Most of the Credit CARD Act of 2009, that well crafted and thoroughly thought through law that will fix all that is wrong about credit cards and allow us to carry guns in National Parks, comes into effect on February 22nd. So it’s time for bloggers like me to revisit the act, particularly some of the less widely 
discussed provisions, and tell our readers all about the big changes on the way.
Wallet Pop beat me to it last week with a post Lenders plan to guess your income from credit report. It was about how the CARD Act "requires lenders to consider your ability to pay any new or additional debt before approving a credit card application." Apparently, that means verifying income, which puts a damper on those really annoying pitches you get to open a store-branded card whenever you try to buy something.
"Retail stores are quite upset about this change in the instant approval of their cards," Bill Hardekopf, CEO of LowCards.com, wrote to WalletPop by e-mail. "Consumers now need to show proof of income when they apply for a card, and not many of us carry this around when we are shopping in the mall."
This made me, briefly, optimistic that the CARD Act would improve my life after all. I hate it when the salesgirl extends the time it takes to check out by asking me if I’d like to save 10% and open a new account. That’s three seconds of my life I can never get back. The only thing worse is when she asks the guy in front of me on line and he says yes.
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January was as cold as we’ve come to expect in the Northern Bits of our great nation and a lot colder than they’ve come to expect in the Southern Bits. Not to worry, the frugalosphere produced plenty of exciting money saving tips to warm us all up.
Frugal Upstate, from the northern Northern Bits, gave us no fewer than 3 different uses for the juice, technically syrup, that canned fruit is packed in. All are ways you can consume it, but without a doubt there are dedicated frugalists already working on potential uses as a household cleaner.
A fundamental premise of frugalism is that it is not about simply doing without. You can spend less of your precious money and still enjoy the modest and temperate pleasures of life. Along these lines, DebtMaven had an excellent post detailing how she practices frugal drinking. For example, since she will not drink her morning coffee without a bit of Irish Cream, necessitating the purchase of two bottles a month (presumably the 1.75 liter size since all good frugalists buy in bulk) she has switched to Carolins from Bailey’s.
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[This is Part 2 of my review. If you haven't yet, you should read Part 1 first.]
The Latte Factor® is not the only registered trademark from previous books that David Bach revisits. Also making a prominent appearance in Start Over, Finish Rich
is the DOLP® debt reduction system.
DOLP®, Bach tells us, stands for dead on last payment. What on Earth that means he does not disclose. (Not in this particular volume anyway.) In practical terms DOLP® is a method of deciding which of your debts to pay off first.
In what order you should pay off your debts is a surprisingly controversial topic in the personal finance world. The two leading theories are the Debt Snowball, as advocated by Dave Ramsey, in which you pay the smallest debts first, and the Right Way, as advocated by rational people, in which you pay the highest interest rate debts first.
DOLP® is, somewhat remarkably, a third method. You divide the outstanding balance on each of your debts by its minimum monthly payment. You then pay off the loan that has the lowest ratio of minimum payment to balance first.
Why? Bach doesn’t say. He claims "the DOLP® system works by identifying the card you can pay off most quickly…." But, assuming that that was your goal, isn’t the card you can pay off most quickly simply the one with the lowest balance? That is, wouldn’t the Debt Snowball be the way to go?
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About a year ago I reviewed Suze Orman’s 2009 Action Plan. I felt certain that it would be the first in a series of annual paperbacks from Ms. Fabulous. Sadly and inexplicably, she seems to have passed on this particular opportunity.
But all is not lost. David Bach, of Latte Factor® fame, has stepped into the breach with Start Over, Finish Rich: 10 Steps to Get You Back on Track in 2010. It works well as a sequel to Orman’s book. Aside from the similar title it shares the same peculiar 4 x 7 1/2 paperback format and a cover laden with gold leaf. (Of course, by law, all personal finance books have some gold leaf on the cover. But this one has an Orman amount.) And Bach cribbed Orman’s gimmick of giving away electronic copies of the book for a limited time to build sales momentum.
But while Orman’s 2009 book had the tone, if not the substance, of a collection of emergency maneuvers to help the reader deal with a calamity, Bach’s 2010 book is more of a pep talk to get the reader back on track now that the calamity is over. Indeed, it is endearingly old school. The goal is to get rich, not merely avoid becoming poor. And Bach generally resists what must have been a strong temptation to make his book seem more timely by claiming that his advice is specially tailored for times like these.
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The piece is entitled Believe It or Not, Existing-Home Sales Were Up in ’09. Why wouldn’t I believe it? Why wouldn’t anybody? We were supposed to have an opinion on this topic? And a wrong one?
I suppose that if you misunderstood what was meant by the term "existing-home sales," confusing it with the prices for houses, rather than simply the number of non-new houses that changed hands in 2009, you might be surprised. Through November ‘09 the Case-Shiller 20 City was down a little less than 3% for the year. (December hasn’t been reported yet.) That’s a great improvement on the year before, ‘08 was down more than 18%, but it’s still down. So, yes, if you thought "existing-home sales were up" meant that prices were up, your befuddlement might have caused a brief bit of erroneous optimism.
Alas, that’s not what it means. The count of houses sold is of great interest to real estate brokers, who make money on each transaction, and of almost no use to anybody else. True, there is a rough and unreliable relationship between sales volume and prices. (See chart here.) It is enough that if we had no price indexes we might use sales volume as one of our tea leaves to help us guess what was going on.
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discussed provisions, and tell our readers all about the big changes on the way.
Credit Cards, Government | Frank Curmudgeon | 
February 8, 2010 12:59 pm | 
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