Latest in Financial News

Keeping up with the latest in financial news can be a hassle. It is important if you want to keep a step ahead of debt or other financial troubles but can seem like too big of a task to manage. If you read the newspaper daily, then the good news is that you should be reasonably up to speed on things. If you don't read the newspaper daily and just rely upon word of mouth, though, then chances are that you may be falling behind on things.

So let's fix that. Down below is a list of current hot button financial issues and decisions currently being debated. Whether it is debt, student loans, or car recalls no information is too small to be overlooked by the savvy and smart consumer.

Toyota: The media coverage which the company has been under for the past month has been overwhelming. By now, most Americans know that Toyota cars have had dangerous problems with them (uncontrollable acceleration being the biggest concern) and their faith in the automotive giant has been shaken.

But are you also aware that now is the best time to buy a Toyota vehicle from a financial point of view? Toyota is currently offering the highest discounts on its vehicles in its entire history. If you think that Toyota has fixed the problems with its vehicles or you are just a person looking for a good deal, then check Toyota's offer out. Toyota vehicles get great gas mileage, something which should help you save even more money in the long run should you choose to purchase one. And before this current crisis, the Toyota brand was known to be one of the safest on the road.

Student Loans: Student loans and governmental grants may be in for a big change. Congress is currently contemplating legislature that would allow it to cut out the "middlemen", or contractors, who usually dole out the governments allocated student education money. They hope that by doing so more students will receive the funds that they need in order to attend college.

Good News: If you are a college student or are currently supporting a student’s education, then there is a good chance that you will be able to save money. The government getting directly involved will mean more money for you and less for the people that you talk to in order to get it. Bad News: If you work for a company that used to work in the business of giving out government grants, then you are looking at tough times. Local economies in places like Nebraska (where many of these companies are located) will also be hit by this. And finally, because the federal government is getting involved, be prepared for more forms - not less.

A final bit of news is that Congressional Democrats are trying to merge the student financial aid bill with the Health Care Bill. Because the financial aid bill is a popular congressional motion that many senators and representatives do not want to vote against, the Democrats believe that merging the two will gain the Health Care Bill the votes that a Reconciliation movement (which is a way for Congress to forcibly pass a bill through in such a way as to make it impossible to filibuster or delay) would require.

Debt: What about it? Debt is the same as always. People get into financial trouble, find themselves with no credit left, and think themselves to be powerless to change things. But that is not true. Thanks to the current economic crisis, companies and experts on debt management have sprung up right and left. Debt, credit, and financial aid groups have advertised like never before in order to get you to use their services. Many of these groups are good at what they do, but there is always one or two that just want to take your money.

But don't let this stop you. If you are in trouble financially and are thinking about declaring bankruptcy, experts are incredibly useful. They can keep creditors off of your back and help you to get yourself financially stable again.

If you are in debt, need a reverse mortgage settlement, or require some other form of financial advice then seek help immediately! Reliable groups such as debthelper.com (a non-profit debt help organization) are around because of debt related problems. It is quite literally their job to help people at the end of their rope.

The Economy: Is the economy improving, getting worse, or doing neither? Well, in a nutshell it's doing all of them. Major sectors of the economy (such as retail) have seen recent improvements, but signs are indicating that these improvements are temporary. According to a Reuter’s article, experts claim that the current economic recovery will slow down this summer, with job losses also slowing down by that time.

Good News: Currently, the U.S. economy is doing better. Businesses are choosing to not fire employees in fear of continuing problems. And companies are hiring temporary workers, allowing people who are currently unemployed the chance to jump back into the job market.
Bad News: While it has slowed, the loss of full time jobs is still continuing. Additionally, with things unlikely to get dramatically better anytime soon, companies are cautious about hiring new full-time workers. We may have hit and climbed up from rock bottom, but we are still a long ways off from the top of the mountain.

If you read this post and found it useful, then feel free to leave a comment. Advice, questions and criticism are both appreciated and encouraged. Speak up and let your fellow readers know what's going on!

Additional Links:

Reuters Economic News Article

Reuters Report on Toyota Discounts Article

New York Times Economic News Article

New York Times Student Load/Health Care Bill Article

Blog Post on Student Loans: Linked Here

The secret lives of America's debtors

Americans are loaded up with credit card debt. What's worse is that some husbands, wives and even children hide those money woes from their families. The results are often devastating.

Hidden debt is a common and insidious problem. "It's a form of cheating so subtle you don't even know you're doing it," said Bonnie Eaker Weil, a relationship expert and author of the book Financial Infidelity. "It's a power struggle that can be more harmful to a relationship than adultery."

Take Johnny and Audi Deas, who live in Dallas.

Johnny runs a nonprofit that teaches local youth how to handle money. He had no idea that his wife, Audi, was racking up thousands of dollars in debt behind his back.

Audi, 37, opened up a credit card without telling her husband and started shopping to relieve stress, buying clothes for herself and toys for her 8- and 10-year-old children.

"I thought that I'd just pay it off each month," Audi said. "But it was $100 here and $200 there, and soon it was spiraling out of control."

Audi quickly found herself a few thousand dollars in debt and eventually maxed out her credit card. She couldn't sleep.

"I lay awake at night with numbers running through my head," Deas said. "It was constantly on my mind: How am I going to pay this off?"

But when Johnny pulled the family's credit report, her secret was exposed. It was a slap in the face, he said.

"This is something I'm passionate about," said Johnny. "This is money meant for our whole family."

After paying off the card with savings, the couple agreed to tackle a monthly budget as a team.

"It's better to be honest," Audi said. "Sure, you'll probably cause a fight -- but at some point you've got to stop fighting."

'No cash flow and no way to plan your life'
When one half of a couple tries to hide debt, it rarely stays a secret forever.

Melanie Jordan began racking up credit card debt to get her career as an independent contractor off the ground, which was tougher than she anticipated.

"It's hard ... you think the deal is set, but then it doesn't go through, which means no cash flow," said Melanie, who lives in Las Vegas.

She financed her business through savings and a credit card for two years, and it was easy for Melanie to hide the debt from her husband because they keep their finances separate. Melanie's business ultimately flopped, and she spent a year trying to pay off her bills secretly.

But the jig was up when the couple applied for a loan to build a house. Melanie's husband was shocked. They decided for other reasons not to rebuild, and Melanie agreed not to run up any more debt.

"It led to a lot of soul searching," she said, "and I won't do it again."

$250,000 lost - and most was Mom's money
Of course, it's not only spouses who lie to each other about money matters. Children often try to hide their spendthrift ways from their parents, too.

Blake K., who declined to use his full name, lost $250,000 day trading. He got interested in the stock market when he was 8, and by age 18 he was day-trading stocks.

Blake's parents divorced in 2002, and his mother gave him $150,000 to manage for her. At the same time, Blake took out $100,000 in personal credit card and business loans to start a software company while at college in Seattle.

"Like any gambler would say, at first it went very well," said Blake, now 27.

Then the market turned, and Blake routinely lost $10,000 and even $30,000 a day. He'd stay up all night to trade on the 24-hour currency market, feverishly trying to make back the money.

"I was in denial," Blake said, "telling myself I could make it all back on the next trade."

Meanwhile, Blake was generating fake statements for his mother's account to cover up his mounting debt. After four years, the entire $250,000 was gone, and he had to tell his mother what he'd done.

He filed for Chapter 7 bankruptcy in January 2007 and did a short sale on a home he had just purchased. He lived in his office for two months.

These days Blake pays cash for everything and never trades stocks or currencies. He runs his own software business, and he has so far repaid his mother $50,000. He blogs anonymously about his experience at debtkid.com, and only his family and fiancée know about his secret past.

"I'm very careful with anything related to money now," Blake said. "It became like alcoholism: Once you recover, you don't risk taking another drink."

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How to Keep Your Credit Card Safe Online

Using your credit card to buy something online has become an almost daily habit for most people. Even so, there are many people who are still uncomfortable with submitting their credit card information online. Their fears aren’t completely unfounded. Scams are everywhere and the techniques scammers use are constantly evolving so it’s true that you are taking on a little bit of risk if you punch in your credit card number online.

Luckily, with some common sense on your part and some technological advances it is incredibly safe to shop online. That isn’t to say there aren’t potential dangers out there, but if you are able to follow a few basic tips and procedures you can make sure your credit card information is safe.

1.Just like you should be aware of your surroundings and be on the lookout for suspicious looking characters when withdrawing money from an ATM, you should know how to recognize the warning signs of online scams and take steps to avoid being a victim. Don’t just blindly click on links or emails and keep your eye out for things that just don’t quite seem right.

2.Ensure your browser and operating system are running the latest versions and you have applied all of the recent updates. These online scammers are constantly changing their tactics and companies must update their software over time to combat their attacks. If you’re running a version that’s a year old you may be vulnerable.

3.Watch for the padlock icon on the status bar at the bottom of your browser window, which indicates that the site is secure. You will also want to look for an ’s’ added to the usual http at the beginning of the web site’s URL when you get ready to submit your purchase information. The https indicates a secure server that is using SSL, which means your information is being encrypted. Without the https or other secure transmission you open yourself up to having your credit card information snagged by a thief during the transaction.

