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Free Credit Score and Lane Bryant!

While the country is righteously outraged as a result of  the recent controversy surrounding the now  infamous Lane Bryant lingerie commercial – a dynamic issue further dividing a nation already at odds over national healthcare, financial regulatory reform, a nuclear Iran and Ben Rothlisberger – I recently stumbled upon a really useful site called “Credit Karma” – www.creditkarma.com. 

As promised, the site provides users with an absolutely free, no strings attached credit score (which comes courtesy of TransUnion).  I signed up for an account on the site this morning and in a matter of minutes had a free credit score along with a “Report Card” that provided grades for the various components compromising my credit score (see my previous post “FICO – the 5 components for a closer look at these categories). 

A couple of other useful features on the site – you can compare your credit score to others in your state, age group, and the Credit Karma community.  Additionally, the site lets you simulate the various effects certain financial decisions (making a late payment, reducing credit card debt, etc) can have on your overall credit score.  And best of all – the site will update your score monthly (again, at no charge).  In my opinion, this is one of the most useful benefits of the website as it allows you to consistently monitor the effect of your personal financial decisions. 

I encourage all of you to visit Credit Karma.   While I’ve got no incentive to push the website nor a financial connection of any sort, I think this site can be a useful tool (one of many) in monitoring your overall personal finance efforts.  It’s easy to use, gives you immediate access to your credit score, and requires no financial committment (the site supports itself by promoting various financial products touted as money savings options – low fee credit cards, savings accounts, etc).  

And since I’ve made it through today’s Wall Street Journal already, found a useful free credit score website and managed to squeeze in a post on my blog … I’m going to allow myself a few quick comments on the Lane Bryant lingerie commercial issue currently being touted as Cleavage-gate. 

* that Lane Bryant model is absolutely gorgeous.  I wonder if she digs guys that are in debt?

* as a guy I think it’s great that there’s some buzz around the idea of a  normal, healthy looking woman.   Give me more images like this on TV and spare me the girls of “16 and Pregnant”, the monsters of ”Real Housewives of Orange County”, and quasi-celebrity disgraces like Kate Gosselin or Octomom.   

* Do I mind looking at Victoria’s Secret models (cast in the role of opposition in this ‘controversy’) - not by a long shot.  Do I think they are the most accurate representation of what a healthy, balanced woman looks like -  absolutely not. 

* I’m shocked that of all the crap on TV (some of which I’m probably guilty of watching on occasion) that anybody could find this commercial offensive or inappropriate.  Isn’t Fox the same network that aired “The Simple Life”?  And doesn’t ABC produce “Desperate Housewives”, the zeitgeist of modern womanhood in America? 

* Aren’t we a silly little nation when Yahoo web trends soar with searches for “Lane Bryant Commercials” and personal finance bloggers with an unsubstantiated sense of self-importance feel the need to weigh in on Cleavage-gate?

Sex is Cheap!!

Let’s be honest … there are a number of ways in which sex can be cheap. Far be it from me to let this post delve into deviant dalliances … but suffice it to say that many of us may look back at a booze fueled weekend in Las Vegas, too much champagne at our college roommates wedding, or that Christmas work party incident with what’s her face that required a walk of shame into the office the following Monday morning … as the backdrop of a an episode that might rightly be classified as ‘cheap’ sex.   

Perhaps we’ve looked back at such escapades with regret or fondness … amused or disgusted by our own foolish sense of au natural adventure. Regardless, I’m suggesting that we may all have had some ‘cheap’ sex at some point in our lives.

But since embarking on my quest to become debt free … ahem, my personal Debt March (author holds up pinky to corner of mouth ala Austin Powers) … I’ve had to consider diverse financial matters that previously escaped my daily thoughts - a monthly budget, living below my means, focusing my expendable income on paying off debt, and perhaps learning to be a bit more frugal.

And there you have it folks … today’s word is Frugal. Yes, for months now I’ve visited your weblogs – all with there obligatory “Frugal” sections touting dinner recipes, walks in the park, great sites for coupons, nights at home with the Scrabble board and a variety of other cost savings tips for life’s expenses and entertainment.

