How Bad is US Consumer Debt? - US Consumer Debt Statistics 2012

From the Credit Examiner

Also from the Credit Examiner:

25 percent of Americans have more credit card debt than they have in emergency savings.

Only 54% of consumers have more emergency savings than credit card debt

There are approximately 37 million student loan borrowers with outstanding student loans today.

One in five U.S. households currently includes at least one resident carrying student debt

Mortgage debt accounts for 70% of U.S. consumer debt and, at a little bit more than $8 trillion, is at its lowest level since 2006.

9.0% of outstanding debt was in some stage of delinquency

Non-mortgage consumer debt increased by 2.2% as compared to last year


In total, American consumers owe:

$11.38 trillion, a decrease of 2.95% from last year

• $852 billion in credit card debt
• $8.15 trillion in mortgages
• $914 billion in student loans, an increase of 7.35% from last year
• $72 billion in auto loans

U.S. Household Consumer Debt Profile:

Average credit card debt: $15,328
Average mortgage debt: $149,782
Average student loan debt: $34,703

Top 10 States with The Highest Consumer Debt

State	Consumer Debt per Person
Alaska	$30,375
Wyoming	$26,779
South Dakota	$26,736
Colorado	$26,424
Maryland	$26,374
Virginia	$26,206
Oklahoma	$26,167
Texas	$26,079
Vermont	$26,059
Washington	$26,020

Abracadollars!!! 3 tips to make money.

Personal Finance 4 The People is pleased to team with others who are able to share their expertise in various areas. We hope to combine our efforts to bring a greater financial effort inorder to help you reach YOUR Financial Independence. Today's guest post comes to us from J. S. Aikens.

We’ve all heard the advice from the financial experts. “Pay off your debt; Put some money toward your savings; Prepare for your retirement.”  This is all great advice, but if you’re anything like me you’ve probably wondered aloud, “Where the heck is this money supposed to come from?”  Well, I hope at least one of these tips will be the seed to get you started

      

Got high interest credit card debt? Then you probably feel like you’re spinning your wheels with your payments.  If you’re current, but unable to make a dent in your principal, try calling your credit card company in the evening or on a weekend. You are more likely to reach a part time employee who may be more lenient and more likely to grant your request (i.e. pleas) to lower your interest rate. With a lower interest rate, that same amount will benefit you because more of your payment will be applied to the principal.

Got a car note? If so, contact your car insurance company and see if they can refinance your car loan for a better rate.  If so, you’ll have two advantages. You can pay your vehicle loan more quickly (if you take advantage of the lower interest rate), and you will have a 30 day grace period during which no payment is due.

Got friends?  If so, do any of them have a small business? Host a gathering (preferably potluck) at your home in which they can present their product or service to your friends and relatives in return for a portion of the sales. You can catch up with your loved ones, and make money in the process.  You are only limited by your imagination, so get creative.

Remember, it’s never too early to plan for retirement, nor too late to build wealth.

...But I have Bad Credit (or No Credit)

Ok, so you have been working YOUR plan and planning YOUR work and are ready to tackle this pesky bad credit issue. Now what?

You have made a list of all your debts (from your credit report and the ones you know about); you have made your short, medium, and long term goals; you have started your Emergency Fund; you have made a budget that fits your needs; and you have paid off a huge chunk of your debts...

Most people are in debt because of credit cards because they don't know how to use them. Now you want to find and/or learn to use a credit card....to your advantage. There are some rules (some standard and some of my own) to follow to get the most out of your credit card experience.

Before I talk about finding the right card for you, let's talk about how to make your credit cards work for you....

Rule #1 - Credit cards are NOT for wants! Remember back when I wrote about Wants, Needs, and Needs to Wants? Well, CREDIT CARDS ARE NOT FOR WANTS OR NEEDS TO WANTS.

Rule #2 - Credit Cards should only be used as an Emergency Fund IF one doesn't exist. See Rule #1!

Rule #3 - Pay off the balance IN FULL every month. For brand new cards with no balance the BEST way to make the card work for you is to only use it once a month for a SMALL purchase, then pay off the balance immediately. This helps to build your history of making payments on revolving debt and builds your credit history. If you have a balance, STOP using the card! Pay the card according to the plan you developed. If you are using the snowball method and this card is at the top of your pay down list - throw as much money at it as possible, while paying the minimums on everything else.

