5 Ways to Pay Down Medical Debt

Medical debt is one of the reasons why Americans file for bankruptcy. Every year many Americans file for bankruptcy due to medical debt. In 2008, 46 million Americans did not have any health insurance coverage.

Many people are uninsured due to the high costs of medical coverage. Many employers only pay a small portion of healthcare costs leaving the remaining expense for the employee. It is expected that 1.4 million Americans will file for bankruptcy this year, and some will be due to medical debt.

Health care costs continue to increase each year. According to the National Coalition on Health Care, in 2008, total health care costs increased approximately 6.0% - almost twice the rate of inflation. In 2008, employer health insurance premiums increased by 5.0%. The annual premium for an employer health plan covering a family of four averaged nearly $12,700 versus $4,700 for individual coverage. Retiring elderly couples will need $250,000 in savings just to pay for the most basic medical coverage.

Many Americans file bankruptcy for various reasons such as job loss, illness, death of a loved one, disability, loss of coverage, divorce, and the additional medical fees associated with health care coverage such as co-payments, deductibles, prescription costs, COBRA costs, etc.

The problem is the lack of mandated regulations in the health care industry, industry fraud and billing errors. Health insurance companies over charge patients fees for services and if you do not have health insurance coverage you might as well sign over your child to pay for the medical costs because when you don't have insurance you can basically be charged whatever fee the doctor or hospital chooses. When you have health insurance you can only be charged a certain amount for services.

We claim to be the most powerful country in the world yet we are the sickest developed country in the world. We have the highest incidents of high blood pressure, diabetes, heart attacks, stroke, and cancer.

We should demand that full health insurance coverage is provided to all Americans no matter what their income or lack of income. You should not get better treatment or additional services simply because you have a higher income or can afford better coverage. Every human life should be valued but based on our health insurance industry it is not. We must fight back and force Congress to develop better laws to improve our health care industry and provide insurance for all Americans because we deserve it. Here are 5 Ways to Pay Down Medical Debt

1. Ask for an itemized list of all services to ensure you are not being charged more than once for services you received
2. If you had health insurance at the time of service, verify which charges are covered under your insurance
3. Negotiate with the service provider (doctor or hospital) to get fees reduced or eliminated in exchange for paying the debt
4. Setup a payment plan with the service provider to pay down the debt
5. Adjust spending to gain extra money to pay towards the medical debt

Are Balances Transfer A Good Thing

Many credit card companies make it easy to transfer credit card balances from one credit card to another offering a lower interest rate for a promotional period of time. After that promotional period expires you will be required to pay a much higher interest rate and any payments made will first be applied to the old debt.

Any future purchases will continue to accrue finance charges. Once the old debt is paid down then any payments made will be applied to the new purchases. You may say – what is the point, I don't see the benefit.

Well, for those Americans who are struggling to pay down credit card balances with interest rates of 17%, 21%, 25% or 32%, a balance transfer is a reasonable option but should not be your first option. You should try to negotiate with your creditor to get a lower interest rate at least temporarily.

If your creditor refuses to work with you, you can file a complaint against the creditor. To save time and money you can transfer the balance to a low interest credit card.

Remember that each time you open a new account it counts towards your credit score and if you have opened more than 1-2 accounts in a 24 month period your credit score will slightly decrease. However, once your debt is paid down to 30% or below the credit limit your credit score will increase.

Transferring credit card balances may also lower your credit score because it is an indication that you are unable to manage your money. The biggest mistake made with transferring credit card balances is not reading the credit card agreement to find out all the terms and guidelines associated with the credit card.

The key to balance transfers is to pay off the transferred balance before the promotional period ends and use the card only occasionally for small purchases paying the balance off in full at the end of the month to prevent paying high finance charges.

Do some comparison shopping before selecting a credit card that offers a balance transfer. Some good sites to use are bankrate.com and creditcards.com.

Here are 5 reasons to transfer a credit card balance to another credit card with a lower interest rate.

1. If your current interest rate is higher than 12%
2. If you are struggling to make the payments due to late fees, over-the-limits fees and finance charges.
3. If you know you will be able to pay the debt off before or by the end of the promotional period.
4. If you are have at least an average credit score of 650 or above and can get approved for a new credit card.
5. If you are serious about getting out of debt.


The goal is to get out of debt and the fastest way to get out of debt is to pay more than the minimum monthly payment.

Stop Annoying Calls From Creditors

Creditors call you at work, home and on your cell phone day and night sometimes every hour on the hour asking for payment. Due to the recession the harassing calls from creditors have increased and have gotten more unprofessional. In some instances consumers are unemployed and therefore can't send a payment but creditors don’t care, they want their money and will do just about anything to get it – even lie.

If you make just one late payment usually 30 days or more late, no matter what your previous payment history you could be placed in the same category as those who avoid paying bills, hide under a rock hoping their creditors will get tired of contacting them for payment or who have filed for bankruptcy.

Most creditors have a Collection Department that calls to remind you to send a payment if the payment is even one day past the due date. The first few calls the creditors seem really nice and ask when you will be able to send a payment. Then they their attitude quickly changes and they use all kinds of threats, lies, emotional guilt, rudeness, etc. to get you to make a payment.

Please don't fall for this! Know your rights as a consumer and the rights that creditors and debt collection agencies have to follow before making a payment agreement verbally or in writing. The two main acts that protect consumers are the Fair Credit and Reporting Act (FCRA) and Fair Debt Collection Practices Act (FDCPA) which can found on the Federal Trade Commission website at ftc.gov/credit.

A creditor or debt collection agency cannot call you before 8:00 am or after 9:00 pm. If a creditor or debt collector contacts you, you have the right to ask them to stop contacting you by phone by saying "cease and desist" and ask them to contact you by mail. If you feel a creditor or debt collector has violated your rights as a consumer file a complaint with the Federal Trade Commission at 1-877-FTC-HELP or by going to their website at ftc.gov.

Never make a decision to pay an overdue bill based out of fear or due to bullying tactics used by the creditors and collection agencies. Take a day or two to calm down, think about your situation and then develop a plan to start paying your debt back. Call the creditor back and tell them your plan to pay the debt back. Follow-up your agreement in writing and keep a copy for your records.

If you fall behind on your payments in the future notify your creditor or the collection agency immediately that you are having financial problems and setup a payment plan with them to prevent bad marks on your credit report and to prevent legal action being taken against you.

Upcoming Events

May 2009
May 6, 2009, Living by Design Show with Cathy Hill, Charlestown, IN, 6pm
May 8, 2009, Booksigning with DC Bookdiva, Washington, DC, 12-6pm
May 9, 2009, Guest on Urban Flow Show, DCTV, Washington DC, 2pm
May 23, 2009, Guest Speaker with Urban Leadership Institute, Baltimore, MD, TBD

June 2009
June 20, 2009, Guest on Urban Flow Show, DCTV, Washington DC, 2pm

July 2009
July 31, 2009, National Black Book Club Conference, Financial Seminar and Booksigning, Atlanta Marriott Marquis, Atlanta, GA

August 2009
August 1-2, 2009, National Black Book Club Conference, Financial Seminar and Booksigning, Atlanta Marriott Marquis, Atlanta, GA

5 Ways to Save Money for Your Summer Vacation

Many Americans work hard all year love and live for their summer vacations. Many Americans love to travel during the summer and family vacations usually begin during the Memorial Day holiday. The work load is usually not as high, the kids are out of school, and airline companies compete for your business.

Americans work between 10-12 hours days which is very unhealthy. We rush to work, rush to get the kids, rush home, rush to come dinner and then repeat the entire process all over again the next day. Americans actually need multiple vacations because we sometimes still do work while on vacation. We never fully take the time to relax. It may seem there are never enough hours in the day to get everything done.

We all need to take time out to relax. I am often guilty of this myself but at least once a year I plan a vacation. Every employee should do the same. You work hard all year and deserve take a vacation even if it is just a mini-vacation for the weekend to a nearby beach or hotel.

Now is a great time to find bargains on airfare, hotels and vacation spots. Here are 5 ways to save money when planning your summer vacation.

1. Plan ahead. Plan in advance for vacations especially if you in debt, recently getting out of debt or live paycheck to paycheck. This way you can save enough money to go on vacation without using your credit card to pay for it.

2. Find deals. Shop around to find the best deals. Visit websites like hotwire.com, priceline.com, kayak.com or hotels.com to find cheap rates for hotel, airfare and cruises.

3. Talk. Talk to friends and neighbors about their current or past vacations and find out how they planned their vacation, i.e. ask about any discounts or sales they know about, inexpensive restaurants, shops, etc.

4. Move quickly. When you see or hear about sales or discounts you have to move quickly to capitalize on the deal because they usually don't last long.

5. Reduce spending. Buy traveler's checks, they can quickly be replaced if lost. If you credit card is stolen you may not have another credit card available to purchase any necessities. Buy toiletries and other necessities before traveling. Take one credit card only for emergencies.

Don't Pay for Someone Else's Debt

When a financial crisis occurs many people often become victims of scams and get taken advantage of because they don't know their rights and allow fear to cause them to make bad decisions.

Companies take advantage of many consumers by using guilt and fear. Don't take responsibility for a debt you do not owe because once you do; you are bound to that debt and will have to pay it.

Many companies are desperate for business and are looking for someone, anyone to pay back an old debt. Companies are now reaching out to relatives and friends of the deceased to try to recoup money for delinquent debts.

