Your credit score impacts your ability to get out of debt and stay out of debt. The worse your credit score, the higher the interest rate you will be charged on money you borrow. The better your score, the less your debt will cost you and the quicker you'll be able to pay it off.
So it's not only important to know your credit scores from all three major credit rating bureaus -- Equifax, TransUnion and Experian -- but to know how to raise your score. The simple truth is that raising your credit score isn't that hard if you know what to do.
Over the years literally thousands of people have been able to fix their credit scores on their own using simple steps, a 12-step action plan if you will, which raises their score quickly and keeps it there. Regardless of where you start from, if you follow this plan and utilize the online tools discussed -- in six months your score should be higher than you ever thought possible.
Step 1: Get Your Credit Report and Check It for Errors
Under the Fair Credit Reporting Act, the Big Three credit bureaus are required to provide every consumer who asks with a free copy of their credit report once a year. You can get yours by going to annualcreditreport.com. This step is important because it is extremely likely that there are errors.
A study by the National Association of State Public Interest Research Groups found that one in four credit reports contain a mistake serious enough to keep you from getting a loan, credit card or in some cases a job.
Once you get your report, go through it with a fine-toothed comb. If you find any errors (for example, late payments that were actually paid on time or credit limits that are lower than they should be), get them corrected as quickly as possible. You can do this by sending the credit agency a certified letter that explains what information was inaccurate, including copies of documents (such as bank records) that verify your claim, along with a copy of your credit report with the disputed issue highlighted.
Under the Fair Credit Reporting Act, the credit-reporting agencies are required to correct inaccurate or incomplete information in your report within 30 days. Go to the "Free Stuff" tab at www.finishrich.com to access sample correction letters. Also, go to Finishrich.com and sign up right now and take advantage of the free Debt Wise 30-day trial. By signing up, you will be entitled to a free Equifax Credit Score, so you can see where you stand.
Step 2: Automate Your Bill Paying
This may be the most important tip. Missing payments or being late on payments can quickly ruin your credit score. For this reason, I strongly recommend that you use your bank's online bill-paying service to automatically transfer a pre-set amount every month from your checking account to cover at least the minimum payments on all your credit accounts. I have practically every bill of mine automated in this way. You can also use your credit card company online bill payment system to notify you through email when you are close to going over your credit limit, which can help you avoid more damage to your score.
Step 3: If You Have Missed Payments, Get Current
It's never too late to clean up your act. Get yourself current as quickly as you can and stay current. Your score will begin to improve within a few months, and the longer you keep it up, the more noticeable the increase will be. The negative weight that FICO gives to bad behavior like delinquencies lessens over time, so as long as you stay on the straight and narrow, those black marks will eventually disappear from your record for good.
Step 4: Keep Your Balance Well Below Your Credit Limit
Of all the factors you can control -- and improve quickly -- how much you owe is probably the most powerful. Since the credit crunch, credit card companies have been cutting customers' credit limits without warning. This can be devastating to your credit score. Say you've got a $1,000 balance on a card with a $2,000 limit--and then the card company slashes your limit to $1,000. Suddenly, you've gone from 50% credit utilization to being maxed out, which can shave 45 points from your credit score. The credit bureaus recommend that you keep your usage below 33% of your available credit.
Step 5: Beware the Credit Card Transfer Game
For years, people have saved money by transferring high-interest credit card balances to low-interest cards. This can still be helpful, but be aware that using one credit line to pay off another sets off credit score alarm bells -- even if all you're doing is consolidating your accounts. All other things being equal, your credit score will be higher if you have a bunch of small balances on a number of different cards, rather than a big balance on just one or two.
Step 6: If You Rack Up High Balances, Pay Your Card Bill Early
The "Amounts Owed" part of your credit score is based on the balance due listed on your most recent credit card statements. So even if you pay your bills in full each month, running up high balances can still hurt your score. Avoid this problem by paying down all or part of your bill before the end of your statement period, thus reducing the balance that will be reported to FICO and the credit bureaus.
Step 7: Hang On to Your Old Accounts
Part of your credit score is based on how long you have had credit accounts. Closing old accounts shortens your credit history and reduces your total credit -- neither of which is good for your credit score. Keep the older accounts open, even if you aren't using them.
Step 8: Use Your Old Cards
The credit card industry has gotten much stricter about closing inactive accounts. This can hurt your credit score, since it reduces the average age of your credit accounts. To prevent this from happening, you should pull out your old cards and start putting at least one charge on them every month.
Step 9: Demonstrate That You Can Be Responsible
The best way to raise your credit score is to demonstrate that you can handle credit responsibly -- which means not borrowing too much and paying back what you borrow on time. Don't open new accounts just to increase your available credit or create a better variety of credit. You should open new credit accounts only if and when you need them.
Step 10: Shop for Loans Quickly
When you apply for a loan, the lender will "run your credit" -- that is, send out an inquiry to one of the credit-rating agencies to find out how credit-worthy you are. Too many such inquiries can hurt your FICO score, since it could indicate that you're trying to borrow money from different sources. Of course, you can also generate a lot of different inquiries by shopping for the best mortgage or auto loan. The FICO scoring system is designed to allow for this by considering the length of time over which a series of inquiries is made. So, try to do all of your loan shopping within 30 days.
