Are You Worried About Online Security?

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The following is a guest post. Enjoy!

How about you all? How do you protect your identity and personal information online? How cautious are you about sharing personal information? How much do you worry about it being stolen? 


Share your experiences by commenting below!

Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

• This article is on a topic that is becoming increasingly important to all of us these days, as it really is a brave new world out there! 
• It seems like I get about 2-3 fraudulent emails per day from people pretending to be Amazon or eBay (eBay posers are especially prevalent!). Typically, these emails are wanting you to think they are from the real company so that you go to their fake website and enter your login information, which can then be stolen. It can be very tempting to fall for these scams because the fake recreations of the real websites are generally very good.
• However, there are several methods that I use to avoid falling in to these traps, as discussed below:
• 1) I never use links given in emails to log in to the company being referenced. Instead, I simply type in the normal (reliable) address in to the URL field of my browser (example – www.ebay.com). This ensures that you are going to the authentic website.
• 2) You can generally also spot a fake website by the hyper link format in the email. If the email was from the actual company, it would be in the format www.ebay.com/payments (or something along those lines). On the other hand, scammers are forced to adopt a slightly different hyperlink format. An example of this would be something along the lines of www.v23r.ebay.info/wrer/payments. The scammers typically try to hide this slightly different address by using anchor text (the text that shows up as a link in the email) that is seemingly normal, such as “Login to your eBay Account.”
• I wrote a good reference post back in June of 2010 on this site (How To Protect Yourself Against Identity Theft) detailing several easy steps one can take to protect his/her personal information online and in general life. Two of the most important steps (in my mind) that you can do are 1) use Opt Out Pre-Screen to reduce the amount of junk mail you receive and 2) place a fraud alert on your credit report. Both of these steps are simple, effective, and FREE!

***Photo courtesy of http://farm3.static.flickr.com/2381/2580085025_7f1cc8d205.jpg

Totally Money Blog Carnival – Most Expensive Weddings Edition – June 6th, 2011

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Welcome personal finance fans to the 22nd (can you believe we’re on the 22nd edition already?! I remember when Crystal started this thing!) edition of the Totally Money Blog Carnival, a weekly carnival that includes the top personal finance and money posts.

Before getting started, I wanted to congratulate FruGal and Miss Moneypenniless at TotallyMoney.com on becoming the new owners of the Carnival. It will be exciting to continue to see the Totally Money Blog Carnival grow.

In honor of June being a big wedding month (after brides and grooms graduated from college and high school in May), I figured it might be interesting to share some stats about the most wild, expensive, out-of-this-world weddings that I could find! You can read these random tidbits in red text interspersed throughout the articles.

Listed below are the top 3 articles of this week’s submissions!

Top 3 Editor’s Picks

1. Mike Piper presents It’s All One Portfolio posted at The Oblivious Investor, saying, “One of the most common investing mistakes is holding the same asset allocation in each account (IRA, 401(k), etc.), even if doing so results in higher costs, complexity, and taxes.”


These days, many of us operate our investing strategy through the use of multiple account types (401k’s, IRAs, annuities, taxable accounts, etc). This article by Mike Piper gives us a good reminder that it is most efficient and also least expensive to use the accounts to maintain one overall asset allocation. Just remember to place the different asset classes in their most tax-efficient location.

Also, an interesting side note is that Mike’s site was recently mentioned as a very high quality investing blog to read by Money Magazine. This is truly quite an honor! Congrats Mike!

2. The Saved Quarter presents Cut Your Budget: Erin posted at The Saved Quarter, saying, “See how Penny from The Saved Quarter helped Erin fit her real life into her budget, giving her ideas to be debt free and with a full emergency fund in two short years!”

Penny from The Saved Quarter has started doing a great thing by reaching out to her readers and seeing if she can help them optimize their monthly budget. In this post, one of her readers, Erin, lays out her current budget, and then Penny uses her expertise to recommend ways for Erin to cut her entertainment and food expenses so that she can pay herself first and pay off her debts quicker. Rock n’ roll Erin and Penny!

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5th Most Expensive Wedding – Chelsea Clinton and Marc Mezvinsky

This 2010 wedding cost a measly $5 million.  Key spending items were $600,000 for A/C’d tents for the guests (you can’t be sweating after all!) and an $11,000 cake. What’s funny is that one of my friends from high school had a $5,000 wedding cake and wasn’t nearly this rich.
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Listed below are the best of the rest of the submissions. Enjoy!

