It’s hard to get through a week without reading about someone’s identity being stolen and their financial life literally ruined in a short period of time. Identity theft is relatively easy and sometimes the crime isn’t discovered until victims are several thousand dollars in the hole. We make it very easy for identities to be stolen; and sometimes freely give our personal information to would-be identity thieves.
Recently I was in line at the post office and there was a girl on her cell phone just a few spaces in front of me. She was talking rather loud, as most people on cell phones think they have to do. If I wanted to steal her identity, I could have because she made it very easy for me or anyone else within earshot of her conversation. In less than 5 minutes she blurted out her first and last name, home address, cell phone number, talked in detail about a few relatives, school friends, church, and I eventually got her place of employment from a casual glance at her id badge she was proudly displaying. With any two pieces of information, an enterprising identity thief (or debt collector, private investigator) can get the rest of what they need to know to become you and spend your hard earned money.
Keep your voice down
Not only is it beyond rude to impose your cell phone conversation on people nearby, you can go a long way towards protecting your identity by keeping the conversation to yourself. The only people around you who want to listen are those who are out to get some juicy piece of information. Always assume someone else is listening and will use your information to their advantage. Keep your voice down or excuse yourself to a more private location if you must give out some personal information on the phone.
Avoid displaying picture id’s, security badges, name tags
I guess that some people are proud of where they work or maybe feel important if they wear their picture id’s and security badges outside of work. Make it as hard as possible for someone to find out who you are. If someone takes a look at you, with the intent of obtaining information you wouldn’t normally give out to strangers, and sees nothing, they’ll move on to a more vulnerable target.
Shred it all
Shred old receipts, bank statements, and any other personal information to keep from dumpster divers and your friendly neighborhood trash collector. Dumpsters are a gold mine for identity thieves. Old receipts, financial statements, and similar documents contain a lot of personal information which can be used. Shred these documents before you throw them away. I’ve watched my own trash collectors take a few seconds to see what they’ve put in their truck and rummage through it. I’ve never seen them take anything out of the trash and put if up in the cab for safe keeping but you are better off not giving them a reason to be nosy.
Use technology to your advantage
Spyware, adware, computer viruses, and a host of other things are out to get any piece of information about you. Just a simple software program (Norton AntiVirus or McAfee Security Center) can make you a difficult enough target that the majority of identity thieves will leave you alone and search for an easier target.
It really just comes down to common sense. Do what you can to protect yourself and be aware of your surroundings. A little prevention goes a long way to making our busy lives less complicated. Two days ago I was standing in line at the same post office and there was another girl on her cell phone directly in front of me. No matter how hard I tried I couldn’t hear what she was saying. She protected herself very well by just keeping her voice down and not drawing anyone’s attention.
Monday, July 24, 2006
Thursday, July 20, 2006
5 Best ways to improve your FICO score
Having a good credit score saves money in so many different areas of life – not just when you go to borrow money. Utilities, insurance companies and employers are just a few entities that may use your credit record to make a judgment about you. To be a trusted risk by the utility companies, get the lowest interest rates, lower insurance rates, and qualify for your dream job as a Wall Street money manager; be vigilant about doing everything you can to maintain the highest score possible in the 5 most important areas.
#1 – Be on time
35% of your score is based on your payment history. Paying off your accounts in full each month is best but if it’s not possible in a given month, then pay a little bit over the minimum payment….and pay it on time. This shows current and future lenders that you are committed to paying back what you owe.
#2 – Keep a low profile
Using all the credit that is available to you (max out all your credit cards) that spells trouble to current and future lenders. Maxed out credit lines make you look like someone on the verge of missing payments and eventually defaulting on loans. When that happens on any one of your accounts, all your creditors have option to close your line of credit without notice. Avoid this by using only 35% to 40% of your available credit. Doing this will keep your payments low and show current and future lenders that you have some self discipline in using credit.
