Debt Consolidation
HOW TO CREATE A BUDGET YOU CAN LIVE WITH BY MAKING BETTER SPENDING DECISIONS
More and more hard working people are finding themselves in debt management crises, through no fault of their own, their employment hours and income are being reduced as employers in turn struggle with revenue losses and debt management problems of their own. It is a vicious cycle that has left many Americans frantic about their financial futures and uncertain about what they can do to recover.
Just as employers are eliminating some of their debt, we as people are going to have to do the same. Obviously we cannot eliminate some of our family members to reduce our debt, so we must reduce the amount of our debt by creating a better debt management plan, or “budget” so to speak.
I know that many of you have already had to tighten your purse strings and your budgets are stretched as it is, but perhaps you haven’t tried some of these financial expert’s methods of debt reduction, or thought you had made a thorough review but may find you simply overlooked something on closer inspection. Either way it’s a worthwhile endeavor to be certain you have trimmed your budget to reduce your debt to the maximum and in the proper ways for your personal health and well being.
The best place to start is with an open and frank conversation with your family about what it is you are trying to achieve, while it is important not to frighten your children with statements like if we don’t do this we’re going to lose the house it is important to give age appropriate information in order to have everyone on board with the family budget planning and the importance of it. The process of preparing for the making of your family budget may take you several hours or even days so you may not want to involve the entire family until you have almost completed the task.
Then with pen and paper in hand, take out all your monthly bank statements, bills and credit card statements for the past 6 months separating them into piles. Once you have done this make a List A for constant monthly expenses such as mortgage payments, car, insurance, etc. any bill that is consistently the same each month (be certain to include all expenses including 401K investments, allowance, charities, AAA, magazine subscriptions, church donations, licensing fees etc. you must be sure you think of all areas you spend even $5.00) and record them onto List A if it is a fixed expense every month and something you must have not want to have, if it is a consistent but discretionary item such as magazine subscriptions place these in a separate pile for discussion later but total the yearly amount up to know how much you are spending in a years time. Then total up all your consistent monthly bills.
Once that is complete begin on a separate sheet List B with the name of the credit card and the interest rate at the top and begin again with two columns headed must and want, you then take all your credit card statements for 6 months and line by line go through each charge deciding if the charge is something the family must have such as gasoline or want to have such as DVD’s etc. include all forms of entertainment or services in your decision process. It is important to realistically decide as a family what is a must and a want and to list them separately for later discussion, after seeing what your debt to income ratio you can decide. Total the must column and multiply by 2 for a yearly total. (As a rule dining out should fall into the want category unless this is a must decision on a family or date night etc.)
Make sure you include all credit accounts in your List B accounting including gas cards, clothing and department store accounts etc. and make List B 2, 3, etc. separately for each credit card account making the must and want list and your yearly totals.
Once that is complete take all your bills such as electric, cable, telephone, cell phone and separate into individual piles these should reflect your fluctuating monthly expenses and it will be necessary to average based on consumption what you are spending yearly for each one. When you have averaged your monthly fluctuating expenses and have totaled them make a List C with the must and want column and list each expense with its yearly total next to it in the appropriate column.
Finally on a separate sheet List D put your total net income for the year being sure to include investment proceeds, real estate rental income, and side jobs etc. any and all yearly income. If your income fluctuates try to average it based upon your earnings for the past 6 months and realistic estimate for the next 6 erring on the side that it will be less than the past 6 unless certain otherwise. Then take the must totals from list A, B, and C and subtract them from your total on List D this gives you your debt to income ratio with the balance being discretionary spending.
Discretionary spending is where your want list comes in and the family meeting must occur, you do not have to show your children (a kids budget is a good thing, teach them early) unless you feel its appropriate your net yearly income, but you must make it clear as to where you stand as far as how much room you have for discretionary spending and base your can fulfill want list based on that.
This is a bare bones budget which should leave you room for fun and entertainment which needs to be included in a budget in order for everyone to stick to the budget and achieve good physical and mental health as well.
Most families today are carrying an average of $13,000.00 in credit card debt with many in excess of $30,000.00 this is unacceptable for any wise money manager and can be a significant deterrent in one’s ability to achieve financial freedom from debt and grow savings, which should be an important part of your long-term financial plan. A reputable credit counselor can devise a strategic financial plan and budget for you and I strongly recommend you seek their advice if you are unable to complete this budget on your own.
No matter what the economy has in store for us you should be moving forward with a sound debt management plan and there is much to achieving that end, the most important being solid debt management and savings and retirement planning.
