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A Financial Health Quiz
Tweet Share on Facebook January 31, 2008 Comment (30)If you've been wondering whether or not you need help—with your finances, that is—the National Foundation for Credit Counseling has just released a quiz to help you figure it out. The quiz, pasted below, asks about credit card balances and secret spending.
I answered yes to two of the questions—I sometimes hide purchases from my spouse, and losing my job would cause an immediate financial crisis in my life. But who wouldn't answer yes to those questions? The NFCC assures me that answering two or three questions in the affirmative just means you're normal, but once you get beyond a few, it might be time to seek credit counseling.
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Avoid Awkward Coffee Shop Encounters
Tweet Share on Facebook January 30, 2008 Comment (2)Whether you're meeting a blind date or a client, get-togethers at the coffee shop can be awkward. If you arrive first, do you buy yourself coffee, or wait for your guest? If you arrive second, do you stand in line to get coffee while your guest waits for you? Or do you follow the example of Lucy Liu's date on last week's episode of Cashmere Mafia? He got there first, ordered three different drinks for her, and let her choose which one to have. Expensive, yes, but also efficient. It seemed to win Liu over.
I first heard about this problem from Denise Baerg, owner of a marketing consulting company in Minneapolis. As someone who meets clients at coffee shops three or four times a week, she wanted to know how best to handle the potential awkwardness. To answer her questions, I turned to my favorite protocol consultant, Judith Bowman, author of Don't Take the Last Donut.
Bowman's advice is simple: Inviting people to meet you at a coffee shop is just like inviting them to your office. You should arrive early so you can get a table and greet them when they arrive, and of course offer to pay. Don't buy coffee for yourself until they get there, but if you know what they drink, then go ahead and have it waiting for them. If you arrive second and your guest already has a coffee, then either go ahead and buy a cup for yourself or skip it altogether. Standing in line can take a long time, warns Bowman, and it may be better spent getting down to business.
That sounds right whether you're meeting a potential client or a potential mate.
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Good (or Bad) News for eBay Sellers
Tweet Share on Facebook January 30, 2008 Comment (56)Attention eBay addicts: The company has announced that beginning February 20, it will cut the fees sellers pay to list items. At the same time, it will charge higher commissions when items do sell. The company says the new approach will reduce the risk for sellers, who don't want to pay fees for items that don't sell. Bill Cobb, president of eBay North America, explained online, "You said you'd prefer fees for success, not listing."
This sounds like a helpful move for heavy eBay users who list many items at once, but I'm not sure it's good news for more casual sellers. For example, say you sell a $500 wedding dress at auction on the site. Before the changes, you would pay a $4.80 listing fee plus $16.75 in commission on the sale for a total fee of $21.55. After the changes, you'll pay a $4 listing fee plus almost $19 in commission, for a total of almost $23.
But you have still unloaded a wedding dress you no longer want, so maybe the difference is just pennies to you.
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Be a Smarter Shopper
Tweet Share on Facebook January 29, 2008 Comment -
Valentine’s Day: Spend or Save?
Tweet Share on Facebook January 29, 2008 Comment (4)The National Retail Federation reports that the average person will spend almost $123 celebrating Valentine's Day this year. But instead of buying candy or flowers, which will be slightly less popular, consumers will lavish the objects of their affection with nights out and even gift cards.
Have you decided what you're getting your loved one yet? Does it come close to the $123 average? I'm all for romance, but that sounds like a lot to me.
For the men out there, here's one more fact to keep in mind, based on the NRF survey: Men, on average, will spend almost twice as much as women to celebrate the day: $163 compared with $85. But before men feel pressure to keep up with that average, let's ask the ladies if they really want such lavish gifts. Personally, I'd rather my husband kept that money in the bank.
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When a Mortgage Overwhelms, Change the Terms
Tweet Share on Facebook January 28, 2008 Comment (40)Dear Alpha Consumer,
Two years ago, my husband and I purchased a home for $217,000. My husband works in construction and is paid a salary plus a bonus, but the new-home-building industry in our area has hit an all-time low, and he has not received any bonus pay in at least six months. Also, part of his wages are garnished to pay child support fees. We are now unable to make our monthly mortgage payments, but the option to sell the house for something smaller is no longer possible. Our $217,000 home is now valued at $165,000. Our savings are depleted, and we have lowered all the other expenses that we can, but we still cannot pay our home loan on time this month. What options do we have besides foreclosure?
