Wednesday, September 16, 2009

Buddy's Tips #006: FICO Scores

I watch my Credit Reports every three months. I am "gun shy" about four things:

1. Information and Credit reporting mistakes and errors
2. Unauthorized credit users
3. Identity theft
4. Failure by the Credit Reporting Bureau to make corrections to my report

In seeking to be watchful, here are some of the things I have learned in protecting my credit:

Fair Isaac Corporation established the concept of evaluating, measuring and scoring credit (e.g., FICO Score). Their Web Site is:

FICO Scores range from 300 to 850

FICO Score is based on the following:

a. Bill payment history 35%
b. Debt to Credit Limit 30%
c. Length of credit history 15%
d. New account or recent application 10%
e. Mix of credit card and loans 10%
TOTAL 100%

1. The higher the FICO score the better: 721 and above is considered Very Good to Excellent. This is always my goal.

2. Credit Bureaus review and create your FICO Score based on:
a. spending,
b. bill payment history,
c. overall debt load

3. All stores and businesses file reports with the 3 major Credit Bureaus each month. These reports are used to determine my FICO Score.

4. Based on my FICO Score, the rate of interest I will be charged on a loan or mortgage is determined.

5. There are three CREDIT REPORTING AGENCIES that issue credit reports:

Trans Union

Web Site:

Telephone Number: (877) 322-8228

6. One technique I use is to request a FREE Credit Report every 4 months from one of the 3 credit bureaus. This enables me to keep track of my credit all year long.

7. Here are some ways I have used to improve and maintain a high FICO Score:
a. I pay all my bills early; always upon receipt. I use an on-line Bill Payer System through my Credit Union. I NEVER pay on time, I always pay before the DUE DATE.
b. I track my Debt versus my approved Credit Limit each month. The lower my debt the better.
c. I have worked hard to pay off all my debts; leaving me with ONLY my mortgage payment. All other debt I create is "selective" as I choose.
d. For a while I was applying for credit to boost my overall credit limits, but I am no longer doing this.

8. I try to protect my credit history by watching:

a. Credit History, itself; and
b. Debt to Credit Limit Ratio
c. Payment history (Although since I pay my bills upon receipt this is not a concern)

9. I don't do this often, as I try to keep all of my credit for "history" sake, but if I have to cancel a card it will be because the Card Issuer is not meeting my needs. The age of the card will not matter if I choose to cancel it. I will have talked with the Card Issuer to discuss my concerns and request a change, etc. If we can't reach a "meeting of the minds", then I will cancel the card. I am the CONSUMER, they need my business, not the other way around.

10. Having a good "mix" of Credit shows I am responsible in handling my credit. So, have a good mix of credit card loans, secured and unsecured loans, and mortgage loans as a part of your credit history. This will work on your behalf.

11. I NEVER miss a payment

12. WATCH YOUR CREDIT CAREFULLY!!! listed as an “authorized user” on someone else’s credit card. NEVER co-sign for another person’s loan. Their FICO Score (spending, credit history and payment activity) will impact your FICO Score.

Friday, August 7, 2009

Buddy's Tips #004- Steps for Long Term Successful Wealth Building

1. Know your income and spending thoroughly
2. Track your income and spending each month
3. Plan monthly payments 7 to 14 days in advance each month
4. Think out each spending move before you actually make a payment
5. Work hard to pay off all debt. Whenever you eliminate a debt set aside a portion of the money that is freed up for savings and then add the balance to your payment against another bill.
6. If you must buy, do “selective purchasing”
7. Save to “selectively purchase” an item, assuming you have to have the item
8. Set incremental savings goals to attain each month.
9. Likewise set incremental debt elimination goals to free up money for savings and further debt payment elimination
10. Goals setting: Set monthly savings/investment objectives and maintain or exceed them. Monitor your savings program weekly
11. Willingly sacrifice today so that you will benefit tomorrow
12. “Save automatically” using automatic reductions from your monthly salary
13. Give yourself a “raise” periodically and to continue increasing your savings amount each month and maintain it over the life of your savings program
14. Give yourself a “savings bonus” to celebrate accomplishments; thereby increasing your savings for a month or so
15. Give yourself a “small gift or treat or party” to celebrate accomplishing a major savings goal
16. Stay focused, be persistent, and remain dedicated to your goals
17. Be consistent in savings; make savings a “habit”; a regular part of your everyday life
18. Save throughout your entire life
19. Never deviate from your savings goals. Don’t get distracted.
20. Give savings a top priority; always save; “pay yourself first”
21. Use “Tax Deferred Programs” for savings. Set up savings program to pay yourself first each month:
a. use Deferred Comp tax deferred programs
b. use 401 K match programs
c. use IRA programs
22. “Maximize your deferred savings”: Work hard to save the maximum amount you can defer into each of these programs.
23. Use “flexible spending account” for health care, if available to you
24. Savings technique: Use low interest loans or cash advance loans to fully invest in your IRA or 401K program. Work hard to pay-off your loan quickly.
25. Save 75% to 100% of all raises or new job income
26. Invest in real estate for investment growth and tax purposes
27. Formula for Success:
Know your Savings Goal=>
Plan how to attain=>
Track progress=>
Compare success rate=>
Adjust savings program=>
28. If you must shop:
a. Buy clothing and other necessities in the secondary market on-line
b. Buy at Consignment Shops
c. Buy at Garage Sales
29. If you use a credit card, use a “cash back program credit card” to benefit from any spending, but most importantly pay-off your credit card in full each month.

