Spring Cleaning for Your Credit Score

by Amy Fontinelle

Tuesday, May 31, 2011

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It's springtime. The chaos of the holidays is long gone, spring break is over, and summer hasn't arrived yet. Excuses are easy to come by when summer is in full-swing, so why not take advantage of this temporary lull and get your finances in order now? These six tips will help you get your finances organized and get your credit score cleaned up.

More from Investopedia: • The Road to the Worst Credit Score Ever • An In-Depth Look at the Credit Crisis • 10 Simple Ways to Improve Your Credit

1. Check Your Credit Report
Any time you're trying to improve your credit score, your first step should be to check your credit report. You can get one free report every 12 months from each of the three credit bureaus (Experian, Equifax and TransUnion) by going to AnnualCreditReport.com. Look closely at each account on your report to make sure that there are no mistakes dragging down your score. Also, make sure that you recognize all of the accounts on your report. Unfamiliar accounts could be a sign of identity theft, though often they are just old accounts that you've forgotten about or accounts for which you are an authorized user but not the primary account holder. Don't panic until you research them further.
2. Assess Your Credit Card Debt
If you don't know the details of your debt, you probably don't have an effective plan for paying it off. Make a list of all the cards that you carry a balance on, how much you owe on each, and what the interest rate is. This way, you'll know which accounts are costing you the most and you can plan to pay them off first.
If you've living off your credit cards because you're unemployed or underemployed, assess your available balances. Also note which cards have lower interest rates and use those for your purchases if possible.
If you added to your debt last Christmas, start thinking now about how you will avoid doing the same thing this year. May isn't too early to plan for the holidays -- you still have time to gradually buy gifts over the course of the year, as you can afford them, or time to save up a holiday fund so you don't have to pay interest on 2011's gifts in 2012 and beyond. A Black Friday deal isn't a deal at 30% APR.
3. Improve Your Interest-Rate Situation
It may not be possible to qualify for a new card with a lower interest rate if you have poor credit, but it might be worth trying. If you do get approved, make sure you understand the balance transfer fees before moving your high-interest debt, and make sure you'll come out ahead even after the fees. Applying for new credit does temporarily ding your credit score, but the savings from lowering your interest rate can be substantial.
You can also try calling your creditors to negotiate a lower interest rate. If that doesn't work, see if you can at least get your card's annual fee waived (if it has one). Develop a strategy before you call because you'll need a way to convince your creditors that there's something in it for them if they give you a break.
4. Prioritize Your High-Interest Debt
Whichever card has the highest interest rate is the one you need to pay off first. Keep paying the minimum on your other cards (and pay on time), and put what you can afford toward your highest-interest balance. The sooner you knock out your high-interest debt, the more money you'll have to work with each month and the easier it will be to work your way through your remaining debts and contribute to your emergency fund.
5. Create a Bill Payment System

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Thirty-five percent of your credit score is based on whether you pay your bills on time, so if you want to improve your credit score, getting on top of your due dates is a great place to start. Look at recent bills and add the due dates to your credit card list. Then, use an electronic calendar system like Outlook or an old-fashioned paper calendar to remind yourself of these due dates each and every month. A checking account with online bill pay can also help you get organized by allowing you to see and pay all of your bills in one place. Some online bill payment systems, like Ally Bank's, can be synched up with your other accounts to let you know how much you owe and when it's due.
In addition to hurting your credit score, late payments cost you money. If you avoided just one $30 late fee per month you would save $360 in a year. That's money you could put toward paying down your debt instead of adding to it.
6. Start Budgeting
If you know exactly how much money you have coming in and going out every month, not only are you likely to spend less because you will be holding yourself accountable for your spending, but you'll also know how much you can afford to put toward paying down your credit card debt each month.
The Bottom Line
In the process of improving your credit score, you'll also be improving your overall financial situation. So even if you don't plan to do anything that will require you have an attractive credit score (like open a new credit card account, take out an auto loan or apply for a mortgage), taking these actions will be worthwhile.
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Social Networks Offer a Way to Narrow the Field of Friends

by Jenna Wortham and Claire Cain Miller
Friday, May 13, 2011

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There are times when you just have to tell your friends about something -- but not necessarily your Facebook friends.
Just ask Becca Akroyd. When Ms. Akroyd, a 29-year-old lawyer in Sacramento, Calif., wanted to share a picture of her new vegetable garden, she didn't turn to Facebook. Instead she posted it on Path, a service that lets people share pictures, videos and messages with a small group.

