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My Financial Journey hosts this weeks Carnival of Personal Finance here. My contribution was on 2006 IRA Maximum Contribution Limits.
Mighty Bargain Hunter hosts the Carnival of Debt Reduction. I submitted an idea on reducing debts with Christmas gifts (and a little help from your loved ones).
You may remember that a while back I dumped Experian® Triple Advantage™ in favor of myFICO®. I have to say that so far the experience hasn’t been great.
myFICO® supposedly tracks your credit and alerts you when changes occur. From their site (emphasis is mine):
|
Your Equifax credit file is monitored daily for:
Newly opened accounts Inquiries from applications for new credit Increases in account balances Changes in account status, such as a missed payment New activity on accounts that were inactive Newly listed public records, such as bankruptcies, court judgments, and tax liens Newly listed collection company records Changes to public records and collection company records Changes to the name listed on your credit report New addresses or phone numbers |
As you may know from reading this site I’ve refinance my mortgage and opened a few credit card accounts in the past few months. On top of all of that there were several radical balance changes around surrounding the 0% offers I used. I got my first Score Power™ report on September 20th. In mid November I still hadn’t heard anything so I used up my second Score Power™ Report. My score had dropped 10 points.
No alerts came!
The new accounts show up on the credit report!
The reason for using these services is to monitor credit changes. If you only alert on some credit changes why should I pay so much? Remember, these showed up on the credit report from them, they were not from another credit bureau.
I entered my info into their customer support system which spit back:
Thank you for contacting myFICO Customer Care. In regards to the Score Watch alert question you've submitted, the best thing to do would be to call our support center to work directly with an agent. Kindly call 1-800-319-4433 (Monday-Friday 6:00 AM to 6:00 PM; Saturday 7:00 AM to 4:00 PM Pacific Time), and a myFICO Customer Care representative will be happy to assist you. |
Big help. Why did they make me waste my time? Why not say: “We don’t deal with … requests online”. I tried calling them during their hours but I waited too long. I’m planning on carving out one more chunk of time to talk with them before demanding email support.
Since this request I got two Score Watch™ alerts. One alert was for my mortgage account was added on the same day it was reported. Good. The other alert was that my FICO® score changed without any reason. Better than nothing.
Looking at the two reports from the same account there are at least 4 additional alerts that should have been generated. Two for the account adds and two for the balance changes.
For now I can only conclude that this service does not live up to its marketed promise. I want to give them another chance to respond before saying this outright, although I must say they are making it quite difficult.
I can say that compared to the Experian® product myFICO® does seem to do something.
Before signing up for this product watch for an update to see if the pick up on any other changes and what there customer service says when I finally get them to respond.
I got notice yesterday that my old number had been transferred over to Vonage and that all my calls should be coming through Vonage within 24 hours. It seems to be working like a charm.
I didn’t change my number when I first signed up because I wanted to see how well the service worked. I was particularly concerned with my old Tivo and the quality of calls.
Tivo worked well. Quality was good. Doing things this way cost ten dollars but I thought it was prudent.
I have to say the call quality is noticeably better.
I’m now on track to start saving $30 a month. Sweet!
Remember, if your signed up for your Discover Card’s “Get More” program you get 5% cash back at a bunch of places like restaurants, movie theaters and Amazon.com. In normally shop at Amazon for 40-60% of my Christmas gifts already and this is a huge bonus for me.
Read more here.
I’ve been using Prosper.com for a few months now and I thought I would update you on my progress. I have about 90 active loans in my portfolio. All of the loans are current. One of the loans was a few days late but is now caught up.
I just ran a performance report (which you can do too from the performance tab) For loans originated in May, June and July and found that in grade AA-D there were no defaults and 53 lates out of about 1300 loans. The reason I chose loans so far back is that there is no chance a loan originated in the last few months can be in default.
We still don’t have enough data to say what additional risks we assume with prosper but I can make a few observations:
- The issue of whether defaults will be higher or lower than the industry statics provided is still an open issue, and will be for at least another year. You should increase the interest rate you are willing to accept to take this into account.
- I’ve been trying to deploy my capital for over two months now and I can’t find enough loans that meet my criteria. Don’t be tempted to over invest in a single loan. Don’t lower your credit standards. You will pay dearly for this. Trickle your money into your Prosper account as needed since they pay no interest on money that is not invested.
- I can tell you I have received about a hundred payments with one late payment that was brought current in a few days.
- The lower you go in the credit score grades the more risk you are taking on. Plan accordingly.
Is Prosper.com riskier than your banks money market account? Certainly! Can you make a higher rate of return? It seems so.
Good luck!
AllThingsFinancial has changed its name and it url. It is now AllFinancialMatters at http://allfinancialmatters.com.
