I hate to be the bad news town crier, but I have just read some discouraging news as far as US credit scores goes. Remember, these credit scores are needed to get credit cars, auto loans, and of course new home financing. They can also affect the price you pay for lots of other things. Even your car insurance rates can be affected! Beyond just affecting people with poor credit, it affects other businesses too. Less homes or autos will get sold if people cannot qualify for credit!

In fact, FICO says that over a quarter of Americans have a credit score that is below 600. FICO says that before the great recession, only about 15 percent of Americans had credit scores that low.

There are also slightly more people with very good credit scores. That would be in the 800 plus range. This may reflect a growing number of people who are trying to cut debt and reduce spending in response to the economic problems.

The number of people with moderate credit scores, between very good and pretty poor, has also been reduced. Some people, perhaps because of a job loss or other troubles, have dropped down. Others have been lucky, and become more aware of their credit scores, and they have moved up.

The full effect of the change in credit ratings may not be felt yet. It usually takes a few months of economic problems, or reducing debt, to really impact credit scores.

We posted before on the advantages of a 0% balance transfer from a higher interest rate credit card. You may think that you cannot find one any more since the card companies have cracked down on credit applications. But there are plenty of offers out there for people who have decent credit.

It may very well be worth your trouble too. Look at an example if you carry a $5k balance at 21 percent (not that high these days). By paying a hundred bucks a month towards that balance, you are setting yourself to stay in debt for one hundred and nineteen months. This also means that you will have paid your credit card company almost twelve thousand dollars for a five thousand dollar balance!

But if you can reduce that rate to zero percent, it would only take 50 months of payments. OK, I admit you will not find an offer for zero percent balance transfers that will last that long, but you may reduce that interest rate to something like five percent. That would still reduce your payoff time to 56 months, or about half of the 21% interest rate.

If possible, of course, it would be better to apply more than 100 bucks a month to a $5k balance, but that may not be possible.

If you are interested in saving some money on your debt, why not take a few minutes to look for online offers? You can visit our original post : Find 0% balance transfer offers.

First you need to understand what GAP insurance is, and also how your regular auto insurance works. If you wreck your car, and an isurer decides it is a total loss, they will only pay you what they determine your vehicle is worth. Oh, you may be able to argue and get slightly more favorable terms, but you are not likely to be able to budge them that much. After all, they are an insurance company, and they pay you for damages. The way they consider those damages, it means they pay for the value of the vehicle, and NOT how much you owe on your auto loan.

These days, a lot of us our extending our loan payoff dates over 4, 5, or even 7 years to reduce payments. A lot of auto buyers also take advantage of low down payment offers. In addition, we may roll the loan on another vehicle into our new vehicle, maning we start off with a loan that is much larger than the value of the car.

Is that it? No, there are other factors that may increase you debt. You may have rolled your sales taxes and extended warranty into your loan. You may have even rolled the GAP insurace in. Sure, you can cancel the warranty and gap insurance if you total your vehicle, but your previous payments will still have had to cover all of those extra expenses.

So, is GAP  insurance a good deal?

Well it, unlike your regular coverage, actually pays off the difference between the value of your vehicle and the loan amount. So if you drove you new car off the lot, it probably depreciated about 20% at the first intersection. So consider that $30,000 note. Even if just consider depreciation, your car is probably worth at least $6,000 less than the note. A total loss could be a big financial problem because you are still responsible for the entire debt. The lender does not care how much your insurer will pay off. They care about getting that loan paid off!

You can usually purchase this coverage from the dealer. Sometimes a finance company may even require it in order to approve a loan. I have also seen it online, and it may be cheaper to buy it that way.

You may wonder why your credit scores affect the premiums you may pay for insurance, and if you do, you are not the only one! How is your credit?

Believe it or not, you will hear a lot more about this in the coming year. And it will affect you, big time. The insurance industry can, based on your credit report, raise your premiums, place you in a subsidiary, and even cancel your insurance altogether. This is done using a system called “Insurance Credit Scoring“. The industry also refers to this as credit-based underwriting, credit-based insurance scoring, an insurance score, a company placement indicator, or an insurance financial stability score, Have you been the victim of “Insurance Credit Scoring”? If you have filed for bankruptcy, divorced, lost your job, or shopped for a home or automobile then you most likely have.

And as life does not always run smoothly and homes and autos are a necessity, chances are good someday you will be. In addition, be warned if you are a small business owner, a home-based business owner, seek credit counseling or if you pay off your large debts (mortgage, auto) early, you will be affected too.

Forget everything you know about checking and cleaning up your credit. “Insurance Credit Scoring” is a whole new ballgame and not only do consumers not know the score, they do not even know the rules of the game!

