By Randy Diamond | MainStreet.com

The economic downturn is bringing attention to a little known practice by auto insurers that targets consumers with blemished credit histories. Insurers can charge higher rates, decline to renew coverage or deny coverage to these customers.

A task force of state insurance commissioners is examining the issue. They’re expected to make recommendations by August as to whether auto insurers’ use of credit reports should be more tightly monitored, or even outlawed.

“We are trying to cut through the rhetoric and get the facts to make an informed decision,” says Michael T. McRaith, an Illinois insurance regulator who chairs the task force.

Three states currently ban auto insurers from using credit reports: California, Hawaii and Massachusetts.

The insurance industry argues that studies correlate poorer credit with an increased likelihood of filing an accident claim. Consumer advocates, on the other hand, question the fairness and ethics of using credit reports to rate auto insurance customers. They are also concerned that consumers already affected by the current economic crisis may get a double whammy when they see their auto insurance rates go up.

“I don’t understand why someone who lost their job because of the poor economy is suddenly a worse auto insurance risk,’’ says Robert Hunter, insurance director of the Consumer Federation of America.

The insurance industry has statistical correlations but can only theorize about the reason for the connection between credit scores and a higher claim frequency.

“If you’re particular about managing your finances, then that same personality may make you a more attentive driver,” says Alex Hageli, of the Property Casualty Insurers Association of America.

Credit-based insurance scoring has been used since 1993 and is now used by 95% of auto insurers. Insurance representatives insist the current financial crisis hasn’t meant the sky is falling in for auto insurance customers. Rates haven’t risen in general, they say, because insurance scores derived from credit reports have remained flat on average through the financial crisis.

But Lamont Boyd, a project manager for FICO, which sells the most widely used industry model for credit scores, said scores have declined for those directly impacted by the economy.

“As a small but growing number of consumers have experienced recent financial hardships, it is impossible to generalize about the impact of such an event on an individual’s credit-based insurance score,” Boyd says.

The nation’s biggest auto insurer, State Farm Mutual Auto Insurance Company, says it has not seen a spike in higher insurance rates.

Regardless of whether motorists are paying higher rates due to the impact of the poor economy, opponents of insurance scoring say the practice is wrong.

Florida Insurance Commissioner Kevin McCarty says studies have shown that scoring has a disproportionate effect on minority groups. “The industry’s attempt to ignore this issue shows a failure to treat its consumers fairly and equitably” he says.

Hunter, with the Consumer Federation, says another big issue is that the information in credit reports is not always accurate, leading to inaccurate scores. (Which is why you should check your credit report regularly and correct any mistakes.) Scores can also vary, depending on which of the three credit reporting bureaus an insurer is using, he says.

What You Can Do Now to Save
Consumers are advised to shop around for auto insurance. Among companies that do factor in credit, different auto insurers assign different weights to it. Having poor credit could account for 30% of the total premium for one insurer and only 5% for another, says Boyd.

It may even pay to talk to more than one insurance agent because different agents represent different insurers, Hunter says.

He also says under federal law insurers must inform consumers who don’t get the best rates because of their credit history the reasons their insurance score was less than perfect. Consumers are then entitled to a free credit report from the credit agency used by the insurer.

By MainStreet.com Staff Writers

In trying to save money, you don’t want to skimp on car maintenance. Proper car maintenance prevents much more costly repairs in the future. Taking proper care of your car also makes it more fuel efficient, which saves you money on gas. Of course, car service technicians are famous for up selling you auto maintenance services you may not really need. So you know when to say yes and when to say, here are some common car maintenance services you can and can’t live without.

Must Haves

Oil Change. Changing your oil regularly is must. Most national car service chains recommend oil changes every 3,000 miles or three months. If you check your owner’s manual, it will tell you how often you need to have this service done. In some cases, you may be able to wait 7,000 miles between changes. You can and should check your oil level more regularly than that. When you stop for gas, use the dipstick to see if you have enough oil in your engine. If not, add more.

Tire Rotation and Pressure Check. Keeping your tires in good shape will extend their life and protect yours as you drive. It’s recommended you rotate your tires every 5,000 miles or so to ensure they wear evenly. You should also check the pressure in your tires once a week to make sure they are properly inflated. Again, check your owner’s manual for the proper level of inflation. Adding air to your tires is cheap (usually free) and easy at your local gas station. Additionally, keep an eye on your tires’ wear bars to make sure the tread is deep enough. Bald tires are slick and can cause accidents.

