by BlondieWrites on April 14, 2010
How to Get Out of Debt in Hard Times
By Lyn Bell
As the credit crunch bites and recession follows the question of how to get out of debt is being asked by more and more people. Many have lost their jobs in the current recession, while others may have had a long time off work through sickness. Hours may have been reduced. resulting in less income. Opportunities to work overtime may have dried up.
It is so easy to get into debt when you go through a bad financial patch. The credit card balance mounts up. You take out a loan thinking that things will soon be back to normal and you can then pay everything off, but so often it turns out not to be so easy. You may be unable to find another job, or your company reduces your hours permanently.
Even if the situation is resolved and your income goes up again, often the debt is not as easy to pay off as you expected. Here are a few steps to help get you started.
o Do a budget! This is the best place to start to sort your finances.
o Keep making your monthly payments on time. Make sure you budget for it and do not use this money for spending.
o Pay the highest interest debts off fastest.
o Cut up your credit cards or at the very least put them in a safe place but not in your purse.
o If you receive a windfall such as a cash gift or an inheritance pay this off debt. Do not spend it!
If these strategies are not working for you, there are several things you can do.
o Debt Consolidation is a way of repaying a lot of small loans or credit card debts with one large loan. Payments can be cheaper each month and will help you to keep track of all your debts. A word of caution though: Do not start accumulating more debt because the pressure has come off. This unfortunately is an easy trap to get into.
o Negotiate the terms of your loans with the lender. Arrange for a longer period to pay. This will make your monthly payments smaller. Be truthful with the lender and explain your situation. If you are making an effort this is seen in a favorable light.
o Apply for a ‘payment holiday’ if you cannot make your payment this month. Remember that interest will still be accruing.
o Bankruptcy is really a last resort and should not be taken lightly. Bankruptcy can be voluntary (where you initiate it) or forced (where you have a court judgment against you). In bankruptcy proceedings you lose all your assets and you will find it very hard to get credit for many years to come. In terms of how to get out of debt, this is certainly not the best way, but sometimes some people have to resort to it.
The best answer on how to get out of debt is to take stock of your situation and be realistic about what you need to do to make things right. Speak to your bank or credit card provider. If you need extra help seek it out with a budget advisor or financial planner.
by BlondieWrites on March 22, 2010
Ways to Save Money and Survive the Recession
There is no doubt that times are hard. And though you are not part of the pack who have lost their jobs in recent months, you’d still feel the crunch when prices are sky high and you just understand why money is harder to come by these days. You are not probably thinking of ways to either earn additional income or ways to save money.
This is especially true for those who are used to having part time jobs that supplement their income. Right now, additional jobs are harder to come by. Not only are their fewer jobs, there are also plenty of competition and frankly, employers will prioritize those who do not have day jobs.
But saving money is actually not as difficult as people make it out to be. Like everything else, it’s all about discipline. If you are committed to the task and you can do anything you want, even manage to squeeze in all your expenses into one measly budget and have enough left to put in the bank. Here are some of the ways on how to save money that you never really thought of.
1. Mind the plug
One of the biggest wastage that people do is their electricity. You don’t realize it but you are probably paying far more for your electricity that what you are supposed to be not because of the cost of electricity but because you have managed to waste those watts when you forget to unplug the appliance or you have left the lights on even when nobody is there already. By changing the schedule of your laundry and your ironing, you can already make a lot of changes in your bills and therefore save tons of money. All you need to do is to always remember. Besides, you will not only save money but you will also be able to help lessen the problems on energy.
2. Skip the coffee
If you are the coffee addict and you just can’t go through the day without the cappuccino, curb the habit. If you can’t, at least resolve to have that cup of coffee inside the house and not buy it from Starbucks or other coffee shops. Coffee there are just so expensive and it is an absolute crime to spend money on just a single cup of coffee, something that you will be able to do at home. Lessen your trips to the coffee shops and you will find that you have a room in your monthly budget.
3. Take a walk or the sub
If you are so used to taking the taxi to work, now is the time to start walking and riding the sub. It’s not actually so hard. You just need to wake a little bit early so that you will have enough time to walk. Although it will definitely take more effort, commuting offers a lot of advantages. If you are on the plump side, you can already lose a lot of pounds when you do it. You can even forgo with your gym class because you are already getting the exercise that you need from it. If you are the fashionista, commuting can provide you with the chance to display your fashion sense.
by BlondieWrites on November 12, 2009
There are several factors that have caused the current economic crisis. At its very core, the sub-prime mortgage crisis was the catalyst.
To give you a brief history of how the sub-prime mortgage crisis began, let’s first explore what a sub-prime mortgage is. It is an adjustable rate loan that was offered to individuals who had bad credit. The brokers who engaged in offering these mortgages received commissions on every sale, and thus the need to entice and cajole buyers into purchasing homes (whether they could afford them or not) was the basis of their sales pitch.
