Last week I decided to start cleaning out my bookmarks folder and dump all sorts of random links on you all at once. This process will probably take at least a couple more weeks, so, hold on to your hats, the storm is not abating. It seems that many of the links I find have to do with all sorts of household budgeting issues and in particular credit card polices, so this week is devoted to those topics.
But first, I just found this great cartoon this morning that explains how the crisis of credit happened and what a lot of the terms you've been reading about actually mean. It's a simplified primer and it glosses over some of the details, but what do you expect from a 10 minute cartoon? Hot Cartoon Makes Understanding Credit Crisis Simple And Fun
Budgeting and Money Management
If you are looking to modify your household spending, the very first thing you need to do is know where your money is going. It's only then that you can come up with a spending and saving plan that will be helpful to you. I would start by keeping track of everything you spend for a month. Every check you write, everything you charge to a credit card, and, most importantly, every dime you spend in cash. It is the cash purchases that most people lose track of and there is often where you can save the most money. Preferably you would track this for six months, not just one, but start with a week or a month and a good picture of your spending habits should emerge.
Next, you need to decide where you want your money to go. A short helpful guide to get you started is: How to Budget Your Money, but you will probably want to adjust your percentages to account for your own individual situation. Some more detailed advice can be found in How to Make a Spending Plan and in Build a family budget that actually works. You can use a spreadsheet like this one that I found on-line or this one that I made myself to help you keep track of your expenses and income.
One thing to remember about this economic downturn is that there are cycles to economic situations and although it may seem bleak right now, there will be an upturn sooner or later. If you are obsessing on how much your financial portfolio has plummeted since the peak, you may want to play around with this calculator to see how long it will take to recover: Calculate Your Financial Comeback.
Credit Cards
If you are carrying credit card debt you are probably suffering a lot more now than you were a year ago in the era when interest free balance transfer offers were flooding your mailbox weekly.
Here's a really handy calculator that graphically shows you how long it will take to pay off your debt. It's a simple program, but you should probably take a look. One thing to really pay attention to is the total amount you will have paid at the end versus the original debt amount. All that is interest only and if you can pay off your debt faster, you are going to reduce that drastically.
One way to pay off the debt faster is just to make each payment a bit earlier than you do now. For more explanation, check out Save On Credit Card Bills By Paying Earlier.
If you are looking for more ways to save money when managing your debt, look at HOW TO SAVE MONEY ON: CREDIT CARD BILLS.
If you are drowning in debt and you may be able to get some relief by contacting your creditors yourself and renegotiating your debt. I would be very cautious about contacting a professional credit counselor or debt consolidation organization. It's unlikely that they are going to be able to do anything for you that you couldn't do yourself and it is actually quite likely they will make your situation worse, not better. However, there are some reputable credit counselors out there and you could try searching the list that of agencies that have been approved by the US Trustees Office (a division of the US Department of Justice). Also, if you need help getting control of your finances, you could try contacting Debtors Anonymous.
Credit History Reporting
Your credit history and credit score can affect more than just whether you can buy a house. It can help determine whether you can rent an apartment, buy or lease a car or even whether you can be hired. It can even affect how easily you can open accounts with utility companies or cell phone companies. A damaged credit rating can have far reaching consequences for all your financial interactions.
Just this month, a new method of generating your credit score, called FICO 08 was introduced and it could affect your score. Here are some articles that detail how you may be affected: The good and the bad of the new credit scoring formula and How FICO scores are changing: 3 scenarios.
If you are looking to improve your credit score, try the suggestions in 7 fast fixes for your credit score
You are entitled by law to one free copy per year of your credit report from each of the reporting agencies. You can easily apply on-line for a copy from the big three agencies (Experian, Equifax, and TransUnion) at: Annual Credit Report. Use only this link to get your free reports. Any other site, like Free Credit Report, is a scam that will cost you money. There are more than just these three credit reporting agencies however, so you should be be sure that you Don't Ignore The Fourth Credit Reporting Agency: Innovis.
If you find an error on your report, it may not be that easy to correct it unfortunately. See Why the Credit Bureaus Can't Get It Right for some cautionary tales of troubles people have encountered in trying to fix errors and how the credit reporting agencies operate.