RETAIL SALES RISE IN JANUARY SEEN AS BETTER DEBT MANAGEMENT
With the economy still in the grips of a recession, the first signs that we may be turning the corner came as January’s revised retail sales transaction figures showed the highest increase in three years with a 1.8% increase in retail spending.
These are encouraging signs, which is that consumer’s who had been struggling with debt management, due to excess credit card debt, and had severely reduced their budget, due to the economy, may be ready to begin spending again, despite the ever rising unemployment rate.
Analysts were predicting much less optimistic retail figures for the entire 1st quarter of 2009 with an unemployment rate the highest seen since 1967, it was expected that consumers would continue to manage debt tightly and save more money out of economic fear, as they did in 2008.
Although, experts and Wall Street has seen this as a sign that the economy will soon begin to recover, other analysts wonder how long, or if, consumers will be able to sustain that level of consumption. Jennifer Lee, an economist at BMO Capital Markets said, “Consumers are fighting the good fight, but with such a terrible job market it is tough to imagine how long they can keep it going.”
Since the economy had been in a downward spiral, and with the real estate and banking crisis, consumers had been on a self imposed debt diet, better managing their debt, purchasing only necessary items and only when needed. The debt diet also included saving more money in order to establish an emergency fund, or larger emergency fund in the event of being laid off from their jobs. Hopefully its not quite time for everyone to panic and run out to find a free debt consolidation solution.
Experts agree that until unemployment declines, even if we do see spurts of growth in the retail sector it will be just that spurts. We don’t expect it to be a lasting recovery until the economy has rebounded in a meaningful way, such as the creation of jobs in the market place. In the meantime consumers should still practice better debt management and save money.
THE SENATE NEEDS A REPUTABLE CREDIT COUNSELOR
The Senate has given final approval and the President has signed a $410 billion dollar bill, on top of the $289 billion in stimulus money, averaging about an 8% increase in domestic agency spending all during an unprecedented economic crisis.
While most Americans across the country are struggling to meet their debt obligations, reducing their budgets, and practicing better debt management the Senate has seemed to “not” get the message of fiscal responsibility the rest of the country is trying so hard to practice.
The retail sales slump is a direct indicator that American consumers have put themselves on a no pork diet, consumers have trimmed their budgets to the bare bones, making tough budgetary decisions in order to practice wise debt management and in many cases have even sought professional credit counseling in order to balance their budgets and find the proper debt solutions.
Reputable credit counselors offer real solutions to out of control credit card debt and consumers who have lost control of their fiscal spending habits, although the solutions do not come without hard work and sacrifice.
It is not only the individuals who cannot solve their debt management problems on their own who are making the bold steps to once again be financially solvent, but also those who have good credit, but are fearful of a shrinking economy and that want to ensure their financial freedom from the economies uncertainties who are seeking credit counseling services today.
It is certain that in time our economy will recover, what is uncertain is how you will be left standing when it does. If you are in good standing with your creditors or not so good, everyone can benefit from a reputable credit counselor or credit counseling agency that offers various degrees of assistance based upon your particular debt management needs.
As consumers are demonstrating their good debt management practices and seeking credit counseling services we can only hope that the Senate will catch on to the trend and seek credit counseling themselves, and take the pork out of their diets too!
UNEMPLOYMENT CHECKS BEING REPLACED BY BANK DEBIT CARDS
As the economy continues at its sluggish pace and unemployment continues to rise, states already having debt management problems due to the budgetary deficits created by losses in sales and property tax relief revenue, are trying to practice better debt management and reduce debt in their budgets.
One way states have initiated to reduce their budget deficits is the outsourcing of unemployment benefits distribution to banks, with unemployment bank debit cards; for example Kansas, with expected savings to be as much as $300,000.00 by not printing and distributing the checks, this maneuver is seen as a welcome debt reduction for suffering state budgets. There is no charge to the state for entering into the program with the bank for unemployment debit cards, and some thirty states have signed up for the cost cutting deal with banks.
This program sounds too good to be true and is, all the debit card programs carry fees to the unemployment debit card users. Banks are charging fees to access your debit card information i.e. 50 cents to check your debit card balance, 50 cents to complain about being charged 50 cents, $1.50 for making more than 1 withdrawal in the same day, etcetera, etcetera! The fees vary from bank to bank, but they are all charging fess.
