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There’s been a lot of talk lately about where the economy is going. Short version for many people would be along the lines of “in the tank”.

That is, things are getting rather rough for a lot of people. Foreclosures, companies downsizing, debts out of control. It’s getting to be a rough time for a lot of families.

I should know. My own husband was just downsized. My income alone isn’t enough to support our family, although I’m working to change that. It’d be nice, you know?

When you have debts added to a sudden decrease in your family’s income, you have to do some fast thinking. You don’t want things to get more out of control than they already are. You also want to lose as little as possible.

And you’d better believe that you want to avoid bankruptcy. Sometimes that may feel like the easiest solution, but it’s not as easy as it once was, and the long term impact on your credit is serious.

The issue people are most aware of right now is what is going on with housing and people’s mortgages. The government has been talking bailout because so many people signed on to mortgages that they really shouldn’t have, and the impact is now showing in a big way. Foreclosures are way, way up.

But whether your money problems are due to miscalculating what you could afford in a mortgage, the sudden loss of a job or some other reason, you need to act fast to minimize the damage.

Your first step should be to look at what you can afford right now. If your mortgage is now out of your range, what are you going to do about it?

With housing prices dropping, this is a tough one indeed. Some people owe more on their mortgages than their homes are now worth.

The ideal, of course, is to start bringing in enough money to be able to afford everything. Finding a second job may be your best way to cope with mortgage problems. This is not an easy step to take, since it greatly limits your free time and family time. But if it’s better than the alternatives I strongly recommend thinking about what you could do.

Of course, if your money problems relate more to being laid off, you are probably already hunting just to get that one new job you need. I really like something a friend told me once about job hunting. She said that movie stars and baseball players had agents, and she wanted the same advantage when she needed a job.

In other words, get help in your job hunt. It may cost some money that you don’t feel you have (and don’t spend more than you can afford!), but if it pays off in a better paying job, that’s an investment. You should at the very least network and be unashamed to tell everyone you know that you’re hunting for a new job. It really can help.

Cutting back is another good plan. Anything you can spend less money on means you have more to put towards debts and mortgages. This can mean living without cable television or internet access for a time. It can mean dropping the cell phone if you’re not trapped by a contract, or your land line phone if you can get by with just your cell phone. And of course there are many other areas you can cut back on, such as eating out.

You should also be willing to talk to your creditors before the problems become obvious. The sooner you can work things out, the better. You may be able to get lower rates on credit cards, do the occasional lower payment, and avoid paying late fees.

Bigger steps to take depend greatly on your family’s situation. Some may be able to get by on a single car rather than having two. With gas prices the way they are right now, even arranging regular carpools with coworkers who live in your area can be quite a help.

At times like this, you need to focus on keeping things from getting completely out of control. A financial downturn doesn’t have to be a complete catastrophe.

An increasingly common trend is for parents to get credit cards for their teenagers. But the big question is, “Is this a good idea?”

Maybe. It really depends on your goals, expectations and how your teen will use it.

The teen years are filled with pressure. It may well be harder for a teen to control his or her spending than it would be for you. Just think of all the things they ask you for. Can you trust them to not go on an uncontrolled spending splurge with a credit card?

I absolutely wouldn’t recommend giving a teen who isn’t holding down a steady job a credit card. How are they to pay it back? You do not want to do this for them, as you’ll be setting them up for poor spending habits later in life.

If you give your teen a credit card, it should be accompanied by a long talk about what you expect to happen. What are the rules for using the credit card? Is it for emergencies only? Are you going to remind them about payments or do they need to remember on their own?

Teens are lucky in that there are many credit cards for students out there. They may or may not need you to cosign. And certainly having a credit card can teach them early on how to be responsible for one. The only problem is that if they mess it up, they get a poor credit rating right out of the gate. It’s quite a risk.

