Payday Loans

February 2006 Monthly Archive


Dave Ramsey's Total Money Makeover

The Total Money Makeover:
A Proven Plan for Financial Fitness

Author: Dave Ramsey

Publisher: Nelson Books

ISBN: 0785263268 – Hardcover, 244 pages

Dave Ramsey hates debt.

If I was debt, Dave Ramsey will smite me down where I stand.

Just like the authors of the other book reviews I’ve done, I’ve had no prior experience with Dave Ramsey’s previous work (I was illiterate till recently). The only reason I picked the book up from the library was because I thought the guy on the cover was Steve Jobs (turns out he’s not).

As I’ve mentioned, Dave Ramsey doesn’t seem to be fond of debt. There’s a good reason for that – he use to be in the debt hole himself. In fact, he was bankrupted. He went from fairly rich at 26, to fairly poor within a few years. After declaring bankruptcy, he took a hard look at himself and how he handled his money.

Ramsey started the second chapter of the book discussing the effects of denial on those with debt. He challenges you to take a look at your own financial picture, and examine if you’re in the hole or not. The book continues on with two very important chapter, specifically, the chapter on Debt Myths and Money Myths.

In Debt and Money Myths, Dave Ramsey lays out many of the common myth that can be often associated with debt, or general money matters. The Debt Myth chapter is basically focused on tearing down the often sold debt ideas within our society, while the Money Myth chapter focused on the financial mentality of people.

Here are some noteworthy ones:

Debt Myth: Make sure your teenager gets a credit card so he or she will learn to responsible with money.

Truth: Getting your teen a credit card is an excellent way to teach him or her to be financially irresponsible.

Money Myth: I’ll just file for bankruptcy and start over, it seems so easy.

Truth: Bankruptcy is a gut-wrenching, life-changing event that causes lifelong damage.

Money Myth: I can’t afford insurance.

Truth: Some insurance you can’t afford to be without.

Many of the debt and money myth are pretty solid, although I do question some of his debt myths. Specifically the anti credit card platform. One of the debt myth Dave Ramsey argues against is the fact that debit cards do not have more risk than credit card. I agree with that point, but he also failed to mention the broader protection afforded by credit cards. Of course, the benefits of credit cards can easily be overshadow by irresponsible usage.

Continuing on, the rest of the chapters lays out Dave Ramsey’s plans for attacking debt and building wealth, which he calls the “Baby Steps.”

The Baby Steps can be lay out as this:

  1. Start an emergency fund of $1,000.
  2. Pay off all debt fast using the “debt snowball” method (except mortgage).
  3. Build emergency fund to cover 3-6 months of expenses.
  4. Invest 15% of household income into Roth IRAs and other pre-tax retirement accounts.
  5. Save for your child’s college fund
  6. Pay off home early
  7. Build wealth and give! (Mutual Funds & Real Estate)

Couple things about the baby steps. They’re pretty solid besides a few things. His college saving suggestions are all pretty dead-on, except for the out of place mention of serving in the National Guard as a means to pay for college. I have nothing against military service, but an important decision such as that should warrant more discussion, instead of a simple one sentence mention, as Dave Ramsey did in the book.

The methods to build wealth (or lack thereof) via mutual funds and real estate is also questionable. I understand that the book centers around debt reduction, so the wealth building portion of the book can be lacking – but suggesting mutual fund without providing more insight can be a bit misleading. If a person is not careful in his selection of funds, he can easily be losing money through fees. Not to mention the fact that many mutual funds have poor track records in beating the market.

The complaints (on Baby Steps) aside, Dave Ramsey’s method of debt reduction, although at times a bit aggressive, can be implementable. Each of the Baby Step he list are important aspect in a person’s financial life, and his emphasis on emergency funds are well appreciated. As you read through each of the chapter on the Baby Steps, Dave Ramsey explains the importance of each step and supplements his points with stories from real life families. This brings me to another problem with the book. Of the 244 pages, many of them are riddled with excerpts of stories after stories. In fact, the last few pages of the book contains even more Total Money Makeover stories. Showcasing result is fine and dandy, but too much of it can become unnecessary fluff.

My beef with the book doesn’t stop there, unfortunately. If you’ve read Dave Ramsey’s previous book Financial Peace before, you really don’t have to bother with this book. While I was reading The Total Money Makeover, I checked out some of his previous work so I can compare and contrast. It didn’t take me long to realize that The Total Money Makeover is simply Financial Peace repackaged, with plenty of fancy products supplementation. The Financial Peace University, My Total Money Makeover website, and the Total Money Makeover Workbook are all clear examples of excessive fluff.

