Orman on defense (Image: Getty)

In a recent interview with Shartia Brantley of theGrio.com and CNBC, financial guru Suze Orman defended her “Approved Prepaid Mastercard,” one that she has called a “game changer.” Endorsers from Kim Kardashian to Lil’ Wayne to Russell Simmons have all taken heat in the past for endorsing prepaid cards and targeting the less than “creditworthy” community. As Brantley writes, “launching a prepaid debit card that bears her name has brought an onslaught of criticism for Ms. Orman. Critics say she is held to a higher standard than other celebrities who have endorsed or placed prepaid debit and credit cards on the market.”

See Orman’s video with theGrio.com below as she discusses why she launched The Approved card and responds to her critics.

In a recent interview theGrio.com/CNBC reporter Shartia Brantley, financial guru Suze Orman defended her own “Approved Card” as a game changer. (It is the first debit card to share purchase information with credit bureau Transunion; although it does not necessarily create a credit score for the cardholder.)

Simmons took his letter to the Web, writing:

“In recent weeks, coverage of prepaid debit cards launched by Suze Orman and Lil Wayne has repeatedly portrayed me as a “celebrity endorser.” Some of these stories have gone so far as to depict my RushCard business in the same light as the ill-fated Kardasian Kard. The truth is, eight years ago I invested millions of dollars, putting my reputation on the line to found UniRush LLC. With the issuance of the first RushCard, I created the first Prepaid Debit Card Account, requiring no linkages whatsoever to a consumer checking account. Today, millions of Americans manage their financial lives with the assistance of prepaid debit cards issued by UniRush and our competitors.

I created this industry because my customers had been left behind by the banking industry. These hard-working Americans had been left to fend for themselves, managing their lives largely with cash in an increasingly cashless society, accessing their money from people sitting behind bulletproof glass windows at check-cashing stores charging high fees. The process was downright awful, requiring long waits in line, oftentimes with children in tow, just for the privilege of cashing a check or paying one’s bills. Prepaid debit cards put our customers back into the American mainstream, eliminating the indignity and dangers of carrying cash while providing a smarter, carefully considered alternative to banks and check cashers.

What did I do to earn the title of “celebrity endorser?”

Read more on Black Politics on the Web.

What do you think? Are prepaid debit cards doing more harm than good in our communities? Sound off with your comments.

You’ve had great success in your first year at Power 105, but came from a management and consulting background. What lessons did you learn in switching career paths?

I’ve quit a job one time because I was going to make more money somewhere else and I was miserable [at the new job]. I really did like the job I quit, but I was looking at it like, “Well, I’m going to go here and make more money.” Sometimes, in the long run, it’s best to make less money, which is what I did when I left working at a clothing line to go work at Shade 45. I wasn’t happy where I was working and I took a crazy $30K pay cut to start all over at Sirius where I made way less.

What impact did that pay cut have on your quality of life?

That’s probably where the debt started from, having so many bills that I had to pay. I worked the first month without getting paid because it was a probation period to see if it was going to work because I had never done radio [at the time], so they definitely took advantage of me. It was a struggle for me for so long but the next year I got a $20K raise and a bonus and I got a raise every year afterwards. I think sometimes you do have to go backwards to get further in the big picture. Now I make more than double what I made at Sirius.

Is that when you started to manage your money better?

If I didn’t get this job at Power 105 I would still be in debt. Being in debt is a depressing thing. Right now it’s amazing to me that I can go out and buy what I want and still be able to save and now I’m saving to buy a house. That’s a realistic thing for me, before it wasn’t even something I could fathom happening. I have a good base going and I feel good about it.

How bad did it get before you got your finances back on track?

The most I ever owed was about $30,000 in credit card debt. I’ve never been at a $0 [balance], but that was the most I ever owed. A lot of that was from being a manager and having to pay for rooms and flights. It was taking forever to get reimbursed and it definitely piles up.

What are some of the steps you took to get out of debt?

Usually they say you should pay off your most expensive bills first, but what I did was paid off the small bills first to get them out of the way. A lot of those were store cards because I have a Neiman Marcus card, I have a Saks card, I have a Bloomingdales card, etc… Those were just little bills, like a thousand dollars or so each and they had the highest interest rates. It made it easier for me to get those out of the way. I also have three American Express cards. After paying off the store cards, I paid off two of them first and then the one that had the highest balance was paid last, but I stopped using all of my cards and that was the only one I would use. So it was really only one bill I had to pay and that was the one with the lowest rate.

