Nothing insightful or thought-provoking today. Simply a remembrance of a tragic time and a small way to pay respect to the families that lost friends and loved ones.

The latest buzz has been all about the first wave of credit card reform laws to have taken effect. On August 20, 2009, credit card issuers must give cardholders 45 days notice before making any significant changes to the terms of the cardmember agreement, and must mail out bills 21 days before the due date. This gives cardholders an extra 15 days notice of any such changes to the agreement as well as an additional 7 days of knowledge as to what the final monthly bill is. Under the act, the customers also have the right to reject any proposed changes made by the card issuers and in turn maintain the current terms while paying off the balance over the following 5 years. That is all well and good, but as a result of the Obama Administration’s credit reform act, many (if not most) credit card holders are seeing significant reductions in credit lines as well. What does that mean? The answer is simple: lowered credit limits paired with sustained usage equals higher credit consumption rates, which is a negative mark on your credit report.

The percentage of credit used compared to the credit limits is a part of a major piece of the credit reporting equation used my Fair Isaac in its Fico Scores/Reports. 30% of your credit score comes from the amounts owed classification of the credit score, which is quite substantial. The thing that nobody is particularly addressing when discussing credit reform is the impact on credit reports and subsequently, credit scores. Even without having any additional credit usage, any of us could see our credit scores plummet simply because credit issuers are tightening the purse strings and reducing the available credit to millions, regardless of prior history. Yes, there are no doubt people reading this thinking to themselves that if you don’t carry a balance then it wouldn’t make much of a difference, and you would be right in most situations. But what about timing issues, people taking advantage of 0% interest offers, and home equity lines (among others)? Not everyone who carries debt is doing something wrong is is out of control with their spending. I have stated on numerous occasions that credit can be a very useful tool if used properly.

It’s not simply an issue of credit scores for the sake of obtaining new credit lines alone. With all that has happened in the credit markets over the past couple of years, and even with TARP money, lenders are making less money available. People trying to take advantage of low interest interest rates in order to lower their mortgages, or even save their homes are getting the short end of the stick. People who are out of work are suffering due to the hits their credit scores are taking in conjunction with the increased use of credit evaluations when it comes to the hiring process. Then you have those who are looking to rent living spaces who could be negatively impacted as well. Even insurance companies are using credit scores to come to a final figure when quoting insurance rates.

The overriding issue is that people in general are not educated enough on the topic of credit. Many view credit reports and scores as nothing more than something that is affecting people looking to borrow money. They do not realize that it also impacts the previous scenarios: landing a job, finding a place to live, insurance rates, even being able to hook up utilities or a cell phone without putting down a security deposit. I am left to wonder if anyone took the time to consider the broader-range effects of forcing such change so quickly. It seems that almost every fiscal policy decision is intended to put out the immediate fires, but lacks the forethought to make a point of trying to prevent the fires from flaring up again in the future.

Perhaps now people will take financial and credit education a little more seriously and make an effort to learn about these subjects, if not to recover from a disastrous situation, then at least to protect themselves (as much as one possibly can) from getting into financial trouble down the road.

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Everyone with any sense of financial responsibility tries to keep their spending within reason, and telephone expenses are no exception.  In fact, one of the most frequent personal budgeting steps is to get rid of the home land line, and to use a cell phone for all calls, taking advantage of the reduction in costs versus years ago, and especially the cost benefit of using a single phone line as opposed to multiples.  Personally, I have been without a land line since November 2006, and have not missed it one bit.  The problem is, however, that many people feel that they are limited in their choice of units when it comes to shopping for a free handset.  I can tell you that used to be the case when you were limited to buying a phone directly from the providers retail outlets, but not any more.

In the beginning of July, I realized that my then-current cellular contract was going to expire in the middle of the month.  Of course, I could have kept the same phone and plan (which was with Sprint) but instead I started looking at other options.  Then I remembered a site for a company called Wirefly which sells the same phones as the cellular companies, but at significantly discounted prices by comparison.  Even though the plans that are offered are the same as through the phone carriers themselves, a site such as this enables consumers to purchase phones that suit their lifestyle better at lower costs or no cost (and sometimes even making money after mail-in rebates!).

