Thursday, December 10, 2015

Is Santa Real? Why the Hype over Christmas?

It's Christmas time and I've been reflecting on why I enjoy it so much. From my consumer advocate perspective, the holiday are often a tough time for consumers. Lots of ads for "sales" that aren't truly a reduced price. Frenzied shopping trips that don't involve doing the recommended research before buying. From my financial counselor perspective, I see how many people don't plan for the spending associated with the holiday and end up in debt afterwards. Some see Christmas as a hyped up American event that is an over commercialized, stressful time.

But I love this holiday and I think it's because of the values behind it.

Value of helping others: The legend of Santa Claus began in 280 AD in now modern day Turkey around a monk, St.Nicholas. According to,"It is said that he gave away all of his inherited wealth and traveled the countryside helping the poor and sick... Over the course of many years, Nicholas’s popularity spread and he became known as the protector of children and sailors." It's fun to help total strangers by donating food, toys, time or money to make their holiday special. This is the time of the year that focuses on giving vs getting.

Value of showing family and friends that you care about them: It's fun to try and find that special surprise for family and friends that shows how much you care about them. That doesn't mean you have to go into debt for it though. Plan ahead for these gifts by creating your holiday budget and stick to it. it's time to help them with something or that gift that lights up their eyes, this is the time to say  I really know you and love you unconditionally.

Value of spending time with family and friends: We're often so busy that it takes a holiday or special event to stop and have gatherings of family and friends and catch up on their lives. Plan something simple, a hike with a friend or a pot luck dinner with family. Slow down and enjoy the time with them.

Christmas and the holidays can be a wonderful, joyous time. Frankly, the values represented during this time should be year around but at least people rally around this time to display them. Christmas isn't just a day-it's a state of mind.

Sunday, July 12, 2015

Privacy-What's the Big Deal?

We love the Internet. We visit 100's of sites in a month. We love our phone and its cool apps. But do we have any idea what's being done with the information about us that's tracked on these websites and apps? I recently attended a conference where a credit scoring company did a presentation on what data factors into their credit score and one of them was our cell phone data-what apps we have, how late at night we stay out and how physically active we are. While many people are, rightfully so, concerned about the recent data breaches at the federal government, I think consumers need to focus on the legal use of personal data. We agree to let a company use our information by using their website. How often do we read the company's "Privacy Policy" or "Terms of Use"? We agree to let those apps use our data by clicking on "Agree" to download it. Data means big revenue to these companies. The only way they will change and not sell our data is if consumers push back and stop using sites/apps that use this business model. 
For more information see ConsumerAction's Privacy website (For full disclosure, I am on their Advisory Board.) and the Federal Trade Commission's site

Sunday, April 26, 2015

FICO Opens Access to Free Credit Scores, Helpful or Not?

FICO, a company that develops the FICO Score, "the standard measure of consumer credit risk in the United States" has announced a new program, the "Open Access for Credit and Financial Counseling" which will allow credit and housing counselors to give their clients' their individual credit score for free. These credit and housing counselors currently buy the client's credit report/score from the credit reporting agencies (CRA) and under their agreements with the CRA have been allowed to use the information to counsel their clients on how to improve their credit, but not to give the client the actual score. Since most lenders use some version of a credit score to determine the terms of any loan and since credit scores from the CRA's are not free to consumers, this is a step in the right direction.
However, I am concerned about what data is used to credit these scores. Many types of businesses do not report to the CRAs resulting in many individuals having difficulty in generating a credit score healthy enough to get a loan, or favorable terms with one.  According to a recent Washington Post Article, "A new kind of credit score for those with no credit", FICO is developing a new score to help people who have had difficulty in the past in having enough data to create a score. Information from utility companies will be added to this new score. That seems fair and helpful. Information on an individual's property and how long they have lived at this address, or how often they have moved around, will also be included. The argument is that the longer a person has lived at one address shows signs of stability. I disagree and think this will harm the credit score for young adults and the low-moderate income individuals. Data collected on how we handle credit and payments on our obligations makes sense to be the data used to assess risk for future loans. How often I move does not. 

Monday, February 16, 2015

President's Day Sales-Are The Prices Really Lower?

Retailers are very good at marketing and creating that sense of urgency for us to buy now. "Best Sale Ever" "Lowest Price of the Year" and "President's Day-80% off" are all slogans thrown out to grab us out of our homes to snag the amazing deals. Then there are the multiple stores who give out discount coupons to their credit card holders to entice them to save an additional 20%. In theory shouldn't that reduce the price to $0 (80% off plus 20%-I know, way too simple math)? While it is generally true that good deals on bedding and winter clothes are available during the President Day Holiday, consumers need to know how to do the ancient art of comparison shopping, defined by as: "to compare prices and quality of merchandise in (competing stores) to determine the best value." I was recently in a major department store, one of the ones where you don't go in without a coupon, shopping for suits with my son. We selected the items we wanted, basing the price on the coupon I had for 20% off and went to check out. However, in my urgency to get these deals advertised on the coupon, I neglected to see that the effective date for the coupon was the following weekend. In spite of disappointing my son, I apologized and turned to put the items away. Coming back next weekend was annoying but worth the 20% discount. To my amazement, the salesclerk laughed and said that the items actually cost less on that day versus next weekend. We bought the items for the price we wanted and left. So much for the coupon being valuable. I couldn't help but wonder if they mark the prices up for the days that coupons are in effect? The point is, regardless of retailers' sensational marketing, capitalizing on holidays and deep discount coupons, consumers need to compare prices and quality to get the best item for the best price.

Saturday, October 25, 2014

Plan Now to Save Your Refund!

"Mental Accounting" is a very cool economic concept, created by Richard Thaler, which basically says that we tend to put our current, and future, money into certain "buckets" or accounts. Once we put money in these mental accounts, we tend not to take them out. For example, we know what paycheck our mortgage or rent comes out of and we don't take from that money. Similarly, and sometimes to our detriment, we put money into grocery or clothing categories. Even if the electric bill went up this month, we have a hard time reallocating money from the grocery or clothing accounts to cover the higher electric bill.

Many of us start planning in November for whatever holiday we celebrate and thinking of the gifts we would like to buy friends and family. If we haven't been saving for these expenses throughout the year, we buy them anyway knowing that there's a tax refund coming early next year. We have already put that refund into a mental account to pay for holiday bills.

I'd like to propose a different idea. Start now in November and put at least half of that expected refund into a mental account for savings. It's the one time in a year where a chunk of money comes our way and having some put away for an emergency will result in a lot less stress when that emergency, invariably, comes our way. Take a look at your holiday expenses and find creative ways to reduce them so you don't wake up in January with a "hangover" of bills and regret.

Using the "Mental Accounting" concept can help us change our financial decisions to help us reach our financial goals and stress less over money.