Category: Debt Management

Following two consecutive months of declines, consumers are beginning to shed their worries about consolidating debt, and a new Deloitte survey shows that spending increased throughout March.

The latest Deloitte Consumer Spending Index for March, which was released on Tuesday, increased by 0.26 percentage points to hit 4.47 percent, from a downwardly revised figure of one month earlier.

The increase was attributed primarily [to] continued declines in initial unemployment claims and real home prices, while real wages were only down slightly from one year earlier.

"The improvement in the index was primarily driven by the job market, as initial unemployment claims continue to trend downward from their peak one year ago. Tax rates, which were cut last year as a part of the government’s stimulus package, also moved downward," said Carl Steidtmann, chief economist with Deloitte Research. "At the same time, declining real home prices remain a drag on the Index, although the double-digit price declines of a year ago have eased to the low single digits."

Stacy Janiak, a vice chairman and Deloitte’s U.S. retail leader, added that while there was still room for the index to increase, consumers had "shed some of their restraint in recent months."

Homeowners who are in need of debt consolidation are continuing to save money by refinancing their mortgage in March through the government’s Home Affordable Modification Program, according to new data from Bank of America.

The latest information from the national bank, which was released on Monday, shows that Bank of America completed the mortgage modifications for 12,200 more homeowners than in the previous month’s report.

In total, the bank has adjusted 32,900 mortgage modifications through the nation’s HAMP program as of April 8, and 560,000 modifications since January 2008 through various adjustment programs.

"We anticipated the momentum of completion of HAMP modifications would build as we entered spring, and we’re seeing that," said Jack Schakett, a loss mitigation strategies executive for Bank of America. "As more homeowners have completed their required trial payment period and provided the information necessary for underwriting, an increasing number of Bank of America customers are receiving long-term assistance through the government initiative and the efforts of our associates."

Across the country, more than 190,000 mortgages have been refinanced through the HAMP by ll types of banks since its inception.

Led by bond yields and improved employment figures for March, average interest rates for all mortgage types increased during the first full week of March, providing little relief for homeowners looking to consolidate debt through mortgage refinancing.

According to the latest Primary Mortgage Market Survey for the week ending April 8, which was released by Freddie Mac on Thursday, the average rate for 30-year fixed-rate mortgages increased by 0.13 percentage points to hit 5.21 percent. One week earlier, the rate had edged above 5 percent following a 0.09 percentage point increase to 5.08 percent.

Similarly, the average rate for 15-year FRMs edged up by 0.13 percentage points as well as it increased to 4.52 percent. One week earlier, the FRM had seen a smaller increase of 0.05 percentage points.

Following a 0.04 percentage point decrease to end April the average rate for 5-year adjustable-rate mortgages negated it with a 0.15 percentage point increase en route to 4.25 percent this week. Similarly, the average rate for 1-year ARMs jumped up by 0.09 percentage points to hit 4.14 percent this week, nearly negating a 0.15 percentage point decline one week earlier.

While more fortunate than those without work and consolidating debt to do their best to make ends meet, a new survey has found that even the majority of those with a job are perilously close to serious financial problems.

According to a survey released Wednesday by CareerBuilder.com, 78 percent of workers with jobs are currently living paycheck-to-paycheck and unable to build up any significant savings. The figure is higher than the 61 percent who said they lived paycheck-to-paycheck in a survey taken last May.

Likely because of the lack of savings possessed by a majority of workers, 56 percent of respondents said they planned on using their tax returns to pay off bills that have piled up in recent months.

"Workers’ wallets are still feeling the ripple effects of the past year," said Rosemary Haefner, vice president of human resources for CareerBuilder. "In addition to scaling back their investments and cutting back on expenses, workers are using their tax returns to help supplement their incomes. Our survey indicates that more workers plan to spend their refunds on everyday expenses than on savings or other items."

Additionally, 34 percent said they planned on putting their tax return into savings, while 8 percent said they would use it to pay back money to people who had given them a loan. Only 11 percent of respondents said they planned to use their refund to fund a vacation.

With consumers looking to cut costs and commit as little money as possible to unneeded expenses, a growing number of cell-phone users have begun switching to cheaper pre-paid phone brands as a means to consolidate debt.

According to a study by the New Millennium Research Council [released] on March 31, the fourth quarter of 2009 marked the first time that new prepaid wireless customers in the country outnumbered the number of new contract-based cell phone customers.

The prepaid cell phone market, which in many cases has cheaper plans than contract plans because they are customizable, grow to 54.4. million customers during the quarter, an increase of 17 percent compared to the final quarter of 2008.

"The era of cell phone penny pinching is officially here. Thanks to the recession, the U.S. cell phone marketplace continues to undergo fundamental changes that will just get bigger as the economic downturn deepens," said Jose Guzman, a project coordinator for the NMRC. "What is different from a year ago is the explosion in new ‘all-you-can-eat’ and unlimited prepaid deals as low as $30 and $45 that will remain attractive to consumers long after the current recession is over."

