Tag Archives: debt
There are two types of people that engage in Black Friday shopping: those that have waited for dramatic price drops in higher priced items, and those that believe shopping is a competitive sport. I’m of the former camp.
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I don’t like being the bearer of bad news, but a storm is coming unlike anything we’ve seen in a very long time. In fact, most of us have never seen something like this in our lifetimes. What is it, you ask? The perfect storm of epic proportions that will change how every single American lives.
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The average American does not understand their relationship to money and debt. The impact was felt very directly during the dot com and mortgage bubbles, forcing many for the first time to recognize that debt is not their friend.
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If you follow my blog in any capacity, you know I love to talk about politics and finance relative to the average individual’s life. So many of us think that what politicians, corporations and high-level financiers discuss and eventually base decisions upon, doesn’t affect us at the individual level. How incredibly wrong and deluded we are if we think that is true!! Everything we do is influenced by these sectors of the population, from the food we eat to the cars we drive. Everything we read, listen to, interact with — especially social media — is monitored and steered for utilization by entities far up the totem pole of power.
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Live within your means, never be in debt, and by husbanding your money you can always lay it out well. But when you get in debt you become a slave. Therefore I say to you never involve yourself in debt, and become no man’s surety. If your friend is in distress, aid him if you have the means to spare. If he fails to be able to return it, it is only so much lost.
I was walking by the News Corp building in the City today and saw this sign talking about our national debt and each citizen’s portion. Seriously? I know the exact amount of my debt and I guarantee it isn’t even close to $45,000.
While the government is elected by the people, I really don’t feel directly responsible for any debt incurred by them. Frankly, I think it’s a ridiculous premise to assign government debt to the individual. The minute you’re born, you are in debt? C’mon. Stop it.
But hey, if that’s how they intend to treat it, why can’t we have a larger say in how debt is used and paid down? Some debt is good, but a lot of this recurring debt is simply no good. Things improving value of living and creates jobs are good (like improving infrastructure). But there are plenty of frivolous projects and activities going on right now that are eating up monetary resources.
And for the record, we need to kill that saying that the USA is the richest nation in the world. You can’t be rich and in massive amounts of debt.
Do what many people are doing now: cut out the fat and get back to core activities and expenses. I’ve had enough of spending money that isn’t theirs.
As I’ve mentioned in the past, I’m on pace with the cleanup of my financial house – this includes paying down my existing credit card with Citibank. Many banks are trying to limit their exposure when it comes to credit, so in the last year or so, they have been lowering credit limits with limited notification to customers. While decreasing the credit limits reduces bank exposure, it negatively affects your credit rating because your debt-to-credit ratio never changes or increases (which is NOT a good thing).
For example: If you have a card with a $5000 credit limit on it and you have a balance of $2500 on it, your debt to credit ratio is 1 to 2, or 50%. If the bank comes back and reduces your credit limit to $3000, your percentage becomes 83.3%, well above accepted limits. Even 50% of the credit limit as a balance is too high these days; in order to keep your credit rating happy, you need to have no more than 25% to 30% of your available credit limit as a balance.
So, when I hear “scams” like the one that got thrown at me this morning, I’m bound to be upset. I had to cancel my card because I received a notification that my card information may have been compromised due to some hacker. That happens. So when I called to authorize the new card, Citi then asked me if I wanted to participate in a program that would give me a 20% “credit” on any amounts paid over my minimum amount due. Here’s the catch: you have to agree to it for a 6 month period AND you have to agree to have your credit limit lowered as you pay it down. I have always been on time with paying my Citi credit card and have always paid more than the minimum amount. Always. But I have a problem with them trying to compromise my FICO score in their efforts to minimize their exposure. The terminology they used wasn’t clear – the lady telling me about the promo was reading from a script, and when I told her, “I’m sorry, I don’t quite understand what you mean by that…”, she had to struggle for an explanation that was close to the meaning. And I got the sense that not many people questioned what was being said. They either said yes or no, and that was it.
I think that most people just hear, “Oh, they’re going to give me a 20% credit for paying more than normal…” and not think about the ramifications of the decrease in their credit limit. You are essentially screwing yourself. My advise: don’t do it. Improving your credit scores are hard enough in this day and age; don’t give the banks more fodder to screw you. Just keep paying it down and limit your usage, and it will be fine.