4.Before submitting personal information to a site, read their privacy policy to find out how the information may be used and whether it will be sold or shared with other businesses. If you don’t like what you read, shop somewhere else. Most sites will obviously have a solid privacy policy, but if it’s a site you’ve never used before it is worth double checking.

5.Don’t provide personal information such as address, telephone number, Social Security number, bank account number, or e-mail address unless you know who you’re providing the information to, why it’s being requested, and how it will be used. If an online store is requesting more information than you’re used to, stop and think about why it is asking.

6.Use a credit card, not a debit card, for online purchases. A debit and credit card may look the same, but they aren’t. You have more protection in the event of a fraudulent purchase if you use a credit card. Besides, your debit card is linked to your bank account, so if your information gets stolen you could find your account wiped out!

7.Carefully review your credit card and bank statement each month for unauthorized charges and notify your credit card company or bank immediately if you notice any charges you didn’t authorize. Not only that, but you should be monitoring your credit score and report on a regular basis. Sometimes the goal is to steal your information so that a criminal can create a fake identity, not necessarily steal your money. So looking at your bank statements might not alert you to identity theft.

8.Finally, make sure your computer is secure. If you use a wireless network at home you need to be sure you have it locked down with at least some sort of WEP or WAP protection. Avoid transacting business on wireless networks that are not your own. And make sure your computer’s anti-virus and spyware software is updated and keeping your computer safe. One way scammers can get your information is by loading trojans or other hidden programs on your computer that silently take your personal information even if you don’t realize it.

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How To Never Get Into Financial Difficulties

Finance is a huge part of our lives yet it remains something that many people struggle with. Today, more than ever before, people are getting into financial difficulties and debt.

The recession has been going on for a few years now and people's houses are still being repossessed. People are still losing their jobs. Worst of all, they're losing their freedom and independence.

What's saddest about people getting into debt is the ties it causes. It you're in debt you're often forced to stay in a job or an area you don't like in order to repay the debt. There's an incredible freedom that comes from being free of debt. Only when you're debt free can you actually live the life you want and be the master of your own destiny.

So here are my tips on how you can avoid getting into debt, simplified and repackaged in a way that I hope makes you see the true value of living within your means.


Never borrow money to buy unnecessary toys
Living within your means brings happiness and freedom that expensive new gadgets don't. If you can't afford to buy the car or TV of your dreams then don't buy it. Get what you can pay for in cash now and be happy with it. If you really need to buy a car to get from A to B then buy one you can easily afford.

Don't be tricked into finance plans that offer "18 months interest free". If you can't afford to buy the item for cash now you may not be able to in 18 months either. If you buy something on those crazy "free credit" terms, you'll be paying over the odds for it and you won't be free anymore. You'll be tied down to making those repayments until they're paid off. Much better to save up, pay cash and live free.

Maybe you're worried about what people will think about your unfashionable car or clunky TV? Don't be. Anyone who judges you by that isn't worth worrying about anyway.



Non-Essentials
Little things like clothes, skincare, & toiletries add up. Just get what you need. I'm sure that many of us in developed countries have many more clothes than we can actually wear. That's why I've classified clothes as non-essentials here. How many pairs of jeans and t-shirts does one person actually need? I'd be prepared to bet that it's not as many as you've already got, especially if you're female. Sorry girls!

I've just spent a year without buying any new clothes, apart from some new sports socks when my old ones had gone to holes and a pair of shoes for a wedding. It wasn't as if I was going to be naked. I had more than enough clothes to see me through the year and I think I even managed to look quite nice most of the time too.

It was great not to bother going to shops and shopping centers and also good at the end of the year to evaluate what I actually needed clothes-wise and spend a few hours clothes shopping. If you can't cut down your clothes shopping to once a year try shopping for clothes only twice a year, maybe when the sales are on.

Or have a clothes and accessories swap party. Invite about 10 friends of varying sizes and tell them to bring the clothes and accessories they never wear. You'll be laughing over each others' disaster buys and amazed to see how good your unflattering trousers look on someone else. This is a cheap, fun night in and a great way to bond with friends.

When it comes to skincare and toiletries get cheaper brands. The pricier ones aren't worth it, you're just paying for the expensive advertising campaigns and the supermodels who promote them. Now why would you want to do that?

So you really need something?

Do you really need it? Really? Truly? It's amazing how many things I think I need and write on my list but never get round to buying because I don't go to the shops very often. If you go shopping every week, apart from to the grocery store or food market, then you're probably spending more than you need to just by being in the shopping mall. Avoid shopping malls like the plague, especially if you have kids with you.

But let's say you've convinced me there's something you really need, your bike's broken beyond repair and you really need a new one to get to work. Please, never buy anything, new or used, without taking the time to ask these two questions:
What's the best price you can do for me? Can you do a better deal for cash? You'll probably get one discount this way but you might even get two price cuts.

If you can wait until the annual sales, you might get a better deal. Or put a search on Ebay, go to garage sales and tell your friends and colleagues you're in the market for a new bike to see if anything comes up.



Housing
Sometimes renting can be cheaper than buying, especially if house prices aren't increasing. Don't be pressurized into buying a house or buying a more expensive house than you can easily afford the mortgage repayments on. You're not buying a better house, you're buying worry and financial pressure.



Grocery Shopping
Forget silly food coupons, just make sure you bulk buy and buy the supermarkets own brands. With most items (basmati rice, virgin olive oil, canned tomatoes, pasta, etc.) some of the cheaper brands taste just as good as the more expensive brands to me. There are only a few things I'm fussy about - I have to have the more expensive brand of mayonnaise - but for most things you'll probably find the no name brands are just as good. Pick and choose your products carefully.



Be Patient
For example, go to the movies on cheap Tuesdays or wait for the DVD to come out to the $1 RedBox. Most things have promotions at certain times of the year or on certain days, you've just got to wait for them.



Banish takeouts
I love eating out. I don't do it as often as I'd like but it's a real treat for me to go to a cafe or restaurant and eat a meal someone else has cooked and will clear away for me too. I just don't get the idea of takeouts though. Most of them don't taste as good as the food you'd make at home and it's not that hard to wash up a chopping board and a couple of saucepans. Most healthy food is quick to make at home too (things like stir-fry and omelets) or can be prepared in bulk so you can freeze some to reheat on another day (curries and soups.)

I know often you may want to socialize without feeling you need to kill yourself with cooking and shopping. Try having a curry night and asking everyone to bring along one dish. Or just a potluck and see what happens. Or a fun sushi night where everyone knuckles down and learns how to make their own sushi.
Start making these life changes to stay out of debt and save money today. There's no time like the present. Like any addict you'll suffer a bit at first, but when you get used to spending less you'll be glad you did. Leave your credit cards at home and reassess how to cut down your spending and what you'll do when you've controlled your spending and earned your own freedom.

What will you do when you're out of debt and in control of your finances? Keep your eyes on the prize and you'll get there in the end.

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Year-End Auto Deals Slimmer, but Bargains Still Abound

Car prices and incentives tend to follow the curve of the economy. In the darkest days of late 2008 through early 2009, consumers brave enough to buy a new vehicle scored some incredible deals. Now, as the country appears to be on the mend and auto sales have risen in recent months, the discounts aren't quite as deep. But that's not to say buyers can't still find bargains as 2009 comes to a close.
According to Automedia.com's "New Car Deals — A Guide to Year-End Deals and Rebates and Incentives," dealers are still eager to clear out their remaining 2009 inventory and start selling new models as they try to secure their year-end bonuses.
Biggest Deals on 2009 Models
As soon as the ball drops to ring in the New Year, 2009 cars will be slapped with the stigma of being last year's model. So it's typical for manufacturers and dealers to sweeten their deals in December. However, some reports say that this summer's Cash for Clunkers program wiped out much of the country's 2009 inventory, which could make it harder to find the vehicle you want.
Here's a sampling of some of the season's hottest offers for 2009s. If you can be flexible on color and options, you could save thousands.
Year-End Incentives on 2009 Models
Make Model Promotion
Chevrolet 2009 Impala $3,500 cash back
OR
0.0% APR for up to 72 mos.
Dodge 2009 Ram 1500 $3,500 cash back
OR
0.0-2.9% APR for up to 72 mos.
GMC 2009 Acadia $2,500 cash back
OR
0.0% APR for up to 72 mos.
Ford 2009 Expedition $2,000 cash back
OR
0.0% APR for up to 60 mos.
Nissan 2009 Altima $1,750 cash back
OR
0.0% APR for up to 60 mos.
Volkswagen 2009 Passat 0.0% APR for up to 60 mos.

When your child goes to college, where would you expect them to live?

• At Home

• In a dorm

• In an apartment

• Anywhere but at home

According to a recent survey by The College Board, the average four-year, in-state public college education now costs more than $60,000 with private school costing closer to $142,000. For room and board, the average college student pays between $8,000 and $9,500 a year. Typically, $2,500 to $4,500 of that total pays for food.