During the housing boom, these predatory lenders sold homes to individuals without checking their FICO scores and subsequently offered homebuyers interest rates that were so low that they were, in one word, “irresistible”.
Unbeknownst to the buyers, however, within a short period of time the interest rates increased and some homeowners were forced to apply for equity loans as a result. However, what transpired thereafter was that the lenders then sold the mortgages to investors here and abroad. As a result, the interest rates on the mortgages increased to a point that the homeowners could not meet the mortgage payments. Foreclosures then ensued, prices of existing homes declined, and the housing market virtually collapsed.
According to foreclosuredataonline.com, the serious sub-prime mortgage crisis began in June of 2007 when two Bear Stearns hedge funds collapsed. This had a rapid effect on other parts of the financial markets worldwide, which reached the crisis level in August-September of this year and temporarily froze the money market sector that is critically important to banking and financial operations.
As sub-prime mortgages began to reset in droves and result in foreclosures, housing prices also declined. Because of the way these loans and CDOs (Collateralized Debt Obligations) were globally distributed, it knocked the whole system out of whack. Keep in mind that a single CDO package might contain as many as 100 sub-prime mortgage loans. As the defaults continued, the worldwide CDOs took a major hit and the entire thing went down like a house of cards.
Paul Krugman, economist and Nobel Prize winner noted that the innovations of recent years — the alphabet soup of CDOs and SIVs (Structured Investment Vehicle), RMBS (Residential Mortgage-Backed Security), and ABCP (Asset-Backed Commercial Paper) were sold on false pretenses. They were promoted as ways to spread risk, making investment safer. What they did instead — aside from making their creators a lot of money, which they didn’t have to repay when it all went bust — was to spread confusion, luring investors into taking on more risk than they realized.
Why was this allowed to happen? At a deep level, I believe that the problem was ideological: policy makers, committed to the view that the market is always right, simply ignored the warning signs. The bottom line is that policy makers left the financial industry free to innovate — and what it did was to innovate itself, and the rest of us, into a big, nasty mess.
by BlondieWrites on November 12, 2009
In its simplest terms, a recession occurs when there are “two consecutive quarters” of negative growth.
While most economists have been fickle in utilizing the term, it is nonetheless clear that our economy is in the throes of a recession. More importantly, however, is the fear that the recession will subsequently turn into a depression.
How does a recession occur? Well, when there is not enough supply to meet a specific demand (as in the case of oil), prices rise and spending becomes stagnant. This, in turn, causes companies to decrease expansion. No expansion means a decline in the work force and, consequently, unemployment rises. Consumer confidence dissipates, prices of homes decline, and everyone becomes affected.
It can also be suggested that the sub-prime mortgage crisis had a direct impact on the current recession. One can use the dot.com analogy to preface the seriousness of our current crisis. Remember when the stock prices for the internet industry increased beyond anyone’s imagination? Most people were buying these stocks because they felt the return on their investment would be phenomenal. It was – for a time, until the market turned sour on internet stocks and over five trillion dollars was lost, thus inviting a recession that affected companies worldwide.
Similar to the brokerage houses that were making money hand over fist today, the only people who profited from the internet stocks were the CEOs of these companies. Shareholders and everyone else were the losers.
Recently, economists have ascertained that the market will have five negative quarters. Others have stressed the importance of having on hand at least 18 months’ worth of savings. Still others, concerned about the Rescue Plan’s execution, are worried that we may be headed for a depression.
Obviously, not everyone agrees as to what will eventually occur. They do agree, however, that until the banks’ lending ability is alleviated, the stock market’s volatility will continue.
This global Rescue Plan was designed to give banks enough money so that they were not tied down by these toxic mortgages that prevented them from lending to one another. This is also why it is currently very difficult for an individual to obtain a car loan, college tuition loan, or other type of loan from banks.
Unless and until this plan begins to have a significant effect on the global economy, thus thwarting a total collapse of our lending institutions, this recession will continue. In other words, we are faced with economic uncertainty and must do what we can to ensure we are prepared for any eventuality.
by BlondieWrites on September 15, 2009
The Ultimate Depression Survival Guide: Protect Your Savings, Boost Your Income and Grow Wealthy Even in the Worst of Times
The Ultimate Depression Survival Guide is a book about surviving the economical crisis with a personal and financial plan. Having a plan and being prepared is half the battle. The author, Martin Weiss, is the editor of the Safe Money Report. He is a financial market analyst with over 30 years of experience who advocates safe investing. He is also the author of Crash Profits.
His book is a step-by-step guide to create a sound financial plan for the future. It offers solutions to today’s unpredictable financial markets and investments. Martin Weiss talks about the challenges ahead and how to overcome them. He provides in-depth advice on how to cope with the housing market decline, the sinking US Dollar and the credit crunch. He also shows you how to take advantage of today’s financial crisis and build your wealth and nest egg, how to deal with the fluctuations in stocks, how to cut your losses in real estate and how to invest safely.