Wiper Replacement and Fluid Check. The easiest way to get in an accident is if you cannot see through your windshield. If your wipers are not working properly or you run out of wiper fluid, that’s exactly what can happen. You will likely need to replace your wipers once or twice a year. Your mechanic should be topping off your washer fluid every time you get our oil changed, but it’s good to have some in the trunk just in case you run out.

What to Skip

Engine Flush. This service uses chemicals to supposedly flush the sludge out of your engine. But if you have your regular oil changes, you shouldn’t have any sludge to flush out. That makes engine flushes a rip-off. If you have severely neglected those oil changes and your engine is running hot, however, you might need an engine flush after all.

Oil Additives. If the service tech tries to sell you additional oil additives, just pass. These are generally a waste of money and don’t actually produce the results they promise, such as added fuel economy. They don’t cost much, but why pay even a little bit for something that won’t make a difference?

Gas Savers. There are a variety of products and gadgets that promise improved fuel economy. Some of them can cost hundreds of dollars, but they likely won’t deliver. The best way to get good gas mileage is to keep to your car maintenance schedule.

Next to buying a new home, purchasing a car is right up there with one of the biggest decisions you are going to make in your life. Investing in a new car can be extremely expensive (depending on what you purchase) and create a lot of anxiety. However, be sure to make a check list before you go into buying your car, this way you make sure all your bases are covered.

Here are some things that you should definitely consider…

How Much Your Monthly Payments Will Be – If you are not paying all cash up front, you should really consider how much your monthly payments will be if you finance the rest of your payment. If you put money down and then finance the rest, this will decrease your monthly payments. The more money you put down, the lower your monthly payments are going to be. Really think about how much you can afford to put down up front because the more you put down the better off you will be in the long run.

How Much Your Insurance Will Be – One of the most important things to consider with a new car is the insurance. Depending on the type of car you get the insurance could be lower or higher than you had expected. Sometimes the cost of your insurance may increase for more sporty cars, red cars, or if you live in the city. Remember that although you may have paid for the car, insurance payments each month are something that you have to remember to pay and allocate for in your budget each month.

Consumer Reviews – One of the best ways to figure out what car to purchase is by reviews that others have done based on their experiences. Although you still need to test drive and look at different types of vehicles, consumer reports and reviews may point you in the right direction. Also make sure to ask your friends or co-workers who own the types of cars that you are looking at what they think, their opinions and experiences may influence your decision greatly.

What Type of Deal You Can Get – Right now dealerships are almost giving cars away. Because the auto industry is really struggling in the current economy, the deals you can get on cars are great! Make sure you do some competition shopping before you make a decision. Get prices and deals from each dealership and then make a list and compare features, safety, and cost. Once you have decided on the car you like best, make sure to bargain your way into the best price. If another dealership offered you two free oil changes for example, haggle this into your agreement with the car you really want to buy. You may be surprised by what dealerships are willing to offer you!

Gas Mileage – One of the biggest concerns people have nowadays is the price of gas and how many miles per gallon (MPG) a car gets. Make sure to really take this into consideration when you are looking at cars. If you do not think you travel far enough to worry about MPG then choose whatever car you like. But if you have a long commute or spend a lot of time in your car, factoring gas costs into your car purchase will save you a great deal of money in the long run.

Although purchasing a car can cause a lot of financial anxiety and uncertainty, ensuring that you have done your research and are confident in your decision will relieve some of this worry. Although the cost of new cars has dropped considerably, if you feel you would prefer a used car just make sure you know consider how to buy a used car. The decision is definitely a big one, but it can also be extremely exciting!

Photo by: faustfoundation

— By Hannah Waters, Geezeo.com

“So to move back here was less like manifest destiny and more like re-dating an ex-girlfriend whom I didn’t really get along with in the first place.”

We all have dreams. But what happens when our dreams meet our wallets? This time of year many consider a move to warmer climates for jobs, opportunities, or dreams. Some just want a change of scenery!

My friend Rick Meyer, a talented stage actor (and not too shabby digital artist, I might add!), shares his experience moving cross-country with his girlfriend. What financial decisions had to be made? What did he learn from the experience? How do you fund your creative dreams? Find out.

Why did you and your girlfriend decide to move cross-country?