Please check your bookmarks and blog reader so that you can keep up with this great blog.
One of the cool things about shopping on the internet is there are so many bargains to take advantage of if only we take a minute to look. Look at the examples below and you’ll be convinced how easy and how useful this is.
One of the gifts I purchased last week was a package of Omaha Steaks. I remembered earlier in the year seeing a discount on Ebates.com so I popped over there for a look. Sure enough they had a great deal. I ended up with $5 dollars in direct savings plus $3 of Ebates on a $50 dollar package. Total overhead was about ten minutes of time. All told it took less time to find the savings and place the order than it would to run into a bricks and mortar and pick up something similar.
Another gift I purchased was a photo book from Kodak.com. This took me quite a bit of time to put together but this was an effort I expected. I finally finished late last week and fired off the order. This morning I went to clean up my junk email folder and discovered an email from Kodak for 20% off to finish the photo book. Yikes! $10 wasted.
It reminded me to always check for deals before buying. The photo book deal and others pop up immediately with a simple web search. Personally I use Google.com and Ebates.com (and now my junk mail folder).
My Internet Shopping Bargain Challenge to myself and to my readers is to always spend a few minutes checking for coupons, discounts, promotions and other bargians when buying pricey items online. You’ve seen that this can work, now go do it! You’ll save a ton.
Dividend yield is a simple way to measure dividends of different priced stocks on a level playing field.
The dividend of a stock is the cash that a company pays its shareholders (maybe you!). Dividends have no guarantee behind them; they can be raised, lowered or eliminated.
The dividend yield is one year of dividends divided by the stock price. This gives us a percentage that allows us to compare the dividends of two differently priced stocks. It is very similar to the rate of return you’d get on a savings account.
For a real world example Wells Fargo(WFC) closed at $35.57. It has dividends over the last 12 months were $1.12 per share. When we divide 1.12 by 35.57 we get 3.15%. Figuring the dividend yield is that easy. Most investing sites will calculate this for you, but it is important to understand what it means.
The dividend yields gives us a rough estimate of what amount of cash we would expect the company to pay us per dollar that we invest.
Dividends can be a very powerful and steady contribution to your overall portfolio performance. More details on this will follow.
Enjoy your turkey, watch some football, spend time with friends and loved ones.
That is how I will spend my Thanksgiving this year.
I'm truely blessed and have much to be thankful for.
I may or not be able to squeek in one more post before I go.
I wish you and your family a happy, peaceful Thanksgiving.
-Scott
Free markets work to reduce friction. When I talk about friction I’m referring to the something that adds a burden that is outsized to the value provided. An example of this was the previous bid system in the stock markets. Bid and ask increments were forced to be a quarter or even sometimes a half dollar apart. Did the market maker really provide a quarters worth of value per share? Did he provide 50 dollars of value when you traded 100 shares? No! High cost with low value. Friction. Of course this system was recently replaced by penny increments reducing the friction and leaving more money in the hands of buyers and sellers.
The same thing applies in the personal credit market. Two years ago I was opening a checking account when rates were a bit lower than they are now. The bank I was at charge over 20% interest on its credit cards. The clerk asked me if I wanted one of their savings or money market accounts. I asked what the rate was and threw out a guess of 1.5%. The clerk laughed and responded “Isn’t that cute”. The actual rate? 0.2%. Ouch. That’s a whole heap of friction.
I think that a wave is about to break over the personal credit market that sands this high friction surface to a silky smooth finish.
I’ve been writing about Prosper.com’s peer to peer lending model for a while now. It is very clear to me that given the disparity between the rate consumers receive on their money and the rates that financial institutions charge consumers that there is room for a profit in between the extremes. Prosper is already knocking the rough edges off the personal credit market. The spread between the borrower and lender rates is around 1-2%.
Zopa, a UK P2P (peer to peer abbreviated for all you folks not in touch with your Web 2.0 slang) company, is moving into the US market. Zopa’s model is different than Prospers. More detail on that later. What you should know is that it will put more pressure on the margins in personal lending and that should ultimately be good for us all. Lower rates for consumer borrowers. Higher rates for consumer lenders. I’ll take it.
Many of us take the time to exchange gifts with the special people in our lives. If you and yours have this tradition, and you are in serious debt consider whether you can use this time to pay down your debt.
Consider asking those that you normally exchange gifts with that you have a very close relationship with to contribute the money that they would normally spend on your gift towards your debt. Keep in mind that this will be a very sensitive topic.
Let the people you ask know how important paying down your debt is in your life.
Only ask if you are very close with the person you are asking. Some people might be offended by the request.
Respect their decision, whatever the conclusion and let your friends know you respect their wishes either way.
If your loved ones agree honor their gift by applying it as agreed and working hard to pay down the debt.
