Creative Financing Doesn't Pay

Let me put it this way.... if the finance person across the table has to be "creative" to get you a loan, the bank doesn't think you will be able to re-pay it! If the bank, who's job it is to deal with money, doesn't think so... maybe you should reconsider!?

A report just came out from the Boston Globe that shows May Foreclosures were up 90% in May. Rest assured, if it was a different time those same customers that are now closing would have never got a loan... but thankfully they were shown the "creative light" and lead to the devil under the A.R.M. of the finance guy.

Here is what you need to know. When you go to buy a car/house/sofa, it is in the dealership/mortgage lender/furniture store's best interest to make the sale happen. Once you leave the building they get paid from the lender for the item you buy. THEY DON'T CARE IF YOU CAN PAY FOR IT!!! They are going to lie, cheat, steal, and get you to find a co-signer to make the sale happen so they get paid. I repeat, they simply DO NOT CARE if you can actually make the payments.

Of course, the solution, pay cash for everything. But when that isn't feasible remember these few things...

1. If you can't afford to buy it, but will be able to afford it in the next 3 years you can probably wait and save the money yourself.
2. If you have to get a loan, try to get it from somewhere different than the place you are buying the product. Go to your credit union and get preapproved for your Car Purchase. Don't go to the mortgage company your realtor recommends. NEVER USE STORE CARDS.
3. If your lender has to be "creative" to finance you, you can't afford it. Examples of creativity are: need of a co-signer (even your spouse), need for a non-standard loan such as A.R.M. or balloon payments, need for multiple loans (cards or mortgages) to cover the entire purchase.
4. Finally, as Dave Ramsey says, "90 Days is not the Same As Cash." Finance promotions are a RIP OFF. They are designed to make you mess up!!! Think about it, why would they give you money to use for free?

How Much Money is in the Federal Reserve?

Trick question! The Federal Reserve System is neither Federal nor a Reserve! The Federal Reserve system was developed in secret by the BANKing industry and DELIVERED to congress for approval over many years of legislation and lobbying.

The Federal Reserve loans money to "member banks" so that they can lend more money than they actually have in reserve. The Federal Reserve chairman can produce more or less money as well as increase or lower interest rates charged to the "member banks." Doing these two things can help control inflation.

Inflation is the DEVALUATION of the dollar so that consumer good's prices seem to appear to increase. Inflation is caused by the basic economic principle of Supply and Demand. The more money available to the public, the less valuable it is.

Little known fact: When the government needs money to fund things like the war, they can go to the Federal Reserve Chairman and request those funds. The chairman then writes a check to the US Treasury for the amount needed and CREATES those dollars. Thus flooding the market with money that did not exist the day before.

3 Common Money Floods: (Causes of Inflation)

• As stated previously, borrowing by the government.
• Borrowing by the "member banks". Member banks can loan up to 9 times for every actual dollar they have in reserve. So, if they choose to streatch their dollar, they are actually creating dollars for the loan.
• Frozen Money. Money is frozen for many reasons; stuck in retirement funds, overseas in government vaults, savings by businesses for trade.

When you hear these three things on the news, remember, it's your TAX dollar that is paying for these! When we as a nation are at the highest national debt ever, you and I are being taxed. When the US citizens have more debt than ever, you and I are being taxed. When China buys US debt, they are doing so to help the dollar (since we are their biggest importer), when they sell it... it will tax us. Inflation is a tax!

Most Americans have no understanding of inflation. My statements are not political, if we must go to war... then we must go, but do not under any circumstance believe that it's paid for by anyone but YOU!

It is important that if you are saving money that your savings plan has at least a 6% gain over the long term. (3% inflation plus 3% taxes) Failure to do this means you could be moving backwards by saving.

Facts About Credit Cards

This article from Blueprint for Financial Prosperity offers some of the old history of Credit cards which still exist today. Extremely interresting read.

7. The Visa logo colors were chosen because the blue represented the sky and the gold represented color of the hills in California where Bank of America was founded.

13. Wonder why minimum payments are so low? It allows consumer to carry more debt while keeping to the same low minimum payment. You can give someone with the ability to pay $100 per month a credit limit as high as $5,000 if they only had to pay 2% a month. If the minimum payment were 5%, they could only have a credit limit of $2,000. The lower the minimum payment, the deeper in debt someone could be in.