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What are some of the things you do now to avoid getting back in the same situation?

As far as clothing, it took me a long time to get the hang of it, but now instead of buying something I’m only going to wear once I’ll borrow clothes and return them. You’re wearing it one time [for a public appearance], why would you want to buy something you can’t wear again because you’ve been photographed in it? If I wear something I’ll tweet about it so [the brand] gets some attention.

A lot of my other bills aren’t that bad, my rent isn’t too bad, my car payment isn’t too crazy—I lease a BMW 328ix and my payment is $520 monthly. I don’t even want to tell you what I pay for rent, because it’s so affordable. I’ve been living in the same apartment in [Brooklyn] for six years. My apartment is so spacious and comfortable, and once I could I really invested in getting nice pieces of furniture that were quality and would last.

Do you find that it’s better to invest in practical items for the home over fashion and accessories?

My desk was expensive but it could last forever and I got it when it was on sale. I pay attention to when stores have their big sales at the end of the year or holidays so I’ll wait until a time like that to purchase. My mattress was also an expensive Stearns & Foster pillowtop mattress but I’ve had it for seven or eight years and it’s still great. You don’t have to get all great furniture all at once but it is a great investment to buy things that will last for decades. Cheap furniture will always break.

What would be your biggest piece of advice for anyone struggling with debt?

It’s never too late to fix your financial situation, it’s never too late to fix your credit. My attitude has always been that there are certain things that I like and I know I want and I know I have to work hard if I want to be able to afford the things I enjoy and appreciate. I’m not saying it’s the right thing to do and everybody should feel that way but it’s always worked for me. I’ve always said, “Okay, you know what, I want this,” and there’s times I couldn’t get it and I always told myself, “I’m going to work as hard as I can to afford the things I want to afford,” and it’s always worked for me.

What would you say is your most important investment?

Your education is always your top investment. Your retirement plan is a great investment and something you don’t even miss and I’ve also been donating money to charity. I just did that recently. I donated to Prep for Prep, which is a program I was in when I was younger and I always wanted to donate. I do a lot of events for Dress for Success and that’s also a write-off. Anytime I can donate my time there’s a few things I do a couple times a month. It’s a write-off but it’s also a good thing to give back to your community.

Are you a Woman of Power? Then Join us for the annual Black Enterprise Women of Power Summit hosted by State Farm, Feb. 15–18, 2012, at The Ritz-Carlton, Orlando, FL. This exciting, executive leadership summit is your chance to focus on YOU. Network with industry leaders, learn career strategies, find work-life balance, and start creating—and living—the life you really want! Register now and use code DGED12 to receive a $200 discount off the price of registration! (Cannot be combined with other offers).

Are you behaving wealthy? (Image: Thinkstock)

As 2012 begins, you are probably reflecting on different facets of your life and may even be drafting a plan to make improvements.  In fact, you may be making a renewed commitment to get your financial life in order this year.  If financial independence is your goal, let me suggest the following quick assessment to get you started on your journey to wealth.  Grab your purse and answer these seven questions to assess whether you are a woman behaving wealthy.

1.  How many different credit cards do you have in your wallet?

Count the number of credit cards (exclude your debit cards).  If you have more than one credit card, then you are likely overspending and incurring debt.  Debt is the enemy of wealth and financial independence.  By spending tomorrow’s money today, you are giving up your future freedom.  On the other hand, financial freedom is built from consistently spending less than you earn.  Thus, a woman behaving wealthy spends on the basis of what is important and pleasurable to her on her current income.  Are you on the road to achieving wealth?

2.  What is the value of your purse and its contents?

Add up the value of your purse and its contents.  For example, if your purse costs $500, your smart phone costs $350, your wallet costs $200, your cosmetics cost $250, and your iPad costs $750, then the value of your purse and its contents is $2,050.  Now, ask yourself if you have invested that amount into savings or retirement accounts over the last month?  In this example, if you have invested at least $2,050 in the last 30 days, then you are building wealth.

3.  Is your cash organized by denomination and facing the same way?

Open your wallet or purse and look at how your cash is organized.  Cash arranged orderly is characteristic of a person whose financial life is organized.  However, cash bills in disarray reflect a disorganized financial life.  As you know, focusing through clutter and chaos is difficult.  Be a woman behaving wealthy and organize your cash, financial files, documents, and accounts.