***Photo courtesy of http://www.lehmannmansion.com/uploads/dd/04/dd047d68df946ca2ef6b16fccf947902/from-Mary-Hill-BethMarkCar-in-Front.JPG
***Wedding stats sourced from http://www.businessinsider.com/most-expensive-weddings-2010-7#1-prince-charles-and-lady-diana-12

Debt Consolidation – The Pros and Cons

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The following is a guest post. Enjoy! 

How about you all? Have you ever used debt consolidation loans? If your debt was spiraling out of control, what method would you use to combat the problem? Did you ever consider 0% interest credit card balance transfers? 


Share your experiences by commenting below!

Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

• Great article here! One thing I’ve always wondered is if there are any qualifications (such as income level) in order to obtain a debt consolidation loan? Does any one have any experience with this?
• I think that it’s also important to point out that debt consolidation loans are not an “easy way out.” They should only be used if someone is having real trouble making the minimum payments on their credit cards each month, whilst still having enough money to live on. 
• For most people, who merely have more debt than they’d like and want to get rid of it, debt consolidation most likely is not the solution. However, what is the solution is to 1) collect your debts, 2) finalize your Debt Free Action Plan, and 3) call your credit card company to get your interest rate reduced.

***Photo courtesy of http://www.flickr.com/photos/exurban/4857586543/sizes/m/in/photostream/

Home Insurance For First-Time Buyers

• When I was going through the process of getting homeowner’s insurance for my condo last year, I never did any comparative analyses on if new vs. existing home owners paid less on home insurance. It’s an interesting question though! What’s everyone else’s take on this?
• @ Comparing Online – I definitely agree with this technique. When I purchased my homeowner’s policy, I went online to the websites of pretty much all of the major national insurance carriers (Nationwide, All State, Geico, Shelter, etc) to find out the cost of the monthly premiums. This gives you a good idea of the market price for insurance so you can know how hard or little to bargain when you are making your final decision.
• Also, I think it’s a good idea to place an automatic reminder on your calendar once a year to shop around the homeowner’s insurance market again to ensure you are getting the lowest price. Don’t feel like you have to be locked in to one policy for the entire time you live in your residence.
• @ Getting Insurance Savvy – It’s really amazing what can cause your monthly homeowner’s insurance premiums to go down. For example, having smoke detectors and a fire extinguisher can lower your cost!
• @ Amount of your deductible – I am a big believer in having a fairly large deductible for my homeowner’s insurance, and then making sure I have an adequate amount of cash in my emergency fund in order to cover the deductible. By having a high deductible, you can decrease your monthly premium payments significantly.
• Last year, when I was deciding which homeowner’s insurance policy to take, I wrote an in-depth post about the various considerations one can think about when purchasing housing insurance. You can view this post at the following link – Homeowner’s Insurance. This was a pretty long post, so I’ve tried to summarize some of the key points below:
• Homeowner’s insurance has three major components – 1) personal property coverage, 2) dwelling coverage, and 3) liability coverage. All are important factors to consider when deciding how much of an insurance policy you need.
• The best way to determine how much coverage you need is to take a written and pictorial inventory of the components of your home.
• Homeowner’s insurance covers most common “perils.” However, damage due to floods, earthquakes, and pets is not covered, unless your area is a declared a national disaster zone by The President. If it is declared a disaster area, FEMA insurance will cover you (hopefully).

When Splurging Was the CORRECT Thing To Do

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The following guest post was written by me in February of this year for Life and My Finances as part of a “Yakezie blog swap” where members of the Yakezie Personal Finance Blogging Network pair up and exchange guest postings on a common topic. The topic of this blog swap was to discuss a time that you were happy that you splurged on a purchase. I wanted to post it here as well so that you all would have a copy! Enjoy!

• Buying drinks at a bar or restaurant is a rip-off. It’s better to drink before you go out.
• Be cautious of “extras” that a travel company or hotel offers to tack on to your package once you arrive at your destination. These can add up quickly!

• Leki treking poles – $200
• Lightweight tent – $125
• Baltoro 70 Backpack – $280
• Prolite air mattress – $100
• Camping stove – $35
• Water filter – $100

Clearly, this is a significant investment of money in backpacking gear.