Step 11: Know the Difference Between a 'Soft Inquiry' and a 'Hard Inquiry'
The credit bureaus all recognize the difference between you checking your own score (a "soft inquiry") and lenders checking your score (a "hard inquiry"). While too many hard inquiries can lower your score, soft inquiries don't count at all. Feel free to check your score as often as you want.
Step 12: Buy a 3-and-1 Report, and a Credit-Monitoring Package and Identity-Theft Service
Your credit score and credit report are so important that it makes sense to pay for a 3-and-1 Report (which provides you with your credit scores from the three bureaus) as well as an identity-theft monitoring service. In most cases, these services will cost you between $14.95 and $19.95 a month -- I personally pay for these services myself because I think it's worth the investment.
Congratulations! You now know more than 95% of all Americans about what may well be the most important influence over your financial life -- your credit record and score. Make lifelong monitoring of your credit part of a debt-free lifestyle! For more resources and tools go to finishrich.com.
Saturday, February 26, 2011
Friday, February 25, 2011
Top Five Credit Score Myths
A good credit score is one of the basic building blocks to financial stability. However, even well-informed consumers may still believe in one or two of the commonly-believed myths about those crucial three digits.
"We're seeing a lot of myths out there and a lot of misperceptions consumers have about their credit scores," says Melinda Opperman, senior vice president of community outreach and industry relations at Springboard Nonprofit Consumer Credit Management.
Financial educators and industry experts share and dispel here the most common fallacies surrounding credit scores. Here's the real truth about your credit score-
Myth: Paying your bills on time and carrying a balance on your credit cards will give you a good credit score.
Yes, making payments on time is important, since late payments can drag down your score significantly, but it's not enough to ensure that your score will be high. That's because 30% of your credit score is based on what's called your utilization ratio - how much of your available credit has been tapped at any given point.
"Folks think they have to carry a balance on their cards in order to get a good credit score," says Opperman. "We let them know they just have to make a purchase and then make a timely payment." If you have cards with high balances, even if you make your minimum payments promptly every month, the large amount of debt you're carrying makes you look like a higher risk to the credit bureaus and will reflect poorly on your score.
Myth: You have to make a huge financial mistake for your credit score to be negatively affected.
Bankruptcy? Foreclosure? Sure, those kind of economic calamities will deliver a big hit to your score, but you don't have to be fielding collection calls at all hours for your score to suffer. In fact, just one late payment can be detrimental, and something as innocuous as opening a slew of store credit cards for the promotional discount can make you look like a credit risk, according to the credit scoring formula.
"One common myth is that credit scores are static, that they don't change that often or that you have to do something huge for them to change," says Natalie Lohrenz, director of counseling at the Consumer Credit Counseling Service of Orange County. But since a credit score is just a snapshot of your credit's health at any given time, it's going to vary at least a little bit from time to time. To put it in more concrete terms, you wouldn't expect your blood pressure to be exactly the same every time you go to the doctor, right? Your credit score goes up and down just a little bit the same way. Conversely, since your score is in constant fluctuation, you shouldn't stress over a point here or there, Lohrenz says.
Myth: The only part of your credit history that matters is your three-digit score.
Terry Clemans, executive director of the National Credit Reporting Association, says many Americans only focus on their score number, to the exclusion of their actual credit report, from which the score is derived. Lohrenz agrees and add, "People shouldn't really obsess so much about the score. Watch the report." In fact, the report is at least as important as the actual number, which is why experts recommend checking it regularly for outdated or erroneous information that can lower your score.
If you don't want to pay for a credit report, you can get one free once a year from each of the three bureaus at annualcreditreport.com, and if you live in certain states, you may be entitled to additional copies. Monitoring your report regularly not only cuts down on your risk of identity theft (since you'll be able to see if someone is trying to obtain credit in your name) but gives you a better sense of how your financial activities are displayed to lenders.
Checking your score won't lower it!
Myth: You can improve bad credit quickly.
You really can't blame ordinary Americans for falling prey to this myth, given that there's an entire industry that purports to boost your credit at warp speed. "One common myth is 'If I want to improve my credit, I have to go to a credit repair agency,' " says Barry Paperno, consumer operations manager for MyFICO.com. As we've discussed before, companies that promise to "clean up," fix or increase your credit score are bad news. At best, they'll blanket your creditors with frivolous requests to review your outstanding debts, which might raise your credit score for a few weeks at most. As far as correcting any erroneous information that might be dragging your score down, you can fix that yourself - for free - by following the instructions on each bureau's website.
While negative notations do stay on your credit report for seven years, Paperno says this doesn't mean your credit will be low for nearly that long. The scoring formula places more weight on recent transactions, so if you had a period of financial instability or irresponsibility in your past, the best way to see your score improve is just to keep paying everything on time now, and paying down big balances to improve your utilization ratio. "The best way to improve your credit score is work with your local bank or credit union and then make timely payments," says Opperman.
Myth: A divorce dissolves jointly-held credit accounts.