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"The people I have on my Path are the people who are going to care about the day-to-day random events in my life, or if my dog does something funny," Ms. Akroyd said. "On Facebook, I have colleagues or family members who wouldn't necessarily be interested in those things -- and also that I wouldn't necessarily want to have view those things."
Path, which limits friend groups to 50, is among a new crop of Web services that allow people to connect with a handful of friends in a private group. Users get the benefits of sharing without the strangeness that can result when social worlds collide on Facebook. Other start-ups in this anti-oversharing crowd include GroupMe, Frenzy, Rally Up, Shizzlr, Huddl and Bubbla.
Even Facebook recognizes that people don't want to share everything with every "friend." It has privacy settings that control who can see what, but many people find these challenging to set up. So last fall, Facebook introduced Groups, for sharing with subsets of Facebook friends. And in March, it acquired Beluga, a start-up that allows sharing photos and messages with small groups privately.
Last month, Facebook said its users had created 50 million groups with a median of just eight members. It also introduced the Send button, which websites can use to let people share things with Facebook groups.
[Smartphones: What's Too Big or Small?]
"We realized there wasn't a way to share with these groups of people that were already established in your real life -- family, book club members, a sports team," said Peter Deng, director of product for Facebook Groups. "It's one of the fastest-growing products within Facebook. Usage has been pretty phenomenal."
Google is also working on tools for sharing with limited groups of people, according to a person briefed on the company's plans who was not authorized to speak publicly. Slide, a maker of social networking apps that was bought by Google, recently released an iPhone app called Disco, for texting with small groups.

©Peter DaSilva for The New York Times

Dave Morin founded Path, a network that limits users to a small number of contacts.

Google may discuss its plans in this area at a conference for developers this week. A spokeswoman, Katie Watson, declined to comment.
No one expects the start-ups in this field -- most of which are new and have relatively few users -- to replace Facebook or Twitter. Instead, their creators say that they do a better job of mimicking offline social relationships, and that they represent a new wave of social networking that revolves around specific tasks, like sharing photos or coordinating plans for the evening.
Shizzlr, for example, was created by two graduate business students at the University of Connecticut after they realized it was impossible to organize plans on Facebook.
"You put out a status about weekend plans and, all of a sudden, you get your uncle commenting that he wants to go hiking with you and your friends," said Nick Jaensch, who created Shizzlr with Keith Bessette.
After users invite a few friends into a group on Shizzlr, the service grabs a list of coming events from Yelp, Google and Facebook and lets members discuss their options. The groups reach capacity at 20 people.
In the last three months, about 3,600 people have downloaded the application -- a tiny number compared with Facebook's 600 million members. But Mr. Jaensch says he is not interested in competing with Facebook.
"The people that you've called in the past two to three weeks are the people you actually do stuff with," he said.
Shizzlr is just getting off the ground, but some of the other services in this field have attracted the attention of prominent investors. Path has raised $11 million from venture capitalists, including Kleiner Perkins Caufield & Byers and Index Ventures. GroupMe, which says it is handling 100 million messages a month, raised $10.6 million from Khosla Ventures, General Catalyst and First Sound, and others. AOL acquired Rally Up late last summer.
[Scams Common on Social Networks?]
Dave Morin, Path's founder, was an early Facebook employee, but thought the social network had grown too large and impersonal for sharing certain things. Hundreds of thousands of users have agreed and signed up for Path, sharing more than five million photos and videos so far, Mr. Morin said. Most of their groups include far fewer than the 50 friends they are allowed, he said.
"People pull out their phone and show their photos and start telling a story about their life -- 'Last week I was on vacation,' or 'here's my cat,' or 'here's what I ate for dinner last night' -- but when we ask if they put those photos anywhere, people would say, 'Oh, no, no, no, it's way too personal,'" Mr. Morin said.
Those photos might also be too boring for the full lineup of one's Facebook friends. And, of course there are other photos that your cubicle neighbors and former flames might find to be ... too interesting.
"The larger social networks have certainly become more loose-tie networks of acquaintances," said Mo Koyfman, an investor at Spark Capital who follows social media trends. "But the way we communicate with acquaintances is very different from how we communicate with friends."
Spark recently invested in Kik, a mobile group messaging app.
Mr. Koyfman said most of these start-up applications centered on cellphones because they were inherently more personal than websites used at a computer.
Mr. Deng at Facebook said that his company was working on more tools for small-group sharing. But some Internet users and entrepreneurs maintain that the big social networks will always be too big for people to share comfortably.
John Winter, a developer in New Zealand, cobbled together Frenzy, an application that lets friends share links, photos, songs and other items in an invitation-only folder on the Web storage service Dropbox, effectively turning it into a private social feed.
"Twitter is public and Facebook is basically public," he said. "What else are you going to use?"