Blueprint for Financial Prosperity

Compound Interest

Question: Why are we so blind?
Answer: We were taught this way... P = C (1 + r/n) ^nt where P = future value, C = initial deposit, r = interest rate (expressed as a fraction: eg. 0.06), n = # of times per year interest in compounded, t = number of years invested

I mean really? Were we ever expected to actually use, apply, and remember for the future what this meant? This was taught between 4th and 6th grades. When you were 12 did you even have an understanding for credit or savings? When I was 22 I still didn't have an understanding for credit or savings.

You need to spend some time actually calculating this again now that you are an adult! You will be amazed what numbers really mean. Did you know that when you are saving, the difference between a 6% mutual fund preformance and a 12% mutual fund preformance is not DOUBLE!

Compound interest is a product of the banking industry. It is designed to confuse you and make their pockets bigger. If it wasn't, who in their right might mind would ever pay 18% interest to borrow money on a credit card, while they were only getting back 1.22% interest on their savings account?

Using this link, you can put a credit card balance in, the amount you owe and how much it will be worth if you pay minimum interest. (kind of) As well, you can put savings amount in, expected interest, and see where you will be.

Pictured, Albert Einstein explaining the rule of 72, it's a great picture but I am not sure Einstein is credited for this formula... I don't think picture is real. The rule of 72 is a quick way to find how many periods of time it takes for your money to double. (Or the banks debt on you.)

Are You Debt Free?

You'll find out quickly that I am a fan of Dave Ramsey. While he may not use the best mathematics to determine what your best option, he knows people, he helps you pick the best option for YOUR life. If you haven't had a chance to listen to him on the radio, pick up one of his books, attend one of his classes, or see him live you really should do so.

My wife and I took the class as a recommendation from our Financial Advisor. I was talking to him one day and explaining my money problems and housing arrangement. I told him that my wife and I were wanting to purchase a house but our money was dictating what we could afford. (A very real statement.)

He said, "have you ever heard of Dave Ramsey?" He explained that he is actually one of Ramsey's "Endorsed Local Providers" and that people come to him for financial advise by referral from Ramsey, a radio money guru. He suggested I pick up his book or CDs and give him a try.

Shortly after that my wife and I took a trip to Iowa and listened to the first 4 CDs during the trip. We were amazed at how real Ramsey is and how much we were doing wrong. We decided then that starting September 1 our life was going to be on purpose. Today, we are not out of debt, but we have a fire in us to do so. Since that date we attend the Financial Peace University class at a local church and we have really come to love sharing the program.

Try listening to him free online, listen to him on the radio, read a book (you haven't done that in a while), attend a class, or go see him LIVE... it's a life changing experience.

If you have taken the class you might enjoy this link, a summary of his investing class.

PS. While it seems like I'm trying to sell you something here, you should know that I do not have advertisers and I am only posting this with your best interest in mind. In the interest of full disclosure, I do receive a gift card when you purchase books from Amazon.com through this site. I plan to use those gift cards to buy more books to evaluate for future posts. Thanks for your support.

Deleting Info From Your Credit Bureau

The fair credit reporting act gives specific measurements for how long a NEGATIVE item can stay on your credit report. Additionally, they leave POSITIVE items on indefinately. So through time is is possible to fix your credit yourself, as long as you don't keep messing up! (I'm working on posts on how to stop messing up.)

It is NOT true that a credit item can be "reactivated". A debt might be able to be "reactivated" with a court action, but the credit bureaus are a reporting agency and must abilde by the law. But that's the catch, the law says how and what they can report, unless you fix mistakes (50% of Americans have them) then items could stay on your credit forever!

Cleaning your credit...

1. Change your bad habits, start paying on time. Fixing your credit is a waste if you are going to mess it up again. There should be a brightline where you move forward to fix your debt.


2. Get your credit report. Why guess where you stand, when you can see the major reports completely free? www.annualcreditreport.com DO NOT GO ANYWHERE ELSE, THERE ARE MANY FRAUDLENT PLACES.


3. Look for simple mistakes, dispute them. If the charge doesn't belong to you, dispute it, they will have to prove it does. Follow dispute information on the bureau website, they make it pretty easy to do now.


4. Look for big mistakes. Put all of your negative items in a piece of paper. Calculate when the debt was FIRST deliquent.... use this list to determine what is out of "range". If it shouldn't be on there dispute it. In the credit world, you have the beneift of the doubt, they have to prove you are wrong.
   
