Funny Money Friday: Flushing money down the toilet

Money doesn't have to be boring! Each week, CreditBloggers.com takes a look at the lighter side of the personal finance world in a series called Funny Money Friday.

There are many ways to hypothetically flush your money down the toilet. Investing in penny stocks, leaving your lights on at home all day, avoiding comparison shopping...these are all fairly common ways to waste. But what if you wanted to be a little more literal?

Amazingly, there is a big market for money-themed bathroom accessories. (What this says about our culture is beyond me) Here are a few of the money accessories up for sale:

Coin Toilet Seat - For only $43.50 you can be the proud owner of this clear resin toilet seat embedded with nickels and dimes. Or upgrade for a dollar more to a seat that includes coins and a dollar bill.

Euro Toilet Seat - A lovely collage of euros on this toilet seat provides a "great finishing detail to any bathroom." Perfect for Francophiles and Europeans.

Money Toilet Paper - A great way to "show your wealth" at home. Although, at $6.75 a roll you are quite literally throwing money down the drain.

Money Shower Curtain - Lather up each morning while getting motivated for the business day ahead. This shower curtain is the perfect item to remind you that it's all about the Benjamins.

Money Soap - A real $1 to $50 bill comes embedded in each bar of soap. At $12 each, you could potentially make money while washing your hands.

Happy Friday!

Survey: What is your biggest financial challenge?

Everyone faces their own unique financial challenges. It could be that you struggle to make ends meet or that you are worried about your credit score. My own challenge is how to best to save and invest each month. Buying a home is an expensive proposition out here in San Francisco, so I have to come up with different ways to save and earn tax breaks. What is your biggest challenge?

This is the worst article about credit scoring

Read this article first please. Then this post will make so much more sense.

Ok, I realize that credit scoring is a complex thing.  Sure, it's not a recipe for spaghetti.  It's confusing, irritating and even infuriating sometimes.  But, come on Liz…get some of it right. 

Today I read that article by Liz Peek at the New York Sun.  I assume she knows something about the subject because surely anyone with the gumption to throw words out there on the world wide web would do some research beforehand so as to not look like a bonehead afterward.  My expectations are clearly far too high.

Anyway, her article is loaded with errors, small and large, important and irrelevant.  Here we go…

First off Fair Isaac removed the comma (,) between Fair and Isaac like 5 years ago.  Small and irrelevant I know, but really irritating for someone who takes this stuff as serious as me.  That's just sloppy on her part…and it's a sign of things to come.

Next she tells her readers that "your credit score…may determine whether or not you get that promotion you've been hoping for."  Someone please tell her that scores are not delivered to or used by employers.  Only credit data is used for employment purposes.  That would be a violation of the Fair Credit Reporting Act because any time a score is delivered, the recipient must make a firm offer of credit or insurance.  Large and important Liz.

Another biggie…"Typically, the three companies provide credit histories to FICO, who then issues a score."  No Liz, that's not what happens.  With that one you just let everyone know that you have no clue as to what you're talking about. 

FICO never takes possession of any credit reports from any credit bureau.  FICO designs and then builds the FICO scoring software WHICH IS THEN INSTALLED at each of the three credit bureaus on their own mainframes.  The credit bureaus are the ones scoring their own credit reports…with FICO's models.  Come on Liz!!  I know you're smarter than that.  You spelled almost every word right in your article.

She also asserts in her e-babble that FICO somehow arbitrarily scores your three credit reports differently on purpose.  Liz!!  Oh Liz!!!  Since you didn't bother to do a shred of research on the topic I'll give you an ignorance pass on this one.  The reason you have three different FICO scores is because you have three DIFFERENT credit reports. Different ingredients equal a different tasting meal.

Wow, you got the next one right.  That's right, age is a factor that CAN be included in your score.  But, here's the real test…can you tell us WHY it can be added?  And then for extra credit please tell us WHY it isn't added.  Then I'll be impressed.  You can't turn in your math homework without showing all of your work Liz.  Makes you look like you cheated. 

The rest of her article is an homage to the new VantageScore, which I posted about some time ago.  She commits a Cardinal Sin by interviewing the guy who is heading the company that markets and sells the VantageScore.  I'm just curious how he's getting paid since the score isn't being purchased by anyone larger than Billy Bob's Used Cars.  I know this for a fact because the sales reps from the credit bureaus have told me since VantageScore was released that they can't sell it because nobody wants it.

The guy's name is Barrett Burns, which may be incorrect since I got it from her article.  I'm sure he's a nice and very smart guy but right out of the gate it's not smart to tell everyone reading that your new world beater of a score is going to be "cheaper to lenders."  Shouldn't you sell the value of the score…and not try and get market share by giving it away?  Sorry, I'm getting side tracked.  Back to my good friend Liz.

