How to Get Out of Debt With the Get Out of Debt Guy » Personal Finance Bloggers Brain Trust

THIS is Why I Have a Hard Time with Social Media

Guest Post — Sat, 10 Dec 2011 15:35:40 +0000

I’m a freelance blogger. As such, I am well aware that submitting to social media sites is a must. But I’m not overly fond of doing it. It’s time consuming. Especially since each social media web site wants you to be part of the “community.”

But I try to be a decent member of the communities I belong to. I have a few core social media web sites that I submit to regularly. They are niche sites, since most of my freelance blogging deals with finances:

I also submit to my friend David’s site, Zoomit.ca, when something of mine is published on a Canadian-owned blog. And, occasionally, because I write about health, I submit to HealthBuzzing.

It’s on these niche sites that I feel a true sense of community. You meet people with similar interests. Yes, I have accounts on Reddit, StumbleUpon and Digg, but I don’t feel the same sort of connection to other users, and I don’t think it’s worth my time to build up a great account.

All that time building a killer account could be wasted if I am banned.

Banned from BlogEngage

I wasn’t exactly a model group member at BlogEngage. I voted for my friends, and submitted between one and three posts a day. However, I did take the time to look through the other submissions on the site and vote for items that looked interesting. I didn’t often make the front page on BlogEngage (which turned out to be a good thing, due a recent purge of people who — without using BlogEngage’s paid services — consistently made the front page).

As a result of my relatively low-key style on BlogEngage, I did manage to avoid the “purge” of accountholders earlier this week. The site owner claimed that he was getting rid of community members that didn’t contribute high quality items, and that he got rid of vote riggers. Fair enough, I guess. It’s your site; get rid of whomever you want. But in a community, you have to be prepared to explain why.

But why dump me? I’m not paying for the services he offers, true, but not a lot of my posts make the front page anyway. And I submit from a wide variety of quality PF web sites because I’m paid to write for them. They’re not paying me because my stuff is complete crap.

I knew I’d be deleted from BlogEngage the moment I submitted a banned friend’s side of the story: 2011 Social Media Fail of the Year. After watching the soap opera that was dealing with BlogEngage’s owner for weeks, I knew exactly what would happen if I submitted that post. But I did it anyway, and was proved right in less than two hours.

But, whatever. One less social media site to have to worry about.

Don’t get me wrong. Being a member of social media sites like Tip’d and BizSugar has introduced me to awesome people and has even aided my ability to land freelancing gigs. But I do wish that I didn’t have to spend so much time on social media sites to be a successful blogger.

And one of the reasons is that you can lose all your hard work in link building through submissions if the site owner decides to erase your account. Site owners can do what they want. I get that. They can erase my stuff at will, because they own the sites. But it’s nevertheless depressing to think that all my links and hard work — and social media submitting can be a huge time suck if you do it right — can be wiped out in an instant.

You have to decide what is going to be the best use of your time.

So, be careful as you choose your social media community. Personally, I’ve had better luck with small niche sites. Those are sites where you can really become involved and get to know people in your smaller area of interest. Bigger sites are easier to get lost in, and it takes more time and effort to become influential. As you decide where to contribute, take a look at the climate. You don’t want to get stuck losing everything on a whim, and you don’t want to spend a lot of time trying to be part of a community that rejects you.

Author: This article was contributed by Miranda Marquit, a freelancer specializing in personal finance topics. Her blog is Planting Money Seeds.

Source: THIS is Why I Have a Hard Time with Social Media

If you would like to contribute a guest post, click here.

Is a Credit Card a Right or a Privilege? – Personal Finance Bloggers Question of The Week

Steve Rhode — Thu, 20 Nov 2008 16:31:43 +0000

From How to Get Out of Debt

This weeks personal finance brain trust question was:

Is having and using a credit card a right or a privilege?

WC – A 27-year-old writer living in Chicago and writing about personal finance through The Writer’s Coin.

This one’s easy: this is a service. So if I had to pick I would say it’s a privilege.

When I was a kid I couldn’t understand the logic behind credit cards. My dad explained it to me and I was shocked: why would a company front you the money for something you don’t have the cash for? Well, because they’re going to make money off it, that’s why. No one owes you a credit card and you shouldn’t expect that. It is NOT a right.

Antisay – This blog is mainly about finance and self-improvement; I am in a constant race to become a better me and this blog is all about that sort of lifestyle. Visit this site.

In my opinion, owning a credit card is a privilege. By definition, a privilege is, “a right or immunity granted as a peculiar benefit, advantage, or favor.” Credit cards are grated only to those who qualify – in theory, anyway. I remember applying for a Victoria Secret store card when I was 18 and being declined because I had no credit history. Once I had a credit history, I was able to get a card with them, but with very high interest rates because I really hadn’t proved my financial self to the world yet.

Having a credit card is a privilege granted when we show that we can be responsible with money. The fact that the credit card companies have lowered their standards significantly in the last decade or so doesn’t change the fact that it’s a service they provide to those who qualify – not a service that they provide to anyone who wants it.

If you have a credit card, it is still a privilege to use it – not a right. If you go over your limit, it is not your “right” to spend more than you’re allowed, and you will get a penalty as a result. And if the credit card company decides they no longer want to lend to you, they can terminate your line of credit. If you abuse the privilege, it will be taken away or you will suffer the penalties.

As a privilege, it is something that should be treated carefully and respected – just like the privilege of recess in elementary school. If you abused the privilege by punching the kid next to you, it was taken away… and so we learn not to punch other kids. And just the same, we have to learn not to overspend or rely on credit too much – lest we find ourselves with a severe penalty. The card might not be taken away from us (unfortunately), but we’ll suffer all the same with late fees, interest, and hassling calls all the time.

I don’t really know how to conclude this – I’m left with final thoughts somewhat unrelated to the topic. Except to say that I wonder what is going through the minds of people who demand credit cards when they don’t qualify? Do they think that the card is their right? I am happy when people are rejected for cards – because I know that they won’t be able to hurt themselves more by overspending themselves into oblivion and then suffering debt misery for the rest of their lives.

Steve Rhode – A personal finance blogger and founder of the Myvesta Foundation, a global social enterprise that helps people find solutions for money troubles. You can ask Steve your debt related question through GetOutOfDebt.org and he’ll help you for free.

I believe that getting a credit card is a privilege since it is something that you must apply for and be awarded or granted access to by another entity.

I think that, rightly or wrongly, many people treat their credit card as a right.

So if having a credit card is a privilege then how much weight can we place in the screams of consumers that feel abused by creditors when the consumer put themselves in that position to begin with? And if it is a privilege and it is issued to generate revenue then isn’t it the banks ethical responsibility to use that tool to maximize revenue for the bank in any way legally possible, even at the expense of the financial well-being of their customers?

But then again, aren’t consumers eligible for fair treatment and regulatory compliance by banks. If they are, then once you get and use a credit card it comes with some rights.

J. Money – You’ll enjoy the blog Budgets Are Sexy for a look inside the life of one blogger and how money impacts it.

It’s a privilege baby! A privilege 99% of us Americans have, but it sure as hell isn’t a right. If it were EVERYONE would be able to have (and keep) one – and these days that’s simply not the case….plus look around at the rest of the world – not even close to what we have going on here. I have not way of backing this up, of course, but i’m sure it’s true.

So if you’re lucky enough to get your hands on a GOOD credit card (like with low interest rates), then cherish it and use it wisely my friend. If you get caught dicking around, it may haunt you for years to come – and that’s no fun for anyone.

