Debt Free

The way to ensure that you're completely protected by the FDIC's insurance policy is to keep less than $100,000 on deposit at any one institution. The other way to ensure that your deposits are covered is to use both an IRA and a traditional savings account to store your money. An IRA is ensured by the FDIC for up to $250,000.

The importance of this strategy was highlighted this past week when IndyMac Bank, a quasi financial giant with about $19 billion in deposits, was taken over by Federal Regulators as it became apparent they could no longer meet depositor's demands. NY Senator Chucky Schumer (D) took considerable flack for writing a letter that eroded public confidence in the troubled lender. When the contents of the letter reached the public causing depositors to pull their money out or transfer it to other institutions. The day after the letter became public, .5% of IndyMac's deposits were withdrawn by frightened customers.

Although Schumer was fundamentally correct in his accusations, many have questioned the wisdom of calling so much attention to the problems, which in effect created a self-fulfilling prophecy, when depositors came running for their money. The Office of Thrift Supervision opined that "the immediate cause of the closing was a deposit run that began and continued" when the senior Senator from NY sent his letter.

Posted by debtblog at 08:05 PM | Permalink | Comments (0) | TrackBacks (0)

Already a major profit center for banks and other financial institutions, the checking account overdraft fees banks charge their customers are going up yet again. At least two major banks, Charlotte, NC-based  Bank of America, and Seattle's Washington Mutual are jacking up the fees they'll charge customers for overdrawing their checking accounts. In  addition they will make it more likely that banking customers will be charged the ffes and less likely that they'll be able to talk their way out of them.

Another bank, also Charlotte based, Wachovia, who was in the news recently for firing their CEO, has gone so far as to send a memo to employees about overdraft fees. Reportedly the memo stated the bank was "..looking for every possible way to generate revenue" and told employees they should not go easy on customers trying to talk their way out of paying late, overdraft, or over the limit fees.

Although it is certainly well within any business's right to charge fees for whatever they see fit, including going a bit over on a checking account, it's also well within a customer's right to find another service provider if they feel dissatisfied. Banks are betting that consumers who are already feeling squeezed by jumping fuel prices, rising food prices and increasing mortgage payments will just sit idly by while the bank inflates their fee structure. If in fact consumers do this, the banks will be vindicated in their decisions. On the other hand, if customers respond by voting as consumers always have, with their dollars, by transferring said dollars to another institution if they feel their bank's fees are unfair, the banks may not be so quick to raise fees the next time.

So, just because you didn't get an ARM that's now adjusted way upwards when you bought your last house, doesn't mean that you won't  be helping to pay for those who did, in the form of higher bank fees. Watch out at your bank.

Posted by debtblog at 12:48 PM | Permalink | Comments (0) | TrackBacks (0)

The fact is that a relatively short trip in an ambulance can result in a substantial bill, and one that you may be completely unprepared for. I found this out the hard way when my wife required a journey in the siren express a few months back. The bill was about $500, and we live only a few miles from the hospital. Thankfully our insurance covered a large percentage of the bill, but it came as a bit of a shock nonetheless. An ambulance ride is one of the things that the average person doesn’t really think about, even in the context of medical procedures. If you live a long way from a hospital, an ambulance ride can set you back upwards of $1,000.

The fact is that many people are not covered at all for ambulance bills, even if they have medical insurance. It just results in one more large bill at a time when there can be so many of them. The first thing you can do is examine your medical insurance plan to see if it covers ambulance services, and if there are any restrictions. That can be important. Failure to follow the stipulations of your insurance can result in your being responsible for the entire bill, rather than just a portion of it. In addition, when you are selecting medical insurance plans, if given the option, check to see how the coverage varies with regard to ambulance services.

The next thing is to see who you’re riding with. In our case there were two options; the county funded ambulance and a private ambulance service. Both showed up in response to the call. We were unaware of the difference and in the furor of the moment failed to ask for the distinction between the two. It makes a big difference when it comes time to pay the bill. The county service is paid for by tax dollars, meaning we already paid for it through a special property tax. Had I been aware of the difference I would have chosen the county ambulance, which I’m sure is just as fast, and staffed by excellent EMTs, just as the private service was.

You have to check, because the name on emblazoned on the side of both ambulances looks similar. In our case, the county funded vehicle didn’t have the equivalent of “County Ambulance Service” or other such thing on the side. Both names looked like private companies, especially in the heat of the moment, so be sure to ask if you find yourself in a similar situation.

If you have Medicare you can’t be billed separately for ambulance calls after 7:00pm. This used to be a standard practice in many jurisdictions but was changed by federal legislators in 1995. Check for this, although such billing mistakes aren’t common anymore.

In some locations you may be billed even though you are transported in a city or county ambulance. If that is the case and you aren’t covered by Medicare, state health insurance, or private health insurance, you can usually apply for some sort of hardship assistance if you are having trouble paying the bill. In other areas the county or city will accept any insurance payment as payment in full, so if you receive a bill for the ambulance service, check with your insurance provider or Medicare. If they have made a payment to the ambulance service, you should not be liable for any other charges.

Separate billing for ambulance services is relatively recent in many areas throughout the U.S. For example in Fairfax County, VA, such separate bills began in 2005. One thing to check on such separate bill is the mileage charge. Make sure it’s accurate, especially because it can be up to $10 a mile, depending upon where you are. It doesn’t take much of an error in such cases to add up to a substantial overcharge.

Another thing to check is the accuracy of the procedures and medications on the statement. While you may be in a relatively poor position to determine the accuracy of this, some things will be obvious. For example if you had a heart attack, you probably weren’t given a topical antibiotic enroute to the hospital. Similarly, if you had a broken leg, you probably didn’t need a defibrillator zap. In many cases the data entry for the bill is done on laptops located in the ambulance and mistakes can be made. Actually, mistakes can happen at any point in the billing chain, so be vigilant.

Hopefully a ride in an ambulance is not something that you or a family member will need, but if you do, you shouldn’t have to pay any more than necessary. Make sure when the bill shows up that no more of your money gets mailed back than is warranted.

Have a great, Debt Free, weekend.

Posted by debtblog at 01:29 PM | Permalink | Comments (0) | TrackBacks (0)

In these areas, the single largest component in the increased cost of housing is the cost of government regulation. You read that right. The more “progressive” an area, such as Seattle, or San Francisco, the more expensive these government regulations seem to be for the average citizen looking for a home. Does your friendly state and local government respond to their constituency’s concern by reducing the level of government regulation, restriction and red tape?