4.  Do you have an up-to-date daily, weekly, or monthly to-do list in your purse?

Whether you maintain your to-do list in a traditional day planner or in an electronic gadget is not important.  What is essential is that you have a plan for what you would like to achieve.  A current to-do list reflects that you have identified, quantified, and prioritized your financial goals.  Researchers have proven that you are 45% more likely to achieve your goals if you write them down.  Are you on the road to achieving your goals?

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5.  Do you have protection plans on the electronic devices in your purse?

Protection plans protect you from loss or malfunction of your gadgets.  Let’s say that you lost your $300 smart phone and you need to replace it.  With a protection plan, you have the option of receiving a free replacement or one for small fee.  Protecting your gadgets is analogous to protecting your assets.  Everyday, you face innumerable risks and, thus, some degree of risk exposure.  A woman behaving wealthy protects her assets – loved ones, income, health, and property.

6.  Do you have an emergency card in your purse?

An emergency card details your healthcare emergency names and numbers (e.g., hospital, doctor, dentist, pharmacy, health insurance plan, insurance policy).  It also holds your family’s contact information (e.g., spouse’s, parent’s, and kid’s contact numbers) in case of an accident.  The best time to prepare for an emergency is before it happens.  If you have an emergency card, then you have taken steps to create a preparedness kit.  Women behaving wealthy are also prepared for the occurrence of other unfortunate instances.  Have you selected a custodial and financial guardian to care for your children in case a tragedy befalls you?  A woman behaving wealthy has a plan in place that protects her loved ones in the event of misfortune.

7.  Are your receipts and important papers (in your purse) organized by category?

The receipts and important documents in your purse can represent additional income and savings for you if you apply them to decrease your taxes.  Many purchases are potential deductions from and credits to income taxes.  By consistently categorizing the expenditures you make that are potential deductions and credits, you are employing tax-reduction strategies to increase your income or wealth.  Taxes are another detour on the wealth-building journey, as they erode your investing power.  A woman behaving wealthy has the objective of retaining as much income as possible, which can then be redirected to more savings.

After Peeking in Your Purse, are you a woman behaving wealthy?

Congratulations are in order if your answers to six or seven of the above items indicate you are on the journey to wealth! However, if your purse audit suggested that you aren’t quite on your desired road to financial independence, don’t worry! Take action today and transform your financial life by completing Women Behaving Wealthy’s FREE Wealth Assessment at www.womenbehavingwealthy.com.

Dream it.  Plan it.  Live it.

Wealthy Women are rarely born that way. Most wealth is created. Robin A. Young creates Wealthy Women. It is Robin’s mission to educate and empower women to embody the necessary habits that create wealthy lives. Hence, Women Behaving Wealthy™ was born. Over Robin’s 12-year career as a Wall Street executive and financial advisor, she has adeptly integrated her academic training and investing experience with sound financial principles and a unique customized approach. This approach has allowed her to successfully manage the portfolios of over 500 millionaires and hundreds of other investors.

“Up to July 2007, I didn’t really know where my money was going,” she confesses, admitting that she was a bit of an impulsive shopper. Harps may have been unaware of her spending but the bill statements were clear: She accumulated $17,000 in debt on three credit cards; $54,000 in school loans; and a $30,000 bill courtesy of the brand-new Nissan Maxima she bought to reward herself for earning a master’s degree in 2007.

Her credit cards financed trips as well as clothes and groceries. After graduation she used credit cards to pay for furniture and a three-week road trip along the East Coast.

“It was ‘normal’ to have credit cards, student loans, and a car payment. Most people think they are doing well financially as long as they aren’t behind. I was no different,” Harps says.

But today, she’s focused on attaining financial freedom. “The first thing I did was commit to the goal of becoming debt free,” says Harps, who uses financial guru Dave Ramsey’s debt snowball method. Ramsey recommends listing all debt in order from the smallest balance to the largest and making minimum payments on all debts except the smallest one. Interest rates aren’t considered unless two debts have the same balance; in that case, list the one with the higher interest rate first. Ramsey believes that eliminating smaller debts gives you quick feedback, builds momentum, and reinforces your commitment, making it more likely that you’ll stick with the plan.

