high value loan.
Unfortunately this can be tricky for student debt and won’t always be available. Right now the government doesn’t allow borrowers to renegotiate federal loans without consolidation, discussed below, but your private lender might. If a large portion of your debt comes from these third parties, it’s worth a phone call to find out what your options are. After all, what works for a speedboat can work for a medical degree, and a few points off that interest rate will make a very real difference in the long run.
Consolidation
Consolidation is similar to refinancing but with the bonus of added convenience.
With loan consolidation you roll all of your existing debts into one simple, if horrifying, monthly bill. Instead of having to keep track of multiple separate bills each month, and running the risk of late fees by missing one, you have just one payment to make. Potentially more important in the long run, consolidation can also help reduce your interest rate. Like refinancing, this tactic functionally replaces old debts by taking out a new one in their place, and sometimes that can come at a renegotiated rate. It’s a strong option for graduates looking to manage their debt, according to Butza.
The Department of Education addresses consolidation directly on its website. It has an established program that’s a common way for people to turn their pile of multiple debts into one, easier to manage system. Consolidating federal loans can also lower monthly payments by extending your plan to as long as 30 years, although that means you’ll end up paying more in interest over time. Still, if you’re more worried about making rent next month than the state of your 401k, a long payment plan might not seem so bad.
Income Based Repayment (IBR)
For a generation of students not quite ready to give up on their hopes of becoming a starving artist, or journalist as the case may be, IBR might just be the answer that far too many people overlook. As the name suggests, Income Based Repayment is a program that fixes payments to your earnings. The less you make the less you pay, and done right it can work wonders.
First, the caveats: IBR is not for everyone or every debt. You can only join if the monthly payments would be higher under a 10 year Standard Repayment Plan than with IBR; in other words, you have to fall below a certain income to qualify. It also only works for the Federal Direct Loan and Family Education Loan programs, so nothing private. Finally, any loans currently in default aren’t eligible for the program, so if you’ve fallen catastrophically behind you’ll need to catch up first.
Now here’s the good news. Under IBR your monthly payments get capped at 15% of discretionary income for the next 25 years, after which the entire debt is forgiven. “Discretionary” is a key word here, since payments weighted by income and family size will likely be somewhat less than 15% in reality. Interest accrues, but if your plan won’t pay both the principal and the interest the government subsidizes your interest payment.
Roberta Frick, Director of Student Finance at the University of Connecticut Law School, advises borrowers to consider not just how much they earn but what that income is relative to debt when evaluating IBR.
“[It’s for] when their expected income is going to be very law compared to their debt,” Frick said. “Even if a student makes $70,000 their first year out of law school, if they have $120,000 in debt, the income based repayment might be a good option.”
The fact that you can change plans annually helps this analysis, Frick said, since students can enter or leave the program as their circumstances change.
Still, no good thing comes for free. While pegging your monthly payments to income does make them considerably more manageable, remember that it will still take a quarter-century before those loans are gone for good. You’ll probably be paying off debt when your children enroll in college. That lengthy plan will also let a lot more interest add up over time, meaning more money that never touches former tuition. Finally, and I can’t stress this enough, it won’t help you out with any private lenders, so make sure your loans are federal before making a plan.
That said, IBR is an excellent program for people worried about how they’re going to follow their dreams without defaulting on their loans. You might not want to keep writing checks for the next 25 years, but as a way to ease the pressure next month it might be just what the doctor ordered.
Graduated Repayment
Under graduated repayment, your loan is restructured to a lower payment that increases steadily every two years. Payments are calculated based on your income, and can go as low as just the interest on the loan if need be. Like IBR, Graduated Repayment is a federal plan, so it only applies to public loans not private. It’s largely an unpopular program, according to Frick, as students opt more and more for either income based repayment or loan payment in full.
“Most people want to be [on the Standard Repayment Plan] obviously, because they can pay it off in ten years, but some people just can’t afford it,” Frick said, noting that she sees fewer and fewer people opt for graduated repayment.
Still, she noted, it’s an option worth at least considering for people who are in a difficult position but anticipate things getting better. It allows a borrower to keep on top of their interest, while at the same time making life easier with reduced payments.
Taxes
This is a small issue, but taxes still bear mentioning. According to the IRS, interest payments on a student loan are tax deductible up to $2,500. It may not mean much depending on what you pay in taxes these days, but it’s money on the table and a lot of people leave it there.
Lender Benefits
Last but not least, many lenders offer benefits for borrowers who subscribe to various payment programs. The most common are rewards for switching to electronic statements and automatic bill pay. Systems like this save the lender money, since they don’t have to print out mailers or track you down every month, and they try to pass some of that along as incentive for you to sign up.
Usually the perk is a small adjustment to your interest rate, nudging it down by a quarter of a percent or so. Don’t laugh it off. Those numbers might seem small today, but over the lifetime of a loan that quarter percent can mean real money back in your pocket.
Plus, it’s that much less junk mail on the table every Friday.
Overall, Blutza and Frick agree that the best way to manage your debt is to stay active and have a plan.
“When a student leaves here we do offer individual counseling sessions,” Frick said of her law school. “We go over how much they’ve taken out, and I ask them what their plans are.”
“Don’t put your head in the ground and [think] maybe they’ll overlook me,” Blutza said. “It’s similar to a health kind of comparison. If you see a problem you’re going to go to a doctor. Better to do it sooner rather than later.
ALSO SEE: Taking the Risk out of Your College Investment
- 10 Things You Should Never Put on Your Credit Card
- 9 Things You Should Always Buy With Your Credit Card
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how to build and maintain your good credit
Apply the knowledge
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(Dr. Christian, STAF, Inc. President)
5 Ways Bad Credit Could Be Wreaking Havoc
on Your Personal Life and Your Career
Havoc = devastation - destruction - ravage - desolation - ruin
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It’s no secret that bad credit is a personal finance killer. Higher interest rates and lower odds of loan approval are just a couple of the side-effects of having a bad credit score. But did you know that having a poor credit score can also be detrimental to your personal life and even your career?
Here are five ways bad credit could be wreaking havoc on your life, as well as some simple solutions to get your credit score back on track:
1.) Bad credit can kill your odds of owning your dream home
First and foremost, having poor credit can essentially dash your dreams of owning that perfect home. Unless you have a really high income to counter your bad credit, or your partner’s credit is superb, odds are you’ll be paying serious interest on your first mortgage, assuming you’re lucky enough to get approved at all.
The cost of a bad credit score when it comes to interest rates attached to home loans, auto loans and credit cards is hard to quantify. But essentially, it’s a lot. According to MainStreet.com, a consumer with a poor credit score (in this example, 620) can expect to pay two percent more than an applicant with a good credit score (750 or better). Considering that the average national monthly mortgage payment in 2011 was $1,061 (according to RealtorMag) on a 30-year mortgage, that’s a difference of over $20 a month in interest alone. And while that might not seem like a lot, that number inflates to $254.64 per year and over the course of a 30-year mortgage, that’s $7,639.20 more in interest!
So yes, it obviously pays to have a good credit score, and could mean the difference between affording and not affording your dream home, or even getting approved int he first place.
2.) Employer credit checks might keep you unemployed
According to money.cnn.com, one in ten unemployed Americans were denied jobs because of bad credit. As credit checks have become more common in the employee screening process, apparently so have rejections due to poor credit. And unfortunately, it’s a chicken-and-egg situation since bad credit is often a consequence of unemployment.
To combat this issue, it’s important for the recently-unemployed to best prepare for life without a paycheck. This means prioritizing your bills, including credit card bills, medical bills and any other bills that could affect your credit score.
3.) Forget cash back and miles credit cards
If you think you can get approved for the sexiest credit card offers with a poor credit score, think again.
Cash back bonuses, frequent flier miles and 0 percent interest cards are essentially off-limits for bad credit consumers. Not only are you unlikely to get approved for these types of cards, you’re best off not even trying at all since creditors take a hard pull of your profile – the kind of credit pull that will actually do initial harm to your score.
That said, there are credit cards for bad credit available that can help consumers improve their scores with responsible usage each month. Secured credit cards are the preferred category of cards, since their annual fees and interest rates are decidedly lower than unsecured bad credit options. They do require a security deposit upon approval, but there are literally no better credit cards for building credit available to consumers with bad credit scores.
4.) The phone calls…
Anyone with outstanding debt knows that having bad credit can lend to their fear of answering the phone.
Collection agency phone calls are no fun to get, but they’re especially bad when they become constant. A lot of consumers might not know that you can get collection agencies to stop calling you by sending them a stop calling letter, and if they persist then they’re actually in violation of The Fair Debt Collection Practices Act and are liable to up to $1,000 in penalties.
That said, just because the phone calls stop doesn’t mean you no longer owe them. The real way to get collection agencies to quit tying up your phone is to pay back your debts.
One last way your credit score may affect your person life might surprise you…
5.) Nobody wants to date bad credit
The New York Times ran a story last year about the rise in credit score inquiries on first dates. Apparently, it’s become common and almost accepted for a possible love interest to ask about your credit score as early as appetizers, and if your credit is bad than don’t be surprised if the person on the other side of the table splits before dessert.
That’s right – a bad score can even go so far as to keep you single and looking until you get your finances on track.
So yes, bad credit can wreak havoc on all facets of your life if you don’t take action. Again, it’s never too late to make improving your credit score a priority. Your personal life – and your career – might also see a nice improvement once you get the ball rolling on building up your score, too.
More Business articles from Business 2 Community:
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- Top 5 Online Marketing Tactics for 2013
- Who Are Your Internet Marketing Mentors?
- Are You Creating A Sense Of Urgency With Your Customers?
- When Things Go Wrong, Don’t Forget the Core Principles of Customer Care
- Content Marketing – Using Content to Win Business and Build Trust – Part Two
____________________________________________________
This is a very important article to start building perfect, top credit
This is a must-to-read article
as are all other articles in this tab
The Biggest Credit Mistake People Make
Below in this site you will get complete guidance for everything needed
to make correct decisions in building
the best possible, lasting credit score & an admirable credit worthiness
This information is before any other guidance to point out how to avoid all mistakes with any action
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Some credit mistakes are obvious. Everybody knows the big one: Failing to pay your bills on time. If you’re looking to wreck your credit score, there’s no faster way.
Some credit mistakes aren’t so obvious. What’s worse, the biggest secret credit mistake — the one most people don’t even know they’re making — actually happens when people are trying to turn their credit score around and be more financially responsible.
That mistake is closing credit card accounts. I know this might sound surprising to some, especially those who have labored for years to pay off big credit card balances. It’s understandable. You just made the final payment, and it would feel so good to call the customer service department of your credit card company and say (to paraphrase Henny Youngman): “Take my credit card, please!”
You have to resist temptation here. My best advice: Put your hands on your head, and back away from the phone.
The truth of the matter is that, depending on your financial situation, closing credit accounts could be the biggest mistake you never saw coming.
First, the implications could come further down the road, long after you’ve forgotten about that closed account. The good news is that good credit sticks around longer than bad credit. Delinquencies and bankruptcies will stain your credit history for seven years and 10 yearsrespectively, but a credit card account with zero delinquencies stays on your report for a full 10 years after it’s closed — and your credit score will benefit from that history during that time.
Unfortunately, after 10 years, that closed account will drop off your credit report. And when it does, you’ll lose all of the positive history associated with that account. And if your overall length of credit history declines when that account goes away for good, then your score will take a hit. Surprise!
The various aspects of your credit profile are weighted differently. FICO and the major credit bureaus allocate about 15 percent of your credit score to the age of your credit history. So, it still matters — but not that much.
Now for more bad news. The second largest component of your credit score (weighted at a hefty 30 percent) is called the “credit utilization ratio.” It’s a fancy way of saying, “How much of your available credit do you actually use?” The general rule: The less, the better. Less is defined as around 10%.
Allow me to illustrate this point: Let’s say you’re an adult in your 20s; you were approved for your first credit card at age 18, got a couple more during the years you inhabited the ivory tower of whatever institution of higher learning you attended and racked up a hefty amount of debt; you then busted your butt to pay it off. Other than that, you have a car loan and you rent your apartment.
If the combined available credit of your three credit card accounts is $15,000 and you are running a $2,000 balance, your utilization ratio is about 13.3 percent. This doesn’t negatively impact your score. Let’s say, however, in your continuing effort to protect you from yourself, you opt to close two of them. Your available credit is reduced to $5,000 and running that same $2,000 balance puts your utilization rate at 40 percent. This would definitely hurt your score and also make it much more difficult to replace that credit in the future.
Now, I’m not saying you should never close a credit card. If you find a lower rate card, or one with better rewards (and the credit limit of the new card is equal to or more than the one you are closing), or you can raise the limits of existing cards to cover the credit limit shortfall it might be worth taking the minor hit to your score caused by reducing the age of your credit history. Just be careful, as a lender may access your credit report and generate a hard inquiry, which can have an additional impact on your score .
If a card is used fraudulently and your bank doesn’t cancel the card and issue a replacement, you should definitely close it immediately. If your relationship is breaking up, and you share a joint credit card with your partner, close the account. Otherwise, you will remain responsible for any excesses or late payments by your ex. If you never use a card that charges a high annual fee, closing it might make sense — but think about it first. There are other examples, but the general rule of thumb is: keep those accounts open.
Even if you have a perfectly valid reason, simply closing a credit card could hurt your credit score. Here are three ways to minimize that damage and speed your credit score’s recovery:
1) Close the right card. Avoid closing the card you’ve had the longest, with the highest credit limit and the lowest interest rate and fees. Store credit cards tend to come with high fees and low credit limits, so consider closing those.
2) Pick the right moment. Closing a card immediately before applying for a loan could cost you in higher interest payments. Don’t close it until after the loan is approved.
3) Manage your ratio. First, request a higher credit limit from the cards you have left. (Again, be careful, as this may generate a hard inquiry. You can ask the credit card company rep if this is their practice.) If you are planning to close a credit card account, you should pay down balances on your remaining cards as well, since those balances may drag down your score.
(4) Correct wrong information in your credit report.
Check your credit report at least once a year and have the credit bureaus fix any inaccuracies. You can visit AnnualCreditReport.com to get the free annual credit report consumers are entitled to. If you find errors on your report, don't assume they will get worked out eventually; it is up to you to contact the bureaus and get it straightened out.
Finally, don’t fall into the trap of avoiding credit altogether. Credit is an asset. It can help you attain your goals, including buying a home, a car and achieving financial security.
It’s a good thing to pay down debt, but once it’s gone and you can breathe normally again, if you wish to resist temptation, shred your credit card, put it in a safe deposit box or give it to your mother (and make her swear she won’t use it) — just don’t close the account.
This is an Op/Ed contribution to Credit.com and does not necessarily reflect the views of the company.
Click green for further info
__________________________________________________
This is a must-to-read article
as are all other articles in this tab
The Biggest Credit Mistake People Make
Below in this site you will get complete guidance for everything needed
to make correct decisions in building
the best possible, lasting credit score & an admirable credit worthiness
This information is before any other guidance to point out how to avoid all mistakes with any action
Click green for further info
Some credit mistakes are obvious. Everybody knows the big one: Failing to pay your bills on time. If you’re looking to wreck your credit score, there’s no faster way.
Some credit mistakes aren’t so obvious. What’s worse, the biggest secret credit mistake — the one most people don’t even know they’re making — actually happens when people are trying to turn their credit score around and be more financially responsible.
That mistake is closing credit card accounts. I know this might sound surprising to some, especially those who have labored for years to pay off big credit card balances. It’s understandable. You just made the final payment, and it would feel so good to call the customer service department of your credit card company and say (to paraphrase Henny Youngman): “Take my credit card, please!”
You have to resist temptation here. My best advice: Put your hands on your head, and back away from the phone.
The truth of the matter is that, depending on your financial situation, closing credit accounts could be the biggest mistake you never saw coming.
First, the implications could come further down the road, long after you’ve forgotten about that closed account. The good news is that good credit sticks around longer than bad credit. Delinquencies and bankruptcies will stain your credit history for seven years and 10 yearsrespectively, but a credit card account with zero delinquencies stays on your report for a full 10 years after it’s closed — and your credit score will benefit from that history during that time.
Unfortunately, after 10 years, that closed account will drop off your credit report. And when it does, you’ll lose all of the positive history associated with that account. And if your overall length of credit history declines when that account goes away for good, then your score will take a hit. Surprise!
The various aspects of your credit profile are weighted differently. FICO and the major credit bureaus allocate about 15 percent of your credit score to the age of your credit history. So, it still matters — but not that much.
Now for more bad news. The second largest component of your credit score (weighted at a hefty 30 percent) is called the “credit utilization ratio.” It’s a fancy way of saying, “How much of your available credit do you actually use?” The general rule: The less, the better. Less is defined as around 10%.
Allow me to illustrate this point: Let’s say you’re an adult in your 20s; you were approved for your first credit card at age 18, got a couple more during the years you inhabited the ivory tower of whatever institution of higher learning you attended and racked up a hefty amount of debt; you then busted your butt to pay it off. Other than that, you have a car loan and you rent your apartment.
If the combined available credit of your three credit card accounts is $15,000 and you are running a $2,000 balance, your utilization ratio is about 13.3 percent. This doesn’t negatively impact your score. Let’s say, however, in your continuing effort to protect you from yourself, you opt to close two of them. Your available credit is reduced to $5,000 and running that same $2,000 balance puts your utilization rate at 40 percent. This would definitely hurt your score and also make it much more difficult to replace that credit in the future.
Now, I’m not saying you should never close a credit card. If you find a lower rate card, or one with better rewards (and the credit limit of the new card is equal to or more than the one you are closing), or you can raise the limits of existing cards to cover the credit limit shortfall it might be worth taking the minor hit to your score caused by reducing the age of your credit history. Just be careful, as a lender may access your credit report and generate a hard inquiry, which can have an additional impact on your score .
If a card is used fraudulently and your bank doesn’t cancel the card and issue a replacement, you should definitely close it immediately. If your relationship is breaking up, and you share a joint credit card with your partner, close the account. Otherwise, you will remain responsible for any excesses or late payments by your ex. If you never use a card that charges a high annual fee, closing it might make sense — but think about it first. There are other examples, but the general rule of thumb is: keep those accounts open.
Even if you have a perfectly valid reason, simply closing a credit card could hurt your credit score. Here are three ways to minimize that damage and speed your credit score’s recovery:
1) Close the right card. Avoid closing the card you’ve had the longest, with the highest credit limit and the lowest interest rate and fees. Store credit cards tend to come with high fees and low credit limits, so consider closing those.
2) Pick the right moment. Closing a card immediately before applying for a loan could cost you in higher interest payments. Don’t close it until after the loan is approved.
3) Manage your ratio. First, request a higher credit limit from the cards you have left. (Again, be careful, as this may generate a hard inquiry. You can ask the credit card company rep if this is their practice.) If you are planning to close a credit card account, you should pay down balances on your remaining cards as well, since those balances may drag down your score.
(4) Correct wrong information in your credit report.
Check your credit report at least once a year and have the credit bureaus fix any inaccuracies. You can visit AnnualCreditReport.com to get the free annual credit report consumers are entitled to. If you find errors on your report, don't assume they will get worked out eventually; it is up to you to contact the bureaus and get it straightened out.
Finally, don’t fall into the trap of avoiding credit altogether. Credit is an asset. It can help you attain your goals, including buying a home, a car and achieving financial security.
It’s a good thing to pay down debt, but once it’s gone and you can breathe normally again, if you wish to resist temptation, shred your credit card, put it in a safe deposit box or give it to your mother (and make her swear she won’t use it) — just don’t close the account.
This is an Op/Ed contribution to Credit.com and does not necessarily reflect the views of the company.
Click green for further info
__________________________________________________
Credit Report vs. Credit Score:
Do You Know the Difference?
Click green for further info
Credit reports and scores remind me a lot of the Abbott and Costello act, "Who's on First?" They can be rather confusing. But while "Who's on First" is funny, confusing your credit report and credit scores is not. In fact, mistaking the two could end up costing you.
Not only are credit reports and credit scores different, they are often used for different purposes. However, because the two are directly related, it can be easy to confuse the two, their purpose and potential effects on your finances.
So let's sort out Who's on first and What's on second when it comes to credit reports and scores.
What is a credit report? Your credit report contains information detailing your credit history. This information can come from a number of sources, including lenders, utility companies and landlords.
This information is compiled by one of three major credit-reporting agencies: Equifax, Experian and TransUnion.
These companies try to compile an accurate picture of your financial history. Credit files include information such as:
-- Name, address and social security number
-- Types of credit you use
-- When you opened a loan or line of credit
-- The balances and available credit on your credit cards and other lines of credit
-- Information about whether you pay your bills on time
-- Information about any accounts passed to a collection's agency
-- How much new credit you've opened recently
-- Records related to bankruptcy, tax liens or court judgments
While the credit-reporting agencies do their best to keep your record free of errors, slip-ups do happen. That's why it's important to check your credit report at least once a year (consumers are entitled to one free credit report every 12 months, available at AnnualCreditReport.com) to ensure all of the information is correct. Keep in mind that each agency may have slightly different information and, consequently, may have errors another credit report doesn't.
It's important to know, however, your credit report does not include your three-digit credit score.
What is a credit score? Your credit score is the actual numerical value assigned to the information in your credit report. A credit-reporting bureau applies a complex (and proprietary) mathematical algorithm to the information in your credit file to generate your numerical credit score.
While there are numerous credit-scoring formulas, FICO is the most-widely known and used by many creditors. Your FICO score can range from 300 to 850, with under 400 being quite low and 700+putting you in the healthy range. Your credit score is meant to give potential lenders an idea of how big of a financial risk you are. In their eyes, the higher your score, the less likely you are to default or make late payments.
Credit-scoring algorithms calculate this likelihood by weighing certain items that are more likely to predict future delinquency. With FICO's, for example, your past payment history makes up 35 percent of your score. Recent late or missed payments on a credit card lower your credit score.
What else goes into your FICO score, and how much does it affect your score? Here's a quick breakdown:
-- Debt amounts (especially on revolving lines of credit): 30 percent
-- Length of credit history: 15 percent
-- Credit mix (having a blend of account types is good): 10 percent
-- New credit: 10 percent
Unlike your credit report, you can't always get your credit score for free. When you order a free credit report, you'll usually have an option to buy your numerical credit score for $7 to $12. There are services, such as Credit Karma, that will provide you with a credit score for free, but this number is only an estimate--it's not necessarily the credit score FICO and other agencies may have.
What are they used for? If you apply for a loan, the lender will most likely pull your credit score. (This causes a "hard inquiry" on your credit, which slightly lowers your credit score.)
Lenders glance at your credit score to determine your credit risk. Most lenders, in fact, have pre-set standards. If your credit score is within a certain range, they'll offer you certain credit terms, all other things being equal.
While lenders will pull your actual credit score, your credit report may be used for other purposes. For instance, potential employers can pull a copy of your credit report (with your permission). Often, they'll look to see if you're responsible with your finances, which may mean you'll be more responsible on the job.
The bottom line. Now that you know the difference between your credit report and credit score, take steps to improve both. Check your credit report regularly for errors, make all your payments on time and avoid maxing out those credit cards.
Click green for further info
Source:
Rob Berger is an attorney and the founder of the popular personal finance blog, the Dough Roller, where he writes about personal finance and investing. He covers credit reports and scores extensively.
__________________________________________________________________________
Do You Know the Difference?
Click green for further info
Credit reports and scores remind me a lot of the Abbott and Costello act, "Who's on First?" They can be rather confusing. But while "Who's on First" is funny, confusing your credit report and credit scores is not. In fact, mistaking the two could end up costing you.
Not only are credit reports and credit scores different, they are often used for different purposes. However, because the two are directly related, it can be easy to confuse the two, their purpose and potential effects on your finances.
So let's sort out Who's on first and What's on second when it comes to credit reports and scores.
What is a credit report? Your credit report contains information detailing your credit history. This information can come from a number of sources, including lenders, utility companies and landlords.
This information is compiled by one of three major credit-reporting agencies: Equifax, Experian and TransUnion.
These companies try to compile an accurate picture of your financial history. Credit files include information such as:
-- Name, address and social security number
-- Types of credit you use
-- When you opened a loan or line of credit
-- The balances and available credit on your credit cards and other lines of credit
-- Information about whether you pay your bills on time
-- Information about any accounts passed to a collection's agency
-- How much new credit you've opened recently
-- Records related to bankruptcy, tax liens or court judgments
While the credit-reporting agencies do their best to keep your record free of errors, slip-ups do happen. That's why it's important to check your credit report at least once a year (consumers are entitled to one free credit report every 12 months, available at AnnualCreditReport.com) to ensure all of the information is correct. Keep in mind that each agency may have slightly different information and, consequently, may have errors another credit report doesn't.
It's important to know, however, your credit report does not include your three-digit credit score.
What is a credit score? Your credit score is the actual numerical value assigned to the information in your credit report. A credit-reporting bureau applies a complex (and proprietary) mathematical algorithm to the information in your credit file to generate your numerical credit score.
While there are numerous credit-scoring formulas, FICO is the most-widely known and used by many creditors. Your FICO score can range from 300 to 850, with under 400 being quite low and 700+putting you in the healthy range. Your credit score is meant to give potential lenders an idea of how big of a financial risk you are. In their eyes, the higher your score, the less likely you are to default or make late payments.
Credit-scoring algorithms calculate this likelihood by weighing certain items that are more likely to predict future delinquency. With FICO's, for example, your past payment history makes up 35 percent of your score. Recent late or missed payments on a credit card lower your credit score.
What else goes into your FICO score, and how much does it affect your score? Here's a quick breakdown:
-- Debt amounts (especially on revolving lines of credit): 30 percent
-- Length of credit history: 15 percent
-- Credit mix (having a blend of account types is good): 10 percent
-- New credit: 10 percent
Unlike your credit report, you can't always get your credit score for free. When you order a free credit report, you'll usually have an option to buy your numerical credit score for $7 to $12. There are services, such as Credit Karma, that will provide you with a credit score for free, but this number is only an estimate--it's not necessarily the credit score FICO and other agencies may have.
What are they used for? If you apply for a loan, the lender will most likely pull your credit score. (This causes a "hard inquiry" on your credit, which slightly lowers your credit score.)
Lenders glance at your credit score to determine your credit risk. Most lenders, in fact, have pre-set standards. If your credit score is within a certain range, they'll offer you certain credit terms, all other things being equal.
While lenders will pull your actual credit score, your credit report may be used for other purposes. For instance, potential employers can pull a copy of your credit report (with your permission). Often, they'll look to see if you're responsible with your finances, which may mean you'll be more responsible on the job.
The bottom line. Now that you know the difference between your credit report and credit score, take steps to improve both. Check your credit report regularly for errors, make all your payments on time and avoid maxing out those credit cards.
Click green for further info
Source:
Rob Berger is an attorney and the founder of the popular personal finance blog, the Dough Roller, where he writes about personal finance and investing. He covers credit reports and scores extensively.
__________________________________________________________________________
A Credit Score That Ignores the Innocuous Mistake
Date: May 5, 2013
Click green for further info
Innocuous = innocent - harmless - inoffensive - innoxious
Megan Barringer had no idea that a medical billing mix-up over a $742 charge for a back evaluation six years ago could end up costing her more than $33,000.
But the old bill, which she ultimately paid, had gone to collections and showed up as black mark on her otherwise clean credit report. Ms. Barringer said she found out about it only when she applied for a mortgage last month and got an interest rate that was half a percentage point more than it would otherwise have been. As a result, she is paying an extra $94 a month on the $298,000 loan she took out on a three-bedroom ranch in Dallas, adding up to tens of thousands of dollars over the life of her 30-year fixed-rate mortgage.
And it was all because the doctor didn’t contact Ms. Barringer, an elementary school assistant principal, in a timely manner to let her know that she had mistakenly handed over her dental insurance card.
“I have always paid my bills on time and I put myself through school and have not had any kind of credit issues,” said Ms. Barringer, a single mother of twin 8-year-old boys. “If they want to punish somebody, does it really need to be on your report for seven years if you have not had credit problems and you pay it off? It just seems a little much.”
Credit scores try to capture your financial behavior and distill that identity into one all-powerful number. But that figure doesn’t differentiate between people like Ms. Barringer, whose credit suffered for an innocuous reason, and consumers who can’t keep up with their credit card payments after a wild shopping spree at Best Buy.
But now, at least one major credit score generator, VantageScore Solutions, has decided to ignore collection actions on credit reports — more than half of which are typically tied to medical debts — as long as the collections are paid. The change is not being made out of sympathy for people like Ms. Barringer. Instead, the company found that paid collections are less accurate at predicting future defaults than looking at unpaid collections in combination with a variety of other factors, like the age of consumers’ accounts and the size of their loans.
“There was no intentional decision to exclude a piece of behavior,” said Sarah Davies, senior vice president of analytics, research and product management at VantageScore Solutions, a joint venture of the three major credit reporting companies. “It was just about what was most predictive.”
VantageScore’s findings would also seem to lend support, at least indirectly, to proposed legislation that was reintroduced in Congress this year to require consumer reporting agencies to remove fully paid or settled medical debt information from consumers’ credit reports within 45 days of the debt’s resolution.
That sort of fix could potentially help some of the estimated seven million people who reported that a billing error prompted a collection agency to contact them in 2012, according to an April study by the Commonwealth Fund, a private foundation that researches health policy issues.
“While it doesn’t seem like an isolated collection account should have a significant impact on your scores, it can,” said Gerri Detweiler, a credit expert with Credit.com who supports the legislation. “We’ve heard from so many people over the years who thought that paying a collection account would help their credit scores. They were shocked to learn it didn’t. It feels terribly unfair to consumers not to feel like they are getting credit for doing the right thing.”
The VantageScore plays second fiddle to the FICO credit score, which is more widely used by lenders and continues to consider all collections valued at more than $100. So it’s unclear how many consumers the formula change will help. And ignoring paid collections does little for the millions of people who cannot afford to pay their medical debts because they are underinsured, uninsured or simply can’t keep up with the growing amounts their health insurance policies require them to pay. Among people who reported having trouble paying their medical bills, 32 million, or 42 percent, said they received a lower credit rating as a result of unpaid medical bills, Commonwealth found. And an estimated 28 million, or 37 percent, said they used all of their savings because of their bills, whereas 20 million, or 27 percent, took on credit card debt.
Even someone with a spotless credit history can fall into a downward spiral with just one hospital stay. “It is easy to point to someone who has run up their debt when it has to do with consumer spending,” said Mark Rukavina, former executive director of the Access Project and now a principal at Community Health Advisors, a Boston-based firm that consults with nonprofit hospitals. “But it is harder to say that about somebody that is dealing with illness and injury.”
The Consumer Financial Protection Bureau, which oversees both the major credit reporting agencies and debt collectors, has acknowledged that medical debts are a problem. Richard Cordray, the agency’s director, has said that consumers who have medical collections reported on their credit file can face a harder time getting a loan — or even a job, since some employers now look at prospects’ credit reports. And the agency has gone so far as buying its own batch of anonymous credit reports so that it can study how medical debts affect consumers, as well as to better understand the degree to which paid medical collection items predict defaults. But it remains to be seen what sort of action, if any, it will take.
The big question is whether FICO’s scoring strategy will eventually ignore paid collections, too, since that would have a much broader effect. A spokesman said that its scoring technique did not distinguish between paid and unpaid collections, though it began ignoring all collections for amounts under $100 when it introduced the latest iteration of its score in January 2009. All other types of reported collections are considered “as a derogatory because as a category they have proven to be strong indicators of credit risk,” the company said in a statement. “To ignore data that has been proven to be highly predictive of a person’s ability to repay a debt would not be in the best interest of consumers or lenders.”
John Ulzheimer, president of consumer education at SmartCredit.com, said he found VantageScore’s change noteworthy, especially when coupled with the fact that FICO began ignoring collections with an original balance under $100. “Now, you have the two most prominent credit score developers agreeing, indirectly, that small and paid collections are worth ignoring,” he said.
Ms. Davies, of VantageScore, noted that all collections were somewhat predictive: a person with a paid collection is generally three times more likely to default on a bill than someone without a collection, while an unpaid collection tells lenders you’re seven times as risky. But looking at unpaid collections in combination with other factors was even more accurate. “When you bring combinations of information together, that can provide more insight than any single variable,” she said.
The scoring company is able to take a more nuanced look now because more detailed data has become available from the big reporting bureaus over a solid period of time, she said.
Stuart Pratt, president and chief executive of the Consumer Data Industry Association, the trade group for the credit reporting bureaus, said that they were waiting to see what conclusions the Consumer Financial Protection Bureau comes to after studying the credit report data related to medical bills. “We take the position that the data has to be consistently presented and reported so that score developer groups and lenders can make their own decisions on how to weigh risk,” he said. “In this case, we don’t see the decision by a single developer as a definitive statement on the predictability of the data.”
Several lawmakers, too, have weighed in on the medical bill issue, though they have not yet gained enough traction for their proposals. Last week, Representative Maxine Waters, a California Democrat who is the ranking member of the House Financial Services Committee, along with several other members of Congress, introduced legislation that would require the consumer reporting agencies to remove fully paid or settled medical debt information from consumers’ reports within 45 days of the resolution of the debt. A similar bill was approved by the House with bipartisan support in 2010. A companion bill was reintroduced in the Senate by Jeff Merkley, Democrat of Oregon, in January.
And in coming weeks, Representative Gary Miller, Republican of California, is expected to introduce a bill with bipartisan support that would try to prevent medical bills from even being reported to the credit reporting companies. Details are still being drafted, but the proposal would prevent debt collectors from reporting any negative information to the agencies for 90 days after a consumer contacts them to resolve the matter, according to a legislative aide with knowledge of the bill. This, too, would be only a partial fix because some consumers, like Ms. Barringer, are unaware that their bills have ended up in collections.
Though specific rules are still being drafted by the Internal Revenue Service, the Affordable Care Act has a provision that requires nonprofit hospitals to make “reasonable efforts” to determine whether a patient qualifies for financial help under the hospitals’ own policies before, for instance, it sells the debt or reports negative information to the credit bureaus.
Each of these efforts would help people in situations similar to Ms. Barringer’s, who, for now, will need to wait about another year for the credit stain to fade entirely. Of course, you need to know what’s on your credit report to begin with. As Ms. Detweiler said, “Consumers don’t always know there is a problem until after it’s too late.”
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Source: NYT
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Below, little further, you'll find the important info for
The Ultimate Guide to the New VantageScore
You need to know about this new score and how it will help you & your family
____________________
Date: May 5, 2013
Click green for further info
Innocuous = innocent - harmless - inoffensive - innoxious
Megan Barringer had no idea that a medical billing mix-up over a $742 charge for a back evaluation six years ago could end up costing her more than $33,000.
But the old bill, which she ultimately paid, had gone to collections and showed up as black mark on her otherwise clean credit report. Ms. Barringer said she found out about it only when she applied for a mortgage last month and got an interest rate that was half a percentage point more than it would otherwise have been. As a result, she is paying an extra $94 a month on the $298,000 loan she took out on a three-bedroom ranch in Dallas, adding up to tens of thousands of dollars over the life of her 30-year fixed-rate mortgage.
And it was all because the doctor didn’t contact Ms. Barringer, an elementary school assistant principal, in a timely manner to let her know that she had mistakenly handed over her dental insurance card.
“I have always paid my bills on time and I put myself through school and have not had any kind of credit issues,” said Ms. Barringer, a single mother of twin 8-year-old boys. “If they want to punish somebody, does it really need to be on your report for seven years if you have not had credit problems and you pay it off? It just seems a little much.”
