How do we survive in these tough times? For those that are in retirement I hope you saved enough back and feel comfortable with how you have moved your money around. You should have been in a more conservative portfolio when you entered into retirement anyway. But for those of you who are just starting on a savings plan and just entering the work force here is an article I found on Yahoo Finance to help you with building an emergency fund.
An emergency fund is one of the first things you need to have before you start investing. This article shows ways you can save money for an emergency fund.
7 Ways to Sock Away Emergency Cash
by Jeffrey Strain
Monday, August 4, 2008 provided by TheStreet.com
Not having an emergency fund is the first step into the deep hole of debt.
With the economy forcing people to take a hard look at their finances, more people are realizing that they need to create an emergency fund, but how do you find the money to begin an emergency fund when you are just making ends meet?
Here are seven simple ways to find money to begin an emergency fund, which will allow you to create that all-important buffer for your finances.
Rearrange Your Current Costs
The least painful way to create an emergency fund is to rearrange the way you currently spend your money without actually giving up anything.
Chances are that you are paying much more than you need to be for a lot of the services you currently subscribe to such as cable TV, Internet access and phone service.
Calling these services with a competing offer in hand and asking for a better deal will often reduce the amount you are paying while keeping the exact same services you currently get.
The same can be done with home and car insurance as well. It usually costs companies much more money to find a new customer than it does to give you a discount, so they are often willing to give discounts to keep you from going to the competition.
You can then take the money you save to begin your emergency fund.
Play Saving Games
There are a number of saving games that you can play to get your emergency fund started. The most common of these is creating a money jar where you empty all your loose change at the end of each day, and collect the money at the end of the month to use for your emergency fund.
A wide variety of money games like this can serve the same purpose.
Increase Your Income
If you have already tapped all the ways that you know how to save money, another option is to make some extra money.
There are a number of ways that you can accomplish this, including finding a part-time job, doing freelance work or starting your own side business.
You can begin a number of jobs that cost very little money to create, and the extra money gained can become your emergency fund.
Sell Stuff
In all likelihood, you have way more stuff in your home than you need. A simple walk around you home looking into the closets, garage and other storage spaces should readily confirm this.
If you haven't used it in the past year, you probably don't need it. Instead of keeping it in storage and letting it gather dust, have a garage sale, put it up for sale on Craigslist or list it as an auction on eBay.
Set aside any money earned to initiate your emergency fund.
Pay Yourself
The reason that the IRS takes money out of people's paycheck each month is because if they didn't, they know that most people wouldn't have the money to pay their tax bill come April 15. They want to make sure they get their money, so they take it up front.
You should have the same attitude with your emergency fund and pay yourself first when your paycheck arrives. Have a set amount taken out of each paycheck before you pay any other bills that gets transferred into your emergency fund.
Another way to accomplish the same goal is to finish paying off a recurring bill such as a credit card or car payment. Instead of using this newly freed up money to buy new things, keep paying it, but this time to yourself earmarked for your emergency fund.
Set Up an Account
When setting up an emergency fund, you will want to open up a separate account so that the emergency fund money isn't mixed in with your regular spending money since mixing makes it much easier to spend the emergency fund money on non emergency things.
Online banks often offer money promotions for opening accounts, which can get your emergency fund started just for setting it up.
Pay Yourself for Things You Use
One of the easiest ways to always have an emergency fund available is to learn to pay yourself to use things you already own.
Getting into this habit ensures you have a mini emergency fund for all the things you use on a regular basis and puts you in a position of never having to buy things on credit again.
Embrace one of the above ways to begin the emergency fund, and give yourself a bit of breathing room.
Copyrighted, TheStreet.Com. All rights reserved.
September 30, 2008
September 24, 2008
Credit Scoring Insurance
I saw this article on insurane scores and did the 'ole cut copy paste so you could see it.
It is the best explination of consumer rating that I have seen for insurance scores in particular the weighting of everything and the the last part on what you can do to improve your scores.
DH
Credit-Based Insurance Score
By Triceiver.com Editors
Many consumers never heard of ‘insurance score,’ and even if they did, they knew very little about it. This is because insurance companies have done an amazing job to keep it as secretive as possible. They rarely mention insurance scores anywhere, even though virtually every company uses it today to help determine whether you qualify for insurance coverage, and at what rate.