Technorati Tags: credit cards for high school students, student credit cards

A good credit score matters when you’re about to try to get a particular loan, such as for a car or a house. A small difference in your interest rate will add up through the years, making it very worthwhile to get your credit score in shape before applying for anything. These are some things to consider at such times:

1. Don’t apply for other credit.

Each time you apply for credit, it can impact your credit score. And if you’re getting more credit cards, that’s an impact too.

2. Beward of closing out credit accounts.

A lot of people like to consolidate all their debts onto one card, and close the remaining accounts. This is a bad idea because you lose out on your credit history from those closed accounts if it’s positive. Painful as it may be to not use an open account, keep it open.

3. Pay all bills on time.

You might be surprised at what can get reported to the credit bureaus. It’s easier than ever to pay bills on time, with all the online and automatic payment options out there. Take advantage of these, and keep track of everything that you still need to send a check in for or that you need to long on for to pay.

4. Pay down your credit cards.

Companies like to see you using less than 30% of your available credit line. Don’t think that opening new accounts to increase your overall credit line is a good idea, however. It’s better to pay down your existing accounts than to open ones you don’t need.

5. Talk to creditors when you’re having problems.

Or not having problems. If you just want a lower interest rate, call and ask for one. It can happen.

But if you are having problems, call and ask them to help you. If you can even send in a partial payment and make it clear that you will keep paying, they can be lenient.

6. Check your credit report with all 3 bureaus.

You might be surprised at the mistakes that can sneak onto a credit report. If you’re going for a big purchase, you want this information to be as accurate as possible and you need time for incorrect negative information to be removed.

This means don’t leave it for a week before you want to start applying. Start a couple months out so that you have time to gather your information and so there is time for the information to be removed.

It really is necessary to check with all three. They can have very different information.

Money problems really take it out of you. They’re some of the most stressful things people deal with in life, short of the death or serious illness of a loved one. Money problems are well known for even breaking up marriages.

Money problems can seem hopeless sometimes, especially times like now with inflation at a 17 year high. Short of earning more money, it’s really hard to get out of trouble. What can you do?

The number one thing to do is to figure out what can be done. Look hard at your finances. You need to look at the mistakes you’ve made and the circumstances that have put you where you are now. How can you turn things around.

Sometimes this isn’t easy. If it’s an unexpected major medical issue or a job loss, it may not have been a direct financial error that got you in that position. Sometimes there really is nothing you could have done to prevent the situation you’re in. But you can certainly work towards managing it.

Talking to other people can be really helpful. If you know someone who is pretty good with money and you trust, talk to them. They may have some insights that will help you. Odds are you won’t like everything you hear, but give it some time to sink in and you may understand what was really meant.
But beyond that, you have to think on how you can cut back. Sometimes this takes some extreme measures, such as moving into a smaller home or apartment so that your monthly expenses will be less. This is one of those steps that makes you take a bit of a step back before you can move forward, but it can work.

You have to cut back in smaller ways too. When it comes right down to it, cable or satellite television is a luxury. Internet is a luxury. Phone I wouldn’t do without personally, but restrict it to a single, affordable line and don’t overdo any calling that costs extra.

Quit eating out every day. So many people waste tons of money every day eating lunch out. Sometimes they even have leftover food from the previous night’s dinner wasting away at home. Take advantage of your leftovers and bring your lunch. This one move can save you several dollars daily, depending on how much you spend on lunches.

Work out a budgeting system. The envelope system is a classic, and there’s even an electronic version called Mvelopes Personal for those who prefer to handle everything on their computer. Figure it out and stick to it!

Changing your lifestyle is never fun. But sometimes that’s what it takes to regain control of your life overall.

Technorati Tags: money problems, lifestyle, paying off bills, debt, overwhelmed

Credit cards are a near necessity these days, and they’re much too easily abused. Wise use of them means that they’ll make your life a little easier and you won’t regret what you’ve spent your money on.

How do you use credit wisely?

The first thing to remember is to be honest with yourself about how you’re using it. If you’re going overboard and using your credit cards to hide the truth from yourself it’s all too easy to end up in a financial hole that’s near impossible to get out of.

Most important in being honest about where you are financially and especially with credit is to look at the numbers. Are you really where you think you are?

