Archive for June, 2009:
Written on June 29th, 2009 by CleanedUpCreditno shouts
One of the little ways in which we try to spend less money on frivolous things like dinners out and fun things like entertainment, is to save our change whenever we have a few quarters, nickels and dimes that are leftover. I regularly get a lot of change, since I do pay for a lot in cash like fast food, or small items at drugstores and things like that, if it’s a small amount and I don’t necessarily feel like using my debit card, so I tend to have a lot of change jangling around in my purse/wallet at all times anyways.
What I do, is at the end of every day or at least at the end of every few days, I take the change and throw it in sort of a kitty – which is an old standup cosmetic bag that I happen to have laying around, and let it build up. At the end of a year or so, I’ll roll the change or take it to a Coinstar location where the machine can give you dollar bills for your change when you throw it down into a little receptacle, and pay about 7 cents on the dollar for the priveledge of getting my change turned into dollars quickly and with minimal inconvenience.
If you don’t like paying that much on the dollar, then take it to a bank all rolled up or go to your bank and get money rolls, I’m not sure if they charge for them or not, and roll the coins and exchange them for cash money. Then, you can have a nice dinner out or two and maybe a movie, depending on how much you saved up (aka how much change do you generate over that period of time), and not have to feel guilty about it like you would if you were spending your “hard earned” money that you have in your checking account of whatnot.
I know it’s neither here nor there, because you could spend that money on some outstanding debt that you have and make that your duty for the money, or you could spend it on a night out. My money’s on the night out, because you gotta live, and this is a way to do it without feeling guilty about. I know money is money, but this feels like it’s sort of a freebee in a way I supposed.
Written on June 26th, 2009 by CleanedUpCreditno shouts
With the way creditors are still clamping down on their financing stores of cash, it’s more important than ever to have as good a credit score as you possibly can. And what does that get you, exactly? Well, it gets you into a club that most can only dream about, since the pool of people who’s FICO score, that little score that is so important for every credit line, mortgage, car loan and small loan you take out in your life, including the credit card limits and terms of interest rates you get, is high enough to achieve just about every great credit offer known to man, are very few and far between.
It is said that anything over an 800 FICO score is pretty much useless, because if you can even achieve a 750, which is great credit, your doors are already opened to the cream of the crop when it comes to credit card offers with low apr’s and high credit limits, mortgage interest rates that are the lowest offered at the time, and car and other small loans that are offered at awesome terms that most of us can only dream about. It means basically that you get things a lot cheaper than all of us average schmoes out here that are just trying to get the best deal we can with only mediocre or “good” credit.
Essentially, even if you don’t make a lot of money, if you have a great credit score, the world is pretty much your oyster when it comes to the financial and goods purchases that you can make at excellent terms that are beneficial to you. Some of the ways that you can improve this FICO credit score are a lot more easily said than done, especially when so many are losing their jobs, getting cut back on their salaries, or are having a hard time in sales jobs that rely on an essentially nonexistent customer base since consumer’s wallets have been on lockdown for months.
One of the first things to remember for your credit score is to ALWAYS make sure you pay your bills on time. This is one of the principal things they look at when determining that four letter score, and if you are religious about paying them on time, you will benefit immensely with the credit companies. If you don’t have a reminder system to make sure you’re paying on time, set one up.
Another rule of thumb for good credit is to make sure you aren’t constantly opening new accounts up, and also to make sure that you aren’t maxing out older accounts, and using all the credit that’s available to you. Also make sure that when you stop using an account, you keep it open rather than canceling or closing it out.
Written on June 23rd, 2009 by CleanedUpCreditno shouts
Well, it used to be, way back when, that you’d work for one single company for almost your entire adult working life, and you’d retire with your “gold watch” and a nice pension or retirement nest egg. That was before the new economic reality that unfortunately faces us today, one that has forced many people out of retirement to report back to the work force because of losses in the stock market that made it necessary, and also one that has pushed out other’s retirement indefinitely.
Many people are finding that their retirement accounts have been wiped out substantially by the current economic conditions that have greatly affected the market and investor confidence, which wiped clean years of progress on the Dow Jones industrial average in a matter of days. It’s still recuperating, and although it has increased substantially, some wonder if it might not take years to get back to the levels we enjoyed in the beginning of 2008, and especially in 2007 when the market seemed to peak and if anything, be overvalued by investors.
