Review: The 10 Commandments of Money by Liz Weston

The 10 Commandments of Money by Liz WestonThe 10 Commandments of Money by Liz Weston is a personal finance book that looks at ten money principles and how they’ve changed in our post-bubble economy. At the start of each chapter, Weston shares the “old-school” mantra, follow by the “bubble economy” mantra, and shares with us the new rules. The chapter then launches into a personal finance principle, she calls them commandments, that I consider essential in a good personal finance system. The key insight is that for each commandment, the new rules represent a more efficient and effective way to implement the old rules. I think this will be clearer when we look at an example later on.

Quick disclaimer: I’m friends with Liz Weston so please keep that in mind when you read my review. Heck, if you look on page 13, she mentions Bargaineering as one of her favorite sites… so just know I’m biased because she’s awesome. 🙂

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Credit Card Diversification

Thick stack of credit cardsIn a recent episode of the Personal Finance Hour, JD and I had the great pleasure of interviewing Liz Pulliam Weston about credit and credit scores. We talked about a lot of thing but one subject I wanted to repeat was that of credit card diversification.

Credit card diversification means you should have multiple cards from multiple issuers so that if something “bad” were to happen at one, you aren’t significantly affected. I have several credit cards for cashback reasons and they, by luck, happen to be from several issuers. I have an AMEX TrueEarnings, a Citi mtvU card, and several others I use infrequently. Why should you have several?

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 Personal Finance 

Liz Pulliam Weston on the Personal Finance Hour

Please join us Monday night (6PM Eastern, 3PM Pacific) on the Personal Finance Hour as JD and I discuss your credit history and credit score with none other than Liz Pulliam Weston! Liz Weston is the most-read personal finance columnist on the Internet according to Nielsen/Netratings and has written several credit and debt related books, so we’re very happy to have her on the program. We’ll talk about everything from the importance of checking your history to the various components that make up your credit score.

At 6PM Eastern, 3PM Pacific, the show will be broadcast online at this page (there’s also a chat room on that page where lots of listeners chat with one another, I’ve heard it’s a fun time!). You can also listen to the show on your telephone by calling calling (347) 327-9144. If you want to get on the air, hit “1” and we’ll get the notification and get you try to get to you as soon as we can.

If you would like to ask a question, you have three options. First, you can leave it as a comment here and I’ll try to ask Liz during the program. Or, you can call in to get on the air or leave the question in the show’s chat room. We hope you join us with this great opportunity to chat with Liz!



Credit Score Q&A with Liz Pulliam Weston

Liz Pulliam Weston is the most-read personal finance columnist on the Internet, according to Nielsen/NetRatings, and last week I had the opportunity to ask her a few credit score related questions because she has a great new book out, Your Credit Score: Your Money and What’s at Stake; How to Improve the 3-Digit Number that Shapes Your Financial Future. Liz was very gracious with her time, giving very detailed answers to five questions you’ll want to know the answers to.

I asked her about how she became interested in credit scores, how the importance of your score has changed in the last year, what you can do to stop companies from closing your lines of credit, what is the most damaging myth about credit scores, and what are some things you can do right now to help improve your credit. You’ll want to read the answers!

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Your Credit Score by Liz Pulliam Weston

I’ve always been a big fan of Liz Pulliam Weston, not because she’s taken the time to answer several reader questions about simplifying your finances in the past, but because she’s so good at taking complex personal finance topics and translating it into terms that ordinary people like us can understand. We live in an imploding world where financial alchemists are turning sub-prime adjustable rate mortgages into solid gold rated bonds, it’s refreshing to know that at least one of the anointed personal finance experts is able to talk to us like regular people. And that’s exactly what Liz Weston has done in her latest book about a three digit number that has the potential to “shape your financial future.”

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 Personal Finance 

Simplifying Your Finances Interview with Liz Weston

I had the fantastic opportunity to email interview Liz Pulliam Weston, a personal finance columnist for MSN Money as well as the author of several books including Easy Money: How to Simplify Your Finances and Get What You Want out of Life and Your Credit Score: How to Fix, Improve, and Protect the 3-Digit Number that Shapes Your Financial Future. I’m going to be getting a review copy from her publicist after we get back from our honeymoon but I wanted to ask Liz a few questions about simplifying our finances and she was happy to oblige!