Sunday, June 28, 2009

Buddy's Tips #002- Identity Theft: Prevention Suggestions

Protect all of your personal financial information. Make it a personal rule “NEVER” give out personal financial information (e.g. checking or credit card numbers; social security numbers) unless you have initiated the action or transaction and it is a legitimate purpose.

Ignore all e-mail spam asking for your information or verification or any other solicitation to gain information directly from you. Do not click on any link embedded in the e-mail. DELETE all of these e-mail as a personal rule of thumb.

Report lost or stolen credit cards or checks immediately. Both can be stopped or blocked immediately.

Carry one or two credit cards in your purse/wallet and never carry information with important numbers (e.g., Social Security Card, pay stubs, PIN numbers).

Buy a Shredder and shred all financial information, statements, account receipts, ATM receipts, bank deposit receipts, etc. with account numbers or personal financial information on it. Keep wallet and purse clean of receipts…empty your receipts daily into a closed container for security reasons. Use them to review your credit card statement monthly and then shred those receipts that you do not need to keep.

Guard your ATM PIN number and account receipts. Don't discard them.

Guard your mail (top security). Don't use your personal mail box to mail bills. Drop your bill payments in a regular mail drop box or at the Post Office itself. When you arrive home each day remove all mail from your personal mail box immediately.

Use “Bill Payer” (or a similar electronic bill paying program) at your local bank or credit union to pay your monthly bills. This will save writing a check (e.g., reduces exposure of your checking account number), save on the cost of postage (e.g., 44 cents per 1 ounce envelop in 2009) and fuel (e.g., driving to the drop box or post office to mail the bill) and time (e.g., on-line bill payment can take only seconds to accomplish). It also gives you a record of payment similar to your check and it reduces “check float” time, which saves you money on any mortgage payments (e.g., reduces interest paid).

Develop a tracking chart of your monthly billing, so you know when you usually receive your individual bills each month. If regular bills stop coming call the company and investigate why. Sometimes a false change of address is used to divert information.

Know your anticipated account balance (based on tracking chart). Check your statements carefully. If there is a discrepancy contact the company issuing the statement immediately. You have 30 days from receipt of statement to dispute a charge and begin corrective action.

Know your checking balance and verify it on-line or upon receipt of statement.

If you are suspicious about a bill investigate it and take immediate action!
o Contact the police and file a report.
o Contact lost or stolen card and fraud division of your bank, credit union, credit card issuers immediately!
o Contact the fraud division of the three major credit reporting agencies mentioned above.
o Contact Social Security Fraud Hotline: (800) 269-0271
o Contact the FTC Identity Theft Hotline: 1-(877)-438-4338

If you use an on-line computer install firewall software to prevent access and don’t put financial information directly on your computer.


Check your credit report for FREE every four months by contacting one of the three credit reporting companies and requesting a free copy of your credit report. This will allow you to monitor your credit report each year at no cost to you.

o Equifax ( (800) 685-1111 or (888) 766-0008 or (800) 525-6285
o Experian ( (888) 397-3742
o Trans Union ( (800) 916-8800 or (800) 680-7289


Federal Trade Commission web site:
Internet Crime Complaint Center:
Identity Theft Resource Center:
Privacy Rights Clearinghouse:
FTC free booklet:
“ID Theft: When Bad Things Happen to Your Good Name”, or
call (888) 687-2277 for a shorter version (ask for stock number D18052)

Tuesday, January 20, 2009

Buddy's Tips #001- Sources of Money

Here are some of the sources I have used in the past to generate "cash" depending on the need:
1. Your current income: Reduce spending (i.e., live on a very tight budget)
2. Refinance Home Mortgage
3. Home Equity Loan
4. Home Equity Line of Credit
5. Construction Loan
6. Co-signed Loan (e.g., family or friend)
7. Secured Loan (e.g., savings or share loan; collateral loans)
8. Savings
9. Unsecured Loan (e.g., personal unsecured loan)
10. Loan (secured or unsecured) with payments made by savings account interest plus prepayment supplement
11. Credit Card Cash Advance
12. Whole Life Insurance Cash Value Loan
13. Gifts from relatives
14. Loan from relatives or friends
15. 401(k) Loan
16. Sell something thru self-marketing (e.g., sell personal items through garage sale, e-bay, craigslist)
17. Pawn Shop (e.g., borrow against a personal item)
18. Consignment shop (e.g., sell a personal item)

Sunday, September 28, 2008

Free Market Financial System?

