The terminology used comes from an official source – Bankrate.com – so that all of the information you need to make an intelligent decision is at your disposal.

Adjustable Rate Mortgages: The Pros

* An Adjustable Rate Mortgage allows for lower rates and payments early in the term of the loan. This allows qualified homebuyers to purchase homes they could not otherwise afford.
* An ARM allows the borrower to take full advantage of the lowest rates without refinancing. This means that as the rates drop, so do the monthly payments without having to pay the fees associated with refinancing.
* New homeowners tend to save more money.

The Cons

* With an Adjustable Rate Mortgage, rates can increase at any time during the life of the loan. (The sub-prime mortgage crisis is all the evidence you need.)
* Most borrowers find ARMs too difficult to understand, leaving them to the mercy of the lender.
* In conjunction with ARMs, there is what is called a “negative amortization loan.” This means that you can end up owing more money. How? If the initial payments were set so low that they covered only part of the interest rate, the balance will be added to the principal.

Fixed Rate Mortgages: The Pros

* Rates and payments will remain the same for the outset.
* A fixed rate mortgage allows homeowners to manage their budget more effectively.
* Fixed rate mortgages are easy to comprehend.

The Cons

* In order to take advantage of falling rates, fixed-rate mortgages may be refinanced. That means a few thousand dollars more in closing costs are incurred.
* There are no payments early in the term of the loan. This can pose a financial burden for homeowners.
* Fixed rate mortgages are the same from lender to lender. However, most financial institutions sell their fixed-rate mortgages into the secondary market. As a result, adjustable rate mortgages can be “customized for individual borrowers, while most fixed-rate mortgages can’t.”

I don’t need to tell you how much damage has been done to our country’s wealth over the last year and a half. We have seen trillions lost as housing prices plummet, stocks crater, and jobs get cut left and right.

But unfortunately, there is yet another threat to your financial well-being that is becoming more and more prevalent.

It’s something I warned my Dividend Superstars subscribers about in their last issue. And because it’s such a widespread — and largely preventable — problem, I wanted to take this opportunity to ring the alarm one more time here in Money & Markets today.

I’m talking about …

Identity Theft: The Silent Destroyer of Wealth

The latest figures on identity theft are downright scary.

According to Javelin Strategy & Research, the number of identity theft cases rose 22 percent to 9.9 million incidents last year.

It was the first time in five years that identity thefts jumped at all!

Thieves no longer have to visit you in person to rob you blind!

As a sign of the times, the number of “crimes of opportunity” jumped to 43 percent of the cases in 2008 vs. 33 percent in 2007. What that really means is that a lot more wallets are getting stolen as the economy weakens.

And while online access only accounted for 11 percent of last year’s identity theft activity, I can’t tell you how many “phishing” e-mails I get in a week.

In case you’re unfamiliar with the term: Phishing is when you receive an e-mail that looks like it’s from a website or company you know and trust, but is really from a scammer trying to get personal information from you.

Another startling fact from Javelin’s survey: 10 percent of identity theft victims knew their attackers. And when they did, the crimes cost them twice as much and went undetected for a longer period of time.

The Good News: It’s Easy to Protect
Yourself from ID Theft Attacks!

Here are a couple very simple steps you can take to prevent your identity from getting stolen:

First, shred documents that contain personal information on credit cards, bank accounts, or your social security numbers.

And note that cross-cut shredders — the kind that chop both vertically and horizontally — are far more effective than the “strip” cutters. The latter leave pieces of paper that can be re-assembled with relative ease.

Strip shredders like this one make it easier for thieves to reassemble documents.

Second, don’t carry important data in your wallet or purse if you don’t have to. For example, there’s rarely a reason to tote around your Social Security card.

Third, whenever you get an e-mail asking for personal information of any kind, be wary. Rarely does a real business or website ask for this information via e-mail.

Even if the e-mail contains a link that looks like the actual company’s address, do not click on it. Instead, close your browser and enter the site’s address on your own.

Fourth, take a good look at your account statements every month. I’m always amazed by the number of people who tell me they just pay their credit card bills without even glancing at the list of charges! Not only do they run the risk of paying for things they didn’t buy, but they also miss the chance to catch outright fraud early in the process.