Hardly, they’d get little credit for that. They wouldn’t want to reduce the cost of regulation and compliance for the guy just trying to get the house built. There would be nothing concrete local pols could point their finger at and say “See how I reduced the cost of housing for the little guy/gal”. Obviously most politicians are concerned with things they can point to during their next campaign. Now, if they can come up with some money to help Joe/sephine homebuyer in their quest for affordable housing, that’s something that can help them get elected next time around.

Are you having trouble believing me about all this? Well, I can understand that. After all houses are so very expensive, it’s hard to imagine that the cost of government is higher than the cost of wood, labor, or windows. Well, sad to say, it is. It’s not only me saying this either, although decades of involvement in the building industry has provided me with ample anecdotal evidence that it’s true. No, greater minds than mine have actually done real research on the problem of expensive housing, and gotten concrete data to back these theories up.

Government regulations, from land use regulations and environmental laws, to extremely complex and expensive building permit processes have piled on a huge amount of additional costs. They reduce the supply of buildable land, and economic law dictates that when you reduce the supply of something that is demanded, its price will increase. They have also increased the cost of compliance through such regulations as restricting the times of the year when work can be done on building projects. In addition some areas are notorious for the cost of building permits and the lengthy and complicated process one must go through to obtain them and keep them open.

I said that greater minds than mine have concluded that all this is true, and one such mind is University of Washington professor Theo Eicher, founding director of the University’s Economic Policy Research Center. He has released the results of a study, itself derived in part from the Wharton Residential Land Use Index, a detailed analysis of the cost of regulation and its contribution to the cost of housing in MSIs (Mean Statistical Areas) throughout the country. Professor Eicher’s study has concluded that in Seattle, fully $200,000 is of the average home price is attributable directly to the effects of government regulation. When you stop and consider that the average home price in Seattle is $447,800, and that $200,000 of that is due to government regulation, it’s amazing that the citizens of Seattle and King County (Seattle’s county) haven’t risen in revolt. The ironic thing is that it is these very same citizens lamenting the increased housing costs that voted in the politicians that enacted the laws, and in a few notable cases, the laws themselves.

For more on the Professor Eicher’s study, go here.

Posted by debtblog at 02:00 PM | Permalink | Comments (0) | TrackBacks (0)

Is it true? Does your credit score really give an accurate prediction of your overall level of general responsibility? What about those who were downsized and lost their jobs, subsequently causing their credit score to decline. Or someone who had excellent credit, but was injured through no fault of their own, lost their job and started falling behind on their bills? Well, thankfully for those who have questioned weather or not the insurance industry has any business using credit scores to help set insurance rates, the FTC has commissioned another of their many studies. This one deals with exactly that question.

Completed in the summer of 2007, the Federal Trade Commission, in concert with the Federal Reserve Board and the Department of Housing and Urban Development (HUD), have brought us a 242 page study on how the use of credit scores affects consumer's auto insurance rates. Does it artificially inflate rates, enabling the insurance companies to pocket millions more of your dollars? Does it let the industry unfairly discriminate against certain groups? We'll see.

First used by insurance companies to help set rates about 15 years ago, this practice has become almost universal among insurers. They love it. In fact, they are so in favor of the practice when setting rates for new customers, that in 2006 they spent $3.7 million in an attempt to defeat an Oregon ballot measure against it. Oregon had earlier banned the use of credit scores in revising rates for existing insurance company customers.

To help ascertain the fairness of the practice, the Feds examined the following areas according to the report:
1 - How credit-based insurance scores are developed and used; and, in the context of automobile insurance the relationship between scores and risk;

2 - Possible causes of the risk / credit score relationship, if any

3 - The effect of scores on the price and availability of insurance

4 - The impact of scores on racial and ethnic minority groups and on low-income groups

5 - Whether alternative scoring models are available that predict risk as well as current models and narrow the differences in scores among racial, ethnic, and other particular groups of consumers.

Seems like the study was fairly thorough, but what did it determine?

Finding 1 -”Credit-based insurance scores are effective predictors of risk under automobile policies. They are predictive of the number of claims consumers file and the total cost of those claims. The use of scores is therefore likely to make the price of insurance better match the risk of loss posed by the consumer. Thus, on average, higher-risk consumers will pay higher premiums and lower-risk consumers will pay lower premiums.”

Finding 2 - “Several alternative explanations for the source of the correlation between credit-based insurance scores and risk have been suggested. At this time, there is not sufficient evidence to judge which of these explanations, if any, is correct.”

Finding 3 - “Use of credit-based insurance scores may result in benefits for consumers. For example, scores permit insurance companies to evaluate risk with greater accuracy, which may make them more willing to offer insurance to higher-risk consumers for whom they would otherwise not be able to determine an appropriate premium. Scores also may make the process of granting and pricing insurance quicker and cheaper, cost savings that may be passed on to consumers in the form of lower premiums. However, little hard data was submitted or available to quantify the magnitude of these benefits to consumers.”

Finding 4 - “Credit-based insurance scores are distributed differently among racial and ethnic groups, and this difference is likely to have an effect on the insurance premiums that these groups pay, on average.

▪ Non-Hispanic whites and Asians are distributed relatively evenly over the range of scores, while African Americans and Hispanics are substantially overrepresented among consumers with the lowest scores (the scores associated with the highest predicted risk) and substantially underrepresented among those with the highest scores.

▪ With the use of scores for consumers whose information was included in the FTC’s database, the average predicted risk (as measured by the total cost of claims filed) for African Americans and Hispanics increased by 10% and 4.2%, respectively, while the average predicted risk for non-Hispanic whites and Asians decreased by 1.6% and 4.9%, respectively.”

Finding 5 - “Credit-based insurance scores appear to have little effect as a “proxy” for membership in racial and ethnic groups in decisions related to insurance.”

Finding 6 - “After trying a variety of approaches, the FTC was not able to develop an alternative credit-based insurance scoring model that would continue to predict risk effectively, yet decrease the differences in scores on average among racial and ethnic groups. This does not mean that a model could not be constructed that meets both of these objectives. It does strongly suggest, however, that there is no readily available scoring model that would do so.”