#3 – Keep that old account open
If you have an old credit account that is still active and doesn’t cost you any monthly or annual fees, keep it open. You can achieve a higher credit score if you can show you have been using credit for long periods of time. Are you tempted to move amounts owed to other cards and close the account with a zero balance? Pay it off instead of constantly moving it around and closing accounts. Not only are you continuing to rack up interest charges and fees on that block of money you keep moving, you are hurting your credit score by piling up closed accounts and shortening your average account history.
#4 – Keep your search for new money short and sweet
Inquiries, inquiries, inquiries and more inquiries. Each one chips away at your score. Make a lot of them at once – car loan, refinance – and your score will take a dive that is hard to recover. Searching for money one loan at a time will demonstrate a restraint on your part and not make you look desperate to open new lines of credit.
#5 – Keep only a few cards open
Stop applying for those department store cards just to get the discount! Instead focus your purchases on a few of the big ones (Amex, Visa, Mastercard, Discover, etc.) that give you rewards or cash-back bonuses for your purchases. Most cards have a rewards program where you can earn miles for every dollar spent which you can then use for airline tickets, hotel points, magazine and newspaper subscriptions and more. The more you focus your efforts on cards that reward you soon you’ll be off on a vacation you don’t have to pay much (or anything) for so you can buy more stuff!
#1 – Be on time
35% of your score is based on your payment history. Paying off your accounts in full each month is best but if it’s not possible in a given month, then pay a little bit over the minimum payment….and pay it on time. This shows current and future lenders that you are committed to paying back what you owe.
#2 – Keep a low profile
Using all the credit that is available to you (max out all your credit cards) that spells trouble to current and future lenders. Maxed out credit lines make you look like someone on the verge of missing payments and eventually defaulting on loans. When that happens on any one of your accounts, all your creditors have option to close your line of credit without notice. Avoid this by using only 35% to 40% of your available credit. Doing this will keep your payments low and show current and future lenders that you have some self discipline in using credit.
#3 – Keep that old account open
If you have an old credit account that is still active and doesn’t cost you any monthly or annual fees, keep it open. You can achieve a higher credit score if you can show you have been using credit for long periods of time. Are you tempted to move amounts owed to other cards and close the account with a zero balance? Pay it off instead of constantly moving it around and closing accounts. Not only are you continuing to rack up interest charges and fees on that block of money you keep moving, you are hurting your credit score by piling up closed accounts and shortening your average account history.
#4 – Keep your search for new money short and sweet
Inquiries, inquiries, inquiries and more inquiries. Each one chips away at your score. Make a lot of them at once – car loan, refinance – and your score will take a dive that is hard to recover. Searching for money one loan at a time will demonstrate a restraint on your part and not make you look desperate to open new lines of credit.
#5 – Keep only a few cards open
Stop applying for those department store cards just to get the discount! Instead focus your purchases on a few of the big ones (Amex, Visa, Mastercard, Discover, etc.) that give you rewards or cash-back bonuses for your purchases. Most cards have a rewards program where you can earn miles for every dollar spent which you can then use for airline tickets, hotel points, magazine and newspaper subscriptions and more. The more you focus your efforts on cards that reward you soon you’ll be off on a vacation you don’t have to pay much (or anything) for so you can buy more stuff!
Tuesday, July 18, 2006
FICO: The 5 categories that make up your FICO score
The Fair Isaac Corporation is the company that originated the FICO® score which is widely accepted as the standard measure of credit risk. It is a scoring model that over 2,600 businesses worldwide use to determine your credit worthiness. These businesses include banks, lenders, insurance companies, retail stores, telecommunications companies, and government agencies. Throughout our lives, we’re going to be involved in one way or another with one or all of these institutions, so it will be easier in the long run if you pay attention to your credit record and maximize your FICO® score.
The higher your FICO® score, the easier your financial life will be. Knowing these 5 categories will enable you to maximize your score, be viewed as a good credit risk, achieve the lowest interest rates (saves you money) and maximum lines of credit when you need to borrow money.
