Funny Money Friday: New Year's Resolutions to Avoid

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.

Hello to those few of you at work today before the holiday weekend! Can you believe that we are only a few days away from 2007? That means it is time to start thinking about New Year's Resolutions!

Getting out of debt, increasing your savings, improving your credit scores...there are plenty of good ideas for resolutions available (and we'll be talking about them in detail next week). But this is Funny Money Friday, so we're going to instead show you some resolution ideas that you should certainly avoid for the New Year.

Really Terrible Financial Resolutions for 2007:

1. Replace your current online passwords with something easier to remember...like "password."
2. Close all your credit cards accounts in an effort to "clean up" your credit report.
3. Debt, glorious debt.
   
4. Move your savings from a high yield savings account to a standard bank savings account; it makes sense to earn an annual percentage yield that is lower than the rate of inflation.
5. Why not file for bankruptcy...it sounds fun.
6. Cash out your 401(k) savings to get that water ski boat you've always wanted.
7. A free laptop just for opening up a credit card account! That sounds too good to be true. Where do I sign up!
8. Reserve your paper shredder exclusively for the purpose of making festive confetti.
9. So, you're saying that there is money in Nigeria that the minister of accounting needs some help with?
10. Beanie Babies are a solid foundation for a long-term investment strategy.

Share your ideas for terrible financial resolutions in the comments section below. Happy Friday and best wishes for a prosperous New Year!

A Few More December Dreams

Did you have a good holiday vacation? I'm back and feeling refreshed after six days away for Christmas. Over the break, we received a couple more credit and personal finance dreams from our readers:

First I want to find a job that I enjoy, that has good benefits and pays well enough to keep up with bills, pay off debt (improve my credit) and extra to save (for my daughter's future as well as mine). I want to get out of debt and save money for a few years, maybe use a money market account. As soon as I am able, I want to move to a nice area with a good school district, in a small house or nice apartment with a yard/play area that is safe (a place I can live in for a long time so I don't have to keep moving). Someday, I want to open a customized jewelry store.
(Christina B.)

My dream is to clear my bad credit so that I can do the things that people with good or excellent credit can do these days. I want to be able to purchase a car or finance a home in the future for my family.  I have been struggling all my life because of bad credit and most of the things on my report are not even mine.  All I want is to clean my credit, I have a job that pays well, but I cant do anything with my credit ratings.
(Luis R.)

Send us your dreams over the next few days as we wrap up our "December Dreams" promotion. Our team of credit and personal finance experts will help point you in the right direction to make your dream a reality. You can learn more about the movie, The Pursuit of Happyness, and the Get on the Right Track of Life Sweepstakes online.

What's on Your Digital Camera?

Did you get some great family photos over the holidays? There sure were plenty of flashes going off at my various family gatherings. I also heard a few folks mention that they had hardly memory left on their cameras.

Like many people, they're storing their prized photos on their cameras – while other people are downloading them to their hard drives. In either case, it means that there are lots of grandpas and grandmas (like me) who are not getting prints the way they used to, back before digitals were so popular. And of course, many hard drive crashes have meant that more than a few families have lost some priceless shots.

Just in Time
I caught a very timely segment on our local NBC station last night that will hopefully make it easy for you to get some of your great shots printed. Kristen Dahlgren reported that there's a price war going on between online photo printing firms, so prints are going for pennies a piece. To see who does the best job, Kristen picked a dozen of her favorite photos, and sent them off to:

    1.  http://www.kodakgallery.com
    2.  http://www.shutterfly.com
    3.  http://www.photocheap.biz
    4.  http://www.winkflash.com

While the prints themselves ranged in price from $ .08  to $ .19 each, there were various charges for shipping and handling, so Kristen's total cost ran from a low of $2.43 at WinkFlash to a high of $4.27 at Shutterfly. Three out of the four batches of photos arrived within a week, with the ones from PhotoCheap taking two weeks to get there.

The Best Part
All the prints looked pretty good to Kristen, although she did see problems with photo cropping and color on some of the copies. Bob Colmer, a professional photographer she consulted, thought about 80% of them were perfectly fine for family photos, with Shutterfly getting his highest grade. Bob and Kristen both felt that all four sites were easy to use.

I visited the sites this morning, and found offers for free prints at three out of the four them, so it surely won't cost you very much to get a whole pile of prints made. And just think … you'll have a terrific present to send Grandma for Valentine's Day.

Happy Holidays from CreditBloggers.com!

We're going to be posting at a reduced frequency over the next week as our credit experts take time off for the holidays. Feel free to send your dreams or questions to us at tidbits@credit.com while we are away. Here are a few last minute tips to help you have a happy holiday season:

• Plan to use any gift cards you receive within a few weeks. This will reduce the risk of loosing or forgetting about the card or being charged expensive fees.
• Pack an extra credit card in your suitcase in case your wallet or purse is lost while traveling.
• Be sure to check the return policies for any gifts you want to exchange after the holidays. Most retailers allow a few extra weeks for returns in January.
• Request a mail hold to keep identity thieves at bay.
• If you are staying in a hotel, lock any sensitive documents or credit cards in a safe if you leave them in the room unattended.
• Leave photocopies of your credit cards, driver's licenses and other important documents with a trusted friend at home. If your wallet is stolen, you can retrieve important contact information from the copies.
• Learn how to save money or avoid scams with your rental car.
• Don't forget to pay bills that might be due over the holidays. Credit card or loan late payments could damage your credit scores.
• Avoid becoming your own Santa before the holidays. If you do want to splurge on yourself, wait until after the 25th for the big sales to start.

