Consequences of Bad Credit

Though there are a lot of consequences that you will have to face due to bad credit, there is good news that you will not be jailed according to the laws of U.S. You should be aware that this situation is just temporary and will change soon. While minor defaults have small consequences, inability to pay bill for over 60 days can lead to certain of consequences. However,the best thing under such circumstance is consult your creditors and focus on reviving your credit and improve it. They will help you to develop a payment plan.

It will also lead to you becoming joblessor and forced to work for fewer hours resulting in lesser salary. This will result in either no money or little money and then you will have to rely on your credit cards for your sustenance. However, if you are not able to repay the credit cards, it might result in worsening your credit score. There it is important to deal financially with a job loss intelligently and tips are:

• Use your emergency savings funds for sustenance and ensure minimum payment of credit cards so that you can continue to using it without affecting your credit history.
• Save money and cut down on wastage of money.
• Develop a budget
• Monitor your credit report and ensure it is revived as most of the employers check it before hiring you
• Consult a credit counselor if you have no emergency money
• Consolidate your debts to avoid more monthly payments

Though it can be very stressful, you should remember that this situation is only temporary and can improve as soon as you get a job.

1. Investing in ponzy schemes:

On the face of it, ponzy schemes seem as the best type of investments since the invention of money. With interest rates at 30 – 40% and climbing, any investor’s eye will pop out at the amount of money they can make when compared to 10 or 12% offered by other institutions. However, the plain fact is that ponzy schemes are simply unsustainable. Statistics show that the life cycle of ponzy schemes never exceed five years. So unless you intend to just wet your beak and leave, investing in ponzy schemes is one sure ways to lose your money. In addition, investors in ponzy schemes receive no protection from federal authorities.

2. Poor financial planning:

If you know that you will need your money for a specific purpose in a short period, it makes no sense to invest in a long-term loan just because they offer higher interest rates. Taking this route will only result in personal financial embarrassment.

3. Investing above your means:

Some individuals propose a strategy rinsing money to make extra cash. As a result, they place moneys entrusted to them into investment schemes and then syphon the profits for themselves. However, as we saw in many cases in the current recession, after the collapse of the financial sector, many individuals were left holding the bag.

4. Excessive processing fees:

Many individuals are blinded by the interest rates offered by investment houses. They do not take the time to investigate the various fees charged for handling their investment. In many cases, the investment house benefits more that the investor.

5. Not paying taxes:

Because the filing of taxes is a part of the social responsibility of each individual, many individuals believe they can circumvent the tax system. However, there are various mechanisms that the tax agencies employ to locate tax dodgers. When these individuals are caught, they are also slapped with interest rates and fines that are designed to be deterrents to tax dodgers.

6. Not reading the fine print:

By failing to read the fine prints of contracts, many individuals get into contracts that not in their financial interest. As a result, they may be stuck with a bleeding investment.

7. Ignoring your investment:

By not being vigilant about the progress of your investment, many investors lose millions to unscrupulous investment brokers. These individuals can often manipulate figures and present a rosy image to their clients.

8. Short-term loans:

Short-term loan may stop a gap or meet an immediate loan. However short term loans are expensive and often result in individuals in a worse off position.

9. Excessive optimism:

Sometimes we rely our optimism as oppose to sensible decision making. Keeping your money in a dying investment because of emotional attachment often leads to investors losing millions.

10. No back up funds:

Plunging your money into investments without back up money can lead to you losing some of your money if you have to close the investment before it matures. Investment houses have various penalties to prevent investors from going down this road.

Recession has certainly taken a toll on a number of issues may it be business, technology or personal issues. Considering the aftermath of the global meltdown and its far reaching impact into our future, bad credit whiz have sorted out four issues the recession will call for a change in our world of existence and support.

Four Ways This Recession Has Changed Our World

While several issues line up the list of changes called for, the following four seem to have a far reaching impact.

• Dropping Birth Rates – The rate of population growth should be maintained at a minimum of 2 births per woman, to maintain minimum population growth, but given that, it does not meet the requirement, the replacement rate of population is expected to stay below 1, which means the population will diminish. With increasing cost of living, raising a child is expensive than ever before. No wonder, why parents go for not more than 1 kid.