Bravo you monastic clan of personal finance gurus and bloggers out there in cyberspace! Let the masses stand upon their desks shouting “Oh Captain, My Captain” at your inspirational words and encouraging blog entries.  Yes, I can’t wait to take my paycheck, put 10% of it directly into savings, pay my monthly living expenses, split the rest between Citibank and my Stafford Loan and sit down on the couch for an enjoyable night of Bill Moyers on PBS (because of course I canceled cable) and a hot serving of leftovers from last night’s tuna casserole courtesy of www.frugaldinners.com!!

So I’ve been pondering …. because hell, living on a budget and below my means leaves me quite a bit more time to consider such deep thoughts about  the universe as cheap sex, Bill Moyers and tuna casserole … do all of you personal finance bloggers and preachers have more or less sex than the average credit card junky buried in debt?  And if you are having more, how come I never see sex touted on your “Check out Big Smart Personal Finance Guy’s Frugal Money Saving Tips section!”  Where’s “Frugal Diva’s” shout out to sex as one of the financially savvy girls closest allies? 

I for one have been resorting to sex as my top frugal distraction since staring this project at the beginning of the year and I’d encourage all of you to do the same.  Feel like going out for a fancy dinner – nope, not as good as staying home and ‘eating out’.  Front row tickets to Shakespeare … me thinks my mistress would rather lie with me!  Charge a new outfit at the mall … I always think my girl looks better with nothing on. 

But let’s promote frugal things that are actually enjoyable (ahem … sex) with the same gusto as the coupon clipping,  yard sales,  garden planting and breakfast budget cutting tips!  Lets inject a little marketing and salesmanship into the personal finance message … after all, are all of you just trying to make a few extra bucks from Google AdSense or are you really trying to promote financial responsibility? 

So here  are my closing thoughts and financial tips of the day  -

“Debt is expensive.  Sex is cheap!”

and 

“Put your credit cards away … there are more enjoyable ways to get fucked!”

FICO Score – the 5 components

The FICO score .  Yes, that 3 digit number that reflects our credit worthiness and more importantly, the rates and terms that lenders will offer us on various loans (mortgages, car loans, etc).   But what goes into it?  How is our FICO score calculated?  What should we be paying attention to? 

While I’m not one of those guys that thinks my FICO score is something I need to guard on a daily basis and watch hawkishly with each and every financial step I take, I do think it’s important to have a general sense of what helps and what hurts my credit score. 

Here’s a quick graphical look at the “5 components” that make up your FICO score and the relative importance or ‘weight’ of each. 

 
CreditCards.com

And for the sake of clarity –  here’s a breakdown of these 5 components (straight from the “I’ve got a deal with Fair Issac Corporation” (FICO) High Priestess herself).  

Payment history (35%)-Aside from extreme events, like bankruptcy or tax liens, late payments have the greatest negative impact on your score. Recency and frequency of late payments count too. In other words, even though a 60-day late payment is not as risky as a 90-day late payment in and of itself, a 60-day late payment made just a month ago will count more than a 90-day late payment from five years ago.

Outstanding balances (30%)-Evaluation of your total balances in relation to your total available credit on revolving accounts is one of the most important factors in the FICO score. Owing a great deal of money on many accounts or “maxing out” on various credit cards can indicate that a person is overextended, and is more likely to make some payments late or not at all.

Length of credit history (15%)-Your score takes into account how long your credit accounts have been established in general, how long specific credit accounts have been established, and how long it has been since you used certain accounts.

New Credit (10%)-Research shows that opening several credit accounts in a short period of time does represent greater risk-especially for people who do not have a long-established credit history. Multiple requests will reduce your score because it looks like you are either trying to get a high amount of credit (possibly because of a cash flow problem) or that you are being rejected by lenders and having to apply elsewhere.

Types of credit (10%)-The score will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. Your score takes into account what kinds of credit accounts you have, and how many of each. The score also looks at the total number of accounts you have

Personal Finance and …. Bling?

Is there a place for jewelry in the mind of the 30 year old former debt addict?  Do I dare delve into temporary debt and pull out the credit card for a pair of diamond earrings? 

I’ve been doing so well with the debt snowball, my monthly budget, living below my means and a number of other things a fiscally responsible individual is supposed to do.   And yet here I am, at the ledge looking down, pondering a financial move so obviously inconsistent with my long-term goals.  Am I not recovered from my addiction … do I just need a little taste of financial frivolity?