1. I recently got married and discussed how we were going to try to simplify our finances, consolidating accounts and reducing the number of mailers we received each month, did you have any tips or advice for us on how to best do this?

First of all, congratulations!! Not only are you embarking on a wonderful journey, but it’s bound to provide lots of great fodder for your blog.

My best advice with trying to combine married finances is to ease into it and figure out what works for you. I’ve noticed people have VERY strong opinions about what you SHOULD do, but the only thing that matters is what works for you and your spouse.

Also, what works for you now might not work in a few years, and that’s okay, since people’s needs evolve.

What’s worked for my husband and I is to have one joint account where our paychecks/income streams are deposited and from which the bills are paid. But we also have “no questions asked” money—an “allowance” that we’re allowed to spend whatever way we please. Will keeps his in a separate bank account—the money is transferred there automatically each week. I take mine out of the joint account.

As I mentioned in the book, technology makes it pretty easy to move money around in accounts, so you don’t necessarily have to combine everything at one bank.

I’m NOT a fan, however, of hidden accounts—credit cards or bank accounts that are kept secret from the other person. I think the accounts themselves should be transparent and available for both parties to see.

If both of you have good credit, then getting a joint credit card or two for household expenses is a good idea (or you can add each other as authorized users to existing cards). Just don’t close old accounts since that can hurt your credit scores.

To reduce credit card offers, sign up for the credit bureaus’ opt out service, or 888 5 OPT OUT.

2. There isn’t a single person out there who isn’t happy to simplify their lives, personal finance or otherwise, but there is always the fear that in “simplifying,” you accidentally cut something out that you never intended. Is there a proper way to approach this so that you make sure you don’t cut out something that was actually quite important?

The biggest fear is probably that you’ll toss something that you’ll need later. But remember that in the rare instance that you’re likely to need financial paperwork, it’s probably “living” somewhere that’s relatively easy to access. Your bank is required to keep your statements for at least six years; ditto your credit card company.

Just take a moment to ask yourself: “What’s the worst that could happen if I consolidate or eliminate this?” If you don’t know the answer, call a pro (like your tax preparer) or post it online in a forum where there are some financially savvy folks.

I’ll reiterate that your simplification generally shouldn’t extend to shutting down credit cards, unless your FICO scores are over 750 and you’re only closing recently-opened, low-limit accounts. Always keep your oldest and highest-limit accounts, regardless of your scores, and don’t close anything if you’re in score-improvement mode.

3. I’m hardly a Luddite but what would you recommend for people who are less trusting of the internet or less able to navigate it when it comes to simplifying finances? Bill pay works great if you trust the system and yourself to set it up properly, but people make errors.

People who monitor their accounts online tend to catch fraud faster and limit the damage compared to folks who wait for their statements to arrive in the mail. And remember that the U.S. mail is not encrypted and there’s no electronic trail showing when a payment left your account and landed in your biller’s account—in contrast to when you’re using online bill pay or other electronic payments.

As with everything else, if you’re new to this, start slowly. Pay a few bills electronically to get the hang of it. Monitor your bank account so you see what’s getting paid. Don’t put everything on automatic all at once.

4. If I only had the time to do three things to simplify my finances, what would you recommend and why?

Use online bill pay. Safer, faster and more efficient than using checks.

Aggregate your accounts. It’s easier to track your money if you can see all your accounts in one place. If you use one bank for everything, you can use its Web site; some bank sites, including Bank of America, have an account aggregation feature that lets you add accounts from other institutions. Yodlee is another account aggregation option that’s been around for awhile and that has lots of features. If you’re wary of having a Web site store your financial info, then use Money or Quicken.

Consolidate to one or two credit cards. The fewer due dates, rates and terms you have to keep track of, the better. Pay off your credit card balances as soon as possible and get in the habit of paying your cards in full every month. Then consolidate to using one or at most two cards for your spending. Try not to use more than 30% of your credit limits at any point during the month to keep your credit scores healthy.

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