Television, radio, Internet access, cell phones, and land lines fees can all add up quickly.

Look for expenses that can be cut

For example you might decide that since you have high speed Internet and a cell phone, that you don’t need a telephone land line as well, so Vonage might be an alternative that will cut your communications expenses.

There will be tradeoffs

Be aware of what you’re giving up.  Emergency services aren’t accessible with VOIP voice over Internet protocol the same way they are by dialing 911.  That may or may not be important to you.  Additionally if there is just one computer in the house, receiving and making phone calls may be inconvenient or interrupting to the person using the computer at the time. The computer may not be easily accessible during evening or late night hours.  If it’s upstairs and your bedroom is on the first floor what happens when you get a 2:00 AM phone call?

To bundle or not to bundle

Bundling Internet access, cable or satellite TV and phone service may well result in additional savings over what those services would cost when acquired individually.  Be aware that  a company like ATT offering the bundling will try to sell you add on services such as call forwarding, that may sound good at the time but that you might not really need.  And those add ons won’t be free.

Buy only what you need

Look at what you need.  Are premium TV stations, cable or Satellite TV really necessary?  It might be if that’s your primary method of entertainment.  It may not be if you can use the Internet to access free movies, videos, or TV program.   Why pay for movie channels when you usually rent videos through Blockbuster?

Invest those savings

It takes time and effort to go through your communications services and analyze what you really need and how you can obtain those services at a lesser cost. However, the savings will be worth it.  Those savings can translate into investments. Rather than spending money on movie rentals from Netflix for example you can invest in their stock and reap the dividends.

Rates differ by geographic area. If you think that rates are standard across the country or even by state, think again.  They can vary from city to city.  The rates are set by the federal government and the banks.   Where you live will have an impact on how much you pay in interest.

Rates vary based on the principal of the loan and the term. Lenders make money based on the interest rate and for how long they will receive that interest rate.  A 15 year mortgage may not have a lower interest rate than a 30 year mortgage.  A loan for $200,000 won’t generate as much income for the lender as a $350,000 loan, so the interest rates may vary.  

Credit history and scores affect rates. Lenders know that someone who has defaulted on a previous loan, is having trouble making payments, or has recently obtained additional credit may be on the brink of financial disaster.  All that information is contained in your credit history.  Risky loan prospects pay a higher interest rate, if they qualify for a loan at all.

Even those who have always made their mortgage and other loan payments on time may find their credit score has dropped because credit card companies have lowered their available credit, or closed an account. Both of those acts can penalize an otherwise good credit history.

These days if you want to be considered for a home equity loan, or to refinance your mortgage, you will need a good to excellent credit history and score.  But that’s not all. The standard used to be a 80:20 ratio of debt to equity for your home.  In other words if your home was worth $200,000 you could have expected to obtain a mortgage of $160,000.  Currently since home values have been falling in many areas of the country, that ratio isn’t standard any longer. Another change is that no doc loans have vanished.  Employment, income levels, and assets all have to be independently verified for loan approval.

Pay day loans got their name because people would run out of cash between paychecks. A loan was made until pay day when it would be paid back. Now pay day loans, also called cash advance loans, means a loan that is granted immediately, doesn’t rely on a credit score, and isn’t secured on assets. The loans can be granted in as little as 30 minutes. The catch is that the fees are high. The interest rate is usually at the highest level permitted by law and if that was the only fee there wouldn’t be any problems. The application fee runs from 5% to 10% of the loan amount and is due when the loan is paid back in 30 to 60 days. That doesn’t sound so bad, does it?

Well a $1500 loan at a 10% application fee would cost $150 for a period of 60 days. That’s an annual rate of 60%, in addition to the actual interest rate, say 24%.

Many people who have taken out a pay day loan find themselves trapped as the amount grows larger and larger. Nearly 60% of those obtaining a pay day loan do not pay it back the first time it’s due. It’s conceivable that the final loan amount owed is two to three times the original loan amount.

There are different scenarios. Some pay day loan lenders require the application fee to be paid at the time the loan is made by subtracting the fee from the loan proceeds. In other words the loan amount owed is $1500 but the amount paid to the customer is $1350.

The length of the loan period dramatically affects the cost of the loan. A pay day loan that is due in two weeks has an application fee the same as one that is due in two months. So if you roll over the loan every two weeks you’re paying four application fees compared to the longer term loan period of two months with one application fee.

If you’re thinking that you will default on the check, don’t. Writing a check that you know you’re not going to pay is a crime in most states.

A pay day loan is a very high cost loan, even though it’s convenient, fast, and doesn’t require good credit.

An asset based loan is one solution. If you have an auto that is free and clear from liens and has some value it may be possible to get a loan using the car as an asset. The problem is that since you have poor credit that loan isn’t going to be from a traditional lending source.

There are companies that will make the loan. The interest rate will be as high as legally allowed in your state. The amount will be for far less than the book value, even low book value of the car. The title to the car will be signed by you and given to the lending company. If you don’t pay the loan back they automatically take possession of the car.

