The Federal Reserve has proposed new rules that would actually help the consumer (you!) in getting out of credit card debt. You have until August 4th (next Monday) to submit your public comment on the proposal and hope to sway the decision of the all powerful Federal Reserve. Word is, they will decide on the proposal by the end of the year.

A brief overview of the proposed rules:

• Credit card companies couldn’t increase your rate on the balance you already have and they must allow you “reasonable” time to pay off the balance.
• They couldn’t apply your extra payments only toward your balance with the lowest interest (I HATE the way they do that!) This one would help out everyone who has special low interest rates on part of your balance.
• They couldn’t use the “two-cycle” method, which basically charges you interest on what you have already paid off. (Read How Two-Cycle Billing Works)
• They need to give you a reasonable amount of time to make your payments. My husband had an evil Citi Personal Loan that would continually send him the payment stub on the 2nd or 3rd of the month when it was due on the 5th… AND you couldn’t make online payments… AND pay by phone was an extra $5…. AND if you didn’t use their exact payment stub your payment would get lost in their system, trust me, we tried.

In addition to the Federal Reserve proposal, several legislatures are trying to take a stand against the credit card companies with bills that help the consumer. Rep. Carolyn Maloney of New York has created the Credit Cardholder’s Bill of Rights. Some of the items in the Bill of Rights resemble the proposal, and then takes it a bit farther to give the consumer more power. Sen. Christoper Dodd of Connecticut also has legislation that follows the proposal and adds a few more rules, like not allowing them to charge a fee to pay over the phone (hint - Citi).

Overall I think it is good that the economic turbulence has at least shined a spot light on some of the poor practices of credit card companies and mortgage companies. Maybe this unfortunate down turn will outcome in greater consumer rights and power. Power to the people, and stuff like that…

To read about the Federal Reserver proposal: Fed. Reserve Proposal
To submit a comment about the proposal: Comment on Proposal
To read about Rep. Maloney’s Bill of Rights: Credit Cardholder’s Bill of Rights
To read about Sen. Dodd’s Legislaton: Sen. Dodd’s Credit Card Reform

Mint.com is a website that allows you to track your financial accounts online. In order to use Mint you have to enter in your log in information for financial accounts (banks, credit cards, loans) into the website. There is some controversy about wether sharing your login passwords and security questions is a good idea or not. Of course, if the site was hacked, everyone using it would be in trouble. However, the same is true for any other website you shop with online. Getting past the worst-case-scenarios of identity theft, lets look at the site for it’s features.

Features I like:
• The design is great, I’m a sucker for all things slick and ajaxian.
• Trending. I like the ability to view pretty pie charts of where all my money is going. You can also easily set sliding date ranges for the pie charts.

• Budgets. You can set budgets for categories then the software auto-categorizes to tell you if you are over-spending on categories. Of course it shows you that you spent entirely too much on donuts last month in a pretty bar graph that is oh-so-slick and dynamic.
• Alerts. You can set up alerts that can send to you an email or text message to your phone when an account hits a set low, or when your bills are late, even if your interest rate changes.

The problem with Mint.com is that there is another site (the behind-the-scenes code for Mint) called Yodlee that is much more robust. Mint only has a limited number of financial institutes linked in and doesn’t have all my financial accounts available, whereas Yodlee has every single one. Yodlee lets me track and trend things with more accuracy and options. For all Mint’s slickness, it is a pain in the ass to edit a transaction’s category. And creating category rules that actually work, is also more cumbersome in Mint. Now, Yodlee can’t compete with Mint as far as design- the site is new and on the cutting edge of web apps. But when it comes down to my finances, I don’t want pretty. I want fast, usable, and robust querying of my data. So I’m sorry Mint, but your cute-as-a-button design just doesn’t make up for the features your big brother Yodlee offers.

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One financial blunder I will never live down is opening a stupid bebe store credit card. They make it so enticing…you are about to check out, thinking about how much this will all cost, and they offer an oh-so convenient way to save 15% (or maybe it’s 10% or 20% depending on the store). I made this egregious mistake while I was in college and had no right to be spending $100 on a single piece of clothing at bebe! What you don’t think about when offered this one time discount is the interest rates this new card will now tax you with. You also don’t think about how much more money you will spend with the store simply because you have a branded card for the store.

Ever wonder why the stores offer you these cards? Retail stores aren’t in the banking business. They want loyal customers who come back time and time again to their store. Research has shown that if a customer owns a store branded card, they are more likely to return and to spend more at the store. Anecdotally speaking, this has been true for me. I got a Victoria’s Secret card, now I buy things from them JUST because I have a coupon if I spend $50 or because I get a cute tote bag with…the Victoria’s Secret logo plastered all over (great, now I’m their walking billboard).

But let’s get back to the bebe card. I opened the card while I was purchasing a skirt and a pair of earrings. The skirt was expensive but the earrings were on sale and only $8. So with my 10-20% discount I might have saved $10 that day. After I got home and tried on the skirt with my shirts, I realized I didn’t like it so I returned it. I was new to credit cards at the time, and I didn’t understand how returns worked on the credit card. So I get a bill for maybe $108. I call the phone number on the bill to ask about what to do since I returned the skirt and the bill should only be about $8. They told me they would send me another bill right away. Stupid me, I don’t know why I didn’t just pay the minimum payment (more than the cost of the earrings) and be done with it. Instead I let it linger, waiting for an updated bill, the skirt didn’t get removed, so on and so forth… (plus I was bad at checking the mail at this time, so let’s be clear- this was MY money mistake and not bebe’s). In the end they sent it to the credit bureau. After the dust settled they did remove the skirt from the bill, but only AFTER my credit score was dinged! I will forever refer to this pair of earrings as my $500 earrings because god know how much they actually cost me when you consider all the problems it caused. And all for a $10 discount!