I’m 34 years old, and I know that this current crisis has set back my plans about five years if my calculations are correct. I had a plan to actually retire from my corporate job a little earlier than the real retirement age, and work on other projects outside of that job, however this current situation drained a lot of my nest egg, and I’m finding that I don’t feel so confident not “retiring” early without that money that I thought I’d have as a cushion for when my real incomes stop coming in.
A lot of horror stories have culminated as well. There are stories of scams and frauds coming to light because of the collapsing stock market, where older people who are already retired are finding that someone has ripped them off of all of their retirement savings. There are stories of elderly people losing so much in the stock market that much of their inheritance money has been dashed, and won’t be passed on to their young ones, which means less money circulating in the economy yet again, and there are also stories about the elderly getting taken for their money from other fraudsters that prey on this sort of thing.
I’ve also heard a lot about my friends who have lost quite a bit, and have been forced to maybe dip into emergency funds early on or cut back on their college savings funds for their kids so that they may still retire in peace and comfort.
Written on June 19th, 2009 by CleanedUpCreditno shouts
A fact that I read recently really troubled me. It troubled me because I felt for these people who had to claim bankruptcy, one of the most emotionally devastating things anyone has to do in their lives, which can destroy relationships and ultimately create depression and unhappiness, had to file it because their medical bills were sinking them to a point where they couldn’t pay them any more, or couldn’t pay their other bills because their medical bills were too numerous. This, in the land of opportunity and what is supposed to be one of the richest places in the world, economically speaking, is a travesty.
This really shows that our health system is in desperate need of an overhaul, and that Americans are being fleeced if they become seriously ill, so much so that they cannot even continue to pay their bills or have the same quality of life they had before they got sick, because of the heavy burden of thousands of dollars in bills that come from hospitals, testing facilities, medications and all the other stuff that goes with keeping a person healthy or treating a disease and preventing them from dying in the modern medical world.
While we often mistakenly think of bankruptcy as a last resort for people who have mismanaged their money of overspent on items they did not absolutely need, this enlightens us that the majority – over fifty percent, is through no fault of their own, only that they are trying to take care of their health and have maybe been struck with an unfortunate illness which requires a lot of expensive medical care and follow up. Diagnosing and treating disease is positively cost prohibitive and astronomical these days.
Even if you have good health insurance, you can find yourself with thousands of dollars in doctors bills if you have had a bout with a serious illness. So much for the American dream of getting a house and spending it on things that keep the economy going. I think that if the Obama administration can address this problem of horrible health care, then maybe it can have an economically healing effect.
Written on June 16th, 2009 by CleanedUpCreditno shouts
It’s always hard when you think you’re getting ahead and something major sort of explodes into a big bill that you totally weren’t expecting, nor did you fiscally plan for. In other words, you didn’t have one of those cool “emergency funds” that everyone seems to talk about having that’s so important and yet no one I know seems to be able to actually afford to build up since they pretty much live paycheck to paycheck. Heck, I consider myself to be very responsible when it comes to finances, but even I don’t have an “emergency fund” per se, instead I just try to make sure I budget so I have enough “cushion” in the account that I use to pay all my bills, and living expenses from.
Financial gurus like Suze Orman will tell you how important it is that you have an emergency fund set aside at all times that consists of about six months of mortgage, living expenses etc. But how many people can realistically do this when they can barely pay their bills as it is? Or, should I say, how can most Americans discipline themselves enough to save that kind of money without having to dip into it before it reaches that six month cushion? It’s a feat much easier said than done, that’s for sure. And like I said, I don’t consider myself a slouch when it comes to self discipline and finances, but even I have had a really tough time coming up with a whole six months in an account that is set aside specifically for emergencies.
What constitutes a financial emergency, exactly? Well, it can be things like something that goes wrong with your house or your car. It can even be a huge unexpected Dr. bill that you weren’t exactly banking on paying. Even with insurance these days, you still have to pay a lot out of pocket if a major health issue comes up. This is why hospitals and doctors are required to offer payment plans, because they realize that not everyone can pay off astronomical medical bills because they are usually considered an extra emergency expense.
A great example of an emergency expense for me is that our septic tank recently needed to be drained, and although I had planned on paying $250 to get the tank drained, it ended up being another $250 to replace the pump that had broken and then another $175 to do a finding fee because the plumbers couldn’t find where the septic lids were when they dug around in the ground, making that part of it an unforseen and unplanned for expense. We also happened to have our income taxes due since we pay them quarterly, so it is an example of an unplanned expense that had to be dealt with.