At a time when working Americans are struggling with debt management problems of their own, hitting unemployed workers with fees just to access their money is causing outrage across the country. Bailing out banks with taxpayer dollars is a foregone conclusion for most Americans now, but this is being seen as just another bailout for struggling banks and writing them a blank check at the expense of the unemployed. Debt Negotiation services are becoming increasingly popular in these uncertain times.
In response, participating banks such as Citigroup Inc., JP Morgan Chase, Bank of America Corp. and US Bancorp espouse that their programs for the unemployed offer convenience, and allow a single free withdrawal from a bank teller to receive all the money at once.
However, the unemployed workers who are struggling to pay their debts and feed their families are seeking a response from the Government about these unseemly charges to the hardest hit Americans today. All the debit card programs carry fees and in some states the unemployed have no option, but to use them.
Unions are advising their members to opt for the direct deposit option when applicable, such as in Florida where the unemployed are offered the option of direct deposit or debit cards. We understand the debt management problems states are facing, said union administrators, but it cannot be at the expense of workers hardest hit by the recession, who have lost their jobs and are struggling with their own debt management as it is, without tacking on fees to their unemployment benefits, its unconscionable.
PENSION FUNDS MAY BE THE NEXT BAILOUT HOW MANY CORPORATE DEBTS DO WE HAVE TO PAY
The economic recession and the uncertainty of Wall Street may claim another victim soon, the pension plans of some 44 million workers and retirees may be in jeopardy before long according to the corporation that insures them.
The Pension Benefit Guaranty Corporation is not a name widely known by most Americans, but it may be on the tip of everyone’s tongue before long if things on Wall Street do not improve as hoped.
The PBGC has already posted an $11 billion dollar deficit, with no signs of the blood letting stopping unless or until the stock market improves, but as more and more companies file for bankruptcy it is assumed that the PBGC will have to take over the faltering companies pension plans.
It is no stretch of the imagination that in about 20 years or so the Federal Government will be structuring a bailout for the PBGC, according to former PBGC Director Charles E.F. Millard, “There’s a significant chance that somebody is going to have to pay the piper.” He further stated, “In the near to medium-term there will be no need for a bailout of PBGC.”
Not everyone is so certain about his projections, and if the economy doesn’t recover soon and businesses continue to fail at the current rate there is some reason for concern. The PBGC has $63 billion in assets, however its debts are in the upward range of $74 billion dollars for pension benefits in the coming years. It is hoped that they will have time to recover, but over the long-term they too may be in need of a bailout as their debt may exceed their assets.
As Americans are struggling with the enormous debt President Obama has just signed us up for with the 1.2 trillion dollar Stimulus Bill and counting, the possibility of the American taxpayer having to pay the debt of yet another major corporation is not sitting well on Capital Hill.
“This is a very important issue for Americans today, when every time you turn around the government is talking about the little people paying for the welfare of others at the expense of taxpayers and the future generations of taxpayers to come,” said one senatorial aide who did not wish to be named. “We are told that we have to be better debt managers and cut the budget, while one after another major corporations’ line up for taxpayer funded welfare checks, enough is enough.”
Fear is the general atmosphere in the air here in Washington, as some legislators begin to worry that their constituents may turn on them in the upcoming election if word spreads of another possible bailout in the future. “You can’t keep telling folks to work harder, cut their budget, manage your debts, pay your increased taxes and then reverse that position or make excuses as to why such and such corporation is failing and you have to bail them out, they just don’t want to hear it anymore, even if it makes sense to bail them out!,” said an anonymous Senator on capital hill. I guess we’ll just have to wait and see on this one America.
THE PERSISTANT AUTO SALES SLUMP IS GOOD NEWS FOR CONSUMERS
Auto makers are facing the worst decline in sales it has seen in the past 27 years, and the dismal sales are not just for the big 3 automakers, Japanese automakers are feeling the pain too.
As American’s battle with a slumping economy and rein in their debt management spending habits, many are putting off buying a new car, or are buying used vehicles instead. We are also seeing a big increase in the refurbishing of vehicles as consumers decide to spend money to spruce up the current family car rather than buying a new one, experts are saying.
There’s little more the automakers can do to entice consumers to buy new cars at this point, after huge rebate and low interest loan incentives failed to bring in buyers most car dealers are expecting the worst. We even have tried to assuage fear of the uncertain economy by offering programs that enable the new car buyer to return the vehicle for the first year if they should lose their job and are unable to pay their debts.
While car makers are fearing the worst, consumers are hoping the continuing decline will lead to even bigger savings for them. As consumers are becoming better debt managers they are opting to buy used rather than new, according to Edmunds.com data shows that 27% of people who intended to buy a new car switched to used at the dealership in February of 2009.