Credit scores try to capture your financial behavior and distill that identity into one all-powerful number. But that figure doesn’t differentiate between people like Ms. Barringer, whose credit suffered for an innocuous reason, and consumers who can’t keep up with their credit card payments after a wild shopping spree at Best Buy.
But now, at least one major credit score generator, VantageScore Solutions, has decided to ignore collection actions on credit reports — more than half of which are typically tied to medical debts — as long as the collections are paid. The change is not being made out of sympathy for people like Ms. Barringer. Instead, the company found that paid collections are less accurate at predicting future defaults than looking at unpaid collections in combination with a variety of other factors, like the age of consumers’ accounts and the size of their loans.
“There was no intentional decision to exclude a piece of behavior,” said Sarah Davies, senior vice president of analytics, research and product management at VantageScore Solutions, a joint venture of the three major credit reporting companies. “It was just about what was most predictive.”
VantageScore’s findings would also seem to lend support, at least indirectly, to proposed legislation that was reintroduced in Congress this year to require consumer reporting agencies to remove fully paid or settled medical debt information from consumers’ credit reports within 45 days of the debt’s resolution.
That sort of fix could potentially help some of the estimated seven million people who reported that a billing error prompted a collection agency to contact them in 2012, according to an April study by the Commonwealth Fund, a private foundation that researches health policy issues.
“While it doesn’t seem like an isolated collection account should have a significant impact on your scores, it can,” said Gerri Detweiler, a credit expert with Credit.com who supports the legislation. “We’ve heard from so many people over the years who thought that paying a collection account would help their credit scores. They were shocked to learn it didn’t. It feels terribly unfair to consumers not to feel like they are getting credit for doing the right thing.”
The VantageScore plays second fiddle to the FICO credit score, which is more widely used by lenders and continues to consider all collections valued at more than $100. So it’s unclear how many consumers the formula change will help. And ignoring paid collections does little for the millions of people who cannot afford to pay their medical debts because they are underinsured, uninsured or simply can’t keep up with the growing amounts their health insurance policies require them to pay. Among people who reported having trouble paying their medical bills, 32 million, or 42 percent, said they received a lower credit rating as a result of unpaid medical bills, Commonwealth found. And an estimated 28 million, or 37 percent, said they used all of their savings because of their bills, whereas 20 million, or 27 percent, took on credit card debt.
Even someone with a spotless credit history can fall into a downward spiral with just one hospital stay. “It is easy to point to someone who has run up their debt when it has to do with consumer spending,” said Mark Rukavina, former executive director of the Access Project and now a principal at Community Health Advisors, a Boston-based firm that consults with nonprofit hospitals. “But it is harder to say that about somebody that is dealing with illness and injury.”
The Consumer Financial Protection Bureau, which oversees both the major credit reporting agencies and debt collectors, has acknowledged that medical debts are a problem. Richard Cordray, the agency’s director, has said that consumers who have medical collections reported on their credit file can face a harder time getting a loan — or even a job, since some employers now look at prospects’ credit reports. And the agency has gone so far as buying its own batch of anonymous credit reports so that it can study how medical debts affect consumers, as well as to better understand the degree to which paid medical collection items predict defaults. But it remains to be seen what sort of action, if any, it will take.
The big question is whether FICO’s scoring strategy will eventually ignore paid collections, too, since that would have a much broader effect. A spokesman said that its scoring technique did not distinguish between paid and unpaid collections, though it began ignoring all collections for amounts under $100 when it introduced the latest iteration of its score in January 2009. All other types of reported collections are considered “as a derogatory because as a category they have proven to be strong indicators of credit risk,” the company said in a statement. “To ignore data that has been proven to be highly predictive of a person’s ability to repay a debt would not be in the best interest of consumers or lenders.”
John Ulzheimer, president of consumer education at SmartCredit.com, said he found VantageScore’s change noteworthy, especially when coupled with the fact that FICO began ignoring collections with an original balance under $100. “Now, you have the two most prominent credit score developers agreeing, indirectly, that small and paid collections are worth ignoring,” he said.
Ms. Davies, of VantageScore, noted that all collections were somewhat predictive: a person with a paid collection is generally three times more likely to default on a bill than someone without a collection, while an unpaid collection tells lenders you’re seven times as risky. But looking at unpaid collections in combination with other factors was even more accurate. “When you bring combinations of information together, that can provide more insight than any single variable,” she said.
The scoring company is able to take a more nuanced look now because more detailed data has become available from the big reporting bureaus over a solid period of time, she said.
Stuart Pratt, president and chief executive of the Consumer Data Industry Association, the trade group for the credit reporting bureaus, said that they were waiting to see what conclusions the Consumer Financial Protection Bureau comes to after studying the credit report data related to medical bills. “We take the position that the data has to be consistently presented and reported so that score developer groups and lenders can make their own decisions on how to weigh risk,” he said. “In this case, we don’t see the decision by a single developer as a definitive statement on the predictability of the data.”
Several lawmakers, too, have weighed in on the medical bill issue, though they have not yet gained enough traction for their proposals. Last week, Representative Maxine Waters, a California Democrat who is the ranking member of the House Financial Services Committee, along with several other members of Congress, introduced legislation that would require the consumer reporting agencies to remove fully paid or settled medical debt information from consumers’ reports within 45 days of the resolution of the debt. A similar bill was approved by the House with bipartisan support in 2010. A companion bill was reintroduced in the Senate by Jeff Merkley, Democrat of Oregon, in January.
And in coming weeks, Representative Gary Miller, Republican of California, is expected to introduce a bill with bipartisan support that would try to prevent medical bills from even being reported to the credit reporting companies. Details are still being drafted, but the proposal would prevent debt collectors from reporting any negative information to the agencies for 90 days after a consumer contacts them to resolve the matter, according to a legislative aide with knowledge of the bill. This, too, would be only a partial fix because some consumers, like Ms. Barringer, are unaware that their bills have ended up in collections.
Though specific rules are still being drafted by the Internal Revenue Service, the Affordable Care Act has a provision that requires nonprofit hospitals to make “reasonable efforts” to determine whether a patient qualifies for financial help under the hospitals’ own policies before, for instance, it sells the debt or reports negative information to the credit bureaus.
Each of these efforts would help people in situations similar to Ms. Barringer’s, who, for now, will need to wait about another year for the credit stain to fade entirely. Of course, you need to know what’s on your credit report to begin with. As Ms. Detweiler said, “Consumers don’t always know there is a problem until after it’s too late.”
Click green for further info
Source: NYT
__________________________________________________________________
Below, little further, you'll find the important info for
The Ultimate Guide to the New VantageScore
You need to know about this new score and how it will help you & your family
____________________
Article 1 of 2 Important new info
The Ultimate Guide
to the New VantageScore
Introduced first in 2006, updated later, the VantageScore formula was developed jointly by the three major credit bureaus — Equifax, Experian & TransUnion — using a combined set of credit data
obtained from each agency
VantageScore has simplified their reason codes and made them easier to understand
by establishing the website ReasonCode.org.
Visit that website - which starts with the following info:
We designed this online tool to help you learn more about the reason codes related to your VantageScore credit scores, which are used widely by banks, credit card companies and other lenders. You receive reason codes with the credit scores you purchase, and on certain disclosure notices that lenders provide to you. Our goal is to help you better understand what the reason codes mean and empower you to make good decisions about your credit habits. Use the reason code look-up tool found on this page to get started. You can also learn more about reason codes with our list of frequently asked questions and take advantage of the glossary of credit scoring terms.
___________
The Article
The Ultimate Guide
to the New VantageScore
Click green for further info
When looking for your credit scores, you may have seen VantageScore and wondered what it is, and if it’s different from other scores. Actually, there are some key differences in the VantageScore, and it’s helpful to you, the consumer, to know what they are, as well as what the score means in general for you. Understanding how credit scores work can help you learn how to manage your credit in order to build or maintain a high score.
First, VantageScore is a credit scoring system that uses credit bureau information from the three major credit bureaus — Equifax, Experian and TransUnion — to evaluate consumer risk. A VantageScore credit score is a three-digit number between 300 and 850, with higher scores meaning lower risk for lenders, and better credit terms for consumers. With that said, here’s a look at the most frequently asked questions about this score.
Who uses VantageScore?
VantageScore credit scores are accepted by the secondary ratings agencies, Fitch Ratings and Standard & Poor’s, and are used by:
First introduced in 2006, the VantageScore formula was developed jointly by the three major credit bureaus — Equifax, Experian and TransUnion — using a combined set of credit data obtained from each agency.
How are VantageScore credit scores calculated?
VantageScore calculations include trade lines (credit accounts), collections, public records and credit inquiries from your credit report, with an emphasis on your past two years of credit history. The formula excludes race, color, religion, nationality, sex, marital status, age, income, occupation, employer and where you live. The scoring factors most influencing VantageScore credit scores are:
Prior to the recent release of VantageScore 3.0, the score range was 501-990. VantageScore now uses a range of 300-850, making its scores more consistent with most other credit scores used by lenders.
What features distinguish VantageScore from other credit scores?
Some of the most notable features of VantageScore credit scores include:
A single scoring formula is used by all three credit bureaus when calculating your VantageScore credit score, yet your credit report is likely to be different at each bureau, resulting in different VantageScore credit scores obtained from Equifax, Experian and TransUnion.
Why should I know my VantageScore?
By checking both your credit report and VantageScore credit scores from each of the three major credit bureaus on a regular basis, you’ll ensure the accuracy of your credit report, while getting a better understanding of your credit risk as seen through the eyes of lenders.
What is a “good” VantageScore credit score to achieve?
There is no single set of “good” or “bad” VantageScore credit scores, as each lender establishes its own unique set of score “cutoffs” based on the amount of acceptable risk for the different credit products they offer. For example, Lender A may require at least a 760 score for the lowest interest rate on a 30-year fixed rate mortgage, but only a 720 score for its lowest auto loan rate. Lender B, on the other hand, may offer the best mortgage rates to consumers having a 740 credit score, and the best auto loan rates to borrowers with a 700 score or above.
How can I achieve as high a VantageScore credit score as possible?
You can begin to raise a low score or maintain an already-high credit score by:
The Ultimate Guide
to the New VantageScore
Introduced first in 2006, updated later, the VantageScore formula was developed jointly by the three major credit bureaus — Equifax, Experian & TransUnion — using a combined set of credit data
obtained from each agency
VantageScore has simplified their reason codes and made them easier to understand
by establishing the website ReasonCode.org.
Visit that website - which starts with the following info:
We designed this online tool to help you learn more about the reason codes related to your VantageScore credit scores, which are used widely by banks, credit card companies and other lenders. You receive reason codes with the credit scores you purchase, and on certain disclosure notices that lenders provide to you. Our goal is to help you better understand what the reason codes mean and empower you to make good decisions about your credit habits. Use the reason code look-up tool found on this page to get started. You can also learn more about reason codes with our list of frequently asked questions and take advantage of the glossary of credit scoring terms.
___________
The Article
The Ultimate Guide
to the New VantageScore
Click green for further info
When looking for your credit scores, you may have seen VantageScore and wondered what it is, and if it’s different from other scores. Actually, there are some key differences in the VantageScore, and it’s helpful to you, the consumer, to know what they are, as well as what the score means in general for you. Understanding how credit scores work can help you learn how to manage your credit in order to build or maintain a high score.
First, VantageScore is a credit scoring system that uses credit bureau information from the three major credit bureaus — Equifax, Experian and TransUnion — to evaluate consumer risk. A VantageScore credit score is a three-digit number between 300 and 850, with higher scores meaning lower risk for lenders, and better credit terms for consumers. With that said, here’s a look at the most frequently asked questions about this score.
Who uses VantageScore?
VantageScore credit scores are accepted by the secondary ratings agencies, Fitch Ratings and Standard & Poor’s, and are used by:
- 7 of the top 10 financial institutions
- 6 of the top 10 credit card issuers
- 4 of the top 10 auto lenders
- 4 of the top 5 mortgage lenders
First introduced in 2006, the VantageScore formula was developed jointly by the three major credit bureaus — Equifax, Experian and TransUnion — using a combined set of credit data obtained from each agency.
How are VantageScore credit scores calculated?
VantageScore calculations include trade lines (credit accounts), collections, public records and credit inquiries from your credit report, with an emphasis on your past two years of credit history. The formula excludes race, color, religion, nationality, sex, marital status, age, income, occupation, employer and where you live. The scoring factors most influencing VantageScore credit scores are:
- Recent Credit Behavior (new accounts, inquiries) (30%)
- Payment History (28%)
- Percent of Credit Limit Used (23%)
- Total Balances/Debt (9%)
- Age and Type of Credit (9%)
- Available Credit (1%)
Prior to the recent release of VantageScore 3.0, the score range was 501-990. VantageScore now uses a range of 300-850, making its scores more consistent with most other credit scores used by lenders.
What features distinguish VantageScore from other credit scores?
Some of the most notable features of VantageScore credit scores include:
- Collections under $250, as well as paid collections of any amount, are excluded from VantageScore calculations.
- Compared with other scoring models, VantageScore credit scores require less credit history to calculate a score, which could result in up to 30 million more consumers receiving credit scores — and greater access to “mainstream” credit.
- For lenders, VantageScore 3.0 delivers up to 25% improved predictive value over the prior version.
- With VantageScore, natural disaster victims are protected from the negative credit ratings that often result from the economic impacts of these events.
- VantageScore has simplified their reason codes and made them easier to understand by establishing the website ReasonCode.org.
A single scoring formula is used by all three credit bureaus when calculating your VantageScore credit score, yet your credit report is likely to be different at each bureau, resulting in different VantageScore credit scores obtained from Equifax, Experian and TransUnion.
Why should I know my VantageScore?
By checking both your credit report and VantageScore credit scores from each of the three major credit bureaus on a regular basis, you’ll ensure the accuracy of your credit report, while getting a better understanding of your credit risk as seen through the eyes of lenders.
What is a “good” VantageScore credit score to achieve?
There is no single set of “good” or “bad” VantageScore credit scores, as each lender establishes its own unique set of score “cutoffs” based on the amount of acceptable risk for the different credit products they offer. For example, Lender A may require at least a 760 score for the lowest interest rate on a 30-year fixed rate mortgage, but only a 720 score for its lowest auto loan rate. Lender B, on the other hand, may offer the best mortgage rates to consumers having a 740 credit score, and the best auto loan rates to borrowers with a 700 score or above.
How can I achieve as high a VantageScore credit score as possible?
You can begin to raise a low score or maintain an already-high credit score by:
- Making all payments on time every month
- Keeping credit card balances low
- Only applying for new credit when you need it Click green for further info _______________________________________________________________________________ Article 2 of 2 1 of 2 is next above
- How Your VantageScore Credit Report Is Calculated
- This article has a similar topic as the article 1 of 2 above
- However, they have somewhat different information - both valuable information. Study both of them.
- Click green for further info
- Since the 1970s, credit scores have played an increasingly vital role in the lending industry. Fair Isaac and Company began assigning credit scores to consumers, based upon various factors over 40 years ago, and these scores are now reviewed not only by prospective lenders, but also by landlords, employers, insurers and governmental agencies. But the computation process for theFICO score has some limitations; for example, a consumer has to have a credit line open for at least six months before it will show up on a FICO credit report. This and other deficiencies have led to the establishment of a new credit bureau called Vantage, which evaluates customers according to a somewhat different set of criteria that can be much more forgiving in some instances.
A Collaborative Effort
The three major credit bureaus have used the FICO scoring model for decades, but the differences in how each agency computes its scores has led to numerous discrepancies that are often problematic for both lenders and consumers. The VantageScore is designed to provide a grading system that is somewhat more standardized than the one used by Fair Isaac and Company. The first version of Vantage appeared in 2006, followed by Vantage 2.0 in 2010, which was modified in response to the changes that swept over the lending industry after the Subprime Mortgage Meltdown of 2008.
The Vantage Methodology
Vantage credit scores are computed in a fundamentally different manner than FICO scores. They start with a somewhat different set of criteria than FICO and also assign a different weighting to each segment. A comparison of the two is shown as follows:
FICO Score- The consumer's payment history: 35%
- Total amounts owed by the consumer: 30%
- Length of the consumer's credit history: 15%
- Types of credit used by the consumer: 10%
- Amount of the consumer's new credit: 10%
- Amount of the consumer's recent credit: 30%
- The consumer's payment history: 28%
- Utilization of the consumer's current credit: 23%
- Size of the consumer's account balances: 9%
- Depth of the consumer's credit: 9%
- Amount of the consumer's available credit: 1%
- 901 to 990 = A - 1 charge-off for every 300 consumers who pay on time
- 801 to 900 = B - 1 charge-off for every 50 consumers who pay on time
- 701 to 800 = C - 1 charge-off for every 10 consumers who pay on time
- 601 to 700 = D - 1 charge-off for every 5 consumers who pay on time
- 501 to 600 = F - 1 charge-off for every 1 consumer who pays on time
The VantageScore Benefit
One of the chief advantages that VantageScore brings is the ability to provide a score to a large segment of consumers (about 30 to 35 million) who currently have little or no credit history. Vantage differs from FICO in that a line of credit only has to be open for a single month in order to be factored into the VantageScore, but its model takes 24 months of consumer credit activity into account, whereas FICO only looks back for six months. The longer look back period can be a big help for consumers who are working to rebuild their credit and are able to show a marked improvement over the longer time span. Vantage also offers a "predictive score" for those with thin credit histories; this score is designed to enhance the accuracy of the actual score. Vantage can also use rent and utility payments in its computations if they are reported by the landlord and/or utility provider.
VantageScore 3.0
The most recent version of VantageScore represents a substantial improvement over the previous two models. It was created using over 900 data points from 45 million consumer credit files spanning two overlapping time frames from 2009 - 2012. It only uses about half the number of reason codes (which signify various reasons for denial of credit), however, and these codes have been rewritten in plain language that consumers can easily understand. The risk assessment formula in the model is also now almost identical for each of the major bureaus, because it employs uniform definitions for consumer payment and credit information that is received by each bureau. Vantage also claims that the predictive score in this version will be 25% more accurate than the previous one due to the substantial increase in both the quality and quantity of data upon which the model is based.
Impact with Lenders
Despite the hype with which the three credit bureaus have promoted their new score system, it has been slow to catch on in the lending industry. VantageScore remains a very distant second to the traditional FICO score for the market share it has carved out among lenders. As of April 2012, less than 6% of the credit scoring market and only 10% of the major banks use VantageScore in their underwriting.
The Bottom Line
Although its method of computation is considered to be more fair and realistic than the FICO model, it will likely take some time for lenders to become comfortable with shifting to this alternative methodology. Nevertheless, the number of institutions that accept the VantageScore is growing, and its popularity will likely continue to increase with its ability to tap a new market of potential lending customers. For these reasons, the major credit bureaus continue to view VantageScore as a model for the future.
More From Investopedia- 5 Ways To Increase Your Chances Of Getting A Job After College
- 7 Tips For Closing A Credit Card
- 14 Stars Who Lost It All Click green for further info Source: Investopedia _________________________________________________________________________
By all means: avoid a bankruptcy - there can be a better solution
A bankruptcy can hurt your life too long
When Can I Get a Bankruptcy Off My Credit Report?
If you ask a barber "Do I need haircut?" , what do you think the barber is going to say?
Of course, he needs your money, he makes his money by giving haircuts.
The barber's answer is: "Yes, you do need a haircut" - whether you really need or not.
What do you think a bankruptcy lawyer is going to tell you if and when you visit a bankruptcy lawyer for a consultation? A bankruptcy lawyer makes his living by selling bankruptcy related legal services.
Of course a bankruptcy lawyer is going to say "You need a bankruptcy".
He is not going to point out the harmful effects a bankruptcy can have - 10 years of lost credit - is it worth it? He is not going to throw out the fee money he will get from you.
Talk to credit counselors They can are free (if you cannot afford paying).
Call your City Hall and ask how to get one or search the web.
A credit counselor earns his living by giving proper credit counseling and can show you what other ways there are to have your financial life back to a good level. AVOID A BANKRUPTCY BY ALL MEANS.
If you’ve been through a bankruptcy, you probably can’t wait until it’s removed from your credit reports. How long does it take? Is it automatic? And is there anything you can do to speed up the process? That’s what Jack, a Credit.com blog reader asked recently:
My bankruptcy is due to be deleted in March of 2014. I was trying to get it removed by sending letters to the 3 FICO Credit Reporting Agencies. One replied back that the file had been deleted and one replied that the information was correct. And I haven’t heard from the 3rd one as yet. Is there any way to get the bankruptcy removed now? As one deleted it and one hasn’t? Could I possibly challenge the reporting agency that said the information was correct?
Information about bankruptcy filings are maintained by the court in which the case was filed. It is known as “public record” information. Credit reporting agencies get information about these filings from the courts, and verify them with the courts when there is a dispute. You can always check that information yourself using the Public Access to Court Electronic Records (PACER) system.
Under the federal Fair Credit Reporting Act, Chapter 7 bankruptcies can be reported for 10 years from the filing date (not the discharge date, which comes later). However, all three major credit reporting agencies will remove Chapter 13 bankruptcies seven years from the date the case was filed. Chapter 13 cases are those in which the debtor pays some or all of their debt back over time. Chapter 7 is when most of your debts are wiped off.
But the filing itself is not the only information about your bankruptcy that appears on your credit reports. “One is the public record, the court filing; the other are the individual accounts (included in the bankruptcy),” says Rod Griffin, director of public education for the credit reporting bureau Experian.
Each account included in the filing will list a notation, “included in bankruptcy.” Those accounts will be deleted seven years from the date the account originally went delinquent and was never brought current, leading up to when it was included in the filing, he goes on to explain. “In most cases, the accounts will be deleted before the bankruptcy is removed,” Griffin says.
As for the bankruptcy itself, our reader doesn’t have to do anything specific to get it removed after the seven- or 10-year reporting period is up. “It’s automatic,” says Griffin. “We track the filing date and we will delete the public record automatically.”
As for the fact that one of the agencies removed Jack’s bankruptcy after he disputed it? He got lucky.
Unlike an old collection account where the collection agency may no longer be in business or may not have the debt anymore and not bother to respond to a consumer dispute, this type of information is easy to verify with the courts. As long as it’s part of the public record, it can be reported. (Inaccurate information about a bankruptcy can be disputed, of course.) So it’s not surprising that he hasn’t had success getting the other two agencies to delete the bankruptcy from his credit reports.
In the meantime, Jack should make sure he has current positive credit references listed on his credit reports. It’s a myth that you can’t get credit after bankruptcy, and once that filing no longer appears on his credit reports, he could actually see his credit scores drop again if he hasn’t made an effort to rebuild credit in the meantime.
Click green for further info
Source: credit.com
________________________________________________
Report Exposes Secrets of Off-Shore Tax Havens
These havens are harboring an enormous amount of money. One study estimated the total could be as high as $32 trillion. That's roughly the size of the U.S. and Japanese economies combined
By The International Consortium of Investigative Journalists & a global consortium of news outlets
Click green for further info
The off-shore tax havens of least 30 Americans accused of fraud, money laundering or other financial crimes have been unearthed in a groundbreaking report by The International Consortium of Investigative Journalists and a global consortium of news outlets.
The first articles based on a cache of 2.5 million files were published Thursday, exposing secrets of more than 120,000 offshore entities -- including shell corporations and legal structures known as trusts -- used to hide the finances of politicians, crooks and others from more than 170 nations.
These havens are harboring an enormous amount of money. One study estimated the total could be as high as $32 trillion. That's roughly the size of the U.S. and Japanese economies combined.
The documents give a first-ever look at how agents for giant private banks would incorporate companies in Caribbean and South Pacific micro-states. These companies would then have front people called "nominees" to serve, on paper, as directors and shareholders -- creating another layer of secrecy and protection for the companies' real owners.
The ICIJ's review of documents from just one company which sets up off-short companies and trusts, Singapore-based Portcullis TrustNet, identified 30 American clients who are in legal trouble for their financial dealings. According to the ICIJ, these include Paul Bilzerian, a corporate raider who was convicted of tax fraud and securities violations in 1989, and Raj Rajaratnam, a billionaire hedge fund manager who began serving an 11-year prison sentence in January for his role in one of the biggest insider trading scandals in U.S. history.
The documents also reveal detailed information about the financial dealings of array of notorious people and companies including international arms dealers, smugglers and a company the European Union says is a front for Iran's nuclear-development program. Records have also been found on:
-- Maria Imelda Marcos Manotoc, daughter of the late Philippine dictator Ferdinand Marcos. Following the release of the data, Philippine officials said they hope to learn if any of the money now held by Manotoc is part of the estimated $5 billion her father amassed through corruption.
-- Individuals and companies who stole $230 million from Russia's treasury in a case which strained U.S.-Russia relations and led to a ban on Americans adopting Russian orphans.
-- A Venezuelan man accused of using offshore companies to fund a U.S.-based Ponzi scheme and spending millions of dollars to bribe a Venezuelan government official.
-- A corporate mogul who got billions of dollars in contracts from the government of Azerbaijan while serving as a director of offshore companies owned by the Azerbaijani president's daughters.
The ICIJ and 86 investigative journalists worked for more than a year to make sense of the cache of 2.5 million files. The reporters came from new outlets in 46 countries, including The Guardian and the BBC in the U.K., Le Monde in France, Süddeutsche Zeitungand Norddeutscher Rundfunk in Germany, The Washington Post, the Canadian Broadcasting Corporation and 31 other media partners around the world.
Click green for further info
Source: The International Consortium of Investigative Journalists & a global consortium of news outlets
_____________________________________________________________________________
These havens are harboring an enormous amount of money. One study estimated the total could be as high as $32 trillion. That's roughly the size of the U.S. and Japanese economies combined
By The International Consortium of Investigative Journalists & a global consortium of news outlets
Click green for further info
The off-shore tax havens of least 30 Americans accused of fraud, money laundering or other financial crimes have been unearthed in a groundbreaking report by The International Consortium of Investigative Journalists and a global consortium of news outlets.
The first articles based on a cache of 2.5 million files were published Thursday, exposing secrets of more than 120,000 offshore entities -- including shell corporations and legal structures known as trusts -- used to hide the finances of politicians, crooks and others from more than 170 nations.
These havens are harboring an enormous amount of money. One study estimated the total could be as high as $32 trillion. That's roughly the size of the U.S. and Japanese economies combined.
The documents give a first-ever look at how agents for giant private banks would incorporate companies in Caribbean and South Pacific micro-states. These companies would then have front people called "nominees" to serve, on paper, as directors and shareholders -- creating another layer of secrecy and protection for the companies' real owners.
The ICIJ's review of documents from just one company which sets up off-short companies and trusts, Singapore-based Portcullis TrustNet, identified 30 American clients who are in legal trouble for their financial dealings. According to the ICIJ, these include Paul Bilzerian, a corporate raider who was convicted of tax fraud and securities violations in 1989, and Raj Rajaratnam, a billionaire hedge fund manager who began serving an 11-year prison sentence in January for his role in one of the biggest insider trading scandals in U.S. history.
The documents also reveal detailed information about the financial dealings of array of notorious people and companies including international arms dealers, smugglers and a company the European Union says is a front for Iran's nuclear-development program. Records have also been found on:
-- Maria Imelda Marcos Manotoc, daughter of the late Philippine dictator Ferdinand Marcos. Following the release of the data, Philippine officials said they hope to learn if any of the money now held by Manotoc is part of the estimated $5 billion her father amassed through corruption.
-- Individuals and companies who stole $230 million from Russia's treasury in a case which strained U.S.-Russia relations and led to a ban on Americans adopting Russian orphans.
-- A Venezuelan man accused of using offshore companies to fund a U.S.-based Ponzi scheme and spending millions of dollars to bribe a Venezuelan government official.
-- A corporate mogul who got billions of dollars in contracts from the government of Azerbaijan while serving as a director of offshore companies owned by the Azerbaijani president's daughters.
The ICIJ and 86 investigative journalists worked for more than a year to make sense of the cache of 2.5 million files. The reporters came from new outlets in 46 countries, including The Guardian and the BBC in the U.K., Le Monde in France, Süddeutsche Zeitungand Norddeutscher Rundfunk in Germany, The Washington Post, the Canadian Broadcasting Corporation and 31 other media partners around the world.
Click green for further info
Source: The International Consortium of Investigative Journalists & a global consortium of news outlets
_____________________________________________________________________________
What if You Are Audited by the I.R.S.
Date: 5/5/2013
Click green for further info
The April 15 tax deadline is now receding in our collective rear view mirror. Nothing to do now, but to start collecting records for next year. Right?
Unless, of course, you are audited by the Internal Revenue Service.
In general, the likelihood of being audited is low. But audits have been on the rise in recent years as the I.R.S. tries to boost revenue, said Bill Smith, managing director of the national tax office at CBIZ MHM, a national accounting and consulting firm.
There are several different kinds of audits, Mr. Smith, a former tax lawyer, said in a telephone interview. Correspondence audits are conducted by mail, and generally relate to a specific item on your return, or small dollar amounts. With a “desk” audit, you may have to go to an I.R.S. office and meet with a revenue agent.
I have a memory from childhood of an episode of The Mary Tyler Moore Show, in which Mary is audited by a cute but obnoxious I.R.S. agent who comes to her apartment to examine her returns and develops a crush on her. That scenario (surprise) apparently doesn’t really happen too often. An “office” audit, in which the I.R.S. comes to you, is generally just done for businesses.
Typically, you’ll learn your return has been selected for an audit when you receive an “information document request” in the mail. The request will specify what documents the agency is requesting and will state the deadlines for providing them.
Mr. Smith conceded that he might be biased, but if you haven’t been working with a tax professional, like an accountant or tax attorney, you might want to retain one if you have been selected for audit. Even if the issue raised in the audit is relatively simple, and you have all the relevant documentation requested, there are procedural hurdles and deadlines that must be met to help things go smoothly.
“Be honest about whether it makes sense to hire a professional,” he said. If you’ve prepared your own return, and the agency is making a simple request for, say, receipts for a charitable deduction — and you know you have them — it may be fine to handle it on your own. But if the amount in question is large, or the tax issue complex, think hard before handling it yourself. “What you don’t want to do is go in, make mistakes, get a giant bill from the I.R.S. and then contact a professional to say, ‘Get me out of this,’” he said.
For help in finding an accountant or a tax lawyer, some professional organizations have tools that let you search by ZIP code: The American Institute of Certified Public Accountants and the National Association of Tax Professionals are two of them.
If you do respond to the letter on your own, make sure your documents are in order — no receipts in shoe boxes — and submit only as much information as is needed to answer the request.
If you have taken an aggressive, but defensible, position on a tax issue, make sure you are prepared to make your argument. “You need to be prepared to articulate your reasons,” he said. “Not just rub your face and say, ‘I was hoping you wouldn’t catch that.’”
If you provide the requested information and the I.R.S. decides to impose a “deficiency,” or an amount owed, you have options. You can agree with the finding, at which point the agency will assess the deficiency and collect it.
If you disagree, you usually have 30 days to protest. You’ll then have a conference with the appeals office within the I.R.S., which is supposed to act in a nonpartisan way to consider your appeal.
If the agency still thinks the money is owed, you can again disagree, which will usually set off a “90-day” letter, or a statutory notice of deficiency. You’ll then have 90 days to file a petition with the United States Tax Court.
If you do want to consider tax court, he said, you have to weigh the cost of legal representation with the amount the agency says you owe. If amount is manageable — say, the I.R.S. says you owe $1,500 — you can try to fight on your own, since hiring a good tax lawyer may well cost $1,500 or more.
One bit of good news: Excepting cases of outright fraud, being audited doesn’t increase your chances of future scrutiny, Mr. Smith said. There is no “naughty” list.
Click green for further info
Source: NYT
_____________________________________________________________
Date: 5/5/2013
Click green for further info
The April 15 tax deadline is now receding in our collective rear view mirror. Nothing to do now, but to start collecting records for next year. Right?
Unless, of course, you are audited by the Internal Revenue Service.
In general, the likelihood of being audited is low. But audits have been on the rise in recent years as the I.R.S. tries to boost revenue, said Bill Smith, managing director of the national tax office at CBIZ MHM, a national accounting and consulting firm.
There are several different kinds of audits, Mr. Smith, a former tax lawyer, said in a telephone interview. Correspondence audits are conducted by mail, and generally relate to a specific item on your return, or small dollar amounts. With a “desk” audit, you may have to go to an I.R.S. office and meet with a revenue agent.
I have a memory from childhood of an episode of The Mary Tyler Moore Show, in which Mary is audited by a cute but obnoxious I.R.S. agent who comes to her apartment to examine her returns and develops a crush on her. That scenario (surprise) apparently doesn’t really happen too often. An “office” audit, in which the I.R.S. comes to you, is generally just done for businesses.
Typically, you’ll learn your return has been selected for an audit when you receive an “information document request” in the mail. The request will specify what documents the agency is requesting and will state the deadlines for providing them.
Mr. Smith conceded that he might be biased, but if you haven’t been working with a tax professional, like an accountant or tax attorney, you might want to retain one if you have been selected for audit. Even if the issue raised in the audit is relatively simple, and you have all the relevant documentation requested, there are procedural hurdles and deadlines that must be met to help things go smoothly.
“Be honest about whether it makes sense to hire a professional,” he said. If you’ve prepared your own return, and the agency is making a simple request for, say, receipts for a charitable deduction — and you know you have them — it may be fine to handle it on your own. But if the amount in question is large, or the tax issue complex, think hard before handling it yourself. “What you don’t want to do is go in, make mistakes, get a giant bill from the I.R.S. and then contact a professional to say, ‘Get me out of this,’” he said.
For help in finding an accountant or a tax lawyer, some professional organizations have tools that let you search by ZIP code: The American Institute of Certified Public Accountants and the National Association of Tax Professionals are two of them.
If you do respond to the letter on your own, make sure your documents are in order — no receipts in shoe boxes — and submit only as much information as is needed to answer the request.
If you have taken an aggressive, but defensible, position on a tax issue, make sure you are prepared to make your argument. “You need to be prepared to articulate your reasons,” he said. “Not just rub your face and say, ‘I was hoping you wouldn’t catch that.’”
If you provide the requested information and the I.R.S. decides to impose a “deficiency,” or an amount owed, you have options. You can agree with the finding, at which point the agency will assess the deficiency and collect it.
If you disagree, you usually have 30 days to protest. You’ll then have a conference with the appeals office within the I.R.S., which is supposed to act in a nonpartisan way to consider your appeal.
If the agency still thinks the money is owed, you can again disagree, which will usually set off a “90-day” letter, or a statutory notice of deficiency. You’ll then have 90 days to file a petition with the United States Tax Court.
If you do want to consider tax court, he said, you have to weigh the cost of legal representation with the amount the agency says you owe. If amount is manageable — say, the I.R.S. says you owe $1,500 — you can try to fight on your own, since hiring a good tax lawyer may well cost $1,500 or more.
One bit of good news: Excepting cases of outright fraud, being audited doesn’t increase your chances of future scrutiny, Mr. Smith said. There is no “naughty” list.
Click green for further info
Source: NYT
_____________________________________________________________
Start here: Study this article & apply always for a perfect credit score
I M P O R T A N T I N F O
Is being debt-free always a good thing?
Seems like a silly question
Kind of like asking if being healthy is a good thing
Living without a lot of unmanageable debt is obviously a great financial position to be in, but we get a number of blog comments from readers who think that credit scores punish people who choose to be debt-free.
The fact is, the facts aren’t on their side. Studies going back more than 20 years, using tens of millions of consumer credit reports to identify predictive consumer behavior, have consistently found that lower amounts of consumer debt lead to reduced credit risk.