This is pretty funny.  Someone is having a hard time with simple math.  She says that VantageScore "has a wider range, from 501 to 990."  Ok, so that's a range of 489 points, right?  990 minus 501.  FICO has a range from 300-850, as Liz correctly points out in the article.  That's a range of 550 points.  850 minus 300.  See Liz, that's what I mean when I say you need to show your math.  So, tell me again please, which score has a "wider range?" 

"Today, the new company is working to convince numerous regulatory bodies and lenders that their scores work and are accurate."  And, they're not too interested is what I'm hearing.  Liz, you need to ask Fannie Mae, Freddie Mac and the rating agencies what they think about VantageScore.  They're all who matters.

"The FICO scoring method was developed in the late 1990s, and since then a great deal has changed in the credit markets."  I think I just blew a fuse.  That might be the dumbest thing I've read today.  So, what was FICO doing in the 1950's when Bill Fair and Earl Isaac started the company?  According to Liz they were waiting 49 years to develop the FICO scoring method.

ACTUALLY, the FICO scoring method has been around since the mid 80s, even earlier if you want to include the technology of credit analytics.  Liz's comments may lead some people to believe that FICO just whipped out a credit score in 1999 and have been collecting their royalty checks ever since. 

FICO redevelops their credit scores every few years Liz.  All you had to do was talk to them and you could have saved face my friend.  They have a PR guy, Liz.  He's real nice.

Then she wraps it up with a delicious "who loves a monopoly anyway" insinuating that VantageScore is going to somehow become an on par player in the credit scoring world.  I'm sure Liz will let you know the minute that happens.

(John can be chastised, complimented or insulted in the comments section below or at AskJohn@credit.com.)

Daycare Costs Rival College Costs

When my daughter was born, I envisioned working from home with her peacefully napping nearby. When the reality of motherhood -- and a baby who never napped more on schedule -- set in, I realized I would need to find good daycare. I started with a good home-based daycare close to home. But then we moved to a new state and I went back to full-time work. We had to try try a variety of options including a home daycare, a YMCA-based program, a pricey private pre-school and finally, a wonderful pre-school where she stayed for three years.

The sticker shock of daycare was astonishing. While I felt fortunate to be able to afford it (especially since I was only paying one child's tuition), I quickly realized that if I were able to invest the money I
was spending on daycare ($525 a month on the low-end, $800 a month for the private school), we would likely have enough money saved for my daughter to attend any university with no problem!

As a personal finance writer, I've seen endless articles on how to afford to pay for college, but not nearly enough on how to  afford daycare. (How many articles have you seen telling newlyweds to start setting aside large sums of money for a daycare savings account, which they may need a lot sooner than college funds?)

Although my daughter is now old enough for public school, I can still empathize with parents writing those checks each month. And I was still thrilled to see the non-profit Consumer Action devote a substantial section of its recent fall issue to the issue of how to afford daycare.

I especially appreciated it when they pointed out that daycare often costs parents more than state-funded college tuition!

You can find helpful tips for finding more affordable daycare in the latest issue of Consumer Action News. Some of the tips include looking for subsidized care, using a Flexible Spending Account at work (count yourself lucky if you are lucky enough to have one), and making sure you take advantage of tax breaks for working parents.

I have no doubt that daycare costs are one of the reasons working families with young children are going deeper into debt, and are not able to pay for expenses like medical insurance. In fact, having children is the #1 predictor that a family will file for bankruptcy, according to Elizabeth Warren and Amelia Warren Tyagi in their provocative book The Two Income Trap.

We must do better for children and their families. Daycare is a tough, demanding job and good providers deserve to be paid well for this important work. How about more programs to fund at-home daycares run by parents who want to stay home with their own children? Or moving to a model such as the one voters choose in Florida with a subsidized part-time pre-K program available to all four-year olds, regardles of family income?

Have you had to juggle your finances to pay for daycare? Have you found help getting affordable daycare? Join our discussion by adding your comments.

Getting ready for car buying season

Car buying season is just getting underway. The words "model year-end clearance" are popping up in car ads and consumers are starting to think about trading in their old vehicles. Car buying season traditionally runs from September through December each year.