#1 – Payment History
Payment history makes up 35% of your total score. Any open line of credit you have will appear on your credit report and if all lines of credit (credit cards, installment loans, retail cards, etc.) are paid and current then you have nothing to worry about here. If a payment on any of your open lines of credit falls outside the 30 day grace period, your credit score could fall as much as 100 points. Yes, you can bring it current again but it takes longer for your score to regain the points loss than it does to lose the points in the first place.
#2 – Amounts Owed
How much you owe to any creditor will have an affect on your score. The question is, what will affect your score positively? On revolving credit accounts, a good rule of thumb is to never use more than 35% of the available credit. If your credit card has a limit of $5,000 then only use $1,750 of it at any given time. This shows potential lenders that you are a disciplined user of credit.
#3 – Length of Credit History
Are you a recent college graduate and just got your first credit card? Maybe you’re a longtime user of credit with established accounts. Throughout your financial life, establish credit lines with the knowledge that the longer good lines of credit are open, the better your score will be. Think twice about canceling old accounts because it may hurt your score. Also, use them periodically to keep them active. Potential lenders like to see that you have a high degree of stability when considering you for a loan.
#4 – New Credit
Tempted to apply for the retail card to get the discount at the counter? The cost of multiple inquiries for different types of credit has the potential to hurt your score. Keep the credit lines to a minimum by passing up the temptation to “save money” at the counter by opening a new credit line. In the long run, it may end up costing you money by giving you a lower credit score and lenders will charge you a higher interest rate on future loans.
#5 – Types of Credit Used
Not all credit is good credit. You can get department store cards, gas cards, consumer finance accounts, mortgages, home equity lines of credit, and the list goes on and on. The best types of credit to have are “major” credit cards like Visa, MasterCard, American Express, or Discover and a mortgage. Stay away from department store cards and gas cards because they usually lead to having too many lines of credit open and lower scores.
The higher your FICO® score, the easier your financial life will be. Knowing these 5 categories will enable you to maximize your score, be viewed as a good credit risk, achieve the lowest interest rates (saves you money) and maximum lines of credit when you need to borrow money.
#1 – Payment History
Payment history makes up 35% of your total score. Any open line of credit you have will appear on your credit report and if all lines of credit (credit cards, installment loans, retail cards, etc.) are paid and current then you have nothing to worry about here. If a payment on any of your open lines of credit falls outside the 30 day grace period, your credit score could fall as much as 100 points. Yes, you can bring it current again but it takes longer for your score to regain the points loss than it does to lose the points in the first place.
#2 – Amounts Owed
How much you owe to any creditor will have an affect on your score. The question is, what will affect your score positively? On revolving credit accounts, a good rule of thumb is to never use more than 35% of the available credit. If your credit card has a limit of $5,000 then only use $1,750 of it at any given time. This shows potential lenders that you are a disciplined user of credit.
#3 – Length of Credit History
Are you a recent college graduate and just got your first credit card? Maybe you’re a longtime user of credit with established accounts. Throughout your financial life, establish credit lines with the knowledge that the longer good lines of credit are open, the better your score will be. Think twice about canceling old accounts because it may hurt your score. Also, use them periodically to keep them active. Potential lenders like to see that you have a high degree of stability when considering you for a loan.
#4 – New Credit
Tempted to apply for the retail card to get the discount at the counter? The cost of multiple inquiries for different types of credit has the potential to hurt your score. Keep the credit lines to a minimum by passing up the temptation to “save money” at the counter by opening a new credit line. In the long run, it may end up costing you money by giving you a lower credit score and lenders will charge you a higher interest rate on future loans.
#5 – Types of Credit Used
Not all credit is good credit. You can get department store cards, gas cards, consumer finance accounts, mortgages, home equity lines of credit, and the list goes on and on. The best types of credit to have are “major” credit cards like Visa, MasterCard, American Express, or Discover and a mortgage. Stay away from department store cards and gas cards because they usually lead to having too many lines of credit open and lower scores.
Wednesday, July 12, 2006
The #1 Way to Turn Bad Debt Into Good
A good definition of bad debt is financing something you consume. If you finance something you consume, you have to feed it, or it loses value over time (cars?) you can put it into the bad debt category. There is an excellent way to turn these bad debts to good debt.
