We’ve all been there. At certain times, we make more than at others. In tough times though, it becomes particularly important to keep strict track of our finances.
In a post from ICMA-RC at ICMARC.org, a few important points are highlighted than can help us to keep our credit scores intact through financially difficult periods of time.
Check your credit report, and check it often
Keeping track of your credit score is the first step to maintaining it. It can change pretty quickly as you make changes to your financial situation, so definitely stay on top of it. Understand where your score is, what may be positively and negatively affecting it, then try to change those circumstances. Set a goal to work towards to help motivate you!
Pay your bills, and pay them on time
While this can be difficult, particularly in the case of layoffs and job loss, paying bills on time will help keep your score high, as well as give you negotitating power in the future. It also looks great when applying for new lines of credit.
Keep your balances as low as you can
This is important for two reasons. First, you don’t want creditors thinking you don’t know how to manage your debt. Additionally though, a relatively large portion of your credit score is based off of your credit to debt ratio, that is, the ratio comparing how much available credit you have, as opposed to how much debt you carry.
Don’t close old accounts unless you have to
This gets lumped in with the last question, to an extent. Closing credit accounts will hurt your credit-debt ratio, making it seem as if you have more debt than you can handle. The only time this is not the case, of course, is if your card is at its limits anyway.
Pay off old debts if possible
A debt that has been sent to collections can be absolutely killing your score, by over 100 points in some cases. If you have a debt that’s gone to collections, take care of it as fast as is practicable. You’ll need to get that debt taken care of and wiped off of your credit report as quickly as possible so your score can begin the recovery and climbing process.
How else you guys keep your scores up in tough times? What’s the hardest part for you? Sound off in the comments!
The Economic News
It was reported this morning that jobless claims have come in at their highest levels in 9 months, rising by 12,000 to a nine month high of 500,000 claims. Homebuilders, construction firms, and governmental bodies all had more layoffs this quarter, spelling continued turmoil for the economy.
What do I do?
Well, there are several options. First, if you’ve got the funds saved up, you can try to wait it out. For some, this may be the best option. Finding a new job, or settling for one that’s beneath your qualifications just for the sake of having one, only to have it for a few months and want something else pretty soon may be more trouble and more expense than its worth. On the other side though, most people don’t have the money to spend without dipping into retirement funds, which cannot be made an option. In those cases…
Find another job! Sometimes you may need to settle for one that is not as great as your previous one, but remember, its a job! And a paycheck! And more than that, you don’t have to do it for the rest of your life, just long enough to get by until you find something better suited to your life and lifestyle. Additionally, many are turning to moonlighting in part-time jobs to get the bills paid, like in warehouses.
Droves of people are also turning to self-employment when laid off. You’ve got the skills from working for someone else for your whole career…Why not put those skills to work for yourself and your own direct benefit, rather than for the benefit of a boss! Start consulting, blogging, or one of a million other ideas from a place like Entrepreneur.com, and start your new career today!
Double Dip Recession?
The new buzz-phrase on the news this week is “Double Dip Recession.” Sounds ominous! But what does this mean, and why might we be headed for one?
What is a double dip recession?
Investopedia defines as double dip recession as:
“When gross domestic product (GDP) growth slides back to negative after a quarter or two of positive growth. A double-dip recession refers to a recession followed by a short-lived recovery, followed by another recession.”
Essentially what they mean is, literally, a second recession immediately following another. This happens because of a multitude of factors including, but not limited to, consumer confidence being low, new hiring being down, unemployment going higher, and a generally negative feeling amongst investors.
How will a double dip recession effect consumers?
Douglas McIntyre, a writer for Yahoo! Finance, outlines what we’ll see here. Essentially, what we’re talking about is the same type of consequences we’ve seen for the past few years.
Housing is going down even farther. While this may be hard to believe, believe it. Even in markets that are already down, they’re going to drop. Unemployment will be up, so consumer confidence and spending will be down, which will also hurt every company that sells to consumers. This means their stocks will fall, and their hiring will drop off, if they don’t have layoffs. These same consumers won’t be buying big ticket items, so kiss the auto industry’s profits goodbye.
The budget deficit and national debt will both grow. While there is plenty of argument over whether or not this is economically acceptable, generally speaking, its not too great to be in debt if you’re not growing to match it. Because of this and other factors, the FDIC may end up borrowing from the Treasury, directly affecting regional and community banks.
No doubt a double dip recession would be a tough time, but if you’re young like I am, you have to look at this in one way: A huge investment opportunity! Get your wallets out and 401k ready, and be prepared for huge 10-20 year returns!
How are you going to invest if you have any extra money? Where do you trim the fat in your household budget? Are you making your bills now? What will happen if the economy gets worse? Sound off in the comments below!
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