Thursday, September 24, 2009

States with Lowest and Highest Debt

According to financial scorecard published by CFED, the honor of having lowest credit card debt goes to Iowa, where average credit card debt is around $2,100. Iowa is followed closely by Mississippi, North Dakota, and South Dakota with the credit card debt just one or two hundred dollars more on average. Alaska has the highest credit card debt of $4,755 on average. The next states with the highest debt are Arizona and Nevada with around $3500 of credit card debt. The difference between highest credit card debt collector, Alaska, and second highest debt collector Arizona is more than $1000 (or roughly one quarter). The credit card debt included all debt from credit cards, private label cards and lines of credit. The detail ranking of credit card debt is given here.

The next category of debt, installment debt, paid in fixed monthly installments until the total amount is paid off such as vehicle loans and student loans. Mortgage debt was not included in the calculation. Wyoming tops the list of state with highest median installment debt around 18,000 closely followed by Alaska (again), and District of Columbia. Michigan has lowest amount of installment debt at around 12,000 followed by Wisconsin and Kentucky around $13,000. The installment debt ranking of state can be found here.

Surprisingly Alaska has lowest consumer bankruptcy filing with 1 in 1000 closely followed by Hawaii, and District of Columbia, Vermont, Wyoming, and South Dakota. The highest bankruptcy filing is in Tennessee where more than 6 in 1000 people file bankruptcy. It is followed by Alabama and Georgia with 5 in 1000 people fling for bankruptcy. 

Image. American Eagle Platinum Uncirculated $100 Coin (Source U.S. Mint)

Wednesday, September 23, 2009

Financial Scorecard of the United States

CFED publishes assets and opportunity scorecard with comprehensive outlook at wealth, poverty and the financial security in the 50 states and the District of Columbia at CFED (formally Corporation for Enterprise Development), is a think and action tank dealing with economic development of communities across the United States with goal of expanding economic opportunity.
The scorecard presents the results in five main economic issues; Financial Assets & Income, Businesses & Jobs, Housing & Homeownership, Health Care Education, Community Investment & Accountability Policies. Each category has between nine and fifteen different outcome measures data.
All states are ranked in every measure with most desirable outcome ranked 1st and the least desirable is ranked 51st. A separate summary for each individual state can also be viewed with an overall scorecard. For example, District of Columbia gets a B from CFED. The detail report can be found here

I hope to hear from you on how your state is ranked and do you see the numbers accurately reflects the economic outlook on your main street.
Image: Screen captured from CFED's website.

Tuesday, September 22, 2009

Impulsive Behavior Linked to Poor Financial Decisions

Impulsive behavior such as infidelity, smoking, and obesity is found to be connected with poor financial choice. The study was conducted by Dr Stian Reimers of Department of Psychology, University College London and is published in upcoming December 2009 issue of Personality and Individual Differences

More than 42,000 survey participants from U.K. were asked if they preferred £45 after three days or £70 after three months (i.e., 267% APR), and asked various question related to impulsive behavior as part of BBC survey . The analysis concluded that there was a strong preference for immediate lower financial gratification (£45) over long-term higher financial reward (£70) with self-reported impulsive behaviors. The immediate financial gratification at cost of higher financial reward can be interpreted as lower saving and/or tendency for high debt. There was also a clear preference for higher future payment with increase of income and age. Early sexual activity, infidelity, smoking, drug use, and higher BMI (obesity) also indicated preference for sooner financial gratification. These findings suggest that bad financial choices such as debt accumulation and lower savings are just another form of impulsive behavior.

The Adobe Acrobat reprint of article can be found at,

Photo. My very impulsive choice of dessert after a full meal. 

Wednesday, September 16, 2009

Print Newspaper Subscription is Dead - Unprofitable & Not Environmentally Friendly

The print subscription of the New York Times cost $14.80 per week or $769.60 per year. Why would I pay nearly $800 for something that I can legally get for free online? Printing multiple unread pages of paper with ink and driving throughout the neighborhood to distribute it everyday cannot be environmentally friendly (even you recycle). I hate to say this but print newspaper subscription is dead. I don’t know anyone under 30 who has regular (weekend subscription not counted) newspaper subscription for a whole year (trial offers not counted). If you still have newspaper subscription, you should cancel it. The production and distribution cost of newspaper can be slashed by using online delivery with smart targeted ads. Yes, I don’t mind newspapers collecting information on me in exchange of information on the world. The reader’s preference for types articles, local information, and content of article can generate pretty profitable ads. On top of that the newspapers still can happily charge for archives etc.
PS. I believe in paying writers/journalist well. However, they need to get alternative source of income from their fame. For example, a long term writers can get partial-paid leave of absence (sabbatical) to work on a book (of course with shared profits with the newpaper). 