Based on the Fair Debt Practices Collection Act by law you are not required to pay a debt that does not belong to you unless your name is on the account as a joint account holder or authorized user.

A creditor can only contact you for payment for a debt of a deceased spouse or parent who had an estate or any assets worth value, i.e. an inheritance, a banking account, boat, car, home, stocks, bonds, or other assets. The money owed to the creditor is paid by the estate after any money owed to the government is paid first.

To protect yourself in that situation, get the caller's name, title, name of the company they are calling from and what they said. Tell the caller you will contact your attorney and then contact them if it is determined that money is owed to them. If you have any bank accounts or other accounts that are in the name of your deceased spouse or parent's name put them in your name to prevent creditors from garnishing those accounts.

If you feel you are being harassed tell the company to stop contacting you by phone and notify you in writing. Learn about your rights as a consumer at ftc.gov.

Understanding Credit Score Codes

When you order a copy of your credit report you get several pages of information which can be confusing. Your credit report can at times seem like a maze. You may see abbreviations and codes that you don't understand. You may be provided explanations of why you have good or bad credit but still may not understand what it means.

One of the major factors in understanding your credit report and your credit score are the reason codes listed on your credit report. Some reason codes that may appear on your credit report are:

1. Length of credit history – this means how long you have had credit, either a loan or credit card.

2. Too many inquiries – this means you have had more than 1 or 2 companies pull your credit report within the last 12-24 months which lowers your credit score. You should have no more than 1 inquiry every 12 months if needed.

3. Too many new accounts – this means that you are considered a risk because you opened more than 1-2 new account within the last 12-24 months which also lowers your credit score. You should have no more than one new account opened every 12 months if needed.

4. Account balances too high – this means that your credit cards are maxed out or the balance on your credit cards are above 30% of the credit card limit.

5. Number of revolving and installment accounts – you need to have a mix of revolving (credit cards, line of credit) and installment accounts (student loan, car loan, mortgage, etc.).

6. Recent delinquency – you had one or more accounts that were paid late in the past 0-3 years.

Your credit score consists of the following factors: your payment history which accounts for 35% of your credit score, the amounts owed which accounts for 30% of your credit score, the length of your credit history which accounts for 15% of your credit score, new credit which accounts for 10% of your credit score, and the types of credit used which accounts for 10% of your credit score.

If you disagree with any of the information or explanations on your credit report or credit score contact the credit bureau reporting it to dispute the information and ask for a listing of the accounts that caused your credit score to be low. To order your credit report visit annualcreditreport.com.

Balance Transfers: A Positive or A Negative

Many credit card companies make it easy to transfer credit card balances from one credit card to another offering a lower interest rate for a promotional period of time. After that promotional period expires you will be required to pay a much higher interest rate and any payments made will first be applied to the old debt.

Any future purchases will continue to accrue finance charges. Once the old debt is paid down then any payments made will be applied to the new purchases. You may say – what is the point, I don't see the benefit.

Well, for those Americans who are struggling to pay down credit card balances with interest rates of 17%, 21%, 25% or 32%, a balance transfer is a reasonable option but should not be your first option. You should try to negotiate with your creditor to get a lower interest rate at least temporarily. If your creditor refuses to work with you, you can file a complaint against the creditor. To save time and money you can transfer the balance to a low interest credit card.

Remember that each time you open a new account it counts towards your credit score and if you have opened more than 1-2 accounts in a 24 month period your credit score will slightly decrease. However, once your debt is paid down to 30% or below the credit limit your credit score will increase.

Transferring credit card balances may also lower your credit score because it is an indication that you are unable to manage your money. The biggest mistake made with transferring credit card balances is not reading the credit card agreement to find out all the terms and guidelines associated with the credit card.

The key to balance transfers is to pay off the transferred balance before the promotional period ends and use the card only occasionally for small purchases paying the balance off in full at the end of the month to prevent paying high finance charges.

Do some comparison shopping before selecting a credit card that offers a balance transfer. Some good sites to use are bankrate.com and creditcards.com.

Here are 5 reasons to transfer a credit card balance to another credit card with a lower interest rate.

1. If your current interest rate is higher than 12%
2. If you are struggling to make the payments due to late fees, over-the-limits fees and finance charges.
3. If you know you will be able to pay the debt off before or by the end of the promotional period.
4. If you are have at least an average credit score of 650 or above and can get approved for a new credit card.
5. If you are serious about getting out of debt.


The goal is to get out of debt and the fastest way to get out of debt is to pay more than the minimum monthly payment.

Paying Medical Debt

Medical debt is one of the reasons why Americans file for bankruptcy. Every year many Americans file for bankruptcy due to medical debt. In 2008, 46 million Americans did not have any health insurance coverage.

Many people are uninsured due to the high costs of medical coverage. Many employers only pay a small portion of healthcare costs leaving the remaining expense for the employee. It is expected that 1.4 million Americans will file for bankruptcy this year, and some will be due to medical debt.

Health care costs continue to increase each year. According to the National Coalition on Health Care, in 2008, total health care costs increased approximately 6.0% - almost twice the rate of inflation. In 2008, employer health insurance premiums increased by 5.0%. The annual premium for an employer health plan covering a family of four averaged nearly $12,700 versus $4,700 for individual coverage. Retiring elderly couples will need $250,000 in savings just to pay for the most basic medical coverage.

Many Americans file bankruptcy for various reasons such as job loss, illness, death of a loved one, disability, loss of coverage, divorce, and the additional medical fees associated with health care coverage such as co-payments, deductibles, prescription costs, COBRA costs, etc.

The problem is the lack of mandated regulations in the health care industry, industry fraud and billing errors. Health insurance companies over charge patients fees for services and if you do not have health insurance coverage you might as well sign over your child to pay for the medical costs because when you don't have insurance you can basically be charged whatever fee the doctor or hospital chooses. When you have health insurance you can only be charged a certain amount for services.

We claim to be the most powerful country in the world yet we are the sickest developed country in the world. We have the highest incidents of high blood pressure, diabetes, heart attacks, stroke, and cancer.

We should demand that full health insurance coverage is provided to all Americans no matter what their income or lack of income. You should not get better treatment or additional services simply because you have a higher income or can afford better coverage. Every human life should be valued but based on our health insurance industry it is not. We must fight back and force Congress to develop better laws to improve our health care industry and provide insurance for all Americans because we deserve it.

Are Hair Weaves An Option for You

In a study by DailyMakeover.com women are cutting back on hair styling costs to save money. Many women are using cheaper products, going to the salon less often and others are turning to weaves as a hair styling option.

Money generated from hair industry for weaving last year was approximately $16 billion. 30 million women are suffering from some form of hair loss. Hair weaving is a big industry.

There are several different kinds of weaves: partial weaves, full weaves, short, long, medium length waves, weaves in all different colors, and hair textures, Remi, Brazilian, Lace, Fusion, Malaysian, Human, Yak, braid weaves, and glue weaving.

Weaves can last up to 3 months. It can take 1-5 hours to add a weave to your hair. You can get weaves, cut, styled or colored any way you like. Weaves can cost anywhere from $100 - $1,000. Here are 4 benefits of a hair weave:

1. Save money on hair stylist costs
2. Protects hair from heat and styling
3. Hair grows faster
4. Provides more flexible with styling and activities – can exercise without worrying about your hairstyle, etc.

Here are 3 disadvantages of a hair weave:
1. Must care for weave on a regular basis
2. Weaves can damage hair if not put on by a trained hair professional
3. All weaves are not the same, go for the quality of a weave versus the cost of the weave

Here is a comparison of salon visits versus a weave

Hair Salon Visit
6 times a year @ $70-$120 a visit = $420-$720 a year
12 times a year @ $70-$120 a visit = $840-$1,440 a year

Remove Hair Weave Fee
Remove fee $40-$80

Sewn in Pieces
4 times a year @ $150-$1,000 a visit = $600-$4,000 a year
2 times a year @ $150-$1,000 a visit = $300-$2,000 a year

Weigh all your options before considering getting a weave. Make sure that a weave is the right option for you.

Do You Live in a Debt Loving State

Debt has become a way of life in America. However some states are in debt more than others. If you are in debt you are not alone. According to TransUnion, the average consumer credit card balance is $8,000. Alaska leads the country with the highest average credit card debt of $7,827, followed by Nevada $6,636, Tennessee $6,568, North Dakota $4,403, and West Virginia $4,517. These figures are alarming and should be a wake-up call to become debt free. A goal for this year should be to pay down your debt. Here are 5 tips to pay down debt:

1. Stop charging – stop charging to avoid going further into debt. Pay with cash instead of credit.

2. Create a budget or spending plan – create a budget to track your spending and reduce expenses. Shop at discount stores, outlets, use coupons, carpool, etc. to find extra money, which can be used to pay down debt.

3. Send more than the minimum – sending just the minimum will extend the time it takes to pay the balance. Send at least $10 more than the minimum each month pay down the balance faster.

4. Use automatic payments – setup automatic payments from your checking account the day you receive your paycheck or soon after you receive your paycheck

5. Negotiate – contact your creditor to negotiate a lower interest rate and/or monthly payment, also ask to have any late fees, over-the-limit or other fees waived

Unemployment Rate Continues to Soar

The unemployment rate has increased to 8.5% or 13.2 million Americans out of work. This also means that 13.2 million Americans do not have health insurance.