When in the midst of a divorce, too many Americans fail to ask how their creditworthiness could be harmed by their former spouse. This is unfortunate, because joint liabilities can come back to haunt you. "Divorce attorneys are not financial counselors," says John Ulzheimer, president of consumer education for SmartCredit.com. "That's not their job, but that's something you have to address."
"If you're a joint account holder, you're equally responsible for that balance," says Paperno. "You need to keep an eye on it, and you need to check your credit regularly to make sure that bill is getting paid." If your spouse promises to keep current on payments on a jointly-held account and fails to follow through, Paperno warns, "Be aware that will impact your score."
"We're seeing a lot of myths out there and a lot of misperceptions consumers have about their credit scores," says Melinda Opperman, senior vice president of community outreach and industry relations at Springboard Nonprofit Consumer Credit Management.
Financial educators and industry experts share and dispel here the most common fallacies surrounding credit scores. Here's the real truth about your credit score-
Myth: Paying your bills on time and carrying a balance on your credit cards will give you a good credit score.
Yes, making payments on time is important, since late payments can drag down your score significantly, but it's not enough to ensure that your score will be high. That's because 30% of your credit score is based on what's called your utilization ratio - how much of your available credit has been tapped at any given point.
"Folks think they have to carry a balance on their cards in order to get a good credit score," says Opperman. "We let them know they just have to make a purchase and then make a timely payment." If you have cards with high balances, even if you make your minimum payments promptly every month, the large amount of debt you're carrying makes you look like a higher risk to the credit bureaus and will reflect poorly on your score.
Myth: You have to make a huge financial mistake for your credit score to be negatively affected.
Bankruptcy? Foreclosure? Sure, those kind of economic calamities will deliver a big hit to your score, but you don't have to be fielding collection calls at all hours for your score to suffer. In fact, just one late payment can be detrimental, and something as innocuous as opening a slew of store credit cards for the promotional discount can make you look like a credit risk, according to the credit scoring formula.
"One common myth is that credit scores are static, that they don't change that often or that you have to do something huge for them to change," says Natalie Lohrenz, director of counseling at the Consumer Credit Counseling Service of Orange County. But since a credit score is just a snapshot of your credit's health at any given time, it's going to vary at least a little bit from time to time. To put it in more concrete terms, you wouldn't expect your blood pressure to be exactly the same every time you go to the doctor, right? Your credit score goes up and down just a little bit the same way. Conversely, since your score is in constant fluctuation, you shouldn't stress over a point here or there, Lohrenz says.
Myth: The only part of your credit history that matters is your three-digit score.
Terry Clemans, executive director of the National Credit Reporting Association, says many Americans only focus on their score number, to the exclusion of their actual credit report, from which the score is derived. Lohrenz agrees and add, "People shouldn't really obsess so much about the score. Watch the report." In fact, the report is at least as important as the actual number, which is why experts recommend checking it regularly for outdated or erroneous information that can lower your score.
If you don't want to pay for a credit report, you can get one free once a year from each of the three bureaus at annualcreditreport.com, and if you live in certain states, you may be entitled to additional copies. Monitoring your report regularly not only cuts down on your risk of identity theft (since you'll be able to see if someone is trying to obtain credit in your name) but gives you a better sense of how your financial activities are displayed to lenders.
Checking your score won't lower it!
Myth: You can improve bad credit quickly.
You really can't blame ordinary Americans for falling prey to this myth, given that there's an entire industry that purports to boost your credit at warp speed. "One common myth is 'If I want to improve my credit, I have to go to a credit repair agency,' " says Barry Paperno, consumer operations manager for MyFICO.com. As we've discussed before, companies that promise to "clean up," fix or increase your credit score are bad news. At best, they'll blanket your creditors with frivolous requests to review your outstanding debts, which might raise your credit score for a few weeks at most. As far as correcting any erroneous information that might be dragging your score down, you can fix that yourself - for free - by following the instructions on each bureau's website.
While negative notations do stay on your credit report for seven years, Paperno says this doesn't mean your credit will be low for nearly that long. The scoring formula places more weight on recent transactions, so if you had a period of financial instability or irresponsibility in your past, the best way to see your score improve is just to keep paying everything on time now, and paying down big balances to improve your utilization ratio. "The best way to improve your credit score is work with your local bank or credit union and then make timely payments," says Opperman.
Myth: A divorce dissolves jointly-held credit accounts.
When in the midst of a divorce, too many Americans fail to ask how their creditworthiness could be harmed by their former spouse. This is unfortunate, because joint liabilities can come back to haunt you. "Divorce attorneys are not financial counselors," says John Ulzheimer, president of consumer education for SmartCredit.com. "That's not their job, but that's something you have to address."
"If you're a joint account holder, you're equally responsible for that balance," says Paperno. "You need to keep an eye on it, and you need to check your credit regularly to make sure that bill is getting paid." If your spouse promises to keep current on payments on a jointly-held account and fails to follow through, Paperno warns, "Be aware that will impact your score."
Thursday, February 24, 2011
Rent Payments Can Now Appear on Experian Credit Reports
For those of you without credit cards or mortgages, there may be a new way to build your credit: Pay your rent on time.