Think of all the purchases you make in a week. Groceries, eating out, gas for the car(s), movie tickets, toys for the kids, fountain drinks at the convenience store, coffee drinks at your favorite coffee bar, and the list goes on and on. Some of these purchases are paid for with cash, but most are put on the plastic. Not such a bad idea until the bill is due. That’s when you get to pay a finance charge for all those espresso drinks you bought over the last few weeks.
In today’s society, more and more of our purchases are put on plastic of some kind – debit card, credit card, gift card, etc. We are becoming a cashless society and you can position yourself to benefit from this ongoing trend.
Stop carrying cash
Once your cash is gone, it’s gone forever. Once you spend it, it can’t earn interest for you. Instead, it earns interest for the person you gave it to. If it’s stolen you can’t replace it. Hopefully you earn some kind of interest on your checking account. If not, it’s time to find a bank that will pay you for keeping your money on deposit with them. Keep your cash in the bank so it can continue to earn interest. Credit cards can be cancelled in a few moments and you are not responsible for unauthorized purchases.
Put all your purchases on a credit card
Putting all your purchases on a credit card gives you some notable benefits. First of all is that you are using the banks money today to pay for the things you need. That leaves your own cash in your own account where it can work for you earning interest. Carrying less cash makes you less of a target for theft. Since credit cards offer various rewards programs, the more you spend on your card, the more rewards you earn.
Pay off your card
That is easy to say but difficult to do. The number one way to turn bad debt into good is to pay off your card each and every month. That requires some discipline on your part but will pay off in the long run in two ways. Your cash stays in the bank to earn interest, and you build your credit score by paying you bill in full each month.
Tuesday, July 11, 2006
4 Kinds of Good Debt
Debt is a lot like cholesterol. Some debt is good and too much bad debt will make your life miserable. Through our financial lives, it’s only the good debt that we want to allow on our balance sheet. Good debt improves our lives over the course of time. Here are 4 types of good debt.
Real Estate
Real estate is the cornerstone of much wealth in the US. For most of us, our homes will be the largest and most valuable asset we’ll own. Unless you’ve “come into money” chances are good that you are going to have to take out a mortgage to pay for your home. This is considered good debt because you’re buying an asset that should increase in value over time.
Investment Real Estate
Right along with your home, owning rental property can be very lucrative. If you have the chance to purchase a rental property and then rent it to someone for a monthly payment larger than your mortgage payment, jump at the chance. That’s a great way to build wealth and generate income.
Education
It is impossible to put a value on a college degree. With a college degree, the money you earn over your career will eventually make the cost of school pail in comparison. There are always going to be stories about people without college educations “making it big” somehow. Those people are the exception rather than the rule. Get as much education as you can. You’ll earn more as a result.
Cars
The thought of borrowing money to pay for something that begins to lose value as soon as you have the keys in your hand seems to go against the “good debt” principal. However, we need a car to get to our jobs, and get other things done in our daily lives. If you buy your car the right way, it can be an asset to you and not a big financial drain. When you buy a car, go for the largest payment you can over a two year period and look for a car that will fit that schedule.
At ABCMoneySource our mission is to empower YOU with understanding on money matters and quickly find MoneySources to finance your dreams..... All from the comfort and privacy of your computer.
Real Estate
Real estate is the cornerstone of much wealth in the US. For most of us, our homes will be the largest and most valuable asset we’ll own. Unless you’ve “come into money” chances are good that you are going to have to take out a mortgage to pay for your home. This is considered good debt because you’re buying an asset that should increase in value over time.
Investment Real Estate
Right along with your home, owning rental property can be very lucrative. If you have the chance to purchase a rental property and then rent it to someone for a monthly payment larger than your mortgage payment, jump at the chance. That’s a great way to build wealth and generate income.
Education
It is impossible to put a value on a college degree. With a college degree, the money you earn over your career will eventually make the cost of school pail in comparison. There are always going to be stories about people without college educations “making it big” somehow. Those people are the exception rather than the rule. Get as much education as you can. You’ll earn more as a result.
