Will Consumers Warm Up To The Credit Freeze Laws?

Last week the Consumerist had an article mentioning that Transunion will let you freeze your credit report so you may protect your credit from imposters. Recent laws in this direction go a step beyond and require all the credit bureaus to let you freeze your credit report. In Texas the law went into effect on September 1st. Since then I have had it on my “TO DO” list to look up more information and consider the possibility of freezing our credit reports. During the past couple of days, triggered by the Consumerist article, I finally got around to investigating it further. And the more I read about it, the less inclined I am to take any action :(

Quoting from the Consumer Union website here is how it works –

A security freeze lets consumers stop thieves from getting credit in their names. A security freeze locks, or freezes, access to the consumer credit report and credit score. Without this information, a business will not issue new credit to a thief. When the consumer wants to get new credit, he or she uses a PIN to unlock access to the credit file.

That sounds great to me! Currently this law is in effect in all but 11 states. (States that do not have this law are Alabama, Alaska, Arizona, Georgia, Idaho, Iowa, Michigan, Missouri, Ohio, South Carolina, and Virginia).

On more detailed review however, it seems like this may be yet another law that offers lip service to the consumer but in reality makes him jump through so many hoops that probably no many will actually use it :( The exact details of the law vary from state to state. However, looking through the overview, it seems like in most states, unless you are a victim of identity theft already, you need to pay anywhere between $5 to $20 to each credit reporting company for each operation such as placing the freeze, lifting the freeze temporarily or removing it all together. In addition, the response to your requests is not immediate and there is a possibility that you will have to wait while your credit report thaws (so to speak) when you try to lift the freeze. Whats worse, it is not really frozen from everyone. It is possibly a small price to pay to protect yourself from having to go through the harrowing experience of identity theft, but over a term of several years, those fees could really add up and moreover, I am not at all thrilled about the delay in being able to access my credit or selective access to my credit!

From the Instructions for using Texas’s security freeze law fact sheet,

Can a creditor get my credit score if my file is frozen?

No. A creditor who requests your file from one of the three credit bureaus will only get a message or a code indicating that the file is frozen.

And

Can an employer do a background check on my credit file?

No. You would have to lift the freeze to allow a background check, just as you would to apply for credit. The process for lifting the freeze is described above.

I would assume for the zillion other places where we use credit checks (e.g., apartment leasing, insurance, getting a store card etc) also, these would be true.

But…

Can anyone see my credit file if it is frozen?

When you have a security freeze on your credit file, certain entities still have access to it. Your report can still be released to your existing creditors or to collection agencies acting on their own behalf. They can use it to review or collect on your account. Other creditors may also use your information to make offers of credit. Government agencies may have access for collecting child support payments or taxes or for investigating Medicaid fraud. Government agencies may also have access in response to a court or administrative order, a subpoena, or a search warrant.

What?? I have marked the part that bugged me the most in bold italics. So my credit is hidden from creditors and employers, but the credit mongers still get to access my credit information and can keep bombarding me with offers??? That just doesn’t sound right.

In addition,

Do I have to freeze my file with all three credit bureaus?

Yes. Different credit issuers may use different credit bureaus. If you want to stop your credit file from being viewed, you must freeze it with Equifax, Experian, and Trans Union.

To protect my credit, does my spouse’s credit file have to be frozen too?

If Texas is a community property state, then yes.

Based on Texas fees, that means I have to spend $60 to put both the better half’s and my credit on freeze. And every time we want to unfreeze it, its another $10 per person, per credit bureau. I can almost hear the leak in my wallet go drip, drip, drip.

But here’s the part that made me decide that this is probably not worth it. From the website,

The freeze goes into effect five (5) business days from receipt of the consumer’s letter (by certified mail) by the credit reporting agency.

How long does it take for a security freeze to be lifted?

Credit bureaus must life a freeze no later than three (3) business days from receiving your request.

To me that feels like snails pace! In a world running at the speed of light, who wants to wait for three business days to lift the credit freeze?

There is one more thing that needs to be considered. Freezing your credit prevents someone from obtaining credit in your name, but it does not prevent someone who has already got hold of your information from cleaning out your bank account and piling up a mountain of debt on your existing open credit accounts. Consumers should be aware that while freezing the credit can offer some benefits, it is not a be-all end-all solution.