In January, credit reporting agency Experian started including residential rental payment data on its credit reports. Previously, only mortgage payments were recorded because banks report monthly to the credit bureau.
This change will not, however, affect every consumer's credit because most landlords still do not report payments to Experian. But the company does expect the number of people impacted to be in the "low millions."
"For many, rent was their biggest monthly expenditure, and they never got the credit they deserved for making those payments," said Brannan Johnston, vice president and managing director of Experian's Rent Bureau. "Historically only negative information showed up for renters through collections or evictions."
So far, Experian has collected histories from more than 45 property managers across the country through its Rent Bureau division, which it said covers more than 8 million residents nationwide.
But Experian doesn't provide a list of participating properties. If you want to know if your credit will be impacted, you have to ask your management company or order a credit report from Experian.
Renting with bad credit
Through the addition of rental data, one in three consumers falling in the lowest rung of Experian's Vantage Score credit scoring model (receiving a letter grade of an F and scoring between 501 and 600) will move up to at least the next level (with a D-grade and a score between 601 and 700), the agency said.
And not only will including rental data help many consumers improve their credit, it has led Experian to open new files for a third of consumers with rental data in its system -- including college students and anyone without a bank account or credit history.
How to establish your credit score
For those of you who aren't as responsible with your monthly payments, you're safe -- for now. Only positive accounts are currently being included on Experian reports. But the agency hopes to begin adding negative accounts to its reports next year.
While credit card issuers typically consider a payment late after 30 days, you're usually considered late after only 5 days with rental properties, said Johnston.
So instead of including negative data for consumers who have been late paying their rent from time to time, Johnston said Experian is likely only to include negative data if someone moved out of an apartment while still owing money, for example.
Experian is currently the only credit reporting agency to include rental payment data, so your FICO score and credit scores or reports from TransUnion and Equifax won't reflect how good -- or bad -- a renter you are.
In January, credit reporting agency Experian started including residential rental payment data on its credit reports. Previously, only mortgage payments were recorded because banks report monthly to the credit bureau.
This change will not, however, affect every consumer's credit because most landlords still do not report payments to Experian. But the company does expect the number of people impacted to be in the "low millions."
"For many, rent was their biggest monthly expenditure, and they never got the credit they deserved for making those payments," said Brannan Johnston, vice president and managing director of Experian's Rent Bureau. "Historically only negative information showed up for renters through collections or evictions."
So far, Experian has collected histories from more than 45 property managers across the country through its Rent Bureau division, which it said covers more than 8 million residents nationwide.
But Experian doesn't provide a list of participating properties. If you want to know if your credit will be impacted, you have to ask your management company or order a credit report from Experian.
Renting with bad credit
Through the addition of rental data, one in three consumers falling in the lowest rung of Experian's Vantage Score credit scoring model (receiving a letter grade of an F and scoring between 501 and 600) will move up to at least the next level (with a D-grade and a score between 601 and 700), the agency said.
And not only will including rental data help many consumers improve their credit, it has led Experian to open new files for a third of consumers with rental data in its system -- including college students and anyone without a bank account or credit history.
How to establish your credit score
For those of you who aren't as responsible with your monthly payments, you're safe -- for now. Only positive accounts are currently being included on Experian reports. But the agency hopes to begin adding negative accounts to its reports next year.
While credit card issuers typically consider a payment late after 30 days, you're usually considered late after only 5 days with rental properties, said Johnston.
So instead of including negative data for consumers who have been late paying their rent from time to time, Johnston said Experian is likely only to include negative data if someone moved out of an apartment while still owing money, for example.
Experian is currently the only credit reporting agency to include rental payment data, so your FICO score and credit scores or reports from TransUnion and Equifax won't reflect how good -- or bad -- a renter you are.
Tuesday, February 8, 2011
Housing Recovery Predicted to Start in 3rd Qtr. 2011
Many Markets Set to Improve Starting Around September of This Year
Local Prediction -
1. State: CT
2. City/Market: Bridgeport-Stamford-Norwalk, CT
Forecast change: third quarter, 2011 – third quarter, 2012 / +1.0%
Market fundamentals -
Median Family Income (2009) $104,000
Median Home Price (Third quarter 2010) $515,000
Change in Home Prices (From 3rd quarter 2009 thru 3rd quarter 2010) +1.2%
Worst 1-Year Home Price Change (1980-2010) -11.7% (2009:Q2)
Local Prediction -
1. State: CT
2. City/Market: Bridgeport-Stamford-Norwalk, CT
Forecast change: third quarter, 2011 – third quarter, 2012 / +1.0%
Market fundamentals -
Median Family Income (2009) $104,000
Median Home Price (Third quarter 2010) $515,000
Change in Home Prices (From 3rd quarter 2009 thru 3rd quarter 2010) +1.2%
Worst 1-Year Home Price Change (1980-2010) -11.7% (2009:Q2)
Wednesday, February 2, 2011
10 Things That Will Go Mainstream in 2011
What's new about the soon to be norm? Read on to see what products are about to become mainstream.Less than a decade ago, environmentalists were labeled "tree huggers," or called "granola" and "crunchy." Today, "being green" is no longer on the fringe -- it's a cultural norm. Recycling is a standard practice (mandatory in many places). Martha Stewart just announced her plans to launch a line of green homes and kids' television stations promote programs like Disney's Friends for Change to encourage youngsters to "Green Their Scene."
