Friday, April 8, 2011

Saving is like a nice

I started off the new year with the goal of saving $1,000 a month to invest for retirement. I won't lie: At first I felt the pinch. February was a little easier and, lo and behold, I found myself with extra money at the end of the month. Once March had passed, I realized I had saved even more cash, going $300 over my goal for that month. In April, I feel I'm poised to save even more than that.

So, what happened? Why is something I once found so challenging getting so much easier?

To begin, I should disclose that it's not all my doing. I'm dating a fellow who is quite generous and insists on feeding me tasty restaurant food at various intervals in the week. In a bit of cosmic irony, he refuses to allow me to pay one cent towards these costs, and I am actually starting to feel a teensy bit guilty. Moral: Be careful what you wish for. The upshot is that I still buy groceries but I am eating at home less often. Instead of $75 a week I am probably spending closer to $50.  That still only accounts for about a third of my "bonus" savings, so where is the other money coming from?

I have a pretty simple theory: Just as spending begets spending, saving does the same. For instance, I stopped spending money on magazines and cable TV, which were always giving me ideas of things to buy - things I don't really need at all. I also think "saving" becomes a habit, just like anything else you do seriously for awhile. It is starting to feel comfy and warm and a beer you crack on your patio after a long week at work, except the beer is, uh, cold. (Yeah, you know where I'll be after 5pm. And yeah, I'll have one for you. Happy weekend.)

Initially, to get my spending under control, I was writing down everything I bought; now I've stopped obsessing over every cent. I don't dither over smaller purchases and I don't feel I'm stingy with myself or my friends. It's like I've cut out the unnecessary items to clear more way
Hey, minimalism can be a beautiful thing.

Monday, April 4, 2011

Credit rating reform: Dreaming in technicolor and seeing red

Past due? Seven years of bad luck for you...
Here's something I'd like to see a political party campaign for: a total overhaul of our incredibly logic-defying credit rating system.

I find it bizarre and arcane that you can be 60 days late on *one* bill, five years ago, and it is still affecting your otherwise spotless credit. Yes, it was my mistake (I moved, my mail wasn't forwarding properly and I believed I had paid off the card. I should have checked. My bad.) I also noticed that my rating dropped a few points recently, despite now having a zero balance on all my credit cards. I can only guess because I applied for and accepted a new credit card with a lower interest rate. This really gets me.

Here are my suggested reforms:

-Free and easily accessible info: Credit scores should be available for free in a timely fashion (aka online). We should not have to mail in forms - and wait weeks - to see where we stood weeks ago. Credit scores are constantly in flux and certain life events require timely access. It's that simple.

-Detailed methodology: Don't just tell us the "kind of things" that will affect our scores. Tell us *exactly* how it is calculated so that we can understand *exactly* how to improve things.

-Be reasonable, please: Isn't seven years a tad draconian? I mean, isn't that also the number of years of bad luck you get when you break a mirror?

-Distinguish between big mistakes and little mistakes: From what I can tell, being 60 days past due on a $50 HBC bill is the same as being 60 days past due on a $5,000 payment. Or your mortgage for that matter.

-Offer some leniency for first-time offences: A person who makes a mistake once and is warned with a lesser sentence might not make it again.

-Quit penalizing us for being "active": When we apply for a more credit or there are "inquiries on our file" that shouldn't automatically be a negative. Judge by our balances and other info. If I have a zero balance on all cards and a healthy bank account, I shouldn't be penalized for getting another card.

-Put more focus on the big picture: True, I was 60 days late on one $50 payment five years ago, but I've been at the same job for six years, have made all my payments on time for the last five years, have savings, and carry a zero balance on my credit cards. Do you think maybe I should have a perfect credit rating at this point? I damn well think so.

-Quit penalizing consumers for having "no credit." It should be a neutral point rather than a hit against us.