Thursday, June 21, 2012



Credit Scores have become more important in the last few years. Increasingly, companies rely upon them for new roles:

Car Insurance: What does good credit have to do with safe driving? It is probably “risk-aversion.” Those with poor credit scores are thought of as being risky for loans. It may well be that they constitute riskier drivers as well.
Getting Hired: It seems oddly backward at first. If you have poor credit because you are out of money, you might be the hardest working candidate that could be hired. But, chances are, a poor credit score might just keep you from getting a call back for that second interview. Employers who use this information will get your permission to check your credit during the interview process.
Renting: You already know that credit scores affect your ability to get a home loan, but harmful information might also tank your rental application on that great apartment you wanted.
Credit Decisions: Instant decisions can be made with in store promotions and credit cards, as well as other kinds of loans.

There are only five elements of the “FICO” score, and surprisingly, the amount of money you have in the bank is NOT one of them! Seriously, you could have a basement full of gold, ten million in the bank and own most of Poplar Avenue and still not be approved for $1,000 store credit card at Sears!

Here, in order, are the magic five factors:
1.  History of Your Payments: A full 35% of your score is determined by whether you make regular and timely payments.
2. Debt Portion Used: 30% of the score has to do with what part of open credit you have that you use. If you only use about a quarter or less of all your available credit, you are understandably seen as a good risk.
Alternatively, if you are maxed-out consistently, you are a much riskier bet, and get a lower score.
3. Years of Credit History: 15% of your score is determined by the length of time that your accounts have been open and used. Thus, even if you have never missed a payment or been late, you cannot have an ideal credit score until you have had credit for several years.
4. New Credit Opened: 10% of a total credit score is subject to recently opened credit. It makes one appear less stable to run up a lot of debt in a short time. (I guess that would hurt our government’s score, huh?)
5. Credit Mixture:  The last 10% considers the multiple types of debt you use.  For instance, having a house note and credit card will count much more than just a card.
In summary, reliable long-term debt-users get good scores. However, it should be pointed out that a good score means you have probably paid bucket-loads of interest at some point.  For instance, on a 30-year mortgage, more monthly interest than principal is paid till around year 19 in most cases.

If you are a great credit risk with a high score, you can likely be relied upon to pay lots more interest over time.

If you want to see your credit reports for free, you are entitled to one from each bureau every 12 months. However, the scores themselves are not free. But, be careful, there is only one government-approved site to use. Do not fall for others that claim to be “Free.” The official free site is 
But, be careful. As we learn in Proverbs 22:7, “The rich rule over the poor, and the borrower is servant to the lender.”

Tuesday, June 19, 2012

NEWEST SCAM: Renters Beware

Watch Out for Fake Rentals

There is a new scam, and even the prudent may fall for this one.

How does it work? You need a place to rent. Maybe your home has sold, or your transfer came through and you need a nice rental home fast. Craig's List has a perfect place at an excellent price. When you email the fellow, it sounds perfect. The photos are great. Good neighborhood. Super deal. As a matter of fact, he says you can lock it down if you will just wire the application fee, security deposit and first month's rent.

Your bank is happy to wire the money and you are tickled to send it.

Unfortunately, that is usually the last you hear from anyone. You are so upset, you drive to the home address to find a family who have rented there for three months, and are not ready to move. When you finally track down the real owner, it is not the guy you have been emailing or wiring $2,000.00 to.

You’ve been conned.

These fellows simply copy real rental listings—complete with photos—and then put themselves as the contact information and re-list them. Some just create listings out of thin air.
Either way, they have your money. By the way you still need to spend more to get an actual rental home.

How can you protect yourself from scams like these and others?

1. Don’t get greedy.  If anything is too good to be true, it usually is.

2. Don’t get in a hurry. Think about it. Every foolish decision you have ever made was probably made in a big hurry.

Online resources like trustee’s offices and appraisal sites can show the actual owner’s name. Have a local friend drive to the house and see if it is even vacant.

Rental applications are easy pickings for identity theft. While you fight that battle, your credit will be so ruined for a while it will be difficult to get approved at a legitimate place.

Generally, if moving to a new area, I would rent a monthly room at a Resident’s Inn or long-term suites till I knew the area better. That gives you time to make a better, informed decision and to talk to an owner in person, inside the property.

If you are not greedy and not in a hurry, thieves will often just give up on you and rip off the next guy.

Don’t be that guy.

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Saturday, June 16, 2012

Why Timeshares Are Bad Investments

Even though I focus on Injury Law, I am often asked about consumer legal matters, especially when speaking to churches and community groups.

On subject that comes up occasionally are timeshares.

Those yearly maintenance fees are not forefront in the consumer's mind at purchase. I have sat through some presentations, and I understand why it can seem like a good idea at first. They ask you questions like this:

1. Do you want to make vacationing a priority for your family? (Of course, who wants to be "Bad Dad.")

2. Have you enjoyed your complimentary (or greatly reduced) stay here the "Almost Water View, But Close Enough Resort and Spa?" (Yes.)