However, I was glad that I made the purchases because 1) I had done a significant amount of hiking and knew that backpacking was something I wanted to take up more seriously, 2) my cash flow while working at a full time engineering job would be more than my income in graduate school (which has turned out to be 67% lower than my f/t job income by the way), and 3) getting more involved with hiking would be directly in line with my Purposed Focused Financial Plan and my life values.

Financial Lessons Learned From Splurge # 2

• Large purchases are OK, as long as they are planned out in advance
• Purchases made to support your core life values are very useful.

How about you all? How often do you splurge on purchases? Are you more often glad that you did, or do you wish you could undo your actions? 


Share your experiences by commenting below!

***Photo courtesy of http://www.stationstops.com/blog/wp-content/uploads/2008/07/fotolia_8215027_xs.jpg

Valuation-Informed Indexing vs. Passive Investing – Which is Better?

Well folks, it’s been on my research topics list since January of this year, but during the past several days, I’ve finally been able to perform the detailed comparative analysis the topic deserves.

What topic is this, you’re probably asking? The topic is Valuation-Informed Indexing (or Valuation-Informed Index Fund Investing – however you want to call it). This topic/investing strategy was first introduced to me by Rob Bennett when he guest posted on the subject over at Free From Broke and has been the topic of numerous online and offline discussions in the personal finance world.

Reading Rob’s post really got me interested in this form of investing, because it is sort of an attempt to put a more actively managed role on my current investing strategy of passive investing, but without all of the emotion that normally causes the performance of active investors to suffer. More specifically, I wanted to find out two things after first hearing about Valuation-Informed Indexing. These are described below:

• Determine the exact method it uses to find out how unbiased and repeatable it is.
• Perform a long term (approximately 20 years) performance comparison between Valuation-Informed Indexing and passive investing to determine which makes you more money.
  • In this analysis, I would also want to compare risk levels (standard deviations) and attempt to optimize the Valuation-Informed Indexing method. 

So, armed with nothing but a Toshiba laptop, a “why-not” attitude, and a smile, I set off in trying to find some answers to the aforementioned goals.

Note from Jacob: I really get a lot of enjoyment out of these types of post that require putting together a spreadsheet, inputting some interest rate formulas, and analyzing large amounts of historical data. Maybe it is the scientist in me that enjoys this!

What is Valuation-Informed Indexing (VII) and How is it Different from Passive Investing?

Truthfully, it was fairly difficult to figure out the exact method that defines Valuation-Informed Index Investing and makes it different from passive investing. This is most likely due to the fact that it doesn’t yet have a wide following, as opposed to passive investing where there are shelves full of books written on the subject!

However, through study of 1) Rob Bennett’s website about Valuation-Informed Indexing (in particular, his “How To” guide) and 2) Professor Wade Pfau’s preliminary research, I was able to piece together enough information to define the VII method and construct a study.

In a general sense, Valuation-Informed Indexing involves changing your asset allocation targets in response to fluctuations in market prices. What does this mean exactly? It means that you should have a higher equity asset allocation when the market is lower and a lower equity asset allocation when the market is high.

Now, this all sounds well and good. But, the real question is “How do we actually go about doing this in a way that doesn’t introduce investor sentiment and ineffective market timing tactics?” VII has an answer to this too!

A summary of the Valuation-Informed Indexing methodology is summarized below:

• First, decide on your base asset allocation. For example, in my study, I used 60% equity / 40% fixed income securities.
• Second, use PE10 data (Current price of S&P500 divided by average inflation-adjusted earnings over the past 10 years) published by Professor Robert Shiller at Yale to change your asset allocation targets based on market fluctuations.
  • When the PE10 goes above 20, switch to 30% equity / 70% fixed income.
  • When the PE10 goes below 12, switch to 90% equity / 10% fixed income.
  • When PE10 is between 12 and 20, use your base asset allocation (60% equity / 40% fixed income, for example).

Application of this strategy is supposed to deliver superior returns at much less risk (standard deviation of returns) than a fixed asset allocation with regular rebalancing (in other words, passive investing).

Existing Findings

The only other numerical studies comparing passive investing to Valuation-Informed Indexing were conducted by Professor Wade Pfau. His preliminary findings can be found here, and the definitive, complete report, can be found at this link.