Happy Holidays! We'll back at full steam after the New Year to talk about financial resolutions like getting out of debt, improving your credit scores, building your savings and buying a home.

Place an Online Mail Hold to Stop Identity Theft

If you are going to be away from home for the holidays, today is a great time to request a mail hold through the Post Office. These mail holds can now be placed online in seconds through the US Postal Service website and for as few as three days. Plus, you can specify if you would like to have the mail delivered or left at the Post Office when the hold is finished.

Why place a mail hold? Identity thieves love the holiday season for many reasons. And abandoned mailboxes are a particularly good treat. Mailboxes during the holidays are often full of gift certificates, credit card offers, receipts, pre-printed catalogs and cash or check gifts from relatives. By requesting a mail hold, you prevent identity thieves from gaining access to these goodies while you are away. 

Dreaming of a better financial future for our children

One of my dreams is pretty simple, and at the same time enormously difficult. It's one that many parents share: to help my daughter learn to be financially successful and avoid many of the mistakes I have made.

Teaching kids about money is no easy task, as any parents will tell you. Our children have their own personalities. We have our own financial hangups we pass on to them whether we realize it or not. (Phil Laut describes it as relying on the thinking gained from 20,000 meals with financial advisers who gave us mixed messages about money, such as money doesn't grow on trees, you must work hard for your money, don't take money from strangers.)

Add to the mix the fact that our kids are assaulted with unprecedented numbers of commercial messages telling them they need the latest and greatest toy/electronic gadget/whatever.

We also blame the schools. I can't tell you how many people have bemoaned to me the lack of financial education in schools. It's understandable that we feel ill-equipped to teach our kids well ourselves, so we think the solution is to turn the job over to "trained professionals." As a result we've seen financial literacy commissions formed, coalitions created and mandatory financial education requirements instituted in some of the more "enlightened" school districts.

Problem is, all the things we are trying -- allowances, stock market games, financial classes at school -- aren't working.

One of my favorite money educators, Sam X Renick, creator of the Sammy Rabbit series of books and music CDs, recently forwarded to me an article that explains what is happening.

Everything You Know About Kids and Money is Wrong

The article discusses research by Lewis Mandell at SUNY Buffalo. Mandell is a highly respected expert in financial education and literacy among young people. Sam summarized the research findings and tips as follows:

FINDING NO. 1
Money classes don't make kids smarter

SOLUTION:
Start financial education sooner, at home and at school.

FINDING NO. 2
Money classes don't change behavior

SOLUTION:
Make saving a habit.

FINDING NO. 3
An allowance can make things worse

SOLUTION:
Set goals, not doles.

FINDING NO. 4
Stock market games are for losers

SOLUTION:
Let children learn from real mistakes, made over time.

TIPS

What parents must do to help your child grow up to be smart about money, take these steps:

Start young
Push your kids to save
Help them set goals

Given the freight train of debt that is barreling down the tracks (individually and nationally) it's critical that we start to find things that work. Our kids are facing difficulties we never imagined as we pull out all the stops to give them the things we never had as kids.

I don't have all the answers but I can share one program that has worked for me: the Sammy Rabbit music CDs and books Sam X. Renick created. They turned my daughter onto saving before she was in kindergarten. Her savings is now far past that of her friends, and she is following the investments her Dad is helping her make with some of the money she's accumulated.

She might just fulfill my dream for me.

What are your dreams for your/our children's financial futures? How are you trying to make them come true? Share your thoughts here!

New December Dreams

Your dreams for December keep rolling in by email! We've received such a great variety of dreams so far. Everything from wishing for a swimming pool to dreaming about medical insurance reform! You can visit Credit.com to learn more about the  movie The Pursuit of Happyness and the "Get on the Right Track of Life" sweepstakes.  Here are some recent reader dreams:

My dream is that we as a society accommodate citizens through a sliding scale . . . based on our annual income and the ability to pay out-of-pocket medical expenses.  Some of us can afford only a swiss cheese policy based on our lower middle class incomes.  We have the insurance but it is only beneficial if something 'catastrophic' occurs.  Then, I'm sure the premium will hit the sky .... it approaches the sky often enough every six months which is why the deductible requires yet another bump.  We're so underinsured and afraid to go to a doctor for a simple check-up in fear of the out-of-pocket expenses, co-pays, and service charges. (Peggy B.)

I would like to rebuild my credit up and start my photography business. (Chaplin H.)

I want to get our debt and increase my FICO score. Can you imagine a 54 year old professional woman who cannot even get a credit card?  I feel so strapped, so lost and it's nothing I have done in the last 10 years.  It's debilitating debt after a sickness that has me, creditors who keep adding more debt, especially those sickening credit cards that companies use to help you get out of debt (it's just a farce) why would you have to pay someone to use you?  Poor choices have gotten me here, I hope better choices will keep me away.  I want a house, a car and some wealth.  My faith will get me there. (Linda S.)