My girlfriend – who I actually adore and can’t believe I do because I have  never adored a woman I was dating before (but that’s a whole different blog) – is graduating in May and getting her Doctorate in Physical Therapy.  I consider this a big deal and a signficant accomplishment … perhaps even something worthy of diverging from the saintly path of responsible personal finance. 

She is not an unreasonable woman, is aware of my past addictions (credit has been just one of my ‘dark passengers’), supports my current personal finance efforts and has no expectation of some lavish gift that I can’t afford at the moment. 

But damn it … can’t you cheat just once in a while?!  I read all of you saintly, ascetic personal finance bloggers with your lessons on frugality, your personal net worths, and your rah rah  rants against plastic and debt.  And you know what … I’m a believer in your church, I kneel at your altar and I repent for my past financial indiscretions.   Oh and there’s the pontiff Ramsey bellowing “live like no one else, so you can live like no one else”. 

Yes … the force is weak in this one and I am considering a brief venture to the Dark Side … temporary credit card debt. 

I love this girl and think there are occasions in life that need to be celebrated appropriately.  And in my mind … this girl has worked extremely hard to accomplish this goal and if her boyfriend can’t make a big deal out of it, who can? 

“Oh silly man … there are other ways to acknowledge her accomplishment and not go into debt.  If she’s such a great girl she’ll understand and wouldn’t want you to succumb to the Dark Passenger of Debt!”

So what does a man on the road to recovery do?  Have any of you personal finance experts ever diverged from your righteous paths for a girl?  a special occasion?  an important milestone?

Love is patient, love is kind.  It does not boast, it is not proud …

 …. but does Love ever just say, “The hell with that.  I’m buying this beautiful girl who I love a big pair of diamond earrings to show her, albeit in a silly consumerist driven splurge, just how proud I am of her!”

Tax on Sales Commission

Ouch!

As a long time sales professional it’s always a mixed bag of emotions when it comes to commission payments on sales.  The best way I can describe it is that feeling you got as a kid on Christmas morning when you were overly excited to open a gift, were handed a big box that you were sure contained the coolest toy, only to open it and realize it was a new outfit.  Sure, you could definitely use the new clothes and your parents did a great job of picking out the latest in kids’ fashion … but there is still that tinge of disappointment, that slight feeling of disbelief – “I can’t believe it … no Nintendo?!?”.  Nonetheless, you would sit paralyzed by confusion, putting on a happy face for your Christmas morning pictures, wondering “What the hell just happened!?”. 

Years later, I’m currently sitting here thinking the same thing.   I just got my first quarter sales commission check.  Here’s a quick look at the math …

Total Gross Commission earned:  $8329.01

Federal Taxes withheld:  $2082.26 (yep, that’s 25%!)

Social Security paid:  $516.40

Medicare:  $120.77

State of WI:  $541.39

Net Commission received:  $5068.20

That’s right, when all was said and done I had nearly %40 of my gross commission taken out in taxes.  Some initial thoughts that ran through my head:

* Didn’t I just read an article last week that said 50% of the country doesn’t pay any federal income tax?  Did I really just drop$2082.26 on federal income taxes for my first quarter commission check alone?

* Social Security.  Ha!  At just over 30, there’s absolutely no chance I’ll see that.  What’s the funding deficit on that magnificent program currently running at?

* Medicare.  Well I’m sure ObamaCare will sort this all out.  It is supposed to lower costs, right? 

* The lovely state of Wisconsin.  An unfriendly tax policy towards corporations and an increasingly unfriendly tax policy towards residents.  Add in cold miserable weather 5-6 months out of the year and … what the hell am I still doing here?

So there it is.  There are the thoughts running through my silly little mind as I hold my sales commission check.  Sure, my net $5068.20 is going to be very useful (see: Debt Snowball) … but I can’t help but wonder how useful the $3260.82 taken out in taxes will end up being? 

My confidence in how, where, when, why and how my taxes are spent is at an all time low.  I’m all for taxes (or as much as someone can be) - provided they are sensible, well thought out,  fair and effective.  

Granted, my tax burden is well below the outrageous taxation levels of some individuals and corporations (great article on this in yesterday’s Wall Street Journal).  But with the Bush tax cuts coming to an end, an increasingly hostile attitude towards corporate profits in multiple industries, increased tax penalties proposed on capital gains, and the discussion of a European style VAT tax (not to mention all the nickel and dime taxes States are using to plug budget holes) … I’m starting to think that Federal and State tax policies are not well thought out components of a fair/balanced national fiscal approach, but rather the too often ill-conceived reactionary noodlings of a small child that hasn’t learned to say “NO”. 

