Starting A New Program

In The Pink Coaching is offering a new credit repair coaching program. Don't confuse this with your traditional credit repair counselor or credit repair service. This program teaches you how to read and interpret your credit score, walks you through setting up your own individualized credit repair plan, sends action reminders, and provides ongoing accountabilty until the deed is done. The benefits are that not only do you fix your credit score yourself, but you understand how to keep your credit in a good place (in the pink). You learn what actions have what effects on your credit score. It's similar to teaching you how to fish rather than giving you a plate of fish ready to eat.

The program is affordable because it's offered via teleconfernce. This also means that you do not have to travel anywhere to attend, all you need is access to a telephone line. FREE informational teleconferences are held on Fridays at noon Eastern Daylight Time. Send email to coach@growthquest.net to get the number to call for the FREE teleconference.

Avoid Buying Unnecessary Insurance

One way to get out of debt faster is to avoid spending money on things not needed. This article points out five types of insurance that should generally be avoided. Exceptions to the rule are clearly stated.

Here's the link:
http://www.smartmoney.com/top5/index.cfm?story=20070126

Enjoy!

Add 50 Points to Your Credit Score

A business colleague who owns a mortgage company showed me how to increase my credit score by 50 points. It's so simple, quick, and easy. All you have to do is opt-out of recieving all those pre-screened credit card offers you don't need or want in the first place. According to my colleague, doing so will increase your credit score by 50 points.

The request is made directly to the credit reporting companies through an official Comsumer Credit Reporting Industry website. Simply go to www.optoutprescreen.com . The process takes 5 minutes to complete and 5 days to take effect. You do have to enter your name, mailing address, and social security number.

Be sure to select the five year option rather than the permanent option. The permanent option requires paperwork to be mailed. However, it may be the preferred option for those hesitant to enter thier social online.

Should you ever change your mind and actually want to receive those pre-screened credit offers, no problem. Simply return to the site and opt in.

The Shrinking Warranty

If you have recently purchased an electronic device or major appliance from Best Buy, Circuit City, Sam's Club, or even Wal-Mart chances are you were offered an extended warranty for an additional fee. Depending on the original price of the item this fee can range from $12.99 to $700. Are you inclined to answer yes and purchase the added warranty? Here are some tips to help you evaluate the value of the extended warranty purchase.

In a recent article published in my local newspaper William Mauldin described the point of purchase extended warranty as "almost a license to print money" for the seller, not the buyer. He states that up to 50% or more of the profits from the sale of the extended warranty end up in the pockets of the seller. Extended warranty sales are big business, totalling $16 billion in 2005. A large portion of the bottom line profits from Best Buy and Circuit City are now generated from the sale of extended warranties, not products.

It is true that the warranties issued by the manufacturers are shrinking in efforts to keep the price of goods competitive with foreign labor and low cost imports. So what is the prudent buyer to do?

• Do read the warranty, know its conditions and provisions. Sometimes the product must be returned in original packaging.
• Know if your credit card account automatically doubles the length of the manufacturer's warranty (some do). If so, make the electronic or major appliance purchase on the card, but pay it off immediately and keep the reciept.
• Do send in the warranty card, often requiring a copy of the purchase receipt for validation.
• Avoid purchasing extended warranties altogether except for laptop computers, plasma televisions, and watches.

Less than 10% of digital cameras require repairs within the first three years of purchase. Breakdowns within the first three years are also unlikely for most major household appliances like refridgerators and washing machines. Repair costs are relatively modest. If you have a lemon, it will most likely become apparrent within the time frame of the original manufacturers warranty.

So the moral of the story is - except in rare instances say no to the extended warranty offer. Usually it's just money out of your pocket into theirs. You are better off taking your chances and paying for the occaisional repair yourself.

Are you money smart? Take my survey and find out. Give yourself 5 points for each yes answer. Add up your total score. A perfect score is 100.

Click button to take survey.

A Merry Christmas Without January Regrets

How did you do this holiday season? Were you able to stick to your budget or did you overextend yourself? Will you be surprised at the new balance when the credit card statements arrive in the mail this month? Read on for a sure fire way to avoid overextending yourself next year.

The absolute best way I know of to truly have a Merry Christmas (or Happy Hanukkah) without January regrets is to plan ahead. Remember back when your employer or bank would set up something called a Christmas Club? A set amount was deducted from each paycheck and placed in a special account called a Christmas Fund. At the end of the year before Christmas, a check was presented to you for the full amount of the fund for your use during the season.