So, there you have it. According to this study, credit scores work, just as the insurance industry said they do. There may be other reasons for the correlation, but we are unsure as to what they are. The use of credit scores to help calculate auto insurance rates may actually benefit consumers, but how much can't be determined at this time. This practice does, in fact allow the insurance companies charge different rates to different ethnic groups. Are we to infer that, because the use of credit scores as a predictor of risk is accurate, that these different racial and ethnic groups actually present different levels of risk? Or, should the companies dig a bit deeper to determine what factors within the groups are responsible for the differences in risk profiles, instead of taking the easy way out? The study also found that the scores have little affect on the company's willingness to offer insurance to different racial and ethnic groups. And finally the FTC determined that, although there may be a suitable alternative to using credit scores to help assess risk profiles, they were unable to determine exactly what those might be.

Once again, your tax dollars have helped to answer a question asked by many. Is the use of your credit score to help set auto insurance rates fair? It seems that the answer is, for the most part, yes.

.

Posted by debtblog at 02:45 PM | Permalink | Comments (0) | TrackBacks (0)

Right off the top – say goodbye to the beloved incandescent light bulb. You know, those bulbs you can buy 4 for a dollar just about anywhere. They'll be phased out by 2020 so you can install those new fangled CFL bulbs. CFL bulbs have challenges of their own, including higher prices, tiny levels of the toxic metal mercury, problems dimming (some actually do dim now), slow time to full brightness, and harsher light. They do perform as advertised in the energy savings department however. You will be able to cut the electricity you now use for lighting by about 60%, provided you are changing from 100%, non dimmed incandescent lighting.

Some of the problems with CFL bulbs will be solved, in time. Some are able to be dimmed now for those who care about such things (and if you have dimmers installed, you should, lest you have to replace them with conventional switches), and prices are already much lower than they were only a couple of years ago. The levels of mercury, while extremely small per bulb, must be multiplied by the millions of CFL bulbs that will be pressed into service.

In addition, we should remember that these new bulbs must have new factories built to meet the burgeoning demand. New factories mean more efficient and environmentally friendly operation in most cases, but don't forget about the environmental damage caused by the actual construction of the new manufacturing facilities themselves.

Before you jump on the CFL bandwagon however, you should know this; once again, legislators failed to get it right. Instead of setting a lighting efficiency standard, and letting light bulb manufacturers workout the details, they banned a technology. Why is that a problem, you may ask? Because GE and others are now developing incandescent bulbs that are nearly 50% more efficient than current bulbs, and will be even more so within 5 years.

So, instead of using a newer, more efficient version of a proven technology that's relatively environmentally friendly, inexpensive, and compatible with all current light fixtures, we'll be forced to switch to a new technology that's more expensive and, while saving a tremendous amount of energy (estimates run as high as $18 billion annually that we'll be able to put elsewhere in the economy), don't work as well as current bulbs. Here is some information on these new high efficiency incandescent bulbs.

What about other provisions of the new energy policy that will affect you? The other place that Americans love to consume energy is their vehicles. We whine about high fuel costs, but still AutoData reports the sales of new Chevy Silverado Pickups, hardly the most fuel efficient of rides, was up over 30% in August and 7% in September 2007 over the same months in '06, despite high gas prices and a full size truck's thirst for unleaded. Some of that increase was purloined from Ford, as the Bleau Oval saw a nearly 10% slide in F series pickup sales year over year for August '07. None of that came from Toyota though, as sales of the new Toyota Tundra, a huge monster of a pickup with some versions producing almost 400hp, was up a whopping 69% in August over last year's figures.

Sales of most manufacturer's SUV's on the other hand, were down over the same months in 2006. Why does any of this even matter? Because it means that, given their free choice, many Americans will still drive large, rather inefficient vehicles. When they make choices like that, they must be stopped, for their own good, if for no other reason.

What impact will the new energy policy have on what you drive in the future? Well, it will get much better gas mileage. It will have to, because the Corporate Average Fuel Economy (CAFE) requirements will be raised from their current 22mpg to 35mpg. That 35mpg figure will also affect trucks, whereas the current standard for trucks and cars is different. So you'll be saving a ton of money at the gas pump. You'd better save at the pump, because you'll be spending more money just about everywhere else, courtesy of the new energy legislation.

Why? Well the technology required to reach the 35mpg mandate will not come cheap, all apologies to inventors of those 80mpg carburetors we just know were derailed by the big oil companies. By some auto industry and energy analyst estimates, the average cost increase per vehicle will be well between $1,500 - $4,000, with some estimates reaching twice that figure! To paraphrase one industry exec “All the cheap, easy stuff's been done. Further fuel economy increases are going to be expensive.” So you will spend at the dealership what you save at the pump, and possibly a bit more.

Another provision of the new energy bill is that we'll be burning more renewable fuels, such as ethanol, in our high mileage vehicles. The law requires a 600% increase over current levels. Hooray for the farm lobby!! While I'm all for turning to locally produced fuels, renewable and otherwise, to wean us from our dangerous dependence on foreign oil, you should know that such independence will definitely come at a cost. First of all, these fuels contain less energy per unit volume than gasoline, so burning them brings about a 20% decrease in gas mileage. Because of this, the net effect of the CAFE increase is even greater, to maybe 36 – 37mpg, making it that much more difficult to attain.

There will be some interesting new hybrid and fuel cell vehicles, in addition to heretofore undeveloped motive technologies that will power our vehicles. It may spell the end of the traditional muscle car, but you should see what they can do with rare earth magnets and lithium ion batteries these days. The Tesla, an all electric roadster based on a Lotus chassis, can do a silent, 3.8 second 0-60 run.

You should also be prepared to cough up more money at your local supermarket. No, not to pay for more expensive light bulbs, but because the increased demand for ethanol as a motor fuel will  raise the price of corn, and with it everything that contains corn, is fed corn, or competes with corn, such as wheat or barley (the price of whiskey and beer's goin' up!). It won't be a dramatic increase increase in most cases, but noticable. The good news is that a large portion of the new biofuel must be from other-than-corn sources, such as switch grass.

Hopefully one of the largest benefits to come from the new bill, other than the reduction in the demand for foreign oil, is the rise of new, hopefully locally developed and produced technologies to meet the demand for energy reduction. It could provide a dramatic stimulus for existing industries and the impetus for developing whole new ones. That may be just what America needs to keep us ahead of, or at least even with, the game in our new global marketplace.