Rule #4 - See Rule #1!

Now that you know the rules of credit card use, what types of cards are avaliable to you and what do you want them to do?

There are many different credit cards, that do many different things. Here is a quick run-down from http://www.creditcards.com/:

• Low Interest Credit Cards
  Credit cards with 0% intro APRs & low fixed rate offers
• Balance Transfer Cards
  Transfer a high interest balance onto a low APR credit card
• Rewards Credit Cards
  Credit cards that "reward" you for your purchases
• Cash Back Credit Cards
  Credit cards that allow you to earn cash back on purchases
• Airline Credit Cards
  Earn frequent flyer miles with an airline credit card
• Instant Approval Cards
  Get approved instantly on select credit cards from specific banks
• Prepaid & Debit Cards
  Control your spending with debit cards, prepaid debit cards, & prepaid credit cards
• Credit Cards for Bad Credit
  Cards for people with bad credit or less than perfect credit
• Student Credit Cards
  Credit cards for high school & college students
• Business Credit Cards
  Cards for corporate & small-business owners
• 0% APR Credit Cards
  Credit cards with 0% APR for 6 - 12 months on purchases or balance transfers

Let's focus on the Credit Cards for Bad Credit and the Prepaid & Debit Cards because we are trying to establish a good history of credit use and to do that we need the right card.

Credit Cards for Bad Credit (or No Credit):

The following Credit Cards and Prepaid Debit Cards, some of which are fee based, are for People with Bad Credit or less than perfect credit. Simply getting a credit card will not help you build, re-build or re-establish your credit history. Making on-time minimum payments with all of your creditors and maintaining your account balances below the credit limits is the key to changing your financial future. Choose from both secured and unsecured credit card.

What is the difference between Secured and Unsecured credit cards?

Secured

A secured credit card is a guaranteed VISA or MasterCard that has been secured by a deposit to the issuer's bank. Generally, you must deposit an amount, ranging from $300 to $5000, in a low-interest saving account or CD to secure the credit card. You then receive a credit line for up to 100 percent of your account balance. Each creditor has its own requirements for how much you can deposit for your credit line. The creditor issues you a credit card by using your deposit as security.

Unsecured

An unsecured credit cards offer just that -credit. When you make a purchase or withdraw cash (usually called a cash advance), funds are drawn from your "line of credit." You pay back the amount you borrowed or "charged" each month, or carry over to the next month (revolve) a certain amount that was borrowed and you are assessed an interest charge. You are then responsible to pay the interest charge as well. Credit cards carry a brand logo (e.g., Visa, MasterCard, American Express, etc.) and are accepted by participating merchants. When you use your credit card, the transaction requires a signature.


Debit Cards, Prepaid Debit Cards, & PrePaid Credit Cards

Prepaid debit cards and prepaid credit cards can help you control your spending. A reloadable debit card allows you to only spend up to the amount you have pre-deposited into the account. If you tend to overspend or would like to control your spending then a pre-paid debit card or prepaid credit card could be a good card for you.

When thinking about what type of card you need, think about your goals, priorities, and WILL POWER. Building or establishing credit is all about doing the right things and using the card in the right ways.

Remember to follow the rules and you will be fine....if you need help choosing the right card or learning how to use your card correctly, Personal Finance 4 The People is just an email away!

Personalfinance4thepeople@gmail.com

Improving Your Credit Score

Your Credit Score is probably the most important number associated with you. More important than your Social Security number, even. How can this be?

Your Credit Score tells things about you like if you are responsible, if you are a good person to loan money to, what your interest rate will be, if you will be hired for that big job. Your Credit Score is suppose to be gauge for risk factor for anyone who is going to be loaning you money, or even hiring you. Of course, there are circumstances when your score may be out of your control, but those moments are what we call life.

