Thank you John,

What you said is basically the message I was getting from the Suze
Orman book on credit/debt and some immigration-related finance books...
but not all of them.

I wish I could help my wife increase her score faster. She has a
secured card but that's about all she can get approved. It's ironic
considering she has a pretty solid income.

Here's what you wrote that I don't completely understand and have
gotten the opposite advice:

"There is a general message that having some debt (50% of the limit on
a credit
card) can produce a higher score than having a lower or higher balance.
For people who pay off bills every month they are hard to judge as they
really do not use credit as much as they are a cash based individual."

I can see how the credit card companies would push this idea of
activity... It seems a little activity goes a long way, Still... is
this really true? Is a small balance better than no balance?

So from all this advice I think my best option would be
pay off credit card A, with the 9.9 fixed APR and higher balance
pay off most of credit card B, with the 7,9 variable and a lower
balance
transfer the leftover 3,000 plus from Ultra into a better no-load, no
hidden taxes mid-cap fund (Fidelity Value?) and win the lottery

Income would be nice too but I'm working on that!

Again FICO really has, in my experience, been a factor in much more
than mortgages So far it's been a factor in immigration issues, cell
phones, insurance, car loans, apartment rentals, and who-knows what
else.

Thanks again...

Gavriel

Malamala, I get the feeling my suggestions didn't really
make any sense to you, or you didn't feel like doing some of
the homework implied in these suggestions. I think you and
your foreign-born wife fall into the category of people who
would benefit from working with a for-fee financial planner
for a few years at least. There is nothing wrong with that.
One gets mastery of financial planning skills through
education. I'm not so sure you've had your share of
educational advantages and so need more formal instruction,
like that a good financial planner might offer.

On the other hand, if the above comments give you motivation
to pick yourself up and do more homework and analysis of
your situation, read on.

"malamala" <ghelias[at]cc.owu.edu> wrote
- quote -

Pay off your credit card debt with the proceeds from the
mutual fund. Then to maximize retirement savings, and if
your employer matches, and you have money left over each
month, start contributing amounts that will allow you to
receive as much match as possible.

I think what Suze Orman and other financial gurus stress are
two things that happen to be large components of FICO:
1. Low {actual credit card debt} to {credit capacity = the
max credit a credit card company will give you with its
card}
2. Paying bills on time.

For reinforcement, see any one of the following:
http://ezinearticles.com/?How-To-Rai...cores&id=68632

http://www.icpas.org/icpas/consumer/06/01-mmt-02.asp

http://en.wikipedia.org/wiki/Credit_score

- quote -

Has the cell phone company said the problem is a low FICO
score? Find out what they want and post back. You seem to be
doing a lot of guessing at what the facts are here. Get the
facts.

Also, why do you want a Target credit card? Can't you use
your other credit cards at Target?

My previous suggestions about the mutual funds to buy with
your remaining $2500 stand, with one caveat: Open a Roth IRA
account, deposit the $2500 into it, and buy mutual funds
within this Roth IRA.

Suze Orman and other financial gurus are also big fans of
Roth IRAs. If you don't understand why, ask.

The only stupid question is an unasked one, but this assumes
you're willing to do a little homework. Such homework
engages your mind and forces you to process new material.
Don't expect to understand everything with a single
reading. Instead, try to get a little something new out of
each new reading on financial planning you do.

Otherwise, what's being said here will not sink in, and the
learning/teaching process fails.

Gavriel,

Maintaining a good to great FICO is wise.

Understand that the FICO is a measure of how well you manage
debt/credit. This means that people with no history, little to no debt
and other people on the extremes will have lower scores. There is a
general message that having some debt (50% of the limit on a credit
card) can produce a higher score than having a lower or higher balance.
For people who pay off bills every month they are hard to judge as they
really do not use credit as much as they are a cash based individual.

So, your plan is sound on the FICO front. It might not be as sound as
having a balance from time to time. If one has a credit score over 720
there is almost no difference in the rate and terms on a mortgage so
the higher score buys you nothing in terms of a mortgage.

Time is also a factor. People will have a higher credit score if they
have accounts that are open, current and in good standing for 3 years
or more. Closing accounts will reduce one's credit score all things
being equal. Change is seen as a slight negative.

Have 3-5 trade lines (credit accounts) at a minimum. They can have zero
balances but need to be open active accounts. Make sure you use them a
bit even if you are going to completely pay them off each month. If an
account is offering a teaser rate of X and you can safely invest the
funds somewhere else at a higher rate then do so. When it comes time to
pay off the account as the teaser period is over do so. In some
markets people were borrowing at 0% for 12 months and putting the cash
in the bank at 5% for the 12 months. Around month 11 they would reverse
the process. From a credit score view this actually helps the person
raise their score while even earning them some extra money.

There are some books on credit scores. You are close to the books so
check out the finer points as it is no possible to reproduce a book in
a discussion group.

Well done so far and your wife's situation is very common. You will
feel the reverse if you were to move to her home country as a credit
history does not transfer across boarders. Many an expat corporate
executive have been bitten by the issue and find they can not buy a
car, get their home sorted (if they rent) and need to put down
something like 30% before mortgage lenders want to deal with them.

John Corey

Thank you Bucky and Elle:

Elle- financially I have nothing except a custodial fund that I share
with my younger sis for medical and school expenses (there's 50k in it
but I don't bother with it much except for taxes). I have no 401k, IRA,
etc. b/c due to continuing med problems I've never really been able to
work full-time for an extended period. I am curious though about the
401k. I'm working 30 hrs now minimum wage-- I don't know if my employer
matches -- so I'm not sure if it is worth even looking into. To be
honest I don't understand.

