New credit card rules could mean a tough time getting a new Visa or MasterCard.

The tighter credit card rules imposed by Congress — mixed with a nation swimming in debt — mean credit card companies and banks will become more picky in selecting their card holders, says Valley credit counselor Dean Wegner.

“Right now, they’re looking for quality vs. quantity, going into 2010,” Wegner said.

People getting cards should not expect as many perks as in the past, he said.

“You’re probably going to see more annual fees, a reduction in points and miles and cash rebates, things like that, a lot of the incentives.”

Those unsolicited credit card applications in the mail might disappear as well.

Credit limits will be reduced — even for those with great credit scores, Wegner said.

“Usually, a great indicator of that is high FICO scores. But, a change from this time last year — a 760 FICO score, typically a new credit limit would be $8,000. Now, that’s reduced to $4,500, on average.”

“Credit card debt is a virus in our culture right now,” he said. “We are the most in debt country of any country in the world with credit card debt.”

Wegner said tougher credit rules should be a wake-up call for people to start using their ATM cards.

“Right now, we’re carrying huge amounts of credit card debt. I think our country needs to get out of it. The abuse of practices, the nuisance fees, all that really needs to go away, and we need to operate more like Europe where everyone operates on debit cards.”

It is argued that a lot of debt becomes too much debt for a country when government debt rises above 90% above national gross domestic product.  Two economists, Kenneth Rogoff and Carmen Reinhart argue this in their publication American Economic Review and present us with some interesting facts.

They looked at data which was recorded over the course of 200 years and from 44 countries and concluded that at ratios of debt to GDP up to 90%, there’s not much correlation between government debt and economic growth.

Above 90%, however, median economic growth rates fall by one percentage point and average economic growth rates fall by about four percentage points.  That makes the 90% level a kind of make-or-break point for countries that are hoping to grow their way out of debt. If the government debt load climbs above 90% of GDP, economic growth slows so much that growth is no longer a viable solution to reducing that debt.  Above the 90% level, governments serious about reducing their debt load have to increasingly rely on “solutions” such as reducing wages and depreciating their currencies, which might over time increase global economic competitiveness enough to give a boost to national economic growth. In the short to medium term, these “solutions” inflict real pain on the citizens of the countries since they reduce standards of living.  According to the International Monetary Fund (IMF) The United States finished 2009 with a debt-to-GDP ratio of 85%. On current trend, the United States will finish 2010 at 94% and 2011 at 98%.The United Kingdom was slightly further away from the cutoff when the International Monetary Fund last updated its numbers in October. At that point, current trends saw the country finishing 2009 at a 69% debt ratio and ending 2011 at 89%. The economic and financial condition of the UK has deteriorated since then, however. The most recent figures show the country finishing 2009 at a debt-to-GDP ratio of 72% and breaking the 90% barrier in 2011.  The two biggest continental economies are in surprisingly similar shape, according to the IMF’s October calculations. France ended 2009 at a 77% debt-to-GDP ratio, according to the International Monetary Fund, and on current trend, will hit an 87% ratio in 2011. Germany ended 2009 at 79% and will end 2011 at 88%.

It is a common dilemma when one must decide if they should stop funding their retirement to focus on paying off debt.  There are very few circumstances where high interest or interest of 9%-12% debt shouldn’t be top priority.  Double digit interest is very difficult to deal with.  If you are dealing with high interest debt, it’s most likely because you haven’t been living within your means.

If we are able to get our interest rate down in to the single digits, we must decide if it is a good time to make retirement a priority or not.  If you decide to fund retirement, you stay in debt longer and pay more interest.

There are a couple other situations where investing may make sense. Consider the following:

First, you only have a specific limit per year that you can contribute to a Roth IRA. (This is currently $5,000 per year — $6,000 per year if you’re 50 or older.) Once you miss the window of availability, you’re out of luck. Your new contributions go toward the current year’s limit. You can’t go back and make up contributions you missed for the past two years once you are out of debt.

Second, if you don’t have the discipline to actually apply any new money to accelerate your progress on debt, then don’t halt your retirement. Decreasing your contributions only to spend the difference at *your vice of choice* may be the single dumbest financial move you can make.

