Jay's Mortgage and Investors Blog

Have you ever thought about your Freedom Point? 

Your "Freedom Point" is one of the more important concepts in mortgage planning and yet it gets surprisingly little attention.

As its name implies, a Freedom Point is the particular date when a homeowner’s liquid assets exceed his debts. At the Freedom Point, paying off a mortgage transforms from an obligation to a strategic financial planning decision.

My duty as a Mortgage Planner is to help my clients reach their Freedom Point as quickly and efficiently as possible.  I achieve this by helping homeowners to make informed liability and mortgage decisions.

In my book, there are two very basic -- and very different -- approaches to accelerating a Freedom Point.

1. Prepay the mortgage by sending extra principal payments to the bank monthly, or annually
2. Leverage a "low payment" mortgage program and then invest the difference between the low payment and the payment of a 30-year amortized loan in an interest bearing account

Let's look at Method #1 in a chart:

In Method #1, a homeowner pursues a safe and predictable plan of attack on his $400,000 home loan.  By over-paying the mortgage each month by $250 (as shown in the "30 Yr Redux" column), the 30-year fixed mortgage is paid in full and the homeowner reaches his Freedom Point in 23.3 years. 

In eliminating 6.7 years off the mortgage, the homeowner saved $131,788 in mortgage interest payments.

Not too shabby! 

Now, using Method #2, the homeowner uses a low-payment mortgage such as a 5-year ARM with interest only payments, or a 30-year fixed mortgage with 10-year interest only payments.  But, he also calculates what the "full" mortgage payment would be if the loan was not interest only. 

The difference in the two payments is invested and then managed in interest-bearing accounts.

In other words, instead of paying principal to the mortgage company, the homeowner pays the principal to himself and earns interest on it.

Let's look at the chart for Method #2:

In financial terms, this is called "compounding" and is the main reason why money in the bank is better than money under your mattress.  The longer the bank holds your money, the more interest it earns over time.

Because of compounding interest, the homeowner using Method #2 reaches his Freedom Point in just 22.6 years.

Why Method #2 may accelerate the Freedom Point is a matter of simple mathematics.  If properly managed, the homeowner’s accumulation fund will earn interest, and then the interest earned will itself earn interest. 

But there's an additional benefit for homeowners using Method #2. 

Having an "accumulation fund" provides additional liquidity and stability.  With money sitting in a bank account (and available at a moment's notice), a homeowner has more financial options in the event of a life emergency such as job loss or illness.

By contrast, extra principal paid into a mortgage is not recoverable without a remortgage.

And now it gets interesting.

Once a homeowner reaches his Freedom Point using Method #2, he holds power over his finances and is leveraging his home to the fullest.  Because a properly-managed interest-bearing account is virtually risk-free, the homeowner can now choose to:

1. Use the accumulation fund to pay off his home in full
2. Leave the accumulation fund alone and continue to earn compounded interest on it

These choices would not be available using Method #1.  Remember, when a person pays extra mortgage principal to the bank, those dollars are considered "locked up" unless the homeowner chooses to remortgage his home.

So, which Freedom Point strategy is best for you? 

It all depends on your personal savings discipline, short- and long-term goals, investment rate of return and current financial situation.

A key starting point, though, is to sit down with a qualified mortgage planner to do a Freedom Point Review.  Annually, your mortgage planner should monitor your progress and help you to make adjustments to your plan, as needed.

Reaching your Freedom Point is all about goal-setting, having a plan, and making informed decisions. If you're not confident that your current mortgage planner can help you make informed decisions to accelerate your Freedom Point, please call me or email me anytime.

As a homeowner, your financial obligations extend beyond your monthly mortgage payment.  Periodically, you are also required to pay real estate taxes and homeowner's insurance premiums.

Each month, you pay your mortgage payment to a company called a "mortgage servicer" (because they "service" your mortgage each month). 

In addition to the risk of not getting paid by homeowners, servicers also face two other risks related to homeowners:

1. That a homeowner's real estate tax bill will become delinquent and will be sold to a third-party
2. That a homeowner's residence will face catastrophic damages during a lapse in insurance coverage

But these risks can be mitigated.

Rather than assume that homeowners will pay on time, mortgage servicers can pay these bills on the homeowner's behalf when they come due while passing that cost on as a mortgage statement line-item.

This service is commonly called "escrow".

The escrow payment varies from homeowner to homeowner, of course.  It's the sum of the amounts due annually for real estate taxes and insurance, divided by 12 months in the year. 

That yields a monthly amount which is then added to the homeowner's mortgage statement each month, and added to a bucket of funds held on reserve by the servicer.

For example, a $3,000 tax bill with a $600 insurance policy = $3,600 in costs annually = $300 monthly paid into escrow monthly.

A $1,500 mortgage payment, therefore, would require a $1,800 check to be written to the mortgage servicer each month.

When a mortgage servicer "escrows" on behalf of a homeowner, it knows that taxes and insurance will get paid on time, thereby protecting its own interests.  This is one reason why some mortgage lenders offer lower rates and/or fees for borrowers that choose to escrow. 

If you're unsure about whether escrowing is right for you, be sure to ask questions.  As with all financial decisions, there are reasons to choose either route.

Ok so this isnt about your mortgage but since we all know a small bisiness owner and this applies to many of my clients I thought this would be of interest.

Have you been inundated with car dealership ads in the past couple of weeks all promising you a big tax break along with your new car or truck purchase? I have! My favorite was the one from Land Rover, who also included a packet of tea from those fine folks who provided the tea for the Boston Tea Party. So I thought I would take a couple of minutes and just go over how the business vehicle purchase deduction works.

The deduction falls under the Section 179 (of the IRS Code) depreciation guidelines, which applies to “qualified personal property” that is bought and placed into active service in the year you take the deduction. In other words, you can take this deduction for any property or equipment you buy this year on your 2007 tax return). Qualified personal property means, roughly, any type of assets that aren’t fixed in place and are used in the active conduct of a trade or business, including vehicles.

It works by allowing you to essentially trade a multi-year depreciation deduction in exchange for an immediate write-off, as long as whatever you’re buying fits under the depreciation cap. That cap is currently $112,000, but starting next year cost of living adjustments will take it up to $125,000 or more.