It’s a bit silly to tell people to avoid buying into debt, and then have the last few pages of your book looking like a late night shop-at-home infomercial. The book’s tag-line of “If you will live like no one else, later you can live like no one else” didn’t really help in negating the infomercial feel too.

Still, some of the content in The Total Money Makeover aren’t total crap. Yeah, the extra product placement towards the end is a real turn-off. Sure, repackaging a previous written work as a new work is a bit shoddy, but within all the fluff and the “You can do it!” cheerleading, there are some meat to be found.

If you’ve already read his previous work, then The Total Money Makeover isn’t a necessary read. If you’re wallowing in debt and you haven’t read his work yet, The Total Money Makeover can be a helpful reference in adjusting to the right direction of debt mentality – but be careful to not rely on it (and its supplemental products) as a guide to building wealth.

Pros:

  • Good at dispelling many debt and money myths
  • Works well as a motivational tool in debt repayment
  • A debt reduction method that looks to be solid
  • Places emphasis on the importance of emergency funds

Cons:

  • The anti-credit position is a bit overbearing
  • Way too much stories making up the content
  • Very similar to previous work
  • Too many product placement & supplementing programs
  • Careless mutual fund suggestions
  • Depth-less wealth building content


Seriously.

I know visibility is a bit poor, but Southern Californians CANNOT drive in the rain.

Look at all those Sigalerts¹. Sheesh.

SLOW DOWN!

_____________________

1. Aka you’re screwed; or, as the California Highway Patrol defines it: “You’re screwed for 30 minutes.”



When I’m driving by myself, I drive like Speed Racer. Mach 5 Go Go Go!

I throttle it like no tomorrow. Pedal to the metal. CHP be damn.

The only reason why I haven’t die yet from the horrid driving, is because even if I drive like a maniac – my econobox won’t go over 43 mph (stupid 4 cylinder piece of junk).

Things change drastically though when I have a passenger.
If my passenger happens to be my mom, I drive like a grandma. Mmm Bingo!

I use my turn signals. I stop at stop signs. I don’t try to beat the light, or the punk in his stupid Ferrari Enzo.

If my passenger happens to be a fellow Speed Racer. Then it’s race time! Because that extra 15 mph is going to get me to my destination three seconds faster.

This is the lovely Passenger Effect.

It can be dangerous, but it can also be helpful. Life has many passenger effects, especially when it comes to the world of buying crap. If you’re shopping with a buddy that just can’t stop spending… there’s a good chance you’ll be influenced to go crazy with the spending too.

Spendaholic Buddy: Come on Cap, you’ve got to buy that pair of pants. It brings out your behind beautifully.

Cap: Ah… I don’t know. My credit card debt is getting a bit high. Plus the pants seem a bit tight.

Spendaholic Buddy: STFU and buy the sexy pants!

Cap: Okay I’ll buy it! You’ve convinced me with your insightful argument!

See how easy it is to be influenced?

We all know that the people we surround ourselves with will have a significant impact in our life. You spend time with positive people, you might become more positive. You spend time with negative people, you might become more negative. This is also true when the issue concerns financial matters.

It’s a whole lot easier sticking to a frugal budget when you’re surrounded by a group of like-minded individuals. They can give you support and help reinforce your goals. When you surround yourself with people that have an exact opposite mindset, things can get a bit rough.

Even if you’re the world’s best driver, you can still be influenced by your passengers. Maybe they won’t change your mindset completely, but their constant backseat driving can still distract you. It’s a whole lot easier to carry out a goal when you don’t have a group of naysayers around you.

It’s true that sometimes you can’t choose who you’re surrounded with. It’s tough when that happens. But you do have some choices in the type of people you can seek out. Will you seek out other like minded individuals? Or will you surround yourself with more of the same?

When you’re in that car with that very special passenger, you’re the world’s safest driver. Your little sister. Your little cousin. Your child.

You buckle up. You check the rear view mirror. You keep to the speed limit and you drive defensively.

You make a choice.



More crazy Internet giveaway! Here’s something I stumbled across.

In this giveaway, the site Subnixus.com is awarding the prize package of:

  • Four day, three night trip to Vegas for two + round trip airfare & hotel
  • OR, the cash value of the prize, $1,392.28 (his extra tax return)
  • Control of the site Subnixus.com for a period of 24 hour.

Pretty darn interesting. A good way to drive traffic to his site I guess. Since the value of the prize is enough to worth a mention. Check out the link “Vegas Giveaway” on top of Subnixus.com for more details.