Written on June 13th, 2009 by CleanedUpCreditno shouts
In an unprecedented time of mortgage difficulties and issues with people being able to refinance their homes in the current credit crunch, there are some wild stories coming in about how individual congressmen and women are actually taking matters into their own hands and calling on behalf of their constituents to get their homes refinanced, or are setting up large meeting centers where banks can meet with homeowners who are trying to refinance their homes into better credit terms and a better finance percentage rate and are hitting road blocks with the banks for various reasons.
I’m amazed at how many people I’ve talked to who are in this boat. They feel like they are trapped because their mortgage payments are high, and the interest they are being charged on their homes is so high that they feel like they are never getting ahead to truly pay off some of that principle, so they are really just barely keeping their head above water in terms of “getting ahead”. We’re sort of in this boat, only we are not facing financial hardship, we are just looking to refinance to a better deal on our interest rate, and are having a hard time consolidating our loan in to one and getting a bank to refinance the whole thing.
We have great credit and have never been late on a mortgage payment, so I think that’s the real kicker for us and what is hardest to understand. One congressman has gone so far as to set up a sort of “convention” where 19 banks are attending and people who are having a hard time refinancing are as well, so that the interested parties can meet eachother and hopefully come to a mutually beneficial business agreement which helps both parties out.
The credit freeze has perpetuated itself because banks are still scared to loan people money, and consumers are still wary or going for a new loan because they are afraid they can’t pay an new debts. The unemployment rate has just made matters more severe in many areas, making it nearly impossible for homeowners to pay their mortgages on time or at all, which adds to the banks not wanting to take the chance on lending more money, and so on and so forth. If you are having difficulty refinancing your home, you actually may want to consider writing your state representatives a letter to see what can be done to help your situation.
Written on June 10th, 2009 by CleanedUpCreditno shouts
If you have the option of a participating in a 401k at your place of employment, I beg you to make this choice of taking part or not a no brainer and just going for it and putting a percentage of your pay into it every two weeks, or however often you happen to get a paycheck. What most people don’t realize is that they are missing out on a great opportunity to make excellent money in a shorter period of time because most of the time companies will match you up to a certain percent by putting in some of their own money to match yours, so you have an even greater benefit, and build up your funds even faster than if you did not have the company match.
Company matches are a great thing. It’s free money, and if you give that up, then you are truly throwing money away and there’s no excuse for that – ever! If you’re concerned about the current market volatility, most 401k accounts will offer a very low risk option. For example, my 401k is through Fidelity, and they offer a money market account as one of their deposit options, where your money is automatically put into a money market account instead of a higher risk mutual fund or stocks of some sort.
Money markets are pretty much guaranteed, but they offer a very low yield, which is why usually people who are close to retirement choose them, since they are no longer worried about growth, but rather have already attained all their growth and are instead worried about sustainability of their capital as well as stability of income, not a high return any more.
Another huge benefit to 401k accounts is that they give you a tax break. Your taxable income is reduced by as much as you contribute. So say if you decide to contribute ten percent of your total income every pay, your taxable income is reduced by that much, reducing your overall tax liability by that much more, which is something we could all use – a tax break!
Of course, if you think your tax bracket will be significantly higher at retirement, than you might instead choose an option where you can pay those taxes now and instead lower your future tax liability for when you are forecasting a much higher tax bracket for yourself or you and your spouse. I suppose it all depends on what you are expecting for your future, and how you think you’ll fare in you job or livelihood in the future as to whether your taxes will be lower now or in the future.
Written on June 7th, 2009 by CleanedUpCreditno shouts
Although some are saying that the closing of around 800 car dealerships in the wake of the impending GM bankruptcy is what the company has needed now for years after being oversaturated in the dealerships, of course this is not good news for the economy, since more jobs will be lost of course through these voluminous closings. I just read an article that made a good point about the future of autoworkers now.
They said that it used to be that once you signed on to become an autoworker on the production lines, that you were pretty much automatically guaranteed to be what we call part of the working middle class. Which is a great thing ,it’s certainly better and more desirable than being in the poor, lower class who struggles from paycheck to paycheck and often earns meager wages for hard work. Being an autoworker used to mean you had a great paying job, good benefits, and a pretty much guaranteed future of comfortable retirement.