There’s no single answer to this dilemma.

Everyone’s situation is different.  Consider all your options. Don’t continue making a certain decision just because it’s what you’re doing right now.

Start from a blank slate. Could you benefit from a singular focus? Are you willing to make further lifestyle cuts to increase you current contributions?  Examine your options and consider the choices.

When will this madness stop?

Just to recap, let’s look at how much we have already spent in little over one year under a Congress lead by Nancy Pelosi and Harry Reid.

$141 billion in TARP funds (if Barack Obama decides he would like to spend the $200 billion dollars of TARP money that has been leftover—as he has indicated that he would like to do—the actual cost would increase to $341 billion … so much for trying to reduce the national debt)

$30 billion to bailout auto manufacturers

$410 billion for the first omnibus spending bill of 2009

$787 billion for the Obama stimulus (some economists put the potential 10 year cost of this stimulus at $3.27 trillion)

$3 billion for “cash for clunkers” (or $24,000 per car)

And there’s more to come. If Congress passes health care reform, it will likely cost taxpayers at leastanother $849 billion.

The amount of spending going on in Washington is staggering. So much so that it is easy to become numb to another $100 billion here or another $1 trillion there. But we must remember all of this spending will have consequences. Even if all of this spending provides a short term boost to our economy, it will almost certainly have long term consequences that will be disastrous—at least for our children and grandchildren, who will be stuck paying our tab.

With our elected officials in Washington again asleep at the wheel, it is up to the American people to alter the course of the nation before we are all driven off of a cliff. Buckle up for a bumpy ride.

source: http://www.examiner.com/x-28541-Kissimmee-Conservative-Examiner~y2009m12d13-Runaway-spending-continues-as-Congress-raises-debt-ceiling-to-almost-14-trillion

Before you consider filing for bankruptcy, it is important you understand the difference between different types of bankruptcy and your reasons for filing.  Credit rating is affected and much legality is involved.

Full freedom from the debt is not easy nowadays as the changing laws are getting tougher. Federal laws are supplemented by additional laws in many states.

If you are filing for bankruptcy, you can be affected by two main chapters of bankruptcy, Chapter 7 and 13.  Both of these chapters of bankruptcy are common and take into account individual debtors and small filers.

Chapter 7 also known as liquidation frees the debtor from all requirements to repay debt and may result in liquidation of assets.  More commonly, the debtors assets are exempt from the process of liquidation.  Fraud-related loans, student loans debt, State and federal debts may not be discharged through this process.

Chapter 13 is for the restructuring of debt and is commonly known as Reorganization. A repayment plan can be worked out by the debtor and creditor on the basis of approval from the court regarding the payment of the debt.

On the other hand, Chapter 13 an attempt to liquidate assets for the payment of complete debt amount. In order to make part payment of the main debt, re-structuring of payment plans is done more often. You can clear all your debts in less than five years.

Legal and Filing fees: Fees is approximately $800 or may be higher for a single person. Couple fees and business owner fees is $1,000 or more. You have to keep all the paperwork up to date to help your attorney in filing your documents. You will also have to spend time reviewing bills and answering questions to your attorney.

Did you know that certain types of debt and financial obligations cannot be discharged when filing for bankruptcy?  There are debts that are exempt from bankruptcy laws and you need to pay them whether or not you file for bankruptcy protection.

One financial obligation that can’t be discharged through bankruptcy is child support.  You are required to pay for child support by court order and filing for bankruptcy does not mean that you can stop paying it.

An IRS lien is expempt from being discharged by bankruptcy. What happens with an IRS lien is that you owe income tax payments from one or multiple years. At a certain amount of money owed, the IRS will put a lien on your house or some other type of asset that you own, or in lieu of that possibility, may garnish your wages via your employer. This type of IRS lien, in addition to being exempt from a bankruptcy discharge, is also on your credit report for about 10 years as a huge blemish, which would be in addition to the blemish on your credit report from your bankruptcy filing. These types of red flags on your credit report can make it more difficult to get approved for new credit in the future.

A court order, which may have awarded an individual or company a specific amount ofmoney through a lawsuit brought against you is not a debt exempt from bankruptcy either.

