I use Debix to help protect me and my family against identity theft. Every year about this time they do a public records scan to see if there is any evidence of misuse of our children’s social security numbers. We are willing to pay extra for this service because our three children are adopted and we know of at least four other people outside our family who know their social security numbers – and one of these people is in prison for theft and another individual is not what you would call an upstanding citizen either!

This past week I received a phone call from Debix that after performing their scan they found suspicious activity regarding my youngest daughter’s social security number. In order for them to investigate further I had to send them documents:

•  copy of child’s social security number

•  copy of birth certificate

• copy of my driver’s license (verify my identity)

• copy of a utility bill  (verify my identity)

So I have faxed the information (people still use faxes!), and am now waiting to hear the results from their further investigation. Hopefully it is just a false positive and everything is okay. But either way we are protected and we have the Debix team on our side to do the leg work and paperwork to help clear up the matter if necessary.

So if you have children this is something to think about. My understanding from talking with knowledgeable individuals is that child identity theft is on the rise.

 

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Store Credit Cards: Some people love them, and some hate them. Personally I have a mixed attitude toward them. Currently we have three store cards: Dress Barn, Kohl’s, and Sears (although the Sears can be used elsewhere since it is a Citi MasterCard).

My wife uses the Dress Barn for herself, the Kohl’s mostly for family clothing, and I use the Sears occasionally for tools and hardware. All three gave significant discounts on purchases that day if you signed up, which helped to cut the price tremendously. They also offer discounts throughout the year if you use the card, which can also save some money.

What I don’t like is three more accounts to track and to remember to pay, although they do send emails with statement info which is a reminder, but it is still a hassle. Also, you tend to automatically get a lot of emails from that store. We have opted out of receiving emails except for statements. That means we get fewer emails, but we may miss out on some specials – I can live with that.

Obviously the goal of the store card is to get you to shop at that store and to entice you to buy more. Since we cut out the emails that helps against being enticed, plus we are not really shoppers so we usually only head out when we really need something. If you love to shop then store cards could be a dangerous thing for you! But if used carefully, they can save you some money.

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Sorry Dave, but I opened up a new credit card account. It is a Sears Master Card, which you can use anywhere Master Card is accepted. Opening the account got us a great deal on a Christmas gift (which is what they are hoping), and I do buy a few tools there over the course of a year. We will see if we keep it open. My credit score is high enough we could take the small ding for opening an account, and if they give us some special offers on the things I already buy there, maybe we will keep it. Otherwise I will probably close it within a year. Opening the account brought us up to 3 credit cards – 1 Visa (tied to our mortgage and helps pay it!), 1 Master Card, and 1 American Express (use at Costco). We also have one debit card tied with PNC bank, and 1 store card (Kohl’s). That is about all I want to have in my wallet!

Just a note – we always pay off our cards in full, and we don’t buy unless we have the money in our budget!

 

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As part of the refinancing process, we got a free copy of our Equifax credit score. The Equifax scoring range is 334-818, and our current credit score is 808. Not too bad. The only key factor that they sighted for why my score wasn’t perfect was “proportion of balance to credit limits is too high on bank revolving accounts.” We never carry a balance, we always pay our credit cards in full every month, so I guess our average balance of $2000 charged each month is a little high compared to our credit limit of $10,000. If I really wanted to I guess I could apply for a limit increase, and maybe I will sometime. It’s not a pressing issue obviously since we got a great rate on refinancing our mortgage. I guess our lowly 808 score will just have to do for awhile!

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Out of control credit debt has a negative affect on your financial history that lasts for years. Consumers get into this kind of trouble, due to unhampered spending and lax budgets. Good credit practices have always been important to remaining financially stable, but it’s only been in recent years that the chickens have come home to roost, as they say. During the economic downturn and the housing market crash, families were unable to handle mortgage and loan payments, and many consumers who had relied heavily on credit had to file for bankruptcy. This was due to one simple problem: consumers were living beyond their means and abusing credit.

Here are three of the worst reasons people rationalize using a credit card:

Not Shopping For the Best Rate:

People tend to open too many lines of credit, and don’t take credit ratings seriously. Don’t open a credit card at a store to save ten percent off your purchase. In the end, the amount a customer will pay in interest outweighs the initial savings. This is an arbitrary reason to apply for a credit card, especially since it can change your financial viability in the future. If a customer can only afford to make minimum payments on their credit, they should be shopping for the lowest possible interest rates.

