Category: Debt Management

In a sign that consumers are still willing to put aside debt worries and bad credit for causes that matter to them, many charities reported an uptick in giving throughout 2009.

According to the Fidelity Charitable Gift Fund, incoming contributions for 2009 stood at $1.1 billion, $0.6 billion higher than their totals from one year earlier.

One aspect of the gift fund that was enhanced in order to appeal to cash-strapped consumers was an increase in accessibility during the year. The minimum grant figure was lowered from $100 to $50 for the year. Additionally, 64 percent of donations came during the year’s fourth quarter, when donors’ finances may have been a bit clearer.

"We are optimistic as we begin the new year," Libbey said. "Throughout 2009, we saw giving gain momentum and peak during December, one of our strongest giving seasons yet. With the economy showing signs of improvement and the markets recovering, we hope to help more donors in the coming year fulfill their giving plans."

Charitable giving seemed to prosper in 2009 despite economic downturn. According to USA Today, Catholic Charities USA had expected to fall well short of its $7.1 million goal for 2009.

However, a 21 percent increase in donations in December compared to one year earlier currently has the charity holding $6.6 million donations for the year with more gifts still left to be processed.

While the U.S. employment situation hardly ended 2009 on a positive note for jobless workers looking to consolidate debt, it was hardly disappointing either as the unemployment rate remained stable from November to December

According to the U.S. Department of Labor, the national unemployment rate for December remained at 10 percent. The rates last change occurred from October to November when it dropped from 10.3 percent, the highest unemployment rate recorded since 1983.

Despite the unchanged rate, the report did note that nonfarm payroll employment had declined over the month as it edged down to 85,000. The drop was primarily due to employment declines in the construction, manufacturing, and wholesale trade industry.

"This report was worse than what we had expected. But at the same time, when looking at the last few months, the trend still shows an improvement," said Torsten Slok, a senior economist for Deutsche Bank, according to Reuters. "Of course it is disappointing that we did not see job growth, but this series is very volatile and we cannot make a strong judgment based on one month.

Despite the overall decline in payroll, both the health care and temporary help services industries – the latter of which was likely spurred by the need for extra workers during the holidays – added jobs during December.

Looking to help out those who are still battered by the recession and looking to cut costs as they consolidate debt, a new promotion from Target will transform the retailer into something of a bulk seller to kick off 2010.

"The Great Save," a new seven-week program that began in some locations this weekend, will offer warehouse-club-sized versions of many of their items, in addition to temporarily shelving a number of "limited time" products at discounted prices as some of their retail locations as well.

Among the limited time items offered at some stores will be shirts from Calvin Klein and Polo Ralph Lauren and handbags from Ed Hardy. Paper towels, toothpaste, and other household items will be among the items that are offered in bulk as part of the promotion.

"The idea is to create the fun, convenience and treasure-hunt feeling of a warehouse environment within your local Target store – without the membership fees," spokesman Joshua Thomas told the Minneapolis-St. Paul Star Tribune.

While the retailer will only run the warehouse-style promotion until mid-February, some experts are wondering whether or not Target will be able to attract cash strapped customers away from more established bulk retailers such as Walmart and Costco that have sold products that way for years.

Unemployed workers in debt counseling who are desperate for a turnaround in the job market may be heartened by the newest ADP National Employment Report released on Wednesday that showed a continued drop in employment loss as 2009 came to a close.

According to the study, employment for nonfarm private sectors decreased by a seasonally adjusted figure of 84,000 from November to December 2009. The rate was noticeable lower than the revised drop of 145,000 jobs in nonfarm employment from October to November, and also reflected the smallest decline in jobs since March 2008.

Large businesses that employed more than 500 workers saw their payrolls decline the most, dropping 34,000 positions. Medium-sized businesses lost 25,000 jobs over the course of the month, as did small businesses with less than 50 employees.

Despite the declines, private employment in the service-providing sector increased by 12,000 for its first gain since March 2008.

The figures from the latest ADP report are causing some economists to be cautiously optimistic about the U.S. Labor Department’s upcoming unemployment figures for December.

Noting that the both organizations have traditionally released figures with similar outcomes, the Wall Street Journal blogger Justin Lahart said that ADP’s figures have sometimes "undershot" Labor Dept. figures because the former does not factor in government jobs.

When those facing debt counseling must deal with the flu or seasonal cold this season, there are a number of ways to keep oneself healthy while staying on the cheap.

According to Dr. William Schaffner, chairman of the Department of Preventive Medicine at Vanderbilt University, there are a number of ways for cash-strapped consumers to fight against the cold and flu this winter without breaking the bank, the New York Times reported.

Instead of spending lots of money on various medications that advertise themselves as cure-alls, Schaffner said it was more cost effective – and healthy – to simply get vaccinated against the seasonal flu and H1N1 virus. With each shot costing less than $20, it may be much cheaper than buying numerous off-the-shelf medicines that just mask symptoms for relief.

Another way to avoid falling victim to the cold is to simply make sure you get enough sleep. Because viruses are not often impacted at all by any antibiotics, keeping one’s immune system strong and ensuring its strength is often the best way to ward off any sickness.

And when it comes to taking vitamins, Echinacea, zinc, and other multivitamins such as Airborne, Dr. Shmuel Shoham, an infectious disease specialist at the Washington Hospital Center in the District of Columbia, advised that it wasn’t worth the money.

