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Sunday, June 7, 2009

Protecting your credit score when paying down debt


By Sally Herigstad

To Her Credit
To Her Credit, Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006).

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To Her Credit archive

Question for the CreditCards.com expert

Dear To Her Credit,
Hello. We would love your advice. To date, my new husband and I have a combined total of about $40,000 in credit card debt. We both came into the marriage with significant balances, but we have worked hard over the past three years to make payments on time, chip away at the debt (that $40,000 number used to be a bit bigger), and improve our credit scores.

In January, a family member of mine passed away. Sometime this year, we will receive an inheritance that will help us eliminate this debt. We are so excited for this fresh start!

I'm worried, however, because when I paid off a credit card a few months ago that had a $2,000 balance, the creditor sent us a letter after the fact reducing our credit limit significantly (from about $10,000 to $500) -- which decreased our credit score. We were penalized for paying it off! So my question is this: How do you recommend we reduce this debt? All at once? By making a few large payments? We want to pay off our debt, not damage our credit scores in the process. Thank you!

-- Jennifer

Answer for the CreditCards.com expert

Dear Jennifer,
It's possible that your creditor reduced your credit limit as soon as they saw you had paid off the card -- thus preventing you from running it up again. However, you had a $2,000 balance on a $10,000 card, so it's not as if they were preventing you from increasing your balance before. More likely, your credit limit reduction had nothing to do with you and everything to do with the general tightening of credit going on everywhere now.

Cathy Pareto, a financial planner with a master's degree in business and president of Cathy Pareto and Associates, says, "It may be that the credit card company did a regular review of their credit history and possibly discovered their high debt load. Card companies do review clients' histories on a regular basis to ensure that customers are still creditworthy. So the timing may have just been coincidence." Pareto has seen credit limits going down for no reason at all. "Additionally, because of the current economic environment and the specific burden on banks lately, many credit card companies are simply reducing or closing lines of credit across the board," she says. "They may have merely been caught in that net."

Chances are, your other credit card issuers will not reduce your credit limits when you pay off your cards. In fact, your lower debt load after you pay your cards off should make you appear more creditworthy. "Having a zero balance should not negatively impact your credit score, it should improve it," says Pareto. "Remember that your credit score depends on a variety of factors -- including your credit mix, your rate of credit utilization (the amounts you owe relative to the limit), the number of cards you carry, the length of your credit history, etc."

The thing that concerns me more than your credit limits or credit score right now is the outrageous amount of interest expense you're paying. Your interest expense on $40,000 could be $400 to $800 per month. I'd get checks out in the mail this afternoon to put a stop to that! Pareto says, "I always recommend that debt be paid off as soon as possible. Why chip away at a pile of debt if you have the cash on hand?"

Before you run those checks to the mailbox, make sure you're saving enough for an emergency fund. Not having an emergency fund is the most common financial mistake people make -- and it's the reason they get right back into debt the first time their car breaks down, they need a root canal, or any other expense comes up. Put enough money to cover three months' living expenses somewhere so you can get to it if you have to.

Good luck with your financial "fresh start" -- and here's hoping that from now on you can use your credit cards as payment tools, not long-term loans. If you always do that, you should seldom have to worry about credit limits again.

Take care of your credit!

Mobile payments predicted to skyrocket


By Seamus McAfee

Mobile payment transactions are expected to catapult to nearly 4.5 billion in 2012 -- a 429 percent increase from an estimated 850 million in 2009, consulting firm Gartner Inc. predicted in a May 28 report by CardLine Global (subscription required).

Most of the 2012 transactions would occur with the same SMS text messaging technology that is used in 2009, Gartner said, but the company also predicted an upswing in Near Field Communication (NFC), which could make up 1.3 billion mobile payments in three years.

NFC works by turning mobile phones into contactless payment devices that can also download information from other NFC chips. However, the technology could be hindered by the lack of mobile devices that support it, and the expense by merchants who would need to install NFC terminals, said Gartner analyst Tole Hart in a CardLine Global interview. Gartner predicts NFC phones will not really be a large presence until late 2010, assuming the global recession doesn't delay it even further.

