Someday A Goat

Changes for FICO scores

Starting Feb. 14, you will no longer be able to access your Experian FICO score on myFICO.com, which basically means that you won't be able to access that number anywhere. Equifax and TransUnion FICO scores will still be available, but consumers will only be able to see their Experian FICO score if a lender shares the information* (for instance, if you are applying for a mortgage and Experian is the credit reporting bureau the lender uses, by law they would be required to share the credit score they used in setting the terms of the loan).

It's unfortunate that a company can make money selling my data, but won't really share it with me. I understand that lenders are credit bureau customers, not consumers, but the credit reporting industry has been forced to be more transparent in recent years, and this feels like a step back. 

myFICO.com forum about Experian change
Wall St. Journal article about Experian change
New York Times article about Experian change

Also in FICO news, Fair Isaac Corp., the company that developed the FICO scoring model, is releasing changes to the model. The new model, which will be called FICO 08, will include several key changes. One that I like is that being an authorized user on another person's credit card will again allow you to piggyback off their credit to improve your own. This was the case for years, but there was talk of eliminating it as companies were offering to allow you to piggyback off of strangers for a fee. The new model will allow piggybacking for spouses and children only, which is a great tool for parents and couples with lopsided scores.

My parents made me an authorized user on a credit card starting at the age of 14, and it made all the difference in my credit score and learning responsible credit habits early on. When I bought my car at 26 in 2005, the loan officer commented that while my credit history was pretty short, I had a great score for someone so young. When my husband and I were married, my credit score was much higher, and his score was improved by becoming an authorized user on my cards. I'm still kind of shocked at how much available credit we have.

FICO 08 will also reduce the damage done by collection debts under $100, and the total amount of available credit will affect scores more. They are also going to more of a big-picture look, so a good mix of loans (credit cards, student loans, car loans, mortgages) will improve scores. 

Consumerist has a great summary of the FICO 08 changes. I was unable to locate many other articles about the changes, so I expect to see more relevant information over the next couple of weeks as the newer scores go into effect. TransUnion and Equifax will be rolling out the new model in the coming months, and who knows what is going on at Experian.

* I'm guessing that Experian will still have their credit score available on their web site, but that number isn't the same as the FICO score based on Experian's records that lenders would use. Basically each bureau generates a FICO score based on their information, and they also generate a credit bureau score that uses a different scoring model. It's kind of confusing, but see Wikipedia for more details.

Watch I.O.U.S.A. this weekend on CNN

Back in August, we went to the theater for the first time in ages. It was a special screening of I.O.U.S.A., which I couldn't recommend more. The movie was produced before the economy had completely melted down, which means that further deficits may be necessary for the time being until things have recovered. However, I think our national deficit is a critical issue. Les over at Spilling Buckets posted earlier today that CNN is going to have special showings of the movie, with unscripted panel discussion throughout the broadcast to account for more recent events.

The movie will be showing on CNN on Saturday, Jan. 10 at 2 p.m., and Sunday, Jan. 11 at 3 p.m. (press release), I encourage everyone to check it out. It is far from dry and boring, and really opened my eyes. 

Download Suze Orman's 2009 action plan for free

You have until January 15 (11:59 pm CT) to download a free copy of Suze Orman's 2009 Action Plan. Not only am I a fan of free stuff, I also really like Suze Orman.

Link to download Suze Orman's 2009 Action Plan

American household debt shrinks for first time ever

CNN has reported that household debt has fallen for the first time ever (technically, in the past 57 years, the amount of time the Federal Reserve has been reporting flow of funds, which this data comes from). The amount of debt held by American households has fallen 0.8%, or about $30 billion dollars, to $13.9 trillion. Keep in mind that these are third-quarter numbers, so we may see more changes when fourth-quarter results are released.

On a personal level, this is great news, we seem to be collectively pulling our heads out of the sand. However, on a macro level, with consumer spending comprising 70% of the U.S. overall GDP (according to CNN in the same article, not sure of their source), there seems to be a fine line between spending rationally, and the economy coming to a screeching halt.