Ever since my separation from my husband my credit went down the hill. I was left with everything and was struggling to make ends meet. For the last four years, I have been using most of my tax return to clear my credit. I am close to 30 and dream to own a home by the time I am 35. I have two children who deserve to have a stable home. We have had to move numerous times and I am definitely ready for a home to call my own. Even my kids, when at school, cut out pictures from magazines of homes that they would like to live in. This makes me very sad because I have not been able to give this to them yet. However, I have made this my goal and slowly but surely will make this dream come true for all of us. Thank you for giving me this time to share my families dream. (Amanda T.)

My dream is to find somebody that will overlook my past credit failures to loan my wife and I enough money to buy our own house in a warmer climate. I have degenerative disc disease. Because of my disability, we live on my measly Social Security income. If only somebody would give us a chance to start over again, to own our own home. That's my dream but I'll keep on dreaming for that, I'm afraid. (Dale T.)

Send us your dreams by email. Our team of credit and personal finance experts might be able to help point you in the right direction so your dream can come true!

Reader Question: Joint Credit Monitoring?

We received a question from our reader, Brian, last week about signing up for credit monitoring services:

My wife and I are interested in signing up for a credit monitoring service. I noticed only one Social Security number and name is available for entry on the order form. Can I sign us up jointly, or do I have to create separate accounts?

Due to security concerns and the "one person, one report" nature of credit report, Brian and his wife will each need to complete their own order online for a credit monitoring program. With identity theft so rampant, the credit bureaus want to be very careful that the person who is ordering is actually the person whose name is on the report. Luckily, ordering online can be fairly easy and you can often choose to use the same email address to receive alerts for both accounts.

While sometimes controversial, credit monitoring programs offer an easy and relatively inexpensive way to stay on top of your credit data. Most monitoring services these days check your data daily and many include access to data from all three credit bureaus. Monitoring is especially helpful for people who are working on improving their credit or preparing for a major purchase.

I think one of the best services available is TransUnion's Unlimited Monitoring. This service includes unlimited access to all three of your credit reports and credit scores along with daily monitoring for just $24.95 the first month and $14.95 a month thereafter.

Another good option is Equifax 3-in-1 Monitoring for $12.95 a month, although it doesn't include any credit scores. Plus, Equifax allows you to buy this service as a gift for someone else. Perfect as a last minute stocking stuffer!   

Funny Money Friday: Holiday Favorites

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.

Hanukkah starts tonight and there are only 10 more days until Christmas. The holiday season is in full swing! At times, it can seem like the holidays are all about shopping and spending (just ask Best Buy). So it helps to have an occasional reminder that retail is not the reason for the season!

For Funny Money Friday this week, we are conducting a poll asking about your holiday favorites. I somehow don't think that "getting into debt" and "getting presents" will top your lists, but I could be wrong. Share your favorites today!

Make Free Online Polls

Happy Holidays!

Whose Job Is It Anyway?

In my mortgage brokerage practice, we spend about 50% of our time taking loans through the normal approval process. The other 50% is spent solving problems, most of which are "cleaning up" the messes created by others with whom we must interface. 

In every deal in addition to me and my loan processor, there is a listing agent, a selling agent, a transaction coordinator or two at the real estate offices, an appraiser, an escrow officer and an assistant, a title officer, a loan coordinator at the lender, an underwriter, a document drawer, and a funder.

Do you want to guess how many of them are better than average?  50%, and the other 50% are worse than average. The first half are great, but those in other half don't do their jobs well.  They forget to do things or misunderstand something and do it wrong, or take too much time, or forget to tell others what they have done. 

All of those impact the transaction and they all need to be fixed.  You can't say, "Sally didn't do her job, but that's OK." Someone has to get Sally to do what she was supposed to do, and of course Sally is now in a bad mood because she doesn't like to be told she didn't do her job right.

If you get enough of these worse than average folks on the same deal, it can be a disaster. Those people account for most of the horror stories you hear about at cocktail parties. We can fix thing because we are looking out for our clients and we identify future problems before they happen. But on some deals I hear about, there just isn't anyone around to fix things in a timely manner.

When you are selecting professionals to work with you are really selecting a whole slew of people, many of whom you know nothing about. You ought to take great pains to get a good team. If you do, your deal will close on time without all the anxiety experienced by those who didn't understand the importance of competence.

Pursue Your Dream: A Home Business

Do you dream about quitting your job and starting a home business of your own? Are you stymied, like I was, trying to figure out what kind of business to set up? Here are a few tips to help you separate your dream home business from the nightmares:

1. Do Something You Know. The well-known investment advisor, Peter Lynch, recommends that you buy stocks of companies you know. That's a good way to think about your home business.

For example, if you're an administrative assistant, you could become a "virtual assistant," offering your services via phone, email, and fax to other folks with home businesses. Try out the idea by  spending some evening and weekend time online, helping out someone you know with a small business. Even if you have to barter your time, you'll gain valuable experience. 