Now more than ever Americans must forever change their spending habits to ensure that they can survive a financial crisis. We don't know what the future holds for this country but we do know these things:

1. Buying things that you can't pay off in 3-6 months will lead to excessive interest and finance charges

2. Buying used vs. new will save you money

3. Living below your means will minimize the chances of filing for bankruptcy or foreclosure

4. Create an emergency fund with enough to cover monthly expenses for at least 3-9 months will reduce stress, anxiety, worry and minimize a financial crisis

5. Using a budget will help to track your spending, provide accountability and ensure you have responsible with your spending

6. Mimicking good spending habits will ensure your children practice good spending habits

7. Each time you use a credit card you are making the credit card companies rich and yourself poor

8. Saving for a rainy day does help

For now, we can only hope by the end of the year or early 2010 the country will have recovered and Americans will have learned a valuable lesson - save now or suffer later.

April is Financial Literacy Month

April is Financial Literacy Month. This month make at least one change to your spending habits to improve your financial life and reduce future financial crises. Making at least one change can: save you money, help pay down debt, and plan for your future.

Make a promise to you and your family that starting in April you will do at least one of the following.

1. Create a budget or spending plan and track spending daily, weekly or monthly

2. Pay bills on time

3. Get current on any late bills – negotiate or setup payment plans

4. Don't buy something if you don't have the cash to pay for it

5. Get overdraft protection to reduce bounced check fees

6. Don't file for bankruptcy

7. Order a copy of your credit report and dispute any errors

8. Pay off at least one credit card this year

9. Create an emergency fund/savings account

10. Reduce spending by using coupons, buying items on sale, in bulk or shopping at discount, wholesale or outlet stores

11. Verify bank statements each month

Improving your financial situation can take time but it is worth it. To educate yourself about your rights as a consumer and about various financial literacy topics visit ftc.gov.

8 Quick Ways to Increase Your Credit Score

Many people have received bad credit ratings due to the recession. Bad credit can prevent you from getting hired for a job, getting a promotion, or getting approved for a loan or credit card. However, here are 8 quick ways to increase your credit score to improve your financial situation:

1. Order your credit report and credit score from the 3 major credit bureaus, Experian, Equifax and TransUnion. You can order your credit reports and credit score online at annualcreditreport.com or by phone at 877-322-8228.

2. If you find any errors on your credit report dispute the information online for a quicker turnaround time usually within 2 weeks.

3. Pay off collection accounts, judgments, and tax liens as soon as possible. Each account paid can increase your credit score by 20-25 points.

4. Once you pay a delinquent debt ask the company to remove it from your credit report. They may say no but it is worth a try.

5. If applying for a mortgage loan, know what your middle credit score is, i.e. if you Equifax score is 620, your TransUnion score is 650 and your Equifax score is 635, your middle score would be 635 and develop a plan to increase that credit score if you are trying to get approved for a mortgage.

6. If you have been 30 days or more late on a credit card bill get current. Getting current on your credit card bills can increase your credit score by 20-30 points.

7. Make sure your account balances are reported accurately on your credit report. Your account balances may not report the most recent balance and can lower your credit score because account information may be reported once every 2 to 6 months.

8. If your credit card balance is 30% or more over the credit card limit send your payment so that it arrives 5 to 7 days before the due date. This will ensure the most recent balance is updated to the credit bureaus each month.

Disadvantages of Filing for Bankruptcy

Last year over 1 million Americans filed for personal bankruptcy. Due to the revised Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, you must attend counseling sessions prior to your bankruptcy being approved. Bankruptcy filers must show proof that there is no other alternative but to file for bankruptcy. The filer's income is compared to the median income in the filer's state of residence. If the filer's income is above the median and is able to pay at least a minimal amount per month to creditors, the filer cannot file for bankruptcy.

The filer's personal finances are also reviewed including living expenses. The Act only allows filing of Chapter 13 bankruptcy once every two years and filing of Chapter 7 bankruptcy once every eight years. The filer must live in their state for 720 days prior to filing for bankruptcy.

The disadvantages of filing for bankruptcy are:
1. You no longer have control over your finances – a trustee is appointed to oversee your finances

2. You now have bad credit

3. If will be difficult to get approved for a loan or credit card

4. If you own a house or are paying off a house, your title may be transferred your trustee and the property may be sold to pay your creditors

5. It will be harder to rent an apartment, house, etc.

6. You must get the permission of the Federal Court or your assigned trustee to travel overseas

7. If may be harder to get hired for a job

8. Chapter 7 bankruptcy stays on your credit report for 10 years

9. Chapter 13 bankruptcy stays on your credit report for 7 years

Bankruptcy should be a last resort. Contact a professional credit counseling agency or certified financial planner to help you develop a plan to pay off your debt to prevent filing for bankruptcy.

Reasons for Being Denied Credit

Many people who previously had average or good credit now have bad credit due to the recession, illness, job layoffs and just being unable to make their mortgage payments. Restoring your credit can be a tedious task. It takes lots of hard work and is the reason why you may have been denied credit. Your credit report can at times seem like a maze.

One of the major factors in understanding your credit report and your credit score is the reason codes listed on your credit report. Some reason codes that may appear on your credit report are:

1. Length of credit history – this means how long you have had credit, either a loan or credit card

2. Too many inquiries – this means you have had more than 1 company pull your credit report within the last 12-24 months and this lowers your credit score

3. Too many new account – this means that you are considered a risk because you opened more than 1 new account within the last 12-24 months which also lowers your credit score

4. Account balances too high – this means that your credit cards are maxed out of the balance on your credit cards are above 30-50% of the credit card limit

5. Number of revolving and installment accounts – you need to have a mix of revolving (credit cards, line of credit) and installment accounts (student loan, car loan, mortgage, etc.)

6. Recent delinquency – you had one or more account that were recently paid late

Your credit score consists of the following: your payment history which accounts for 35% of your credit score, the amounts owed which accounts for 30% of your credit score, the length of your credit history which accounts for 15% of your credit score, new credit which accounts for 10% of your credit score, and the types of credit used which accounts for 10% of your credit score.

If you disagree with any of the information or explanations on your credit report or credit score contact the credit bureau reporting it to dispute the information and ask for a listing of the accounts that caused your score to be low.

Financial Predictions Update

In October 2008, I made a few predictions, let see how many of them came true.

1. Gas prices will fail below $2.50 by election day and rise again after the election - true, gas prices fell below $2.00

2. Housing prices will continue to fall through the middle of 2009 - true, since 2006 home prices across the country have fallen by 12.4%. However, in a few states sales are rising slightly but overall sales are still declining.

3. The Federal Reserve will reduce interest rates at least once more by the end of the year - true, the Federal Reserve cut interest rates 10 times in the past 15 months

4. Americans will continue to fight back and express their concerns about high gas prices, health care, and the war in Iraq - true, health care costs are still high, gas prices are around $2.00 a gallon, and the troops are still in Iraq.

5. In the coming weeks more Americans will voice their support for one candidate or the other - true

6. More laws will be passed in favor of same sex couples - true

7. The war in Iraq will continue until 2010 - true

8. Brittany Spears will get married again - not true, she has been seen with several men but hasn't tied the knot yet

9. The number of jobless claims will continue to rise through the end of 2008 - true, over 2 million Americans are unemployed and another 2 million are expected to lose their jobs by mid-2009

10. Mortgage companies and other financial institutions will begin to place calls requesting a payment from customers in good standing who usually make payments on time but make a payment after the due date - true

11. Halloween, Black Friday and Christmas sales will be less than expected - true, sales in 2008 were lower than expected

12. Many small business will file bankruptcy or go out of business by the end of 2008 - true

13. More scandals and fraud cases will be exposed to Americans by the end of 2009 - true, this is ongoing

14. The current financial crisis will end in 2010 - true

Live Below Your Means

Americans are living above their means, drowning in debt and the problem is getting worse. Many Americans spend their entire paycheck the same day or within a week of being paid. Many Americans live above their means, are in debt and have no savings. Here are 5 ways to stop living paycheck to paycheck:

1. Direct Deposit. Cashing checks at a check-cashing store costs on average 1% to 5% the amount of the check. Use direct deposit for free and save yourself some money.

2. Education. Further your education or take training classes to expand your skills at your current job. This will put you in a better position to get a promotion at work or salary increase. That money can be used to create a savings account, plan for retirement or pay down debts.

3. Budget. Stop using your credit cards and pay for everything with cash. If you don't have enough money to pay for expenses create a budget for yourself to determine your total monthly expenses and total monthly income and reduce your expenses (i.e. cable, cell phone, internet, etc.). Shop at discount stores, use coupons or carpool to find extra money which can be used to pay down debt.

4. Savings. You should have enough money saved to pay at least 3 to 6 months worth of bills. Open a high interest online savings account such as emigrantdirect.com or ing.com. Then develop long-term savings goals such as planning for retirement or homeownership.

5. Seek Help. Talk to friends, relatives or neighbors who have gone through similar situations. Go to the library to research various ways to reduce expenses. Many groceries stores teach classes on how to shop on a budget.

If you want to stop living paycheck to paycheck you have to change your thinking and see yourself being debt free.

Decoupled Debit Cards

Decoupled debit cards are where one institution issues a debit card that can be linked to any bank account and used for purchases and ATM withdrawals just like debit card consumers get from their bank when they open a checking account. The company pays a fees plus any interchange income.

Pros
1. Can charge rewards to combat the decoupled credit card.