Wade’s findings reveal that VII provides more wealth for 102 of the 110 rolling 30-year periods from 1870 to 1980. However, in recent years, it appears that the out performance of VII over passive investing is becoming less and less.

As someone in my mid-20’s, the time period I was most curious about was the most recent twenty year period. Additionally, I wanted to test this period because in order for me to be convinced to give up passive investing in favor of Valuation-Informed Investing, I would need to see demonstration of its superiority in a time frame that is more relevant to me.

Lastly, over any 20 year period, it would reason to believe that random, short term fluctuations in the market should be hidden by the correct, overall, long term behavior.

Study Methodology

So, now that I’ve explained a little bit about what Valuation-Informed Indexing is in general and what existing research has been done on the subject, we can now get in to the specific investigation that I conducted.

The details of how I set up my analysis are summarized below:

·      Investment Total – For simplicity, we will assume that our investment only consists of a one-time initial purchase of $10,000. Transaction fees, fund expense ratios, and taxes will not be considered in the scope of this analysis.

• Time Period – January, 1990 to May, 2011.
• Portfolios – There will be two competing types of portfolios – 1) a Valuation-Informed Indexing portfolio, and 2) a passive investing portfolio. Various parameters within each of the models will be changed in order to analyze performance.
  • The equity portion of the portfolio will consist of shares of an S&P500 index mutual fund. Historical performance data for the S&P500 was taken from Yahoo Finance at the following link – S&P 500 Historical Prices – January, 1990 – Present at monthly intervals.
  • The fixed-income portion of the portfolio will consist of low-risk 1 year Treasury Bills. Historical yield data for 1 year Treasury Bills was taken from FederalReserve.gov Government Fixed Income Investments historical prices.
  • Both of these resources have a handy “export in Excel format” feature to facilitate quick analysis in spreadsheet format.
• Rebalancing – Rebalancing for the passive investing and VII portfolios will be done monthly (the same as what I do currently). This is different than Pfau’s analysis, which assumed annual rebalancing.
• Asset allocation changes – The passive investing portfolio will remain at the same asset allocation targets for the duration of the study. However, the asset allocation targets for the Valuation-Informed Indexing portfolio will be adjusted based on the PE10 trigger levels discussed previously.

Study Results

The complete results/details of my comparison between VII and passive investing can be found at the following Google Docs Spreadsheet – Valuation-Informed Investing vs. Passive Investing. Rows 1696 and 1697 contain the total return and standard deviation (risk level) for each portfolio.

The table below shows a summary of the portfolio returns and standard deviations of the analysis. Three passive investing portfolios were compared to three different Valuation-Informed Indexing portfolios/strategies. It’s interesting to note that from 1990-2011, the PE10 never fell to the lower trigger point level of 12.

As can be seen in the table, passive investing with monthly rebalancing resulted in total returns over the ~20 year time period of 239%, 267%, and 220%, for 60/40, 75/25, and 50/50, asset allocation splits, respectively.

For comparison, three different Valuation-Informed Indexing strategies/portfolios were employed, as described below:

Valuation-Informed Indexing Portfolio 1

• When the PE10 goes above 20, switch to 30% equity / 70% fixed income.
• When the PE10 goes below 12, switch to 90% equity / 10% fixed income.
• When PE10 is between 12 and 20, use your base asset allocation (60% equity / 40% fixed income, for example).

Using this strategy, a total return over the time period analyzed was 185% (much less than the 60/40 asset allocation passive investing portfolio).

Valuation-Informed Indexing Portfolio 2

Because the total return obtained from Portfolio 1 failed to outperform the passive investing portfolios, I decided to attempt to refine the strategy (because I really do feel that there is potential for this form of investing! We just have to find it!).

Next, I proceeded to take the average PE10 from 1990-May 2011, and saw that the average PE10 was a whopping 25.68. Since this PE10 seems to be higher than we’ve seen historically, I figured that maybe by increasing the upper trigger to 25, a higher return would be seen.

Making this change, the strategy for Portfolio 2 becomes as follows:

• When the PE10 goes above 25, switch to 30% equity / 70% fixed income.
• When the PE10 goes below 12, switch to 90% equity / 10% fixed income.
• When PE10 is between 12 and 20, use your base asset allocation (60% equity / 40% fixed income, for example).

