Blogs We Love: The Budgeting Babe

I love personal finance blogs, especially blogs where the author is personally working toward some financial goals. One of my favorites is The Budgeting Babe, where Nicole is a 27-year old working girl on a budget. She covers tips for cost-cutting, homebuying, budgeting and building wealth with a dash of humor and a good helping of realism on her site.

When Nicole asked CreditBloggers to help answer a question about collection accounts last week, I jumped at the chance. You can read my advice to a reader facing overwhelming credit card debt and collection accounts online today!

Emily Davidson – Credit.com's Communication Director and former TransUnion credit expert. Emily writes about credit reports, credit scores, loans and personal finance as the CreditBloggers.com moderator.

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?

Creating a personal finance blog

There is a new blog born every half a second according to an article in the New York Times. That adds up to 175,000 new blogs created each day!

People create blogs to keep in touch with friends, talk politics, post photos and more. There are also a lot of people who use blogs to keep track of the budget, improve their credit scores, manage their investments or get out of debt. You can browse personal finance blogs like these online at PFBlogs.com and PFBlogs.org.

Anyone with a personal finance goal can benefit from creating their own blog! Use free Blogger software or inexpensive TypePad programs to create your own blog today. Share your goals, track your progress and watch your finances improve.

Do you have a personal finance blog already? Share a link to your site in the comments section below!

Must-read: Emergency plan for dealing with deep debt

Yours truly was quoted in a recent Bankrate.com article about dealing with a debt crisis. Even though my bias is more than apparent, I really do recommend you check out this story. Sheyna Steiner did a great job of outlining five simple steps that could help anyone get out of debt and back on track.

Check out the article here and share your feedback in the comments section below.

College for Less

Here's an easy way to cut the cost of college and the time it takes to get a degree: Take a CLEP test. Officially known as the College-Level Examination Program (CLEP), these tests are brought to us by the College Board, the same folks who create the SATs. Approximately 40 different tests are offered in composition and literature, foreign languages, history, social sciences, math, science, and business -- and are accepted at some 2,900 colleges.

Whether you're in the know because of a high school course, life experience, independent study, or on-the-job training, for a mere $60, you can get the same number of credits as you would for successfully completing a semester-long course -- or even one that lasts a full year. Given what tuition costs these days, $60 beats the cost of every college course.

Each school has its own rules (of course), so it pays to double-check in advance, but chances are good that you'll:

• Save money
• Cut the amount of time it takes for you to graduate
• Place out of introductory courses
• Fulfill some of your school's core curriculum requirements

With the exception of a test called "English Composition with Essay" all the tests are scored instantly online. Visit the College Board for more information about CLEP tests.

Special Note for Military Personnel: You can take the CLEP tests for FREE -- whether you are on active or reserve duty. Click here for more information.

Have you ever taken a CLEP test? Tell us how you made out!

Check out Credit.com's new look!

Credit.com has just launched our brand new website! Check it out online today. Along with a totally new look, we also have added:

• More articles in the learning center
• New life stage sections to help you manage your money
• Product comparison charts
• Free financial worksheets
• A new easy-to-use navigation system
• Commercial mortgage offers

We'd love to hear what you think! Share your feedback with us by email or in the comments section. We just launched a few minutes ago and are still working out a few kinks, so email us if you find any problems with the site!

Stop Cell Phone Spam

I was trying to make friends with my cell phone on a recent road trip, when I discovered that there were some "text messages" waiting for me. Text messages?! Who could be writing to me at my cell phone? I can't figure out how to use the blasted thing to make a call, and now people think I'll be able to write to them?!

Turns out they were just spam 'bots, trying to sell me you-know-what that starts with a V. Depending on the cell phone plan you have, these lovely messages may be coming in on your dime – or more. Some plans charge as much as 15 cents each. So if you received similar messages, you might want to call your carrier and ask a couple of questions:

1. Am I being billed for spam coming to my cell phone? Fortunately, my plan doesn't charge for text messages, but if it did, I'd ask …
2. Will you please waive the fees for these junk calls?

Whether you have to pay for them or not, who wants the bother? So put your cell phone on the  National Do Not Call Registry. If your other phone numbers aren't listed there, you can sign them up for no telemarketing calls, also.