Marcus – The creator of the CreditMattersBlog, this blogger has a deadly sharp point of view when it comes to consumer debt issues. Visit his blog.

If anyone says that it’s a right, I’ll be shocked.

Of course, it’s a privilege. But before you can earn the privilege, you must first be approved for a card. Indeed, we all started out with a clean slate. None of us could prove our creditworthiness from the get go. Therefore, our first card is typically granted without us having to prove a thing.

Beyond our first card, though, it is a privilege to get additional cards. No one is guaranteed the right to get approved for a credit card. Indeed, we must earn that privilege by demonstrating that we can handle additional credit. Still, even if we’ve shown that we’re capable — and responsible — there are no assurances that the card companies will continue to extend credit to us. For whatever reason, a card company could withdraw our credit lines (in the form of credit-limit decreases or closures). If that happens, you’ll then realize that it was always a privilege to have the card in the first place. Fact is, if it was a right, the card companies wouldn’t be allowed to take the credit away.

That’s my two cents on the topic.

Dawn – Iowa Hippie Chick blogs about money love and marriage and offers so very insightful posts on personal finance that involve emotional insight and awareness. Vist her blog.

This question is a no-brainer …
Having a credit card is a privilege!

It is a privilege that we earn by handling our personal finances responsibly.

I suppose, it’s similar to the privilege of driving – If not handled with care it should be taken away. Thus keeping the rest of us safe from irresponsible users!

Patrick Bryan – Living in Northern Ireland, Patrick helps people in a very different environment and economy but yet, much is universal and much is the same. Visit Patrick’s Northern Ireland blog on debt.

Until the constitution is amended to include ‘the right to get into debt’ I feel you would have to describe a credit card as a privilege rather than a right. It is a commercial decision for a credit card company to issue someone with a card – in essence they decide if they are a good risk to repay the money lent, and if there is a profit to be made from the relationship.

For many of us credit cards are a great benefit providing convenience, reduce the risk of carrying cash and provide interest free credit for up to 56 days. Until debit cards came along nothing could beat the benefit of having a credit card in your wallet, and if you use them ‘responsibly’ then I believe that we should still consider it a privilege to own one.

Unfortunately it is when people fall behind with credit cards that the dark side of our flexible friends is revealed. High interest charges, late payment fees, retroactive application of interest charges, two-cycle billing – I could go on. It is for this reason the Credit Cardholders’ Bill of Rights was proposed. The capricious nature of credit cards is that even though they are inanimate pieces of plastic they can assume magical powers, transforming themselves from a helping hand which pulls you out of trouble into a shove in the back when you are teetering on the edge of a financial precipice.

So, rather than defining a credit card as a ‘privilege’ or a ‘right’ I would prefer people to regard them as a form of ‘luxury debit card’ – a way of spending money in a safe and convenient manner, but which has to be paid back when the bill arrives each month. And if you can’t trust yourself to do this on a regular basis then it is probably best if you just use a regular debit card instead, and keep your credit cards at the bottom of your sock drawer, or locked in a high tower and guarded by a dragon.

What Do You Do When The Town Is Laid Off? – Personal Finnance Bloggers Question of The Week

Steve Rhode — Fri, 14 Nov 2008 16:32:45 +0000

From How to Get Out of Debt

This weeks personal finance brain trust question was a tough one that caused many of our bloggers to not contribute because there really isn’t a good answer to it. I knew it was going to be a tough one.

DHL just announced massive layoffs that will cripple the town of Wilmington, Ohio and the surrounding area.

What advice do you have for the DHL employees, businesses and people of Wilmington, Ohio to be able to deal with this?

WC – A 27-year-old writer living in Chicago and writing about personal finance through The Writer’s Coin.

This is a tough one because I don’t know that I have an answer for the people who are now out of a job at DHL. My answer is more about what you can do before this happens, and I think it has to do with what’s happening in the auto industry and in Detroit.

You have to diversify your skills. If you’re really good at something, then by all means go out there and do it well and you should be fine. But always make sure you’re expanding your skills. Don’t let this happen to you where a shipping company says “You’re fired” and all you can do is something related to shipping (or the auto industry). Picture yourself doing something else—if you can’t then you need to re-evaluate what you’re doing.

This is another reason to always push yourself at your current job (another being that it makes you a better worker), so that you get better as time goes on. This makes you less expendable and, if you do lose your job, better positioned to find a new one.

It is the sheer scale of the job losses in Wilmington that is staggering – 7,000 jobs in a town of just 12,000 people. It is hard to imagine how a small community manages to recover from a shock like this, and I’m afraid that there could be some hard times ahead for both the former DHL workers and the local shops and businesses which rely on the money they spend with them.

If you have lost your job my advice is to first do a serious appraisal of your financial situation and where possible cut out all unnecessary expenditure immediately. Cut back on Christmas, sell the second car, hold off booking the family vacation for next year. Second – consider if you should relocate elsewhere – is there a job you can do in another country/state? It might be tough moving away from your friends and neighbours but you must at least consider this option as it could be the quickest route back to financial security.

For those who want to stay (and I can’t blame you, I believe Wilmington is a beautiful town with a close-knit community) then you need to think about what you can do to make yourself employable again. Can you retrain for another trade or profession? What service do people need right now in your local area and are willing and able to pay for? If you have always harboured a desire to do something else with your life then this is your chance – to go back to school or learn a new trade, or start a business. Bear in mind that there might not be a lot of money being spent in your town for a while so perhaps there is either something you can do which involves selling your product or service on a wider scale? The internet and ecommerce is a great liberator in this respect and enables many businesses to operate without any major constraints on location in relation to their customers.

I live in Northern Ireland which over the past 40 years has gone through the cycle of suffering a large number of job losses from a number of large employers (shipbuilding and heavy engineering), through to a period of economic regeneration to create the relative prosperity enjoyed now, and the best solution for job creation (which took a lot of trial and error to arrive at), was for the government to provide relatively small but numerous sums of grant money to encourage local people to create small to medium sized businesses which created jobs in their community. This spread the risk of one business or sector going into decline, and also avoided the prospect of multinational companies such as DHL cutting off limbs in an economic downturn as has happened in this case. Let’s hope the new administration has some grant money available to help towns such as Wilmington, Ohio rebuild their shattered economy and in future provide more local control over job creation.

The DHL cuts create an economic dust bowl like that faced by the residents of Oklahoma and the High Plains back in the 1930s. The Dust Bowl exodus was the largest migration in American history within a short period of time. People had to move because the ground was no longer fertile and food and income were scarce. It didn’t rain in that part of the country for nearly a decade of blowing dirt and dust storms.

In hindsight one can see that a region or town that is so dependent on one employer is playing with fire. It is one thing when ten local businesses fail that employ a total of 100 people but it is catastrophic when one employer fails and takes 7,000 jobs with it.

This is a time and opportunity for government to provide assistance to local residents to allow them to create small business opportunities in the soon barren community. It is the good side of government and a role that it can play to make a real difference in the area.

The thought that another similar employer is going to be located and enticed to fill the now missing jobs, is an unrealistic expectation.

While residents may want to stay and fight for a better future, at some point the reality of having to put food on the table, make the car payment and pay the mortgage become a reality. And at times like these, these emergency days, this is the time that people, rightly or wrongly, turn to credit cards to make it through. Payments will be expected, life goes on and income must be replaced.

Such a mass exodus out of town creates other problems as well. With so many homes going up for sale as people leave the Wilmington, Ohio area, housing prices will plummet. There will not be enough buyers for the homes on the market. Homes will languish and eventually be foreclosed on.