Click:
The First Thing You Must Do Before Paying Off Debt
While having zero percent credit utilization (revolving balance/limit ratio) and all loans paid off won’t necessarily guarantee the highest possible scores — many other factors also go into a credit score — a credit report absent any debt or late payments can easily be expected to deliver the kind of credit score that will qualify for some of the best rewards programs available — which saves you money.
The following frequently asked questions, and their answers, address the issue of whether you can remain debt-free and at the same time have a good, or even great, credit score:
Q: Do you have to owe money to have a good credit score?
A: No. In fact, credit scores look very kindly on credit reports containing nothing but credit cards and loans with zero balances — and spotless payment records — as long as one or more cards remain through at least occasional use.
Q: Do your credit accounts have to be active to have a score?
A: While scores don’t like to see a lot of debt, they do like to see some amount of credit use, or “activity.” With cards, the more frequently they are used, the less likely they are to be closed due to inactivity by the card issuers.
Q: Do you have to have a credit card to have a good credit score?
A: No. While a well-managed credit card or two can definitely contribute positively to your score, without a credit card, a good credit score can still be built using any type of credit that’s reported to the credit bureaus, such as loans, home equity lines of credit and retail cards.
Q: Does it help your score to pay finance charges?
A: No. Neither the finance charge rate nor the amount appears on a credit report. Of course, account balances not paid in full each month may include finance charges, but that level of detail doesn’t appear on the credit report.
Q: Will a debit card or prepaid card help my credit score? Important: Answer is:NO
A: No. While they may look and often function like a credit card, using a debit or prepaid card is essentially spending your own money. With credit cards, you are being extended credit, even if only temporarily.
For this reason (click green: debit and prepaid cards don’t appear on credit reports,
and are not included in credit scores.
To be clear, paying all credit card charges before finance charges are incurred is the goal here, with many consumers using some of the following techniques for using credit to their advantage, while remaining debt-free:
Below in blue a good idea - apply
A reader wrote to us with her own strategy for maintaining a great credit score
while staying debt-free:
I routinely use credit cards for just about everything and pay the balance off every month. This past year, I bought a computer and some other things with the points I had accumulated. My credit score is 809 which gives me peace of mind. — Donna
Source: Credit.com
_________________________________
I M P O R T A N T I N F O
Is being debt-free always a good thing?
Seems like a silly question
Kind of like asking if being healthy is a good thing
Living without a lot of unmanageable debt is obviously a great financial position to be in, but we get a number of blog comments from readers who think that credit scores punish people who choose to be debt-free.
- Sounds like punishment for not being in debt. So glad I got rid of all those credit cards…. -D
- My credit score: Cash only. -N. PA
- You can’t win with FICO scores, especially if you remain debt-free and live beneath your means. -Codeine P
The fact is, the facts aren’t on their side. Studies going back more than 20 years, using tens of millions of consumer credit reports to identify predictive consumer behavior, have consistently found that lower amounts of consumer debt lead to reduced credit risk.
Click:
The First Thing You Must Do Before Paying Off Debt
While having zero percent credit utilization (revolving balance/limit ratio) and all loans paid off won’t necessarily guarantee the highest possible scores — many other factors also go into a credit score — a credit report absent any debt or late payments can easily be expected to deliver the kind of credit score that will qualify for some of the best rewards programs available — which saves you money.
The following frequently asked questions, and their answers, address the issue of whether you can remain debt-free and at the same time have a good, or even great, credit score:
Q: Do you have to owe money to have a good credit score?
A: No. In fact, credit scores look very kindly on credit reports containing nothing but credit cards and loans with zero balances — and spotless payment records — as long as one or more cards remain through at least occasional use.
Q: Do your credit accounts have to be active to have a score?
A: While scores don’t like to see a lot of debt, they do like to see some amount of credit use, or “activity.” With cards, the more frequently they are used, the less likely they are to be closed due to inactivity by the card issuers.
Q: Do you have to have a credit card to have a good credit score?
A: No. While a well-managed credit card or two can definitely contribute positively to your score, without a credit card, a good credit score can still be built using any type of credit that’s reported to the credit bureaus, such as loans, home equity lines of credit and retail cards.
Q: Does it help your score to pay finance charges?
A: No. Neither the finance charge rate nor the amount appears on a credit report. Of course, account balances not paid in full each month may include finance charges, but that level of detail doesn’t appear on the credit report.
Q: Will a debit card or prepaid card help my credit score? Important: Answer is:NO
A: No. While they may look and often function like a credit card, using a debit or prepaid card is essentially spending your own money. With credit cards, you are being extended credit, even if only temporarily.
For this reason (click green: debit and prepaid cards don’t appear on credit reports,
and are not included in credit scores.
To be clear, paying all credit card charges before finance charges are incurred is the goal here, with many consumers using some of the following techniques for using credit to their advantage, while remaining debt-free:
- (1) Paying for your charges the same day you make the purchase using online banking. Or, if it’s a department or other retail card you’re using, you may be able to make the payment right then and there in the store. With this method, the balance for the account will appear on your next statement as zero, while maintaining a positive payment history and zero percent credit utilization.
- (2) Prior to the next statement date, making multiple smaller payments for convenience. As long as all charges are paid by the next due date, balances will be reported as zero, payments as current, and utilization as zero percent.
- (3) Waiting for the charges to appear on your next statement, and paying the entire balance before the due date on that statement — either in one or multiple payments. While not quite as good for your score as the above methods, due to your credit report now showing a balance for the account, as long as you pay by the due date on your statement you will still avoid finance charges and remain essentially debt-free.
Below in blue a good idea - apply
A reader wrote to us with her own strategy for maintaining a great credit score
while staying debt-free:
I routinely use credit cards for just about everything and pay the balance off every month. This past year, I bought a computer and some other things with the points I had accumulated. My credit score is 809 which gives me peace of mind. — Donna
Source: Credit.com
_________________________________
5 Things You Should Never Put on a Credit Card
Click green for further info
Credit cards are powerful financial instruments, but cardholders must use them carefully to avoid becoming trapped in a cycle of debt. At the same time, it can be difficult for cardholders to contemplate a huge expense knowing that a bank has already extended them sufficient credit to just charge it.
Yet a credit card is often the worst means of finance. Credit card debt is unsecured and typically carries a higher interest rate than a car or home loan. And unlike a home mortgage or student loan, credit card debt is never tax deductible.
Of all the things that be financed with a credit card, here are the five worst:
1. College tuition. Many adults can trace their debts back to their college years when they didn’t fully appreciate how difficult it would be to pay off credit card charges, especially after interest starts to compound. And in many cases, college graduates aren’t able to land a job as soon as they hoped, or they have insufficient income to start paying off their debt.
Rather than using a credit card, higher education can be funded through low-interest student loans, scholarships, grants, and part-time jobs. And if these sources are inadequate, students can consider a less expensive school or delay enrollment until they have more savings.
2. Taxes. When taxpayers find themselves with an unexpectedly large liability, it can be tempting to just charge it. And conveniently, the IRS makes it easy to use a credit card to make payments through one of several companies that they authorize to accept money on their behalf.
However, there are several reasons why you shouldn’t. First, the payment processors will collect a fee of between 1.88%-2.35%. Also, the IRS will allow you to set up a payment plan with a more competitive interest rate. IRS underpayment interest rates change each quarter, but are currently at 3%, far better than any credit card’s standard interest rate. And finally, taxpayers should seek to have their withholding adjusted to ensure that they are not underpaying taxes in the future.
3. A big wedding. When couples chose to host a lavish event, it is easy to understand why some people think that the wedding industry is going too far. Planning a wedding is not easy, but couples need to live within their means and avoid financing the occasion with their credit cards . It is a special day for newlyweds, but it is not worth it when they are forced to begin their lives together underneath a mountain of debt.
4. Vacations. People take vacations to take a break from their everyday lives and to reduce stress. But when travelers finance their trips with their credit cards, they will only be returning to the difficulties caused by their debt. Going camping, staying at hostels, and visiting family and friends are just a few of the ways that people can have a getaway that fits within their means. And if that is not your idea of a dream trip, contribute to a vacation fund each month until you reach your goal, and use your savings to finance a vacation.
5. Medical bills. Treatment costs for the uninsured can be staggering, but that is no reason to turn to credit cards as a means of finance. Ideally, the uninsured should shop around before seeking treatment, but that is not always possible. But even after receiving the bill, most providers will be able to adjust their rates and offer payment plans with little or no interest.
It is one thing to earn rewards by making a charge to a credit card that can be immediately paid off, but it is another matter to use credit cards as a means of finance. By understanding why it almost never makes sense to finance some charges with a credit card, you can make the best decisions when presented with a major expense.
Click green for further inf0
Source: Credit.com
__________________________________________
Click green for further info
Credit cards are powerful financial instruments, but cardholders must use them carefully to avoid becoming trapped in a cycle of debt. At the same time, it can be difficult for cardholders to contemplate a huge expense knowing that a bank has already extended them sufficient credit to just charge it.
Yet a credit card is often the worst means of finance. Credit card debt is unsecured and typically carries a higher interest rate than a car or home loan. And unlike a home mortgage or student loan, credit card debt is never tax deductible.
Of all the things that be financed with a credit card, here are the five worst:
1. College tuition. Many adults can trace their debts back to their college years when they didn’t fully appreciate how difficult it would be to pay off credit card charges, especially after interest starts to compound. And in many cases, college graduates aren’t able to land a job as soon as they hoped, or they have insufficient income to start paying off their debt.
Rather than using a credit card, higher education can be funded through low-interest student loans, scholarships, grants, and part-time jobs. And if these sources are inadequate, students can consider a less expensive school or delay enrollment until they have more savings.
2. Taxes. When taxpayers find themselves with an unexpectedly large liability, it can be tempting to just charge it. And conveniently, the IRS makes it easy to use a credit card to make payments through one of several companies that they authorize to accept money on their behalf.
However, there are several reasons why you shouldn’t. First, the payment processors will collect a fee of between 1.88%-2.35%. Also, the IRS will allow you to set up a payment plan with a more competitive interest rate. IRS underpayment interest rates change each quarter, but are currently at 3%, far better than any credit card’s standard interest rate. And finally, taxpayers should seek to have their withholding adjusted to ensure that they are not underpaying taxes in the future.
3. A big wedding. When couples chose to host a lavish event, it is easy to understand why some people think that the wedding industry is going too far. Planning a wedding is not easy, but couples need to live within their means and avoid financing the occasion with their credit cards . It is a special day for newlyweds, but it is not worth it when they are forced to begin their lives together underneath a mountain of debt.
4. Vacations. People take vacations to take a break from their everyday lives and to reduce stress. But when travelers finance their trips with their credit cards, they will only be returning to the difficulties caused by their debt. Going camping, staying at hostels, and visiting family and friends are just a few of the ways that people can have a getaway that fits within their means. And if that is not your idea of a dream trip, contribute to a vacation fund each month until you reach your goal, and use your savings to finance a vacation.
5. Medical bills. Treatment costs for the uninsured can be staggering, but that is no reason to turn to credit cards as a means of finance. Ideally, the uninsured should shop around before seeking treatment, but that is not always possible. But even after receiving the bill, most providers will be able to adjust their rates and offer payment plans with little or no interest.
It is one thing to earn rewards by making a charge to a credit card that can be immediately paid off, but it is another matter to use credit cards as a means of finance. By understanding why it almost never makes sense to finance some charges with a credit card, you can make the best decisions when presented with a major expense.
Click green for further inf0
Source: Credit.com
__________________________________________
The First Thing To Do Before Applying For a Credit Card
Click green for further info
Whether you love shopping or loathe it, hunting for a great credit card is one of those shopping expeditions that is well worth it. The deal you snag now on a new card can pay off handsomely in coming years. But before you jump in and start comparing credit card interest rates, fees or rewards, there’s one step you won’t want to overlook: reviewing your credit reports and scores.
This first step is crucial because the information in your credit reports — and the scores that are calculated as a result — will be critical in determining which cards you get and how much you pay for them.
But be forewarned: Card issuers don’t disclose specific details about their credit score requirements up front. And the credit scores they use are most likely “customized,” which means they are not the same scores that you will see when you request them yourself.
Why, then, should you bother to review your credit reports and scores before you get a credit card if you won’t see what lenders see? There are three good reasons:
Spotting Credit Report Mistakes.
The first is that if you do find a mistake on your credit reports that may be affecting your credit scores, you’ll want to dispute it and wait for a correction before you apply. Otherwise you could pay more for your next piece of plastic.
In a recent study of the credit report dispute process, the FTC found that 5.2% of participants experienced a change in their score such that their credit risk tier decreased; meaning they may have qualified for a better rate. (In that case they were looking at auto loan rates, but the same principal applies to credit cards.)
Where Do You Stand?
The second is that you want to get your credit scores to see what credit “tier” you fall into. In other words, is your credit excellent, good, fair or poor? The answer to that question will help you avoid applying for credit cards that you aren’t likely to be approved for. Again, most credit card issuers don’t reveal their credit score minimum requirements, but they may state what type of customer they are looking for when it comes to a particular program. For example, a search for credit cards on Credit.com shows that many of the cards offering the lowest rates or most generous reward programs are geared to customers with excellent credit, but there are some available to applicants with good credit. There are also cards geared specifically to consumers with poor credit who are trying to get their credit scores back on track.
[Free Resource: Check your credit score and report card for free before applying for a credit card]
Shop With Confidence.
The third reason to check your credit scores is so you are prepared to take advantage of great credit offers when they come along. For example, let’s say you see an offer online or in your mailbox promising a big cash-back offer if you qualify. If you already know your credit is in good shape, you’ll be able to take advantage of the offers when you see them rather than worry that you might hurt your credit scores by applying.
Two particular factors you’ll want to look at when checking your credit scores and credit profile are the “age” of your credit history and “inquiries.” In Credit.com’s Credit Report Card, for example, if you score “A”s for both of those factors, then applying for a new card should be no big deal. But if you earned a B- or below, then you’ll want to be more cautious about opening new credit cards and take your time between applications. Click green for further info Source: Credit.com
Ultimately, shopping for a new credit card is more like shopping for a car than a new pair of jeans. You’ll have to do your homework to snag the best deal. But the payoff will be there every time you pull out that card in future shopping trips. Remember that you can get your credit reports for free once a year from each of the three major credit reporting agencies through AnnualCreditReport.com. You can also monitor your credit score and review and easy-to-understand breakdown of the information in your credit report for free using a service like Credit.com’s Credit Report Card.
____________________________________________________
Click green for further info
Whether you love shopping or loathe it, hunting for a great credit card is one of those shopping expeditions that is well worth it. The deal you snag now on a new card can pay off handsomely in coming years. But before you jump in and start comparing credit card interest rates, fees or rewards, there’s one step you won’t want to overlook: reviewing your credit reports and scores.
This first step is crucial because the information in your credit reports — and the scores that are calculated as a result — will be critical in determining which cards you get and how much you pay for them.
But be forewarned: Card issuers don’t disclose specific details about their credit score requirements up front. And the credit scores they use are most likely “customized,” which means they are not the same scores that you will see when you request them yourself.
Why, then, should you bother to review your credit reports and scores before you get a credit card if you won’t see what lenders see? There are three good reasons:
Spotting Credit Report Mistakes.
The first is that if you do find a mistake on your credit reports that may be affecting your credit scores, you’ll want to dispute it and wait for a correction before you apply. Otherwise you could pay more for your next piece of plastic.
In a recent study of the credit report dispute process, the FTC found that 5.2% of participants experienced a change in their score such that their credit risk tier decreased; meaning they may have qualified for a better rate. (In that case they were looking at auto loan rates, but the same principal applies to credit cards.)
Where Do You Stand?
The second is that you want to get your credit scores to see what credit “tier” you fall into. In other words, is your credit excellent, good, fair or poor? The answer to that question will help you avoid applying for credit cards that you aren’t likely to be approved for. Again, most credit card issuers don’t reveal their credit score minimum requirements, but they may state what type of customer they are looking for when it comes to a particular program. For example, a search for credit cards on Credit.com shows that many of the cards offering the lowest rates or most generous reward programs are geared to customers with excellent credit, but there are some available to applicants with good credit. There are also cards geared specifically to consumers with poor credit who are trying to get their credit scores back on track.
[Free Resource: Check your credit score and report card for free before applying for a credit card]
Shop With Confidence.
The third reason to check your credit scores is so you are prepared to take advantage of great credit offers when they come along. For example, let’s say you see an offer online or in your mailbox promising a big cash-back offer if you qualify. If you already know your credit is in good shape, you’ll be able to take advantage of the offers when you see them rather than worry that you might hurt your credit scores by applying.
Two particular factors you’ll want to look at when checking your credit scores and credit profile are the “age” of your credit history and “inquiries.” In Credit.com’s Credit Report Card, for example, if you score “A”s for both of those factors, then applying for a new card should be no big deal. But if you earned a B- or below, then you’ll want to be more cautious about opening new credit cards and take your time between applications. Click green for further info Source: Credit.com
Ultimately, shopping for a new credit card is more like shopping for a car than a new pair of jeans. You’ll have to do your homework to snag the best deal. But the payoff will be there every time you pull out that card in future shopping trips. Remember that you can get your credit reports for free once a year from each of the three major credit reporting agencies through AnnualCreditReport.com. You can also monitor your credit score and review and easy-to-understand breakdown of the information in your credit report for free using a service like Credit.com’s Credit Report Card.
____________________________________________________
Credit Cards:
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Research and compare credit cards at Credit.com
________
Free Resource:
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Check your credit score and report card for free before applying for a credit card
Before applying study all credit and credit score related articles above & below
It is important to know everything related to get the best credit score and keep it
Then you'll save plenty of money, save plenty of tears
& build a more successful life for you and for your family
_______________________________________________
Click green title:
Research and compare credit cards at Credit.com
________
Free Resource:
Click green below:
Check your credit score and report card for free before applying for a credit card
Before applying study all credit and credit score related articles above & below
It is important to know everything related to get the best credit score and keep it
Then you'll save plenty of money, save plenty of tears
& build a more successful life for you and for your family
_______________________________________________
The Future of Credit Cards
Date: May 2013
At a recent conference devoted to travel and credit card rewards, executives from Chase, Barclaycard, US Bank, Capital One and American Express were on hand to share their views on the future of credit cards — and there was a broad consensus on where the industry is going in the next few years.
Here are four of the biggest credit card trends on the horizon that emerged from the discussion:
1. Banks are leveraging Big Data. When you think about it, credit card issuers don’t just collect money, they also collect massive amounts of data. They know who you are, how much money you make, and where you spend it. The next step is for them to provide offers that are directly relevant to customers. Think of the way that your grocery store uses a loyalty program to track your spending and offer you coupons at checkout, but then imagine that model extended across multiple merchants. That is what is implied by Big Data.
2. Card issuers will capitalize on mobile devices. Closely tied to their push to capitalize on their data, banks see a future where they can present these offers to their customers in real time. By combining location information and spending data, banks can present customers offers that they can act on when away from their computers. The question then becomes, will cardholders value these offers, or find them to be a nuisance? Banks are betting that the more relevant they are, the less of an issue they will be.
Banks also hope to offer cardholders not just deals and offers, but valuable information to help them manage their spending. In a follow-up interview I had with Shane Holdaway, Managing Vice President of US Cards for Capital One, he described a future where his bank would offer information to consumers about how they spend, and how to spend smarter. In his vision, your credit card becomes a budgeting tool rather than just a method of payment and finance.
3. Banks will offer more products to the unbanked and underbanked. Do you know any adult who does not have a bank account? The FDIC Household Survey concluded that 8.2% of U.S. households are unbanked (meaning they don’t have a checking or savings account), and more than 20% are underbanked (meaning they have a checking or savings account, but use non-bank means of credit, like payday loans) — and those numbers are growing. Sonali Chakravorti, Vice President of Membership Benefits for American Express, stated that in partnering with Walmart on the BlueBird prepaid card, American Express was looking at the next generation of customers who don’t even want a bank account. While it remains to be seen, the next generation might find bank accounts as relevant as land lines, compact discs, and print publications.
4. Expect less junk mail, but more social media marketing. Matthew Massaua, Senior Director US Card for Barclaycard, made the point that credit card marketing is changing to meet the times. According to Massaua, social media marketing of credit cards is growing while direct mail marketing is starting to decline. In fact, Barclaycard has lead the way in integrating social media with its credit card products by introducing its innovative Ring card .
David Gold, General Manger of Partnerships for Chase Card Services, highlighted the importance of new media to the credit card industry. In fact, he noted that he wakes up every day worried about what will be written online about his products by bloggers who focus on how many cents they can get out of of each point. Others on the panel also admitted following blogs and other online outlets closely. So when you read a site like this, you can be sure that the banks are listening, too.
The industry will undergo an evolution, not a revolution
Change is coming, but it won’t be overwhelming. When asked about the pace of change in the industry during the next two years, four of the five panelists characterized the industry as going through more of an evolution than a revolution. Only Bob Daly, Senior Vice President of US Bank, would hint at some major change his bank could introduce within the next two years. Whether he was trying to out-psych his competitors, or he has something extraordinary up his sleeve, only time will tell!
It was interesting, and educational, to hear credit card industry executives share their thoughts on the future. By understanding where credit cards are going, you won’t be surprised when you get there.
More from Credit.com
Click the following links - good information (if the link has expired, search the web with the title)
Date: May 2013
At a recent conference devoted to travel and credit card rewards, executives from Chase, Barclaycard, US Bank, Capital One and American Express were on hand to share their views on the future of credit cards — and there was a broad consensus on where the industry is going in the next few years.
Here are four of the biggest credit card trends on the horizon that emerged from the discussion:
1. Banks are leveraging Big Data. When you think about it, credit card issuers don’t just collect money, they also collect massive amounts of data. They know who you are, how much money you make, and where you spend it. The next step is for them to provide offers that are directly relevant to customers. Think of the way that your grocery store uses a loyalty program to track your spending and offer you coupons at checkout, but then imagine that model extended across multiple merchants. That is what is implied by Big Data.
2. Card issuers will capitalize on mobile devices. Closely tied to their push to capitalize on their data, banks see a future where they can present these offers to their customers in real time. By combining location information and spending data, banks can present customers offers that they can act on when away from their computers. The question then becomes, will cardholders value these offers, or find them to be a nuisance? Banks are betting that the more relevant they are, the less of an issue they will be.
Banks also hope to offer cardholders not just deals and offers, but valuable information to help them manage their spending. In a follow-up interview I had with Shane Holdaway, Managing Vice President of US Cards for Capital One, he described a future where his bank would offer information to consumers about how they spend, and how to spend smarter. In his vision, your credit card becomes a budgeting tool rather than just a method of payment and finance.
3. Banks will offer more products to the unbanked and underbanked. Do you know any adult who does not have a bank account? The FDIC Household Survey concluded that 8.2% of U.S. households are unbanked (meaning they don’t have a checking or savings account), and more than 20% are underbanked (meaning they have a checking or savings account, but use non-bank means of credit, like payday loans) — and those numbers are growing. Sonali Chakravorti, Vice President of Membership Benefits for American Express, stated that in partnering with Walmart on the BlueBird prepaid card, American Express was looking at the next generation of customers who don’t even want a bank account. While it remains to be seen, the next generation might find bank accounts as relevant as land lines, compact discs, and print publications.
4. Expect less junk mail, but more social media marketing. Matthew Massaua, Senior Director US Card for Barclaycard, made the point that credit card marketing is changing to meet the times. According to Massaua, social media marketing of credit cards is growing while direct mail marketing is starting to decline. In fact, Barclaycard has lead the way in integrating social media with its credit card products by introducing its innovative Ring card .
David Gold, General Manger of Partnerships for Chase Card Services, highlighted the importance of new media to the credit card industry. In fact, he noted that he wakes up every day worried about what will be written online about his products by bloggers who focus on how many cents they can get out of of each point. Others on the panel also admitted following blogs and other online outlets closely. So when you read a site like this, you can be sure that the banks are listening, too.
The industry will undergo an evolution, not a revolution
Change is coming, but it won’t be overwhelming. When asked about the pace of change in the industry during the next two years, four of the five panelists characterized the industry as going through more of an evolution than a revolution. Only Bob Daly, Senior Vice President of US Bank, would hint at some major change his bank could introduce within the next two years. Whether he was trying to out-psych his competitors, or he has something extraordinary up his sleeve, only time will tell!
It was interesting, and educational, to hear credit card industry executives share their thoughts on the future. By understanding where credit cards are going, you won’t be surprised when you get there.
More from Credit.com
Click the following links - good information (if the link has expired, search the web with the title)
- The Simplest Credit Cards in America
- What Not to Do With Your Credit Card Rewards ______________________________________________________________________________
The 11 Most Commonly Asked
Credit Questions
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At Credit.com, the readers ask us questions every day on every kind of credit problem you can imagine. While everyone has their own unique concerns, there are also many universal issues out there. Here rounded up 11 of the more common questions - the answers right here for you.
1. How can the credit card companies raise my interest rate if I’ve paid my bills on time? What can I do about it?
It used to be that credit card issuers could raise your rate, even on existing balances, at any time and for any reason. Thanks to the Credit CARD Act, a federal law, they can no longer do this. They can, however, raise your rate on your outstanding balance if you are more than 60 days late with a payment and they can increase the interest rate on new purchases, but only if they give you 45 days advance notice so you can cancel your account.
As for what you can do, the best thing is to try to negotiate a lower rate. Call your card issuer and suggest you will take your business elsewhere if you can’t get a better deal. This works best if you have other credit cards with available credit lines, since the issuer will no doubt review your credit report to decide whether or not to work with you. It’s always worth a try, though. As author Marc Eisenson says, “Not asking is an automatic no!”
If you can’t negotiate a better rate, try transferring your balance to another card — either one you already have, or a new one.
2. A debt collector has contacted me about an old debt. Do I have to pay it?
Maybe; maybe not. Every state has a statute of limitations, which governs how long the creditor or collector has to sue you. If this debt is too old, and they try to sue you to collect, you can raise the statute of limitations as a defense. That means they don’t have much leverage in terms of forcing you to pay. And that gives you more leverage to negotiate a settlement — or just to tell them to leave you alone. For more information, and to fully understand your rights, check with your state attorney general’s office or a local consumer attorney.
If the debt is too old, you can simply write to the collection agency, indicate that you believe the debt is outside the statute of limitations, and instruct it to stop contacting you. Send your letter via certified mail and keep a copy for your records.
If you are worried about your credit report, keep in mind that collection items may only be reported for up to 7 1/2 years from the date you fell behind with the original lender, regardless of whether they are paid or not. If you pay one more penny: a new statue of limitation starts from that new payment day - be careful for your own best.
3. What is the ideal number of credit cards to carry?
It depends on what you mean by “ideal.” Most people will be just fine with two major credit cards. One should be a low-rate card for times when you must carry a balance, and the other should be a card with a grace period. No annual fee is ideal, unless you plan to use the card heavily to earn some type of reward. If that’s the case, weigh the cost of the annual fee against the freebies you will earn.
If you are asking about the ideal number of credit cards to obtain a strong credit score, two is a good number as well, though you can have many more and still maintain a strong credit rating. Generally, it’s a good idea to have at least four credit accounts of different types (for example, a mortgage, car loan, a major credit card and a retail card). Keep your credit cards active by using them periodically. It’s good to pay your bill in full each month to avoid finance charges.
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Finally, if you have a lot of credit cards already, don’t close them in the hopes that it will boost your credit score. Your score may actually drop if you close old accounts.
4. My child has a lot of debt. What is the best way to help?
The best way to help your child is to give him or her some financial literacy materials to learn about how to manage debt.
But my guess is that you may be writing because he or she is asking you for a consolidation loan to help pay off the debt and, while you want to be helpful, you are not sure that’s the route to go.
First, trust your instincts. If you think your child has trouble handling money, then it is likely you will just be enabling him or her to go a bit longer without having to shape up. Even if your child is truly in deep straits, your loan is unlikely to solve the problem. He or she needs crisis intervention, not a loan.
If you simply can’t say no, then do one of two things:
- Give a gift rather than a loan. You’ll never have to worry about whether you will get paid back and there will be no hard feelings if you aren’t.
- Agree to lend the money only if your child will agree to sign an official loan agreement. It would also be a good idea to have them set up automatic transfer of the payments to your checking or savings account from your child’s. There will be no wondering about whether a check has been mailed.
5. My spouse/parent died and I discovered a lot of debt. Do I have to pay it?
In most cases you are not responsible for another person’s debt when they die, unless you are a co-signer on the account.
If, however, that person was your spouse and you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin), debts incurred during the marriage are considered community property and you are likely responsible for them.
When a person dies with outstanding debt, the creditor will first look to any co-signers and then to the estate for payment. The creditor may not bother to pursue the debt if it is a small amount, but there is no guarantee.
If you are feeling pressured to pay a debt you are not responsible for, or if you are not sure whether you have to pay your deceased relative’s debt, you may want to contact an estate planning or consumer law attorney.
6. I am retired and Social Security is my only income (or I am on disability and have no income except Social Security Disability). That barely even covers my monthly rent, utilities, medicines, medical co-pays, food, etc. I am being hounded for credit card debts and the debt collectors are calling day and night.
I don’t have the money to file for bankruptcy. What can I do?
It sounds like you have little income and no assets. If that’s the case, it may be that you are “judgment proof.” That means that even if someone tried to sue you, there wouldn’t be any way to force you to pay. Creditors generally cannot seize Social Security payments to pay debts. In addition, most retirement accounts (IRAs, pension plans, etc.) are also protected from creditor claims. If you are judgment proof, there may be no reason to file for bankruptcy.
You may want to talk with a bankruptcy attorney to assess your situation, especially if you have assets such as a home or money in bank accounts outside of retirement accounts.
If you are judgment proof, you will likely be able to stop the creditors or collectors from contacting you by simply writing a letter indicating that you have no income other than Social Security payments and no assets. Explain that you have no way to pay them and ask them to stop contacting you. At that point, they likely will stop. Keep copies of your letters, send the letters certified mail, and keep copies of any correspondence you receive. If you are sent any papers that indicate they may be trying to sue you, contact a consumer law attorney immediately.
7. Will checking my credit report hurt my credit score?
No. When you check your own credit report through a service that sells credit reports directly to consumers, you create what is called a “soft inquiry.” These inquiries are listed when you review your own credit report, but they are not shown to creditors and do not affect your score. You can pull a free copy of your credit report at AnnualCreditReport.com or you can check your credit scores using the free Credit Report Card.
It’s a great idea to review your credit report on a regular basis, so go for it.
8. How many points does an inquiry take off your credit report?
There is no set number of points that will be deducted from your score for a single inquiry. The same inquiry from the same lender at the same minute can affect two people’s credit reports differently.
In general, inquiries are a small part of your credit score (less than 5%), and the stronger your score, the less likely one or two inquiries are to have an effect on your score.
Nevertheless, be very careful about applying for new credit, a cell phone, insurance, or anything that might result in a credit check if you are in the process of getting a mortgage. Sometimes a score drop of just a few points can drop your score below the range for the rate you are trying to get.
[Related Article: The First Thing To Do Before Applying For a Credit Card]
9. My ex-husband was supposed to pay this account, he didn’t, and it damaged my score. Now what do I do?
Joint accounts can create problems long after a marriage is over. Even though your ex-spouse is supposed to pay the bill according to the divorce decree, you are still on the hook for the debt to the lender if you are a co-signer. That’s because your divorce decree is an agreement between you and your ex. It doesn’t erase the original contract you had with the lender.
As far as your credit is concerned, the late payment will likely be considered accurate, since the account is still yours until it is paid off, closed, or refinanced into your ex-spouse’s name. Once in a while, a creditor will agree to remove the late payment from the innocent spouse’s credit report, but may require that it be paid off first.
Talk to your divorce attorney to find out what can be done in terms of forcing your ex to live up to the terms of the divorce decree. If he doesn’t have the assets to pay off the debt now, you may want to ask whether he can be required to make payments to your attorney, who can then make sure the payments are made. As long as the account remains unpaid, however, and he pays it late, your credit will be damaged.
10. I co-signed an auto loan for my daughter. When I tried to refinance my mortgage, I found out she has been paying it late, and it has hurt my credit score. What can I do to get that information removed?
Sorry, you’re likely out of luck. If there is one piece of advice we can give about co-signing, it is this: don’t do it. When you co-sign, you are agreeing to be fully responsible for the debt. And by law, if the issuer reports debts to a credit-reporting agency, it must report that information under the co-signer’s name as well as the primary account holder’s.
That said, the lender might be willing to remove those late payments if you will bring the account up to date and/or pay it off. If it does agree to “re-age” the account, get it in writing. Of course, by contacting the lender, you may find that you are inviting the creditor to contact you if your daughter gets behind again, whether or not your credit report is cleared. After all, you are the co-signer.
[Free Resource: Check your credit score and report card for free with Credit.com]
11. I’m deep in debt and have a terrible credit score. What should I do?
While it may not seem like a blessing right now, your lousy credit score may be a plus. It will keep you from digging the hole deeper with a “consolidation” loan*) . It’s time to focus all your effort on one goal — getting rid of that debt. I would first encourage you to get a free debt consultation to determine whether a credit-counseling program will work for you.
Even with bad credit, you may be able to get your interest rates lowered that way. And you’ll get advice to help you build money management skills. If it turns out this type of program won’t work for you, you may need to talk with a bankruptcy attorney.
Either way, once your debt is no longer an issue, you can begin to rebuild your credit. We have seen consumers significantly improve their credit scores in less than two years when they worked at it. Good luck!
*) a “consolidation” loan defined: click below for different answers
to consolidate = Synonyms: strengthen - fortify - unite - harden - solidify
- Debt consolidation - Wikipedia, the free encyclopedia
en.wikipedia.org/wiki/Debt_consolidation
Debt consolidation entails taking out one loan to pay off many others. This is ... Debtconsolidation can simply be from a number of unsecured loans into another ...
Student loan consolidation - Concerns - Alternatives - See also
What is Consolidation Loan? - InvestorWords.com
www.investorwords.com/1048/consolidation_loan.html
Definition of consolidation loan: The replacement of multiple loans with a single loan, often with a lower monthly payment and a longer repayment period. also ...
FinAid | Loans | Student Loan Consolidation
www.finaid.org/loans/consolidation.phtml
Consolidation Loans combine several student or parent loans into one bigger loan from a single lender, which is then used to pay off the balances on the other ...
What is consolidation loan? - BusinessDictionary.com
www.businessdictionary.com/definition/consolidation-loan.html
Definition of consolidation loan: Installment loan that pays off two or more older-loans with a new loan. A consolidation loan usually has a longer payback period, ...
Debt Consolidation Definition | Investopedia
www.investopedia.com/terms/d/debtconsolidation.asp
Debt consolidation involves taking out a new loan to pay off a number of other debts. ...Definition of 'Debt Consolidation' ... Also known as a "consolidation loan".
Loan Consolidation - definition of Loan Consolidation by the Free ...- www.thefreedictionary.com/Loan+Consolidation
(Economics, Accounting & Finance / Banking & Finance) a single loan which is taken out to pay off several separate existing loans. Want to thank TFD for its ... Source: Credit.com Click green for further info _______________________________________________________________________________
A Foreclosure Is Killing My Credit,
What Can I Do?
Foreclosures can do a number of things on your credit report, even for years after they happened. With the Great Recession causing an upheaval in the housing market and many homeowners behind on payments, the aftermath of foreclosures is still a reality for many Americans today.