Another trend we've seen go front-and-center is frugality. Beginning around 2009, the U.S. recession made thrift commonplace. People who once mocked coupon-cutting turned to it in droves. Economically chastened Americans said goodbye to conspicuous consumption and hello to living within their means.
This past year was also when e-readers (like the Kindle) and gourmet food trucks exploded onto the scene and worked their way into the hearts of Main Street Americans. So what niche items or practices are set to go mainstream?
Here are 10 that we expect to gain mass acceptance in 2011 -
1. Paying With Your Cell Phone
We will likely to begin paying for items just like other countries have already done such as China and European countries. Need a caffeine fix, but forgot your wallet? No worries. Stroll into any Starbucks in America and you can now pay using your iPhone or Blackberry smartphone. The pay-by-phone service is free and works via a mobile app tied to your existing Starbucks card. In early 2010, Target launched a similar app where users can access their gift cards from their smartphones. And then there's Apple. Rumors abound that the next version iPhone and iPad will contain "near field communication" (NFC) chips which would allow users to make purchases by just waving their devices. CNNMoney has gone as far to say that "credit cards may soon be as outdated as vinyl records." We agree.
2. Tablets
A little more than a year ago, there was virtually no market for tablet PCs. Then came the iPad. Announced on Jan. 27, 2010 and debuting in April, Apple shipped 7.33 million of the devices by year's end. And while iPad sales etimates for 2011 vary widely, some analysts predict that as many as 65 million units could be shipped this year. And that's not to mention the flood of competitors entering the tablet computer market. Let the tablet wars begin!
3. Bolder Beers
Go bold or go home. That should be the mantra of today's brewers. A quarter of a century ago, the American beer landscape was dominated by light lagers. Then smaller brewers began gathering fans as they crafted beers with bolder flavors. Now Portfolio.com reports that in the first half of 2010 these craft breweries saw a 12% year-over-year growth, while the U.S. beer industry overall fell by 2.7%. Major brewers, like MillerCoors LLC, have taken notice. In August 2010, it launched an independent corporate division to focus attention on its craft and import beer business, which includes brands like its successful Blue Moon Belgian-style wheat ale. We expect to see more major breweries innovate as they try to keep up with beer-drinkers' changing palates.
4. Mobile TV / Users Canceling Cable TV Service
In 2010, for the first time ever, pay TV subscriptions in the U.S. declined. That downward trend is not likely to be reversed, and may even accelerate. As mobile TV providers improve their services, more and more users will find it less painful to cut those (cable) cords that bind. In addition, your options for TV-on-the-go will be plentiful this year.
5. Black Rice
CNN asks, is black rice the new brown? Like brown rice, it's full of antioxidant-rich bran, but it also contains "anthocyanins" which have been linked to reducing blood levels of LDL cholesterol and helping to fight heart disease. Lotus Foods first introduced black rice to the U.S. market in 1995. They explain that the ancient grain was once eaten exclusively by the emperors of China. Today you can find it supermarkets like Whole Foods. We expect to see it on more grocery-store shelves and restaurant menus in the coming year.
6. Clean Eating
Wait, what is clean eating you ask? It's a nutritional lifestyle centered around eating foods that are minimally processed and as close to their original sources as possible. Once just the stuff of weight lifters, fitness competitors and health-food fanatics, this way of eating has reached a whole new audience thanks to people like Tosca Reno. At the age of 40, Tosca transformed herself with clean eating. She has since created a media empire based on her Eat-Clean Diet that includes 10 books, a magazine, a blog, a reality show, seminars and more. You will see this clean-eating trend mirrored in manufacturers and restaurants touting products with "simplified ingredients."
7. Tube-Free Toilet Paper
In October 2010, Kimberly-Clark rolled out the first tube-free toilet paper product, under the Scott brand. This environmentally-friendly invention eliminates the wasteful brown cardboard tube which contributes up to 160 million pounds of trash in the U.S. each year. We expect this to catch on with consumers, and that competitors like Procter & Gamble, SCA and Georgia Pacific will follow suit and begin manufacturing their own tube-less brands.
8. Home Automation
It's worth noting that the technologies to link your home appliances with WiFi and smartphone apps have been around for many years, but 2011 may really be the year that it all comes together. For example, in January LG announced a new line of Thinq appliances that will allow users to control and monitor their oven, washing machine, refrigerator and vacuum from outside the home. Get ready, the future is now.
9. 4G Wireless
4G networks offer faster wireless broadband speeds than have been available before. The first claim to this speed was by the Clearwire/Sprint partnership. Next was T-Mobile. Verizon launched its 4G network (using Long Term Evolution or "LTE" technology) in a few dozen markets in late 2010. According to Forbes, it has promised full network coverage by 2013, as will AT&T. But, in general, we anticipate an explosion in 4G-compatible handsets and increased coverage areas in 2011.