So while scholarships, financial aid and student loans all can help, it's important to have a sound plan for how you'll be able to afford to help put your children through college. There are many ways you can save, and each has its own distinct advantages.

Certificates of Deposit (CDs) are a great way to guarantee a higher rate of return than an ordinary savings account, and let you plan for the short (as little as 30 days) or long term (up to 7 years). In addition, laddering multiple CDs may improve the liquidity of your college savings while reducing interest rate risk. However, there may be early withdrawal penalties if you are forced to pull money out before its maturity.
College-specific savings investments such as 529 plans are available at a low cost, allow high contributions and provide tax-free earnings1 to pay for college expenses. Other college investment and savings options include Coverdell Education Savings Accounts and Uniform Gifts/Transfers to Minors.

One way to help lower your debt and consolidate all your bills into one, is to call Debthelper.com @ 800-920-2262. We can negotiate for you to lower interest rates and combine all your accounts to 1 monthly payment. Saving you hundreds, if not thousands of dollars in interest. Call us to find out more.
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Beware: Loopholes in the Credit CARD Act you need to know about

The credit card reform bill, otherwise known as the Credit CARD Act, goes into effect next month (on February 22, to be exact). While there's a lot to be grateful for in this legislation, there are also some omissions, loopholes and flat-out giveaways to the credit card companies of which consumers need to be aware.

WalletPop talked to Lauren Bowne, an attorney with Consumers Union, the nonprofit consumer-advocacy group (and publishers of Consumer Reports). Bowne has been tracking this act as officials get ready for its launch, and she offered WalletPop readers a list of loopholes to watch out for when you use your credit cards after the CARD Act kicks in.

The bad news
There is no cap on the interest rate card companies are allowed to charge. While companies can't hike your rates on existing balances unless you're 60 days late with a payment, they can raise rates on future purchases any time and for any (or no) reason, warns Bowne. They do have to tell you this, but they'll probably send it in an envelope that looks like junk mail in the hopes you'll throw it out.

Lesson? Read everything your credit card company sends you! Issuers have to give you a 45-day warning, and a new rate can kick in as soon as two weeks after they send you that notice. If you don't want to pay the new interest rate on future purchases, your only choice is to stop using the card (or pay your balance in full every month).

While the CARD Act has limits on the severity of penalty fees you can be charged, there's no rule against card companies making up as many new fees as they can conjure and charging whatever they like for them. MSNBC's Red Tape Chronicles tackled this topic in a recent post. Some issuers have already started adding annual fees to cards that didn't used to require them, and are also adding things like fees for paper statements. Some are even adding "inactivity fees" if you don't use your card for a long period.

Expect to see more of this in the future, experts say. (Yet another reason to read all the mail your credit card company sends you, so you can opt out or, at worst, cancel the card if you don't want to pay the new fees.)

The Red Tape Chronicles also highlighted another area of fee creep: Card companies are allowed to -- so it's safe to assume they will -- raise existing fees. The amount you pay for anything from balance transfers to cash advances has already been creeping up. Be prepared to see it rise further in the future. Again -- and we can't say this enough -- read your mail. If a fee for, say, balance transfers pops up, be sure not to transfer a balance or even stop using that card.

We told you card companies can't hike your rates on existing balances. That's true as long as you have a fixed-rate card instead of a variable rate card, says Bowne, and that is a loophole big enough to drive an armored truck through. This is the reason why card issuers have been switching people to variable-rate cards as fast as they can print out and mail the notices.

Right now, most variable rates are in line with or maybe even a little lower than the fixed rates users were paying before. This is because the "variable" part of the variable rate, called the prime rate, is at a historic low because the government is keeping interest rates very low. Translation: When the Federal Reserve raises interest rates -- which most experts think will happen in about a year, give or take -- to prevent inflation, your interest rate's going to rise, too. Our best advice? Pay those balances down as soon as possible to avoid paying more when interest rates go up.

While issuers have to give you 45 days' notice before making most kinds of changes to your account (such as raising rates), there are two important exceptions, Bowne says: Your card company can lower your credit limit or close your card without giving you any warning at all. So what's a consumer to do?

Your best move in this case would be to call the issuer, ask why they made the change and see if they'll reverse it. If not, it's a good idea to pay down that balance as fast as possible, since a lowered limit can impact your credit score by skewing your utilization ratio. Bowne says issuers tend to close cards that are inactive or aren't used very often. However, if you find yourself with a closed card that has a balance on it, it's in your best interest to pay that off as fast as possible, since the issuer will likely report that balance as the credit limit, making it look as if you've maxed out your spending.

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Why we pick 'debit' rather than 'credit'

When you punch in a PIN to pay with your debit card, you're saving the store -- and maybe yourself in the long run -- some money.

Posted by Karen Datko

We recently changed the way we buy most stuff -- be it groceries at the supermarket or paint at the hardware store. When we swipe our debit card, we type in our PIN. That's the “debit” choice when card users are asked to pick “credit” or “debit.”

How does your credit compare?
Why are we doing this? When you say “credit” and provide a signature -- sometimes waived, depending on how much you “charge” with your card -- you’re allowing the banks to siphon more money from the store and, ultimately, the consumers.

A recent New York Times story explained how this came to be -- and gives a lot of the credit, shall we say, to Visa. Here’s a very condensed version:

When debit cards were introduced, merchants could accept them without paying a fee to the banks. But that all changed in the 1990s when Visa offered to process debit card transactions on its credit card network -- creating the “credit” with signature choice.

Visa also set higher fees for each transaction as a financial incentive to attract more clients -- banks that agree to issue Visa-branded credit and debit cards. Naturally, more banks signed up. “By 1999,” the Times said, “Visa was setting fees of $1.35 on a $100 purchase, while Maestro and other regional PIN networks charged less than a dime, Federal Reserve data show.” (Maestro belonged to MasterCard.)

More recently, Visa has taken an interest in the PIN-transaction market, too. Visa controls 73% of the signature debit market and is the dominant player in the PIN debit market with 42%.

How does this affect you and me?

Merchants pay a processing fee for each transaction plus an “interchange” fee that’s a percentage -- usually 1% to 3% -- of the purchase price. Interchange fees from debit and credit card purchases brought in $45 billion for banks last year, more than double their take in 2002.
That’s the fee that makes businesses angry. The Times said, “Some merchants say there should be no interchange fees on debit purchases, because the money comes directly out of a checking account and does not include the risks and losses associated with credit cards.”

Merchants pass the fees on to consumers in the form of higher prices, which are paid by everyone, even those who use cash. “The National Retail Federation estimates those lucrative interchange fees cost households an average of $427 in 2008,” the Times said.

So far, PIN transactions cost merchants less than signature transactions. “When you sign a debit card receipt at a large retailer, the store pays your bank an average of 75 cents for every $100 spent, more than twice as much as when you punch in a four-digit code,” the Times said. Small merchants pay even more.

But that could change. Debit cards have already surpassed credit cards in popularity and are expected to beat out cash by 2012 as our favorite way of buying things. There’s more money to be made by Visa, MasterCard and the banks.

What's your game plan for 2010?
Some, including members of Congress, are looking at regulating the fees, but years of lawsuits and complaints about the unfairness of it all haven’t had much impact.

Would it make a difference if these fees were lowered? Would, for instance, merchants hire more employees or drop their prices if we all switched to PIN transactions (or made all purchases with cash)? It’s hard to say.

Obviously one person's decision to punch in a PIN won't amount to a hill of beans or cheaper kibble. But when we consider that more money stays with our locally owned grocery store -- well-regarded for its support of local charities and events -- rather than being siphoned off to some big bank, that’s enough for us.

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New Requirements for Credit Card Disclosures

The first phase of the Credit Card Accountability Responsibility and Disclosure Act (aka Credit Card Act) goes into effect February 22, 2010. The new law will require certain disclosures to all credit card consumers. The following disclosures must be present on every monthly statement sent to credit card borrowers:

1.The total number of months it will take for the consumer to pay off their credit card if they only make the minimum payment. This disclosure is very important because many debtors are under the false belief that paying only the minimum payment on their credit card will pay off the card in a few years. That is far from the truth. Depending on the balance of the credit card it could take 10 years or more to pay off a credit card paying only the minimum payment.

2.The total cost of the credit card loan. This cost will include the principal and interest if the consumer only makes the minimum payment as noted above. This disclosure is necessary to let people know that they will often pay twice or even three or four times for an item they charge to their credit card and repay over the years.

3.The payment amount the borrower needs to make if they want to pay off their credit card loan in 36 months. This disclosure will definitely help millions of Americans come to terms with their credit card debt. When debtors begin to realize that they need to pay $1,000 per month over the course of three years to pay off their maxed out credit cards they may seriously consider bankruptcy if they don’t have the income.

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Earthquake Relief for Haiti

In an effort to help those who have been affected by the earthquake in Haiti, and their continuing tragedies, Credit Card Management Services, Inc. d.b.a Debthelper.com is now a collection center to help those in need.

Your gift will help distribute relief supplies to children and families impacted by the earthquake and aftershocks in Haiti.