So frankly, I am not sure if this law will really be helpful to me – a consumer. I would love to put a freeze on my credit and protect me and my family from being victims of identity theft. But I don’t know if the 3 days needed to lift the freeze will mean I will lose out on some good offers. Maybe its my recent experience that is making me so skeptical. I found out just before the end of last month, that my credit union was offering a very low promotional low APR till the end of the month for auto refinancing. I immediately made a phone call and switched my loan. It saves me quite a bit of money in the long run. Something like that would not be possible if I place a freeze on my credit. In this particular example, I would have to first contact my credit union to find which credit reporting service they will use, and then contact that agency to lift the freeze. After the credit reporting agency receives the notification it would take them 3 days to lift the freeze. That is too much time, and by then I would probably no longer be able to avail the low rates. In addition to the hassle, the pesky fees really bug me. Frankly, I have no idea where and how my credit gets used and not really sure if I want to agree to shelling out $10 here and $12 there every now and then, because I went and put a freeze on my credit!

So, what do you think? Will you freeze your credit (if your state offers the option) or will you wait and watch to see how things go?

You can find out about the exact details of the law for your state here.

Free Round Trip Airline Ticket + $100 Gift Card to Apply for a Credit Card

As of last month, I have $55,000 in credit card arbitrage. I started to get worried that I am getting addicted to this game and getting too greedy. So I resolved not to apply for any more cards until the offers on the current cards expire and I need to move the money. But then I came across the offer mentioned below and could not resist the temptation. I fought hard for a week and finally gave in. Now I put the ball in your court :)

Details of the deal -

The card: AMEX Gold Business Card. (Don’t shy away from the term “business” just yet).

The offer: 25,000 Membership Rewards bonus points (redeemable for one round-trip airline ticket or $250 Home depot gift card or $125 Amex gift card etc.) + $100 tigerdirect.com gift card. Annual fee waived for first year.

The icing on the cake: Easy online application process with instant approval.

The URL: Apply here (not an affiliate link)

Acknowledgments: The credit for this deal goes to Leeskey711 at Fatwallet who posted this offer in this thread. There is tons of information in that thread to answer most of your questions.

The FAQ: Questions below summarize some of concerns related to this particular offer.

I do not own a business. Can I apply for a business card?

If you have a blog, sold something online or offered any paid services (eg. lawn mowing) that can be verified, then legally you qualify to be a sole proprietorship. When you apply for the business card, use your full name as the business name and the SSN as the tax id.

What about the annual fee?

With this offer, the annual fee for the first year is waived. From the second year, the fee will be $125. I think Amex will offer you another 10,000 points for continuing to use the card beyond the first year of fee-free service. So it is up to you whether you want to continue to use the card beyond the first year or to cancel it.

How will this affect my credit score?

From my understanding of this thread, (and someone please correct me if I am wrong), the business credit is kept separate from personal credit. Your personal credit history will still be pulled (hard pull) before you are approved for the offer. However, the criteria used for personal credit such as utilization do not come into play while being approved for business credit. I have read in the above FWF threads that for the particular AMEX offer mentioned above, approval is fairly easy. I am not sure how the credit score will get affected if you cancel the card before the one year of fee-free service is up though. Frankly, in our case, we don’t plan to apply for any major loans in the near future and so if we don’t use our good credit scores to take advantage of offers like these, I don’t know what good a high credit score is for. If you have a different situation (eg. plan to buy a house or a car in the next year or so), I would highly recommend that you do more research into this and see if it is still worth it for you.

Do you believe everything that you read in the Fatwallet Finance forums?

Honestly? Yes :) But that’s just me. If you don’t, then you should look around of more information until you come around too :) Initially, I didn’t believe much of what I read, and spent hours browsing on the web to verify anything that I read on FWF. Now I am not so suspicious. And ever since I switched to the “finance” forums from the “hot deals” forums, I have managed to make quite a bit of money (mainly from CC arbitrage), instead of blowing it on junk just because it was on sale. There are a few guys out there whose opinions I really respect. And the community as such is obsessed with these games, and makes sure that they point out when someone makes a mistake. Overall, I think it’s a more reliable source for information (especially for credit related stuff) than random browsing on Google.