One reader wrote into us, asking for help with a foreclosure on her credit report:
My home has been foreclosed but the second mortgage is still showing an outstanding balance on my credit report — should that be? How do I remove this? I expect “foreclose” status to remain for 7 years but not the amount. Am I right?
When a bank or mortgage lender forecloses on a mortgage, the loan will typically be reported as a “foreclosure” or “foreclosed” in your credit report. However, just because the mortgage has been foreclosed doesn’t necessarily mean the outstanding balance is automatically wiped out. Typically, credit reports with a foreclosed mortgage will show the entire outstanding balance, so the way the first mortgage is being reported is actually accurate and can’t be removed until it reaches the 7-year expiration timeline.
[Related Article: The First Thing to Do Before Buying a Home]
Foreclosure & Deficiency Balances
Foreclosure laws vary by state but typically when a home goes into foreclosure the bank or mortgage lender will then attempt to sell the home to recover their losses. If the sale price of the home doesn’t cover the outstanding debt, the remaining amount may be considered a “deficiency” and depending on your state laws, the lender may legally be able to attempt to collect on the deficiency amount or they may report the deficiency as “income” to the IRS if the debt is forgiven. This means you could end up receiving a 1099 (showing that the forgiven deficiency as income) at the end of the year.
Foreclosure & Second Mortgages
A second mortgage is separate from the first mortgage and even though the first mortgage was foreclosed, the second is not automatically included in the first mortgage’s foreclosure. This means the second mortgage will continue to be reported and the outstanding balance will remain. The second mortgage will not show “foreclosed” because it’s a separate loan and not part of the original/first mortgage, unfortunately.
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Source: Credit.com
_________________________________________________
What Can I Do?
Foreclosures can do a number of things on your credit report, even for years after they happened. With the Great Recession causing an upheaval in the housing market and many homeowners behind on payments, the aftermath of foreclosures is still a reality for many Americans today.
One reader wrote into us, asking for help with a foreclosure on her credit report:
My home has been foreclosed but the second mortgage is still showing an outstanding balance on my credit report — should that be? How do I remove this? I expect “foreclose” status to remain for 7 years but not the amount. Am I right?
When a bank or mortgage lender forecloses on a mortgage, the loan will typically be reported as a “foreclosure” or “foreclosed” in your credit report. However, just because the mortgage has been foreclosed doesn’t necessarily mean the outstanding balance is automatically wiped out. Typically, credit reports with a foreclosed mortgage will show the entire outstanding balance, so the way the first mortgage is being reported is actually accurate and can’t be removed until it reaches the 7-year expiration timeline.
[Related Article: The First Thing to Do Before Buying a Home]
Foreclosure & Deficiency Balances
Foreclosure laws vary by state but typically when a home goes into foreclosure the bank or mortgage lender will then attempt to sell the home to recover their losses. If the sale price of the home doesn’t cover the outstanding debt, the remaining amount may be considered a “deficiency” and depending on your state laws, the lender may legally be able to attempt to collect on the deficiency amount or they may report the deficiency as “income” to the IRS if the debt is forgiven. This means you could end up receiving a 1099 (showing that the forgiven deficiency as income) at the end of the year.
Foreclosure & Second Mortgages
A second mortgage is separate from the first mortgage and even though the first mortgage was foreclosed, the second is not automatically included in the first mortgage’s foreclosure. This means the second mortgage will continue to be reported and the outstanding balance will remain. The second mortgage will not show “foreclosed” because it’s a separate loan and not part of the original/first mortgage, unfortunately.
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Source: Credit.com
_________________________________________________
The First Thing to Do
Before Buying a Home
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Many people are thinking about buying a home. Some will be first-time homebuyers, while others will be “boomerang” buyers who lost their homes in the housing meltdown but are now hoping to get back in. Still others may see this as the best time to upgrade to a larger home, downsize to a smaller one, or to move to the retirement locale of their dreams.
Whatever your motivation for buying a home, unless you are going to pay cash for the property, there’s one essential step you must take first: get your (1) credit reports and (2) credit scores.
The reason? Your credit scores will help determine what type of home loan financing you can get, and the interest rate you’ll pay. You’ll want to have plenty of time to dispute credit report errors if you find any, and get them fixed. The last thing you want is to find out at the last minute that you can’t buy your dream home because of something on your credit report that shouldn’t be there.
If you will be buying and financing a home with someone else — a partner or spouse, for example — you’ll each want to get your credit reports and scores. Get them from all three major credit reporting agencies; Equifax, Experian and TransUnion, as they each collect their own data and don’t share corrections with each other. You can do this for free once annually at AnnualCreditReport.com. Beyond that, Credit.com’s Credit Report Card is a free tool that provides you with an easy to understand overview of your credit standing, along with your free credit scores, which is updated monthly. It’s a good and simple way to keep tabs on your credit regularly, because you’ll quickly be able to see if anything is amiss.
You’re Not Just a Number
The three-digit number that represents your credit score will be important when it comes to buying and financing a home. A difference of a few points could make a difference in the rate you’ll pay for your mortgage. Mortgage lenders will typically use the middle of the three credit scores to determine the rate/program for which you qualify.
But that doesn’t mean you need to obsess about your score. Doing so can cause you unnecessary grief. After all:
In fact, when we included a free credit score with our free Credit Report Card — one of our most popular tools — we wanted to make sure that consumers understand that they don’t have a single score. That’s why we provide an Experian score, but also show consumers their VantageScore and estimated FICO score along with it. After all, there are dozens of scores available at any given time, and if you focus on just a single number, you may miss the bigger picture.
What’s in a Number?
If focusing on the number that represents your credit score isn’t the most important thing, then what is? Understanding the elements that make up your scores can be much more important. Our Credit Report Card, for example, assigns a grade to each of the main factors that go into a score:
If you earn a “D” for debt usage because your balances on one or more of your credit cards is close to your limits, you may want to pay some of them down if you have the cash available to do so. On the other hand, if you have a large student loan balance that you can’t afford to pay off, you may want to simply focus on making your payments on time rather than taking all the money you’ve saved for a down payment to pay it off.
What Can Your Score Do For You?
When it comes to buying a home, your credit scores can help you secure the financing you need to buy the property and pay it off over time. Your credit scores are a tool to help you achieve your personal and financial goals. If you can get the loan you need with the credit scores you have, then be satisfied with that — even if you don’t have the best score your loan officer has seen!
And finally, it’s important to put your scores in context. Mortgage lenders will look at other factors, like your debt-to-income ratios, employment history, and down payment. As any loan officer can tell you, even a perfect score can’t get you a loan if — for example — the appraisal comes in too low, or if you can’t document your income.
Research and Compare Mortgage Rates at Credit.com
Tagged as: credit score, home loans, mortgages
Click green for further info
Source: credit.com
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Before Buying a Home
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Many people are thinking about buying a home. Some will be first-time homebuyers, while others will be “boomerang” buyers who lost their homes in the housing meltdown but are now hoping to get back in. Still others may see this as the best time to upgrade to a larger home, downsize to a smaller one, or to move to the retirement locale of their dreams.
Whatever your motivation for buying a home, unless you are going to pay cash for the property, there’s one essential step you must take first: get your (1) credit reports and (2) credit scores.
The reason? Your credit scores will help determine what type of home loan financing you can get, and the interest rate you’ll pay. You’ll want to have plenty of time to dispute credit report errors if you find any, and get them fixed. The last thing you want is to find out at the last minute that you can’t buy your dream home because of something on your credit report that shouldn’t be there.
If you will be buying and financing a home with someone else — a partner or spouse, for example — you’ll each want to get your credit reports and scores. Get them from all three major credit reporting agencies; Equifax, Experian and TransUnion, as they each collect their own data and don’t share corrections with each other. You can do this for free once annually at AnnualCreditReport.com. Beyond that, Credit.com’s Credit Report Card is a free tool that provides you with an easy to understand overview of your credit standing, along with your free credit scores, which is updated monthly. It’s a good and simple way to keep tabs on your credit regularly, because you’ll quickly be able to see if anything is amiss.
You’re Not Just a Number
The three-digit number that represents your credit score will be important when it comes to buying and financing a home. A difference of a few points could make a difference in the rate you’ll pay for your mortgage. Mortgage lenders will typically use the middle of the three credit scores to determine the rate/program for which you qualify.
But that doesn’t mean you need to obsess about your score. Doing so can cause you unnecessary grief. After all:
- Trying to tweak your scores based on what you think may help improve them can sometimes have the opposite effect.
- There are many different loan programs with different credit score requirements. A loan officer can help you shop around to find the right program to meet your needs.
In fact, when we included a free credit score with our free Credit Report Card — one of our most popular tools — we wanted to make sure that consumers understand that they don’t have a single score. That’s why we provide an Experian score, but also show consumers their VantageScore and estimated FICO score along with it. After all, there are dozens of scores available at any given time, and if you focus on just a single number, you may miss the bigger picture.
What’s in a Number?
If focusing on the number that represents your credit score isn’t the most important thing, then what is? Understanding the elements that make up your scores can be much more important. Our Credit Report Card, for example, assigns a grade to each of the main factors that go into a score:
- Payment History
- Debt Usage
- Credit Age
- Account Mix
- Inquiries
If you earn a “D” for debt usage because your balances on one or more of your credit cards is close to your limits, you may want to pay some of them down if you have the cash available to do so. On the other hand, if you have a large student loan balance that you can’t afford to pay off, you may want to simply focus on making your payments on time rather than taking all the money you’ve saved for a down payment to pay it off.
What Can Your Score Do For You?
When it comes to buying a home, your credit scores can help you secure the financing you need to buy the property and pay it off over time. Your credit scores are a tool to help you achieve your personal and financial goals. If you can get the loan you need with the credit scores you have, then be satisfied with that — even if you don’t have the best score your loan officer has seen!
And finally, it’s important to put your scores in context. Mortgage lenders will look at other factors, like your debt-to-income ratios, employment history, and down payment. As any loan officer can tell you, even a perfect score can’t get you a loan if — for example — the appraisal comes in too low, or if you can’t document your income.
Research and Compare Mortgage Rates at Credit.com
Tagged as: credit score, home loans, mortgages
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Source: credit.com
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A Step-By-Step Guide
to Disputing Credit Report Mistakes
Note, that you always must dispute the item with the credit reporting agencies
that are reporting it before you can sue for credit damage
For that reason, some consumer law attorneys recommend sending a dispute
to the CRAs*) and filing a copy of that dispute with the furnisher
*) credit reporting agencies (CRAs)
The information in your credit reports is what’s used to create your credit scores, so you don’t want to let mistakes on your credit reports potentially throw your credit scores out of whack.
An FTC study released today shows that one in five consumers have errors on their credit reports and 5% of consumers have errors serious enough that they could result in less favorable loan terms.
“These are eye-opening numbers for American consumers,” said Howard Shelanski, Director of the FTC’s Bureau of Economics, in a statement. “The results of this first-of-its-kind study make it clear that consumers should check their credit reports regularly. If they don’t, they are potentially putting their pocketbooks at risk.”
Here’s how to dispute credit report mistakes, step-by-step:
Step One: Order current copies of your credit reports. Make sure you have fairly current copies (ideally, less than 60 days old) of your credit reports from all three major credit reporting agencies (CRAs), Equifax, Experian and TransUnion. Since these agencies don’t share information with one another, you can’t assume that the same mistakes — or lack of them — appear on all your reports.
Step Two: Dispute the mistake. Sounds straightforward, right? But you have a couple of choices to make here. The first is whether to dispute the item with the credit reporting agency (or agencies) whose report(s) shows the error, or with the company that is furnishing that information to the CRA (the “furnisher.”)
[Related Article: What's Really in Your Credit Report?]
Dispute the mistake with each of the credit reporting agencies that are reporting the inaccurate information if:
Your second choice is whether to dispute the item online or by mail. Filing online is fast and easy, and you don’t have to spring for a stamp, but you’ll want to make the extra effort to mail your complaint if:
Here are the addresses and links necessary to file a dispute with the major credit bureaus.
Equifax
P.O. Box 740256
Atlanta, GA 30374-0241
Dispute onlineExperian
P.O. Box 9556
Allen, TX 75013
Dispute online
TransUnion
P.O. Box 2000
Chester, PA 19022
Dispute online
[Credit Score Tool: Get your free credit score and report card from Credit.com]
Step Three: Wait for a response. The CRA or furnisher has 30 days to get back to you with a response. If the information is corrected or deleted, skip to step six. If not, go to the next step.
Step Four: Escalate your dispute. If you are told the information is correct, but you know it’s wrong, you’ll need to escalate your dispute. Send a letter to the CRA and/or furnisher stating why you believe the conclusion is wrong, and CC: the Better Business Bureau, your state attorney general and the Consumer Financial Protection Bureau. Send copies of your dispute to those agencies.
Step Five: Talk with a consumer law attorney. If your attempts to fix the problem don’t work, then you may want to talk with a consumer law attorney with experience in consumer credit disputes. The website of the National Association of Consumer Advocates is a good place to start.
Step Six: Keep records of your dispute. Put all your records of your dispute (copies if your credit reports, letters of correspondence, printed copies of emails or online responses, etc.) into a file and put it in a place where you can get to it if the same data appears on your file again.
Step Seven: Monitor your credit reports. At a minimum, order your credit reports from AnnualCreditReport.com, and use a credit monitoring tool (our Credit Report Card is free and is a good way to keep tabs on things). If you monitor your credit reports and scores closely, you’ll be alerted quickly to any problems. Credit reporting agencies are not supposed to reinsert items that were deleted as the result of a dispute without notifying you first, but it can happen.
[Free Resource: Check your credit score and report card for free with Credit.com]
For more Credit 101, check out these articles - click green title:
Click below for further info relating to the above article:
to Disputing Credit Report Mistakes
Note, that you always must dispute the item with the credit reporting agencies
that are reporting it before you can sue for credit damage
For that reason, some consumer law attorneys recommend sending a dispute
to the CRAs*) and filing a copy of that dispute with the furnisher
*) credit reporting agencies (CRAs)
The information in your credit reports is what’s used to create your credit scores, so you don’t want to let mistakes on your credit reports potentially throw your credit scores out of whack.
An FTC study released today shows that one in five consumers have errors on their credit reports and 5% of consumers have errors serious enough that they could result in less favorable loan terms.
“These are eye-opening numbers for American consumers,” said Howard Shelanski, Director of the FTC’s Bureau of Economics, in a statement. “The results of this first-of-its-kind study make it clear that consumers should check their credit reports regularly. If they don’t, they are potentially putting their pocketbooks at risk.”
Here’s how to dispute credit report mistakes, step-by-step:
Step One: Order current copies of your credit reports. Make sure you have fairly current copies (ideally, less than 60 days old) of your credit reports from all three major credit reporting agencies (CRAs), Equifax, Experian and TransUnion. Since these agencies don’t share information with one another, you can’t assume that the same mistakes — or lack of them — appear on all your reports.
Step Two: Dispute the mistake. Sounds straightforward, right? But you have a couple of choices to make here. The first is whether to dispute the item with the credit reporting agency (or agencies) whose report(s) shows the error, or with the company that is furnishing that information to the CRA (the “furnisher.”)
[Related Article: What's Really in Your Credit Report?]
Dispute the mistake with each of the credit reporting agencies that are reporting the inaccurate information if:
- It’s something not supplied by a furnisher that you can contact; for example, a wrong address, or incorrect public record information such as a judgment would require you to work with the CRA.
- The information reported doesn’t belong to you.
- You have documentation that will show the furnisher that they are making a mistake in how they report the information to the credit reporting agencies; for example, copies of correspondence documenting a billing error.
- You’ve already disputed the item with the CRA and it has confirmed the information is “correct” and you want to go to the source.
Your second choice is whether to dispute the item online or by mail. Filing online is fast and easy, and you don’t have to spring for a stamp, but you’ll want to make the extra effort to mail your complaint if:
- It doesn’t fall neatly into one of the CRA’s dispute categories. If you dispute it online, you’ll likely have to choose a reason for the dispute from a menu that gives you a few standard choices. If you need to provide a more detailed explanation, a letter may be your best bet.
- You’re giving up your rights online. Before you dispute a credit report mistake online, read the website terms and conditions to make sure you aren’t agreeing to mandatory binding arbitration, which means you forfeit your right to have your day in court if it is not resolved.
- You have proof of your side of the story. If you have documentation that the information is wrong, you’ll want to include it in your written dispute.
- This is your second attempt to get it right. If you received a response from the credit reporting agency that says the data is correct, but you know it’s not, you may want to follow up with a letter.
Here are the addresses and links necessary to file a dispute with the major credit bureaus.
Equifax
P.O. Box 740256
Atlanta, GA 30374-0241
Dispute onlineExperian
P.O. Box 9556
Allen, TX 75013
Dispute online
TransUnion
P.O. Box 2000
Chester, PA 19022
Dispute online
[Credit Score Tool: Get your free credit score and report card from Credit.com]
Step Three: Wait for a response. The CRA or furnisher has 30 days to get back to you with a response. If the information is corrected or deleted, skip to step six. If not, go to the next step.
Step Four: Escalate your dispute. If you are told the information is correct, but you know it’s wrong, you’ll need to escalate your dispute. Send a letter to the CRA and/or furnisher stating why you believe the conclusion is wrong, and CC: the Better Business Bureau, your state attorney general and the Consumer Financial Protection Bureau. Send copies of your dispute to those agencies.
Step Five: Talk with a consumer law attorney. If your attempts to fix the problem don’t work, then you may want to talk with a consumer law attorney with experience in consumer credit disputes. The website of the National Association of Consumer Advocates is a good place to start.
Step Six: Keep records of your dispute. Put all your records of your dispute (copies if your credit reports, letters of correspondence, printed copies of emails or online responses, etc.) into a file and put it in a place where you can get to it if the same data appears on your file again.
Step Seven: Monitor your credit reports. At a minimum, order your credit reports from AnnualCreditReport.com, and use a credit monitoring tool (our Credit Report Card is free and is a good way to keep tabs on things). If you monitor your credit reports and scores closely, you’ll be alerted quickly to any problems. Credit reporting agencies are not supposed to reinsert items that were deleted as the result of a dispute without notifying you first, but it can happen.
[Free Resource: Check your credit score and report card for free with Credit.com]
For more Credit 101, check out these articles - click green title:
- What’s Really in Your Credit Report?
- 8 Rules of an Effective Credit Report Dispute Letter
- How Much Will One Late Payment Hurt Your Credit Scores?
Click below for further info relating to the above article:
- CHAPTER 391. FURNISHING FALSE CREDIT INFORMATION ...
statutes.laws.com/.../chapter-391-furnishing-false-credit-information
Chapter 391 Furnishing False Credit Information - FINANCE CODETITLE 5. PROTECTION OF CONSUMERS OF FINANCIAL SERVICESCHAPTER 391.
[PDF]
Key Dimensions and Processes in the U.S. Credit Reporting System:files.consumerfinance.gov/.../201212_cfpb_credit-reporting-white-p...
File Format: PDF/Adobe Acrobat - Quick View
from “consumer reporting,” as defined in the rule, of over $7 million. Prior to the ...Furnishing credit information to the NCRAs is a highly concentrated activity, ...
FDIC Law, Regulations, Related Acts - Consumer Protection
www.fdic.gov › Regulation & Examinations › Laws & Regulations
Dec 15, 2011 – 202.10 Furnishing of credit information. ... provided herein, this regulation applies to all persons who are creditors, as defined in § 202.2(l). ________________________________________________________________________________
What to Do When a Debt Collector
Demands a Full Payment
A Credit.com reader recently wrote in with this issue:
I have been paying a collection agency $100 per month for a hospital bill for 7-8 months now. They now want me to settle this debt in full and say I owe: $9,131.20. They don’t want to work with me and want me to take out a loan to pay them in full but I can’t afford it. The statute of limitations for Oklahoma is 3 years and I want to pay it but they don’t want to work with me. What are your suggestions before I speak with them?
Dealing with an outstanding collection can be nerve wracking, especially when you’re trying to do the right thing and make every effort to pay your debt. And as you’ve experienced first-hand, it’s even more stressful when the debt collector refuses to work with you.
Unfortunately, your situation is a little more complicated and exacerbated by the fact that you’d made prior arrangements with the collection agency to make monthly payments. For future situations like this, I would urge anyone dealing with an unpaid collection to review and follow the steps outlined in our infographic on what to do if a debt collector calls before agreeing to any type of payment plan. Often it may be in your best interest to negotiate a settlement over opting for a monthly payment plan — or at the very least, getting the payment arrangement in writing. Before I answer your question, it’s important to clarify a few details on collection agencies, how they work and the statute of limitations on unpaid debts.
The deal with debt collectors
First, collection agencies aren’t legally obligated to accept or agree to payment plans. In short, debt collectors don’t have to work with you or agree to any payment schedules based on what you’re reasonably able to afford. Their goal is to collect as much of the debt as they can, as quickly as they can. I’m also going to go out on a limb here and assume that the $100 payments that you’ve sent so far are based on what you’ve been able to afford, not on any amount that was agreed to by the collection agency. I say this solely because collection agencies rarely work out extended or long-term payment plans. They are collectors, not lenders, unfortunately. They aren’t interested in slowly collecting monthly payments. Based on your current payment schedule it’ll be more than seven years before they are able to collect the full amount, which is why they don’t want to work with you and are being more aggressive and pushing for you to pay in full “now.”
Second, the statute of limitations (SOL) for creditors/collectors to file a lawsuit is based on the date of the last payment on the debt. In your case, the statute of limitations restarted when you began making the payments 7-8 months ago and will now be based on the date of your last payment. And while SOLs on debt collections vary by state, according to Oklahoma Statutes the 3-year SOL applies only to contracts “express or implied not in writing.” If the original contract with the hospital was a written contract and was agreed to in writing, the SOL would be 5 years instead of 3:
§12-95. Limitation of other actions.
A. Civil actions other than for the recovery of real property can only be brought within the following periods, after the cause of action shall have accrued, and not afterwards:
1. Within five (5) years: An action upon any contract, agreement, or promise in writing;
2. Within three (3) years: An action upon a contract express or implied not in writing; an action upon a liability created by statute other than a forfeiture or penalty; and an action on a foreign judgment;
[For a state-by-state list of SOLs, please see our interactive resource "Statute of Limitations On Debt Collection by State"]
What should you do now?
If you can’t afford to pay the debt, it’s a bad idea to take out a loan to pay it in full. I’d also argue that it would be better to settle the debt for less instead of trying to pay it in full with long-term monthly payments — especially if your financial situation is already precarious. In your case, it may even be worthwhile to consider holding off on the monthly payments and setting aside the $100 per month until you’ve collected a larger sum of cash that you can use as incentive to negotiate a settlement. Debt collectors are more likely to negotiate a settlement, often at much lower amounts, if they think there’s a chance that they may not be able to collect at all. In many cases, collection companies purchase these debts from creditors (or the hospital in your case), for pennies on the dollar. Obviously, they want to collect as much as possible, but as long as they are able to collect more than they paid for the debt, it’s still a profit for them.
It’s important to do what’s right and pay the debt, but if you are truly under a hardship and unable to pay, it may not make sense to even struggle or agree to try. At the very least, it may be more feasible for you to stop making the payments while you save up a settlement fund. It won’t stop the collector from suing you but the fact is, they could technically do that now if they choose. Remember, collectors don’t have to accept payments and can still sue you in an attempt to collect the debt if they think there’s any chance that they would win. However, if you are truly unable to pay the debt, they may decide that it isn’t worth the time and money to go after you for it.
Sadly, I can’t speak to your personal financial situation in regards to income, assets and other financial obligations, so with that in mind, if the collector does pursue legal action, you should speak with a collection attorney. Most consultations are free and they’ll be able to help you better understand your options based on your individual financial liabilities and assets, and advise you accordingly. Hopefully, it doesn’t reach that point and you’re able to negotiate some sort of settlement to effectively resolve the debt.
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Source: Credit.com
More from Credit
- SEE further BELOW for this article (if this link is not connecting): How Often Does My Credit Report Change? _____________________________________________________________________________
Are You Judgment Proof ?
What does it mean ?
I am retired and Social Security is my only income
(or I am on disability and have no income except Social Security Disability).
That barely even covers my monthly rent, utilities, medicines, medical co-pays, food, etc.
I am being hounded for credit card debts and the debt collectors are calling day and night.
I don’t have the money to file for bankruptcy. What can I do?
It sounds like you have little income and no assets. If that’s the case, it may be that you are “judgment proof.” That means that even if someone tried to sue you, there wouldn’t be any way to force you to pay. Creditors generally cannot seize Social Security payments to pay debts. In addition, most retirement accounts (IRAs, pension plans, etc.) are also protected from creditor claims. If you are judgment proof, there may be no reason to file for bankruptcy.
You may want to talk with a bankruptcy attorney to assess your situation, especially if you have assets such as a home or money in bank accounts outside of retirement accounts.
If you are judgment proof, you will likely be able to stop the creditors or collectors from contacting you by simply writing a letter indicating that you have no income other than Social Security payments and no assets. Explain that you have no way to pay them and ask them to stop contacting you. At that point, they likely will stop. Keep copies of your letters, send the letters certified mail, and keep copies of any correspondence you receive. If you are sent any papers that indicate they may be trying to sue you, contact a consumer law attorney immediately.
________________________________________________
What does it mean ?
I am retired and Social Security is my only income
(or I am on disability and have no income except Social Security Disability).
That barely even covers my monthly rent, utilities, medicines, medical co-pays, food, etc.
I am being hounded for credit card debts and the debt collectors are calling day and night.
I don’t have the money to file for bankruptcy. What can I do?
It sounds like you have little income and no assets. If that’s the case, it may be that you are “judgment proof.” That means that even if someone tried to sue you, there wouldn’t be any way to force you to pay. Creditors generally cannot seize Social Security payments to pay debts. In addition, most retirement accounts (IRAs, pension plans, etc.) are also protected from creditor claims. If you are judgment proof, there may be no reason to file for bankruptcy.
You may want to talk with a bankruptcy attorney to assess your situation, especially if you have assets such as a home or money in bank accounts outside of retirement accounts.
If you are judgment proof, you will likely be able to stop the creditors or collectors from contacting you by simply writing a letter indicating that you have no income other than Social Security payments and no assets. Explain that you have no way to pay them and ask them to stop contacting you. At that point, they likely will stop. Keep copies of your letters, send the letters certified mail, and keep copies of any correspondence you receive. If you are sent any papers that indicate they may be trying to sue you, contact a consumer law attorney immediately.
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The First Thing You Must Do Before Paying Off Debt
You’ve made up your mind: It’s time to tackle your debt. You have researched ways to get out of debt, perhaps weighing the pros and cons of snowballs over avalanches to pay off your debt faster. Maybe you’ve thought about calling a credit counseling or debt settlement agency, or even a bankruptcy attorney, to see what they can offer.
Before you decide on your plan of attack, though, there’s one crucial step you won’t want to miss.
It can make or break your efforts to get out of debt: Get your credit reports and scores.
Here are three reasons why this step is so essential to your success.
(1) You’ll have a starting point.
Any debt counselor will tell you that consumers struggling with debt often underestimate how much they owe. If that describes you, don’t feel too badly. You’ve probably just been focused on making sure you can make the monthly payments. But in order to create a plan to get out of debtyou’ll need a list of all your creditors and what you owe. Your credit report can help you identify who you owe, along with recent balances. (You can get free copies of your credit reports each year at AnnualCreditReport.com.)
You may also find debts listed on your credit reports that you had forgotten about, such as collection accounts. Forget to include those in your plan, though, and your efforts may be derailed if those collectors suddenly decide to pursue you for payment but you can’t afford to pay them.
Plus, no matter which approach you choose to get out of debt, you’ll have to know what you owe. Your credit report can help you with that task.
(2) You’ll understand how your debt affects your credit.
If you’ve been making your monthly payments on time, you may assume your credit is “good.” But, in fact, the balances you are carrying may be dragging down more than just your net worth; they may be hurting your credit scores.
You won’t know that by looking at your credit reports, though. Your credit report just contains information about your accounts, balances and payment history. It won’t analyze whether your debt may be too high.
Your credit score, on the other hand, will show you the impact of your debt means to your scores. For example, in Credit.com’s free Credit Report Card, one of the five factors that make up your score is “debt usage.” That factor takes into account how close your balances on your credit cards are to your limits, for example. As your balances on your cards approach the limits, your credit scores suffer.
Getting out of debt will usually help your credit scores in the long run. But in the immediate term, your goals — get out of debt and build better credit, for example — may be at odds. Take bankruptcy, for example; it’s not great for your credit, but it may be the fastest way to become debt free. Understanding where you are now, as well as how debt relief options may affect your credit, can help you make a more informed decision about which approach is best for you.
(3) You can track your progress.
Paying down debt is usually a marathon, not a sprint, and most of us are going to need encouragement along the way. Monitoring your credit score each month is one way to get that regular dose of motivation. Over time, as your balances decrease, your credit scores will hopefully get stronger. But even if your credit scores suffer because you choose to settle your debt or file for bankruptcy, keeping track of your score can help you monitor your progress as you work to rebuild your credit and your financial life.
Click green for further info
________________________________________________________________________
You’ve made up your mind: It’s time to tackle your debt. You have researched ways to get out of debt, perhaps weighing the pros and cons of snowballs over avalanches to pay off your debt faster. Maybe you’ve thought about calling a credit counseling or debt settlement agency, or even a bankruptcy attorney, to see what they can offer.
Before you decide on your plan of attack, though, there’s one crucial step you won’t want to miss.
It can make or break your efforts to get out of debt: Get your credit reports and scores.
Here are three reasons why this step is so essential to your success.
(1) You’ll have a starting point.
Any debt counselor will tell you that consumers struggling with debt often underestimate how much they owe. If that describes you, don’t feel too badly. You’ve probably just been focused on making sure you can make the monthly payments. But in order to create a plan to get out of debtyou’ll need a list of all your creditors and what you owe. Your credit report can help you identify who you owe, along with recent balances. (You can get free copies of your credit reports each year at AnnualCreditReport.com.)
You may also find debts listed on your credit reports that you had forgotten about, such as collection accounts. Forget to include those in your plan, though, and your efforts may be derailed if those collectors suddenly decide to pursue you for payment but you can’t afford to pay them.
Plus, no matter which approach you choose to get out of debt, you’ll have to know what you owe. Your credit report can help you with that task.
(2) You’ll understand how your debt affects your credit.
If you’ve been making your monthly payments on time, you may assume your credit is “good.” But, in fact, the balances you are carrying may be dragging down more than just your net worth; they may be hurting your credit scores.
You won’t know that by looking at your credit reports, though. Your credit report just contains information about your accounts, balances and payment history. It won’t analyze whether your debt may be too high.
Your credit score, on the other hand, will show you the impact of your debt means to your scores. For example, in Credit.com’s free Credit Report Card, one of the five factors that make up your score is “debt usage.” That factor takes into account how close your balances on your credit cards are to your limits, for example. As your balances on your cards approach the limits, your credit scores suffer.
Getting out of debt will usually help your credit scores in the long run. But in the immediate term, your goals — get out of debt and build better credit, for example — may be at odds. Take bankruptcy, for example; it’s not great for your credit, but it may be the fastest way to become debt free. Understanding where you are now, as well as how debt relief options may affect your credit, can help you make a more informed decision about which approach is best for you.
(3) You can track your progress.
Paying down debt is usually a marathon, not a sprint, and most of us are going to need encouragement along the way. Monitoring your credit score each month is one way to get that regular dose of motivation. Over time, as your balances decrease, your credit scores will hopefully get stronger. But even if your credit scores suffer because you choose to settle your debt or file for bankruptcy, keeping track of your score can help you monitor your progress as you work to rebuild your credit and your financial life.
Click green for further info
________________________________________________________________________
How Often
Does My Credit Report Change?
“Credit reports can change as often as every day if there is new information provided to the credit bureaus,”
says Barry Paperno, community director for Credit.com.
The emails usually come in the form of a slightly panicked plea, often from individuals who have just used Credit.com’s free Credit Report Card for the first time. They’ve seen something that they either didn’t expect or think is wrong, or they think their credit scores should be higher.
“How long will it take my credit report to be updated after I pay off a credit card/settle a collection account/get the IRS to remove a tax lien etc?” The writers of those emails will sometimes go on to explain that they are trying to get a mortgage, auto loan, or some other type of loan, and want to make sure their latest credit report information is considered.
So how often do credit reports change? Like so many things in life, your credit report can change in the blink of an eye.
“Right now it’s 11:40 my time,” said Rod Griffin, director of public relations for Experian, when I interviewed him for this story. “Let’s say a lender requested your credit report right now. If you apply for credit (again) in an hour your credit report could be different,” he says, referring to the inquiry that would have been generated when the first lender accessed my credit information.
“Credit reports can change as often as every day if there is new information provided to the credit bureaus,” says Barry Paperno, community director for Credit.com.
[Share Your Credit Experiences on the Credit.com Forum]
If you want to be technical about it, you don’t really have a credit report on file with the credit reporting agencies to begin with. Explains Griffin: “We have information from each of the lenders, and we go out to our databases and compile information from those databases when a credit report is requested. Your credit report represents a snapshot of your credit history at any given point in time.”
That means that the information is available in the credit reporting agencies’ (CRAs) databases at the time a credit report is requested is the information that will be reported. “You don’t have a credit report until you apply for credit and it’s requested,” Griffin says.
But it’s not like checking your online bank account and seeing the debit card purchase you made a few minutes ago in your running balance. “It’s not real time,” says Griffin.
While lenders often supply information to the CRAs on a daily basis, that doesn’t mean youraccount information is updated that frequently. “Lenders may have millions of customers and they don’t update all of their information at the same time,” Griffin points out. He goes onto add that many lenders report account information around the close of the customer’s billing cycle.
[Credit Score Tool: Get your free credit score and report card from Credit.com]
But it’s not just information that is added to credit reports that cause them to change. Information also is removed or suppressed in the CRAs’ databases. Certain types of credit information must be removed when required under federal or state law, for example. “We’re also constantly tracking dates in case information needs to be removed because it’s too old. For example Chapter 13 bankruptcy will automatically be removed seven years from the filing date,” Griffin says. You don’t have to ask the CRAs to remove information that should no longer be report. It should happen automatically.
And just as credit reports can change at any time, so can credit scores. There’s a common perception that a “credit score is calculated, stored on a shelf somewhere, and changed periodically,” says Paperno. Instead, it is calculated when it is requested, based on the information from a CRA that is available at that time.
Does this change how you should view your credit report? Not really. You’ll still want to make sure you stay on top of your credit information so you can challenge mistakes if necessary. To do that:
Check your credit reports. At least once a year, visit AnnualCreditReport.com to get your reports and check that they are accurate and complete. (As we mentioned earlier, you can also get your credit score and a snapshot of your credit report for free from Credit.com’s Credit Report Card.)
Give yourself time. Check your reports 3–6 months before applying for a major loan like a mortgage or auto loan, recommends Griffin. That will give you time for your credit report to be corrected and updated if you do find mistakes.
Be patient. It may take 30–45 days or so for updated information to appear on credit reports requested by you or a lender, due to the reporting process. If you’ve recently paid off a credit card with a high balance, for example, it may take a little time to see the lower balance reported.
[Free Resource: Check your credit score and report card for free with Credit.com]
Source: credit.com
Click green for further info
____________________________________________________
Does My Credit Report Change?
“Credit reports can change as often as every day if there is new information provided to the credit bureaus,”
says Barry Paperno, community director for Credit.com.
The emails usually come in the form of a slightly panicked plea, often from individuals who have just used Credit.com’s free Credit Report Card for the first time. They’ve seen something that they either didn’t expect or think is wrong, or they think their credit scores should be higher.
