Can Obama Make Sense of All This Debt?

Early Tuesday morning, the federal government announced a new, massive $800B program to buy up bad debt and pump money into the sagging credit markets. According to a NYTimes article entitled: “U.S. Unveils New Programs to Ease Credit,” the program would be structured as follows: "The Federal Reserve said that it would buy up to $600 billion in mortgage-backed assets from the government-sponsored mortgage finance giants Fannie Mae (FNM) and Freddie Mac (FRE). The agency would also buy up to $100 billion in debt directly from the companies and up to $500 billion in mortgage-backed securities."

In addition, the Fed and the Treasury unveiled a different $200B package to help commercial lending (car loans, student loans, etc).

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U.S. Mortgage Rates Drop Most in Seven Years on Fed Debt Plan

Nov. 26 (Bloomberg) -- U.S. mortgage rates dropped by the most in at least seven years as a Federal Reserve pledge to buy $600 billion of debt succeeded where seven cuts in the central bank’s benchmark rate had failed.

The average rate for a 30-year fixed mortgage fell to about 5.5 percent after starting at 6.38 percent yesterday, according to Bankrate Inc. It was the biggest one-day drop in at least seven years, said Holden Lewis, of the North Palm Beach, Florida, publishing and research firm.

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New $800 billion rescue plan includes money for credit card debt

WASHINGTON — Treasury Secretary Henry Paulson, warning that "millions of Americans cannot find affordable financing for basic credit needs," announced a major expansion of the federal bailout on Tuesday — as much as $800 billion to make mortgages and consumer credit more available and affordable.

The government will buy up to $600 billion in mortgage-backed assets, and, in a separate action, lend up to $200 billion to investors who've bought securities backed by consumer loans such as credit cards, auto and student loans, in a bid to free up consumer credit.

Paulson, speaking at a Washington news conference, hailed the housing aid as "a very strong statement of support for the housing market....Mortgage spreads have...not come down as much as they might," he said, "but I would say mortgage financing has remained...available and it has not risen nearly as fast as the cost of other credit."

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Credit cards with the happiest users

If you hate your card company, it may pay you to check out the cards with the most-satisfied users.

Credit cards aren't created equal. Neither are credit card companies.

A recent consumer survey by J.D. Power and Associates recently confirmed what the credit-savvy already know: American Express makes its customers happier than any other issuer. "Happier" is relative, of course. The survey of nearly 8,000 consumers reported that AmEx scored 783 points out of a possible 1,000 when judged on five issues:

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How You Can Make Your Debt Consolidation Work for You

How do you define debt consolidation? Consolidation is the process of combining all unsecured debts into one account. Thus, instead of paying multiple debts-each with its own interest rate, the borrower can submit only one monthly payment with a single interest. Thus, the money you save from the additional interest costs can be used in paying off your original debt.

Many credit counseling services recommend consolidation on extreme cases of debt. If the borrower owes huge debts with different creditors, repayment can be very difficult unless the bills are consolidated. Nevertheless, this doesn’t mean that consolidation is always the solution to debt problems. A credit counselor must also suggest practical ways on how the borrower can be free from debts more easily.

Read full article: How You Can Make Your Debt Consolidation Work for You


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The Debt Diet: Ways to Trim Unsightly Bills

It's time to go on a debt diet.

Carrying around a few thousand dollars in credit-card balances may have seemed perfectly acceptable a few months ago. But in this financial crisis, it can be downright dangerous to your financial health. Credit-card companies are jacking up rates and fees, making it easier to fall deeper in the hole. And during a recession, when the possibility of layoffs looms larger and most of us feel increasingly vulnerable, debt becomes even more pernicious.

Unfortunately, even if you are determined to be more disciplined, paying off your debt can be just as slow and frustrating as trying to work off those irritating love handles. Just as we have to keep eating when we're dieting, we still may have to use our credit cards for travel and other needs.

Read full article: The Debt Diet: Ways to Trim Unsightly Bills


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Checklist for Those on Debt Management Plan

When faced with serious debt problems, people run to credit counseling agencies for help. True, there are many reputable non-profit organizations that offer credit counseling and help on financial management. However, there are also many organizations that pretend to offer credit counseling but charge their clients with unreasonably high fees for their services.

The Federal Trade Commission (FTC) warns the public against such credit counseling agencies that claim to be non-profit but asks for unreasonable payment from their clients who are already swamped in debt. Some of these fake credit counseling agencies use deceptive tactics on customers who do not have any idea that they’re dealing with the wrong credit counseling agency.

What is a Debt Management Plan?
For instance, some credit counselors may advice consumers to enroll into a debt management plan. With a Debt Management Plan, the consumer will be submitting a monthly payment to the credit counseling agency. The agency in turn, will divide the payment and distribute it to different creditors. It is true that creditors can give lower interest rates and even waive penalties for those who are paying through a debt management plan.


Read full article: Checklist for Those on Debt Management Plan


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Financial Focus: There are still ways to consolidate your debt

Q: As credit tightens, what options are available to consolidate debt? What are some of the safest ways for consumers to consolidate debt?

As credit markets continue to struggle, many consumers are concerned about how to best manage their current debt load. If you are fortunate enough to be a homeowner and still have some equity left, a consolidation refinance may be one option to consider.

While most credit cards have variable rates of interest, home loans have the option of a low permanently fixed rate. Even with the financial crisis in full swing, mortgage interest rates are some of the lowest available in the finance marketplace. Underwriting criteria have toughened up in recent months, so you actually have to prove you can pay back the new mortgage.

Read full article: Financial Focus: There are still ways to consolidate your debt


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Regulators nix credit card debt forgiveness plan

WASHINGTON – Federal bank regulators have rejected a request by banks and consumer advocates for a program to let lenders forgive huge portions of credit card debt.