The largest mistake people in Wilmington will probably make is to use up their credit and spend down their savings in hopes of finding a good solution to stay. That will only leave people broke and trapped in a dying community.

There is no good answer for the people of Wilmington, Ohio that will leave them without the need for sacrifice or loss. With the drying up of DHL it is much like the Dust Bowl drought. It would be best to learn from history and not repeat the same mistakes learned by the residents of the Dust Bowl or those from economically ravaged steel towns that have yet not come back.

With unemployment rising all across America it may no longer be a choice of finding work where you want to live but living where you can find work. Like the Oakies of the Dust Bowl that loaded up the Model T Ford for the drive west in pursuit of jobs, so will many Wilmingtonites migrate to other corners of the country, in search of jobs and in search of financial dignity.

Wilmington, Ohio can come back in the future but it will first go through a period where it will wither and die back. Government intervention may be a solution to revitalize the area but those programs will take time. Spring does not come immediately.

But in the future where there might not be hope right now, opportunity will rest in potential. What one person sees as an empty town, another creative soul might see as a blank canvas of new and better things. Downtown storefronts might turn into unusual residences with character. Local pizza shops, service and craft stores may open and from the ashes a future new Wilmington may be born.

So You Have to Use Your Credit Card In An Emergency – Personal Finnance Bloggers Question of The Week

Steve Rhode — Thu, 06 Nov 2008 15:13:04 +0000

From How to Get Out of Debt

This weeks personal finance brain trust question was:

What goes through your mind when people say that they HAD to use their credit card to get by? Is using a credit card when you can’t afford to pay a smart or necessary thing to do?

WC – A 27-year-old writer living in Chicago and writing about personal finance through The Writer’s Coin.

I think that people should take that as a warning. I realize for some people it’s the only option, but anyone that catches themselves saying that should really reprioritize to make sure that it doesn’t happen again and that they’re not making things worse by paying with a credit card. Whether it’s “smart” or not depends on how big of a hole they’re digging and what the alternatives are. If they could cut their spending somewhere, then it’s a bad call.

Credit cards have the potential to help but also the potential to make things worse, and not realizing that is a huge mistake. For the people out there who have no choice and have nowhere else to turn—credit cards are a serious warning. If you can’t get by without them you are in deep trouble and something needs to change ASAP.

Patrick Bryan – Living in Northern Ireland, Patrick helps people in a very different environment and economy but yet, mush is universal and much is the same. Visit Patrick’s Northern Ireland blog on debt.

To pay your essential bills on your credit card is clearly a danger sign, however I can’t condemn people for doing it, and I can understand why it feels like the only alternative at the time. Many people also have temporary cashflow issues, and using credit cards helps them get by until (for example) their bonus is paid, or a big contract comes in. It is a great way of getting fast, accessible credit for short periods of time. I use my credit card for most of my purchases (including groceries and fuel) and enjoy 56 days interest free borrowings, why shouldn’t I use the credit cards money for free in that way? I always make sure however to pay the bill each month and use this discipline to keep control of any of the wilder spending urges I experience.

My advice to people who are finding that they have to use credit to get by is to first look at their budget – identify what is happening and take action. If it is going on non-essentials and you are not clearing the bill each month, stop buying them! If you still have a shortfall each month you need to ask yourself some tougher questions – can you downsize the car, shop at cheaper stores, cut back on the family vacation next year? Ask yourself this question – “if credit cards hadn’t been invented, how would I have managed to pay the bills this month, and what would I be doing differently in relation to my spending?”.

It is a very dangerous activity to use a credit card to get by at present as providers are starting to identify people using their cards to shop for essentials and are reducing limits and in some cases withdrawing cards if they think the customer is getting badly out of shape. They are also actively cutting credit limits and withdrawing unused cards.

Leaving aside the rights and wrongs of putting essentials on credit cards my advice is to try and wean yourself off the habit, even making some life-changing decisions if necessary to try and live within your means. In the coming recession I strongly recommend curtailing your borrowing wherever possible and try not to rely on credit to buy anything you can’t repay when the bill comes in.

Patrick – Patrick writes two excellent blogs, Cash Money Life and the Military Finance Network.

I think a lot of it depends on the situation. When many people are just starting out in life, they may not have an emergency fund in place or have a lot of savings. In this case, credit cards can be used as a last resort for emergencies. They are much better than using payday loans to make ends meet.

The important thing is that people only use credit cards to get by for true emergencies – food (not fast food or restaurants), car repairs, plane tickets for a family emergency, etc. The problem comes when people think they NEED to use credit cards to get by and end up using them for expensive clothes, jewelry, or other luxury items.

Ouch! Not much good happens from using credit and creating debt when there is no reasonable expectation that you will be able to repay it. It only leads to bigger problems down the road unless you win the lottery or find a windfall of money to pay off the debt.

It might not be a smart thing to do but I can certainly understand how some might find it a necessary thing to do. I remember right after hurricane Katrina hit New Orleans and slaughtered that area. People were without homes, without food, without jobs and without hope. People used their credit cards to buy diapers, pay for a hotel room or pay for food.

And being in that same situation, with a hungry child looking up at me, I can’t say that I would not do the same thing in that situation. That does not make it right but maybe desperate times call for desperate actions.

Abusing a credit card may be necessary but there will be consequences to pay latter. Those consequences could include bill collectors, bad credit report, a bad credit score, threats of lawsuits, being sued, wage garnishments, etc.

When someone tells me that they had to use their credit card to continue to get by when not faced with an unusual life emergency, well then that’s a clear sign that we need to come face-to-face with the reality of the situation and deal with it.

Using a credit card to make ends meet at the end of the month, month-after-month, or using once credit card to pay another is critically dangerous to your financial health. What will happen soon enough is that the denial about the financial situation will soon get stuck on the tracks and be broadsided by the powerful and fast moving freight train of reality. That’s painful. You need to take action and get off the tracks before that happens.

J. Money – You’ll enjoy the blog Budgets Are Sexy for a look inside the life of one blogger and how money impacts it.

I think “Wow, they must have REALLY been in a sucky situation!” I’m more of a positive thinker, so I tend to give people the benefit of the doubt from the get-go. I bet most of the time the people confuse NEEDS with WANTS, but that usually pops in my mind later if i’m giving it more thought.

There is nothing with with putting NEEDS on your credit card to get by – this is life, and it’s not always perfect. If you need food or shelter, and have absolutely no money in the bank, then you’re pretty much out of luck. It also depends on the timeframe we’re talking about here. If we’re talking about a few years here, then obviously there are some other ways to get your hands on money – loans, friends, etc. But i see no problem w/ loading up the card for a few months and then working to pay it off as quick as possible.

I personally put everything I personally can on a credit card to manage my budget. It gives me 30 free days, ya know? I pay it off in full each month, but worst case scenario you rack up a little interest when needed. That’s what it all comes down to really – the needs vs wants.

Dawn – Iowa Hippie Chick blogs about money love and marriage and offers so very insightful posts on personal finance that involve emotional insight and awareness. Visit her blog.

What goes through my mind

Is they don’t have a grip on their personal finances.
They probably don’t have a spending plan/budget.
They definitely don’t have an emergency fund.
And they just aren’t getting real with themselves, about their own money!
I don’t think it is a smart thing to do, at all.
It just dig’s their debt hole deeper, compounding their problems.
Solution = Emergency Fund!

Marcus – The creator of the CreditMattersBlog, this blogger has a deadly sharp point of view when it comes to consumer debt issues. Visit his blog.