3. Do you plan to vacation in the future? (Beats working. See answer to One, above).

4. Is it usually better to own or to rent? (There is a trick here, but most say "own" right off. Own stifles flexibility. They say you can trade points and so forth, but who needs more bureaucracy in their life? If I rent, I can leave or change on a moments' notice.)

5. Do you understand that you will receive a "deed to the property" that can pass down in your will to your children?  (You bought time, that invisible, ethereal thing, not land. Besides, you can leave a three-legged spotted hamster to your children in your will, but that does not make it a good investment.)

6. So would you like to buy one week or two? You know we are running a special --today only! (Hurry!!)

Look, you may use and even enjoy a timeshare, but financially you are very unlikely to come out ahead. If you want one, you can research them online.  "No, wait! This sale is only good for today!" will echo in your ears. The representative will not let you research at all-- you agreed to 90 minutes of rapt attention and she will take every drop and go in for the close. If she can't do it, she'll get one of the slick, useless-looking guys with the great tan to "explain it to you so you can understand it better."

Escaping a timeshare is a feat worthy of Houdini and is almost always done at a loss, especially if you total up the maintenance fees and the (not really mentioned occasional "special assessment fees") paid out, along with the weeks you could not use it and gave it your brother in law for free!

50% off or more is what you can save by buying after market, but also what you will lose when you sell yours. You could always rent one, though. Most resorts have people who would love for you to rent their unit for a week just to cut losses.

Financing is the selling of money to impatient people. The earlier in life that you understand that most money is made by selling not stuff--but money itself-- the more successful you are likely to be. GM sells cars only so they can sell you money (financing).

You cannot even write off the interest like on a home mortgage. Not like that idea is really good, either. Even if you are in the highest tax bracket at 35%, for every dollar you give a bank in interest (profit), you get .35 cents back on an interest deduction. Heck, I will trade you .35 cents for every dollar you have right now! Bring your friends! (If your CPA recommends buying a house only for the tax deduction, you might want to rethink your advisor's advice.)

In short, I am not mad at you if you bought, or still go out and buy a time share. And, you can be a pretty generous guy when you loan it out to people.

But, just understand, that it is an attempt at a luxury, not a good investment.

Wednesday, June 13, 2012

A Lawyer Looks at Online Banking

Still Writing Out Checks By Hand?

Old-fashioned check-writing is quickly going the way of the vinyl record and the corded telephone.
Online banking and automatic payments have quietly reduced the use of hand written checks to the point of actually contributing to reductions at the gargantuan U.S. Post Office.

Online bill payment has some definite advantages:

1. No need to order expensive checks.
2. Never run out of checks.
3. No need to stand in line to buy postage.
4. No need to keep envelopes nearby.
5. Never run out of stamps.
6. Save .45 cents on each bill by not using postage.
7. Less paper used means less environmental impacts.
8. If your paper bill gets lost, automatic payments still occur.
9. No need to pay up bills ahead when planning to travel.
10. Online privacy is more secure than the information on each paper check.
11. You can use a credit card or other means to earn perks, points and miles.
12. The first of the month loses its significance as the time to pay bills.

With all these advantages, why are some people still writing checks?
Usually, those born before the moon shot are a bit more dubious about technology--or anything new--for that matter.  There is a healthy skepticism of computers and that can be a well-founded concern.  Some places, like your local church, may not accept electronic payments. However, online checking will mail them a paper check and you don’t even pay the postage.

There is always a worry about online privacy. We all hear the advertisements about identity theft and leaked passwords. The good news is that you are not held liable for identity theft--or for any charges you--or an authorized party did not agree to. It can be a hassle, but identity theft is usually just that.

There are even arguments in favor of really old-fashioned cash over checks. If you go to the store to buy an $89.00 item with nothing but a $100.00 bill in your pocket, you have killed any attempt at impulse buying.

There are also arguments that we should use credit cards exclusively.  You get points, miles and perks for money you would spend anyway.  And, record keeping is much easier when tax time rolls around. However, Dave Ramsey and other experts point out that we all tend to spend much more if we are “charging” it. Additionally, the credit card companies know that, over time, you will get behind and use their profit center: interest.

In the end, I have grown to like online banking a lot.  What do you use and why? Follow, Comment & Share

Monday, June 11, 2012

Is Life Just High School All Over Again?


There is a widespread idea that life is just high school all over again.

There is even a song called “High School Never Ends” that purports to discuss this. I have not listened to the song, because it is a “pop” song and there have been virtually no “pop” song I have been able to stomach since about 1988.  (Thank God for Christian and Country music).