Be thankful for the blessing you receive. With hard work you will overcome your debt burden.
Thanks to Money, Matter and More Musings for putting the Carnival of Debt Reduction up at his new location. Of course you can check out my article on how to drive down your debt with a simple impulse control practice.
Thanks to Brian Gongol for putting together an interesting format for this weeks Carnival of the Capitalists. My contribution is my thoughts about Lennar’s “Everything’s Included” and misleading customers.
The maximum contribution limit for both traditional and Roth IRAs in 2006 is $4000. Of course with the IRS there are always exceptions. You can’t exceed your income. You can contribute and extra $1000 dollars if your over 50 (not all the exceptions are bad!).
A lot of people are precluded from using IRAs because of there “high” incomes. If you have an income over $50,000 a year or you already have a retirement plan from work check out the more detailed limits and phase outs that apply in these cases.
Find out how much you can contribute and make very effort to get this money put away to save a tremendous amount of tax expense.
Do you have trouble paying off your debts because you keep spending try this tactic. Only carry $20 cash with you. Only cash. No credit cards and no debit cards.
You will have limited your ability to act on your impulses. Little changes like this can help you get control of your finances.
The best place to get deals on computers and software was swap meet style shows. There were so many “great deals” that I found I had to set a budget beforehand and only bring the money I could afford to spend. Why? Our impulses can be powerful.
Leave your credits cards at home and you’ll find it easier to pay down your debt and overcome your impulses.
Index funds are a valuable tool but they are not the be all, end all of investing. People like them for the low fees. Low fees are great. People enjoy the ease that they bring to investing. I like easy. People point out that many mutual funds don’t perform as well as the many index products (while charging fees). This is both true and shameful.
You should look at any investment by its returns less fees. If an investment has higher total returns that is a good indicator that it is a better investment (even this is not universal, you also need to factor in risk among other things).
Here is an example.
The Vanguard 500 fund (VFINX) is an S&P 500 index fund. It has pretty much matched the S&P with an 11.72% annualized return over the last three years. It has a 0.18% annual fee.
The Janus Contrarian fund (JSVAX) is a large cap fund that is managed. Its annual fee is 0.96%. It has an impressive 22.11% annual return.
As you can see over this time frame the Janus fund wallops the Vanguard fund with returns net of fees 21.15% versus 11.54%.
I don’t own either fund and I’m not recommending either of them. I would say you can clearly achieve better returns than an index fund.
I wish you great returns!
The 2006 SEP IRA contribution limit is $44,000. Of course this is further limited to 25% of an individual’s 2006 compensation. Another key restriction for you lucky folks is that only the first $220,000 dollars of compensation can be counted. You can read more from our friends at the IRS.
For those of you that don’t know a SEP IRA is a retirement plan that costs much less in administrative fees than a 401k. For this reason many small businesses choose to use them.
If you managed to set aside $44,000 towards your retirement this year I extend to you a big wooo-whooo. Congratulations. For those of you that didn’t take heart in the little steps, consistent progress leads to huge results!
I frequently need to make large numbers of long distance calls. I switched a few years back to a flat rate unlimited long distance plan with a normal carrier. I recently noticed the rate on the plan inching up to where it is just shy of $60 a month.
I’ve had seen the Vonage adds and, after checking them out signed up. Their $25 plan seems to run about $29 after taxes and fees. I received the package and set it up. I’ve made and received a few calls since and I have to say I was very impressed with the quality.
Some thoughts:
- Saving $360 a year is a good deal.
- I didn’t switch over my phone number right away because I want to make sure it works well before taking that step.
- You have to have high speed internet (DSL or cable modem to use the service).
- Voange has lots of cool (and free) features that I'll cover later.
I’ll update you as time goes on but it looks like I’m well on my way to saving $360 dollars a year.
If you have bill pay and you have debt you have a great way to get out debt. Setup a weekly bill pay of $7 dollars to your highest rate debt. Keep making your regular payments.
Bill pay makes the task effort free once you set it up.
By having regular and manageable extra payments you’ll pay down your debt years faster. Invest in your debt free future!
We’re in Debt brings us this weeks Carnival of Debt Reduction. City Girl’s Financial Blog host this week’s Carnival of Personal Finance.
Of course I’d appreciate it if you’d check out my article on renegotiating your credit card rate and leave your thoughts and experiences.
Don’t Mess with Taxes does a great job on Decision 1040, the most recent Tax Carnival. If you have the time read my contributions on contributing to your 401k and 2006 401k limits.
I occasionally visit new home developments to keep an eye on trends. Recent I went to a development by Lennar where they were touting their Everything’s Included® program.