Among the worldwide adoption of mobile payment technology, Gartner said the burgeoning numbers in Asia will cause it to "lead the world in the number of mobile-payment users and transctions in 2012."

Subaru Stella All-Electric Vehicle Goes On Sale In Japan

subaru-stella

WHILE SUBARU AND TOYOTA work to bring a Subaru hybrid to market in 2012, the all-electric version of the Subaru Stella, which combines technology from the company’s R1-E prototype with the regular Japan-only Stella platform, is about to go on sale in the home islands.

With deliveries scheduled to begin in late July, Subaru is expecting to sell around 170 units of the plug-in Stella between now and March 31, 2010 – the end of Japan’s next fiscal year.

Powered by a high performance lithium-ion battery (petrol/battery hybrids such as the Prius draw the electric part of their power from nickel-cadmium batteries), the production version of the all-electric Stella returns up to 90km from one charge - more than enough range for the average city dweller.

The plug-in Stella can be charged up to 80 percent capacity in just 15 minutes using a special ‘quick charge’ system, while a regular AC100 volt Japanese household power outlet will provide a full charge in eight hours.

subaru-stella_02

Part of that 90km range is gained through a regenerative system which recovers inertia energy during deceleration, enhancing the Stella’s efficient running.

Almost a featherweight at 1010kg, the four-seat Stella delivers a sufficient 47kW and 170Nm of torque (which is available immediately) through the front wheels, courtesy of the Permanent Magnet Synchronous System.

In keeping with its urban angle, the Stella has an electronically-limited top speed of 100km/h.

Despite its diminutive size and low power, the advanced technology has assured – for now at least – that Stella will be the most expensive car in its size class, starting at ¥4,725,000, or $60,700 in Australian dollars.

subaru-stella_03

On the bright side, the Japanese government will offer a ¥1,380,000 subsidy (AU$17,700) through its Next Generation Vehicle Promotion Centre program. Further tax benefits are expected to help environment-conscious buyers pick up the Stella for a good price.

What about the Aussie market? With Mitsubishi working and hoping for a 2010 release of its similar i-MIEV electric vehicle, Subaru may well plan to beat the three red diamonds to the punch. At this point, TMR has been unable to confirm Subaru’s plans in Australia for the Stella.

With third-party battery service provider Better Place teaming up with Macquarie Capital Group and AGL Energy to establish an electric vehicle battery charging infrastructure in Australia, one thing is certain: we’re moving in the right direction.

Mercedes-Benz Launches Super-Efficient Direct-Injected Engines For C-Class

m-b_c250_cdi_03

MERCEDES-BENZ has rolled out a trio of direct-injected engines in Europe, all of which will power the marque’s volume-selling C-Class sedan and estate.

Heading the new additions to the range is the C220 CDI BlueEFFICIENCY, which utilises a 2.1 litre direct-injected inline diesel four to produce 125kW and 400Nm.

That’s the same amount of power and torque as the current C22o CDI, but thanks to direct injection, fuel economy improves from 6.7l/100km to 4.8l/100km and CO2 emissions drop from 177g/km to 127g/km.

m-b_c250_cdi_01

Next up is the C250 CDI BlueEFFICIENCY (above), whose engine displaces the same volume as the C220 CDI but cranks out 150kW of power and a mighty 500Nm of torque. Despite the higher output of the C250 CDI, fuel economy is also on the low side at 5.1l/100km. Carbon emissions are a respectable 134g/km.

The third engine is the direct-injected petrol inline four of the C250 CGI BlueEFFICIENCY, which drinks just 7.2 litres of petrol per 100km while still managing to deliver 150kW and 310Nm of torque.

m-b_c250_cdi_02

They may be frugal, but the new engines certainly aren’t lacking in get-up-and-go. The C220 CDI will accelerate from zero to 100km/h in 8.4 seconds, the C250 CGI in 7.4 seconds and the C250 CDI in a very respectable seven seconds flat.

As for when these engines will be fitted to Benz’s local offerings, Mercedes-Benz Australia confirmed with TMR that the C220 CDI BlueEfficiency will be going on sale in August, while the C250 CGI is in the pipeline but isn’t likely to arrive this year.