Too often the answer is no, you aren’t. There’s something you forgot when you decided that things were going well. But if things are going nicely, it’s a great feeling to know that you were right about your situation.

The second thing to remember is to not go overboard. Even if you have the credit, do you really need to buy everything you think you want? Saving and investing is often a much better plan for the long term than spending freely.

The third thing to remember is to not make excuses for what you spend. When money is tight it’s easy to dismiss running up the credit cards because of holidays and birthdays. If you can’t afford to spend the money, perhaps you should cut back. Other people will generally understand.

The fourth thing is to make sure you are getting the best possible rates on any credit cards or other debts you’re carrying. There’s no point in paying more for the money you owe than you need to.

Make sure your interest rates haven’t been climbing for no good reason. Credit card companies do sometimes increase rates without what you would think of as a real reason. If your rates are going up for no reason, and the company won’t lower them, remember that there are plenty of options out there. Remind the company of that too, and be prepared to follow up and find someone who will offer more reasonable terms.

Finally, know your own weaknesses. Do you fall for impulse purchases often? Do you just love spending money? Do you love to eat out?

If you know where your worst spending habits are, you can address them. Find ways to keep from spending excessively in those areas that really don’t work well for you.

Set a budget for those things you don’t want to give up on completely. It’s often harder to give something up completely than it is to find a way to enjoy it in moderation. There should be some room for fun in most budgets.

Technorati Tags: using credit wisely, credit, debt, budget, budgeting, personal finance

The entire point of having a rewards card is to get paid for what you would spend anyhow. These aren’t the right choice for everyone. For example, if you tend to carry a balance and the rewards card carries a higher interest rate than a plain credit card, you may be best off with the plain one.

But when you have the rewards available to you, you may as well make the most of them. How can you do that?

1. Choose the right rewards card.

What are your shopping habits? Many cards give higher rewards for certain types of purchases. If this corresponds well to your own spending habits, you’ll earn more.

For example, if you telecommute or have a very short drive to work, and do little other driving, a gas rewards card probably won’t benefit you as much as one that pays you back on other types of purchases. But if you have to drive a lot, this type makes a lot more sense than others may.

2. Drop any with an annual fee.

There are plenty of no annual fee rewards credit cards out there. If you’re paying to have one, you are probably losing out on a lot of what you would otherwise be getting from it.

Think about how much you would have to spend to cover a $50 annual fee. It’s about $1000. Why lose that much of your shopping power?

3. Use it as much as possible while paying the balance off.

If you can keep the balance of the card paid off, there’s no reason to not earn rewards on the money you have to spend anyhow. Many bills can be paid on credit cards, and of course regular purchases such as clothes and groceries can go on them too.

4. Don’t spend just to earn points.

Spending money because you like earning points or rewards is a good way for things to get out of control. Think about what you really need, and don’t forget that saving money for the long term is important. There are no good reasons to spend just to see your points go up on your rewards credit card.

5. Know the terms.

Sometimes the percentage rate you get back changes in 6 months to a year. In other words, the most advantageous rewards credit card now may be different when the terms change. Keep up with what the credit card company is giving you.

Technorati Tags: rewards cards, credit cards, credit card terms

There are some very good reasons to carry credit card debt. Unfortunately, too many of us carry it for bad reasons.

But even when you go into debt for good reasons, it weighs you down. Limits you. Makes your life just that much harder.

Credit card debt is quite simply a strain on the finances.

I’ve been working for a few years myself trying to get out of credit card debt. I had been solidly on my way when we were slammed by some medical bills that wiped out all my progress and then some. It has taken a year to recover from that and get to where I feel as though I’m making progress again.

In the meantime, we’ve had to live more frugally than ever. Keeping up with all the bills becomes a struggle. The added debt was in a good cause, but dealing with it has been a strain.

What to do, what to do?

First thing to do is to live frugally as you try to get rid of the debt. Figure out what you can cut from your lifestyle to save money. There are many different ways to do this, such as eating out less, sticking to a paid-off car rather than replacing it, even cutting back on retirement savings.