“How long will it take my credit report to be updated after I pay off a credit card/settle a collection account/get the IRS to remove a tax lien etc?” The writers of those emails will sometimes go on to explain that they are trying to get a mortgage, auto loan, or some other type of loan, and want to make sure their latest credit report information is considered.
So how often do credit reports change? Like so many things in life, your credit report can change in the blink of an eye.
“Right now it’s 11:40 my time,” said Rod Griffin, director of public relations for Experian, when I interviewed him for this story. “Let’s say a lender requested your credit report right now. If you apply for credit (again) in an hour your credit report could be different,” he says, referring to the inquiry that would have been generated when the first lender accessed my credit information.
“Credit reports can change as often as every day if there is new information provided to the credit bureaus,” says Barry Paperno, community director for Credit.com.
[Share Your Credit Experiences on the Credit.com Forum]
If you want to be technical about it, you don’t really have a credit report on file with the credit reporting agencies to begin with. Explains Griffin: “We have information from each of the lenders, and we go out to our databases and compile information from those databases when a credit report is requested. Your credit report represents a snapshot of your credit history at any given point in time.”
That means that the information is available in the credit reporting agencies’ (CRAs) databases at the time a credit report is requested is the information that will be reported. “You don’t have a credit report until you apply for credit and it’s requested,” Griffin says.
But it’s not like checking your online bank account and seeing the debit card purchase you made a few minutes ago in your running balance. “It’s not real time,” says Griffin.
While lenders often supply information to the CRAs on a daily basis, that doesn’t mean youraccount information is updated that frequently. “Lenders may have millions of customers and they don’t update all of their information at the same time,” Griffin points out. He goes onto add that many lenders report account information around the close of the customer’s billing cycle.
[Credit Score Tool: Get your free credit score and report card from Credit.com]
But it’s not just information that is added to credit reports that cause them to change. Information also is removed or suppressed in the CRAs’ databases. Certain types of credit information must be removed when required under federal or state law, for example. “We’re also constantly tracking dates in case information needs to be removed because it’s too old. For example Chapter 13 bankruptcy will automatically be removed seven years from the filing date,” Griffin says. You don’t have to ask the CRAs to remove information that should no longer be report. It should happen automatically.
And just as credit reports can change at any time, so can credit scores. There’s a common perception that a “credit score is calculated, stored on a shelf somewhere, and changed periodically,” says Paperno. Instead, it is calculated when it is requested, based on the information from a CRA that is available at that time.
Does this change how you should view your credit report? Not really. You’ll still want to make sure you stay on top of your credit information so you can challenge mistakes if necessary. To do that:
Check your credit reports. At least once a year, visit AnnualCreditReport.com to get your reports and check that they are accurate and complete. (As we mentioned earlier, you can also get your credit score and a snapshot of your credit report for free from Credit.com’s Credit Report Card.)
Give yourself time. Check your reports 3–6 months before applying for a major loan like a mortgage or auto loan, recommends Griffin. That will give you time for your credit report to be corrected and updated if you do find mistakes.
Be patient. It may take 30–45 days or so for updated information to appear on credit reports requested by you or a lender, due to the reporting process. If you’ve recently paid off a credit card with a high balance, for example, it may take a little time to see the lower balance reported.
[Free Resource: Check your credit score and report card for free with Credit.com]
Source: credit.com
Click green for further info
____________________________________________________
Your top credit score info starts here
Apply the information
_________
Guide for getting through
the loss of sensitive documents:
(1) Social Security Card, (2) Credit card (3) Driver’s license
There are two concerns when you lose a card or document that contains sensitive information:
(1) retrieving it for your personal use and
(2) doing whatever you can to prevent identity theft that could result from the loss
Click green for further info
Social Security card
Replacing your Social Security card isn’t difficult or expensive — the Social Security Administration allows you to receive three free replacements in a year or 10 in a lifetime.
Completing an application (see below)*) and showing a photo ID will get you a new card.
The real problem with losing your Social Security card is you can’t change your number, which is among the most useful tools for identity thieves. If your card is lost or stolen, the best thing you can do is closely monitor your accounts or enroll in an identity protection service.
Your best bet is to carry your Social Security card with you only when absolutely necessary and put it in a safe place the rest of the time. Here are a number of other tips to help you avoid Social Security fraud (click green).
Credit cards
As soon as you realize you might have lost a credit card, cancel, cancel, cancel. Find the customer service number for your bank or credit card company, cancel your current card and have a new one sent, which will almost always be free.
With quick reporting, you’ll likely be reimbursed for any charges made after it went missing. A new card will also feature a new number, eliminating the usefulness of an old card for thieves.
Driver’s license
Your driver’s license is another form of information that can be dangerous in the hands of identity thieves. If your license is lost or stolen, you should contact the Department of Motor Vehicles in your state immediately to report it.
Since even an invalid driver’s license can be useful for criminals, it’s prudent to closely monitor your accounts and credit report after losing your license. Your DMV can also help you get a new license and renewal fees vary by state.
_________________________________
Click green for further info
*) Completing an application for Social Security card
Application For A Social Security Card
Fill Out And Print An Application
(1) (click: Application for a Social Security Card, Form SS-5 (for people in the United States)
(2) Application for a Social Security Card, Form SS-5-FS (for people outside the United States)
Note: You need Adobe Reader software to view this application. If you do not have it, download it here for free.
Learn What Documents You Need - You must present certain documents when you apply for a Social Security card. To get a list of documents, go to Documents You Need For A Social Security Card.
Where To Take Or Mail The Application And Documents
Take (or mail) your completed application and necessary documents to your local Social Security office. If you live or receive mail in Bronx, N.Y.; Brooklyn, N.Y.; Manhattan, N.Y.; Queens, N.Y.; Orlando, Fla. (Orange, Osceola and Seminole Counties); Sacramento County, Calif.; Phoenix, Ariz. (Maricopa County and Apache Junction Area);
Las Vegas, Nev.; Philadelphia, Pa.; or Greater Twin Cities Metropolitan Area, Minn., you must apply in person or by mail to a Social Security Card Center.
__________________________________________
Apply the information
_________
Guide for getting through
the loss of sensitive documents:
(1) Social Security Card, (2) Credit card (3) Driver’s license
There are two concerns when you lose a card or document that contains sensitive information:
(1) retrieving it for your personal use and
(2) doing whatever you can to prevent identity theft that could result from the loss
Click green for further info
Social Security card
Replacing your Social Security card isn’t difficult or expensive — the Social Security Administration allows you to receive three free replacements in a year or 10 in a lifetime.
Completing an application (see below)*) and showing a photo ID will get you a new card.
The real problem with losing your Social Security card is you can’t change your number, which is among the most useful tools for identity thieves. If your card is lost or stolen, the best thing you can do is closely monitor your accounts or enroll in an identity protection service.
Your best bet is to carry your Social Security card with you only when absolutely necessary and put it in a safe place the rest of the time. Here are a number of other tips to help you avoid Social Security fraud (click green).
Credit cards
As soon as you realize you might have lost a credit card, cancel, cancel, cancel. Find the customer service number for your bank or credit card company, cancel your current card and have a new one sent, which will almost always be free.
With quick reporting, you’ll likely be reimbursed for any charges made after it went missing. A new card will also feature a new number, eliminating the usefulness of an old card for thieves.
Driver’s license
Your driver’s license is another form of information that can be dangerous in the hands of identity thieves. If your license is lost or stolen, you should contact the Department of Motor Vehicles in your state immediately to report it.
Since even an invalid driver’s license can be useful for criminals, it’s prudent to closely monitor your accounts and credit report after losing your license. Your DMV can also help you get a new license and renewal fees vary by state.
_________________________________
Click green for further info
*) Completing an application for Social Security card
Application For A Social Security Card
Fill Out And Print An Application
(1) (click: Application for a Social Security Card, Form SS-5 (for people in the United States)
(2) Application for a Social Security Card, Form SS-5-FS (for people outside the United States)
Note: You need Adobe Reader software to view this application. If you do not have it, download it here for free.
Learn What Documents You Need - You must present certain documents when you apply for a Social Security card. To get a list of documents, go to Documents You Need For A Social Security Card.
Where To Take Or Mail The Application And Documents
Take (or mail) your completed application and necessary documents to your local Social Security office. If you live or receive mail in Bronx, N.Y.; Brooklyn, N.Y.; Manhattan, N.Y.; Queens, N.Y.; Orlando, Fla. (Orange, Osceola and Seminole Counties); Sacramento County, Calif.; Phoenix, Ariz. (Maricopa County and Apache Junction Area);
Las Vegas, Nev.; Philadelphia, Pa.; or Greater Twin Cities Metropolitan Area, Minn., you must apply in person or by mail to a Social Security Card Center.
__________________________________________
Social Security Number (SSN)
One of the most important keys to your identity is your Social Security number
Guard it. Protect it. Keep it away from the fraudsters.
Put Up an Identity Shield to Protect Your Social Security Number
1. Don't carry your Social Security card in your wallet. If that wallet is ever lost or stolen, that Social Security card is equivalent to a winning lottery ticket in the wrong hands of the wrong guy.
2. Avoid carrying cards with your SSN, particularly health insurance cards, unless you need them to receive care.
3. Keep it off other cards. Request that your driver's license number or any other identification number is not the same as your Social Security number.
4. Never give out your SSN, credit card number, or other personal information over the phone unless you have a trusted business relationship with the organization and initiated the call using a verified phone number.
5. Avoid including your SSN on medical history forms and job applications.
6. Provide your SSN only when absolutely necessary—for tax forms, employment, stock, property transactions, etc.
7. Keep it away from accounts. If your financial institution attempts to use your SSN as an account number, ask them to change it immediately.
8. If a government agency requests your SSN, look for a Privacy Act notice. This will state whether a SSN is required, how it will be used, how it is protected, and what happens if you don’t provide it.
9. Check your Social Security Earnings Statement each year for signs of fraud. You should receive it yearly approximately three months before your birthday.
10. Don’t use the last four numbers. Many businesses have started using the last four digits of your SSN for remote identification purposes for access to online banking and telephone banking via both Interactive Voice Response (IVR) and live telephone agent. It may be used in combination with other simple and widely available identifiers like a ZIP code. A number of institutions have used it as a default password when you reset your telephone, online or even ATM PIN. It is not a recommended practice.
Top 5 Worst Places to Use Your SSN
McAfee, the anti-virus company, recently made headlines when it released a study of the most dangerous places to use your Social Security number. The places were ranked based on the number of data breaches—where hackers break into computer systems and steal personal information—from January 2009 through October 2010. The results are disturbing:
1. Universities and colleges
2. Banking and financial institutions
3. Hospitals
4. State governments
5. Local governments
What is most maddening is that these are exactly the kinds of institutions where you have no alternative but to give up your Social Security number to gain services. So what do you do when, say, standing in line at university registration or on the phone with a financial institution and you’re asked to cough it up?
1. Ask questions. First, ask if they really need your Social Security number. Are there other options? Name and address, or date of birth perhaps? Many types of businesses cannot, by law, require you to give up your SSN, so you might just have a call center employee seeking the shortest route to a finished call.
2. Never give your SSN or other information to anyone from anywhere who calls you. This could be a well-known scam where criminals pose as reputable institutions. If your bank does call you, ask them for a call-back number and verify that it’s legit online.
3. Visit annualcreditreport.com to get a free copy of your credit reports from Equifax, Experian and TransUnion, and make sure nothing is amiss. Then consider a fraud and credit monitoring service or a similar plan that
will notify you of any unusual activity.
_________________________________________________________________
5 Places Where You Should Never
Give Your Social Security Number
Any Place: do not give anywhere where your question "for what reason is it needed"
is not properly and to you acceptance answered. State: I do not want to become a ID theft victim.
Keep a copy of this article with you and point out the selected lines - give a copy of the article.
Click green for further info
Every time you go to a new doctor or dentist and they give you a clipboard brimming with documents to fill out and sign, notice how they always ask for your Social Security number? Do you dutifully give it up? Did you ever wonder if they really need it?
I once asked a doctor why he wanted it. His response: “I don’t really know. I guess it’s because we’ve always asked for it.” (In actuality, most doctors ask in case your insurance doesn’t pay the entire invoice and/or to fill out a death certificate if you die. Offer a next of kin who knows the number instead, and your phone number for billing issues.)
Almost every day somebody asks for your Social Security Number and, like the Grand Marshal of a parade throwing rose petals or candy to the crowd, you probably give it up without giving it a second thought — because that’s what you’ve always done.
So, the next time someone asks you for your Social Security number, reflect on this: In December, the Army announced that hackers stole the Social Security numbers of 36,000 visitors to Fort Monmouth in New Jersey, including intelligence officers. Cyber activists took control of the CIA’s website. The private information, including some Social Security numbers, of celebrities and political leaders including FBI Director Robert Mueller and Secretary of State Hillary Clinton were exposed.
The sensitive data of First Lady Michelle Obama, Vice President Joe Biden and Attorney General Eric Holder, recently were posted on a website for the world to see.
Hackers even listened in on a phone call in which the FBI and Scotland Yard were discussing the criminal investigation against those very same hackers!
And, these incidents are only the crumbs on top of the coffee cake when you consider that hackers and thieves have improperly accessed more than 600 million consumer files since 2004.
Monty Python had it right
The moral to these horror stories is that if your Social Security number is stored on any computer anywhere, hackers will find a way to access it, or a compromised or disgruntled employee may well walk out the door with it. If your doctor, gym, or child’s grade school claims otherwise, that their security systems can protect your private data better than the CIA, FBI and Scotland Yard, to quote Monty Python: “Run away!”
Your identity is your biggest asset, and your Social Security number is the key to your personal kingdom. With it an identity thief can wreak havoc, hijacking your old credit accounts, establishing new ones, buying cars and houses, committing crimes, even obtaining medical products and services while pretending to be you, endangering not just your credit and your reputation, but also your life.
Consumers whose Social Security numbers are exposed in a data breach are five times more likely to become fraud victims than those who aren’t, according to the latest identity fraud report by Javelin Strategy & Research.
Just say no
For better or worse, you are the gatekeeper. The person most responsible for shielding your Social Security Number is you. Therefore, your mission is to limit, as best you can, the universe of those who gain access to it.
Here’s a short list of companies and organizations that have absolutely no business requesting your Social Security number:
1. Anyone who calls or sends you an official-looking email, who texts you a link to any site or designates a number to call where you are asked to confirm your SSN. If they call, check the credit or debit card that is the subject of the communication, call the customer service number listed on the back, and ask for the security department. If they email or text, do the same, or go directly to the institution’s website (provided you know who they are). Make sure you type the correct URL, and make sure that the page where you are asked to enter your information is secure. Only provide personal information if you’re the one who controls the interaction.
2. Public schools: Your utility bill confirms your address. Your email and phone number give them channels to contact you in an emergency. Asking for your Social Security number is overkill.
3. Little League, summer camp and the like: For the same reasons as school, a Social Security number should never be required by these groups. If they ask for your child’s birth certificate, show it to them, don’t leave it with them unless they can prove they will protect it. And even then, can you really believe them? If you use credit to pay for the activity, the organization may need your Social Security number. If you pay for it upfront or with a direct debit to your bank account or credit card, they don’t. Period.
4. Supermarkets: A frequent shopper card is neither a loan, nor a bank account. It’s merely a tool grocery stores use to track your purchases, primarily for marketing purposes. Regardless, many supermarket chains request customers’ Social Security numbers on their application forms. Refuse.
5. Anybody who approaches you on the street, whether it’s a cell phone company salesman offering a free T-shirt or someone running a voter registration campaign: Never, ever give your SSN. If you want an ill-fitting T-shirt festooned with corporate logos, buy one. If you want to register to vote, go to your county board of elections in person.
This is the short list. There are plenty of other organizations that should never get your Social Security number, and if you know one that I’ve left out, please leave it in the comments.
Don’t just hand it over
Once you realize how often you are asked for your Social Security number, you may be surprised. It happens literally all the time. So, the next time someone does, as they inevitably will, here’s how to handle it:
1. Take a minute and think. Maybe they ask for SSNs blindly, because everyone else does, or because that’s how they’ve always done it. Maybe they actually need it. See if their reason sounds legitimate. (Update: For example, Credit.com’s Credit Report Card does ask for your SSN in order to generate your credit score and credit report summary — an industry standard – but the information is fully encrypted with a bank level authentication process.)
2. Negotiate. There are many different ways to identify you without a Social Security number, including your driver’s license or account number. Fight to use those instead.
3. If you must share your Social Security number, do so, but make sure the people taking it down have strong security measures in place to protect it. That said, you only have their assurance and frankly, in light of the mistakes people make and the sophistication level of hackers, who really knows if they can protect it?
Overcoming the addiction
If all this sounds like a giant pain in the neck, you’re right. It is. In the midst of our busy lives, we shouldn’t be the only ones concerned with protecting our most valuable identity asset, but it is what it is. Until somebody creates a Silver Bullet for identity theft, we are forced to take matters into our own hands.
Don’t be passive; ask the companies and nonprofit groups with which you do business how they plan to protect you. Do they password protect and encrypt all the personal information they collect? Do they have strict controls on who has access to computers containing your Social Security number, and do they keep this sensitive data off laptops, tablets and hard drives that are easy to steal or lose?
Like the doctor I met, many companies collect Social Security numbers they don’t need because they’re operating on autopilot. They’ve always done it, and their colleagues at other companies do it, so the practice continues and spreads on the strength of simple, dumb inertia. I believe that we are smarter than that. By demanding that companies do a better job protecting our personal information, and refusing to hand out our Social Security numbers like candy at a parade, we can force them to get smarter, too. And if they don’t think we’re serious about this and the government doesn’t finally force them off their Social Security number addiction, it is highly likely that the ultimate regulator of the American economic system, class action attorneys, will be knocking on their doors.
Source : Kiplinger
____________________________________________________
Give Your Social Security Number
Any Place: do not give anywhere where your question "for what reason is it needed"
is not properly and to you acceptance answered. State: I do not want to become a ID theft victim.
Keep a copy of this article with you and point out the selected lines - give a copy of the article.
Click green for further info
Every time you go to a new doctor or dentist and they give you a clipboard brimming with documents to fill out and sign, notice how they always ask for your Social Security number? Do you dutifully give it up? Did you ever wonder if they really need it?
I once asked a doctor why he wanted it. His response: “I don’t really know. I guess it’s because we’ve always asked for it.” (In actuality, most doctors ask in case your insurance doesn’t pay the entire invoice and/or to fill out a death certificate if you die. Offer a next of kin who knows the number instead, and your phone number for billing issues.)
Almost every day somebody asks for your Social Security Number and, like the Grand Marshal of a parade throwing rose petals or candy to the crowd, you probably give it up without giving it a second thought — because that’s what you’ve always done.
So, the next time someone asks you for your Social Security number, reflect on this: In December, the Army announced that hackers stole the Social Security numbers of 36,000 visitors to Fort Monmouth in New Jersey, including intelligence officers. Cyber activists took control of the CIA’s website. The private information, including some Social Security numbers, of celebrities and political leaders including FBI Director Robert Mueller and Secretary of State Hillary Clinton were exposed.
The sensitive data of First Lady Michelle Obama, Vice President Joe Biden and Attorney General Eric Holder, recently were posted on a website for the world to see.
Hackers even listened in on a phone call in which the FBI and Scotland Yard were discussing the criminal investigation against those very same hackers!
And, these incidents are only the crumbs on top of the coffee cake when you consider that hackers and thieves have improperly accessed more than 600 million consumer files since 2004.
Monty Python had it right
The moral to these horror stories is that if your Social Security number is stored on any computer anywhere, hackers will find a way to access it, or a compromised or disgruntled employee may well walk out the door with it. If your doctor, gym, or child’s grade school claims otherwise, that their security systems can protect your private data better than the CIA, FBI and Scotland Yard, to quote Monty Python: “Run away!”
Your identity is your biggest asset, and your Social Security number is the key to your personal kingdom. With it an identity thief can wreak havoc, hijacking your old credit accounts, establishing new ones, buying cars and houses, committing crimes, even obtaining medical products and services while pretending to be you, endangering not just your credit and your reputation, but also your life.
Consumers whose Social Security numbers are exposed in a data breach are five times more likely to become fraud victims than those who aren’t, according to the latest identity fraud report by Javelin Strategy & Research.
Just say no
For better or worse, you are the gatekeeper. The person most responsible for shielding your Social Security Number is you. Therefore, your mission is to limit, as best you can, the universe of those who gain access to it.
Here’s a short list of companies and organizations that have absolutely no business requesting your Social Security number:
1. Anyone who calls or sends you an official-looking email, who texts you a link to any site or designates a number to call where you are asked to confirm your SSN. If they call, check the credit or debit card that is the subject of the communication, call the customer service number listed on the back, and ask for the security department. If they email or text, do the same, or go directly to the institution’s website (provided you know who they are). Make sure you type the correct URL, and make sure that the page where you are asked to enter your information is secure. Only provide personal information if you’re the one who controls the interaction.
2. Public schools: Your utility bill confirms your address. Your email and phone number give them channels to contact you in an emergency. Asking for your Social Security number is overkill.
3. Little League, summer camp and the like: For the same reasons as school, a Social Security number should never be required by these groups. If they ask for your child’s birth certificate, show it to them, don’t leave it with them unless they can prove they will protect it. And even then, can you really believe them? If you use credit to pay for the activity, the organization may need your Social Security number. If you pay for it upfront or with a direct debit to your bank account or credit card, they don’t. Period.
4. Supermarkets: A frequent shopper card is neither a loan, nor a bank account. It’s merely a tool grocery stores use to track your purchases, primarily for marketing purposes. Regardless, many supermarket chains request customers’ Social Security numbers on their application forms. Refuse.
5. Anybody who approaches you on the street, whether it’s a cell phone company salesman offering a free T-shirt or someone running a voter registration campaign: Never, ever give your SSN. If you want an ill-fitting T-shirt festooned with corporate logos, buy one. If you want to register to vote, go to your county board of elections in person.
This is the short list. There are plenty of other organizations that should never get your Social Security number, and if you know one that I’ve left out, please leave it in the comments.
Don’t just hand it over
Once you realize how often you are asked for your Social Security number, you may be surprised. It happens literally all the time. So, the next time someone does, as they inevitably will, here’s how to handle it:
1. Take a minute and think. Maybe they ask for SSNs blindly, because everyone else does, or because that’s how they’ve always done it. Maybe they actually need it. See if their reason sounds legitimate. (Update: For example, Credit.com’s Credit Report Card does ask for your SSN in order to generate your credit score and credit report summary — an industry standard – but the information is fully encrypted with a bank level authentication process.)
2. Negotiate. There are many different ways to identify you without a Social Security number, including your driver’s license or account number. Fight to use those instead.
3. If you must share your Social Security number, do so, but make sure the people taking it down have strong security measures in place to protect it. That said, you only have their assurance and frankly, in light of the mistakes people make and the sophistication level of hackers, who really knows if they can protect it?
Overcoming the addiction
If all this sounds like a giant pain in the neck, you’re right. It is. In the midst of our busy lives, we shouldn’t be the only ones concerned with protecting our most valuable identity asset, but it is what it is. Until somebody creates a Silver Bullet for identity theft, we are forced to take matters into our own hands.
Don’t be passive; ask the companies and nonprofit groups with which you do business how they plan to protect you. Do they password protect and encrypt all the personal information they collect? Do they have strict controls on who has access to computers containing your Social Security number, and do they keep this sensitive data off laptops, tablets and hard drives that are easy to steal or lose?
Like the doctor I met, many companies collect Social Security numbers they don’t need because they’re operating on autopilot. They’ve always done it, and their colleagues at other companies do it, so the practice continues and spreads on the strength of simple, dumb inertia. I believe that we are smarter than that. By demanding that companies do a better job protecting our personal information, and refusing to hand out our Social Security numbers like candy at a parade, we can force them to get smarter, too. And if they don’t think we’re serious about this and the government doesn’t finally force them off their Social Security number addiction, it is highly likely that the ultimate regulator of the American economic system, class action attorneys, will be knocking on their doors.
Source : Kiplinger
____________________________________________________
10 Riskiest Places to Give Your
Social Security Number
Click green for further info
McAfee, the antivirus software company, recently released a list of the most dangerous places to give your Social Security number. Many of the places on the list might surprise you.
1. Universities and colleges
2. Banking and financial institutions
3. Hospitals
4. State governments
5. Local government
6. Federal government
7. Medical businesses (These are businesses that concentrate on services and products for the medical field, such as distributors of diabetes or dialysis supplies, medical billing services, pharmaceutical companies, etc.)
8. Non-profit organizations
9. Technology companies
10. Health insurers and medical offices
The places are ranked based on the number of data breaches involving Social Security numbers from January 2009 to October 2010. What’s most disturbing is that you must disclose your Social Security number if you want to receive services from most of those places (either as required by law or the groups' own policies).
So I asked Adam Levin, chairman and co-founder of Identity Theft 911, what people could do to prevent their Social Security numbers from falling into the wrong hands and keep their identities safe. "It’s obvious there is no slam-dunk 100% way to protect yourself," he says. "Everywhere you turn, you’re going to run into an organization looking for information from you."
However, you can take steps to lower your risk, he says. And there are things you can do to detect identity theft and limit the damage.
Don’t be so quick to give out your number. As Levin said, a lot of organizations and companies will ask for your Social Security number. But that doesn’t mean they all have to have it. You will be required to provide your Social Security number in any situation that requires your identity to be verified (such as an application for credit or a license) or about which the IRS must be notified. Otherwise, be sure to ask whether the agency, business or organization has to have it. Unfortunately, even though many groups -- such as private insurers -- can’t require your Social Security number, they might refuse to do business with you if you don’t provide it. In those cases, ask if you can give just the last four numbers rather than your full Social Security number.
Don’t ever give out your Social Security number or any other personal information to someone you don’t know who initiates contact with you by phone, e-mail or in person. For example, if you receive an e-mail that claims that you must provide personal information to claim a refund from the IRS, it’s a scam. The IRS doesn’t request information from taxpayers by e-mail.
Lock away your Social Security card. Your Social Security card belongs in a fireproof safe in your home, not in your wallet. Why? Because if someone stole your wallet, he’d be able to steal your identity, too. And don’t leave your card or any other personal information sitting out where others can see it. Levin says this is a big problem at universities, where students leave wallets, credit-card statements and other items with personal information that can easily be stolen. See 5 Steps to Protect Your College Student’s ID. Be sure to cross-cut shred any documents with your personal information once you no longer need those documents.
Protect your number from cyber thieves. Even though there’s not much you can do to protect your personal information once you hand it over to another business or organization, you can take steps to protect the data on your computer. Make sure you install antivirus and Internet security software on your computer -- and update it frequently. "If you buy the software and don’t update it, it’s like becoming a member of a gym and not going," Levin says. The McAfee Total Protection software is $59.99 (after a $20 rebate) and the Norton 360 software is $79.99. Levin also says you should frequently change passwords for your online accounts and not use the same passwords for financial accounts and social networks.
Control the damage. Even if you take all these steps, there still is a chance that you will become a victim of identity theft. That’s why it’s imperative to check your accounts daily to catch any transactions you didn’t make. “If you have time to check e-mail and a social networking site, you can find time to check your bank and credit-card accounts,” Levin says. And take advantage of the free credit report you’re entitled to once a year from each of the three credit bureaus -- Experian, Equifax and TransUnion. Go to www.annualcreditreport.com to get your reports. Rather than checking them all at once, though, order each one separately to spread out your credit checks throughout the year.
If you notice any problems, act quickly to repair the damage. You can contact the credit bureaus and ask them to put a fraud alert or credit freeze on your accounts. A fraud alert, which is free, requires lenders to make some effort to verify your identity before issuing new credit in your name. A credit (or security) freeze prevents the credit reporting companies from releasing your report without your consent. The credit bureaus charge a fee to initiate a freeze, but you might not have to pay if you're a resident of a state that waives the fee for identity theft victims. See Fraud Alert vs. Credit Freeze.
If your wallet (with your Social Security card or any credit cards inside it) is stolen, report it to the police. With a police report, you can place an extended fraud alert, which lasts seven years, on your credit report, and you'll have documentation that will help you bolster your case if you become a victim of identity theft.
See the Federal Trade Commission’s identity theft page for information about what you can do if your identity has been stolen.
Source: Credit.com
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Social Security Number
Click green for further info
McAfee, the antivirus software company, recently released a list of the most dangerous places to give your Social Security number. Many of the places on the list might surprise you.
1. Universities and colleges
2. Banking and financial institutions
3. Hospitals
4. State governments
5. Local government
6. Federal government
7. Medical businesses (These are businesses that concentrate on services and products for the medical field, such as distributors of diabetes or dialysis supplies, medical billing services, pharmaceutical companies, etc.)
8. Non-profit organizations
9. Technology companies
10. Health insurers and medical offices
The places are ranked based on the number of data breaches involving Social Security numbers from January 2009 to October 2010. What’s most disturbing is that you must disclose your Social Security number if you want to receive services from most of those places (either as required by law or the groups' own policies).
So I asked Adam Levin, chairman and co-founder of Identity Theft 911, what people could do to prevent their Social Security numbers from falling into the wrong hands and keep their identities safe. "It’s obvious there is no slam-dunk 100% way to protect yourself," he says. "Everywhere you turn, you’re going to run into an organization looking for information from you."
However, you can take steps to lower your risk, he says. And there are things you can do to detect identity theft and limit the damage.
Don’t be so quick to give out your number. As Levin said, a lot of organizations and companies will ask for your Social Security number. But that doesn’t mean they all have to have it. You will be required to provide your Social Security number in any situation that requires your identity to be verified (such as an application for credit or a license) or about which the IRS must be notified. Otherwise, be sure to ask whether the agency, business or organization has to have it. Unfortunately, even though many groups -- such as private insurers -- can’t require your Social Security number, they might refuse to do business with you if you don’t provide it. In those cases, ask if you can give just the last four numbers rather than your full Social Security number.
Don’t ever give out your Social Security number or any other personal information to someone you don’t know who initiates contact with you by phone, e-mail or in person. For example, if you receive an e-mail that claims that you must provide personal information to claim a refund from the IRS, it’s a scam. The IRS doesn’t request information from taxpayers by e-mail.
Lock away your Social Security card. Your Social Security card belongs in a fireproof safe in your home, not in your wallet. Why? Because if someone stole your wallet, he’d be able to steal your identity, too. And don’t leave your card or any other personal information sitting out where others can see it. Levin says this is a big problem at universities, where students leave wallets, credit-card statements and other items with personal information that can easily be stolen. See 5 Steps to Protect Your College Student’s ID. Be sure to cross-cut shred any documents with your personal information once you no longer need those documents.
Protect your number from cyber thieves. Even though there’s not much you can do to protect your personal information once you hand it over to another business or organization, you can take steps to protect the data on your computer. Make sure you install antivirus and Internet security software on your computer -- and update it frequently. "If you buy the software and don’t update it, it’s like becoming a member of a gym and not going," Levin says. The McAfee Total Protection software is $59.99 (after a $20 rebate) and the Norton 360 software is $79.99. Levin also says you should frequently change passwords for your online accounts and not use the same passwords for financial accounts and social networks.
Control the damage. Even if you take all these steps, there still is a chance that you will become a victim of identity theft. That’s why it’s imperative to check your accounts daily to catch any transactions you didn’t make. “If you have time to check e-mail and a social networking site, you can find time to check your bank and credit-card accounts,” Levin says. And take advantage of the free credit report you’re entitled to once a year from each of the three credit bureaus -- Experian, Equifax and TransUnion. Go to www.annualcreditreport.com to get your reports. Rather than checking them all at once, though, order each one separately to spread out your credit checks throughout the year.
If you notice any problems, act quickly to repair the damage. You can contact the credit bureaus and ask them to put a fraud alert or credit freeze on your accounts. A fraud alert, which is free, requires lenders to make some effort to verify your identity before issuing new credit in your name. A credit (or security) freeze prevents the credit reporting companies from releasing your report without your consent. The credit bureaus charge a fee to initiate a freeze, but you might not have to pay if you're a resident of a state that waives the fee for identity theft victims. See Fraud Alert vs. Credit Freeze.
If your wallet (with your Social Security card or any credit cards inside it) is stolen, report it to the police. With a police report, you can place an extended fraud alert, which lasts seven years, on your credit report, and you'll have documentation that will help you bolster your case if you become a victim of identity theft.
See the Federal Trade Commission’s identity theft page for information about what you can do if your identity has been stolen.
Source: Credit.com
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The Widow(er)'s Guide to Social Security Benefits
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As a Certified Financial Planner™, I work with a lot of widows trying to navigate the tricky world of Social Security benefits after their spouse passes away. (See complete information for a Certified Financial Planner™ next below)
Social Security provides you, as a widow, with a choice between your own Social Security benefit based on your work history, and a survivor’s benefit based on your deceased spouse’s work history. Social Security is gender neutral, therefore this information applies to both widows and widowers.
When You Can Start Taking Benefits
You are entitled to 100% of your deceased spouse’s benefit at full retirement or you can take reduced benefits as early as age 60. If you are disabled, you can begin taking benefits at 50. The full retirement age is 66 if you were born between 1945 and 1956, and gradually increases up to 67 if you were born between 1957 and 1960. The normal retirement age for everyone born after 1960 is 67.
Click: What Happens to You Social Security Benefits When You Die?
As a widow, you have the option to begin taking benefits based on your own earnings record and later switch to survivor’s benefits, or you can begin with survivor’s benefits and later switch to benefits based on your own record. While collecting survivor’s benefits, you can earn delayed retirement credit on your own Social Security, but you cannot earn delayed retirement credit on survivor’s benefits.
Unfortunately, at any given time you have to select either survivor’s benefits or your own benefits, you are not entitled to both. Don’t wait beyond 70 to begin taking Social Security because there is no additional increase in the benefit after age 70. If you were already receiving Social Security benefits before your spouse’s death, you can call Social Security to see if you will earn more money collecting survivor’s benefits.
Generally, you cannot get survivor’s benefits if you remarry before age 60. After age 60 remarriage does not impact your survivor’s benefits. At age 62 you are entitled to benefits based on a new spouse’s work record, if those would be higher. If other family members are entitled to survivor’s benefits, be aware that there is a limit to the total amount that can be paid to a family.
Just Because You Can, Doesn’t Mean You Should
Generally, if you plan to keep working, you can cover your current expenses, and you are in reasonably good health, you should delay taking Social Security benefits until full retirement. If you take Social Security or survivor’s benefits before your normal retirement age and you earn over a certain level, Social Security will withhold part of your benefit.
In 2013, Social Security will withhold $1 in benefits for every $2 of earnings above $15,120, and $1 in benefits for every $3 of earnings above $40,080 in the year you reach full retirement age. However, when you reach full retirement age your benefit is recalculated to give you credit for the benefits that were withheld as a result of earning above the exempt amount.
Click: 3 Ways Student Loans Can Wreck Your Retirement
Once you reach normal retirement age, you can keep working and your benefits will not be reduced regardless of your earnings. However, if you are still working while taking Social Security, you may end up paying taxes on a much larger portion of your benefits.
Taking Social Security early also results in a reduced benefit based on the number of months you receive Social Security before your normal retirement age. If you were born in 1960 and you take benefits at 62 your maximum reduction would be around 30%. You may be able to begin by taking a reduced survivor’s benefit before your normal retirement age, and then switch to an unreduced benefit based on your own earnings record, at full retirement age.
What Could Reduce Your Benefits?
