Thoughts on Debt

Ban raising rates on existing balances unless you’re at least 30 days late paying the minimum due

“They’re not gonna raise the interest rate if you’ve been less than 30 days late. In the past, if you were three days late (for instance), they would hit you. That’s not gonna happen anymore. So that’s a really, really good thing.” Payments won’t show up on credit reports as late anymore until the 30-day mark is hit.

Eliminate the “universal default policy”
“They’re not gonna increase interest rates if your payment is missed on another card. … If you miss on your phone bill or something like that, the credit card companies see it and raise all your interest rates to across the board. That’s what’s called the ‘universal default clause.’ That one’s gonna be gone, too.”
End “double-cycle billing”
“No (more) retroactive interest. This is what’s called ‘double-cycle billing.’ You’ve paid your bill for the last month, but you’re still paying interest, even though you’ve paid it off in the past. It’s outrageous. So, they’re gonna stop double-cycle billing. That’s a really very, very good thing.”
If you pay more than the minimum due, prohibit banks from applying the extra only to the parts of your balance carrying the lowest interest rate

Improve the readability of monthly statements

“Those things have got all sorts of legalese and (are) very difficult (to read). (Banks are) supposedly gonna make it much easier to read, so you understand the interest rates, you understand the late fees and all that, so that, hopefully, should make things a little bit better.”
There will be more bold-face print, and still be a bunch of legalese, but more plain language. Companies will have to be more forthcoming on their policies.

Most experts feel, although these changes will begin moving the credit card companies in the right direction, that they will still find legal ways to get us to pay more like increasing membership fees and so forth.  For now keep an eye on the changes and on your statements, because you don’t know for sure when the changes will begin or how other areas of your billing may be affected.

Today it was announced that Bush and the government are bailing out Citibank or Citicorp, because they are in debt and in danger of going under.  I just need to ask one question, how far in debt is Bush going to leave us when his reign of terror is over.  Seriously, I can’t really understand why they are continuing to allow these bailouts over and over again.  What is going to happen is that we are going to crash harder than ever before with the way he is going, and then there is going to be no one to bail us out.  We can’t keep pretending that there is not a problem here, nor can we keep pretending like these companies didn’t put this on themselves.  After years and years of giving too much credit to people, now they are surprised that they can’t pay it back? I think that was probably foreseeable.

I guess my biggest concern, which I think is a genuine one is being with how simple it is to get Bush to give out money, how many more companies are going to jump on this band wagon before January, and how many more bailouts are we going to let him do?

My fear is that all these bailouts are just holding off the inevitable depression we are heading for and are going to make it worse in the long run.  I really think that all Bush is trying to accomplish is to save face and hold off the depression in this country until after he leaves office.  Then that will make the Democrats look like they are the ones who did it and will more than likely guarantee that the Republicans will be back in control in four years.

Many people are faced with debt and are doing what they can to get there heads above water.  With the economic trials people just can’t afford to spend the way they used to.  Hanging on and trying to put aside a few dollars here and there has become near impossible, so how do you address this, especially with the holidays quickly approaching.  Honestly, the best way to approach this is to try and buy now.  I know that sounds difficult to do, but for many people who are in this spot, what happens is you hold off on spending the money for the holidays until the very last minute.  Unfortunately, what happens in this case, is that you wind up spending way more this way on everything and leave yourself in a financial hole.  Last minute shopping leaves you settling for what is left and paying full price.  Spending a little bit each week towards Christmas is a great way to chop through that Christmas list in a hurry, while coming up with some really cute and creative ideas.

Look on the internet and try to come up with cute homemade ideas for holiday gifts.  For instance, the older relatives in the family always love something with a picture on it, or artwork done by their grandkids, so put some thought into it.  Make a picture collage, Holiday Ornaments, or a tee shirt with the kids hand prints.  All of these gifts will provide treasured memories for the family for years to come, and even better yet, they can be made for under $10 each. Make gifts for the neighbors and teachers at school. Try some homemade cookies in a cute cookie tin.  It is a great way to let people know that you are thinking about them this holiday season, without spending a fortune.

Being creative and smart will help you to shop the sales and clearances, get some great inexpensive ideas, and in the long run not only reduce your amount of holiday debt, but also reduce your stress going into the holidays.

