SUCCESSYour guide to managing money, work and the business of life

Are postings on Facebook and other social media off limits in determining your creditworthiness?

FICO, creator of the widely used credit-scoring systems in consumer lending, insists social media are not being screened, despite multiple reports in the media recently that seemed to indicate otherwise.

FICO has recently added new lay-ers of information that help determine who is creditworthy and who is not. The new data, which are part of a pilot program, refl ect such things as how well some consumers pay their cable TV bills, smart phone bills and utility bills.

According to FICO, this trove of information is aimed at millions of people who have had diffi culties getting access to credit or who are new users of credit, such as college students and other young consumers.

While FICO is looking at alterna-tive data, a spokesperson said in a recent statement to me that “at this point social media data is not part of any FICO score.”

The confusion over the use of social media appears to have started when FICO’s chief executive, Will Lansing, was interviewed by the Financial Times. In that recent conversation, Lansing said this: “If you look at how many times a person says ‘wasted’ in their (Facebook) profi le, it has some value in predicting whether they’re going to repay their debt. It’s not much but it’s more than zero.”

FICO said the comment and ac-companying story headlines that focused on how “being wasted” may damage your credit score “created a misperception” about the company’s credit-scoring policies.

Christina Goethe, FICO’s director of communications, said Lansing was “talking generally about the fact that different types of data have different levels of predictive value” in terms of being a credit risk or not.

Goethe said there were several important reasons that the company is treading carefully with social media.

FICO scoring systems have been redeveloped numerous times over the years to keep up with the behavioral trends of consumers, Goethe said, “but changes to the score are made cautiously after exhaustive research.”

Unless social media information is “proven unequivocally to be predic-tive of credit risk, it will not be part of any FICO score,” she said.

Goethe also said that if social media posts were collected and used to generate a credit score that infl uenced whether a person got a car loan or a credit card, then the decision would have to comply with all fair credit reporting laws and regulations. “This includes enabling consumers to dis-pute the data used to calculate their FICO scores,” she said.

The dispute resolution process, she said, would be very diffi cult and need to be refi ned.

Meantime, FICO and its credit card test partners are focusing on whether some consumers pay their cable bill on time and other forms of alternative data to crunch credit scores. A full roll-out of this system, called FICO XD, could come early in 2016.

Questions, comments, column ideas? Send an email to srosen@kcstar.com.

FICO says it’s not peeking at social media

A spokesperson said in a recent statement to me that ‘at this point social media data is not part of any FICO score.’

BEST CREDIT CARDS OF 2015Shop around for the card that suits your preferences

Shopping for a credit card? You have plenty of great options to suit your spending patterns and preferences. Plus, we’ve picked out prepaid debit cards that go easy on fees — and one even pays cash-back rewards. Take a look.

For cash back: The no-fee Citi Double Cash card pays 1 percent when you make a purchase and another 1 percent when you pay the bill, to return an impressive 2 percent on all your spending. With the American Express Blue Cash Preferred card, you’ll easily earn back the $75 annual fee with its 6 percent cash back on up to $6,000 in supermarket purchases annually (1 percent thereafter), plus 3 percent on gas and qualifying department-store purchases and 1 percent on everything else. Spend $1,000 in the fi rst three months and you get a $150 statement credit.

For travel: Earn 1.5 points on every purchase with the no-fee BankAmericard Travel Rewards card and three points per dollar when you book travel through the Bank of America Travel Center. You can use points for statement credits on travel purchases at a rate of 100 points per dollar. The Chase Sap-phire Preferred card’s $95 annual fee is waived the fi rst year, but its rewards make the fee worth paying after that. You’ll earn two points per dollar on travel and dining and one point on everything else. You can transfer points to several loyalty programs, including

Southwest Airlines Rapid Rewards and Amtrak Guest Rewards.

For prepaid: The Bluebird From American Express and Wal-Mart card charges no fees, aside from $2.50 for each out-of-network ATM transaction. The mo-bile app has new tools to let you track and categorize spending and set monthly limits. Consider the Ameri-can Express Serve Cash Back card if you expect to charge more than $595 a month on it; with 1 percent cash back on all purchases, you’ll cancel out the $5.95 monthly fee.