It is what it is. Some people are deeply into debt. I suspect that some people use their cards as a last resort. When someone tells me that they HAD to use the card, I ask how that actually transpired. Did they always use cards to supplement their income? Did they start using the card recklessly and then end up in a hole? For the most part, most people don’t have to use their cards to get by — at least not initially. It’s only after they’ve started loading up on debt, and can’t keep up, that they usually have to turn to credit cards to make ends meet.

Your second question is much easier to answer. If you can’t afford to pay your credit card bills in full each month, you should stay away from cards. You’ll eventually get buried if you can’t pay your card in full each month. Most of the people I’ve run into — who ran into trouble with cards — typically carried balances from month to month. Carrying balances, especially ones that continue to rise, is also not good for your FICO score. Higher utilization translates into lower scores. I’ve written extensively about the virtues of paying in full.

Using a credit card, when you can’t afford to pay the balance off each month, is not smart.

Which Presidential Candidate Is Better For Debtors? Personal Finnance Bloggers Question of The Week.

Steve Rhode — Mon, 27 Oct 2008 19:08:54 +0000

From How to Get Out of Debt

This weeks personal finance brain trust question was:

Which U.S. presidential candidate will most likely do more to help debtors and/or reform current bankruptcy regulations? Feel free to elaborate.

WC – A 27-year-old writer living in Chicago and writing about personal finance through The Writer’s Coin.

This question seems like a veiled attempt at asking “who are you voting for?” But just in case it isn’t, here’s what I think: whoever winds up winning this election will have to—at some point—say something to the effect of “Things are a lot rougher than we thought, and everything I said during the campaign has become obsolete. Therefore, we can’t do everything we promised.”

Unfortunately, candidates can’t really tell the truth about what they’re thinking when really bad things happen. Both candidates knew that they would have to compromise their plans due to the economic downturn we’re going through, but they can’t say that because the opponent would slam them, attack them, etc.

Either way, whoever wins will have a lot more work to do and more restrictions to follow through on what they’ve promised.

As both an outsider to the US elections and a lifelong non-voter I am probably not qualified to give a response to this question however my instincts say that if one candidate is going to do something for debtors, it is Obama.

Obama voted against the 2005 Bankruptcy Bill which was seen as removing some key rights for debtors and favouring the banks instead. McCain supported the Bill. Obama is a supporter of the Credit Card Bill of Rights and appears to place this issue high on his political agenda. McCain strikes me as being part of the establishment, conservative and change-resistant, and for that reason I believe that he will not want to rock the boat too much if he is voted into office.

If Obama is elected however I would certainly expect his proposals on bankruptcy reform to become watered down; members of his own party for example helped pass the 2005 Bankruptcy Bill, and any legislation he proposes will almost certainly be opposed by lobbying from the banks and other large creditors (remember the government is a creditor too, i.e. the IRS). We are finding in the UK that there is a lot of inertia surrounding proposals to reform our bankruptcy system and we are still waiting on draft legislation to be enacted which were put forward by the current government back in 2005.

Antisay – This blog is mainly about finance and self-improvement; I am in a constant race to become a better me and this blog is all about that sort of lifestyle. Visit this site.

The truth is that no candidate will help debtors. We could spend hours hashing out the different tax policies of each candidate, debate over who has the better ideas, or ague whether smaller or bigger government would be better for us as a society right now….

When it boils down to it, however, the truth is that no candidate – no president – will ever fix a debtor’s life or financial situation. It seems a majority of US citizens hold the president or the government responsible for fixing their lives, when in reality that is the responsibility of the individual. Reforming bankruptcy regulations or changing lending laws will not solve many problems… they may ease some people along, but the fact remains that those in trouble will always be in trouble until they get themselves out.

I have my opinions on who should win, but voting one way or another will never improve or lessen one’s chances of getting out of debt. With a lot of hard work, a budget, and a heck of a lot of patience, ANYONE can get out of debt. It doesn’t matter what your taxes are, what rights credit cardholders have, or if we have public healthcare or not.

Work at it and you’ll get there.

Gerri Detweiler – She has been helping consumers find solutions to their credit problems for more than twenty years. Her newest book is Stop Debt Collectors: How to Protect Your Rights and Resolve Your Debts. She serves as Credit Advisor for Credit.com.

In my view, it is pretty clear which candidate would be more helpful to debtors: Barack Obama. He voted against the Bankruptcy Reform Act in 2005 (which took a lot of courage, as many from both parties voted for it), and he has spoken out numerous times in favor of bankruptcy reform to help alleviate the current housing crisis.

John McCain appears to favor the type of reform we’ve seen implemented so far: measures that favor Wall Street but have yet to have a significant or direct impact on Main Street.

Steve Rhode – A personal finance blogger and founder of the Myvesta Foundation, a global scoial enterprise that helps people find solutions for money troubles. You can ask Steve your debt related question through GetOutOfDebt.org and he’ll help you for free.

Having lived through and closely watched the bankruptcy reform act of 2005 I will admit that I have no faith in the Bush administration to do what is best for people with financial troubles. I have also been very disappointed by the lack of effort of the current Republican ticket of McCain-Palin to speak specifically about reversing the senseless bankruptcy reform of 2005 which only hurts consumers. Just recently there was a great article about the farce that the bankruptcy reform created.

The voting record for the Bankruptcy Reform Act of 2005, bill number S 256, was:
McCain: Yes
Obama: No

I was actually surprised to see the list of those that voted against the bill, all democrats.
Akaka (D-HI)
Boxer (D-CA)
Cantwell (D-WA)
Corzine (D-NJ)
Dayton (D-MN)
Dodd (D-CT)
Dorgan (D-ND)
Durbin (D-IL)
Feingold (D-WI)
Feinstein (D-CA)
Harkin (D-IA)
Kennedy (D-MA)
Kerry (D-MA)
Lautenberg (D-NJ)
Leahy (D-VT)
Levin (D-MI)
Lieberman (D-CT)
Mikulski (D-MD)
Murray (D-WA)
Obama (D-IL)
Reed (D-RI)
Rockefeller (D-WV)
Sarbanes (D-MD)
Schumer (D-NY)
Wyden (D-OR)

On the Obama-Biden side I am both encouraged and disappointed. I’m disappointed that Joe Biden represents Delaware, the home of some of the most offensive banks against consumers and that he voted to go along with the bankruptcy reform act debacle. However, Barack Obama has a long and clear record of standing up for consumers, speaking about about credit card company tactics and rocking the boat for positive change in consumer protection to defend consumers from abusive lending practices.

As I said previously:

With so little time before the next presidential election it is a good time to take a quick look at some important issues that are impacting the wallets and purses of the American consumer.

Under the Bush administration consumers were significantly harmed by unreasonable and unfair bankruptcy reforms that clearly helped big business, hurt consumers and only made bankruptcy more expensive for the same people that still need to file for protection.

A future administration for change and putting people first should strongly look at repealing or enacting legislation to turn back the hands of time to allow consumers in an ever-tightening economy, to have more reasonable access to bankruptcy.

The Obama-Biden ticket has promoted a Credit Card Bill of Rights for some time now and it would be beneficial to see the McCain-Palin ticket pledge to work diligently to put similar protections in place.

In my research for my article on John McCain’s Bad Credit Card Rates, I also found the following information:

It appears that Barack Obama has a very good grasp on the problems faced by people in America today that are carrying credit card debt. An article in the Chicago Sun-Times reveled a number of comments that Senator Obama made regarding credit card debt.

“For too long, credit card companies have been using unfair and deceptive practices to trick Americans into signing agreements they can’t afford,” Obama said. I agree.