Using this strategy resulted in a total return over the time period of 195% – higher than Portfolio 1, but still much lower than the passive portfolios.

Valuation-Informed Indexing Portfolio 3  

In a final effort to increase my returns using VII, I next tried to increase my equity exposure during “high PE10” times to 50% equity/50% fixed income (instead of 30/70 in Portfolio 1 and 2).

Making this adaptation, the strategy for Portfolio 3 becomes as follows:

• When the PE10 goes above 20, switch to 50% equity / 50% fixed income.
• When the PE10 goes below 12, switch to 90% equity / 10% fixed income.
• When PE10 is between 12 and 20, use your base asset allocation (60% equity / 40% fixed income, for example).

Using this strategy resulted in a total return over the time period of 221% – higher than Portfolio 1 and 2, but still much lower than the passive portfolios, with the exception of the 50/50 asset allocation one.

Conclusion – Passive investing outperforms Valuation-Informed Indexing in the past 20 years, but VII displays much less risk. This is consistent with the normal risk/return correlation.   

So, what can we conclude from all of these results and confusing numbers? In my opinion, we can take away several key things.

1)     While Valuation-Informed Index Investing may have outperformed passive investing in most previous historical periods, evidence of it not performing as well in recent years is enough to keep me as a passive investor, at least until VII is refined.

a.      It’s interesting to note that by using the VII methodology, an investor would have been 30% equity / 70% fixed income from January 1995 until September 2008. The investor would have taken on less risk (in the subsequent market crash of 2008-2009) by owning fewer equity shares during this “high price” time. However, he or she also almost totally missed out on the 163% total return during the ~13 year time period.

2)     Valuation-Informed Index Investing has great potential because it greatly reduces the risk to investor returns.

a.      Even though VII failed to outperform passive investing in my analysis, it also provided much less risk, as evidenced by the sharp decrease in standard deviation of the portfolio value over time.

b.     For example, VII Portfolio 1 provides a slightly lower return of 185% over the time period analyzed (compared to the passive investing portfolios). However, the portfolio also has 34%, 55%, and 21% less risk (standard deviation of portfolio value) compared to the 60/40, 75/25, and 50/50 passive portfolios, respectively.

This ability of VII to deliver sufficient (but slightly lower) returns at less risk is what I think is the real power of Valuation-Informed Indexing. I feel that with some refinements, VII can become an effective investing strategy. However, I’m not quite ready to switch over just yet…Thanks for reading!

How about you all? Have you ever tried or heard of Valuation-Informed Index Investing? What are your thoughts about its efficacy? What improvements do you think need to be made? 

Share your experiences by commenting below!

***Photo courtesy of

50,000 Total Visitors = Just Awesome!

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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Click here to enter my free giveaway for 2 copies of H&R Block At Home Premium Edition

Happy Memorial Day to everyone! In the spirit of celebrating success and taking a break on this holiday, I wanted to share something very special that happened to My Personal Finance Journey this past Saturday, May 27th, 2011.

We passed the 50,000 total visitors threshold!

This is very exciting news for all of us here at My Personal Finance Journey, even to Cheapskate Jake, who, to my surprise, hasn’t scared too many people away! Go figure!

It’s been an incredibly fun journey (pardon reference to the site name) to get to where we are today. This site started on January 15th of 2010 (almost a year and a half ago) as a way for me to share what I’ve learned about personal finance and investing and learn from other like-minded folks. I definitely had no idea when I started this site that it would be such a large part of my life and identity.

If I had to venture a guess, I’d say that I’ve spent about 1500 total hours on this blog. Big hint here: if you’re looking for a get rich quick venture, blogging probably isn’t the best for you! During this 1500 total hours, there have been 378 posts written by both myself and various guest posters (we’re not quite to the 500 post mark yet!).

When I think back on this ~1.5 year journey, there have been several accomplishments/actions in particular (other than simply writing posts) that stick out in my mind as being most significant. I’ve listed these below:

• Joining the Yakezie Personal Finance Network.
• Joining Yakezie was probably the best thing I ever did as a blogger. Not only have I gotten to meet some amazing friends, but I’ve also been able to learn many things about how to effectively run a website and organize advertising campaigns.

