The Right Way To Monitor Your Credit Report

November 24, 2010 By 1 Comment

Before I explain how I monitor my own credit report, I’ll fill you in on why I do it at all, and what I think of “credit.”

Your credit score, a name which is a facade for a cancerous mind-set in our culture, is actually a debt score.  It’s a measure of how much you love paying the banks hard earned money.  The only thing you need this magical rating for, which the financial industry can’t even decipher, is to borrow money, and thus, pay interest to someone else.

In the video game world, back in the 80′s, dropping a quarter in the slot added a “credit” which you could exchange for one play, which usually consisted of 3 lives.  At no time did you play the game, then add the quarter.  So, the word “credit” had been mangled to the banks’ advantage.

Is a credit score really important to your future?  Well, if it’s a high score, which is evidence that you borrow money and pay it back, then you can continue to borrow money.  If it’s a low score, you cannot.  If it’s a zero score, you can also borrow money.  Strange you say?  That’s right.  Even if your score is zero, meaning you have never borrowed money and you have no open accounts, you can get a mortgage.

So why is it at all important to know what your credit score is?

Aside from providing you with the illusion that you’re financially successful because of your high score, it is important to know what accounts are open on your report(s) as identity theft has become a very serious problem.  It’s also important to know that certain service providers, such as insurance companies, if you have a lower score (remember, a zero score is not a bad thing, but a middle of the road score is) they may raise your rates.  You may need to put a deposit on your utilities when you have them turned on, or you could run into trouble securing a mobile phone.

Most of these concerns mean nothing to the debt free.  If you manage your money well, you’ll have the money to put the deposits down with your cell phone company, or utility company, and after time, you’ll receive that deposit back.  Most people who cry foul at deposits do so because they don’t have any money, and they don’t have any money because they’re paying it to the banks instead of saving it.

The Right Way to Monitor Your Credit Report

There are companies out there that advertise free services that aren’t actually free.  In fact, they will trap you into memberships that bill you monthly or even annually, so you don’t notice, just to know your credit report.  This is a bad idea.  There is one website that you can go to, where you can order your credit report completely free of charge, one time per year, per credit reporting agency.

The name of that site is Annual Credit Report (www.annualcreditreport.com).  It’s NOT freecreditreport.com (which I will not link to.)  At AnnualCreditReport.com you have access to your credit report from each of the 3 reporting agencies one time per year.  Knowing that, the best way to stay on top of your credit report, to ensure someone hasn’t opened any accounts in your name, is to order one report every 4 months starting on the 1st of the year.

So, on January 1st, you would order your report from one of the reporting agencies, then on May 1st, the second agency, and then September 1st from the 3rd, until you reach January the following year, where you’d order the very first report again.  This ensures that you don’t have a 12 month gap where you may not know what’s going on.  You’ll be minimizing that gap down to 4 month periods instead.  If there is a dispute, it’s going to be easier to handle as less time has passed.

Get started today.  It actually is free.

Filed Under: Personal Finances, Planning and Budgeting Tagged With: , , , ,

Customer Service, I Vote With My Wallet

July 25, 2010 By Leave a Comment

There’s nothing more important in a business transaction than making it clear to your client that you’re happy that they have chosen you.  After all, they do have a choice.  It’s been a while since I was inspired to write about the experience I’ll explain below, but reading A Customer Service Confluence. Realizing the Key to Business Success by a fellow REALTOR® reminded me of the incident, and how important customer service is.

Now, when it comes to where you purchase your gasoline, your coca cola, or your convenient store snack, one usually doesn’t have high expectations for customer service, as these transactions require very little interaction between the purchaser, and the attendant.

At the corner of Indian School Road and Pima Road sits a standard convenient store and filling station which received a visit from me recently.  At the pump, I paid for my gasoline to the tune of around $40.00 total.  While the tank was filling, I stopped inside to pickup a drink.  When I handed the clerk my debit card, I was told that there was a $5.00 minimum purchase to use my card.

ME: “I’m sorry, what?”

HER: “Sorry sir, there’s a $5.00 minimum purchase.”

ME: “I just spent over $40.00 at pump one.”

(At this point, it didn’t matter, I had already made my decision.)

HER: “It’s per transaction, sir.”

ME: “Are you serious?”  (there were plenty of people standing around who overheard me.)  ”You know what?  Keep your drink.  I’ll go do business with someone who wants my money.  And I’ll make sure never to visit here again.”

I wasn’t angry, I wasn’t rude.  I didn’t raise a stink, or make a scene.  I simply said these words kindly and matter-of-fact-like, and went on my way, never to return.

Was I effective?  It’s possible.  I won’t be able to measure it.  Perhaps this article will inspire you to be more conscious about your purchasing decision and you’ll avoid the same gas station.  I do know that they will never receive any of my business ever again.  ”Come on,” you say.  ”It’s just a gas station.  It’s not like it’s a big deal.”  Well, to me, it is a big deal, because it doesn’t just happen at the little gas station.  It happens with all of the places you choose to spend your money.