Posted by debtblog at 03:41 PM | Permalink | Comments (0) | TrackBacks (0)

Make sure you get replacement value coverage. With many insurance companies, it will cost you an extra 10% - 15%, but since the premiums payments are fairly small, we’re not talking about very much money here. It will be worth it if you ever need to actually use your insurance.

Another bonus is that, in the event of a fire or natural disaster, most renter’s insurance will cover the costs of temporary relocation. That really helps if you’ve got to move into a hotel and eat out for a while as you find a new place to live, or your apartment is repaired. As with homeowners insurance, renters insurance will cover the costs of someone injured on your property (subject to the limits of the policy). In today’s society, that’s not a bad idea.

To get renters insurance, try your auto insurance provider. You may even qualify for a multi line discount. You can also check with friends for a referral to a god insurance provider.

The bottom line; it’s pretty inexpensive, and unless you own nothing, a little insurance is probably a good idea.

Posted by debtblog at 02:52 PM | Permalink | Comments (0) | TrackBacks (0)

Financial Misconception 1
One such financial misconception that’s been spread around for years is that you have 3 days to make up your mind after you sign a contract. So, it's a bit of a legal misconception with large financial implications. If you decide you really shouldn’t have made the deal, you can cancel the contract. Well, that’s not really true, except in a few isolated cases. Where this can get really expensive is when you’re buying pricey items such as vehicles. You must check with your state AG’s office to find out what items in your state actually give you a grace period after you’ve signed a contract. In legal parlance the 3 day contract grace period is known as the “3 day right of rescission”.

In Washington for example, you have this right on certain products and services, such as health club memberships, some timeshares, and a few other select sales. In Texas, you can get a 3 day right of rescission on certain sales made at locations other than the seller’s place of business, with some exceptions, the same is true in Oregon. In fact, sales made in your home are one of the only places where the 3-day grace period applies in virtually all locations. The Federal law on the subject can be seen here:
http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&tpl=/ecfrbrowse/Title16/16cfr429_main_02.tpl

In short, you should expect not to be granted any such rescission and treat it as an exception if you are lucky enough to get one. You must check your state’s laws to be sure.

Financial Misconception 2
Another common financial misconception is that Social Security disbursements aren’t subject to Federal income tax. This isn’t true in many cases. It all depends on how much income you have from sources other than Social Security, and if file a single or joint tax return. If you file singly, you will have a greater chance of having to pay tax on your social security income. Look on the bright side, though; the IRS can never treat all your Social Security income as taxable, only 85% of it! Make sure you go over how you’ll be receiving all your sources of retirement income with your tax professional to ensure you get to keep as much of your hard earned SS income as possible.

Financial Misconception 3
You can only contribute up to the IRS set maximum to your 401(k). For many, this is true, however, if you’re over 50 years of age, the Feds will allow you to contribute a bit extra, in the event you need to catch up to where your retirement account should be. For 2007, this catch up amount is $5,000. The amount is subject to your employer’s plan limit maximum, which can be smaller, so ask at HR to find out. There are similar catch up rules for those over 50 who have IRA’s, but the contribution limits are smaller.

Financial Misconception 4
Paying the minimum payment on your credit card is enough. Hardly. Actually, even though the minimum payment percentages have recently been increased, it is still a brutally slow way to pay off your credit cards and is virtually sure to keep you in debt forever. If you want to have any chance of getting debt free, especially if you ever use your credit cards, you’ll have to pay more than the minimum.

The exception to this is if you have multiple credit cards. In that case, you should pay the minimum on all the cards except the one with the highest interest rate. That one you should pay as much extra every month as you can afford to. When it’s paid off, use the money to pay off the next highest card, and so forth, until you’re debt free.

The aforementioned scenario is about the only one where consistently paying your card’s minimum payment is the proper course of action (one exception would be a no interest card, in that case, you want to pay off the card as late as possible. This is because, assuming you pay no interest, the money you use to pay off the card in the future has less value than the money you would use to pay it off today.

Posted by debtblog at 01:42 PM | Permalink | Comments (0) | TrackBacks (0)

The first thing you need to be aware of is the ubiquitous ‘limited warranty’. That means just what it says, the coverage doesn’t extend bumper to bumper, top to bottom, or forever. It’s up to you, as a consumer, to determine exactly what the limitations are, something many consumers are loathe to do, given all the extremely fine print contained in most warranty descriptions. You, however, should not be among them, especially on major purchases, such as appliances, big screen TVs, vehicles, roofs, and even entire new homes. Seemingly minor differences in warranty coverage could dramatically affect how the manufacturer or builder stands behind their product, and more importantly, how much money you could have vacuumed (be sure to check the coverage on those too) from your bank account to pay for repairs. Remember limited means just that and something you may take for granted as being covered, may, in fact, not be.

One warranty clause you should be aware of on vehicle warranties, especially extended ones purchased for used vehicles, is the phrase “internally lubricated parts”. This is a common clause in such warranties. It means that parts lubricated by the internal oil supply of the transmission/differential/transaxle and/or engine are covered, but there are some other important parts and pieces that comprise the power train of the vehicle, and you could be stuck picking up the tab, should one of them break. These include (possibly expensive) parts such as wheel bearings, CV joints, drive shafts, and U-joints. Such things may be covered, but the chances are you’ll be paying for them if your extended warranty includes the ‘internally lubricated’ clause.

Another clause to be aware of is the term “normal wear and tear”. This could be construed as almost anything, depending on who is doing the evaluation, so be aware of this, but typically it refers to things such as clutches and brakes on vehicles and batteries on laptop computers for example. If you are unsure, ask the company for clarification.

If you are buying an extended warranty, make sure when the thing goes into effect. Some start covering the product from the date of product purchase, others kick in on the day you buy the warranty. Read the terms carefully to be sure. You could be purchasing the warranty weeks or months after you purchased the product, it’s up to you to decide if the dates are important to you or not. A similar clause applies to extended vehicle warranties when it comes to mileage. If the warranty states the coverage is for “5 years or 100,000 miles” for example, you need to make sure if that means 5 years or 100,000 miles from the date you purchase the warranty, or when the vehicle reaches 5 years old or 100,000 miles on the odometer. It’s often the latter. Needless to say, this could dramatically affect your coverage.