To pay down her bills, she trimmed excess items from her budget and downsized to a smaller apartment. She also worked part time at Macy’s, provided babysitting and house cleaning services, and participated in paid studies to earn extra cash. Her efforts literally paid off: She eliminated her credit card debt in nine months and within 34 months paid off her car loan.

“By using the debt snowball method, I moved my debt-free date from November 2037 to December 2014 and decreased my estimated interest fees by $65, 000,” notes Harps, who earns roughly $72,000 annually.

What’s more mind-blowing is that shes is amping up her debt-elimination efforts and moving her target “freedom” date up 18 months to June 2013.

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She’s currently brainstorming ideas to pay off the remainder of her student loans, including selling some clothing items on eBay and using income she earns from Weekend Rum Cakes, a three-way partnership with friends that projected revenue earnings of $5,000 in 2011. Moreover, she started a new side business, Harps Financial Coaching, last March, earning $2,000 in gross revenues for 2011. Harps says any remaining funds from her two ventures go toward paying student loan debt.

Her lifestyle may sound austere, but she finds inexpensive ways to enjoy life. She allocates $40 every payday to leisure activities, goes to dollar cinemas, and participates in endurance running events around the country.  “I learned that personal finance is more about behavior than it is about math,” she says. Being able to pay off the small debts gave me a sense of accomplishment and reinforced the idea of becoming debt free.”

HOW SHE DID IT
• Commit to change. To make this approach work, you must modify your relationship with money. “If you’re not committed to becoming debt free, you could buckle. If you have a budget, stick with it and resist the urge to spend. Why? Because you’ll risk breaking your word, says Harps, and money, regardless of the amount, will add up. “It’s like trying to lose weight,” she says.

•  Plan. Budgeting is a must for those seeking to be debt free. “If you don’t tell your money where to go, there’s no telling where it will end up,” says Harps. She recommends completing a budget every month and updating it on paydays on a spreadsheet. She used the Rapid Debt Reduction Calculator and CNN’s money calculator to estimate interest savings.

•  Manage taxes. In addition to managing her debt, Harps has also been careful about her tax obligations because of her new business and other income-producing ventures outside of her job. She advises saving receipts and keeping good records. “I have a tax accountant who helps me understand my business taxes. I have been advised to save 35% to cover taxes.” Harps says that her tax accountant helped her navigate tax rules and provided clarity about tax forms that small business owners need to use.

• Use bill pay. Setting up automatic bill payments through your bank will ensure that you pay bills on time and avoid late fees. Harps uses automatic bill pay to pay all her minimum payments on a monthly basis; she made extra payments when her budget allowed. “This really helps to keep you and your money focused on the goal,” she says.   

Keep tabs on your credit utilization.
A credit utilization ratio is a calculation used by creditors that measures how much credit you’re using compared to how much you have available. The more unused credit you have, the better. Your credit utilization accounts for 30% of your score.

Stay in contact with your lenders.
If you find yourself in a tight spot and you don’t think you’ll be able to pay your bills on time, contact lenders immediately. You might be able to work out a payment plan.

Devise—and stick to—a budget.
Knowing exactly how much money you have available will help you manage your finances.

Cut the fat.
Once you’ve devised a budget, identify areas where you’re overspending. Cut back or eliminate those items.

Pay off high-interest debt.
Once you’ve paid off those bills with the largest interest rates, apply your dollars toward your next highest debt and so forth. This way, you’ll get rid of high maintenance fees faster.

Use cash whenever possible.
Paying for items with actual dollars from your wallet will make you think twice about creating new debt.

Add income.
If your belt can’t get any tighter and spending less isn’t helping much, find a way to make more money. Now is the time to look for a part-time or freelance job.

Seek help from a certified financial planner.
A CFP can help you identify areas where you need to improve and assist you with reaching your goals. Some planners will conduct the first session for free or at a reduced cost.

(Image: Thinkstock)

Thirty days.

That’s roughly the amount of time the average American sticks to his or her New Year’s resolution.

If we’re honest about our financial New Year’s resolutions – like saving money, organizing our finances better, or laying off the credit cards – many of us will admit that we might not even make 30 days.

But what if there was a way to jump-start your finances in 2012 so that even if your willpower waned after a month or so, you’d still be enormously ahead of the game?

Actually, there are several steps you can take to greatly improve your chances of achieving your financial goals in the coming year.

