I’m still here, but I have not had extra time to write new threads for the blog due to my work schedule, renovations and health issues. Sorry, I didn’t let my regulars know sooner. Crazy schedule.

Ethanol is consider a biofuel alternative to gasoline.  It is produced from the fermentation of sugar from foods such as corn, sugar cane, etc. and it also can be produced by the hydration of ethylene from petroleum production too.  Many gas stations advertise ethanol additives in their gasolines and that by purchasing their ethanol gasolines you are helping reduce pollution in the environment, that your car will run better, etc.  Is this true and what are the things you may want to know…

Not all vehicles do well with ethanol based fuel.  Your gas mileage could be reduced and unknowingly you could be filling up more often. People who have reported reduced gas mileage with ethanol based gasoline are some hybrid owners and people with older cars. 

Of course for you to know whether ethanol based gasoline is affecting your gas mileage or not, you will have to test your own vehicle for results.

On various television programs you have probably heard the words “fico” score or credit score mentioned, but what exactly is this? 

Fico stands for the Fair Isacc Corporation.  They were the inventors of a credit scoring system that most of the world uses. 

Your credit score or fico score represents a calculated measure of what type of credit risk you actually are.  Credit scores range from 300 – 900 with the majority of people in the 600 – 800 range. Higher credit scores mean lower interest rates charged on loans.  Lower credit scores mean higher interest rates charged on loans.  For instance, a person with a credit score of 450 will pay  three to five points higher interest rates on loans than a person who has a credit score of 800.

Keeping a good credit score is very important because it can affect your ability to get a mortgage, get a school loan, get a car loan and even your ability to rent suitable accommodations. 

What are the things you may want to know…that affect your credit score for better or worse?

The amount of time you have had credit – Loyalty pays off. Try to establish credit with companies for at least seven years or more. Although other reward programs or incentives can be tempting, jumping around from credit card company to credit card company can lower your fico score/credit score. Of course, age also plays a factor in the total amount of time you have had credit too.  The amount of time you have had credit makes up 15% of your fico score/credit score. 

How often your credit is accessed – Buying a car?  Opening a bank account?  Applying for a credit card?  Renting an apartment? Inquiring about loan?  Getting a mortgage?  All these things require access to your credit report.  Each time someone other than you accesses your credit report it lowers your score.  If you are buying a car, inquiries within 14 days will be grouped together.  If you are buying a house inquiries within 30 days will be grouped together.  How often your credit is being accessed makes up 10% of your fico score/credit score. 

Different types of credit you have - Installment debt like a car loan or a mortgage is looked upon more favorably than revolving debt like credit cards.  The different types of credit you have make up 10% of your fico score/credit score. 

Your bill payment history  - Do you pay your bills in full and on time?  If you are not paying your bills on time and/or making minimal payments on several maxed out credit cards this will lower your credit score.  Do you know that your bill payment history actually makes up the largest portion of your fico score/credit score?  35% 

How much debt you have compared to available credit – Maxed out or high balances on your credit cards?  If you compare the amount of your available credit on your credit card compared to the amount of debt you have on your credit cards; does it work out to over 50%?  If it does, this affects your credit rating for the worse.  Your goal should be not to borrow more than 50% of your available credit balance from any single lender. (mortgages and car loans excluded) Do you know will have a better credit score if you owe smaller amounts on several credit cards rather than maxing out one credit card to its limit?  How much debt you have compared to available credit makes up 30% of your fico score/credit score.

Here is an example of what a credit report looks like.

If you live in Canada, here are links to Canadian credit bureaus:

Transunion

Equifax

Experian

If you live in the U.S. here are links to U.S. credit bureaus: 

Equifax

Transunion

Experian

With U.S. home prices declining many people are considering buying foreclosure properties in the U.S.  Foreclosure properties in some states are selling for $1.00 to $1,000.00, but before you jump on the band wagon thinking you are getting a great deal, what are the things you may want to know….

Ghost Towns - Some neighborhoods have so many foreclosures that they are becoming “ghost towns”.   The problem with purchasing a foreclosure in a “ghost town” is that the neighborhood may or may not come back to life when the economy eventually gets better.  A lot of homes in these “ghost town” neighborhoods are being torn down because no one wants to purchase the homes and the neighborhoods are attracting vandals and crime.

Flipping - With attractive prices many people are thinking they can fix up these cheap foreclosures and flip them for profit.  Some of these flippers are also learning the hard way.  The house may have unforeseen problems that cost more to fix than planned, thieves may break in and strip out everything once you are done renovating and/or the house may take longer to sell than planned or may not sell at all.

Consider employment levels - Cities whose economies are not diverse enough or depend on one or two industries as a means of revenue/support have been especially hard hit. For instance, with auto sales slowing Detroit has taken a hit.  Nevada has an 8.3% unemployment rate because tourism is down and gambling revenues have dropped 69% as of June 2008. 