The book also features topics that today’s successful investors should be familiar with, including global investing, commodities and foreign currencies. He also talks about how to gain wealth by buying assets at low prices.
The Ultimate Depression Survival Guide is a book full of advice for today’s investors, not only to survive the economic downturn, but to profit from it.
by BlondieWrites on September 6, 2009
When our financial picture is good, we often do not worry about saving money. But when things take a turn for the worse, we realize the error of our ways. Had we found ways to spend less and save more, we might not have to worry so much.
When faced with reduced income and/or rising prices, saving money is not optional. It’s something we must do to survive. But if you’ve never pinched pennies before, it’s easier said than done. Here are five ways you can save money when times are tough.
1. Shop around. Comparing prices on groceries, clothing and other tangibles is a good place to start. But you can also save a substantial amount of money by comparing prices on such things as insurance, phone service and internet access. Call around or check prices online to find the best deals.
2. Clip those coupons. Some people shudder at the thought of using coupons, or they feel that they don’t make much of a difference. But those cents (and sometimes dollars) off can really add up over time. And coupons aren’t just for groceries any more. You can find them for everything from dinners at your favorite restaurant to movie rentals.
3. Don’t buy when you can borrow. If the outside of your house needs cleaning, your first thought might be to go out and buy a pressure washer. But if your neighbor has one, he might be willing to loan it to you, saving you a big chunk of change. If you’re willing to loan stuff to others, they will often be happy to return the favor, saving you both money.
4. Cut your transportation expenses. If possible, using public transportation is usually the cheapest way to get from Point A to Point B. If that’s not an option, carpooling is the next best thing. Taking turns driving to work with a co-worker will be of benefit to both of you. And there’s no reason to stop there. Share rides to the store with neighbors, take turns with a fellow soccer mom driving the kids to practice, and take one vehicle when going out to eat with friends instead of driving separately.
5. Be self-sufficient. Anything you can create at home will almost certainly be cheaper than the same thing bought from a store. So try your hand at sewing your own clothing. Learn to bake bread from scratch. Plant a garden and learn how to preserve the surplus for later use. You’ll certainly save money, and you might find an enjoyable new hobby.
Saving money isn’t completely effortless, but it’s not as hard as you might think. Some simple changes in lifestyle can leave us with more money each month. During hard times, saving money can help keep us afloat. And when our situation improves, it can help us save up money for emergencies, retirement and other important causes.
by BlondieWrites on August 27, 2009
Experiencing a drop in income can send us into a panic and our budgets into a tailspin. Unfortunately, it can happen to just about anyone. You or your spouse could be laid off, work could dry up if you’re self-employed, or you or someone in your household could fall ill. Times like these call for drastic money-saving measures.
If you have adequate savings, you will be able to live off of that for a few months. But whether you have an emergency fund or not, spending as little as possible is the key to making it through such tough times. You often don’t know how long your income will be reduced, so it’s crucial to stretch the money you have as far as possible. Here are some ways to do that:
1. Take a look at your bills and see what can be eliminated. Things like housing and electricity are hardly optional, but there are other things you may be able to live without for a while. Possible candidates include cable or satellite service, cell phones, long-distance plans, Internet access and gym memberships. Unless there is a pressing need for these things, consider getting rid of them until things are better.
2. If you or your partner is still working, make sure that you’ve claimed as many exemptions as you qualify for on your tax withholding. You won’t get as large a refund as you would with fewer exemptions, but you will have more take-home pay out of each paycheck.
3. Cut your phone bill down to a bare minimum. It’s a good idea to have a phone in case of emergencies, but we often have lots of extra features that we could live without. So cancel the call waiting, call forwarding and other such features, and get the cheapest possible long-distance plan (if you really need long distance).
4. Conserve electricity. Turn down the thermostat and wear more clothes when it’s cold out. Turn the lights off when you leave a room, and don’t leave the computer or television on when they’re not in use. These measures may not seem to matter much, but when used in conjunction with each other, they can knock a noticeable amount off of your bill each month.
5. Spend as little as possible on groceries. Coupons are good, but they don’t always save you more money than buying a cheaper brand. Try to combine coupons with sales for maximum savings, and don’t be afraid to buy store brands. They’re usually just as good as the big names.
6. Avoid eating takeout, and cook meals from scratch as much as possible. It takes more time than preparing convenience foods, but it can save you a great deal of money. If you’re short on time, cook large batches when you have a chance and freeze the leftovers to eat later.
7. Get help if you need it. Food pantries, thrift shops, churches and other organizations make it their mission to help those in need. If you truly can’t afford necessities, swallow your pride and ask for help. You can always repay the good deed by making a donation when you’re able.
When you’re dealing with reduced income, it’s easy to feel hopelessness. But there are ways you can stretch your limited funds further. By cutting out all but the essential expenses, you increase your chances of making it through your financial crisis until you find a way to replace your lost income.
