Dec

8

The AP reported that Consumer Credit fell by 3.51 billion in October. They went on to report that demand for revolving credit fell 9.3%. But, the number is even better as auto loans are included in this category and actually rose by 2.6%. Revolving credit has fallen for the past 13 months. (Source: NY Times Dec 8th, page B7)

The report implied that this trend could be a problem to the economy recovering I about fell over. Are you kidding?

Americans, you need to be commended for paying down your debt. Spend what you make and nothing more. In fact, you are saving more and this too is a good thing, as Banks actually get to loan X number of dollars based on the $$$ of deposits they have on hand. So actually, savings is good for our recovery!!!

While we are not close to being out of the woods, and I still think something smells funny with the banks , but, lets take a quick inventory of the good.

Last October we were in the face of a complete and total meltdown of the economy. At that time your government, both parties, stepped up to the plate and took steps to stop the bleeding.

After the Obama election our President and the Democratic party have continued working on this matter. Much work is still left, but…

- We have received back 500 billion of the 700 billion in TARP money.
- Americans are saving more
- Americans are shedding debt that is bad (credit cards!)

Our government has done what was needed to help a complete meltdown. Now, hopefully they will reapply this TARP money to stimulate job growth in meaningful and enduring ways, like building up green infrastructure and investing in education. Frankly the government has acted far more like capitalists than our captains of business and industry. Hopefully big business they will continue to become more responsible with their balance sheets.

The road to change is about being fiscally responsible, from the government down to each one of us. We have a long way to go, but we must continue this pattern of behavior in sustaining ways.

If we can get people back to work, we can soon begin paying down our deficit again, which if you recall President Clinton started doing during his administration.

Good work America. Keep it up.

Apr

22

Commercial: CITI
“If you are stuggling to make payments your credit card is here to help”

Who exactly are these jokers talking to?

Those of us that do not use credit card all that much?

–or–

The people that have a problem with credit they fed more and more credit to for years and now have jacked up their rates to over 30%?

Many people that carry balances have found their credit line slashed (not such a bad thing) and their monthly interest rates raised above 30%.

Credit card companies have a captive audience they can now feed upon like loan sharks for awhile. These organizations screwed you by providing you access to cheap credit. Now they are screwing you by charging you massive interest.

What does 30% interest look like on a 10,000 balance?

If you plan on paying off the card in 36 months it looks like this:
Monthly Payment: $424.52
Interest Paid: $5,287.57

Back when you had a 12% rate it would have cost you $332.14 a month to pay off the balance over three years.

If you continue to make the minimum monthly payment (4% per month on the unpaid balance) here is what that looks like
Payment Period: 10 years
Interest Paid: $13,949.00
Balance still owed after 10 years: $1630.60

You monthly payment at $10,000 is $400.00. The balance declines each month. But, the credit card company is counting on you to continue using your card to keep the balance at or around $10,000.

A serious question for you…

Are your planning on no longer using your card?

Welcome to financial slavery.

It is time to cut up those cards and start paying them off. If you can trasnfer the balance to a lower interest card do so. But pay it off. Even if you can get a 20% rate it will only cost you $371.64 to pay it off over 4 years. That saves you a bit over $50 a month.

You will find more information and a link to a free Excel spreadsheet you can use to figure out how to get out of credit card debt.
http://www.everydollarmatters.com/your_debt.php

 

Feb

5

NO! People and Businesses with good credit have access to credit today. Highly leveraged individuals and businesses are having a tough time. Yes, there are exceptions, but this for the most part is the current reality.

Businesses and People with good credit are not seeking credit at this time as these times are far too uncertain. Credit is available, it is just that the demand for credit from those that can afford it is low.

JOBS are what we need to focus on. Keeping people employed. Today the local new had a story about the Port of Seattle being creative and working with its employees to assist them in helping to solve their budget problems. Instead of layoffs employees will be taking short furloughs. This is the type of create thinking we need to solve our problems.

 

Jan

18

I am dead serious. For many out there, credit card companies are lowering credit limits and raising interest rates. I for one am glad. If you have more credit card debt than you can afford to pay off in three months then you have too much credit card debt.

There are always exceptions to the rule but people with average to poor FICO scores, people carrying a great deal of debt are being squeezed right now. Use this as an opportunity to payoff your credit card debt.

People with good credit are not getting squeezed with higher rates or lower balances. Why? First, risk is low. Second, many folks will use their credit cards to make purchases that they payoff over three to six months. My wife and I will make bigger purchases on the card and pay them off in two or three months.

Credit card companies would be foolish to squeeze us as we would not think twice of just waiting to make the purchase until we could pay for it 100%. Additionally, if our rates even climbed as high as 15% we would start paying them off every month and not worry about carrying a few hundred dollars into the next month.

High interest rate are credit cards are a good thing. So is raising the minimum monthly payment. In the long run it will force people to get out of debt and start living within their means.