Often times, an identity thief will just charge something very small at the outset to see what happens. It could be a $20 book or a cup of coffee. If the card stays open, the thief might get more aggressive and really take you to the cleaners.

Fifth, in addition to watching your account statements, you should also pull all three of your credit reports once a year. Be on the lookout for charges or debts you don’t recognize … cards you never opened … unfamiliar addresses … anything out of the ordinary.

Remember, an identity thief could do a number of things with your information — ranging from opening a brokerage account in your name to renting an apartment!

Pulling your credit reports is now easier than ever, and completely free. The Fair Credit Reporting Act entitles you to a free report from the three nationwide consumer reporting agencies (Equifax, Experian, and Transunion) every 12 months.

To get your reports, visit www.annualcreditreport.com or call 1-877-322-8228. You can also request them by mail at: Annual Credit Report Service, P.O. Box 105281, Atlanta, GA 30348-5281.

You can pull all three reports at one time. Even better, in my opinion, is pulling one every four months. That way you get a regular checkup. See something suspicious? Contact the agency and any financial institution involved immediately.

Remember, there’s little you can do to change the major economic trends out there. But there’s always plenty you can do to shore up your own financial well-being.

Best wishes,

Nilus

P.S. My number one goal is helping you protect — and build — your wealth through these scary times. And it’s absolutely critical that you get all of my articles on personal finance matters PLUS my recommendations of the best investments for these tough times.

That’s why I want to offer you my Dividend Superstars newsletter at a very special price AND give you a whole series of special wealth-protecting reports in the bargain. Click here for all the details.

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

There are other reasons why a homeowner would consider refinancing.  Let’s take a look at a few.

Let’s assume you have a 30-year mortgage and want to refinance it for less time.  If you have the funds available, you could refinance your home for 25 or 15 years if you so choose.  Conversely, if you have a short-term mortgage, you can lengthen it in order to utilize the money to pay off debt or pay for college loans.

Shorter-term mortgages allow you to build up equity in your home and pay off the mortgage sooner rather than later.  It really depends upon your financial situation, age, how close you are to retirement, and how long you intend to stay in your home.

Perhaps you have gained an excellent credit rating over the years.  This would be a good time to take advantage of the low interest rates for consumers who have excellent credit and FICO scores.

Another reason why you may wish to consider refinancing is to change from an ARM or Adjustable Rate Mortgage to a Fixed Mortgage.  If you decide to take this particular route, it is advised that you speak to a financial planner to ensure you can both afford it and save a substantial amount of money.

Finally, for those of you who have a balloon mortgage – refinancing may be the best way to avoid having to pay the higher payments that will necessarily follow.

It is estimated that the current recession may last through this year and beyond.  There are many questions you have to ask before you consider refinancing.  Is your job secure?  Can you afford the fees associated with refinancing?  Do you have excellent credit and is your FICO score at 750 or higher?

While refinancing can save you money in the long term, remember that missing a payment may cost you dearly.  Give it a great deal of thought and seek professional assistance if necessary.

by Mike Larson 03-20-09

The Federal Reserve has done it now. In poker terms, it’s gone “all in.”

Specifically, the Fed said this week that it will ramp up its purchases of Fannie Mae and Freddie Mac Mortgage Backed Securities (MBS) from $500 billion to a whopping $1.25 TRILLION in the coming months. The Fed is also going to double its purchases of Fannie Mae, Freddie Mac, and Federal Home Loan Bank bonds to $200 billion from $100 billion.

And for the icing on the cake …

The Fed will buy as much as $300 billion in longer-term U.S. Treasury securities. It’s going to focus on Treasuries with maturities between two and ten years, and make purchases two or three times a week.

Printing money and using it to buy our own debt is Banana Republic-type stuff.

I’m going to call it like I see it here:

This is Banana Republic-type stuff! And I’m not talking about the clothing store. Printing money out of thin air at the central bank, only to turn around and buy debt securities issued by your Treasury, is the kind of practice you typically see in emerging market regimes.

We’re essentially monetizing our country’s debt and deliberately devaluing our country’s currency. We’re also screwing over our foreign creditors — a dangerous path to tread considering we’re a net debtor nation that’s trying to borrow tens of billions of dollars a month to fund our massive deficits.