Here are three powerful ways to turbocharge your finances in 2012. These strategies can also help you make the most out of just 30 days in the New Year.

1. Give yourself a one-month challenge

Behavioral experts say it takes about three or four weeks for you to do something repeatedly, and have that action turn into a habit that lasts. So give yourself a one-month challenge to do, or stop doing, something in order to improve your finances.

If you want to start a good habit, try logging your expenses daily to better track your spending. Alternatively, you could carpool to work or even just put every dollar you get into a savings jar each day. Remember, you only have to do it for one month.

At the end of 30 days, you can always stop or tweak what you’re doing. But you will likely be so satisfied with the benefits of your newfound habit that you will decide to stick with it for the long haul.

To eliminate a bad habit, like overspending, consider not visiting your favorite retail store for 30 days, not carrying your credit cards with you each day to avoid impulse shopping, or not eating out at all for one month.

(Image: Thinkstock)

2. Join a financial boot camp

For the ultimate month-long challenge, and to achieve financial fitness, join a financial boot camp.

One option is MyMoneyCircles.com, a free, four-week boot camp that guides you to financial health one step at a time. As a Money Coach, I’m proud to lead this online boot camp, along with a team of other personal finance experts.

In just one month, we help you address some of your most pressing financial questions and concerns, and deal with your most stubborn financial challenges. For example, you’ll learn how to save money quickly on your immediate and long-term bills, including groceries, communications, housing and more.

You’ll get the skinny on how to manage credit and debt wisely. You’ll figure out what you need to do to adequately protect you, your family and your assets against unforeseen circumstances like a layoff or illness. And you’ll get a game plan to save more money for retirement and other future-oriented financial goals.

The boot camp includes community groups that let you to connect (anonymously) with other like-minded people who share your same financial goals. And while MyMoneyCircles is designed to keep you accountable and on track financially, a range of resources, quizzes and tools also make the process doable and fun.

(Image: Thinkstock)

3. Get started now

Why wait until January 1, April 15, or some other arbitrary date in the future to begin fixing your finances? Start taking charge of your money matters today just by adopting this motto: “Think-Do.”

Simply put, it means when you think of something you know you should do, or need to do, go ahead and tackle that task immediately. Think-Do.

For instance, if you’ve been too scared to check your credit report, you can order it online today from AnnualCreditReport.com. Done.

If you’ve neglected to buy much-needed life insurance, you can get life insurance quotes today from Insure.com. Done.

Of if you’ve put off organizing your tax records, you can start gathering your receipts and financial paperwork today. Done.

Exactly what you do isn’t as important as doing something – and doing so today.

If you put the “Think-Do” strategy into practice for 30 days, you’ll be amazed at how much gets accomplished.

By taking just one small but powerful action step, you push past the inertia and inaction that cripples many people financially. Instead of procrastinating important financial goals month after month, you’ll be addressing many of those issues in just 30 days flat.

So instead of making and breaking financial New Year’s resolutions, this time simply put these three ideas into practice for one month – and watch your finances reach another level of success in 2012 and beyond.

(Image: ThinkStock)

Before the last of the Thanksgiving leftovers have even been gobbled up, the big announcement came that retailers just enjoyed their “biggest Black Friday ever!” Rather than hit the gym to work off those yummy candied yams and pies (pecan, apple, sweet potato… Oh, my!), Americans raced to…. the malls! Or, they just sat back at home, scratched their full bellies, and chugged antacids as they shopped online, getting their Cyber Monday fix on early. The final tally? More than $50 billion in total sales for the “holiday” weekend, up from $45 billion last year!

Major network news correspondents, otherwise credible financial analysts, and so-called money-honeys of all genders, sizes and hues, treated this bit of shopping trivia like it was a great big Christmas present! Despite still outsized unemployment, foreclosure, homelessness, and national debt statistics, legitimate journalists actually posed the question: “Does this mean our economy is finally turning around?”

I love Christmas (and a killer sale) as much as anybody, and I hate to be a Scrooge, but bah, humbug, and let’s be serious, folks! The fact that 227 million of us opted to go out and shop the day after Thanksgiving (and the day after that, and the day after that…) is an indicator of little else other than the fact that it’s what we’ve been successfully conditioned to do—even in the face of crisis. In fact, especially in the face of a crisis!