Basing your business on something you know means you can:

• Avoid the learning curve.
• Use your contacts.
• Gauge the workload and fees.
• Show a proven track record.
• Set up your business more quickly and turn show a profit faster than a brand-new line of work.

The danger? Too much of the same old, same old. You don't have to love every aspect of running your business, but you must do something you enjoy. So if you hate the line of work you're in now, choose another approach.

2. Cash In on a Passion or Hobby. Imagine feeling more motivated, happier, and richer -- just by focusing on one of your real interests. Doing something you love can be tremendously rewarding. Some entrepreneurs find themselves asking, "You mean I can get paid to have this much fun?"

Any hobby can become a business: cooking, flying, fishing, sports, stamp collecting, carpentry, electronics, music ... . Some pay better than others, and some are easier to start than others. As long as you remain open-minded and optimistic, you can have fun while you try some out.

Be careful, though. Turning your hobby into a profit-making venture can quickly turn fun into a burden. Find a way to invest a minimum amount of time and money into giving it a shot. If you aren't having a ball, you can drop the idea without regret, or modify it without too much cost.

For example, once I thought about starting a greenhouse business, so I volunteered to help transplant seedlings at a local nursery. In exchange, I got all the plants I wanted, answers to all my questions, and a lot of hands-on experience. Turns out it wasn't the business for me, but it didn't cost me anything, and I've put my greenhouse expertise to use in my own backyard.

3. Try Something New. Maybe you've always been chained to a desk, longing for a job outdoors. Perhaps you want to try something more creative than what you're currently doing. Or maybe you're just itching for a change.

While starting a completely different business offers tremendous opportunities for both personal and professional growth, it's obviously harder than staying with something you know. You won't get referrals from people already familiar with your work, and you'll have to do a lot of research to get up to working speed.

But if you keep at it, you may ultimately develop a brand new set of skills – and your dream business. Find low-cost ways to sample some alternatives. For example. say you want to open a store. Ask some store owners to let you be shopkeeper for a day.

Want some more tips on setting up a business? Click here. Let us know about your dream business!

Debt Dooms Grads from the Start

Does it come as any surprise that even twentysomethings these days have overwhelming debt? If only they weren't spending money they didn't have on giant flat-screen TVs, iPods, and video game systems, they might not have such huge credit card debt – right?

Actually, while the consumer market is ever more flooded with a dizzying array of expensive gadgets on which to squander your savings – or your credit, whatever the case may be – the majority of today's twentysomethings are deep in the red because of college. Half of college graduates put their school expenses on credit cards. We're talking necessities like tuition, books, and food here, not that new entertainment center.

Worse yet, those of "The Boomerang Generation," as it has come to be known, are increasingly moving back in with their parents after college; and they aren't getting much sympathy from older generations either. The USA Today article suggests a lack of patience for their plight. "Come on," the older generations say, "why don't these kids just roll up their sleeves, get to work, and shovel their way out of debt?" Even slightly older Generation Xers, once tagged "slackers", can't fathom why anyone would return to the nest after graduation.

While we won't touch the psychological theories behind The Boomerang Generation's tendency to move back in with their parents, some of them do so because they have too much debt to take on while living on their own.  Pile onto the debt a damaged credit score and you have a person starting out life on very weak financial footing.

The older generations who advocate for the Boomerangs to pull themselves up by their collective bootstraps might not be aware that – adjusted for inflation – the average salary for male college graduates has dipped slightly from $51,223 thirty years ago to $50,700 in 2004. Tuition, however, is up 248% for private and 268% for state colleges. And let's not forget that credit is easier than ever to get, with maxes so high that students can rack up credit debt into the 5 digits. Higher tuition, less pay, and endless credit means, well, that parents might not be converting their kids' old bedrooms into home theaters or game rooms anytime soon.

The article quoted one woman whose nightmares are a metaphor for her generation, which is less likely than other age groups to pay their bills on time and more likely to have their loans charged off:
"I have nightmares," says Heather Schopp, 29, of Long Beach, Calif., who accrued $165,000 in student-loan debt to become a chiropractor. "I dream I'm on a hot-air balloon, hanging on for dear life."

It doesn't help that while student aid is up overall, it's spread more thinly among more students. Nor does it help that Congress cut funding from student loan programs – historically the biggest cut to those programs ever. Add to that the latest scandal of schools selling students' information to credit card companies.

Think about it for a moment: Students are paying higher tuition to schools, which make even more money by selling their information to the very entities that indebt this generation. It's a vicious cycle, one that leaves no room for long-term savings and investment for home-buying, family-building, and eventual retirement. It seems like everyone's winning but the grads – and their parents.

Tuition isn't ever likely to drop, and we can't count on salaries to increase dramatically in the near future either. Properly educating students on dealing with debt would help, but we also need to reach some middle ground on the schools' responsibility in the equation, lest we force future generations to trade longer-term financial security for their diplomas.

Hospitals Aim to Improve Debt Collection Practices

It looks like one of my dreams may be coming true this December! The world of medical billings and collections has long been my favorite pick for reform. Too many consumers end up with destroyed credit or are forced into bankruptcy because of outrageous health care bills and aggressive collection practices. In the worst cases, patients can face arrest, difficulty paying for their housing, liens and bank account seizure for unpaid medical debts.