But what’s done is done …

We’ve gone off the edges of the map now, and in a way that I think will ultimately end badly. Indeed, the Fed’s actions sparked the biggest one-day plunge in the U.S. dollar in several years. Gold also surged, a vote of no confidence in central bankers’ willingness to preserve our purchasing power.

The Impact on Treasury
And Mortgage Rates …

The currency and metals markets weren’t the only ones rocked by the Fed’s moves. Long bond futures rocketed more than eight points in price soon after the Fed announcement hit, before pulling back a bit. The yield on the 10-year Treasury Note, which had been flirting with the 3 percent level, plunged roughly 50 basis points in the blink of an eye.

After the Fed’s announcement, the yield on the 10-year Treasury Note plunged roughly 50 basis points in the blink of an eye.

These are unheard-of moves in the Treasury market! Indeed, a rise or fall of two points in price — or, say, 15 basis points in yield — is considered a big deal. We also saw a big move in the home loan market, with MBS prices rising and mortgage rates falling.

The last weekly survey from the Mortgage Bankers Association pegged the average 30-year mortgage rate at 4.89 percent. That tied the record low set in January. I expect we’ll head down to the 4.5 percent level as the impact of the Fed’s latest move settles in.

How does 4.89 percent compare to previous lows?

Consider that the lowest annual average mortgage rate seen in the 20th and 21st centuries was 4.7 percent, set right after World War II. In other words, this is just about the cheapest that mortgage money has ever been.

Whether you agree with what the Fed is doing or not, one thing is crystal clear: It’s having a major impact on interest rates.

But enough about the big-picture macroeconomic stuff. Let’s talk about what the latest round of largesse from the federal government and the Federal Reserve means for rates and your PERSONAL finances.

Specifically …

Is This the Right Time to Refi Your Mortgage
Or Buy a New House?

If you have a mortgage, now is the time to get in touch with your lender and see what he or she can do for you. A typical rule of thumb is that if you can save one percentage point on your interest rate, you may want to go ahead and refinance.

But keep in mind that refinancing isn’t free …

You’ll have to pay upfront fees for everything from a title search to an appraisal to prepaid interest. Those costs can run several thousand dollars, depending on the size of your loan and where you live. So before you decide to refi, make sure you’re going to keep that new mortgage with those lower payments long enough to recoup your upfront costs.

There is one alternative: You can have your lender cover most of your closing costs. But if you do so, you’ll have to accept a higher mortgage rate in exchange.

Also be prepared for a long line at the lender’s office, or a long wait time on the telephone. Because of this latest Fed action and the recent roll out of the Obama mortgage plan, lenders will be swamped with calls.

It’s a buyers’ market right now. And prices are likely to decline further. So even though interest rates have dropped, you don’t need to rush into anything.

So what if you were considering buying a house? Is now the time to jump in? Will the Fed’s move have as big an impact on home buying as it’s having on the refinance market? In one word … NO.

Look, refinancing to grab a lower rate and payment is a no brainer when rates plunge. But the decision to buy a house or not depends on a lot more than financing costs …

You have to think about whether your job is secure. And you have to take the likely direction of home prices — lower — into consideration. Does it really make sense to jump in and buy now when the employment outlook is so uncertain? Or when home prices will likely continue to fall for the next year to 18 months?

Personally, I’d encourage you to tread carefully. Take your time. There’s no need to rush in and buy now with so many homes to choose from and prices likely to decline further. You, as a buyer, have the upper hand now and will likely continue to have it for some time.

Until next time,

Mike

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

What would happen if your boss cut your salary, you had no savings, and none of the banks or credit card companies would lend you any money? You’d be in some deep doo-doo, wouldn’t you?

Well … that’s exactly the situation the U.S. is potentially staring at if foreign governments decide they don’t want to loan us any more money by buying U.S. Treasury and other government-backed bonds.

And who buys most of our bonds? China and Japan …

At the end of 2008, China owned $727.4 billion worth of U.S. Treasury bonds. And Japan was second, at $626 billion.

Japan has drastically curtailed buying U.S. bonds now that its economy is in shambles. But China has been — and continues to be — the most important lender to the U.S., essentially funding a big chunk of President Obama’s $787-billion economic stimulus plan.

The problem is …

China is Re-Thinking the Wisdom
Of Holding So Much U.S. Debt

Chinese Premier Wen Jiabao is worried about the stability of China’s huge portfolio of U.S. government bonds.