So how does it apply to cars? In one of two ways:

Option 1: The $25,000 “SUV” deduction. If you buy a vehicle that weighs between 6,000-14,000 lbs, you can write off up to $25,000 of the purchase price under Section 179. The “SUV” label is kind of self-explanatory — what other passenger vehicles out there weigh 6,000 lbs?

Option 2: The “Business Vehicle” deduction. Originally Section 179 was supposed to help people write off the cost of delivery and other hard-working vehicles. In fact, if your vehicle weighs more than 14,000 lbs you can apply the entire $112,000 deduction to your purchase. If your vehicle weighs more than 6,000 lbs but less than 14,000 lbs, you can also take the full deduction amount if it meets one of the following conditions:

• Your vehicle is designed with a seating capacity of 10 people or more, not including the driver
• Your vehicle has no seating other than the driver, a fully enclosed storage area and a short front end (i.e., a UPS van)
• Your vehicle is a pick-up truck with a bed at least six feet long (Yes, pick-up lovers, this means what it says - buy a “long bed” and take the entire cost as a Section 179 deduction, as long as your vehicle weighs 6,000 lbs or more)

Now here’s a fun fact - if you look for a good deal between now and the end of the year you don’t have to pay the full purchase price to get the deduction. You just have to make the sale. And remember, if you’re buying the vehicle through a C Corporation, you’ve got until your business’s year-end, which may or may not be December 31st.

This 30-second video posted to YouTube and shows a home's electric meter running backwards after installing solar panels.

The meter runs backwards because the home is putting more power into the electric grid than it is taking out for itself.

With energy costs expected to continue to rise and the costs of "going green" coming down, it may make sense to evaluate whether solar panels or other high energy efficency improvments to your home are a good value.

There's still that up-front cost, but FHA and Fannie Mae both have come out with EM or Energy Efficiant mortgage products because they both realize that you should be able to afford a few extra dollars a month on your mortgage payment due to your lower energy costs. While they may not cover the whole cost of the improvment but what they dont cover upfront might be made up month to month in the form of much lower bills and possible tax credits.  Each slower or clockwise tick is lowering your monthly energy bill and could possibly even eliminate it.

It's worth watching those 30 seconds again.

For some simple lower cost ideas to save on energy give these a try:

• Buy compact flourescent light bulbs. The cost a little more but will out last regular incandecent bulbs many times over. They are in every fixture in my home.
• Add insulation. There is even a tax credit that should help defray some of the costs and the savings in the end can be quite large.
• Replace old single pane or non Low-E windows. These can make a large difference in isulating your home as well as providing protection from radient heating in summer and heat loss in winter. If the expense is to large to start now try looking into having your windows covered with a film that is very similar to window tint.
• Have an energy efficiency expert come test your home. They will be able to tell you where you can save the most for the least money.
• Buy energy efficent appliances and electronics. Those old refidgerators, water heaters and washers and dryers can cost you up to 50% of your monthly bill. For a current list of the most efficent appliances check the governments Energy Star website.

While we cant fix it all at once doing a little at a time to make improvements can yeild rewards in our wallets as well as our enviorment. Keep in mind that any improvments that you do have the possibility of raising the value of your home and maybe able to be financed into your mortgage which inturn might also yeaild a tax savings as well.

No not necessarily. There are no joint credit reports or scores, so getting married in itself won't lower your score. But becoming a co-signer on an account with a bad history will tarnish your record.

Lenders will look at both individuals credit histories if you apply for a loan together, and the bad one could carry more weight. See if you can qualify for the loan with only one income, or wait to apply until your spouse's score improves. Just keep in mind that if you appy together the one with the higher income will be considered to be the primary borrower and their credit will in turn be weighted as such.

One way to bring up the scores of the spouse with the lower score that might not have a great history but is not really bad such recent bankrupcy is to add them to one or more good accounts as an "Authorized User" that were only under your name. This does not mean they will always be issued a card. If the the credit issuer does issue a card you can simply cut it up and it will acheve the same result, which is the reporting of the good account on the others credit report to bring up their scores. Just remember that anything that happens on that account that might be negative for you will also be negative for them. The good news for both parties is that the account with the authorized user can be removed from their credit history as fast as it was added.

1. Closing Credit Cards Accounts

Some of you may wonder why Closing Credit Cards is number one on this list as the biggest credit mistake even above Missing Payments. In fact, closing credit cards is almost as bad of an idea to increase your credit scores as missing payments, but it is also a clear number one on the list of credit myths. It is perhaps the most common piece of advice that consumers are given when they ask,” How can I increase my credit scores?”. If there were ever a wolf in sheep’s closing as far as credit mistakes go, it’s this one. Closing credit card accounts will not increase your credit scores. So called “industry experts” such as consumer credit counselors suggest that you close credit cards as a strategy to increase your credit scores. However, there are two huge reasons not to close credit cards that you no longer use. They are:

• They will eventually fall off your credit reports – Information on your credit reports has to follow certain rules as far as how long it can remain on the report. In most cases credit information will remain on your credit files for no longer than seven years from the account’s Date of Last Activity or “DLA.” Your DLA will continue to update each month so long as the account remains open. So, an open account will never reach the seven-year mark because each month your DLA updates to the current month. However, once you close the account your DLA will cease to update and the clock begins ticking. Eventually the account will be removed permanently from your credit reports.

  Why is this a bad thing? The answer to this one is very simple. It’s all about your impressive past. Here’s an analogy that might make this easier to understand. Let’s say hypothetically that you made straight A’s in high school. What if the record of that perfect scholastic accomplishment were permanently deleted seven years after you graduated? Would you ever want that history deleted? Of course you wouldn’t. This also applies in the credit reporting environment. If you have a perfect record of making your payments on time then this significantly helps your credit scores so why would you ever want that history to disappear? You wouldn’t.

  What should you do with old credit cards that you don’t use any longer? The problem with inactive credit cards is that you are not generating any revenue for the credit card company. Eventually they will proactively close the unused account because you are a liability, not an asset. Prevent this from happening by using the card once every few months for dinner or a low dollar item like socks or a new belt. Once the bill comes, pay it in full. Doing this will ensure that the account will never be closed and you’ll always get credit for your good payment history.