10. Mobile Coupons
Cutting out and remembering to bring along paper coupons is tedious. Maybe that is why smartphone users are so receptive to receiving digital coupons. Regardless of the reason, mobile coupon spending is expected to reach $1 billion by 2011. In addition, Daniel Schock, retail industry director for Google says, "We can tell you searches for mobile coupons have more than doubled since 2008." With a primed-and-ready audience, we expect more and more retailers to adopt mobile coupons this year.
Another trend we've seen go front-and-center is frugality. Beginning around 2009, the U.S. recession made thrift commonplace. People who once mocked coupon-cutting turned to it in droves. Economically chastened Americans said goodbye to conspicuous consumption and hello to living within their means.
This past year was also when e-readers (like the Kindle) and gourmet food trucks exploded onto the scene and worked their way into the hearts of Main Street Americans. So what niche items or practices are set to go mainstream?
Here are 10 that we expect to gain mass acceptance in 2011 -
1. Paying With Your Cell Phone
We will likely to begin paying for items just like other countries have already done such as China and European countries. Need a caffeine fix, but forgot your wallet? No worries. Stroll into any Starbucks in America and you can now pay using your iPhone or Blackberry smartphone. The pay-by-phone service is free and works via a mobile app tied to your existing Starbucks card. In early 2010, Target launched a similar app where users can access their gift cards from their smartphones. And then there's Apple. Rumors abound that the next version iPhone and iPad will contain "near field communication" (NFC) chips which would allow users to make purchases by just waving their devices. CNNMoney has gone as far to say that "credit cards may soon be as outdated as vinyl records." We agree.
2. Tablets
A little more than a year ago, there was virtually no market for tablet PCs. Then came the iPad. Announced on Jan. 27, 2010 and debuting in April, Apple shipped 7.33 million of the devices by year's end. And while iPad sales etimates for 2011 vary widely, some analysts predict that as many as 65 million units could be shipped this year. And that's not to mention the flood of competitors entering the tablet computer market. Let the tablet wars begin!
3. Bolder Beers
Go bold or go home. That should be the mantra of today's brewers. A quarter of a century ago, the American beer landscape was dominated by light lagers. Then smaller brewers began gathering fans as they crafted beers with bolder flavors. Now Portfolio.com reports that in the first half of 2010 these craft breweries saw a 12% year-over-year growth, while the U.S. beer industry overall fell by 2.7%. Major brewers, like MillerCoors LLC, have taken notice. In August 2010, it launched an independent corporate division to focus attention on its craft and import beer business, which includes brands like its successful Blue Moon Belgian-style wheat ale. We expect to see more major breweries innovate as they try to keep up with beer-drinkers' changing palates.
4. Mobile TV / Users Canceling Cable TV Service
In 2010, for the first time ever, pay TV subscriptions in the U.S. declined. That downward trend is not likely to be reversed, and may even accelerate. As mobile TV providers improve their services, more and more users will find it less painful to cut those (cable) cords that bind. In addition, your options for TV-on-the-go will be plentiful this year.
5. Black Rice
CNN asks, is black rice the new brown? Like brown rice, it's full of antioxidant-rich bran, but it also contains "anthocyanins" which have been linked to reducing blood levels of LDL cholesterol and helping to fight heart disease. Lotus Foods first introduced black rice to the U.S. market in 1995. They explain that the ancient grain was once eaten exclusively by the emperors of China. Today you can find it supermarkets like Whole Foods. We expect to see it on more grocery-store shelves and restaurant menus in the coming year.
6. Clean Eating
Wait, what is clean eating you ask? It's a nutritional lifestyle centered around eating foods that are minimally processed and as close to their original sources as possible. Once just the stuff of weight lifters, fitness competitors and health-food fanatics, this way of eating has reached a whole new audience thanks to people like Tosca Reno. At the age of 40, Tosca transformed herself with clean eating. She has since created a media empire based on her Eat-Clean Diet that includes 10 books, a magazine, a blog, a reality show, seminars and more. You will see this clean-eating trend mirrored in manufacturers and restaurants touting products with "simplified ingredients."
7. Tube-Free Toilet Paper
In October 2010, Kimberly-Clark rolled out the first tube-free toilet paper product, under the Scott brand. This environmentally-friendly invention eliminates the wasteful brown cardboard tube which contributes up to 160 million pounds of trash in the U.S. each year. We expect this to catch on with consumers, and that competitors like Procter & Gamble, SCA and Georgia Pacific will follow suit and begin manufacturing their own tube-less brands.
8. Home Automation
It's worth noting that the technologies to link your home appliances with WiFi and smartphone apps have been around for many years, but 2011 may really be the year that it all comes together. For example, in January LG announced a new line of Thinq appliances that will allow users to control and monitor their oven, washing machine, refrigerator and vacuum from outside the home. Get ready, the future is now.
9. 4G Wireless
4G networks offer faster wireless broadband speeds than have been available before. The first claim to this speed was by the Clearwire/Sprint partnership. Next was T-Mobile. Verizon launched its 4G network (using Long Term Evolution or "LTE" technology) in a few dozen markets in late 2010. According to Forbes, it has promised full network coverage by 2013, as will AT&T. But, in general, we anticipate an explosion in 4G-compatible handsets and increased coverage areas in 2011.