The chances of winning this is a lot better than the lottery, btw. Deadline’s March 1, 2006.

Update:

Here’s another nifty giveaway that’s ending soon. Flexo from Consumerism Commentary is giving away The Automatic Millionaire Homeowner. Pretty sweet for just leaving a comment!



Nothing beats starting an article with a rhetorical question:

Do you ever wonder what’s going on with your credit report and history? Ever wonder when your credit card provider will report the updated (higher) balance to the 3 credit reporting agencies? Ever wonder which of the 3 credit agency gets the updated balance first. Ever wonder what a credit report even looks like?

If you’re like me, you’ll be a bit curious too (or obsessed).

If you didn’t know, your credit history and your credit score changes frequently. This makes perfect sense, since our financial picture changes daily. One day we’ll have more money, the next day we’ll have less. The same applies to what goes on your credit reports. One week you may have lower balance thus higher scores, the next month you may have higher balance – thanks to your spouse giving little Jimmy that VISA he wasn’t ready for, thus reducing your score and getting a surprising slap in the face when you got rejected while trying to refinance your mortgage…

*ahem*

So who wants a slap in a face? I know I don’t.

Thus the best way to keep on top of what’s going on and avoid imaginary slapping of the face, is to utilize a daily credit report update service. You should note that these services are different in that they offer you daily updates of your credit report, instead of a single snapshot like other types of credit report. Since your report changes daily, having a service that can track daily changes will be especially useful for those in the process of credit improvement.

There are lots of daily credit report services out there, and one of the more popular services amongst the online credit forum users would be the services offered by Trilegiant.

Trilegiant is a big company that provides many different products and services, which ranges from shopping, health, entertainment, to consumer protection services. One of their forefront credits monitoring service would be PrivacyGuard.com

Here’s the Better Business Bureau’s Information Page on Trilegiant.

This review will cover services from each of the website below:

That’s quite a lot. But if you check these websites out, you’ll find that they’re pretty much all the same, Trilegiant basically just slapped together different color schemes. In fact, there’s quite a lot more of them out there. Check out the example below:

The main focus will be Credit Keeper and Privacy Guard, two services that I had subscribed to for a period of a little over a month. There has been lots of changes to Credit Keeper and Privacy Guard since my subscription, which was cancelled back in May of 2005. As mentioned, all of the websites above have the same color scheme; they also have the same features and services overall except for Bank of America’s Privacy Source which has a different contact number for customer services.

Each of the services have different pricing, which is a bit strange since they’re all from the same company (Privacy Source’s different pricing is understandable though).

Here are the current terms and pricing:

  • Credit Keeper – 1 month free trial, afterwards a $9.95 monthly membership fee
  • Privacy Guard – 2 months trial for $1, afterwards a $12.99 monthly membership fee
  • Credit Alert – 2 months trial for $1, afterwards a $12.99 annual membership fee
  • Privacy Source – 1 month trial for $1, afterwards a $129.99 annual fee

Each of the websites above also offers other different type of reports and scores. The main focus we’ll be going over here would be daily monitoring and daily credit report updates.

THE SIGN UP PROCESS

Is quick and painless. You provide your usual information and you’ll be good to go. They automatically generate a User ID for you, which contain parts of your last name and randomly generated numbers. You’ll also have an account number emailed to you, which you should keep for future reference (when you want to cancel the service).

NAVIGATING AROUND THE SITE

Could be a lot easier. Although the site presentation is fine, finding what you need is definitely a problem due to poor link placements. A lot of people (including me) seem to have problems finding out what to click to pull the daily credit report.

As you can see from the picture above, to request your credit report you’ll have to click on the “My Benefits” button and then click on the “Triple-Bureau Credit Report” link on the left. Afterwards you should click on “Request Report,” which will bring you to the report request screen.

If you check out the pictures, you can see why this may confuse people a bit, because the page looks like another sign up form. This page contain lines for you to input your credit card number to make payment (not shown in pictures), but you do not need to input them to request your report. Those that read more carefully will notice that the report is $0.00.

So to request your report, simply click on the check box shown (the service provides only one “What If” score, if you want more, you need to pay $6 for it). After you click on the box, fill in your social security number and click submit on the bottom. This will pull up your credit report for the current day. You should note that you can only request one report per day.

WHAT THE CREDIT REPORT LOOKS LIKE

To view a sample of the credit report provided, click HERE!

