Fed Rules Make Credit Approval Harder to Come by for Stay-at-Home Spouses

Money can't buy you love, Storm Trooper. Sorry.

The Federal Reserve last year announced a new rule that requires credit card companies to evaluate personal income, rather than household income, in making credit card approval decisions. Not only did this move cause a stir among consumer interest groups, it also left many of the folks who aren’t primary household earners understandably unsure as to whether they would be able to obtain credit.

Credit scores are, simply put, a valuable commodity. Decision makers from banks to landlords to employers use these three-digit encapsulations of our fiscal responsibility to make decisions regarding suitability for loans (not to mention corresponding interest rates), jobs, and apartment rentals, just to name a few things. As a result, the difference between excellent credit and limited credit is an extremely expensive one that could create roadblocks for an individual who finds him or herself financially independent for the first time in years, as could be the case in the event of divorce or the passing of a loved one.

That is why the Fed’s new underwriting rules are so troubling to many stay-at-home spouses. Credit cards are generally considered the most attainable and efficient credit building tools, as they report information to the major credit bureaus on a monthly basis and do not require the same debt burden as a loan. However, in the aftermath of this new rule being put into effect, two things have become clear: 1) The Fed’s decision was logical and 2) It doesn’t completely shut out stay-at-home spouses from credit access.

Weight Watchers and Finances

Now THIS is an exercise I could get behind.

A few weeks ago, my wife and I started attending Weight Watchers meetings. I did this because, awesome though it may be, my long-term goals in life do not include washing myself with a rag on a stick.

To those of you who would suggest that I just eat less on my own and save the fees incurred to be a part of Weight Watchers, I would agree heartily, and then point you to how well that scenario has worked out for me in every diet I've been on since high school. This includes my own brief flirtation with the Paleo Diet a few months ago.

Also, to those of you who say that Weight Watchers is for women, I bring up the case of celebrity spokesman Sir Charles Barkley who recently lost a good deal of weight through the program. I take his involvement to mean that I will soon be pulled over for speeding and offer a ridiculous alibi. Oh wait, scratch that last bit; I forgot that he's not a role model.

And that's everything I know about Charles Barkley. Go USA 1992.

Anycrap, since its foundations in the 1960s (as seen this season on Mad Men), Weight Watchers has gone through various iterations, but the basic two ideas that it has always espoused are taking in a little bit less food than you need on a daily basis and going to regular meetings. The first pillar is pretty much standard on every diet, but the second apparently helps a lot of people to succeed (as I'm cheerfully told every meeting).

I thought about these two things, and I realized that both of them are also very helpful ways to help you succeed with money.

If you're reading this blog, you're probably not too worried about where your next meal will come from or how you're going to make rent this month. As such, you probably have an excess of money when you compare what all your monthly costs are to live and how much income you bring in. What you could do (and what a lot of people do do*) is to spend all of the money you bring in every month with no thoughts of saving money. Heck, you could take this a step further by not only spending all that you've made, but also putting extra purchases on credit.

This isn't meant to judge. Your humble narrator has ridden the credit card train to glory ruin more than once in his short life. Nevertheless, just as eating too many chicken-fried chalupas** will make your body unhealthy, spending more than you have on things that you don't need will make your financial life unhealthy. Conversely, saving on calories and saving money will make your body and wallet healthier, respectively.

On the topic of the meetings, the basic idea is to go to a public place with other people who face the same struggles that you do. From this, so the idea goes, you develop a camaraderie, and you start to hope that other people will succeed, and they start to hope that you succeed. When you combine that with the stickers they hand out for meeting your weight goals (I'm a sucker for arbitrary prizes), you find yourself positively re-affirmed when you make good choices with food.

How does this tie into your use of money? Well, in my case, this site is a public platform where I can discuss my thoughts on money, saving, and investing. While I'm not as transparent in my finances as some other bloggers (I'm uncomfortable putting that information online), just the fact that I have this website frequently makes me rethink what I want to spend my money on. For example, I've daydreamed about buying an 80-inch plasma flat screen at Costco, but, given how much money I have and the fact that I'm headed to grad school in the fall, there are so many other ways that I could better spend/save that money.

If I did make a big purchase like that, I'd probably want to share about it here. However, that purchase would be at odds with a lot of what I've written about on this site. As such, having this site keeps me accountable to person that I want to be when it comes to finances, just as Weight Watchers meetings keep me accountable to the slimmer person I hope to become.

What do you think? Has anybody else noticed the similarities between struggling with weight and struggling with money? Let me know in the comments.

*Hahaha...do do.
**I don't think this is a thing, but it sounds, alternately, awful and delicious. Awfully delicious? You be the judge.

Photo by Rennett Stowe.

On Handling Telemarketers

"Oh joy, oh rapture! A telemarketer!"

When I was first rich in spirit but poor in pocket (read: the year after I graduated college), I held a variety of part-time jobs to make ends meet. I was a part-time English teacher for a group of home-schooled high school kids. I worked at Panda Express for a while, until the manager told me that I wasn't smiling enough. I seriously considered dumpster-diving with my roommate for bottles and cans to recycle until someone pointed out to me that I probably shouldn't take personal finance/lifestyle advice from homeless people.

But the job that I liked the least was when I spent a couple of months as a telemarketer.