But this all may be changing! The Dallas Morning News reported today that many hospitals are adopting new consumer friendly policies. In 2003, the American Hospital Association issued guidelines for fair billing practices that included talking with patients about payment programs and coverage options, making care more affordable for consumers with limited means and promoting "fair and balanced billing and collection practices." Amazingly enough, these guidelines seem to have had an impact on hospital procedures.

Tenet Healthcare Corporation has implemented payment plans and discounted prices as part of their Compact with Uninsured Patients that "that pledges to treat them fairly, provide them with financial counseling, and help them apply for local, state and federal health care programs, such as Medicaid."

These are all baby steps toward combating the serious issues of health care costs, insurance and collection. There is still a long, long way to go before the system is fully reformed for consumers. I'm continuing to dream about more reforms to medical billing practices in the meantime. What is your dream this December? Share your thoughts with us at tidbits@credit.com.

More December Dreams

We are continuing to receive some great emails from our readers about their dreams! This all a part of our winter promotion to help consumers get on the right track, overcome challenges and make their dreams come true. You can learn more about this campaign and the movie, The Pursuit of Happyness, online here. Here are the latest dreams:

I will be 50 years old next month, and it has been my dream for the longest time to have enough money to live in South Florida. I see myself with enough money to enjoy the Florida sunshine with very little stress over money. (Debra W.)

I'd like the chance to pay off all my debts, and to start over, if it's possible at my age (68). I would like to be able to get a regular credit card. (Joey C.)

My dream is to get my credit score to 750 or more and to be at the point where I can want into the most elite and prestigious restaurants or shopping centers and get whatever I desire. Just knowing I can get it if I want.  To be able to have the home of my dreams and help my kids do the same. To be able to travel anywhere in the world I want. Get treated like royalty. That's my dream. (Rosalinda C.)

To improve my credit score. And to buy a car and pay my bills. (Bob C.)

What is your dream? Credit.com has resources to help you manage your credit, get out of debt, start saving for the future, buy a home or buy a car. Visit us online at www.credit.com for more information. And don't forget to send us an email or share your dreams in the comments section below.

Your Credit: A Million Little Pieces?

All those unwanted credit card applications arriving in your mailbox, would you ever consider just handing them out to strangers so they, too, can take advantage of your good credit? Of course you wouldn't. But if you're ripping up your credit card applications – even into tiny little pieces – and throwing them in the trash, you may as well be handing them out.

Earlier this year, one man documented online how he tore up a credit card application (his own), taped it back together, filled it out with a change of both address and telephone number, and sent it to the credit card company. The credit card arrived at the new address (his parents' house), ready to be activated.

The outrage here is that the credit card companies practically carpet the nation with unsolicited credit card offers, pretty dangerous as these applications can easily be stolen from mailboxes or the trash. The credit card companies' advice for dealing with this avalanche of sensitive information is as follows: Throw unwanted applications in the trash – but be sure to TEAR THEM UP FIRST to prevent thieves from assuming your identity! Maybe the companies didn’t count on thieves knowing how to use tape.

Right about now you're either feeling completely betrayed by the credit card companies' sage protective measures – you thought you could trust them! – or you're wondering if maybe, just maybe, the gentleman's experience was a fluke.

If only! Straight out of Chicago, more disturbing news. The NBC news affiliate there tried the same thing – with five instant credit offers. They ripped up the applications, then taped them back together and filled out each one, often having to write around the tape (since they taped the front; the guy with the Website taped the back to make writing easier – potential credit thieves take note!). One application included a change of address where the applicant had never lived. In several weeks' time, three cards were mailed out – one to the changed address – with limits totaling $21,000. No questions asked. Not even a phone call to verify the applicant's identity. Let's hear it for easy credit!

The issuing banks –Chase, MBNA and Bank of America – admitted that maybe the applications did kind of squeak through their rigorous screening processes. They ultimately defended their decisions, however, based on the fact that the signatures, Social Security numbers, and birth dates matched those of individuals with good credit.

So what's the message here? As long as the signature, social security number and birth date belong to someone who has good credit, it's completely okay if it's written on an application that appears to have, at one point, been destroyed! No big deal if you’ve changed your address, we’ll send it wherever you specify –whatever's convenient!

No word yet on whether these banks will accept "applications" on cocktail napkins, but it sounds like a worthy experiment.

Does their verification process extend much past an applicant's signature, birth date and Social Security number? Are the credit card companies so completely on autopilot that they can ignore red flags like these? Are they really doing all they can to protect our information along the way?

Stories like these continue to reinforce the need for consumers to take every step possible to protect their information. Credit card companies won't take care of it for you! If you aren't taking advantage of every credit offer that comes to you – and hopefully you’re not – chances are you won't miss the offers if they stopped coming to you altogether. Step 1: Opt out of having all credit card offers sent to you in the mail by calling (888) 5-OPT-OUT.

In the meantime, step 2: Buy a shredder and feed it with any remaining offers you don't plan to use, turning them into confetti to celebrate a new year without all the junk mail.

Funny Money Friday: Holiday Haiku Winner

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.