• Lowering Demand for Houses – Bigger houses have literally become out of fashion. Or should I say, maintaining larger houses invites loads of expenditure and hence people prefer smaller apartment complexes. The trend makes it clear that people are moving towards what is called the joint family system or more preferably called multiple generation houses. While the said trend is prevalent in Indian, Hispanic and Asian families, it is catching very fast in the western countries too. It has multiple advantages. First and foremost is the cost benefit involved in more number of people living in bigger houses, which means the cost is shared among more number of people. Secondly, the same house is used across generations, which means lesser number of houses for the later generations too and thirdly, all members of the family living together reduces the need for day care services, as the family members at home help in taking care of the children, eventually reducing the expenses. Above is not only true in case of buying houses, it holds good even when the houses are rented.
• No to High Cost Colleges – What do you think is the reason behind high cost colleges? Well, it is free availability of student loans and a finance that has enable colleges to increase the cost of education, making it eventually more expensive. While in the early 60’s a family had to save 57 days earnings to pay the annual college fees, in the current decade the number has increased to 195 days.The best thing to do is to reduce the cost of education by opting for community colleges and avoiding high cost colleges. Well, once the trend continues, all high cost colleges will be required to reduce their fees in order to attract more and more students. Until it happens, stay in low cost colleges and then apply for a shift to these colleges. It is here that online colleges will find a favorable position in view of those students, who are looking for low cost and best curriculum courses.
• Retail Shopping a matter of past – With more and more web based shoppers advantages experienced by consumers that help them get rid of the difficulties like commuting to the store for purchasing your groceries. It is also the case with mega stores or the so called all in one store. With growing number of large sized mega stores, retail shops are left to face a big blow in terms of business and demand. With growing technology and changing attitude of people, the retail market never seems to resume. Of course these stores and shopping may not have what is called the human touch, well it is not far off when you will have a dedicated personal assistant who will help you complete your online shopping without hassles.

So what is that you have to say about how recession has changed our outlook?
]]> http://blog.badcreditwhiz.com/aftermaths-recession-changed-world/feed/ 0 http://blog.badcreditwhiz.com/effects-recession-real-estate-2009/ http://blog.badcreditwhiz.com/effects-recession-real-estate-2009/#comments Mon, 18 Jan 2010 10:58:11 +0000 William M. Davis http://blog.badcreditwhiz.com/?p=1209

The collapse of the real estate market has been one of the major highlights of this current recession. Homeowners and investors have seen the value homes fall through the floor. This has also been coupled with unprecedented high levels of foreclosures and weak consumer confidence. Analysts trying to place a dollar figure on the amount of losses have all agreed the financial losses nationwide could be in excess of $600 billion and counting. Although recognized as the genesis of the financial meltdown, subprime mortgagers are still bent on slapping on high adjustable interest rates on subprime borrowers who had purchased homes under the no down payment home purchase system.

Expanding Crisis

After the second quarter of 2009, we saw a new trend developing in the real estate market where the fangs of the recession started biting into the untouched territory of high end, second home and vacation home markets. These homes usually valued over a million dollars and were reserved for the rich were standing still without suitors. Locations such as Florida, California, Michigan and Nevada where there is usually a waiting list with real estate agents to purchase high-end houses were all showing increased rates of foreclosures and late mortgage payments even among the rich. This has led to many in the real estate business to concede that by the time this recession is over no one will be spared.

Lack of Confidence

Prior to the collapse of the housing market in the US, investment in subprime investments was hot commodity amongst traders. These subprime loans were being packaged and resold with A+ rating providing high returns for investors. When interest rates began to rise and the pressure was brought to bear on the subprime home owners, the bottom of the bucket fell out, investment houses began operating as “ponzy” schemes by taking the investments of smaller investors to pay the larger ones. This however was unsustainable and the entire system crashed. As a result, over 2.5 trillion dollars was eventually lost in the confusion that followed. Investors started selling blocks of bond at prices significantly less that market price as the bonds were downgraded from A+ to junk.
To prevent a total collapse of the mortgage bond market, the government had to provide financial support to the major players Fannie May and Freddie Mac.

Loss of Jobs

The real estate was one on the major employers of skilled laborers. These laborers ranged from carpenter, plumbers, electricians and engineers. The collapse of the real estate market literally put these individuals out of jobs as there was a cessation in new housing developments and current homeowners chose to suspend all home improvement until the financial condition improved.

New Opportunities

It is said that in everything there is opportunity. Some individuals have managed to benefit tremendously out of the collapse of the real estate market. Some individuals preferred to invest in modest investments that were unaffected in the recession. As a result, they were there to buy up many potentially valuable real estate properties at a small percentage of the original market value. These individuals stand to make significant profit when the market resurges. Other investors such as those in the home rental sector were also able to acquire property at knock down prices. ]]> http://blog.badcreditwhiz.com/effects-recession-real-estate-2009/feed/ 0 http://blog.badcreditwhiz.com/recession-impact/ http://blog.badcreditwhiz.com/recession-impact/#comments Thu, 07 Jan 2010 09:47:56 +0000 William M. Davis http://blog.badcreditwhiz.com/?p=1202

The recession of 2008-2009 will last in the minds of many individuals for the rest of their lives. We have seen companies suffer unprecedented losses, countries brought to their knees and individuals losing their entire fortunes in a matter of hours. To compound the issue is that in the aftermath of all these losses, is the revelation that all this could have been avoided with better fiscal planning, investors being more pragmatic and less dishonesty on the path of investment traders. Irrespective of who is to be blamed, the overwhelming fact is that this recession has been one of the worst and its effects will usher in various changes that should prevent it from reoccurring.