It was too simple to get the job; I just had to show up to a training meeting. I don't think I even interviewed with anybody, which probably should have alerted me to the fact that this job wasn't going to be pleasant. I was payed a base rate (minimum wage), but I could also get bonuses if I got a certain number of people in a single week to show up. Spoiler alert: I never made more than minimum wage.

I worked for a company that tries to set up appointments for people to get hard-sold on timeshares. Basically, if you see a car at a mall or a county fair or something, and you fill out a form to win it, what you're actually doing is giving your contact information to the company I worked for.

That brings us to step number one of handling telemarketers: don't give your personal information out if you don't want to be called.

In my company's defense, if you showed up to the timeshare presentation, you were bound to "win" something for your time. I think the top prizes were a Hummer or $50,000 in cash, but there were a plethora of lesser prizes as well (from what I heard, most people ended up with a free weekend at the timeshare). The fact that my company wasn't a scam is what kept me working there as long as I did, even though, for me, the work was miserable.

I'll let you in on a little secret: people hate telemarketers. I don't blame them. I hate telemarketers. And this ended up being my problem with the job. Some people have the constitution to be forever friendly and gracious while trying to sell people on going to timeshare presentations to people while being met with rage at being inconvenienced.

I just don't. I can only take so much anger and vitriol directed at me. My last shift at the telemarketing position had me just staring at the phone, petrified at being on the receiving end of somebody's wrath again. After that, I just stopped going.

However, my time telemarketing taught me how to get off of calling lists, and it's simpler than you might expect. As stated above, the first step is to not give out your number to contests and drawings.

Assuming you already fell for the first step, the next step is to calmly state to the telemarketer that you want to be taken off of the calling list. At least in California, the telemarketing agency is required by law to remove you if you ask.

The third step is to document for your own records when you asked to be removed. To be honest, the telemarketing agency may call you again (my agency was fairly low-tech, and so our "leads" were in the form of 3x5 scraps of paper with names, phone numbers, and whatever other information had been given. These "leads" were in a huge box in the middle of room, and the same person might be in the box multiple times). If they do call again, ask to speak to a supervisor, and state that you already asked to be removed from the calling list, and remind them that it's against the law for them to keep calling you.

After that, you'll probably never be called from that agency again. Unless, of course, you enter another contest.

Photo by epSos.de.

Some Ethics of Spending

So minutes, hours, days, month, and years,

Passed over to the end they were created,

Would bring white hairs unto a quiet grave.

Ah, what a life were this! How sweet, how lovely!

-- Henry VI, Part 3, II.v. 38-41.

I was watching the ... documentary? filmed series of mostly one-way conversations? I'm not sure what to call it ... Examined Life on Netflix the other evening (because I am a pretentious jerkwad)*, and one of the speakers in the film, Peter Singer, said something obvious in a way I hadn't considered before. He posed the following hypothetical situation, and he then asked people how they would handle it.

Here's the scenario:

A screen that offers time to reflect.

Suppose you're walking in a park on a bright, sunny day, and you walk past a pool that's only a foot deep. You notice that a young child has waded into the pool, and the child is obviously having some difficulty. After watching for a moment, you realize that the child is about to drown, and you know that if you act right now, you can save the child's life. This action will involve walking into the pool (which poses no danger to you as an able-bodied adult) and retrieving the child. The only reason that gives you pause is the fact that the shoes you're wearing are expensive, and by walking into the water, you will necessarily ruin them. You know that there's no time to hesitate if you choose to rescue the child; another few seconds, and the kid will drown. What do you do?

I'm fairly certain that approaching 100% of the people reading this would decide to save the child's life because, on a very basic level, most people agree that the direct saving of a life is more important than shoes, expense be damned.

However, Singer, as philosophers are prone to do, doesn't let the question stop there; he goes on to ask, basically, if you would allow your money to be lost by ruining your shoes to save a child's life, why not, in the first place, instead of spending the money on the expensive shoes, spend that money by donating to one of the various, valid charitable organizations that use your money to feed starving children?

I know some of you reading this will immediately claim that Singer's question poses an absurd reduction. After all, why go the movies when you could help at a soup kitchen? Why read a blog post when you could be learning first aid? Why do ANYTHING immediately gratifying and enjoyable when you could be helping others?**

But to react in this way is to miss an opportunity for reflection. There is truth in what he says. After all, economics studies how people spend their finite resources, and it follows (by definition of finite) that spending money on one item necessarily means that that money is unavailable for other expenditures (credit cards work to make people feel like they're circumventing this, but as anybody who has read a personal finance blog knows, the reckless use of credit cards frequently ends in disastrous results).

It is important to realize that each dollar we spend is a dollar we can't spend another way, and I think it's worthwhile to remember this on a weekly, daily, or even a transaction by transaction basis.

What do you think? Do you consider where each dollar you spend could have gone, and/or what help it could have provided? Let me know in the comments.

*Though, to be fair, you could probably add that clause to the end of nearly any sentence I've written on this site, and it would remain accurate. "Should I Drop Chase Bank?" because I am a pretentious jerkwad? Here's my Lending Club update because I am a pretentious jerkwad. Here are 6 things you don't know about me because I am a pretentious jerkwad. You get the idea. Apt, no?
**I would argue that helping others can be both gratifying and enjoyable; I find that little in life is truly an either/or situation.

Photo by psd.

**This post was featured in the Carnival of Personal Finance #364.**