The study also found that, in total, there were approximately 285 million Americans who were subscribed to some type of wireless phone service.

The deep effects of the Great Recession and the need for many families across the country to consolidate debt and save money can be seen in a new report from the Mortgage Bankers Association that shows the number of householdsdeclined from 2005-2008 despite a population increase.

The report, titled What Happens to Household Formation in a Recession, found that the number of households across the country declined by 1.2 million from 2005 to 2008, despite a population increase of 3.4 million.

The study, which was conducted by University of Southern California associate professor Gary Painter and sponsored by the Research Institute for Housing America, also found that the national home-ownership rate had fallen to 67 percent from a peak of 69 percent.

"With such a significant drop in households nationwide, it is clear the most recent recession impacted individuals’ decisions to move out on their own and caused many Americans to join already formed households,” said Painter. "…Clearly, given the depth of the downturn in 2009, and the ongoing weakness in the job market through the beginning of this year, this study gives no reason to expect that household formation has picked up at all."

The decline in households and needs by many to save money during the recession also led to an increase in overcrowding, which increased nearly five-fold and indicated that families had taken to sharing households.

A new report from the U.S. Department of Labor has found that job openings and labor turnover remained mostly stable in February, likely pleasing consumers who are in the process of debt consolidation and looking for brighter economic times ahead.

According to the Labor Department Job Openings and Labor Turnover report for February, which was released on Tuesday, job openings only saw a slight decline in the month as they fell to 2.72 million from 2.85 million in January. Hires also declined only minimally to 3.96 million from 4.08 million in January, as did total separations (3.95 million, down from 4.15 million in January.)

"Generally, you’re moving in the right direction on job openings," said Michael Feroli, the chief U.S. economist at JPMorgan Chase, according to the Associated Press. "[But] as today’s numbers remind us, it’s not a straight line up."

In the last 12 months ending in February, the hire rate remained unchanged in total nonfarm and private employment while government hiring increased.

In turn, the rate of layoffs across the country declined slightly as well by 0.1 point to 1.4. The decline came as the number of layoffs hit 1.82 million in February, down from 1.95 million in January and 2.59 million in February 2009.

This tax season may be a good opportunity for adults who are concerned about saving money for their younger relatives’ college education, especially if they have not been able to in recent years due to debt consolidation issues.

With the Florida College Investment Plan, adults filing a a tax return this year will have the option of creating a tax-free savings account through a 529 college saving plan that is tax exempt and can be initiated through a variety of five different investment options.

With a tax refund in hand, friends, parents, or grandparents can open a savings account for a child with an initial deposit of at least $250 or an automatic bank withdrawal of at least $25.

"Every grandparent would like to see their grandchildren get a college education. You want the best for them, and one of the best things you can give them is a head start towards college," says Justine Kellner McGeehan, a Tallahassee resident who has an FCIP account for her grandchildren.

Money saved by the plan will be accepted at most accredited public or private universities and colleges for undergrad or graduate programs. Additionally, neither the creator or recipient of funding from the FCIP need to be a resident of Florida.

With many Americans who are in the midst of making every penny count as they consolidate debt, a settlement reached in Maryland may provide some savings to families who desperately need it.

Attorney General Douglas F. Gansler announced on Thursday that his office’s Consumer Protection Division had reached a settlement with BJ’s Wholesale Club Inc to return all money the retailer earned from deceptive coupons they offered.

From late 2008 to early 2009, Maryland consumers were offered “Buy One Get One Free” coupons for use at area BJ retailers. However, fine print in the coupon negated the offer by limiting it only to items priced below a certain price that the retailer did not offer

"Businesses in Maryland must abide by the law and when they advertise something for free, it is just that – free," said Attorney General Gansler. "As a result of this agreement, BJ’s has agreed to stop these deceptive practices and reimburse customers in Maryland."

In addition to refunding the 2,000 Maryland residents who wrongfully paid for products that should be free, the settlement also dictated that BJ’s pay a $40,000 penalty to the Consumer Protection Division.

A recently conducted survey by International Living magazine has found that, due to ecomonic restraints and the debt consolidation needs required by many across the country, Americans are more likely to expatriate than ever.

According to the survey, an overwhelming 95 percent of the 500,000readers of the magazine responded they were more likely to move out of the U.S. currently than they were one year earlier.

Jackie Flynn, the publisher for InternationalLiving.com, said that an increased sentiment to leave the country had been suspected by many at the magazine after a high turnout at their recent U.S.-based conferences

"The economy is faltering," said Flynn, "unemployment is at record levels, the health care debate nearly caused a civil war, and there are real wars being fought on two fronts in the Middle East. The cost of living is going up so fast that people are being priced out of their retirements. It’s no wonder our readers are getting serious about moving abroad."

Elaine Finnegan, the website’s events director, added that many of the magazine’s conferences had sold out, forcing them to put a registration limit on them because the demand to learn about living outside the U.S. had grown so much in the last year.