OK. I am done gushing now :)

Coming back to the offer, both the better half and I have applied for a card each and received the instant approval. We have also received an acknowledgment mail from tigerdirect.com to verify our email address. Now I am off to dream about what to do with 50,000 reward points and $200 gift cards :)

PS: If you are curious to find out more about the “business card” related issues, I highly recommend reading this thread the credit for which goes to MikeR397 at Fatwallet.

A Brain Teaser and a Book Giveaway

As promised yesterday, here is the announcement for the giveaway of another fascinating new book. But before we get there, here is a quick brain teaser (excerpted from the book, reprinted with permission). Answer these questions based on what you already know (i.e, this is not a general knowledge quiz, so don't bother to go googling).

1. Driving due south from Detroit, what is the first country you will come to when you leave the U.S.?
      a. Cuba
      b. Canada
      c. Mexico
      d. Guatemala

Now think for a moment about how certain you are that your answer is right. Are you 100% sure? 95% sure? 90%? Or less?

2. Which country derives more than 75% of its energy from nuclear power?
      a. United States
      b. France
      c. Japan
      d. None of the above

Again, take a moment to think about how certain you are that your answer is right. Are you 100% sure? 95% sure? 90%? Or less?

3. Approximately how many microbes live in the typical person’s gastrointestinal tract?
      a. 100 trillion
      b. 100 billion
      c. 100 million
      d. 100,00

Once more, think about how certain you are that your answer is right. Are you 100% sure? 95% sure? 90%? Or less?

Did you answer Mexico for the first one? And how sure were you? 90%? 100%? Well, like most people who responded similarly in the original survey, you would be wrong. The correct answer would be Canada (the city of Windsor, Ontario). Don’t believe me? Check it out for yourself!

If you are like most people who participated in the original study, your answer for the second question was probably “None of the above” with around 70% accuracy. Again, you would be wrong, since France relies heavily on nuclear power to meet its energy needs.

Finally, for the third question among the people surveyed people most of them answered 100 million with 50% confidence in their answer. The correct answer is 100 trillion (best reference I could get).

The point of this exercise was not to ask you some trick questions and prove you are wrong, but to point out that it is human nature to feel confident about what we *think* we know. The very fact that I called it a "brain teaser" must have tipped you off that these are trick questions - yet, what was the percentage of confidence you had in your answers? This human psychology of thinking "I Know" plays a huge role in our financial decision. Unlike this trivial exercise, in real life the ignorance of our ignorance can result in severe financial misjudgment – be it investing decisions, retirement planning, estate planning etc. The book "Your Money and Your Brain: How the new science of Neuroeconomics can help make you rich", the subject of this month’s giveaway, does a great job of illustrating the concepts of psychology and brain activity in relationship to the way we handle money. It is an easy-read book (contrary to the image conjured up by the title!) chock full of such exercises, examples, surveys and study results which help realize some of our behavioral quirks and the silly mistakes we make which can cost us a lot of money in the long run. So, go ahead, leave a comment below and enter into the contest to win on of the three copies of the book being given away. And just for kicks (for our own informal survey) in the comment please jot down your answers to the above questions. And please be honest.

I'll go first. Here were my answers when I first read the questions -

1. c. Mexico (100% confidence - "what kind of a question is that – everyone knows that the answer is Mexico!")
2. d. None of the above (~80% confidence- "well if some country generated so much nuclear power, I would have surely heard about it?" )
3. b. 100 billion (25% - basically a 4-sided coin toss)

So stereotypical, I know!!! Yuck.

This should be fun :) The comment form will stay open from now through the end of October and I have three copies of the book to give away. Feel free to mention the giveaway to your friends as well and have them enter too so if you don’t win but they do, you can at least borrow the book from them :) And any help in spreading the word about the giveaway is much appreciated - it won’t affect the odds of winning, but hey, you never know when that good karma will come in for rescue :)

And like the earlier giveaway, a couple of quick reminders. I use blogger which does not require you to enter an email address when you leave a comment. So please either leave a link to your blog or your email address in the comment so I will have a way to inform you if you are a winner. Note that some of the blogger profiles are not public – so if you are linking to your blogger profile, make sure it is shared and I can view it and there is some contact information there. Note: You do not need to have a blog to participate. If you don’t have a blog and are not comfortable leaving your email address in the comments, please email me at ispfmail at gmail dot com and please copy the entire comment into the mail (but please make this the last option). In the previous giveaway I had several participants who signed off as "anonymous" and one of them actually won and it was lucky he left an email address in the comment – otherwise it would be a nightmare trying to contact him! Also, the books will be shipped only to US addresses. If you win and are outside the US, you will have to arrange for someone here in the US to collect the book on your behalf and ship it to you (sorry).