Tuesday, September 15, 2009

Quicken and Mint

This review was written last weekend prior to announcement that would be acquired by Intuit (Quicken) .
I have been aware of Quicken through its software and briefly used it in 2001. Recently I used Quicken Online to reveal guts of my finances and to get accurate figure on how deep my rabbit hole (debt) went.
I signed up for right after I signed up for Quicken Online. I found both of them very similar and useful. Identical categories for “Trend”, “Transaction”, and “Planning” (“Goal”) exist in both. Mint also has additional categories for “Investment”, and “Ways to Save” (aka targeted advertisement). It is difficult to compare the two because both have similar navigation and tools and only subtle differences. Some tools are more user friendly in one versus another. For example, Quicken lets you select date range and Mint displays APR of your card prominently.  Mint's design is slightly more user friendly and it also sends more pertinent email reminders. On the other hand, Quicken Online offers a possibility of easily upgrading to a more powerful software package. My suggestion is to use both since they are free.

Sunday, September 13, 2009

Debt and Procrastination

How many times have you paid extra money because you procrastinated paying your bills or forgot to cancel a service on time? Procrastination in essence is deferring the work for future time. Whereas, debt by definition accumulates more interest and penalty fee with the further deferment. Thus, procrastination is very unprofitable for you.
Here are few ways to beat procrastination for better financial health.
  • Immediate Action. If certain items take less than 5 minutes to do, you should just do it. Since it’s not worth the time to schedule, it will either be nagging you or you will forget it. So, for minor items go ahead and do it, nobody is too busy to not have 5 minutes.
  • Automate. Setup automatic payments for all your bills. It takes usually few minutes to setup the payment and information you need is usually in your personal check. Automatically deposit of all your income (if possible) or develop a habit of depositing it on a same day (there are 24 hour ATMs).
  • Review. Every first Saturday morning of the month review your accounts for 1 to 2 hours. Make sure to setup automatic reminder in application such as phone, email to remind you of review. The review should include; paying extra payment on your debt than you scheduled, calling customer service to renegotiate term, fee or interest, canceling any unnecessary subscription.

Friday, September 11, 2009

Unscientific Inquiry on Accuracy of Credit Karma's Credit Score

Credit Karma ( provides a free no-hassle credit score without the usual 30 days free bait followed by extravagant automatic enrollment. Instead, it recuperates its costs with targeted advertising offers based on your credit history.
I don’t oppose automated targeted ads. We are already bombarded with many of them unknowingly and often they provide better matching offers. I checked my Credit Karma's scores a month ago but had an uneasy reservation when I learned that Credit karma provides its own “proprietary credit score” on scale of 300 to 850 (same scale as FICO Score of Equifax).
All of us who have done a credit score check from all 3 credit bureaus know that the credit scores differ by a few points. Credit scores are slightly different because each provider uses somewhat different algorithms. However, all credit scores are calculated from payment history (~35% weight), credit utilization (i.e. how much balance you have on card, ~30%), length of credit history (~10%), types of credit, and recent inquiry (high multiple credit inquiries are negative, ~10%).
In order to find the accuracy of credit scores, I briefly subscribed a trial offer (and canceled same day) and pulled credit scores from all 3 credit bureaus. In comparison to my Credit Karma scores, credit score differ as follows (difference in parenthesis); Transunion (0 points), Experian (+17),and Equifax or FICO (+7). The low difference in Transunion score maybe because Credit karma utilizes Transunion's service to calculated its scores. As a safe guard I also asked my cousin M to check his scores. He found his Experian score was 12 points lower than Credit Karma’s score.
In conclusion to my little unscientific experiment, Credit Karma’s credit scores are reliable. It gives free tools. There is no need for not signing up for the service since it’s free. I would love to hear about your own Credit Karma's experiment.