2. Can get features such as free checking, free cards and transaction payout (reward), go online to view cash rewards accruals.

3. Can earn points on debit card purchases for having additional bank products such as money market accounts, CDs, loans, lines of credit, etc.

4. Combines the ACH industry and the payment networks such as Visa, NYCE, etc.

5. The intermediate service provider can capture the interchange income from the card transaction which would previously go to the consumer's financial institution.

6. It helps the consumer because they can use debit cards more frequently, reduce use of credit cards and no longer have to worry about fees associated with using a credit card.

Cons
1. It will hurt the financial institutions by eliminating income from banks that rely heavily on charges such as insufficient funds, etc.

2. Deprives credit unions of transaction fees but who will still have to pay ACH fees.

3. Targeted to 18 to 34 year olds who are generally are more internet savvy and may not be concerned about their relationship with their bank.

4. The transaction is performed and settled online over the branded payment networks between the merchant and the intermediate sevice provider but is settled with the consumer's financial institution using the offline ACH network.

5. Can increase risk to the consumer such as account validation which was not a risk in the previous transaction system.

Be cautious when using decoupled debit cards and be sure to pick the card that is right for you.

Are You to Blame for This Mess

For several months Wall Street employees and consumers have pointed the finger at many people who they feel should be responsible for the recession and financial crisis the country is experiencing. Some consumers believe President Bush is to blame, some feel Alan Greenspan is to blame, some feel Wall Street bankers, loan officers and mortgage companies are to blame and some feel consumers are to blame. No matter who messed up the economy, it is time to fix it and we can't wait for the government to fix it, we have be accountable for our actions and start with ourselves to help minimize the impact of the recession and future financial crises.

If any of the following conditions apply to you, start today to develop a plan to improve your financial life and your knowledge about the banking industry, housing industry and personal finance.

1. You got approved for a mortgage but had a gut feeling that something was wrong but didn't say anything about it.

2. You got approved for a mortgage and knew you couldn’t afford it but hoped that you would be able to work overtime or get some extra income to make the monthly payments.

3. Assumed you would not lose your job.

4. Assumed you would not get sick.

5. Assumed you would not experience loss of a family member.

6. Assumed the mortgage industry professionals were your friends and would be honest with you about everything regarding your mortgage application and mortgage loan paperwork and the process.

7. Were unaware of your housing rights as a consumer.

8. Lived paycheck to paycheck, day by day and did not worry about the future.

9. Did not have health, life or disability insurance.

10. Did not understand basic housing industry terms such as balloon, arm, and interest only.

Unfortunately the housing industry failure has taught all consumers that the only way to survive a crisis is to plan for the future, to live below your means, to save and to properly manage your finances.

To ensure that you do not become a victim again follow these 7 steps:
1. Read. Before signing a mortgage or loan application read the application in its entirety. Ask questions and write down the answers. Take the application home with you and read it in its entirety several more times. Jot down any additional questions you may have and contact the mortgage professional to get your questions answered. Do research at a library or on the internet about how to buy a home and the mortgage application process.

2. Say no to Bad Credit Companies. Do business with a reputable company. Search to see if a company has had any complaints filed with the past 2 or 3 years with the Better Business Bureau or FTC. Ask family, friends, co-workers or relatives if they have done business with the company. Be sure the company is licensed to do business in your state.

3. Don’t fall for gimmicks or false information. Verify everything told to you regarding your mortgage application. Hire a real estate attorney if necessary to review the mortgage application with you prior to signing it.

4. Slow down. Take your time and don't let the settlement company, your realtor or the seller of the home rush you into signing the mortgage application and/or settlement paperwork. Once you sign the paperwork you are bound by law to go forward with the loan unless the paperwork provides a rescind clause that allows you to cancel the loan within 3 days from the date of your signature.

5. Plan. Plan for your future by creating an emergency fund to cover all of your monthly bills and household expenses for at least 6-9 months.

6. Insurance. Get insured and get at least basic health, life and disability insurance to protect you if you become ill or are unable to work.

7. Track. Track your spending and live below your means. Your total monthly bills should be no more than 28% of your net income. Your total monthly debt should be no more than 15% of your net income. Your total housing expenses including mortgage payment should be no more than 35% of your total net monthly income.


Following these tips will ensure that you do not become a victim of predatory lending, that you properly manage your money and that you are prepared for the unexpected.

Don't Get Suckered into Paying Someone Else's Debt

When a financial crisis occurs many people often become victims of scams and get taken advantage of because they don't know their rights and allow fear to cause them to make bad decisions. Companies take advantage of many consumers by using guilt and fear. Don't take responsibility for a debt you do not owe because once you do; you are bound to that debt and will have to pay it.

Many companies are desperate for business and are looking for someone, anyone to pay back an old debt. Companies are now reaching out to relatives and friends of the deceased to try to recoup money for delinquent debts.

Based on the Fair Debt Practices Collection Act by law you are not required to pay a debt that does not belong to you unless your name is on the account as a joint account holder or authorized user. A creditor can only contact you for payment for a debt of a deceased spouse or parent who had an estate or any assets worth value, i.e. an inheritance, a banking account, boat, car, home, stocks, bonds, or other assets. The money owed to the creditor is paid by the estate after any money owed to the government is paid first.

To protect yourself in that situation, get the caller's name, title, name of the company they are calling from and what they said. Tell the caller you will contact your attorney and then contact them if it is determined that money is owed to them.

If you have any bank accounts or other accounts that are in the name of your deceased spouse or parent's name put them in your name to prevent creditors from garnishing those accounts.

If you feel you are being harassed tell the company to stop contacting you by phone and notify you in writing. Learn about your rights as a consumer at ftc.gov.

6 Ways to Pay Down Debt

The recession is a new experience for some and a previous experience for others. Some have learned there lessons and changed their spending habits for the better. Others still have not learned their lessons and are hoping the "money angel" will fall down on them and help to get them out of the mess they are in.

This is a time of great stress and fear. Many people make rash decisions without thinking things through. This also applies to paying down debt. If you owe debt and have the money to pay it off or reduce the debt owed do so.

Now is the best time to negotiate with creditors and others you owe debt to. Here are 6 ways to pay down debt faster.

1. Pay balance in full each month prior to the due date or as soon as you receive the bill which helps to avoid paying finance charges. Beware of companies who may move your due date around to prevent you from paying your bill on time in hopes of being able to charge a late fee.

2. Pay half of the balance with 1st paycheck of the month then pay the remaining balance with 2nd paycheck of the month

3. Pay weekly instead of monthly. Pay the minimum monthly payment the first week after you get the bill, and then each week pay as much as you can toward the monthly balance. Repeat this every month.

4. Pay as much as you can when you get the bill, and then pay more towards the bill when you get extra money.

5. Set up automatic payments from your checking account the day you receive your paycheck or the day after you receive your paycheck

6. Can the Customer Service Department to find out if there is a certain hour and minute you need to make your payment by.

These six steps to ensure that you get out of debt faster, increase your credit score, reduce stress, stop harassing phone calls from creditors and lead you on your way to financial freedom and a debt free life.

The Recession - A Great Time for Discounts

Many Americans are struggling to make ends meet due to recession. Many Americans are changing their spending habits and finding ways to save money, pay down debt and just live from one day to the next. The way companies do business has changed due to the recession.

Due to the recession there has been positive change in the way companies view their customers. Companies are may have been doing this previously but are really making an effort to:

1. Show customers how much they value their business
2. Offer discounts, incentives or waive fees
3. Provide sympathy or mini-counseling to customers to encourage them to keep their accounts open
4. Frequently thank customers for their business in various ways

It is unfortunate that it took a recession for some businesses to start providing top quality customer service. For so long customers have been frustrated by the lack of customer service they receive.

According to Empire Research Team, a typical business hears from only about 4% of its dissatisfied customers - 96% just go away, and 91% will never come back. Most customers just go away because they believe their complaints will not do any good, not worth the trouble or personal stress, or don't know where or to whom to complain. Fifty-six – seventy percent of the customers who complain to you will do business with you again if you resolve their problem.

If they feel you acted quickly and to their satisfaction, up to 96% will do business with you again, and they will probably refer other people to you. A dissatisfied customer will tell 9-15 people about the problem experienced and approximately 13% of your dissatisfied customers will tell more than 20 people about their problem. It costs five to six times as much to get a new (first time) customer as it does to keep a current one. It takes 12positive service incidents to make up for one negative incident.

Consumers can take advantage of this opportunity during the recession by asking for discounts or specials. Here are 6 ways to ask for discounts with companies you currently do business with:

1. For creditors, ask for the cancellation department. Tell them you are happy with the service you have received but are unable to afford the interest rate you are paying. Ask that the interest rate by lowered to an amount you can afford, at least 30-50% of what you are currently paying, i.e. if you current interest rate is 24%, ask for an interest rate of 12%.

2. For utility companies, ask if they offer any specials or discounts for customers.

3. If have a bundled package (you pay for multiple services with the same company), ask about additional discounts they may offer. If you don't currently get a bundled package ask for one to save money.

4. If you cable companies, ask if they offer any specials or discounts. Tell them you are happy with their service but cannot afford to pay the monthly bill, especially if any fee on your monthly bill has increased in the past 6 months. Tell them you found a cheaper offer with a competitor and would like to cancel your service.

5. For insurance companies, if you have not received any moving violations in the past 3 years and have a pretty decent credit score remind them of that. Tell them you feel that you are paying too much for your rate. Quote a price from a competitor and tell them you are considering switching to another company and then began negotiating.