• You will hurt your “utilization” measurements – This is significantly more important than your closed accounts eventually falling off your credit reports. Revolving Utilization is the amount of your revolving credit card limits that you are currently making use of. For example, if you have an open credit card with a $2,000 credit limit and a $1,000 balance then you are 50% “utilized” on that account because you’re using half of the credit limit. This measurement is almost as important to your credit scores as making your payments on time. If you had a second open, but unused, credit card with a $2000 credit limit and a $0 balance then your aggregate revolving utilization is 25% because you have $4000 in credit limits and $1000 in balances. $1000 divided by $4000 is .25 or 25%.

  How will closing an unused credit card hurt your credit score? Let’s say that you closed that second unused credit card from the above example. Once you do so then you remove it from any utilization calculation and now you’re stuck with one open card with a $2000 credit limit and a $1000 balance. Now your utilization has gone from 25% to 50% (divide $1000 by $2000 and you get .50 or 50%). As this percentage increases, your credit score decreases.

2. Missing Payments

The reason missing payments is number two on the list instead of number one is that it doesn’t take a credit scoring expert to tell you that missing payments is a bad thing. It’s common sense, unlike Closing Credit Card Accounts. The explanation why missing payments is a huge mistake is also fairly obvious. Credit scores look at your credit history to see how you have managed your current and past credit obligations in an effort to predict how likely you are to miss payments in the future. The most powerful “predictor” of future late payments is having missed payments in your past. There are three ways that missing payments will hurt your credit scores. They are:

• How Frequent are Your Late Payments? – If you miss payments frequently then you will be penalized much more severely than someone who misses payments infrequently. Missing payments every once in a while indicates that you are a responsible consumer but you may have problems with finding the time to make your payments. Or, perhaps the bill was lost in the mail or you were out of town on travel when the bill came due. The point is that you are not making a habit of missing payments. Don’t start.
• How Recent are Your Late Payments? – Since scoring models are designed to predict how you are going to pay your bills in the subsequent 24 months, it’s very common that they assign more value to how you’ve managed your credit in the most recent two years. If you have late payments that have occurred in the most recent two years then you are more likely to miss more payments in the next two years. As such, your score will suffer.
• How Severe are Your Late Payments? – The severity of your late payment also plays a big part in your credit scores. This not only makes statistical sense but also common sense. Consumers who have missed payments by only a few weeks and then bring their payments up to date are going to score better than consumers who have payments that are 90 days past due or worse. If you have late payments it is in your best interest to do all that you can to bring them up to date.

3. Settling With Your Lender on a Past due Account

“Settling” is a term used in the consumer credit industry that means accepting less than the amount you owe on an account. For example, if you owe a credit card company $10,000 but you can’t pay them the full amount then they will likely make you a deal for less than that full amount. They have “settled” for less than the full amount, which is likely much less than you contractually owe them. This may seem like a good idea because you are happy that you didn’t have to pay the full amount. However, the lender will report that remaining amount to the credit bureaus as a negative item. This remaining amount is called the “deficiency balance”. A deficiency balance is considered just as negatively by credit scoring models as any other severe late payments. If you can arrange a deal with your lender so that they will NOT report the deficiency balance then that will be your best course of action. If they will not agree to this then you have to figure out a way to pay them in full or your credit will suffer for 7 years.

4. Over Utilization of Your Available Credit Card Limits

Having high balances on your credit cards will undoubtedly cause your credit scores to go down, and in most cases, in a big way. The mistake you are making is called “over utilization.” Over utilization is the practice of running up balances too close to your credit card limits. For example, if you have a Visa card with a credit limit of $10,000 and a $5,000 balance you have a utilization percentage of 50% because you are using 50% of your credit limit. The higher that percentage the fewer points you will earn for your credit scores. If your balance is $9,500 then you will be 95% utilized and in big trouble. Your best bet would be to use your cards sparingly and pay them down as much as possible each month. If paying your cards off every month is unrealistic then try your best to keep that percentage as low as possible. There is no magic target to shoot at, but it’s safe to say that the lower the percentage the better.

5. Excessively Shopping for Credit

Every time you fill out a credit application you are giving the lender permission to access your credit reports. When they access your credit reports they automatically post what is called an “inquiry”. The inquiry is a record of who pulled your credit report and on what date. Federal law requires that the lender post the inquiry. It also requires that the inquiry remain on the report for 24 months.

Inquiries are used by credit scoring models to determine whether or not someone is shopping for credit. It is a statistical fact that consumers who have more inquiries are higher credit risks than consumers with fewer inquiries. As such, the more inquiries you have the more points you will lose in your credit scores. While the exact point value is a closely guarded secret by the credit scoring companies you should assume that your scores would suffer if you have an excessive amount of inquiries.

Probably the most troublesome byproduct of holiday shopping is the collection of inquiries that consumers end up with. Think about this scene: you go to the mall to go shopping and are enticed by offers of “10% off today’s purchase” in exchange for applying for a store credit card. This sounds like a great idea because you are saving a few bucks on your purchases. But if you look at the big picture you will see that this is a horrible idea with dire consequences. If those excessive inquiries cost your credit score 10, 20 or 30 points you could expect to pay higher interest rates on either a future home or car loan. Either way, the thousands of additional dollars that you will spend in interest far outweigh the $20 you saved at the mall.

Think twice about applying for a store card simply to save a few dollars. It’s a better idea to pay for the product with cash, a check or a credit card you already have.

6. Thinking that all Credit Scores are the Same

Credit Scoring is already a confusing enough topic to understand. Add to the mix that there are as many different types of credit scores as there are soft drinks and it gets really confusing. The most commonly used credit score is a credit risk score. A credit risk score is designed to assist lenders by predicting whether or not a consumer will pay their bills on time in the future. The most common credit risk score is designed and developed by a company called Fair Isaac Corporation. This Minneapolis based company builds the industry standard “FICO” score. FICO is an acronym for Fair Isaac Corporation. The vast majority of lenders use their scoring models as part of their standard lending procedures.