It’s my observation that even though we as consumers have the power to dictate the products that come to market, and the services that certain companies offer, we often believe that we are powerless and are subject to whatever is offered at the price it is offered.  Part of this reasoning comes from the impulsivity that we bow to as we have to have it now and fail to exercise patience and planning to acquire the things that we like.

Yes, the convenient store was a “have to have it now” scenario for the fuel, as I need to be able to drive, but I didn’t need the drink.  In fact, it was well worth it to me to sacrifice the joy of cracking open a fresh beverage, even in the midst of one of the hottest weeks of the year in order to make a financial point.

Where I spend money and on what is the determinant of what will be available to me and where it will be available.  If I don’t like the service, I don’t have to use it.

Sometimes it’s not the product that we need to step away from, but the middle man who provides it.  If one purveyor provides lemonade with a smile, and the other frowns at you, it’s still lemonade, but the choice is clear.  You will vote with your wallet whether you like it or not.

Start recognizing that you have the power as the consumer to tell the world who you support and who you do not.

Filed Under: A Call To Action Tagged With: , ,

Borrowing Your Life Away

March 14, 2009 By Leave a Comment

One For One Exchange

Imagine two men in a field, each holding something the other needs.  Both men put a reasonable amount of time into acquiring the items.  Eventually they will come to an agreement about them and will exchange the items.  The value placed on each item is called utility, which is a measure of the relative satisfaction one derives from a good or service.  In this particular example, neither men will be exchanging more than just the item, which means no monetary value can be placed on them.  In fact, the reason they are both willing to part with their item, is because of the perception that each of them will increase their utility through the exchange.  If both men believe their utility will increase, then we’ll probably see an even trade where both men will walk away satisfied.  It also may indicate that they are the only two people interested in those items, and that there may be no way to measure a market value based on a currency system.

One For Many Exchange

Let’s give these two characters a name.  We’ll call them Joe and Bill.  In this instance, when Joe and Bill meet, Joe sees that Bill has something that he could really use, which would increase Joe’s utility significantly, but Bill looks at what Joe has and decides that he could use what Joe has, but doesn’t necessarily need it, and isn’t really excited about it.  Bill’s utility isn’t going to increase much.  Something has to give at this point.  This is where negotiation comes in.  It’s likely that Joe is going to have to offer more than just his item to Bill in order to get Bill to make the exchange.  So, Joe gives Bill his item plus a few other things, or perhaps whatever is being used in that day for currency.  Of course, we have to consider that in times when government has failed, people revert to a system of bartering, where goods and services become the currency until a government that the people can trust defines a new monetary system.

In the U.S., we have our American dollar, and we agree that it holds value, but it rests upon nothing.  Not even gold.  If you think about the value of Gold, remind yourself of the last time any civilization traded Gold when the economy failed.  It hasn’t happened for many centuries, and won’t happen in the future.  Dave Ramsey spoke about this in one of his recent podcasts, outlining that the most recent brush with a completely failed economy that we have seen was what happened in New Orleans after the hurricane.  You didn’t see people trading gold, you saw them trading goods and services.  You give me a gallon of water, I give you a gallon of gas, etc.

Many For Many Exchange

The many for many exchange is just a bloated form of the  One for One exchange where it simply takes more items to reach a one to one exchange.  I’ll trade you this, this, and this for that, that, and that.  More volume, but balanced out, just like all of the exchanges.  Again, as long as there is a perceived increase in utility for both parties to the transaction, then the details of the transaction just become pieces on the balancing scale of negotiation.

Borrowing Your Life Away

The three examples above are very basic micro economic facts of life.  There’s one common theme that runs throughout, however, and that’s that the exchanges that took place above assumed that each participant actually had something to trade.  They had worked hard to find what they needed to trade, and when they found someone with which to trade, they succeeded, and walked away from the transaction happy.  Each item was owned by the other.

But what if you were standing in the middle of that field and you wanted something the other person had, yet you had nothing to offer in return, except your word that you would eventually return something to them that may satisfy them?  What would they be thinking?  They might look at this situation and think that there’s a greater opportunity to them increase utility through this transaction than if we simply traded up front.  What happens?  Well, in this case, Joe offers to Bill an item that Bill cannot pay for now, in exchange for a greater payment later, because both are now bound by time.  Bill is now obligated to increase Joe’s utility over a longer period of time, and Joe has to wait to be paid, and may be tempted to skim as much as possible because Bill isn’t going to be able to pay him right away.  Bill may have a percieved increase in utility for the “new car” he just bought, but it’s short term, because Bill has forgotten that he has agreed to pay far more than he believes the item is actually worth to him, all for the sake of having it now, for just a little bit, instead of later, for the full value.