Summary of results from Federal Reserve
Links to complete Flow of Funds report from Federal Reserve, in addition to other graphs and information

Better lucky than good

We absolutely love our house, and could stay here indefinitely if we needed to. According to Zillow, we either got a screaming deal on our house, or it hasn't lost any value in the year that we've lived in it. And I'm so glad we bought last year, even if it was the top of the market.

Most of our down payment was in the stock market, especially in financial stocks (I know, I know, it should not have been in the stock market, I won't make that mistake again). I look at what the prices on stocks I sold are today compared to March/April 2007 - October 2007, when we liquidated the down payment, and I thank my lucky stars that we found our house when we did.

We looked for a house for almost exactly a year, and between drive-bys, online searching and the 60+ houses we visited with the realtor, we must have considered more than 400 houses all told. Once we found this one, it was less than two weeks until we had a contract and closing date on it. The timing could not have been better.

If we hadn't found this house, it would have probably been years before I felt comfortable enough to sell portfolio positions for a down payment. And even with 20% down, we may not have qualified for the mortgage since our credit history is short (long for our age, but short in general terms). Sometimes it's better to be lucky than good.

Is the marine and fish store doing that well?

I was catching up on my Suze Orman episodes last week, and while watching her 10/18/08 episode, I saw local commercial for fish/marine store down the street from our house. It occurred to me that the store must be doing well in the down economy to be doing TV ads. Of course, the price for spots has probably gone way down with ad budgets starting to get cut as current contracts expire. How well must the business be run for it to be advertising when discretionary spending is going down? Or maybe it's a last-ditch effort for extra sales, although the store has been there for years.

My husband has more experience with broadcast, and he did make the good point that it's a Saturday evening show on cable. We'd have to look closer at her ratings to see whether they've been going up lately, but my guess is yes.

The marine store could also be well-positioned to take advantage of inexpensive advertising--maybe with additional online sales? I'm tempted to drop by next time I'm in the area just for a look-see.

Almost out of gas

You may have seen news reports that Atlanta is running low on auto fuel--partly because the pipeline that services the city is under capacity due to Gustav and Ike, partly because the EPA requires Atlanta gas stations to use a lower-sulfur fuel due to our lovely smog, and partly because every idiot in town wants to top off the tank before gas runs out entirely, exacerbating the problem.

We tend to wait until our cars are pretty low on fuel before we fill up--it's been helping us attempt to make our weekly spending targets. This has made the past couple weeks feel like we're speculators trying to time the stock market, only our transportation to and from work depends on the bet. Riding a bike, walking and car pooling are all not options for either of us for a variety of reasons. Kind of like living paycheck to paycheck, it's a stupid way to do things.

The week before Ike hit, my husband's car was approaching empty, but we figured that he could make it to work on Friday, we could use my car if needed over the weekend, and he could fill up the next Monday, which was payday for me and thus the turnover for weekly spending. I filled up my car that Tuesday, and as the week wore on, gas prices went up as Ike churned toward Texas. We heard rumors that gas was getting low in the metro area. We decided that his car running out of gas in an uncertain situation was not going to work as he was already almost on fumes, so he went with all the lemmings to fuel up on Friday. Turned out to be a good thing, prices went up further, and supplies in the city were limited.

However, the hurricane passed, and we figured it would be about a week before everything returned to normal and stopped paying attention all last week. Fast forward a week to last weekend, and both our tanks were getting pretty close to empty. I decided to delay a trip to CostCo on Saturday to save money. I would have filled up while I was there, and since I go first thing in the morning, I probably wouldn't be so nervous now. I noticed a couple gas stations with lines on Sunday, but figured it would be OK by mid-week when I would really need gas. On my way to work Monday morning, I was shocked to not only see lines at every gas station, but the station right by my work had two lines 7-8 cars deep outside the station. I would say at least half, if not more, of the stations in North Atlanta are out of gas at any point in time. And prices are more than $4, sometimes a lot more, just for unleaded.