If you are thinking of buying a new car before the end of the year, now is the time to get started. Here are some helpful steps to get you ready for car buying season:

• Check your credit scores - Your credit score plays a major factor in determining your auto loan rates. Check your credit score early to see where you stand. If you spot an inaccurate or fraudulent record, work on getting it resolved right away.
• Save up a down payment - Even saving just a few hundred dollars can reduce the amount you need to borrow and save you a lot of money. If you are planning to trade in your car for this amount, try selling it independently first. You'll usually get a higher price this way.
• Check the loan rates - Use your credit score to see what kind of loan rates you may be able to receive. Most online lenders, banks and dealers will give you a quick quote estimate if you tell them your score and how much you want to borrow. Calculate your best financing option before you hit the lots.
• Research online - Car buyers have access to amazing resources thanks to the internet. Visit sites like Kelley Blue Book and Consumer Reports to get important information on cars that fit your budget.
• Shop on the last Saturday of the month - If you are buying from a dealership, plan to shop on a Saturday morning at the end of the month. This is when dealers will be the most eager to make you a deal.

You can read more about getting ready for a vehicle purchase in the special "Buying a Car" section of Credit.com.  Are you planning on buying a call this fall? Share your tips, questions and feedback in the comments section below.

Jobs and the Housing Market

I have always felt that the health of any housing market was dependent upon the number of jobs that were being created, or lost, as the case may be.  The Southern California real estate market went in the tank in the early 1990's because of the loss of 300,000 jobs in the aerospace and construction industries.

Lots of Northern California counties did not implode during the dot com crash a few years back, but in Santa Clara County, the loss of all those jobs in Silicon Valley had a terrible effect on real estate values until the employment came back!

I hear that small towns in the Mid-West have attracted new small businesses.  Properly so as I think that a lot of people will get fed up with the pollution and congestion in urban areas and will move to places where small-town ethics are alive and well.  But there is a problem.  In a town that had static or declining population, there aren't any extra houses to go around. When you create 50 jobs, someone is going to have to go there and build 50 new homes.

So if you are concerned about the health of the housing market in your area, like if there’s a bubble or not, take a good look at how many jobs are being created. 

Funny Money Friday: Early American Credit Card

Money doesn't have to be boring! Each week, CreditBloggers.com takes a look at the lighter side of the personal finance world in a series called Funny Money Friday.

It's easy to forget that credit cards are a fairly recent addition to American culture. The whole thing got started back in the 30's and 40's with department store charge cards. The first general purpose credit cards weren't issued until the 1950's by Diner's Club, Bank of America and American Express. For this week's Funny Money Friday, we're taking a look back at some of the ancestors of the modern credit card:

Charge Plates - Issued by department stores to customers with established accounts. One charge plate from a store called Capwell's advertises: "This card will be honored at Capwell's under regular credit procedures. Please use this plate when making purchases as it will identify you quickly, speed your purchase and assure accuracy. For your protection if this card is lost or stolen, notify Capwell's credit office immediately."

Metal Credit Cards - Sort of a hybrid of the metal charge plates and modern plastic credit cards. This example is from Sears. Department stores also often issued small metal tokens that worked as charge cards, a precursor to the keychain credit card.

Paper Cards - Paper was a lot easier to carry in your wallet but wasn't as durable as the metal plates. This example is a Shell Gasoline charge card from the 1930's. Check out the back side of the card for a great historical example of credit card "fine print."

Plastic Cards - Plastic credit cards became popular in the 1960's but they still were not uniform in shape or design.

Modern Credit Cards - The shape and features we now recognize became widespread in the 1970's. Still, the first electronic terminal would only be developed in 1979 to replace paper deposit slips. Security holograms started appearing on cards in the 1980's and computer chips in the 1990's.

We've come a long way from these metal and paper credit cards to the magnetic and plastic cards in use today! In another few years our plastic cards will probably be obsolete themselves. Already, many cards only need to be waved over the machine instead of swiped. And in Japan cell phone chips have become the trendy way to pay. 

What do you think the credit card of the future will be like? Share your feedback and ideas in the comment section below. Happy Friday!

Getting credit card revenge without damaging your score

One of my friends emailed me last night with this question about how to best punish a bad credit card company:

Is it bad for your credit score to close a credit card? I only have 2 cards total...and I want to cancel one of them. 

Here's why I want to close the card: the customer service guy ENRAGED me.  A few days ago I was thinking "wow, I don't think I've received a statement in a couple of months."  I called and found out that the idiot creditor that changed my address put down "Main" Street and not "Marin" Street when I moved a few months ago.  It's definitely their fault, I obviously never said I lived on Main Street. 

Despite all this, I was only one week late with my payment. The credit card company won't waive the $39 late charge and the finance charges.  I have never had finance charges in my life!!!  Can you believe that?  And the rep wasn't even apologetic and wouldn't even waive the fee to let me pay over the phone!

I have been a valued cardmember, whatever that means, for 8 years and always paid on time.  This is how they treat me?  So, I want to close the account. What do you think?

This is a pretty common question I'm asked. People want to exercise their consumer rights when they are mad with a company. Closing your account seems like a logical way to punish your creditors, but it could end up hurting you a lot more than it hurts them.