In understanding the title of this blog one of the most important things to understand currently is that this maniac is spending through this country’s money for what will require about a 50 year payback period. Now, it is not bad enough to say that we are still spending endless amounts of money on this war which to say the least is never ending in a country whose name we don’t even pronounce correctly. Don’t get me wrong, I realize that these people might have needed our help in the beginning (the verdict is really still out on this fact) but the war is basically killing the economy in this country and still we are fighting it and at home people are struggling just to survive. As if the war was not bankrupting us enough, Bush is now running around and bailing out all the big finance companies to make it look in the numbers that we have money that we really don’t have. He currently has a bill in Congress to allocate $700 billion more dollars to failing companies over the next two years. Well, that’s great people but didn’t anyone tell him his term is up in about 3 months. Realize that he is spending money that we don’t have, and where is it going to come from…US. That’s right we are going to be paying off all this debt because, let’s face it, we can’t spend money that we don’t have right? Is anyone really seeing this besides me? I don’t know but I wish when I was running a little short that I could just print up some more money and go spend it with no financial backing. Oh, that’s right, we can’t just print money that is illegal. Well, I guess it isn’t if you are the President of the US then it is okay to make more money if you need it. Don’t we have enough debt already. Making these companies look better is just making our economy worse. Don’t buy into it, you can’t fix this country’s problems by spending more money we don’t have. Don’t worry though, the bread lines won’t be forming until after George W. Bush leaves office, this way he will still look like the good guy and the poor President who takes over is going to be sunk by Bush’s two year plan to bankrupt us. Keep saving those pennies people, we are gonna need them.

Many people remain uninformed about credit card debt and about credit cards in general. When asked about their debt, 35% of American’s said they carry balances on credit cards, and about 5% said they didn’t know. (How do you not know?) Maybe it is just that they don’t want to admit it. Studies by the Federal Reserve and data release by credit card companies indicate that the percentage of households with credit card balances in this country is at least in the mid 40’s. It could be even higher with the economy on the down swing.

In a separate study, nearly 2/3 of more than 1,000 people said they carry a revolving balance on one or more of their credit cards. Another 8% said they didn’t know whether or not they did. And 15% of people with credit cards say that they have experienced at least some amount of difficulty in paying their minimum balances. They continue to do studies about consumer debt which still show that most consumers don’t really understand the whole thing. They have a limited understanding of reading their credit report, understanding their credit scores and in spite of this they say that consumer knowledge about credit is improving. For example, less than a third of Americans understand that a credit score is a number that estimates your likelihood of paying back a debt. A credit score is based on but is separate from your credit reports. The three major credit reporting agencies are Equifax, Experian and TransUnion and the best known credit score is the FICO . The best way to improve your credit score is to pay all your bills on time. The range is about 300-850 and the higher your score the better the credit you can get and the lower the interest rate available to you.

More than a third of American’s were unaware that insurance companies use credit scores to approve your coverage and to set your rate. Less than 3/5 knew that regularly maxing out a credit card, even if paying your bills on time will lower your credit score. In addition, 79% of American’s thought they could get their credit score free once a year, however that is your credit report, not your credit score. You generally have to pay about $15 for your credit score number.

Most people don’t realize that they need to be checking their reports for accuracy every year, and they should check their credit score every few years and before they apply for a mortgage or other large line of credit. Washington Mutual estimates consumers can reduce finance charges by $105 a year on average by raising their scores 30 points.

Knowledge is power and knowing more about credit, how it works, and how we can make it work for us, is an important part of the system. Getting information now about credit, debt, credit score and other credit information, can help us improve our credit score and keep it in good standing. This can open up some major opportunities for you. Just remember it is never too late to start improving your credit rating.

Most American’s are carrying a lot more debt than they can afford.  Credit card debt in the US has reached a record high - Nearly $1 trillion, according to the latest figures from the Federal Reserve Board.  The average American household’s debt from credit cards has risen from $2966 in 1990 to $9840 in 2007.

As getting loans becomes more difficult and the cost of groceries and medical bills is on the rise, more and more people are turning toward plastic instead of cash to meet many of their basic needs.  For many of us easy credit has lead to spending well beyond our means.

The debt crisis in this country however, is created less by our spending and more as a result of an industry devoid of regulations and checks and balances.  For too many years, the credit card industry has been allowed to run rampant with charges and additional fees well beyond what is reasonable.

Consumer complaints and pleas for help may be having an effect.  Both the Federal Reserve and Congress have proposed new rules that have broad support.  Unfortunately, action has not yet been taken, but it is on the horizon.

The real problem is that the credit card companies make the most money on those of us who can’t afford what we spend.  This is why if you pay your bill in full every month, the credit card companies have a term for you and surprisingly they think of you as a “deadbeat”.  They deliberately target those who can not afford to pay their bills.  As a matter of fact, if you are having trouble paying your credit card bills, then you will more than likely receive some extra credit card offers in the mail.  They all want you to borrow from them.

We can hope that the legislation will soon be coming down the pike to give these big companies what they truly deserve and perhaps bring some relief to us all.

We are all feeling very helpless against the powers that be that are pulling our purse strings these days.  There are things that we need to do to take back some of the power from these piggies.  I am not saying that there has not been a cost increase in the production and delivery of the foods we love.  I am however saying that the price of gas has been backing off a little, but a block of cheese, 16oz of mozzerella cheese has risen about $3.00 a block, this is double its price only 3 months ago.  I can assure you that the cost to produce this block of cheese has not gone up $3.00 and therefore we need to be careful not to let these companies take advantage of us.  We need to take some proactive steps to stand up for ourselves here.  After all, you better believe that the price of cheese will come down after pound after pound goes bad on the store shelf.  Yes, it will mean compromising a little, but it is worth it to take a stand.  We can do something about it, we still have the power of the dollar and if we start exercising that power, we can make a difference.