That's a tough situation, but you may be able to avoid foreclosure yet. The first step is to call your lender. Lenders don't want to see customers fail to make payments and lose their houses, either. Your lender will most likely work with you to get you back on track.
According to Pam Hamrick, vice president of LendingTree Loans, one option is forbearance, where borrowers temporarily make reduced payments or none at all. To qualify for this option, borrowers usually need to show that they are experiencing a temporary problem and that a tax refund, future bonus, or other form of income will let them catch up. Also, interest may still accumulate, so you may have to make bigger payments down the road.
Another option is to ask the lender to modify the terms of the loan so the payments are more affordable, Hamrick says. For example, you may be able to extend the term of the loan so monthly payments are lower.
When asking your lender for these options, Hamrick recommends showing that you are making a good-faith effort to pay your mortgage. "If you can demonstrate that you've reduced other expenses, the lender will be more inclined to negotiate," she says. If your situation is more long term, however, then it will be harder to persuade the lender to change its terms.
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Can Coins Make You Rich?
Tweet Share on Facebook January 28, 2008 Comment (15)Can counting dimes and quarters really add up to big bucks? According to my colleague and blogger Russell Heimlich, it can. He estimated the value of his change jar through its weight and learned he had $30 sitting around. He's still saving it. He says emptying his pockets into a jar every day forces him to save money.
Another option for change collectors is to find a Coinstar machine and pay a fee for it to count your money for you. According to the company, the average household has around $90 in spare change lying around. Banks also often have coin-counting machines in their lobby, and account holders can frequently use them for free.
But is either method worth the time? I try to make exact change when I buy small items, which often stops me from breaking bills. In the end, that method should save as much money as counting piles of change.
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Consumerist Bites Back
Tweet Share on Facebook January 28, 2008 Comment (2)The Consumerist, the site where "shoppers bite back," didn't like our recent articles on rebates. The bloggers there say we unfairly blame consumers for failing to redeem rebates, when it's really companies' fault for making the process so difficult. At least we got some love from the readers' comments, where some pointed out we were just reporting it as we saw it.
• Also in the blogosphere: You can check out this week's Carnival of Personal Finance for tips on retirement withdrawal, socially responsible investing, and why there's no need to feel embarrassed about not having new clothes.
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How Will You Spend Your Rebate?
Tweet Share on Facebook January 25, 2008 Comment (26)It's a question that can reveal hidden financial desires: How would you spend your economic stimulus rebate check, now expected to be $600 for individual taxpayers and $1,200 for married couples without children?
Personally, I would like to devote it to either updating my wardrobe or getting a cappuccino machine—but in reality it should probably go into my future down payment fund. To get you in the mood to spend your own rebate, which, pending congressional approval and the president's signature, could be in your mailbox by summer, here are what personal finance and consumer experts plan to do with their checks:
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Despite Fed Rate Cut, Loans Are Harder to Get
Tweet Share on Facebook January 24, 2008 Comment (5)Capital One's earnings call Wednesday underscored the fact that just because the Fed cut interest rates earlier this week doesn't mean consumers will find it any easier to borrow money. While banks can borrow more cheaply, they are worried that consumers won't be able to pay them back. So, in Capital One's case at least, it is lending to fewer customers or, in some cases, charging them more.
The company's top executives told analysts that particularly in Capital One's auto loan business, they had experienced an "unacceptable" degree of charge-offs because borrowers were unable to pay back loans. As a result, chief executive Richard Fairbank said the company was no longer lending to the riskiest subset of borrowers. Even for prime borrowers—those deemed low-risk—the standards have risen. On average, the credit scores of Capital One's prime borrowers were 30 points higher in the fourth quarter of 2007 compared with a year earlier.
In other words, if your credit score is less than impressive, you might have a tough time borrowing money to buy that new Jeep.
"In general, [auto loans] are performing poorly. The industry, as a whole, relaxed terms in the 2004-2006 time period. And now they're tightening back up," says Moshe Orenbuch, research analyst at Credit Suisse.
Fairbank added that the financial services provider had increased loan pricing—that is, it is charging higher fees or rates—"to build more resilience into our loan portfolios." Another reason not to expect the Fed cut to provide relief to your own debt portfolio anytime soon.
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Alpha Consumer
Kimberly Palmer, senior editor for U.S. News & World Report, writes about making smarter financial decisions. She’s the author of Generation Earn: The Young Professional's Guide to Spending, Investing, and Giving Back.
Generation Earn
Senior editor Kimberly Palmer’s book, Generation Earn: The Young Professional's Guide to Spending, Investing, and Giving Back, is now available.
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