Obama said he knew only too well how easy it was to get caught by deceptive credit card deals: “In the interest of full disclosure, I’ve gone through this. I’ve had credit cards.” Wouldn’t it be nice to have a President that actually lived through credit card debt and cares about all the consumers in financial pain?

According to the Bankruptcy Law Network:

Senator McCain called the bill, “…an important step toward a fair and balanced approach to restoring personal responsibility to our federal banking system.”

Senator Obama did state at a January, 2008 debate, in response to a question about the 2001 and 2005 bankruptcy bills, “I opposed them both. I think they were bad ideas, because they were pushed by the credit card companies, they were pushed by the mortgage companies, and they put the interests of those banks and financial institutions ahead of the interests of the American people. And this is typical.”

So based on the previous record of Barack Obama, the hope for change, the reality of republican erosion of consumer rights on their watch, and the need for greater protections for consumers from unfair financial practices, I think any debtor looking for a positive change on consumer debt issues will find more chance of effective leadership on these issue from Barack Obama.

Source: Which Presidential Candidate Is Better For Debtors?

The Personal Finance Brain Trust Tackles – Trying to Make Ends Meet But Still In Trouble

Steve Rhode — Mon, 20 Oct 2008 18:32:46 +0000

From How to Get Out of Debt

This weeks personal finance brain trust question was one that I received online.

My wife and I are both working, paying rent and land payment (have been trying to sell it), 3 kids and other debts and bills we are struggling from pay to pay and never get ahead. We have also borrowed money from family to help, but are still in trouble.

What can we do to ease the pressure.

Help!

WC – A 27-year-old writer living in Chicago and writing about personal finance through The Writer’s Coin.

This is the type of question that really gets to me. This is a case where money-saving tips and tricks come up short. This isn’t about cutting corners and saving money, these are situations that require life changes.

Gradual but drastic changes in how people live their lives. As Eminem so eloquently put it in the movie 8 Mile: “Do you ever wonder at what point you got to stop living up here and start living down here?”

It’s easy to cut corners and maximize a budget when you’re cutting things like movies and dinners out on the town. This question hits at the core of problems people have around the country: much more serious problems that require bigger changes.

It’s going to be hard, but my advice for this person would be to drastically change the way he/she handles their money. It may not be fun, but you have to stop living beyond your means, and if you’re “struggling” you shouldn’t be living at the level you are right now. Follow Eminem’s advice.

It is difficult to fully answer your question without more information and the first thing I would encourage you to first carry out an income and expenditure analysis.

Keep track of all your spending for at least a week but preferably 30 days.

Hopefully this will show you where your money is going and perhaps suggest ways to economise. It is amazing how much we can all spend on little things like newspapers, magazines, coffee etc. All of these are small expenses but can quickly add up to a lot of money each month.

Of course if your shortfall is high each month then more drastic action might be called for. It seems to me that you might have to give up on your dream of being a homeowner for a while. If you are struggling with rent and a land payment then by the time you develop the land you will probably end up with a property which between mortgage payment, taxes and maintenance will cost you more each month than renting. I have seen too many people over the past few years struggle to be a homeowner in order to build equity, only to end up repossessed because they can’t afford the running costs.

Now could be a good time to offload that land cheaply, put your finances in order and perhaps even put away some rainy day money in a zero risk readily accessible deposit account.

Patrick – Patrick writes two excellent blogs, Cash Money Life and the Military Finance Network.

The first thing you want to do is create a master list of all your income and all your regular expenses. With this list you will then determine if you have enough monthly income to cover everything. As you list your recurring expenses, look for ways to reduce them such as dropping cable or satellite TV, stopping monthly subscriptions, etc. You can also look to further reduce expenditures by buying generic products, reducing your utility usage, etc.

After you have cut expenses, look at the paper again. If the expenses side of the paper is larger than the income side of the paper, you are still in a losing situation. The only solution is to either cut more expenses or bring in more income. You may be able to cut recurring expenses by requesting rate reductions from creditors, reducing luxuries, and selling items that have recurring payments (such as the land or a car). To bring in more income you can try working overtime, taking on part time work, starting a side business, or holding a garage sale to sell unneeded items and make extra cash.

The only way to get ahead of the curve is to bring in more income than your current monthly expenses, there is no other way.

When everything has been cut to the bone and there is no other expense to cut, that’s when you should start looking at benefits you may be entitled to. Government benefits like food stamps (now called SNAP), food allowances for women, infants and children (WIC) and health benefits like Medicaid should be there in your time of need. You can see this previous answer for more information on these benefits and others.

Maybe you’re feeling like you are too proud to hunt down those benefits. But you’ve paid into those programs through your tax dollars all this time. If you are in need, don’t let pride stand in your way of feeding the kids.

You should really take a good look at bankruptcy and see what debts you can get rid of in bankruptcy. Since the land won’t sell you can either reduce the price way, way down to move it, let the land go back to the finance company and include any residual debt owed on the land in your bankruptcy, or let your bankruptcy lawyer try to negotiate down what you owe on it so you can include it in the bankruptcy but keep it.

I’m really concerned about the borrowing from family to help make it. You’ve noticed that’s not working so in reality all you are doing is just going further into debt but to a different person. It is not solving the problem.

Getting out of debt is hard, difficult and sometimes damn near impossible, but it is not rocket science. If you can get your basic expenses to fit within your income, with a buffer to save a little in a savings account and get by, that’s what a basic budget should look like. If you are trying to pay down debt on a new spending plan or budget then you’ve got to trim down your expenses so far to include your basic expenses, debt repayment, and savings.

The pressure is intense and debilitating but it is not going to ease until you start to put a plan in place to resolve this situation. The pressure you are feeling is the force that builds up between the wall of reality and the wall of demands as they move closer and closer to each other. Once you alter your financial existence or eliminate your debt through bankruptcy, then the relief valve will open and the pressure will decrease.

You will find that your best solution will probably lie in a combination of these actions. That might be, cutting back, bankruptcy, benefits and then focusing on building a new financial life and putting money into a savings account.

J. Money – You’ll enjoy the blog Budgets Are Sexy for a look inside the life of one blogger and how money impacts it.

Oooh, tough one :( First off, i’m sorry to hear that you’re in this situation, that’s def. not fun – especially when it involves a family. I do, however, give you mad credit for reaching out and looking for solutions! Now, do i have a solution? Yes, actually i have a few, but without any specific details it’s pretty broad. And I’m afraid none of it’s all that new or exciting:

1) Track all your $ – Find out where every single dollar is going! (not where you *think* it’s going, but where it *is* going)
2) Make more cuts – Go down this list of expenditures and decide which are necessities, and which are “likes”. Cut out the “likes” for now, and focus on the needs. You can always go back once this passes.
3) Create a budget – After you’ve made some cuts, or before even, come up with a REALISTIC budget. This is important for a number of ways, but mainly to help you track your progress each month.
4) Have c/c debt? – Try consolidating and/or asking for a lower interest rate. It won’t pay it off, but it sure would lower the amounts you owe each month!
5) Bring in more money – A bit obvious here, but it’s imperative at the rate you’re going. If you haven’t already, try asking for a raise at work – you may get shot down, but it’s worth a try. If that doesn’t work, consider looking around for the next step up, or in the meantime even looking for a 2nd job that one of you can take. It’s not ideal, but it may be necessary.

Again, it’s sorta hard coming up with specifics w/out more details, BUT i can promise you that if you give all 5 of these a shot, you’ll have a much better chance coming out of all this much sooner :)

Personal Finance Brain Trust – What Rights Should Debtors Have?