If you receive a pension from a job you held with a government entity and you did not pay Social Security tax, your Social Security survivor’s benefit may be reduced. Additionally, if you collect Social Security benefits based on your own work history and you earned a pension from a job in which you didn’t pay Social Security, the Windfall Elimination Provision may reduce your Social Security benefit. Be sure to discuss this with your Social Security representative when you file for benefits.
Social Security can be extremely complex and widows have many opportunities to optimize their benefits. Before filing for Social Security, please research the options available to you and meet with a Social Security representative to fully understand your choices.
Click green for further info
Source: Credit.com
_____________________________________________________________________
6 Ways to Get the Most Out of Social Security
Necessary info - study this & apply
Quotation "Knowledge is no power - only applied knowledge is power
(Dr. Christian, STAF, Inc.)
By far the most important factor in how much you collect from Social Security is not how much
you earned, but how long you stick around to collect benefits. The best way to maximize Social Security is to eat right, go to the gym, get your annual checkup and in every other way take care of
yourself so you can continue to collect that monthly benefit through your 70s, 80s, 90s & more.
Click all green for further info
Social Security took a cut out of every paycheck we ever earned, and the money was used to pay benefits to our grandparents, parents and older siblings. Now, finally, it's our turn, and it's only natural that we want our benefits, too. Yet the rules for collecting Social Security are incredibly complicated, and vary depending on your marital status, how long you worked, where you worked and when you retire.
Meanwhile, we hear dire predictions that Social Security is running out of funds, benefits will be cut and eligibility rules may change. Nobody knows what the long-term future holds, but under the current program, which is not likely to change much in the near term, there are six proven strategies to make the most out of the program:
1. Work a long time. Social Security says it figures your benefit by calculating "your average indexed monthly earnings during the 35 years in which you earned the most." So, obviously, one way to maximize your benefit is to put in a full career, working for at least 35 years. Maybe that seems like a long time, but look at it this way: If you retire at full retirement age (66 for most of us), you can still get the maximum benefit even if you didn't start your career until you were 31, or if you began working at age 21 and took off 10 years to raise children.
2. Don't retire early. Workers are eligible to start taking Social Security benefits at age 62, but the amount you receive at 62 is discounted by about 25 percent.
Also, if you start Social Security before full retirement age (66 for most of us) and you earn more than $14,160 per year, the government starts temporarily withholding your benefits.
Conversely, if you work beyond full retirement age (= 66 for most of us), you receive a bonus of approximately 7 percent a year, up to age 70. There's no extra benefit to working past age 70.
3. Have a good job. Social Security sets a maximum amount of salary that is subject to the payroll tax, currently $113,700 per year, which is the same amount of earnings it will credit toward your benefit. This amount is adjusted for inflation. The maximum amount in 2000 was $76,200, and in 1990 is was $51,300. This is easier said than done, but the way to maximize your benefit is to earn the maximum amount set by Social Security throughout your career. If you were earning at least $51,300 in 1990, $76,200 in 2000 and $113,700 today, you're eligible to collect the maximum benefit from Social Security.
3. Don't retire early. Workers are eligible to start taking Social Security benefits at age 62, but the amount you receive at 62 is discounted by about 25 percent. Also, if you start Social Security before full retirement age, and you earn more than $14,160 per year, the government starts temporarily withholding your benefits. Conversely, if you work beyond full retirement age, you receive a bonus of approximately 7 percent a year, up to age 70. There's no extra benefit to working past age 70.
4. Don't earn too much in retirement. If you're married and file a joint tax return, yourSocial Security benefits are not taxed if your combined income falls below $32,000. Half is taxed if your income is between $32,000 and $44,000, and 85 percent of your benefits are taxed if your income exceeds $44,000. If you had a good career and didn't retire early, you'll likely be subject to the 85 percent rule. Don't get upset; that's the one progressive aspect of Social Security. But there is one way around it: don't get married. Two singles can earn up to $50,000, instead of $32,000, before their benefits are subject to federal income tax.
5. Live in a tax friendly state. There's not much you can do to avoid federal taxes unless you take a vow of poverty, but you can do something about state tax. Most states do not levy income tax on Social Security benefits, including retirement havens like Florida, Arizona and the Carolinas. But about a dozen states do exact income tax on your Social Security benefits, including red states like Kansas and Utah as well as blue states like Connecticut and Vermont.
6. Stay in good health. By far the most important factor in how much you collect from Social Security is not how much you earned, but how long you stick around to collect benefits. You can work all your life, but if you die the day after you retire, all is lost. The best way to maximize Social Security is to eat right, go to the gym, get your annual checkup and in every other way take care of yourself so you can continue to collect that monthly benefit through your 70s, 80s and 90s.
Source:
Tom Sightings is a former publishing executive who was eased into early retirement in his mid-50s. He lives in the New York area and blogs at Sightings at 60, where he covers health, finance, retirement, and other concerns of baby boomers who realize that somehow they have grown up.
More From US News & World Report (if the link has expired search the web with the title)
Necessary info - study this & apply
Quotation "Knowledge is no power - only applied knowledge is power
(Dr. Christian, STAF, Inc.)
By far the most important factor in how much you collect from Social Security is not how much
you earned, but how long you stick around to collect benefits. The best way to maximize Social Security is to eat right, go to the gym, get your annual checkup and in every other way take care of
yourself so you can continue to collect that monthly benefit through your 70s, 80s, 90s & more.
Click all green for further info
Social Security took a cut out of every paycheck we ever earned, and the money was used to pay benefits to our grandparents, parents and older siblings. Now, finally, it's our turn, and it's only natural that we want our benefits, too. Yet the rules for collecting Social Security are incredibly complicated, and vary depending on your marital status, how long you worked, where you worked and when you retire.
Meanwhile, we hear dire predictions that Social Security is running out of funds, benefits will be cut and eligibility rules may change. Nobody knows what the long-term future holds, but under the current program, which is not likely to change much in the near term, there are six proven strategies to make the most out of the program:
1. Work a long time. Social Security says it figures your benefit by calculating "your average indexed monthly earnings during the 35 years in which you earned the most." So, obviously, one way to maximize your benefit is to put in a full career, working for at least 35 years. Maybe that seems like a long time, but look at it this way: If you retire at full retirement age (66 for most of us), you can still get the maximum benefit even if you didn't start your career until you were 31, or if you began working at age 21 and took off 10 years to raise children.
2. Don't retire early. Workers are eligible to start taking Social Security benefits at age 62, but the amount you receive at 62 is discounted by about 25 percent.
Also, if you start Social Security before full retirement age (66 for most of us) and you earn more than $14,160 per year, the government starts temporarily withholding your benefits.
Conversely, if you work beyond full retirement age (= 66 for most of us), you receive a bonus of approximately 7 percent a year, up to age 70. There's no extra benefit to working past age 70.
3. Have a good job. Social Security sets a maximum amount of salary that is subject to the payroll tax, currently $113,700 per year, which is the same amount of earnings it will credit toward your benefit. This amount is adjusted for inflation. The maximum amount in 2000 was $76,200, and in 1990 is was $51,300. This is easier said than done, but the way to maximize your benefit is to earn the maximum amount set by Social Security throughout your career. If you were earning at least $51,300 in 1990, $76,200 in 2000 and $113,700 today, you're eligible to collect the maximum benefit from Social Security.
3. Don't retire early. Workers are eligible to start taking Social Security benefits at age 62, but the amount you receive at 62 is discounted by about 25 percent. Also, if you start Social Security before full retirement age, and you earn more than $14,160 per year, the government starts temporarily withholding your benefits. Conversely, if you work beyond full retirement age, you receive a bonus of approximately 7 percent a year, up to age 70. There's no extra benefit to working past age 70.
4. Don't earn too much in retirement. If you're married and file a joint tax return, yourSocial Security benefits are not taxed if your combined income falls below $32,000. Half is taxed if your income is between $32,000 and $44,000, and 85 percent of your benefits are taxed if your income exceeds $44,000. If you had a good career and didn't retire early, you'll likely be subject to the 85 percent rule. Don't get upset; that's the one progressive aspect of Social Security. But there is one way around it: don't get married. Two singles can earn up to $50,000, instead of $32,000, before their benefits are subject to federal income tax.
5. Live in a tax friendly state. There's not much you can do to avoid federal taxes unless you take a vow of poverty, but you can do something about state tax. Most states do not levy income tax on Social Security benefits, including retirement havens like Florida, Arizona and the Carolinas. But about a dozen states do exact income tax on your Social Security benefits, including red states like Kansas and Utah as well as blue states like Connecticut and Vermont.
6. Stay in good health. By far the most important factor in how much you collect from Social Security is not how much you earned, but how long you stick around to collect benefits. You can work all your life, but if you die the day after you retire, all is lost. The best way to maximize Social Security is to eat right, go to the gym, get your annual checkup and in every other way take care of yourself so you can continue to collect that monthly benefit through your 70s, 80s and 90s.
Source:
Tom Sightings is a former publishing executive who was eased into early retirement in his mid-50s. He lives in the New York area and blogs at Sightings at 60, where he covers health, finance, retirement, and other concerns of baby boomers who realize that somehow they have grown up.
More From US News & World Report (if the link has expired search the web with the title)
- 10 Things Everyone Should Know About Social Security
- 12 Ways to Increase Your Social Security Payments
- 10 Places to Retire on Social Security Alone ________________________________________________
Certified Financial Planner® - What is a CFP®
CERTIFICATION REQUIREMENTS
CFP®
Click green for further info
The CFP® certification process, administered by CFP Board, identifies to the public that those individuals who have been authorized to use the CFP® certification marks in the U.S. have met rigorous professional standards and have agreed to adhere to the principles of integrity, objectivity, competence, fairness, confidentiality, professionalism and diligence when dealing with clients.
CFP Board conducted a nationwide consumer survey among upper-income households. That survey reflects the public's growing demand for financial planners who adhere to rigorous standards. Of those surveyed:
- 85% considered successful completion of a certification examination "very important" or "extremely important."
- 95% felt financial planners should adhere to professional practice standards.
- 97% said the most important standard for financial planners was adherence to a professional code of ethics.
In addition, the CFP® certification prepares you for a career-long commitment to meeting the ever-changing needs of your clients. As a CFP® professional, you become a coach and problem-solver, able to provide truly personalized services to clients and to maintain high levels of financial planning and professionalism. Finally, your expertise and credibility as a financial planner is instantly communicated with the CFP® marks - the financial planning certification most sought after by consumers and financial planners alike.
INITIAL CERTIFICATION
To become certified, you are required to meet the following initial certification requirements (known as the four "Es"):
- Education
- Examination
- Experience
- Ethics
Education
The first step to CFP® certification is to acquire the knowledge required to deliver professional, competent and ethical financial planning services to clients, as outlined in the major personal financial planning topic areas identified by CFP Board’s most recent Job Analysis Study (See the list of Principal Topics). CFP Board’s coursework component requires the completion of a college-level program of study in personal financial planning, or an accepted equivalent, including completion of a financial plan development (capstone) course registered with CFP Board. You must also have earned a bachelor’s degree (or higher) from a regionally-accredited college or university in order to obtain CFP® certification. The bachelor’s degree requirement is a condition of initial certification; however, it is not a requirement to be eligible to take the CFP® Certification Examination and does not need to be met before registering for the examination. CFP Board does not grant equivalencies or exceptions to the bachelor’s degree education requirement.
Examination
After you have successfully met the education coursework requirement, you will be eligible to register for the CFP® Certification Examination. The CFP® Certification Examination assesses your ability to apply your financial planning knowledge, in an integrated format, to financial planning situations (See the Job Task Domains). Combined with the education, experience, and ethics requirements, it assures the public that you have met a level of competency appropriate for professional practice.
Experience
Because CFP® certification indicates to the public your ability to provide financial planning without supervision, CFP Board requires you to have three years of professional experience in the financial planning process, or two years of apprenticeship experience that meets additional requirements. Qualifying experience may be acquired through a variety of activities and professional settings including personal delivery, supervision, direct support or teaching.
Ethics
CFP® professionals agree to adhere to the high standards of ethics and practice outlined in CFP Board’s Standards of Professional Conduct and to acknowledge CFP Board’s right to enforce them through its Disciplinary Rules and Procedures. When you have completed the education, examination and experience components of the CFP® certification process, you will be directed to complete a CFP®Certification Application on which you will be asked to disclose information about your background, including your involvement in any criminal, civil, governmental, or self-regulatory agency proceeding or inquiry, bankruptcy, customer complaint, filing, termination/internal reviews conducted by your employer or firm. CFP Board conducts a detailed background check for all candidates, including review of any disclosures made on the CFP® Certification Application. Matters that may or will bar you from obtaining certification are investigated in accordance with CFP Board’s Disciplinary Rules and Procedures. Authorization to use the CFP® marks will not be approved until the background check and any investigation are concluded successfully.
Important Note
Applicants for CFP® certification are required to satisfy CFP Board’s Fitness Standards for Candidates and Registrants, which describe conduct that will always bar an individual from becoming certified and conduct that is presumed to be unacceptable and will bar an individual from becoming certified unless the individual successfully petitions CFP Board’s Disciplinary and Ethics Commission for consideration. CFP Board encourages all individuals pursuing CFP® certification to review the Fitness Standards for Candidates and Registrants before addressing the other certification requirements.
CERTIFICATION RENEWAL
Once you have been authorized to use the CFP® marks, you must meet CFP Board’s renewal standards to continue to use them.
The renewal requirements include the following:
- Pay the annual $325 certification fee (non-refundable),
- Submit a properly completed certification application (every two years), and
- Complete 30 hours of continuing education (CE) accepted by CFP Board every two years.
The certification fee, in conjunction with other sources of revenue including exam fees, supports the operations of CFP Board in fulfilling its mission and objectives. Some of these activities include protection of the CFP® certification marks; enforcement of CFP Board’s Standards of Professional Conduct; educating the public about the CFP® marks; and development and administration of the CFP®Certification Examination.
Learn more about the Public Awareness Campaign
Renewal reminders will be sent to you beginning approximately four months before your certification expires.
Learn more about the renewal requirements
FIND AN EDUCATION PROGRAM
Click: SEARCH HERE
If you're up for the challenge of helping people achieve their financial goals, financial planning is the career for you.
WELCOME TO OUR NEW WEBSITE
We welcome your feedback and invite you to complete a brief 5-question survey to help us improve your experience on CFP.net.
Click: COMPLETE THE SURVEY
Click: FINANCIAL PLANNING FOR YOU
Click: FIND A CFP® PROFESSIONAL
Click: CONTACT US
Click green for further info
Source: Internet
___________________________________________________________________________________
8 Things Not to Keep in Your Wallet
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That overstuffed wallet of yours can’t be comfortable to sit on. It’s probably even too clunky to lug around in a purse, too.
And with every new bank slip that bulges from the seams, your personal information is getting less and less safe. With just your name and Social Security number, identity thieves can open new credit accounts and make costly purchases in your name. If they can get their hands on (and doctor) a government-issued photo ID, they can do even more damage, such as opening new bank accounts. These days, con artists are even profiting from tax-return fraud and health-care fraud, all with stolen IDs.
[More from Kiplinger: How to Protect Your Identity, Finances If You Lose Your Phone]
We talked with consumer-protection advocates to identify the eight things you should purge from your wallet immediately to limit your risk in case your wallet is lost or stolen.
And when you’re finished removing your wallet’s biggest information leaks, take a moment to photocopy everything you’ve left inside, front and back. Stash the copies in a secure location at home or in a safe-deposit box. The last thing you want to be wondering as you're reporting a stolen wallet is, “What exactly did I have in there?”
1. Your Social Security Card...
...and anything with the number on it.
Your nine-digit Social Security number is all a savvy ID thief needs to open new credit card accounts or loans in your name. ID-theft experts say your Social Security card is the absolute worst item to carry around.
Once you’ve removed your card, look for anything else that may contain your SSN. As of December 2005, states can no longer display your SSN on newly issued driver's licenses, state ID cards and motor-vehicle registrations. If you still have an older photo ID, request a new card prior to the expiration date. There might be an additional fee, but it's worth it to protect your identity.
Retirees, pull out your Medicare card, too, because it has your SSN on it. Instead: Photocopy your Medicare card (front and back), black out the last four digits of your SSN on the copy, and carry it with you instead of your real card.
[More from Kiplinger: The 5 Money Smartest (and 5 Money Dumbest) States]
2. Password Cheat Sheet
The average American uses at least seven different passwords (and probably should use even more to avoid repeating them on multiple sites/accounts). Ideally, each of those passwords should be a unique combination of letters, numbers, and symbols, and you should change them regularly. Is it any wonder we need help keeping track of them all?
However, carrying your ATM card’s PIN number and a collection of passwords (especially those for online access to banking and investment accounts) on a scrap of paper in your wallet is a prescription for financial disaster.
Instead: If you have to keep passwords jotted down somewhere, keep them in a locked box in your house. Or consider an encrypted mobile app, such as SplashID ($9.95; Android, Blackberry, iPad, iPhone), Password Safe Pro (free, Android only) or Pocket (free, Android only).
[Related: Common Money Traps to Avoid]
3. Spare Keys
A lost wallet containing your home address (likely found on your driver's license or other items) and a spare key is an invitation for burglars to do far more harm than just opening a credit card in your name. Don't put your property and family at risk. (And even if your home isn't robbed after losing a spare key, you'll likely spend $100+ in locksmith fees to change the locks for peace of mind.)
Instead: Keep your spare keys with a trusted relative or friend. If you’re ever locked out, it may take a little bit longer to retrieve your backup key, but that’s a relatively minor inconvenience.
4. Checks
Blank checks are an obvious risk—an easy way for thieves to quickly withdraw money from your checking account. But even a lost check you've already filled out can lead to financial loss—perhaps long after you've canceled and forgotten about it. With the routing and account numbers on your check, anybody could electronically transfer funds from your account.
Instead: Only carry paper checks when you will absolutely need them. And leave the checkbook at home, bringing only the exact amount of checks you anticipate needing that day.
[More from Kiplinger: 10 Riskiest Places to Give Your Social Security Number]
5. Passport
A government-issued photo ID such as a passport opens up a world of possibilities for an ID thief. “Theives would love to get (ahold of) this,” says Nikki Junker, a victim adviser at the Identity Theft Resource Center. “You could use it for anything”—including traveling in your name, opening bank accounts or even getting a new copy of your Social Security card.
Instead: Carry only your driver’s license or other personal ID while traveling inside the United States. When you're overseas, photocopy your passport and leave the original in a hotel lockbox.
6. Multiple Credit Cards
Although you shouldn’t ditch credit cards altogether (those who regularly carry a card tend to have higher credit scores than those who don’t), consider a lighter load. After all, the more cards you carry, the more you’ll have to cancel if your wallet is lost or stolen. We recommend carrying a single card for unplanned or emergency purchases, plus perhaps an additional rewards card on days when you expect to buy gas or groceries.
Also: Maintain a list, someplace other than your wallet, with all the cancellation numbers for your credit cards. They are typically listed on the back of your cards, but that won’t do you much good when your wallet is nowhere to be found.
[Related: How Hackers Attack]
hacker = (1) An enthusiastic and skillful computer programmer or user (2) A person who uses computers to gain unauthorized access to data.
7. Birth Certificate
The birth certificate itself won’t get ID thieves very far. However, “birth certificates could be used in correlation with other types of fraudulent IDs,” Junker says. “Once you have those components, you can do the same things you could with a passport or a Social Security card.”
Be especially cautious on occasions—such as your mortgage closing—when you may need to present your birth certificate, Social Security card and other important personal documents at once. “Everything’s together,” Junker notes, “and someone can just come along and steal them all. Take the time to take them home, and don’t leave them in your car.”
8. A Stack of Receipts
Beginning in December 2003, businesses may not print anything containing your credit or debit card’s expiration date or more than the last five digits of your credit card number. Still, a crafty ID thief can use the limited credit card info and merchant information on receipts to phish for your remaining numbers.
Instead: Clear those receipts out each night, shredding the ones you don’t need. But for receipts you save, keep them safe by going digital. Apps such as Lemon and Shoeboxed create and categorize digital copies of your receipts and business cards.
More from Kiplinger:
Click green for further info
Source: Kiplinger
___________________________________________
Source: What’s A Credit Score, Really ?
What’s a Credit Score? Really.
Date: 04/24/2012
“Do you know your credit score?”
It’s a question you probably hear from time to time, and if you don’t know the answer, it can feel unsettling. It feels like people are talking about you, you don’t know what they are saying, but you know it could be bad. It’s like the worst part of high school.
But the reality is that it’s kind of a trick question. You don’t have just one credit score. It’s not like the SATs in that way. Most people have dozens of credit scores and they are used by different organizations for different reasons. This doesn’t mean that they aren’t important, rather, the credit scoring system is more nuanced and while you should know where you stand overall, and be aware of your credit scores, it’s important to keep it all in perspective.
(Credit.com includes a credit score in its free Credit Report Card, which provides users with an easy to understand overview of their credit standing. But we take it a step further and put your score into context. That’s what this article is all about: helping you understand how credit scores and credit in general really works.)
[Share Your Credit Experiences on the Credit.com Forum]
Why so many scores?
According to some estimates, the average American has somewhere around 35 credit scores, and they are used for a variety of different reasons. Most are designed to predict risk, and they are generally calculated based on data from one or more of the three major credit bureaus (Experian, Transunion and Equifax), but the purposes of the different scores may vary.
FREE TOOL:
CHECK YOUR CREDIT
Credit.com’s Credit Report Card
Check your credit bureau profile for free with this great tool. See your detailed credit evaluation, expert advice on managing your credit, and unlimited free updates every 30 days.
Get Started Here »
Broadly speaking , these types of credit scores are available:
Generic scores are designed to predict how consumers may repay a variety of different loans.
Industry scores are created to predict performance on certain types of loans. For example, there are scores specifically tailored to predict risk of missed payment an auto loans.
Custom scores are developed on a lender’s customer base and predict the likelihood of a consumer not paying as agreed with that particular lender. They are “customized” for the lender’s own specific customer base and purposes. Your credit card issuer, for example, would generate a custom score on your profile, yet would never share it with other entities.
Educational scores are created to show consumers how their credit standing compares to other consumers. The score that you’ll find in our free Credit Report Card is an example of an educational score, because it is used to educate you, the consumer, and not used by a lender to evaluate your creditworthiness.
Is one type of score better than the other? Not necessarily. Let’s suppose an auto lender purchases an auto industry specific credit score based on information in your Equifax credit file at the very same time that a credit card company requests one to evaluate you for a credit line increase. And at the same time, you order your own score because you are thinking about shopping for a new credit card.
The number that each of these two lenders—and you—get may be different. That’s because the auto lender is ordering a score tailored to predict how likely you are to pay back an auto loan. The credit card company may be using a custom score to evaluate how likely you are to repay the credit card you want from that bank. And your educational score may be designed to help you understand the strengths and weaknesses of the information in your credit reports, as well as how those compare to others. The same data is being used in all three cases, but the scores are different.
How Does FICO Fit In?
We’ve all heard the term FICO Score tossed around, but a lot of people are confused when it comes to what the company actually does. Let’s start by explaining what FICO isn’t.
FICO is not one of the major credit bureaus (Equifax, Transunion and Experian), which means that FICO does not actually gather data about individuals. Rather, the FICO mathematical formulas are applied against the data from the credit reporting agencies to calculate a score. Their claim to fame is the formula, NOT the information that gets plugged into it. FICO scores are the most widely used credit scores, but they aren’t the only game in town. VantageScore was created by the credit reporting agencies to offer lenders an alternative to the FICO formula. In addition, each bureau has its own proprietary scoring models.
For competitive and legal reasons, the various credit scoring models may operate on different scales.
For example, here are the ranges for a few popular credit scoring models:
What Do the Scores Actually Take into Consideration?
Now that you know there are a variety of credit scores, you might be thinking, “Why should I even bother trying to keep tabs on this stuff? I’ll never be able to keep it all straight.”
In one sense, you’re right. You’ll never be able to monitor ALL of your credit scores, but the fact of the matter is that there’s no practical reason to do that anyway. Almost all of the credit scores out there look at the same pieces of information, they just may evaluate them a bit differently. In the end, if you take advantage of an educational credit score you’ll be able to monitor the various ups and downs of your credit.
It’s most important that you are mindful of the basic factors that go into every scoring model (all of which you can track using Credit.com’s Free Credit Report Card):
That means the main things you can do to build, maintain or even improve your credit scores are similar, no matter which scoring model will be used. Those are:
Use credit. Credit scores can’t be calculated from nothing. The score needs to see a minimum amount of established credit and recent activity on your credit to be generated.
Pay your bills on time. By reviewing your credit reports, you’ll know which lenders report to the credit reporting agencies, and you can be extra careful about paying them on time, every time. Keep in mind that some lenders only report negative information. That means that even a lender who doesn’t report positive payment history may report if you fall behind.
Try to stay out of trouble. Tax liens, judgments, foreclosure, collections and bankruptcy are likely to result in a credit score drop, no matter which model is being used to generate a score. If you can’t avoid these kinds of problems, try to find a way to resolve them so you can shift your attention to rebuilding your credit.
Keep debt levels (especially on credit cards) low, if possible. FICO has said that consumers with the best scores tend to use, on average, 10% of the available credit on their credit cards. When you do charge items on your cards, feel free to pay off the balances in full each month. That’s won’t hurt your credit scores, and can save you money on interest charges.
Shop carefully for new credit. While a single inquiry into your credit or a new account won’t ruin your credit scores, they can have an impact. That’s especially true if you apply for multiple credit cards in a short period of time, for example, or open a bunch of new accounts at once. As FICO representatives are fond of saying, “Be a credit grazer, not a credit gorger.”
For more Credit 101, check out these posts:
What’s a Credit Score? Really.
Date: 04/24/2012
“Do you know your credit score?”
It’s a question you probably hear from time to time, and if you don’t know the answer, it can feel unsettling. It feels like people are talking about you, you don’t know what they are saying, but you know it could be bad. It’s like the worst part of high school.
But the reality is that it’s kind of a trick question. You don’t have just one credit score. It’s not like the SATs in that way. Most people have dozens of credit scores and they are used by different organizations for different reasons. This doesn’t mean that they aren’t important, rather, the credit scoring system is more nuanced and while you should know where you stand overall, and be aware of your credit scores, it’s important to keep it all in perspective.
(Credit.com includes a credit score in its free Credit Report Card, which provides users with an easy to understand overview of their credit standing. But we take it a step further and put your score into context. That’s what this article is all about: helping you understand how credit scores and credit in general really works.)
[Share Your Credit Experiences on the Credit.com Forum]
Why so many scores?
According to some estimates, the average American has somewhere around 35 credit scores, and they are used for a variety of different reasons. Most are designed to predict risk, and they are generally calculated based on data from one or more of the three major credit bureaus (Experian, Transunion and Equifax), but the purposes of the different scores may vary.
FREE TOOL:
CHECK YOUR CREDIT
Credit.com’s Credit Report Card
Check your credit bureau profile for free with this great tool. See your detailed credit evaluation, expert advice on managing your credit, and unlimited free updates every 30 days.
Get Started Here »
Broadly speaking , these types of credit scores are available:
Generic scores are designed to predict how consumers may repay a variety of different loans.
Industry scores are created to predict performance on certain types of loans. For example, there are scores specifically tailored to predict risk of missed payment an auto loans.
Custom scores are developed on a lender’s customer base and predict the likelihood of a consumer not paying as agreed with that particular lender. They are “customized” for the lender’s own specific customer base and purposes. Your credit card issuer, for example, would generate a custom score on your profile, yet would never share it with other entities.
Educational scores are created to show consumers how their credit standing compares to other consumers. The score that you’ll find in our free Credit Report Card is an example of an educational score, because it is used to educate you, the consumer, and not used by a lender to evaluate your creditworthiness.
Is one type of score better than the other? Not necessarily. Let’s suppose an auto lender purchases an auto industry specific credit score based on information in your Equifax credit file at the very same time that a credit card company requests one to evaluate you for a credit line increase. And at the same time, you order your own score because you are thinking about shopping for a new credit card.
The number that each of these two lenders—and you—get may be different. That’s because the auto lender is ordering a score tailored to predict how likely you are to pay back an auto loan. The credit card company may be using a custom score to evaluate how likely you are to repay the credit card you want from that bank. And your educational score may be designed to help you understand the strengths and weaknesses of the information in your credit reports, as well as how those compare to others. The same data is being used in all three cases, but the scores are different.
How Does FICO Fit In?
We’ve all heard the term FICO Score tossed around, but a lot of people are confused when it comes to what the company actually does. Let’s start by explaining what FICO isn’t.
FICO is not one of the major credit bureaus (Equifax, Transunion and Experian), which means that FICO does not actually gather data about individuals. Rather, the FICO mathematical formulas are applied against the data from the credit reporting agencies to calculate a score. Their claim to fame is the formula, NOT the information that gets plugged into it. FICO scores are the most widely used credit scores, but they aren’t the only game in town. VantageScore was created by the credit reporting agencies to offer lenders an alternative to the FICO formula. In addition, each bureau has its own proprietary scoring models.
For competitive and legal reasons, the various credit scoring models may operate on different scales.
For example, here are the ranges for a few popular credit scoring models:
- FICO: 300-850
- VantageScore: 501-990
- Experian Plus Score: 330-830
What Do the Scores Actually Take into Consideration?
Now that you know there are a variety of credit scores, you might be thinking, “Why should I even bother trying to keep tabs on this stuff? I’ll never be able to keep it all straight.”
In one sense, you’re right. You’ll never be able to monitor ALL of your credit scores, but the fact of the matter is that there’s no practical reason to do that anyway. Almost all of the credit scores out there look at the same pieces of information, they just may evaluate them a bit differently. In the end, if you take advantage of an educational credit score you’ll be able to monitor the various ups and downs of your credit.
It’s most important that you are mindful of the basic factors that go into every scoring model (all of which you can track using Credit.com’s Free Credit Report Card):
- Payment history
- Debt (balances, available credit and the ratios between them)
- Seriously negative information
- Length of credit history
- New accounts
That means the main things you can do to build, maintain or even improve your credit scores are similar, no matter which scoring model will be used. Those are:
Use credit. Credit scores can’t be calculated from nothing. The score needs to see a minimum amount of established credit and recent activity on your credit to be generated.
Pay your bills on time. By reviewing your credit reports, you’ll know which lenders report to the credit reporting agencies, and you can be extra careful about paying them on time, every time. Keep in mind that some lenders only report negative information. That means that even a lender who doesn’t report positive payment history may report if you fall behind.
Try to stay out of trouble. Tax liens, judgments, foreclosure, collections and bankruptcy are likely to result in a credit score drop, no matter which model is being used to generate a score. If you can’t avoid these kinds of problems, try to find a way to resolve them so you can shift your attention to rebuilding your credit.
Keep debt levels (especially on credit cards) low, if possible. FICO has said that consumers with the best scores tend to use, on average, 10% of the available credit on their credit cards. When you do charge items on your cards, feel free to pay off the balances in full each month. That’s won’t hurt your credit scores, and can save you money on interest charges.
Shop carefully for new credit. While a single inquiry into your credit or a new account won’t ruin your credit scores, they can have an impact. That’s especially true if you apply for multiple credit cards in a short period of time, for example, or open a bunch of new accounts at once. As FICO representatives are fond of saying, “Be a credit grazer, not a credit gorger.”
For more Credit 101, check out these posts:
- What’s Really in Your Credit Report? _______________________________________________________________________
8 Credit Score Myths Debunked
8 Credit Score Myths Debunked
Says one specialist in the credit scoring business:
"I have received thousands of questions and comments about credit scores in my 20+ years of working in the credit scoring business — and I realize there are a lot of misconceptions about credit scores and lending practices.
Here are several common credit score myths that I see repeatedly surface."
_________________________
Myth #1: Every inquiry for credit costs 5 points
Fact:There is no fixed set number of points that an inquiry will cost. Generally speaking, inquires have a relatively minor contribution to the overall score.
Myth #2: Part of my credit score is calculated based on where I live
Fact:Credit score calculations do not factor in where you live (city or zip code, for example). Effectively managing your credit, on the other hand, will result in a higher score—regardless of whether you live in Beverly Hills, Calif. or Zanesville, Ohio.
Myth #3: A bankruptcy will haunt my score forever.
Fact:While most negative information must be removed from your credit report after seven years,
the (click: Fair Credit Reporting Act allows bankruptcy to be listed on your credit report for up to ten years.
It’s true a bankruptcy will negatively affect your score, though the impact on your score lessens over time as the bankruptcy ages.
Myth #4: A short sale has less of an impact on a score than a foreclosure.
Fact:The presence of either a foreclosure or short sale information on a credit bureau report is considered negative by credit scores, as it is predictive of future credit risk. Generally speaking, both will have a similar impact on a score.
Myth #5: Making a lot of money results in a higher score.
Fact:Your income does not have a direct impact on credit bureau scores, as your income information is not recorded on your credit report. The score focuses on how you manage your credit—not on how you could manage your credit given your income.
Myth #6: Going to a credit counseling agency will hurt my score.
Fact:Not true. An indication that you are working with a professional credit counselor will not, in and of itself, hurt the score. However, negotiated settlements on balances owed with your creditors may affect your score if the lender reports it as such.
Myth #7: Carrying smaller balances on several credit cards is better than having a large balance on just one card.
Fact: Not always. A credit score will often consider the number of accounts or credit cards you carry that have a balance, in addition to your overall utilization of available credit. Thus, you may lose points for having a higher number of accounts with balances.
Myth #8: 850 is the perfect score.
Fact:While 850 may be the highest FICO score, it is not a “perfect” score. The “perfect score” is what a lender requires to approve you for the credit & credit terms you are seeking.
8 Credit Score Myths Debunked
Says one specialist in the credit scoring business:
"I have received thousands of questions and comments about credit scores in my 20+ years of working in the credit scoring business — and I realize there are a lot of misconceptions about credit scores and lending practices.
Here are several common credit score myths that I see repeatedly surface."
_________________________
Myth #1: Every inquiry for credit costs 5 points
Fact:There is no fixed set number of points that an inquiry will cost. Generally speaking, inquires have a relatively minor contribution to the overall score.
Myth #2: Part of my credit score is calculated based on where I live
Fact:Credit score calculations do not factor in where you live (city or zip code, for example). Effectively managing your credit, on the other hand, will result in a higher score—regardless of whether you live in Beverly Hills, Calif. or Zanesville, Ohio.
Myth #3: A bankruptcy will haunt my score forever.
Fact:While most negative information must be removed from your credit report after seven years,
the (click: Fair Credit Reporting Act allows bankruptcy to be listed on your credit report for up to ten years.
It’s true a bankruptcy will negatively affect your score, though the impact on your score lessens over time as the bankruptcy ages.
Myth #4: A short sale has less of an impact on a score than a foreclosure.
Fact:The presence of either a foreclosure or short sale information on a credit bureau report is considered negative by credit scores, as it is predictive of future credit risk. Generally speaking, both will have a similar impact on a score.
Myth #5: Making a lot of money results in a higher score.
Fact:Your income does not have a direct impact on credit bureau scores, as your income information is not recorded on your credit report. The score focuses on how you manage your credit—not on how you could manage your credit given your income.
Myth #6: Going to a credit counseling agency will hurt my score.
Fact:Not true. An indication that you are working with a professional credit counselor will not, in and of itself, hurt the score. However, negotiated settlements on balances owed with your creditors may affect your score if the lender reports it as such.
Myth #7: Carrying smaller balances on several credit cards is better than having a large balance on just one card.
Fact: Not always. A credit score will often consider the number of accounts or credit cards you carry that have a balance, in addition to your overall utilization of available credit. Thus, you may lose points for having a higher number of accounts with balances.
