Get 50% off some great money books!

DWYD cover2013FT Press is offering half off (and free shipping!) on a selection of finance and investing titles through May 16. In addition to two of mine, “Deal with Your Debt” and “Your Credit Score,” the titles include Gail MarksJarvis’ excellent “Saving for Retirement” and Lynn O’Shaughnessy’s “The College Solution,” a must-read for any parent who wants his or her kids to go to college. To order, use the link above and enter coupon code FTPF at checkout.

I’d like to thank FT Press for organizing this promotion as well as yesterday’s Tweetchat, and thanks also to the other personal finance bloggers who took part:

You can check out the conversation on Twitter using hashtag #FTPersonalFinance or visit our Tweetchat room.

Experian to offer FICOs to consumers again

YCS4 coverExperian stopped offering FICO scores to consumers a few years ago, even though it continued to sell the scores to lenders. This refusal made it tough for consumers to know what rates they should expect from mortgage lenders, which typically take the middle of your three FICO scores (one from each bureau). You could still get your TransUnion and Equifax FICOs from MyFico.com, but not your Experian FICO.

That’s apparently about to change. Buried in a press release today was an announcement that Experian will once again “make FICO Scores available to consumers through myFICO.com and through third parties.”

“This is great news for consumers,” said credit scoring expert John Ulzheimer, the president of consumer education for SmartCredit.com who tipped me off to this important development.
After withdrawing from its partnership with MyFico.com, Experian continued to sell credit scores to consumers–but they weren’t the same scores lenders typically used. One score Experian sells, the PLUS score, isn’t used by lenders, while the VantageScore is used by about 10% of lenders. FICOs, on the other hand, are the leading score, so being able to get them again from Experian is a real boon.

How credit scores are like cats

Cute cat enjoying himself outdoorsWhen people complain that credit scoring formulas aren’t fair or consumer friendly, I think of my Great Auntie M.

Great Auntie M. was a lovely older woman, and she was besotted with her cat. Great Auntie M. once told me that if she died first, she wanted the cat euthanized since he “couldn’t possibly live” without her.

Just as Great Auntie M. misunderstood the fundamental nature of cats, so many people misunderstand the fundamental nature of credit scores. There are more than a few parallels between the two, so let me explain:

They’re finicky. Your cat may turn up its nose as its food bowl, or kick litter out of a box that’s not perfectly clean. Credit scores are similarly fussy about certain things: paying bills on time, not using too much of your available credit limits, not applying for new credit too often.

They hold grudges. When my husband moved in with his sister years ago, her cat was not amused by the presence of a new person. The cat expressed himself by depositing a single turd in the exact middle of hubby’s bed. One of our own cats once stalked up behind her brother, lifted up her paw like a prizefighter and smashed his head with it. There was no immediate provocation to this act of vengeance, so we can only speculate what he did earlier to tick her off. Credit scores don’t quickly forgive infractions, either, especially big ones. A single skipped payment can affect your scores for up to three years, a foreclosure for up to seven years, a bankruptcy for up to 10 years. (The impact decreases over time if you use credit responsibly, but it can still persist.)

They have their own agenda. Cats can be cuddly, playful, affectionate. (I have one sitting on my lap right now, monitoring my typing.) But cats typically are independent. They can withdraw affection in an instant, stalk away and regard you with indifference. Cats feel no obligation to oblige, conform or bend to the will of another. They are, in other words, the polar opposite of the dog now sleeping at my feet, a desperate-to-please golden retriever whose primary need is reassurance that yes, he is still part of the pack.

Like cats, credit scoring formulas don’t particularly care what you think. Credit scores were constructed for lenders, not consumers. In fact, originally you were never supposed to know that credit scores even existed, let alone what yours were. Credit scores have their own, internal logic that they follow, regardless of its impact on you.

Here’s another similarity: credit scores, like cats, can reward you if you figure out what they like and don’t like. With both, the effort is worthwhile.

Get your questions answered–live!

DWYD cover2013Please join me Thursday at 2 p.m. Eastern/11 a.m. Pacific for a live Twitter event to answer your questions about debt and money–plus a chance to win free or discounted books.

I’ll be joined by some of my favorite bloggers:  J.D. Roth of Get Rich Slowly, Donna Freedman of Surviving and Thriving, Mary Hunt of Debt Proof Living, MP Dunleavey formerly of Daily Worth, Steve Rhode, the Get Out of Debt Guy, and  Gary Foreman of the Dollar Stretcher.

We’ll tweet about credit scores, saving for retirement, paying off debt, saving for college and more. To tune in, use the hashtag #FTPersonalFinance and click over to our Twitter Chat Room to track the conversation.

You can subject questions in advance  to @FTPress or by email lisa.loftus@pearson.com. A few questioners will be picked at random to receive a free copy of my book Deal with Your Debt. Everybody who participates can receive 50% off FT Press’ personal finance titles.