6. For banks, if you have bounced at least once check call your bank and let them know you are currently experiencing a financial crisis. Tell them that you are happy with the service you are receiving. Ask them if they can waive the overdraft fee or fees (if you bounced more than one check). Thank them for any fees that they waive. In the future if you know a check will bounce contact your bank right away and ask them about any options or programs available for customers who have bounced checks, i.e. overdraft protection, etc.

When you call a business' customer service department, always be polite and courteous, this goes a long way.

8 Tips to Help Authors Survive the Recession

Many small businesses are suffering from the effects of the recession. The book business is suffering along with every other business in this recession. Some small business include authors who are frequently trying to find ways to save money and reduce expenses which can be a difficult task. Here are 8 tips to help authors save money during the recession.

1. Network. Since we are in a recession and many small businesses and authors lack a marketing budget, attend as many free networking functions as you can. Check your local newspaper or local civic organizations for networking events in your area.

2. Create a website. If you don't already have a website, create one. If you can't afford to pay for a website, create a free one on Myspace.com or Authorsden.

3. Sell. Think of creative ways to sell your books. Sell them at barber shops, hair salons, networking events, conferences, grocery stores, libraries, and community events. You can also sell your book on eBay or Amazon.

4. Create a shopping cart. Create a shopping cart on your website or use Google or PayPal. Make it easy for customers to purchase your book and any other products you wish to sell.

5. Learn. Learn everything you can about marketing your book, selling your book, and how to run a business. As an author you are a business and you must promote yourself as a business. Some great books to use as a reference are 1001 Ways to Market Your Book by John Kremer and The Publishing Game by Fern Reiss. Do research on web marketing by visiting websites such as Wilsonweb and Writers Market, and Writers Digest.

6. Barter. Barter services with other authors or small businesses if you cannot afford to pay for them. This will save you money and help out someone else.

7. Create a newsletter. Create a newsletter and provide a sign-up sheet at each event you attend. Use websites like Icontact or Constant Contact to create your newsletter. You can also find free newsletter templates on Microsoft's website. A newsletter is a great way to promote your book without spending a lot of money.

8. Develop a plan. Develop a marketing plan for your book, plan at least 6-12 months in advance of what you hope to accomplish with your book. Set target dates for each goal and document steps taken to accomplish each goal.

Tips for Investing in 2009

Many people are asking for advice from friends, co-workers, family members, strangers and their financial planners about what they should do with their investments or retirement plan. Many people panicked and spent all or a large portion of their retirement money or moved their retirement money to a savings account, CD or hid it under their mattress.

Every investor has different financial goals and objectives and should work with a financial planner to assist with meeting your goals. Financial planners have expertise in how to survive the ups and downs of the stock market and can provide the best advice and if and when you should move your money. Here are 7 tips to help you invest your money in 2009.

1. Diversify. If you have all of your investment in one area, re-allocate your investments to at least 3 areas to minimize losses.

2. Review. Review your financial goals with your financial planner at least once a year to ensure you are on track to meet your goals. Also, check your statement for any errors and notify your financial planner immediately.

3. Loan. If you plan to take out a loan on your retirement plan or sell shares of stocks, consult a tax professional and your financial advisor to determine what options you have to minimize losses and taxes and ensure you will be able to continue to meet your financial goals.

4. Time. Your money cannot grow if you take it out too soon. It is the timing in the market, not the timing of the market. It takes a minimum of 5 years to see a significant return on your investment. The rule of 72 states that it takes at least 72 months for your money to double so be patient.

5. Don't panic. Don't panic and get overwhelmed by the media, fear, anxiety and nervousness of those around you. Stay calm and follow the plan you have setup with your financial planner. Don't torture yourself by checking the stock market everyday or checking your retirement account balance every week or every month. Don't let emotions cause you to make bad decisions.

6. DRIPs. To offset any losses you may have experienced you can purchase a Dividend Reinvestment Plan (DRIP) or use it as an easy way to start investing.

7. Buy now. The motto is "buy low, sell high" is truly appropriate during this recession. This is a great time to buy stocks or to invest in a mutual fund. When the market bounces back you will have achieved great gains.

Freddie Mac and Fannie Mae to Fund Loan Modification Program

The Obama Administration will only use $50 billion from the $700 billion financial industry bailout package to fund the government foreclosure prevention program. Fannie Mae and Freddie Mac will contribute over $20 billion to the $75 billion loan modification program.

The money will be used to subsidize interest rates to assist distressed borrowers' so their monthly payments can be lowered to affordable levels.

The foreclosure prevention program requires doubling the Fannie Mae and Freddie Mac lines of credit they have with the federal government to $200 billion each.

The Department of Housing and Urban Development will contribute the remaining money towards the modification program which will be used for credit counseling programs for consumers in extreme debt.

The government will use the money to provide incentives to borrowers, mortgage loan servicers and mortgage investors to encourage loan modifications. HUD is conserving the remaining $350 billion from the package by drawing on Fannie Mae and Freddie Mac for funds.

The Obama Administration will use the money to stimulate consumer and business lending and provide additional capital to banks.

An excellent way to keep the bailout money focused on the financial industry is by using other federal funds to support the loan modification program. However, the federal government is the one providing the funds which ultimately comes from the taxpayers.

President Obama's Middle Class Task Force

The Obama Administration has begun working on several different initiatives to help get the country back on its feet due to the lack of effective leadership of the previous administration. My interest has been peaked by one of the administration's initiatives - the middle class task force that will be led by Vice President Biden.

The newly formed task force will address problems middle class America is experiencing. Vice President Biden is the chairman of the task force. The president stated "the strength of our economy can be measured by the strength of our middle class" and I agree.

The Vice President and members of the task force including Jared Bernstein who is the Executive Director of the task force will work with several federal agencies that address issues affecting the middle class. The President's goals for the task force are:

1. Expanding education and lifelong training opportunities
2. Improving work and family balance
3. Restoring labor standards, including workplace safety
4. Helping to protect middle-class and working-family incomes
5. Protecting retirement security

The first task force meeting will be held on February 27, 2009 to discuss Green Jobs: A Pathway to a Strong Middle Class.

The Census Bureau states the median income for Americans is $50,000 a year. The Vice President describes the middle class as "any family that can’t afford to miss more than two or three paychecks without financial difficulty".

For more information visit the newly formed task force website AStrongMiddleClass.gov.

Freddie Mac Rents Foreclosed Homes

Freddie Mac will allow some mortgage borrowers to rent out their homes they lost to foreclosure. Freddie Mac wants to prevent foreclosed properties from becoming vacant so they won't fall into disrepair and be vandalized. Foreclosed properties also reduce property values and cause an increase in crime.

Freddie Mac will also allow renters to remain in their homes even if their landlord's property will be foreclosed. There are approximately 8,500 properties that have begun the foreclosure process but many of these properties are vacant. Renting out the property will help the housing market recover at a faster rate.

There are some guidelines that homeowners must follow under the Freddie Mac program. Former homeowners and tenants have to demonstrate they have enough income to pay the rental fee. Freddie Mac is also considering reinstating mortgages for borrowers who can qualify for a modified loan.

Freddie Mac recently announced it will stop all foreclosure sales involving occupied single family and 2 - 4 unit properties with Freddie Mac owned mortgages through March 6, 2009. The suspension however does not apply to vacant properties.

Fannie Mae is offering a similar plan and boasts that it has prevented the sale of 20,000 foreclosures and stopped the eviction of 6,300 homeowners and renters this winter season.

Fannie Mae also announced it will stop all foreclosure sales and evictions of occupied properties through March 6 in anticipation of the Obama Administration's national foreclosure prevention and loan modification program. For more information visit the Fannie Mae and Freddie Mac websites.

More Jobs Cuts and Counting

Last month employers announced more jobs cuts are expected, a total of 12,000. Several companies are still struggling to generate a profit and are forced to cut staff, close offices or reduce employee salaries and benefits to stay afloat. Thus far 2.6 million people are unemployed.

Eastman Kodak will eliminate 2,000 to 3,000 more jobs this year, Cessna will eliminate 2,000 jobs, Oshkosh will eliminate 1,050, Charles Schwab will eliminate 500 to 600 jobs, AstraZeneca will eliminate 6,000 jobs.

If you hear rumors that your company will have layoffs update your resume, take on additional responsibilities at work and reduce your spending by at least 30% each month. Use the extra money to pay down debt or create an emergency fund.

It is predicted that more jobs cuts will occur before the end of this year. Let's hope things start to turn around before then.

Should You Buy a New Car

The Obama administration has requested that automakers GM and Chrysler provide plans to turnaround the companies. Both companies are required to submit plans to restructure their businesses as part of the $17.4 billion received in government loans to keep the companies afloat.
The economic stimulus package includes a one year interest deduction for purchasing a new car.

I don't recommend buying a new car during this recession unless you have done everything possible to keep your car running and your car is no longer reliable and you have enough money in your budget to pay a car note. Your transportation costs should be no more than 15% of your total monthly income which includes your car note, gas, insurance, maintenance costs, and parking.

Initially it may seem as though buying a new car will ease all your worries. Buying a new car will make a huge difference in your budget. You will have to pay a car note, plus regular maintenance. Your new car should not have any major problems for at least 3-5 years. When you own a used car you should save money each month in a car maintenance fund to have money available if your used car needs repairs.