Myth #8: 850 is the perfect score.
Fact:While 850 may be the highest FICO score, it is not a “perfect” score. The “perfect score” is what a lender requires to approve you for the credit & credit terms you are seeking.
_________________________________
The Bad Stuff is Off My Credit Reports
–
So Why Didn’t My Scores Go Up?
When something really negative gets removed from your credit reports, you probably expect your credit scores to go up. Seems only fair, right? Turns out there may be several reasons why your scores may not rise after negative items are removed, as one reader’s question illustrates.
Bill recently shared his experience in the comments section of a story I wrote about a new IRS policy that will help people trying to get tax liens off their credit reports:
BAD NEWS EVERYONE: I just had 3, count them 3 BIG TAX LIENS removed (not released, removed) from my credit report. These liens totaled over $200,000.
My credit score went up ZERO points. None, nada, zip, nothing. However, on the same day I had a hard inquiry on my account because I applied for a credit card (a crime in this country I take it). For that infraction my score dropped 20 points.
IN SUMMARY:
The major tax liens expunged from my report – zero benefit.
1 hard inquiry – lost 20 points.
Why didn’t Bill’s score go up after the liens came off his credit reports? There are several possible explanations.
[Free Resource: Check your credit for free before applying for a credit card]
It Takes Time
The first possible reason is an obvious one: a lien is still appearing on one of his credit reports. Steve Ely, the CEO of eCredable.com, says that “it takes time to flow through the system. The company placing the lien likely followed the traditional process of updating the credit file, which means it typically takes 30 days to have the lien removed from the file. ” He adds that a “second possibility, is that the lien was removed by one or two of the credit bureaus, but not all three. Even if one of the bureaus still has the lien on file, it will affect the credit score created from that particular credit bureau.”
RECOMMENDED:
FREE CREDIT CHECK TOOL
Credit Report Card
Check your credit for free with this great tool from Credit.com. It offers expert advice on how to manage your credit. And you can return every 30 days for unlimited free updates.
Sign Up Here »
Since Bill stated that the liens had been removed in his comment, though, we’ll assume that this explanation doesn’t apply here, and look for another reason.
Jumping Scorecards
In FICO’s scoring algorithm, consumers are grouped into smaller models referred to as “scorecards.” While the criteria for the individual scorecards aren’t public information, there is likely one or more scorecards that include consumers whose files list seriously derogative information such as tax liens. When that negative information is removed, the consumer’s information may then be grouped with another scorecard. That may mean Bill’s credit data is now being compared to another group of consumers.
Credit.com credit scoring expert Tom Quinn notes that while this is a possibility, it would be unusual for a consumer to move from one scorecard to another and not see a resulting change in their credit scores. Bill said his scores stayed exactly the same when the liens were removed.
So let’s keep looking.
Timing is Everything
If the tax liens were on his reports for years before they were removed, they may have had limited impact on the credit scores before they were deleted, suggests Quinn. Generally, recent information has a greater impact on credit scores than old information.
I asked Bill what other credit references he has at this point and he told me there is nothing else on his credit reports except a paid off car loan.
Bingo! The fact that Bill hasn’t used credit recently probably is as much to blame here as anything. It’s an important lesson: Even if you’ve been through difficult credit problems, it’s important to establish current, positive credit references that can boost your credit scores over time. I suggested that Bill start with a secured credit card so he can build the credit reference he needs. Once he has one under his belt for 6 to 12 months, he should be in a much better position to get an unsecured card.
[Credit Cards: Research and compare secured credit cards at Credit.com]
This timing theory gets additional credibility from a comment posted by another reader in response to Bills. A reader named Dave wrote:
I just had a Fed Tax Lien removed, and I gained an average of 118 points on my FICO. My lien was less than a year old though, so I guess perhaps the time since the lien might have been a factor…
If It’s There It Counts
There’s one more point worth noting about Bill’s credit situation. “The amount of the lien has nothing to do when calculating the credit score. The liens could total $1 or $1 million, and it makes no difference. The score is affected by the presence of one or more liens, not the amount of the lien,” says Ely. Quinn concurs: “Generally speaking, the dollar amount of the tax liens have little to no impact on the score.”
Has something seriously negative – bankruptcy, repossession, foreclosure, or lien, for example – recently been removed from your credit reports? What happened to your credit scores? Share your experience below.
Click green for further info
__________________________________________
The Bad Stuff is Off My Credit Reports
–
So Why Didn’t My Scores Go Up?
When something really negative gets removed from your credit reports, you probably expect your credit scores to go up. Seems only fair, right? Turns out there may be several reasons why your scores may not rise after negative items are removed, as one reader’s question illustrates.
Bill recently shared his experience in the comments section of a story I wrote about a new IRS policy that will help people trying to get tax liens off their credit reports:
BAD NEWS EVERYONE: I just had 3, count them 3 BIG TAX LIENS removed (not released, removed) from my credit report. These liens totaled over $200,000.
My credit score went up ZERO points. None, nada, zip, nothing. However, on the same day I had a hard inquiry on my account because I applied for a credit card (a crime in this country I take it). For that infraction my score dropped 20 points.
IN SUMMARY:
The major tax liens expunged from my report – zero benefit.
1 hard inquiry – lost 20 points.
Why didn’t Bill’s score go up after the liens came off his credit reports? There are several possible explanations.
[Free Resource: Check your credit for free before applying for a credit card]
It Takes Time
The first possible reason is an obvious one: a lien is still appearing on one of his credit reports. Steve Ely, the CEO of eCredable.com, says that “it takes time to flow through the system. The company placing the lien likely followed the traditional process of updating the credit file, which means it typically takes 30 days to have the lien removed from the file. ” He adds that a “second possibility, is that the lien was removed by one or two of the credit bureaus, but not all three. Even if one of the bureaus still has the lien on file, it will affect the credit score created from that particular credit bureau.”
RECOMMENDED:
FREE CREDIT CHECK TOOL
Credit Report Card
Check your credit for free with this great tool from Credit.com. It offers expert advice on how to manage your credit. And you can return every 30 days for unlimited free updates.
Sign Up Here »
Since Bill stated that the liens had been removed in his comment, though, we’ll assume that this explanation doesn’t apply here, and look for another reason.
Jumping Scorecards
In FICO’s scoring algorithm, consumers are grouped into smaller models referred to as “scorecards.” While the criteria for the individual scorecards aren’t public information, there is likely one or more scorecards that include consumers whose files list seriously derogative information such as tax liens. When that negative information is removed, the consumer’s information may then be grouped with another scorecard. That may mean Bill’s credit data is now being compared to another group of consumers.
Credit.com credit scoring expert Tom Quinn notes that while this is a possibility, it would be unusual for a consumer to move from one scorecard to another and not see a resulting change in their credit scores. Bill said his scores stayed exactly the same when the liens were removed.
So let’s keep looking.
Timing is Everything
If the tax liens were on his reports for years before they were removed, they may have had limited impact on the credit scores before they were deleted, suggests Quinn. Generally, recent information has a greater impact on credit scores than old information.
I asked Bill what other credit references he has at this point and he told me there is nothing else on his credit reports except a paid off car loan.
Bingo! The fact that Bill hasn’t used credit recently probably is as much to blame here as anything. It’s an important lesson: Even if you’ve been through difficult credit problems, it’s important to establish current, positive credit references that can boost your credit scores over time. I suggested that Bill start with a secured credit card so he can build the credit reference he needs. Once he has one under his belt for 6 to 12 months, he should be in a much better position to get an unsecured card.
[Credit Cards: Research and compare secured credit cards at Credit.com]
This timing theory gets additional credibility from a comment posted by another reader in response to Bills. A reader named Dave wrote:
I just had a Fed Tax Lien removed, and I gained an average of 118 points on my FICO. My lien was less than a year old though, so I guess perhaps the time since the lien might have been a factor…
If It’s There It Counts
There’s one more point worth noting about Bill’s credit situation. “The amount of the lien has nothing to do when calculating the credit score. The liens could total $1 or $1 million, and it makes no difference. The score is affected by the presence of one or more liens, not the amount of the lien,” says Ely. Quinn concurs: “Generally speaking, the dollar amount of the tax liens have little to no impact on the score.”
Has something seriously negative – bankruptcy, repossession, foreclosure, or lien, for example – recently been removed from your credit reports? What happened to your credit scores? Share your experience below.
Click green for further info
__________________________________________
How Do Student Loans Impact
Your Credit?
U.S.student loan debt now exceeds $1 trillion
and makes up a greater proportion of consumer debt than credit cards
Click green for further info
For many young people, obtaining credit can be difficult, particularly since the Credit CARD Act of 2009 reined in many of the marketing efforts directed at students by credit card issuers. Yet one of the often-overlooked positive aspects of those “good old days” (for card issuers) was that those credit cards helped develop some first-time credit history — both good and bad — for many young consumers who might not have been able to establish credit otherwise.
These days, credit cards seem to be taking a back seat to student loans, as U.S. student loan debt now exceeds $1 trillion and makes up a greater proportion of consumer debt than credit cards.
For many, a student loan is now the first step toward establishing the personal financial track record known as a credit score.
While perhaps small consolation for students and graduates drowning in student loan debt, one positive feature of student loans is that they can provide (click green) an effective way to establish and build credit without the help of mom, dad or a credit card.
To qualify for a FICO credit score — the credit score most lenders still use — all that’s needed is a credit account of any type (cards, loans) with at least six months of history that has been reported by the lender to the credit bureau within the past six months. This includes deferred federal or private student loans, where no payment has yet been required, as well as student loans in forbearance .
To the credit scoring formulas, a student loan is considered “installment” credit; one of the primary credit types, along with revolving (cards) and open credit (charge cards). Most installment loans, whether student, auto, or even mortgage, tend to impact credit scores similarly across all of the major scoring categories: payment history, amount owed, length of credit history, new accounts, inquiries and credit mix.
Payment history. A positive student loan payment history, including loans in a deferred or forbearance status, can provide as much benefit to a credit score as any other type of well-managed credit account. Consequently, late student loan payments can hurt a score as much as late payments on any other type of account. Student loans in deferred or forbearance status are generally treated as being “paid as agreed” for scoring purposes.
Amount owed. Here is where student loan debt differs most from credit card debt, as it carries little of the impact that revolving (credit card) balances have on scores. While student loan balances comprising a high percentage of the original loan amount — whether newly opened or deferred — can negatively impact a score by a few points in some situations, for the most part, the amount of student loan debt has little bearing on credit scores.
Length of credit history. The age of a student loan, as measured by the number of months since the open date, is factored into credit scores no differently than any other type of credit account, whether in repayment, deferred or forbearance status.
New accounts. A newly opened student loan, like any other new account, can cause at least a slight drop in score when first appearing on the credit report. This impact can also be felt from multipledisbursements of a single loan if reported as separate “trade lines” with different open dates.
Inquiries. Most inquiries related to a new student loan are considered “hard” inquiries — meaning they can impact your score. However, like inquiries resulting from new auto and mortgage loan applications, student loan inquiries are usually “deduplicated,” such that you can incur any number within a certain period of time — typically 14 to 45 days — and only one will count in the score. And, as with all hard inquiries, none are considered after one year.
Credit mix. For the student loan borrower who also has a credit card or two, simply the presence of a student loan on the credit report can positively contribute to her score by helping demonstrate the ability to manage different types of credit.
Finding a ray of positive light when talking about student loans these days is not easy. However, for the young person just getting started in adulthood and looking to build credit, a student loan can provide all the credit needed to establish a good — or bad, for that matter — credit score.
Source: Credit.com
Click green below (if the link has expired, search the web with the title) __________________________________________________________
Your Credit?
U.S.student loan debt now exceeds $1 trillion
and makes up a greater proportion of consumer debt than credit cards
Click green for further info
For many young people, obtaining credit can be difficult, particularly since the Credit CARD Act of 2009 reined in many of the marketing efforts directed at students by credit card issuers. Yet one of the often-overlooked positive aspects of those “good old days” (for card issuers) was that those credit cards helped develop some first-time credit history — both good and bad — for many young consumers who might not have been able to establish credit otherwise.
These days, credit cards seem to be taking a back seat to student loans, as U.S. student loan debt now exceeds $1 trillion and makes up a greater proportion of consumer debt than credit cards.
For many, a student loan is now the first step toward establishing the personal financial track record known as a credit score.
While perhaps small consolation for students and graduates drowning in student loan debt, one positive feature of student loans is that they can provide (click green) an effective way to establish and build credit without the help of mom, dad or a credit card.
To qualify for a FICO credit score — the credit score most lenders still use — all that’s needed is a credit account of any type (cards, loans) with at least six months of history that has been reported by the lender to the credit bureau within the past six months. This includes deferred federal or private student loans, where no payment has yet been required, as well as student loans in forbearance .
To the credit scoring formulas, a student loan is considered “installment” credit; one of the primary credit types, along with revolving (cards) and open credit (charge cards). Most installment loans, whether student, auto, or even mortgage, tend to impact credit scores similarly across all of the major scoring categories: payment history, amount owed, length of credit history, new accounts, inquiries and credit mix.
Payment history. A positive student loan payment history, including loans in a deferred or forbearance status, can provide as much benefit to a credit score as any other type of well-managed credit account. Consequently, late student loan payments can hurt a score as much as late payments on any other type of account. Student loans in deferred or forbearance status are generally treated as being “paid as agreed” for scoring purposes.
Amount owed. Here is where student loan debt differs most from credit card debt, as it carries little of the impact that revolving (credit card) balances have on scores. While student loan balances comprising a high percentage of the original loan amount — whether newly opened or deferred — can negatively impact a score by a few points in some situations, for the most part, the amount of student loan debt has little bearing on credit scores.
Length of credit history. The age of a student loan, as measured by the number of months since the open date, is factored into credit scores no differently than any other type of credit account, whether in repayment, deferred or forbearance status.
New accounts. A newly opened student loan, like any other new account, can cause at least a slight drop in score when first appearing on the credit report. This impact can also be felt from multipledisbursements of a single loan if reported as separate “trade lines” with different open dates.
Inquiries. Most inquiries related to a new student loan are considered “hard” inquiries — meaning they can impact your score. However, like inquiries resulting from new auto and mortgage loan applications, student loan inquiries are usually “deduplicated,” such that you can incur any number within a certain period of time — typically 14 to 45 days — and only one will count in the score. And, as with all hard inquiries, none are considered after one year.
Credit mix. For the student loan borrower who also has a credit card or two, simply the presence of a student loan on the credit report can positively contribute to her score by helping demonstrate the ability to manage different types of credit.
Finding a ray of positive light when talking about student loans these days is not easy. However, for the young person just getting started in adulthood and looking to build credit, a student loan can provide all the credit needed to establish a good — or bad, for that matter — credit score.
Source: Credit.com
Click green below (if the link has expired, search the web with the title) __________________________________________________________
What’s Really in Your Credit Report?
Date: 05/14/2012
What’s Really in Your Credit Report?
Click green for further info
You probably have it in your head that your credit report is “good” or “bad.” But with credit reports, beauty is in the eye of the beholder. The credit report itself is just a compilation of facts about your financial habits and it is, in fact, judgment-free.
It’s up to lenders, insurance companies or others that review your credit reports to evaluate that information, and they usually do that with the help of credit scores. Of course the information used to calculate your credit score is found in your credit report. So you don’t really want to see one without the other! (It just so happens you can do all of this—get an overview and explanation of your credit report and see your credit scores—using Credit.com’s Credit Report Card. It’s absolutely free!)
There’s a popular misconception that your credit report is a computer file sitting at a credit reporting agency being periodically updated. But it doesn’t quite work that way. When someone requests your report, the credit reporting agency’s computers go to work, compiling information that matches your identifying information into a report that can be scored or provided to the lender, insurance agency or other company that purchased it.
[The Credit.com Forum: Your Credit Questions Answered]
Experian has described it this way: You may have all the ingredients you need in your kitchen to make a particular dish, but until you put those ingredients together, the dish doesn’t exist.
There are three main companies that compile and sell credit reports nationwide: Equifax, Experian and TransUnion. They don’t share information with each other, and the data each one collects and reports may be different as a result. That’s why it’s a good idea to review your reports with each of these agencies. You can get them once a year at AnnualCreditReport.com and you may be entitled to extra free copies under federal law. (Our Credit Report Card and the accompanying scores are based on your credit report data and essentially translates the information in the raw credit file into something more user friendly.) And if you’re planning on trying to build better credit, you might consider subscribing to a credit monitoring service that provides additional features.
What’s In Your Credit Report?
There are four main categories of information in your credit report: personal information, account information, public record information and inquiries.
Personal information includes the items used to help identify accounts that are yours when your report is compiled:
- Your current and former names (if you’ve married or divorced and changed your name, for example)
- Your Social Security number
- Current and former addresses and variations
- Employment information
[Credit Score Tool: Get your free credit score and report card from Credit.com]
Account information (a.k.a. “tradelines”): This is the meat of your credit report and usually is the most detailed and longest section of your credit report. It may include:
- Credit cards, department store cards, gas company cards
- Vehicle loans or leases; RV and boat loans
- Mortgages and home equity loans
- Consumer finance company accounts
- Credit union credit cards or loans
- Lender name and account number
- Date the account was opened and closed (if applicable)
- Original and current balance
- Monthly payment amount
- Payment history
- Current status (paid as agreed, 30 days late, etc.)
Also remember that some accounts, like medical bills, are only likely to show up on your credit reports if they have been turned over to collections. And since reporting accounts is voluntary, you may not see all of your loans on your report.
Public Record Information includes items that are part of the public record, which means they have been recorded with a court. This section can also contain collection accounts, even though those are not part of the public record. What you’ll find here:
- Civil judgments (criminal information is not reported on standard consumer reports)
- Bankruptcies
- Federal, state and county property and tax liens
- Collection accounts
[Featured Products: Compare credit score, report, and monitoring plans at Credit.com]
Inquiries note when someone has obtained your credit information. There is nothing that indicates whether you were approved or rejected for credit at that time. Some inquiries can affect your credit scores, but not all do. Soft inquiries usually aren’t seen by anyone else but you, and they usually won’t affect your credit scores. These include:
- Consumer inquiries, which indicate that you’ve requested your own credit information.
- Promotional inquiries, usually for prescreened credit cards. Tip: You can remove your name from these marketing lists by calling 1-888-5OPT-OUT.
- Account review inquiries created when your current lenders request your credit information.
- Employment or insurance-related inquiries
What to look for here: Look into inquiries from companies whose names you don’t recognize. While it’s possible that they could be from companies you’ve done business with (if they report under a different company name), they could also indicate fraud.
Next Steps
Once you’ve reviewed your credit report carefully, your next steps will be to:
- Dispute mistakes and
- Get your credit score to understand how lenders may view the information in your reports.
For more Credit 101, check out these links:
- What’s a Credit Score? Really.
- A Step-By-Step Guide to Disputing Credit Report Mistakes
- 8 Rules of an Effective Credit Report Dispute Letter
- How Much Will One Late Payment Hurt Your Credit Scores?
Tagged as: Annual Credit Report, credit 101, credit lessons, credit report, Credit Report Card, free credit report
Gerri Detweiler Credit.com's Personal Finance Expert, Gerri focuses on financial legislation, budgeting, debt recovery and consumer savings information. She is also the co-author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, and Reduce Stress: Real-Life Solutions for Solving Your Credit Crisis as well as host ofTalkCreditRadio.com. Have a question for our experts? Email them at [email protected].Connect with me on Google+
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4 Ways Identity Theft Can Affect Your Credit
Date: Year 2012
If you’ve been a victim of identity theft then you know how much work it can take to clear your name. In theory, identity theft should not have an ongoing impact on your credit reports or scores. But the reality can be much different.
“Long term, there should be no damage to your credit from ID theft,” says Barry Paperno, community manager for Credit.com. “But in the short run, you could lose more than 100 points from your score and not regain all of them until after the fraudulent credit information is removed from your credit report, which could take weeks, and in some complex cases even months.”
(Click: Consumer law attorney Robert Brennan, who represents consumers who have been victims of identity theft, agrees; adding “Identity theft hurts your credit in several ways, both known and unknown to the average consumer.”
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The Credit.com Forum - click: Your Credit Questions Answered
Here are the top four ways identity theft immediately impacts your credit:
Higher balances on existing accounts: The fastest growing type of identity theft reported in 2010 involved the use or misuse of an existing credit account, according to a report by the Department of Justice. Approximately 5.5 million households were affected by this type of fraud that year.
If you aren’t monitoring your accounts closely, you may not catch a sudden increase in the balance on your credit cards. Unfortunately, though, credit card balances that are close to the limits can have a significant impact on your credit scores. “High credit utilization (balance/credit limit) can drop a high FICO score (780+) by as much as 45 points,” explains Paperno.
The good news here is that once those new charges are successfully disputed, your credit scores should no longer be impacted by those fraudulent charges.
New accounts: When a crook uses your personal information to open a new account, that account will typically appear on your credit reports. “Any new account added to your credit report can cause a slight drop in your score,” says Paperno. Even if those accounts were paid on time, they would have an impact on your credit scores.
But they usually aren’t.
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Late payments: Some consumers don’t learn that their information has been compromised until after the damage has been done. In this not-uncommon scenario, the thief opens new accounts, makes purchases, and pays the bills for a little while, then bails. “The identity thief will often crash the consumer’s credit score by not making payments on the fraudulent account,” says Brennan.
The damage can be severe. “Even a minor delinquency, such as a 30-day late, can cause a high FICO score (780+) to lose as much as 100 points,” Paperno warns.
Inquiries: Every time the scammer applies for credit using another consumer’s personal information, that “inquiry” is recorded on the victim’s credit report. While multiple inquiries don’t typically have a significant impact on one’s credit scores, they can add up.
And that can be hard to clear up. Brennan explains:
When a consumer applies for credit, he or she gets “hard inquiries” on their credit reports, which themselves can depress credit scores because credit scoring models consider “hard inquiries” to be a signal that a consumer is shopping for credit. Identity thieves applying for credit can produce the same hard inquiries on a consumer’s credit report, which in turn will depress credit scores. When a victim of identity theft is cleaning up their credit, not only must they clean up the fraudulent tradelines—the records of payments on credit accounts—but they must also clean up the “hard inquiries” to make sure that any that have been made by identity thieves are removed.
You Have Rights
The Fair Credit Reporting Act, the law that regulates credit reports, requires credit reporting agencies to block information on credit reports due to fraud.
Specifically, it says:
§ 605B. Block of information resulting from identity theft [15 U.S.C. §1681c-2]
(a) Block. Except as otherwise provided in this section, a consumer reporting agency shall block the reporting of any information in the file of a consumer that the consumer identifies as information that resulted from an alleged identity theft, no later than 4 business days after the date of receipt by such agency of –
(1) appropriate proof of the identity of the consumer;
(2) a copy of an identity theft report;
(3) the identification of such information by the consumer; and
(4) a statement by the consumer that the information is not information relating to any transaction by the consumer.
That’s one good reason to monitor your credit reports and investigate suspicious activity immediately. Act quickly and hopefully the problems created by identity theft will be gone before any long-term damage is done.
Featured Products: Research and compare Identity theft protection plans at Credit.com
Tagged as: credit reports, credit scores, identity theft
Gerri Detweiler Credit.com's Personal Finance Expert, Gerri focuses on financial legislation, budgeting, debt recovery and consumer savings information. She is also the co-author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, and Reduce Stress: Real-Life Solutions for Solving Your Credit Crisis as well as host of TalkCreditRadio.com. Have a question for our experts? Email them at [email protected]Connect with me on Google+
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The Ultimate Credit Report Cheat Sheet
The Ultimate Credit Report Cheat Sheet
by Credit.com
7/12/2012
as a PDF
The link below- if the link has expired use the title to search on the internet or visit (click: Credit.com
To make it easier for you, we’ve taken a sample credit report and annotated it so you can use it as a handy reference for when you pull your credit report. While each of the three major credit reporting agencies (Experian, Equifax and TransUnion) maintains separate reports, the format is consistent.
You know you’re supposed to check your credit reports regularly, but you might not know what to look for once you have the report in front of you. Credit reports are lengthy, detailed documents that aren’t always easy to understand. But if you want to stay on top of your credit, you need to know how to read your credit report — and you need to know how to spot mistakes, inconsistencies and signs of fraud so you can correct them. A working knowledge of the weak points in your credit can also motivate you to improve on those areas and build your credit.
You can get a free credit score and credit summary using Credit.com’s Free Credit Report Card, and you can check it as often as you want. AnnualCreditReport.com gives you free access to your full credit report once per year from each of the three major CRAs.
Click on the image below or download the Credit Report Cheat Sheet as a PDF.
________________________________________________________________
The Ultimate Credit Report Cheat Sheet
by Credit.com
7/12/2012
as a PDF
The link below- if the link has expired use the title to search on the internet or visit (click: Credit.com
To make it easier for you, we’ve taken a sample credit report and annotated it so you can use it as a handy reference for when you pull your credit report. While each of the three major credit reporting agencies (Experian, Equifax and TransUnion) maintains separate reports, the format is consistent.
You know you’re supposed to check your credit reports regularly, but you might not know what to look for once you have the report in front of you. Credit reports are lengthy, detailed documents that aren’t always easy to understand. But if you want to stay on top of your credit, you need to know how to read your credit report — and you need to know how to spot mistakes, inconsistencies and signs of fraud so you can correct them. A working knowledge of the weak points in your credit can also motivate you to improve on those areas and build your credit.
You can get a free credit score and credit summary using Credit.com’s Free Credit Report Card, and you can check it as often as you want. AnnualCreditReport.com gives you free access to your full credit report once per year from each of the three major CRAs.
Click on the image below or download the Credit Report Cheat Sheet as a PDF.
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Can You Really Get Your Credit Score for Free?
Date: 08/20/2012
We often talk about how important it is to stay on top of your credit reports and scores. We encourage consumers to review their free credit scores, whether that’s through Credit.com’s Free Credit Report Card or another service.
But the truth is, once you have that information, figuring out what to do with it can be tricky. When it comes to taking action, what’s really important — and what’s not?
The Number: Don’t Obsess
Yes, it’s true that the three-digit number that represents your credit score can be significant. If you are trying to get a loan to buy or refinance a home, for example, a difference of a few points in one of your scores could cost you a lot of money in the long run if it means you have to pay a higher rate.
But at the same time, obsessing about your credit scores can be not only frustrating but fruitless. There are many reasons for that:
- Your scores can change as often as information on your credit reports change.
- Every lender has different standards, so the same score may earn you the best deal with one lender but not with another.
- And, perhaps most importantly, you have many scores, not just one, so trying to figure out which scores matter most can be an exercise in futility.
[Credit Score Tool: Get your free credit score and report card from Credit.com]
What Goes Into The Number: A Bigger Deal
If focusing on the number isn’t the most important thing, then what is? Understanding the elements that make up your scores can be much more important. Our Credit Report Card, for example, assigns a grade to each of the main factors that go into a score:
• Payment History
• Debt Usage
• Credit Age
• Account Mix
• Inquiries
Within those, we recommend you put your efforts toward the things you can control. If you get a “C” or “D” for a particular factor, you’ll get suggestions for things you may do to address that grade. Some of these may be things you can address immediately while some may not be under your direct control.
If you earn a “D” because your credit report reflects a large number of recent inquiries, for example, then you can stop applying for credit for a time (action you can take) but you also will have to just sit tight while the current inquiries get older. After a year or two they won’t have the same impact on your scores.
What Your Credit Score Does For You: The Biggest Deal
The reason you want great credit scores is that they can help you save money and achieve your financial goals. If, for example, you have high-rate credit card debt, a decent credit score may help you qualify for a personal loan that you can use to consolidate that debt. If you walk away with a fixed-rate personal loan at a lower interest rate that you pay off in three years, for example, you can save money and get out of debt faster.
And finally, it’s important to put your scores in context. Even mortgage lenders look at other factors, like debt-to-income ratios and employment history. As any loan officer can tell you, even a perfect score can’t get you a loan if the appraisal comes in too low, or if income or assets aren’t well documented.
[Free Resource: Check your credit score and report card for free with Credit.com]
Tagged as: credit 101, credit report, Credit Report Card, credit score
Gerri Detweiler Credit.com's Personal Finance Expert, Gerri focuses on financial legislation, budgeting, debt recovery and consumer savings information. She is also the co-author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, and Reduce Stress: Real-Life Solutions for Solving Your Credit Crisis as well as host of TalkCreditRadio.com. Have a question for our experts? Email them at [email protected].Connect with me on Google+
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Why You Should Not Give Retailers Your ZIP Code
But be aware that a credit card issuer sometimes asks for that information
(1) American Express, for example, may prompt you to key in your ZIP code at some stores
for security purposes
The information is not kept by the merchant and not used for marketing, the company says
(2) And you do still need to provide your ZIP when shopping online, whether to indicate where to ship
your stuff or as part of the Address Verification System (AVS) online merchants use to fight fraud
Many gas stations use a similar method during pay-at-the-pump purchases
In all other cases, proceed with caution
When it comes to paying with plastic at the cash register, you know the drill. A quick swipe, a signature and the contents of your shopping cart are yours. But sometimes the cashier asks for one more thing:
"May I have your ZIP code, please?"
You may think it's necessary to complete the transaction or it may seem like a harmless piece of information to give out, so you go ahead and reveal it.
But that simple decision can result in more junk mail heading your way and more telemarketers disrupting your day, said Paul Stephens, director of policy and advocacy for Privacy Rights Clearinghouse, a nonprofit watchdog group based in San Diego, Calif.
So what's a credit card customer to do when a merchant asks for a ZIP code at the cash register?
How Your Retirement Package Compares With Members of Congress
"Just say no," Stephens advised.
Two states have now declared that the practice violates their privacy laws. Last week, the Supreme Judicial Court of Massachusetts ruled that a ZIP code amounts to "personal identification information." The California Supreme Court made a similar ruling in 2011.
Here's why privacy advocates are concerned.
Some stores gather ZIP codes for benign reasons, like trying to figure out where to open a new location based on where their customers live, but the overall trend is for companies to use the data to find out more about you and market directly to you, Stephens said.
When you swipe a credit card at the cash register, the merchant receives your name, card number and expiration date, but little else, Stephens said. Give the store your ZIP code, however, and you're providing a valuable piece of the puzzle.
When paired with your name, it can help the merchant figure out your mailing address, phone number and specific demographic information, Stephens noted.
Now, the store can send you a catalog or even sell your profile to a data broker. It happens all the time, but most people have no idea of the implications of revealing their ZIP, he said.
"Obviously, if I go into a store and I make a purchase, I don't expect-unless I sign up for a mailing list-that I'm going to start receiving catalogs from the store," Stephens said.
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The Massachusetts ruling in March 2013 followed a complaint brought against Michaels Stores by a customer who said she received marketing materials from the craft store chain after employees asked her to provide her ZIP code during purchases.
The California decision involved a Williams-Sonoma (WSM) customer who alleged the company used her ZIP code to locate her home address.
Merchant trade associations counter that collecting such data is beneficial to consumers.
"Asking for generic information helps retailers tailor merchandise, customize advertising and marketing-promotions, deals and coupons- and individualizes services," said Stephen Schatz, a spokesman for the National Retail Federation, in a statement.
"Thus, retailers may ask for general info such as ZIP codes in order to better know and serve their customers."
In a brief filed in the Massachusetts case, the Retail Litigation Center also argued that stores collect ZIP codes for important business purposes, like analyzing demographics.
Still, Stephens said there should be no need to provide a ZIP code when asked by a clerk in a brick-and-mortar store.
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But be aware that a credit card issuer sometimes asks for that information. American Express, for example, may prompt you to key in your ZIP code at some stores for security purposes. The information is not kept by the merchant and not used for marketing, the company says.
And you do still need to provide your ZIP when shopping online, whether to indicate where to ship your stuff or as part of the Address Verification System (AVS) online merchants use to fight fraud. Many gas stations use a similar method during pay-at-the-pump purchases.
In all other cases, proceed with caution.
Click green for further info
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Should You Be Worried About Credit Report Inquiries?
Important information
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Some things never change when it comes to what annoys people about credit scores. While consumers’ understanding of credit scores has evolved over the years, within that always-increasing level of understanding there remain some parts of credit scoring, such as inquiries, that people just don’t seem to get. They get the idea of late payments and maxed out credit cards predicting risk. But inquiries?
A credit inquiry is a notation that goes on your credit report every time your credit report is accessed by anyone with a “permissible purpose,” as defined by the Fair Credit Reporting Act. Inquiries remain on a credit report for two years, and generally fall into two categories: hard and soft inquiries. Only hard inquiries from within the past year can impact credit scores. Older hard inquiries and soft inquiries are ignored by the scores entirely.
The typical hard inquiry is triggered when a lender accesses a consumer’s credit report and score as part of the credit application process. Hard inquiries can also result from collection agencies using credit reports in their skip tracing efforts.
Soft inquiries include inquiries resulting from consumers accessing their own credit reports, lenders making pre-approved credit offers, creditors periodically reviewing existing accounts, and insurance and employment credit checks. Not only are soft inquiries ignored by the scores, they are excluded from credit reports seen by lenders, and only appear on the consumer’s report.
Some of the ways in which inquiries provide value to lenders and consumers:
- According to Fair Isaac (FICO), people who have added six or more inquiries during the past year can be up to eight times more likely to file for bankruptcy than those with credit reports showing no inquiries.
- As the only major area of your credit report to update immediately, inquiries tend to be the earliest indication that a consumer has applied for new credit, which tends to be a factor indicating increased future credit risk.
- Inquiries can provide early evidence of identity theft when a consumer’s credit file has been accessed fraudulently.
- For most consumers, one additional inquiry will take less than five points off their credit scores.
- The “rate shopping” feature of credit scores allows you to have any number of mortgage, auto or student loan inquiries (VantageScore includes credit cards) on your credit report from within any 14- or 45-day period (depending on the scoring model), with only one of those inquiries counting in the score.
- Inquiries appear on your credit report for two years, but are only considered by credit scores for the first year.
To review the inquiries on your credit report, visit AnnualCreditReport.com, where you can access your own credit reports from the three major consumer reporting agencies: Equifax, Experian and TransUnion. Also, get your free Credit Report Card monthly from Credit.com.
More from Credit.com
- Can You Really Get Your Credit Score for Free?
- The Ultimate Credit Report Cheat Sheet
- How Often Does Your Credit Report Change ? ___________________________________________________________
How to Pay Zero Interest on Your Credit Card Balance
for About 1 Year +/-
If you’re heading into Fall with a fat balance on your credit card, you’re not alone. Millions of Americans have incurred excessive debt over the past few years, and this trend spikes early in the year.
And, when it comes to credit card debt, there is some good news and some bad news.
First, the bad news. Starting in Feb of 2011, new rules and regulations went into effect that more tightly regulate what credit card companies can do. They're not able to retroactively increase rates, must have 45 days advance notice of rate hikes, and are limited in what they charge for overdraft fees. So, how can this be bad news for consumers?
Well, the bad news is that in order to compensate for lost revenue from these new rules, credit card companies have been jacking up interest rates for everyone. You may already have received notice that your borrowing costs have gone up.
So, what’s the good news? Well, the good news is that there still remains something people can do to immediately cut the interest rate on the amount they owe on their credit card to zero. It’s called a zero interest balance transfer.
By transferring the balance of your debt from your current credit card to a new interest-free card, you can give yourself time (often up to 21 months) during which no interest is charged against your starting balance. This allows all the money you make in payments each month to be applied directly into paying down your balance, shrinking the amount you owe much faster. This can greatly benefit your credit score and credit-to-debt ratio, both of which can make you much more attractive to lenders.