Chinese Premier Wen Jiabao, speaking at the closing press conference of China’s National People’s Congress — China’s annual legislative session — dropped this verbal bomb on the Obama administration last week:

“To be honest, I am definitely a little worried. We have loaned huge amounts of money to the United States, so of course, we have to be concerned. We hope the United States honors its word and ensures the safety of Chinese assets.”

I highly doubt that those remarks were impromptu. They are a clear message to the Obama administration that it needs to stop spending like a drunken sailor if it expects the rest of the world to buy U.S. government bonds.

The line of Chinese policymakers, economists, and scholars voicing concerns about investing too much of their country’s $2 trillion surplus in U.S. debt is growing longer and longer. Many are urging diversifying out of U.S. bonds and into more tangible assets such as natural resources and gold.

The reason is simple:

There is an expectation that U.S. bonds are headed for a big drop in value because we are simply printing too much money to fund our stimulus spending spree.

In fact, the Chinese are already starting to move out of U.S. bonds …

Last summer, China’s big state-owned banks — such as the Bank of China and the Bank of Communications — began dramatically reducing their holdings in Fannie Mae and Freddie Mac debt.

It turns out the Chinese made a pretty savvy move … Fannie Mae and Freddie Mac bonds have gotten annihilated since then.

Now, the Chinese are concerned that U.S. Treasury debt could suffer as well.

So what can you do if you think the Chinese and Premier Wen Jiaboa are right?

Four Safe Hiding Spots
To Consider:

Safe Hiding Spot #1 —
Shorten-up on maturities …

Long-term bonds are the last thing you’ll want to be holding if Obama’s administration keeps spending like a drunken sailor.

If you’re a fixed-income investor, you could shorten the maturities of your bond portfolio. The Obama administration can’t spend, spend, spend without creating a big inflationary problem down the road. That means long-term bonds are the very last thing you want to be holding when inflation takes off.

Safe Hiding Spot #2 —
Funds that profit from
rising interest rates …

As the mountain of debt shoots to the moon and the safety of U.S. obligations comes under attack, the Treasury will likely have to boost interest rates to get investors to buy its bonds. And there are mutual funds that could make you richer along the way. For example, the Rydex Inverse Gov Long Bond Strategy (RYJUX) fund and the ProFunds Rising Rates Opportunity (RRPIX) fund are meant to profit from rising Treasury bond interest rates.

Safe Hiding Spot #3 —
This fund offers protection
against a tumbling U.S. dollar …

Another high-profit strategy is to bet that the U.S. dollar is headed for trouble. The Merck Hard Currency (MERKX) fund invests in the currencies of countries with the strongest economies and budget surpluses and could do very well if the U.S. dollar falls. Subscribers of my Asia Stock Alert already own this fund.

Safe Hiding Spot #4 —
Non-dollar debt …

I believe the most lucrative strategy of all will be investing in long-term, non-dollar denominated debt of countries with prudent fiscal and monetary practices. International bond funds, like the T. Rowe Price International Bond (RPIBX) or the American Century International Bond (BEGBX), could be big winners.

To sum it up: If I could make one and only one prediction for the next year, it would be that the U.S. dollar is going lower. A lot lower.

And if I’m right, any of the above safe hiding spots should do very, very well.

Best wishes,

Tony

P.S. For the latest on the tremendous, money-making opportunities available in Asia, sign up for our new free e-zine, Uncommon Wisdom, with daily updates and recommendations to preserve and grow your wealth.

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This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

Here are some tips to help you save money on your household bills:

* Become more energy efficient.  This includes replacing all light bulbs with energy-efficient ones.

* Use energy-efficient appliances, including the air conditioner.  Clear the air filter regularly.

* Unplug all appliances when not in use, and shut down the computer instead of keeping it in sleep mode.

* Keep the refrigerator thermostat to the recommended temp.

* Lower the home thermostat at night, and ensure your home has been thoroughly winterized.

* Wash only a full load of laundry, using cold water.

* Take shorter showers – preferably less than five minutes.

* Purchase store-brand groceries.  When on sale, buy in bulk.

* Buy clothes at a consignment shop or a thrift store.

* Instead of buying books, CDs, or DVDs, go to your local library or join any one of the trading or swapping sites online.