Insurance Credit Scoring is based upon the belief that that there is a direct statistical relationship between financial stability and risk. In other words, the lower your insurance credit score, the more likely you are to file claims, inflate claims, commit fraud and commit arson. This score is based solely on information contained in consumer credit reports from Equifax, Experian, and Trans Union. This insurance credit score is then used in conjunction with motor vehicle records, loss reports, and application information to determine your insurance risk at a particular point in time. Some companies have also started using insurance credit scores to non-renew coverage regardless of whether a claim has been filed or premiums have been paid on time.

If you think your old insurer is using your credit score to inflate your rates, it may be time to compare insurance quotes. You can get scores from top rated companies like Esurrance or Progressive.

America has always been known as a nation of consumers. And yet the past recession may have changed us into a more frugal society.  Top economist tell us there is a growing trend among the middle and upper middle class to become savers instead of spenders. You can read more about the analyst opinion here - Frugality - The New US Trend.

Many of these people did not lose their jobs or income. But they did have some wake up calls.  Instead of being a nation that is tied to consumerism are some of us moving towards anti-consumerism.

• Savings and Retirement Account Values Declined. Account values dropped. Even people with bank savings accounts or CDs found that interest rates dropped to less than inflatiion. Even if they did not lose actual money, they lost value.
• Even people who kept their own jobs probably saw friends or neighbors getting terminated from employment they thought was stable.
• House values declined. For many of us, our homes are our largest assets. Even if we kept our homes, we probably did not see a lot of growth in value, and many of us saw a decline.

People over 50 may have been hit particularly hard. Retired people depended upon investment accounts which kept declining as many prices rose. People who were approaching retirement had to rethink their plans to leave jobs. Most baby boomers, who are not yet at retirement age, have no plans to retire at 65.  Some say it is because they enjoy work, but a lot admit they just cannot afford to quit their jobs.

Also see - Is Frugal The New Green?

Are You Becoming A Cheapskate?

Do you think this is true? Have you become more frugal lately. Maybe you take small steps like cutting don on gas usage or clipping coupons for groceries. Maybe you have downsized or gotten rid of a car completely. You can register for free to leave a comment. Our readers would love your feedback.

Even these days, with real estate in a bit of a slump, new neighborhoods still pop up in my local area. I see signs on the new construction, and even in store parking lots, advertising that people can purchase a home for less than the cost of renting an apartment. But is that true. Even if you pay $1,000 a month for rent, and a sign advertises you can pay $750 for mortgage payments, will it still be a lighter burden on your budget?

Homeowners Pay More Than Mortgage

When you rent, you really just pay your rent. You may also buy renters or home contents insurance too, but that is pretty cheap. A basic policy will probably not cost more than $40 a month in most areas, and many people can find good coverage for a lot less than this.

So compare that to the cost of homeowners insurance policies. Those will cover your property, building, personal property, liability, and possibly other things. Instead of looking at a $20 - 30 monthly bill, you will probably need to spend more than $100 a month.

When you pay rent, your landlord pays property taxes. When you own a home, that will be your responsibility. As with insurance, your own rates will vary by your location, value of home, etc. But it would be conservative to estimate that most home owners probably spend a couple of hundred dollars a month, or more, for their county taxes, school taxes, water district taxes, etc.

Remember to also check out neighborhood association fees. Sometimes these are very modest, just a few hundred dollars a year, but sometimes they are much more expensive. Let us, for this article, estimate they will be about $50 a month.

So what does this all do to our example. We were comparing $750 in mortgage payments vs. $1,000 a month in rent. But we have to remember to add some other things to that mortgage payment. So if we add in $200 a month for taxes, $100 for property taxes, and $50 for homeowners association dues, we have actually figured out basic home ownership costs wil be about $1,100!

But are we done? Well, when you rent, you call your landlord to fix things. When you own your own home, you have to call repair people, and you have to pay them. How much will this cost? I cannot predict what will break or back up next in your home, but I would say it would be prudent to allocated a minimum of $100 - $200 a month to fix critical items.

You can purchase a home warranty which may help you budget for broken applicances, and it may cost $400 - $500 a year. But these usually come with deductibles you have to pay as well, so you should still budget some emergency funds. besides they do not cover everything.

Should You Buy A Home?

You will have to make your own decision about if you should purchase a home or just keep renting. You can enjoy may benefits of home ownership, and you can be putting your money towards growing a large asset. I just do not want everybody to look at an avertisement, and then automatically decide home ownership will always be a bargain when compared to renting!

OK, it is crunch time for doing taxes now. Just be sure that in your rush to get your taxes done, you do not overlook some perfectly legal ways to reduce your bill or increase your tax return. Here are some tax deductions you may not have thought of. Keep in mind that this is not professional tax advice, but just stories of allowed deductions. Do your own due dilligence!

Paying Your Spouse or Signifigant Other For Real Work - If you run a business, and your spouse or partner does real work for that business, you can pay them and deduct the expense. For example, if you own rental property, and your spouse or partner gets paid to collect rent, that would seem legitimate. Keep in mind that normal chores like washing dishes will not count.