Don’t Fall for Introductory Rates:

Read the fine print, especially on APR stability. Be wary of introductory rates, because they’re often offered for a limited time for promotional purposes. Once the promotion period is over, rates can jump over ten percent. These are designed to generate consumer buzz, and get people to transfer sizable balances over to the new card. If you want to transfer a balance, make sure you pay it off before the teaser rate expires, or you’ll be stuck with a staggering APR.

Don’t Take Out Cash Advances:

This is one of the worst mistakes a credit holder can make. It’s simply a bad choice to take cash advances with a credit line. The offer comes at the price of incredibly high service fees and potential higher interest rates. You may need a quick influx of cash, but using cash advances becomes far too costly. Save your money, and don’t rely on these speculative offers.

At most, consumers should have only one line of credit open to help build a credit history, which makes many things like buying a home, a car, or getting competitive insurance quotes online easier in the future, but the card should be used sparingly. They’re a necessary evil, but make sure you review the card terms. Make sure you consistently check your balance, and reevaluate spending habits.

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The stores are ready for Christmas, but are you? Just got back from shopping for a birthday gift for one of my daughters – boy are the stores in full Christmas mode! Toys-R-Us was even having a 2-day Christmas sale (which we took advantage of to buy for birthday!) promising lowest prices of the season! Wow. I say this every year, but this year it seems even worse - Christmas  shopping season is even earlier! 

Since the stores are ready early, why aren’t we? They are trying to take our money, so what are we doing to try to keep it? For our family, our strategy is pretty simple. We have a budget for Christmas (that I have been saving money for all year), we have a list of people we will purchase for, and a dollar amount that we will spend on each. And we stick to it! This helps us avoid January credit card surprises!

Some friends of mine have been getting together once a week to have a gift making party. Each week they work on a craft that will be given away as gifts. What a great idea! They get to spend time together and have fun. They help each other with craft ideas and help each other make the craft. They save money by making instead of purchasing something. And its a very personal gift that most people will love! Win, win, win!

One thing I am thinking of doing is giving my girls a home made gift certificate worth some time with Daddy – like a Daddy Date.

What are you doing this year to help save money or plan ahead? Share your ideas!!!

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Went to Walmart with the family Monday night to pick up a few items. Now, I am not a big fan of Walmart, nor am I a big hater either, I am just ambivalent. I like the prices, the selection isn’t too bad, what I don’t like is the service (absent), and the always long wait to check out – 1/2 the time spent in the store is always in line waiting to pay.

Anyway, went to check out last night and my Visa credit card would not work! The cashier ran it twice, and both times my card was denied. I was ticked, and the cashier was less than friendly or helpful. So I used another credit card ans went on our way (we only keep 2 credit cards).

When we got home there was a message from our credit card company about a potential fraud. So I went online and checked my recent credit card statement  and there was nothing wrong. So I called the company – all they said was that the Walmart purchase was flagged.

This is the second time this has happened when I shopped at a Walmart, the other time was about two years ago. For some reason this Walmart will flag our Visa card for potential fraud. We were not buying big ticket items, just some basic groceries. Maybe its because there is a closer Walmart to us that is in our same county but we prefer the one in the next county – the mileage difference is only about 2 miles for us but the time and ease to get there is better for the one a little farther away. Who knows? I’m just curious how shopping at a Walmart for groceries triggers a fraud alert when someone the other year stole our number and bought something online in another state but that didn’t trigger an alert?

The good news is that nothing was wrong, and the worst thing that happened was that I was a little embarrassed in the store and a little worried on the way home. I’m glad I had a backup plan to pay for the purchases!

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We had our 4th Dave Ramsey video session last night (13 sessions total). The attendance is 64 people and they are pretty faithful in coming every week.

Last night’s video on debt was the best in the series so far. At 100 minutes long, I was worried that it would be tedious and boring – wrong! If nothing else, Dave Ramsey is a great communicator and motivator. I can’t say that there was anything new in what he said about debt, but the way he packages the information and the intensity in which he delivers it makes it memorable and I believe helps individuals change their habits.

I have been budgeting for 26 years, have for the most part stayed out of debt except for a mortgage (once or twice in my early years I had a little debt that was paid off rather quickly – in about a year). But after last night’s video even I was motivated to do better!

I have been some what nonchalant about our mortgage. Now, my wife and I are motivated to be a little more aggressive in paying it off. It’s a 30 year mortgage, but we would like to see it gone in under 15 years.