More Ways to Save on Cells
If you – or your teen or tween -- is likely to be tempted by text messaging and/or some of the newer downloads, such as games, ringtones, ringbacks, subscriptions, and music, I urge you to read  "Cell Phone Fees That Sneak Up on You," an eye-opening article in PC World’s July 2006 issue. I had no clue that it could cost someone $6 to send a photo by phone, or that people were signing up at $2 a month so they can buy movie tickets with their cell phones. Why pay the $24 when you can order them for free with your PC?   

Here's your best defense as a smart cell phone shopper, according to  PC World’s senior editor, Yardena Arar: "Ask carrier sales reps for pricing details that will help you determine the true costs of any services that interest you, and ask if there's any way to track your bandwidth and message usage between monthly bills."

She also suggests ways to avoid fees. For example, "instead of downloading songs from a carrier's music service, get a phone equipped with a memory card slot so you can play tunes you've ripped on your PC." Even if you're not likely to rip a tune any time soon, you can still save money on your wireless bill.

The secret is to pick a plan that fits your calling pattern. Look at a few previous bills, and find out: 

• When do you make most of your calls?
• What's the average length of each call?
• Do you use your cell to make long distance calls?
• How often do you travel beyond your home calling area?

Then visit Point.com, where you can compare your plan to the newest plans out there. You might save money or get extra freebies like free long distance if you switch carriers. But if you're happy with your carrier, call and ask for a better deal – assuming there's no extra fee for it. All the sales reps know competition is fierce, and while new business is great, so is keeping an existing customer. So don't be bashful! You might just get some of the newer freebies included, like free text messaging!

If you give it a shot, please let us know how you make out!

Medicare's Prescription Drug Plan: Let's Ditch the Penalties

The May 15th deadline has come and gone for seniors to sign up for Medicare Part D, that new, incredibly confusing program that will help them pay for prescription meds. The way things stand now, most folks who missed the deadline will face monthly penalties once they do sign up. The next enrollment period is between November 15, 2006 and December 31, 2006 - with coverage beginning January 1, 2007.

I've seen monthly penalty estimates ranging from an average of $2.31 to $2.50. That doesn't sound like a lot … until you factor it in as an additional, fixed monthly expense … for as long as the person lives! All because of a missed deadline? C'mon, let's cut them some slack.

If you agree that these penalties ought to be axed, you'll be glad to hear that there's talk in both the House and Senate about doing just that. Tell your legislators that you support a penalty-free Part D. It's so easy to drop them a quick email. Just click here

The Deadline Is Irrelevant to Lots of Folks
One of the things that bothers me most about all the Medicare Part D deadline talk is that there are many  people who are still eligible and should be applying now, but may not, because they think they messed up. AARP has put together a list of around a dozen exceptions to the rule, which includes everyone who's become eligible for Medicare since February, 2006. Ditto for folks who move out of their drug plan's service area, be it into or out of a long-term care facility or not. Most important, low-income seniors have until the end of the year to sign up for extra help. When in doubt, call 800-MEDICARE or visit Medicare's site.

Write Quickly
You might want to send that email to your reps sooner rather than later. Congress is about to go off on yet another vacation. While most of us get a day or two days off for Memorial Day, they get a whole week. (That's what they took for St. Patrick's Day, too.)

As The New York Times points out in an editorial, "while they're gone, federal disaster unemployment benefits will start to expire for some 80,000 people still out of work because of Hurricanes Katrina and Rita. Both houses have only a few days left to extend this much-needed aid. … The average benefit is $104 a week — and that is for people who lost everything and, in many cases, loved ones only nine months ago." You might want to mention this in your emails, too!

In fact, Congress is on track for spending less time in session than it has since Harry Truman complained about the "do-nothing Congress" of 1948, which met for 108 days. I read about this year's estimate - 97 days – in a great USA Today piece by Kathy Kiely.

Hmmm ... maybe we're better off having our elected officials spend less time together in DC. What do you think? Share your opinion in the comments section below.

Blogs we like: I Want a House

CreditBloggers.com doesn't just love writing about personal finance, we also love reading about it! Once in a while, we like to feature a blog that has caught our attention. Today, we're talking about the blog I Want a House.

The author of "I Want a House" is an average Joe named Dave. He is in his 20's and has the goal of buying a house in Acton, MA. Dave is just about to sign the final papers on his first home and has a lot to say about the process. If you are thinking about becoming a homebuyer this summer, this is a must-read blog. Be sure to check out his posts on the trials and tribulations of finding a home and managing his new budget.

What's your favorite personal finance blog? Share your recommendations in the comments section below.