If your used car needs a new engine or several new parts, you should compare the cost of buying the parts on your own plus the cost of having the parts installed in your car, versus the cost of buying a new car with a car payment for 12 months. I am pretty sure the repairs will be much less than the new car note.

If you still decide to buy a new car, who should you buy a car from? The big 3 automakers are still struggling financially. Chrysler is struggling the most while GM is struggling but has been able to stay afloat with the government loan money received. Ford is in the best shape financially. Here are 6 tips to consider when purchasing a new car from the big 3:

1. Models Eliminated. Due to the recession, the big 3 may eliminate some models. The weaker models that do not generate enough revenue will probably be the first to be eliminated. Finding parts for discontinued models may become harder to find.

2. Warranty. You need to be concerned about a car's warranty. If the automaker files bankruptcy your warranty may no longer be valid which will instantly increase the costs of getting your car repaired.

3. American vs. Foreign. Many auto buyers prefer to buy foreign made cars. Unfortunately this has a dramatic impact on US automakers whose revenue has been steadily declining over the past few years. One major way to help jumpstart the revenue of the big 3 is to buy American made cars such as Cadillac, Buick, Chevrolet, Jeep, etc. You can always check the Consumer Reports survey to find out about the pricing, quality and reliability of Americans made cars.

4. Research. Research the automakers financial report, prices and incentives, warranties and clauses that address how the company honors customers if it has financial problems such as being sold, filing for bankruptcy or completely going out of business.

5. Trade in. Don't trade in your old car. You will get a better deal by selling your car to Carmax, Craigslist, eBay or the newspaper.

6. Temptation. Don't fall into the trap of temptation with low car prices. Do your homework and ask lots of questions, take a friend or relative with you who has experience buying cars to assist you with buying your new car.

This is the time to buy only "needs". A new car is usually a "want" and should be evaluated in your list of financial priorities and financial goals.

What the IndyMAC Sell Means

The FDIC announced last month that it would sell IndyMAC to a group of private investment firms for $13.9 billion. The buyers include J.C. Flowers & Co. and hedge fund Paulson & Co plus several other firms.

The bank will be controlled by IMB Management Holdings and managed by Steven Mnuchin, who is chair and co-chief executive of Dune Capital Management. Terry Laughlin, will serve as chief executive of IndyMac and previously headed Merrill Lynch Bank & Trust.
The failure of IndyMac bank will cost the FDIC between $8.5 billion and $9.4 billion and the deal is expected to close within the next three months.

The private buyers will put $1.3 billion in capital into the IndyMAC bank. IMB Management has agreed to continue the streamlined loan modification program that FDIC Chairman Sheila Bair put into place to continue to receive the FDIC's loan loss protection.

The IndyMac loan modification program will assist homeowners who are experiencing problems by adjusting their mortgage payments to no more than 38% of their monthly income. This is achieved by either reducing the interest rate or extending the length of the loan.

According to the FDIC, more than 8,500 mortgages have been modified and over 9,400 are in the process of being modified. The new bank will have 33 branches in the Los Angeles area.

Beware of Predatory Lenders

According to the Daily News two mortgage companies, Consumer One Mortgage and HCI Mortgage have been found guilty of overcharging African Americans and Latino mortgage loan applicants versus similar Caucasian applicants. Both companies were ordered to pay $665,000 in payments to 445 African American and Latino borrowers.

The Housing and Urban Development has charged: a New York City cooperative and Mississippi Regional Housing Authority with discrimination against disabled persons, various landlords in Alabama wrongfully evicting Caucasian tenants, the Wayne County Housing Authority for housing discrimination against African Americans, and landlords in New Mexico for evicting a couple expecting a baby because the woman became pregnant after moving into the apartment. These are just a few of the thousands of incidents that occur each year against African Americans and Latino mortgage applications and homeowners.

The Fair Housing Act (Title VIII of the Civil Rights Act of 1968) prohibits discrimination in the sale, rental, and financing of dwellings, and in other housing related transactions, based on race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women, and people securing custody of children under the age of 18), and handicap (disability).

When you are considering buying a home follow these 8 tips to prevent being a victim of predatory lending and discrimination:
1. Do you research before applying for a mortgage loan
2. Shop around to several lenders before making a selection
3. Ask questions if you don't understand something
4. Take the paperwork home and read it over, contact a real estate lawyer or law school student to help explain any legal terms and information you don't understand
5. Make sure all of your questions regarding the loan are answered
6. Make sure you are comforable with the terms provided
7. If the terms keep changing find another lender to do business with
8. When all else fails go with your gut instinct, if it seems too good to be true it probably is

Also refer to the Housing and Urban Development Fair Housing website for more information on predatory lending and how to protect yourself or file a complaint.

Proposed Tax Cuts

The new administration wants to offer taxcuts to all Americans and businesses. The proposed tax cuts by the House include:
1. Payroll tax credit of 6.2% of earned income in 2009 and 2010 with a max of $500 for single filers and $1,000 for joint filers each year. It would be phased out for higher income filers. Congress may offer this tax credit by the end of the year.

The proposed tax cuts by the Senate include:
1. Retirees would get a one-time payment of $300

2. The remaining tax cuts are similar to the propsoed House bill

Tax cuts proposed by the House and Senate include:
1. First-time homebuyer credit of $7,500 for purchases made after 4/8/08-7/1/09 must be repaid over 15 years starting 2 years after the credit is claimed. However, if you buy a home in 2009 you don't have to pay back the credit as long as you don't sell your house within 3 years.

2. Increasing the Hope credit to $2,500 per student in 2009 and 2010 to cover college costs and would be available for all 4 years

3. Increase the earned income credit for low-income filers with 3 or more children

4. The tax credit for energy saving home improvements will increase and extend to 2010. The credit may be increased by 30% with a cap of $1,500.


Business tax cuts:
1. Revive 50% bonus first-year depreciation for assets purchased in 2009

2. Carry most or all of their losses for 5 years except for businesses that received aid from the government

3. Extending the renewable energy credits for wind, solar, biomass, and geothermal

4. Continue the higher $250,000 limit on expensing assets through 2009

5. Expand work opportunity credit to cover businesses that hire out-of-work youth between ages 16-25 or unemployed veterans

Help for Homeowners

If you are facing foreclosure or are late on your mortgage payments there is help for you.

The Federal Reserve has created a program to help homeowners. The program promises to: reduce the amount owed on your mortgage loan, reduce the interest rate or lengthen the term of your loan.

The program will apply to mortgage assets that are currently held by the Federal government due to the bailout of Bear Stearns and AIG.

To qualify for the program a homeowner must be at least 60 days late on their mortgage payment.

For more information contact the Federal Reserve.

The New Credit Score

With all of the worry regarding the recession, job loss, rising prices of food and medical costs, we know have something else to worry about. Currently we have 2 types of credit scores, the FICO credit score and the Vantage credit score, vantagescore.com. However, Fair Isaac sued the three credit bureaus in 2006, accusing them of unfair and uncompetitive practices that it said harmed the FICO brand regarding use of the Vantage score.

Starting in late January or early February 2009 a new credit score will replace the current FICO credit score called the FICO 08. The FICO 08 will have the same range of 300 to 850 as the current (classic) FICO score.

The new FICO 08 will be used by TransUnion in late January 2009. Equifax will begin using the new FICO 08 in spring 2009. Experian has not announced when the new score will be used Equifax because it is waiting for the lawsuit filed by Fair Isaac to be resolved.

Fair Isaac insists the new credit score formula was created as a result of a demand by consumers due to increasing defaults on mortgage payments and late payments to creditors. The FICO 08 claims to provide a better way of analyzing consumer risk and that the product will be used by most lenders to grant credit and to set interest rates and other loan terms. FICO scores are also factored into credit decisions by insurance underwriters, cell phone, and utility companies and are sometimes used by employers to evaluate prospective employees.

Fair Isaac says most consumers will see a slight increase in their FICO 08 scores compared with their current FICO score numbers, but others will see a drop in their score. Fair Isaac says the new formula will do a better job of predicting consumers who are a good risk and who are a bad risk, especially among consumers: with bad credit or short credit histories, who are actively seeking credit or who are listed as authorized users ("piggybacked" on others' good credit).

Fair Isaac said FICO 08 will be less harmful to those who have had a single serious credit setback, such as a charge-off or repossession, as long as their other active credit accounts are all in good standing. Having a "moderate amount" of credit inquiries on your credit reports won't be as harmful to consumers under the new formula. No one knows what is considered a "moderate amount". However, consumers with several delinquent accounts may experience a drop in their credit score.

Warning: You May Pay for Not Using Your Credit Card

Due to the bailout and current recession we have been experiencing for the past year or so many banks and financial institutions are afraid of losing more money. As a result, they are changing the rules and implementing new guidelines for credit card holders. If you haven't used a credit card in the past 6 to 12 months you are at risk for having your account closed or your credit limit reduced. If your limit is reduced or the account is closed this will lower your credit score. If doesn't matter what your previous payment history was or what your credit score is.

Some credit card companies that are practicing this are: Citibank, HSBC, Chase, Capitol One and Washington Mutual. Many credit card companies are doing this without notifying customers. If you have been a victim of this check your credit card disclosure agreement. If you don't have a copy asked the credit card company to send you a copy. Read it carefully. If it is not mentioned in your credit card disclosure agreement then call the company and complain. Here are 5 ways to reduce your changes of having your limit reduced or your credit card account closed.