So join us Thursday!

 

Is your dog blacklisted by insurers?

Dog teethMy column today, “10 dog breeds that rile insurers up,” discusses how your pet’s breed could cause some companies to deny coverage or charge you more.

The breeds include various types of terriers commonly called “pit bulls,” as well as Dobermans, Rottweilers, German Shepherds, Huskies, Cane Corso and Mastiffs.

These so-called “breed lists” aren’t used by all insurers and tend to change as the types of dogs involved in attacks change (something that’s often related to breed popularity). There’s a reason that “nippy” dogs such as Chihuahuas and dachshunds aren’t on these lists: although they may be more likely to bite, they can’t do the damage that a bigger breed can. The average insurance claim for a dog bite is nearly $30,000, which implies a whole lot of pain.

If you own a dog that’s on an insurer’s breed list, or if you simply want to avoid expensive lawsuits and the possibility of harming others, there are plenty of ways to reduce your liability to dog bite claims. Among them:

Shop around. Every insurer has different criteria, so getting quotes from a number of different companies can help dog owners find coverage. An insurance broker who is knowledgeable about various insurers’ policies can help with the search. Larger insurers may be more accommodating than smaller ones. For example: State Farm, the largest homeowners insurance company, says it does not discriminate by breed but does require dog owners to answer questions about their animals’ history and behavior.

Spay and neuter. Sexually intact dogs are more likely to bite than spayed or neutered animals, according to the Centers for Disease Control and Prevention.

Mind your kids. Don’t leave infants or young children alone with any dog, the CDC advises. Teach children not to approach unfamiliar dogs and to remain still if approached by dogs they don’t know, or to roll up into a ball and stay motionless if knocked down by a dog. (If an unfamiliar dog is leashed and with its owner, make sure your child asks the owner first if the dog is friendly and if it’s okay to approach. Your child should know to let the dog sniff first before petting.) Kids should be taught not to disturb dogs that are eating, sleeping or tending puppies. Most dog bites occur “during everyday activities and while interacting with familiar dogs,” according to the American Veterinary Medical Association, so be vigilant about how your child behaves with dogs. Don’t let a child or anyone else tease or threaten a dog.

Don’t encourage aggression. Wrestling or even tug-of-war can trigger aggressive behavior in your pet. Dogs that have already demonstrated such behavior (lunging, biting)  “are inappropriate in households with children,” the CDC notes. Yes, such dogs can be trained, but the risk to your kids is too high.

Socialize and train your dog. The CDC recommends teaching all dogs “submissive behaviors,” such as rolling over to expose their belly and giving up food without growling. Training can help with these behaviors and others that can make dog ownership easier. Shelters and pet stores are two places to look for low-cost training. Use a leash in public so you can control your dog, the AVMA advises.

Dog bites are no joke. They send some 800,000 Americans every year to emergency rooms and other medical providers for treatment, according to the AVMA. Half of those victims are children, since kids are much more likely to be seriously injured if bit. (I was going to include a photo of what a dog bite did to a young girl’s arm, but decided it was just too graphic.) Senior citizens are the next most common victims.

So do the right thing. Your dog–and your neighbors–are counting on you to be a responsible owner.

 

 

 

Don’t delay gratification too long

Mom in Alaska. She landed this honking rainbow on her first cast. Getting her off the river after that was almost impossible.

Mom in Alaska. She landed this honking rainbow on her first cast. Getting her off the river after that was almost impossible.

Today is my mother’s birthday. She would have been 82.

Except that she died twenty years ago of colon cancer. She loved life and she should have had more of it.

I write about this for two reasons. First, to enlist you in my effort to get everybody screened. Colonoscopies aren’t fun, but they can save your life. Catch it early, and colon cancer is a non-issue. Procrastinate, and it can kill you. The AMA recommends you get your first colonoscopy at 50, or 40 if you have a family history of the disease. You’re not off the hook if you’re younger: start bugging your parents, your aunts and uncles, your older siblings to schedule their screenings. A little nagging can save a life.

The second is to remind you to do the things you love, go the places you want to go, take the chances you’re afraid to take. Don’t put this stuff off indefinitely. Although plenty of people are live-for-today grasshoppers, I suspect more than a few of you are careful ants, focused diligently on the future.

I once heard from a man who wanted to take his 11-year-old on a trip to Europe. But he also felt he should start paying down his mortgage, as he was on track with his retirement savings and that seemed to be the next logical goal. Go, I told him, while she still wants to spend time with you. She’ll be off on her own soon enough, and the mortgage will still be there for you to tackle.

Delayed gratification is good and necessary if you want a sound financial foundation–and if you want to retire someday. But also don’t forget that tomorrow is not guaranteed. Think about what you would regret not doing, not saying, not being if today were your last day. It may not be, probably won’t be, but your life will be richer for living as if it might.