Welcome to debt.  The bible talks about this in Proverbs 22:7 – “The rich rule over the poor, and the borrower is servant to the lender.”  When was the last time you chose to be someone’s slave?  There is a simple solution to debt.  It’s called savings.  The reason you may be in debt is because you are not patient enough to save.  When you borrow money, you pay more than you should pay for something, and you lock yourself into a pattern of slavery until you pay off the debt.

Filed Under: Featured, Personal Finances Tagged With: , , , ,

Cash is King: Lower the Rate

February 13, 2009 By 2 Comments

(Note: I’ll preface this by letting you know that a credit card is the devil.)

Today, while using a credit card that I usually use, that I’ve had for over 10 years, which has a limit over $20,000, to pay an important bill, I was declined.

What?  Declined?  How can that be?  Here’s how.  My credit card company (AT&T Universal Card), in their infinite wisdom, made an executive decision to tighten my credit line to the balance on my account.  In a time when cash flow is king, and required to continue moving the parts of the machine that allow me to make an income, the last thing you want to have happen is this, as it completely eliminates your cashflow.  When I asked them why, they told me they ran a check on my credit report.  Why would they do that?  I don’t believe they did it.  I think they’re just telling us that and the real story is that they’re scared to death that they’re too exposed.  That’s fine and dandy and all, and they have every right to do so, but let’s be reasonable here!  No letter, no phone call, no notification at all.  Ask forgiveness instead of permission right?  Get this…I was paying my AT&T phone bill with my AT&T credit card!

As a 100% commissioned sales person, my income depends on the closing of the next sale.  Expenses that have a return on the investment, such as placing sign posts, sending out cards, subscriptions to various marketing services, and oh yeah, my monthly cost to the brokerage, are typically floated on my “business line of credit,” or, the credit card that I choose to use to fund my operations.  Whether it be a small monthly fee to DocuSign, or my brokerage fee, the credit card is a critical cashflow tool that makes it much easier to manage my monthly expenses.  One payment at the end of the month, easy to track, no problem.

Closing a sale results in me paying off the balance in its entirety at which point I realize my profits and recover my operating cash.  Due to the recent (pardon my french) banking bullshit that we the little guy have been forced to feel through the disgusting practices of some extremely greedy people at the top, many of us are no longer able to pay the very bills that we need to pay in order to continue making money.  How can a credit card company cut off my purchasing power…the very line of cashflow that I need to generate income?  Well, they can and they do.  But that’s just one part of the story.  The interest rates that credit card companies charge are yet another piece of this idiotic puzzle.

Interest Rates are Criminal

After a long phone call, I was able to get my rate reduced from a criminal 29.99% to 12%.  Others have not been so successful.  One colleague recently called the credit card company to have her rate reduced and instead, they eliminated 90% of her purchasing power.  They dropped her from $20,000 to $2,000, and didn’t even giver her a rate reduction.  I was rather shocked to find that I had been increased to a criminal rate.  I’m tempted to never pay them back at all, but that would not be the right thing to do.

I’m not sure how I managed to get the rate reduced, other than being good at sweet talking the operator, but I did get it reduced, and thankfully, they also went back 6 months and credited me the difference of 29.99% and 12% because I had overpaid unjustly.  Missing a payment by one day will screw you so hard your head will spin, and they usually just apologize at you and say there’s nothing we can do.  “You’ll have to contact Experian,” they say.  “They’ll be able to show you why we made the decision.”  No maam, they will not.  They will not be able to show me why your credit card company decided to limit my purchasing power.  They will not be able to show me why my rate cannot be reduced to retain my future business.  All they can do is show me my credit history.  They have no idea how to read your mind anymore than I do.  I have no idea what your executives were deciding when they made the call to cut off my cashflow.

$1000.00 at 30%

I’ve written about this before, but there’s no doubt that it needs to be known by all who use a credit card (which I will reiterate takes extreme financial discipline, which most people don’t have.)

A card with a balance of $1000.00 usually requires only a minimum payment of $15.00/month.  You can buy that new laptop for only $15.00/month right?  Not so fast.  Let’s assume you pay $25.00/month instead of the minimum of $15.00.  At 29.99% annually, you will be paying somewhere around $4300 for that $1000.00 laptop and it will take you 15 years to pay it off. CRIMINAL!  If you fall into this trap once, that’s okay, get yourself out as fast as you can.  If you fall into it more than once, you’re an idiot.

The real lesson to learn about finances is that when you owe someone money, you become enslaved to them and the freedom to experience life as you were designed to experience it is virtually eliminated.  If you can, at all costs, and all interest rates, avoid credit cards entirely.

Filed Under: Personal Finances Tagged With: , , , ,

Branding your business is critical!

September 18, 2007 By Leave a Comment

As the technology director for a real estate company with over 300 agents, I have seen nearly every online etiquette and marketing violation known. At our brokerage, we offer the agents a branded e-mail address. [Read more...]

Filed Under: Hey! Wake Up! Tagged With: , , , ,