What’s worse is that if you to continue to drive the car they can and will charge you a lease payment. That payment can be astronomical. There are no state statutes on what the lease payment can be. It’s not unheard of for the company to charge $500 a week. So if you get a $3000 loan (on a car with a value of $10,000) at 24% interest for eight weeks and drive the car for those eight weeks, you’ll end up paying a total of $7,120 dollars.

If you don’t pay the loan back you’ll lose the $7,000 in value of the car over and above the loan. Don’t think that you can refuse to pay the loan back and just keep driving the car. You don’t own it anymore and would be committing grand theft auto, a felony.

It makes more sense to sell your car outright and then buy a much cheaper car until your financial situation improves.

The federal government’s $8,000 tax incentive program for first time home buyers originally scheduled to end by November 30, 2009 but extended to April 30, 2010, combined with the new $6,500 incentive for current/repeat home owners has had a positive effect on home sales. However some of those homes, 21%, were previous foreclosures.

The overwhelming majority of homes in certain geographic areas such as Merced, Stockton, Madera, and El Centro, all in California, saw at least 67% of all home sales generated from resold foreclosures, with about that same level in Las Vegas. Overall nationwide slightly over 26% were sold for less than what the seller originally paid.

A first time home buyer for the tax incentive program is defined as someone who has not owned a house for the previous three years. For couples, neither of the spouses could have owned a home in the previous three years. The incentive is 10% of the purchase price of the home with a maximum of $8,000. The income can be no more than $125,000 for an individual and $250,000 for a married couple. Other restrictions apply.

The tax credit is a one for one dollar reduction in the amount owed for federal income tax. If the amount owed is less than the tax credit the government will send a check to the homeowner for the difference.

The new $6,500 incentive for current/repeat home buyers is effective until April 30, 2010. There are purchase price maximums and income level requirements that must be met, as well as other restrictions.

In some cases the incentive can be applied toward the down payment of the home rather than waiting until the income returns are filed and the incentive check received.

Even with the motivation of the tax incentives selling a home will be a challenge. Foreclosures are expected to drop slightly. That means there will still be an overabundance of REO homes on the market. Banks are motivated to sell those homes to get them off their balance sheet. The competition from REO homes makes it more difficult for home owners to sell.

Even though home values may be stabilizing it’s still not a good time to be a home seller. It will be interesting to see how many people take advantage of the current/repeat home buyer tax incentive. After all in most cases they’ll have to sell their current home to buy a new one.

The first step in teaching children about money is to get them to understand the concept of cash. Setting an example is one of the easier ways to do that. The next time a purchase is made when the children are around, pay cash. It will take some planning ahead. It defeats the purpose to use the ATM in front of the child. Going grocery shopping? Use cash.

When taking the children clothes shopping set a goal of spending a certain amount, say $100 with the objective of purchasing 4 outfits, such as 2 pairs of jeans, 2 pairs of pants, 2 long sleeved shirts, and 2 short sleeved shirts. Tally what you’ve spent so far and when the $100 limit is reached that’s it. Don’t be surprised if your child tells you to use your credit card to make up the difference. They’ll be shocked to see how quickly the $100 goes. They also may be surprised to see how much of their hundred dollar budget is eaten up with logoed items or designer clothing.

The second step is demonstrating that using a debit card or writing a check is spending your own money. The accounts don’t replenish themselves. Set up a savings account for your child. Use birthday gift money, allowances, or money they earn doing chores. It’s an extra step but take the child with you and have him or her make the deposit. Check the deposit slip and show the child that the cash is now in their account. When the child sees something they want, tell them they can use their own money to pay for it. Eventually the concept of the money they have in their account determines how much they can spend will start to dawn.

Electronic banking, debit and credit cards have made it easier to keep finances in order. Adults know that their paycheck determines their budget. Most of them know that it’s not possible to spend more than they earn on a regular basis without digging themselves deep in debt. Children need to learn these same rules at an early age to become fiscally responsible adults themselves.

The job market varies by region. The south showed job losses in both September and October. However, Texas and Florida were basically flat. The smallest decline was in the Northeast. In the West, California fell by only 3,700 about the same as Arizona with a much smaller population. In the Midwest most of the states declined but Michigan showed a small gain and Wisconsin had no change.

Don’t let a layoff take you by surprise. Keep your eyes and ears open. Slower sales, stretching out payment terms, no rehires, and elimination of perks are all signs that the company may be in trouble, or at least getting ready to reorganize. Getting a new job is easier when you’re currently employed. If you think your name might be on the elimination list get your resume in order and start looking. The downside is that some employers may feel that since you are looking for a new job it’s a sign of disloyalty. Keep the job search quiet.

Some employers offer a severance package based on how long you’ve been with company, others have a standard package, and still others don’t have any severance package at all. You might be able to find out by reading the company handbook. Knowing what, if any, money and benefits will be provided if you are terminated helps planning for the future.

In any economy a cash cushion is a good idea but when the job market is dropping it’s critical. It isn’t easy to save at least three months of living expenses. Some experts recommend six to 12 months of living expenses. It’s tempting to think that by the time that much money has been saved the economy will be rebounding. That may be true. And then again things could get worse.