Companies make it easy to hack your identity

The hackerYou might think breaking into a corporate database would be hard. Not so. A recent report from the Verizon RISK Team found the vast majority of incidents required minimal skills and took place in a few hours. Unfortunately, those breaches often weren’t discovered for months or even years–and it typically wasn’t the company but rather a third party that discovered a breach.

From a Credit.com post on the study:

While one in 10 were so easy the average Internet user could have caused them, another 68 percent were the result of hacking attacks using the most basic methods, requiring relatively few resources to complete. Only one breach suffered in all of 2012 required “advanced skills, significant customizations, and/or extensive resources” to complete.

That is likewise reflected in the amount of time it took to cause most data breaches, the report said. Altogether, 84 percent took hours or even minutes to perpetrate, while these incidents typically took months or even years to discover. Nearly two-thirds of all breaches took at least that long, up from just 56 percent the year before, proving that it’s actually becoming more difficult to spot breaches, as well as contain them. While most were remediated in hours or days, nearly a quarter took months.

The take-away from this is that companies aren’t doing nearly enough to protect the information they collect about you. And the sad truth is that you have little control over what goes into these databases. You can do your best to protect your identity, and still have your information breached.

You should still take steps to reduce your exposure, steps like not giving your Social Security number to companies that don’t need it and refusing to give businesses permission to share your information. You should use tough-to-hack passwords and stop sharing secrets on social media. You also should monitor your credit reports and financial accounts.

Until companies get serious about protecting your data, though, you’re still a target for identity theft.

 

Are too many people on disability?

DisabledThe number of people getting disability checks from the government has skyrocketed in the past three decades. The federal government spends more on cash payments to disabled workers than on food stamps and welfare combined.

This trend has drawn some media scrutiny lately. You may not have time to read everything that’s been written, so here’s an overview:

As jobs for people without college degrees have disappeared, many people who lose their jobs wind up on disability. Planet Money reporter Chana Joffe-Walt says in the NPR piece “Unfit for Work” that “disability has also become a de facto welfare program for people without a lot of education or job skills.” Qualifying for Social Security disability means you get about $13,000 a year, plus you qualify for Medicare, the government health insurance program for the elderly. For many who qualify, that may beat a minimum wage job with no benefits. “Going on disability means, assuming you rely only on those disability payments, you will be poor for the rest of your life. That’s the deal. And it’s a deal 14 million Americans have signed up for.”

The rise in people on disability, however, isn’t unexpected or solely the result of the lousy economy, according to a response to the NPR report by a group of former commissioners of the Social Security Administration, which oversees the disability programs. “The growth that we’ve seen was predicted by actuaries as early as 1994 and is mostly the result of two factors: baby boomers entering their high- disability years, and women entering the workforce in large numbers in the 1970s and 1980s so that more are now ‘insured’ for DI based on their own prior contributions,” the commissioners wrote. The commissioners point out that it’s not easy to get government disability and that most people who apply are denied. “The statutory standard for approval is very strict, and was made even more so in 1996,” the commissioners wrote.

Few people on government disability ever go back to work. Private disability insurers do a better job than the government programs of returning people to the workforce, according to this story in the Wall Street Journal. That shouldn’t be surprising, since qualifying for government disability is typically a lot tougher than the standards you have to meet to trigger private disability insurance payments. That means the folks getting government disability checks are often a lot sicker (in fact, one in five men and one in seven women die within 5 years of being approved for government disability). Private insurers are also, shall we say, eager to get people back to work (or at least off their benefits). Yet the discrepancy seems to offend the Journal, which also decided to blame people on government disability for at least some of our current economic malaise in “Workers stuck on disability stunt economy.”

As a taxpayer, I don’t want to foot the bill for someone who could work but doesn’t. But I’m also leary of attempts to paint government disability programs as a refuge for loafers.

Clearly, this is a complicated–and emotional–issue. You’ll be hearing more about it as Congress struggles with the budget and social safety net programs, so it would be worth spending a little time researching the facts.

 

 

Will the new credit score change your life?

YCS4 coverIn case you missed them, here are some of the issues I’ve been writing about recently:

A much-heralded new version of the VantageScore could offer big benefits to consumers, but only if lenders actually start to use it. Read all about it in “New credit score could change lives.”

HSAs still aren’t a household acronym, but more companies are offering these health care accounts–and yours might be next. For the right people, HSAs can be a way to supercharge your retirement savings since they allow you to invest unused cash contributions in stocks. But you also run the risk of having the market wipe out your health care funds right when you need them. Read “Should you invest health care funds?” for more.

Divorce doesn’t necessarily separate your credit obligations, and a vengeful or oblivious ex can really mess up your credit. Learn what you should know before and after your split in “Don’t let your ex trash your credit.”

Are you giving identity thieves the clues they need to hack into your life? If you use social media, the answer may be yes. Read “Secrets you should yank off Facebook now.”