There are many different places where consumers can purchase their credit reports and credit scores however not all of the scores being sold are, in fact, the authentic FICO score. On the surface this might not seem like a big deal but it certainly can be. For example, if you are in the market for a new car and you purchase a credit score from a web site that no lender uses then you are really no better prepared to go car shopping. If, however, you purchase the authentic FICO scores then you will have the same exact score that the car dealers will eventually see when they run your application for credit. This can be incredibly empowering for the shopper because you’ll know what your credit situation is before the dealer does. Given that there is a general distrust of car dealerships this will ensure a fair negotiation process when it comes to dealer financing. It will be more difficult to be taken advantage of by an unscrupulous dealership.

When you are shopping online for your credit reports and credit scores be sure that the score you are buying is branded as the authentic FICO® Credit Score. These can be purchased through various reputable web sites such as www.myfico.com,  www.equifax.com, and www.experian.com.

7. Thinking that all Credit Scores Predict the Same Thing

Adding to the confusion in number six above is the fact that there are models that predict other things than general credit risk. Scoring models can be built to predict almost anything including:

• Insurance Risk – That’s right. Insurance companies use credit scoring models to predict whether or not you are likely to file an auto or homeowner’s insurance claim. A poor insurance score will mean that you will pay higher premiums or be declined coverage outright.
• Response Rates – Raise your hand if you receive pre-approved offers of credit in the mail everyday. There is an incredible amount of science behind those offers and why you get them. It’s not random. You have been selected from hundreds of millions of other consumers to receive that offer because you have a “Response Score” that indicates you are more likely to respond to that offer than someone else who didn’t get it.
• Revenue Potential – Credit card companies also use revenue scoring models to predict whether or not you will use their credit card and, therefore, generate revenue for them.
• Collect Ability – For those of you who have collections on your credit reports you can feel certain that the collection agencies assigned to collect those past due debts are also scoring you to determine whether or not you are likely to repay your collections.
• Bankruptcy Potential – Bankruptcy scores predict the likelihood that you will file for personal bankruptcy. You can assume that if you have a poor bankruptcy score that your credit applications will likely be declined.
• Attrition Potential – These scores predict whether or not you will stop using one card in lieu of another. This is called attrition and it is considered the cancer of the credit card industry. If you have a score that indicates that you are likely to attrite and start using another lender’s credit card then you should expect to begin receiving special bonus offers as an effort by your current credit card company to dissuade you from moving on to another card.
• Fraud Potential – Amazingly sophisticated, these models actually can predict whether or not a purchase you are trying to make with a credit card is fraudulent or not. What’s even more amazing is that it takes about 2 minutes to complete your check out at a store and in this short amount of time you have been scored to see whether or not the retailer will accept your credit card.

8. Not Understanding Your Rights Under The Fair Credit Reporting Act

This act, commonly referred to as the “FCRA”, is a list of the rules and regulations that govern lenders and the credit reporting agencies. You should become familiar with your rights under this act which can be accessed at no cost at the Federal Trade Commissions web site. The address is www.ftc.gov. Some highlights are:

• Permissible Purpose – There are only eight legal reasons why your credit reports can be accessed. These are called “Permissible Purposes.” Some of the more obvious reasons are:
  Consumer Disclosure – If you ask for a copy of your own credit report then this is a permissible purpose.
  As Part of a Legitimate Business Transaction – If you fill out an application for credit then this gives the lender permissible purpose to pull your credit reports.
• Your Right to Dispute Your Credit Information – Every consumer in the U.S who has a credit report also has the right to dispute the information in that report if they feel it is incorrect, outdated or unverifiable. The FCRA lays out the process and requirements on how to file a dispute and what kind of turnaround time your lenders and the credit reporting agencies have to complete their investigation.
• Your Right to a Free Copy of all Three of Your Credit Reports – Recently the FCRA was amended by an act called FACTA also known as the Fair and Accurate Credit Transactions Act. FACTA calls for national disclosure of credit reports for free. By September 2005 every person in the U.S can get a free copy of his or her three credit reports. Requesting your free copies if very easy. Go to www.annualcreditreport.com to verify your eligibility.

9. Not Knowing that you Have Three Credit Reports and Three Credit Scores

Most consumers understand that they have a credit report. However, most consumers do not know that they have three credit reports compiled and maintained by three separate and competing companies called “Credit Reporting Agencies.” These companies are essentially warehouses that store your credit history and sell it to lenders who want to grant you credit. These companies are:

• Equifax – Equifax (NYSE: EFX) is based in Georgia. Their web address is www.equifax.com
• Experian – Experian is a division of an English based company called GUS (Great Universal Stores). Several years ago Experian purchased the credit database that was formerly known as TRW Credit Services. Their web address is www.experian.com and they have U.S corporate offices in California.
• TransUnion – Based in Illinois, TransUnion is privately held. Their web address is www.transunion.com.

Each of these companies maintains credit files on over 250,000,000 consumers, which they sell to lenders. They do not share credit information with each other since they are competitors. As such, you will likely have a unique credit report and credit score at each of these companies. Do not assume that your credit reports and scores are all the same.

10. Not Having Credit (or a Credit Score)

That’s right. Not using credit is a huge mistake. The way the credit system in this country works is that it rewards consumers who manage credit responsibly. The reward is in the form of easy access to inexpensive loans. However, choosing to not use credit will prevent you from building a solid credit history and score and will subsequently make it very difficult to secure home or auto loans when the time comes.

I am frequently asked about “opting out,” and which opt outs I think are the most important. This list is a distillation of ideas for opting out that the World Privacy Forum has developed over the years from responding to those questions. The list below does not contain all opt outs that are available. Rather, it contains the opt outs that they believe are the most important and will be the most useful to the most consumers.

Many people have told me that they think opting out is confusing. I agree. Opting out can range from the not-too-difficult to the challenging.  My hope is that this list will clarify which opt out does what, and how to go about opting out.

In this list, some opt outs can be done by phone, some have to be sent in a letter via postal mail, and some can be accomplished online. Some opt outs last forever, some have time limits, and others can be changed at will. If an opt out is on this list, it is because they thought it might be important enough to be worth whatever annoyance it may pose.

Not every opt out is right for everyone, and not everyone will necessarily want to opt out. It is a personal choice. Take a look at the list below, and see if any of the opt outs appeal to you, or might make a difference to you in some way. 