I think it is about high time that I made some comment about the latest actions by the Federal Government and this whole bailout scheme that is taking place at the moment. In one word: baloney. Let’s consider the mess that the United States currently is in. We (and I say we from a very generous perspective since many of these fiscal decisions were made by individuals that were not even considering the interests of the nation when they issued them) are head-stuck-in-sand deep in debt, major institutions have failed and now the retail sector is taking a hit. We are at over 7% unemployment and every time you turn on the TV, they are talking about companies that are laying off more people.
You do realize that everyone has the whole thing wrong: giving money away to companies without a plan will not work. I am STILL appalled that they gave — GAVE — away millions of dollars to the banks and did not insist that they had to account for every cent. It is this sort of entitlement that has failed our country.
After watching everything, I realize that every American has to fend for themselves. The U.S. government, as much as they swear they are, are not looking out for our best interest. They’re not. And the fact that they have allowed this to tumble so far is evidence of the lack of leadership, responsibility and action that it takes to correct the situation. If they really cared about the welfare of the people, they would have stopped this fruitless war (saving billions of dollars), reinforced our core industries (to ensure jobs for American workers) and looked to the future by lowering our dependencies on foreign everything — oil, industry, manufacturing. We gave it all away and now we are paying the price for it! They should have bolstered our education system, which is in decline. I just saw CNN today and there was a report that 1 of every 7 Americans are illiterate! How is that possible in this day and age? It is unacceptable! It is equally unacceptable that our national debt is astronomical and there doesn’t seem to be any sign of taming it. At the rate we’re going, the dollar is going to be worthless and we’re going to be paying for things in foreign currencies like Zimbabwe currently is. And NOBODY is going to lend money to us because, let’s face it, would YOU lend money to someone that’s TRILLIONS of dollars in debt already? I didn’t think so.
Look, I feel very passionately about this. We all have personal responsibility in this and should be already shocked into the reality that things have changed; our world has changed. For the first time in decades, we have a catastrophe on our hands and we need solutions to get us out of it. Bailouts are unrealistic means of salvaging something that may not be viable in its current model. The way Americans have lived for years has not been a viable model with the whole “living beyond our means” bit. This is the time where we have to put our sensibility caps on and return to our former saving ways. For the individual, this is not about luck or hoping that the government will “take care of it”. Each decision we individually make affects what happens next, and it affects what our future generations will have to face.
I say, if you aren’t saving, start NOW. Build that emergency fund and take advantage of company matches on retirement accounts. If you’re knee deep in debt, pay it down NOW. If you don’t have a job, find one. It’s hard, I know. But if you can’t find a job, keep looking… but in the meantime, keep learning skills and keep yourself well rounded so that you increase your overall marketability. Take advantage of all the free programs out there while they are still available. Do whatever it takes to give yourself an edge. Believe me, social security and medicare are not going to be around long enough for my generation to see a DIME of assistance.
I feel encouraged by Obama’s entry into office and I hope and pray that he will bring the change he has promised to the government scene. It won’t happen overnight as some people have been pressuring; it’s just unrealistic to expect that it will happen so quickly. BUT, I am hoping that it is a deep departure from the policies and decision-making that has led to this disastrous series of events. Companies need to be held accountable and submit to strict oversight in their financial activities. No more tax shelters and money laundering. No more deceptive practices and bold-faced lies to people that trust them. It is downright DISGUSTING.
It it high time that everyone retreats from the life of excess and the reality of living within and if not, under one’s means. I also would like to see some sort of program in place teaching young people (and adults for that matter!) the value of money and to instill the values of saving and investing. Nobody teaches these important tools and they are usually left to flounder about without a plan of action about their spending habits, retirement and/or investments in life-value things like purchasing a home. I wish I had that knowledge along the way — I had to figure it out myself like most folks.
Let’s get it together people!!
Some good sources:
www.feedthepig.com (learn how to save – now)
onthemoney.cnbc.com (get your financial house in order with carmen’s advice)
iousathemovie.com (be in the know about how your government spends your money and the current state of things)
cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp (or google “debt calculator” — use this to plan out how to pay that debt down)
www.ingdirect.com (save for a rainy day without taking too much risk — take advantage of higher interest rates)