Credit cards should always be used wisely. You don’t ever want credit card debt because the more you have the harder it is to get out on top. However, it’s even harder to watch credit card spending during times of economic hardship like the current credit crunch we are facing. Here are a few tips on how to avoid increasing your credit card debt during a credit crunch:

1. If anything, you should be aggressively paying down your credit card debt. Things are getting worse and interest rates are going up so if you can, pay them off.

2. Be weary of using credit cards to pay for frivolous things. Ask yourself, do you really need the item? Is it a necessity? Forgo those purchases unless you know you can pay them off once the bill arrives. Not being able to pay off these items will cost you much more in the long run because you will be paying the high interest rates. 

3. If you have no choice but to put daily necessities on your credit card such as food and gas, pay off those items as soon as you can. Lenders these days are reducing credit limits while increasing interest rates so if you’re not paying off the bill then those items are costing you double or even triple the price if you were to pay in cash. 

The  main thing to keep in mind is that you should be spending wisely and saving aggressively so you can pay down any credit card debt you may have. It’s not worth ruining your credit over. 

Learn more about budgeting and how to use credit cards wisely.

Budgeting should be something that you do year round rather than just during a rough economic time. However, budgeting during economic downturns is much more difficult. Here are some tips on how to budget correctly:

1. Always plan for the worst case scenario such as someone losing their job. If possible, you should try to save at least 3 months worth of bills including rent or mortgage payments.

2. Cut frivolous spending like buying coffee from a cafe a few times a week or going out to eat. Instead, make your own coffee or get it from work. Simple as this may seem, these small cut backs add up in the long run. This can also encourage more bonding time between you and your family. Making dinner together can be a fun event.

3. Coupons, coupons, and more coupons! Clip coupons, pay attention to grocery store and department store advertisements, and stock up on items that are on sale that you use regularly. 

4. Contact your creditors if someone has lost their job and let them know about the situation you’re in. Sometimes they may be able to help by putting in place lower payment plans. The last thing you want to do now is to get into higher credit card debt. Always be aware of how your actions now affect your credit score. The last thing you want is to increase credit card debt or ruin your credit. Think long term.

5. Keep a journal or spreadsheet of what you are spending including food and all bills. Compare how you’re doing month over month. By doing this simple exercise, you’ll realize where all of your money goes and will make you more aware of your spending habits.

Click here to learn more about budgeting to save, and how to use credit cards wisely.

The National Bureau of Economic Research said today that the U.S. has been in a recession since December of 2007. They said that the massive decline in jobs in 2008 was one of the key reasons they decided to state why the recession started last year. They estimated that employers have cut jobs by 1.2 million. 

In a statement, White House Deputy Press Secretary Tony Fratto said that even though the recession is now official, it is more important to focus on the steps being taken to fix the economy.

“The most important things we can do for the economy right now are to return the financial and credit markets to normal, and to continue to make progress in housing, and that’s where we’ll continue to focus,” he said. “Addressing these areas will do the most right now to return the economy to growth and job creation.”

So, if you are in need of an economic stimulus package, look into credit repairing your credit. It’s one of the biggest factors lenders look at when determining your risk. Your credit score will also determine your loan rate. The lower the score, the higher the interest rate. You may be able to save hundreds of dollars a month by avoiding high interest rates on your credit cards, auto loans, and home loans. 

To read more, visit: 

http://money.cnn.com/2008/12/01/news/economy/recession/index.htm?postversion=2008120112

Unless you live in a cave, you’ve probably heard about President Bush’s proposed $700 Billion (yes, that’s Billion with a capital “B”) buyout. There’s a lot of “gloom-and-doom” news reports about closed-door meetings, hidden agendas, higher interest rates, tougher credit approval guidelines and the like. But what most average Americans want to know is how it’s going to affect them. Here it is in plain English, along with ideas on what you can do to weather the storm.

Basically, the Bush Administration and Congress are suggesting that the US Government buy up $700 billion in distressed mortgages nationwide. This massive debt is the result of the housing market crash and mismanaged funds and credit ratings by senior executives. Although it would be easy to write an entire book on that subject alone, this is the simple answer. And it’s important to note that as a result of this buyout, it will become increasingly more difficult to be approved for credit, at least in the short term.

Who’s responsible to come up with the $700 Billion?

Although it looks like Congress will approve the buyout, they won’t be footing the bill. No, my friend, that’s up to you and me and the rest of the taxpayers. It comes out to roughly $2,500 a piece. To be clear, it won’t likely be a one-time $2,500 hit on your taxes – the proposal allows for it to be spread out a bit, and hopefully prevent it from being a burden to the average taxpayer. Nevertheless, $2,500 is a significant amount of money to most people that I know, so start saving now.

In the interest of being fair, the total amount may be less than $700 Billion – that’s just the cap right now. You see, after the Treasury Department buys the mortgages, it will turn around and sell them to investors (if you’ve got good credit and you’re optimistic about the plan you could be one of them), and it may not end up costing the entire amount approved by Congress. The Government isn’t just writing a check for $700 Billion, the proposal allows it to spend up to that amount. Any way you look at it, it’s still a whole lot of money.

So, as an American who is neither rich nor reckless financially, I’m being asked to bailout people that are?

The simple answer is, “Yes.” What’s in it for you, then, the average American homeowner of average income and spending habits? Well, it could end up saving your retirement or 401k. With the massive collapse of Washington Mutual last week, just about everybody’s financial future is uncertain. If you’ve got good credit, chances are, you’ll be just fine. If your credit is fair to poor, you may have a much tougher time of it. It’s speculated that foreclosures will continue to rise in the short term, so repairing your credit could save you not only money, but ultimately your house as well.

How is it that Congress can suddenly come up with $700 Billion when they haven’t been able to come up with even a fraction of that amount for healthcare, to repair bridges and tunnels, etc.?

It’s a good question, and one that I’m certain will be asked frequently in the months to come. The response from Washington is that although there are many other valid and worthy places to spend money, as a matter of national security and continuing our way of life, the financial system could not be allowed to collapse, no matter the cost.

How do I prepare myself for what’s next?

For the short term, clean up your finances and your credit. Reduce your outstanding debt as much as possible, and carefully evaluate any new applications for credit or major purchases. The goal for the short term is a financially protected and defensive position, while the long term may very well be financially lucrative to those who have the good credit to support them.

We’ve all heard the stories, nightmares really, of loan sharks, crooks, and leaches in the credit card space that impose unreasonable restrictions on consumers. Consumers seem to be in agreement that there need to be tighter controls to protect consumers in the credit-card space. There are complaints that these credit card companies often initiate arbitrary rate increases as well as penalizing consumers that marginally are late on payments, as marginal as payments that are 1 day late. Share these gripes, check out this MarketWatch article, Interest in new rules boils over. 

Let’s face it, America is a shopaholic nation. And this insatiable desire to shop is fulfilled by the use of credit cards, with 1 in 7 Americans carrying 10 or more credit cards. Americans can’t get enough of this lifestyle, meaning that Americans continue to spend more, year over year.   

But the wind of change is blowing and this time the American consumer is looking to simplify their lives and cut back their once insatiable desire to buy SUV’s, plasma screens, and extravagant homes. In fact, 84% are looking to buy “less stuff”. It’s an interesting and monumental change in consumer sentiment. Read on to find some intriguing signs on how this may be The End of Credit Card Consumerism.

Loaded up with Credit Card Debt? Free Information on Controlling Your Credit Card Debt is one click away.