The process is rather simple, and does not take much time at all.  All that is involved is selecting  your phone, plan, additional services and accessories (if any).  The entire order took less than ten minutes for me to complete, and within a few hours I received an e-mail that confirmed the approval by AT&T for my new line of service on a brand new (not refurbished) Blackberry Curve 8900 plus a Kingston 2 GB MicroSD card and shipping at a total cost of….$0.  No, I did not leave out any numbers in that price, everything I received was completely free of charge to me.  It really doesn’t get much better than that (except if there was a mail-in rebate on top in which case I would have actually made money off the deal!)

I can’ say that it was all cake, though.  Apparently, the activation process is linked to the tracking number and the new phones are activated within 24 hours of delivery confirmation.  In my particular case, though, the person inputting the tracking information into my order screwed up, adding 2 extra digits to the tracking code so it was never linked to the real FedEx package.  What ended up happening was that the Wirefly system never received the delivery status and subsequently never activated the phone.  I had to call the customer service line and speak to someone who didn’t understand English very well, and therefore could not fully comprehend my situation, but after a couple of times running through the situation, he finally was able to set the activation process in motion.  So, even though I had to wait an extra day and a half to start using the phone, I would have to say that I walked away from the experience quite satisfied.

And, in case you may be wondering about all of those people who aren’t looking to switch to a new provider, you can upgrade to many of the latest phones for the same zero cost (and in the case of the higher-end models, a minimal fee).  I checked out the pricing on the upgrade side of the picture, and it works out very well in that scenario as well.  The only differences are that you have to be eligible to upgrade according to your individual contract specifications, and some of the phones do cost some money to upgrade to, although many upgrades costs less than what the cellular providers will charge for a brand new contract.  All you generally have to do is commit to a new/extended contract, and you are good to go.

A couple of days ago, Kiplinger Online ran an editorial called “20 Ways to Waste Your Money” which outlines a variety of ways in which people “waste” money.  My question is, these are “wastes” according to whose ideals and beliefs?  There are obviously people who have enough money to spend on anything they want, and those who don’t have the money to buy anything extra above the absolute necessities.  But what about the people who fall in the middle, who make a moderate amount of money and with proper planning can afford to make the purchases that the article “wastes”? I am not going to run through the whole list, but rather, I am just going to touch on a couple of the points which I agree and disagree with the most.

To start, the first point on the list of how to waste money is to “Buy new instead of used“.  I could not disagree more about this suggestion.  For starters, when buying used there is no guaranty of a warranty should anything go wrong.  Secondly, unless it is something being purchased directly from the original owner, and a person whom you know personally, there is no way to tell what the real history of an item is, as it can even be third- or fourth-hand.  In the case of a car, electronic equipment, clothing, and furniture for example, you can never know just how well the items were cared for, and what conditions they were kept in.  What would happen if the car breaks down, the clothing falls apart in the washer, the furniture collapses under you, or the electronics short out?  You are essentially out of luck since you will have no true recourse other than an attempt to take the seller to small claims court, and even then it might not be worth the legal fees, not to mention the time required.  New items, however, will be covered by the selling store’s/dealer’s limited-time return policy, followed by the guaranteed manufacturer’s warranty since you have the original receipt showing the purchase from an authorized reseller.

Another item I take issue with is point nine, “Buy brand-name instead of generic”.  In some cases, as in many pantry food items, and lower-end clothing items there is no real value attained by purchasing brand names, especially since many of those products such as cereals, athletic sneakers, pastas, and lower-end garments are produced in the same factories and simply labeled differently.  However, when it comes to electronics, computer equipment,  better-quality clothing, etc. there is a true and recognizable difference in quality.  In these cases, the materials used in the productions are often-times of superior quality and offer longer lasting life in addition to better performance, and longer lasting.  In addition, with outlet stores, and specialty retailers such as Marshalls and TJ Maxx, you can find name-brand items at a significant discount to the manufacturer suggested retail price (MSRP), and sometimes the name-brands can be found at lower prices than the generic or “knock-off versions.