It is very bad for your credit to close a card. It is especially bad to close one of the oldest credit cards or one of only a few credit cards on your report. Closure can shorten your credit history, throw off your balance of accounts and reduce your amount of available credit. All three changes result in damage to your credit score.

Unless the credit card has an expensive annual fee, just cut the card up and leave the account open. The unused balance is good for improving your revolving debt utilization and credit score. Be sure to check the account once in a while even after you've closed it just in case. You wouldn't want a forgotten fee or fraudulent purchase to damage your credit while you're not looking.

As for the late fees, don't give up on having them removed. Call again and ask to speak to a manager or the retention department. Tell them that you've been a good customer and that if they don't resolve the issue you will close your account immediately. If they still ignore the issue, then you should just cut up the card without closing the account.

When Life Throws You (or Someone You Love) a Curve Ball

Help Is a Quick Call Away
Someone I'll call George, who has been disabled for a decade and struggles to make ends meet in the best of times, posted this to an online discussion group in my community:

"I just had a leg amputated and am now in rehab. All I'm getting when I leave is a wheelchair and a shower chair. I need a ramp built so I can get in my home but I don't have any money for it. They gave me some numbers for possible help with a ramp but they didn't work out. Does anyone have any ideas? Any help would be greatly appreciated!"

It nearly broke my heart! So I began doing some Internet research, looking for a program or organization that'd help. Pretty much all I came up with was general contact info for various government agencies, such as the departments on heath and aging, as well as listings of nonprofit organizations.

I wanted a way to cut through the bureaucracies to get George a ramp. Oh yeah, it was Sunday night. Not even a chance of someone at an agency responding to an email or phone call. Just before I threw up my hands in frustration, I remembered 2-1-1.

What's 2-1-1?
This three-digit phone number operates as a one-stop information and referral service in many communities, steering callers to appropriate government agencies and nonprofits that work in health and human services. It hadn't dawned on me that 2-1-1 would be available in my neck of the woods, which is fairly off the beaten track. But much to my surprise, even out here, folks can get help 24/7. By the end of this month, it's expected that 185 million people will have access to 2-1-1 in 40 states, Washington, DC, and Puerto Rico.

First launched in 1997 by United Way in Atlanta, 2-1-1 is a great place to turn for help in crisis intervention and in simply cutting through the dizzying array of agencies, hotlines, and hassles whenever you're looking for a hand in your community. Call 2-1-1 if you need a referral to: food banks, shelters, health insurance programs (including those for children), support groups, counseling, drug and alcohol intervention and rehabilitation, Medicaid and Medicare, and medical information lines.

Do you need financial assistance or job training? The folks at 2-1-1 will let you know what's available in your community. Ditto for education programs, adult day care, Meals on Wheels, respite care, home health care, transportation, childcare, Head Start, after school programs, family resource centers, mentoring, tutoring, and protective services.

Does 2-1-1 Deliver for George?
I didn't want to just give George the 2-1-1 number without knowing if he'd benefit, so I called and described his situation. The operator didn't find a magic ramp-builder for George, but she did ferret out an organization I had some questions about and said a supervisor would get back to me the next day. Much to my surprise, I heard from Melissa, the supervisor, first thing Monday morning!

It was a zoo here then, and before I got around to returning her call, she called me back. Now I call that service! Melissa had done some research and came up with four concrete options for George – including two local groups that might actually build the ramp as well as two agencies that could help George make sure he gets all the benefits he's entitled to and coordinate all the care he needs. She had the phone numbers and hours all ready for me.

Far, far away
While Melissa was talking, I kept thinking how comforted I would have been if George were my dad, living clear across the country in that predicament. If your parents need a hand and you're not handy, you can search the 2-1-1 system by simply entering their zip code. You'll get the number you can dial to connect directly with the 2-1-1 information and referral service near your folks.

I told George what I found out, and we'll know soon enough if 2-1-1 pans out for him. I'll keep you posted. In the meantime, have you ever called 2-1-1? How did it work out for you?

Lenders Promote Homeownership in a Spanish Soap Opera

Between Talk like a Pirate Day and this press release, it seems like every day is Funny Money Friday this week!

This is one of the weirder real estate stories I've heard recently: Freddie Mac, Bank of America and Bank of Texas Mortgage have collaborated to create a Spanish soap opera that promotes financial education. This "edutainment" show is called Nuestro Barrio and will start broadcasting next week in Texas, Florida, Georgia and Arizona:

Nuestro Barrio subtly spreads educational messages in a culturally-sensitive manner. Educating consumers about smart credit choices, helping them understand the importance of building and maintaining good credit, and demystifying the homeownership process will empower them with the skills and information necessary to get on the path to homeownership.

