#59: Money & Finance:Credit, Money Management, and Saving

1. Credit

I read the article on how credit scores work, and watched some of the videos. One surprising thing for me was the recommendation that you don't cancel old accounts. I have been angry at one of my cards for their greedy policies, and wanted to write to close it. I have had it a very long time, though, so I guess I will just cut up my card and let the account sit there and age. I took the Credit Quiz and missed one question, related to this issue of cancelling old accounts.

I recently was alerted by Kelsey-Seybold clinics that an employee laptop had been stolen, and that my personal information could have been compromised. I was advised to place a fraud alert with one of the credit monitoring services, so I filed with Experian by phone. It was a very easy process, and the alert was also passed on to the two other main credit bureaus. The alert will be kept in place for 90 days from the day I filed it.

When Experian notified me by mail that they had placed the alert, they recommended that I check my full credit report, which I just did online. That also was an easy process, and I got my report instantly online for free. There were no surprises or obvious errors in the report.

Since I had never seen my credit score, I did decide to purchase it for $5.95. While my score was good ("Prime Plus"), it was not as high as I thought it would be since I have had many accounts over the years and always paid promptly. The reasons for the lower score are kind of bizarre in my opinion. For one, I seem to be penalized because the report "does not show any recently opened credit accounts." My score is also lowered because my report "does not show any real estate loans, such as a mortgage..." It seems weird that having faithfully paid off a long-term mortgage doesn't count for anything in this wonderful world of credit!!


2. Money Management

I use Microsoft Money to manage my finances. I enter what I have spent, and categorize each expenditure, and a "budget" of sorts is prepared to let me know where my money goes. It is helpful to know what my monthly expenses are, but I don't obsess about staying within prescribed limits. Many people resist working with budgets because they see them as "rules" rather than as useful mental "guidelines."

Microsoft Money also has modules for handling credit cards, tracking investments, and planning for future purchases. If you wish, it can translate your data into charts and graphs that give an alternative way to view your finances.

3. Savings and Retirement

The Harris County retirement package is certainly one of the excellent fringe benefits of working for the library system. It is one of the reasons often cited in job interviews about why people want to work for Harris County.

I had opened an online account with TCDRS in the past, as I am tantalizingly close to making use of it for retirement. The numbers are looking good -- too good to retire!!

I have been to the retirement seminar to get information for planning, so I knew quite a bit about TCDRS, but looking at the site was a good review. Most helpful is the page of forms, such as estimates of benefits, change of address, beneficiary designations, etc.

#58 Money & Finance:Banking, Budgeting, Spending

1) Banking

My bank does offer online banking for free. I have used it to go in and look at my balance, and to see if a particular check or deposit has cleared, and that has been very handy. However, I have been reluctant to go purely "paperless." I like having that paper statement in hand when balancing my account or entering data in my Microsoft Money program.

I have not used the service to pay a bill, although I do have many bills set up (with the utility companies, phone company, etc.) to make automatic deductions from my back account. That is even easier, as you don't have to enter amounts each time. I also have many automatic deposits made (like my paycheck). I have never had a problem with these kind of deductions or deposits.

I know the bank is very interested in protecting the security of my account. It is critical to their business. If I follow common-sense practices for protecting my login information and passwords, I should continue to have no problems.

I appreciate the possibility of being able to get e-mail alerts for deposits or for unusual activity. This gives added peace of mind, and would help detect any situation before it gets out of hand.

2) Budgeting

Of the free budgeting tools discussed, www.mint.com looks most intriguing. I signed up for a free account, but was a little disappointed. It was very quick to set up an account, but when I tried to enter data for six of my accounts, only two of them made connections. The checking account popped up right away, as did one credit card account. However, others had messages like "Legalese has changed on your account" or "Unable to connect, try later."

I currently use Microsoft Money for managing my accounts, and was tempted by the automatic transaction entry and categorization of Mint. It could potentially be a big time-saver, as I now spend multiple hours per month on updating. The time-saving feature may eventually be true, but up-front, Mint is still a lot of work. All of your accounts already have to have online logins established, and the categorization involves a lot of tweaking. I think Mint might be useful for my son, who does not have the patience to do the data entry for a program like Microsoft Money.

My biggest concern is a security issue. While it would be convenient to be able to access my data over the Internet in one place, I am still uncomfortable that it could be too accessible to hackers. After creating my account and trying it out, I deleted it. What it it did inspire me to do is to explore the newer editions of Microsoft Money, to see if easier data capture is possible with that program.

I definitely would never use a site like rippleplay.com. The latest "news" update on the front page was from July 2007!

3) Spending

I read the article on cutting spending, but I have already incorporated most of these suggestions in my lifestyle. One that is on my "to do" list is to investigate bundling our telephone with our cable/internet package. A great savings for us came with the discovery of Skype. Using this service, my husband can talk overseas with his relatives for free. Best of all, they can add web cams to the process, and even see each other! The quality of the transmission is pretty amazing, and it's hard to believe that their words and images are crossing thousands of miles.

Another suggestion for saving at holiday time is to share your family news through a blog, rather than buying, printing, stamping, mailing holiday newsletters. We created an online journal in December of 2008 in the midst of the financial crisis, so that we could share pictures and thoughts and ideas with our friends and family in a cost-effective way. What could be better than FREE! Take a look at http://agafiteijournal.blogspot.com/

For fun, I took the quiz to see if I have a spending problem. I was surprised that I got only 85 out of 100, until I reviewed the ones I missed:
*** I learned that Treasury bonds have higher interest rates than CDs, which is good to know as they are also safe investments.
*** On the question, "What happens when you get a raise?", my response "I don't notice" was considered not correct. I guess most people must get bigger raises than library employees do.
*** On the question, "Which investment portfolio is likely to earn the best return over 10 years?", the answer considered correct was one that include 85% stocks. This must show the age of this quiz. Stocks have certainly been in the tank in the current economy, and I doubt that this is really the right answer now.

My biggest advantage in saving money is that I HATE SHOPPING.