Filed under: Internet, Web services, Google, Social Software, web 2.0

A few weeks ago Google launched a new feature that makes Google Reader a bit more social. Whenever you mark an item as “Shared,” your Gmail/Google Talk contacts will be able to find that article by following a new “Friends’ shared items” link in Google Reader.

Now here’s the thing: Google Reader shared items have always been available to the public. But in order to find a shared item feed you need to enter a rather complicated string of characters in your web browser’s URL bar. The result is that you’re probably not going to find anyone’s shared items unless they give you a link. Some people have made their shared items available to the public purchase putting a link on their blog. Robert Scoble is famously nearly as proud of his “link blog,” as he is of his actual blog. But other readers assumed they’d some level of privacy and only shared items with a handful of friends.

Now that anyone you’ve ever corresponded with over Google Speak can see your shared items, you might be a bit more careful of what you share. And some people aren’t particularly pleased with that situation.

Is the new Google Reader shared items feature an invasion of privacy? We’re going to go out on a limb here and state no. If you don’t want the whole world to see your shared items, there’s an easy answer: don’t click the share button. But we have the ability to envision plenty of situations where you would want to share some stories with the whole world and other stories with just a select group of people. Or where you might want to be able to differentiate between “friends,” and family, colleagues or other people who might not find some of your shared items so amusing.

So while we don’t think Google necessarily did anything wrong by adding this feature, we don’t really understand why the feature is one size fits all. There’s no option for users to opt out of having their items shared other than to cease sharing items at all. And there’s no way to share your items with some friends, but not others.

What do you think? Is the new Google Reader friends’ shared items feature a privacy violation or just a poorly implemented attempt to make RSS reading a more social experience?

[via Scobleizer]

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Filed under: Borrowing, Cards, Debt, Entrepreneurship, Extracurriculars, Wealth

Have you racked up some serious doubt — more money than you earn in a year perhaps? Are you, like Tina Fey in Mean Girls, in a situation where the only man who calls your house is “Randy from Chase Visa”?

A piece in this weekend’s Wall Street Journal speaks about the success some people struggling to emerge from debt bondage have had with blogging about it: the accountability that comes from reporting on your ups and downs to the world and the emotional support that comes from readers.

If you’re in debt and you’re looking to blog your way out, email me at ZBissonnette@gmail.com. We’re looking for a few brave souls willing to write about their financial woes WalletPop, and what they’re doing to mend them.

Plus: We’ll pay you!

Pic from Flickr: http://www.flickr.com/photo_zoom.gne?id=2058416937&size=s

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Filed under: Debt

Fair Isaac Corp, the company that created FICO credit scores, is changing its calculations in 2008 (subscription required). The company states that the new scores will be better at predicting the likelihood of defaults on debts. They say the new system will reduce default rates by 5% to 15%.

The new credit scores, called FICO 08, will supposedly be impacted less by rare credit mistakes by consumers. But those who repeatedly make credit blunders will be treated more harshly. The scoring system will still analyze payment histories, available credit, length of credit histories, and the number of inquiries and new accounts.

Delinquencies on accounts will now be analyzed a little differently. In the past, a delinquency was a delinquency. Under the new system, major and minor delinquencies being looked at more carefully and scored accordingly. Consumers with multiple delinquencies will also be treated more harshly than those with only one or two.

Fair Isaac says that 90% of the largest banks use the FICO score in their lending process. The scores are also used by companies offering insurance, utilities, and cellphone service. The new credit scores will be put into play by spring.

Forensic accountant Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations through her company, Sequence Inc. Forensic Accounting. The Association of Certified Fraud Examiners honored Tracy as the 2007 winner of the prestigious Hubbard Award and her first book, Essentials of Corporate Fraud, will be on bookshelves in March 2008.

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Filed under: Ask WalletPop, Borrowing, Debt, Home

A friend e-mailed me with a question about a home equity loan her family is considering. They’re going through a credit union, and weighing whether to get a loan at a 15-year term, with 6.75% or Prime minus 50 bps, or a 30-year term with 7.00% or Prime minus 25 bps. “But we’ll probably be selling the house in five years!” she stated. “What should we do?”