Anything you are willing to provide will be greatly appreciated and invaluable to the families you will be helping. The immediate need is dry foods such as rice, beans; can foods, tents and army type cots, blankets and medical supplies.

Where: 4611 Okeechobee Blvd. Suite 114 WPB, FL 33417
Time: Mon – Fri: 9:00am – 8pm; Sat: 12:00pm – 5:00pm
Information: (561) 472-8000

Debthelper.com

Attention Car Owners - Do You Need a Reality Check?

This is a guest post from Joe Plemon from Plemon Financial Coaching who authors the blog Personal Finance by the Book.

“Geraldine”, a sassy lady portrayed by the late Flip Wilson, answered her husband thusly when he demanded an explanation for yet another new dress: “The Devil made me do it! I was walking down the street minding my own business when he snuck up behind me and pushed me into that dress store. He MADE me try on! Then he pulled a gun on me and forced me to buy it and sign your name to a check.”

Geraldine’s humor is timeless because so many of us can relate to it. For example, have you ever bought a new car and then wondered what possessed you to do it? I doubt if it was the devil, but the devil’s first cousin, car fever, will have the same results.

Do you currently own a car you wish you had never bought? Are you asking yourself if you should try to sell it or just live with it? This post is designed to help you think through this dilemma.

Start by asking yourself these questions:

How much do I owe on it?
If you paid cash, then you are probably not facing a financial crisis necessitating the sale of the car. If you simply don’t like the car, then take your time, sell it and pay cash for another one. If you are in debt, move on to question two.

How big a burden is this car on my budget?
If one hiccup in your life will cause you to start missing payments, then you need to amputate this car before that hiccup occurs. Even if you are easily making your payments, you still might be deceived into thinking all is well. Long term debt on a depreciating asset such as a car is a formula for staying perpetually in car debt. To break that cycle, you need to get the car paid off in 24 months or less and then keep driving it while you save cash for your next car. If you are on track to do so, then keep the car and enjoy it. If not, you should seriously consider getting rid of it.

If I am seriously considering selling, how do I go about it?
Knowledge is power. First, you need to learn if you are upside down (owe more than the car is worth). Check http://www.kbb.com/ to learn the private party value* of your car. If this value is less than what you owe, you are upside down. *(Use private party value because you are money ahead selling the car yourself).

But how does this work? Here is an example: You owe $22,000 on your “Geraldine” car and you could sell it for $18,000 (private party sale on www.kbb.com), thus putting you $4,000 upside down. If you decided to buy a $3,000 car (we will call the “beater”), your new debt would be $3,000 plus $4,000 = $7,000. You are still upside down, but you have eliminated $15,000 of debt.

How do I go about selling a car I am upside down on?
Unless you have an extra $4,000 available, you will need to borrow it in order to get the title released. So where do you borrow the money from?

Start by checking with the title holder. You have done your homework, so explain your rationale. In effect, you are asking for an unsecured loan on your upside down amount. Most lenders are not thrilled by this, but explain that this same amount of the current loan is already unsecured and you are simply asking that they move this amount from a more expensive car to a less expensive car.

If the title holder balks, don’t give up. Try your credit union or your home town bank, explaining that you will be moving your business to them. If you simply can’t find financing, consider other options such as selling stuff (Craigs List or Ebay or yard sales) or temporarily working a part time job.

REALITY CHECK: Are you ready to get your Geraldine car out of your life? Good! Doing so will not only be a huge relief, but will teach you to never again succumb to car fever. Still, you need to go into this decision with both eyes open, so the following pros and cons will help you preview the reality of your decision:

The Good
◦LESS DEBT. You have just reduced your total debt by $15,000!
◦OUT OF DEBT QUICKER: From our example, with an 8% loan and monthly payments of $400, your Geraldine car will be paid for in 5 years and 9 months. Your “beater”, on the other hand, will be paid off in only 19 months.

◦STAY OUT OF DEBT: Once the beater is paid off, you could save $4,800 toward another car by making payments to yourself for one year. Assuming your beater would bring $2,000, you could upgrade to a $6,800 paid for car. Had you stuck with your Geraldine car, it would have depreciated to about $12,000 by now and you would still owe $13,300 on it.
◦PEACE: You will know that you have taken the steps to undo that Geraldine decision. This is a great feeling.

The Reality Check
◦INCONVENIENCE: Selling your car and buying another is a hassle.
◦A DOWNGRADED DRIVE: Face it: your Geraldine car is nicer than a beater will be. Be prepared for it.
◦LESS DEPENDABILITY: No doubt your beater will have some issues. You need to be realistic in assuming that it will not be as dependable as a newer car.
◦MORE MAINTENANCE: With less dependability comes more maintenance.
◦FRIENDS WON’T UNDERSTAND: Reality? Yes. Negative? Not really. Just be prepared for it.

One Final Reality Check
You may not be able to arrange the necessary financing. Why? Either your credit score is not adequate or you are too far upside down. Should this be your scenario, you will need to strategically pay down all other debt in order to free up enough cash flow to make huge car payments. Keep the car until it is paid off or you will be swimming in car debt for years to come.

Source

A Few New Years Resolutions To Help You Out

Well, it's that time of the year again. The end of 2009 approaches, and a new year will soon begin. If you're anything like me, then you've probably made some pretty generic New Years wishes in the past like "I'll try to be healthier" or "I won't procrastinate anymore". There's nothing wrong with making those kinds of wishes- it's just that we often let them slide when life throws us a curveball.

When you make a New Years resolution this year, try to change things up a bit. Instead of making a big and amazing resolution such as "I won't procrastinate anymore", say something like "I'll finally take that special someone out". Focus on something specific and positive instead of vague or negative qualities about yourself. Pay the bills as soon as you get them, take five minutes out of your day to sit down with your spouse or kids and connect with what's going on in their lives. It's like Robert Williams once said "Carpe Diem - seize the day!"

If you're having trouble managing debt, medical issues, or some other crisis, then the ability to sieze the day is all the more important. Go out and see a free credit help agency like the people at debthelper.com about your debt, find out whether or not you will qualify for some form of medical aid from the government through froms such as the FAFSA form for students, and just try to do something productive like helping your roomates or spouse out around the house to share the burden. Small things can make a giant difference.

It's easy to make a sweeping resolution to try and deal with everything in your life, but don't do it. Keep it simple and specific. Your New Years resolution could be just what you've needed to get you out of trouble. You can be the change in your own life. So go out and seize the day!

Have a Happy New Year!

Bank Of America Credit Card Changes: Things To Watch Out For

If you own a Bank of America credit card, then you are likely aware of the fact that the bank has changed (and is continuing to change) its credit card policies due to the passage of Congress's Accountability, Responsibility, and Disclosure (CARD) Act of 2009, which takes effect in February 2010.



It would be in your best interests as a customer/cardholder or a potential customer to know what exactly they are changing, because it may have an effect upon your financial situation. The purpose of this blog post is to try and bring some of these changes to your attention, and to provide you with access to the documents being used to do so.



Highlights/Major Changes:

1) Your rate for existing balances will no longer be raised for being a few days late with your payment -but you will still be charged a late payment fee. This change affects the "Default Pricing" section of your credit card agreement.

2) Beginning on February 13, 2010, your APR's on existing balances can only be raised if you do not make your minimum monthly payment within 60 days of the payment due date. However, the APR on future accounts and transactions can still be raised if you fail to make the payment within 60 days. They also reserve the right to amend your agreement in such a situation (which would be very detrimental for you!). In order to do so, Bank of America has to provide you with at least 45 days of prior notice.

3) Bank of America will not give you a charged fee for going over your credit limit (although such transactions would still be declined). However, doing so can negatively affect your account balance if your account is currently at a penalty rate.

4) Here's a big one - Any amounts that you pay over the minimum payment required will now be used to pay down balances with the highest APR. In other words, if you have a credit card account with two balances and you overpay on one, then the amount that you go over will be used to pay off the account with the higher APR. This is a tricky one that you need to keep your eye on.

5) Payment dates will always fall on the same date each month, and will be at least 25 days from the closing date printed on your account.

Helpful Documents:

Reading the following documents will give you a firsthand look at the changes being made, what exactly is being changed, and why. You can also use them to help reach your own conclusions concerning your personal financial situation.

For a copy of what the February legislation should look like, you can find an online copy if you click on the following link: Credit Card Program

For a copy of Bank of America's letter explaining these changes, you can look at a sample provided by them. You can find it by clicking on the following link: Sample Customer



For a copy of the Accountability, Responsibility, and Disclosure (CARD) Act of 2009, click on this link: Congressional Act. And if you want to know more about what the Act will affect, you can find out by clicking on the next link: Congressional Act Explained.

Two Helpful Tools to Deal With Student Loans

Tuition. It is the financial nightmare of many parents, and almost every student faces the problem of how to pay for it at one point or another. Scholarships are by far the best choice out there to deal with the problem - regardless of the students age, as there are scholarships out there for returning students as well as those who are fresh out of highschool - but what about those who don't get any, or if the scholarships don't cover the whole bill?

