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Recently it was reported that several economic forecasters (supposedly people who know what they’re talking about when it comes to finances and the US economy) are saying that there are some not so bright days ahead for the US economy. But I thought things were looking up?

Apparently the economy is somewhat sensitive to highs and lows, and you can look at the economy as sort of a “blood sugar” of economics and finances. It’s good to maintain it at a steady rate, not get too high or too low, just like with your blood sugar (I’m terrible at analogies, so forgive the less than adequate explanation, if you get it - great!).

The economy was looking good from a growth standpoint at the beginning of 2006, but experts say that growth has slowed tremendously, which usually means tougher days are ahead. Can’t we catch a break?

Here are the factors economists are saying will influence our economic outlook:

1.) Businesses only created 75,000 new jobs in May (opposite of what I earlier reported, this was reported after I posted the job outlook, the government was surprised too). This may not sound so bad if you didn’t know that the government forecasted an estimated 175,000 new jobs being created. Population? Maybe…

2.) The housing boom of 5 long years is coming to an end.

3.) The inflation that has been somewhat absent as of late may also start to be an issue. Believe it or not, inflation can sometimes be a good thing, although not on it’s face, inflation is needed to create a healthy and strong economy.

Everyone kept talking about the “new bankruptcy law” that was shadowing anyone who was in financial trouble. I remember this talk starting a couple years ago, and then not hearing about it for a while, probably the law got held up in congress. And for good reason. The new bankruptcy law was known for one thing primarily : It would make it much harder for people to just “write off” their debts to their creditors by filing for bankruptcy. And how so?

Well, the new law is in effect officially, as far as I know, and it is called the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005″, which is pretty much a self described law, but I’ll get into a little bit of explanation of why it was put into effect and even proposed for consideration in the first place. The law’s purpose is to make it more difficult for some people to just completely erase debts by simply filing for bankruptcy.

In the past, before this law was passed, many financial companies, lenders, banks and other financial services companies felt that too many people with gambling problems, and unruly spending habits were able to just get off scott free by filing bankruptcy and not being responsible for repaying any of these debts to their lenders, who were left holding the bag.

Some people do oppose the law though, claiming that it may hit the people who need it the most the hardest, such as lower income families and single moms. As with anything else, this law seems to be fair from one perspective but also tends to deprive others who really deserve it of their rights to financial freedom.

Entitlement? For some yes, for others it really might be a necessity. It’s a shame this isn’t a law that sees more grey than black and white. But that’s the problem with law, isn’t it?

I was just reading about the 26.5 million veterans whose records have been stolen and possibly sensitive information compromised, such as their social security numbers, which can basically get you a loan, credit card or other purchasing powers fairly easily today.

The worst part is, breaking news is saying that these identity thefts were kept secret for days before the press got ahold of the story. The good news is, the thief may not even have bad intentions, although I’d be willing to bet someone who steals information would have no qualms about selling that information to the wrong people.

The FBI has launched a full investigation of the crime, and is hoping to have some answers for these people soon. With the publicity about identity theft, and the increasing importance of sensitive information such as SSN and other personal information due to online buying, and other forms of buying where a person does not need to be physically present to make a purchase, identity thieves are getting more and more creative in how to steal and use to their benefit, other people identities.

It’s even happened to me, although it wasn’t really a case of a stolen identity in the sense of personal information, but my Paypal account got hacked once, and someone made several charges with my account without my knowledge or permission.

To my relief, paypal and my backup credit card caught on to the suspicious activity and did not allow the last few transactions through, but it taught me a lesson that nothing is safe any more.

Years ago, when I found myself deep in debt to the tune of about $10,000 from college books, partying, car fixing and everything else under the sun, and nothing to fall back on except credit cards, I thought it was hopeless and I would never be completely out of credit card debt.  I had a couple of high interest cards too, so it seemed like paying over the minimum was futile since the balances still never seemed to budge under the weight of excessive interest rates.

Then, about five years ago, I consulted the biggest nonprofit consumer credit foundation - Consumer Credit Counseling, or as I call it CCC.  The friendly counselor was an older guy, I remember him because he had a bit of an accent and his last name was Houston, pronounced like “House” then “ton”. 

Anyways, he set me up on a payment plan of $210 every month, and negotiated the interest rates with each of my credit cards individually.  About 4 years later, and 50 money orders later, I was debt free.  At least from the first round of debt. Sad thing is, as I was paying off that debt, I racked up a little more!  TO be continued…. 

Many financial analysts and planners recommend that before you go to buy a house, or any other major investment such as a car, boat, house repairs and improvement  or second home, that you get your credit checked - in other words, either pay for a credit report from the credit bureau, or get a free credit report, as we so frequently see advertised.  So what is the catch to the free credit report?

Usually, most free credit report sites will try relentlessly to get you to pay a monthly or yearly service charge to get updates and special reports on the status of your credit, and they may even offer some other fringe benefits if you order your free credit report with them.  Usually, the free one is a one time deal of course.  Some will even only give you a partial report, and charge additional for details or other needed information.

Regardless, most credit reports end up being fairly accurate.  There are some times though, that I’ll hear through the grapevine that someone had an outstanding debt listed that should not still be listed and is paid off, but it still shows for some reason.  This is exactly why you should be concerned with your credit score when purchasing any major investment. 

You may have items on there that you either have forgotten about, or just never knew about to be able to pay off.  This happens all the time.  You want to make sure you go in to get the best rate, and you won’t get that unless your credit is good.

I had often wondered what the difference was between a 401k and an IRA, and then when I went to a “free lunch” with an Ameriprise representative (who then proceeded to mercilessly call my house, even though I was not interested in his services), I learned that you should probably not put all of your money, or max out your maximum contribution to your 401k at your job, because you can actually see greater gains and maybe even better tax benefits if you put that money into an IRA.

Boy, was that a mouth full. Let me explain. I was putting almost 25% of my total income, pretaxes, into my 401k at my job. He said this was a mistake, because although I thought I was doing so good by being able to sock that much of my income away on a biweekly basis for my retirement, I was actually not garnering as much of an overall increase in value over the long haul.

He said this was because a 401k does not allow you enough options, and it’s better to just max out whatever your company match is, in my case 4%, and then look into putting the rest of your money that you WOULD HAVE put into your company’s 401k, into a tax sheltered IRA.

I’d love to be able to explain a little better, but unfortunately I am not a financial planning expert, I’m still learning this stuff myself. Anyone who reads this who has more knowledge on the subject, feel free to add a comment/explanation.

There was an article recently about how the high (and getting higher reportedly) gas prices are really impacting the poor and the middle income working class the hardest. To the wealth and rich, these astronomical gas prices may be a drop in the bucket, but to people who live paycheck to paycheck, and do not even have a savings to speak of, this is hitting them very hard in the wallet.

Just a quick aside, another reason I started this weblog, is because I’ve recently been asking my friends how bad of debt they are in, and they unanimously felt they were “in over their heads”, especially if they owned a home and had kids.  With the gas prices currently being outrageous, and interest rates soaring, it’s a wonder that most people can even put food on the table for their kids. 

I read an article today that said that the people hardest hit by the increasing gas prices were the middle to lower paid individuals.  Then, I read another article on how more and more people are resorting to buying motorcycles instead of cars to save on gas, as well as resorting to getting jobs within walking distance or riding their bikes to work.  Just not using gas for one week saves many people upwards of $50 a week!  Think of what the $50 could do!