I am wholeheartedly for educating consumers about smart credit choices (I am a credit blogger after all) but something seems really fishy about this whole idea. First of all, Freddie Mac and these banks aren't just doing this out of the goodness of their hearts. They certainly have a vested interested in promoting borrowing and this relationship isn't fully explained on the show's website. Secondly, is this "subtle" telenovela going to be watchable at all? The episodes read like bad after school specials on personal finance:

Fedi receives his credit card statement and sees firsthand the consequences of using his credit card irresponsibly and is informed that he should pay off his debt before it grows larger. Javier opens a checking account and a savings account. Miguel's real estate agent declines to show him a house in a neighborhood he prefers, and he learns that he can protect his rights by alerting the local Fair Housing agency. A reputable real estate agent explains how a former restaurant owner went bankrupt after failing to use good accounting practices.

This show covers all the bases! The first 13 episodes include lessons on insurance, loans, banking, credit scores, credit cards, predatory loans, housing counselors, car loans, check cashing, college, real estate agents, debt, fair housing, bankruptcy, diabetes, racism, unemployment, foreclosure, debt counseling, budgeting and self esteem.

What do you think about Nuestro Barrio? Is it a cool way to promote financial education or weird  propaganda from financial institutions? Share your feedback in the comments section below!

Credit Tips for National Talk Like a Pirate Day

Ahoy mateys! September 19th is thar official, national "Talk like a Pirate Day." Landlocked buccaneers can celebrate by reclaiming some of their doubloons and fight agains' financial urchins with these thar tips:

• Get yer junk mail to walk the plank - How'd ya Jacks like to come home to a mail box as empty as ship's keel? One two minute phone can can dramatically reduce the number of preapproved credit card offers you'll receive. Call 1-888-5-OPT-OUT or go online to OptOutPrescreen.com.
• Tell identity thief scallywags to eat yer peg leg - Most consumers would rather kiss a weevil than check their credit reports but it is one of the jolliest ways to avast identity theft.
• Blow yer credit card limits up - Do the swashbucklin' thing and call up yer creditors to demand a credit limit increase with no scurvy dog credit checks. If you've been a good matey, they be obligin'. This can give your credit score a hearty boost.

Shiver me timbers! If yous sprogs follow these three steps yous can avoid a trip to Davy Jones' Locker! Yo ho ho and a bottle of rum to ya! 

Survey: How do you pay for vacations?

The holidays are just around the corner and many people are starting to think about taking vacations. I'm starting to plan a trip to Thailand myself! I've been saving money each month that I'll use to pay for this big trip. But not many people finance their travels this way. Credit cards, even with their 3% currency conversion fees, are a popular way to pay for a vacation. How do you plan to pay for your next trip? Take our online poll!

Liar, Liar, Pants on Fire!

I don't know how many of you remember this little saying which was common when I was a kid.  It's been a long time since I heard anyone say it so perhaps the saying is out-of-fashion.  Lying certainly isn't. I was reminded of this when we were told about a particularly egregious event where a client correctly figured out he was being lied to by his agent in a transaction

My belief is that lying is widespread in the real estate and mortgage businesses. This observation is shared by every industry professional with whom I have ever discussed this topic.  Indeed, it is a feeling shared by a large percentage of the population as well. 

The folks at Harris Interactive regularly poll the public on a wide variety of topics and recently they asked about how much people trusted various professionals.  Healthcare folks like doctors and nurses came out on top, as I believe they should.

Real estate agents, however, were second from the bottom, just above stockbrokers. From what I know, homebuyers are right. In spite of the fact that the National Association of Realtors says, "Each one subscribes to a strict code of ethics," I have my doubts.  When I mention this to others in the industry, they all laugh because they can easily think of people in their offices who believe that telling the truth may be convenient sometimes, but is not always necessary.

Bottom line, you are just plain foolish of you don't check out the past behavior of real estate agents and mortgage loan officers by getting references form their three most recent client and calling them to verify if they are truth-tellers.

Funny Money Friday: World's Ugliest Credit Card

Money doesn't have to be boring! Each week, CreditBloggers.com takes a look at the lighter side of the personal finance world in a series called Funny Money Friday.

Customization and design are the name of the game in today's credit card industry. You name it, there is a credit card out there with a picture of it on the front. And some of those credit cards ain't pretty! Here are some of our picks for the world's ugliest credit cards:

Trump Card - Uggg! Platinum on black with lots of "class" to go around. Was it designed to look like an 80's limousine? Don't expect people to be awed when you bust this baby out to pay!

Beanie Baby Card - This credit card design is so chock full of beanie babies that you can't even make out you credit card number. Great for preventing shoulder surfing!

