July 2010 Archives

We're used to California being declared in a state of emergency for wildfires, but on Wednesday, Governor Arnold declared a state of emergency over California's finances, according to Reuters. It's no surprise that the state has experienced financial turmoil in the past few years, but things have reached a dire point now that there is a $19 billion budget shortfall.

The budget is five weeks overdue, and it might take a few more weeks until the Democrat-heavy legislature and Schwarzenegger, a Republican, can get their act together and agree.

The deficit is 22 percent of the $85 billion general fund budget the governor signed last July for the fiscal year that ended in June," Reuters said. The article blames the recession, the housing slump, high unemployment and financial market turmoil as the main causes in California's drop in revenue.

In the declaration of emergency, Schwarzenegger ordered that tens of thousands of state employees take three days of unpaid leave so the state will have enough funds to pay for essential debts. He estimated that the government will run out of money by October if no progress is made, and that the state comptroller may have to start issuing IOUs next month.

For a healthy dose of personal finance tips, advice and ideas, read on for my roundup of the week's best blog posts.

Oh my gosh, I'm so excited I could just go and flip a table.

My blog titled "'Real Housewives of New Jersey' credit card tales of trouble" about the broke but fabulous RHNJ co-star Teresa Giudice was included in the Carnival of Personal Finance hosted by Beating Broke.

Journalists and researchers question whether the new frugality mentality is permanent or just a fad. From my viewpoint, I think it's a little of both.

I just read something on CNN that shocked me. When Facebook CEO Mark Zuckerberg was a mere 18-year-old college student at Harvard, he allegedly granted a businessman an ownership stake in what was then a small online side-project. Now it's a billion-dollar Internet company, and New Yorker Paul Ceglia is trying to claim what he says is rightfully his.

Ceglia claims that he hired Zuckerberg in 2003 to work on two business ventures, one of which was "designed to offer the students of Harvard university access to a website [sic] similar to a live functioning yearbook with the working title of 'The Face Book.'" Sound familiar? Ceglia says he paid $2,000 to Zuckerberg for the job. CNN reports that Facebook's lawyer has admitted that Zuckerberg signed a contract with Ceglia, but they aren't sure yet whether the document he has produced is the real document in question or whether the real contract states what he says it does.

Lawsuits are messy, especially when they dredge up financial matters from many years ago. While they are sometimes unavoidable, this proves why it's so important to have clear written and signed contracts and save them forever! You never know when something like this will surface. Contracts and good records are important for everyone, even if it's just a contract for a one-time freelance service. It's easy to shrug the formality off, especially if the other party says a contract is optional. I think it's important to err on the side of caution and always have a clear contract.

Now for my weekly roundup! Read on and learn about some of my favorite personal finance blog posts from the past week.

The tables turn on reality TV Real Housewives of New Jersey co-star Teresa Giudice -- and this time she's not the one flipping them.

No, don't worry RHNJ fans. She wasn't arrested for being a "prostitution whore," but Teresa, the big-haired spendaholic, known for her extravagant shopping sprees and lavish lifestyle, is flat broke.

News recently surfaced that she and husband Giuseppe "Joseph" Giudice filed for bankruptcy in October of last year. The couple is approximately $11 million in debt, according to court documents. Unpaid mortgages and home renovations (some of which the Giudices dispute) constitute a majority of what they owe, but their credit card balances aren't pretty either. The Giudices owe a staggering $100,000 spread across eight credit cards. Of that, they charged nearly $20,000 in total on their Bloomingdale's, Neiman Marcus and Nordstrom cards alone.

It's not unusual for the summertime to bring high temperatures. But with thermometer readings in the northeast reaching into 90s and beyond over recent weeks, blog carnival host NerdWallet made "gettin' hot in here" the theme of the latest Carnival of Personal Finance.

Since my latest blog post --entitled "The latest economic casualty? Falling FICO credit scores" -- was included in the Carnival of PF, it's fair to say that post is now officially both hot and nerdy. That blog post can be found in the "credit and debt" section of the carnival, right next to the picture of an egg frying on a sidewalk.

A few weeks ago, I blogged that I was dying to get an iPhone 4, but was doing everything in my power to resist. Despite the new features I so desired, I concluded that I just didn't need one. Shortly after that, once the phones were in stock, I called AT&T to see if I qualified for an upgrade. I learned that even as a current AT&T customer, it would still cost a whopping $199. Ouch. I wavered back and forth, and ultimately decided to wait -- at least until I heard more from people as to whether it was actually worth it.

Boy am I glad I waited; it turns out that the iPhone 4 has major antenna reception issues. According to Wired, it's so bad that Consumer Reports, which initially ranked iPhone as the best smartphone, has come out and said that it can't recommend the phone because of this major technical problem. A steel antenna band runs along the edges of the phone. When you grip the phone in a certain way--particularly in the left-hand corner--the phone will lose three or four bars of signal (the problem is called "the death grip"). Apple has even advised consumers to avoid holding the phone in that corner, and I've seen some blogs call for a recall. There were murmurs that a new software update would fix the problem, but Mobile Crunch says it doesn't work.