The moral of this mistake: THINK before all your financial decisions, even the small ones can turn into giant hair-balls if you don’t use your brain.

Credit card companies are already raping you with interest rates. Why oh why would anyone want to say, “Here credit card company please take $X per year from me because I am a sucker. Thank you.”

Now, I have to admit that I am a credit card point whore…I’ll do anything for those little points, don’t test me. So I signed up for 2 American Express cards that had annuals fees just to get the points. However, they waived the fee the first year. So I diligently counted my months and right before time I called them and cancelled one and got them to remove the fee on the other.

Lately, American Express has been sending me letters every week about how I am “invited” (don’t you love the terminology) to fork over $400 of my hard earned money every year for a super-shiny, ultra-exclusive platinum card. I get a good laugh at how they try to market these to customers by making you feel oh-so-special and playing to our natural desire to be better than those average folks with average credit cards. Then I swiftly throw the letter into the trash.

A few weeks ago my mom tells me she got a posh new card that has so many benefits. Of course, my poor mom fell for their gimmick. She’s only human and was particularly enticed by the offer that you get one free plane ticket with every ticket you purchase on the card. Oh, and did I mention you get to go into the airport lounge? Once again, pandering to our desire to feel special. I told her this was a bad idea, but she didn’t believe me. She said she would call me from the fancy-pants lounge with her mimosa in hand to tell me how absolutely fabulous it is. She was happy with her decision, until she found the catch.

Her platinum card didn’t get her a free ticket with every run-of-the-mill ticket she purchased, nope. She had to purchase a business class ticket to get the free one. And since business class is well over double the price of low-life-coach, this is really not a deal at all.

BTW- My mom isn’t the only one who fell for this, apparently Tina Fey did as well.

In this series of posts, we will poke fun of and laugh at our mistakes. We all have made money mistakes some time in our lives, and I find having a hearty laugh at our embarrassing oopsies can help us avoid them in the future. Feel free to share your own money mistakes through the series- your personal financial blunder may help others…that is after their judgmental laughter subsides.

“Don’t ever make the same mistake twice, unless it pays.”
-Mae West

I often feel overlooked and underestimated because I am a woman in my field. It doesn’t help that I look younger than I am, and have repeatedly been mistaken for a teenager. So I decided one day that I wanted to read up on how other women over-come the gender difference, especially when it comes to making money.

In general, I’m skeptical of books about “secrets” and “millionaires” and “six-figures” and the like. But this one had good amazon reviews, so I gave it a try. And I am glad I did. The book tells you first what low-earning women do that sabotage their careers. Then it looks at what high-earners are doing different. I don’t think any of the ideas where new or groundbreaking, but the ideas were presented in a very inspirational way. After reading a chapter I felt energized and wanted to make the recommended changes, right away.

I liked the book so much, I recommended it to my mom, and plan on giving her my copy. It has the kind of information and inspiration that I want to share with all the women I care about.

The only negative I could see is that the book would best benefit women who are stuck as a low-earners. Women who have already achieved the six-figures or close to it, probably wouldn’t benefit as much. Also, there is a finance section in the book but it is very basic and merely an outline. Anyone looking for a complete solution for six-figures should also read about finance more specifically.

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I am obsessed with money. Not in the way that I want/need more and more money, but in the way that I track every penny in and out, analyze purchase decisions to the nth degree, and thinking about the money I’m saving makes me giddy with delight. I was not always this way though.

When I was young, my family lived outside of our means. I share in the blame because I always wanted the best toys, the coolest gadgets, and most fashionable clothes. My step-dad was a CPA/CFO and was the most intelligent man I ever meet. However, intelligence and knowledge of money systems does not inherently make one money smart. He was constantly shuffling money around to meet all the bills and debt. He probably knew better, but maybe he just wanted to keep my mom and me happy and didn’t want to let me know we were in trouble.

When I came home the first weekend holiday (Columbus day to be exact) after starting college, he died. Dealing with the death of a loved one is hard enough. Financial crisis only makes a difficult situation all the more impossible. He had no life insurance. We had a mortgage, and a second mortgage, and a mortgage on the rent house, and credit card bills, and debt, and more debt, and more credit card bills. I spent the first few days after he died calling all the credit card companies in his wallet. Trust me when I say you never want to leave your family with that kind of mess. He didn’t mean to, but it happened. My mom and I went from middle-income, living beyond their means, everything is fine… to poverty level.

How did I cope? Well at first I went to the mall. I tried to feel better by buying pretty clothes, a new set of makeup, a new pair of shoes might do the trick. Then when I moved back home to go to college, I rented the luxury gated apartment, needed a new car. My theory was that I was already in the red, and when you see no end of debt in sight, what harm can more debt possibly do?

This story isn’t all bad though, things did eventually turn up. All my dad’s debt eventually, and painfully, got squared away. My mom became brave by quitting her low-paying state job and taking the plunge into a new, blooming career that allowed her to be independent and not rely on a husband. Me, I meet my husband, and he inspired me by teaching me a bit of frugalness. Although, he had no idea at the time the kind of monster he had created with a little bit of budget inspiration. Along the crazy, wild-ride way I have learned first and foremost that money does not make you happy, it does a lousy job at filling emptiness, and it can bring out the worst in people. However, with proper planning, budgeting, and saving, money can make life easier, less worrisome, and more secure.