The Medicare Prescription Drug Plan: Don't Let Seniors Throw Out the Baby with the Bath Water

I don't know what they were thinking in Washington, when they came up with the Medicare Prescription Drug Plan (aka Medicare Part D). If it turns out they were on drugs, it wouldn't surprise me.

The promise - that Medicare would pay about half the drug costs for seniors - is certainly a step in the right direction. But I don't see how the program could be more confusing and complicated. Still, those who sign up by May 15th can save a substantial sum, not just in 2006, but for the rest of their lives. Folks who don't will pay penalties … essentially forever.

Yet you really need to be 'Net savvy to make the most of the program – which must deter lots of seniors. Also, the press accounts of its problems have no doubt discouraged many others from applying.

And who knows? Maybe President Bush's current campaign to get seniors to sign up is  having the opposite effect. With his popularity down the tubes, I'm afraid many will decide that since Bush is for it, it can't be any good. Yet it's way better – and cheaper – than no drug coverage at all.

Feel the program should be significantly reformed and the May 15th deadline canceled? I agree! Sign a  petition aimed at those two goals. Then be sure to get your folks to sign up for a drug plan by the 15th!

Be the Solution
If you're reading this, chances are good that you can help loved ones figure out which of the 40 or more plans makes the most sense for them. If you do it before May 15th, you'll help them save a lot of money for years to come, and maybe get yourself some "brownie points." (Hey, we can all use some of them!)

So volunteer right now to help your mom, dad, grandma, grandpa, aunts, uncles, etc. navigate Medicare's site! If they don't already have drug coverage, the new drug plan can save them money - but if they make a bad choice, their annual drug costs could easily increase by thousands of dollars. This is no joke!

First, though, they may already have a drug plan – via "Medigap" or private insurance (e.g., through a former employer). This coverage is often better than what's available through Medicare, and they should have received a letter from their plan making that clear. If that's the case, you get the points and don't even need to sit down at the keyboard!

Also important to know up-front: There are new subsidies for those with low incomes.

There's No One Size Fits All
Unfortunately, no one plan is going to be best for everyone – or everyone who has arthritis – or even everyone with arthritis who lives in Detroit. There are way too many variables, including:

• Location.
• Deductibles, which range from $0 to $250.
• Co-pays, which vary by company and by drug.
• "Formularies" – the list of drugs that are covered by each plan, sometimes in limited quantities. If the specific meds aren't on the list, they won't be covered. If they're on the list, keep your fingers crossed that they won't be removed, which the insurers can do after giving notice.
• "Doughnut" coverage – for the built-in gap in coverage.

The Skinny on the Doughnut
There's an initial coverage limit of $2,250, which is calculated according to the total cost of a person's meds – not the total amount the senior has spent. So folks on pricey prescriptions get there pretty quickly. After that amount is reached, seniors pay the full cost of all drugs - until their out of pocket cost reaches $3,600.

The price of the drug remains the same, since the seniors are still in a plan. But instead of paying about 25% of the bill, all of a sudden, they have to pay the whole amount -  until they've laid out $3,600.

Fortunately, for those who must take a lot of meds, there are plans that fill the hole. In any case, once that $3,600 is reached, catastrophic coverage kicks in, and about 95% of drug costs are covered (with some exceptions).

Punch a Few Keys for Someone You Love - NOW!
To make sure your loved ones benefit as much as possible from Medicare Part D, invest the time in the next few days to help them compare their alternatives. You'll need a list of all their meds, including the doses and monthly quantities, plus the names of their preferred drugstore … and patience for the process.

While you can call 800-MEDICARE and give the list of prescriptions to someone, it's too complicated imho for a phone call. It can be useful for specific questions, though.

Remember: Folks who don't sign up by May 15, 2006 will face monthly penalties. After that, the next sign up period is between November 15, 2006 and December 31, 2006, with coverage beginning January 1, 2007. So go get yourself some brownie points and please let us know how you make out!

Wall Street's Take on the Housing Bubble

Two recent Salon.com "How the World Works" columns demystify credit derivatives and spell out how Wall Street feels about  the housing market. In the first article, "Brother, Can You Spare Some Credit?," Andrew Leonard explains:

"A very simple way to understand a credit derivative is as a kind of bankruptcy insurance policy. A bank loans money to an institution, let's say, just for fun, General Motors. The bank then turns around and pays another institution to assume the risk that General Motors might default on that loan. If G.M. doesn't default, the institution selling the 'protection' pockets their fee and everyone is happy. But if G.M. does default, the seller of the credit insurance policy has to make good."