5 Little Cuts for Big Savings

Michael Estrin
Saturday, May 7, 2011

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Saving Just a Little
Saving without making drastic cuts to your household budget sounds too good to be true, but it is possible with the right approach.
If your goal is to funnel a small percentage of your income into your savings, you probably don't need to rethink everything. Instead, you can hit your savings target by adjusting your lifestyle.
So what's the catch? You have to know where to look. And once you find places to save money, you need to put that money into a savings account.
Rethink Your Cable
While cable TV rates vary by region, most subscribers have something in common, says Julie Murphy Casserly, president of JMC Wealth Management in Chicago.
"They're probably overspending based on what they actually use," Casserly says.
According to Casserly, the solution isn't to make drastic cuts on home entertainment but rather to set up a system where you pay only for the programming you watch. On the one hand, that means making your plan as basic as you can. But it also means doing something a little counterintuitive to anyone watching their budget. Use pay-per-view and on-demand offerings in lieu of expensive movie channel subscriptions, Casserly says.
"I advise this with all my clients, and on average, they save between $40 and $100 a month because they only pay for what they watch," she says.
Monitor Online Deal Sites
You can save money by shopping online. But you have to approach it with the right mindset.
Casserly advises subscribing to a few popular deal websites such as Groupon or LivingSocial. The sites offer deep discounts on local services and products, essentially allowing customers to buy store credits at up to half off that are redeemed later. But don't be lured to buy something you don't need.
"Buy only what you would have bought anyway," Casserly says.
For example, if you see your favorite local restaurant offering a deal, it pays to grab it because you'll be able to discount the bill on your next visit.
Buy Bulk Gift Cards and Tickets
You can also save money on gift cards if you're able to buy them at a bulk discount, Casserly says.
"I buy gift cards for my favorite chains at Costco and get 20 percent off on a $100 card," she says.
The key is discipline, Casserly says. If you pounce on every deal that's offered, you'll actually increase your monthly spending.
Increase Insurance Deductibles
When you get an initial quote for homeowners, renters or car insurance, you might have a good understanding of how your deductible affects your monthly premium. But often, people simply renew without taking the time to re-evaluate, says Jennifer Nelson, an insurance agent in Iselin, N.J.
"If you don't think about your deductible, there's a good chance you're overpaying because you end up buying more coverage than you need," Nelson says.
While rates vary based on a number of factors, the premium always goes down when you get a higher deductible. However, if your deductible is within the limits of your personal emergency fund, it's a good idea to consider raising it.
But don't just raise your deductible to the maximum. Instead, Nelson advises working with an insurance professional to make sure your deductible fits into your overall finances.
To benefit from cutting the premium, Nelson suggests putting the difference between your old and new premiums toward your emergency savings. That way, if you need to cover the higher deductible, you're prepared. If you never make a claim, place the money that would have gone to higher premiums into a savings account.
Ditch Your Unlimited Cell Phone Plan
Paying $100 a month for unlimited calls, text messages and Internet data may not seem like such a bad deal when you shop for similar plans with other major cell phone carriers. But are you actually using the entire plan?
According to Danny Kofke, author of the book "How To Survive (and Perhaps Thrive) On A Teacher's Salary," most people don't use anywhere near what they're paying for on their cell phone plans.
"The key is to find the plan that fits your usage," Kofke says. "Chances are, you can look at your current plan and see that you're paying for minutes or services you're not using."
While each family is different, Kofke says he and his wife decided to cancel a $50-per-month cell phone plan because they hardly used it. They now have a prepaid cell phone. On the downside, the prepaid phone costs more on a per-minute basis. But by paying as they go, Kofke says they've dropped their monthly cell phone bill to $20 per month. Making the change saves them $30 per month ($360 per year), and they haven't changed their calling habits.