For balance transfer: Pay no balance transfer fee with the Chase Slate card as long as you move the money within 60 days of the card’s issue. Plus, there’s no annual fee, and the annual percentage rate is zero percent for the fi rst 15 months. Citi Simplicity charg-es a fee of $5 or 3 percent of the balance (whichever is larger) for balance transfers, but the introductory zero percent APR continues for a lengthy 21 months. And the card charges no annual or late-payment fees and no penalty APR for missing a payment.

For sports fans: The BBVA Compass NBA Ameri-can Express card is a slam-dunk for basketball fans. You get three points per dollar spent on NBA pur-chases (including qualifying tickets and in-stadium transactions), two points on gas and groceries, and one point on everything else.

By Lisa Gerstner |

CORUND/FOTOLIA

Steve RosenKids & Money

12 travel sites to save you moneyFeeling too pinched to travel? You can still find good deals to get away — if you know where to go online first. Here are the best travel sites we've found to help you bag bargains on airfares, lodging and car rentals.

Airfares• Kayak.com scours hundreds of online sources for the cheapest fare available.

• AirfareWatchdog.com works best for travelers ready to take off at the drop of a deal.

• WhichBudget.com will help you build an inexpensive overseas flight plan.

• Major airlines will refund you the difference if the fare falls below what you paid. Yapta.com will shoot you an email or Tweet and walk you through how to collect your refund.

Rental cars• Hotwire.com often offers the best published deals on cars by collecting rates from its eight rental car company partners.

Lodging• Hotels.com lets you search just one site for accommodations.

• Priceline.com's Negotiator is uniquely suited to help you haggle for the best bargains.

• At TripAdvisor.com you can filter the results to find which hotels are best for value.• BedandBreakfast.com lists extensive details on even the tiniest inns and sends promotional codes and "hot deals."• HomeAway.com offers a big selection of deals on rental lodgings.• HomeExchange.com provides the largest network of home swappers.• JetSetter.com is our favorite private-sale site for luxury hotel deals.SOURCE: Kiplinger Washington Editors

VACANT

SUCCESS

My parents, who are in their early 60s, just moved from the five-bedroom house they’ve lived in for more than 20 years to a two-bed-room house. Besides being far too big, the old house had chronic termite and roof problems and needed a lot of yard and pool mainte-nance. The new one is newly renovated with all new mechanicals and a smaller yard, and it’s in a more walkable neighborhood near their friends and my younger sister.

Downsizing was emotionally and logisti-cally difficult, but I’m really proud of them for making this decision now while they’re young, healthy retirees. And it turns out that they’re doing exactly what wealth advisors would tell them to do.

A recent survey of wealthy baby boomer investors by UBS found that 42 percent feared “being a burden” on their family, while only 9 percent feared the opposite, “dying alone.”

“People are not relying on the way things used to be,” says Sameer Aurora of UBS. “It was assumed in more traditional times that

older people will be taken care of until the end of their lives by mostly their children and extended family.”

Part of this changing perspective, says Au-rora, comes from what might be called “the triple-decker sandwich.” It’s not so uncom-mon for boomers, facing retirement them-selves, to be caring for their elderly parents while also managing relationships with adult children who may have dependent children of their own.

And this issue is only going to grow. The number of Americans needing long-term care is expected to double in the next three decades. And a recent study of patients on Medicare found that out-of-pocket costs at the end of life were highest for patients with dementia, who need help with activities of daily living, often for years, most of which are not covered by public programs.

So how should families be tackling this thorny issue?

Location, location, location. Aurora says the first step in long-term retirement planning should be the one that my parents have just taken. If you’re living in a large, expensive home in a car-dependent neigh-borhood, downsizing now will enable you to limit expenses while maintaining indepen-dence longer. Being near family and friends is, if anything, even more important. Even though 89 percent of respondents in the UBS survey say they’d prefer to stay in their current home, they still find a smaller home to be vastly preferable to a nursing home or assisted living.

Long-term care insurance. If you want to be cared for in your home, you should look for an insurance policy that covers that type of care as part of your retirement planning. The younger and healthier you are, the cheaper these policies are. Aurora talked to one client in his 70s who put it bluntly. “I want my time with family to be filled with laughter,” he said. “Let the health aide take care of the bedpan.”