Also known as credit-based insurance scores, or insurance risk scores, they are calculated from your financial records collected by the three credit reporting companies. The theory is that there exists a statistical correlation between a person’s credit history and the likelihood of filing insurance claims. In another word, if you have bad credit, you are riskier in the eyes of an insurer. So it is now possible that your car insurance will go up, despite a clean driving record, zero at-fault accidents, and living in a good neighborhood.
This doesn’t seem very intuitive to many people. In fact, two thirds of consumers surveyed by the Government Accountability Office (GAO) didn’t know that bad credit could cost them more in insurance premiums.
However, insurance companies have been arguing that using an insurance score is not only fair, but justified, citing a number of studies that proved a clear correlation between credit history and insurance risks. One particular study published by EPIC in 2003 released some interesting data to support that view. One of the findings in the report is that insurance scores are among the top three risk factors in each of the six automobile coverage studied: No.1 for Personal Injury Protection and Medical Payments, No.2 for Bodily Injury and Property Damage Liabilities, and No. 3 for Comprehensive and Collision Insurance.
As requested by the FACT Act, Federal Trade Commission (FTC) is also conducting studies to evaluate insurance scores. Also there have been increasing efforts from consumer advocates to demand more details from insurance companies and score developers. So the mystery about insurance scores will eventually unfold, but before that day comes, we have been able to gather most information available today, from numerous sources, and present you a detailed and non-biased analysis of insurance scores.
Who develop insurance scores?
There are currently three sources that generate insurance scores:
1. Fair Isaac, the developer of the famous FICO credit scores. They also have different names:Equifax: InScoreExperian: the Experian/Fair Isaac Insurance ScoreTransUnion: the Fair Isaac Insurance Risk Score
2. ChoiceTrust from ChoicePointThere are also multiple scoring models, but the most popular one is ChoicePoint Attract.
3. Individual Insurance CompaniesSome insurers use their proprietary methods, such as Progressive's A24 credit-scoring model and Farmers’ Fire & Auto Combined Evaluation Tool.
What is in an insurance score?
An insurance score takes into consideration many data contained in your credit report. Below is a breakdown of the Fair Isaac Insurance Score model which outlines the importance of each category. Note that the importance may vary slightly for different group of consumers.
Payment History (40%)
Payment information on specific accounts (credit cards, mortgage, car loans, etc.)
Delinquency and how long past duePublic records (bankruptcies, tax liens, judgments, etc.)CollectionsNumber and types of accountsTime since negative marks
Amounts Owed (30%)
Total amount owed on all accounts and on different types of accountsNumber and types of accounts with balancesUtilization rate overall and on specific accountsProportion of installment loan amounts still owing.
Length of Credit History (15%)
Age of oldest account and average age of all accountsAge of oldest account, by type of accountLength of credit historyTime since accounts opened, by specific type of account
New Credit (10%)
Number of recently opened accountsProportion of new accountsNumber of recent “hard inquiries” Time since recent account openings and hard inquiries
Types of Credit Used (5%)
Number and types of accounts, current status, recent information.
What is not in your insurance score?
Anything not in your credit report, plus Soft inquiries (made by yourself, companies for promotion purposes, employer, etc.). Your age, marital status and where you live (these are important factors considered by insurance companies, however) & Your employment information.
How to improve my insurance score and pay a lower premium?
The following tips have proven to be very helpful in raising one’s insurance score as well as credit score, but the key is to manage credit responsibly, and you will see better scores naturally with time.
Check your credit reports periodically and fix any errors immediately.
Go to http://www.annualcreditreport.com/ to get free reports or order them from http://www.myfico.com/ to constantly monitor your records from all three credit reporting companies. Start correction process as soon as possible because it takes time. If you have negative marks that still remain on your report after expiration date, dispute with the credit bureaus.
Pay your bills on time.
Plain and simple, but it is the best advice you can get anywhere. If you are late, don’t wait until the next billing cycle and make the payment immediately, as the time your payment is over due is as important as a late payment itself. Also ask the lender whether they can forgive you by not reporting it to credit bureaus. If this is your first time, they might just agree.
Keep your credit utilization rate below 35%.
This applies to both single account and overall credit limit.