* At the end of each day, have the entire family put their loose change into a jug or large gallon-sized container.

* Prepare a family budget that you can stick to.  Get the entire family involved.

* Complete all errands in one trip.

* Walk whenever you can to save money on gas.

* Bring lunch to work.  Make lunches for the kids to bring to school.

* Curtail eating out.

* Unsubscribe from magazines.

* Perform manicures and pedicures at home.

* Cut up all credit cards except one; only use that one for emergencies.

Introduction

The economic crisis brought about a recession that may last for several years.  With unemployment rising, major companies declaring bankruptcy, banks still unwilling to lend to other banks, the credit crunch affecting millions of people, and the market’s consistent volatility has everyone very concerned about their individual finances.

Not since the Great Depression have more households been affected by this recession. Concerns about job loss, home foreclosures, and the inability to pay down debts and loans have become the primary focus for many people here and abroad.

In this report, we will discuss how to obtain lower rates on loans, how to appropriately budget, counseling services, different types of loans, and how to choose loans wisely.

One can use the Boston Marathon as an analogy to describe how one feels when debt is mounting and there seems to be no way out.  It is mile 13 of the Marathon, infamously called the “wall.”  As runners approach mile 13, their legs feel light dead weight and they find it difficult to go on.

Take heart!  Just as those runners find whatever inner strength they have to persevere to go on and finish the race, you too have to find that part of you that will not give up.

You will have to make whatever sacrifices are necessary to go beyond the wall, and bring stability not only to your personal life, but your financial one as well.

This report will offer many websites on the Resource Page that can help you make it to the finish line, as well as our tips and suggestions for better budgeting.

How to Obtain Lower Interest Rates on Loans

Car Loans

If the interest rate on your car loan is too high, you can always switch to another lender.  But before you do make the switch, call the lender with whom you have the loan and ask if there is a lower interest rate available to you.

In addition, call your own bank to determine if they are offering a lower interest rate. Or, if you are a member of a credit union, you may be able to obtain a lower rate through them.

Keep in mind that if you have an excellent credit rating, you are in a better position to obtain a lower interest rate. If your FICO score is under 700, chances are the banks will not offer a better rate. Currently, you need a score of 720 or higher to acquire the best rate available.

Two other alternatives may be to (1) contact your lender and discuss extending the loan term or (2) converting your current loan into a lease.  This requires you to find a lese company who will buy your car and pay off the loan.  Then they can lese the car back to you.  The payments will be substantially lower. When the lease expires, you can then determine whether to buy the car or return it.

Student Loans

There are three types of repayment loans available with Sallie Mae.  They are: Extended Repayment, Graduated Repayment, and Income-Sensitive Repayment designed to lower your monthly payments.

Extended Repayment

The following loans fall under this type of repayment:  Stafford, Parent and Graduate PLUS, federal consolidation loans for balances that exceed $30,000.  To qualify, you must:

* Be a new Federal Family Education Loan Program (FFELP) borrower with one or more eligible loans first disbursed on or after Oct. 7, 1998.
* Have obtained a federal consolidation loan on or after Oct. 7, 1998 with no other outstanding FFELP loans when the consolidation loan was made.

Graduated Repayment

According to Sallie Mae, “Graduated repayment allows Stafford, PLUS, and many of private student loan borrowers to make reduced payments that may be as low as interest only for up to four years followed by standard payments of principal and interest for the remaining repayment term.

Keep in mind that reduced payments may increase the total cost since the loan principal is repaid more slowly. Terms and conditions apply. Partial or full prepayment is allowed at any time without penalty.”

Income-Sensitive Repayment

Your payment must cover at least monthly accruing interest. You determine the percentage of your monthly payment: between 4% and 25% of your monthly gross income.

* You have to apply annually for an income-sensitive repayment plan.
* You can prepay at any time without penalty.
* Because the loan is repaid more slowly, your total interest costs may be higher over the life of your loan.

TIP:  The following information was obtained from MSN money:  “As of July 2009, borrowers “will have the assurance that their loan payments won’t cripple them,” says Robert Shireman of the Project on Student Debt. Rather than pay a fixed amount over 10 years — the standard repayment schedule — struggling grads can opt for a program that bases payments on up to 15% of their annual discretionary income, defined as gross income above 150% of the federal poverty level.”

