Finances

An avid cyclist and bike racing fan, I sit transfixed during the many hours of Tour de France coverage every July when the race rolls around. This year, during some of the less-than-scintillating early miles of the sprint stages, my mind wandered a bit, and it occurred to me that there are some interesting parallels between winning the Tour de France and winning at personal finance.

Having watched Lance Armstrong pull off the win for 7 years in a row, I’ve compiled this list of the Top 10 Ways Managing Your Money Is Just Like Riding a Bike:

1. If you take safety precautions (e.g. helmet/emergency fund), you’ll feel a whole lot more relaxed and confident on the journey.

2. The better prepared you are, the greater your chances of succeeding. It’s important to learn from the past, but you must also scout out the road ahead and evolve with the constantly changing environment.

3. Crashes happen. The actions of other participants, bystanders, and the media can sometimes distract you from your goal. If you expect the unexpected and are able to respond with a level head, you’ll be better off.

4. If you take too many unnecessary risks, you might end up out of the race, and sometimes it can take quite a while to recover.

5. But you’ll probably have to take at least some calculated risks to come out ahead. For example, you might improve your performance by using cutting edge products, e.g. ultra-light wheels for big uphill climbs or, in the financial world, Health Savings Accounts (HSAs.) But you also make some tradeoffs, e.g. less stability going downhill or, with HSAs, penalties if you withdraw the money for something besides health care.

6. There will be rainy days, and there most certainly will be ups and downs. The one who weathers the tough days the best usually comes out ahead in the end.

7. You don’t have to come out on top ("beat the market," so to speak) every day ? or any particular day, for that matter ? to win the overall race, the race that really matters.

8. You can go a lot farther if the team you surround yourself with has skills, experience, a well-defined goal, and the right motivation.

9. Even if you start at a huge disadvantage, you can emerge victorious if you have the right attitude, understand the rules of the game, and persist despite setbacks.

10. A little bit of luck never hurts!

So the next time you’re in doubt as to which road to take on your personal financial journey, consider looking to the peloton for guidance and inspiration. Whether your goal is a yellow jersey on the Champs-Elysées in July or a secure retirement, there’s a surprising amount to learn from watching a bunch of bike racers circumnavigate France. Congratulations, Lance!

Identity theft is a serious crime that continues to grow. If you become a victim of identity theft, you may spend months, or years, trying to repair the damage. A compromised credit report can ruin your chances of getting a new job, a loan, insurance or even housing. It’s true that it is possible that you could be arrested for a crime you didn’t commit if someone else has used your identity to break a law.

Unfortunately, many of the methods that thieves use to steal identities are completely beyond your control. Although it’s rare, some store clerks have been known to use their position to give or sell information to identity thieves. There are some measures you can take, however, that will make it harder for them to steal your identity.

Protect Your Credit Card Number When Making Purchases:

After you make a purchase and your credit or debit card has been swiped through a credit card terminal, check to make sure that the printed receipt hides all but the last four digits of your credit card account number (there will usually be an x in place of the first twelve digits).

Commonly referred to as the first of the three major “Check Systems” in the U.S., Chex Systems is an association of financial institutions that network together in order to develop a database that maintains the records of mutually unwanted customers. To make sure that only financially responsible individuals open up checking accounts at member institutions, these banks report on customers who demonstrate poor financial management skills. When a customer’s checking account is closed due to demonstrated mismanagement, then he or she is reported to Chex Systems. Once done, the customer will have a very difficult time opening up an account at any other financial institution partnered with Chex Systems for the next five years.

Since the vast majority of financial institutions (banks) reject potential customers who are on file at Chex Systems, being reported to them can put an individual at an extreme disadvantage. But what, exactly, does it take to get a checking account closed and reported to Chex Systems in the first place? The answer the bank usually gives out is simply "closed for cause." Yet there are many ways that a customer can end up having his or her account terminated. These range from acts as serious as fraud to the simple irresponsibility that leads to excessive overdrafts. It is important to remember, however, that policy can vary greatly between financial institutions. Depending upon which bank is in question, instances in which accounts are "closed for cause" can involve customers:

Well, dang! From what I’ve heard and read, it looks like we’ve reached an all-time world-class new record in the amount of personal debt on the books. Now it’s probably not quite as bad as we’ve been led to believe, however many of us have managed to tromp further than we should have into the financial swamp. How well we’ll be able to find our way back out to dry ground will depend on our knowing just where the heck we are in the first place. And that takes us right to the "B" word.

"Budgets"

For some of us, the word immediately congers up visions of frowning accountant-type folks, complicated computer programs and mountains of wadded up balls of scratch paper piling up around the kitchen table. For those of us who are fiscally challenged and would prefer to place our faith entirely in the benevolence of the Saints of the Oblivious Shopper, even the mention of the "B" word is enough to drive us to the emotional security of watching the latest TV reality shows.