Well, unless you can pay for it out of pocket, the option that many middle-low income families take is to pursue student loans. These can take a variety of forms, ranging from a standard bank loan to Pell grants, Stafford loans, Perkins loans and more. This can be a frightening decision to make, especially for low-income families and those with low credit ratings.

Two Helpful Tools

If you or someone that you know is thinking about taking a student loan, two tools that you should be aware of are the Free Application for Federal Student Aid, or FAFSA, form and the website http://humancapitalscore.com/.

1) http://humancapitalscore.com/ was recently mentioned in a Wall Street Journal article (a link to the article in question can be found at the bottom of this post) about college degrees and post-grad jobs. The website contains a free online calculator for figuring out how much that a student may make after they graduate.

This can be useful in determining how much money that you should take out on a student loan because "many experts say total student loans shouldn't exceed a grad's first-year income after graduation". The entire point of humancapitalscore.com is to provide you with those numbers, and it is simple and easy to use it. All you have to do is input the potential students test scores, high school and college attended (or considering attending), grades and major.

2) If you, your kid, or someone else that you know does decide to take out a student loan, then make sure to check out the FAFSA form. The purpose of the form is to "...ensure that all eligible individuals can benefit from federally funded or federally guaranteed financial assistance for education beyond high school" (taken from the fafsa website). Broken down, what this means is that the goal of FAFSA is to make it financially possible for highschool graduates to gain a college or vocational degree.

In the past, however, it has often fallen short of its goal. Like many federal programs, it has been called needlessly complicated and notoriously difficult to fill out - let alone recieve aid from. Asking applicants as many as 157 questions in order to determine the students eligibility, many students and their families have given up without even turning it in. This may soon change.

According to a New York Times online article that I have linked on the bottom of this post, the Obama administration is trying to fix this problem. Specifically, the article states that:

"In January, when next year’s form goes online, about 20 percent of the questions will be eliminated, mostly by avoiding redundancies. For example, students who are at least 24, or married, will automatically be able to skip the 11 questions about their parents’ financial information, and low-income students will be able to skip the questions about assets, which are not used to determine their aid eligibility."

Further changes are also pending that can affect low-income families and "less than 3% of applicants", but they may or may not happen. In order to be sure about whether or not the new FAFSA form can help you out, take a look at the new form which is being released sometime next month, January.

Remember, tuition doesn't have to be a crushing nightmare. There are ways to send yourself or your kid to college without taking on a massive amount of debt besides, or in addition to, finding scholarships - you just have to be aware of your options.

Wall Street Journal
New York Times
FAFSA

A Few Things I do to Organize my Finances

This is a guest post by Mr Credit Card from Ask Mr. Credit Card. Today, Mr Credit Card is going to write about ways to keep your finances organized. If you are looking for a credit card, then be sure to check out his best credit cards list section.

Telling folks to be organized in their finances is easy to say, much harder to do. I’m going to share some ideas that I myself have implemented and hope you find them helpful for yourselves and your situation.

Set Monthly Bills on Autopay – I find it such a hassle to constantly go through my utility bills, cell phone bills, internet connection bills, credit card bills, mortgage etc. For me, I find that putting all my bills on automatic bill pay works for me. There are a couple of ways to do it. You can set it up from your online bank account, or with the entity which you are paying the bill. What I also do is to put some of my utility bill on my credit card to earn extra reward points!

Some folks prefer to manually check the bills and write the checks themselves. For me, I find that this will not work because I just cannot be bothered with things like that. I also do check my bills even though they are on autopay to make sure there are no errors. The only thing you have to be aware of is to have enough cushion in your checking account. You do not want to be short of money and go into overdraft!

Have a separate box for warranties – Ever bought a new blender and forgetting where you put the warranty after you send them in (normally within 30 days though most folks actually forget about it!)? I used to lose warranties and instruction manuals because I had no set place to put them. Well, I now put all product instruction manuals and warranties in one place (more like a big box). That way, even though I am unlikely to ever need to refer to it, I always know where it is.

Have a separate file or box for your insurance policies and wills – We all buy insurance policies and once the payment starts, we forget why we buy them! Some folks don’t even remember buying them! I find that it is a good practice to keep these documents in a separate area. I frequently forget about the nitty gritty details of my health insurance and when I want to check them, I know where to get the documents.

Have lots of files – I file all my statements in bright colored files that I get from statements. For me, I refuse to receive “email or online statements” from my credit cards or utilities. I receive my statements in the mail and file them promptly.

Use Quicken – I use Quicken to track my accounts (both personal and business). My CPA told me to set up my business accounts in Quicken so that she has less work to do come tax time (and would presumably charge me less!). Since I moved over to Quicken, I found life so much easier. I could track my expenses and see patterns in my spending (obviously, you could use use services like mint.com. But for me Quicken does the job.

One trick that I’ve been taught was to set up my expense categories in my business accounts according to the expenses listed under the Schedule C (Form 1040 – where you file your business P&L). This makes it easy for your CPA if you just give him or her your Quicken file.

Use Separate Business Credit Card for your business – I used to use one personal credit card just for my business expense. But I found that I occasionally used it for personal use as well (most of the time by accident! or to make use of reward points!). But it gets messy because it gets in the way of keeping your business and personal finance separate. I finally bit the bullet and got myself a small business credit card. The card I got was the American Express Plum Card, which earns me cash back if I pay in full within a 10 day cycle. I also get no preset spending limits, which allows me to charge a higher than normal expense if the need arises.

Keep track of all your autopay accounts you charge to your credit card – Once I got my new business credit card, I had to call the vendors (or change them online) to change my credit card account. My web host for example has my old credit card information. Google has my old credit card information. My Verizon FIOS had my old credit card number. I had to either call them to tell them to charge to my new credit card or do it online.

Track your portfolio performance – Whether you have a single or multiple accounts with various online brokers, you should always consolidate your accounts into a platform for performance tracking. Quicken for example, does a good job of that. If you only use one brokerage firm, then the task is relatively more simple as most will have some form of annual performance tracking tool. But part of keeping your finances organized is to be able to say precisely what was your return last year net of fees.

Get a safe – I would recommend getting a safe to keep important documents like birth certificates, marriage certificates, your college degree. You could obviously keep your jewelery in it as well.

Have a list of important phone numbers – Make a list of your banks’ numbers, your brokerage number, your attorney’s number, your health insurance agents number, your doctor’s number. You never know when an emergency might come up and you want to have those numbers on hand.

I’ll stop here – These are some of the things that I have done to try to keep my finances organized. I hope you will find some of these tips helpful. The one thing that I have not really figured out is how to organize my pile of receipts! I hate filing them and I am very tempted to get something like Neat Receipts where I can just scan in my receipts and it can be transferred to my Quicken account and the images can be used for IRS audits. But I’m not sure if scanning receipts is an improvement at all. If anyone has any ideas for these, I’m all ears.

Source

When Good Debt is Bad

We know the old adage: never go into debt for depreciating assets. For a long time, the conventional wisdom has been that bad debt are things like credit cards, appliances, and things that lose their value quickly. At the same time, many people regard two types of debt as “good debt”. These are mortgage debt and education debt (or student loans). But, are these really good debt? What happens when making payments on a mortgage or student loan debt instead of paying down an investment in the future become more like a ball and chain holding you back from things? How can appropriate boundaries on this debt be set? Consider the following:

–What is a realistic estimate of your future income? — the main problem that I find with servicing mortgage and student loan debt is the unrealistic forecast many people have of their future stream of earnings. Sure, when starting out, an entry level wage typically goes up. However, a realistic worker today needs to consider that regular annual pay raises have not been part of the median worker’s experience in America. In addition, most people will experience some income uncertainty from layoffs, furloughs, lower bonuses, and stints between jobs (intentional and unintentional). This income irregularity needs to be part of planning of paying off large debts.

–What flexibility is given up through these debts? — one of the saddest conversations that I’ve had with friends and co-workers recently has been around those that feel chained to a job they hate because of large debts hanging over their heads. For graduate school debt, sometimes over $100,000, I know many people that have opted for corporate law or banking in order to pay their debts down. This is a huge barrier for many people wanting to go into public and community service roles. Mortgage debt, or the inability to quickly sell a house, also seems to be a barrier in quitting a job, moving to a new location and other problematic features of having a huge inflexible, and illiquid liability. With the shine on housing finally dulled, perhaps more people won’t continue with the false mantra of “housing only goes up”.

–What is the payoff period of the loan? — at the age of 18, when most people take out their first student loan, it’s hard to comprehend what a decade really means. With some of the large student loan balances, many people are committing themselves to a payment over $1000 a month, each month, for over 10 years. With most mortgages, people tend to sign up for a 30-year loan. Are you really prepared to service these loans for 10 or 30 years, respectively?

–What is the opportunity cost? — in addition to flexibility, servicing large loans often means having to give up future purchases and activities, or threaten future retirement schemes. While it may be worth it to many people, it pays off to take a long, hard look at the trade-offs before engaging.