Home Mortgage Loans

This may be the one area where most of your money is tied up on a monthly basis.  If you have a problem pay your mortgage, consider refinancing.

The rule of thumb is to refinance if the interest has been lowered by 2%.  Regardless of whether you have an adjustable rate mortgage or a fixed mortgage plan, refinancing can alleviate many of the current worries you have about paying off debts.

This will require researching the refinancing rates online.  After finding the best rate (use the online calculators to assist you), then you can determine how much you will save and apply the savings to pay off other debts.

TIP: With the current economic crisis, you may want to change your ARM loan to a Fixed Loan in order to prevent higher interest rates from increasing on your existing loan.

Loan Consolidation

A debt consolidation loan may be another alternative you can use to take all those high-interest rate credit cards and other loans and combine them into one monthly payment.

There are two types of consolidation loans: secured and unsecured.  A secured loan requires collateral, whereas an unsecured loan does not.

A secured loan should not be taken lightly.  Remember, collateral will be needed to obtain the loan – and if you default on said loan, you can lose whatever was put up for collateral.

Conversely, an example of an unsecured loan may be a home equity loan or mortgage refinancing.

The benefits of a debt consolidation loan include:

* Lower interest rate than the rate(s) you are paying on your existing debts
* Significant savings during the life of the loan
* The ability to pay off all credit cards and other loans
* Cutting up all credit cards except one

Seeking the Advice of a Financial Counselor

This is another important step you may need to take.  If all else fails, contact an accredited professional financial counselor you can help you pay down your debt by utilizing either a debt settlement or management plan.

Debt Settlement Plan.  The counselor will contact the creditors and settle your accounts by sending a portion of the debt.  If this agreeable with the creditors, the payments can be lowered so they can be repaid over time.  Individuals who have chosen this particular route have reduced their payments up to 65% and have become debt-free within five years.
Management Plan. The counselor will work with the creditors to negotiate benefits that will help you manage your debt in an easier manner.  They will either help to reduce your interest rates and waive any fees applicable so as to reduce your monthly payments.

How to Choose Loans Wisely

Finding the best loan for you requires a great deal of research.  As mentioned earlier, your best bet is to find an unsecured loan that has the lowest possible interest rate.

In order to secure the lowest interest rate, your credit rating today has to be excellent, that is, with a FICO score of 750 or above.

This may seem like a daunting task, but it is nonetheless necessary in order for you to reduce interest rates or obtain a new loan with a low rate.

Banks are being particularly cautious in lending money because of the sub-prime mortgage crisis.  For applicants with a so-so credit, rating banks will not be willing to take the risk that payments will not be forthcoming.

Here are steps you can take to increase your FICO score and improve your credit rating.

* First, contact the three credit reporting agencies and obtain copies of your credit standing as well as FICO scores.  Question any item in each report that you deem suspicious.

* Call each credit card company and/or bank where you have a loan, and ask if the interest rates can be lowered.  This should save you a few dollars in the short term.  If at all possible, double up on payments for the first two or three months.

* Ask family members to loan you the money if necessary.  This is an important step before securing a consolidation loan.

* Once you have made a list of the banks or lenders who are offering low interest rate loans, call to make an important with each one.

* Determine who is offering the best loan package and then make the decision.

TIP:    You can opt for a loan consolidation or a home equity loan. Ascertain the difference between the two and make your decision based on your particular financial circumstances.

Home Equity Loan
A home equity loan allows you obtain a loan by using the equity in your home as collateral. This may or may not be a good idea since the value of homes has dropped considerably since the economic crisis.  However, it doesn’t hurt to look into this alternative.
TIP: A home equity loan is a “secured” loan, which means that if you default on payments – you can lose your home.

Budgeting

Do you have a household budget? If so, is it working for you?  If not, here are some tips and suggestions that you can utilize to overhaul your budget and save additional money to pay off those loans.

First, scan your budget and get rid of unnecessary expenditures such as: manicures and pedicures, weekly visits to the hair salon, magazine subscriptions, newspaper deliveries, buying a cup of coffee daily, going out to lunch or dinner, vending machines, parking meters, lotto tickets, and other incidentals that can cost you dearly every month.

