Saturday, December 22

Make Money by Shopping for Car Insurance

I was going along, minding my own business when out of nowhere my car insurance bill shows up. No problem, I set aside money each month so that when the bill comes, I can pay it and be good for another year (yes, this company has annual premiums instead of semi-annual).

Anyway, I open the bill and was floored at the price. Now, I'm not a young man, but I suppose that is relative.. I am married with two children and am closer to 45 years old than I am to 39 years old. My driving record over the past 20 years is remarkably impeccable (before then, well that another story...).

I dug up the old bills from a few years ago when I got on-board with this company. Wouldn't you know it? The annual premium, slowly, like the hour hand on a clock, kept moving up. Over three years, the premium increased by almost $400.00!

So I asked my agent to shop my policy around for a better price. In the mean time, I was doing some shopping around on my own. The verdict? $400 in my pocket!

I'm not an insurance agent, so I don't know anything about how an insurance agent is paid for selling insurance or how their pay impacts the premium price, or even if it does. What I do know is that insurance carriers will slowly increase your premiums. The small increases add up and are pure profit for them, and pure undo expense to you!

So, how can you make money shopping for insurance? By reducing your premium like I did! There are two sure fire ways to do this: (1) Negotiate with your current carrier (2) Switch to another carrier.

Keep in mind, whether you negotiate a better deal or just switch to another carrier, make sure that you're not sacrificing coverage for a lower premium. Depending on whether or not a lender has an interest in your car, and how old the car is, you probably want comprehensive and collision coverage with a deducible of no more than $1000 ($500 is better, but the premium will be higher). Make sure that you have a good limit of liability too! Especially if you have other assets that you need to protect if in the unfortunate event you run somebody over and get sued!

For more information on shopping for car insurance, click here.

Thursday, December 20

Do you have money left over in your FSA?

If you have money left over in your Flexible Spending Account (like I did!), then you have to read this post over at
Blueprint For Financial Prosperity. Some fantastic ideas on how to get some benefit out of these left over funds.

Remember, if you don't use 'em, you lose 'em!

New FICO Math will effect your credit score

Fair Isaacs Corporation, the people that create the credit score models, have a new formula that can impact your credit score in the future.

This new math or formula is expected to do a better job of predicting whether or not you will default on a loan. The formula, called FICO 08, is also expected to be more forgiving for the occasional late payment, and more critical for those that are habitual late payers or non-payers.

Building ones credit history by 'piggybacking' will be difficult, if not impossible with this new formula. Credit 'piggybacking' is when someone adds another as an authorized user to their account. The repayment history is reflected on both users, however the primary account holder is obligated for the repayment where the 'piggybacking' party is not. This was a method used by many sub-prime borrower to artificially boost their credit scores.

Wednesday, December 19

Is this Deceptive Advertising?

I received "A Special Offer for a Valued Chase Visa Customer" in the mail today.  A promotional fixed rate of 6.99% Fixed APR until the Balance is Paid Off!  What a deal, save for the 3% balance transfer fee.
Here is the rub.  The second sentence of this offer certainly puts quite spin on the balance transfer fee.  It reads;
"This offer includes a fee of 3% of the amount of each transation.  This transaction fee has a $5 minimum and no maximum."
No, I didn't add the emphasis by underlining the no maximum part; that's exactly how it appears on the offer that I received.
I'm sure that this simply is saying that there is no maximum fee, that it can be as high as anything!  However, at first glance, it appears to be offering some sort of benefit.
Am I out in left field or does it look that way to you too?

Monday, December 17

Should you pay an old collection account appearing on your credit report?

Alright, so they probably did something that made you mad. I can relate! Once I was a cellular customer with the same company for over 6 years. Each year, my contract would 'automatically' renew. Anyway, when I ultimately switched carriers (yes it was before the anniversary date of my contract) I was charge a $175 cancellation fee.

To say that I was upset is an understatement! The way that I see it, the early termination fee applied if I were to cancel during the first 24 months, not the first 60 months!

Anyway, I didn't pay it. As a matter of fact, they referred the account to collections, and ultimately it wound up on my credit report for seven years.

I didn't feel it was right of them to charge me this fee. Because I wasn't willing to see the forest through the trees, I wound up paying more in higher interest rates than I would have had I just swallowed my convictions and paid the fee.

So, that is my story. Do you have collections on your credit report that for one reason or other you don't feel you should pay? Is this really helping you or hurting you?

Is it hurting your credit score? Yes, absolutely. The more recent the collection item is, the bigger the impact it has on your score. But, just as importantly, a collection item might mean that your receiving calls from a collection agency. This can make you feel like your finances are in trouble (maybe they are) and this can take an emotional toll on you.

Do you need a loan? All lenders are different, but many will want to see that your paying or have paid the collection accounts before lending you any money. Paying these collections could improve your creditworthiness. Are these collection items on your credit report keeping you from earning a preferred interest rate from the lender? Is your credit costing you more just because of these accounts that you've overlooked ?

Here are some free educational booklets from MyFICO that help you understand how collections play a role in your credit score.

The verdict? Well, that is for you to decide. My thoughts are that if it is a debt justly owed, then pay it. If you feel that it is unjust, then pursue getting it amicably resolved. Any account on your credit report is disputable. So if it isn't right, you can contact the credit reporting agencies and file a dispute. If the party reporting the account fails to respond to the investigation (many of them do not respond) then the account will automatically be removed from your credit file.

In the end, like so many things in life, it's up to you!