The first points which I agree with are the second and fourth ones which suggest “Carry a credit-card balance“ and “Pay to use an ATM“as being major no-no’s.  I won’t go into much detail, as these are rather common guidelines for anyone to follow, regardless of income or tax bracket.  There is simply no reason to pay more than you have to in order to make a purchase.  The only time I can disagree with paying for ATM access is if you have an account which reimburses you for foreign ATM withdrawals.

The biggest point I agree with is number seventeen “Give Uncle Sam an interest-free loan“, and which is something I preach to clients all of the time.  Basically, by allowing yourself to pay in a substantially higher amount in federal income taxes with each paycheck, you are not only robbing yourself of the valuable spending power that having the money throughout the year will give you, but more importantly, you are giving up the earning power that comes along with that as well.  The way I explain it to clients, is removing the government from the equation and replacing it with a stranger and asking Would you ever hand over any sum of money on loan without having the borrower pay you interest in order to borrow the funds?”  I would say that 99% of the people I pose the question to say “no”, however they always qualify it by adding something along the lines of equating the tax refund to forced savings.  My view–if you want “forced savings” set up a savings account and have a set percentage or fixed amount automatically transferred from either your paycheck directly or from the account where the paycheck gets deposited to.  Out of sight, out of mind.

I’m sure that many people would both agree and disagree, just as I do with this article, and some of its major points.  However, as I have written in the past in articles such as “Financial advice is not a one size fits all proposition” not everyone’s views can apply to all people, or even a large subsection of the population.  Everyone needs to evaluate their own situation and make the decisions that best fit their own circumstances and budget.

Some time ago, I had my twitter account suspended.  Mind you, I was not sent a courtesy warning to inform me of any terms of service (TOS) violations that I had been guilty of (probably due to the fact that I had not committed any violations) nor had I been sent an actual notification of the suspension.  So, I did what any rational person would do..I screamed and cursed at twitter for an hour!  Just kidding, actually I simply went to the website, and looked for a contact at the support desk to resolve the issue.

Unknown to me at the time, twitter does not have a customer support service in the traditional sense (they claim that since it is a free service, they cannot get to every e-mail but encourage people to try and help themselves!?)  So I search for a way to get clarification or challenge the suspension and come across a crude submission form which essentiall asks you to state your issue in your own words, select a category of the problem from a drop-down list, and as if it really makes a difference–it asks for your mood! Now, I may not be able to interpret what everyone feels, but I’m pretty sure that if you are having a difficult enough time with something that you have to submit a case to support, then I can’t imagine that you would be in a very cheery mood.

But, back to the issue at hand.  A couple of days go by and the only response I had received was a copy of my submission along with a generalized list of causes for having an account suspended.  Deciding to go back to my account and see if there was anything posted there, I noticed that my case had been marked closed.  There was no explanation, no person to contact to further details, no option to respond.  “Ok”, so I thought to myself, “maybe it takes a couple of days to rescind the suspension or something”.  Well, those few days turned into a couple months, partly due to the fact that I had family issues to deal with and twitter was not the primary thing on my mind.

On July 11, I went back and filed a new case, adding that this was the second time I had been filling out the form.  The same form which asked what mood I was in the first time I went through this process.  Imagine how I would have liked to respond this time!  Not surprisingly, I received the submission confirmation in my email.  Also, not surprisingly, that was the only communication I would receive on the subject.  I proceeded to log back in and manually check the status, and what do I see?  A second closed case with no resolution nor explanation!

So, what do I hope to accomplish with this post?  Absolutely nothing, but it is a good outlet for my frustration and maybe can let others out there know that if they are experiencing similar issues with twitter, or any other service, they are not alone.  But I will be bringing this post over to my business blog later today, and expanding upon it to relate it to poor business practices and planning, so check there later!