I explained to her that when she was selling really shouldn’t weigh into this decision; the terms of the home equity loan almost certainly indicate that it will be paid off whenever the house is sold (it’s a “material change” and you can’t use the equity of a home you don’t own anymore as collateral). Mortgages, home equity loans, and home equity lines of credit are rarely carried to the 10-, 15-, 30- or 40-year term on the contracts, as most homeowners sell their houses or refinance their debt every five years or so. As long as the payments for the 15-year term could fit in her budget, I stated, she should take that option; the interest rate was lower and that’s all that really matters in the medium-term outlook.

Then she explained the uncommon terms of this credit union’s loans; the payment was calculated, not based on the term and interest rate, but based on the size of the loan. For $100,000, the payments were $1,200 a month no matter what. I did the math; on the 6.75% loan, the payoff amount would be more than $2,000 less than the 7.00% loan. Easy decision, and it’s my mantra: always pick the lowest interest rate.

There’s on caveat, of course, and that’s origination fees and other costs associated with signing the loan. In this scenario, the 15-year and 30-year loans had similar fees. But if you were to compare loans from different institutions, you’d want to add fees into your equation. If the 7.00% loan, for instance, had $2,500 less in origination fees (which would be unusual for a home equity loan like this), I would have advised my friend choose that option.

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Filed under: Debt, Home, Real Estate

You might be wondering exactly what the Fed hopes to reach with its rules change. The Fed spelled out its goals yesterday:

• “Prohibit lenders from paying mortgage brokers “yield spread premiums” that exceed the amount the consumer had concurred in advance the broker would receive. A yield spread premium is the fee paid by a lender to a broker for higher-rate loans.” My take: Prior to this new rule many brokers did not disclose how much money they were making by steering consumers to subprime loans. Consumers who could have qualified for prime loans were encouraged to take subprime mortgages so brokers could make more money.

• “Prohibit certain servicing practices, such as failing to credit a payment to a consumer’s account when the servicer receives it, failing to provide a payoff statement within a reasonable period of time, and “pyramiding” late fees.” My take: The fact that these practices weren’t stopped prior to this rule change are outrageous. I don’t know why this was allowed for so many years.

• “Prohibit a creditor or broker from coercing or encouraging an appraiser to misrepresent the value of a home.” My take: This is one of the key abuses that got so many homeowners in trouble this day. Many have homes that are worth much less than the amount due on their mortgage because of these abuses. Yes, its true that the downturn in real estate is impacting home values, but it’s this abuse that helped to fuel the real estate bubble that just burst.

• “Prohibit seven misleading or deceptive advertising practices for closed-end loans; for example, using the term “fixed” to describe a rate that’s not truly fixed. It would also require that all applicable rates or payments be disclosed in advertisements with equal prominence as advertised introductory or “teaser” rates.” My take: Again, I’m confused. I thought the current rules on truth in advertising should have stopped these abuses. Why didn’t it and why didn’t the Fed act as soon as they saw this misleading advertising?

• “Require truth-in-lending disclosures to borrowers early enough to use while shopping for a mortgage. Lenders could not charge fees until after the consumer receives the disclosures, except a fee to obtain a credit report.” My take: A change that’s been needed for a long time. You can’t compare apples to apples until you get these numbers, but too often consumers must pay application fees before they get to see these numbers and are therefore reluctant to spend even more money to get information from another lender, making shopping for the best deals more expensive.

Seeing these goals it’s no surprise Congress wants to act to take away some of the Fed’s control over consumer banking practices. Clearly the Fed sees its allegiance to the banks and will only act to protect consumers when it’s forced by public reaction to do so.

Lita Epstein has written more than 20 books including the “Complete Idiot’s Guide to Improving Your Credit Score” and “The 250 Questions You Should Ask to Avoid Foreclosure.”

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Filed under: Debt, Reduce, Reuse, Recycle, Saving

This is a great concept written about by a blogger who is working to pay down debt and free her family from financial imprisonment. She calls her blog “I’ve Paid For This Twice Already,” in honor of those credit card purchases that rack up interest month after month, resulting in many people paying twice as much for the things they purchase.

The “debt snowball” concept is promoted by Dave Ramsey, a proponent of being debt-free. That means no credit cards, no auto loans or leases, and no loans other than a modest home mortgage.