This article is part of a series related to being Financially Fit

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Cut the Cord on Your Cable TV

by Matthew Moskovciak
Saturday, May 7, 2011

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All you disgruntled cable customers out there — in other words, anyone who is not a cable executive — now is the time to rejoice. With the latest improvements in technology and growth in online content, you can disconnect the cable box without giving up TV. In fact, the number of cable TV and satellite subscriptions fell last year for the first time in the history of the business.

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To be sure, ditching your cable or satellite provider isn't exactly painless, especially if you're a sports junkie. (You didn't think your cable company was going to make this easy, did you?) But with a moderate amount of research and tinkering, you can replicate much of what you'd be getting via your cable subscription for significantly less money. In my own case, I used to pay more than $100 a month to the cable company; now I pay about half that for a combination of streaming, downloaded, and over-the-air content.
Here's a quick primer on ways to keep your TV screen lit up with entertainment, news, and sports, without surrendering to Big Cable.
1. See What's Available Over the Air Many people are shocked when they find out they can receive free high definition TV from major TV networks simply by connecting a basic over-the-air antenna. In fact, in most cases over-the-air HDTV has slightly better image quality than the HD cable you're paying for, since cable companies often compress their signals in order to include more channels. Every modern HDTV has a built-in tuner, and in my case, I only needed a $23 indoor antenna to get crystal clear over-the-air HDTV.
You can check what kind of TV reception you're likely to get by visiting AntennaWeb and entering your street address. The site will tell you how far you are from transmitting stations and what channels will come in easily. Of course, even if you get great reception, you're still only going to get access to the major network channels, such as ABC, NBC, CBS, and Fox, as well as PBS and regional channels. But that means no Comedy Central, HBO, or AMC. To get access to shows on those cable channels, you'll need to consider streaming and on-demand video services, which brings us to steps 2 and 3.
2. Choose Streaming Video Services
There are plenty of streaming video services out there, but Netflix is the most popular. For $8 per month, you get unlimited access to Netflix's instant streaming catalog of 20,000 films and TV shows, which you can watch on your computer, iPhone/iPad/iPod Touch, and any other Netflix-enabled home theater device, such as a Wii or certain Blu-Ray Disc players. (For more on connecting your TV to a video service, see item 4, below.) In the past, much of Netflix's streaming catalog consisted of older movies and TV shows, but the selection has been improving rapidly, including a recently announced deal to make available every episode of AMC's Mad Men. And for just $2 more per month, it may be worth adding on a one-DVD-at-a-time plan that will get you access to newer content via discs sent in the mail.
To watch recent network television, you can sign up for Hulu Plus, a partnership between NBC, News Corp., and Disney. You can watch TV shows on Hulu.com on your computer, but Hulu Plus has the advantage of being easily viewable on your television and/or mobile device; it's also available in HD and has more comprehensive content. Hulu Plus costs $8 a month and gives you full-season access to popular shows such as "Modern Family" and "30 Rock," with new episodes available right after their live airing.
3. Buy Cable Shows a la Carte
Current episodes of popular cable shows such as Justified and The Walking Dead aren't typically available on Netflix, but you can get access to most of them via Amazon Instant Video and iTunes, typically a day after they air. Episodes usually cost about $2 for standard definition and $3 for high def, and since you're actually purchasing the shows (rather than renting them), you can go back and watch them any time you like. Last year, for example, I was able to watch every episode of season four of Mad Men (this was before the deal with Netflix) on Amazon Instant Video the day after it aired. If you're using Apple TV to watch iTunes shows on your television, be aware that some shows need to be downloaded first to a PC, which can take some time.