Steve Rhode — Tue, 14 Oct 2008 17:59:03 +0000

From How to Get Out of Debt

This weeks brain trust question was:

Question:

Bank of America is proudly telling people about their new loan modification program and how much it will help people. But this program did not materialize until Bank of America was sued by some states over predatory lending.

The real world situation is that the majority of lenders are unresponsive or just not helpful to help people deal with money troubles. Consumers would be surprised that it is actually hard to get banks to accept fair and sustainable payments to help people avoid bankruptcy.

The question for this week is what rights do you think consumers should have in a perfect world in order to be able to deal with lenders, when the debtor is having problems paying their bills, so they can avoid foreclosure, repossession and/or bankruptcy?

WC – A 27-year-old writer living in Chicago and writing about personal finance through The Writer’s Coin.

I may sound a little harsh saying this, but I really feel like people that get into products they didn’t a) understand fully or b) can’t afford, should have to suffer the consequences of their actions. Ignorance isn’t an excuse and people should’ve read up on what they were getting into before they signed on the dotted line.

On the other hand, when this many people are in a bind, it’s beneficial for both the banks and the consumers to find a middle ground. What that would be I really have no idea. As to avoiding foreclosure and bankruptcy, they should’ve thought about that before they got themselves into this mess. Americans are quick to judge and spew hate towards big corporations for their excess and greed, but everyday citizens are doing the same thing, so we too should suffer the consequences.

I believe that more should be done to prevent irresponsible lending by financial institutions before the outcomes of that lending (i.e. bad debt) are tackled. The solution I see to solving the problem of foreclosure/repossession would be to take defaulting borrowers’ property into public ownership through a national home rescue scheme, which would buy the asset off the bank and then rent the property back to the borrower whilst giving them an equity stake, which would provide some security of tenure.

Here in the UK there is already a highly effective way of dealing with unsecured debt – the Individual Voluntary Arrangement (IVA) which enables debtors to enter into a structured debt repayment plan which enforces an interest freeze on their creditors, and the debtor only pay back the proportion of their borrowings they can afford to over a 5 year period. This legislation was seen as a way of providing debtors with important rights however IVA proposals over the past couple of years have been hamstrung by the requirement to get the agreement of 75% of creditors by value, and as many as 20% of IVA proposals are currently turned down for this reason. The banks simply veto arrangements if the required dividend is not met, often without considering what an individual debtor can actually afford to repay or the potentially reduced dividend they will receive in the event of the debtor’s bankruptcy.

Proposed IVA modifications dating back as far as 2005 would allow debtors who owe below £25,000-£30,000 to enter into a simple IVA (SIVA) with no requirement for a creditor vote but the government has not as yet enacted the legislation, despite there being a huge debt problem in the UK and a real need to free up the current system. Perhaps now with the part-nationalisation of some of our biggest lending institutions the government will take a more active part in addressing the problems of debt and will work towards solutions which are equitable on all parties, and do not leave the matter largely up to market forces.

Antisay – This blog is mainly about finance and self-improvement; I am in a constant race to become a better me and this blog is all about that sort of lifestyle. Visit this site.

What a loaded question! … It’s unfair to say that the lender should take all the burden when he debtor is the one who can’t pay their bills. Since we don’t live in a black and white world, however, I think some different circumstances need to be considered in order to qualify the “rights” of the debtor.

This question boils down to asking: who should ultimately “win” when a loan situation becomes a struggle – the banks or the consumers? There is no one solution because of the aforementioned circumstances. I think that looking at the debtors’ situations before they took on the debt with this one particular lender is key. Let’s examine two examples…

I feel that if the debtor was not previously in hot water and now is unable to pay some (or all) of their bills, than the fault should lie somewhere closer to the debtor and they shouldn’t be granted too much leeway that could ultimately hurt the lender for something that wasn’t the lender’s fault. This is more of a classic lending situation: the bank loans out, the person over extends themselves, payments aren’t made.

In this situation, the rights of the consumer, in my opinion, should be (at the least) fair and reasonable interest rates on the loan and low, previously-disclosed late-fees when payments don’t come in. Even in the situation where the bank is in the right, they should not abuse their customers by charging outrageous finance charges or dropping hidden late fees out of nowhere. The consumer in this case has every right to fair and legal lending practices. I also feel it would be in the bank’s interest to extend some sort of extended payment plan to the debtor to keep them happy being a debtor, but I don’t feel the bank is under much obligation to do so.

Now, if the debtor was deeply in debt to begin with and the bank “went after” the debtor, the story is changed completely. If the person was clearly targeted as prey in predatory lending practices, than far more leeway should be granted toward the consumer. In this sort of case I feel that lengthy repayment plans, deferred (non-accrued) interest, and possibly lenient settlements are all in order. I think if the debtor is suffering undue abuse from the lender than all actions on the part of the lender should be in the interest of the debtor, not the themselves.

I honestly can’t see this issue clear-cut, and you’ll find me hard to pin down on this question… I feel that in the end, how the debtor got into the loan itself has a very clear indication of how the loan will end up. It goes back to my answer last week – those who should have never been “let” (baited) into debt in the first place can’t be faulted for having been extended the loan – that is the lender’s fault. But if the person did it all to themselves, than I say they have to undo it themselves – but in a fair environment, with reasonable finance charges and late fees – with everything out in the open.

Patrick – Patrick writes two excellent blogs, Cash Money Life and the Military Finance Network.

I think it is in the best interest of lenders and borrowers to work together in good faith to try and come up with a solution that works for both parties. The state of the economy is such that lenders can’t afford to foreclose on too many houses. In some cases it would be in the best interest of the banks to work to restructure the loans to extend the length of the loan, possibly at a lower fixed interest rate. Yes, that would mean writing off profits and it would affect stock prices, but that would also prevent many foreclosures, which are more expensive. This kind of thing should be done on a case by case basis, and only after the customer has worked with an approved financial or credit counselor.

On the customer’s end, they need to cut back on expenses wherever possible to meet their obligations – be it a mortgage, car loan, credit card bills, student loans, or anything else. It would not be right for banks to give customers concessions, only to have the customers continue getting deeper into debt.

There are obviously a lot of issues on both sides of the fence that need to be addressed.

If we want to stop the downward spiral of home values in many parts of the country, the solution that we must enact as quickly as possible is bankruptcy reform: allowing judges to modify home loans for consumers in bankruptcy who have the ability to stay in their homes under different terms. Consumer advocacy groups have been calling for this change for a couple of years now, and every day it makes more and more sense.

Bankruptcy reform is not a bailout. It does not even require taxpayer money. It does require a lender to accept a lower interest rate, and perhaps a reduced amount of principal. Even then, lenders come out ahead by receiving more than they would if they allowed the home to go into foreclosure – and likely be stripped of appliances, fixtures, furnaces and more before the sale.

Those who think bankruptcy reform would be an easy out for consumers who got in over their heads should think again. Bankruptcy has become more difficult for consumers to file and complete, thanks to changes in the law several years ago. Many consumers who would take advantage of this reform would be forced to pay back debts in a five-year court-supervised Chapter 13 bankruptcy plan — hardly a walk in the park.

But they would keep their homes out of foreclosure. Their neighbors would not have to see their home values drop by 10 – 15% or more because of a foreclosed home in the neighborhood. And taxpayers would not have to pay for a risky loan purchased by our government just so the bank could free up more money to lend to someone else.

We’ve been bailing out Wall Street. Now let’s really help Main Street, and enact bankruptcy reform. We can’t afford to wait any longer.