However, there is hope for a rebound as consumers are now being put off by the increasing price of used vehicles, which are still continuing to rise. Automakers are hoping the continued industry incentives and signs of economic recovery will stimulate buyers.
For consumers looking to save money that has been holding off for even deeper discounts, time may be getting short to take advantage of those incentives. As consumer confidence returns in the market place and spending increases automakers will not be so desperate to resort to rock bottom pricing. Holding out for that final reduction in price may end up costing you more money in the end if your timing is off. We all seek to reduce debt in economically challenged times and getting a better price or reduced finance rates will certainly help you with your debt management, but that is only if you don’t wait too long to take advantage of debt reducing prices.
AMERICANS NOW TREADING UNKNOWN WATERS: WHAT YOU CAN DO TO KEEP YOUR HEAD ABOVE THE ECONOMIC TIDE
Historically, the United States has seen her share of economic ups and downs, some worse than others i.e. the Great Depression where we saw unemployment rates of one out of every three workers unemployed, and even though our unemployment rates are no where near the conditions of The Great Depression Americans are struggling.
Debt management problems abound at every level in the world today, and many good people, often through no fault of their own are drowning in debt due to the loss of a job or reduction of hours or wages. The government is doing what it can for those of us unemployed by extending unemployment benefits and food stamp programs, but fundamental change needs to take place.
America must take seriously the task of debt management and take meaningful steps to reduce debt and practice better debt management if our economy and Americans are to recover. In order to better manage your finances and get out of debt there are simple steps you can take that can help insulate you from a faltering economy and allow you to once again be debt free. This will require commitment and dedication to fiscal responsibility and will not be a quick fix solution to your financial woes, but the results are worth it if being debt free is your goal.
Many good hardworking people fall into the buy now pay later trap, and without even realizing how much debt they are amassing end up with credit card debt in excess of $15,000.00 dollars, that is how much over 48% of American households owe in credit card debt alone. Based on those figures it is apparent that consumers are having trouble with their debt management and the faltering economy has put additional strains on consumers trying to reduce their budget and debts.
If you are among the 48% struggling with credit card debt a good reputable debt management company may be the necessary step you need to take in order to take control of your financial future. Credit counseling offers different types of counseling for consumers with all different levels of debt management problems, and offer varying degrees of assistance in managing your debt problems and finding appropriate debt solutions.
It may be as simple as placing you on a structured budget or advising you as to how to construct your own budget, but the solutions you seek to your debt obligations are there for you to take advantage of. Contact a reputable credit counseling service today, and begin the process of creating the prospect of debt freedom for your future, despite what the economic future may bring.
LESS IS MORE THE NEW TREND IN BUYING A HOME
The dramatic down turn in the economy has created a new trend in home buyers needs of late; smaller home sales are on the rise and not only in the resale market. Builders are saying they are getting more and more requests from clients to build much smaller homes than the current average size of 2,521 square feet under air of new homes.
Although some experts say that this is due to the sluggish economy, other experts feel this may be a new trend in home building. People have had to reduce their debt and practice better debt management due to the economy; this has made them more cost conscious and practical in their housing needs.
According to the National Association of Home Builders the average size of a new home has steadily increased since 1970; it has grown 50% percent in the past 38 years, until now. The sluggish economy coupled with rising debt crisis has home buyers rethinking how much space they really need. Combine that with the rising cost of energy, utilities, and home maintenance hence the rising demand for smaller homes. There have even been some extreme cases of home buyers wanting dramatically tiny homes, some as small as 100 square feet.
While the Association doesn’t expect that extreme to become a trend it is a sign of the times; the trend of smaller homes may be a short term response to the economy, it is also said to be a sign that we may be in the beginning of a long term cycle of smaller housing, not a passing phase.
A recent A1A report stated that home buyers today are trying to reduce their monthly debts and are more concerned than ever before with the debt they incur on a yearly basis just to heat a 4500 square foot home. Practicality is setting in and buyers are more focused on the quality and functionality of their living space indoors and expanding their outdoor space.
Interior designers are finding the same to be true also in stating that the trend is to create smaller warmer interiors. People are definitely downsizing and seem very concerned about saving money on the cost and size of their homes to reduce their initial debt amount on the purchase price; they are reducing their debt and managing their money wiser, they are reducing the budget of their interior space and expanding the budget for the outdoor space. I don’t think the budget conscious, negotiate debt buyers are a short term economic trend, I think the less is more mind set is here to stay.
