THERE ARE TWO TYPES OF VICTIMS OF THE ECONOMY

A study recently conducted indicates that as our economy is slumping, the rate of economically based or motivated crimes is increasing at astonishing rates. Research shows that burglary and robbery rates always increase during times of economic woe; as people who are struggling with paying their debts and aren’t equipped with the tools for proper debt management or debt cosolidation, sometimes become desperate and resort to crime.

According to Professor Richard Rosenfeld of the University of Missouri-St. Louis; some studies show a one year lag between changes in the economy and debt related crime rate increases.

Would that mean we have yet to see the worst of the rise in crime; New York City and Tucson have already seen increases in theft and homicide, as well are crimes against property in Providence and Chicago.

The recession also contributes to a loss of police enforcement resources; as city and state agencies struggle with debt management and decreasing revenue from taxes, they are forced to make budget cuts to reduce debt and their ability to reduce crime is hindered.

During the Great Depression FDR’s New Deal work relief programs helped to deter crime. “ A 10% increase in government spending on work programs in the 1930’s,” says Price Fitzpatrick a University of Arizona economist, was associated with a 1% reduction in crime.”

With the Obama administration spending close to 1.2 trillion dollars on a government stimulus plan, I guess America should be crime free once the stimulus plan takes effect, even though we will owe a debt that our children’s children will be paying for years to come.

There are two types of victims of the economy; people who are struggling with debt management in an economy plundered by Wall Street greed and those who have been robbed at gun point or worse, either way the perpetrators all belong in the same jail cell.

BUYERS BEWARE RETAILERS ARE OUT TO GET YOU … TO SPEND AGAIN

Retailers are making major changes from the way they have gone about business in the past, when customers were aplenty and the spending seemed to never end … ahh the good old days … but the times they are a changing as the song goes.

Retailers reeling from the pain of a holiday season of shoppers who cut spending by the most dramatic amount in at least 39 years, have been scrambling ever since trying new strategies and concepts to bring customers back to the register.

They are cutting out marginal suppliers creating a leaner inventory and hiring outside experts to analyze where they can increase sales, examining methods specific to their particular markets, as well as targeting the clientele that is still buying and making new roads to insure customer satisfaction shoppers have never seen before.

Primarily this is actually good news for consumers who will see an array of products at lower price points, from the ordinary supermarket groceries to designer brand names you could only put on your wish list in the past. Pricing consumer goods for debt ridden and an anxious customer base is the primary goal in hopes of bringing the customers back in.

Luxury retailers such as Neiman Marcus are getting creative too, by eliminating some vendors and focusing on serving its best customers. They are trying to retrain it’s customers to buy regular-price goods by hosting more frequent smaller private events for groups of 20 to 30 clients. Weaning customers off discounts is a big challenge for the industry because consumers have gotten so used to them.

As shoppers simply stopped buying, stores were forced to discount as much as 75% in some instances even before the holiday season began; resulting in the weakest season since at least 1969, when the ICSC index began keeping retail statistics.

Alas my words of caution for you the consumers struggling with debt, up to your ears in debt, just plain tired of debt, beware of the friendly vendors who are out there inviting you to come back, because if you’re on a debt diet and trying to stick to it, you just remember … the retailer is out to get you … to spend again! Don’t get yourself stuck in debt, or worse yet find yourself having to consider debt cosolidation unless absolutely necessary.

Credit Card Companies Find New Rules A Little Stifling

Regulators are expected to issue a new rule today that will help crack down on some of the most unfair business practices of Credit Card Companies. For decades consumers have been forced to agree to go along with sudden interest rate increases, ridiculous fees and fines. Banks are already reducing the amount of credit available to consumers, even with the bail-out packages. There’s no doubt that this much needed rule revision will only increase the banks actions to protect their profit margins.

Let’s be clear, it doesn’t really seem fair that after getting this huge bail-out package they actually want to hold back as much of the cash as possible. It’s very important for business espcially to have avialable lines of credit. Unfortunately only time will tell if and when the banks start to release capital to business owners and consumers.

Some of the new rules expected to be implemented are:

• A credit card issuer will not be able to raise rates on exsisting debt  unless it’s associated with the end of a promotional period, or if a payment is more than 30 days late.

• A rule that will prevent credit card companies to apply payments only to lower interest debt. For  instance if an account is over limit, the interest rate may be 12% higher (or more) for any balance over limit opposed to the regular under limit balance. Many companies will apply payments first (and the interest rate associated with that debt) to the over limit balance. This essentially enables the company to receive a higher interest rate overall.

• A new rule will bar banks from charging late fees unless they’ve given consumers a fair amount of time to submit the payment. The rule will give consumers 21 days from the due date to pay before they’re hit with a late fee. The maximum late fee is up to $39.

On average the industry charges the following fees:

Average penalty rate - 26.9%

Average late fee - $25.90

Average over limit fee - $29.13

Average annual fee - $43.50

Average returned payment fee - $32.03

Percent that change APR for “any reason” - 77%

Percent that change APR because of record with other creditors - 45%

Average grace period - 23 days

Amount that require arbitration to settle disputes - 71%

Hopefully the credit card issuers will find that having better overall business practices might actually increase their overall returns. Many consumers are simply walking away from their credit card debt. They’ll simply write it off in their mind and instead contract with a debt reduction company or tax relief agency who offers similar services.

Again only time will tell, and hopefully we’ve all learned something from this crisis.