Don’t close old credit card accounts
It will decrease the average age of your accounts. If you have too many credit cards and need to cancel some of them for security reasons, start with the most recent ones and try to allocate the credit lines onto other cards with the same issuer.
Pay down credit card debt
This will not only save you a pile of money, but also increase your credit/insurance score as insurers view credit card debt negatively as compared to other installment loans.
Apply for new credit cards only as needed.
Even though new credit increases your credit limit, this can lower your score in the following months and will significantly damage your insurance score in some models. Opening multiple new accounts in a short time will definitely hurt your score, especially if you have relatively short credit history.
Establish credit history early
Apply for a credit card as soon as you are eligible and make payment on time. Don’t worry about initial credit limit being too low; it will increase over time. If a family member with good credit can add you as an authorized user, it will jump start your credit building process.
Rebuild credit if damaged
If your credit has been damaged by bankruptcy or charge-offs, start the rebuilding process early. Get a secured credit card is a good alternative if you don’t qualify for other regular cards.
Do your rate shopping within a few weeks
If you are applying for a mortgage and need to shop around for better rates, plan ahead and do it within 15 – 30 days. Each time you give permission to a lender to check your credit it will result a “hard pull,” which will lower your score. But scoring models are sophisticated enough to count multiple inquiries of the same type in a short period of time as just one, thus not affecting your score much. Your own inquiries don’t affect your score at all, so there is no need to worry about monitoring your credit activities.
Have mixed accounts of different types
Having a mixture of installment loans (mortgage, car loan, etc.) and credit cards will raise your score, if you manage them responsibly.
Shop around and compare quotes from several insurers
Insurance companies use different models to calculate your insurance score, and they can vary significantly. So shop around before accepting a quote.
Ask about your insurance score
If you see a sizable increase in your premium when renewing a policy, ask whether insurance score played a role. Demand to see your score. You should also ask for a recount if you have fixed certain errors in your credit reports.
It is the best explination of consumer rating that I have seen for insurance scores in particular the weighting of everything and the the last part on what you can do to improve your scores.
DH
Credit-Based Insurance Score
By Triceiver.com Editors
Many consumers never heard of ‘insurance score,’ and even if they did, they knew very little about it. This is because insurance companies have done an amazing job to keep it as secretive as possible. They rarely mention insurance scores anywhere, even though virtually every company uses it today to help determine whether you qualify for insurance coverage, and at what rate.
Also known as credit-based insurance scores, or insurance risk scores, they are calculated from your financial records collected by the three credit reporting companies. The theory is that there exists a statistical correlation between a person’s credit history and the likelihood of filing insurance claims. In another word, if you have bad credit, you are riskier in the eyes of an insurer. So it is now possible that your car insurance will go up, despite a clean driving record, zero at-fault accidents, and living in a good neighborhood.
This doesn’t seem very intuitive to many people. In fact, two thirds of consumers surveyed by the Government Accountability Office (GAO) didn’t know that bad credit could cost them more in insurance premiums.
However, insurance companies have been arguing that using an insurance score is not only fair, but justified, citing a number of studies that proved a clear correlation between credit history and insurance risks. One particular study published by EPIC in 2003 released some interesting data to support that view. One of the findings in the report is that insurance scores are among the top three risk factors in each of the six automobile coverage studied: No.1 for Personal Injury Protection and Medical Payments, No.2 for Bodily Injury and Property Damage Liabilities, and No. 3 for Comprehensive and Collision Insurance.
As requested by the FACT Act, Federal Trade Commission (FTC) is also conducting studies to evaluate insurance scores. Also there have been increasing efforts from consumer advocates to demand more details from insurance companies and score developers. So the mystery about insurance scores will eventually unfold, but before that day comes, we have been able to gather most information available today, from numerous sources, and present you a detailed and non-biased analysis of insurance scores.
Who develop insurance scores?
There are currently three sources that generate insurance scores:
1. Fair Isaac, the developer of the famous FICO credit scores. They also have different names:Equifax: InScoreExperian: the Experian/Fair Isaac Insurance ScoreTransUnion: the Fair Isaac Insurance Risk Score
2. ChoiceTrust from ChoicePointThere are also multiple scoring models, but the most popular one is ChoicePoint Attract.
3. Individual Insurance CompaniesSome insurers use their proprietary methods, such as Progressive's A24 credit-scoring model and Farmers’ Fire & Auto Combined Evaluation Tool.