Determine where you can make additional cuts, such as:

* Groceries.  Buy in bulk when items are on sale.  Buy store brand items instead of premium items.  Use online coupons, Sunday circulars, and in-store circulars to save money. Prepare meals for a month by setting aside one day to cook soups, stews, and other meals for the family.

* Energy savings.  Unplug appliances when not in use.  Turn down thermostat at night.  Keep refrigerator thermostat to recommended temperature.  Use microwave more often.  Use energy efficient light bulbs and ceiling fans. Clean air condition filter often.  Winterize your home. Take shorter showers.  Do not leave water running when shaving.  Wash a full load of laundry in cold water.  Shut down computer; do not leave it in sleep mode. Make sure your water heater is adequately insulated.

* Entertainment.  If you normally eat out once or twice a month, eliminate this from your budget.  Try not to order take-out; you can prepare delicious meals in no time.  Utilize Food TV.com for 30-minute meal recipes.  Instead of going to the movies or renting DVDs, there are several online websites that you can join wherein you can swap movies on DVD, CDs, and books.  Or you can visit your local library.

* If you have cable and paying a fortune for premium channels, consider eliminating them as well.  Look into the many bundle packages available today.  If it is cost-effective, sign up.

* Call your telephone company and, line by line, eliminate the unnecessary features.  If you use a cell phone to make all your calls, eliminate your home phone.  For long distance calls, you can use the online company Skype and make calls for free.

* Clothing.  Use several of the online rebate and coupon sites to save money on clothes.  Consider shopping at consignment shops or thrift stores.

* Save money on gas.  While the cost of a gallon of gas is quite low now, it may go up again anytime soon.  Walk whenever you can. Make one trip to complete your errands. Maintain your car by making sure the tires are properly inflated; you are not carrying excess weight in your trunk; you change the oil and filter accordingly. Do not exceed the speed limit while driving, and do not sit in the car with the AC on.

* Prescription drugs/doctors.  You can save quite a bit of money by keeping your family healthy.  If you are required to take prescription drugs, check the many pharmacies that are offering lower prices.  Look into changing your health insurance to accommodate your family’s needs.  By generic over-the-counter medications whenever possible.

* Parking Meters.  These can eat up quarters faster than a slot machine.  If you shop in your local neighborhood, park on side streets or further away from the center of town.  You can save a lot of money by not using parking meters.

Keep contributing money to:

* 401K Plans.  If your company is offering a 401K plan and you have been contributing to it, don’t stop.  Even thought it may have lost money during the market downturn, this money is necessary for your retirement.  Eventually the market will return back to normal and the stocks, bonds, and mutual funds will continue to yield earnings.

* IRA/Investments.  If you have an IRA, continue to contribute. As for any stocks you may have, do not sell them as yet.  When the market rebounds, so will your stocks.

Finally, and this is very important, set aside – if you can – enough money to cover expenses for six months.  Since we do not know how long this recession will last, there is always the possibility that in addition to the loans you have, an emergency may occur requiring you to pay for whatever services are needed.
When it comes to budgeting, it is necessary that you adhere to it.  Yes, it will be difficult; and yes, there will be occasions when you need to take from Peter to accommodate Paul.  But these are difficult times that call for difficult measures.

Owing money can be a heavy burden to bear.  It can cause stress and other health conditions.

The content of this report is a means by which you can contemplate the choices you have, choose the best possible scenario for you and your family, and act upon it as soon as possible.

Telling you that there are hundreds of thousands of people with similar financial problems may not ease the pain, but it may alleviate it to some degree.

Here is how one woman talked about her financial situation:

“I am very worried. I have many credit card debts. I live on a meager pension, and supplement it with at-home work. I am also taking care of my parents as well. Together, we are just getting by. I watch how I spend every penny. My budget is small and doesn’t allow for any emergencies or illness, even though I have healthcare coverage from my former employer.

I worry that my savings, such as they are, will dry up. I do not know what I will do then since I do not make enough to apply for a consolidation loan. I have several debts that need to be paid every month. It’s hard, but the alternatives are few. All I can do is work hard every day and pray I will not become a statistic.”

Does this sound familiar?  People across the globe are experiencing some type of financial failure.  Many lost their entire savings during the economic crisis; still others lost a substantial amount of money in their retirement funds.

Every day, you read about people who invested with one firm or another only to find out the crooked CEOs spent their client’s money and there is nothing left.  People, like you, who worked hard all their lives just to be able to enjoy retirement comfortably.