The theory is that by spreading the risk, a major downturn in one sector of the economy won't lead to a system-wide credit crisis. Sounds like a plan … until you consider that in 1998, there wasn't a market for insurance against credit risks. Yet by 2005, there was over $16 trillion worth of credit derivative contracts out there. As Andrew Leonard puts it, "From zero to 16 trillion -- now that's a growth economy."

So what does this have to do with the housing market?

One of the reason banks buy credit derivatives (read: protection money) is to cover their losses in case borrowers default on mortgages. With less to lose, lenders can afford to offer more and riskier loans. But it is going to cost them ... and therefore us ... a lot more to insure those loans. Between September and December of 2005, the price almost doubled for credit derivatives on subprime ARMs.

In "Wall Street Bets on a Housing Bubble," Andrew Leonard cuts through the jargon and explains:

"The smartest players on Wall Street see the housing market about to implode. So they're loading up on cutting-edge financial instruments that will theoretically protect the buyer from exposure to millions of homeowners suddenly beginning to default on their loans. And for the moment, they're making money hand over fist as the value of those derivatives rises with every new data point about slumping housing sales, slow housing starts and rising interest rates."

No one knows what's going to happen when the defaults start rolling in on the subprime ARMs and the sellers of those derivatives have to pay up. "But any prospective homeowner thinking right now about jumping into the market with a no-money-down, adjustable-rate mortgage might want to think twice," Leonard suggests. "Wall Street is betting against you."

Andrew Leonard's articles provide an excellent intro -- as well as leads on where to turn for more more information on this complicated subject. Highly recommended, even if subscription or ad viewing is required on Salon.com.

What do you think about housing market? Should borrowers be worried or is it all hype? Share your feedback in the comments section below.

 

Blogs we like: StopBuyingCrap.com

Personal finance doesn't have to be mind-numbingly boring. As we try to demonstrate in our "Funny Money Friday" posts, there is actually some humor in the credit world. One of our favorite blogs here at CreditBloggers.com tries to reveal the more interesting side of money management on a daily basis.

StopBuyingCrap.com calls itself the "Super Fun Happy 'Personal Finance' Blog that's Actually Seriously Boring." Operated by a college student in California, this blog is all about navigating the financial world and keeping yourself from overspending. Check out today's post about scammers selling oven doors packaged as flat screen televisions. 

Have a great personal finance blog recommendation? Is there a money management website that you read everyday? Share your suggestions and feedback in the comments section below. 

Bankruptcy Reform: Bad News

There's really bad news on the bankruptcy reform front. As expected, the controversial new law is making things worse for folks who, in eight out of ten cases, were forced into dire financial straits by circumstances beyond their control. Almost all of the 61,355 people who have been seen so far by credit counselors can't pay back any of their debts.

These are the key findings of a study just released by the National Association of Consumer Bankruptcy Attorneys (NACBA), called "Bankruptcy Reform's Impact: Where Are All the Deadbeats?" NACBA surveyed credit counseling firms that have been approved to provide required credit counseling services to people before they can file for bankruptcy.

While the credit counseling requirement was designed to steer people who could repay their debts into a debt management plan, the study concludes this "simply imposes new costs and time burdens on individuals who can ill afford either."

As NACBA executive director Brad Botes puts it: "Contrary to the claims of the proponents of bankruptcy law changes that they would zero in on the alleged legions of 'deadbeats' who supposedly were crippling the U.S. economy with 'billions of dollars in losses associated with profligate and abusive bankruptcy filings,' the federal bankruptcy law changes ... are doing no measurable good whatsoever. "

"Instead," Botes explains, "they have put new hurdles in the path of people who are already flat on their back due to financial crises over which they have no control, such as the loss of a job, catastrophic health care bills, and so on."

Bankruptcy filings are down, perhaps because many Americans may mistakenly believe that due to the new law, they no longer have the option. "Even though the process is now more cumbersome, time consuming and expensive than before," Bote recommends "consumers who need help should still seek out a bankruptcy attorney to explore their options and figure out how to navigate this trickier and more confusing process."