If you haven't checked your credit score in awhile, you could be in for a shock.

According a report by the Associated Press, millions of U.S. borrowers have experienced significant declines in their FICO scores -- the grading system most banks use in their lending decisions -- amid high unemployment and limited access to credit. That scoring shift means many borrowers will find it increasingly difficult to qualify for affordable mortgages, auto loans and credit cards. "Millions more people will pay more over the next several years for credit," says Gail Hillebrand, financial services campaign manager with nonprofit Consumers Union in San Francisco.

But credit scores aren't only moving lower. The FICO data shows an increasing number of borrowers on the fringes of its scoring range, which runs from 300 to 850, with fewer borrowers in the middle of that range.

So, you clicked on a certain picture or perhaps you've included ice fishing as one of your interests. Other people will probably find out.

The tales of sites tracking their users' actions or pimping out personal information to marketers are becoming more commonplace. For the most part, though, this type of information exchange has become a tolerated side effect of life online.

But there are some types of information that consumers expect sites to keep private. Consider the number of times people save credit card information online, or enter bank account numbers into budgeting sites. Even the contents of our e-mails and Google Docs, which are all stored in cyberspace, are assumed to be safe from prying eyes.

The tales of sites tracking their users' actions or pimping out personal information to marketers are becoming more commonplace. For the most part, though, this type of information exchange has become a tolerated side effect of life online.

But there are some types of information that consumers expect sites to keep private. Consider the number of times people save credit card information online, or enter bank account numbers into budgeting sites. Even the contents of our e-mails and Google Docs, which are all stored in cyberspace, are assumed to be safe from prying eyes.

That's not a wise assumption.

I was a bit stunned when I saw an article on CNN this week about an Alaskan couple living 150 miles above the Arctic Circle. In addition to bearing far-below-zero temperatures, the Korth family is utterly isolated -- they live 60 miles from their nearest neighbor. They have lived this isolated life for 30 years.

The Korths live off the land; they hunt, fish and trap their food. But according to CNN, they aren't totally in the dark when it comes to technology; they have a satellite phone, a radio, guns, a chainsaw and a snow machine to check up on the animal traps. But living so far away from other people and primarily fending for themselves, it seems that money isn't a big part of their lives. They sustain their family by living off the land.

Can you imagine a place where you hunt and trap your own food rather than going to a grocery store or restaurant and purchasing it with a debit or credit card? Can you fathom living in a world where credit really doesn't matter? I think it's pretty incredible that this family is able to live so far removed from anyone else. How do you feel about this?

While you think about that, read on and enjoy this roundup of my favorite blog posts in the personal finance blogosphere from the past week!

Got rewards points from using your favorite NFL team's official credit card? Redeem them soon to get that Peyton Manning jersey or Dallas Cowboys helmet or they'll disappear forever.

Consider it a two-minute warning from the National Football League and Bank of America: "After August 31, 2010," the bank says on its NFL Extra Points program website, "Bank of America will no longer offer the NFL credit card program. All points must be redeemed on or before this date." Otherwise, the points will expire.

To drive home the point, NFLExtraPoints.com features a giant countdown clock just below a headline that screams "Redeem your points before the clock hits zero! Last chance to spend your points." The site also says that current NFL credit cardholders will soon receive more information on the situation.

So what's driving this? The NFL is moving its credit card business from Bank of America -- with whom its partnered for 15 years -- to British-owned Barclays Bank. According to the Associated Press, Barclays' new NFL program is set to debut in September. The NFL regular season begins September 9.

I'm pleased to announce that shopping for new fashion accessories might be a more valuable activity than you think. Companies around the world are now selling wearable ways to minimize your chances of falling victim to identity theft. From smart wallets to stealthy socks, here are a few of my favorites. Happy shopping!

The iWallet: If James Bond had a wallet, I think he would own the iWallet. This suave-looking contraption reads fingerprints and is unlocked in the same way as an iPhone. However, it won't respond to just anyone's touch. The wallet remains locked if the fingerprint does not match the owner's. Another handy feature is that the wallet links via Bluetooth to the owner's phone. An alarm will sound if the two devices are separated.

After buying the iWallet, however, you may not have much cash left to put in it. The cheapest model costs $399.

The television commercials promising college degrees or professional certificates fast are hard to miss. The smiling TV actors offer assurances of future economic security and success. But might these programs really be subprime mortgages disguised in academic regalia?

Schools like University of Phoenix, ITT Technical Institute and a host of others are part of the growing for-profit education sector that might the next industry to crash, burn and drag us all down with it, according to Steven Eisman, the investor famous for predicting the subprime mortgage crisis that set off the recession.

The glaring similarity between the subprime mortgage business and for-profit education is the issuance of loans to people who cannot repay them.