Think about tradeoffs. Most people are not so wealthy that they don’t have to make choices. Maybe you were hoping to chip in for a son’s mortgage or help with your granddaughter’s college tuition. But what if it comes down to paying for that vs. hiring daily help that will save your kids from hav-ing to quit their jobs to take care of you one day? What is the plan that’s going to preserve everyone’s relationships?

If you do end up depending on your children in your old age, a source of conflict could be how care responsibilities are split between siblings. Aurora noted that it is typi-cally women, and those living nearby, who shoulder more of the burden.

Talk to a professional, preferably all to-gether. “A good advisor should be willing to sit down with the whole family,” says Aurora. Look for one with expertise in intergenera-tional wealth transfer, inheritance and estate planning — and who wants to build a long term relationship as your needs change over time.

Anya Kamenetz welcomes your questions at diyubook@gmail.com.

Don’t want to burden your

children? Plan now

Downsizing now will enable you to limit expenses while maintaining independence longer.

Business leaders of the future and future funders of those leaders, I have one request:

Please take my money.I insist. I want to offer you my

money in exchange for your ser-vices. Maybe you’ve heard of this: It’s called capitalism. I’m tired of you telling me my money is no good. Of you refusing to entertain the pos-sibility that I might explicitly value your service. Mostly I’m talking to you, Internet businesses.

For too long, people have em-braced the compromised notion that free is not just an acceptable price but also the optimal one. Investors have clamored that user growth, not revenue, is what mat-ters. Because why monetize now when you can figure it out later? And we, the people — readers, view-ers, members, and users — have thought we were getting a great deal.

We’ve paid — with information and tracking and invasive inter-ruptions. (I’m shaking my fist at you, Ethan Zuckerman, inventor of the pop-up ad.) We’ve paid with delayed service updates and poor communications and ignored pleas. We’ve paid with services vaporizing because they wanted to build an audience before building a business.

We’ve paid by failing to notice that we are not the customers. The

customer is the advertiser, the data miner, the bigger fish to come along and acquire the assets of a promising young company that cashed out, offering us as the asset.

By refusing to turn users into customers, many of these compa-nies have a confused loyalty. Paying customers can demand refunds. They can organize their money with that of other customers and demand improvements. It’s called accountability. I want your incen-tives to grow to be aligned with me, not some third party paying you to snitch on me.

Private company valuations are so chimerical in part because there’s rarely a financial relationship between the business and its users. We invent these proxies for value such as time spent on a site or the number of sunset photos uploaded. Do you know what’s easier to count than all that? Money. I value those great sunset pictures, but can I exchange them for online photo-storage space? Does Amazon accept hugs as payment?

Not every service should be deliv-ered solely on the basis of a person’s

ability to pay. Health care is one example. Some types of education

and housing qualify too. For cer-tain classes of services, we are all customers and we should all con-tribute. It’s called taxation, and we are living another myth in thinking

that we can stop paying that money and still maintain the relative quali-ty of communal services that sustain our society. Even Donald Trump understands that. We’ve been sold a false sense of “free” in both business and government.

I implore you, experimental entities masquerading as financially sound businesses: Take my money. I don’t just want to be your user, a term that implies subservience and substance abuse. I want to be your customer. I want to be your primary source of funding rather than a series of investment rounds.

You may think me old-fashioned to bring up this idea of money and customers in a business discussion, but lots of things are making come-backs these days: mohawks and neon-colored clothing and national-ism and vinyl records. Let’s bring customers back too.

Baratunde Thurston is a supervising producer for The Daily Show With Trevor Noah and a cofounder of Cul-tivated Wit, a collaborative comedy company.

KIRSTEN ULVE

LET ME PAY FOR ITWith all the concern about a tech bubble bursting and dead

unicorns, I have one bit of advice that can fix everything

DMITRY/FOTOLIA

Anya KamenetzThe Savings Game

By Baratunde Thurston |

Mutual fund wins big investing in tiny companies

Thurston

Over the past year, small-company value funds have provided little value for their shareholders. On average, funds that focus on cheap small-capitalization stocks lagged both the small-cap Russell 2000 index and Standard & Poor’s 500-stock index, which tracks big-company stocks. One small-cap fund that bucked the trend was James Micro Cap (JMCRX), which whipped the category average by nearly 11 percentage points.