• Starting the Carnival of Passive Investing.
• The purpose of the Carnival of Passive Investing is to 1) highlight the various high quality posts written about avoiding investing in individual stocks each month and 2) to create a “go-to” network/community of passive investing knowledge.
• As an example of this second purpose, one of the most prolific participants in the monthly Carnival of Passive Investing is Mike from The Oblivious Investor. By increasing awareness about Mike’s posts, I want people to know that if they are interested in the passive investing methodology, following Mike’s blog would provide material appropriate to their liking.

To close, I just want to say “THANK YOU” to all my readers! This milestone (obviously) would not have been possible without you, and your continued interaction and commentary keeps me going as a blogger!

How about you all? What have been some of your favorite posts from this site in the past year? If you are a site owner, have you hit any important site milestones recently? 


Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/squeakymarmot/1019406320/sizes/z/in/photostream/

Find Out Your Credit Score For Free With CreditKarma And An Analysis of My Results

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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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The title of the infographic below is “Financial Responsibility in the United States.” I have to admit that I literally “laughed out loud” when I saw this title (please pardon the reference to emoticon abbreviations – i.e. LOL). Why did this title make me laugh, you may ask?

Simple. The concept of being financially responsible in the US seems to be becoming less and less important. Why own something when you can just buy the car or cell phone on credit, right? Therefore, maybe a better title to this graphic would have been “Financial Irresponsibility in the United States?!”

Regardless of my personal feelings on the situation, the infographic gives some important insight in to the credit scores of the US public. I’ve tried to summarize these in bulleted form below:

• The average US credit score is 692.
• A person’s credit score can range anywhere from 300 (minimum) to 850 (maximum), with higher scores indicating a higher degree of credit worthiness and that you are more dependable in paying back debts.
• A credit score of 720 is generally regarded as the minimum you want to have in order to qualify for the most favorable credit terms (think lower interest rates!)
• I admit that the national average of 692 is slightly higher than I expected it to be, stemming from the magnitude of debt problems I hear about from friends and the financial media. 

• There is a clear trend that credit scores get progressively worse, as you go further south in the United States.
• Texas, New Mexico, Nevada, and Louisiana have, on average, the lowest credit scores and the higher occurrence of personal bankruptcy filings. 
• This makes me wonder – what causes this? Is it that financial education (both in the home and in schools) is worse in the Southern states? Do people just have less money? Is cost of living more expensive?
• If any one has any theories on this, definitely chime in/comment below!

How To Find Your Credit Score Absolutely Free (no credit card information required)


If you have read my previous series on building credit history and improving your credit score, you’ll know that I am a big fan of using Annualcreditreport.com to obtain my credit report for free once per year.

However, one thing that I have been making up stupid excuses about not doing is checking my actual credit score. One of the these less-than-robust excuses was that I didn’t want to pay the $15-$30 to check my credit score through one of the three credit agencies – Transunion, Experian, or Equifax.

But, this all changed last week when I was reading a blog post from a blogger friend describing her use of CreditKarma.com to get her real time credit score absolutely for free at any time! Since it seemed to have worked for her and more importantly, be secure, I decided to give it a go!

To find out your credit score for free from CreditKarma, simply follow the easy steps below:

• Go to https://www.creditkarma.com/signup.
• Create an account and password.
• Enter your personal information (note: this does include entering your Social Security Number).
• Confirm your identity by answering some simple multiple choice questions about your past (typical questions you have to answer when requesting a credit score/report).

• Overall Credit Grade
• Overall, the report said that I was doing pretty well managing my credit, with an Overall Credit Grade of an A! Nice!
• Open Credit Card Utilization
• Since I’m not currently carrying any balances on my credit cards, I have 0% credit card utilization. I would have expected that this would be a good thing, as higher credit card utilization can present a warning sign of credit risk.
• However, for some reason, I was given a C grade in this category.
• Maybe this is because the credit companies like you to carry a little balance from month to month so they know you’re not just using them for the cash-back benefits, as I am.
• % of On-Time Payments
• As mentioned above, I have never missed a debt payment, and got an A grade in this category, with 100% on-time payments.
• Average Age of Open Credit Lines
• I scored a D grade in this category, since the average age of open credit accounts I have is 2 years. 
• In my opinion, an average age of open credit lines of 2 years is perfectly acceptable. However, I am guessing that the creditors like to see the average age be longer than this. This is something that I believe will come naturally with time.
• Total Accounts
• I scored a D grade in this category. This is most likely because I have a large number of credit card accounts that I opened only to receive the free money sign up bonus offers.
• In addition, I also only have credit card accounts. I don’t have the desired mix of mortgages, personal loans, car loans, and credit card accounts that would make this score go up. 
• Hard Credit Inquiries
• Hard credit inquiries are ones that go on your credit report whenever you apply for new credit.
• I got a C grade in this category, with a total of 5 hard inquiries in the past 2 years. 
• Derogatory Marks
• All of my debt accounts/credit cards are in good standing, so I got an A grade in this category.