Another problem with extended warranties is the viability of the company you purchase them from. This includes store brand warranties, not just warranties from warranty companies. If you bought electronics from Silo or Pacific Stereo in the 1980’s you know what I mean. These companies seemed large and viable, then POOF! They were gone. No company, no warranty. Manufacturer’s warranties are less troublesome in this regard.

If you purchased an extended vehicle warranty from Warranty Gold, Pro Guard International, or Smart Choice, you know all too well that those extended vehicle warranties can become worthless overnight if the company that honors them goes bankrupt. It’s incumbent upon you, therefore, to carefully research the background of any extended warranty company before you purchase. Look into their financial viability and their history. You sure don’t want to spend $1,500 on an extended warranty, only to be unable to file a claim.

Sometimes warranties are simply not worth the cost, in many people’s opinion. This especially applies to some consumer electronics products. Why in the hell would anyone buy an extended warranty on a VCR or DVD player, for instance? Much to the chagrin of your local electronics repairman, you can buy a brand new one for well under $100, and many times it’s better than the one your spent $300 for 5 years ago. You need to do a cost benefit analysis before purchasing any extended coverage.

Buying a warranty is purchasing an insurance policy against failure. You are hedging your bets that your shiny, new product may, indeed fail at some point. What are the odds that it will? Do careful research on the reliability of what ever product it is that you’re purchasing. If the results bear out the need for a warranty, then consider its purchase, otherwise stick the $1,500 in a nice mutual fund that will generate you a healthy return. If the darn thing breaks, use the money for the repair or replacement. If not, you’ve got another little nest egg.

Posted by debtblog at 01:49 PM | Permalink | Comments (0) | TrackBacks (0)

It’s time for the second annual Debt Free Customer Satisfaction Roundup, with some results from various customer satisfaction surveys from around the globe. After all, if you’re spending your hard earned money, you should be happy with the results.

Hey, maybe Tiger would say nice things about Buicks even if he didn’t have that hefty endorsement contract. In the JD Power vehicle dependability survey released today, another vehicle brand tied Lexus for the highest dependability score. It’s the first time in a dozen years that feat’s been accomplished, and it was by Buick, no less! Way to go General! Maybe Lutz is really kickin’ some tail over there after all.

In another GM luxury nameplate coup, the number 3 ranking on the survey, immediately behind Buick, was Cadillac. If you want to drive an import, but don’t want to spring for a Lexus, you can pick up a ride from their parent company, Toyota, who finished 4^th.  Honda rounded out the top five in vehicle dependability, according to the JD Power study. Although the study was conducted through this year, it was actually taken on model year 2004 vehicles, so if you’re buying used, you can let that be your guide.

In the 2007 JD Power survey for initial quality, which measures reported defects in the first 90 days of new vehicle ownership, Lexus was again at the top of the heap, but was actually edged out by German uber-performance nameplate Porsche. At least it appears you do get what you pay for with these brands, but pay you will. Lincoln moved up 9 places from 2006 to finish in the number 3 spot in the 2007 initial quality survey.

What if you’d rather fly than drive? You should probably head over to the boys in blue. Jet Blue, that is. They aced all 8 categories of the 2007 JD Power airline customer satisfaction survey to finish a resounding first. Hopefully that will help them overcome some of the problems they’ve faced in the last few years. They seem to be making customers happy, in any case. Number two position in the budget airline category was occupied by perennial favorite Southwest Airlines. According to the 2007 University of Michigan customer satisfaction index, the airline industry as a whole has a score of 63.

63 may not sound too great. If you are a cable or satellite TV provider however, you’d do well to reach even that mediocre mark. As an industry, the folks that bring you your in house entertainment scored a less than stellar 61 points. Ouch! Even the Internal Revenue Service managed to bring home a score of 65 in the index.

When you get there, you’ll probably need someplace to stay. If that hideaway at your brother’s doesn’t sound too inviting, maybe you could check in to a room at Microtel Inns and Suites, who again finished with the highest customer satisfaction rating in the economy / budget category. If you were thinking you’d rather crash in a place that befitted your esteemed station in life, maybe the Ritz-Carlton would be more to your liking, and to make it even better, they finished at the top of the luxury hotel class for 2007.

Since this is a personal finance blog, after all, there’s a better than even chance some of you will be banking online. In that case, you’ll be well served by Wachovia, who, according to the latest comScore customer satisfaction survey, topped all others for online banking customer satisfaction for the 3^rd year in a row. To ensure your family won’t have to shoulder those mortgage and car payments when you’re gone, you’d do well to visit Met Life. The 2007 University of Michigan customer satisfaction survey touts them as the life insurance provider that’ll engender the warm and fuzzies better than any other.

If all that car shopping, traveling and banking has you feeling a bit famished, the University of Michigan’s customer satisfaction survey for 2007 picks Publix as the supermarket to swing by for something to eat. They led all supermarkets in the survey, sliding past Safeway, and soundly trouncing last place finisher Wal-Mart, although Wal-Mart’s Sam’s Club subsidiary did very well in customer satisfaction scoring.

If you’d rather do your shopping online, Barnes and Noble and, no surprise, Amazon.com, led all others. As an aside, Amazon would have made you pretty happy as an investor too. Their stock has posted impressive gains this year, going from under $40 a share in March, to $74.11 now. Over the last 5 years Amazon (NASDAQ: AMZN) has given investors quite a ride. The period has taken the stock from around $15 to where it sits today. The 5 years has been marked by two nice rallys, one from late 2001 to late 2003 where the stock climbed from the mid $14’s to about $60 a share. It then took it’s sweet time to give about half those gains back. About a year ago, it started another impressive rise, going from $30 to almost $80 earlier this week, before giving back about $6 a share in the last 2 days.

If all this has you starved, but your refrigerator’s looking pretty barren, swing through your local Wendy’s drive through for some heart stoppers on the way to stock it up at Publix. Wendy’s (78 points) far outpaced number 2 and 3 finishers BK (69) and MickyD’s (64) in the U of M report. Wendy’s also received top honors for “best burger” in the most recent Zagat survey of quick service restaurants.

Thanks, and have a great, “Debt Free” weekend.