Top ten opt outs:


1. National Do Not Call Registry
2. Prescreened offers of credit and insurance
3. DMA opt outs
4. Financial institution opt outs
5. CAN SPAM
6. Credit freeze
7. FERPA
8. Data broker opt outs
9. Internet portal opt outs
10. NAI opt out



1. National Do Not Call Registry (good for five years)


What it does:

The National Do Not Call Registry is a national list of phone numbers that telemarketers are not supposed to call.

If you put your home phone number on this list, telemarketers are not supposed to call you. The Federal Trade Commission manages the Do Not Call Registry. Home and mobile numbers can be on the Do Not Call list, but you can’t opt out a phone at your place of business (unless you work from home using your home phone number.) Also, the Do Not Call opt out does not stop you from being called by anyone you have done business with in the last 18 months. If you make an inquiry of a merchant, the merchant can call you for six months. Charities and politicians are not covered by the Do Not Call list rules.

How to opt out:

You can opt out by phone (call from the number you want to get opted out) or you can opt out online. We prefer the phone opt out, not the online service. To opt out online you must provide an email address for verification, and your email address will be kept and can be shared with other federal, state, or local agencies “for any regulatory, compliance, or law enforcement purpose.”

Opt out by phone: Call 1-888-382-1222

Opt out by TTY: 1-866-290-4236

Opt out online: https://www.donotcall.gov/default.aspx

More about the Do Not Call List:

See the FTC info page: http://www.ftc.gov/donotcall



2. Opt out of prescreened offers of credit and insurance (five years or permanently, at your choice)


What it does:

Opting out of prescreened offers will stop you from receiving offers for credit and insurance.

Prescreened (sometimes also called "preapproved" or "prequalified") offers come in one of two ways from credit reporting files maintained by credit bureaus:

A creditor or insurer may ask a credit bureau for a list of consumers who meet certain criteria, for example, a minimum credit score.

A creditor or insurer may submit a list of names to a credit bureau to screen for consumers who meet certain criteria.

The result of the opt out is that you will not receive prescreened credit card or insurance offers. Many of these offers come in the mail. If you do not want these offers, or if you are concerned about someone else picking up your prescreened offers, you may want to opt out. If you do want the offers or don’t receive many, you may not find this opt out important.

How to opt out:

(Note: you will be asked to give your Social Security Number to complete this opt-out.)

Opt out by Phone: 1-888-5OptOut (1-888-567-8688). This is an automated phone system. You will have three choices: you can remove your name for 5 years, add your name back in, or permanently remove your name. When you call in, you will be asked to verify and provide some information such as your name and home phone number. You will also be asked for your Social Security Number.

Opt out online: https://www.optoutprescreen.com/?rf=t Note: If you have previously opted out of pre-screened offers, you can also opt back in through this web site.

More about opting out of pre-screened offers of credit:

See FTC Privacy Choices for your Financial Information: http://www.ftc.gov/bcp/conline/pubs/credit/privchoices.shtm#whatstop

See FTC Prescreened Offers of Credit and Insurance page: http://www.ftc.gov/bcp/conline/pubs/credit/prescreen.shtm

See FDIC Financial Privacy page: http://www.fdic.gov/consumers/privacy/faqs/index.html

See Privacy Rights Clearinghouse: http://www.privacyrights.org/ar/FTC-OptOutPrescreen.htm


3. Direct Marketing Association Opt out Services (DMA opt outs)


What it does:

The DMA is the largest U.S. association of marketers – invoking DMA opt outs can diminish receiving marketing mail and catalogs.

Only businesses that are members of the DMA will comply with an opt out request through the DMA programs. The DMA offers several flavors of opt outs. It offers a Mail Preference Service opt out, an email list opt out, and an opt out that lets you remove the names of deceased people from mailing lists. The Mail Preference Service should not affect your receipt of mail and catalogs from companies that you already do business with.

How to opt out:

You can opt out of the DMA lists by visiting the DMA web site. Two of the lists require a $1.00 fee.

Mail Preference Service, usable by anyone. This list reduces mail such as catalogs, etc. It also gets your name off of some prospect mailing lists. https://www.dmaconsumers.org/onlineform.php

Requires a $1.00 fee payable by credit card. You can register by mail, but you have to send a $1.00 check.

Email List Opt out. This list will get you off of some mailing lists and may help reduce some unwanted commercial email. http://www.dmaconsumers.org/consumers/optoutform_emps.shtml. Good for five years. This list will not act as a total cure for spam.

Deceased Do Not Contact List. By signing up for this list, you will remove the names of deceased individuals from marketing lists.

https://www.ims-dm.com/cgi/ddnc.php

Requires a $1.00 fee payable by credit card.

DMA Do Not Contact Service for Caregivers: For those seeking to remove the names of individuals in their care from commercial marketing lists. https://www.ims-dm.com/cgi/dncc.php

More about DMA opt outs:

If you opted out and are still getting mail or email from DMA members, you can file a complaint with the DMA by emailing them at privacypromise@the-dma.org. However, remember that it can sometimes take one month or more until putting in an opt out will have an effect, depending on the type of list. Be patient.

See information about all DMA lists: https://www.dmaconsumers.org/consumerassistance.html

See Information about the DMA mailing list, detailed: https://www.dmaconsumers.org/cgi/offmailing


4. Bank/Financial Institutions opt out (This section applies to banks, credit card companies, brokerage firms, insurance companies, and other financial institutions.)


What it does:

If you opt out, you limit the extent to which a financial institution can provide your personal financial information to non-affiliates.

The financial institution opt outs are among the most important to understand, but they can also be challenging to understand. If you don’t opt out, the assumption is that the financial institution can share your data in some circumstances. To quote from the FDIC:

Unless you opt out, your financial company can provide your personal financial information (for example, information on the kinds of stores you shop at, how much you borrow, your account balances, or the dollar value of your assets) to non-affiliates for marketing and other purposes. (FDIC Privacy Choices page, http://www.fdic.gov/consumers/privacy/privacychoices/index.html#yourright)

A non-affiliate is generally defined as a company that is unrelated to your financial company. The FDIC notes that a non-affiliate may include "Service providers ...., joint marketers--companies that have an agreement with your financial company to offer you other financial products or services, or other third-party non-affiliates--which could include companies that may want access to your financial company’s mailing list to tell you about other products and services." (FDIC Privacy Choices page.)

