Surviving the Debt Crisis

At the best of times we have trouble keeping our credit scores within an acceptable range, but with the current debt crisis it is almost impossible. Although the debt crisis is called by a number of different names such as a recession or an economic downturn, the bottom line is still the same. Most of us are literally robbing Peter to pay Paul. If you have any hope of surviving the current debt crisis in order to come out the other end with a decent credit score, there are some things you might want to be aware of.

If You Have a Job Keep It!

Statistics have shown that there is a real jobs crisis. Just take a look at the fact that President Obama and current legislators have extended unemployment benefits and you will see that people just are not finding work as they were a year or two ago. In fact, Great Britain recently decided to eliminate 500,000 government jobs as part of their austerity measures. This was under the premise that it would enable them to cut back on corporate taxes which would then enable companies to snatch up those unemployed government workers. The tax money saved was meant to help them grow their businesses.

This didn’t happen and according to a report in the NY Times and it isn’t about to happen any time in the near future. Companies are going bust by the hour. You may be looking for upward mobility, but current conditions are not favorable for changing jobs. With so many businesses closing their doors, you just might land an employer who is about to be bankrupt. Without access to their books, you have no way of knowing how solid that business is. If you have a job, keep it!

The Great Credit Card Dilemma

It has also been reported by almost every major consumers’ group that people are now using their credit cards to pay monthly bills such as their utilities and to shop for groceries in order to make ends meet. Inflation is skyrocketing but wages are at a virtual standstill. The best advice here is to try to avoid using your credit cards if at all possible. Keep in mind that you will be paying interest on those expenses which is making already high bills even higher! What you might want to do in a situation like this is make sure that the amount you charge can easily be paid within thirty days so that those charges don’t accrue interest.

Of course, that pre-supposes the fact that you have a credit card that doesn’t charge interest if the balance is paid in full within that billing cycle. If you already have a balance which cannot be paid in full it will not work. What most financial advisors are suggesting is that you get rid of all your higher interest credit cards and only keep one on hand for emergencies only. (The operative word here is emergencies!) Most utilities companies and other debtors will gladly set up payment arrangements if you contact them timely before the due date. Once you have passed your due date it becomes much more difficult to get a payment plan.

In the end it is up to you to cut back wherever and whenever you can. Only use your credit cards as an absolute necessity and keep your job even if you feel you are not making enough money. You may find a better job and you might not, but hang on to the one you have until you are certain you have a better position. Take the time to check out a new employer before making the change. Surviving the debt crisis will take extra planning, cutting back on expenses and a little extra fortitude, but it can be done. With a little effort you can come out the other end of these trying economic times with a decent credit score. Save now – spend later.


Workers Earning Less Now than at the Height of the Recession

If you have ever wondered why you don’t seem to be able to stay on top of your bills, a recent report issued by the New York Times can answer that question quite easily. You are probably earning at least 6.7% less than you were during the height of what is being called the Great Recession.

It is difficult enough to keep up with recurring bills such as utilities, rent/mortgage, automobile payments, credit card bills but when you are earning $6.70 less on every hundred you make, it is almost unbearable. Not only are you earning less, but prices just keep on going up. Inflation is at a breakneck speed and it does not appear that it will level off any time soon.

According to a study conducted by two former officials of the Census Bureau, the median household income is now at $49,909 which marks a total decrease of 6.7% from December of 2007 when the recession officially began. During the recession household income only fell 3.2% which is why it is so dismaying that we have fallen so low when Washington tells us the recession is over.

Americans are not only unhappy with the current state of affairs, they are downright angry. When polled, most people state that leaders are letting them down and that it’s politics as usual. This does not appear to be good news for either the Democrat or the Republican parties as the caucuses are in full swing.

President Obama is calling the financial situation an official ‘emergency’ and is asking for Congress to pass his jobs bill. Many analysts feel that it doesn’t stand a chance of passing even though there are some strong spots in the bill. However, at a cost of $477 billion, it is more than Washington is prepared to spend at the moment. The bill itself is a blend of public works, tax cuts and unemployment benefits which Republicans are none too pleased with.

The two men responsible for the report on the current state of household income, John F. Coder and Gordon W. Green, Jr. find that the American standard of living is significantly reduced. Oddly, our standard of living is reduced but joblessness is waning as well. They find that there are two main factors contributing to this situation.

First of all, there are growing numbers of people outside the workforce. These are categorized as those neither working nor seeking a job. The second factor is that hourly pay is being held low and is not in keeping with the rate of inflation. Of note are the rises in the cost of oil and food which have risen significantly. What is most surprising about these facts is that during the recession, wages rose faster than inflation.

The pair noted that a great number of people who became unemployed during the recession had to take a sizeable decrease in pay just to get a job again. In fact, the situation is so critical at the moment that many of the country’s leading economists claim that the recession is far from over.

For the average consumer in the United States, this means tightening our belts and really keeping an eye on our own debt. If all you can make is minimum payments, then at least keep up with them. Economists suggest that we charge less, pay more and watch our own personal finances. We could be in for the long haul if things don’t improve soon.

Also, take the time to keep track of your credit report because hard economic times also tend to lead to rising amounts of identity theft. Make sure to order your annual free credit report and score so that you can make sure that everything on your report is of your making. If not, dispute it as soon as possible. Times are not getting easier and you need to know that any debt on your report is fair and accurate.