Hello Kitty Card - With sparkles! Completely not geared toward the youth market at all. What's next, a Barbie credit card?

Harrah's Casino Card - Nothing says "financial responsibility" more than a credit card for gamblers with gold poker chips on the front.

  Aussie MasterCard - This Australian credit card is purple and rounded...Like a credit card version of Barney.

Do you have an ugly credit card? Share your picks for the world's ugliest credit cards in the comments section below. Happy Friday!

Comparing American Spending to the Rest of the World

An interesting report was released earlier this week by ACNielsen. The study looked at American financial behavior, feelings and spending habits compared to other countries.

Surprisingly, American's are the second ranked country for consumers who report being "strapped for cash." 22% of our consumers reported having no cash to spare after covering their basic living expenses. Only Portugal exceeded this with 23%. The next highest percentage was 17% for the Netherlands and the UK.

The study also looked at how Americans spend the small amount of spare cash we may have. Again, I was pretty surprised by the results. Most US consumers reported that they would spend spare cash on paying off debts (41%) or building savings (38%). Most global consumers reported that they would use spare cash for savings (40%) or vacations (34%).

"While Americans are notorious for overspending and building debt, these findings show a desire for financial responsibility when it comes to discretionary income," said John J. Lewis, President & CEO, ACNielsen U.S. "Perhaps because the idea of living from paycheck to paycheck is so prevalent, consumers who have a little extra cash would rather use it to shore up their finances than spend it right away."

Does this survey accurately represent your financial situation? Do you have spare cash each month? Do you use your leftover money to pay off debts and build your savings? Share your feedback in the comments section below.

Viruses and Sypware Cost Us Big Bucks

Grrr....I just spent a morning clearing a stubborn virus off my computer. What a waste of time!

But, hey, I am thankful I caught it.

After crashing a computer a couple of years ago due to unchecked spyware (over 125 pieces of spyware, according to the computer repair guy) I now run a daily virus and spyware check using an antivirus program -- on both my desktop and laptop. I also use a second free spyware program to sweep daily for anything the other might have missed. The total cost for the antivirus programs run me about $100/year.

But I can't afford not to be vigilant and neither can you.

Thanks to those annoying, and sometimes dangerous, viruses and spyware, American consumers spent around $8 billion for computer repairs, parts, and replacement over the past two years. That's according to the 2006 Consumer Reports State of the Net, the third annual survey of online activity and threats, conducted this spring by the Consumer Reports National Research Center. They warn that an estimated 2.6 million households bought new computers because of virus infections, while another million had to replace their computers after spyware infections in the past six months. (Clearly, I am not the only one!)

It's important to realize that the damage can go beyond buying a new computer and losing your data. Some of the more frightening programs (bots) can be used to remotely monitor your keystrokes and use info to gain control of your computer, access your log in information and then wipe out your financial accounts or personal information very quickly.

This doesn't mean that you should stay offline. Other studies, particularly those by Javelin Strategy and Research and the Better Business Bureau find that consumers who monitor their financial information online experience fewer losses and resolve identity theft problems more quickly than those who rely on paper statements.

But it does mean that if you are going to go online you must be protected. About 25-- 35% of us aren't. That's just nuts.

It's time to invest in good up-to-date antivirus program -- then use it! Update it and scan regularly. Do the same with a spyware protection program.

Or take the risk that you will need to buy a new computer sometime soon.

Have viruses or spyware cost you money? Share your experiences with us so maybe we can avoid the same problem!

FreeCreditReport.com gets some unwanted attention

Anyone who has watched TV lately has probably seen the commercials. FreeCreditReport.com, a division of Experian, has long been a leader in advertising credit report products. The most recent add starts with "I'm thinking of a number" and ends with that catchy jingle. But all this advertising has led FreeCreditReport.com to get some unwanted attention from MSNBC.

If you visit MSNBC.com this morning,  the first thing you see is a huge photo of the FreeCreditReport.com site and a headline that blares "Don't be fooled. Despite its name, FreeCreditReport.com will cost you." Pretty dramatic stuff! The subsequent article is part of the Red Tape Chronicle series with Bob Sullivan. He's written great articles before on topics such as identity theft, credit card fees and other consumer issues.

So what is the deal with these free offers? Every credit bureau has a similar "free credit report" offer that they promote. Most of these offers include a credit report, credit score and 30-day trial of credit monitoring. If you cancel before the trial ends, you aren't charged and you get to keep the credit report. If you don't cancel, you are signed up for a year of credit monitoring.

Experian's offer is different in that it only includes a credit report and monitoring trial (no score) and that they are spending millions advertising the program. Plus, the terms and fees are a bit more hidden on their site than on other retailers.

Should you go for one of these free offers? Maybe.