We’ll miss out on the fast n’ frugal C250 CDI BlueEfficiency, but odds are we’ll be seeing a lot more direct-injection tech in future Mercedes products.

2009 FPV F6 310 Road Test And Review

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IN A COUNTRY OBSESSED with V8 performance cars, you might think that a car like the F6, with its blown six, would have a hard time establishing its credentials.

Sure, FPV still sells a lot more V8s than they do sixes and HSV doesn’t even bother to go there. But being a volume seller in the muscle sedan category isn’t a true measure of the F6’s success.

The real measure is respect.

If there was a Fight Club for cars, the F6 would be the darkly brooding contender, waiting in the shadows for the competition to get serious. The one that all the competitors fear most.

Legend has it that the F6 will out-run the fancy V8s and that even more power is just a cheeky tweak away. School kids stare in awe, middle-aged men admire, but most telling of all, V8 drivers avoid eye contact.

It’s a bona fide urban myth in the metal.

Styling

There is no going past the Dash Green of our test vehicle. This particular F6 didn’t attract attention, it demanded it.

Hunkered down over a set of optional graphite 19-inch wheels, the chiseled F6 looks menacing.

2009 Ford FPV F6 Photo Shoot

There are no flared guards, no bonnet scoops or bulges, no overt body kit. The F6 doesn’t need the Tupperware to look tough.

To further accentuate that ‘minimalist toughness’, FPV has removed the grille on the lower air intake, putting the beefed up intercooler on display. Not great for stone protection on the open road, but raunchy nonetheless.

2009 Ford FPV F6 Photo Shoot

FPV badges take pride of place on both the front grille and rear bootlid, with unique F6 310 badges positioned on the sides and rear of the vehicle.

New graphite headlight accents now match the standard 19 inch machine faced alloy wheels with Graphite accents, and the optional F6 Graphite wheel as fitted to the car we drove.

Sure, there has been plenty of online debate concerning the FG’s styling. Some appreciate the clean, sharp and almost minimalist look (that has some competitors looking like cartoon characters), while others simply don’t think it has evolved enough from the BF.

2009 Ford FPV F6 Photo Shoot

We like it, especially in F6 and GT guise.

Mechanical Package

The F6 is all about that syrupy smooth, boosted 4.0-litre straight six.

The 4.0 litre turbo-charged DOHC 24 valve in-line six now produces maximum power of 310kW at 5500 rpm, and maximum torque of 565Nm across the range from 1950 to 5200 rpm. That’s enough to have FPV claiming (and it’s not hard to believe) that the F6 sedan is one of the best performing six-cylinder vehicles on the Australian market.

It’s also a 40kW and 15Nm increase over the previous BF model.

2009 Ford FPV F6 Photo Shoot

To achieve such a significant increase, FPV’s engineers strengthened the piston and conrod design, dropped the compression ratio (from 8.7.1 to 8.5.1), re-profiled the camshafts, fitted a larger intercooler and improved turbo, recalibrated the engine management and turned up the boost to 0.91 bar (13.3 psi).

A new intake system has improved airflow from the air intake to the engine head inlet. The result is not only more power but much improved driveability.

FPV says you can expect to achieve an average of 12.1L/100km for the ZF auto-equipped F6 (12.3L/100km for the six speed manual).

2009 Ford FPV F6 Photo Shoot

Our average over the course of the week that the F6 was in our care was 14.8 L/100km, but we expect that ‘normal’ driving will result in a significant improvement to the figure.

The F6 buyer has a choice of the either the ‘performance’ TR6060 six-speed manual transmission (replaces the BF’s T56) or the excellent ZF six-speed automatic transmission with Sequential Sports Shift at no extra cost (yes, you read that correctly).

The auto has a cylinder cut feature during wide-open throttle gear changes, which shortens the torque off, torque-back-on time between gear changes. In-gear acceleration is best described as brutal.

Power aside, one of the defining features of the F6 on test, was its ability to stop… quickly.

Braking duties in standard form are handled by the premium FPV Brembo performance brake package, which features 335×32mm front rotors with four-piston calipers and 328×26mm rear rotors with single-piston calipers.