10. Mobile Coupons
Cutting out and remembering to bring along paper coupons is tedious. Maybe that is why smartphone users are so receptive to receiving digital coupons. Regardless of the reason, mobile coupon spending is expected to reach $1 billion by 2011. In addition, Daniel Schock, retail industry director for Google says, "We can tell you searches for mobile coupons have more than doubled since 2008." With a primed-and-ready audience, we expect more and more retailers to adopt mobile coupons this year.
Should I Take Out a Reverse Mortgage?
A reverse mortgage can be a good way for people 62 and older to turn their home equity into extra spending cash that can supplement Social Security and withdrawals from savings, making retirement more enjoyable than it otherwise might be.
Typically, you can take the loan proceeds in a lump sum, monthly payments for life, as a credit line or a combination of these.
One of the big appeals of this type of arrangement -- as opposed to, say, tapping your home equity by refinancing or opening a home equity line of credit -- is that you don't have to repay the loan until you die or move out of your house.
Another plus is that the payments you receive from a reverse mortgage don't affect your Social Security benefits (although they could affect your eligibility for programs like Medicaid and Supplemental Security Income, or SSI, the program that provides income to people with low incomes and disabilities).
Until recently, though, there's been a practical problem for anyone who plans to use a reverse mortgage primarily as a line of credit that could be drawn upon when and if needed, versus taking out a large amount for some immediate need (renovating a home, replacing a car, whatever).
That problem: In addition to interest expense and an annual insurance charge (now 1.25% a year) on the outstanding balance, the Department of Housing and Urban Development's popular Home Equity Conversion Mortgage reverse mortgage program (aka HECM Standard) also levies an initial one-time insurance premium of 2% of the value of your home.
That amounts to $6,000 for a $300,000 home. You don't have to pay this charge out of pocket. Still, it boosts the overall cost of borrowing, and can significantly drive up the effective annual interest rate you pay if you wind up drawing very little against the reverse mortgage or if you die or move from your home shortly after taking out the loan.
But in October, HUD unveiled a new reverse mortgage program, known as HECM Saver, that whittles down the initial insurance premium from 2% to 0.01% of your home's value, reducing that one-time charge from $6,000 to just $30 on a $300,000 home.
You'll still incur interest charges and the annual insurance fee. But by lowering the upfront cost, the HECM Saver potentially makes a reverse mortgage a more viable option if you intend to use it primarily as a back-up line of credit or an emergency fund, or if you think you will use it sparingly or not remain in your home for many years.
I say "potentially" for two reasons. For one thing, you'll still have to pay closing costs on the loan, which can include such expenses as an appraisal, title search and insurance, credit checks, mortgage taxes and a loan origination fee.
Lenders can charge an origination fee of as much as $2,500 if your home's value is less than $125,000. If your home is worth more than that, lenders can charge 2% of the first $200,000 of your home's value plus an additional 1% on the amount over $200,000.
That translates to a $5,000 origination fee on a $300,000 home. (The origination fee is capped at $6,000.) Some lenders may be willing to waive origination fees and pick up a portion of other upfront costs, such as the initial insurance premium.
But you'll still want to take a close look at what you're being charged upfront and decide if that amount makes sense given the likely amount you'll be borrowing.
You should also know that because it levies a lower initial insurance premium, the HECM Saver doesn't allow you to borrow as much as you can with a HECM Standard reverse mortgage.
For example, a 62-year-old who owns a $300,000 home with no mortgage debt might qualify for just under $102,000 with an adjustable rate HECM Saver.
Under the HECM Standard program, that same person might be able to borrow almost $141,000. (To see how much you might get under each program given your age, where you live and the market value of your home, check out AARP's reverse mortgage calculator.)
No matter how enticing getting money on the house might seem, remember, a reverse mortgage isn't something you should take on lightly. As part of the deal, you're required to pay homeowners insurance premiums and property taxes. You must also maintain the property in good condition.
Fail to do so, and you could be forced to repay the loan even if you're still living in the house. If you don't have other resources to do that, you would have to sell. So before signing up for a reverse mortgage, consider whether there are other options for you and your spouse.
In some cases, retirees can be better off tapping a cash-value life insurance or freeing up their home equity by downsizing to smaller or less expensive digs that have lower ongoing maintenance and utility costs.
Fortunately, HUD has beefed up the mandatory no- or low-cost counseling that borrowers must get before taking out a reverse mortgage.
And to help people considering a reverse mortgage more fully understand the pros and cons of such a loan, counseling agencies must now provide potential reverse mortgage borrowers with a packet of information before the counseling session, including material for assessing these loans' true costs and a booklet from the National Council on Aging that outlines how reverse mortgages work.
Remember too that while HECM reverse mortgages are insured by the federal government, the loans themselves are made by private lenders who do not set identical terms.
So compare the offerings of several lenders before settling on a loan. You can find tips on choosing the best loan by clicking here. I also suggest you peruse the material on the reverse mortgage section of AARP's website.
Finally, a recent Consumers Union report contends that some unscrupulous reverse mortgage lenders push these loans on people who might be better off without them or even use reverse mortgages to perpetuate various financial scams.