As its name indicates, James invests in the smallest of the small. Managers Brian Culpepper, Trent Dysert and David James begin their search for potential winners by screening about 1,300 stocks with market caps of $1.4 billion or less. They assign

each stock a score based on 27 fac-tors, including price-earnings ratio, price-to-book-value ratio and relative strength, a measure of how a stock is performing compared with the broad market. Stocks scoring in the top 10 percent qualify for purchase. But every stock that enters (or leaves) the portfolio must win approval from a majority of a nine-person committee that includes the three managers.

The committee also dictates an overarch-ing investment strategy. Based on the group’s 2015 outlook, the managers pared back hold-ings in energy and other commodity stocks, one reason the fund has performed well lately. Top holdings include such obscure names as ePlus and Covenant Transporta-tion Group.

By Ryan Ermey |

Build a sizable nest egg? Check. Purchase a new set of golf clubs? Check. Plan for taxes on your retirement in-come? Chhhh...Wait a minute. Plan for what?

Lots of retirees are surprised by the big bite that taxes can take out of their savings. And depending on where you live, the tax hit can be especially pain-ful. In fact, some states even tax Social Security benefits, the most important source of income for many retirees.

The 13 states that tax Social Secu-

rity are Colorado, Connecticut, Kan-sas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont and West Virginia.

But just because a state taxes Social Security doesn’t mean it’s a bad place to retire. Overall, Colorado and West Virginia are actually tax-friendly places to live in retirement despite the tax on Social Security. Weigh a state’s entire tax picture — from income tax to sales tax to property tax — to better under-stand how your money will be taxed and how you can budget for those costs.

I started figure skating when I was 3 and won the Olympics at 16. I am often asked about what happened in the interim, to share the secret to success that

existed between these two bookends. It’s something I’ve spent a lot of time thinking about too.

Telling people what they want to hear in a few short sentences and telling people the reality is not always the same thing. It’s not because I don’t want to share the reality of it — the real-ity of leaning in, day after day, hour after hour, minute after minute. The reality of occasionally taking on more than you think you can handle to reach the next level, which sport requires you to do, and to do often.

Two amazing things can happen when you embrace this: You gain a newfound confidence in yourself, and you meet people who will change your life by inspiring you to keep leaning in.

To have success in skating, you need to be very skilled in articulation. You must understand what you want, your capabilities, your opportunities, and constantly work on your ability to deal with failure and success. Once you have a grasp on that, you start working on ways to express it bet-ter externally.

There is a joy in being able to communicate how you feel inside to the outside world. It’s this articulation that forms the most basic connection from one person to another and something I continue to work on every day.

A few months after the 2002 Winter Olympics, I gave a speech in New York. Billie Jean King was front and center. I spoke about the influence she’s had through her “Battle of the Sexes” tennis match, but also about the importance of the legislation she helped pass to ensure equal opportuni-ties to future generations of children in federally funded programs through Title IX.

When we spoke after, I knew I had a like-minded friend. What I didn’t know was that the relationship we began

then would become what it is today, years later.

I’ve always admired her boldness in being the person to stand up and make a change when she encounters injustice. It’s a quality that has made me want to be more like her. We went to a hockey game at Madison Square Garden re-cently, and I told her that I was applying to law school to be more effective in the work we were doing together through the Women’s Sports Foundation, an organization she founded. In true Billie

Jean fashion, she didn’t just approve of the idea of becom-ing a law student, she celebrated it as if it was the best idea she’d heard all year.

I was recently appointed to the Board of Trustees for the Women’s Sports Foundation. After working as an ambas-sador for WSF, focusing on benefiting underserved girls and women, I became more aware of the multifaceted challenges and issues facing people all over the country. When senators and representatives take meetings with me, I know I only have a few minutes to clearly and concisely make my point. It is now more important than ever for me to be articulate. It’s a skill I’ve been developing my whole life: on the ice, off the ice, at Yale as an undergrad, and now as a 1L at the University of Pennsylvania Law School.

I think of Billie Jean’s reaction at that hockey game often. When I look back to the ingredients for success I achieved in sport, enthusiasm and passion are at the heart of it. When I look forward, her reaction reminds me of the can-do spirit and optimism I want to have for life and for the possibilities I have ahead of me — possibilities for creating opportunities for others and advocating for justice for all of us on the playing field and off of it.