There is a great degree of variability between financial institutions. Some do not share customer information with non-affiliates, so they do not offer an opt out. Some take an extra step and offer customers the ability to opt out of both unaffiliated and affiliated marketing. Because the type of available opt outs vary from institution to institution, you will need to read the privacy notice closely. Financial institutions are required to provide privacy notices. These notices can sometimes be difficult to understand. The opt outs are controlled in part by the Gramm-Leach-Bliley Act, a federal law that provides some privacy protections for customers of financial institutions.

How to opt out:

You may have received a privacy notice in the mail from your bank or other financial institution. If you missed it, simply ask for a copy of the company's privacy notice. They are required to have one. The privacy notice may also be posted on the financial institution’s web site. Read the notice closely, and follow the company's directions for opting out. You can opt out at any time. By law, you are required to opt out in the way the financial institution determines you should, whether by letter or phone or online. We have not listed all financial institutions here, just some of the largest.

Bank of America:
Opt out online: https://www6.bankofamerica.com/privacy/Preferences.do

Opt out by phone: 1.888.341.5000.

Citibank:
No online opt out found. http://www.citibank.com/us/d.htm and click on privacy for more information

Opt out by phone: 1-888-214-0017

Chase:
Opt out online: https://chaseonline.chase.com/colappmgr/colportal/prospect?_nfpb=true&_pageLabel=page_ecareprefs

Opt out by phone: 1-888-868-8618

Wachovia:
Opt out online: https://www.wachovia.com/personal/forms/privacy_optout

Opt out by phone: 1-866-203-5722

Wells Fargo:
No online opt out found. Info at https://www.wellsfargo.com/privacy_security/privacy/individuals

Opt out by phone: 1-888-528-8460

More about financial institution opt outs:

See FDIC's Your Rights To Financial Privacy Page, includes information about opt outs: http://www.fdic.gov/consumers/privacy/yourrights/index.html

See FTC’s Privacy Choices for your Personal Financial Information: http://www.ftc.gov/bcp/conline/pubs/credit/privchoices.shtm

See FDIC's Privacy Choices page, this page has an excellent section on opt out: http://www.fdic.gov/consumers/privacy/privacychoices/index.html#yourright

See FDIC's Financial Privacy Page FAQ: http://www.fdic.gov/consumers/privacy/faqs/index.html

See Privacy Rights Clearinghouse How to Read Opt Out Notices page: http://www.privacyrights.org/fs/fs24a-optout.htm.


5. Use the CAN-SPAM Opt out


What it does:

The federal CAN-SPAM Act requires that a commercial emailer give each email recipient an opt out method.

A commercial emailer must provide a return email address or another Internet-based response mechanism that allows a recipient to ask the emailer not to send future email messages to the recipient’s email address. The law requires that commercial email be identified as an advertisement and include the sender's valid physical postal address. The message must contain a clear and conspicuous notice that the message is an advertisement or solicitation and that the recipient can opt out of receiving more commercial email. It also must include a valid physical postal address.

The federal spam law doesn’t work very well to deter most spam. However, any legitimate company using email for advertising is likely to comply. If you receive an email from someone you recognize as a legitimate company and it has an opt out, you can stop that company from emailing you again. This is a very powerful tool because it flatly prohibits more commercial email from that sender to your email address.

How to opt out:

Check to make sure the email is a CAN-SPAM compliant email. Some emails offer opt outs, but the opt outs are fake. How to tell the difference?

First, a CAN-SPAM compliant email will be labeled as an advertisement.

Second, it will include a valid postal address for the sender.

Third, it will include a workable opt out link of some type.

If all three elements are present in the email, then there is at least a chance that the opt out is offered in good faith. You have to use your own judgment about each email. Transactional emails are not required to offer an opt out. For example, if you place an online order with an Internet merchant, the message confirming your order, informing you of the shipping date, etc., need not offer an opt out. But if you get a message a month later announcing a sale, that commercial email should include an opt out.

More information about CAN SPAM:

See the FTC CAN SPAM page http://www.ftc.gov/bcp/conline/pubs/buspubs/canspam.shtm.


6. Credit Freeze (also Security Freeze)


What it does:

A credit freeze (sometimes called a security freeze) lets you stop the disclosure of your credit report by a credit bureau.

The result of a credit freeze should be that neither you nor anyone else can open a new credit account in your name. (A freeze will not stop your existing credit cards from working.) A credit freeze can also prevent insurance companies or employers from obtaining your credit data. That’s why if you are actively seeking new employment or insurance, you may want to think carefully about enacting a credit freeze unless you are currently a victim of identity theft.

The credit freeze is widely considered by consumer and privacy advocates as a potent measure to prevent some forms of identity theft. A credit freeze can be especially helpful to individuals who are having persistent problems with identity theft. Credit freeze is not for everyone, and not everyone has the right at this point to set a credit freeze.

The way a credit freeze works is that access to your consumer credit report and your credit score are locked when you put a freeze on the files. A lender or merchant will normally not issue new credit if it cannot access your credit report or score. The benefit of a freeze is that you can stop thieves from getting credit in your name. The downside is that you are also stopped from getting credit unless you “thaw” the freeze. You can unlock your security freeze by using a PIN to unlock access to the credit file. Some states require the “thaw” to take no longer than 15 minutes. Some allow longer times.

The ability to freeze your credit is available nationwide through the credit reporting bureaus. There is some variability in cost and details state-by-state due to variance in state law. (For information about which states have a freeze law, see “More about credit freeze” below.)