Shoham told the Times that while taking vitamins may slightly help the fight against a cold, "the beneficial effect on the common cold is minor at best for these supplements."

Kentucky community interest groups are supporting state legislation that would cap the interest rates payday lenders are currently charging.

Jennifer Belisle, the deputy director of the Northern Kentucky Community Action, recently went on record in support of Governor Beshear’s recentsupport of new laws for 2010 capping rates at 36 percent, the Public News Service recently reported.

Under the state’s current rules, payday lenders can charge exorbitant rates that can sometime charge upwards of 300 percent and allow numerous loans to be taken out at once, holding up some of their customers’ attempts to consolidate debt as they find themselves in worse financial trouble.

"People get caught in a debt trap and a debt cycle. They think they’re borrowing several hundred dollars, for maybe two weeks or a month – and what happens is, it takes six, nine, 12 months or more to pay the debt off."

She added that Kentucky lenders had seen a substantial up tick in business ever since Ohio passed its own set of rules capping rates within the state, putting their lenders out of business and sending their former customers over the border to Kentucky lenders that can bilk them with their exorbitant rates.

In addition to Belisle, the Kentucky Coalition for Responsible Lending has also thrown its support behind rate caps in Kentucky.

Consumers looking to consolidate debt by attempting to move into a cheaper house or refinance their mortgage at a lower rate may not like the latest statistics regarding mortgage rates, which shot up at their quickest pace inrecent months during the week ending December 27.

According to the Zillow Mortgage Rate Monitor, average interest rate for 30-year fixed-rate mortgages saw the largest increase for the week, skyrocketing 0.16 percentage points to hit 4.93 percent. The rates had undergone an increase, albeit a much smaller one, the week earlier as well as increasing 0.05 percentage points for its first increase since October.

Rates for 15-year FRMs took a noticeable jump as well, rising by 0.13 percentage points to hit 4.37 percent. The week prior, average rates for type of mortgage had undergone a much smaller 0.03 percentage point increase following two weeks of smaller 0.01 percentage point gains.

Shorter term 5-1 adjustable-rate mortgages also underwent a significant jump for the week, bumping up 0.13 percentage points as well. The rate had undergone much smaller increases in recent weeks, including a 0.04 percentage point increase the week prior.

As the national mortgage rates continued to rise during the year’s fourth quarter, the volume of mortgage requests continued to fall as well as the volume of mortgage requests declined 26 from the week prior.

Despite many consumers’ plans to avoid spending money on their credit card this holiday season, new research is showing that restricted lines of credit being implemented by creditors.

According to Britt Beemer, the chairman of the polling firm America’s Research Group, restrictions on consumer’s credit lines may be responsible for a decline in sales during the November and December to $436.7 billion, 1.2 percent below the spending figures during the same months taken one year earlier, BusinessWeek recently reported.

ARG research found a noticeable decline in credit offerings has taken place in 2009 resulting in 10 percent more credit requests being denied than in 2008 while 37 percent of cardholders had their credit lines amended somewhat.

If not for the decline in credit, Beemer said that end of year sales in ’09 could have been a completely different story. Instead of a decline, he told BusinessWeek that sales could have climbed by 0.8 percent to $445.5 billion during that same time period.

The potential for a decline in sales will likely not sit well with retailers whom are already dealing with a decline in consumer spending for the third straight year. A recent study from Consumer Reports found the average consumer would spend $699 on holiday gifts this season, an average of $41 less than 2008 figures.

A newly issued study from Equifax has found that creditors are beginning to shy away from consumers who may have previously dealt with credit counseling services as a way to climb out of debt, reductions of credit lines have led to a decline in new card issuances in recent years.

Accordingto the study, which was released on Tuesday, creditors have developed a trend of reducing their lines of credit since instituting card risk management programs in July 2008. In that time, Equifax reported that card credit accounts had declined by 93 million while lines of credit had decreased by $803 billion

Equifax also found that the 2.4 million bank cards that had been opened in September was 45 percent lower from one year earlier.

"The story of 2009 continues to be one of consumer retrenchment and credit tightness as people strive to pay down debt or are forced to abandon it, and lenders more aggressively manage risk in their portfolios," said Dann Adams, president of Equifax’s U.S. Consumer Information Solutions.

The survey also found that delinquency rates for credit cards saw a significant jump over figures taken at the end of 2008. In November 2009, the 60-day delinquency rate for cards stood at 4.62 percent, well above the 3.76 percent rate recorded in November 2008

As consumers deal with limited funding and other means of debt management that may eliminate the possibility of buying any big-ticket items this year, more may instead look for a personal touch with their presents this season.

"With everyone being frugal, giving someone a custom water bottle with a picture of their dog on it is more chic and special and loved than last year’s Chanel sunglasses," said Amy Maniatis, vice president for marketing at CafePress.com.

In addition to selling its own pre-made apparel, CafePress offers the ability to customize 40 different items ranging from beer steins and magnets to pillows and boxer shorts by adding pictures and lettering.
Other websites such as ScrapBlog offer customers the ability to upload series of pictures and have them turned into personal printed scrapbooks.

"With the recession, people don’t want to surround themselves with things that are just stuff," home furnishing designer Jonathan Adler told the Times. "Everything that people purchase now has to have a little bit more meaning."

With funding so limited for many, giving emotionally meaningful gifts has been so en vogue this season that many advertising campaigns have downplayed the notion of glitzy and expensive presents in favor of more personal ones that carry extra meaning.