You can do the same thing for yourself. Calculate what you spent on the holiday. Be sure to include the cost of any special clothing, food and beverage, and travel. Divide the total amount by 11. The result is the amount of money each month you need to set aside in your personal Christmas Fund beginning this month. Open an interest bearing savings account at your bank or credit union. Transfer or deposit the set amount monthly. It is best if you can set up an automatic deposit to guard against forgetfulness or lack of tenacity.

This is a form of planning for the unexpected. In reality you are planning for an expected, but not a monthly occurring expense. If you will do as suggested, you will enjoy a holiday without financial woes or January regrets. The last thing you want is to still be paying on a credit card funded holiday a year later.

Warning! Warning!

Those of us who are old enough to have watched the television series "Lost In Space" will recall the robot who would issue a warning when danger was sensed. I heard on the local news that Hurricane Katrina evacuees who are temprarily housed in our area can receive free birth certifcates. This sent up my red warning flag.

While I am all in favor of Hurrcane Katrina evacuees receiving all the help we can give, I am concerned about opportuinities created by the loosening of the usual requirements for unscrupulous characters. Identity theft comes to mind.

While volunteering at the local Red Cross Service Center, I did hear about a local individual who came into the center and signed in three different times in an effort to receive services and aid to which he was not entitled. He was not an evacuee. The staff were on to him which is good, but I do feel the opportunity for increased fraud is present.

Be encouraged to check your credit card statements for errors. Notify the complany of errors immediately. Also, get the three copies of your credit report that you now are legally entitled to recieve for free during time span of a year (one copy from each of the three credit reporting companies). Space your requests every 4 months to allow periodic monitoring for identity theft and fraud.

Follow this link to read an article about how now is a good time to break the chains of debt. Some tips are given: http://www.sanluisobispo.com/mld/sanluisobispo/business/12678097.htm

Wolf in Sheep's Clothing

I had an interesting conversation today with a gentleman from a credit counseling company. I saw the listing in the local phone book and decided to explore what services they offered. The company was listed under Credit and Debt Counseling Services. A very friendly gentleman answered the call on the 800 number. He indicated that they provided budget counseling, education, and a debt management program. It's all done by phone and fax. They have 1100 clients nationwide. They do not have any classes. They are a non-profit organization. They only handle unsecured debt. They will not help you with your mortgage payment or any other type of secured debt.

When pressed as to fees for service I was told there was a $75 set up fee that would be a tax deductible donation to the non-profit organization. Then there would be a set fee of $25 to $50 per month depending on the number of debt accounts they managed for me. This fee, and the amount of money needed to cover the actual monthly debt payments, would be electronically debited from my checking account each month. He emphasized that the fee was tax deductible.

I questioned how payment for a service could be tax deductible. I did not get a clear answer. "All I know is that it is tax deductible." I stated that if I went to the Mental Health Center (also a non-profit) and received a service, my payment would not be tax deductible. He responded that he did not write the laws, he just knew it was tax deductible.

I have two major concerns about this type of "credit counseling service." First, I think they are trying to hide their fees under the category of tax deductible donations and therefore cheating Joe taxpayer and Uncle Sam. Secondly, I do not believe they put much energy into teaching their clients the skills needed to handle their own finances and debt payments. They are not about empowering people to learn to do for themselves, or turning bad financial habits into good financial habits. I do believe they are about making money.

If they empower their clients to properly manage their own accounts then the debt management program, as it exists, would not be needed. There would be no collection of the monthly "tax deductible donation" for the 3 to 5 years required to payoff the debts. Do the math, that is a lot of donation. A mid-range fee of $35 for 5 years is $2100. At 1100 clients that adds up to be $2,320,000 in tax deductible donations ($464,000 annually). This is just an estimate as there is a fee range and all accounts do not continue for 5 years. However, I think I am in the wrong type of debt reduction business!

As a consumer, I would rather make arrangements myself for the automatic debt payments to go directly to the creditors, negotiate my own lowered interest rates, and then automatically deposit the $35 per month into my own tax deferred retirement account. I would much prefer the fee amount go toward building my retirement nest egg.

On the flip side, if you are late with a credit card payment, just once, they will hit you with a high interest rate, as high as 29% and a late fee as high as $39. It would be worth it to pay the credit counseling service their tax deductible donation if you are unable to arrange automatic payment for your revolving credit accounts to ensure you are never late with a payment. However, I would feel much more comfortable dealing with a company that was up front and honest about their fees.

Automatic bill pay is becoming an everyday occurrence. Most utilities and credit card companies have automatic payment options available from their websites. In my opinion, only if you are unable to automate your own debt payments should you consider one of these agencies. Even then, do your homework to make sure you are dealing with a reputable company.