1. Order a copy of your credit report from annualcreditreport.com. If you have already received a copy within the past 12 months you can still order a copy from the website but you will have to pay a small fee of $6 per report from each credit bureau: Experian, Equifax and TransUnion.

2. Check your balances. Review your credit card accounts and pay down debt on the cards with the highest balances to prevent the accounts from being closed or the limits reduced. For accounts that have not been used in a while and that have a larger limit, buy something cheap like milk and bread or a pair of socks and pay the bill off right away. Do this every 3 months to show activity on the accounts. Don't worry about credit cards with balances less than $1,000 or new accounts opened within the past 24 months because they won't impact your credit score as much if they are closed.

3. Ditch the small potatoes. You may want to close any credit card accounts that haven't been used in 1 to 2 years that have a limit of $500 or less and have a zero balance. If you have more than one credit card in this category only close one of these types of accounts every year. This will prevent your credit score from being impacted as much. This will prevent the credit card companies from closing your account and reporting this on your credit report. In some cases, credit card companies will report "closed by creditor", "account closed by credit grantor", "closed at creditor's request" or something similar. This greatly lowers your credit score.

4. Negotiate. If you have an account that has been closed and you use your credit card to make ends meet or pay for basic necessities I would recommend calling the credit card company and letting them know that you need your credit card. They should be sympathetic and re-open your account if it was closed or increase your limit if it was reduced. If that does not work call back and ask to speak to a supervisor. Follow-up all correspondence in writing. If that fails file a complaint against the credit card company with the Better Business Bureau and Federal Trade Commission.

5. Find extra money. Sell new and unused items on eBay or Craigslist. Get a part-time job and find ways to reduce expenses to get extra money to pay for basic necessities to make up for the loss of using a credit card that was closed or the limit was reduced.

Bankruptcy Filings Increased in 2008

Due to the financial woes the country has experienced for the past few years personal bankruptcy filings remain high. At the end of September bankruptcy filing rose 30%. From July through September 2008 bankruptcy filings rose 35% or equaled to 292,291 filings.

Personal bankruptcy filings in 2008 totaled approximately 1.1 million and increased 31% from 2007. Older Americans have also filed for personal bankruptcy due to the rising costs of food, gas, and medical costs. According to AARP, personal bankruptcy filings among Americans age 65 or older grew by 125%. The bankruptcy rate of Americans aged 75 to 84 jumped 433.3%. Bankruptcy should be a last resort. Here are 5 ways to prevent filing for bankruptcy.

1. Live below your means. Keep debt to 15% or less of your monthly income. Save 10% of your monthly income, housing costs should be no more than 30% of your monthly income, transportation costs 28% and other expenses 17% to ensure you keep a balanced monthly budget.

2. Downsize. Get a cheaper car or home or buy a condo to save money on housing and transportation costs.

3. Enjoy retirement. You should be debt free and mortgage free during your retirement. If you are not you need to make a plan to move towards being debt free during your retirement.

4. Change your diet. If you are spending hundreds of dollars a month on medical costs and prescriptions it is time to change your diet. Eat more fruits and vegetables. Eliminate junk food, fast food, fried foods and sweets. Eat balanced meals and don't overeat. Try to eat 3 meals a day and eat your largest meal at lunch. Don't eat after 7pm. Start exercising. Contact a nutritionist or get a referral from your doctor to develop a plan to shed those extra pounds.

5. Get help. Contact a financial advisor to map out a plan to help you pay off your debt and enjoy your retirement years.

9 Quick Ways to Save Money in 2009

Many Americans baulk at the words "budget", "cut back", "spending plan", "reduce expenses", or "save" and other terms that are used to help Americans change their spending habits. However, these words are not the enemy, your spending habits are. These words are very helpful and if followed can begin to change your financial situation over a short period of time.

The recession should be a wake-up call to all Americans aged 18 and over that now is the time to change those bad spending habits and plan for the future. We must use the advice of our parents, grand-parents and great-parents such as "a penny saved is a penny earned", "save your money for a rainy day", "better safe than sorry" and many others sayings.

I have talked to thousands of people across the country and many times when I talk some who is 50 and older they are not experiencing a financial crisis, they have one credit card or no credit cards, are not in debt or have small amounts of debt, have a savings account and a retirement account and are puzzled as to why so many Americans who are employed are struggling to pay their bills. If you fit into that category here are 9 quick ways to save money in 2009.

1. Ditch the Starbucks. Trade in your Starbucks for coffee at home. On average a cup of Starbucks costs $5.25 a cup. If you drink 5 cups a week you are spending on average $26.25. On average one bag or canister of coffee from the grocery store costs $5.76 which can last anywhere from one week to three weeks depending on how many cups you drink a day.

2. Drink tap. Trade bottled water for tap water. Use a filter to remove particles from the tap water.

3. Cancel all memberships. Cancel any memberships you currently have and request a full or partial refund. In you have a gym membership cancel the membership and exercise at home with a video tape or take low cost classes at a local YMCA or community center.

4. Cancel subscriptions. Cancel all magazine and newspaper subscriptions. To keep up with current events listen to the radio or watch the news.

5. Downsize. Move to a cheaper apartment, condo or home. Trade in your car for a used car with a cheaper note. Trade in designer clothes for cheaper brands like Gap or Old Navy.

6. Get a roommate. Rent out a room in your home or apartment. Sleep in the basement or on a couch to rent out a room if you only have one bedroom. Use the extra money to pay down debt or create a savings account.

7. Skip the pampering. Skip the hairdresser and barber or reduce visits by half each month. Skip the spa or nail salon for those facials, manicures and pedicures. Try doing them at home yourself to save money.

8. Reduce car expenses. Buy the cheapest gas possible for your car. Carpool and get regularly scheduled maintenance on your car to make it last longer. Keep you car for at least 5-10 years to save money.

9. Slash your grocery bill. Skip the steak and potatoes and pork chops. Fix more casseroles, soups, stews and other comfort foods to save money on grocery bill costs. You can also eat sandwiches for lunch or dinner, eat tuna, hot dogs, bologna, breakfast food, Ramen noodles, cup 'o noodles and other cheap buys to slash your grocery bill.

Jobless Rates Reach All Time Highs

In December 2008, the country's jobless rate increased to 7.2% or 11.1 million Americans who were unemployed. This was the highest level in the past 16 years. Employers were nervous about the economy and as a result eliminated 524,000 jobs in the month of December 2008.

In Massachusetts the jobless rate increased to 6.9% with 16,800 employees losing their jobs. In California, the jobless rate increased to 9.3% which marked a 14 year high for the state with 78,200 employees losing their jobs. In North Carolina, the jobless rate increased to 8.7% which was the highest in the past 25 years. In December, 396,846 people were unemployed. In Connecticut the jobless rate increased to 7.1% with 11,500 employees losing their jobs and was the worse since 1991. In Washington (state) the jobless rate increased to 7.1% with 251,700 employees losing their jobs.

These figures also coincide with the foreclosure rates of these states. As of December 2008: California had 89,449 foreclosures (highest in the country), Massachusetts had 3,919 (ranked 15th), North Carolina 2,274 (22nd), Connecticut had 2,060 (25th), and Washington had 2,769 (21st).

To reduce the impact of a job loss, be the best employee you can be: arrive to work on time every day, cancel vacation, "mental health days", and other scheduled time off. Ask for extra assignments, reduce your lunch hour to 30 minutes and spend the other 30 minutes looking for a part-time job or doing research to take a course or training class to increase your skills.

Spend time with senior employees at your job and learn all you can from them, but be sure to remind them that they are the senior staff on the job and you are only there to learn from them and not take their job. Reduce your expenses by bringing your lunch to work or carpool with co-workers to save money. Make at least one sacrifice to save money and reduce your expenses to pay down debt and create an emergency fund to cover bill for at least 8-12 months.

How Banks are Helping Customers Pay Down Debt

Due to the bailout and current recession many businesses have gone bankrupt and closed their doors forever or have downsized such as Lehman Brothers, Circuit City, Linens 'N Things, Steve & Barry's, Sharper Image, KB Toys, Mervyns to name a few.

Some companies are so desperate for revenue that they are offering incentives to help customers pay back debt like Citibank which offers to match a percentage of credit card payments made over the minimum monthly payment if the customer agrees to pay off a percentage of their credit card balances quicker. However, Citibank does have a cap on the match up to $550 and the customer has to agree to stop using their credit card during participation in the matching program.

If you are struggling to pay back debt contact your creditor right away to negotiate. Try setting up a payment plan; ask for late fees, over-the-limit-fees or other penalties waived, a reduced interest rate or a reduced minimum monthly payment. If the creditor refuses to work with you call back and ask to speak to a supervisor. If that fails file a complaint against the company with your state Better Business Bureau, Consumer Affairs office, Attorney General's Office or the Federal Trade Commission. Be sure to follow-up all phone calls with a letter.

Be Thankful

According to the Department of Labor, the jobless rate increased to 7.2% or approximately 11 million Americans that are currently unemployed. In December 2008, 2.6 million jobs were eliminated. In addition, employers reduced hours, benefits and perks. Many employees now have to do the work of 2 to 3 employees due to layoffs for the same or reduced pay. It seems no industry is immune to the layoffs.

The largest layoffs occurred in the construction, manufacturing, temporary services and retail industries. The government and health care industry were the only industries that actually created jobs.