Free offers that include a credit score are a great way to get a quick snapshot of your credit standing. You just need to remember to cancel the free trial right away which can usually be done by phone or email. If you are not good about remembering these sorts of things, don't sign up for a free trial. Also, avoid free trial offers that don't include a credit score.

You should also remember to get your three free credit reports every 12 months from AnnualCreditReport.com. This free offer mandated by law doesn't include a score but you can add it on for about $6 per report.

In the end, the important thing is just to check all three of your credit reports and all three of your credit scores every year. If you order through AnnualCreditReport.com it will cost you around $18. If you buy a 3-in-1 credit report with all three scores it will cost you about $30. If you order free trial offers, it could potentially be free or could end up costing you about $360 if you don't cancel. You can compare features and prices online here.

How do you check your credit? Do you use the free annual disclosures? Subscribe to a monitoring program? Share your feedback in the comments section below.

September 11th and identity theft

It doesn't seem right to talk about credit and personal finance on this solemn anniversary. But there are important connections between credit and terrorism that deserve mention on September 11th.

The 9/11 commission report includes several comments about the close connection between identity theft and terrorism:

For terrorists, travel documents are as important as weapons. Terrorists must travel clandestinely to meet, train, plan, case targets, and gain access to attack. To them, international travel presents great danger, because they must surface to pass through regulated channels, present themselves to border security officials, or attempt to circumvent inspection points.

In their travels, terrorists use evasive methods, such as altered and counterfeit passports and visas, specific travel methods and routes, liaisons with corrupt government officials, human smuggling networks, supportive travel agencies, and immigration and identity fraud. These can sometimes be detected.

Experts have also suggested that Al Qaeda trains operatives on how to steal identities and commit credit card fraud.  "The threat is made more serious by the fact that terrorists have become experts at identity theft and SSN fraud to enable them to obtain cover employment and access to secure locations. There is virtually no means of obtaining identification that has not at some level been exploited by these groups."

Keeping a close eye on your identity is a good way to stop identity theft, and possibly terrorism, in it's tracks. Do your part by checking your free credit reports at least once a year and reporting suspicious identity theft behavior to the proper authorities. You can read more about preventing, reporting and stopping identity theft online here. 

Another reason to check your credit report: See if you are listed as a terrorist

The Arcata Eye, a small newspaper in Northern California (BoingBoing.net reported the story today on their blog), is reporting that a US citizen with the middle name "Hassan" has had his credit report marked with the phrase "Son of Saddam Hussein" along with other alerts.

These notations come from the US Department of Treasury's list of Specially Designated Nationals and Blocked Persons (SDN), that is set up to prevent business with sanctioned nation and narcotics traffickers. The credit bureaus matched these records with Hassan's credit reports based on his middle name:

"Computer software programs are scanning the lists and putting watch list names on credit reports even if it's only a partial match; so if there is a mistake the credit bureaus can just say it was computer error."  Said Sinnar.  She continued, "But credit reporting agencies have a legal obligation to have procedures in place to ensure the accuracy of credit reports."

Hassan has been unable to remove the inaccurate information from his credit reports and mentioned that he has had trouble qualifying for a mortgage based on these records. And other similar cases have been reported accross the country involving people named "Muhammad" or "Hussein."  And the Latino community is also impacted because the SDN list includes common Cuban and Colombian names used by narcotics traffickers.

Click here to read the full story online. You can share your feedback and opinions in the comments section below.

The Advantage of Un-Do

I am doing a loan for a computer programmer.  I am a reasonably "technical" guy but nothing like him.  I got through HTML 3.0 before I gave up on webpage development and he's waaaaaaay beyond that. But the conversation drifted around to the topic of the "Un-Do" feature of computer programs like Word, Excel, and many others.

If you make a mistake in typing or formatting, you can hit a little button with an arrow on it or click on EDIT – UN-DO LAST ACTION, or select Ctrl+Z and it will return you back to some point before you made the mistake.  This can be a lifesaver if you accidentally delete and entire document before you've saved it. 

Unlike a computer program, buying a home and financing it do not have Un-Do buttons.  If you make a mistake, you live with it. Un-doing a purchase you shouldn't have made means selling a property, which will cost you many thousands of dollars in real estate commissions. And perhaps there's a problem with the property and maybe you can't sell it for what you paid for it.

Refinancing a property isn't that expensive, but it still costs thousands of dollars to get the right mortgage. There's no reason you can't get the right one the first time.

This emphasizes the value of getting good advice from your real estate agent and your mortgage loan officer. Truthfully, many of them do not care if you make a mistake just as long as they collect their commission!  So choose your agents carefully and make sure that they will help you keep from wishing there was an Un-Do button to push.