After all, isn’t that exactly what we were urged to do by none other than then-president George W. Bush in the immediate aftermath of 9/11? He didn’t suggest that we batten down our financial hatches in preparation for the colossal war bill we’d be facing, or that we collect goods from our already overflowing closets and cupboards to help sustain those with less in our communities, or to send to troops and their families. No. He said, go out and shop!

And we did.

Then, we kept on doing it. For the last decade, we have spent money and racked up debt at record levels—and why wouldn’t we when at every turn, when the economy has stalled, disaster has loomed, and the so-called great financial minds of the world are thoroughly stumped, they say the same thing: Go shopping.

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(Image: ThinkStock)

This message has been so consistent and all-consuming, that holidays from the most pedantic (President’s Days) to the most frivolous (Halloween) to the once most holy (Easter) have become little more than consumer-fests. And technology has taken this all over the top. Forget store catalogs and paper sales circulars; retailers begin their constant assault of sales promos in October and they don’t stop until the holiday clearance racks have been emptied in mid-January. My email inbox overflows with them, as does my phone, which delivers no fewer than three texts a day with “special” sales codes and “exclusive” deals. There is no avoiding it, or the mark it leaves on you whether in the time it takes to view and delete items, or the I’ve-gotta-have-it desire to not miss a grand shopping opportunity. For better or worse, the retailers approach works!

So, I got to thinking, what if we were able to duplicate their very successful strategies in the areas of our lives that truly need improvement? Those areas that wouldn’t just benefit us individually, but collectively, as communities and as a nation? Here are a few ideas that quickly came to mind:

• Education: What if all private schools from nursery through college offered a buy-one-get-one-free deal so that if you pay full price for one child to attend, the next child goes for nothing? You’d get four diplomas for the price of two, six for the price of three and so on. It would encourage family unity and institutional loyalty, and it would enable more families to educate multiple children without breaking the bank.
• Volunteerism: The point of volunteering is, of course, to give of your time for giving’s sake. But what if we incentivized things like teaching prison inmates to read, leading fun activities at eldercare centers, or maintaining community gardens and parks? What if for every 20 hours a month you spent donating your time and talents to the betterment of your community you received an income tax rebate or a post-graduate tuition discount or a gift card for a free checkup that you could use yourself or re-gift to someone who has no healthcare insurance?
• Health: Ever watch The Biggest Loser? It’s incredibly inspiring to witness the morbidly obese overcome years (in some cases, lifetimes) of poor eating and exercise choices and towering self-doubt in a 13-week television season. But let’s be clear about their motivation: Cold, hard cash. One of the greatest cripplers of our economy are our nation’s healthcare costs and they keep climbing higher, as all that ails us keeps getting worse, even as we live longer. Wouldn’t it be cheaper to actually pay people to get healthy? The looming threat of stroke, heart disease, disability and premature death if you don’t get healthy has made little impact. But what if you received a text today guaranteeing you an actual cash prize if you did get healthy? How much would it take for you to make some key changes in your lifestyle? Probably less than you think.

I could go on, but you get the idea. A great education accessible to the masses, stronger, more interactive communities, better physical and emotional health, these are truly the gifts that keep on giving. We just need a better marketing plan—and maybe a few cash incentives—to get the message across. We could start by putting the Thanks back in Thanksgiving. Clearly, we’ve got the giving—and getting at a bargain—part down.

Fair Isaac, creator of the FICO score, has rolled out to all three credit bureaus its newest general-purpose FICO score, dubbed FICO 08. With this new version of the credit score, FICO says its will disregard collection accounts and other dings on your credit file when the original balance owed was under $100.

The logic there,” says FICO’s Tom Quinn, “is that for small dollar amounts, like a collection notice from a public library system, the (credit scoring) model will now bypass those and not consider those to be negative. Any kind of derogatory public information that’s less than $100” will be excluded, Quinn adds.

This certainly has the potential to help boost your FICO score if it was impacted by such a blemish. But beware: amid the credit crunch, every single account you have, and every single financial transaction you engage in is being analyzed to determine your credit worthiness.

All Transactions – Large and Small – Matter Greatly Amid the Credit Crunch

Also, even with FICO saying it won’t use those small accounts in its scoring methodology, the debts nonetheless remain on your credit file, and some lenders may require that you resolve those issues or pay off those debts before approving you for a loan.  More importantly, you should know that every transaction – large and small – matters greatly amid the current credit crunch. And when I say “every” transaction, I mean it.

