June 6, 2013 By

Thursday’s need-to-know money news

YCS4 coverGood credit, stolen credit and ways to save on travel to the vacation home you should have purchased when mortgage rates were historically low.

Five Reasons Why You Can’t Ignore Your Credit

While living debt free is a good thing, living credit free can have unforeseen and expensive consequences.

Here’s Everything We Know About The Rakuten/Buy.com Credit Card Breaches

If you’ve shopped at the online marketplace recently, you should pay very close attention to your statements.

26 Secrets to Save on Travel

Flying on a Saturday afternoon may not sound like fun, but it could save you big bucks.

Farewell 3% Mortgage Rates

Job gains and an improving economy signal the end of historically low mortgage rates.

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June 5, 2013 By

Wednesday’s need-to-know money news

collegeHere are some of the top money stories around the Web:

How to Pay Student Loans You Can’t Afford

With interest rates on federal Stafford Loans set to double on July 1st, Credit.com’s Gerri Detweiler breaks down the four main income-based repayment programs.

The Surprising Downside of Cutting Up Your Credit Cards

While it may curb your spending, cutting those credit cards in half could hurt your credit score.

Banks Lag on Consumer-Friendly Checking Practices

After surveying 36 of 50 of the country’s largest banks, the Pew Charitable Trusts’ Safe Checking in the Electronic Age project discovered that not a single one met all of the recommended practices.

Are You Paying the iTunes Tax?

The days of tax free internet purchases could soon be over.

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June 3, 2013 By

Catch me on CNBC today

DWYD cover2013I’ll be discussing how 10 years of savings can be worth more than 30 years of savings on today’s “Closing Bell” with Kelly Evans and Scott Wapner.

Today’s 20-somethings have a unique–and easily blown–opportunity to set themselves up for their future. Because of the power of compounding, the money they save now for retirement is worth far more than if they start even a few years later. The idea that you can put it off and “catch up” when you’re older? Basically, it’s a myth, since it’s so very, very hard to make up for missing that early start.

NBC News columnist Bob Sullivan outlines how this works in “When $30k is worth more than $90k.”

The takeaway? Paying off debt is important, but not as important as saving for your future. Opportunities to save for retirement really are “use it or lose it,” and blowing them off could make your future self the real loser.

Please join us around 4:50 p.m. Eastern/1:50 p.m. Pacific for the discussion.

 

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May 31, 2013 By

How to avoid moving scams

Unhappy MoverThe last time we moved, our stuff was held hostage.

The mover had a variety of entirely bogus reasons for hanging onto our stuff while trying to exceed the written, “not to exceed” estimate. Among the excuses: We didn’t tell him there were steps at the new house (there were two) or it was at the fringes of Los Angeles (we’re actually quite close to the geographic center of the city).

At the time, I didn’t know that reputable movers were being bought up by bad guys who pulled these stunts, or that moving in many areas is so lightly regulated that they can get away with this crap.

If you’ve got a move planned this summer, take the time to check out Consumer Report’s tips for avoiding scams.

One of the best tips I know isn’t included: Ask your employer, or another major company in the area, which companies they use to move their executives. These movers won’t be the cheapest, but since they rely on repeat business, they’re far less likely to be scamsters.

In the end, I paid a couple hundred dollars more than we agreed to ransom our stuff–much less than the $1,000 or so the mover demanded, but still too much. If we ever have to move again, I’ll be a lot more diligent in choosing a mover.

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May 29, 2013 By

It’s National 529 Day!

College studentWho doesn’t love obscure commemorative/promotional days? But this one is worthwhile since it brings attention to the state-run college savings plans that can help you pay for your children’s future education.

Here are the most important facts you need to know about college savings:

If you can save for college, you probably should. The higher your income, the more the financial aid formulas will expect you to have saved for college–even if you haven’t actually saved a dime. Even people who consider themselves middle class are often shocked by how much schools expect them to contribute toward the cost of education. (By the way, it’s the parents’ assets and income that determine financial aid, so if you don’t help your kid with college costs, he or she could be really screwed–no money for school and perhaps no hope of need-based financial aid.)