Good Luck, y'all.

And The Winners Of The Giveaway For The Book "Quiet Millionaire" Are...

Finally, it is time to announce the winners. After removing the duplicate entries, we had 51 people contesting for 3 books, bringing the odds of winning to 1:17. Not bad huh? Think you won? Well, here is a look at your competition. I have linked to your blogs when possible. I couldn’t open all the blogger profiles – so sorry I couldn’t link back to some of you.

1. Anastasia	2. paidtwice	3. Stephanie
4. Anonymous	5. Anonymous	6. Ben
7. Anja Merret	8. The Digerati Life	9. Brenna
10. ashley	11. melvynadam	12. Aaron
13. Mike	14. Viv King	15. Jon - SmartWealthyRich
16. AlvaroF	17. KK	18. ka
19. Edwin	20. golbguru	21. Sun
22. David	23. Jason	24. Nigel
25. KatDJZ	26. beth	27. Diane
28. Patrick	29. Paul	30. Upsidedown
31. Anonymous	32. micromysore	33. ryan
34. Smitha	35. mapgirl	36. the man
37. Stephanie	38. GeckoGirl	39. Young in Red
40. Call 2 Arms	41. Marie	42. Marsha P
43. Peter	44. Anonymous	45. the baglady
46. Anonymous	47. Anonymous	48. SJean
49. Kara	50. Maya	51. Anonymous

I ran the numbers through the random number generator at random.org and the winners are –



Congratulations Anonymous, Diane and the man! I will send you an email to get your shipping addresses and soon you can be on your way to the quiet millions :)

The rest of you, please don’t be disheartened too soon. Check out this spot tomorrow for the announcement of another great book giveaway!

Until then, ta ta...

The Best of Finance Blogosphere + Reminder for Book Giveaway

The giveaway for the book "The Quiet Millionaire" is in its last few days. So far, we have 49 entries for 3 books. The odds don’t look too bad :) So, if you have not yet entered, do so before the end of the weekend by leaving a comment on this post. Be sure to check back in on Monday to see if you are a winner, and on Tuesday for the announcement of a brand new giveaway!

Now onto some articles that caught my eye this past week.

This article from Single Ma takes the cake! I don’t have any kids (yet) and will probably not need to resort to these tricks any time soon – but the whole article is neatly filed away in some corner recesses of my brain. When the day comes for me to deal with a similar situation, I am pretty sure I will be able to pull it right out :) Believe me, all those of you with teen and tween age girls *want* to read this article!

Flexo at Consumerism Commentary has a great, detailed review of the online money management site Mint. I really liked that Flexo took the time to give a great introduction based on his personal financial life and then the in-depth analysis of Mint. Personally, I belong to the account-watchers-anonymous and would love to use a service like yodlee/mint. But I am so paranoid that if a hacker gets hold of such an account, he will end up having all my financial information that I have not ever opened an account at either Yodlee or Mint :(

Tricia at Blogging away debt decided yesterday was a feel good day and put up an article about Paul Potts. The first time I had seen his Britain’s Got Talent video on You Tube was probably the first time I sat through an entire opera performance! The emotional story of a dream coming true never ceases to amaze me! Head on over to Tricia’s post for some tidbits and videos about Paul Potts, for some lovely feel good weekend moments.

If you are familiar with the Sun’s Financial Diary, you probably know that he is very much into investment and does his own research. However, if you are “not quite there yet” and plan to hire a broker to handle you finances, then Sun can still provide you some great advice. In this post he offers some valuable resources for researching your broker.

Golbguru at Money, Matter and More Musings wonders whether signing the back of the card is really useful. In response to an earlier post I wrote, Anne who works at a retail store had said that at the place she works, the signature is only used to provide as proof if the credit card asks for it! In my own experience twice earlier, when my card was swapped once with my BIL and one with the better half, the signatures didn’t do diddly squat and we just kept using the other person’s card until somebody we realized that the name on the card wasn’t their own!