But, there is a light at the end of that long dark tunnel.  All you have to do is find the path to it.

Finally, don’t panic.  When you do so, you make decisions that are not in your best interest.  Sit down with your family and devise a new budget; make the necessary changes to it; enlist the aid of your children (age appropriate), and ensure them that everything will be okay.

And it will be………….

Resources

CNN.Money Budget Calculator: http://cgi.money.cnn.com/tools/budget101/budget_101.jsp

Student Loans: http://www.salliemae.com/

FinAid: http://www.finaid.org/loans/consolidation.phtml

Loan Calculator: http://www.finaid.org/calculators/loanpayments.phtml

Loan Interest Rates Comparison: http://www.bankrate.com/brm/rate/brm_loansearch.asp?product=51

Auto Loan Calculator: http://www.bankrate.com/brm/auto-loan-calculator.asp

Student Loans Interest Rates and Fees: http://www.salliemae.com/get_student_loan/apply_student_loan/interest_rates_fees/

Credit Reports: http://www.ftc.gov/freereports

A Consumers Guide to Health Insurance:  http://www.ahrq.gov/consumer/insuranceqa/

About 401K Plans: http://www.401k.org/

Sample Letters to Lenders: http://www.cclcnsw.org.au/content/view/50/61/

Financial Counseling Services: http://www.moneymanagement.org/

Consumer Credit Counseling Services: http://www.creditcounseling.org/

National Credit Union Administration: http://www.ncua.gov/index.html

Credit Union Locator: http://www.creditunion.coop/cu_locator/index.html

Rebates: http://www.ebates.com/index.htm;jsessionid=abc0nCW5q3msfcIKYBIxr

Online Coupons:

http://www.anycoupons.com/

http://www.couponcabin.com/

http://www.currentcodes.com/

http://www.wow-coupons.com/index.php

http://www.couponfetch.com/

While we take water for granted, it certainly costs a bundle to use.  Here are five ways to save money on your water bill.

1.  Washing machine.  Here is where significant savings can be realized if you only wash full loads of laundry.

2.  Dishwasher.  The same applies here, too – utilizing the dishwasher only when you have a full load of dishes, pots, and utensils can save money on your water bill.  If you do not have a dishwasher, fill up the sink and wash dishes, pots and pans, and utensils.

3.  Take showers instead of baths.  Purchase a shower-head that produces less flow of water than normal.  If you prefer baths, try not to fill up the tub but instead utilize half a tub of water.

4.  Toilet.  Sometimes after you flush the toilet you may hear a sound of running water.  Have your tank inspected to ensure it is working properly.  Be sure not to throw cotton swabs or other foreign material into your toilet.  Use a limited amount of toilet paper so as not to clog up the toilet.

5.  Drinking water.  One of the best ways to save money on your water bill is to refill water bottles from the tap and keep half of them refrigerated and the other half on hand for other personal uses.

For example, instead of using running water to brush your teeth or shave, use the bottled water.  Bottled water can also be used for cooking and unfreezing meats and vegetables.

Here is another way to determine how much water you utilize every day.  From the moment you wake up, take note of how much water you use from morning until bedtime.  Cut down water use in those areas where you feel you are wasting water.

Check the faucets in your home to ensure they are not dripping water.  Check the pipes under your sink to ensure there are no leaks there either.  When mopping your tile floors, fill up the kitchen sink instead of letting the water run continuously.

We tend to use water in a wasteful manner without realizing it.  The more attention you pay to how much water you use on a daily basis, the lower your water bill will be.

Looking for easy ways to save more money around the house?  Here are some more articles to get you started…

12 Ways to Save Money Around the House

How to Survive a Recession: Saving Energy

52 Easy Ways to Save Money and the Planet

Alternative Ways to Save Money on Groceries

From MySuperChargedLife.com:

Handling Pressure: 3 Fantastic Quotes to Help Us Cope

From WiseBread.com:

Waste Not Want Not: Turning Waste Into Savings

From TheSimpleDollar.com:

The Limits of Frugality: What’s Next When You Can’t Cut Any More?

From MoneyTheory.com:

In Keeping Up With the Joneses…

From FreeMoneyFinance.com:

Five Alternative Investments to Protect Your Portfolio

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