Posted by
joslyn – September 2, 2010
There are several different types of bankruptcy, but the two that apply to most individuals are known as Chapter 7 and Chapter 13. Although the nuances of filing for bankruptcy are complex and vary in individual cases, here is a very concise, generalized overview:
Chapter 7 Bankruptcy:
Your standard bankruptcy filing. The courts will appoint a trustee to collect your assets and liquidate (sell) them in order to pay back your creditors. Certain assets may be exempt from seizure. This is obviously a more viable and practical option for those who have no assets to lose, and are therefore poised for a “fresh start.”
Chapter 13 Bankruptcy:
If you have a regular income, this type of bankruptcy (sometimes called “reorganization”) allows you to pay off your debts over a 3-5 year period and still keep your property. In order for Chapter 13 to go through, you (the “debtor”), creditor(s), and the court all have to agree on a plan. This is the best option if you have a non-exempt asset you don’t want to lose.
What both of these options have in common is that they’ll damage your credit rating to at least some extent. Bankruptcy will stay on your public record for ten years.
For more explicit information about bankruptcy law and details, see the U.S. government’s web sites on Chapter 7 and Chapter 13.
Posted by
joslyn – August 31, 2010
I heard a budgeting term today: the Latte Factor®. It’s the amount of money you spend every day on the minutiae—not just lattes, but things like bridge tolls, chewing gum, and trashy magazines.
The question is, would cutting out the small stuff really save you money? Or do those dollars here and there actually improve your quality of life to the extent that they are worth it? It could be argued that a latte every morning makes your commute bearable and thus inspires you to get up and go. I’ve had more than one friend tell me that they lie in bed at night thinking excitedly about their morning coffee.
One could also argue that it makes more sense to focus on bigger areas of money-saving potential. Three dollars here and two dollars there does add up… but does it add up quickly enough to be worth the deprivation involved?
David Bach, who put the ® in Latte Factor®, offers a calculator on his web site so you can decide for yourself: To latte or not to latte?
Posted by
joslyn – August 26, 2010
What banks refer to as the “Prime Rate” is a reference rate that they use to come with the real rate they will charge each customer. The Prime Rate (at least in the U.S.) is about 3 percentage points above the federal funds rate. (That’s the interest rate banks charge each other for overnight loans that they make to fulfill reserve funding requirements.)
A subprime rate is attached to a subprime loan granted to someone with questionable credit. Although the “sub” might make you think it’s a lower interest rate, that’s not the case. It’s actually higher. It’s “subprime”—in other words, less than the best rate possible to consumers with better credit. Subprime loans can apply to all sorts of loans, from mortgages to auto loans to credit cards.
If you have poor credit and have trouble getting access to a loan at the Prime Rate, a subprime loan can be a good way to rebuild your trustworthiness and re-establish your credit.
The Wall Street Journal is considered the leading authority on the U.S. Prime Rate. Right now the Prime Rate is listed by WSJ as being 3.25%.
Read all the laborious details about how the Prime Rate is calculated on Wall Street Journal’s site.
Posted by
joslyn – August 24, 2010
Average credit card interest rates went up to 14.7% in the second quarter of this year—a 9-year high—thanks to the financial reform bill that passed last year (the Credit Card Accountability Responsibility and Disclosure Act of 2009).
Ironically, one of the measures of the bill was to prevent credit card companies from indiscriminately raising rates, but they were given a period of time before that law would kick in. In that meantime, they hiked up rates willy-nilly in order to brace themselves for the change, and also to compensate for the fact that they can no longer charge all sort of ruthless hidden fees.
The Consumerist put it quaintly: “Unable to keep soaking you on the backend with hidden fees, tricks, and traps, issuers now have to push their profit-taking to the fore.”
Another factor? Well, second quarter 2010 also went down in history as the second-highest level of credit card spending in history. With that newfound “credit sector confidence,” banks felt comfortable raising rates.
Ironically, as credit card interest rates go up and up and up, interest rates everywhere else are plummeting. Mortgage rates are at their all-time-lowest.
Bad time to use your credit card; great time to buy a house!