The Office of the Comptroller of the Currency rejected the request for a special program that would allow as much as 40 percent of credit card debt to be forgiven for consumers who don't qualify for existing repayment plans.

An unusual alliance of financial industry interests and consumer advocates, represented by the Financial Services Roundtable and the Consumer Federation of America, made the request to the Treasury Department agency on Oct. 29. It demonstrated the urgency of the situation in a deepening economic crisis: consumers — even those with strong credit records — defaulting at high levels on their credit cards, while banks battered by the credit crisis bleed tens of billions from the losses.

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Regulators nix credit card debt forgiveness plan

Credit card debt forgiveness, credit card debt, credit card debt consolidation, credit card debt relief, credit card debt settlement, eliminate credit card debt, credit card debt elimination, credit card debt reduction

WASHINGTON – Federal bank regulators have rejected a request by banks and consumer advocates for a program to let lenders forgive huge portions of credit card debt.

The Office of the Comptroller of the Currency rejected the request for a special program that would allow as much as 40 percent of credit card debt to be forgiven for consumers who don't qualify for existing repayment plans.

An unusual alliance of financial industry interests and consumer advocates, represented by the Financial Services Roundtable and the Consumer Federation of America, made the request to the Treasury Department agency on Oct. 29. It demonstrated the urgency of the situation in a deepening economic crisis: consumers — even those with strong credit records — defaulting at high levels on their credit cards, while banks battered by the credit crisis bleed tens of billions from the losses.

Read full article: Regulators nix credit card debt forgiveness plan


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Ready to Consolidate That Debt?

IF YOU'RE A homeowner saddled with debt (and we're talking about high-interest debt like the kind you pile up on credit cards), then a home-equity line of credit, or HELOC, might be a good escape hatch. After all, the average credit card now carries an annual percentage rate (APR) of around 14%, whereas the average APR for a $30,000 HELOC is about 8.2%, according to Bankrate.com. And that's before you consider the tax break on your interest payments.

From a pure number-crunching perspective, consolidating high-interest, nondeductible debt into a HELOC or a home-equity loan, or HEL, is a no-brainer. Of course, your home is the collateral for such a loan, and foreclosure could leave you bunking down in Mom's den. So look in the mirror. If you're the type who will simply accumulate more debt once you've wiped the slate clean on your credit cards, forget the loan.

Read full article: Ready to Consolidate That Debt?


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Debt Consolidation Information: Debt Consolidation Companies

Debt Consolidation Information: Debt Consolidation Companies: "There are companies who offer debt consolidation services especially for those burdened by bad debt. Representatives of these companies are experts in debt negotiation and in giving professional advice on managing finances."

Make It Through Holidays Debt-Free

You probably don't want to start thinking about Christmas and the holiday shopping season this early, but it's in your financial interest to do so.

While it is possible to escape Christmas debt-free, it does require a bit of organization, preparation and willpower. By taking the time now to create your holiday shopping plan, you are much more likely to find that there isn't any extra debt to have to deal with even after all the celebrating is over. Here are a few steps to take to make that happen:

Budget and list: Your biggest enemy during the holidays is impulse purchases. With sales and specials in every retail window, it's easy to get sucked into purchasing items that you never planned to buy. To avoid this, you need to make a budget of how much you can afford to spend. Once finished, make a list of all the people who you need to buy gifts for and figure out how to make those fit within that budget. By assigning prices to all the gifts that you need to purchase, you'll know exactly what you can and can't afford.

Read full article: Make It Through Holidays Debt-Free


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Is There Still Such a Thing as Good Debt in this Economy?

The current economic crisis has been blamed in part on the lenders who issued mortgages to underqualified borrowers, spreading bad debt throughout the financial system. So, is there still such a thing as good debt?

James Burns, author of the new book The 3 Secret Pillars of Wealth: How to Crack Your Wealth Code Using the Tools of the Self-made Billionaires, believes that there is, and that following some simple rules can help you determine when to borrow money.

"People often view debt as all bad," says Burns, "and with the current financial crisis most people are either unable to get a loan or wary of borrowing money altogether. But there are times when you should borrow money."

Burns explains that businesses often borrow money to aid expansion and that investors have long borrowed money in order to capitalize on opportunities they might otherwise not be able to afford.

Read full article: Is There Still Such a Thing as Good Debt in this Economy?


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Debt Consolidation recommendation reiterated

One of the men who caused the creation of the Marshall County Board of Public Utilities has been a champion of consolidation and as he was leaving that panel recently, he reasserted that method of improving public service.

"We need to look at the opportunities for cooperation between the utilities... to bring these organizations together to achieve the economy of scale we could have together," Joe Barry Brandon told the MCBPU during a special called meeting of the rural water service on Oct. 21.

It was the day the board officially received a consultant's report with a recommendation that to overcome an increased debt load there should be a water rate increase of some 34 percent.

"Nobody likes to raise taxes or increase rates," Brandon said. "This organization is trying to look into ourselves and see how we can best serve ourselves and deal with the recession."

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Credit card debt forgiveness for some benefits all

In these extraordinary times, card issuers' plan to erase up to 40% of some customers' debt would also be good for those who pay their bills on time.

When I heard last week that banks want to forgive up to 40% of some customers' credit card debt, my first question was, "What's the catch?"

"There's no catch," answered Scott Talbott, chief lobbyist for the Financial Services Roundtable, an industry group that helped concoct the debt-relief program. "There's no hidden agenda. These are extraordinary times and the industry is aggressively working to help customers."

He's half right. As best as I can tell, the banks' offer comes with no strings attached.

However, this isn't pure altruism. Credit card issuers would enjoy some significant benefits under the plan, making it an act of self-preservation that just so happens to be in the best interests of potentially millions of cardholders.

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