Lean In stories come from the Community section of the Lean In website, an offshoot of Facebook Chief Operating Of-ficer Sheryl Sandberg’s best-selling book “Lean In: Women, Work, and the Will to Lead.” For more, visit www.leanin.org.

SUCCESS

Terry SavageThe Savage Truth

For many years, U.S. Savings Bonds were an attractive, simple way for Americans to save money for the future or to provide meaningful gifts to grandchildren. Older Series EE bonds had a high “floor” inter-est rate and an additional variable rate that changed every six months. In 2005, that formula was discontinued. Now EE bonds carry a fixed rate for the first 20 years, set at the time of purchase. Locking in today’s low rates makes them quite unattractive.

Deciding how and when to cash older Se-ries EE bonds has become an art form. And few experts are as knowledgeable as Jackie Brahney of SavingsBonds.com, a web-site that is dedicated to helping investors understand their savings bond values. The website offers a free savings bond calculator and color coded inventory form, secured with a password. For a membership fee of

less than $1 per month, you can also get a “cash-in” report, helping you decide which bonds to cash first and the optimal time to cash them.

Here are five basic things you should know:

When should I cash my savings bonds? Older, paper savings bonds reach “original maturity” when they reach their face value — the amount written on the bond. Because of the variable interest rates on them, there is no fixed date for that to happen. They will continue earning interest until they reach “final maturity” — 30 years from the issue date for all EE bonds.

What’s the tax implication of cashing a savings bond? Unless you elected to pay taxes on the interest on an annual basis, which few people do, you must pay federal income tax on the bonds in the year they mature — even if you don’t cash them in. (And if you cash them in early, you’ll pay taxes that year.) There is no state or local income tax on U.S. Savings bonds.

Warning: Cashing in a lot of bonds in one year could result in enough interest income to put you in a higher tax bracket or push seniors into paying more for Medi-care Part B. Also, for bonds purchased after 1989 in parents’ names, there may be some tax advantages if the proceeds are used to pay college costs, depending on the family income and other requirements.

How do I choose which bonds to cash in? That depends on the bond. Some older EE bonds that have not reached final matu-rity had a guaranteed rate as high as 8 per-cent for the original maturity period; they still may pay a higher semi-annual rate than current low yields. That’s why it’s important to have Savings Bond Inventory and “cash-in” reports as offered by SavingsBonds.com. Also, despite low current fixed rates, all EE bonds issued since May 2005 are guaran-teed to double in value in 20 years, with a value adjustment made at that point.

Note: Cashing in bonds just one day before interest is posted will cost you all the interest for that period (either one or six months, depending on the bond). And cash-ing them within five years of purchase will create a three-month interest penalty.

How do I cash in savings bonds? If you have paper bonds, you can bring them to a financial institution. But you should run a savings bond valuation report before doing so, to make sure you are receiving the cor-rect amount! You can cash electronic bonds early at TreasuryDirect.gov, but they must be held at least one year before they can be cashed.

Can I give my bonds to my children to avoid taxes on the interest? Removing the primary owner (which can only be done before final maturity) usually creates a tax-able event. The original owner is respon-sible for reporting all interest earned up to that point.

Do your homework before getting rid of old savings bonds. They could be more valuable than you think. That’s the Savage Truth.

Terry Savage responds to questions on her blog at TerrySavage.com.

5 things to know when cashing in

savings bonds

They will continue earning interest until they reach ‘final maturity’ — 30 years from the issue date for all EE bonds.

JOE RIMKUS JR./MIAMI HERALD

Sarah Hughes performs her routine during the 2002 Winter Olympics women’s free skating competition in Salt Lake City, Utah. Hughes went on to win the gold medal.

Olympic gold medalist Sarah Hughes:

SNYFER/FOTOLIA

Which states tax Social Security benefits?

‘When I look back to the ingredients for success I achieved in sport, enthusiasm and passion are at the heart of it.’

By Sarah Hughes | Olympic Figure Skater & Law Student

SUCCESS

Q: What’s your favorite off-the-wall question to ask potential hires and why?