It is time to move from debt to debt free and the best way to do this is to live like it was the 1900’s all over again.  Grow your own food, cook it, can it, freeze it.  That is right, we can bake bread, we can go to bed when the sun goes down and we can live without a credit card.  You may not eat what you want, watch what you want or go where you want, but you can actually live much, much more frugally than you have been.  I know this sounds like the extreme, but the truth is just like any other lifestyle change there is a period of adaptation, and it will feel a little odd for a while, but we can make the changes necessary for survival and we must or we won’t make it.

I recently saw an infomercial on TV about debt.  I thought it had some very interesting information about how credit card companies prey on the weak.  This interview was with someone who had written a book about resolving your debt, I am not sure that I really want to plug this book, hence I am deliberately omitting the name of it from my article.

The author had some interesting thoughts that I want to share with you.  He said that credit card companies specifically target people who are low income, students, uneducated, and minorities for the sole purpose of getting them in over their heads.  Counting on the fact that it is the people without money who will max out their credit cards the quickest.  Now you may ask yourself how this serves them.  Well, let’s say for instance that you charge $1000.00 on a card that’s limit is $1000.00.  You start out making the minimum payments, but the account keeps growing and with interest your account goes over the limit and that costs you an additional $45.00 per month, and then you send in a late payment and that costs you another $45.00 and before you know it your balance when it goes to collection is about $5000.00.  Figuring that you made $600.00 worth of payments while paying the minimum and you only borrowed $1000.00 in reality then you would owe about $400.00 to the credit card company, but now they are saying you owe $5000.00 now many people actually do at least begin paying towards that $5000.00 and many actually pay it off.  If you don’t however, the company is really only out about $400.00 and they get a tax break on that money from the government and then turn around and sell the $5000.00 debt to a collection agency.  This process can be seen by many as legalized loan sharking, in the fact that with interest and charges your balance can go from $400 to $5000 in almost the blink of an eye.

People who pay their credit cards every month, provide very little income to the credit card companies and therefore they want nothing more than to see you overspend and fall flat on your face.  The problem that most people with debt face, is even after they realize their mistakes, stop spending and try to pay down their bills, they are too late because the charges are rolling in and the debt keeps increasing, even though they are not spending at all.

This book claimed to have answers and debt solutions, however, after looking into it, this particular author has tried several different avenues of scamming the public through the years, and therefore, I would not recommend his book to anyone, however, I did think that the information about the credit card companies and how they make money on you even when you don’t pay was extremely informative and worth sharing.

Granted the US economy is not doing well, but if you are suffering because you have accumulated too much debt and you have not had any mitigating circumstances such as illness or death, then it is time to set yourself straight and accept some personal responsibility. Unfortunately many people may not like to hear this, but most debt comes from overspending and reckless spending. Some people can’t help but have the newest and latest things on the market, even if they can’t really afford them. Many people are trying to keep up with the neighbors, the designer clothes, and the new cars, without having the income to support doing so.

If you have money, and you work, then you need to try to live within your means. Sometimes that isn’t fun, but it is very freeing to know that you have very little money going out every month, and it is extremely rewarding to watch your savings and 401K accounts grow. There is something so peaceful about not owing everybody and their cousin money, and about not having bills piling up while you are riding around in your new car. With the economy struggling you need to tighten your belt even further, which may mean putting off that vacation you have been saving for or reducing it to a smaller one. You must be smart, and at this stage of the game if you are wallowing in debt, you need to start up a plan to get it to a manageable amount quickly. That may mean cutting out the luxuries, saving money on your current bills, cutting coupons, or even taking on a second job. You need to begin getting those bills paid off and living within your means before things get even worse.

No one is really sure how long the prices on necessities are going to be rising for, but they do all agree that we are nowhere near the end yet. It is time to scrape every penny together and save it. Don’t spend without worry, that could be money that you will need to live on next year. Save at every opportunity and the payoff will be great.

Is it any wonder why so many people in this country are in debt? If you think about it we live in a country that is always in debt, but ironically their debt never seems to count against them in the same way our debt counts against us. Why is that? When we spend more money than we have or than we can afford, we run the risk of losing everything, yet somehow our government overspends and they just call it a “deficit“. Why are they allowed to function at a deficit, but we are not? If you think about it, where do they get the money from when they are spending more than they have? Do they borrow it or just print up more money?

I would really like to just be able to say I am functioning at a deficit this week and move on, but unfortunately no one would think that was acceptable if I said it. Aren’t they really setting a tone for American’s to spend more than they have? I assure you that in other countries the credit card debt is nowhere near what it is in this country, although the trend is showing an increase in debt internationally as well.

As American’s this is a definite time to learn from our mistakes and start taking down our debt. Let’s face it you can live without a new TV or a new car, but can you really live without food and shelter? We need to stop putting things on our credit cards that we really can’t afford and start paying cash. I really think that this is the wave of the future in this country, as I just can’t see how credit card companies are going to continue to lend us money if we continue to not make good on our debts.