And the more the spotlight is shed on the current fiscal crisis of our Federal and State governments, the more I can’t help but feel a little frustrated.   A frustration that stems in part from this project.   The more I’ve focused on living within a budget,  controlling my expenses, living below my means to pay of debt … the more I think it reasonable to expect state and local governments to do the same.  The more I read the personal finance blogs of others, the money-saving tips and budgeting resources I see available on various financial websites, the news stories about individuals spending less and living more frugally … the more concerned I am at the disconnect between governments and those they govern. 

I for one would like to see the state of Wisconsin and Washington DC keep a monthly budget and debt tracking spreadsheet – a detailed glimpse into what’s going in and what’s going out. 

My apologies for the Sales Commission Tax induced rant.

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iPhone and iSave

I’ve always been that guy when it comes to cell phones.  And anybody reading this probably knows at least one guy like me –  the guy that always goes with the free phone when I’m signing up for my cell phone plan or extending my contract with a current provider. 

And I’ve been fine with being that guy up until this point in my life.  Sure, I was still walking around with an analog phone when everything went digital.  And yes, I was still carrying around a Zack Morris/Saved By the Bell sized phone when flip phones first came out.  My last phone did have a camera though – .00025 megapixels!!  

But hey – I only needed my phone to make calls, right?

That’s what I thought until I finally popped for an iPhone – the 3GS, 16gb in black.  And I must admit, it is a tremendously useful little device. 

But why include this in a blog on my personal financial situation? 

Because my decision to switch carriers (former US Cellular customer) and go with the iPhone was based primarily on the fact that doing so would actually SAVE me money in the long run be reducing my monthly cell phone budget. 

I know … Whiskey Tango Foxtrot? 

Well in a recent conversation with my boss I mentioned how useful and iPhone would be for business purposes: checking work email, navigating while traveling, having access to the internet while at various industry conferences, etc. 

And you know what – he agreed.   And he agreed to the tune of 60% – the percentage of my monthly phone bill that my company has agreed to pay. 

So now I have a monthly plan with AT&T (including internet, minutes and text) that runs approximately $115 per month: my share of this translates to roughly $46! 

My previous plan with US Cellular ran me $70 a month and I had no internet access, the same minutes and fewer text messages.  Granted, I did have to buy out of my current contract – a cost of $140. 

It’s possible to argue that I could have looked at US Cellular smart phones and accomplished the same thing – save money by getting my employer to pick up part of the tab.  But I admit it – the idea of finally splurging for phone and those incessantly catchy Apple commercials led me straight to the iPhone.  In my mind, US Cellular didn’t offer a smart phone that could compete with the iPhone on a number of levels – so, I ate the contract cancellation penalty (understanding that my plan to now split the bill with my employer would offset this upfront cost of switching providers in less than 6 months). 

The long-term result – I’ve got a much better/more useful phone and going foward the switch is going to save me money on a monthly basis. 

The lesson – think outside of the box when it comes to your monthly expenses!   Taking the initiative to approach my employer will save me $288 a year – and got me a better phone and monthly plan. 

And while not everybody might be able to sell their employer on the idea of paying a portion of their monthly bill, perhaps there are other, less obvious, options.  In the case of your cell phone bill:

1) shift to a share plan with a friend.  Typically, you can add a line to an existing plan for a relatively low monthly fee and up the minutes on the plan for less than it would cost for two individual cell phone plans. 

2) look at a lower monthly package.  Seriously, when’s the last time you actually analyzed whether you have too much or too little when it comes to your monthly minutes?  Call your provider and ask them to analyze your usage over the last 6 months. 

Any other ideas on how to save when it comes to your cell phone bill?  Other tricks you’ve used to reduce a monthly expense?

No Federal Income Tax?!

I read an article on MSNBC today with the headline:

“Half of Americans pay No Federal Income Tax: Credit for low - and middle – income families exempt many”

This is the image that immediately came to mind.   What do you think?

What's Your Current non-Mortgage Debt?

What’s Your Current non-Mortgage Debt?