Your Financial Habits Are Under Intense Scrutiny, Even if You Don’t Know It

Increasingly, retailers, credit reporting agencies, credit scoring companies, and of course banks and other lenders are watching every financial transaction you make. Made an online purchase to buy some shoes lately? Somebody tracked it.

That’s why the next time you’re working at your computer – or simply surfing the web – you’ll see a pop-up or some advertisement featuring shoes. Ditto for school supplies, furniture, electronic gadgets, or anything else you purchase. But the scrutiny goes way beyond just watching what you buy, and then trying to sell you more of it.

Retailers, lenders and credit-scoring firms are all capturing a wealth of data about your financial habits, both on and offline, in an effort to tell them who among us is the most credit-worthy – and who is the least.

(Image: Thinkstock)

You May Be Deemed “Risky” Based on What You Buy and Where You Shop

So what exactly are they watching? In a word: everything. They’re looking to see whether you accept credit card offers, online, in the mail or via telephone. They’re gauging whether or not you’re likely to take a balance transfer offer for the initial low interest rate – only to toss the card when the offer expires, or when a better deal comes along. They’re looking at the types of stores you frequent, and whether you spend money (that is, use your credit cards) at “risky” establishments, like bars, clubs and casinos.

They’re also poring over all manner of data regarding your housing, and that includes both renters and homeowners. For those of you who rent, they’re looking at whether you’ve consistently paid your rent or time, whether you’ve been delinquent, and whether you’ve ever been evicted.

For homeowners, they’re looking at how much overall debt you have, whether or not your mortgage is a fixed-rate or adjustable loan, whether or not you have a home equity loan or line of credit, and if so, how much you typically tap and how often. If it seems as if the credit industry has got a spotlight on you, it’s because they do. But you don’t have to be blinded by it – or blind-sided – if you manage your financial affairs properly.

Your Credit Report is Constantly Being Updated

Again, when I say that every transaction counts, let me make something clear: I’m not just referring to business transactions that involve loans. Every transaction means just that – every economic exchange you make, every credit, loan or contract agreement you enter into, and every financial move of yours that can be documented – all of it matters greatly. Every single transaction counts.

Do you think that your dealings with cell phone companies, water end electric services, and public utilities aren’t being monitored? Think again. About 100,000 organizations supply information to the credit reporting agencies. These organizations include banks, lenders, collection agencies, credit card companies, leasing firms, utility companies and any other entity that extends credit or reports information about you. Even libraries have been known to rat on delinquent patrons to the credit bureaus for having an overdue library book!

The same pattern holds true for various municipalities around the country; places like Chicago and New York City will report you to collection agencies in a hot minute to for failing to pay parking tickets or moving violations. And as cash-strapped cities try to cope with budget shortfalls and a tough economy, you don’t have to be Nostradamus to predict that many more cities will soon start using collection agents to pursue “small” debts due from local citizens.

The Convergence of the Credit Crunch, Technology and Big Brother Means You Must Be Careful Even With Small, Overdue Bills

Thus, transactions large and small take on greater importance amid the credit crunch because, in many ways, Big Brother isn’t merely looking over your shoulder these days. Big Brother now seems to be peeking into your laptop, using a skycam to watch where you go, accessing your Blackberry or iPhone, and placing wiretaps on your home and business phones too. OK, so maybe it’s not that bad. But you get my point.

An incredible amount of information about your finances and money patterns is being captured, analyzed, and dissected in ways you probably never imagined. I predict that in the future, this trend will greatly increase—even for small bills.

Simple, little transactions that you may regard as minor or even big bills that you are disputing can all wind up having serious ramifications for your credit rating.

That magazine subscription you ordered (even if it was just part of a sales promotion) can come back to haunt you if the $14.95 bill isn’t paid. Those music videos you’ve neglected to return (since forever) could land you on someone’s collection list. And even that hospital co-payment or medical debt that you’ve been sent a bill for yet again – for the umpteenth time after your insurer refused to pay – that too could ultimately damage your credit rating if left unattended.

So do yourself a favor—handle all your bills wisely and pay everything on time, and that includes small bills of less than $100.

“Ask The Money Coach” is a syndicated column written by personal finance expert Lynnette Khalfani-Cox, co-founder of the free financial advice blog, AskTheMoneyCoach.com. Follow Lynnette on Twitter at @themoneycoach.