The first page you will see is the Credit Score tab. This shows your three score from the three credit report agency. You should note that this is a “FAKO” credit score, a score that’s computed by Trilegiant, but not by Fair Issac – which is the credit score company that most mortgage lenders rely on.

Although the scores are FAKO score (term use to indicate fake credit score) instead of FICO score (the real deal from Fair Issac), it does have some uses in the sense of giving you a feel of where you stand. FAKO scores are not computed using the same formula Fair Issac, thus they can be widely different from the real FICO score. You shouldn’t take FAKO score at face value and you shouldn’t rely on them to make major credit decisions. If you want a real credit score that most lenders use, check out www.myfico.com.

Now let’s take a look at the other tabs. Clicking on the Personal Profile Tab will show you the personal information that is contained in your credit report. You will see what each of the three credit agency has on their file. As you can see in the sample, there may be variance from one agency to another. This is perfectly normal.

Clicking on Credit Summary will provide you with a list of accounts from your credit report and the amounts owe on them. You can read the better description provided in the sample page. You will also see that the total amount dues and the account number listed may be different from one agency to another. Again, this is perfectly normal, and is one important reason why you should check your credit report.

Clicking on Public Records in the example will show the records for the unfortunate bankruptcy John Consumer had to file.

A very useful tab is the Credit Inquiries tab, which shows the hard inquiries that are shown on your credit report. Hard inquiries are those that can be seen on your report by everyone, while soft inquiries are those that can only be seen by you. One bad part about this credit report is that they do not show the list of soft inquiries.

Finally, we’re getting to the meat of the credit report. Clicking on Account History will give you a good glimpse into what accounts are shown on your credit report. You will see the current balance owe from each individual account shown in the report, and also your two year history of payment dates. On time payment are shown by the green OK circle, while late payments will be shown by a red circle.

The sample shown here does not provide enough information, but you can see that one of the accounts was reported by Equifax and Transunion, but not by Experian. Other differences you may encounter are the amount of balances, the payment history report, and the time when balances are updated. These discrepancies occur because certain creditors report to certain agencies. Some report to all, some don’t.

These differences are very important and they are one of the major reasons why a credit report pull is useful. Beyond getting your credit pull, consider getting your FICO score from Fair Issac by using this myFICO promotional code.

MY EXPERIENCES WITH THE SERVICE

All of the membership services I mentioned above offers daily credit monitoring from one single credit reporting agency, and daily credit report updates from all 3 credit agencies. Trilegiant has since then changed what’s available on PrivacyGuard, Credit Keeper due to abuse from members.

Because Trilegiant has been changing the services offered on each of their website so much, you should check each of the websites above to see what sort of services you’ll be receiving if you choose to subscribe to their service. The best bet is to call and ask for clarifications on the service you’re planning to get. Whether if reports are available daily, and if the reports are updated daily or not.

What happened was that some people wanted to see updates for their credit report so much that they resort to exploits to pull more than one report per day. It seemed daily credit report wasn’t enough, these people wanted hourly. I suppose if you’re doing some heavy duty credit improvement, you’ll need up-to-date information so you can make the best possible decisions. Still seemed pretty extreme to me though.

So during my subscription of Privacy Guard, they removed online credit report updates to stop the abuse (if you want a credit report, you’ll have to request it via snail mail). It’s pretty lame of them to punish everyone, seeing as how it was only a select few that abused the system. Although on the flip side, the people that exploited the system got their accounts cancelled. The rest of us just got our service changed.

Eventually I received a postcard from Privacy Guard, telling me that the information contained in my report will be updated monthly instead of daily. No more online daily credit report updates? No more Privacy Guard for me.

On the Credit Keeper side, all was well. I was able to continue to pull my credit report from all 3 agencies online daily.

The web server for the services were online and available the majority of the times, load time was fast and trouble free. There were rare down times, but usually if I come across a connection problem, it would be resolved within the hours.

Privacy Guard and Credit Keeper often tout the many “benefits” you’ll receive in subscribing to the service, some of which includes an interest calculator, which is fairly useful, but it’s a tool that can be found all across the web for free. Click on the picture below to see the calculator.

One notable benefit would be the free Drivers Record feature. Unfortunately for me, this was a useless feature, as you can see below:

Padded features aside, the features I’m paying for was working out well enough. (Before Privacy Guard changed the service anyway). Looking up daily updated credit report was very useful as I try to get a feel for how my credit issuers report to the credit reporting agencies. I found out that checking your credit report daily can get quite addictive – especially if you’re in the process of improving your credit. It’s nice to see the progress and results of hard work.