I'm starting to get nervous. My car might be able to make it through Friday, but my husband's definitely won't. And I don't want to waste the last of my gas sitting in line to have the station run out by the time I get to the pump (happened to two of my coworkers). Five of the seven stations that I checked early this morning were out, and the other two had insane lines. Since I'm already not eating lunch out, and we've been cooking dinner at home, I don't have a lot of ways to save fuel at this point. News reports say that it's supposed to get better by the end of the week, but I'm not sure our cars are going to last.

Between this and the stock market wobbling, it's hard to stay optimistic. My rational brain knows better, but a giant emergency fund and a full tank of gas would go a long way to feeling more sane.

Update: My husband waited a short while in line around 8 pm to get gas, but had to drive around for a while. I'm going to see if I can hold out another day.

Heard on the radio this morning

On my way into work this morning, I realized that almost every commercial on the handful of radio stations that I listen to was for people with bad credit, people wanting to refinance, basically just any sort of service that a person with less-than-stellar credit (and likely an emergency fund also) might need. There has been a noticeable increase in these types of commercials just this week, which isn't unusual at all when a company wants to align message with current events.

What really caught my attention was a commercial for a computer company. "How are you supposed to afford a laptop if you have bad credit?" Um, pay with cash. Sheesh. Not that I'm perfect, but financing is not the only option in every situation. The only target I think that statement can apply to is possibly a student. Sometimes radio advertising makes me sad.

I.O.U.S.A.

I went to the special screening of I.O.U.S.A. last night, which included a livecast town hall meeting after the film. The panel featured 5 of the brightest people in the United States, including Warren Buffett. I couldn't recommend the film more, it was a very thoughtful, clear and basic presentation of the national debt situation. I'll be posting more of a review this weekend, but please do check out the link. There are also many clips of the movie on YouTube.

The movie was sold out at the theater where we saw the movie, but it was interesting--I think my husband, my friend and myself were pretty much the only people under 40 years old. We saw quite a few people attempt to buy tickets, I was surprised that it was so popular because I only read about it this week.

Also? David Walker (former U.S. comptroller general--AKA head bean counter for the country) is my new hero.

I.O.U.S.A The Movie

(link opens in new window)

You don't have $3.97 in your account?!?

So I stood in line at Walgreens on my lunch hour. In front of me was a younger woman, wearing scrubs. I had seen her walking as I turned in to Walgreens, and as she had a backpack, I guessed that she relied on public transportation (with our poor system and extreme summer heat, I don't know how people do it).

The cashier rang up her vitamin water and a pack of cigarettes (she was clearly choosing based on price), she ran her card and got the dreaded "It didn't go through" comment from the cashier. She just stood there for a second, then asked if she could try again, this time running it as credit. It went through, but only $3.30, so she had to cough up $0.67 (which was paid mostly in pennies).

We've been working so hard at trying to get our debt paid of and watching every penny for what seems like ages now (since we moved in together more than 4 years ago and my now-husband finished school) with what seems like very little result. We're actually way deeper in the hole between a mortgage, a new car and some significant addition to the credit card debt.

But I don't think I've ever had just $3.30 in my account (or tried to buy anything when it gets low). I also have the blessing of several safety nets. Had I not been in my particular circumstances, that girl could have easily been me. I'd have to check, but I think that $60-some dollars is the least I've had in my account. Who knows, maybe I'll look it up in quicken and find that I was pretty darn close. Maybe she just started maxing out her 401K and isn't used to the reduction in cash flow. Maybe it's all been transferred to savings. Whatever her situation is, mine isn't really that far away. I'm still clearly spending more than I earn. I may be a little better about having available funds, but I'm not any different really.

Have you noticed random people in public with very obvious money problems lately?