As I watch what is going on in Wall Street, I reflect back to the days of Enron and and I'm more convinced than ever that we do not have a "true" free market financial system any more. What we have is a play ground for the wealthy and those who think they know it all. These are the folks who "like to make big deals" and receive big commission checks. In their arrogance, they look down on the "little people" who provide them the money that they so freely spend at no risk to themselves. Jesus says, "What does it matter if you gain the whole world and loose your life?" This question can be applied to our nation and those who drive its financial sector, "What does it matter if you gain the whole world and lose a nation?". What is the bottom line in all of this? Individual and corporate GREED!!!

So what does that mean for me as a consumer and investor?

Well, I will be putting my money in investments that are guaranteed by FDIC or real estate property. By purchasing real estate I accomplish two things: 1) I can provide housing for others (renters), which allows me to help my fellow man; and 2) I will receive an income. At least with real estate and FDIC insured investments I can control their usage without fear of loss of my investment due to the wild ideas of some money manager in a New York City brokerage house. I have lost all my respect, confidence and trust of big investment firms...they too don't know what they are doing. The loser will always be the hard working American, who is trying to save money for future retirement.

Giving my hard earned money to Wall Street, where they say "trust me" not the brightest thing for me to do. $700 billion dollars as a bail out...? While as a nation we may have no choice to save our economy and financial future, it is important to me that Wall Street work hard to return to private sector monetary sources as quickly as possible and return the loaned tax payers funds back to the American government as fast as possible. I hope that Congress has sense enough to "fire' the top executives and money handlers of these corporations before they give them the funds and hire people who can be trusted to protect the tax payer and investors in their daily financial decision-making. I also hope that Congress has sense enough not to pay large severance packages to executives who have brought their corporation and our nation to the brink of financial disaster.

Currently I save 15% of my earned income. I don't want to have some "free-thinking, money grubbing, speculator" in a brokerage house spend it on a poor financial strategy, dumb idea or speculative impulse.

Sunday, March 2, 2008

Savings and Investment Program

One thing I learned early in life, thanks to my grandmother and aunts, was to save money. I had to teach myself how to do that "systematically". "Automatic withdrawals into savings" has been a big help in this regard. Over the past decade or so, with the advent of deferred savings programs (IRA, 401k, etc) I have always been able to save a little here and a little there and over time have been able to build up to the maximum established by law. The trick has always been to never allow any new income to get into my checking account. So the combination of "automatic withdrawal" and deferral programs, has made it even easier to save for retirement every pay day. God has been kind to me in this regard and I praise Him for His love and generosity.

All of this takes discipline and dedication. You have to have a personal "vision" of what you are trying to accomplish. It also requires much self-sacrifice. To save or invest for the future (mutual funds are an investment) you have to give up things you may "want" today, so that your investment program will allow you to live and enjoy life fully somewhere in the future.

My best friend began a savings and investment program 25 years ago starting at "0". He is today a millionaire... and owns 2 beautiful homes. So I know personally "putting money into savings and investments over time" works.

One final thing I learned, is that you have to save/invest at the same time you are reducing and eliminating debt. Time is truly money, so the longer you have funds invested the greater the benefits of compounding; stock growth; property value.

All of this has been a daily challenge for many years in managing my money. Especially, when you are trying to do all of this and meet the needs of your family, pay for college, maintain automobiles, etc...

It truly tests your skills. I pray each day for 30 - 60 minutes and asks for God's inspiration as I present my daily issues to Him. God has always shown me the right paths to follow. To quote Our Blessed Mother...Praise be Jesus!

Wednesday, February 20, 2008

Buddy's Tips #003- Mortgage Payment

Here is a technique I have used quite a bit. In the near future I will add my pre-payment techniques to this section. I pay my mortgage on a 25 day cycle. One technique I have used to maintain my 25 day payment schedule on my mortgage is to obtained a secure or unsecured loan to make my mortgage payment or prepayment. This technique can also be applied to other bills. While this may sound weird, it is actually a good way to meet all payment obligations in advance; it gives me an additional 30 days until the next billing cycle; and it gives me the time needed to pay-off the secured or unsecured loan during the 30 day time frame. Everybody wins and I do not have to worry about when I get paid to make my mortgage payment. Once I'm paid I simply pay off the loan.