So if you get a chance, I would recommend see the video on debt (this session is usually free if someone invites you to the seminar). It really helps motivate you in the right direction to do wealth building by paying off debt as fast as possible and avoiding it in the future.

Hi there - could you help spread the word about A Penny Saved? We rely on word of mouth to get new readers. If you would send someone a link, email, or even mention it to your friends, I would truly appreciate it. Update on Dave Ramsey Seminar is a post from: A Penny Saved, the best darn personal finance blog around.

So you are thinking about buying a house, or maybe just refinancing your current home. So you go to the bank (or Credit Union) either online or in person to apply for the loan. You’ve done your part, filling out all the paperwork. Now it is the underwriter’s turn to do his work. But what is he looking for? His job is to determine your credit worthiness. To do this he will look at three C’s: your collateral, your capacity, and your credit.

Collateral. In most cases, the property you are taking the loan out for is the collateral for the loan. In case of default, this is what the lender has to sell to recover their losses. They will look at the value, the marketability, and the condition of the property. The loan officer will also look at the money you have available for down payment, closing costs, cash reserves and other assets you may have.

Capacity. Next, the loan officer will look at your capacity to pay off the loan. He will look at things like your gross income(in relation to expenses), your employment history (do you have stable employment), and length of time at current / past residences (do you move around a lot). He will look at your debts that may affect your ability to repay a loan. He wants to know that you have the money available to pay a monthly loan.

Credit. What is your credit history – how have you handled loans and credit in the past. Do you use excessive credit? Have you paid off other loans? Can you handle additional debt or will it become a burden?

After looking at your collateral, capacity, and credit, the loan officer will make a determination whether or not you will get the loan. The better your collateral (the lower the loan amount is to the estimate of the collateral the better), the greater your capacity (earnings exceed expenses), and the wise use of credit in the past will all work favorably toward you being accepted for a loan.

If you have specific questions, you should talk directly to a banker; each financial institution will have different parameters for approving loans. But by knowing what a lender looks for in general can show you areas that you need to address before applying for a loan, and whether it is the right time for you to be applying for a loan. It will also help you be prepared to answer any specific questions a lender might ask.

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For work I was at a local branch of PNC Bank, which is also my personal brick and mortar bank. Now I hardly ever have to go inside a bank what with ATM’s and on-line banking. So I was just curious and looked over their information for fun and they had a “Preparing for Homeownership Qualifier Worksheet” booklet that piqued my curiosity.

FYI, PNC is a regional bank that operates in 17 states, mostly in the East, but also has branches in the Midwest. It is currently the fifth largest bank in the U.S. Anyway, I have my loan through Wells Fargo, a fixed rate 30 year loan at 4.75%. But I was curious to see what a bank would tell you about qualifying for a loan.

After some introductory fluff, they talk about the down payment you will need. They state that lenders require home buyers to contribute funds toward the purchase of a home. So far so good. Then they tell you that the down payment can be as little as $500, and that no down payment is required for VA loans, and that there are down payment assistance programs available. Isn’t that kind of thinking by banks and individuals part of what got us into the housing mess we are in now? I was pretty surprised. Now maybe they just say that and there qualifying is stricter, but I was shocked that they would say things like that in print. Generally speaking, I believe personally that if you don’t have at least a 20% down payment, you should not be buying. Of course there could be exceptions, but not many.

The material then went over some of the costs of owning a home, things like monthly mortgage payment, taxes, insurance, repairs and maintenance, utilities, furnishings, etc.

Then came the qualifying worksheet. It was a pretty simple do it yourself check. Basically, they want you to have only 28% of your gross monthly income going toward monthly housing expenses (mortgage, taxes, insurance). They also want your total monthly debt to be less than 36% of your gross monthly income. Again, I think those numbers are high. Currently, my monthly housing expense is 18% of my gross monthly income. My total recurring debts is the same (only have a mortgage – no car or credit card debt).

My Mom, before she retired, worked in the lending department of a bank. As she has reminded me more than once – thae banks goal is to make money off of you; your job is to not let them! The more that they can get you to borrow, and they will try to get you to borrow more than you should, the more money they make.

You need to go in knowing what you can comfortably afford, not what a Bank or Credit Union or whoever tells you you can afford – even it its printed! Sadly, even after the crash, things haven’t changed that much in banking.

Hi there - could you help spread the word about A Penny Saved? We rely on word of mouth to get new readers. If you would send someone a link, email, or even mention it to your friends, I would truly appreciate it. PNC Bank Qualifier Worksheet is a post from: A Penny Saved, the best darn personal finance blog around.