Only it is just a title. Everything was clearly not included. I don’t expect them to include the furniture or the drapes. But I was surprised to see flooring, counters, fixtures, molding and structural features excluded. Why all the focus on the words “everything’s included?” It seemed as if everywhere I looked there was a sign that something or another wasn’t included.
For the most part these items are not typically included by other developers either. Nor did they fool me. I was simply appalled that Lennar would try and mislead me. It reflects very poorly on them and makes me think they will not deal honestly with me in other ways.
To Lennar: try “free upgrades” or “many upgrades included”. When you say “Everything’s Included®” and it is not you look silly or deceitful depending on the individual. (Even with the registered trademark)
To all businesses: Play it straight, provide a value and promote that value. Don’t even get close to misleading your customers.
I saved four dollars today without trying. I stopped into Vons, a local supermarket, to pick up some shampoo. I normally wouldn’t buy this at a supermarket as their prices are simply too high. Today I had little time and so I bit the bullet and grabbed the $8.39 shampoo.
At the register I entered my card number and the cashier was quite excited. “You saved four dollars!”
Vons has a program were every twelve dollars you spend on health an beauty items until 12/5/06 you get four dollars off. At five dollars this is probably a little bit of a savings of Target or Wal-Mart. The receipt says I have another $7.26 towards my next $12.
Look out for this and other similar loyalty programs at place where you have a club or membership card.
If you are paying more than ten percent on your credit card balances you have to get the rate down. Your first step will be to try transferring your balance to another card with a lower rate, preferably 0.
You may have credit so damaged that you can’t get a new card. In that case call your credit card companies and ask to be put on a payment plan with a lower interest rate.
Credit card companies may well turn you down, but you don’t know until you ask.
Here are some points to remember:
• If you’ve been a long time member remind them of that.
• If you carry a balance and pay on time your are likely a profitable customer remind them of that.
As with all negotiations:
• Be polite, if the person you are speaking with has discretion you want them to use it in your favor.
• If you are not getting anywhere ask for a supervisor. The supervisor may be better able to help but the customer support person may not tell you that.
If you negotiate your rate down this will help you eliminate your debt much more quickly. Whether or not this works you should find a way to pay down your debt faster.
Good Luck!
I often want to vary the amount I’m willing to invest in a Prosper loan based on the final interest rate. I do have a life to live so I can always be there to place a last minute bid.
What do I do?
I split my bid into multiple bids. Say I see a promising loan at 12.5% with two days left. If I can beat 12% with this particular loan I’d like to invest 200 dollars. If I can only get 11% I still would like to invest 70 dollars.
I place two bids, the first bid for 70 dollars at 11% and the second big for 130 dollars at 12%.
This works well when the time period is very short as the interest rate is not likely to change by more than a couple of points. It is far less useful 5-10 days out as the rate may change by over five points.
The reason is the Prosper minimum of $50 per bid (and the fact that I am not a billionaire). You could place 12 bids at 0.5% intervals and go away to Hawaii for a week if you had enough money that you were willing to risk 600 dollars on one loan. Granted this is a pretty extreme case. But I do find myself wanting to bid 50-120 dollars based on the final rate in three or four steps and this can’t be done.
So, to the folks at Prosper, how about a bid add on feature where you can bid additional amounts at a higher rate on a listing where you already have 50 dollars invested at a higher rate?
For everyone else go ahead, use bid splitting and enjoy your time away from the computer!
If you have time read my other entries on Prosper.
The Festival of Frugality is up at Lazy Man and Money. You can check out my entry on how finding a way to set aside a dollar a day can be a rewarding way to pay down your debts faster.
The Carnival of Personal Finance is up at Its Just Money. There are a mountain of articles this week including mine on why I have to use credit cards.
Thanks to the editors for their hard work.
In 2006 you can contribute up to $15,000 to your 401k. Be careful as all the usual government caveats and restrictions apply.
One additional note for those of you in the age fifty and older club is that you may be eligible to contribute and extra $5,000 as a catch up contribution.
As the tax year comes to an end make sure you are at least taking advantage of your employer match. If you managed to max out your 401k then congratulations, that was hard but fruitful work. Taxes are the biggest expense for most people, setting aside $15,000 tax free is a phenomenal accomplishment.
For more details checlk out the IRS site.
Pizza Hut’s online ordering can save you money. How do I know? Last night I was ordering pizza to launch an evening of handing out candy to the kids in the neighborhood. When I got to the checkout the site asked me if I had any coupons.
I am not generally a coupon clipper and so I didn’t have any.
I did however notice a little button beside the question that let me view their current coupons. I clicked and, at the bottom of the page was one for two dollars off the pizza I was ordering. I clicked it and they took two dollars off my order. Very simple.
Always order your Pizza Hut pizza online. Always scan the coupons page when checking out. It is much easier than clipping coupons.