–What are the alternatives? — I’m certainly not advocating for people to forgo their education, but I do think that people should consider lower cost alternatives more than in the past. For a mortgage, downsizing expectations, or deferring a house purchase for a year or two to accumulate a larger down payment, is straightforward. For education, I recommend that people consider lower cost options like state schools and community colleges, especially if they are planning to get a second degree. Also, looking at programs that help to pay down debt in exchange for public service. Unfortunately, it looks like Harvard Law School just suspended this program as it looks like too many people had the same thought.

Source

STRESSED?!

Dr. Mark Rogovin doesn't need to check in with CNN to know the tanking economy is taking a toll on the public.

The waiting room of his Boynton Beach family practice is evidence of it.

"They're tired despite a full night of sleep, they have rashes with no clear cause," Dr. Rogovin reports, "they're not sleeping, they're not eating or they're eating too much of the wrong stuff.

"Some of them, frankly are tearful and acknowledge it's stress-related, and others come in thinking they have a terrible disease."

They don't, it's just stress.

But that's no small matter if, like thousands of Americans, that stress is chronic or constant.

What is stress?

Well, back in the day it was a response your body generated to meet outside demands — like that big animal bearing down on you as you gathered berries.

Think of that fight-or-flight rush of adrenaline, or a boost in blood pressure, blood sugar or body heat.

The idea is to make you more alert or stronger.

But it's supposed to be a short-term solution.

An economy that threatens your job, how you put food on the table or a roof over your head can send you into a chronic state of stress. And bundles of research tells us that's no good for your body.

Then what happens?

More people end up in Dr. Rogovin's, or some other doctor's office complaining of a litany of ailments.

Stress can create a new illness or exacerbate ones you already have.

An 2008 AARP study found that 20 percent of people 45 and older reported health problems due to financial stress. (To compound matters, about a fifth delayed seeing a doctor because of the cost.)

That study also found that while older folks have less stress in their lives than younger ones, Baby Boomers (ages 45 to 63) appear to be the most susceptible to stress that comes with concern about money and the economy.

And we're not talking about mere headaches or tight shoulders — though they are among the more common stress-induced pains.

In West Palm Beach, Dr. Mujahed Ahmed says he's seeing more patients who complain of lack of sleep, heart palpitations and dizziness.

To the south, Dr. Charles Metzger at MDVIP in Boca Raton ticks off even more issues: upset stomachs, back pains and higher blood pressure.

Also, research indicates stress can hamper the immune system. While there's no evidence yet that suggests stress can cause cancer, there is some question whether it may play a role in cancer by "tampering" with the immune system, according to a special report on stress released last fall by the Harvard Medical School.

So what do you do?

First, figure out the source.

Metzger has his patients complete a stress inventory.

"It's a great way to broach a topic that sometimes doesn't get broached. It asks questions about your sleep, do you still enjoy things you used to, it asks about your libido," Metzger said.

He also asks them to keep a journal.

"Just understanding what's going on as they write it down gives them more distance from the feeling, helps them think more clinically. As people start to understand things better they get a feeling of more control," Metzger said.

"I have people come in saying, 'I feel bad. I have headaches.' Turns out what's bothering them most is, 'My neighbor's fence is on my property.' "

Even when people recognize the stress in their lives, they don't realize the toll it's taking, Ahmed said.

"Sometimes they have stress but think they're handling it. Or they rationalize something like a job loss, saying they can pursue something else, but subconsciously it comes out. Turns on them. It all goes inside," Ahmed said.

All these doctors, and others throughout the country agree the next step is to try and tackle the stress with changes in our routine.

Then it may be time to change.

Time to change your bed time for one, said Rogovin.

He often suggests turning back that time even just a half-hour.

Add in some time for exercise, even if it's just walking. Again, Rogovin favors at least a half-hour — walking in the pool if you're overweight or older.

Then there are the standards: eat well, rest, ask for help.

"We also try to go through relaxation techniques, biofeedback, massage, yoga, meditation," Metzger said.

Bottom line: You must find a way to curb that stress.

"The effects are not trivial," said Sarah Burgard, an assistant professor of sociology at the University of Michigan, who has studied stress and its resulting health problems.

"I was actually really surprised to see the magnitude of problems. It is similar to the effects of being a smoker," said Burgard, whose team looked at 3,000 employed people under age 60 who were already enrolled in two long-term studies.

Another interesting finding: People who constantly fear losing their jobs are worse off health-wise than people who actually do lose their jobs but eventually land another.

Everyone react differently to stress.

Here are some red flags to look for:

•Headaches, muscle tension, neck or back pain
•Upset stomach
•Dry mouth
•Chest pains, rapid heartbeat
•Difficulty falling or staying asleep
•Fatigue
•Loss of appetite or overeating 'comfort foods'
•Increased frequency of colds
•Lack of concentration or focus
•Memory problems or forgetfulness
•Jitters
•Irritability
•Short temper
•Anxiety
Source: American Psychological Association

The American Psychological Association offers these tips to help deal with your stress about money and the economy:

•Pause but don't panic.
Pay attention to what's happening around you, but refrain from getting caught up in doom-and-gloom hype, which can lead to high levels of anxiety and bad decision making. Remain calm and stay focused.

•Identify your financial stressors and make a plan.
Take stock of your financial situation and what causes you stress. Write down specific ways you and your family can reduce expenses or manage money more efficiently. Then commit to a specific plan and review it regularly. Although this can be anxiety-provoking in the short term, putting things down on paper and committing to a plan can reduce stress. If you are having trouble paying bills or staying on top of debt, reach out for help by calling your bank, utilities or credit card company.

•Recognize how you deal with stress related to money.
In tough economic times some people turn to unhealthy activities like smoking, drinking, gambling or emotional eating. The strain can also lead to more conflict and arguments between partners. Be alert to these behaviors — if they are causing you trouble, consider seeking help from a psychologist or community mental health clinic.

•Turn these challenging times into opportunities for real growth and change.
Think of ways that these economic challenges can motivate you to find healthier ways to deal with stress. Try taking a walk — it's free and a good way to exercise. Having dinner at home with your family may not only save you money, but help bring you closer together. Consider learning a new skill. Take a course through your employer or look into low-cost resources in your community that can lead to a better job. The key is to use this time to think outside the box and try new ways of managing your life.

•Ask for professional support.
Credit counseling services and financial planners are available to help you take control over your money situation. If you continue to be overwhelmed by the stress, you may want to talk with a psychologist who can help you address the emotions behind your financial worries, manage stress, and change unhealthy behaviors.

16% of people 45 and older had to use retirement savings or other savings to pay for medical care

21% have cut back on other expenses in order to afford their medical care

One in six, 16%, are not confident they will be able to afford health care in the coming year

Source: 2008 AARP study

TAKING STOCK OF STRESS ...

A recent survey by The Associated Press and AOL found that people with high amounts of stress related to their debt were far more likely to report suffering several health problems — including ulcers or digestive-tract problems, migraines or other headaches, anxiety, severe depression, muscle tension and heart attacks.

When that survey was conducted, an estimated 14 million Americans had high levels of 'debt stress' that were contributing to serious health problems, according to Paul J. Lavrakas, a research psychologist and consultant to The Associated Press.

Source

Plastic Free

More holiday shoppers this year are using cash or debit cards to avoid overspending with credit cards.

But what about the rest of the year? Is it possible in a credit-dependent society to get by without plastic?

"Credit cards are not necessary," says Ed Fredericks, a finance professor at Pepperdine University. "Originally, credit was seen as a privilege. Soon it kind of turned into something that everyone had to have. Multiple cards were mailed out to people, whether they were able to carry credit or not."

Granted, credit cards are convenient, offer protections you don't get with cash or debit cards, and make sense for many consumers.

But the buy-now, pay-later system has lulled millions of Americans into piling on debt. And many consumers are finding in this tough economy that card issuers, at least for now, have the upper hand. Issuers are doubling interest rates, raising fees and lowering credit limits at the first hint of risk. These tactics - plus new annual fees - are being used even against disciplined customers who don't carry balances.

"Right now, everyone wishes they didn't have a credit card. People have gotten into such a deep hole with credit cards in the last decade or so and are desperately trying ... to climb out," says Beth Kobliner, author of "Get A Financial Life: Personal Finance in Your Twenties and Thirties." "Cash is becoming a bit more in vogue."

The latest government figures show that the average credit card debt is $7,905 per household, down from $8,387 last year, Kobliner says.

Yet millions of consumers live without credit cards. Some never got into the habit; others have sworn off plastic after being burned.

Danielle Peterson, a Web developer for the University of Maryland, Baltimore, hasn't used a credit card for two years.

"It makes me feel pretty good. I really don't miss having the credit card bill come at the end of every month," she says. "I feel bad for everyone who has a credit card and is facing these interest rates and everything else."

The 32-year-old got her first card while a student at the University of Maryland, Baltimore County, where she opened accounts with vendors on campus to get free T-shirts or other gifts. Card debt wasn't a big issue until her senior year in 2000, when she took an unpaid internship in New York and lived off credit cards. Add tuition, and her balance ballooned to $8,500.

Peterson signed up for a debt management plan, closed her accounts and paid off the balance over 2¿ years.

A few years ago, she got another credit card as a backup. But after slipping into carrying a balance again, Peterson closed the account and paid it off. She now sticks with cash and a debit card that pulls money immediately out of her checking account.


