March 2010 Archives

The biggest news to take place last week (and the past few months) is the passage of the health care reform law. Once everything is finalized and in place, the controversial law should ensure coverage for more Americans, lower premiums and lessen discrimination for gender and preexisting conditions.

The price tag for the bill is a whopping $940 billion, according to the Congressional Budget Office, and while some of the changes will save money and pay for themselves in the long run, the government has to find other creative ways to finance the expanded health care coverage.

One such method is adding a 10 percent tax for visits to tanning salons, according to CNN. In the next 10 years, it is estimated that this "sin tax" will raise a cool $2.7 billion.

Some tanning salon owners are shouting that it's not fair and that consumers will no longer want to visit their business, but people who fry in tanning beds are more likely to suffer from cancer, which means more health care expenses when they're older.

It makes sense to me! If you are trying to keep your costs down (and health up), you might want to stay away from tanning salons.

Who wants to look like those "Jersey Shore" kids, anyway?

"Would you like a credit card with that?"

Credit cards have been served up like French fries at fast-food restaurants.

That's about to change. According to a recent article in the Wall Street Journal (subscription required) about Chase dropping the Starbucks Duetto Visa card, credit card issuers are "pulling the plug on some of the specialized, reward-loaded plastic they pitched to consumers when credit was easy and wallets were wide open."

Just as eating too many fries clogs your arteries, too many credit cards have caused financial arrest. The explosion of niche-branded cards -- whose rewards are tied to a specific brand or product -- has imploded consumers' bank accounts.

When you give a kid a credit card, expect trouble. That's proving to be the universal truth as credit card use explodes across the globe.

Case in point: A recent Burson-Marsteller survey revealed that in Saudi Arabia, 52 percent of its 18 to 24 year olds are struggling with credit card debt. The survey included both Arab nationals and Arab expatriates. Given the growth of credit cards in Saudi Arabia, it's no surprise that young adults participated in their popularity. According to ArabianBusiness.com, the number of credit cards issued in that country rose 104 percent between 2003 and 2008 to 12.3 million.

When most of us find ourselves deep in credit card debt, there's not much we can do. If we're lucky, our creditors will work with us to make a deal and lower our interest rate or give us more time to pay off what we owe. Rarely is debt ever just forgotten or canceled -- that is, unless you are an impoverished country.

It's been announced that a group of countries are canceling about $1 billion of debt that Afghanistan owes them. In March of 2009, Afghanistan's public debt was estimated at $2.1 billion; half of that is owed to the Parish Club, which, according to CNN, is "an informal group of creditor governments from major industrialized countries that meets monthly in Paris with debtor nations on restructuring their debts."

The club is forgetting the debt partly because of Afghanistan's involvement in the program Heavily Indebted Poor Countries. About $441 million of the debt is being forgiven due to participation in the program, while creditors are simply writing off the remaining $585 million. In exchange for the assistance, Afghanistan has pledged to use what would have been their debt repayment money to fund U.N. programs.

Don't you wish someone would just swoop in and help you out with your debt? Unfortunately, it just doesn't work that way. But here's a little help: Check out the best of the personal finance blogosphere from the past week below to learn how you can take control of your own finances and debt before they overtake you. Sure, it's not a bailout the size of Afghanistan, but it's a start!

Who knew someone with trouble moving her jaw could do jaw-dropping comedy?

An online video clip featuring reality-TV star Heidi Montag has already received more than 1 million views and is burning up the celebrity blogosphere since its posting on Tuesday. But Montag, famous for her stint on MTV's "The Hills," (and more recently for her numerous plastic surgeries) isn't peddling a new reality show or designer clothing line. Rather, the clip shows Montag, decked out in diamonds and a skin-tight dress, pushing for consumer protection.

We were already running late. It was our first business trip, and the three of us were nervous about visiting our two London offices for the first time. The line to buy Oyster cards, the rechargeable plastic cards you use to ride the subway, was moving slowly since only one cashier was working. It was rush hour, and one of our co-workers offered to save time and pay for all three of our cards; she was trying to rack up JetBlue miles with her American Express credit card.

We went up to the cashier's stand together. My co-worker said she wanted three Oyster cards, each with $25 on them. Sighing, the man said each card had to be purchased with a separate transaction. Wanting to earn those frequent flier miles, she wanted to go ahead and pay for each anyway. He took her card for the first payment and gave her the receipt to sign. When she signed it and handed it back, he compared her signature on the receipt to that on the back of her card. "Sorry," he said. "They don't match."