Setting a goal of say, $15,000 may seem insurmountable. Break the goal into smaller more achievable chunks, perhaps $500 per month. Or look at your total expenses and save a percentage. Most of us waste money even though we don’t intend to. Track all the cash you spend in a small notebook. You may be surprised at the total of all those lunches, gourmet coffees, newspapers, and snacks.

Preparing for the worse, in this case losing your job, isn’t easy, but it pays off in the long run.

“The Pre-Paid Legal Services Top Five List is intended to be a ’snap-shot’ of the issues that legal service plan members are facing today, and given the economic hardships that so many Americans are experiencing, it’s not a pretty picture,” said Pre-Paid Legal Services Founder and CEO Harland C. Stonecipher.

Debt collection activities by the lender, or service provider owed the money, don’t have the same restrictions as activities by debt collection agencies. Debt collection agencies must stop harassment when requested by the debtor.

The Federal Trade Commission (FTC) protects consumers from abusive actions by debt collectors.  Debt collectors are defined more broadly than just agencies.  It also includes attorneys who attempt to collect debts on a regular basis, as well as those companies who buy debts and then try to collect them.

Debt collectors must stop contacting you if you make the request in writing.  For other actions you can take see the FTC website.

Many households these days are nearly drowning in a sea of debt, potential foreclosure, and possible bankruptcy.  There are ways to legally eliminate unsecured debts.

Debt settlement is probably the most common way.  It is simply paying the lender an agreed to amount that is less than the face amount of the debt owed. Most lenders won’t consider debt settlement if the debtor has made any sort of payment within the last six months.

This is important because the first time you contact the lender they will exert extreme pressure on you to get some sort of payment.  They may even refuse to talk with you unless you make a “good faith” payment.  Don’t start the clock again by making the payment.

Contacting the lender to discuss debt settlement is a flag that you will not or can not pay off the debt in full.  If the lender believes that you have sufficient assets they may start legal proceedings to sue you for a judgment.  Once the judgment is made they can initiate collection activities through wage garnishment, impounding your bank account and other assets.

On the bright side more lenders are willing to consider debt settlement because they are aware many consumers don’t have the where with all to pay their debts in full.  Even a partial payment is better than no payment at all.

Debt settlement does eliminate your debts for payments of 40% to 50% of what is owed.  However the downside is that it destroys your credit rating as the short pay is reported to the credit reporting agencies. There also may be a tax implication as well.  Debts that are forgiven can be considered as income by the Internal Revenue Service and be taxed.

Before you take any action, do the necessary research, so you know the consequences.

Collection Agencies
If the lender is positive you won’t pay the account in full, and it’s been 6 months since you’ve made any payment at all, they may sell the account to a collection agency for pennies on the dollar. Literally a $5,000 debt may be sold for $100. The agency knows it won’t collect on every debt and it knows the odds are it won’t collect the full amount. But it will go after you in the most aggressive way that’s legal. A debt turned over to an agency is an indication you’re on a downward slide financially. Even if you pay off the debt to the agency that black mark stays on your record.

Negotiation is a no no
You can negotiate interest rates, application fees, and late fees. But don’t negotiate the amount you owe. It’s a short term victory. If the creditor agrees to settle for less than you owe, the amount you didn’t pay will be reported to the credit bureaus and will stay on your record for seven years.

Time is on your side
However negative your credit report is now you can clear it up in time. Make payments on time from now on and you’ll start to see that score go up. Creditors look at the total score but they also look at the most recent payments. If your score is climbing upwards because you’ve been responsible with your credit and payments that’s a better sign than if your recent history shows missed and late payments.

Work on improving your credit score and you’ll start to see results.

You can improve your credit score. It won’t happen overnight but it will happen. Here are a few tips.

Keep credit card accounts open
One of the factors that lenders look at and that impacts your credit score is how much of your available credit line you’ve actually used. Someone who has a credit line of $10,000 but only has $1,000 available will receive a lower score than someone else who has a credit line of $5,000 but has $4,000 available. Keep credit card or revolving personal loan accounts open, especially if the account has been paid off.

Apply for no more than one or two credit cards or loans at a time
Each time you apply for credit and a lender reviews your report it’s notated in the credit report. Lots of inquiries will be interpreted to mean that you are short on cash. Applying online may count if you provide your personal information such as social security number. Review the fees, rewards, membership charges, and interest rates for each card and apply for the card that fits your needs the best first.

Use credit as little as possible.
Credit cards are used for convenience, emergencies, and major purchases but shouldn’t be used for purchases that you know you won’t have the money for when the bill comes due. If at all possible use the card as little as possible while you pay down the balance every month. If you must use a credit card get a secured card or prepaid card

Work with your creditors
It happens to the best of us. There may come a time when you are over your head in debt and just can’t make the payments. Perhaps you’ve lost your job, had major medical expenses or are divorced. Don’t ignore the situation it won’t go away. Contact your creditors, explain the situation and see if you can get some extra time to pay, lower interest rates, or fees waived.

A strong credit history and favorable credit score is important for a strong financial future.