When you received an energy (heating) bill last winter, were you afraid to open it? Granted that we have a home with a lot of really big windows, but we saw energy bills last winter in the hundreds of dollars. Your bill probably wasn’t that bad but I’m guessing that it was a lot higher than you would have liked.

The good news is that there are some inexpensive things you can do to cut that cost. Here are 10 of them.

1. If you have a fireplace, be sure to keep the damper closed. You can lose up to 5 percent of your heat if your damper is open when the fireplace is not in use.

2. Keep your furnace filter clean. Replace it at least once a month during heating season. This alone can cut your heating costs by as much as 5 percent.

3. Be sure to keep inside doors open to improve heat circulation. This will help the efficiency of your heating system.

4. Lower the setting on your thermostat. If you can reduce your daytime indoor thermostat temperature from 72 to 68 degrees, you should save about 5 per- cent during the heating season.

If you’ve been thinking about filing for bankruptcy, your best bet might be to file now.

A new bankruptcy law takes effect in November that will make it harder and more expensive for most families to file for bankruptcy and discharge their debts.

The major result of the new law is that fewer people will be able to file for Chapter 7 Bankruptcy and will be forced to file for Chapter 13 Bankruptcy, instead.

A Chapter 13 bankruptcy is basically a reorganization bankruptcy. Under Chapter 13, you must file a plan with the court showing how you will pay off your debts over a period of three to five years. Once both you and your creditors agree on the repayment plan and the bankruptcy court approves it, both you and your creditors are bound by it.

Beginning in November, if you want to file for a Chapter 7 bankruptcy, there will be a qualifying test. Under this two-part test, you will first be required to apply a formula that exempts certain expenses such as food, rent, etc., to see if you can afford to pay 25 percent of your "non-priority unsecured debt" (credit cards, medical bills and the like). Second, your income will be compared to your state’s median income.

Are you having problems with debt? Are you afraid to answer the phone because it may be an angry creditor calling? Do you have problems getting from one paycheck to the next? The simple answer is that you need to budget. But for that budget to work, both you and your spouse need to be in total agreement.

If one of you loves to shop and doesn’t worry much about credit card debt while the other hates spending money like death, you have a problem. You can create budgets till Honolulu freezes over, but it won’t work and chances, are, you and your significant other will end up fighting constantly.

Even before you start to create a budget, the two of you must sit down and discuss your life objectives. Get out a piece of paper. Make a list of long-term objectives the two of you can agree on. One might be to get out of debt. Another might be to make monthly contributions to a college fund for the kids. A third could be to begin a retirement fund. Or you might decide it’s important that one of your get some specialized training that would lead to a higher salary.

Debt levels are at an all time high in the UK. The younger generation tend to be feeling the pinch the most, but parents are increasingly being required to bail them out, often at great expense to their own limited mortgage or retirement savings.

It has become almost accepted as a fact of life that graduates will begin their careers with a considerable level of personal debt. The Association of Investment Trust Companies found that on average students expected to graduate with £7,208 of debt, while parents believed it would be nearer to £9,741, however the real average was found to be currently running at £13,501. Graduates then need to service credit cards, take out a mortgage, then cover the payments, repay university loans, not to mention the pressure to start saving earlier, and save more, for their retirement, whilst the basic state pension increasingly becomes inadequate. The government revealed in June that student debt for 2003-04 was seven times higher than they were in 1994-95 and the Student Loans Company has shown that debts owed to them has risen to more than £13bn.

ID theft is a major consumer concern, though there is apparently much confusion about proactive protection initiatives and apparently safe and unsafe spending behaviour. For example, many consumers remain reluctant about shopping online, but they may still give out personal details over the phone in a cold call, or they may have redundant or dormant accounts and financial products which are susceptible to fraud.

If reducing fraud vulnerability wasn’t sufficiently difficult already, consumers are now being offered anti-ID theft services and ID protection insurance by banks, insurance companies and credit reference agencies. There is considerable debate around such policies however, as they do not offer full financial compensation. In The Observer last week, Richard Brown, Chief Executive of consumer finance site moneynet ( http://www.moneynet.co.uk ) stated that:

"Few, if any, of them appear to offer insurance protection against actual financial loss in the event that a credit company, for example, refuses to cover the loss ? and this is what consumers really need. While ID protection services may have a degree of value, they shouldn’t be used as a reason to take an otherwise uncompetitive product."

Car donations and used car donations are the way many people choose to recycle their older model cars without having the headache of repairing, advertising, showing, and hopefully then selling them. Being able to get rid of an older car and at the same time gaining the benefits of charitable giving and a tax deduction are all part of the allure of used car donations. Car donations are becoming more and more popular as a means of unloading used cars because of the convenience of the whole process and the ease of transfer.

Many charities enjoy assuming the hassle of used car donations because they find it a very profitable way to finance the work of their particular charitable outreach. By simply accepting car donations and then liquidating those used car donations by selling them at auction, the charity reaps great financial rewards. Most charitable foundations have a set of operation guidelines in place concerning car donations and used car donations that ensures the general public ease of donation by making the process smooth and relatively effortless.