So began the first of many adventures on our visit with old-fashioned U.S.style swipe-only credit cards in a new-style chip-and-PIN world. The lesson: If you don't have chip-and-PIN, don't expect to easily buy your fish and chips.

In honor of Women's History Month -- which takes place each March -- the latest Carnival of Personal Finance has been dubbed the Women in History edition and includes thoughts from Eleanor Roosevelt, Helen Keller, Amelia Earhart -- and myself.

For this edition, along with the wisdom of personal finance bloggers, you also get some great quotes from six important historical female figures.

Carnival host SimplyForties has rounded up some of the blogosphere's best posts on personal finance, which are definitely worth a read. Among them, you'll find my blog post, "Being a financial reporter doesn't make you immune from banking headaches," in the Clara Barton section of the carnival.

What could bring together an all-star cast of "Saturday Night Live" presidential doppelgangers?

The issue of consumer protection.

Seven stars and ex-stars of the long-running NBC comedy got together for an unusual, and sometimes side-splitting, political effort in a special video made for the Web site Funny or Die.

In the video Obama, played by Fred Armisen, emerges from a smoke-filled bathroom to engage in a bedside chat with the First Lady Michelle Obama (Maya Rudolph) to have a bedtime chat about -- what else? -- financial institutions, deregulation and consumer protection.

"These banks and the credit card companies are ripping off the people with almost no regulations," Obama complains. "I'm trying to make a consumer agency to protect families and the lobbyists and Senator Shelby acts like I'm trying to change the national anthem to 'I Got 99 Problems and the B**** Ain't One of Them.'"

Yes, it does get raunchy, but in a PG-13, maybe a mild R sort of way.

As he and Michelle settle back in bed, the string of ex-presidents parade into the bedroom, all exhorting him to find a way to pass the consumer protection law.

The segment, directed by Ron Howard, brings back Dana Carvey as George H.W. Bush, Dan Ackroyd as Jimmy Carter with a few extra peanuts stuffed in him, Chevy Chase as the ever bumbling Gerald Ford, Darrell Hammond as the ever ribald Bill Clinton, Jim Carrey as Ronald Reagan and Will Ferrell -- co-founder of Funny or Die -- as George W. Bush.

Credit card issuers get special satirical attention.

"When I put the Iraq war on my credit card, I never dreamed I'd be paying 28 percent in interest rates. It's astronomical," whines Ferrell/Bush.

It was my friend Brian's first time applying for a credit card. He was 19, and his parents thought it would be a good

idea for him to start building his credit score. As Brian and his parents discussed his application with the banker, they were both surprised to learn that he already had a credit card - five, in fact. There were also surprised to learn that he never paid his bills and had an affinity for expensive jewelry.

Brian, of course, was a victim of identity theft. Several years later, and despite professional help, he still hasn't

managed to clear his name. He's not alone. Identity theft is a growing problem, rising 12 percent in 2008, and it is a crime that can affect any person at any age. However, the virtual lifestyle of most young people places them at an increased risk, and they must take extra precautions to avoid becoming victims.

Working as a reporter for CreditCards.com offers a lot of perks -- caviar dispensers in the break room, private flights to international finance conferences and casual dress every Friday -- but improved banking relationships aren't included. My recent headaches prove that point.

My story begins several months ago: Inspired by the calendar change to 2010, I resolved to strengthen and streamline my personal finances. After all, even personal finance reporters aren't perfect. Some of the changes included closing an old Wachovia account, which included (in my mind) underperforming IRAs -- Roth and traditional -- and moving that money to my existing Chase bank account, since that's where my direct deposit goes each month. Unfortunately, my plan had costs -- in both time and money -- that I didn't expect.

One of the many ways I annoy my co-workers is to break out one of my favorite books, "Chase's Calendar of Events," and regale them with the random events that happened to have taken place on this particular day in history. For example, I will say, "Did you know that today is .. " and as their eyes reflexively begin rolling back in their heads, I'll continue, "... National Pig Day?"

So when we got the chance to host this, the 246th edition of the Carnival of Personal Finance, and it happened to fall on March 1, I knew I could spread my for random, obscure facts. March is noted for many things, according to Chase's. Among them: March is International Ideas Month. It's National Clean Up Your IRS Act Month. It's International Mirth Month, too. International Expect Success Month is in March, as well. And don't forget, March is also Spiritual Awareness Month. Finally, cheer up, because it's also Optimism Month.

So enjoy this week's best of personal finance blogs in this carnival, sorted into the events they most closely resemble.