   Delinquencies (30 – 180 days): Can remain seven years from the date of the initial missed payment.
   Collection accounts: Remain seven years from the date of the initial missed payment that led to the collection (the original delinquency date). When a collection account is paid in full, it will be marked "paid collection" on the credit report.
   Charged-off accounts: Remain seven years from the date of the initial missed payment that led to the charge off (the original delinquency date), even if payments are later made on the charged-off account.
   Closed accounts: Closed accounts are accounts that are no longer available for further use. Closed accounts may or may not have a zero balance. Closed accounts with delinquencies remain seven years from the date they are reported closed, whether closed by the creditor or by the consumer. Positive closed accounts remain 10 years.
   Lost credit card: If there are no delinquencies, credit cards that are reported lost will continue to be listed for two years from the date the card is reported lost. Delinquent payments that occurred before the card was lost are reported for seven years.
   Bankruptcy: Chapters 7, 11, and 12 remain for 10 years from the filing date. Chapter 13 remains seven years from the filing date. Accounts included in bankruptcy will remain seven years from the date they were reported as included in the bankruptcy.
   Child support judgments: Remain seven years from the date the judgment is filed.
   Civil and small claim judgments: Remain seven years from the date the judgment is filed.
   City, county, state, and federal tax liens: Unpaid tax liens remain 15 years from the filing date. Paid tax liens remain seven years from the paid date of the lien.
   Inquiries: Most inquiries listed on your credit report will remain for two years. All inquiries must remain for a minimum of one year from the date the inquiry was made. Some inquiries, such as employment or pre-approved offers of credit, will show only to you.
   
   
5. Make a list of the items that should drop off of your credit over the next year. A year later, pull your credit report again (for free) and compare it making sure that the new items came off.


6. While your past is important, the last 2 years is the most. Keep your credit clean and wipe off the old stuff... before you know it you'll be setting pretty to buy that house. (You don't need credit for anything else.)

As a final note, just because an item is no longer appearing on your credit report, you are responsible to pay it! It is only right to pay it, otherwise it is theft. But as a side note, an item may no longer be legally collectable if you have not had a court judgement within a certain period of time depending on what state you are in. (Statute Of Limitations) I'm not a lawyer, you'll have to investigate this yourself.

Junk Mail and Telemarketer Call Reduction

Do-Not-Call Registry
Telemarketers should not call your number once it has been on the registry for 31 days. You must enter each phone number you do not want to receive calls, recommend your office, home, fax, and each mobile number in your household. Your registration will be effective for five years.

• www.donotcall.gov Or Call 888-382-1222
• The do not call registry does not [technically] work for businesses; however, it is still recommended you put your office phone in because it will likely help to reduce calls anyway since most telemarketers want to clear themselves of all liability by clearing their call lists of the do not call phone numbers regularly.
• Politicians are exempt from this program; they do not define themselves at telemarketers.
• Companies you actively do business with can still call as well.

Credit Card Pre-approved Offers
Direct mail and credit companies generate mail based on demographics including zip code, income band and credit payment patterns. Credit bureaus make big money selling this information, information from your PRIVATE credit report without your direct consent. One call does it all for agencies Equifax, Trans Union, Experian and Innovis.

• http://www.optoutprescreen.com/ Or Call 888-567-8688
• You just need your address, former address within two years, and social security number. Each adult in the house will need to call.
• You will be given a choice to opt out for five years or permanently. If you elect to opt out permanently, you will be mailed a Notice of Election from each credit bureau to Opt Out Permanently, which you must sign and return to activate your permanent opt-out. Even though your request becomes effective with within five days of your notification, it may take several months before you see a reduction in the amount of solicitations.
• If you have a 17-18 year old in your home or someone underage who is already receiving credit solicitations, consider doing this with them also. Perhaps they will be less tempted to get credit cards their first few years of college if they do not get pre-approval letters.

Combat Your Creditors Directly

• Be sure to READ the privacy statement you receive annually from each creditor. In this statement they will explain what they plan to do with your information and what you can do to limit them. READ this statement and follow the instructions. This will keep your information from being spread to “subsidiaries” and “partners” of your credit card company; apparently they have a lot of “friends.”
• Here's an Example for you, you'll have to look up the rest on your own: Discover Card. In order to provide you with access to these products and services, we may share the information we collect about you with other members of our corporate family. (The ENTIRE Morgan Stanley Corporation) We may share the information we collect about you with non-affiliated third parties, including those that accept the Discover Card. To indicate your preferences, call Discover Card at 1-800-225-5202 or write to Discover Card, PO Box 30961, Salt Lake City, UT 84130-0961.
• Write any credit card company that sends you courtesy checks, request for them to not send them at all. These checks are extremely dangerous from a temptation standpoint and even worse from a fraud standpoint. They usually have an extremely high interest rate when you write one. It is very simple for a thief to pass these checks and very difficult for you to get cleared from them… much more difficult than a credit card dispute.