Pinyo at Moolanomy looks at compound interest with a slightly different perspective. He shows that the first million is the hardest to reach both psychologically and mathematically but it gets much easier after that (He actually hopes to get to 10 Mil!)

Sharon at The Frugal Duchess has a great find for all the thrift shop lovers - An Ebay style auction by goodwill stores!

Finally, Clever Dude has a very thought-provoking article titled Don’t let pride ruin your life that is not really about personal finance, but definitely worth a read.

That’s it for now folks! I hope you have a pleasant relaxed weekend.

DIY Projects for Frugal Home Owners: Carpet Cleaning Basics

This article is a part of the series “DIY Projects for Frugal Home Owners”, an attempt to get me (and hopefully a few readers) more interested in handling simple DIY projects around the house and saving some money along the way.


No matter who you are, there is a good chance that your home will get dirty from time to time. This holds true even if you clean your home each and every day. The most common area for dirt and grime are the carpets since it gets the most wear and tear. Carpets are what people walk on every day and are always coming in contact with dirty shoes, grease, dust, pets etc. The good thing is that you do not have to live with this type of dirt in your home. You can clean your own carpets very easily in order to present a better home.

Some homeowners think that they need to hire a professional to clean their carpets, but nothing could be further from the truth. Do it yourself projects, such as cleaning carpets is quite easy to complete. Sure, you are going to have to put a bit of time and sweat into these projects, but in the end you will be glad that you did this on your own. A job well done is a reward in itself – if that isn’t good enough there is all the money you can save by doing things yourself :)

Cleaning the carpets is all about getting the deep down dirt. The first step however is to start with vacuum cleaning to get rid of the surface dirt. I would highly recommend investing in a good vacuum cleaner. I have been drooling over a Dyson for a while, but we decided to settle for a Bissell (that was available on sale). The problem with such run of the mill vacuum cleaners is that after a few uses, they seem to lose the suction or worse, start to kick up dust. By the time we have kids, it will probably be time to retire this vacuum cleaner anyway, and maybe then we will buy a Dyson.

A neat trick I learnt from the time that we called maid service is to use a carpet cleaning and deodorizing powder. I think she used the “Resolve” brand and I really liked how fresh it made the room feel. It is supposed to contain absorbent granules that attract the tiny dirt particles in the carpet to attach to it. And since the granules are heavy and not “stuck in” they can be vacuumed right off. Leave it in for a few minutes and then vacuum, to get a clean fresh smelling carpet.

If you have set-in stains, you may need to spray a stain remover and scrub the area first before using a vacuum cleaner. Personally, we have a bit of an obsessive compulsive streak and we keep a can of carpet stain remover handy. Anytime there is a spill we immediately spray the foam and scrub it with the brush attached to the canister and then mop it up with a towel or paper napkin. Since we do not usually allow a stain to set in, I do not have much experience with removing set-in stains, but here is an index for removing pretty much any stain that you can think of from your carpet.

When regularly used, good vacuum cleaners can be quite effective in removing surface dirt and preventing it from settling in. However, if you prefer a more deeper cleaning, then it is time to get a heavy duty rug scrubber. You have two options here. You can either buy a rug scrubber so that you can use it whenever you want in the future, or you can rent one. If you anticipate deep-cleaning your carpets on a regular basis (got toddlers?), you might want to consider buying one. But in most cases, I suspect renting is going to work out just fine.

Rug scrubbers are available for rent in most big chain grocery stores as well as home improvement stores like Home Depot, Sears, Lowes etc. For a 24-hour period rental, they cost anywhere from $19.99 to $29.99 depending on the type of equipment you choose. You can choose to buy a deep cleaning solution or use warm water and soap (or a mild shampoo). The rug scrubber (“Rug Doctor”, “White track” etc) often comes with instructions about how to use it. If the instructions require you to stay off of the area for 12 to 24 hours make sure you plan your cleaning schedule accordingly.

Cleaning carpets is part of being a homeowner. Dirt will get into the house no matter how careful you are. But if you do what it takes to rid of it, you can reap some great benefits while trying to sell your stain-free house some day. Even though prevention is the preferred choice, the cure is not all that hard. The only thing that it needs is a bit of elbow grease :)

Is "Slow and Steady" Approach to Wealth Out of Fashion?