A debt free America would be a very good thing indeed.

Jan

5

This is a lifestyle change that is long term. I can tell you this from first hand experience. Once you start doing it, at least after the inital early struggle, you begin to find how free you feel, how much better you sleep at night.

I am talking about managing your money in a manner that is free of debt. Living within your means.

It is really great to turn on the TV and read people in the mainstream media now professing this philosophy. But the mainstream media is all about popular culture, and as such does not endure for long. It is merely a snapshot of the current status quo. This is not to say that the advice being pedaled right now is not good advice. Things like…

- Spend no more than you make
- Save some of what you make
- Have a cash emergency fund
- Keep at least three months minimum of living expenses in cash accounts
- Save for your retirement
- Do not use the equity in your home as a personal piggy bank
- Credit card debt sucks

But this is a lifestyle change you are making. The tightening of credit is going to force many to make this change whether they want to or not. Maybe it will help us to collectively realize that there is more to life than just collecting stuff. I hope this is the case.

Dec

31

Same as I had for you at the end of 2007 and 2006

1. Spend what you make

2. Create a budget and stick to it

3. Begin to make more than the minimum payment on your credit cards

It is hard to tell what 2009 has in store for us. I think it is going to be a bumpy ride.

Dec

6

Of all of the folks out there dispensing advice Suze has never wavered in her approach. She never got sucked into the housing market insanity of the last ten years. She has always preached sound principles for managing your personal finances. If you need to dig yourself out of a financial hole she is one of the shovels you want to pick up.

Nov

13

Two headlines in this mornings Seattle Times. “Credit Card Relief Plan is Rejected” and “U.S. Ditches Plan to Buy Banks’ Troubles Assets“.

The former a story about Federal Bank Regulators REJECTING a plan to allow banks to forgive up to 40% of credit card debt with the money the govenment gave them. (Note: The mere fact these knuckleheads came up with such a stupid idea to begin with just floors me. Maybe not stupid, more like your kid trying to scam you on buying something after you tripled their allowance.)

Next time y’all are coming up with ignorant, wing-nut ideas for spending our money maybe you could take the 40% you were going to forgive the people knee deep in credit card debt and credit the checking accounts of those of us that do not have any credit card debt. We would even promise to cash the check immediately and go shopping. It could serve to help make us feel irresponsible and share in the blame. It could remove some of the blame and burdon from those that created this mess. Whadddya think?

The second story was about the Bush administration finding a portion of their lost mind and halting plans to purchase worthless banks assets. Now there was a tough decision, ehhhh? Hey, even the freakin’ tooth fairy gets a tooth.

I am not so pleased with the decision to bailout Detroit, though I will give the Obama plan to appoint a Czar (hopefully not a yes person) to oversee these folks a shot. Maybe the heads of GM, Chrysler, and Ford might have a joint meeting, bring in some consultants for an exhorbanant fee to aprise them that when one runs a business the goal is to a) make products people want to buy, b) keep in touch will the times, and…oh…it is a for profit venture they are engaged in so, c) running the business to be profitable might be a neat new idea to try.

Later

 

Nov

13

…the finger pointing

…the blame

One thought. There are at least 10-20% of you that need to hold up the mirror.

Our current economic crisis is certainly fueled by…

But, how many of you were borrowing this money? running up debt and getting yourself in way over your head? What really sucks is that all of your actions are having a profound effect on those of us that have managed our money wisely.  

In the past we had a financial system that was somewhat sane. It did not lend money to people without making sure they could pay it back.

No, I am not done. Even though this current crisis is fueled by the minority, there are 50% of you that have contributed to our mounting consumer debt.

For the past fifty years we have become a nation of debt. When I was a young kid in the sixties…

…and…

Accoring to Federal Reserve debt statistics total consumer debt in 1980 was $355 billion. It is now at 2.6 trillion.

NEWSFLASH… Many of you are not buying any more because the debt game has come to an end.

This is going to last YEARS people. YEARS!!!

So, Federal government here is what you need to do. Come up with a plan that is for the long haul. WE DON’T need a band-aid to try to try to smooth things over. Start thinking beyond what is happening this week!

Quit trying to save the people who are in way over their head. Quit trying to save the businesses that have screwed up. Doing so will only make matters worse. Far worse.

People, start a new revolution of managing your money wisely. Spend what you make. Not a dime more. Pay down your debt. Want what you have. Enjoy each other, not things.

Nov

10

just floors me. I was watching “On the Money” on CNBC and this guy called in to ask advice. He was 55. Wanted to sell his house he was breakeven on, tap his 401k to put 60% down on a home in Florida, and pay off his $85,000 credit card debt. He actually talked to an accountant as well.

I am just shaking my head. You know his 401k is down like the rest of ours between 20-40%. Borrowing against his retirement is going to cost him about 40%. The guy has $85,000 in credit card debt!!!

Wow…

 

 

 

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