Entries for March 2008

A reader recently reminded me why dating websites are not always worth their monthly fees. She writes that since she signed up for one over a month ago, she still has not found a suitable match. Yet, as a senior, she says she would like online dating to work out since it is easier than trying to meet people in person. (And you don't have to be a senior for that to be true—few people enjoy trying to find dates in dark, loud bars.)

Online dating sites can work, but you have to be smart about it. The Better Business Bureau reported a sharp increase in complaints about dating websites earlier this year, and recommends being wary of advertisements that claim "exclusive" communities or other potential exaggerations.

I'm also going to share another tip, courtesy of a friend who found her own serious boyfriend online after trying out two different dating websites. For a first meet-up, stick with short coffee dates, she says. You'll often know within the first 10 minutes whether you click with someone, and if you don't, there's no point in wasting time and money to find out just how badly you are matched.

Readers, please share any other online dating tips below—learning the hard way is too expensive.

In the midst of a heated debate over credit card reform, the New York Times has come down on the side of the reformers. In an editorial published Saturday, the newspaper urges Congress to pass new regulations, such as Rep. Carolyn Maloney's cardholder's bill of rights:

Before more Americans get in so deep that they cannot dig out, Washington needs to change the way these companies do business to ensure that consumers are treated fairly.

You can check out this week's Carnival of Personal Finance at Stock Trading to Go for tips on choosing an online broker, educating your man about money, and fishy tax write-offs.

Are you replacing steak with chicken? Fresh veggies with frozen ones? Citigroup Global Markets reports that consumers are buying their food at less expensive stores such as Wal-Mart, making cheaper dinners, and avoiding pricey brands.

The firm attributes the shifts not only to an uncertain economic environment but also to steep food inflation. The price of food for home consumption has risen 5.1 percent over a year ago, according to the Bureau of Labor Statistics. And food isn't the only reason for squeezed budgets: More than 70 percent of consumers surveyed said higher gas prices had changed the way they shop.

The bottom line: Making a home-cooked meal on the cheap is getting harder. You can check out these tips on how to buy and cook in bulk to save while still keeping your stomach happy.

Usually, the main message I get from watching sitcoms is that everyone else has nicer furniture and clothes than I do. Shows seem to almost always feature the well-to-do—perhaps because that's what the rest of us like to look at while we relax. But every now and then, television imparts some useful financial tips. The blogger at Well-Heeled points out some of her favorite money lessons from Sex and the City, which will be coming out later this year as a movie:

• When Carrie realizes that she's spent $40,000 on shoes but could not secure a loan on her own to buy out her share of the co-op after she breaks up with Aidan. Personal finance lesson for the gals--don't be the Old Lady Who Lived in a Shoe! Manolos can't fund a retirement....

• When Samantha gave up her hair appointment to Miranda and offered to baby-sit Brady.Friend lesson: The best present isn't about money.

Parents feel more prepared to give their teens advice on the birds and bees than on investing, according to a study released this week by Charles Schwab. That goes a long way toward explaining why so many kids don't know as much as they could about money management, says Carrie Schwab-Pomerantz, chief strategist of consumer education for the financial services firm.

She recommends discussing money around key milestones in a child's life, such as getting a first toy, car, or job, which gives parents a chance to teach kids to save 10 percent of their income. Parents can also involve their kids in daily discussions about family budget decisions, Schwab-Pomerantz says. Schwab's MoneyWise website offers an interactive game and other tools to get the conversation started.

Here is my interview with Diane MacEachern, author of Big Green Purse: Use Your Spending Power to Create a Cleaner, Greener World, about how to balance saving money with buying environmentally friendly products. She says it's possible to do both.

You can read about our conversation here or hear it and also get the Alpha Consumer tip of the week. Listen now, iTunes, RSS

The IRS has a solution for consumers who are still confused about how to get their rebate checks but are savvy enough to watch videos on YouTube. Together with the American Payroll Association, the agency has launched a series of videos, posted on YouTube, to clarify what consumers need to do to get their economic stimulus money. In the video below, IRS Deputy Commissioner Linda Stiff says consumers need only make sure to file a tax return, and the IRS will do the rest. As for how to spend that rebate once you get it, here are a few ideas.

Larry Chiang, founder of Duck9.com, which helps people boost their credit scores, responded to my criticism of his company last week. Basically, I said that paying a company almost $10 a month to remind you to pay your bills is a waste of money. He says it can be worth it. In an E-mail, he told me the following:

Statistically speaking, getting into the 95th percentile (a credit score over 750) is, by nature, hard. A Duck9 registered user graduates to a FICO score over 40 percent higher than an [average] adult living in the United States. Paying $9.95 is ok but we [also] dole out 50,000 free for life subscriptions per month.... Duck9's reminder service is super simple but we add value with predictive reminders based on [the patterns of] students' lives....

[Duck9 is] a secret society of students who realize that over half of America's charge-offs [which have a big negative impact on credit scores] are for under $200 and usually from a department store that they don't know they owe.

I spoke with WTOP over the weekend on how to engineer a career makeover, especially in the wake of a layoff. The good news is that it can be an opportunity to pursue a passion. Listen now,  iTunes , RSS.

The New York Times confirms what I have long suspected: A little negotiation can go a long way, even at large retailers. Places like Best Buy, Home Depot, and Circuit City are now giving consumers the chance to knock down prices while shopping in stores. The article cites shoppers' success with strategies such as threatening to walk out and playing good cop, bad cop with a friend.