The snowball method requires you to list all your debts, either in order from lowest to highest total, or from lowest interest rate to highest interest rate. You decide how much money each month you will pay toward your debt. All accounts are paid the minimum payment, and any extra money that is to be paid on debt goes toward the debt you want to pay off first. (The one you want to pay off first will either be the one with the lowest balance or the one with the highest interest rate, depending upon the methodology you prefer.)

Suppose you decide you’ll pay $1,000 toward debt each month. You make all minimum payments, and have $300 left over. The extra $300 is then applied to the debt you want to pay off first.

Each month you continue this process of paying all minimums, but applying your extra debt paydown money to the single debt you want to pay off first. After you eliminate that one, you use all extra debt paydown money toward the next debt you’ve targeted.
The process is called snowballing because as you get rolling, you are paying more and more each month toward the targeted debt.

Now onto snowflaking. You’ve your monthly debt paydown money, but what about adding some extra to that? The blogger writing about her snowflaking experience looks for small ways each month to raise some extra money (little snowflakes) that are added to her monthly snowball.

She says she does surveys on the web, sells things on eBay, and has yard sales. I can think of a lot of other ways to make or save money, such as using coupons at the grocery store, waiting tables one night a week, or providing dog walking services.

No amount of snowflaking is too small. Something that adds $10 or $15 to your debt paydown is worth it. Each one of these little things can add up swiftly. The blogger states she has averaged about $200 extra per month toward paying her debts.

It’s not a new concept, but it’s a great idea with a cute name that fits in well with the debt snowball concept.

Forensic accountant Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations through her company, Sequence Inc. Forensic Record-keeping. The Association of Certified Fraud Examiners honored Tracy as the 2007 winner of the prestigious Hubbard Award and her first book, Essentials of Corporate Fraud, will be on bookshelves in March 2008.

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Filed under: Debt, Home

In a day and age in which we should be hoping for less government involvement in our lives, rather than more, here come the feds trying to protect home buyers from themselves.

It seems that many are under the impression that the “subprime mortgage crisis” is largely due to predatory lending. That’s, somehow mortgage lenders are twisting the arms of consumers and getting them to purchase too-big houses on too-little budgets.

Today the Federal Reserve will try to protect home buyers from predatory lenders. Although the proposed rules are designed to protect those in the subprime markets, it would apply to all loans made by all mortgage lenders.

Potential features of the rule include restrictions against penalties for subprime borrowers who pay off their loans early, requiring lenders to make buyers escrow money for taxes and insurance, barring or limiting “stated income” loans which don’t require borrowers to prove how much money they make, and creating new standards for deciding how huge of a mortgage a consumer is eligible for.

I contend that homeowners in mortgage trouble were either irresponsible or were taking a gamble that they could afford their mortgages once their interest rates went up. I don’t think these new rules are necessarily bad in and of themselves, but I do think that home buyers need to own up to their (big) part in this mess. They need to be responsible with their money, and shouldn’t rely on the government to protect them from themselves.

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Filed under: Borrowing, Debt

Most of us will, as we grow up, at some point be hit up for a loan by a friend. Most of us agonize over the decision, but there’s no reason you should. To prepare you against that day, consider this list of ten reasons you shouldn’t loan money to your friend.

1. Your impression of your friend will forever after be colored by the memory of that loan, whether or not it was repaid promptly. When he walks into the room, some part of you’ll always hear a giant sucking sound.
2. There are no terms for such a loan that’ll not feel either miserly or foolishly generous. Each friend views himself as a sub-prime candidate.
3. You will lose confidence that your friendship is based on common regard, and start to wonder if his bonhomie is that of a vehicle salesman.
4. Your friend will forever be looking for a way to repay the favor or,
5. failing that, will come to resent you for the debt of that favor.
6. You will become an enabler of her profligate ways, sharing responsibility for any self-destructive choices she makes with your money. Yes, you helped pay for the Harley she wrapped around a telephone pole.
7. You’ll learn something about your friend you would be superior off not knowing. He’s a QVC junkie?
8. Every time you pass on buying something because you can’t afford it, you’ll think of the money you loaned to your friend.
9. People drift apart as their natures diverge, but the bond of the loan will keep you tied together like a bad marriage.
10. Other friends will also start to view you as a lender of last resort.

Of course, there are many offsetting reasons to go ahead and make the loan. But you don’t need any help with that decision, right?