Posted by debtblog at 01:37 PM | Permalink | Comments (0) | TrackBacks (0)

Well, when Huffington's Hypocrites move out of their Mega mansions and into a 1,400 sq foot homes with CFL bulbs like the rest of us live in, then they can pop off. Until then, Arianna, hop into your Prius and stop meddling into our lives. Carbon credits? Walk the walk for a change, instead of just talking the talk. I personally could give a rat's buttocks if she ever takes a private jet or not. When you have engagements all over the country, it's doubtlessly a much more efficient use of your time than any kind of commercial common carrier. It's when she gets up in the saddle of her high horse saying what a wonderful thing carbon credit are, and because she can afford them, she can do as she chooses, while us Plebs should do as she says, that makes my blood boil. It must be fantastic to be so much more able and enlightened than the rest of the population.

Sorry about the Monday morning rant.

Now, about those airlines Arianna may be avoiding by traveling on more exclusive modes of transportation -
Recently I was on a flight where, mysteriously, it took the luggage 1-1/2 hours to find its way the 100 yards from the gate to baggage claim. Several travelers were unfortunate enough to have theirs not appear even then. Thankfully, about 4 hours later, mine was located. One group so affected included a woman traveling to give a training seminar. Many of the materials she was to be using for the seminar were in her luggage. She indicated that many of them were more or less irreplaceable.

This points to the necessity of not carrying mission critical materials in your checked baggage. Send them Fed Ex or UPS Next Day Air, and insure them, to mitigate the risk of them being lost or stolen. They'll arrive at your hotel intact and the $50 you'll spend is a tax deductible business expense anyway. What price piece of mind and business continuity? If those materials are truly essential to this woman's training business, it could cost her not only revenue, but also referral business when she is unable to give her best presentation. The $50 or $100 would have been a small price to pay.

I began using this little strategy not through the desire for risk mitigation, but because, after a long week at a trade show some years ago, carrying on and checking 100's of pounds of materials seemed like too much work (In addition, these days you'll be charged additional money for those extra pounds). An easier method beckoned, and it worked very well. From that point forward, it's been one of my standard strategies.

Is air travel really getting worse? Anecdotal evidence from friends and associates screams yes, but what about real data? According to the U.S. DOT's records, the airlines' on time performance in each of the months February (67.27% on time) – May (77.91%) actually showed improvement over the previous month, however they also showed declines from the same months last year. So, things are getting better and getting worse. Astoundingly, the DOT indicates that some 518,549 flights were more than 30 minutes late in the month of May alone! On some levels, it's surprising that we have an airline industry at all, since another U.S. DOT report on 21 airlines indicates that Q1 of this year was the first profitable Q1 for the airline industry since Q1 of 2000.

What can you do do to keep from being caught in an air travel nightmare? Aside form the typical advice about arriving 2 hours early, one might suggest that you drive. As this may not be practical for a day trip from LA to Cincinnati, here are some ideas. First of all, if you're traveling west for a little R&R or business to Hawaii, know that both Aloha and Hawaiian Airlines had the best on time performance in the month of May, and by a significant margin. Both the island airlines were over 90% on time, while the next best was Southwest at 81.74%. According to the U.S. DOT, the worst of the airlines surveyed for May was U.S. Air, at a dismal 63.7%. Wow! More than 1/3 of their flights are late. If you're one of those stuck in an airport, it probably seems like more. So, Southwest seems like a good bet.

The worst day of the week for on-time performance? No surprise, it's Friday, barely eclipsing Thursday for that dubious distinction. Where can you go and be sure you can actually arrive on time? Greenville, MS, home of Greenville Municipal airport and Palmdale, Palmdale Af Plant Nr 42 in CA showed every other airport in the nation how it's done. They reported a 100% on time arrival performance in May. As for the rest of the field (in the continental US), Bellingham International in WA, Minot International in ND, Simmons Nott airport in NC, Elko Municipal in NV, E.E.Faust Regional in WY, Nantucket Memorial (remember Wings?) in MA, Melbourne Regional in FL, Twin Falls City/Co Joslin in ID, St George Municipal in UT all scored over 85% in on time arrival percentages. Sadly, the odds are few of you ever travel to those places on a regular basis.

What about places you can travel to if you haven't an aversion to small regional jets and turboprops? Try Spokane International in WA (84%), Metropolitan Oakland International in CA (81+%), Jackson - Evers International in MS (81%), and Fresno Air Terminal in CA (83%).

What about the on time percentages for the big boys in May? La Guardia NY (63.86%), Los Angeles International (77.12%), Mc Carran International - Las Vegas (74.39%), Dulles International in DC (69.20%), Hartsfield-Jackson in Atlanta (74.99%), Miami International (72.36%), Minneapolis St Paul International (70.78%), Kansas City International (77.66%), Dallas Love Field (76.86%), Detroit Metro Wayne County (65.71%), Logan International – Boston (69.07%), Denver International (70.96%), Salt Lake International (79.45%), Sky Harbor International – Phoenix (74.70), O Hare – Chicago (62.62%) It's really is true, when it seems like something always goes wrong there. Unless of course, you happen to be traveling to Kennedy International (60.25%), where you stand to do even worse.

Posted by debtblog at 02:01 PM | Permalink | Comments (0) | TrackBacks (0)

The other day my wife got a call from one of her credit card companies, inquiring why she was getting $300 worth of products from the Disney store and a new cell phone. Apparently their fraud algorithm indicated those purchases, in that time frame, was outside her normal spending patterns. Their algorithm works very well. Someone was using her credit card without her permission. The problem was that her card was securely in the confines of her purse, right where she left it.

Thankfully, in this instance, the attempted credit card fraud was discovered before it went from attempted to actual. Since the fraud attempt occurred in the mall, you'd think it would be easy enough to use security cameras to try and catch the perpetrators. They know exactly what time the attempt was made, and where. Just look at the video, and there you go.

Security experts point out that even though the digital video servers used for the CCTV systems in most major malls would easily allow the perp to be captured, sadly it would be only on video. It seems law enforcement is just too damned busy in most metro areas to worry about most of your garden variety credit card and identity theft. That means you have to protect your own credit card. Your card doesn't have to get stolen, even though a friend of mine had his stolen at the gym a few years ago. The thieves get some nice outdoor stuff from REI before he found out.