Well, not any more. As so many other paradigms have changed through the course of this recession, so has the one about autoworkers being comfortable and well paid, and secure above all. Now, being an autoworker strikes fear into people’s hearts as the auto industry faces it’s largest crisis ever and is forced to close down multiple plants and dealerships, putting thousands out of work, and reducing benefits and pay for those that are left holding the bag. Not a great deal, as you’re well aware.
Written on June 4th, 2009 by CleanedUpCreditno shouts
When I read the facts and figures about college student credit card debt, I couldn’t help but get that familiar sick feeling in the pit of my stomach that I always had when I was a college student myself and was going through a really tough time dealing with both student loans having to be repaid, no great job to show for my years of school, and a mountain of credit card debt. I admit, I was naive, and I charged so many things on my credit cards as a college student. But it was easy money, and I used it not only for fun stuff but for things I needed at the time like groceries and car repairs so I could actually eat and get to the job I had waiting tables.
So many other college students fall prey to this as well, because many of them don’t even work. Some have help from their parents, but that doesn’t cover all their bills, and they end up getting in debt so deep over their head that it feels overwhelming when they get out, like they’ll never dig their way out. With today’s job market, we are seeing more and more college students graduating with mountains of credit card debt and debt from tuition that can’t get a job in the field they went to school for. They are forced to work jobs that don’t pay so great, and at the same time, their living expenses are barely getting paid because they have all this debt to repay.
It’s enough to make anyone feel like they want to bury their head in the sand and never come back up to reality. The statistics are nothing short of depressing on the current state of affairs for recent college grads. Apparently, the number has skyrocketed up to 41% more debt for college students over just the past four years, which means they are paying more and more credit card debt, and that amount went up within a matter of just a few short years. Now, with the credit crunch and the reigning in of credit card companies offering so much easy money, we may see that shrink, but still, it’s a state of affairs that needs to somehow stop.
Because of this squeeze on recent college grads, the default rate on college student loans has also increased over what is considered to be an acceptable amount, with students so squeezed by other higher interest bills that they choose to default on the loan that actually is giving them a good deal. They are trying to pay off the higher interest debt, but foregoing the low interest debt that is the student loan, which may be hurting them even more, and is certainly burning their credit score in the long run. Credit cards for college students should be reviewed carefully before one signs up. Make sure the interest rate is fair and that there isn’t fine print stating they can raise it to an enormous percentage if certain conditions exist.
Written on June 1st, 2009 by CleanedUpCreditno shouts
The economic recovery would be looking a lot rosier if it weren’t for the piling up of foreclosures that seem to be continuously indundating the economy as of late. We’ve heard some promising signs of increasing consumer confidence, but the foreclosure rate still seems to be catching up to all of this bad lending that occurred, and it’s certainly not being helped by the continuously mounting job losses. People are losing their jobs at record rates, pays is being slashed and companies are still mulling more cutbacks to catch up with the faltering economy, and this can only result in more trouble for homeowners who are already pinched in the light of the multitude of financial factors that seem to be piling up against the average citizen.
We just wrote recently about how college grads are having mounting debt troubles with credit cards they got as college students that tended to add more percentage points to their rates at the most inopportune time, and this is another addition to the problems we are seeing facing all age groups. College grads are being hit hard since they tend to have bundles of college tuition and living expense debt piled on to credit card debt that is mounting and revolving every month so they can never seem to get out of the mess. They are also faced with awful job prospects, many times being forced into something that doesn’t pay very well and is not in their field.
People who are trying to get more affordable mortgage rates so that they might avoid foreclosure, or a payment plan that is targeted to people in financial trouble, as many mortgage companies are being forced to offer because of the increasing issues with homeowners not being able to pay their mortgage, are saying that they are facing huge backlogs and are having to wait a long time for relief.
This time amounts to higher rates of foreclosures and more of a chance that these individuals will default and buckle under the pressure. Many people are frustrated and even abandoning homes that they owe way more on than their worth. I totally get this part, not the abandoning the home, I think that’s irresponsible and really destroys your credibility with creditors in the future, but the part about owing a lot more on your home than it’s worth.
It’s frustrating when we constantly get notices from Zillow, an online appraisal service that gives a general idea on what your home is worth, that say our home has decreased, yet again, in it’s value, and looking at our mortgage statements that say we owe a staggering amount more than the dollar value.