More savings=less debt. Most financial aid is in the form of loans these days, so your saving now will reduce your kid’s debt later. (A CFP once told me to substitute the words “massive debt” when I see “financial aid.” So when you say, “I want my child to get the most financial aid possible,” I hear: “I want my child to get the most massive debt possible.”

529 plans get favorable treatment in financial aid formulas. These accounts are presumed owned by the parent, so less you’re expected to spend less than 6% of the total each year–compared to 35% of student-owned assets.

Learn more by reading “The best and worst 529 plans” and this primer on Motley Fool.

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May 22, 2013 By

Smarter travel planning this summer

GondolaIt’s time to plan some summer fun, and yesterday’s “Smarter Travel” Tweetchat with Ally Bank featured some great tips. (You can check out the conversation using #allymoneychat on Twitter.)

Here are some ideas to cut your costs:

Travel outside the box. Your options aren’t just “fly or drive”? Donna Freedman recommends checking out the Megabus. “I went from Philly to NYC for $1.50. Could make day trips really cheap.” She also traveled on the Megabus in the United Kingdom for a fraction of what the train fare would have cost. Speaking of trains, overnight trips on Amtrak can be pretty expensive, but we’ve scored free roomettes (double-bunk sleeper) and bedrooms on overnight trips up and down the West Coast using Starwood points that we dumped into Amtrak’s Guest Rewards program.

Cut hotel costs. Once again, your choices aren’t just “hotel or bunk with friends”? Check out Airbnb or VRBO or consider a house swap.

Book strategically. The best day to book airfares is often Tuesday, while the cheapest day to fly is usually Wednesday. But Bing’s price predictor can help you figure out whether to snap up a fare or wait a little longer. (Just search for an airfare, and the predictor will give you the likelihood the current fare will increase or drop.) Join frequent flyer programs and sign up for email newsletters so you can hear about special sales. Kiplinger has more here in its “21 secrets to save on travel.”

Rescue orphaned miles. Got points in a travel program you no longer use? You may be able to shift them to a loyalty program you do use. Check out Webflyer.com’s Mileage Converter to explore the possibilities. Speaking of points:

Don’t settle for expensive. Last-minute trips don’t have to be budget-busters. Airlines may release more seats a few days prior to the flight so that you can book them with frequent flyer miles. Priceline and Hotwire are great places to bid for cheap flights, rooms and cars.

Re-shop your reservations. Change fees make rebooking airfares tough on most carriers, but you can typically change hotel and car rental reservations without penalty. I usually book a few months in advance, then check three weeks out and again a week out to see if hotel or car rates have fallen.

Plan cheap fun. Last time we visited Hawaii we bought an Entertainment book for the islands before we left. The $10 we spent for the book was offset with our first museum visit; the coupons for other activities and restaurants were a bonus. Donna suggests talking to locals and doing searches for “free/cheap things to doyou’re your destination. “Maybe something just opened & isn’t on the general radar yet,” she noted.

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May 20, 2013 By

Want to get away this summer?

GondolaPlease join me on Twitter tomorrow (Tuesday) at 2 p.m. Eastern/11 a.m. Pacific when we’ll be discussing “Smart Planning for Summer Travel.” Among the topics:

  • How to take advantage of dropping airfares
  • How to plan financially for travel and take advantage of discounts
  • Good apps and Web sites to use
  • When to consider home swaps or rentals instead of a hotel
  • How to handle travel setbacks and emergencies

And much, much more.

You can RSVP at http://bit.ly/15GUesH and check out the Twitter feed @AllyBank for more details. On Tuesday, join us at http://tweetchat.com/room/allymoneychat to follow us
during the chat.

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May 10, 2013 By

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.

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May 9, 2013 By

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.

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May 8, 2013 By

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.

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