How do you protect yourself from credit card theft? After all getting debt free is hard enough with your own debts, you don't want them added to by someone else. Luckily you're usually only liable for $50 of fraudulent activity in most cases. Thank the Feds for that one. Even with the $50 liability limit, credit card fraud is a problem you want to avoid. Here are some tips to help you avoid credit card fraud:

1 - Don't let your card out of your sight. It's common now for thieves to use small scanners to capture the information from the magnetic strip on your card. Presto! They now have all your account information and PIN, which they are free to use, or more likely, sell to organized crime. This is especially dangerous at restaurants when you give your card to your server to pay for your meal. They take it away to do who knows what with it. Don't let them.

2 – Make sure you destroy all copies of anything with your credit card number and name on it, such as receipts.

3 – Write “Please Check ID” on the back of your card next to the signature. With any luck the store clerk will actually do just that. It's amazing when they apologize for checking your ID when you make a credit card purchase. Aren't they supposed to do that? If every retail employee did check your ID, instances of credit card fraud would take a hit.

4 – Get your credit cards replaced with picture cards. It's allot harder to get away with using someone else's credit card if their picture is on the front , and they look nothing like you. If they want to go so far as to get cosmetic surgery to resemble you, let them have the money. They earned it.

5 – Keep your credit cards in a mini wallet separate from your main wallet. That way if you lose your wallet a thief is less likely to get both your credit cards and your ID. You may lose one or the other, but not both. As an added bonus, it'll be easier to leave your credit cards at home when you head out shopping. That'll help you on the road to getting debt free.

6- Unless you called a business, don't ever give your credit card information out over the phone. Who's really on the other end of the line anyway? Probably some boiler room credit card theft operation in Uzbekistan, that's who. That applies even if they seem legit and have most of your information already. The scam there is that they're most likely after the 3 digit security code on the back of your card.

Hopefully you'll never be the victim of credit card fraud, but in this day and age the numbers aren't on your side, unless you have no credit cards.

Posted by debtblog at 12:18 AM | Permalink | Comments (0) | TrackBacks (0)

I mean, come on! Saving money is great, but at what real cost? It's patently obvious that the Chinese need more oversight in their economy if they are going to be exporting products to other nations. If they want to poison themselves, more power to them, but keep that crap at home, please! With new tales of Chinese product recalls, from pet food to tires, surfacing on an almost daily basis, you should think next time you decide to grab that can of fish from Wal-Mart.

According to news reports, Chinese director of quality control, a Mr. Han Yi, said “These are not isolated cases” when describing the number of illegal production facilities uncovered during a recent investigation. Why did he say this? Because they found an astounding 23,000 different products that were substandard or out right contaminated. What did they find in the foods? Oh, nothing, really, unless you worry about industrial chemicals in your chicken and veggies. If you're a fan of imported victuals from our red friends west of Taiwan, you should know the actual contaminants found include formaldehyde, mineral oil and paraffin.

Mr. Yi's right, these are not isolated incidents. According to the New York Times (as much as I hate to give them any credit) in 2005 companies were found to be repackaging food waste products and selling them as fresh. Yum! If you feed your baby Chinese milk powder based formula, know that problems were found with that as well.

If American consumers, and those of every other nation were smart, we'd stop buying Chinese food products at once. It's bad enough to sabotage our economic futures by relying so heavily on (mostly one way) trade with China, and sending so much of our money there, but we could at least hope our people won't be poisoned for their troubles. You may think you're getting a great deal and saving money, but what's the real cost?

That ignores that many Chinese food products are produced using slave labor, which is the primary reason they are so inexpensive. The largest cost component of many products is labor. It stands to reason that if you can reduce that (or eliminate it entirely), you'll be able to undercut your competition. Yes, China has a huge market that American companies would greatly benefit from tapping. It would help our trade imbalance tremendously if we could get some of our money back for a change, but if the cost of our firms doing business in China is that we must import the crap they are sending us for dinner, the cost is too high.

Posted by debtblog at 01:37 PM | Permalink | Comments (0) | TrackBacks (0)

When purchasing a new laptop computer, make sure that you are able to use widely available replacement parts, such as batteries and especially power supplies. Some manufacturers, notably Dell, require the use of a like branded power supply otherwise the computer will run at about one third normal speed and the battery will fail to charge. All other power supplies will only allow the computer to run, not charge the battery. You will get an error message informing you of this fact when using any other supply, except the factory supplied unit (in some cases you'll get the message even when using the factory [Dell] supply).

In the interest of keeping my readers informed so they may make a good decision when purchasing their next laptop, I advise you check such things thouroughly. My advice is that you be aware when purchasing certain laptops you may incur the additional expense and inconvenience of having to buy only factory supplied parts, rather than readily available replacements. After all, there are many companies out there that produce fine batteries and power supplies. As is evidenced by the battery recall fiasco of a few months ago, simply buying a factory supplied replacement is no guarantee of quality.

Caveat Emptor.

Posted by debtblog at 05:01 AM | Permalink | Comments (0) | TrackBacks (0)

First of all, before the roasting, Kudos to Apple for offering consumers a choice in quality levels in the first place, and allowing DRM free music downloads. DRM free downloads, with greater device compatibility, from iTunes has been a quest of many consumers for a long time.

The problem lies with Apple’s claim their new AAC music downloads at a 256k bit rate have, as their website proclaims, “audio quality indistinguishable from the original recording”. Now that may be true whilst one is listening on the pint sized ear buds typically used with an iPOD, but I’m sure many in the audio/video and recording industries would argue is not the case on a high quality home audio system. Apple’s claim is misleading in the extreme. For those of you unversed in such matters, standard CDs (using what’s known as the “Red Book” standard) have a bit rate of 1,411.2 kbps. No matter how good the compression algorithm is, and AAC is a good one, something’s missing from the picture at 256k.

Apple may be forgiven for such transgressions if their statements contained a grain of truth, but there actually are high resolution audio formats on the market, and they are not just high resolution, but multi-channel as well. In this vein, Sony and Philips gave us the Super Audio CD (SACD), and it really sounded fantastic. There is also the DVD-Audio format, a competitor to SACD (won’t the A/V industry ever learn consumers want a single format they can support?) that basically uses the entire data storage capability of a DVD to store audio only, instead of audio and video.