I think there is a point to that thought. Life seems to be more effected by who you know, even more so than what you know. But, I also think the fakeness and shallowness of high school does fade away a good bit. After all, most people over 40 have buried someone they loved, many have had a divorce, bankruptcy or a child with some disease. Infertility or cancer just seems to water down the “ohh and ahh” factor over the new car, lake house, fake tans and other juvenile pretenses.

This thought about life being like high school has been thrust upon me since receiving the invitation to my 25th high school reunion. It is not hard to find adults who appear to be in cliques that remind many of the high school “jocks” or the “cheerleaders” and so on.   Oddly, some of the “cool” folks now were not so popular back then. Some high school beauties will not be aging well. Some former jocks will now be on endless yo-yo diets trying to get back that athletic build.  Shy kids may be more outgoing.  Nerds might now be like gazillionares like Bill Gates. Who knows?

Brad Paisley is a country singer with a knack for great lyrics. In one hit song, he thinks about what he would tell himself, if he could write a letter to himself back at 17. In the aptly-titled song, “Letter to Me” he contemplates:
If I could write a letter to me
And send it back in time to myself at 17…
At the stop sign at Tomlinson and Eighth
Always stop completely don't just tap your brakes
And when you get a date with Bridgett make sure the tank is full
On second thought forget it that one turns out kinda cool
Each and every time you have a fight
Just assume you're wrong and daddy is right
And you should really thank Mrs. Bringman
She spend so much extra time
It's like she sees the diamond underneath
And she's polishing you 'til you shine
And oh you got so much going for you going right
But I know at 17 it's hard to see past Friday night
Tonight's the bonfire rally
But you're staying home instead because if you fail Algebra
Mom and dad will kill you dead
Trust me you'll squeak by and get a C
And you're still around to write this letter to me
You've got so much up ahead
You'll make new friends
You should see your kids and wife
And I'd end up saying have no fear
These are nowhere near the best years of your life
I guess I'll see you in the mirror
When you're a grown man
P.S. "go hug Aunt Rita every chance you can"
I wish you'd study Spanish
I wish you'd take a typing class
I wish you wouldn't worry, let it be
I'd say have a little faith and you'll see

This rings true to me. And I have attended a few reunions. (Some say they are only for the thin and the rich, but I went anyway). As for me, I find it rather embarrassing how few folks I actually remember.  The extremes do stand out—the ones that were particularly nice or exceptionally jerks. Everyone in the middle, I remember well, not so much. It reminds me of the old saying, “People forget what you say, but they never forget how you made them feel.”

Facebook has had an interesting effect on the reunions. On one hand, it is much easier to find and invite people than before. On the other hand, you can connect easily with those you wish to through that venue. It is not necessary to go eat rubber chicken to do so.  I keep up with many of my closer friends from high school.

But, for me, there is more to returning to El Dorado High School in Southern Arkansas. I was raised there, and it is special for me to take the kids around and bore them with stories of my childhood.  It will make me really miss my Dad, to see the house he lived in till he passed away too young.

But the highlight of the trip will no doubt be—Spudnuts.  Yes, Spudnuts. They are donuts made with potatoes. They literally melt in your mouth.  I know of no other place close by where they are made.  And my kids will not forgive me if we don’t use this excuse to go and experience that sweet delicacy.  I am investing my life in my children, not impressing folks I only vaguely recall.

Consumer Alert : Home Warranties Warning

As an injury lawyer, I seldom address consumer issues. However, if you have a home warranty, you will want to read this.

A home warranty program pays for covered repairs, and you pay a small service fee for each visit. It is usually $50-60.00. There are advantages:

1. The warranty company has a list of reputable contractors. Due to their constant business, the warranty company is in contact with contractors and they know which ones are taking care of people. That is better than just calling out of the yellow pages.

2. The warranty company is always open, and claims can be filed on line as well. This is great for landlords, who can simply let a tenant call in his problems directly and not bother the landlord to be the middle man. The tenant can also schedule a time when they can be home and alleviate that responsibility from the owner.

3. Also, most repairs are only the fee, even if they have to make multiple trips due to waiting on parts, etc.

However, having a home warranty is not without its pitfalls.

Recently, one leaking air conditioner finally gave up the ghost in a rental home I own. I was glad I had the warranty. That is, until the contractor tried to get me to pay a surprising $510.00 in addition to the $60.00 service fee!

They explained that these were for "uncovered expenses."  Here is the list:

$120.00 cleaning fee
$175.00 to redo drain pipe
$165.00 permit fee
$  50.00 disposal fee

I took issue with this. (No surprise to those who know me). I was really particularly incensed at the "permit fee." According to the local authorities, there is not--and there has never been--a permit required to simply repair a faulty air conditioner.  And $50.00 to "dispose" of something made of copper? Really? It might be worth that in just metal!

In the end, these things were not actually owed. Be aware that this is going on. Or at least it is with AHS Warranty Company.

Be advised.

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