It is enormously frustrating for me to talk to good people all over the U.S. and UK who want to repay their debt, the best they can, but creditors refuse to accept their repayment offers. These are people that wind up going bankrupt but who never wanted to.

There is no law or process that allows the consumer to have protection under the law when making a good faith and best effort to repay what then can in a reasonable and sustainable fashion.

The IVA (Individual Voluntary Arrangement) process in the UK is the most fair way for debtors to come to a binding agreement with their creditors to repay their debt over a fixed period of time, have the remaining balance eliminated and stop interest.

In the United States, Myvesta, tried this approach for five years and U.S. creditors fought that approach every step of the way, yet the U.S. based credit card companies like Bank of America and Capital One, participate in the IVA solution in the UK.

The only way to slow down the number of U.S. bankruptcy filings is to give consumers access to a bankruptcy alternative that would be based on their actual available funds each month and that would operate much like a Chapter 13, payment plan, but not be bankruptcy.

Credit counseling or debt management plans are not binding on the creditor, nor do they eliminate any original balance yet unpaid after a period of time.

What U.S. consumers need is some legal right to force creditors to accept reasonable repayments rather than have creditors refuse payments which only drives more consumers to bankruptcy and serves no social purpose other than to remove the stigma of bankruptcy.

Bankruptcy reform is desperately need in the U.S. so we can go back and correct the senseless legislation passed in 2005 that only further damaged consumers while benefiting the banks.

Would You Like More Credit Card Rights If It Means Credit Cards Are More Expensive?

Steve Rhode — Tue, 07 Oct 2008 18:53:37 +0000

From How to Get Out of Debt

This week I asked the Personal Finance Bloggers Brain Trust the following question and as always, the answers are thoughtful and insightful.

Question:

At the very time that our banks and Wall Street are asking and looking for a financial bailout they are condemning the ‘Credit Cardholders’ Bill of Rights. The American Bankers Association issued the following statement within minutes of HR 5244 passing in the House.

“The American Bankers Association is very disappointed by the action today of the House of Representatives. The so-called “Credit Cardholders’ Bill of Rights” (H.R. 5244), while well-intentioned, will increase the cost of credit for consumers and small businesses across the country, result in less access to credit for consumers and businesses alike, and may further roil the securities markets – all at a time when our economy can least afford it.

“Legislation resulting in higher prices to consumers makes little sense at any time, let alone when global markets face the degree of turmoil that confronts them today. By limiting their ability to manage risk in making loans, this bill will force lenders to increase prices for everyone to compensate for that added risk. That’s unfair.

“Sometimes things that appear attractive on the surface often come with too high a price tag. Increasing prices for consumers, reducing low-cost credit alternatives for small businesses, and causing more ripples in the securitization market make little sense.”

So let’s assume that the ABA argument that this consumer protection legislation will lead to an increased cost of credit for consumers and small businesses, when more consumer safeguards are put in place, will actually happen. Should we be afraid of costlier credit if in exchange consumers get greater consumer credit rights and protection against sudden rate changes, elimination of huge fees and clear credit disclosures?

Answers:

Patrick – Patrick writes two excellent blogs, Cash Money Life and the Military Finance Network.

Current credit card agreements are convoluted and subject to change at any given time. Form a consumer’s point of view, there is very little standardization across different credit card companies and sometimes not even across different credit cards under the same brand and bank. Most agreements tend to highly favor the credit issuer, which is understandable as it is their money.

However, there is very little in the way of consumer protection and current laws favor the credit issuing companies. Standardization would not hurt them beyond the initial compliance phase in which they would need to make all current agreements comply with any new regulations. Beyond the initial compliance phase, standardization would actually simplify their bookkeeping process and streamline their operations, potentially lowering costs. They may not be able to get consumers on as many hidden fees, but enough consumers will carry a balance that they will always remain profitable.

Should consumers be afraid of costlier credit? No. The credit card companies need our business and will always find a way to approve and make loans; that is their business. The credit industry is cutthroat enough that rates and lending will settle in at a level that remains profitable. Consumer credit rights and protections should be welcomed by all consumers as it is in their best interest. As long as they pay their bill on time it shouldn’t affect them in any negative way, and can only help them.

Antisay – This blog is mainly about finance and self-improvement; I am in a constant race to become a better me and this blog is all about that sort of lifestyle. Visit this site.

There’s no point in being afraid of costlier credit – in the end, it benefits the consumer, even if initially it doesn’t appear that way.

First of all, the “Bill of Rights” that has been put in place is breath of fresh air in what has long been an industry fraught with malicious “small print” and abused and exploited customers. If these laws, which give consumers some safeguard against the tyranny of the credit companies, come with a price, I think we should all be willing to pay it – considering what the protection is worth.

I can’t see why having credit slightly less accessible (because of its cost) is a bad thing anyway. Sub-prime mortgage crisis, anyone? People who don’t qualify for credit shouldn’t be granted it, and I also think that most of those who do qualify really shouldn’t be extended much privilege either. Credit is a dangerous tool that many people abuse and that leads thousands to ruin. By making it costlier, perhaps fewer will try to borrow in the first place – making our businesses and consumers stronger in the end because they are operating on capital and not on credit.

The last thing anyone should want to do during an economic downturn is rely on credit. We would all be a lot more secure during an economic “crisis” if we were financially stable ourselves, and not so indebted every which way. A slow economy doesn’t much touch the man who is financially free. I think the ABA is blowing smoke because they don’t like the laws, period – not because they care at all about the individuals or small businesses.

This is of course my option, which at times tends to be rather extreme – especially when it comes to credit ;)

Dawn – Iowa Hippie Chick blogs about money love and marriage and offers so very insightful posts on personal finance that involve emotional insight and awareness. Vist her blog.

Rights of any kind are not free – just look in any history book to confirm that.

And a “Credit Cardholders Bill of Rights” is long overdue.

Yet the timing of the bill is a bit scary.

I definitely have a little fear of the unknown these days …

Assuming the Bill of Rights will lead to increased costs of credit then I believe that this is a worthwhile trade-off against the current obscure regulations which apply to the US credit card industry. I have been quite shocked to read about the terms and practices permitted under the current legislation and I can’t believe that the most evolved economy in the world permits individuals to potentially be subjected to such terms and conditions as universal cross-default, any-time, any-reason interest rate changes, retroactive application of interest rates and two-cycle billing.

I believe that what the American consumer wants and deserves more than anything in their dealings with financial institutions is transparency and clarity. People need to know at the outset how much their credit card is likely to cost them – both in terms of maintenance fees, interest charges and also the costs of not maintaining the arrangement. Those fees should be well defined before the card is issued to the borrower, and proportionate to the costs incurred by the lender in providing those services. From what I can see this legislation is long overdue, and if the American credit card customer is going to pay more for their borrowings as a result of the Bill (which is highly debatable), then at least they will hopefully be aware of that cost from the outset, and the borrower will no longer face the fees and charges lottery of different card providers which currently prevails.

J. Money – You’ll enjoy the blog Budgets Are Sexy for a look inside the life of one blogger and how money impacts it.

Wow. I’m no expert in the field, but that statement really puts me off. Maybe it’s because i manage a customer service department myself, but i am all for up-front & bold credit disclosures – regardless of the consequences that may, or may not, come to fruition down the road. Whether we should be “afraid” or not is a totally separate issue. It’s like saying,

“I’m sorry grandpa, I can’t help walk you across the street because i’m afraid that there’s a chance i’ll get hit while doing so. And if i get hit then i can’t feed my family, and if i can’t feed my family they will die. So, as you can see, I’m too afraid of helping you because of what *may* happen”.