How to opt out:

Here are two ways to find out how to opt out for your state:

1. The World Privacy Forum’s Credit Freeze page has a list of states that either have a credit freeze law, or have passed a law. Each state links to the official state information page about how to place a credit freeze, or to another information source for that state. Many of the official state information pages are excellent, and provide tips and sample letters. Even if you are not in a state with a law, as of Nov. 1, 2007, you can still set a security freeze. http://www.worldprivacyforum.org/creditfreeze.html

2. Consumer’s Union has an excellent and frequently updated page on all current state freeze laws and requirements, with a link on how to opt out for each state and sample letters. http://www.consumersunion.org/campaigns/learn_more/003484indiv.html

More about credit freeze:

See the FTC Credit Freeze page: http://www.ftc.gov/bcp/edu/microsites/idtheft/credit-freeze.html

See Consumer’s Union frequently updated page on all current state freeze laws and requirements, with a link on how to opt out for each state and sample letters. http://www.consumersunion.org/campaigns/learn_more/003484indiv.html

See the PIRG state freeze page: http://www.pirg.org/consumer/credit/statelaws.htm Links to the state laws.

See California Office of Privacy Protection. Even if you don’t live in California, this is an excellent page to learn more about how credit freeze works. If you are a California resident, you will find sample letters ready for you to print out. http://www.privacy.ca.gov/sheets/cis10securityfreeze.htm


7. FERPA opt out (students)


What it does:

The FERPA opt out stops schools from releasing student directory information (Name, home address, date of birth, and other information) without consent, with some limitations.

FERPA stands for Family Educational Rights and Privacy Act. If you are a K-12 student or a college student, or the parent or guardian of a student under 18, you should know about the FERPA opt out. While some parts of school records may be given out only with written consent, schools still have the right to give out what is called "directory information" without student consent, including potentially giving the information out over the phone.

Directory information includes the student’s name, school and permanent address, school and permanent home telephone number, school mail box address, major, dates of attendance, degree(s) received and dates of conferral, and other personally identifying information. There is some variability; some schools also consider the weight and height of athletes, the school email address, and participation in officially recognized activities to be directory information.

If there is a FERPA opt out form on file for the student, the student can prevent the public disclosure of his or her directory information. Then, only legitimate employers or law enforcement professionals or others with a legitimate interest should be able to access that sensitive directory information. Victims of domestic violence may find filing a FERPA opt out to be crucial to them.

How to opt out:

FERPA opt outs are often done with a FERPA form supplied by the school. Usually school records offices will have FERPA information for you, or will know where to send you to find that information. Colleges and some other schools may post the form online. For students under 18, parents have to sign the FERPA forms. This will limit how students' home address and other directory information can be released.

If you search the web for “FERPA” plus the name of your school, you may find detailed information about how to file a FERPA opt out for your school available online. FERPA opt outs may also be called “Restriction of Directory Information” at some schools.

More about FERPA opt outs:

See the U.S. Department of Education's FERPA site: http://www.ed.gov/policy/gen/guid/fpco/ferpa/index.html You can find more information about FERPA here, and you can find information about filing a complaint if you have opted out of FERPA and you believe the school violated the opt out.

See the World Privacy Forum FERPA tips for jobseekers: http://www.worldprivacyforum.org/resumedatabaseprivacytips.htmlScroll to tip #8.


8. Data Broker opt outs


What it does:

Some commercial data brokers allow some categories of consumers to opt out of some limited uses and disclosures of personal information.

Commercial data brokers acquire, purchase, accumulate, and sell information about consumers. Many data brokers have large data files with some information on most Americans. The data brokers have multiple lines of business that use consumer data in different ways. Data brokers offer some very limited opt outs, and not all data brokers offer opt outs. If you are a victim of identity theft, a law enforcement professional, or a victim of domestic violence, the opt outs may be important for you. Opt out policies can be challenging to find on the data broker sites. If these links below are stale, please let us know and we will locate the new links for you.

We have mixed views on data broker opt outs. On the one hand, we think that a consumer who opts out does a good thing by exercising those few options that are available. Each consumer opting out helps to preserve opt outs for all consumers. However, the data broker opt outs are generally quite limited, and it is nearly impossible to tell just what effect an opt out will actually have. When you read the opt out offerings carefully, you will see that they are often qualified. Consumers who are victims of identity thieves, victims of domestic violence, public officials, and others may have the greatest interest in seeking what opt out options are available.

How to opt out:

Note: of the data brokers in this list, Acxiom, Choicepoint, and Lexis Nexis are the largest. If you are an identity theft victim, a law enforcement professional, or have a strong safety need to opt out of data broker databases, start with these three companies first.


Acxiom:
You can opt out of some of Acxiom’s marketing and directory products. To do this you will need to request an opt out by sending an e-mail to optoutus@acxiom.com or by calling 1-877-774-2094. You can read more about Acxiom opt outs at http://www.acxiom.com/default.aspx?ID=2851&DisplayID=18

Choicepoint:
You can opt out of some of Choicepoint products, with limitations.

All consumers can opt out of the Choicepoint Marketing database. To opt out, go to Choicepoint's online form at http://www.privacyatchoicepoint.com/optout_ext.html#optout and then fill out the form.

Some consumers can opt out of other Choicepoint products. Here is what Choicepoint says about this particular opt out:

Certain states allow their public and elected officials to prohibit dissemination of certain public records. In addition, ChoicePoint may allow public and elected officials, including law enforcement officers, to opt out of certain PFG products and services in cases where the official is working undercover, on a high-profile assignment, or under threat of death or serious bodily harm. Public and elected officials must submit their opt out requests, in writing on official government letterhead, to: ChoicePoint Inc. Office of Privacy Compliance 1000 Alderman Drive MD 71-A Alpharetta, GA 30005 Email: privacy@choicepoint.com Also, ChoicePoint may allow certain private individuals who are facing a substantial risk of physical harm or who are victims of Identity Theft to opt out of certain PFG products and services. Individuals who may qualify for this opt out must submit their request, in writing. Such requests must include documentation substantiating the risk of physical harm or the individual’s status as an Identity Theft victim. Accepted documentation must include a properly filed police report, or a letter from a law enforcement agency, or a law enforcement contact familiar with the issue necessitating the request. Requests must be submitted to: ChoicePoint Inc. Office of Privacy Compliance 1000 Alderman Drive MD 71-A Alpharetta, GA 30005 Email: privacy@choicepoint.com For more on Choicepoint optouts, see http://www.privacyatchoicepoint.com/optout_ext.html#optout

Intelius:
This company's opt out policy is difficult to evaluate. They say they will opt you out as a “courtesy,” “temporarily.” We do not know exactly what either courtesy opt out or temporarily specifically means, or how long exactly this opt out will last. Nevertheless, to opt out, go to http://find.intelius.com/privacy-faq.php#5 . Intelius directs consumers to fax or mail their name and address as it appears on its website to opt out.