Retail sales - Are stores, restaurants, etc. surviving or shutting down in the neighborhood?  Sure it is a given that a business or two may fail in the neighborhood, but when anchor department stores and 25% of smaller stores in a large shopping mall are shutting down this may indicate further economic declines and hard times will hit the neighborhood. 

Overbuilt - Some neighborhoods are way overbuilt with too many homes for too few of people.  These areas may take a long time to recover or may not recover at all. 

Remember…

A cheap price on a foreclosure property doesn’t automatically guarantee a quick profit in the future, a lot of other factors are at play too.

As we enter into a recessionary environment many people are being cautious with their finances.  Recently, we have seen a lot of great sale prices, stores going bankrupt and some stores downsizing the total number of stores they operate.  Many people think if they wait long enough the price will just get lower and lower and lower and lower. What is the hazard of this type of thinking and what are the things you may want to know…

Currently 26% of U.S. retail stores are in danger of filing for bankruptcy. 

Approximately 12,000 U.S. retail stores will close their doors in 2009.

6,000 – 7,000 U.S. retail stores will shut their doors by the end of 2008.

Up to 40% of retail stores profits comes from Christmas sales.  

66% of the U.S. economy relies on U.S. consumer spending.

60% of U.S. commercial mortgages are in default (this is yet to hit the U.S. economy)

As excess inventory is sold off retail stores will get leaner and meaner. The total number of retail stores will shrink due to closures and bankruptcies.  There will be less inventory on hand due to slowing sales and some stores will not be able to get enough inventory in to stock their shelves unless they have cash on hand and/or access to credit. That is probably easier said than done in this credit crunch environment. Eventually deep discounts will be become harder and harder to find as inventory levels shrink down to manageable levels and there is less competition in the marketplace in general. 

So… for the best selection and deepest discounts you may only want to wait for falling prices to a certain point.

Wishing you a very Merry Christmas and wonderful New Year!

For the Canadian residents that are snow bound and didn’t receive their boxing day flyers, see all the boxing day specials online here

See you next year!

Unfortunately, I’m one of those organized people that you may love to hate. Yes, I start shopping for Christmas presents after Christmas is over.  I love the bargains, you can get so much more for your buck, but I also understand not everyone likes to shop a year in advance or can afford to do so.  If you are on a budget here are some things you may want to know… about some cheaper gift ideas.  

Organized Christmas   -  Looking for inexpensive holiday gifts to make? Try this frugal collection of gifts in a jar, stocking stuffers, or “just for fun” activities like Snowman Soup and Magic Elves.  Free printable gift tags, popcorn toppers and craft items add to the fun!

Better Budgeting - 63 gift ideas under $10.00

Gifts in a jar recipes -  Can you layer ingredients in a jar?  No cooking talent required.  They even include doggie treats.

A home made Christmas - Christmas gifts to make

Plus….

Coco’s idea for the hard to buy for person.  You can make a homemade gift basket.  Here is a photo of one I made  up with a water mellon theme which was set on a water mellon metal tray.  It included water mellon jokes printed from the internet, a real water mellon, water mellon gum, water mellon jello, water mellon jam spreaders/knives etc.  

 

Lately we have seen some Circuit City stores and Linen’s n Things stores go bankrupt.  Once a store goes out of business many people flock to the store thinking they are going to get a steal of a deal, but are they really? What are the things you may want to know…about liquidators?

They change price tags – Most liquidators change price tags on all the inventory.  They raise the price on the items and then offer you 10%, 20%, etc. off those prices.  Sometimes they just put a new price tag over the old price tag, so if you peel back the price tag you may see that the original price maybe lower than the liquidators price.

Out to make a buck – Yes, liquidators just like any other business are out to make a profit, yet many people seem to think otherwise.

Discounts – Always start out small and then gradually increase closer to the date the store is actually closing. 

Bring in other stock – Liquidators may bring in leftover stock they have on hand and price it with that stores price tags.  You maybe purchasing items that were never originally sold in that store and are of lesser quality.

Gift Cards – Once the store is turned over to the liquidators gift cards are no longer honored. If you have a gift card and hear that particular store is having financial problems redeem your gift card as quickly as possible before the liquidators takeover. 

Exchanges/refunds – Liquidators do not offer any exchanges or refunds. Period!

Sold as is – Buyer beware. Liquidators do not take damaged/faulty items off the floor. All items are sold as is too.  Make sure you check that the item is working properly, not flawed, is the right size, not falling apart, broken, stained, etc. before you purchase it and walk out the door.

Remember…

A going out of business sign doesn’t necessarily mean you are getting a screaming deal.  Shop around.  

Know your prices and be on the lookout for items re-priced higher, peel back price tags, watch for prices cut out of the shelf tags, etc. 

Phone the store to find out when they are actually closing.  You will get a bigger discount closer to the actual store closing date.