Summary of My Results


So, overall, I was very satisfied with my credit score of 754. It is above average, especially for someone that is my age. I could definitely improve my score by 1) signing up for fewer free money sign up bonus offers from credit cards and 2) setting up small automatic payments on all of my credit cards each month in order to show that those accounts are active.

Does This Sound Too Good To Be True?


If you’re like me, you probably are thinking that this Credit Karma thing sounds too good to be true. However, it really is something that makes sense, if you think about how Credit Karma is making their money.

This question can be answered by one word – advertising.


Credit Karma has figured out that by offering credit scores for free, they drive an enormous amount of traffic to their site. Furthermore, because Credit Karma displays your credit score, it enables them display credit card and bank account offers to you that you are pre-qualified for. And, credit card and bank companies will pay big money for this type of “captive” audience. This is how Credit Karma makes their money! Pretty reasonable/logical if you ask me!


How about you all? What resource do you use to check your credit score? Have you ever used Credit Karma? Are there any other resources out there to get your credit score for free? 


Share your experiences by commenting below!

***Photo courtesy of http://farm4.static.flickr.com/3509/3928496281_f906248523.jpg

Tips For Buying A Foreclosed Property

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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Click here to enter my free giveaway for 2 copies of H&R Block At Home Premium Edition


The following is a guest post by editors at SmallBusinessLoansDirect.com. Enjoy!

How about you all? Have you ever bought a foreclosed property? If so, would you recommend it to others? What were the positives and negatives?


Share your experiences by commenting below!

Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

• @ 3.8 million foreclosures in 2010 – This is astounding! How many homes can there be in the US after all, considering that there is about 300 million people living here? That’s like 1-2 people out of 100 affected! Do you know anyone that had to foreclose on their home?
• @ Idea of the housing market still being under pressure in 2011 – I absolutely believe this. In my condo community, none of the units on my row have sold in the past year that I have lived here. Simply amazing! Let’s hope the market turns back around by the time I have to sell in around 2015 or so.
• @ The stereotype that all foreclosed properties are trashed – I encountered this when I was searching for a house as well. What would happen is that I would find a property listed on the MLS system, and when I reviewed it with my real estate agent, she basically, immediately advised me to avoid the property. I wonder why this is? Maybe they have had some bad experiences with clients being unhappy with the results of buying a foreclosure and just want to “play it safe?” Any ideas?

***Photo courtesy of http://farm4.static.flickr.com/3235/2539334956_87cef7e457.jpg

Simplify Your Asset Allocation and Remove The Impossible From Your Investing Strategy With Betterment.com

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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Click here to enter my free giveaway for 2 copies of H&R Block At Home Premium Edition

If you’ve stopped by my site before, you probably know that I am a proud supporter and practitioner of passive investing strategies. In fact, in January of this year, I started The Carnival of Passive Investing just for the purpose of spreading the word about this very effective style of investing.

Essentially, passive investing involves the use of different types of index ETFs and mutual funds to obtain a target asset allocation based upon your personal tolerance for risk. By applying this simple passive investing approach, we are able to actually outperform 70-80% of investing “professionals.”

So, needless to say that I am a big supporter of any new products or services that makes it easier for individual investors to get off of the foolish active investing (individual stock investing) track and in to the proven world of passive investing.

One of these services facilitating passive investing that I was recently exposed to is Betterment.com.

What Does Betterment.com Offer?

How about you all? Have you used Betterment? Are you a fan of these single solution asset allocation investments? 


Share your experiences by commenting below!