With this extra money you need to work hard on paying off that debt. Do not pay the minimum. Even a tiny bit over that will be a help in the long run. The more you can pay, the sooner the debt will be gone.

Cutting back isn’t enough?

It may be time for a second job or taking a chance on a home business. You decide. But in any case, bringing in some more money is a great way to pay down your debt faster. It’s a big sacrifice, especially if your current job already takes up much of your time and leaves you feeling tired, but sometimes that is what it takes.

The home business option is not for those who need money immediately. There’s risk involved. You probably won’t earn significant amounts quickly. But it can also be a lot more fun.

Debt is a terrible thing in so many ways. It stresses relationships. It limits what you can do financially, even beyond what your current earning levels may do. It takes away money that you could use much more effectively. Once it becomes possible to rid yourself of debt, it is a very good idea to do so.

Technorati Tags: credit card debt, personal finance, money trouble, financial problems, too much debt

Many people are just about done Christmas shopping. Sadly, many have gone well out of budget. That’s so easy to do, of course.

If you’re still doing holiday shopping, take a look at where you are relative to your holiday budget. If things have gone overboard, figure out how you’re going to get it back under control. Better to do this now than to be paying off credit card bills for months and months in the new year.

If you’ve gone over budget and still have shopping to do, figure out if you can exchange things that are not within your budget. Perfect gift it may be, but is it worth the excess? It’s a personal decision, but good money management means you pay attention to these things and do what is necessary.

Get a little creative if budget is becoming a problem. Think of gifts you can give that involve more time and less money, for example. Make gifts. Grandparents often love framed photos of grandchildren, for example.

Don’t give in to the urge to spend to excess at this time of year. There are far more important things in life than great presents.

Technorati Tags: holiday budget, christmas budget, money, personal finance

Even with the holiday crunch there are some things you need to do to keep your finances in order for next year. Some will have more to do than others, but a little thought on your finances is always a good thing.

Flexible Spending Accounts

Take full advantage of these. Why not? You aren’t losing anything by it. In fact, you lose if you don’t. The money is gone if not used. So figure out what you need.
Check with your employer, however. Some allow you to incur expenses even into March.

Check on Your Retirement Contributions

401k, IRAs (traditional and/or Roth) and others. If you can put more in them, get it all taken care of now. You may have until April 15 for some of these, but now is not a bad time to start thinking and planning.

Charity

This is a great time of year to remember the less fortunate. Not only can it help to make the holiday season more special for the less fortunate, it’s your last chance for charitable contribution write-offs. So get busy and share.

Remember that giving all that old clutter in your house can count under charitable contributions too. This is one we’re working on right now in my home. Going through all the kids’ toys and figuring out which they don’t use anymore. Since we had those big fires here a while back the kids are feeling quite sympathetic with those who may have lost all their toys.

Can You Bunch Deductions?

Property taxes and other things may be better bunched into batches so that you can take the deductions every other year. If your deductions are less than the standard deduction you may want to research this and see if it will help.

Prepare now to take the best possible advantage of what’s out there for you. Consult with a tax advisor for the best results, and make your appointment now rather than finding out they’re booked for the rest of the year. A little planning can go a long way.

Technorati Tags: end of year, personal finance

You’ve probably gotten a fair start to your holiday shopping, or maybe even finished it. If you’re still shopping, it’s not too late to take another look at your shopping budget.

My husband and I used a very simple way to estimate what gifts would cost us this year. We looked up everything on Amazon.com. From that, we have a list of what we’re after and what it would cost online. Makes for easy price comparisons.

While not everything is available there, it did allow us to look at what it was we really wanted to buy, and what it would cost. Much better than adding up individual receipts to see where you’re at.

Many people go far overboard with their holiday shopping, and regret it as they pay the bills off for months to come. Improving your control over your shopping habits at this time of year can limit the damage you do to your finances.

Technorati Tags: christmas shopping budget, holiday shopping