Save Money On Transportation

Whether you own one, two or more vehicles, this item can save you quite a lot each month. First, if you have two or more cars, do you need that many? Yes, we know it is more convenient, but is it really necessary. Again, there was a time in this country (which still exists in other countries) when families did share things. Is your work and your spouse’s work close enough that you could commute together? Just because your hours are different by a half or a whole hour does not mean you cannot share a ride. It just means one of you will get to work earlier then usual or leave later then usual. Or you can arrive and leave at the usual time but spend the extra time reading a book. If this seems difficult to you, remember that by cutting back to just one car, you will be cutting your car expense (including payments, gas/oil, insurance, and annual registration) in half. That would mean a savings of as little as $500 a year (if one car loan is already paid off) up to as much as $505 or more a month ($350 car loan payment + $100 for gas/oil + $50 insurance + $5 registration). This would be a savings of $6,060 a year.

If this is impossible due to working in opposite directions from your home or one of you works days and one nights, can you commute with someone else or take public transportation to work? Yes, this can be inconvenient and there will be times when your ride does not show up but when that occurs you could still share a ride with your spouse once in awhile. Or what about setting up your own car pool in order to keep your car? That is, find others at work who live near you or live in your general direction that can meet you at a particular place and ride in with you for a couple of dollars a day. Alternating whose car you use each week will still save you some gas money.

Another very important consideration today is whether to give your 16 year old their own car. No, we do not support this idea. Our family has always shared. Giving your teenager their own car is a huge additional burden on a family and doing so can make it easier for your kids to get into trouble. At least you can cut down on the possibility of trouble by insisting that the kids do their homework between school and when you get home from work and then they can use the family car one or two evenings a week to go out.

Again, depending on which method you decide on, you can save from $100 a month (commuting with fellow workers) to $500 or more a month (cutting back to just one car).

Another problem that we have seen is the individual who buys a new car and then finds that he cannot make the monthly payments due to unemployment, illness, etc. When this happens, rather than wait for the bank to repossess your car and ruin your credit rating, first tell the bank what is happening and what you have planned. Then sell the new car in order to pay off your bank loan and buy a used car. Yes, you may have to get by with an old beat up car for awhile but you will be able to sleep a lot better.

Avoid Credit Card Debt - Consider Hidden Credit Card Costs

The Fixed-Rate Credit Card That Isn’t: When you take out a fixed-rate mortgage, you know what the rate will be for the entire life of the loan. When you take out a fixed-rate car loan, you know that the interest rate will be the same on the first payment as the last. When you take out a fixed-rate credit card, it’s an entirely different story. Severe credit card debt can be avoided if you’re careful.

Variable-Rate Cards: Just like with mortgages, a variable rate means the interest rate is tied to another interest rate in the economy, and will change if that interest rate changes.

Every card issuer that offers a variable-rate card is free to decide how it’s going to compute the rate. One, for instance, may determine the rate by adding 5 percent to the prime rate as listed in the Wall Street Journal. Another may choose to tie the rate to the federal discount rate.

Most variable-rate cards change rates quarterly but some do semiannually-it is up to the card issuer to decide. Information about how the variable rate is determined, and when it changes, has to be disclosed up front in applications and solicitations. According to CardTrak.com, most variable-rate cards have interest rate “floors” below which the interest rate cannot go, even if the index rate goes lower. If rates dip very low, as they did in 2001, consumers may be better off getting a lower-rate card elsewhere than sticking with a bottomed-out variable rate.

Tiered-Rate Cards: A few credit card programs offer tiered rates: The interest rate depends on the balance on the card. For example, a tiered card may charge 17 percent on balances up to and including $1,000, and 13 percent on balances above $1,000. This rate structure is designed to reward higher balances and make more money off lower balances. Tiered-rate cards are usually not good deals because they “reward” customers for going deeper into debt.

Different Rates for Different Balances: Many cards now charge different rates for different balances. There may be a lower rate for the balances you transferred from another card during a promotion, for example, or another rate for cash advances. If you have balances subject to different interest rates, your issuer will print an “effective” rate on the statement, which is basically an average of the different rates you are paying.

A caution: All issuers allocate payments to the lowest-rate balance first. That means you’ll be wiping out the cheapest balance first. This is directly contradictory to the most common advice for paying off debt, which recommends you pay off your highest-rate balance first. Consider yourself forewarned.

Teaser Rates: 5.9 percent or even 0 percent interest sounds great. And it can be. But remember: Card issuers would not continue to offer teaser rates if they weren’t profitable. Many teaser rates just don’t last that long. Six months sounds like a long time, but by the time you’ve completed the transfer (which can take a few weeks), you may not benefit from the new rate that long. And if you don’t find a new card or negotiate a better deal, you may be stuck with a higher rate than you need.

So which do you choose: a fixed-rate, variable-rate, or tiered-rate card? It really doesn’t make a difference whether you choose a fixed-rate or variable-rate card, since neither is completely stable. So far, there have been no studies that tell whether fixed or variable-rate cards change rates more dramatically. We think it’s a matter of finding a bank that has a general reputation for charging low rates (fixed or variable) and hoping they don’t decide to suddenly change their marketing strategy. Whatever you choose, you are taking something of a chance. The exception are cards from Arkansas banks, where state law keeps rates very low. If you can get one of these cards, you know the rate will be good as long as that law’s in place!

When Your Account Changes Hands

It’s true that the big banks keep getting bigger-at least in the case of credit card issuers. Credit cards are so profitable for banks that “do it right” that many of the larger banks want to get more and more customers. Sometimes, they’ll just buy them from other issuers.

Card issuers have to give you fifteen days’ advance written notice before changing the terms of the credit card. This is also true if a bank buys another bank’s cards and raises any of the costs. In addition, individual states may have laws that cover banks located in that state.

If, for instance, your new credit card issuer is located in Delaware or New York, you will have extra protection against a sudden rate hike. Delaware and New York laws require issuers to give customers thirty days’ advance written notice before raising the rate, and also require banks to give customers the opportunity to pay off the card at the old terms and surrender the card.