One in four (25 percent) say they would like to be less reliant on credit and debt in the future, 21 percent plan to keep a lid on spending on non-essentials, and 18 percent think they will save and invest more. Fifteen percent say they will now develop and stick to a financial plans.

This is an interesting development. If the recession really does result in a change to overall financial habits, then that could be seen as a definite silver lining. Now is a good time to take a look at your own financial habits and see what can be done about paying down debt, and reducing credit card use. And, of course, it always helps to make a financial plan. It would be even more encouraging to see more people decide to make use of financial planning.

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Post from: EveryJoe

Do You Plan to Change Financial Habits?

I received an email from A New Horizon, a credit counseling and debt solutions company, pointing out that some credit card issuers have loosened their requirements for hardship repayment plans. This could mean that you have a better chance at qualifying for a debt hardship plan if you are looking to repay your debt. However, it is important to consider the following things when going for financial hardship debt plans:

1. You may have to close your account: Many issuers will require that you close your account to take advantage of the lower interest rates or waived fees that come with a hardship debt repayment plan.
2. Your credit score could drop: Depending on the program you end up with, and if your credit account is closed, you may end up with a lower credit score, resulting in difficulties if you plan to apply for new credit anytime soon.
3. Be aware of fees charged by third parties: While some people benefit from having a third party help arrange matters for them, the fact of the matter is that many credit counseling and debt solutions companies charge high fees. It is possible to go directly to your credit card issuer and attempt to negotiate a lower interest rate or access to a hardship program.

In the end, it is nice that these hardship programs exist, but you should be careful before entering one. Read the fine print, and carefully consider your options before committing.

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Post from: EveryJoe

Credit Card Issuers Offer Hardship Programs

Credit restrictions limit credit acquisition

The other side to this, of course, that credit is not growing. Lenders are imposing stricter credit standards on potential customers. Credit requirements, as well as income requirements, are tougher than they have been for years. This means that many people are being turned down for new lines of credit.

This is not necessarily a bad thing. One of the reasons we are in this mess is due to the ease of credit. When anyone with a pulse — including kids — can get a credit card, you know there is something wrong. The idea that you have to prove yourself responsible and able to make payments is a good one, and one that seems to be making a reappearance.

The next question is this: How long will this new found credit prudence last?

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Post from: EveryJoe

Outstanding Consumer Credit Falls

credit card practices and debt solutions practices

It’s important to note, though, that Brooks doesn’t excuse consumers from their responsibility in all of this. He makes it very clear that if you incur debt, you should repay. What he takes issue with, though, is the fact that the system is so rigged that even those who are trying their best to make changes and make good on their obligations have a hard time getting ahead. And once you start sinking money into a debt solutions program, he warns you that there is a good chance you will be had.

But it isn’t all doom and gloom. Indeed, Brooks strikes a hopeful tone toward the end of the book as he provides useful information that can help you get out of debt — without the help of the debt management and negotiation industry. He talks about using a boundary system rather than a traditional budget, as well as provides insight on improving your credit, rather than having a mindset of “repairing” something that really isn’t broken. Brooks also offers helpful information on stopping debt collector harassment, and provides sample letters and scripts to use.

In the end, Deceptive Money is a great resource if you are in debt and wondering what you can do to get out of debt. It is also a must-read if you are thinking of joining up with a debt solutions company, since it provides detailed information on various scams and how to avoid the pitfalls.

Post from: EveryJoe

Book Review: Deceptive Money by Bob Brooks

• 37% of young married women handle all of the household finances on their own, as opposed to 30% of young married men. (I presume that the remainder have some system of joint financial management.)
• Most young  married women knew about their spouse’s finances before they married. This is, I think, a positive development. It is vital for couples to understand the financial strengths and weaknesses each person is bringing to the table. Women are being told by society that they need to be more involved and self-sufficient, and so a shift is taking place. Sadly, the same is not true amongst young men; most are not aware of their partner’s financial situation upon marriage. This should change.
• Younger women are less likely than older women to fight with their spouses about money. I found this fascinating. Bad habits and in-laws came in ahead of finances as sources of contention. Of course, if more younger women are in control of the finances, there is less need for confrontation about them.

These trends offer some interesting insight into couples finances. And it forced me to take a look at my couples finances. I am in that 37% that pretty much handles the finances on their own. My husband doesn’t really care about the money; he just wants to know if we have enough :). Every few months we touch base on our financial situation, and talk about what we’d like to save up for in the coming months, but, for the most part, I decide what to do with the money.