How do you think you did in this interview? “Ask this at the end of the interview. It’s a question that catches them off guard and is pretty telling. They will sometimes reveal nervous twitches, double-sided answers or just general comments you may not have caught the first time around. You may also find more specific answers to take a candidate from on the fence to the other side.” —Cyril Agley, Talon Ventures LLC

How did you earn your first dol-lar? “I love asking this question. I’m not looking to hear about doing chores around the house. I’m looking to ex-plore their ‘hustle’ gene and their entre-preneurial drive by exploring how they worked at a young age. You can gain really interesting insights from this.” —Julian Flores, GetOutfitted, Inc.

Are you nervous? “I find this question to be a good ice breaker. It gives you a sense of whether they are letting their guard down and opening up — being

genuine — or if they are sticking with their prepared canned answers. It’s amazing how much that one question can immediately change the course and tone of an interview.” —Steven Newlon, SYN3RGY Creative Group

If I were to put you in charge for a day, what would your day look like? “By asking this question, I am able to get an idea as to whether this is some-thing that excites them or intimidates them, deciphering the leaders from the followers. Sometimes it’s funny to hear what they think I do all day. What I’m looking for is someone who wants to take initiative, has great ideas for imple-mentation and potential suggestions for improvement based on research.” —Jessica Baker, Aligned Signs

Why are you in the field you’re in? “Most interview questions focus on the result (e.g. ‘Given problem Y, what’s your solution?’), but especially at a startup, the problem itself isn’t always known. I ask candidates why they do what they do, because it highlights those who are truly passionate about their work. Passionate people detect and solve problems before you have to ask them as interview questions.” —Todd Medema, Sled

What activities do you do outside of work? “This can tell you a lot about people. Do they have other interests or goals outside of work, or do they just sit on a couch in their free time? Are they able to set their mind toward something and achieve it even when they aren’t being paid or nobody is watching? Do they have interests outside of work that are bettering them as a person?” —Nate Andorsky, Creative Science Labs

What’s your plan B? “I usually like to ask them to present an idea and have them outline a plan. Then, I’ll ask them what they would do if their plan didn’t work. Having the knowledge and cre-ativity to immediately adjust into a new plan is key for all business roles.” —Tom Chalmers, IPR License

What’s your spirit animal? “If they can handle that type of question and laugh about it, I know they’ll be a good fit.” —Lisa Curtis, Kuli Kuli

BusinessCollective, launched in partner-ship with Citi, is a virtual mentorship program powered by North America’s most ambitious thought leaders, entre-preneurs, executives and small business owners.

Best sources for advice

on investments

Investors can glean good advice everywhere from old-school newsletters to new-age Twit-ter feeds. Sources we like best are chock full of market data and history to buttress market opinion, but are engaging and accessible to ordinary investors at the same time.

Best stock market letter: InvesTech Re-search (four-issue trial, $39), which promises “safety-first profits,” has bested the overall stock market over the long haul with less risk. Publisher James Stack analyzes economic, monetary and market data (some going back more than 100 years) to make market calls and recommend allocations.

Best investing blog: Economist and strate-gist Ed Yardeni, head of Yardeni Research, provides sophisticated yet accessible analysis of unfolding economic, political and market-related developments in Dr. Ed’s Blog. Subjects range from company earnings to the Federal Reserve to analysis of stock, bond and other markets.

Best investing Twitter feed: Bespoke In-vestment Group, a research and money man-agement firm, helps investors sift through the market morass by sending out tweets stuffed with charts, graphs and tables that give plenty of context for the day’s market and economic news.

Best online advisers: For conservative investors: Schwab Intelligent Portfolios offer advice that will appeal to the risk-averse. In our test of online advisers, Schwab prescribed a relatively modest 65 percent allocation to stocks for a 25-year-old investor with an aver-age tolerance for risk. The minimum invest-ment is $5,000, and Schwab doesn’t charge a management fee. n For investors just starting out: Betterment and Wealthfront have low minimum require-ments. On assets of less than $10,000, Better-ment charges 0.35 percent per year; Wealth-front is free.n For investors with more-complex finances: Vanguard’s Personal Advisory Services has a $50,000 minimum, but you get access to a cer-tified financial planner who not only manages your portfolio but also offers comprehensive financial-planning advice. The service costs 0.30 percent of assets under management.

VIGE.CO/FOTOLIA

By Anne Kates Smith and Nellie S. Huang

By Founder Society

8 interview questions that break

the ice