For last week's Funny Money Friday post, we asked you to submit your most creative haiku having to do with holiday credit, money and debt. The best haiku entry would win free copies of the books Credit Scores, Credit Cards and Identity Theft.  Today's the day we reveal the winner!

With an optimistic theme that fits perfectly into our "December Dreams" campaign, our winning haiku comes from the blog Easy Change. This site has a goal of "small steps toward making myself a better, richer, and happier man." Here's the haiku:

Winter Wonderland
money falling down like snow
Enough for everyone

Money falling down like snow sounds like a a perfect holiday dream to me. Let's hope for a blizzard! You can share your dreams for December (haiku format optional) in the comments section below or by sending an email to tidbits@credit.com. Happy Friday!

Pursue Your Dreams this December

For the rest of the month, CreditBloggers.com is going to be focusing on overcoming challenges, getting on the right track and achieving dreams. This is a part of our "Get on the Right Track" program for the movie The Pursuit of Happyness. You can estimate your credit score for free, read tips for getting ahead and enter for your chance to win the Get on the Right Track of Life Sweepstakes online here.

We are also asking our readers to share their dreams with us as part of this campaign. And we've received a few great dreams from our readers already:

My dream is to buy me a home with swimming pool and to have enough money to decorate it stylishly. (Josette A.)

My dream is to get out of debt , improve my credit score to purchase a home and, last but not least help, my son open up a sneaker store. (Kim C.)

I want to be able to say and then to live this statement: This day is mine! (Jeannette D.)

Right now, my dream is to stop foreclosure on my home and buy another in the same area. I want to create enough wealth to live well and be a real blessing to whomever God assigns. (Anthony M.)

Tell us about your dream! Do you want to buy a home? Get out of debt? Travel the world? Start your own business? Send an email to tidbits@credit.com or post your dream in the comments section below.  Check back with CreditBloggers.com throughout the month for more dreams!

Reader Reports Dramatic Bank of America APR Rise

We received a shocking email from a reader called Del earlier this week. He wrote in to report on a crazy situation that occurred after his credit card switched from MBNA to Bank of America ownership:

After Bank of America bought out MBNA bank my credit card changed over and they increased my interest rate from 7% to 25%. I have never been late with my payments to anyone and have an excellent credit report. When I opened my latest statement, I was shocked to see the doubling of my interest rate! When I contacted BofA, I was told that a letter was sent to me asking if I wanted an increase in my rates and that by not responding with a no, they went ahead and increased them [to 25%!]. I never received such a letter. Not only is this unethical, is it legal?

In my youth this was loansharking. I bring this to your attention for two reasons. First, all I ask is that this practice is brought to your attention so you can help others I am sure are being squeezed like this by them, and second to see if you have suggestions for how I could get a fair rate back. On second thought,  I plan to pay off all of my BofA account and never do business with them. What do you think?

What a horrible situation! Technically, it is legal for Bank of America to increase your interest rates as long as they alert you to the change somehow. This business with the letter asking you if you want to raise your rates seems completely absurd to me, but likely covers the legal bases.

If calling and demanding that your interest rate is lowered doesn't work, you should then start paying off the card as fast as possible. You may even want to transfer the balance to a different card with a lower rate. When the account is paid off, do not close it with the bank. Instead, leave the card open but don't use it. Closing credit cards can cause significant damage to your credit scores, so it often hurts you more than the creditor.  Keep the dormant card in a safe drawer at home for emergencies and check in on it once in a while to make sure it is okay. Letting the card go dormant is better for your credit scores and still "punishes" the bank for their bad behavior.

Have you received a letter like this from Bank of America? Have your credit card rates increased dramatically? Share your story in the comments section.

More Medical Bill/ Debt Collector Woes

Sometimes consumers do win. The Federal Trade Commission just announced a $1 million settlement with debt collection agency CAMCO (Capital Acquisitions and Management Corp.) and affiliated companies. The company was sued back in December 2004 for the kinds of abusive, illegal and deceptive debt collection practices that consumers often complain about:

Trying to collect "zombie debts" -- debts so old that they are beyond the statute of limitations and cannot appear on credit reports; and pressuring consumers to pay debts that don't even belong to them.

While the FTC doesn't get involved in individual disputes, you should complain to them about unfair debt collection or creditor practices, because they will collect those complaints and take action if they find a pattern of abuse by a particular company. They also report annually to Congress on debt collector complaints they receive, and it's important for consumers to weigh in. It just takes a moment to file a complaint at FTC.gov.

And speaking of debt collectors, one of the trickiest collection issues these days is a medical bill that ends up in collections, usually because the consumer thought the insurance company should or would pay for it. It is especially frustrating to consumers who always always pay their bills on time but wind up with damaged credit because of a small bill. And it's also unfair to consumers who are injured or ill and can't stay on top of every single little bill, to add long-term injury to their credit reports.

We've blogged on that topic here on CreditBloggers before, and now I have some more advice to pass on to you. Here is the question I received from a reader:

Peter was monitoring his credit when he discovered a collection account on his credit report. It turns out it was for medical services received in 2005. He paid his co-pay at the time of treatment and never knew that his insurance didn't pay the balances, because the Explanations of Benefits were sent to another address. (Apparently the doctor didn't bill him directly, either.) Now his credit has taken a serious hit. He also mentions the medical office that turned him over to collections won't return his phone calls.