You walk that grandpa across the street because it is the RIGHT thing to do. Plain and simple.

Sure that’s a pretty colorful exaggeration there, but the fact of the matter is that we can’t lose sight of the MAIN objective here: helping the consumer. And if the end result IS higher costs for everyone, well that’s the way the cookie crumbles. The only difference here is that the consumer is now more educated, and will at least understand what the hell is going on.

(So my answer is that it doesn’t matter if we should be afraid of the consequences or not – we have to do what’s right.)

WC – A 27-year-old writer living in Chicago and writing about personal finance through The Writer’s Coin.

This is one of those “it depends on your philosophy” questions (aren’t they all?). Here’s what should happen in an ideal world: a massive educational push gets everyone interested in learning how to handle their credit cards and money in general so that it doesn’t matter what banks and credit cards do in terms of jacking up their rates and dinging them with fees.

If you play by the rules, you don’t have to pay for any of this. The problem is that the rules are too complex for some and that many people simply can’t survive without going over their limit or being late on a payment. This is at the crux of the whole thing. For those people, something needs to be done. Tightening of credit? Sure. I’m from Guatemala, where getting credit is a real hassle. People sometimes can’t/won’t pay back money they owe. Since the legal system is a mess, businesses know the odds of getting their money back are slim to none. So they don’t give loans and credit out very easily. Does that hamper small to mid-size businesses? Sure, but it’s better than having a whole bunch of people begging credit companies to please stop nailing them with fees.

At least I think so.

I doubt that this increased regulation is going to have any impact on the actual cost of credit since as long as banks are competing for business they will offer attractive deals to win new customers.

The lack of regulation in protecting consumers has already lead to significantly costlier credit due to arbitrary increases in interest rates, term changes, phony arbitration, excessively high fees and all the other creditor actions which have been punitively put in place.

Ultimately the banks want a playing field that wholly favors them and that is understandable but self-regulation has not worked very well and if consumers are going to get some protection from unfair credit card company tactics the most effective approach would be federal law.

And let’s not forget that these legislative rights would not be a needed or considered if credit card companies had not already abused their positions with consumers.

Tithing, Saving and Getting Out Of Debt – The Personal Finance Bloggers Brain Trust

Steve Rhode — Mon, 29 Sep 2008 19:22:54 +0000

From How to Get Out of Debt

This weeks question put to the personal finance bloggers brain trust at GetOutOfDebt.org was:

When people are working with a credit counselor or working up their own budget they often hear or believe that they should not make religious contributions and should not put any money in savings while they are making debt repayments. Instead, some believe that every dollar should be used towards debt reduction. What is your opinion?

Elizabeth Warren – A national expert in consumer debt and bankruptcy. She has authored a number of books and is often see on news shows and talk shows providing expert consumer debt advice. More Information | Blog

Paying down debt is a form of savings. Because credit card companies charge 16% (or more) and savings accounts pay 4% (or less), it usually makes sense to pour every penny into debt repayment.

Getting rid of debt is life transformative, and it is worth pushing hard toward that goal.

I see religious contributions as a very different issue. For some, tithing is a regular part of religious observance. For such people, contributions are an expense, much like food or medical care. The costs should be kept to the lowest sustainable level, in the same way that it makes sense to pass up steak when the budget is tight, but nourishing the soul is as important as nourishing the body. Getting out of debt is about building a better and more complete life.

WC – A 27-year-old writer living in Chicago and writing about personal finance through The Writer’s Coin.

I think this all comes down to priorities. Religion is a very personal decision and I don’t think anyone should tell anyone else how to handle their religious beliefs. Debt can be a crushing thing, though, and I personally believe that you can’t really take care of other people until you can take care of yourself first. I would make religious contributions something you can take care of once you’ve settled your debt. Pay it off first and you’ll be in a better position to give down the line.

Dawn – Iowa Hippie Chick blogs about money love and marriage and offers so very insightful posts on personal finance that involve emotional insight and awareness. Vist her blog.

To me, the reason we usually get into debt in the first place is a lack of financial balance.

The process of debt reduction can be a terrific time for us to learn that balance.

Even if our primary goal is reducing debt – allocating a percentage of our incoming dollars to an emergency fund, savings, or retirement account, is a start to living in financial balance!

And if we are committed to tithing or donating to a charitable organization – it can definitely continue during debt reduction. Maybe just scaling back on the actual dollar amount if necessary, until the debt is reduced.

It’s really not about the debt reduction period – it’s about learning good financial skills for life! (If we don’t learn how to balance our finances during our debt reduction, we will probably just end up back in the same place – DEBT).

Thought provoking question, glad to have the opportunity to rumble it around my brain!

I think the practical outcome to your question will depend on the level of debt people find themselves in, and how much agreement they have to obtain from their creditors in terms of their budget, although fundamentally I would always defend a person’s right to make religious contributions and have savings.

If a client is going into a debt management plan or IVA then as you know there are ‘allowable expenses’ up to a certain level, and also ‘other’ expenses which the creditors may or may not permit. I had a case recently for example where the creditors agreed a £30pm gym membership because the clients had made reasonable claims in other sections of the income & expenditure form. I argued that staying healthy was important for these people and would help them continue to work hard to repay the money they owed.

I certainly support an individual’s right to make religious/charitable contributions whilst in debt themselves, as for many people they feel a strong personal obligation to give, and when struggling with personal debts they also need to boost their feelings of self-worth wherever possible. The desire to make that religious/charitable donation may just give that person enough determination to grit their teeth and work harder to resolve their debt problems.

In terms of making savings there are two aspects to this – from a purely financial perspective if you are paying 29% APR on a credit card and earning 6% on a deposit balance then it makes good sense to repay the credit card BUT in many cases credit card companies will cut a client’s spending limit if they reduce the balance on their account, or have perhaps defaulted them which means that they can’t spend at all. If that is the case then they have no emergency fund accumulated even though they are reducing their borrowings. For this reason I would recommend clients still have some savings tucked away for a rainy day as they are less likely to be able to rely on using their credit card as a buffer zone. Also, learning to save is a fundamental way of keeping out of debt in future, so it is good to get people in to that habit early, even if it is just a small amount whist they are reducing their debts.

Many debt advisers and credit counselors approach the budget as a purely technical exercise and do not realize that to be truly representative of the person it should include expenses that are critical to the person even if we do not agree.

Giving to a religious organization at a time of debt reduction is one such area. If tithing is fundamentally important to the person in debt, they are aware that money used to donate is not available to reduce debt and they want to give it, then I support that decision.

It would be wrong for an adviser to suggest that they stop something like tithing or religious contributions and giving that is a core belief. If giving is slashed by the adviser it can have ramifications with the debtors self-worth and self-esteem when they are unable to give as they feel is necessary. And continuing to feel a valuable part of their religious community can give comfort and emotional support during an otherwise difficult time in their lives.

However, I do have the conversation with people that they can give in other ways that are valuable, other than money. They can donate time and work around their religious organization to still feel like an important contributor even though the money donated may be less that their previous donation amounts.

It is my opinion that savings should be part of a debt reduction budget. If the person is not putting emergency cash aside then far too often unexpected expenses wind up right back on the credit cards if they are still open. If the cards are not open they often find themselves in a very difficult position and it is not unheard of a client to then go get a silent payday loan to cross that financial bridge. Savings should be based on the individual persons circumstances but I usually suggest no less than $50 per month. If a large reserve is built up then a lump sum payment could be used to accelerate debt reduction latter.

What are your thoughts about this? Leave your comment below.

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