SayEducate

Are you feeling financially pinched? Are you getting sticker shock every time that you grocery shop? You’re not alone! Higher fuel prices and a flat economy are conspiring together to make many consumers feel ill at ease. Thankfully, there are some steps you can take to manage your finances during these slow times. Let’s take a look at some money saving tips to help you keep more of your money.

Shop Elsewhere — It could be time for you to ditch your favorite grocer or at least take the bulk of your shopping elsewhere. Speaking of bulk, warehouse stores such as BJs and Costco sell just about everything in larger quantities saving you 10-30% on your weekly shopping bill.

Eat Out Less — Mostly everyone enjoys eating out on a regular basis. You don’t have to stop this practice completely, but if you are in the habit of dining out two or more nights per week, then cut back to one night and pocket the savings.

Work From Home, Carpool, or Public Transportation — Will gasoline well above $3 per gallon and the average commute taking a half hour or longer, the hit your pocketbook takes every time you start up your car quickly adds up. You may not be able to convince your boss to allow you to work from home, but you could show her that once a week makes sense. Otherwise, carpool to work or consider public transportation.

Stop The Plastic – Using credit cards can be an expensive habit. Using them and keeping monthly balances will cost you plenty. That 25% discount you got when you bought your new wardrobe at Macy’s disappears if you don’t pay off your credit card balance immediately.

Cut Out The Excess — If you have cable television, do you need HBO or cinema options? Dump what you don’t use and save $10- $15 monthly. For your phone bill, combine your phone, long and local calling, cable, and internet access to one service provider — save $30 to $50 monthly. Cancel whatever magazine or newspaper subscriptions you do not need, buy your lattes from McDonald’s instead of Starbucks, and use coupons when food shopping.

Pay Off Your Debts — Wherever possible, pay off a car loan, a credit card, or other debt to free yourself of a financial burden. Use the savings to stay ahead of rising costs and always shop around before making any major purchase.

Saving money comes simply if you are determined to find ways to curtail your spending. Saving a little bit here and a little bit there will add up, keeping you ahead of the game and removing much stress from your life.

See Also: Debt Reduction Tips

Short term interest rates have dropped by 2.5% since last Fall thanks mostly to the Federal Reserve Bank pushing its discount rate down to some of its lowest numbers in history. Although at 3.25% the discount rate is above the all time low of 1.00% reached in 2004, the result should be much lower consumer rates across the board.

Except when it comes to credit cards.

Curiously to many consumers, credit card rates haven’t dropped as fast as some would have hoped. Instead, some cardholders have been rudely awakened and are now paying rates that are higher than ever before.

Credit Card Rates Increase

Bankrate.com, one website that tracks this sort of information has said that credit card interest rates have decreased by about 1.4% since last October. On the other hand, some issuers have hiked up their rates to the chagrin of cardholders.

Reasons For The Uptick

There are several reasons why consumers are paying more for their credit cards when they should be paying less including:

• Some cardholders had promotional or introductory rates. When the promotional period ended, the new higher rate kicked in.

• Banks are worried about their mortgage losses and see credit cards as one way to bring in money. If you don’t carry monthly balances, then credit card interest rate changes have no impact on you.

• You were late…with something. You’ve been paying your credit card statements on time, but you’ve been late with a utility bill, car payment, or some other consumer invoice. Guess what? Creditors share this information with each other. Your credit card company is looking for any excuse to jack up your rate and they found one.

If you are dissatisfied with your credit card, call the issuer and ask for a lower rate. If you do not receive a lower rate, consider shopping around for a new card.

Time To Switch Credit Cards?

If your credit is good or excellent, then getting a new card shouldn’t be difficult for you. However, if your credit is fair or poor, then a new credit card can cost you more in interest rates and other fees. In this case it would be better to simply not use your current card(s), and work diligently to pay off your debt.

Resources

Manage Credit Card Use

Smart Money Tips

Time for a New Card

You are behind on your mortgage payments and are struggling to keep up with your credit card and car payments. Food and gas have gone up in price and your recent raise at work was a paltry 2% — moreover, your job may be outsourced to China or India in 2009, putting additional pressure on you.

To top it all off, your mortgage rate will reset this summer adding an additional $300 to your monthly expenses. Worse, you cannot refinance at a favorable rate because your creditworthiness has slipped due to your late payments.

Does this scenario sound far-fetched? Unfortunately, it isn’t — at least for some cash-strapped consumers. Indeed, although mortgage rates have dropped and are near historic lows, some consumers are finding that they cannot refinance, putting themselves into a precarious position: should they simply walk away from their homes?

Just Walk Away, Renee

One website is encouraging consumers to walk away, but I’m not going to link to them. There are some serious consequences to abandoning your financial obligations, long term headaches you should know about. Let’s take a look at the consequences and what some options are available for you.

Consequence Of Leaving Your Home Behind

Of course, you can simply pack up your goods and leave your home. But, if you do then you’ll quickly discover:

Your creditworthiness will nosedive. If you walk away, your home will be foreclosed and your credit will plummet. Getting a new job, renting an apartment, or doing almost any other activity which requires someone to access your credit report will become very difficult. If you think that you have problems now, just wait.

Your other creditors will take action. Creditors share information about you with each other. If you walk away from your home, then your credit cards will likely reset to a default rate and you’ll be ineligible for new credit, perhaps for many years.

Smart Action You Can Take

If you aren’t able to refinance your home and you cannot afford future payments, then the following should be considered:

List Your Home. Seek out the services of a real estate agent who can help you sell your home. You can explain your plight to her, but request that your financial situation not be made known to potential buyers. You don’t want a “fire sale” for your home, you would prefer to get out from under this obligation unscathed.

Sell Your Home. Last week, I made mention of one option for getting out of your home — short selling. In summation, short selling allows you to find a buyer who offers to buy your home for less money than what you owe on your mortgage. Although this is something mortgage brokers hate (and aren’t required to accept) there are certain situations where a short sell makes sense. Please read that article for more information.

Do Not Act In Haste

Perhaps the best advice for you is to not act in haste. Take care that you don’t fall prey to scams where someone will offer to lend you money for the short term, but for a high rate. There are people who are looking to entice cash-strapped homeowners into taking out high-rate second mortgages which can only worsen your problems.

Above all else, talk with your current mortgage lender and see what can be worked out. Get help through a credit counselor and only consider personal bankruptcy as a last resort.

Further Reading

Get Above Water: When You Are Struggling to Make Mortgage Payments

Debt Management Tips

Home Refinancing (Tips)