Robert Brennan, a savvy consumer law attorney with experience in credit cases (and a website with helpful info on credit damage cases), offers this advice:

"Gerri, I've seen this in a lot of cases where the patient signs a fine-print admission form stating that he/she is fully responsible for the costs of the treatment.  First thing is, tell consumers to find that clause in the admissions forms and cross it out, replacing it with, "If my insurance does not pay, I will not be responsible for any unpaid balances other than the agreed-upon deductible."  That puts the pressure back on the doctor's office to go after the insurance company, not the patient.

Unfortunately a lot of medical insurance contracts have a fine-print clause stating that you have to dispute a denial of benefits within one year of denial, and a lot of patients do not even learn of the denial until much later.  If this is the situation, have consumers contact the state insurance commissioner, which can frequently pressure the insurer into paying.  Also, the insurance company is supposed to give notice if it's declining benefits, and if the patient did not receive the notice, this is another "arrow in the quiver" for the consumer.

If this happened to me, I simply would not pay. I'd write a letter back to the collector and the creditor telling them that I would be glad to assist them with making a claim against the insurance policy, but the treatment should have been covered by the insurance policy and therefore I'm not paying and if they persist, I would file a bad faith claim against the insurance company as well as a wrongful debt collection claim against the debt collector.  If the consumer keeps the letter professional and sincerely offers his/her assistance in making a claim against the insurance policy (documenting everything, of course), that of course makes the consumer look better later on down the road in case the consumer does need to pursue litigation.

By the way, most experienced debt collectors are very handy at making claims against an insurance policy if they think it will get the debt paid. I've seen it a lot."

Robert adds, "This is a good example of why you should (and I believe you do) advise your clients to pull their credit reports at least 3 to 4 times a year, to catch stuff like this and dispute it early. 

Remember, even if the patient has signed a financial responsibility statement, he/she can still dispute the credit reporting and have it entered on their credit reports as a disputed debt because there is a dispute--whether the insurance company should pay for it."

I'll add to Robert's comments by reiterating my earlier advice: If you have a problem with a medical collection account damaging your credit, speak up! Let us know about your experience here, and also file a complaint with the FTC. The only way the rules will change is if we all start demanding they do!

Debt Counseling Becomes Reality TV?

I almost couldn't believe my eyes when a co-worker emailed me a link to "Maxed Out." This television show on the Style Network (of all places!) is all about counseling women with financial problems. Here's the show summary:

Meet Aurora--she's 21 and already $80,000 in debt. Can she put the manicures on hold and give herself a fresh financial start?

Kathleen is a single mother earning $37,000 a year. Can she dig herself out of debt and give her children the security they deserve?

In each episode of Maxed Out, finance coach Ayse Hogan gets to the root of what is causing one woman's unhealthy relationship with money. Observing the subject's behavior and putting her on a strict budget, Hogan helps the cash-stressed gal by demonstrating the basic tenets of wealth-building: debt reduction, savings and investment.

Known for her blunt style and shocking visual metaphors, Ayse is dedicated to helped maxed-out women maximize their futures!

Ayse Hogan is a bookkeeper and self trained personal finance coach according to her website. Most of her basic advice seems solid, but I spotted a few issues with some of the specifics. Mainly, the problem is that Ayse is apparently Canadian. Therefore, the advice she gives is about the Canadian credit system (which is vastly different that the US credit system) and things like RRSPs (Canadian retirement savings programs). American viewers should keep this in mind when listening to her tips!

Have you been so lucky as to have seen Maxed Out on TV? Send us a full report!

YSP to Get a Hearing in Court

About 15 years ago Fannie Mae and Freddie Mac, the two quasi-government sponsored agencies that buy most of the loans done in America these days, started offering pricing that allowed mortgage lenders to make increased fee compensation by offering loans that carried interest rates higher than the going market price. That meant if a lender could find a customer who was too trusting or too stupid and who would not question the rate, the lender could significantly increase its income. How much?

Let's say that the market rate was 6% and that the lender could earn 1 percentage point as income, say $3,000 on a $300,000 loan.  If they could talk the borrower into paying 6.25%, perhaps telling him the "market moved" or that he wasn't qualified for the 6% program, they could earn $4,500. Note that they already cover costs and earn some profit with $3,000 income, so the extra $1,500 is really gravy!!!

This extra income is called Yield-Spread Premium - YSP for short - and is the main vehicle by which dishonest lenders diddle their clients.  According to HUD rules, this payment must be disclosed to the borrower, but as a general rule, it is only disclosed too late in the game to do anything about it. Plus, most borrowers don't know how to read the documents anyway.  They don't know that they are paying an extra .25% in rate so their lender could go to Hawaii and bask in the sun!

The regulators and the courts have been waltzing around this topic for years and no one in power ever seems to want to step up to the plate and start enforcing CONSUMER PROTECTION laws that are already on the books.

