JoeTaxpayer

This week, a few more things to consider that will save you money.

First, a water heater insulation blanket. Not a high tech item, this is just a layer of insulation you wrap around your hot water heater to prevent the heat from escaping through the tank exterior. A tank that’s warm on the outside is a good hint that the wrap will help. While you’re at it, go around your house and find any gaps around doors or windows that you can caulk or insulate. You should also check your wall outlets on external walls, you may find cold air leaking in through them in the winter, and the hardware store has insulation specifically designed for this application.

Rechargeable batteries – flashlights, kids’ toys, digital cameras, all these items use batteries, lots of them. The technology for NiMH (Nickel Metal Hidride) has improved dramatically over the last few years, and they can be recharged 1000 times before losing their ability to take a charge. Another case of doing the math and deciding if you can save money here.

Software – Moolanomy offered a great find, Winlibre which contains a full suite of software. One included title is OpenOffice which is a Microsoft Office substitute capable of opening and authoring MS Office compatible files.

Last, for today, I was at the deli counter the other day and could help but notice, the potato salad was $4,49 per pound, as was the cole slaw. This got me thinking. Learn to make you own side dishes. Some of the prepared foods at the grocery store aren’t too outrageous, but others are over five times what it would cost for you to make it from scratch.

Have a great weekend.
Joe

Thanks to Marketplace (Heard on American Public Media, not to be confused with NPR), I learned that there are 10 purchases that should not be put on credit cards. While these purchases aren’t part of the criteria of FICO scoring, they can lead to the credit card issuer reducing your credit line which can impact your FICO score. Let’s review the list, and you can decide if it crosses the line of “big brother” or is just good business practice;

1. Traffic Tickets – A ticket will already raise your insurance rates, they should be paid by check, not the credit card.
2. Retreading your tires – this can seem like a frugal decision, but the card issuers feel it’s indicative of tight money, and this sets off a red flag for them.
3. Bargain Binges – If you change your spending habits and suddenly begin shopping at the Dollar store or Walmart, you might see the issuer react. As with the tire retread, this can be a sign of tight money.
4. Adult Playthings – No judgment here, not by me, anyway. But this is viewed as escapism by the card companies, and they think you are escaping financial worries. Not sure how they reason this, but that’s the claim.
5. Marriage Counseling and Therapy – I’d think it positive that people try to work out their issues, but not the card companies. A divorce can lead to financial trouble, and counseling often precedes divorce.
6. Lottery Tickets – well this makes sense, and I never thought you could even charge these.
7. Cash advances – again, this makes sense to me. If you are struggling and need to use the cards to get by, short term, you are best off charging the normal expenses and conserving cash, but avoid the cash advance option off the card.
8. Personal Pampering – So I decide to send my wife for a well deserved birthday trip to a spa, this might not seem so to the card issuers. They may view it as trying to reduce stress, stress from fear of job loss.
9. Income tax – Again, charging an item you should be prepared to pay with cash is a red flag.
10. Booze – Frequent bar visit are another red flag, so if it’s your turn to buy, stop at the ATM first.

Such a list raises new and troubling questions to me. Data mining has gotten out of control and has the potential to hurt the consumer. To prepare yourself for the impact from this, as well as the ongoing banking crisis, it’s a good idea to review your cards’ balances and to be ready to change your usage if and when your credit lines are cut.

Joe

FICO scoring has never been more important, as banks are now taking the risk of lending money a bit more seriously. Let’s review, as best we can, how this score is determined and what you can do to improve your score.

By the way, the above is from a PBS special, “Secret History of the Credit Card.” Mrs. Taxpayer is still kidding me how a show with such a title can get my interest.

FICO formulas are still a bit of a secret, but the above is a good start. As I’ve read more about each of these criteria, I understand that ‘amounts owed’ are a ‘percent available credit used’ more than total dollars. So accepting a new card and instantly using the entire line may have a bit of an impact, but this is where unused credit on other cards actually helps bring down the total percent used. Of course, applying for too many cards in a short timespan also will impact your score.