If you are behind in one or more debts with your creditors, those creditors will commonly file a lawsuit against you eventually.  This takes time and most creditors are not quick to go to this extreme to collect their money but in time it will most likely happen.  If this type of lawsuit occurs before bankruptcy, it will not be discharged after bankruptcy is filed.  If you have creditors with a judgment against you, filing for bankruptcy may not do much for you.

Government loans such as federal student loans are also exempt from bankruptcy discharge.

WASHINGTON – The stress from deepening debt is becoming a major pain in the neck — and the back and the head and the stomach — for millions of Americans.

When people are dealing with mountains of debt, they’re much more likely to report health problems, too, according to an Associated Press-AOL Health poll. And not just little stuff; this means ulcers, severe depression, even heart attacks.

Take Edward Driscoll, 38, of Braintree, Mass. He blames debt — $10,000 worth — for contributing to his ulcers and his wife Kimberly’s panic attacks. “Just worrying, worrying, worrying, you know, where the next payment of this is going to come from,” he says.

Although most people appear to be managing their debts all right, perhaps 10 million to 16 million are “suffering terribly due to their debts, and their health is likely to be negatively impacted,” says Paul J. Lavrakas, a research psychologist and AP consultant who analyzed the results of the survey. Those are people who reported high levels of debt stress and suffered from at least three stress-related illnesses, he says.

That finding is supported by medical research that has linked chronic stress to a wide range of ailments.

And the current tough economic times and rising costs of living seem to be leading to increasing debt stress, 14 percent higher this year than in 2004, according to an index tied to the AP-AOL survey.

Among the people reporting high debt stress in the new poll:

• 27 percent had ulcers or digestive tract problems, compared with 8 percent of those with low levels of debt stress.
• 44 percent had migraines or other headaches, compared with 15 percent.
• 29 percent suffered severe anxiety, compared with 4 percent.
• 23 percent had severe depression, compared with 4 percent.
• 6 percent reported heart attacks, double the rate for those with low debt stress.
• More than half, 51 percent, had muscle tension, including pain in the lower back. That compared with 31 percent of those with low levels of debt stress.

People who reported high stress also were much more likely to have trouble concentrating and sleeping and were more prone to getting upset for no good reason.

When their construction business went under four years ago, Pamela Crouch, 61, and her husband, who had retired from General Motors, found themselves struggling under IOUs totaling $30,000.

“We just kind of felt desperate. We just really didn’t have enough to live on to pay what we had to pay,” recalls Crouch of Eaton, Ind. She remembers having trouble sleeping and concentrating. “We ended up paying a lot of our bills just on the credit card,” says Crouch, a medical assistant in a nursing home. “We were stressed and depressed. … It was really rough.”

Their son, a manager of a construction supply company, recently helped them out with their debt problems. “Things are doing much better,” she says. “It made a world of difference in how we feel.”

‘Fight-or-flight’
It isn’t known for certain whether such stress is causing health problems, says Lavrakas, who while at Ohio State University in the late 1990s helped to develop an index to measure the extent to which people are stressed from financial debts.

Source – http://www.msnbc.msn.com/id/25060719/

Spending less during the holiday season does not mean you will have less fun.  Make sure you plan an affordable holiday.

Create a holiday budget.  A spending plan is a good start for a cheaper holiday season.  Don’t forget to include the cost of decorations, food and gifts into your budget.

Make a gift list and don’t go over your spending limit.  Get your gift ideas down on paper before heading out to the shop.

You don’t have to spend a lot to give a nice gift either.  Remember what your budget is while shopping.

Shop at thrift stores, yard sales and flea markets or other second hand sources for gifts.  Maybe you know someone that likes vintage jewelry or antiques and you can find these things for cheaper at a second hand shop.

Make sure you don’t end up shopping for yourself on top of the other people you are shopping for.  You will end up with less stuff and more money in the bank.

Make your own cards.  The cost of holiday cards is really expensive plus you have to pay for postage.  You can also wrap your own gifts.  In store gift wrapping sometimes increases the cost of each gift by another couple of dollars.

It’s the holiday season, the biggest shopping season of the whole year.  It’s this time that many Americans end up with thousands of dollars in credit card debt they cant afford to pay back.  Here are some reasons to avoid using your credit card while shopping for the holidays.