Good news. A court in Washington state has agreed to hear a suit and has even made it a class-action suit. It looks as if some concrete action is liable to come from this action. I sure hope so as it could be the biggest news on the YSP front in years. For those who are interested in learning more, check out http://brokerwatchdog.com/2006/11/26/pierce-v-novastar-mortgage/

Stay tuned!

Mortgage Company Horror Story

Do you ever wonder what exactly is going on at your mortgage company? If it ever seems like your loan is being handled by a bunch of drunk, barely trained weirdos...it could actually be the truth.

A shocking story about the rise and fall of a mortgage company called Merit was published in The Seattle Times on Sunday. This company specialized in loans for subprime consumers and claimed to have written almost $2 million in loans at its peak. Merit boasted having a 400% growth rate during a time of mortgage slow down. Behind the profits was a web of dysfunction that is hard to believe:

• "Merit did put loan officers through a 19-step program. "Loan Officer 101" was 15 minutes long, as was "Mortgage Glossary." Thirty minutes were devoted to "10 Step Loan Flow."
• "One loan officer had come to work fresh from being a Hooters Girl. Another solicited clients for two endeavors: writing mortgages for Merit and selling marijuana paraphernalia on the side."
• "Several Merit loan officers boasted online that doing drugs was a favorite pastime."
• "Merit's loan officers executed mortgages that were so flawed that the investors who bought the loans from Merit forced them to buy them back."

Eventually Merit was sued by their creditors, partners and service providers and the 400 person company shut their doors. The founder of the business is struggling to keep his own $4 million dollar home and is facing possible bankruptcy.

How can you avoid working with a mortgage company like this? First, investigate the lender's record with the Better Business Bureau. Merit had over 40 consumer complaints filed with the Washington BBB. You can also do a quick online search for other consumer complaints and should ask for client references before you sign up. Also, investigate if your state requires that mortgage loan officers are trained or certified and check the credentials of your loan officer against these standards. And don't be afraid to ask a lender about their experience writing loans.

Funny Money Friday: Holiday Haiku Contest

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.

December starts today and along with it the somewhat panicked countdown to Christmas. The holidays are notoriously dangerous times for consumers trying to stay out of debt, under their credit card limits and away from identity thieves. Don't let financial worries cloud your holiday cheer. Instead, channel your frustrations into a haiku!

CreditBloggers.com is running a holiday haiku contest all week long! Haikus are short poems with a 5 syllable line, 7 syllable line and 5 syllable line.  You can read more about haiku online here. We're looking for haikus with a holiday theme and, of course, mentions of credit, debt and other personal finance topics. Here are two examples to get you started:

Holidays are here
It's time for cheer and shopping
Debt for the New Year

Visa, MasterCard
Credit cards love this season
Deck the halls with debt

Enter your haikus in the comments section before the end of the day on Thursday. The winners will be announced next Friday and will receive free copies of the books Credit Scores, Credit Cards and Identity Theft. Over a $20 value and perfect for stocking stuffers!

Give Us Your Tired, Your Poor… And Their Serious Home-Buying Power

The Seattle Times reports the story of a man and his family who moved to the Emerald City and bought a house there. A simple American tale, but not quite: the man was an undocumented immigrant, without a credit report or a social security number.

Seem like that should be a problem? Well, no. Lately, more and more lenders have begun offering mortgages – knowingly – to undocumented immigrants. Through one of these lenders, the Seattle man was able to secure a loan and purchase a home. (For those interested, the man now has his green card.)

How did the Seattle man get the loan? He proved he paid taxes by providing an Individual Taxpayers Information Number, and that he could pay the mortgage by providing proof of income. In lieu of a credit report, he offered a letter of recommendation from his employer. The loan was approved: no social security number, no credit report needed.

Why are lenders doing this? Are they becoming more attuned to progressive causes? Do they sympathize with the struggles of the immigrant who simply wants to enjoy a decent standard of living? Is this a new, softer side of the mortgage lending industry? Maybe we have underestimated them...

Perhaps. Perhaps not. Bob Byrd, the chairman and CEO, Bank of Bartlett, sums it up nicely in an Associated Press article "We're doing this because we think it's right. We're doing this because it's legal. And we're doing this because it's profitable."

Regardless of how you feel about the issue of undocumented immigrants living and working in the U.S., it's perfectly legal for a foreign national to own property in the U.S. It makes no difference whether the homeowner-elect is living and working here illegally. A growing number of enterprising lenders recognize this and, in fact, see undocumented immigrants as a large, untapped market: estimated at $60 billion – according to the Associated Press article.

Part of that profitability lies in the higher interest rates lenders can charge this "high-risk" population. What if an undocumented lendee is sent back to his or her country of origin, leaving the house – and mortgage payments – behind? Because of this plausible eventuality, lenders add several points to the average going interest rates; predatory lenders, of course, charge much more, sometimes doubling the rate.

Because many feel undocumented immigrants don't even have the right to be here, you'll likely hear very little public outcry over any predatory lending practices aimed at them. Still, it might be in everyone’s best interest to consider what happens to our Emerald City family once its members are legal residents or citizens. Do you think the bank steps in at that point and offers a lower rate? The deportation risk is gone, right? So, shouldn’t the rate change accordingly?