More recently, for motion picture soundtracks, and presumably music videos, video sound stalwarts Dolby Labs and DTS have brought us Dolby Digital HD, Dolby Digital Plus, and DTS-HD. These are truly high resolution digital audio formats. Amazingly, these true high resolution audio formats don’t use a 256k bit rate!! Maybe they can learn something from Apple. Obviously the scientists and engineers in the labs in Cupertino must be much more on the ball than those dullards over at Sony, Philips, Dolby and DTS, or maybe it’s just the marketing (consumer confusion) department.

Consumers are confused enough by the audio /video industry. Remember VHS/Beta? Not to be outdone, this generation of a/v marketers has delivered HD-DVD / Blu-Ray Disc. Few remember it, but we nearly traveled don the same path with standard DVD, until an 11^th hour compromise by Sony and Toshiba (Hey! Those are the same two companies involved in the whole HD-DVD / BRD thing) put the whole thing to bed, and let us all enjoy DVD.

Regarding Apple leading consumers down the “High Resolution” path to low resolution audio, it’s been seen before.  Remember FOX’s “Fox High Resolution” video broadcasts a few years ago? When the other networks were broadcasting in HDTV, Fox decided they would put off the investment in transitioning to real HDTV a few years by giving consumers “High Resolution” TV (HRTV??).That stuff was widescreen TV that ran at higher than regular TV, but lower than HDTV resolution, hence the “high resolution” moniker. Consumers were so confused that few probably even knew what they were getting, and that’s probably just as the FOX execs wanted it. Maybe the same guys are in the marketing departments at FOX and Apple.

Posted by debtblog at 02:38 PM | Permalink | Comments (0) | TrackBacks (0)

For many people buying a car is like going to the dentist; you’ll get rid of some long term pain by undergoing a few of the most grueling hours imaginable. It’s not made any easier by some of the crap the dealers pull in an attempt to scrape a few, or more bucks from every sale. Some of the techniques they use are not so bad, but others are downright unscrupulous. Not all car dealerships operate this way, many are great businesses that operate under the principle of “treat the customer right and they’re yours for life”. Others  however, more than deserve the bad reputation the industry as a whole has earned for itself.

Here is a dealer scam you should look out for if you venture into a car dealership this summer. As with any major transaction, you should bring your best stuff and keep your guard up. Make sure you read every little thing before you sign it. It won’t be easy, with the 40 page contract you may be handed, but think about it for just a second, please. If there are uh, questionable, clauses in the contract where would you expect to find them? Well, buried deep within it, of course, and probably in small type.

One way you can avoid the following scam, and many other questionable car dealer practices, is to secure your own car financing before you venture anywhere near the dealer’s lot. They make a substantial percentage of their profit on what’s known as the back end of the deal. That includes everything that you buy besides the actual car itself. One of the main profit centers of most car deals is the financing package. That’s because the dealer often sells the financing contract for a nice bit of extra money over and above what they made on the vehicle. They can make as much, or in many cases more, than they do on the car sale itself. There are some dealerships that almost use the car deal as just a vehicle to sell financing products. It’s amazing.

I know; I worked at a Nissan dealership for a summer during college. Looking back on it now, it was a great education. I know now they were not one of the dealers you’d want to send your friends to. That’s probably one of the reasons they went out of business years ago. Sorry, I digress.

The scam that makes me hot is known as the “spot delivery scam”. You may have had it happen to you or someone you know before. It’s pretty simple, really. You go to the local car dealership and find that fantastic bit of plastic, aluminum, and steel that’s been keeping you up nights for the past year. It drives even better than you imagined. Oh my god! The power just shoves you back in the seat when you barely tap the accelerator. It corners like it’s on the proverbial rails, too. The leather on those seats is so butter soft, and smells out of this world (sorry, PETA!).

The salesman seems like a pretty nice guy too. After a bit of haggling (you weren’t born yesterday, after all) you work out a great deal on your new plastic fantastic and go zooming off the lot, sun streaming through your new sunroof. You really worked them over, didn’t you? Boy, that motor sounds great! After a week, your enthusiasm for your new love hasn’t diminished in the slightest. In fact you are more enthralled with your new car than you were when you first took it home. By now you’ve showed it off and bragged about it to all your friends, your associates at work, parents, and the guys on your softball team.

That’s when the phone call comes. “Mr. Jones, hi, it’s Mike down at XYZ Motors. How are you liking your new ride?” Yeah, we sell a ton of those, we can’t even keep them in stock. They’re one of the best cars in the past 5 years. I knew you’d love it. Hey, we got a call from XYZ financial today. It seems there was a little problem with your financing. It’s no big deal, really.” ”I’ll take care of it for you. I just need you to come in and sign a few papers. It’ll only take a second, and I’ll get you back out on the road. You want another excuse to drive your cruiser anyway, don’t you? Would you rather come down this afternoon or in the morning?”

You have just been victimized by the spot delivery scam. They let you take the car but hadn’t actually approved the financing. You signed a contract with a “upon approval of financing” clause. So, you signed a contract, drove off the lot in your new car and actually didn’t own it yet. After you take mental ownership of the vehicle, they call you back and lower the boom.  If you’re lucky, you can just take the car back, but don’t count on it. For one thing, due to human nature, few people would ever do that anyway. In their mind, it’s now their car. They want to keep it that way, and if they only have to pay an extra $20 - $50 a month, they’ll do it.

The scam is worse because the dealer knew exactly what financing you were qualified. They knew more about your credit than anyone but the feds and your bank. They can get you into a higher interest loan with this scam, however. They basically bait you into the car with a low interest loan, let you mentally embrace it, take mental ownership of it, and then hit you with demands to revise the financing terms you agreed to. Most people just go along with it. That’s one of the reasons to secure your financing before you ever go near a car lot, and to get your credit rating up as far as possible before you make a major transaction.

That’s only one of the little tricks and psychological games you’ll encounter when you’re buying a car. There is a litany of others, ranging from extremely subtle to the completely insane. The best way to counter these is to be as informed as possible and to have your financing before you go to shop for a car. The car dealer should obviously be able to make a profit. They have high overhead and provide jobs and a service for the community. But they should not be underhanded and try to screw the consumer, which some do, and do it with gusto. A fantastic resource to discover what you’ll face at the dealership, and show you how to potentially save large sums of money is Peter Humleker’s book Car Buying Scams. As a former dealership general manager, he’s seen it all and can give you a rare insider’s perspective on what you’ll encounter and what to do about it.

Posted by debtblog at 02:55 PM | Permalink | Comments (0) | TrackBacks (0)