Work Related Travel - If you have to travel for work, even if it is a professional convention or event, your expenses should be tax deductible. Now a business convention in Las Vegas may mean you can deduct reasonable meals and transportation and hotel bills. A side trip to Hoover Dam for please would not be considered part of the deal.

Home Office - Be careful here, because you really need to set aside a room of your house as a home office, and you cannot just deduct a room which also gets used most of the time for other things. But if you do have a home office, you can also deduct a percentage of other bills - like utilities and repairs, and sometimes even outside landscaping - that is in proportion to the size of the room vs. the size of your home. 

Individual Health Insurance - If you are self employed, a contract worker, etc., and you have to buy private insurance because you do not have a group plan, your premiums are deductible.  This deduction can help a lot of small business people afford individual health insurance rates too. This is only fair because companies have been able to deduct this expense for years.

Business Related Car Trips - You need to keep a travel log, but you can deduct miles you put on your car for your business even if you also use the vehicle for personal use.

It seems like so many types of insurance have different names that have the word mortgage or home in them that many consumers get confused. But private mortgage insurance is a product that many lenders require to qualify home buyers for their loans. It protects the lender, but not the borrower, in case of a loan default.

Because these loans are riskier, many mortgage companies require PMI if a lender cannot put down 20% of the purchase price. The problem for the borrower is that this coverage can be expensive, and of course, that makes it even tougher to build equity in a home because the cost of owning a home will be higher.

Sometimes the only course is to accept the added cost if buying a home is a good decision for other reasons. But we did find a good article with some ways to avoid PMI.  After all, it is hard to get excited about paying an extra 1% of your loan value every year to protect the mortgage company! If you loan value is $100,000, that means your monthly  payment may be about $80 higher, and if your loan is $250K, you could pay almost $200 more!

Now I’m sure you would rather spend that money to build equity, or almost anything else, than protecting your lender.

A lot of us tend to hold home ownership us an ideal. We consider renting a thing that is done as a temporary way to get a place to live when there are no other options at the moment. And yet, is buying a home always the right answer? Here is another article with some answers (or more questions): Own or Rent a Home?

If anybody has noticed the news about the high foreclosure rate, it has to be obvious that owning has not worked out well for a multitude of American families. We have to understand that, for most of us, owning does not mean holding a clear deed. Instead we rely on a hefty mortgage. So the truth is that our loan company or bank really owns a large part of our homes.  If the lender has to take the house back, it can hurt our financial life for years.

And along with that monthly mortgage also comes other bills. Remember that you will not be able to call the landlord when the air conditioner or dishwasher don’t work. You will have to call a repair person and pay the bill yourself. You must also factor in the cost of your mortgage interest, property taxes, and homeowners insurance.

Now in some cases, you may also get some more income tax deductibons. Mortgage interest and property taxes can be deducted, but that is only if they are higher than the standard deduction that most taxpayers use.  Many homeowners do not benefit from any more reduction in taxes than if they had rented instead.

Who Should Buy A Home?

It is impossible to give a general answer to this quesstion. But here are some quetions to ask yourself before you buy.

• Do you plan to stay in the home for awhile? People are much more likely to benefit from owning a home over the long term. That gives them time to build up equity and realize more benefits of home ownership.
• Can you get an affordable loan? Make sure you can afford your monthly payments plus other costs without stretching your budget. 
• Do you have emergency money set aside? Most of the people who had home foreclosures or other financial problems last year had no reason to expect them a year or two before. If you do not have enough cash set aside to live on for a few months, you should really ask yourself if you can afford to buy a house. Remember that you will be reponsible for mortgage payments,  homeowners insurance, repairs, and upkeep.

Lots of families are very happy with their own homes. Nobody can question the pride, security, and stability that a home gives people. But many other people realize that they should just keep renting for awhile longer. The right answer to the question of renting or buying really depends upon you.

By the Way…

If you already own a home, fast and free online quotes can help you find lower homeowners insurance rates in minutes.

In spite of the tougher bankruptcy laws, 2009 saw a dramatic increase in bankruptcies. Apparently people were in enough financial distress so that the tougher laws did not scare them off. I just wish that the laws would also get much tougher on the credit industry. In this world, it is certainly debtor beware.

In fact every state saw an increase, though some that were hit hardest by the recession endured the highest portion of the 1.4 million US bankruptcies reported last year When interviewed, a common theme among filers was the fact that 3 years ago they never would have predicted they would be in this situation now.

The trend has a lot to do with the financial situation. But it may also be related to the fact that lawyers and consumers are getting more familiar with the new bankruptcy laws. In fact, there was a surge in filings in 2005, right before the tougher laws were enforced. But since then, the number has been climbing back up.