The plain and simple truth is that I brought my girlfriend to California twice. Last March she absolutely fell in love with California. She’s never lived away from her hometown and so you could say that the move here was like her own little manifest destiny. She had to make the move. I already lived here from 1993-2001 and wasn’t crazy about the cultural differences. So to move back here was less like manifest destiny and more like re-dating an ex girlfriend whom I didn’t really get along with in the first place. “Sure you run around and call me a loser but let’s try and re-connect shall we?”

What kinds of acting do you do? Do you have a “day” job?

One major attraction to moving back to California was to pursue my first and pretty much only love, acting. In California, there is more chance for TV or film work and its time I begin to explore those opportunities. In New York, as well as here when I lived in Los Angeles, I concentrated on only stage work. Because performing in front of a live audience the feedback is electric and immediate. If things go well on stage they let you know it. Of course, if things don’t go so well or when your play is a bomb, they let you know that too. Performing live is such a rush. But these days, being able to pay my heat bill is a rush. My highly glamorous day job is in insurance. So, I have heat. But if all goes well, in the near future, I will be on my dream path again. Acting with heat…and lights…and food!

Financially-speaking, what’s been the biggest surprise resulting from your cross-country move?

Well, the cost of moving was expensive. We needed to pack up the stuff we’d acquired over the years and have it shipped across country. But, the cost of the move itself was cheap in comparison. It was about $2500 dollars. But, not getting paid for the days I wasn’t working is what hurt most financially. At the time of the move I had no vacation time in my bank so I lost income the entire time I was out of work. Then when I did begin to work, it took two more weeks to receive my first check. So, I didn’t see a paycheck for nearly two months. These are the things you need to consider when you are getting set to make a big move or life change. It makes you respect your savings account. Or lack of a savings account…

Going down the list of all of your expenditures and doing some research before you make a move really helps to cushion the blow when faced with “hidden” expenses. We failed to do the legwork and have been recovering from our lack of planning. Going to college is much more affordable in California. However, if you are new to the area, you are considered an “out of state resident” for 1 year before you can take advantage of the government programs. So being an “out of state resident” will cost you. Car registration in California is different. They impose a VLF (Vehicle License Fee) tax on your vehicle which is based on the entire value of your car. My car is only 2 years old so that set me back. Picking up a new auto insurance policy was hefty because most insurance plans require that you put down a large deposit. Gas is much more expensive here than what we were used to often approaching the $3.75 a gallon mark. Knowing these bits of info wouldn’t have prevented us from moving but we might have come better prepared.

What advice would you give other recent graduates who decide to pursue life after school in another location?

Well, it never hurts to save as much as you can. It can be hard to do, especially on a recent grad’s salary but every little bit helps. If you plan to move out of state, make a list of your monthly expenditures and to the best of your ability find out how your move will effect each bill. Will auto insurance be more expensive? What will be the going renter’s rate or Mortgage rate? What types of taxes will be imposed on me for being a new resident? How long will I be considered an out of state resident? Based on the climate, will my new state/location cost more or less in utilities? Heat? Electric? Etc. Of course, there is always the hope that a new job will offset many of these expenses. So, if you can find a job in town first you can always inquire about the reimbursement of relocation or travel expenses.

As a creative person can you recommend any good ways to minimize expenses while pursuing dreams?

I wish I could say that dreams should always be number 1 but at the end of the day you really need to make sure your ends are met. So, unfortunately for most of us that question can better be phrased “are there any good ways to minimize your dreams while you are pursuing your expenses?” With some planning and some cut backs, you can build a nest egg that will help you pursue your dreams with a stronger safety net. If you are working in a 9-5 job, probably the single most important thing you can do to save money is start a 401k plan. You don’t have to force yourself to save money because it happens automatically, most companies match amounts and the amount grows fast. Also, if I feel that money is tight, I will cut back anything that seems like a luxury as long as it doesn’t relate to something I’m passionate about. No sushi. No sports bar and beer on a Sunday. But, I’ll always have money in my pocket for a movie!

Bottom line, is it better to have money, or talent?

It’s definitely always better to have talent. We all have our own talents but if you can take that talent and apply it to your 9-5, the money will follow. Few people get to utter the words “I love my job”. And when you can utilize your talent for something you love to do and put it to work for you, I can’t imagine a richer, happier more fulfilling life.

Totally agree, Rick. Thanks for sharing your cross-country move with us. Contact us with news of your next acting gig — we’re looking forward to it! You can contact Rick through Geezeo’s NYU Group.

Moving? Keep your finances in one place here at Geezeo.