Funny Money Friday: Credit card art

Money doesn't have to be boring! Each week, CreditBloggers.com takes a look at the lighter side of the personal finance world in a series called Funny Money Friday.

Are you good at keeping track of your credit cards? Do you obessesively review your monthly statements or check your accounts online daily? Or are your fixated on reducing your debt balances?

Kate Bingaman knows how you feel. This artist spent 28 months documenting the purchases she made with line drawings and posting them online at ObessiveCosumption.com.

Obsessive Consumption was created by Kate Bingaman to showcase her love/hate relationship with money, shopping, branding, credit cards, celebrity, advertising and marketing.
...
She is currently hand drawing all of her credit card statements until they are paid off and also spends her time consuming, documenting and making

Her credit card statement drawings are amazingly detailed. You can see her Chase, FNBA, Juniper, MBNA, Target and USAA drawings from the last two years online here. And you can even buy one of her drawings for $140. She's going to keep drawing her statements until she gets all of her cards paid off.

It looks like she has $23,572.78 still left to pay off, so she'll probably be drawing for a few more years. Maybe we could work out a trade! I'd gladly help Kate create a debt reduction plan in exchange for a framed drawing! Happy Friday!

Politicians vote to protect horses, not humans

Did you hear the news? The American Horse Slaughter Prevention Act (HR 503) just passed the House of Representatives with a final vote of 263 to 146:

"I applaud every U.S. Representative who voted in favor of H.R. 503. Thank you for standing up for America, for our ideals, and for our horses," said T. Boone Pickens, legendary oilman and philanthropist, who along with his wife, Madeleine, is an outspoken opponent of horse slaughter.

Regardless of how you feel about horse meat, it is logical to question why our policians are supporting this type of legistlation instead of bills that protect Americans? The Data Accountability and Trust Act (HR 3997) has been in a holding pattern since June. Sure, this act has some serious loopholes but at least if would offer additional protections for identity theft victims and some rules for businesses that lose data. Here are a few more consumer bills that are floating around:

• Servicemembers Credit Protection Act (HR 5427) - Would help to strengthen and promote special credit and financial protections available to active duty military personnel.
• Credit Card Reform Act of 2006 (S 2655) - Would prohibit the Universal Default Clause, put a cap on fees and require credit cards issuers to consider a borrower's ability to repay before extending credit.
• Government Credit Card Sunshine Act (HR 4089) - Would require government credit card bills to be made public. (wouldn't that be interesting!)
• Identity Theft Relief Act (HR 3804) - Would allow identity theft victims to deduct 100% of their expenses related to fraud.
• College Student Credit Card Protection Act (HR 1208) - Would set restrictions on the marketing of credit cards to college students. Includes not allowing creditors to give more than one account to a student with no income.
• Comprehensive Identity Theft Prevention Act (S 768) - Would establish an Office of Identity Theft with jurisdiction to regulate and enforce laws. Includes new online security regulations, Social Security number protections  and privacy rules.

Want to read more? Search GovTrack.us for the terms "credit," "identity theft" or "horse meat."

Taxes and your credit card debt

The good news is I'm about to give you a little math lesson that will really motivate you to get out of credit card debt. The bad news is 'm about to give you a little math lesson (hehe). It'll show that you're paying a lot more in interest on the pieces of plastic in your pocket than you think. A LOT MORE!

My hope is that once you learn how much credit cards really cost, you'll focus on getting yourself out from under like never before. For example, you may think you're paying 14% on the plastic in your pocket, which is fairly typical these days.  Unfortunately, you're really paying 20.47% -- once you factor in taxes.

Taxes?! What do taxes have to do with it?
We spend 31.60% of our income on taxes! This budget-busting calculation comes from the non-partisan, non-profit Tax Foundation, which also reports that we worked from January 1 to April 26, 2006, just to cover the 50 or so taxes we're likely to pay this year. That's 116 days on nothing but taxes. Not a penny for food, clothing, or shelter – or for celebrating Tax Freedom Day. Ugh!

Since credit card interest isn't tax deductible (and hasn't been since the late 1980's), we pay our credit card bills with "after-tax dollars" – the 68.40 cents out of every dollar that we can actually spend on something other than taxes.

The numbers are even more startling if your credit is less than ideal. For example, say you're rebuilding or establishing credit with a secured card that comes with a 19.50% APR. That 19.50% will really cost you 28.51%.

Did you make a late payment on another credit card or bill and now find yourself paying 30% on all your credit cards? It’'s called universal default, and what looks like 30%, which is plenty bad enough, will really cost you a whopping 43.86%!

How much are you really paying?
The math is surprisingly simple. You divide the credit card interest rate by 100, minus your tax rate.

Credit Card Interest Rate