Intelius fax number: (425) 974-6194

Intelius mailing address: Intelius, Inc. Attn: CUSTOMER SERVICE 500 – 108th Ave NE #1660 Bellevue, WA 98004

Lexis Nexis:
If you fall under three categories, you can opt out of some Lexis Nexis non-public information databases. (These categories include you if you are a state, local or federal law enforcement officer or public official and your position exposes you to a threat of death or serious bodily harm; or you are a victim of identity theft; or you are at risk of physical harm.) There is a detailed process for you to go through to opt out. If you are a victim of identity theft of have been the victim of domestic violence, this opt out could be helpful.

See this web site for the Lexis Nexis process: http://www.lexisnexis.com/terms/privacy/data/remove.asp.

US Search Profile Opt Out:
You can opt out of part of the US Search record profile. Specifically, you can opt out of information culled from non-public record sources. An example of this is information compiled from magazine subscriptions – many people do not realize that magazine subscription information is often available for sale through data brokers, mailing list vendors, and others.

If you would like to opt out, you will need to mail in a signed request with the following information - your full name, e-mail address, mailing address, social security number, date of birth, past addresses and aliases to: US SEARCH, Opt out Program 600 Corporate Pointe, Suite 220 Culver City, CA 90230. More on US Search opt out:

More about data broker opt outs:

See the Privacy Rights Clearinghouse Info Brokers Opt Out page: http://www.privacyrights.org/ar/infobrokers-optout.htm

See the CDT Opt Out Site: http://optout.cdt.org/ The CDT Opt out site was last updated in 2002, but it is still useful.


9. Internet Portal Opt Outs


What it does:

Some large Internet portals allow some limited forms of opt outs. These opt outs can have varying effects, for example, some opt outs spare you from receiving unwanted email.

How to opt out:

We have not listed every portal that you could potentially opt out from This is a selection of opt-outs that some large Internet portals offer.

Amazon:
Find out about choices at http://amazon.com/gp/help/customer/display.html/102-6769060-6468131?ie=UTF8&nodeId=468496#choices. There is a Customer Communications Preferences link at http://amazon.com/gp/gss/ccp/. Note, you will need to sign in before seeing this page.

Ebay:
After you have signed in to your Ebay account, you can make choices by finding the Preferences link under My Account.

MSN:
At the MSN.com site, click on the MSN privacy link at the bottom of the main screen. Then look for Communications Preferences. You will be offered a series of links that allow you to exercise choice about the types of communications that you will receive.

Yahoo:
Sign in to your Yahoo account and look for the Options Link. Click on that link and then click on YAHOO! Delivers. You can then select or unselect what types of advertising email that you want by checking or unchecking boxes with descriptions. Note: if you don’t uncheck the boxes, all boxes will be automatically selected, so watch this closely.

More about Internet portal opt outs:

We encourage you to read the privacy policies of Internet web portals. The opt outs can make a difference, and one of the best ways to find out about the opt outs that are available to you is to read the privacy policy for that web site.


10. Network Advertising Initiative opt out (NAI opt out)

What it does:

The Network Advertising Initiative (NAI) offers a centralized opt out system that allows Internet users to avoid some types of tracking of their web activities.

Some online ads appear on multiple web sites -- these ads are generally called network ads. If you browse with cookies turned on (as many people do) at a couple or more of web sites with network ads, or make some purchases or register at those sites, then your activities may in some situations be tracked. In some cases, things you do online can be linked back to you personally by name or email address and then merged with other information about you.

If you opt out of NAI tracking, it means that companies that have tracking ads at multiple web sites will no longer assemble a file of all of the places you have visited, will no longer link your web activities with you personally, and will no longer merge the web activities connected with their ads with other information about you. This is how the NAI describes it:

While advertising networks do collect data on consumers who view their advertising, this data is often anonymous. However, profiles derived from tracking consumers' activities on the Web can be linked or merged with "personally identifiable information" (PII). It can also be combined with offline purchase data or information collected via a survey, census, or registration form. These activities are most often invisible to consumers. (http://www.networkadvertising.org/consumer/faqs.asp)

The NAI opt out uses what is called an "opt out cookie" to tell advertisers not to track you. This opt-out can seem counter-intuitive: you accept a cookie on your computer to make sure you aren't tracked using cookies.

How to opt out:

Step one: You must accept third party cookies for this opt out to work. Open your web browser and check the cookie settings to accept all cookies.

Step two: Open the following page: http://networkadvertising.org/consumer/opt_out.asp. You will see a prominent Consumer Opt Out button. After you click this button you will see an opt out page listing network advertisers with a checkbox next to each. This page is supposed to allow you to check and uncheck boxes, then click a button and automatically opt you out of all NAI tracking. In our tests of the opt out system, we found that the page can exhibit variable results based on the system used to access it, and does not always function at 100 percent for all systems, or at least it did not in our tests. Using computers running Firefox or IE on MS Windows and Safari on Mac OSX, our tests found that only some of the checked boxes successfully opted out. (The page has a feature that will tell you whether the opt out was successful or not.) Using a computer running Mozilla on a SUN Ultra, and computer running Firefox on Mac OSX, our tests found that all boxes did opt out.

Step three: If the page did not automatically opt you out of everything you wanted to opt out of, you can follow the individual links listed under each advertiser on the NAI opt out page. You may have to click through a number of pages before you can actually opt out. The NAI provides a phone number and an email for you to call if you are having trouble opting out: phone 207-351-1500, x110 or send an email to membership@networkadvertising.org.
Note: After you have opted out, if you remove the opt out cookies from your computer, the opt out must be repeated. We reiterate: this opt out may be helpful and useful, but it also can be challenging.

More about the NAI opt out:

See the NAI Frequently Asked Questions Page: http://www.networkadvertising.org/consumer/faqs.asp

See World Privacy Forum cookie page: http://www.worldprivacyforum.org/cookieoptout.html