Cars
The thought of borrowing money to pay for something that begins to lose value as soon as you have the keys in your hand seems to go against the “good debt” principal. However, we need a car to get to our jobs, and get other things done in our daily lives. If you buy your car the right way, it can be an asset to you and not a big financial drain. When you buy a car, go for the largest payment you can over a two year period and look for a car that will fit that schedule.
At ABCMoneySource our mission is to empower YOU with understanding on money matters and quickly find MoneySources to finance your dreams..... All from the comfort and privacy of your computer.
Monday, July 10, 2006
Do-It-Yourself Debt Management
Do-It-Yourself Debt Management is now made easier than ever in big part because of competition between financial institutions. Many checking accounts offer no minimum balance and free online bill pay, free transfer of funds between accounts, among other features in order to gain new customers and retain current ones.
Do-It-Yourself Debt Management is simple to achieve in the following 10 steps. All you have to do is follow a simple plan and monitor it from time to time. Before you know it, you’ll be out of debt completely. You’ll pay no credit counseling fees, no debt management or debt consolidation fees. s the process of combining all your monthly debt payments into one manageable monthly payment. This option is a little less stressful because there is only one day per month you have to remember to make a payment; and depending on your consolidation method, it could bring you lower interest rates so you can pay off debts quicker.
1. Make a list of all your bad debts – include “creditor” “amount owed” “minimum monthly payment” and “number of months to pay off” (divide the total owed by the minimum payment).
2. Rank each debt based on the number of months to payoff. Debt #1 will be that with the least amount of months to payoff. Debt #2 will be the next lowest number of months to payoff and so on.
3. Evaluate your income and spending habits and come up with an extra $150 to $200 per month.
Do-It-Yourself Debt Management is simple to achieve in the following 10 steps. All you have to do is follow a simple plan and monitor it from time to time. Before you know it, you’ll be out of debt completely. You’ll pay no credit counseling fees, no debt management or debt consolidation fees. s the process of combining all your monthly debt payments into one manageable monthly payment. This option is a little less stressful because there is only one day per month you have to remember to make a payment; and depending on your consolidation method, it could bring you lower interest rates so you can pay off debts quicker.
1. Make a list of all your bad debts – include “creditor” “amount owed” “minimum monthly payment” and “number of months to pay off” (divide the total owed by the minimum payment).
2. Rank each debt based on the number of months to payoff. Debt #1 will be that with the least amount of months to payoff. Debt #2 will be the next lowest number of months to payoff and so on.
3. Evaluate your income and spending habits and come up with an extra $150 to $200 per month.
- Take your lunch -- $5/weekday to eat out adds up to $100/month.
- Coffee – drink it for free at the office.
- Specialty coffee drinks – $4/day for a coffee drink for a month adds up to $80/month.
- Tobacco – Cigarettes cost approximately $23/carton. If you smoke 2 packs a day, that carton will last you 5 days. Your monthly cost of this habit is $138. Quitting would be best but if that’s not an option, cutting back will save you money on cost of cigarettes which can be put toward your debt plan.
- Check your other fixed monthly expenses to see if you can reduce them further and put the extra money toward paying off debts.
- Use these things for rewards for reaching milestones in your debt management plan instead of crutches to get you through the day. Pay off your debts with the extra money.
4. Open a separate checking account from your personal account(s) – needs to have free online bill pay, no minimum balance, and be able to accept funds transfers from your personal checking account. If you can get an interest bearing account with the above-mentioned features, that would be outstanding.
5. Determine the minimum amount you need to pay on each debt.
6. Set up an account transfer from your personal checking account to your bill pay account for the amount you came up with in step #5.
7. Set up your automatic bill pay for each creditor so that the funds leave your bank and arrive at your creditor a few days before the due date. Pay the minimum amount on all the debts numbered 2 through the end of the list.