Making the switch
Going without credit cards is an adjustment. It requires building savings and tracking expenses.

"I do a mental tally every time I'm using my card and what my balance will be after that," Peterson says. She frequently checks her account balance online.

"This time of year is probably the hardest time to not have a credit card because of all the weekly sales," she concedes. "But not having a card allows me to stay true to budget and not be tempted by impulse shopping."

She's right.

"You are more likely to buy and spend more when you use credit cards [rather] than debit cards," says James Roberts, a marketing professor at Baylor University. A study of fast-food restaurants, for example, found that customers using credit cards spent 50 percent to 100 percent more than those paying with cash, he says.

People spend more with credit cards because it's painless, Roberts says. You get what you want immediately, but the bill won't come for a month.

Paying with cash or a check is painful because you see the money disappear before your eyes, he adds. Debit cards are a little less painful than cash, but they hurt, too.

Proponents say that credit cards are more secure and are required by merchants such as car rental agencies and hotels. Others say you need a card to build a credit history and credit score.

That reasoning is outdated, Roberts says.

Lose cash and it's gone, of course. Federal law, though, limits your liability to no more than $50 if your credit card is stolen. Legal protections for debit cards depend on when you report a missing card, and it's possible to see your entire account wiped out if you wait more than 60 days. But in practice these days, card companies frequently give debit cards the same liability protections as credit cards.

As the use of debit cards has grown, so has their acceptance.

"I traveled all over Europe on my debit card two years ago," Peterson says. "I used it to book cruises and plane tickets, and rent cars."

Of course, card policies vary among businesses, so you should check before traveling. According to some car rental policies, for instance, the agency will put a larger hold on a debit card than a credit card. And some agencies conduct a credit check on customers using debit cards.

As far as credit scores go, a credit card is an easy way to establish a score, but not the only way.

"You can have a very good score without a credit card," says Barry Paperno, consumer operations manager for FICO, creator of the widely used credit score.

To generate a FICO score, you must have an account that's more than six months old posted on a credit report and activity in that account within the past six months, he says. Besides credit cards, FICO takes into account student loans, car loans, a mortgage, home equity and other consumer loans.

Peterson, for instance, says she was able to get a car loan and a 30-year-mortgage with favorable terms without a credit card. One benefit you don't get with cash or debit cards: If you have a dispute a merchant over a purchase made with a credit card, the issuer is in your corner to negotiate.

So, can you adjust to life without a credit card?

"It's not going to be an easy shift if you have been relying on credit," warns Bruce McClary, a counselor with Clearpoint Credit Counseling Solutions.


Planning ahead
Living without a credit card takes discipline. You must keep enough money in the bank to cover everyday expenses and unforeseen emergencies, such as your furnace dying. You must budget and track expenses to avoid overdrawing your bank account. And you may have to wait to purchase something you want.

Living without a credit card will take more work, but the trade-off could be worth it.

Says Roberts, "You can live a better life and be more financially at peace without a credit card."

Source

False Economy: Think You're Saving Money? Think Again

You assume you're being a savvy consumer by doing things like using coupons, getting free shipping with online purchases, and shopping in stores with no-hassle return policies. But are you really being taken for a sucker?

There are plenty of programs and promotions out there that claim to save you money. However, retailers don't come up with these promotions to save you money. They come up with them to make profits. The game comes down to who is playing who.

You can save money through many of the programs and retailers below, but the trick is to make sure you're working them, and not the other way around.

Coupons
It's great to get a discount on something you were going to buy anyway. But coupons are often used to entice folks into purchasing stuff that's not normally on their shopping lists, and that they don't really need—so if you buy, it's a net loss, even if you're buying at a discount. There's an interesting discussion on whether coupons are a waste at FiveCentNickel.com. Most bargain hunters use them, but use them carefully, strategically. To use coupons wisely, you must be willing to jump from brand to brand and from store to store, and you must keep your eye on what you're actually paying out of your pocket, rather than what you're supposedly saving with some coupon. As one commenter said:

There is no point in saving $0.50 on a $4.00 bottle of salad dressing, when the one you normally purchase is $2.39.

Which brings up another point: Even if you have a coupon for a national brand product, a generic store brand equivalent might be cheaper, and tests have shown that store brands generally taste just as good or better.

0% Financing
Yes, you can get a deal with 0% financing—but only if you pay back the loan in its entirety before the 0% period runs out. As a Consumer Reports post said, retailers like Best Buy and Wal-Mart offer 0% financing for big purchases like flat-screen TVs, but once that no-interest period expires, you're looking at interest rates of around 30%. Again, no harm done if you're certain you can pay off the balance in the agreed-upon time frame. The problem is that many people are attracted to 0% financing because they don't have the money to pay in full. They may think they'll be able to cover the debt in the 6, 9, or 12 months detailed in the contract, but, especially because the economy's been so dodgy, do they know for certain?

Stores That Are Always on Sale
At some stores, the discount hype never ends, and there's always a readily available coupon to knock 20% off your purchase. Kohl's and Bed, Bath & Beyond come to mind. The result of the non-stop sale-o-rama is that the retail price is pretty much meaningless. No one ever pays the list price (or at least no one ever should). The price after you've factored in the coupons and the never-ending discounts—that's the true price. And often, it's still not that great. The bottom line is, well, your bottom line. Don't be bowled over by a flashy discount; look at what you're paying, and see if you can get it cheaper at another store.

Stores With Good Return Policies
Of course, a good return policy is good for consumers. But the fact is that, per a WSJ story written to inform the business side of the equation:

... customers who know they can return anything they buy, no questions asked, for a full refund are likely to buy more than shoppers who are afraid they might get stuck with something they don't want or lose money on the return. They're also more likely to refer the retailer to other shoppers, broadening the company's customer base.

Retail researchers study this stuff inside and out. They know, for instance, that there's a lower likelihood of an item being returned if it was purchased at a discount, or that a customer who usually shops in the store will be less likely to return items purchased online.

I'm not saying to avoid shopping in stores with easy return policies. I'm saying that you should be mindful of the puppeteers who come up with these strategic return policies, and that you should only purchase the items you really want. And if you decide after the fact that you don't want the item, by all means return it. A no-hassle return was one of the reasons you were shopping in the store in the first place.

Free Shipping
The issue here is similar to stores with no-hassle return policies: It's commonplace to get duped into buying more than you normally would have. Many retailers have carefully-considered dollar minimums that a shopper must meet to get free shipping. So, even if you only wanted to buy one $12 item, you wind up spending $50—but with free shipping!

Studies have shown that consumers are far more likely to buy a $5 item that comes with free shipping than to buy the same item for $2.50 and pay $2.50 for shipping. Makes perfect sense, right? Don't trick yourself into thinking you're getting a deal, when what is really happening is that you're spending more than you planned.

Extended Warranties
You pay more upfront with the idea that it'll save you money down the line when the car or laptop or whatever breaks and needs to be fixed. The two big problems with extended warranties are that they are expensive (sometimes 30% or 40% of the cost of the item itself) and that consumers rarely ever use them (and stores make as much as 80% profit on extended service plans because of it). Net result: Very few consumers get their money's worth out of extended warranty, even though they may think that buying them is the prudent thing to do.

Source

Four Important Steps on Good Debt Management

Before you declare bankruptcy because you are stuck deep with several debts, think hard about such decision. There are good debt management techniques that you can opt to do to help you ease your way through your debts.

The process is not easy. Financial problems are never easy. This is especially true if you owe various companies and various people lots of money. The situation will be worse once you are dealing with the situation and find out that you don’t have any idea where to get the money to settle your dilemma.

The reason why declaring bankruptcy must be thought hard about is the fact that such occurrence will be recorded on your credit report for 7-10 years. This will gravely affect your credit status in a negative manner. What you can do is find the right solutions to your problems. You can plan for how you will settle your debts. And you must abide by the rules that you set for yourself to follow.

Here are only some suggestions on how you must prepare in managing your debts.

1. Do not add to your problems by acquiring more debts.
This is the last thing that you need right now. You may still be tempted to swipe your credit cards every now and then. But resort to that only on emergency situations. If you have to change your lifestyle to be able to buy what you can only afford, then do that. It is better to live by your means than to live in fear of a credit collector coming at your house, ringing your phone and knocking on your door.

2. Your goal must be to reduce the amount of payments that you allot for your debts as time goes by.
To achieve this, you must religiously settle your debts little by little. Whatever extra money that you get as bonuses from your work or tokens from other people, you must immediately think about your debts first. Allocate enough money to this endeavor. You want to get out of this rut as soon as possible. But what are your reasons why you want to do that?

The wrong answer to this question is that you are settling your debts now so you can start using your credit cards to buy more gadgets or whatever luxury that you want to acquire. The right answer is that you want to start living according to what you can afford.

3. You can call your creditors and ask for help with your situation.
You can tell them your situation and your longing to get out of that. You can ask them for the right repayment schemes that they can offer you. This way, the interests of your debts will stop from increasing. But if they have agreed on such terms, you must prove yourself worthy of it all. You must pay for whatever amount you’ve bargained for at every period that it must be done.

