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

Have you noticed that when you go into your local grocery store the age of greeters and workers seems to be increasing? I know from working at the bank the number of our older customers that are now working after being retired is increasing. I know we’re all living through this economic turndown, but many of us don’t realize the effect it has on retirees and those that are close to retiring. Heck, what about those of us who would like to retire one day? We’re being affected too because we can’t save as much!

The other day at lunch I read this article about how people who are retired are having to cut back on their traveling. That triggered a thought in my mind: how many people as they are planning for their retirement actually consider the fact that inflation can sometimes go haywire? If you stop and think about it, these people have saved and saved for so many years, and they probably figured in inflation as well, but how can they predict (and cope) with something close to hyperinflation like we may be dealing with now?

It really makes me think of how I want to handle my money and savings for retirement. I know with the market being so horrible, I’ve lost money, and that’s just made me want to diversify my savings even more. I want to know that I’ve got liquid cash saved for whatever emergencies come along. I want to know that my money is safe and secure and I’m not going to lose money for some part of it. Of course, I’m still young and I’m okay with having my 401K and Roth IRA in stocks and mutual funds. I’m just saying I want to make sure I’ve got some money in a liquid savings account for retirement too.

I feel bad for the people that have retired and then gone back to work. They worked many, many years and looked forward to their retirement and now it’s being pushed back. I know they are most likely thankful for the opportunity to work, so I keep that in mind. I think the main lesson I’ve learned is that you can never save too much money. Still live your life and have a good time, but make saving a priority. You won’t regret you did!

What are some steps you are taking to ensure your retirement is everything you want it to be? Are you paying off debt, saving more, or living on less?

Posted under Economy