Canceling cards can hurt you in two ways, raising the ‘percent credit used’, and reducing average age of accounts, so these are concerns. It may be a great feeling to cut up your paid off cards, but the better choice may be to check your score and act slowly. Keep the cards that have no annual fees, making a small charge now and then. If you plan to cancel the cards with fees, first calculate the total percent credit used, so you are sure that canceling those cards don’t impact your score. In the long run, paying one more annual fee may save you by avoiding the rate bump you may see from a lowered score.

If you are in dire straights, still make every minimum payment. Even if this means charging the same amount you just paid off. Missed payments will quickly impact the interest rates on the card involved, and soon raise the rates on all your open accounts.

There are those (such as Dave Ramsey) who will tell you to avoid all credit cards. This is nonsense. Graduate college, get a good job, save for a house, and you’ll find that without any credit history your options to get a mortgage will be limited despite the nice downpayment and low debt to income that new mortgage would cost you. Instead, find two no-fee (you’ll pay in full so the rate doesn’t much matter) cards, with a rebate or some perk, and use them for your routine purchases, even just gas if you wish. This will help build a real credit file and keep you from being financially invisible.

Last, check both your Credit Report as well as your credit score on a regular basis. Annual Credit Report will link you to your choice of reports from the three major credit reporting agencies for a free report once per year. By cycling through them, you can use a different one every 4 months, and catch errors or suspect activity a bit faster. Credit Karma is a great way to get a FICO score for free on a regular basis. Neither of these companies will ask you for payment or to sign up for a paid service as a condition of the free reports.
Joe

Quite a few great reads to share with you this week.

Let’s start with Jeff’s post at My Supercharged Life 25 Things Every Father Must Teach His Daughter About Life. I am a sucker for well created lists, and despite not being a financial one, this list will be added to my ongoing List of Lists, as it’s just that good. Jeff starts with “Family is forever. I want her to know that I will always love her mother. Her family will always be here as a complete unit for her to depend upon. I will model the loving marriage I want her to have.” With many people getting divorced I need to make sure my own daughter understands that her parents are in this for the long haul. Of course we may argue, as anyone might, but I’ve told her, “your mom and I have been arguing for 25 year this coming November, and we’re looking forward to 25 more.” Friends argue, as do we, but I never show her disrespect. Jeff’s list continues and it’s good reading for any Father, but especially one with daughters.

Financial Highway offers Frugal Summer BBQ: 7 Money Saving Tips for BBQ which I enjoyed. One tip that attracted some criticism was to have your guests bring the meat. I’m OK with that. If I am doing the cooking, I’ll be busy enough with sidedishes, drinks etc, and not having to foot the whole bill would be great. If I am the guest, I’m happy to bring the main dish but do none of the work. Sounds like a win-win to me.

Zac Bissonnette interviewed Dave Ramsey on WalletPop, and while I have my differences with Dave, overall, I think that people who follow him are better off that those who remain reckless. In this interview, Dave talks about how the recession might be this generation’s depression and how people under 40 haven’t seen a really bad down market. Maybe he forgot the tech bubble of 1999-2001? Either way, I like Zac’s questions and style.

Flexo at Consumerism Commentary asks “Is it Ever Okay to Steal Entertainment?” It’s an interesting spin, and a unique view.

I can’t ignore Nathan Barry’s 100 Things Your Kids May Never Know About. It came just a week after my book discussion of I Love It WhenYou Talk Retro, and given the blog’s title is Geek Dad, this list is a comprehensive list of the things our kids may never see. Betamax tapes, Floppy Discs, and even hard copy (paper) maps are just a few of the tech items that comprise this list. A fun read. How old you are will impact how many things you already don’t know about.

I hope you’re having a great weekend and enjoy these finds.

Joe