I've also warned about such abuses as putative advisers recommending reverse mortgages and then persuading borrowers to invest the money in high-cost investments like annuities. So certainly, you and your wife should look into a reverse mortgage as a way of getting some extra income.
But don't commit until you've thought about other options, you understand all the costs and you're convinced that the person making the loan is on the up and up.
Typically, you can take the loan proceeds in a lump sum, monthly payments for life, as a credit line or a combination of these.
One of the big appeals of this type of arrangement -- as opposed to, say, tapping your home equity by refinancing or opening a home equity line of credit -- is that you don't have to repay the loan until you die or move out of your house.
Another plus is that the payments you receive from a reverse mortgage don't affect your Social Security benefits (although they could affect your eligibility for programs like Medicaid and Supplemental Security Income, or SSI, the program that provides income to people with low incomes and disabilities).
Until recently, though, there's been a practical problem for anyone who plans to use a reverse mortgage primarily as a line of credit that could be drawn upon when and if needed, versus taking out a large amount for some immediate need (renovating a home, replacing a car, whatever).
That problem: In addition to interest expense and an annual insurance charge (now 1.25% a year) on the outstanding balance, the Department of Housing and Urban Development's popular Home Equity Conversion Mortgage reverse mortgage program (aka HECM Standard) also levies an initial one-time insurance premium of 2% of the value of your home.
That amounts to $6,000 for a $300,000 home. You don't have to pay this charge out of pocket. Still, it boosts the overall cost of borrowing, and can significantly drive up the effective annual interest rate you pay if you wind up drawing very little against the reverse mortgage or if you die or move from your home shortly after taking out the loan.
But in October, HUD unveiled a new reverse mortgage program, known as HECM Saver, that whittles down the initial insurance premium from 2% to 0.01% of your home's value, reducing that one-time charge from $6,000 to just $30 on a $300,000 home.
You'll still incur interest charges and the annual insurance fee. But by lowering the upfront cost, the HECM Saver potentially makes a reverse mortgage a more viable option if you intend to use it primarily as a back-up line of credit or an emergency fund, or if you think you will use it sparingly or not remain in your home for many years.
I say "potentially" for two reasons. For one thing, you'll still have to pay closing costs on the loan, which can include such expenses as an appraisal, title search and insurance, credit checks, mortgage taxes and a loan origination fee.
Lenders can charge an origination fee of as much as $2,500 if your home's value is less than $125,000. If your home is worth more than that, lenders can charge 2% of the first $200,000 of your home's value plus an additional 1% on the amount over $200,000.
That translates to a $5,000 origination fee on a $300,000 home. (The origination fee is capped at $6,000.) Some lenders may be willing to waive origination fees and pick up a portion of other upfront costs, such as the initial insurance premium.
But you'll still want to take a close look at what you're being charged upfront and decide if that amount makes sense given the likely amount you'll be borrowing.
You should also know that because it levies a lower initial insurance premium, the HECM Saver doesn't allow you to borrow as much as you can with a HECM Standard reverse mortgage.
For example, a 62-year-old who owns a $300,000 home with no mortgage debt might qualify for just under $102,000 with an adjustable rate HECM Saver.
Under the HECM Standard program, that same person might be able to borrow almost $141,000. (To see how much you might get under each program given your age, where you live and the market value of your home, check out AARP's reverse mortgage calculator.)
No matter how enticing getting money on the house might seem, remember, a reverse mortgage isn't something you should take on lightly. As part of the deal, you're required to pay homeowners insurance premiums and property taxes. You must also maintain the property in good condition.
Fail to do so, and you could be forced to repay the loan even if you're still living in the house. If you don't have other resources to do that, you would have to sell. So before signing up for a reverse mortgage, consider whether there are other options for you and your spouse.
In some cases, retirees can be better off tapping a cash-value life insurance or freeing up their home equity by downsizing to smaller or less expensive digs that have lower ongoing maintenance and utility costs.
Fortunately, HUD has beefed up the mandatory no- or low-cost counseling that borrowers must get before taking out a reverse mortgage.
And to help people considering a reverse mortgage more fully understand the pros and cons of such a loan, counseling agencies must now provide potential reverse mortgage borrowers with a packet of information before the counseling session, including material for assessing these loans' true costs and a booklet from the National Council on Aging that outlines how reverse mortgages work.
Remember too that while HECM reverse mortgages are insured by the federal government, the loans themselves are made by private lenders who do not set identical terms.
So compare the offerings of several lenders before settling on a loan. You can find tips on choosing the best loan by clicking here. I also suggest you peruse the material on the reverse mortgage section of AARP's website.
Finally, a recent Consumers Union report contends that some unscrupulous reverse mortgage lenders push these loans on people who might be better off without them or even use reverse mortgages to perpetuate various financial scams.
I've also warned about such abuses as putative advisers recommending reverse mortgages and then persuading borrowers to invest the money in high-cost investments like annuities. So certainly, you and your wife should look into a reverse mortgage as a way of getting some extra income.
But don't commit until you've thought about other options, you understand all the costs and you're convinced that the person making the loan is on the up and up.
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