4. You can also hire a pro to handle this task for you.
You can settle for this if you feel like you can no longer handle the situation. You can ask for the help of credit counselors to manage your debts and teach you how to never again get yourself into this kind of situation.

Part of a good debt management is self control and sacrifice. You just have to bear in mind that all these will be for your own benefit. Try to never commit the same mistakes with regards to money once you have finally gotten out of your dilemma.

Source: Debt Managment Help

Are You a Credit Card Junkie? Learn How to Kick the Habit

Are you a credit junkie? Millions of Americans are, including our favorite relative, Uncle Sam. We usually think of junkies as drug addicts or drug peddlers, but a junkie is any person who derives inordinate pleasure from or who is dependent on something. For many people, that’s buying things with credit. In other words, spending money on things they can’t afford. Getting addicted to credit is just as easy as becoming addicted to anything else. At first you give it a try and maybe you buy something on a new credit card. Like magic, you just purchased something yet your bank account didn’t go down. What a wonderful feeling! So you buy something else on credit, and then even more stuff gets thrown on the credit card. Hey, it’s like free money, right?

Until the bill comes. Suddenly you get your statement and see just how much you spent, but guess what? You only have to make a minimum payment of $50 for the month. Who can’t afford $50 when you just cleaned up and brought home $2,000 worth of new merchandise? And things usually just get worse from here as the credit card balance increases, the minimum payments go up, and the finance charges take up virtually all of your payment.

You’ve now become a credit junkie.

The Credit Junkie Quiz
How can you tell if you’re a credit junkie? Keep track of how many of the following questions you answer with “yes.”

•You have more than two or three credit cards and carry a balance on them.

•You pay the minimum or less on your credit cards.

•You’ve reached the credit limit (or are very close) on your credit cards.

•You juggle other bills in order to pay the minimum monthly payments on credit cards.

•You charge items you used to pay for with cash (food, gas, etc.)

•You incur late fees or over-the-limit fees on credit cards.

•You’ve taken out one or more debt consolidation loans to pay off credit card balances, but then charge to the credit cards again.

•You take out cash advances on your credit card to pay other bills or expenses.

•You use your bank overdraft protection to cover checks you’ve written that you don’t have the money to cover yet.

If you answer yes to any of the questions, you may be a credit junkie. If you answer yes to more than three, you have a confirmed diagnosis. For treatment options, continue reading.

Treatment Plan for Credit Junkies
Now that you know the symptoms of being a credit junkie, it’s important to be aware of the risk factors that can cause this condition or make it worse. The first rule for avoiding any disease is to take precautions to reduce your exposure. For credit junkies, this includes:

•Can the Credit Card Offers – If you were an alcoholic, you wouldn’t keep a bottle of Jim Beam on your kitchen counter where you had to look at it every day, would you? If you’re a credit card junkie, why subject yourself to the temptation to overindulge by allowing yourself to be inundated with credit card solicitations in the mail?Credit card companies send out over three billion credit card solicitations each year, but that doesn’t mean you have to be one of the recipients. Call 1-888-5-OPTOUT (567-8688) toll free to request that the credit reporting bureaus stop selling your name and address to lenders. This request is good for two years. You’ll be asked for personal information, including your name, telephone number, and Social Security number.

•Avoid Shopping Malls – For a credit junkie, cruising the malls without a definite plan in mind is like taking a dieter to a giant smorgasbord and telling them not to eat anything. Limit your exposure by planning your shopping trips ahead of time. The fewer trips you make to the mall or other stores, the less impulse buying you’ll do.

•Cancel the Catalogs – The more you order from catalogs, the more your name gets sold to other catalog companies and the more catalogs you receive. These visual reminders of all the things you could buy (whether you need them or not) is extremely difficult for a credit junkie to resist. Know where to go to just say no. Opt-out of junk mail to reduce the number of catalogs and other unsolicited mail you receive for the next five years by writing to the Direct Marketing Association (DMA), Mail Preference Service, PO Box 643, Carmel, NY 10512, and asking to be removed from their marketing lists, or register online at . If you continue to receive catalogs, call each catalog company and ask to be removed from their mailing list.

•Reduce Visits to Online Stores – Like catalogs, online stores stimulate your desire to buy things you don’t need and didn’t even know you wanted. If you shop online, prepare a list of what you need ahead of time and stick to it.

•Be Aware of Advertising – Our addictions to spending start with the hundreds of advertising messages we’re bombarded with each day from multiple media, from television and radio to billboards and email pop-ups. Awareness is the first line of defense. You may also receive a lot of spam that’s actually email you like to receive. Are you getting weekly emails from Pottery Barn because you signed up for email alerts on new sales? While technically not spam, you’re subjecting yourself to unnecessary advertising. Take a few minutes to go through your inbox and cancel all of those subscriptions.

Source: Gen X Finance

Debt turning shoppers into Scrooges

WASHINGTON (AP)—A lot more Americans are feeling stressed out by debt this holiday season, raising the glum likelihood they’ll behave like Scrooge rather than Santa.

In fact, fully 93 percent say they’ll spend less or about the same as last year, according to an Associated Press-GfK poll. Half of all those polled say they’re suffering at least some debt-related stress, and 22 percent say they’re feeling it greatly or quite a bit. That second figure is up from 17 percent just last spring, despite all the talk about economic recovery.

Most people - 80 percent - say they’ll use mostly cash to pay for their holiday shopping, and that generally means buying less.

Shoppers cut back, look for sales

For example, Joy McGavin, 26, of Pittston, Pa., says she will cut back on holiday gifts by a few hundred dollars this year and pay for everything with cash.

“Family - nieces and nephews - we won’t be able to afford this year,“ says the stay-at-home mother of three. They now shop at Big Lots - not Wal-Mart. “They’re too expensive this year,“ she says.

Her husband, Robert, had been working two-full time jobs, as a mechanic at a garage and at an auto parts store. Recently his retail job was cut back to part time. “We don’t have as much as we had last year,“ McGavin laments. They don’t have health insurance and have racked up major medical bills.

Diane Morrison, 57, of Flemington, N.J., says simply, “I’m going to cut back.“ She’s clipping coupons and “looking for big sales.“

She owns a payroll company, and many of her clients are laying off workers. Some of the companies are folding, she says, and “I’m feeling more stressed because I feel my income will go down because of what’s happening with my business.“

Joblessness, foreclosures, credit card defaults weighing down consumers

Morrison and the McGavins are hardly alone with job problems. Unemployment has rocketed past 10 percent for only the second time since World War II, making it harder to pay monthly bills. Home foreclosures have spiked to record highs, and defaults on credit card debt are rising.

What does that mean for retailers in their most-important season?

“Cash serves as a very direct governing force upon spending,“ says Dr. Alan Hilfer, director of psychology at Maimonides Medical Center in Brooklyn, N.Y. “If you have $100 in your pocket, and that’s all you can spend, you’ll look around and make a decision based on the amount of money you have.“ Credit cards, on the other hand, allow people to make more impulse purchases.

In the survey, people who intend to spend less during the holidays reported suffering from higher debt stress than those who plan to spend the same or more, said Paul J. Lavrakas, a research psychologist and AP consultant who analyzed the results.

Those who plan to use cash to pay for most of their holiday season purchases have higher stress levels, he said. So do those who will carry over at least some of their holiday season credit card charges because they won’t be able to pay the bill in full when it arrives.

Hilfer said that when debt increases and becomes a focus of anxiety, it forces people to start thinking more long term.

“They won’t allow impulse buying and won’t splurge as much because they are thinking that next year they may need to have the money to fix the motor on the washing machine, so they can’t spend that money now,“ he said.

Holiday sales are key as consumer spending drives economy

How consumers behave during the holidays and beyond is a critical force determining how strongly the economy snaps back from the worst recession since the 1930s. Consumer spending is the single-largest driver of overall economic activity.

The traditional kickoff of the holiday sales season is Friday - the day after Thanksgiving.

This time of year is crucial for merchants, accounting for up to 40 percent of their annual sales. The National Retail Federation believes holiday sales will decline this year, but the drop won’t be as steep as last year when the country was deep in recession.

Looking to next year, consumers won’t be in much of a mood to go on a shopping spree because of high unemployment and tight credit, according to the National Association for Business Economics. Consumer spending will rise a lackluster 2 percent next year, restraining the recovery, NABE forecasters said. Unemployment now at 10.2 percent, will average 9.8 percent.

For people who do plan to charge their holiday purchases, 75 percent say they’ll pay off the charges in full when the bill arrives.

The average amount owed on credit cards is $5,600, the poll said, up from $4,900 in the spring.

More broadly, people carry an average of about $46,000 in debt - mortgages, credit cards, auto loans and other consumer debt. That’s a far bigger load than in the early 1980s when the jobless rate last topped 10 percent. In 1982 per capita debt totaled about $14,000 in today’s dollars.

The AP-GfK poll involved interviews with 1,006 adults and was conducted Nov. 5-9. The margin of sampling error was plus or minus 3.1 percentage points.

Source: News Runner