There are many reasons your score may not reflect you in a positive way. Medical bills and unpaid bills are 2 of the biggest reasons I have found to be an issue for most people. That, along with a lack of credit. Yup, not having "enough credit" is a bad thing too. To find that "perfect" balance, here are some tips:

- Pay your bills on time. Paying bills on time, for my clients, is often an issue because if they had the money to pay their bills on time they wouldn't need me. Paying your bills on time is important because it builds a history of being financially responsible. Even if you are only paying the minimum amount due, make sure it's on time. If you can't pay a bill on time, call and let the company know. They will probably work with you.




- Having a credit card is important in your Credit Score. Having a credit card does a couple things for you. Part of your credit score is HOW LONG you have had that card, your HISTORY of paying revolving debt, and your CREDIT-TO-DEBT RATIO. Your credit-to-debt ratio is how much avaliable credit you have compared to how much debt you have. Use your credit card for small purchases and try to pay the balance off every month. Most people carry a balance, so make sure you are paying, at least, the minimum payment due each month.





- Have an Emergency Fund. An emergency fund gives you room to live when life happens. An emergency fund stops the use of credit cards for emergencies. The emergency fund gives you room to breathe when something unexpected happens. A good rule is to start with a goal of $1,000 and work your way up to 6 months of BASIC expenses.





- Educate yourself. Learning the methods and tips of good financial habits is something most of us weren't taught growing up. There are too many personal finance blogs out there to use the excuse of not knowing better. There are too many people willing to help you learn the right things to do financially. You can only use the "I was never taught" excuse for so long before you have to teach yourself.





- Plan YOUR work! Work YOUR Plan! Sit down and develop a plan. Plan for things you want, for things you need, and for things you need to want. Have a plan A, B, C, even a plan Z if you need it.





- Check you credit report. You get one free report from each of the 3 companies once a year from the government at http://www.annualcreditreport.com/ . There are also other ways to keep an eye on your credit. Your bank might offer a service to monitor your credit, things like this usually come with a fee so keep that in mind.




These are small but important things you can do to make sure your credit is where you need it to be. You have a life to live, don't let your lack of financial knowledge keep you from living the life you want.

If you need assistance, contact us by email, Facebook, Twitter, Phone.

personalfinance4thepeople@gmail.com

http://www.facebook.com/#!/PF4TP

@peoplesfinance

202-431-8008



Wednesday's Lunch Time Financial Time: How to Save Money in 20 Minutes

Each Wednesday, PF4TP brings you a financial tip to help you on your journey towards Financial Independence! Enjoy!

From Yahoo! Personal Finance - Organize Your Finances and Save Money in 20 Minutes

7 Ways to get on Track Financially

Lately, I have been writing a lot about getting out of debt and getting on track financially. We don't realize how simple becoming Financially Independent is. Yeah, it takes work, lots of time, and dedication but it's more than worth it in the long run.

You can live your dreams. You just have to work for them and plan.

1. Stop overspending.


Really, stop! If you can't afford it (and it's a want), you don't need it. Track what you do spend by using something like Mint.com to see where you might be spending too much and change your habits accordingly. Use this information to create a budget.

2. Make more money.


Turn a hobby/skill/telent/passion into extra income. Sell old books. Make Ebay and Craigslist your new best friends. Work more hours. Take on a second job. Become a tutor. Try to bring in at least $100 a month in extra money...

3. Pay down those credit cards and other debts.


With all this extra money you now have coming in, pay down your credit cards and debts. Use Dave Ramsey's Snowball method to pay down your debts. Make a list of all your debts in order of amount you owe and work your way down the list, one debt at a time.

4. Build an Emergency Fund.


Open a savings account with an online bank, like ING, that gives you a higher interest rate than regular savings accounts. You can't immediately touch this money, so plan well! Set ING to take a set amount out of your regular bank account every payday, of an amount that works for you, and forget about it. Before you know it, you will have money for emergencies.

5. Stop using credit cards as often.


Instead of using your credit cards to buy things, save to buy the things you want. Learn to delay gratification and implement a 24 hour rule on purchases over $100. Think it over. Do you really need it? Right now? Make your credit cards work for you...once you have paid them off use them once a month to buy something small and pay off the balance each month.

6. Downsize if necessary.


If you cant afford to live where you live move or get a roommate. If your car payments are too high or gas is costing you too much, sell your vehicle and get a cheaper one. Downsize your life to a life you can afford.

