Michelle Singletary
Thursday, September 1, 2005
8:49 AM
With so much news about devastation wrought by Hurricane Katrina in Louisiana, Mississippi and Alabama, many people will feel compelled to donate to relief efforts. But please be very careful. The con artists are out already.
Caroline E. Mayer and Brian Krebs report in today's Washington Post that phony Web sites and scam e-mail messages are already floating around the Internet seeking donations for Hurricane Katrina relief efforts. "Scammers Hit Web in Katrina's Wake."
An FBI official quoted in the story offered this advice: "People who want to make a donation or contribute to a cause should actively seek out reputable organizations and then contact them by telephone or by typing their Web address into a Web browser. The important point is that they initiate this contact on their own."
Before giving, call your local Better Business Bureau or charity registration office, which is usually a division of the state attorney general's office. Information on national charities is available from the BBB's Wise Giving Alliance at 800-575-4483 or www.give.org. washingtonpost.com has compiled a list of reputable relief organizations (scroll down to the "make a donation" section).
Free at Last, Free at Last
Starting today, consumers who live in the eastern United States are eligible to obtain copies of their credits reports for free. The program has been phased in geographically over the past year, and now people living in Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia, the District of Columbia, Puerto Rico and all U.S. territories are eligible for the program.
The Post's Caroline E. Mayer wrote about the reports in today's paper -- "Order Free Credit Reports, Then Cross Your Fingers." She was online this morning to answer reader questions about the program. Read the transcript here.
The Fair and Accurate Credit Transactions Act of 2003, also known as the FACT Act, was passed to help consumers fight identity theft by giving them easier access to their credit files from the three major credit bureaus -- Experian, TransUnion and Equifax. Once every 12 months, you can obtain a free copy of your credit report upon request. I add that emphasis because you won't automatically be sent your credit reports; you have to ask for them.
There are several ways to get the reports:
* Online at www.annualcreditreport.com. This central site allows you to request a free credit report. Don't be fooled by imitators. This is the only site that is authorized by the federal government. You will go through a simple verification process to make sure you are, well, you.
* By phone at 1-877-322-8228. You will go through a simple verification process over the phone. Your reports will be mailed to you.
* By mail by filling out a request form (which you can find online here) and sending it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, Ga., 30348-5281.
The Federal Trade Commission has a good explainer available online here.
There's always a catch. While you can get your credit reports for free, your credit scores are not gratis. You still have to pay to see your scores (you have one for each credit bureau report). The costs vary, so check on the Web sites for the three bureaus.
Today's Color of Money Column
I used my column today to answer questions about a column I wrote recently about real estate and taxes. That column -- "Think Location and Taxation" -- focused on the tax mistakes rookie real estate investors make.
Read today's column here: "An Expert Weighs In on Housing Tax Issues."
Advice From Penny Pinchers
Before I list my favorite penny-pinching tips for this week, I suggest you read a well-penned account by David Hagedorn, chef and owner of David Greggory Restau-Lounge -- "On Cheapskates and 'Scams.'"
Hagedorn's account of diners' rude and miserly behavior is quite interesting. It's a view from the people who own and serve us at restaurants. After 25 years in the restaurant business, Hagedorn says he's breaking up with the dining public. And why is the relationship falling apart?
"The plain fact is that diners do not carry their weight in the diner-restaurateur relationship. My own shortcomings aside, restaurateurs everywhere face this problem," Hagedorn writes.
The following are just a sample of customer practices that Hagedorn said offend him and others in the restaurant business:
* The Bottled Water Scam: Bottled water is not free in restaurants any more than it is in sandwich shops or gyms.
* Stealing: Many people rationalize theft with the belief that restaurants build its cost into their budgets. Not true. Taking a book of matches is accepting a gift; taking 20 is stealing.
* Special-Occasion Freebies: Whoever the first person was who gave a free "birthday" dessert to a patron should be shot. The public has come to expect, even demand, a free dessert for a birthday or anniversary.
And now tips leftover from entries submitted by readers for this year's Color of Money Penny Pincher of the Year Contest:
* Stephen Blais from Arundel, Maine, says that his wife "saves the tiny slivers of bath soap which are too small to grasp. She collects these and puts them in a nylon stocking until she has enough to equal an approximate bar of soap. She then uses it as if it were a bar of soap and then starts the process over again."
* Patricia Hanson of Charlottesville, Va., writes: "When I receive an especially nice greeting card, I cut off the front page, write a message on the back, and send it as a postcard the next time I need to greet someone."
* Donna Kogut from Blasdell, N.Y., says, "I always do my laundry and run my dishwasher at night. Electricity is cheaper in the evening. You'll be guaranteed to save lots of money per year." (For more energy saving tips, visit the Department of Energy's Web site.)
Financial Fact or Fiction
Myth: A reader wrote: "I've been told that the way to work the system is to get an interest-only loan, but dedicate several hundred dollars additional each month to pay down the principal. This method allows you to have a lower interest rate and still build equity. Is that true?"
Financial Fact: The way to work the home mortgage system is to only agree to a loan that is right for you. Trying to "beat" the system can sometimes end up beating you into financial trouble.
Interest-only loans are loans on which, at first, you pay only the interest on what you borrow. An interest-only payment option can come with a 30-year fixed loan or an adjustable-rate mortgage (ARM). The length of the interest-only portion of the loan can vary from three to 10 years. After that, the loan converts to interest plus principal.
In a column back in May ("The Interest-Only Trap"), I wrote about the increasingly popular interest-only loan and what sort of consumers might effectively use this mortgage product. You can build equity with an interest-only loan if you voluntarily make extra payments. But I do wonder how many people who say they will do this, actually do?
In a column in July ("Desperately Seeking Loans"), I pointed out that although interest-only loans can initially result in some savings, they might leave you vulnerable to sharply higher payments when interest rates adjust or principal payments start to come due.
Are you wondering if what a so-called financial expert told you is true? Do you have a co-worker who thinks he knows everything about personal finance and you want to confirm his advice? Send me any "Money Myths" that you want help dispelling. Drop me a line at colorofmoney@washpost.com. Put "Money Myth" in the subject line.
You are welcome to e-mail comments and questions to singletarym@washpost.com. They may be used in a future column or newsletter with the writer's name unless otherwise requested.