Stop Junk Mail
The Direct Marketing Association estimates that listing with their mail preference service will stop 75% of all national mailings. Requests are kept active for five years. It can take up to six months for your request to be fully processed. You can also opt-out online or mail them your request, this service is $1 per person, but it’s worth it!

• https://www.dmaconsumers.org/cgi/offmailing
• Mail Preference Service
  Direct Marketing Association
  PO Box 643
  Carmel, NY 15012-0643
• Include your complete name, address, zip code and a request to "activate the preference service". And… a check for $1.

To stop mail addressed to former residents, or a former spouse
If the former residents neglected to fill out a Post Office change of address card, or it expired, you can fill one out for them. You must fill out one card for each unique last name. Write "Moved, Left No Forwarding Address" as the new address. Sign your own name and write "Form filled in by current resident of the house, [Your Name], agent for the above". You must write "agent for the above". Hand this form directly to your carrier, if possible, as your carrier must approve the form and see that it gets entered into the post service National Change of Address (NCOA) database. This is very effective.

Mail From Any Source
Start with the Direct Marketing Association. But, if that doesn’t work you’ll need to go directly to the source. Look for the return mailing address or phone number of the company. Call or write asking to be removed immediately, request written confirmation of your removal.

Phone Calls From Any Source
Request to be put on the “Do Not Call List” but don’t make the mistake of hanging up! Ask them for their company name, address and phone number. Get their verbal confirmation that you are now on the do not call list. Ask them how long it will take for your request to become effective. Keep a record of the call, call the Federal Trade Commission if it doesn’t stop.

Be careful not to search for these web sites as you could come upon a phishing site, a fraudulent site designed to look legitimate and obtain your info. Type these web addresses directly in the Address Entry box on your browser. Oh and I took some of this information from a web site long before I started this blog.. don't remember who.

Dealerships Rip You Off With The "Four-Square," Here's How To Beat It

This is one of the most informative articles I have ever read about high pressure sales and the specialized techniques car dealerships use. This is a MUST READ for anyone who owns or will ever own a car... new or used.

Read the whole article, it's long, it's important, and it will save you thousands... for example.

Sometimes, if the manager feels especially nasty (or has gone a few rounds with you via the worksheet), they'll come out of the tower and say "Folks, I'm (Douchey Douchebag), the sales manager here. Congratulations! You've just bought a car! We were able to get the payments to $310 - I know you wanted $300, but that was the best we could do. That's close enough, right?" They'll nod their head (another psychological trick to get you to agree), and almost every time the person says "Yea, that's fine!" The problem is, they didn't realize that a $10 payment bump over a 5-year loan nets an extra $1k in profit for the dealership. It's called "the $10 (or $15, or $20) close", and I only saw it fail when a person was really, really exasperated with us. The deal ends, and you wake up in a year realizing that, somehow, you're $6,000 upside down on your car, while the dealership is laughing all the way to the bank.

The Consumerist - Dealerships Rip You Off With The "Four-Square," Here's How To Beat It

Paying off your Bad Debt might get your Phone to Start Ringing

The credit bureau Experian is now signing up debt collectors up into their new program... good news for Experian... bad news for us. Apparently, they are monitoring our credit bureaus and when a creditor puts us on the watch list they will get notification if our situation to pay improves.

The introduction of additional trigger criteria and attributes within Collection Triggers increases the ability for companies to act quickly whennew information is available. Subscribers to Collection Triggers arenotified within 24 hours when the financial status of a consumer withintheir collection portfolio has improved.

So, Jimmy bounced a check. A collector has been trying to collect for some time now. The collector puts him on Collection Triggers with Experian. Two years later Jimmy gets his act together and pays off a credit card, finally. This action might just be an action that would notify his debt collector that he has some money availabe to pay his old debt.

Personally, I believe that this "service" is an infringement and goes way beyond what the purpose of the credit bureau was. Credit bureaus were designed so consumers could gain the trust of a company by showing a postive history. Since then, the bureaus have turned into a marketing company selling off your name and addresses and now your private credit information.

PRNewswire - "Experian Now Empowers Collectors With 'Improved Ability to Pay' Consumer Intelligence "