2009 Ford FPV F6 Photo Shoot

Our test car on the other hand was fitted with the excellent optional Brembo brake package which includes larger 355 x 32mm cross drilled and ventilated front rotors with 6 piston calipers up front and 330 x 28mm cross drilled and ventilated rear rotors with 4 piston calipers in the rear.

Underneath the F6 are the same ZF Sachs dampers that are standard on the XR6T, however FPV has recalibrated the valving and revised the XR6T’s spring rates to offer what it says is a performance suspension system that suits both road and track driving.

For those concerned about the reliability of previous turbo-charged FPVs, then it will be comforting to know that the FG F6 has seen more than 23,000 hours spent in design and validation, with durability testing and calibration conducted across Australia and track testing performed at Winton Raceway in regional Victoria.

Interior & Equipment

Inside the F6, the FG Falcon roots are obvious, however some nice detail touches remind the driver that this is no ordinary Falcon. In fact, it’s not really a Falcon at all.

In a charcoal-dominated environment, our test car featured the optional ‘Technique Leather’ sports seats, the standard sports seats being a combination of Technique cloth with ‘suede-feel’ bolsters and silver stitching.

2009 Ford FPV F6 Photo Shoot

While perfectly comfortable, they are built with ‘wide’ Aussies in mind and perhaps don’t provide enough lateral support.

An attractive ‘optical check accent’ trim is a feature across the dashboard and doors. There are also the usual FPV extras: leather-bound steering wheel, FPV starter button, individual build number and blue illumination instrument cluster with unique FPV graphics, helping to set the F6 apart from the XR6T.

2009 Ford FPV F6 Photo Shoot

As you would expect (given the price), the interior features a premium kit including steering wheel mounted cruise control and audio switches, dual-zone temperature control air-conditioning, front and rear power windows and alloy pedal covers.

Our test car was also fitted with the optional (on auto equipped cars only) adjustable pedal box, making achieving the perfect driving position extremely easy.

A roomy and comfortable place to spend some time, the F6 is also more than capable of swallowing a family-sized load of luggage. The boot space is massive, a point noted by our photographer whose equipment usually fills a boot and a back seat.

fpv-f6_boot_2

Safety Features

Unbelievably (and thankfully) for the first time, the F6 is equipped with Dynamic Stability Control (DSC) and side curtain-airbags, both of which are now standard across the entire FPV range.

Other safety features include Electronic Brakeforce Distribution (EBD), and four-channel Anti-lock Braking System (ABS), driver and passenger airbags, and Beltminder technology for the driver.

Keeping thieves at bay is a remote alarm and FPV’s ID Datadot identification.

The Drive

At TMR we’ve recently driven the FPV 5th Anniversary GT and HSV’s Clubsport R8, both highly capable, powerful and FAST Aussie performance sedans, so this was always going to be an interesting test drive.

It’s easy to get comfortable in the F6. In my case (I’m 6ft tall) drop the seat, move the steering wheel up to its maximum height position, drop your wrists over the wheel to get the right distance and then adjust the pedal box to suit: perfect.

2009 Ford FPV F6 Photo Shoot

Turn the key, hit the starter and you’ll be pleasantly surprised at just how smooth the 4.0-litre inline six is. Out on the road, it’ll take a few kilometers to adjust to the brake feel. There is plenty of pedal feel but those big Brembos are keen to reveal their might and you find yourself backing off the pedal pressure earlier than normal, in order to stop smoothly.

You can however, be guaranteed that stopping will never be a problem. Once you have adjusted to their feel, the big Brembo brake package does nothing but inspire confidence. We didn’t try them on a track but suspect plenty of new owners will and they will not be disappointed.

2009 Ford FPV F6 Photo Shoot

Our time with the F6 included a run from Melbourne central out to the Dandenongs, a round trip that provided a mix of winding roads and straight freeway miles, a combination that revealed just what a Jekyll and Hyde the F6 is.

You can amble along in 60 zones, cruise at 100km/h on the freeway and gently nudge your way through the tourist traffic in the Dandenongs and frankly never realise the potential of the car you are driving. In fact you’ll find yourself prodding the accelerator just to check that all is still as it should be.

2009 Ford FPV F6 Photo Shoot

There is no real exhaust note, no grumbling V8 gently rocking the car, nothing aside from a faint turbo whine at low rpm to even hint at this car’s potential.