For more info about the bankruptcy study, listen to an online interview between credit expert Gerri Detweiler, a contributor to this blog and host of EverydayWealthRadio.com, and Maureen Thompson of the National Association of Consumer Bankruptcy Attorneys. (If this interview is no longer listed on the front page, simply type Maureen Thompson into the search field to access the interview. )

The best and worst online credit card services

A report released today recognized Discover, American Express and Chase as having the best online customer experience.  Discover earned praise for having high customer satisfaction with rates and fees and for being the easiest card to apply for online.  American Express earned points for being "trustworthy" and Chase was commended for customer service. Click here to download the full PDF report by the Keynote Systems.

Do you agree with these rankings? I am an American Express customer and do enjoy using their simple but effective website. What are the worst internet banking and credit card services out there? Share your picks for the best and worst online banking services in the comments section below.

Must read: Generation Debt

Anya Kamenetz is the 25 year old author of Generation Debt, a new book that discusses the financial problems of young Americans. A former columnist for the Village Voice, Kamenetz critiques her generation for having too much debt and little control over their spending.  I haven't had a chance to read the book yet, but today's Salon.com interview with Kamenetz was very interesting (subscription or free day pass required):

"These days, when you are 21, you can get a credit card and you can use it to fly to Miami on spring break. People do that because they see their friends doing it and that is the normal thing to do, but it's a mistake. At the same time, these people are also going home and eating Ramen noodles. It's schizophrenic. For instance, everyone has cable TV now. Even very poor people have cable TV. And there is this whole shadow credit economy where no matter how badly off you are, you can buy a big-screen TV. It's messed up."

Kamenetz also discusses credit cards on campus, mandatory financial education, the job market and student loans in her interview with Salon. If you are interested in reading more about Kamenetz you can visit her blog for more information. It is also interesting to read the Amazon reviews of her controversial book.

Do you agree that this latest generation has more financial problems than others? What do you think needs to be done? What were your experienced with money in your 20's? Share your feedback in the comment section below.

Blogs we like: SoundMoneyTips.com

SoundMoneyTips.com is a great blog that offers a once-daily money management tip. Covering a wide variety of budgeting and investing topics, this blog is a fun spot to check in for a quick update each morning. Check out the tips on shopping for health food online, getting free 411 phone service, and keeping your credit score healthy over the holidays from financial writer Michael Weinstein.

Blogs we like: The Red Tape Chronicles

MSNBC's Bob Sullivan is one of our all time favorite bloggers. Red Tape Chronicles is chock full of helpful information and investigations into about scams, credit and identity theft. You can find him online at http://redtape.msnbc.com/.

Be sure to check out his post on hidden credit card fees associated with making foreign transactions, especially if you are going to be traveling internationally for the holidays. If you are thinking about buying gift cards this holiday season, read about the real costs of gift cards first.

Blogs we like: The Budgeting Babe

If you would rather shop for Manolos than think about mutual funds,  The Budgeting Babe may be the blog for you! This personal finance blog at http://budgetingbabe.blogspot.com/ takes a common sense approach to savings, money management and more. Be sure to check out this post on why women should save more for retirement than men. Based out of Chicago, The Budgeting Babe is a great source for fun and rational financial tips!

Blogs we like: SavvySaver

SavvySaver is the personal finance blog of a 27-year old trying to save, budget and invest. CreditBloggers likes this blog particularly because of the smart advice and realistic goals set by the author. In this recent post, the blogger discusses Generation Y's financial goals:

This just shows that many people in my generation are willing to take responsibility for their own lives. They want jobs that are personally fulfilling, and are willing to provide financial security for themselves in place of the job security felt by previous generations. I think this is evident in the number of personal-finance blogs that have popped up in the last year. Personal finance is no longer something that we keep to ourselves or let someone else handle for us; we are taking responsibility.

As if managing money isn't hard enough already, the SavvySaver is also in the midst of planning her wedding. With the average wedding these days costing about $25,000, it's interesting to read her advice and commentary.

Blogs we like: FiveCentNickel.com

It's great to see people fired up about credit and money online. That's why CreditBloggers is a fan of FiveCentNickel.com. This blog is dedicated to all things personal finance. From credit cards to identity theft, the host and readers of FiveCentNickel are determined to find the real story and the best deals. Be sure to check out this post where they crunch the numbers on Dave Ramsey's debt repayment plan.

Calling all credit questions!

Have a question about credit scores? Worried about identity theft? Want to know if a credit card offer is a good deal? Ask the CreditBloggers experts!

Submit your questions by email or by entering them in the comments sections. Our team of credit, personal finance and identity theft experts are happy to answer your questions on the blog.