We have all heard the story of the “hare and the tortoise” when we were young. But somehow, many of us seem to have forgotten the lesson taught by the story as we grew older. In a world where the rich are placed on a pedestal and worshiped, the “gods” are those people that made it rich quick and with a bang. Larry Page and Sergey Brin, Chad Hurley and Steve Chen, David Beckham, Tiger Woods, Oprah Winfrey – these are the people that fascinate us. OC, the simple life – these are the TV shows that hold our attention. We dream that someday we will be rich and famous too.

There is nothing wrong, or for that matter new, with this dream. For generations, people have dreamt of becoming rich. But it seems to me that in the more recent times, this dream has somehow caught on a tone of urgency. We not only want to be rich, we want to be rich *now*. We don’t want to wait for our boat to come in – we just want to get there right away. In a world where everything moves at the speed of light, it seems like we have come to expect our dreams to become reality fast too.

Take for instance the example of a friend’s younger brother who recently graduated with an undergrad degree. He got a job right out of college and it pays him a fortune. Being a bachelor who shares an apartment and stays close to work, he could easily manage to splurge on parties and manage to save a fair amount at the same time. Considering that he is in his early 20’s, if his career grows at a reasonable rate and he maintains a consistent savings plan, he could easily be a multi-millionaire by the time he retires. But he does not see it that way. He looks at the folks who made their millions in the dot com boom and feels that he has already missed the boat. To him, the only way to make money is to make it fast and with a bang.

Last year, when he was in his senior year of undergraduate study, he was assaulted by severe doubts of whether he did the right thing by majoring in computer science. He was fascinated by the real estate boom and was convinced that that is where the money is. For a while his folks were seriously worried that he may throw the three years he spent on the engineering degree to pursue a real estate certification. Fortunately, he stuck it out and completed his undergrad. But with the real estate bust, he is again disheartened and fretting about missing “yet another” boom. He is already looking to see what the next wave it going to be. He wants to make his millions by 30 and retire to a life of traveling the world and driving expensive cars.

He is an extremely smart person. And I have no doubts that he has the potential to make it big. But if every smart person were to become a millionaire before 30, we would have a lot more stories to tell than we do now. In addition to being smart and talented, success requires a pinch of luck and a dash of timing. I wonder if in his quest for instant success, he is neglecting the more time tested way to riches – the slow and steady way. While the stories of the slow-and-steady millionaires may not be as fascinating as the stories of the got-rich-quick whizzes, the slow-and-steady approach has a much better probability of eventual success.

The attitudes and expectations of my friend’s brother is a bit disturbing to me, because I can understand and to a large extent relate to the way he feels. I look around me at the peers who joined start-ups that went public and who made a nice cushion of money. I know a few seniors who rode the dot com boom. And a colleague from an old job that day-traded his way into retirement at 32. And a friend who sold his home in California at just the right time, and owns a house now in Texas free and clear. It makes me wonder if I am doing the right thing. If I should look at other options than the regular 9-to-5 job (that is really more of a 8-to-8 job) and find my own ways to quick riches.

But when you look closely, for every friend that I can think of who can afford to retire in their 30’s, I can think of a hundred others that cannot. The common strand in many of the success stories is that, these people were going about their daily lives as usual, and the right opportunity came knocking. Seems to me that the best approach to riches would be to take the slow-and-steady approach, while keeping an eye open for an opportunity to make it rich quick. That way, if the stars align just right and you are the story that people talk about, great! If not, at least you have a Plan B already in place to make you rich eventually.

The nice thing about plan B, the slow and steady plan, is that it is tried and tested for centuries and as shown in the book Millionaire Next Door it works. In addition, there is a clear cut step-by-step manual to take you where you want to be. As long as you are persistent and follow the directions in the manual, you will get there. And instructions usually read something like this:

• Live below your means.


• Stay out of debt.


• Invest wisely.


• Avoid the temptation to keep up with the Joneses.


• Rinse and Repeat.

Now for something that can give you a guaranteed results (bar the unexpected curve balls that life may throw your way), those instructions aren’t all that hard to follow, are they?

In this fast paced world, the slow-and-steady approach to riches may be extremely uninteresting and seem out of fashion, but considering that it can make promises that no other approach can make, I doubt it will ever really lack a following. Count me in.