There are some things to consider before transferring your balance to a new card:
- Always take into account the length of the zero percent APR period.
- Be sure you are able to pay off your balance within this introductory period. Otherwise, high interest rates often kick in when the period ends.
- Make a payment schedule and set aside money each month to pay towards your balance.
- Ask up front about transfer fees. These can come as unexpected surprises and throw off the payment plan you have created.
More good news! There is a great, free online service called CreditCards.com that can help you find offers from credit card companies eager to get your balance transfer business. All of the credit card offers are presented clearly so they’re easy to compare, and you can find the offer that works best for you.
The site is also a tremendous informational resource for consumers wanting to make informed decisions about their spending.
For many people, a zero balance transfer is a complete no brainer, and can result in significant savings in the short term. After all, why would you pay a penny more in interest than you have to? And, by eliminating your debt, you improve your credit score, and earn lower interest rates on your credit cards.
And, using a service like CreditCards.com is one of the best ways to find a balance transfer credit card that will help you get rid of your credit card balance fast.
To search and compare balance transfer cards now, click here.
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8 Less Known Things That Affect Your Credit
Learning the rules of credit isn’t always as straightforward as you might think. Sometimes, doing something you might think would be great for your credit score can actually have an unintentional negative impact.
Here, we rounded up some of the most unexpected things that can affect your credit.
Late Library Books
You might not think that the overdue copy of “50 Shades of Grey” that you checked out of the library would have an impact on your credit score, but that bill could be sent to a collections agency.
“Collections that can seriously hurt your score can arise from parking tickets and library fines, as much as from medical bills and credit card charge offs — with the impact to your score being similar,” says Barry Paperno, a credit industry veteran and Credit.com’s Community Director.
So, get those books back when they’re due or the librarian won’t be the only one coming after you.
[Credit Score Tool: Get your free credit score and report card from Credit.com]
Divorce
Getting divorced involves dividing your assets as well as your debts, but just because your ex takes on the mortgage payments doesn’t mean that you’re off the hook.
“The account remains on their credit report and remains their responsibility until it is paid and closed. And even then it won’t be removed from their credit history,” says Gerri Detweiler, Credit.com’s Director of Consumer Education. “Plus if your ex declares bankruptcy, creditors will come after you for balances on any joint accounts.”
Closing an account
Many people think that getting rid of a credit card that they don’t want, need or actually use is a good idea since it will show they’re not credit-dependent. However, this can be a bad idea for two important reasons.
“This can (but will not always) raise your utilization percentage, and a closed account is often purged from your credit report sooner (7-10 years) than an open one (remains indefinitely) causing you to lose all of the positive credit history associated with the account,” Paperno says.
One important note on closed accounts that might surprise you — it doesn’t matter if you close the account or if the issuer closes it, the effect on your credit score will be the same.
Just a single late payment
This isn’t like high school where the teacher might give you a slide if you turn in a homework assignment late only one time. If a credit issuer reports a late payment on your account, it will impact your credit score.
As we recently highlighted, this problem will affect those with excellent credit more negatively than those with credit that’s just fair or average.
[Related Article: How Much Will One Late Payment Hurt Your Credit Scores?]
Having credit cards, but no loans
An important component of your credit score is the diversity of accounts. This means that lenders are looking to see if you can handle both revolving and non-revolving types of credit. While having only one type of account can have a negative affect on your score, Paperno warns that it’s not worth taking out a loan just to improve this aspect of your score.
Disputing an account
If an account appears on your credit report erroneously when you do your annual credit check-up (something personal finance experts highly recommend), disputing it won’t take it off your report but it will affect your credit score. But disputes aren’t just limited to wrong accounts showing up — you can dispute an account for a variety of reasons like a late payment that you contend was paid on time. Consumers need to be aware that disputing that account could have a negative impact on your score.
“Disputed accounts do appear on credit reports, but in some cases are excluded from credit scoring, which can have the effect of raising your utilization if the disputed account(s) have lower utilization than the ones still being counted,” Paperno says.
Applying for credit (even when you aren’t rejected)
Every time you apply for a line of credit, a hard inquiry is placed on your credit file that will lower your score. Although, don’t worry about getting hit twice — once for the inquiry and once if you’re rejected.
“When you’re turned down for credit, the fact that you’ve been denied doesn’t appear anywhere on a credit report, resulting in no impact to the score — other than from the inquiry resulting from the application,” Paperno says.
Renting a car
This isn’t a universal. Renting a car will not always ding your credit score, but some rental car companies will do hard inquiries on your credit that will affect your score.
Dollar Rent a Car is one of the major brands that does this as a practice. It will do a credit inquiry when drivers ask to use a debit card to rent a car.
Apply and use this free resource:
[Free Resource: Check your credit score and report card for free with Credit.com]
Tagged as: credit misconceptions, credit mistakes, credit myths, credit scores
Source: credit.com
Kali Geldis Credit.com's Deputy Managing Editor. Kali writes on a wide range of personal finance and credit topics. She previously ran MainStreet.com, the personal finance website powered by The Street. She has also worked for The Wall Street Journal as a Dow Jones Newspaper Fund intern and at The Huntington Herald-Dispatch as a reporter. Have a question for our experts? Email them at [email protected].
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Can You Really Get Your Credit Score for Free
We often talk about how important it is to stay on top of your credit reports and scores. We encourage consumers to review their free credit scores, whether that’s through Credit.com’s Free Credit Report Card or another service.
But the truth is, once you have that information, figuring out what to do with it can be tricky. When it comes to taking action, what’s really important — and what’s not?
The Number: Don’t Obsess
Yes, it’s true that the three-digit number that represents your credit score can be significant. If you are trying to get a loan to buy or refinance a home, for example, a difference of a few points in one of your scores could cost you a lot of money in the long run if it means you have to pay a higher rate.
But at the same time, obsessing about your credit scores can be not only frustrating but fruitless. There are many reasons for that:
- Your scores can change as often as information on your credit reports change.
- Every lender has different standards, so the same score may earn you the best deal with one lender but not with another.
- And, perhaps most importantly, you have many scores, not just one, so trying to figure out which scores matter most can be an exercise in futility.
[Credit Score Tool: Get your free credit score and report card from Credit.com]
What Goes Into The Number: A Bigger DealIf focusing on the number isn’t the most important thing, then what is? Understanding the elements that make up your scores can be much more important. Our Credit Report Card, for example, assigns a grade to each of the main factors that go into a score:
• Payment History
• Debt Usage
• Credit Age
• Account Mix
• Inquiries
Within those, we recommend you put your efforts toward the things you can control. If you get a “C” or “D” for a particular factor, you’ll get suggestions for things you may do to address that grade. Some of these may be things you can address immediately while some may not be under your direct control.
If you earn a “D” because your credit report reflects a large number of recent inquiries, for example, then you can stop applying for credit for a time (action you can take) but you also will have to just sit tight while the current inquiries get older. After a year or two they won’t have the same impact on your scores.
[Related Article: What's A Credit Score, Really]
What Your Credit Score Does For You: The Biggest DealThe reason you want great credit scores is that they can help you save money and achieve your financial goals. If, for example, you have high-rate credit card debt, a decent credit score may help you qualify for a personal loan that you can use to consolidate that debt. If you walk away with a fixed-rate personal loan at a lower interest rate that you pay off in three years, for example, you can save money and get out of debt faster.
And finally, it’s important to put your scores in context. Even mortgage lenders look at other factors, like debt-to-income ratios and employment history. As any loan officer can tell you, even a perfect score can’t get you a loan if the appraisal comes in too low, or if income or assets aren’t well documented.
[Free Resource: Check your credit score and report card for free with Credit.com]
Tagged as: credit 101, credit report, Credit Report Card, credit score
Source:
Gerri Detweiler Credit.com's Personal Finance Expert, Gerri focuses on financial legislation, budgeting, debt recovery and consumer savings information. She is also the co-author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, and Reduce Stress: Real-Life Solutions for Solving Your Credit Crisis as well as host of TalkCreditRadio.com. Have a question for our experts? Email them at [email protected]. Connect with me on Google+
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A Step-By-Step Guide to Disputing
a Credit Report Mistake
Article 1 of 2
Article 2 below has a sample letter
for disputing a credit report mistake
Click green for further info
The information in your credit reports is what’s used to create your credit scores, so you don’t want to let mistakes on your credit reports potentially throw your credit scores out of whack.
An FTC study released today shows that one in five consumers have errors on their credit reports and 5% of consumers have errors serious enough that they could result in less favorable loan terms.
“These are eye-opening numbers for American consumers,” said Howard Shelanski, Director of the FTC’s Bureau of Economics, in a statement. “The results of this first-of-its-kind study make it clear that consumers should check their credit reports regularly. If they don’t, they are potentially putting their pocketbooks at risk.”
Here’s how to dispute credit report mistakes, step-by-step:
Step One: Order current copies of your credit reports. Make sure you have fairly current copies (ideally, less than 60 days old) of your credit reports from all three major credit reporting agencies (CRAs), Equifax, Experian and TransUnion. Since these agencies don’t share information with one another, you can’t assume that the same mistakes — or lack of them — appear on all your reports.
Step Two: Dispute the mistake. Sounds straightforward, right? But you have a couple of choices to make here. The first is whether to dispute the item with the credit reporting agency (or agencies) whose report(s) shows the error, or with the company that is furnishing that information to the CRA (the “furnisher.”)
[Related Article: What's Really in Your Credit Report?]
Dispute the mistake with each of the credit reporting agencies that are reporting the inaccurate information if:
Your second choice is whether to dispute the item online or by mail. Filing online is fast and easy, and you don’t have to spring for a stamp, but you’ll want to make the extra effort to mail your complaint if:
Here are the addresses and links necessary to file a dispute with the major credit bureaus.
Equifax
P.O. Box 740256
Atlanta, GA 30374-0241
Dispute online
Experian
P.O. Box 9556
Allen, TX 75013
Dispute online
TransUnion
P.O. Box 2000
Chester, PA 19022
Dispute online
[Credit Score Tool: Get your free credit score and report card from Credit.com]
Step Three: Wait for a response. The CRA or furnisher has 30 days to get back to you with a response. If the information is corrected or deleted, skip to step six. If not, go to the next step.
Step Four: Escalate your dispute. If you are told the information is correct, but you know it’s wrong, you’ll need to escalate your dispute. Send a letter to the CRA and/or furnisher stating why you believe the conclusion is wrong, and CC: the Better Business Bureau, your state attorney general and the Consumer Financial Protection Bureau. Send copies of your dispute to those agencies.
Step Five: Talk with a consumer law attorney. If your attempts to fix the problem don’t work, then you may want to talk with a consumer law attorney with experience in consumer credit disputes. The website of the National Association of Consumer Advocates is a good place to start.
Step Six: Keep records of your dispute. Put all your records of your dispute (copies if your credit reports, letters of correspondence, printed copies of emails or online responses, etc.) into a file and put it in a place where you can get to it if the same data appears on your file again.
Step Seven: Monitor your credit reports. At a minimum, order your credit reports fromAnnualCreditReport.com, and use a credit monitoring tool (our Credit Report Card is free and is a good way to keep tabs on things). If you monitor your credit reports and scores closely, you’ll be alerted quickly to any problems. Credit reporting agencies are not supposed to reinsert items that were deleted as the result of a dispute without notifying you first, but it can happen.
[Free Resource: Check your credit score and report card for free with Credit.com]
For more Credit 101, check out these posts - click - if the link has expired, search he web with the title below
Tagged as: credit 101, credit lessons, credit reports, credit scores
Source:
Gerri Detweiler Credit.com's Personal Finance Expert, Gerri focuses on financial legislation, budgeting, debt recovery and consumer savings information. She is also the co-author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, and Reduce Stress: Real-Life Solutions for Solving Your Credit Crisis as well as host of TalkCreditRadio.com. Have a question for our experts? Email them at [email protected].Connect with me on Google+
______________________________________________________
a Credit Report Mistake
Article 1 of 2
Article 2 below has a sample letter
for disputing a credit report mistake
Click green for further info
The information in your credit reports is what’s used to create your credit scores, so you don’t want to let mistakes on your credit reports potentially throw your credit scores out of whack.
An FTC study released today shows that one in five consumers have errors on their credit reports and 5% of consumers have errors serious enough that they could result in less favorable loan terms.
“These are eye-opening numbers for American consumers,” said Howard Shelanski, Director of the FTC’s Bureau of Economics, in a statement. “The results of this first-of-its-kind study make it clear that consumers should check their credit reports regularly. If they don’t, they are potentially putting their pocketbooks at risk.”
Here’s how to dispute credit report mistakes, step-by-step:
Step One: Order current copies of your credit reports. Make sure you have fairly current copies (ideally, less than 60 days old) of your credit reports from all three major credit reporting agencies (CRAs), Equifax, Experian and TransUnion. Since these agencies don’t share information with one another, you can’t assume that the same mistakes — or lack of them — appear on all your reports.
Step Two: Dispute the mistake. Sounds straightforward, right? But you have a couple of choices to make here. The first is whether to dispute the item with the credit reporting agency (or agencies) whose report(s) shows the error, or with the company that is furnishing that information to the CRA (the “furnisher.”)
[Related Article: What's Really in Your Credit Report?]
Dispute the mistake with each of the credit reporting agencies that are reporting the inaccurate information if:
- It’s something not supplied by a furnisher that you can contact; for example, a wrong address, or incorrect public record information such as a judgment would require you to work with the CRA.
- The information reported doesn’t belong to you.
- You have documentation that will show the furnisher that they are making a mistake in how they report the information to the credit reporting agencies; for example, copies of correspondence documenting a billing error.
- You’ve already disputed the item with the CRA and it has confirmed the information is “correct” and you want to go to the source.
Your second choice is whether to dispute the item online or by mail. Filing online is fast and easy, and you don’t have to spring for a stamp, but you’ll want to make the extra effort to mail your complaint if:
- It doesn’t fall neatly into one of the CRA’s dispute categories. If you dispute it online, you’ll likely have to choose a reason for the dispute from a menu that gives you a few standard choices. If you need to provide a more detailed explanation, a letter may be your best bet.
- You’re giving up your rights online. Before you dispute a credit report mistake online, read the website terms and conditions to make sure you aren’t agreeing to mandatory binding arbitration, which means you forfeit your right to have your day in court if it is not resolved.
- You have proof of your side of the story. If you have documentation that the information is wrong, you’ll want to include it in your written dispute.
- This is your second attempt to get it right. If you received a response from the credit reporting agency that says the data is correct, but you know it’s not, you may want to follow up with a letter.
Here are the addresses and links necessary to file a dispute with the major credit bureaus.
Equifax
P.O. Box 740256
Atlanta, GA 30374-0241
Dispute online
Experian
P.O. Box 9556
Allen, TX 75013
Dispute online
TransUnion
P.O. Box 2000
Chester, PA 19022
Dispute online
[Credit Score Tool: Get your free credit score and report card from Credit.com]
Step Three: Wait for a response. The CRA or furnisher has 30 days to get back to you with a response. If the information is corrected or deleted, skip to step six. If not, go to the next step.
Step Four: Escalate your dispute. If you are told the information is correct, but you know it’s wrong, you’ll need to escalate your dispute. Send a letter to the CRA and/or furnisher stating why you believe the conclusion is wrong, and CC: the Better Business Bureau, your state attorney general and the Consumer Financial Protection Bureau. Send copies of your dispute to those agencies.
Step Five: Talk with a consumer law attorney. If your attempts to fix the problem don’t work, then you may want to talk with a consumer law attorney with experience in consumer credit disputes. The website of the National Association of Consumer Advocates is a good place to start.
Step Six: Keep records of your dispute. Put all your records of your dispute (copies if your credit reports, letters of correspondence, printed copies of emails or online responses, etc.) into a file and put it in a place where you can get to it if the same data appears on your file again.
Step Seven: Monitor your credit reports. At a minimum, order your credit reports fromAnnualCreditReport.com, and use a credit monitoring tool (our Credit Report Card is free and is a good way to keep tabs on things). If you monitor your credit reports and scores closely, you’ll be alerted quickly to any problems. Credit reporting agencies are not supposed to reinsert items that were deleted as the result of a dispute without notifying you first, but it can happen.
[Free Resource: Check your credit score and report card for free with Credit.com]
For more Credit 101, check out these posts - click - if the link has expired, search he web with the title below
- What’s a Credit Score? Really.
- What’s Really in Your Credit Report?
- How Much Will One Late Payment Hurt Your Credit Scores?
Tagged as: credit 101, credit lessons, credit reports, credit scores
Source:
Gerri Detweiler Credit.com's Personal Finance Expert, Gerri focuses on financial legislation, budgeting, debt recovery and consumer savings information. She is also the co-author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, and Reduce Stress: Real-Life Solutions for Solving Your Credit Crisis as well as host of TalkCreditRadio.com. Have a question for our experts? Email them at [email protected].Connect with me on Google+
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8 Rules of an Effective Credit Report Dispute Letter
Article 2 of 2
Click green for further info
Discovering and resolving mistakes on credit reports can be complicated. We often hear from users of our Credit Report Card who’ve noticed a sudden drop in their credit score accompanied by an unexplained delinquency. That leads to more digging and finding an error on one or more of their three bureau credit reports. That’s where it all starts. Once you’ve confirmed there’s a mistake on your credit report, you’ll need to make two important decisions.
The first is whether to dispute the information with the credit reporting agency or the company giving the information to the credit reporting agency. (Need help picking? Here’s a quick guide to deciding.)
The second decision you’ll need to make is whether to send in your complaint via snail mail (make sure to send it certified mail) or file it online. Both have pros and cons, but if you’ve decided to dispute a credit report mistake by mail here are some important rules to follow:
1. Include identification information. Your name, current address and last four digits of your Social Security number should be at the top of your letter. Also include the credit report reference number, if one is available.
2. Identify the item that’s wrong. Clearly describe the account with the information that’s wrong; for example, “Visa credit card account number ending in 5678 opened 6/18/2006.”
[Credit Score Tool: Get your free credit score and report card from Credit.com]
3. Be brief, clear and to the point. The average credit report dispute is processed in a matter of minutes so don’t expect the person processing your dispute to pour over several pages of narrative. Make sure you clearly state the reason for your dispute close to the top and put any other relevant information into bullets. If your letter is more than one page, it’s too long.
4. Write clearly or type your complaint. If your handwriting is legible, feel free to handwrite your complaint. If it’s not, type it.
5. Don’t quote credit protection laws. You don’t need to reference the section of the Fair Credit Reporting Act (FCRA) that applies to disputes. The credit reporting agencies know they have to investigate consumer disputes. Reference the FCRA and it may sound like you are being coached by a credit repair firm.
[Credit Cards: Research and compare credit cards at Credit.com]
6. Include copies of documentation, if available. If you have something that documents your side of the story, feel free to include a copies – not originals. Highlight any particularly relevant parts; for example, a statement from the credit card issuer that it would remove certain negative information from your reports.
7. Let them know you’re speaking up. If you have tried to resolve your dispute but are getting nowhere, you may want to put a CC: at the bottom of your letter, indicating you’ll also be sending a copy to the Better Business Bureau, your state attorney general’s office and the Consumer Financial Protection Bureau. There’s no need to do this the first time you complain, but if you aren’t getting results, getting others involved may help your dispute get the attention it deserves.
8. Ask a friend or relative to proofread it. Ask someone you trust to take a quick look at the letter to get their opinion on whether the reason for your dispute is clear. If they don’t understand it, the person reading the letter may not either.
Sample Letter
Jane Q. Consumer
123 Main Street
Anytown, USA 12345
SSN: xxx-xx-1234
May 21, 2012
Ref #: 000-111-2222
To Whom It May Concern:
I would like to dispute the following item on my credit report:
Big Bank Mortgage Services.
Partial account number 5678.
Opened 6/3/2000
My credit report shows a 30-day late payment in the amount of $631.75 for May 2011. However, I was not late. I have enclosed copies of my statements for April, May and June 2011 that together clearly show my payment for May was not 30 days late.
Please correct this as soon as possible. Thank you,
Jane Q. Consumer
Jane Q. Consumer
Here are the addresses and links necessary to file a dispute with the major credit bureaus.
Equifax
P.O. Box 740256
Atlanta, GA 30374-0241
Dispute onlineExperian
P.O. Box 9556
Allen, TX 75013
Dispute onlineTransUnion
P.O. Box 2000
Chester, PA 19022
Dispute online
[Credit Score Tool: Get your free credit score and report card from Credit.com]
For more Credit 101, check out these posts:
- What’s a Credit Score? Really
- What’s Really in Your Credit Report?
- How Much Will One Late Payment Hurt Your Credit Scores?
Image: annilove, via Flickr
Tagged as: credit 101, credit lessons, credit report, credit report dispute, credit reporting agencies
Source:
Gerri Detweiler Credit.com's Personal Finance Expert, Gerri focuses on financial legislation, budgeting, debt recovery and consumer savings information. She is also the co-author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, and Reduce Stress: Real-Life Solutions for Solving Your Credit Crisis as well as host ofTalkCreditRadio.com. Have a question for our experts? Email them at [email protected].Connect with me on Google+
___________________________________________________________
Detailed information everyone of us needs and most do not know
Disputing a Charge on Your Credit Card
Date info: January 25, 2013
This article info is from a different source that the ones above - study & compare
If you have ever disputed a charge with your debit or credit card company, you know what a potent weapon this type of complaint can be.
The card issuer generally takes your word against the merchant or service provider at the outset, restores the money to your bank account temporarily or issues a credit and then goes about its investigation. It essentially demands that the merchant or service provider who supposedly did you wrong prove that it did no wrong at all.
But if you have never wielded this power tool of consumerism, there are a few things you should know first. The cat and mouse game that goes on behind the scenes can be tilted much more — or much less — in your favor, depending on which charges you dispute and how you go about disputing them.
Chances are you will need to use the dispute process sooner or later. We live in a world where you often cannot use cash to buy cocktails on an airplane and any individual can attach a card reader to a smartphone and accept card payments from anyone else. Mistakes will inevitably be made.
Meanwhile, all sorts of online businesses depend on recurring subscription revenue. Mistakes will inevitably be made again. Oops, we somehow forgot to honor your request to cancel your subscription. Oops, we forgot again. Oh, but now it will take until the next billing cycle. Sorry!
You have had the legal right to correct these mistakes ever since 1975, when the Fair Credit Billing Act went into effect. The law dictates that there be a process by which you can question unauthorized charges, billing errors and transactions involving goods or services you never received or merchants did not deliver in the way they were supposed to.
This creates problems for merchants. Plenty of people pretend that they never received products that were supposed to arrive by mail and then dispute the charge, hoping their card company won’t be able to figure out that they are liars and thieves.
Even legitimate beefs or misunderstandings create many problems. In the 12 months ending Sept. 30, 2012, Visa processed $2.07 trillion in transactions in the United States. While cardholders disputed just 0.037 percent of that amount, that adds up to $765.9 million in transactions under review. According to MasterCard, 0.05 percent of its transactions worldwide are subjects of dispute, so its card issuers will probably deal with over 15 million questionable charges this year. Several million of these disputes involve outright fraud, though none of the card networks would break out the exact percentages. Avivah Litan, an analyst at Gartner, estimates that 20 percent of disputes involve fraud.
The rest require a lot of manual labor. Every time someone initiates a dispute, the bank that issued the card must look into it. Someone has to contact the merchant and wait for a reply that may include a receipt or other documentation.
Merchants must carve out time to respond to each dispute. They also pay one-time fees for the privilege and may end up paying higher overall fees to accept cards if disputes are too frequent. Or they just get cut off from accepting cards altogether.
The true cost per dispute to the banks of all of this back and forth ranges from $10 to $40, according to a 2010 estimate by the consultants at First Annapolis. Given that cost, according to Scott Reaser, a principal there, many banks will simply absorb the disputed charge on a consumer’s bill and never contact the merchant if it is below a certain threshold.
That number will differ for every bank, though it probably averages around $25. Some large retailers, it turns out, have similar strategies, according to a 2009 Government Accountability Office report. So even if the bank contacts a merchant about the dispute, the merchant may allow the customer to win the dispute without bothering to investigate the complaint. The report did not say what the threshold was, and the G.A.O. is not permitted to identify the retailers it spoke to.
It is tempting to conclude that you can get away with disputing any old thing under $25 and not have to worry about tangling with the merchant again. But given that frequent disputes can lead to higher costs down the road, some merchants vow to fight every one.
Or they have consultants who make them fight as a condition of offering their assistance. That’s how Monica Eaton-Cardone, the co-founder of Chargebacks911.com, works with her merchant clients to help them keep their dispute rates down and get out (or stay out) of trouble with the companies that control their ability to accept cards.
Why does she operate that way? The answer begins with her own painful experience in the direct response business, selling things to people who sometimes didn’t like what they received in the mail or didn’t realize they had signed up for a recurring service with regular bills.
Faced with the threat of losing her ability to accept cards if the number of disputes didn’t decline, she realized there was a very basic problem with the process: she concluded that over 70 percent of the people disputing charges with their bank never called her, the merchant, to complain first.
“When you go to a bank’s Web site and you see a button that says, ‘Dispute This Transaction,’ it doesn’t say that this is going to hurt the merchant and could actually increase the costs of buying a service from this business,” she said. “It just tells you that there’s a quick and easy way to cancel your subscription right here. And you can get a refund! If you don’t want to pay your whole bill, just click on this button.”
She is not blaming consumers. They are just doing what their banks prompt them to do. “But not fighting back is sending the wrong message to consumers and card companies,” she said. “Letting the dispute go tells them that this is a sure way to get a no-questions-asked refund.”
It is unclear how effective this campaign has been, and you could be forgiven for thinking that the dispute process is something of a free-for-all. After all, some service providers resort to outright intimidation to keep their dispute numbers low.
The proprietors at Enchanted Attire, an online clothing retailer, wish to inform you that “you agree not to file a credit card or debit card chargeback with regard to any purchase” and that “in the event that a chargeback is placed or threatened on a purchase, we also reserve the right to report the incident for inclusion in chargeback abuser database(s) of our choosing.” Oh, and by the way, “being listed on such databases may make it more difficult or even impossible for you to use (any of) your credit card(s) on future purchases with us or other merchants.”
Movers have been known to do this, too.This violates Visa’s and MasterCard’s rules, for starters, and none of the experts I spoke with this week knew of anyone keeping a database for this purpose that merchants could contribute to and that other merchants could gain access to. No one from Enchanted Attire returned my messages to shed light on this.
It shouldn’t take threats to keep us in line, though. Jim Van Dyke, chief executive of Javelin Strategy and Research, suggests a simple framework for people who want to wield the dispute weapon and bask in its power but not be totally obnoxious about it.
“The consumer owes the merchant one tangible shot, one wholehearted best effort to make things right,” he said. “But if they breach their commitment, then the consumer should simply escalate it and say goodbye to that merchant.”
MORE IN YOUR MONEY
Click green title below and study the article - interesing, beneficial info
Wealth Matters: What the Small Player Can Expect When Using a Lobbyist
Source: NYT
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What Not to Do With Your Credit Card Rewards
Click green for further info
There is a lot to love about credit card rewards. Cardholders earn points, miles, and cash back that that can be used for award travel or other valuable benefits. And other than annual fees, these rewards can be earned without any cost when cardholders avoid interest by paying their balances in full.
But many cardholders fail to appreciate that how they spend their rewards is at least as important as how they earn them. When you consider spending your hard-earned points and miles you should never do the following six things if you want to make the most of your plastic points.
1. Redeem points or miles for merchandise awards. Nearly every airline, hotel and bank rewards program has merchandise awards available. The products range from kitchen gadgets to high-end electronics, but there is one thing they almost all have in common — they are a terrible value.
Merchandise awards typically return only one cent in value for each point or mile spent, and that is only if you consider the product’s full retail price. In fact, cardholders are getting less than one cent in value for their points and miles when they likely could have purchased the items at a discountand received additional rewards from using their credit card for the transaction. In contrast, these points and miles can be worth several cents each when used for expensive last-minute flights and luxury travel.
2. Redeem rewards for statement credits. Cash is valuable, but many reward programs offer minimal value when used for statement credits. For example, Chase’s Sapphire Preferred and Ink Bold cardholders can redeem their Ultimate Rewards points for just one cent each as statement credits. But those same points are worth 1.25 cents towards travel reservations booked through Chase, or even more when transferred to points or miles with any of 10 different travel partners. Worse, American Express’s Membership rewards terms and conditions state that 20,000 points are necessary for a $100 statement credit, so cardmembers who choose this option only receive a half a cent in value for each of their points.
3. Allow points or miles to expire. There is nothing as devastating as attempting to redeem valuable points or miles only to learn that they have expired. Every airline and hotel program has its own rules, but retaining a co-branded credit card will usually keep the account active.
4. Lose rewards by canceling your credit card. Thankfully, points in bank-operated loyalty programs don’t expire the way airline and hotel points and miles can. Nevertheless, cardholders need to be aware that unclaimed rewards typically disappear when the account is closed. So if you are ready to cancel your credit card, make sure to redeem all of your points first.
5. Forfeit rewards by not keeping your account in good standing. In the fine print of most credit card agreements is a clause that allows the bank to withhold rewards when customers fail to make payments on time. So, in addition to incurring late fees, a penalty APR and damaged credit, cardholders can also lose reward points and miles when they miss payments.
6. Donate points and miles to charity. It is commendable to donate to charity, but our tax laws make it unwise to use points and miles to do so. Since you did not pay for credit card rewards, the IRS does not consider their donation to be tax deductible. Instead, use your points and miles for the most valuable rewards possible and donate the money you saved to the charity of your choice. In this way, you can still claim the deduction, and your tax savings will allow you to donate even more.
Credit card rewards can be simple to earn, but complicated to spend. By understanding how to avoid these pitfalls, cardholders can focus on finding the most rewarding uses for their points and miles.
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Source: credit.com
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How to Make the Most of Credit Card Rewards Malls
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Those who use their credit cards to earn free travel, merchandise and cash back know these rewards can be extremely valuable. At the same time, we also know that shopping online can be quick and convenient. But what few cardholders realize is that their credit card can allow them to earn bonus rewards when they make purchases online through their bank’s shopping portal.
How online shopping malls work
Several of the major banks offer their cardholders an online shopping mall. These include:
- Chase’s Ultimate Rewards mall
- Citi’s ThankYou shopping mall
- Discover’s ShopDiscover
- Wells Fargo’s EarnMoreMall
In addition, the shopping mall itself might offer goods and services that can be purchased directly. These offers can include merchandise, travel and entertainment. Furthermore, these shopping malls tend to double as reward portals when it comes to making purchases directly from the mall. For example, visitors to Chase’s Ultimate Rewards website can make some purchases by redeeming their Ultimate Rewards points, by using their credit card, or both combined. So if you do not have enough points for an award, you can split the cost between points and dollars.
How to maximize the use of online shopping malls
First, find out if the credit cards you have are eligible to earn rewards in one of these online shopping malls. For instance, holders of Citi’s cards that earn ThankYou points can participate in their shopping mall, while those with their other products, such as their American Airlines cards, cannot. Next, create a login and browse the different offers. It may even be helpful to print out a list of the offers from your favorite retailers. Finally, be sure to login to the shopping mall and use its links whenever shopping from these retailers.
Beware of the drawbacks
Ultimately, users of these malls must be on the lookout for their two greatest pitfalls. The first would be spending more money in order to earn additional rewards. For example, many of the offers that return the most bonus points are for purchases with the highest profit margins, such as flower delivery services. If you were going to order flowers this way, it makes sense to take advantage of this offer. But in many other cases, cardholders can save even more money by shopping around for the best prices.
The other mistake would be spending too much time comparing offers just to earn a few cents cash back on a minor purchase. The proliferation of these shopping portals can make it too time consuming to choose the right portal just to earn a small bonus.
Bottom line
Online shopping malls can be a great way to earn additional rewards from your credit card spending. But like all reward credit card use, the advantages can disappear when shoppers get carried away with their spending. By utilizing these malls only for purchases they were about to make anyways, cardholders can earn additional rewards without increasing their overall spending.
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Source: credit.com
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Credit Cards With No Annual Fee: How To Pick One
Date: March 2013
Many credit card users find it absurd to pay a fee to use their credit card, especially when they realize how profitable the products are to the banks that issue them. And between interest charges, foreign transaction fees, cash advance fees, and late fees, it is understandable that some cardholders will wish to avoid paying an annual fee when
there are plenty of cards offered at no cost. In fact, there are so many cards on the market without annual fees, it can be difficult to find the best ones.
How to Choose the Best Card With No Annual Fee
The most important factor in choosing a credit card with no annual fee is to recognize how the cardholder will use the card. Those who tend to carry a balance on their credit cards should be looking to save the most money on interest rates and fees. Cardholders who pay interest can seek out the lowest standard interest rates, or look for a promotional financing offer with 0% APR interest on balance transfers or new purchases.
[Related Article: The First Thing To Do Before Applying For a Credit Card]
Alternatively, credit card users who avoid interest charges by paying each month’s balance in full can look for a no-fee card that offers rewards for their spending. Most no-fee reward cards will offer cash back, but there are just a few that return airline miles or loyalty points in hotel programs. As with all reward cards, the goal is to earn the most valuable rewards per dollar spent.
But beyond rewards, both types of credit card customers should also consider any other perks and benefits offered by a credit card. Some cards feature purchase protection and travel insurance policies, and many offer some type of rental car insurance that can be extremely valuable.
A Few Good Credit Cards With No Annual Fee
Chase Slate
For those who already have credit card debt, the Chase Slate is a basic card with one outstanding feature — it is the only card that offers a 0% APR promotional balance transfer with no balance transfer fee. It also features Chase’s Blueprint program which contains useful budgeting and goal setting tools. Using Blueprint, cardholders can even avoid interest by paying some charges in full while carrying a balance on others.
[Related Article: How to Pick a Cash Rewards Credit Card]
Discover it
Earlier this year, Discover replaced all of its existing products with their new “it” card. This no-fee product combines popular features from many of its earlier products. For example, it comes with one of two promotional financing offers; 18 months of interest-free financing on balance transfers and six months on new purchases, or 14 months for both. In addition, it is also a rewards card. All purchases earn 1% cash back, while those from select categories of merchants can earn 5% back. The eligible merchants change each quarter, and only the first $1,500 of qualified spending each quarter will earn the bonus.
American Express Blue Cash Everyday
With this no-fee card, customers earn 3% cash back rewards at supermarkets (on up to $6,000 spent annually), 2% on gasoline purchases and at select major department stores, and 1% back on all other purchases. This is one of the most competitive rates of return for a reward card with fixed bonus spending categories. This card also includes travel accident, purchase protection, and extended warranty policies.
Related Article: 6 Balance Transfer Credit Cards With No Fees
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The web provider, weebly.com, is working on this page and on this whole website to find out the reason for the technical malfunctioning. The orderly, original set up for article topics, lines and additional links with the complete texts is not holding.
The lines are jumping unevenly, changing the font size and boldness is changing by itself after the website work. All is fine when STAF, Inc.'s editors save & publish the new information. When next time starting to work on the editing and placing new material, the pages appear badly messed up - it happens after STAF, Inc.'s editors exit the whole website.
H0wever, all information stays in this extensive website is available in full in every page and for every article.
STAF, Inc. is sorry for the inconvenience - the web provider will repair this technical malfunctioning.
All material in this website is being used in College & University education for every degree level. Despite the "jumping lines & other technical difficulties", you will and every web visitor still will get the high level science information.
Save The American Family - STAF, Inc.,-not-for-profit- __________________________________________