Photo. Screen Shot

Wednesday, September 9, 2009

Using What You Got... Foodwise

Every time I go grocery shopping, I buy two philosophically different foods. One is easy ready-to-eat (at most requiring reheating by microwave) and other raw food such as canned, frozen, and fresh ingredients that needs some preparation. The ready-to-eat food is meant to be for near emergency when I don't feel like cooking and raw food is meant for every other occasion.
As week rolls by, I forget about raw food that needs any more preparation than trip to microwave. As a result, the fresh vegetables get thrown out, canned food remain piling up in pantry and frozen vegetables move to back of the freezer, while easy microwavable delights keep disappearing. The ready-to-eat food is easy and at best has a tolerable flavor but usually has a high fat and/or salt content. The raw food would be perhaps prepared in a healthy way (I can’t see adding 2 sticks of butter and eating it myself), more customizable to my taste buds and cheaper. However, procrastination takes its toll and I keep on buying easy microwavable delights at an outrageous price (gotta pay for a shinny box).
So what should I do to eat healthy in low budget? I have decided to not buy any grocery for at least a month or whenever my pantry and freezer is empty. I promise to update you if I can survive using what I got.

Photo. Farmer's Market at Arlington, VA

My Debt Roundup - September 2009

In 49 days, I have decreased my debt by $1,454 from $27,619 (July 22) to $26,165 today (Sept 9). It means that I am paying more than $30 each day towards my debt payment. So, where am I cutting cost? One thing; I am religiously bringing lunch from home. A nice side effect of this is another bodily loss - loss of 5 pounds or so.

PS. I know that I calculated my debt in 49 days. A more obvious approach would to do it monthly. Herein, I promise to show off my progress or share my failure at the beginning of every month by showing my current debt after I have paid my rent, which is my largest monthly expense.

Monday, September 7, 2009

Federal Trade Commission (FTC) Guide on Debt for Consumer

Federal Trade Commission (FTC) Facts for consumer on Debt
Get free government booklets (Acrobat PDF or HTML) with information for consumer on debt. Examples on topic include; consumer right on credit, acceptable debt collection practice, information on filing bankruptcy, consumer alert, and other helpful personal finance topic  related to debt.

Photo. FTC Website's Screen Shot

Tuesday, September 1, 2009

Good debt vs. Bad debt (Does good debt exist?)

A few years back two nameless friends were contemplating either to buy a condo or a flat screen TV. The housing supporter suggested buying a condo instead of renting. Other friend, instead wanted to get a flat screen TV to watch Sunday football at home (high definition rocks). The housing friend explained that there are “good debts” and “bad debts”. Even CNNMoney’s Money 101 Lesson (recommended) has a chapter on “good debt” and “bad debt”.CNN Monney defines good debt as anything “you need but can't afford to pay for up front without wiping out cash reserves or liquidating all your investments.” and bad debt as something “you don't need and can't afford.”
Three years later and after collapse of housing bubble, the friend who bought the house is in substantial debt and the friend who bought reasonable 32 inch LCD TV has saved more than $1000 dollar in bar tab.
So there is no good debt or bad debt. All debt are potentially bad and all investments are potentially rewarding (note: with risk).
Thus, I would redefine the two categories into “investment debt” and “avoidable debt”. The “investment debt” are unavoidable within pragmatic terms, taken after exhausting all the reasonable alternatives and after thorough risk assessment. This “investment debt” are investment on higher education, reasonable house for raising a family, loan for reliable and affordable vehicles to commute to work (in lack of good public transportation) etc.  And there are those “avoidable debts” which are incurred for reasons that can be avoided, or have practical alternatives or which can be abstained from. This “avoidable debt” include; credit card debt for expensive vacation, loan for designer wear and layaway for the flat screen 60 inch LED TV (you can really live with 32 inch LCD!). 

Does Applecare really care?

I bought an additional year Applecare warranty for my iphone a few weeks after its first birthday on second week of September 2008. Well! Apple guaranteed to protect my iphone for “an additional year” for low price (being sarcastic here!) of  $72.97 (excluding accidental or intentional damage). For nearly a year, I didn’t really use Applecare. Now, when I wanted to get my headphone replaced before my Applecare expires, the Apple says my warranty has already expired. So what happened? I realize Applecare considers 1 additional year starting right after your initial warranty finishes NOT the day you buy the warranty.
Let me make it clear, let’s say if your Apple product’s warranty ends on September 1, 2009 and you buy Applecare for 1 additional year on January 1, 2010.  When will the warranty expire? September 1 2010, NOT January 1, 2011. I consider that to be a deceptive practice at best even if it is legal (power of almighty fine print).
So, what did I do? I called Apple and politely yet firmly voiced my complaint and disbelief at this deceptive Applecare practice. After 45 minutes of complaining, they decide to give me a headphone. Apple customer service was good and polite, but is Applecare worthy of its price? 
Photo. Near The Market Common, Clarendon, Arlington VA