This Week In Your Wallet – April 26, 2011
This week started off with a bang – literally! At a few minutes before 7 a.m. Monday morning I heard a huge noise from upstairs, followed by the sound of rushing water. I ran up the stairs expecting to see a flood but was instead met by a tempered shower door that had exploded into a million pieces. Thankfully, no one was hurt. But you know how some incidents set your adrenaline rushing for hours? I’m writing this mid-Monday afternoon and it still hasn’t settled down. So if there are typos, you’ll understand why.
I also, loyal readers, want you to know that I’m on to some of you. I planted a trivia question (a fairly easy one in my opinion) at the end of last week’s newsletter with offer of freebies for the first answers on Twitter and Facebook. My Facebook friends were all over it, but I didn’t get a single response on Twitter, which tells me some of you aren’t reading all the way through. I just want you to know I don’t necessarily write these things in order of importance. It’s worthwhile (for your wallet always, and sometimes for prizes) to read (or at least skim!) til the end. But I’ll put this week’s trivia question right here – I’ll send copies of The Difference to the first correct respondents on Facebook and Twitter. If my morning had a soundtrack, which Annie Lenox song would be its first single? Now, on to saving you some dough.
Airplane
The next time an airline loses your bags or bumps you (without you volunteering) you’re going to profit to a greater extent. Here’s the 411.
The price of getting bumped has just doubled. Under the new rule – which goes into effect August 1 — you’re now entitled to double the price of your original ticket (up to $650) if the bumping leaves you delayed for a short period of time (that means 1-2 hours after your originally scheduled arrival time). And if you’re delayed longer, you’re entitled to up to four times the value of your tickets, up to $1,300.
If your bag is lost and you paid a fee, that fee will be refunded. This is on top of providing reasonable expenses for lost or damaged or delayed bags.
Fees must be disclosed. Finally you know all those niggling fees we’ve been griping about — the airlines now have to prominently disclose those on their websites. According to the DOT, this means information about baggage fees, meal fees, fees for canceling or changing reservations and advanced seating fees. Government taxes and fees are also going to be required to be included in any fares you’re quoted before buying.
Oh, and the next time you’re stranded on the tarmac, you can trust you won’t be there for longer than three hours – and that you’ll have access to the lav and to water – with the exception of safety, security and air traffic control related reasons.
Life and Debt
I wrote a column recently for the New York Daily News and the fact that it’s still being retweeted tells me that it was a good one. (If you’re not following me on Twitter, where I’m @jeanchatzky, please do.) It was about what John Ulzheimer, president of consumer education for SmartCredit.com, has dubbed the “seven deadlies” – essentially the seven deadly sins as far as your credit score is concerned. I’ve condensed it for you here so you know what to avoid at all costs.
- Public records
- Severe late payment
- Charge-off
- Collections
- Settlement
- Repossession
- Foreclosure
Bankruptcies, judgments, liens: All of these rank up there as some of the most damaging. But of them, bankruptcy is the most damaging of all. Chapter 7 and Chapter 13 can both can stay on your record for up to 10 years.
This is the most common offense. Anything past 90 days constitutes “severe,” but all late payments stay on your report for seven years if reported. Fortunately, they start to pale as far as how much new issuers of credit care about them after 24 months.
This can happen if you’re 30 days late, although credit card lenders often give you a few months. The debt is usually then sold to a collection agency. It will remain on your file for seven years from the date your account is 180 days past due.
The second-most common offense, collections can kick in after a severe late payment. They can be triggered by unpaid medical bills, utilities and credit card debt, and they’re all equal in terms of the impact on your score.
You’ve seen the ads by companies offering to help you settle your debt for less than you owe. You can also try to do this yourself by calling and making an offer – the avenue I recommend. Short sales, too, fall into this category. Settlements stay on your file for seven years.
We think of cars – and the Repo Man – but really, any asset that secures a loan can be repossessed. This, too, will stay on your file for seven years, and you may still owe money after the repossession, says Ulzheimer.
We’re all too familiar with this now, but here’s a quick overview: Foreclosure stays on your report for seven years. If you want to lessen the blow (slightly), try a deed in lieu of foreclosure – with that, you’re waving the white flag, telling the lender you can’t pay, and turning in the keys.
Finally, what doesn’t hurt your score? Your income. It’s not a factor. Having many credit cards won’t either – as long as you pay your bills on time. And the fact that you ran up your credit card bill a couple months ago, but paid it off in full, won’t affect your score when you check it now.
The Money Pit
Finally, the folks at Money magazine put together a list of 100 – count ‘em – 100 best money moves. You can go through the list if you’d like. Here’s a link. But I decided to pull out my favorites.
- Skip the GPS unit for your car and use an app instead. “Phones that run on the Android OS have one built in; for an iPhone, download NAVIGON MobileNavigator ($50). Then attach your phone to the dashboard with a window mount ($20). Ready to roll.”
- Swap homes rather than buying and selling. “If you find another homeowner who likes your place — and you like his — you can save a bundle in transaction fees by swapping,” the story says. Sites that facilitate swapping include goswap.org, besthouseswap.com and onlinehousetrading.com. Money points out the need to get a really good appraisal and use a lawyer to seal the deal.
- Get a free rental car upgrade. Yes, I know you might want the compact now that gas prices are such an issue. But you can, according to Money, increase your odds of getting the free upgrade by booking a midsized car. It’s the most popular, therefore the one the car company is likely to run out of, which can get you the nod.
Have a great week!
Jean