If you have a debt on your credit card now, you will only be adding to it.  You will spend more money with a credit card because there is no physical sign telling you to stop spending.  Try to avoid using your credit card and use some cash you have put aside for holiday shopping.  You will pay more with a credit card as well because you pay interest on balances that you carry for more than a month.  Also, if you already had a balance on your card, you won’t get a grace period.  Interest will start adding up quickly.  The New Year will come and you will be paying off debt from the holiday season.  During the holiday season, there is also a much higher risk of credit card fraud.  Leave your credit card at home and reduce the risk of someone stealing your card while shopping.  In February 2010, a credit card rule will stop credit card companies from raising rates on already existing balances.  Banks still have around 60 days once holiday shopping ends to raise your rates before the new rules take effect.  You could be paying much more than you expected.  You could be spending more than you can afford.  When holiday shopping, it is difficult to keep a tab of what you are buying.

Many people willmax out their credit cards while holiday shopping.  You are now risking going over your credit limit once the finance charges kick in.  When a balance is over 10% to 20% of your credit limit, it has a negative impact on your credit score.

Buying more gifts than you can afford will only cause trouble for you in the near future.

Do not go shopping without a budget.  Going shopping without a limit will make it very easy to charge more than you can afford.  Before leaving your house to go shopping, you should figure out exactly how much you can afford to spend.

Once a budget is made, make sure to keep up with it.  Keep all of your receipts and check your account to make sure you are not spending too much every now and than.

Many are guilty of opening a new account just to get discounts.  Plenty of retail shops try to convince their customers to sign up for the store credit cards for better discounts on purchases.  You will be risking charging more than you can afford, in return affecting your credit score.

Never let someone else go holiday shopping with your credit card.  You won’t have any idea how much they are spending and if your card borrower does not pay, you will have to have extra money to pay for their balance.

Be careful not to leave your card somewhere while shopping.  Your credit card is targeted this time of the year more than ever.  Never let your cards get out of your sight.

If you are using your credit card to buy gifts because you don’t have cash chances are you can’t really afford the gifts anyway. If you don’t have money for gifts, don’t resort to credit. Instead, consider regifting items you’ve received or give homemade gifts.

Charging gifts for yourself because you “deserve” them.  It can be hard walking around the stores for weeks without getting anything for yourself. You’re going to see things you want to buy, but practice some self-discipline. Remember that while you’re out getting gifts for others, there are people out buying gifts for you.

Ignoring your post-holiday billing statement.  If you kept track of how much you spent, you can already guess that your first credit card billing statement will be higher than normal. Facing it sooner rather than later will help you get rid of that high balance sooner rather than later.

By turning your thermostat down three degrees, you can save around 3% on your heating bills.  Make sure it is off when you are at work and turn it down even lower when you are sleeping to save even more money.  Shut the doors to any rooms that aren’t being used to conserve energy.  Weatherstripping doors and windows can amount to using less heat.  An insulated attic can also reduce the cost of your heating bills.  The refrigerator, hot water heater and the heating system are three of the biggest energy consumers in your home.  To improve the efficiency of your appliances, Make sure you give your furnace a tune-up once a year.  Wrapping the water heater will insulate it and cleaning the refrigerator coils twice a year will also help improve their efficiency.  It is also possible that your utility company offers a reduced rate for certain times of the day.  If your schedule allows it, timing these devices to cycle during this period could greatly reduce the amount of energy being used.  A lower water bill can be obtainable if water leaks are fixed and water saving shower heads are installed.  By placing a heavy object in the toilet tank such as a brick, you will also be conserving the amount of water used.  Filling up the dishwasher and washing machine halfway and than running it costs the average American household $700 to $900 dollars in added utility fees each year.  Do full loads of dishes and laundry. Also when drying your clothes in groups one after another, your dryer saves energy because it is already hot.  Using e-mail and calling friends and family at night and on weekends can significantly lower your long distance phone bill.  See if there is a cheaper long distance package available.

These are just a few tips to help you save money on your utility expenses.  Feel free to share any other stories, ideas or practices you go about in your home.