Bucky- thanks for doing the math I'm pretty slow on that aspect. I
tried to negotiate with Discover 1.9 APR but what's the point if I am
paying it off ASAP. That said, at this point a 5,000 dollar mutual fund
is a luxury I can do with out at 25 and struggling.


Elle:

Re the FICO deal- the reason I am concerned is because I don't have a
high income so I need something going for me (and my score is pretty
high), More importantly, Suze Orman and other financial gurus stress it
BIG TIME especially twenty-somethings... I would be cynical except that
my wife earns four times as much as I do but has no credit and can't
even get a cell phone or a target credit card. There must be something
to the FICO score aside from mortgages.

Re Ultra. It is crap as far as I'm concerned. I'm going to transfer the
remaining 2500 to another stock fund, probably Fidelity Value. I don't
know enough about small-cap stocks to go aggressive but I want a decent
return. Other than that I don't know what to do with it except:
1. put it in a bank (bad idea I think... my emergency fund is the trust
fund me and my sister share)
2. go to Vegas (bad idea I know... I can't even figure out "Go Fish".)
3. stocks (which I also know nothing about... although I wish I did...
I'd put money in that pharmaceutical company Teva)
4. put it under my bed

Anyway thanks for the advice and any other advice you could give me!

Gavriel

malamala wrote:
- quote -

Good move, you're basically exchanging your mutual fund for a
guaranteed 8-10% return.

- quote -

Don't transfer. The 8-10% APR only comes out to about $20 of interest
per month ($2500*0.10/12). The 2% APR would be about $4 interest per
month. So you're only saving $16 per month, while it would cost $60 to
do the balance transfer.

Can you clarify: Is any of the money you want to use to pay
off your debt in an IRA? Otherwise, it seems you have three
concerns:

1.
How do you get rid of your debt as economically as possible?
If you can sell your shares in the mutual fund (= "cash out"
below) within about two to three months, worst case, then
you should not consolidate to the 1.9%, $60 tranfer fee
card. Reason: Each month, the $2500 of debt is currently
costing you around $21 in interest. ( = 10% * 2500/12),
worst case. The transfer fee is higher than what you'd pay
in interest. BTW, you do want to pay off this debt. That
8-10% credit card interest is very likely more than stocks
are going to return for awhile.

2.
After paying off the debt, should you continue to hold
shares in American Century Ultra, or should you find another
mutual fund? I just graphed TWCUX vs. the S&P using
finance.yahoo.com's graphing tools, and I'm not impressed. I
suggest reviewing all of your retirement allocation and
re-allocate as needed per guidelines like those found via
the free online tools linked at
http://home.earthlink.net/~elle_navorski/id4.html. Stick
with no load index funds (or no load domestic stock and
bond funds with expense ratios lower than 0.5%;
international funds not more than 1%) for now.

3.
How do you attain a high FICO score?
I can only comment here that this notion that one needs a
high FICO score is one pushed by the credit industry,
bottomline, to get people to borrow so they make humongous
profits from fairly modest households. Generally speaking,
the only time a low FICO score should seriously impact a
couple is when they want to borrow money to buy a house or
condominium. Have you checked your score lately?

Where are you with your health insurance? Emergency fund?
Retirement portfolio? Have an IRA? 401(k)?

Hello friends, I need some advice as I am in my early 20s and on my own
and clueless...

I have a 2500 in credit card debt on two cards. I have decided to pay
it off with part of a mutual fund-- American Century Ultra -- in which
I have some 5000.

My reason:

A) the fund over 13 yrs has preformed well but isn't going anywhere
this century and I have other funds such as Fidelity Value that I feel
are better managed.
B) I work at a book store and every single book stresses keeping your
FICO score up especially if you are starting out with little money.
C) I do not want debt b/c I have a low income and my wife is from
abroad and has no credit score despite a high income.

(I do not charge at will: the debt is medical related).

It will take me probably two or three weeks to take out sufficient
funds from Ultra to pay off the two credit cards with balances ($
2500). The reason is the issue of transferring custodial ownership to
myself.

The two cards with balances both have reasonable APRs--7.99 variable
and 9.99 fixed.
I have a third card-- cut up -- that I keep for health emergencies. It
offers 1.9 transfer rate but a 60 bucks per transfer fee (I tried to
negotiate... no dice).

Should I transfer to the third 1.9 APR card to both consolidate and
avoid higher finance charges should the process of mutual fund cash out
be delayed? Or should I just wait a few weeks hopefully, pay the
minimums, and pay off the whole thing when the fund is cashed out?
(What is the proper term for cash out? I watch too much poker on TV)!

I know!

This seems trivial... but I am young without savings and with severe
medical problems and anything I do regarding credit --be it insurance,
cell phones, apartments, cars, bank accounts, trips to the zoo, popcorn
at the movies -- seems to depend on a good FICO score. I want to keep
the FICO fascists happy. Should I stay or should I transfer? Does it
even matter seeing as I will probably pay the balances in two to three
weeks!?

Also- is American Century Ultra worth keeping some money in? It is so
much different now (larger, less aggressive, loves Dell, etc.) than it
was when I bought with my barmitzvah money.

Please any advice would be so helpful...

Best,

Gavriel