7. Strip away the non-necessities.


If necessary, get rid of everything that isn't a need for the time being. Focus on your monthly bills, debts, and savings goals. As you clear debts you will have more money a month to do what you please with. Get back on track before you spend on wants.

It seems like a lot of work, and it is, but it is worth it in the end to see your dreams come true and to live the life you want....

5 Rules for Smart Credit Card Use

Is this you?



It doesn't have to be. Follow these 5 Rules and take control back from the credit industry!

1. Only Spend Money You Actually Have
It’s important to remember that credit cards don’t represent “extra” money; your credit card balance is essentially borrowed money. If you don’t pay off your credit card balance, you will have to pay interest on it. This is when things start to get expensive as a credit card user. Make sure that when you use your credit card, you already have the money to pay off your purchase.

2. Pay Off Your Balance Each Month
This was hinted at in #1, but it bears repeating: Pay off your balance each month. Smart credit card users don’t carry a balance because it becomes too costly. Instead, make it a point to pay off your balance each and every month. You can reap the benefits associated with your credit card without having to pay interest.



3. Watch Out for Fees
Be aware of the fees that are being charged. While a credit card with a generous rewards program that you will use can be worth an annual fee, most cards just aren’t worth the fees you pay. Also, watch out for foreign transaction fees, high late payment or over the limit fees, and other charges that might be part of the program. Also, be wary of credit card protection plans that will charge you a fee. This is especially important if you are trying to pay down debt and still have a credit card balance. You don’t want to be paying these fees.

4. Get a Rewards Program You Will Use
When choosing amongst credit cards, it is usually better to choose one with rewards. However, you want to make sure that you are choosing a rewards program that you can actually use. Check to see what restrictions there are, and what kinds of fees might be charged for redeeming your rewards. If you don’t travel much, an airline rewards card might not be the best option. However, if you have a long commute, a rewards program that gives you extra points or cash back for gas purchases can be of great benefit to you. Consider the rewards as you use your credit card.

5. Use Your Credit Card for Rewards
The savviest credit card users know that they will get the best benefits when they use their credit cards a great deal. A credit card is convenient, and you can earn rewards and cashback. You should use your credit card for everything you can, from gas to groceries to online purchases. When you use your credit card for regular, everyday, budgeted spending, you can reap the rewards without paying the interest. This is a good way to rack up the rewards or earn hundreds of dollars in cash back each year.

Easier said than done. I know. At least it's a start!



Ready? Set? Go!

Be Careful....it's a TRICK...

So often people tell me that they have never had a credit card and so often I’m still surprised by this. I know exactly why these people say this and can definitely see their side, but…it also makes no sense in making life easier for them. Having a credit card is a HUGE responsibility and test of will – see I can understand why some people feel it best not to have a credit card – but the advantages far outweigh the disadvantages.

Having a credit card helps you build a credit history – what kind of history depends on various things like your financial value system, your current financial situation, and how strong your will is. Credit cards help you to build a credit history by being part of a couple things such as length of credit history and debt-to-credit ratio, while also giving lenders a sense of your likelihood of paying back the loan by analyzing your payment history. Credit cards are pretty important.

If you mess up with your credit cards, the effects can be felt for YEARS!



If you are an adult and have never had a credit card, I’m sure you have noticed how much more difficult things like renting a car or buying anything with an interest rate.

Is there a right way to have and use credit cards? Sure, and it can even work FOR you.

The main things to remember when using a credit card are:

• Always try to pay the balance in full each month.

• If you have a rewards card, it is extra important NOT to carry a balance because the payments go to the oldest purchases first.

• You don’t even have to carry the card with you, just use it once a month to buy a pack of gum or something, and then pay it off.

• If you have debt spread over several cards, you can try to qualify for a 0% or lower than your current interest to pay the debt quicker. BUT you have to pay the debt off by the time the offer is up or you lose the game.

• Try to only use your card for large purchases only when necessary.
Trying to get a credit card as without ever having one or messing up with one is a bit harder. A secured or lower limit card, usually with a fee. Check out CreditCards.com to find the right card for you….

And remember to USE IT RIGHT! ...well try to anyway....