Tis the season to be jolly.  Fa, la, la, la, la la, la, la!   With the economy in turmoil and retail sales slumping what are the things you may want to know…before you start buying all those Christmas presents?

Refund/Exchange policies may change – In uncertain economic times don’t take refund/exchange policies for granted even if you shopped at that store for years. Crippled with high inventory and slowing sales, new final sale – no refunds/no exchange policies are becoming more common place than ever before.  Double check the stores refund policies and especially so if the item is on sale.

Stores may go out of business/bankrupt  - Here today, gone tomorrow.  Shop at reliable stores.  More stores go bankrupt during the months of January to early March because sales basically drop off a cliff after Christmas.

Boxing day or after Christmas sales – With too much inventory on hand, deep discounts may occur before Christmas and less so after Christmas depending on inventory levels.  Pay attention to all those Christmas flyers, some items are already 50% to 70% off.

Prepaying or putting a deposit on a gift in advance – If you are ordering something that requires a deposit or prepayment, put it on your credit card for your own protection.  Credit card charges can be reversed back to the retailer in case of bankruptcy.  Cash/cheques can not. 

Gift certificates – If a store files for bankruptcy protection, a lot of times gift certificates become void and will not be honored.  By the same token, if you receive a gift certificate for an unique store you may want to redeem it as quick as possible. 

Shop early – For best selection and to get sales people to help you in general.  A lot of retailers have already laid off staff or are not hiring extra staff this Christmas.  Help may be limited and/or hard to find. Extra cashiers may be non-existent and lineups may be longer than usual. 

Comparison shop – In slowing retail environments stores slash prices and try to out do each others sale prices.  It pays to comparison shop beforehand as you may not be able to get a refund if you find the item for a much lower price somewhere else.  (read refund/exchange policies may change – above for further information)

Remember…

The best Christmas gift doesn’t have to be the most expensive, it is the thought that counts.

The all mighty dollar and the bank account.  Almost everyone has one, but what are the things you may want to know…about banks in general?

Best rate – The bank will show you their products only. The competition may offer a better interest rate, a better mortgage rate or higher yielding investments. It pays to comparison shop.

High Interest Savings Accounts/ Very low mortgage rates - Sound too good to be true? Beware of teaser rates. These rates may only be valid for a few months. Then you can end up paying a higher interest rate on a mortgage and/or earning less interest on your bank account over the longer term. 

Commissions – The bank is there to sell you their products. It is always a good time to invest no matter what the stock market is doing.  Ever wonder why they keep suggesting to purchase their new mutual fund, certain types of investments, etc.  Higher commissions bottom line. What! You didn’t know your financial advisor gets a commission?  It’s not like they want to reveal that information to you, because you may think they are not looking after your best interests if you know they are making commissions off of your investments.

Banking fees – Only seem to keep increasing.  Mistakes are common. Complain, point out mistakes, say the fees are unreasonable, many times they will reverse the fees to keep your business.

Fine Print – Banks never explain the fine print in detail.  Make sure you know what you are signing and the liabilities, fees, etc. associated with it.  Leave your pride at the doorstep, ask questions, don’t assume anything.

Online Accounts – These accounts may not be suitable for everyone, as some online transactions may take longer to process, like an out of town cheque, etc.  Plus, they not as secure as the bank makes them out to be. Usually, banks will offer you higher interest rate if you open one of these online accounts.  Read the fine print, ask about transaction clearing times, find out if the account is right for you.

Mistakes – Banks are not immune from making any kind of mistakes, not depositing your pay cheque in the right account, withdrawing the wrong automatic payment amount, etc. Someone else may have the same bank account number as you with a different transit number (different city).  If the person moves to your area, vacations/visits your area, mistakes can be made in your bank account.  Check your accounts over on a regular basis.

Credit cards – Once again the banks will only offer you their products. The competition may offer better reward programs, interest rates, etc.

ATM’s – Ever wonder why you are starting to see so many generic ATM’s now?  It’s all about the money making opportunity in the fees. Also, if you need to withdraw cash while you are on vacation, not all banks are created equal when it comes to foreign transaction fees.

Identity Theft – Banks don’t advertise their problems with identity theft. Use only one bank?  Probably not a good idea in this age of identity theft.  Because an identity thief ruins your credit rating, you will not be able to go out and open up an account at a totally different bank to resolve an identity theft problem. 

Remember…

To shop around.  Just because you have been dealing with the same bank since you were 12, it doesn’t mean the bank is offering you the best interest rates, best banking fees or the best of anything.  

Try not to be fooled by fancy advertising. Sometimes this is more about increasing the banks business in general and good PR. Offers might not be as rosy as they appear. 

Deal with more than one bank to protect yourself in the event of possible identity theft. 

Always read the fine print, don’t assume anything.  Ask questions, forget about how dumb you think your questions may be. Better to understand the liabilities/risks rather than having to deal with unexpected financial surprises in the future.

Check your accounts over for possible errors on a regular basis.