Sometimes simply asking for a better deal can work, too.

There's been much buzz recently about how easy it is to manipulate credit scores. A handful of companies, some of which advertise on radio and television, promise to improve poor credit scores, which determine how easy and expensive it is for people to take out loans. I recently spoke with Larry Chiang, founder of Duck9.com, which promises to help people boost their credit score to an impressive 750.

Here's how it works: Duck9.com reminds people to pay their bills on time, which is key to improving credit scores. Students—the service is aimed at those in college—can pay $9.95 a month for this reminder or put themselves on a 25-to-40-day wait list and get the service free. "Twenty-four on-time payments in a row get you to a FICO score over 700," Chiang says. "It's very binary."

My take: Life doesn't need to be this complicated. Pay attention to the bills that arrive by snail mail or E-mail, and you won't need to rely on a company to give you reminders.

If it feels that you have less money left over for luxuries, here's why: Prices for groceries, gasoline, healthcare, and other staples have risen 9.2 percent since 2006, according to the Washington Post. During the same period, income for nonmanagerial workers has risen only 5 percent. The one sliver of good news? Prices for what might be considered indulgences, such as restaurant meals, alcohol, new cars, furniture, and clothing, have gone up by 2.4 percent. So if you do have any money remaining after feeding yourself and your gas tank, a dinner out might be affordable.

Television advertisements sell us cars, soap, and food. But student loans? Check out this ad from E-Loan. One reader recently told me that she would be suspicious of any company that placed such ads. Would you?

I recently spoke with Sen. Ron Wyden about his and Sen. Barack Obama's credit card reform proposal, which involves rating cards according to a five-star system. He defended it against one of the credit card industry's main arguments in opposition to it, which is that it's impossible to develop a set of criteria that would apply to all consumers, since we're a diverse bunch. Wyden's point, in a nutshell: Everyone can benefit from easily understood language and policies, and the rating system wouldn't apply to things like interest rates, fees, and rewards.

Chris Amolsch, a criminal defense attorney, has noticed a disturbing increase in the number of people being added to the credit files of those with good credit in an effort to boost their own scores. He says that loan officers, who have access to personal information, sometimes call credit card companies, pretending to be someone else, in order to add clients to the credit record. While such activity is illegal and a form of identity theft, the victims sometimes fail to notice it has happened. "It's probably way more prevalent than you think it is," he says.

One way to avoid becoming a victim: View all monthly credit statements carefully to make sure no extra names have been added. While consumers are notified of such changes, Amolsch says that the problem is most severe among immigrants with limited English or literacy skills who may have difficulty understanding such alerts.

My grandmother surprised me recently when she suggested that I keep a secret stash of money, separate from my husband's and my shared account, for "emergencies." Not to sound naive, but I wasn't sure why I would need such a thing. Even in the worst-case scenario, aren't wives still entitled to half of all their joint accounts? My grandmother explained that it was just nice to have some flexibility—not to guard against disaster but in case I wanted to buy something on my own one day.

She's not the first grandmother to make such a suggestion. In Money: A Memoir, Liz Perle writes:

Ben Popken, editor of the Consumerist, a site where mistreated consumers can express themselves, sees the dark side of our shopping culture every day. The tone of the site—summarized by its tagline, "Shoppers Bite Back"—clearly resonates with its hundreds of thousands of daily visitors. After all, who can resist watching, almost voyeuristically, as readers post the details of their (always negative) experiences. As a reader of the site myself, I asked Popken to answer a few questions. Excerpts from our E-mail conversation:

You receive thousands of complaints from consumers. What trends or commonalities do you see?
A lot of people are frustrated and don't know where to turn. They're bewildered. They try the routes they've been told to but still aren't getting satisfaction. I see a lot of people getting their E-mails ignored by companies. "It's company policy" [is often] used as the magic word to explain away bad customer service.

Get Rich Slowly, one of the most popular personal finance blogs, is also one of my favorites. Blogger J. D. Roth openly describes his own money struggles and successes, including how he paid off $35,000 of debt. I asked him to share his secrets. Excerpts from our E-mail conversation:

You speak honestly about how you overcame your own debt struggles. What do you think made it possible for you to pay it off? Was there a turning point?
I didn't overcome my debt all at once. It took time. I was $35,000 in debt in 2004. I was still $30,000 in debt in 2005. But I gradually added new techniques—cutting costs, exercising frugality, increasing income—until by the end of 2007, I had achieved a sort of snowball effect. I only had a $10-a-month positive cash flow in late 2004, but by the end of 2007, I had over $1,000 per month in positive cash flow. It was mind-boggling. Even though I see the numbers every day, I can hardly believe them as I type them.

The first big surprise of Rep. Carolyn Maloney's hearing on her proposed credit cardholders' bill of rights was who wasn't speaking. A few minutes before the hearing began Thursday, her spokeswoman explained that the consumers the congresswoman had invited to testify were no longer being asked to do so, out of concern that credit card providers couldn't respond to the consumers' tales of woe unless waivers had been signed. It wasn't clear why the waivers weren't immediately handed out and signed. (Maloney later released a statement expressing her disappointment and commitment to having the "regular people" testify at a future date.)

Maloney's bill of rights would mandate 45 days' notice of any interest rate increases and prohibit card companies from raising rates because of behavior related to other accounts. It is one of a handful of credit card reform proposals being debated in Congress. Sens. Ron Wyden and Barack Obama have also proposed a five-star rating system to help consumers easily evaluate cards' policies.