Some private sector employees gave no notice to employees who came into work one day and were laid off the same day.

If you have delayed furthering your education, now is the time to go back to school or gain at least one other skill to make yourself more marketable to a potential employer. You should have at least 2 skills that you can list on your resume to become more appealing to hiring companies.

If you still have food, clothing and a roof over your head, be thankful. It may be a cold winter and many people are homeless and jobless which will make this winter season even harder.

To help ease the pain of a layoff:

1. Start saving every dime, quarter, nickel, penny, and dollars you can.

2. Reduce all your expenses – eat Ramen Noodles, oodles & noodles, tuna fish, bologna, hot dogs, breakfast food, etc. for dinner to save money on groceries.

3. Modify your tax withholding for six months to get extra money to pay down debt and pay for monthly expenses. After June 30, 2009 change your tax withholding back to your original deductions to prevent owing taxes at the end of the year.

4. If you are currently contributing to a 401K, halt contributions for 3-6
months to get extra money to pay down debt and start a savings account.

5. Prepare for the worst by creating an emergency fund to cover bills and monthly expenses for 8-12 months.

6. Keep up to date with the employment trends and news. This will help you to know when to start applying for jobs. Polish your resume and keep it up-to-date so when a job becomes available you can apply for it.

7. Lower your job expectations. You may have to take a significantly lower pay cut to get hired. When you do get hired learn everything about your job, take training classes and be a model employee. This will help you to get promoted at a faster rate and increase your salary.

New Year’s Resolutions for a Recession

Here are 7 tips help you survive the recession in 2009 and develop good money management skills so if another crisis occurs you will not feel the pain as much as you did in 2008.

1. Admission. Admit you are in debt and stop charging! Face reality and make a plan to get out of debt. You can’t get out of debt doing the same things you did in 2008. You have to make a change. If you are in a lot of debt then you need to make some drastic changes. If you drive an expensive car consider selling your car and buying a used car with a smaller payment or no payment at all. Negotiate with creditors to setup payment plans to pay off debt.

2. You are Not the Jones. Don’t live above your means. Buy needs instead of buying wants. Don’t impulse shop or buy something based on how you feel (sad, happy, angry, mad, depressed). Shopping doesn’t make you feel better, it is a temporary feeling, when you get your credit card bill those happy feelings go away quickly. Find ways to reduce expenses to help pay down your debts. Catch public transportation or carpool to work. Buy items or sale, buy used instead of new, use coupons, or shop at wholesales or thrift stores.

3. Be Responsible. Because of the bailout things have changed and creditors are looking for any reason to identify someone as risk. It doesn’t matter what your previous payment history has been. Only use your credit card for emergencies only. Don't use your credit card to purchase gas, food or other everyday items. Keep credit card balances at 30% or below the credit limit. Pay balances off at the end of the month.

4. Track Spending. Write a list of all of your total monthly expenses including debt and write down your total monthly income (net). If you have any money left over use that to pay down your debts. If you do not have any money left over look at the areas where you can reduce expenses. Use paper and pen, and a tool like Microsoft Money or Quicken or use the envelope method.

5. Save. Save. Save. I cannot emphasize this enough. Create an emergency fund with enough to cover at least 6-8 months worth of bills. This will prevent you from getting into debt. For long-term goals begin planning for retirement or increase your allotment for retirement. You should save at least 10-20% each month towards retirement.

6. Education. Further your education by taking training classes, get a college degree or an advanced degree to increase your skills set and salary. Plan to take at least one training course every year during your career to stay current with industry standards and technology advances.

7. Financial Planning. Get health, life and disability insurance. Also, create a will even if you don’t feel you have anything of value, but someone else might be eyeing something you possess. Your will can ensure that all your possession are distributed properly to your heirs. You should also consider getting a trust. Store copies of your financial and insurance papers in a fireproof and waterproof safe. Make copies of all of your credit cards, insurance papers, mortgage and creditors bills and store in your safe.

Beware of Cash Strapped Cities

Many cities around the county are finding other ways to generate revenue for their cities at residents and visitors expense. Many cities are installing more speed cameras and handing out record numbers of speeding tickets and parking tickets due to budget cutbacks. These changes are happening pretty quickly so one day you may drive through an area and be fine, the next day you may get a ticket. Some cities that are raking in the cash are: Baskin Louisiana, Boston Massachusetts, and New York City. States that are raking in the cash are North Carolina, Colorado, Detroit and Arizona. Here are 5 ways to prevent being a victim of cash strapped cities.

1. Slow down. Drive the speed limit at all times especially when out-of-town.

2. Know the limit. Know the speed limit in all areas where you live, work and drive to prevent getting a speeding ticket.

3. Stop at caution. Don’t drive through the yellow caution light. In times past you could drive through the yellow caution light and make it through an intersection before getting snagged by a red light camera. These cameras are more sophisticated now and some are on a hair trigger. In addition, the price of a ticket has increased, you could get slapped with a $50 to $200 ticket for speeding depending or going through a red light.

4. Be polite. If you are pulled over for speeding or given a parking ticket be polite with the police officer and everyone you communicate with regarding the ticket. Being polite will go a long way and may help to get the ticket cost reduced or get lesser penalties.

5. Don’t be aggressive. If you are an aggressive driver now is the time to change your ways. Cameras are available on nationwide highways that ticket aggressive drivers.

These habits may also cause an increase in your car insurance or being dropped by your insurance for repeated offenses. Make a change in your driving habits in 2009; it will save you a lot of money and headaches.

Christmas Shopping Survey

Please answer the following questions below to participate in a financial survey. The responses will remain anonymous and the results will be posted on my blog. If you would like to participate send your responses to feedback@hefreemanenterprises.com. Please submit your responses no later than January 10, 2009.


1. Did you buy Christmas gifts this year? If yes, go to question 2 if no skip 5
2. Did you scale back your Christmas shopping this year because of the recession?
3. Did you buy gifts with cash or credit?
4. Do you have the money to pay the credit card bill when it arrives in January 2009?
5. Are you currently in debt?
6. Do you have a different outlook on your finances this year because of the recession?
7. Have you made a plan to improve your financial situation next year?
8. If you purchased Christmas gifts this year do you have one or more of the following: 1) savings account, 2) 401K with your employer, 3) IRA, 4) stocks

Christmas Wasn’t The Same This Year

Due to the recession, increasing food prices, previous increase in gas prices, continuing company layoffs, 4.39 million unemployed, 46 million uninsured and thousands more are homeless or at risk of experiencing a financial crisis many American cut back. Today I am happy to know that someone finally woke up. Some Americans actually cut back their Christmas shopping and faced reality. Some Americans were smart this year and didn’t spend money they didn’t have on Christmas gifts.

According to SpendingPulse, the 2008 Christmas shopping season was the worst it has been in decades. The shopping season was tracked from the day after Thanksgiving until Christmas Eve. The Christmas shopping season accounts for approximately 40-50% of retailer’s annual revenue. Sales at specialty clothing stores such as Gap and Old Navy fell 19.7%. Sales at electronics stores such as Best Buy fell 26.7%. Sales at high end department stores, jewelry stores and restaurants fell 34.5%. Online sales fell 2.3%.

This is the start of a new day. If you are feeling the sting of the recession you need to make a plan for how to survive in 2009. Experts indicate that the recession will continue through 2009 and possibly into 2010 so you need to make sure that you are able to survive and reduce your chances of losing your home to foreclosure, filing bankruptcy, having repossession or some other financial crisis. Make your plan today before it’s too late.

Keep Saving Your Pennies

The number of Americans currently unemployed has reached 4.39 million. This number is staggering and reminds Americans that now more than ever you need to have a Plan B.

No one knows what tomorrow holds so if you haven't already start savings your pennies, quarters, dollars, and more. Use coupons, only buy necessity items.

More layoffs are expected in the new few months. Bancorp will cut 1,000 jobs, Textron will cut 2,200 jobs and Unisys Corp will cut 1,300 jobs. That is an additional 4,500 Americans who will become unemployed.

You can no longer buy luxury items because you don't know if you will still have a job to pay for it. You must live within your means and that is going to hurt and hurt big but as your grandparents and parents used to say, it is better to be safe than be sorry.

Beware of Pick a Pay Loans

The next wave of loans due to reset in 2010 are the “Pick a Pay” Mortgage loans. The “Pick a Pay” mortgage loans are where homeowners can choose to pay less than the full monthly mortgage payment and the difference is added on as principal.

When the loan is reset in 5 or 10 years the homeowner is locked into a higher monthly mortgage payment. This may cause a higher increase in foreclosures or bankruptcy filing because homeowners will be unable to make their mortgage payments. Many banks and financial institutions offered this loan such as Wachovia, Golden West, Countrywide, Washington Mutual, First Federal Financial Corp, and Platinum Capital Group.

However, this type of loan neglected to tell homeowners that they could risk having negative amortization and could even up owning more on their home than it is worth because the loan principal would increase between 110 to 125% of the original loan amount when the loan resets.

Mortgage loan officers are worried that is may be harder to help homeowners modify their loans because there will be a large difference in their current mortgage payment and the new mortgage payment when the loan resets.

If you are currently a homeowner and do not have a fixed interest rate that remains the same over the life of the loan please read your mortgage loan agreement and contact your mortgage company to modify your loan to get a fixed interest rate. Contact a hud counselor hud.gov/offices/hsg/sfh/hcc/hcs.cfm or call Hope Now at 888-995-4673 to get help.