4. Consider a Streaming Video Box
You may already have a device that will let you watch the services mentioned above on your big-screen television — many Blu-ray players and HDTVs sold in the past few years have built-in support for these services, and all the modern game consoles (Xbox 360, PS3, and Wii) also support Netflix streaming. If you do need to buy a separate box, though, the $99 Roku XDS is a good choice, as its support of Netflix, Amazon Instant Video, and Hulu Plus gives you the most options to stream TV. The $99 Apple TV is also a great box that's easy to use, but its TV rental options for direct streaming are limited to only some Fox and ABC shows.
If you don't want to buy another box and are willing to put up with a little hassle, you can connect a laptop directly to your TV. It's not the most convenient solution, since you'll have to fuss with a computer connected to your TV instead of simply relaxing on your couch with a remote, but you'll only need to purchase a cheap HDMI cable to be able to watch any Internet video that's available via your browser, including old episodes of Star Trek.
5. Consider an Over-the-Air DVR
Getting free over-the-air TV is great, but if you're used to the convenience of watching shows whenever you want using a digital video recorder (DVR), it can be jarring to be stuck watching primarily "live" television. Luckily, there are several DVRs that can record over-the-air shows. For ease-of-use, the $100 TiVo Premiere is the hands-down best option, although you'll have to pay $20 a month. It might be tough to swallow a monthly fee when you're trying to save money, but TiVo's excellent user interface and convenience options, such as Season Pass recording, can make it worth it for heavy TV watchers. The Channel Master CM-7000PAL costs more upfront (about $300 to $350), but doesn't have a monthly fee. It also lacks a lot of the perks of the TiVo. You'll need to tell it what channel you want recorded, at what time, and for how long, as opposed to just choosing shows on the TiVo.
Finally, it's also possible to set up an over-the-air DVR using your PC and Windows Media Center software, although you'll need to be moderately tech-savvy to get it up and running. On the other hand, it is free. You can get an idea of what's involved by checking out the Windows Media Center quick guide.
6. Watch Sports Live Online (if You're Out of Market)
There are a surprising number of sports options for cord-cutters, although most of them are not cheap. Services like MLB.TV ($99 a year), NHL Gamecenter Live ($175), and NBA Game Time ($45) are all available via the Roku XDS and offer live, streaming games. Aside from the price, the big catch is that all of these services are subject to blackout rules if you're "in market," so you often won't get to see your hometown team play.
At the same time, remember that if you're able to receive over-the-air HDTV, you'll get lots of live sports from the major networks. And if you're lucky enough to be a fan of a team that gets regular national coverage (yes, we're talking about you, Yankees and Lakers fans), you might not be in such bad shape. But if you don't want to miss your local team's home games, then yes — this could be a deal breaker. Consider finding a local bar that carries the games, or sweet-talking a friend who hasn't cut the cord yet. Just remember to factor in the cost of a six-pack when you're doing the cable-free math.
7. Make Sure You're Not Spending More Without Cable
Once you add up all the subscription fees, new hardware costs, and video on-demand purchases, cutting the cord can be as expensive as having cable — if you're not careful. That's why you need to keep track of your purchases and make sure you're actually using everything you're paying for. My personal situation is close to a best-case scenario. I already had a lot of the hardware I needed and am not a particularly heavy TV watcher, so I spend about $50 a month on digital video content, less than half what I had been paying for digital cable.
Despite the challenges, cutting the cord doesn't require a Ph.D. in Geek, and it can save you real money. If you're in need of cable-cutting inspiration, check out my own personal experience as a cord-cutter for the past four years.
Matthew Moskovciak is a Senior Associate editor at CNET, where he reviews home theater devices.
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