Changes because of the Recession

The recession has led to many individuals and government to rethink their economic strategies to drag themselves out and prevent falling back into recession. Some of these changes include:


1. Currency Changes: The days of the rule of the US dollar are over. Since the advent of the latest recession, we have witnessed the value of the US dollar falling against other major world currencies. In addition, many investors are shifting their investments from US dollars to gold as they now see gold as a more secure format of hording their money. This has also triggered a rise in the price of gold thus reaping huge profits for early bird investors.


2. Consumer changes: The world of China manufactures and the US consumes is now confined to the history books. The credit downfall in the US and subsequently in other major commercial markets resulted in US consumers tightening their belts and literally brought the consumer driven market to a standstill. As a result, manufacturing countries such as China have to turn to their own population by implemental fiscal policies that promote local spending. Thanks to their large population, China’s economy with still growing while other countries broke under the burden of the recession.


3. Fiscal Policy Changes: The recession have ushered a wave of fiscal changes. To counter the effects of the recession each country has had to formulate their own strategy based on their financial capacity. In the US, we have seen extensive government spending to boost employment, the implementation stringent rules on bonus packages for top executives of financial institutions and the lowering of interest rates to boost borrowing.
Japan is battling a problem of deflation where prices keep dropping due a rise in the value of the yen against the US dollar. As a result, they are implementing policies that will add some controlled inflation to their financial system.

Other countries such as Iceland have had to resort to borrowing from the IMF to sure up their finances as all their national reserves dried up because of the recession.


4. Political Landscape: Prior to the recession, the world was in a one-poled mode where all events were dictated by the United States. However, the crippling recession has brought the US to its knees to an extent where they have had to resort to getting financial assistance from countries such as China. This has significantly rescinded their political clout as they are now unable to pressure these countries to conform to their wishes as before. ]]> http://blog.badcreditwhiz.com/recession-impact/feed/ 0 http://blog.badcreditwhiz.com/home-owner-recession/ http://blog.badcreditwhiz.com/home-owner-recession/#comments Fri, 29 May 2009 10:45:30 +0000 William M. Davis http://blog.badcreditwhiz.com/?p=764

For homeowners looking to secure themselves this recession, it is quite vital that they plan their moves properly. To start with, do not go for any loan package which requires putting collateral. At present, when the possibility of increase in monthly source of income is not that much, you would not like to take a chance by putting your house as collateral.

Finding A Right Kind Of Lender

Homeowners need to find a lender that is willing to give you new loan at low rate of interest and easy repayment schedule. Another significant thing you must take note of when finding a lender is the processing fee. You do not need to opt for a lender which is demanding processing fee as there are so many lenders operating in the market that does not charge any sort of processing fee

Cheap Home Owner Insurance Rates

To get cheap home owner insurance rates, you need to shop around in the market. At the time of recession, this is the only option you have in terms of getting a best possible deal. If your credit rating is up to the mark, you will face no problem in getting cheap home owner insurance rates. However, if that is not the case, make sure that you improve your credit rating first before applying for home owner insurance.

Benefits Of Economic Recession

• If you have some extra money to layoff, you can go for a wide variety of undervalued stocks. By following this route, you can give your investment portfolio a very profitable look in the long run.




• The main benefit of economic recession is that you will get loan at lower interest rates. People with good credit score can borrow as much money as they want. Further, mortgages are not going to be costly.




• With economic recession, you are going to get plenty of tax benefits. This is especially important for homeowners that are not able to put 20 percent down on their new house.

Home Owner Survival In Recession

In order to survive recession, it is quite important for home owners to take every decision after careful planning. One wrong step and your financial condition will deteriorate. Even worse, you can lose your home. Do not show any desperation in repaying the loan amount. If possible, talk to your lender and explain your exact situation. It has been noticed that in order to save their money, lenders may give you some sort of discount in the form of interest rates and monthly installments.

Refinancing

To get the best out of refinancing, you need to keep a keen eye on the rate of interest that is being charged by the lender. If the rate of interest is pretty much similar to previous loan, you are not going to gain much from the refinancing. With refinancing, your monthly installment is going to be reduced somewhat.

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