CANCELING THE SERVICE

Unless you’re rolling in money, you would probably want to cancel the service eventually. The canceling process is, unfortunately, not as easy as the sign-up process.

*looks of shock and surprise*

What? A company giving you a hard time when you want to cancel? Unreal.

When I received the postcard about the changes in Privacy Guard’s service, I immediately called to cancel, but it took long waits on the phone and many transfer to finally reach someone that can help me. Because I had two accounts with them, it complicated matters further.

As you can see in the pictures below, the charges made on my account was on 6/13/05, although I called days before to cancel, my refund was not processed till weeks later on 7/07/05.

On the flip side of things, the refund process with Credit Keeper went along without a hitch, which didn’t make much sense at all – since they’re both the same company, and customer service is handled by the same contact number.

As you can see above, the refund was processed within the same working week. Funky. Other than the semi-hassle experienced, there isn’t any major problem with canceling the service, as noted in the Better Business Bureau report.

THE CONCLUSION

Despite the many flunky incident involved with the Privacy Guard and Credit Keeper service, I would have to say that the overall experience was not that bad.

The information from the daily credit report updates are fairly valuable, and the layout of the credit report was well done. It was easy to read and easy to compare. Updates and changes to your report can be easily spotted from the Credit Summary page. This service is the perfect tool for those looking to fix their credit history, and people that are just generally curious

Although the cost of the service can eventually add up, the price of $9.95 per month, or $12.95 per month is actually pretty nice – especially for daily credit monitoring, and three credit report with daily updates.

The customer service was obviously lacking, but I didn’t expect much in the first place. Customer service for Privacy Source (for Bank of America) was reportedly better, as Bank of America has a different contact number (and possibly different service rep) for their service subscribers.

Canceling the service was quite a hassle, for I had to listen to the usual scripted speech of why I should keep the service, and the “benefits” I’ll loose if I cancel the service. The refund process was also inconsistent, but I eventually received my money back.

At the end I believe that the real benefit from the service outweighs some of the quirk. That’s the case for me anyway. If you’re in a situation where you require daily credit monitoring, and daily credit reports update – you should definitely check out Credit Keeper or Privacy Guard. (I’ll go with Credit Keeper since it’s cheaper per month, if you decide to keep using it).

Besides, you’ve got nothing to loose during the trial period: one measly dollar, some of your valuable time, and a little bit of your sanity as you try to call and cancel.

PROS:

  • Daily credit monitoring
  • Daily updates for 3 credit reports
  • Well layout for credit reports with fairly detailed information
  • Price for service is fair

CONS:

  • Services provided seemed inconsistent
  • Other benefits are fairly useless
  • Hassle in canceling service
  • Questionable sell tactics via BBB’s report


Whoops.

From CNN Money.



Here’s a good read on personal finance.

It’s not a PF 101 thing, but it’s a bit more real.

It’s not perfect yet, but it’s effort, it’s progress, and it’s pretty awesome.



Viagra Blog: I can’t take it anymore! All I want to do is inform people about ED and possible options for ED; specifically, Viagra. But nooo, every single day, some jackarse will spam me to shred! You know what’s worse? They’re not even spams about Viagra! I don’t care about cheap free OEM software! Hey, stop smirking like-

Cap: Sorry sorry, I couldn’t help it. I know how you feel, Viagra Blog. *giggles*

Viagra Blog: Look, you brought me out here in the middle of nowhere for a reason right? Don’t tell me you’re

Cap: No. No way. Heck no. I’m only 23, dammit. Anyway, there’s someone I’d like you to meet.

Cap: Viagra Blog, meet Spam Karma.

Spam Karma: Hellooo there, sexy.

. . .

I get a lot spam, believe it or not. Like out of the wazoo. You’d think a blog without any content, depth, and value – would have no trouble with spam, but alas, this isn’t fantasy land. It’s the Internet.

Ever since I switched from Blogger to WordPress, and got my own domain – I’ve been spammed to death. Manually deleting them is tiring. If they were good o’ spam like pornographic materials, I wouldn’t care. But they’re boring spams about Viagra, and OEM software. I hate it.

So instead of figuring out a solution, I complained to another person. Namely, Jim from Blueprint for Financial Prosperity.

The exchange went something like this (or not):

Cap: Jim, I can’t give you more power to the shields. These spams are killing me.

Jim: STFU and download Spam Karma.

And that was that. Life got better, my cholesterol level went down and I became one happy camper. So if you have a WordPress blog and you’re besieged by spam, download and install Spam Karma! Afterwards you can dance the night away!



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