What is in an insurance score?
An insurance score takes into consideration many data contained in your credit report. Below is a breakdown of the Fair Isaac Insurance Score model which outlines the importance of each category. Note that the importance may vary slightly for different group of consumers.
Payment History (40%)
Payment information on specific accounts (credit cards, mortgage, car loans, etc.)
Delinquency and how long past duePublic records (bankruptcies, tax liens, judgments, etc.)CollectionsNumber and types of accountsTime since negative marks
Amounts Owed (30%)
Total amount owed on all accounts and on different types of accountsNumber and types of accounts with balancesUtilization rate overall and on specific accountsProportion of installment loan amounts still owing.
Length of Credit History (15%)
Age of oldest account and average age of all accountsAge of oldest account, by type of accountLength of credit historyTime since accounts opened, by specific type of account
New Credit (10%)
Number of recently opened accountsProportion of new accountsNumber of recent “hard inquiries” Time since recent account openings and hard inquiries
Types of Credit Used (5%)
Number and types of accounts, current status, recent information.
What is not in your insurance score?
Anything not in your credit report, plus Soft inquiries (made by yourself, companies for promotion purposes, employer, etc.). Your age, marital status and where you live (these are important factors considered by insurance companies, however) & Your employment information.
How to improve my insurance score and pay a lower premium?
The following tips have proven to be very helpful in raising one’s insurance score as well as credit score, but the key is to manage credit responsibly, and you will see better scores naturally with time.
Check your credit reports periodically and fix any errors immediately.
Go to http://www.annualcreditreport.com/ to get free reports or order them from http://www.myfico.com/ to constantly monitor your records from all three credit reporting companies. Start correction process as soon as possible because it takes time. If you have negative marks that still remain on your report after expiration date, dispute with the credit bureaus.
Pay your bills on time.
Plain and simple, but it is the best advice you can get anywhere. If you are late, don’t wait until the next billing cycle and make the payment immediately, as the time your payment is over due is as important as a late payment itself. Also ask the lender whether they can forgive you by not reporting it to credit bureaus. If this is your first time, they might just agree.
Keep your credit utilization rate below 35%.
This applies to both single account and overall credit limit.
Don’t close old credit card accounts
It will decrease the average age of your accounts. If you have too many credit cards and need to cancel some of them for security reasons, start with the most recent ones and try to allocate the credit lines onto other cards with the same issuer.
Pay down credit card debt
This will not only save you a pile of money, but also increase your credit/insurance score as insurers view credit card debt negatively as compared to other installment loans.
Apply for new credit cards only as needed.
Even though new credit increases your credit limit, this can lower your score in the following months and will significantly damage your insurance score in some models. Opening multiple new accounts in a short time will definitely hurt your score, especially if you have relatively short credit history.
Establish credit history early
Apply for a credit card as soon as you are eligible and make payment on time. Don’t worry about initial credit limit being too low; it will increase over time. If a family member with good credit can add you as an authorized user, it will jump start your credit building process.
Rebuild credit if damaged
If your credit has been damaged by bankruptcy or charge-offs, start the rebuilding process early. Get a secured credit card is a good alternative if you don’t qualify for other regular cards.
Do your rate shopping within a few weeks
If you are applying for a mortgage and need to shop around for better rates, plan ahead and do it within 15 – 30 days. Each time you give permission to a lender to check your credit it will result a “hard pull,” which will lower your score. But scoring models are sophisticated enough to count multiple inquiries of the same type in a short period of time as just one, thus not affecting your score much. Your own inquiries don’t affect your score at all, so there is no need to worry about monitoring your credit activities.
Have mixed accounts of different types
Having a mixture of installment loans (mortgage, car loan, etc.) and credit cards will raise your score, if you manage them responsibly.
Shop around and compare quotes from several insurers
Insurance companies use different models to calculate your insurance score, and they can vary significantly. So shop around before accepting a quote.
Ask about your insurance score
If you see a sizable increase in your premium when renewing a policy, ask whether insurance score played a role. Demand to see your score. You should also ask for a recount if you have fixed certain errors in your credit reports.
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