However, we did discuss money before marrying, and we knew how much debt the other had before going in. (Hint: I had waaaaay more going in, as a result of stupid credit decisions in college.) We don’t fight too much about money. Usually, there are only issues if my husband finds out that we can’t get something. Or if I get annoyed at how much we’re spending on something that I think is superfluous. But if we’re going to fight, it’s usually about other things.

How do you handle your couple finances?

Post from: EveryJoe

Young Women Taking the Financial Lead

One of the more interesting things about the episode is what you find out later: Michael has been buying the complete Muppet Show, as well as something called a “core blaster” for his abs. Turns out he is spending a bunch of money on useless stuff, stuff that doesn’t really fulfill any sort of need. How often does that happen to us?

Happy Friday!

Post from: EveryJoe

Friday Fun Video: The Office Bankruptcy

This book made very interesting, albeit depressing, reading. An inside look at the way politicians are in bed with the big financial companies, Poorhouse provides you with a front-row seat to the causes of our current financial problems as a country and as individuals. White unflinchingly looks at the way both parties have enacted “reforms” that have done very little reforming — and in some cases made things worse for consumers. She also offers a look at the “advice” we have been given with regard to 401k retirement plans, home ownership and college education, and why even those who try to do what’s right end up in financial trouble when they attempt to do what’s right and responsible, but are stymied by a lack of good information.

But the book is more than an indictment of our institutions and politicians. It also includes a number of reforms that might actually work, and what you can do to join other consumers to lobby for reform. (Be forewarned: Some of the proposed reforms in the book are a bit radical, and some the more conservative-leaning will find them unacceptable. I think they’re great, but others will disagree. However, most of the book offers information that anyone can appreciate.) White also includes practical advice about what you should do in the meantime to salvage your financial future. White offers rules about saving for retirement, tips for getting a mortgage that you can afford and paying it off quickly, and ideas on rethinking the way you pay for college. There is also a helpful section aimed at helping you create an action plan to get out of debt.

In the end, Welcome to the Poorhouse is an interesting read. It will open your eyes to the history behind our current system, and why it is the way it is. And it also provides you with actionable information that you can use to improve your own financial situation.

Post from: EveryJoe

Book Review: Welcome to the Poorhouse

1. In many cases, credit card debt is self-imposed, and we have created our own bonds.
2. Credit card companies can legally still do pretty much whatever they want with your terms. They just have to give you 45 days notice now, and can’t do it retroactively, thanks to the Credit CARD Act.

That said, it is true that credit cards do employ many unfair practices, and they do work hard to keep you in debt (and paying obscene amounts of interest). And I myself am a little annoyed. My Discover card issued by GE Money Bank is jacking up my interest rate again. Unlike the woman in the video (who, it turns out, did miss a payment), I have not missed a payment. And most months I pay off what I charge on the card. This comes after having my credit line reduced. I’m severely annoyed. If I didn’t need the available credit to help score in order to get a good refinance rate, I’d cancel today.

Post from: EveryJoe

Friday Fun Video: Debtors Revolt

• Rise in home prices.
• Upward trend in the stock market.
• Paying down debt.
• Debt write-offs.

Most of this is good news. Indeed, the fact that Americans have been reducing their debt and relying less on credit is quite encouraging. The fact that we are likely to have a long recovery from this recession is also a good thing, in my opinion.

Americans are just now re-evaluating the spending practices of the last couple of decades and are working to get their personal finances in better shape. Some of the habits being developed are good for individual financial situations. A gradual economic recovery will help Americans cement some of their frugal practices into true lifestyle adjustments. A fast recovery would not give us time to make a true shift in mindset.

Hopefully, many Americans will see their increase in household wealth and net worth and realize that this is a good way to take steps toward financial freedom.

Image source: sxc.hu

Post from: EveryJoe

Household Wealth Increases

Unfortunately, we are seeing changes to credit card perks and rewards programs. Five Cent Nickel recently commented on the fact that Citi is reducing the amount of travel insurance it offers on its credit cards. And there are several other instances of shrinking rewards and rising credit card fees. These new developments are severely limiting the advantages of having a credit card. It would be nice if credit card issuers simply cut some of the lesser-known perks and left it at that, but this is not likely to be the case. Rather, credit card issuers are most likely to cut perks and raise fees while cutting rewards.

For those who are deep in credit card debt, there is little that can be done. And the interest charges erase the benefits associated with rewards and perks anyway. However, for those who have been using credit cards with discipline and as financial tools, it may mean that a new tactic will have to be found.

Image source: Wikimedia Commons

Post from: EveryJoe

Credit Card Perks Being Cut