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Filed under: Borrowing, Debt, Home, Real Estate, Saving, Transportation

People frequently ask me should I pay down my mortgage or invest the money instead? When you look at this question as purely a decision about the amount of money you can build in a long-term portfolio, the answer is simple . Based on current mortgage interest rates of 6% to 6.5% for a 30-year loan (as long as you have a good credit rating), investing the money in a stock growth portfolio that will net you about 8.25% after taxes (I’m assuming an 11% annual return and a 25% tax bracket) is the ideal bet.

Here’s how you can compare apples to apples. Suppose you can get a 30-year, $200,000 mortgage loan at 6.25% and a 15-year, $200,000 mortgage loan at 6%. You’ll usually find a lower interest rate on shorter-term mortgages. For the 30-year mortgage you’ll pay $1,231.43 per month for principal and interest. During the 30-year period you will pay a total of $243,316.38 in interest. For the 15-year mortgage, you’ll pay $1,687.71 in principal and interest. During the 15-year period you’ll pay $103,788.46 in interest. Yes that’s a large interest savings of $139,527.92. But, there’s an opportunity cost for saving that interest.

Suppose instead of choosing the 15-year mortgage, you choose the 30-year mortgage and save the payment difference in a stock growth portfolio that’ll net you about 8.25% after taxes. The payment for the 30 mortgage is $456.28 less than the payment for the 15-year mortgage. Investing $456.28 per month for 30 years into your stock portfolio would grow to $698,552.72. So as long as you can be disciplined enough to actually make that investment and manage it appropriately, it makes more sense to select the 30-year mortgage.

You can select to payoff the 15-year mortgage and then put the entire payment in a investment account. But, even if you do that and then invest the full $1,687.71 payment for 15 years in an 8.25% investment after taxes, your portfolio would be almost $100,000 less - $603,120.78.

But, if you are closer to retirement and want to enter retirement without mortgage debt, then paying down the mortgage rather than investing makes more sense. Since retirement income is usually a fixed amount, while living costs continue to increase, such as health care, fuel, etc., often it’s best to enter retirement without any significant debt.

Lita Epstein has written more than 20 books including the “Complete Idiot’s Guide to Improving Your Credit Score.”

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Filed under: Budgets, Debt, Retire, Saving

You’ll find lots of personal finance information on the internet, but what can you truly trust? I’ve my favorites that I check out regularly. You can trust them and you’ll get good, solid financial education and advice.

If you’re comfortable managing your finances online, rather than deal with the hassles of downloading your financial data into a money program on your computer, a good safe website is Yodlee Money Center and it’s free to use. The initial set up can be a bear, but once you’ve gotten through the process of getting access to all your financial stuff - bank accounts, credit cards, reward programs, loans, investment accounts and so, you’re ability to manage your financial picture will be greatly enhanced. Yodlee manages the on the web services for many banks, so the security is tight.

You can get a quick view of your net worth. You can manage your bill payment. You can get an automatic monthly calendar of bills due. You can get alerts for fraud protection, budget tracking, late payment avoidance and low balance warnings. You can categorize all your expenditures and get clear reports of your spending.

Once you’ve got your finances in order, you probably want to find websites where you can get good solid personal finance education and advice to improve your financial picture. Well, of course, stop by Wallet Pop regularly, but other spots that you should frequent include:

SmartMoney Personal Finance - SmartMoney University is by far the best personal finance education spot on the internet. You can find excellent on the internet courses on just about any personal finance and basic investing topic. In addition to SmartMoney University you’ll find in-depth articles on retirement options, education savings options, college planning, debt management, health care, insurance, real estate and taxes.

Kiplinger’s.com is one of the most respected websites for personal finance. You’ll find a wealth of excellent articles as well as tools and calculators. Kiplinger’s basics section is a great place to begin to learn about almost any money issue.

Morningstar Personal Finance is an unknown jewel. Many people think of Morningstar as the place to go for information on mutual funds, but there’s a lot more for you to explore. You’ll find information on retirement investment options, education investment options, annuities, portfolio planning, mortgages, refinancing, stock options, tax tips and a lot more. So check it out.

Lita Epstein has written more than 20 books including the “Pocket Idiot’s Guide to Investing in Mutual Funds” and the Complete Idiot’s Guide to Improving Your Credit Score.

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