8. On debt #1, pay the minimum plus all the extra cash you came up with in step #3.
9. Focus on debt #2 once debt #1 is paid off, using all the income you were using to pay on #1.
10. Repeat this process until all the debts on your list has been paid in full. Also, once all the debts are paid, leave the monthly transfer in place and make the money you’ve saved to this point work for you instead of the other way around.
The key to this plan is to not take on any additional bad debt, remain laser focused on paying off debts and using extra income you can come up with for the cause. At least once a month you should monitor your plan to make sure the payments are being made on time, and everything else is going according to schedule.
At ABCMoneySource our mission is to empower YOU with understanding on money matters and quickly find MoneySources to finance your dreams..... All from the comfort and privacy of your computer.Friday, July 07, 2006
Car Insurance - 4 Reasons To Update it TODAY!
In days past we used to get insurance from our parents insurance agent and just go with that. Now, it certainly pays to spend a few minutes doing an online insurance quote to see if you're getting the best coverage for the lowest cost. Here are 4 reasons to check your insurance coverage at least annually.
#1 -- Competition keeps rates reasonably low
There are many sites online now that can give you multiple quotes from multiple companies in just a few minutes. For most of these quote services, all you need is your name, address, and vehicle information to get a quote. The good part for consumers is that the more companies that offer quotes online, the lower the rates should stay. You know that companies check each other out online and make necessary adjustments. Yes, service when you file a claim has something to do with it, but most people are shopping purely on price.
#2 -- Depreciation: Why pay the insurance cost based on last years value?
Okay, you might not get much of a price break here but it doesn't cost you anything to check it out. The logic is clear though. If your car is worth less this year than it was last year (and most all of us can claim that), then you might be able to save yourself a few extra bucks this year on insurance.
#3 -- Job change
It's true, some companies will give a break to a biochemist but not your friendly neighborhood dogcatcher even if they drove the same type of car, lived next door to each other, and had identical driving records. Some auto insurance companies studied millions of policies over the past 3-4 years and concluded that certain occupations are less risky than others. It makes sense. Have you had a job change recently? You could be due a break on your car insurance.
#4 -- Education
The same insurance companies that will give discounts for certain occupations will also give even more discounts for higher education. Someone with no high school diploma will pay more for car insurance than will someone with their GED or even a more advanced degree. In most cases, you'll earn more if you have an advanced education. The insurance companies think (and probably have proof) that the more education you have, the less likely you are to be in a car accident.
You can get direct access to nationally recognized quote services through ABCMoneySource.com at the Car Insurance page. Check it out and see how much you can save.
#1 -- Competition keeps rates reasonably low
There are many sites online now that can give you multiple quotes from multiple companies in just a few minutes. For most of these quote services, all you need is your name, address, and vehicle information to get a quote. The good part for consumers is that the more companies that offer quotes online, the lower the rates should stay. You know that companies check each other out online and make necessary adjustments. Yes, service when you file a claim has something to do with it, but most people are shopping purely on price.
#2 -- Depreciation: Why pay the insurance cost based on last years value?
Okay, you might not get much of a price break here but it doesn't cost you anything to check it out. The logic is clear though. If your car is worth less this year than it was last year (and most all of us can claim that), then you might be able to save yourself a few extra bucks this year on insurance.
#3 -- Job change
It's true, some companies will give a break to a biochemist but not your friendly neighborhood dogcatcher even if they drove the same type of car, lived next door to each other, and had identical driving records. Some auto insurance companies studied millions of policies over the past 3-4 years and concluded that certain occupations are less risky than others. It makes sense. Have you had a job change recently? You could be due a break on your car insurance.
#4 -- Education
The same insurance companies that will give discounts for certain occupations will also give even more discounts for higher education. Someone with no high school diploma will pay more for car insurance than will someone with their GED or even a more advanced degree. In most cases, you'll earn more if you have an advanced education. The insurance companies think (and probably have proof) that the more education you have, the less likely you are to be in a car accident.
You can get direct access to nationally recognized quote services through ABCMoneySource.com at the Car Insurance page. Check it out and see how much you can save.
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