If you want to really get to know the F6, you’ll need to find the right stretch of road and grab it by the scruff of the neck.

Bumping the shifter into sports mode is the first step, allowing that trick ZF gearbox to get serious. It will hold revs longer, find the perfect gear for corners and constantly adjust as it ‘learns’ your driving style.

2009 Ford FPV F6 Photo Shoot

Acceleration from a standing start is phenomenal. Like a jet, the turbo relentlessly builds boost between gears, topping out a little north of 6,000rpm.

Your senses cop a pounding. The turbo whines, the waste-gate flutters as it dumps excess boost on gear changes, the induction roar is glorious and you very rapidly find the legal limit.

What really impresses is the F6’s mid-range punch. Forget those big capacity V8 competitors because nothing that we have driven can match the F6’s ability once on the move (or even from a standstill for that matter).

2009 Ford FPV F6 Photo Shoot

Bump the shifter across to sports mode, nail the throttle and the effect is instant and vicious as the ZF drops down a couple of gears, dropping the big six right into its torque-laden sweet spot.

Where the FPV GT feels like a brawny grand tourer, the F6 feels nimble and lithe.

That ‘feel’ is largely because the F6’s powerplant is lighter and sits lower in the engine bay than the GT’s. As a result, the F6’s front dampers have an easier life than those in the GT and the handling is better balanced.

For a big sedan, the F6 inspires confidence when cornering with excellent turn-in, minimal body-roll and good feel through the wheel. Like all of our big Aussie performance sedans, the F6’s chassis is no technological tour-de-force, but it is certainly highly effective.

2009 Ford FPV F6 Photo Shoot

For the majority of driving situations, the F6 displays a composed ride and predictable handling, only rail crossings and patchy bitumen will ruffle its feathers and send a little unwanted feedback to the driver through the wheel: but just enough to remind you that this is a performance sedan first and foremost.

That’s the refined Dr Jekyll in the F6 equation.

In true F6 tradition, Mr Hyde though is never far away and he demands your full attention.

The F6 is perfectly capable of scaring the pants off a ham-fisted or clog-footed driver. While it is substantially better to drive than its less well-sorted predecessors (overall a smoother and more predictable power delivery), it can be thoroughly brutal in the way it delivers that truck-load of torque… a quality that will appeal to some, and intimidate others.

2009 Ford FPV F6 Photo Shoot

Get this beast on boost mid-corner and there is potential for disaster, that’s just ‘physics 101’ when you have 565Nm arriving at the rear wheels in a rush. That mighty boosted six can and does carry a whip hand to the rear rubber and stability control systems, especially in the wet.

For the inexperienced who fail to exercise restraint, piloting the F6 can be a white knuckled ride.

The Verdict

Urban myth, a Jekyll and Hyde, a legend in the making, the F6 is all of those and more.

On the one hand, it is capable of lulling you into a perfectly comfortable sense of security on the daily commute. It can even have you questioning your $65k spend.

On the other hand, a rush of adrenalin, excitement and even fear are just a flex of the right foot away.

2009 Ford FPV F6 Photo Shoot

Is it better than a GT or R8? Well that depends on how you like your power delivered. It is dynamically superior to the FPV GT, on par with the Clubsport R8 and faster than both.

For some, bragging rights will be enough and the F6 will be their only choice. They’ll most likely be full-time family men and part-time adrenalin junkies.

Cashed up younger men will ‘understand’ the F6, they’ll appreciate its street cred and most likely have been brought up on a diet of turbo-charged Japanese grey imports.

The F6 will be their only choice of Australian performance sedan in this price bracket, a V8 would just be too old fashioned.

2009 Ford FPV F6 Photo Shoot

Then there are the ‘over 40’s’. Brought up on a diet of Aussie V8s, there will be some who will buy it simply because having the hottest ride in town is important in itself. Others will be content to respect it from a distance, safe behind the wheel of their ‘slower’ GT or R8.

Out on the road, they’ll give the F6 a wide berth, because with age comes wisdom.

In a few years, the straight-six powered F6 is to be consigned to history. Take a walk on the wild side and grab one while you still can.