It never ceases to amaze me how much credit card debt some people have. I was reading something the other day that said that 58 percent of Americans say that they rely on credit as a way of making ends meet. As high of a percentage as that is, I was a little surprised that it wasn’t higher. With the rising cost of gas and food prices, I anticipate it will be raised by the end of this year.

Last year, our nation’s collective credit-card debt was $937 billion, having nearly quadrupled in fewer than 20 years. If our nation continues to spend at the same rate, how is anyone going to afford to live? Quadrupling in 20 years is embarrassing. What are people charging? Things they probably don’t need: new furniture, vacations, new electronics, etc. I think credit cards can be so tempting and I sometimes have to hold back from spending when I know I’ve got my credit card. I feel like if I don’t have to record it like I do in my checkbook, then it’s not as bad because I’m not being held accountable. This is why I only use my credit card for gas or for large purchases I may end up returning. I don’t like tying the funds up if I’m not 100% I’m going to be keeping the item.

This year, close to 2.5 million households are likely to go into foreclosure, and more than a million people are expected to file for consumer bankruptcy. I think this is so sad. While these people have made their own money choices, I still feel for them. I can’t even imagine losing my home. I think bankruptcy is the chicken way out; after all, many people make it their priority to cut back and pay off debt. Just look at how many personal finance bloggers there are!

Why do you think our country has gotten into so much credit card debt?  What’s going to happen in the future?

Posted under Credit Cards, Economy

With the current credit crisis happening before our eyes, now is the time to make sure your credit report is in order.  Many banks are taking precautionary measures to ensure a credit crisis like this doesn’t happen again.  They are lowering the loan to value ratio on how much they will lend up to the home’s value; for example, my financial institution used to lend up to 100% loan to value, and now the maximum is 85%.  The are verifying income on a regular basis and requiring pay stubs.  It seems that the rules are being changed and banks are buckling down even more on a daily basis.

Today it was announced that if there’s a joint application, the rate of the loan would be based off the person with the lower credit score.  Hypothetically, if Mr. Money and I applied jointly for a loan and my credit score is 800, which would be an interest rate of 5%, and his credit score is 700, which is an interest rate of 7%, they are going to give us the 7%.  It is really devastating for someone who has horrible credit and has a strong co-signer.  It’s almost not worth having that co signer anymore.

While I understand all the rules and regulations, it’s still hard for me to grasp.  Almost my whole banking career we’ve been very giving with our loans.  As long as you had good credit, a steady income, and would sign on the line, you’d get the loan you wanted.  Not anymore.  We’ve been struggling every month to meet our loan goal.  Thankfully, they did lower it, but even then we’re still struggling.  It just amazes me how fast things can go downhill.

What’s your opinion of all these new rules and regulations for lending?  Do you think they are a good thing?

Posted under Credit Cards, Economy, Loans

The financial institution I work for is set to announce its earnings tomorrow.  I went out after work with a few other office managers who seem to think that after tomorrow we’ll all be out of jobs because our bank is the next to fail.  While it’s a concern, I don’t think that is truly reality- yet.  I am one of the optimists and I say that we’re going to be fine.

If all the people would stop freaking out about IndyMac bank failing, then so many other banks won’t be in trouble, like others are predicting.  I can’t even begin to tell you how many questions I have had about FDIC insurance and how to style accounts so that they are covered in the past few days.  It’s been horrible.  I am tired of telling people to add a beneficiary to their account to get $100,000 extra FDIC coverage!  I understand it is my job, but I also feel that consumers should do a good job of educating themselves on their money.  I had a customer today tell me that the person who opened her account should have let her know about the $100,000 per depositor FDIC coverage.  We have signs put up all around the branch letting people know about this.  It’s not like we are hiding it.

I think it all boils down to making smart money decisions.  Sure, if you’ve got more than $100,000 in an account, make sure you add a joint owner or beneficiary! Just make sure that you do it as soon as possible for peace of mind.  If people start making a run on the banks, of course they are going to run out of money and will have no choice to go under.  Make sure you cover your assets.

I am worried that I will be out of a job soon, but at the same time, I know that is something I cannot worry about.  It’s totally out of control.  I’m going to sit back, take one day at a time, live frugally, save my money, and pay off my debt.  After all, isn’t that all we can do?

Do you think more banks are going to fail? 

Posted under Bank Secrets, Economy, Save Your Money