Credit Wise
(featured column)

How to Be Financially Fine in '09

by Jennifer Wallis

It’s pretty much impossible to escape the constant talk about the economy right now. I’ve heard our current uncertain economic status compared to the Depression in the 1930’s. For us everyday folks, that kind of talk can be really frightening. Instead of feeling like a sitting duck--just waiting for everything to happen to you--it’s time to take control and do something about it. The fate of your financial future simply can’t be left to anyone else so it’s time to take the lead.  More...

Begin by educating yourself about the options available to you and ensuring that you have the best rates available on any outstanding loans and debts. Sounds great, right? But, where do you start? The good news that all of the resources you need are right at your fingertips on the Internet and also right in your local community. Here’s a checklist of where to turn for help.

Your Bank or Credit Union : Check your interest rates on any existing car and personal loans. If they’re over 6%, shop around for better rates. Interest rates have gone down in the last couple of years so there’s a good chance that better rates may be available now. My husband and I bought a car last year. We were recently able to refinance with a local credit union at 4.9%. They didn’t even charge us any application or refinance fees! This move saved us thousands of dollars and reduced the number of payments we have left.

www.annualcreditreport.com : If you don’t review your credit report at least once per year, you are totally missing out. Up to 70% of all credit reports contain some kind of error so there’s a good chance that yours does, too. Some can be as simple as an incorrect address, which won’t really affect your credit. However, some errors can make you look like you owe more than you do and can trigger higher interest rates or can cause you to be denied credit. It’s incredibly important to review your credit report and dispute any inaccurate or out of date information. Also, don’t pay for your credit reports. You get one free from each of the three credit bureaus every year so take advantage of that instead of paying.

Your Financial Advisor : Not everyone has a financial advisor but they can be incredibly helpful. If you’re in debt, a financial advisor may ask you to work on reducing that amount first. However, planning for retirement, navigating the stock market, and learning the ins and outs of IRAs are best done with an expert. You certainly don’t have to be debt-free before you start investing but once that debt gets paid off, socking money away will be much easier.

Your HR Department : If you usually receive a large tax refund, it’s a good idea to review your exemptions. By reducing the amount of taxes you pay from each check, you’re directly increasing your take home pay. While you don’t want to end up owing taxes at the end of the year, you could definitely benefit from receiving larger checks throughout the year. Another thing to inquire about in  the HR department pertains to a flexible spending or cafeteria plan. This can be an incredible way to pay for medical expenses and daycare, tax-free. While you’re visiting your HR specialist, why not set up your check for direct deposit with at least $25 per check going directly into a savings account? Starting the saving habit is easier if it doesn’t take much effort.

Your Credit Card Company : If you working on whittling away that credit card debt, you want to ensure that you have the lowest rates available. If you haven’t had any late payments, you may be surprised to find that your credit card company may be willing to reduce them just by asking. Call your credit card company and tell them that you’re a good customer and would like to see if they can give you a lower interest rate.

Your Non-Profit Credit Counseling Agency : If you have missed a payment due date here and there, your credit card company will be much less likely to reduce your rates. However, your local non-profit credit counseling agency may be able to help. Most offer free counseling so that you can consult with a financial expert. They’ll even help you develop a personalized plan to meet your financial goals. They also offer Debt Management Plans that may be able to lower your payments, interest, and stop late and over the limit fees. They can also help you get caught up on any last payments without having to cough up the entire past due amount. To find a local agency near you visit The National Foundation for Credit Counseling at www.nfcc.org

Your Mortgage Company : While you’re thinking about interest rates, check the one on your mortgage, too. If the current rates are more than 1-2 percentage points lower than the one on your mortgage contract, it may be worth it to refinance. Check with your loan officer for fees and ask how much you can save by refinancing.

While there isn’t much we can do but ride out this national economic storm, there are certainly many things you can do to ensure your own financial stability. Follow these tips to make sure you are protected. If nothing else, taking charge of your own fate should bring some comfort during these uncertain times. You may have more power than you think.

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Copyright © 2008 by Jennifer Wallis. All rights reserved.

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