limits http://www.wisebread.com/taxonomy/term/9953/all en-US The Limits of Small Economies http://www.wisebread.com/the-limits-of-small-economies <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-limits-of-small-economies" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/coffee_with_view.jpg" alt="Coffee with a view" title="Coffee with a view" class="imagecache imagecache-250w" width="250" height="133" /></a> </div> </div> </div> <p>The first step always recommended to people whose finances are out of control is that they institute some small economies. Quit with the fancy coffee drinks. Brown bag it for lunch. Switch to generic brands at the grocery store.</p> <p>These steps are mentioned first not because they're the most important, but because they're quick, easy, and (almost) universally appropriate. But the hard truth is that small indulgences are not what ruin people's finances. (See also: <a href="http://www.wisebread.com/simple-living-through-capital">Simple Living Through Capital</a>)</p> <h2>Financial Ruination</h2> <p>People's finances are ruined two ways:</p> <ol> <li>A sudden drop in income.</li> <li>A large uninsured expense.</li> </ol> <p>I started to make separate lists of the sort of things that lead to these problems, but it turns out there's so much overlap that one list pretty much covers it: Unemployment, illness, accident, divorce, lawsuit, natural disaster, business failure, disability, etc.</p> <p>Those are the things that cause individual financial collapse, not being unable to resist the latest shiny high-tech gadget.</p> <h2>Failure to Thrive</h2> <p>Which is not to say that people shouldn't attack the small indulgences. That's still worthwhile, for two reasons.</p> <p>First, they're something that you can take action on right now.</p> <p>Attacking the big things often takes months or years of effort before there's any payoff &mdash; moving to a cheaper house, getting a better job, changing careers, settling a lawsuit. (And that's putting aside the really terrible situations like a terminal illness where there's literally nothing you can do to fix things.)</p> <p>Saving a few bucks every week won't fill the hole blown into your finances by a major disaster, but it does give you something positive to do.</p> <p>Second, although small indulgences are rarely if ever the reason for ruination, they do make it hard to get ahead.</p> <p>Back before interest rates were so low, it would have been possible to write a little parable here about how much money you could save over 10 years if you cut your expenses by $20 or $50 a week.</p> <p>At current rates, that story isn't so compelling now. But however little money small sums invested at low rates for a few years adds up to, it still leaves you way ahead of the alternative &mdash; small sums borrowed at high rates for a few years. (Go ahead and crank the numbers on that if you don't believe me.)</p> <p>However you figure it, small economies do give you the chance to accumulate a little capital, and <a href="http://www.wisebread.com/on-the-importance-of-having-capital">a little capital</a> improves your life in many ways.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/the-limits-of-small-economies">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-retirement-latte">The Retirement Latte</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-one-size-fits-all-spending-tips-that-don-t-really-fit-everyone">5 One-Size-Fits-All Spending Tips That Don’t Really Fit Everyone</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/a-money-resource-book-the-finish-rich-dictionary-book-review">A Money Resource Book: The Finish Rich Dictionary (Book Review)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-millennials-have-changed-money-so-far">6 Ways Millennials Have Changed Money (So Far)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/could-trump-bring-higher-interest-rates-and-inflation-consider-these-money-moves">Could Trump Bring Higher Interest Rates and Inflation? Consider These Money Moves</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Latte Factor limits spending less Wed, 23 Jan 2013 10:48:37 +0000 Philip Brewer 965731 at http://www.wisebread.com Is your credit score suffering without your knowledge? http://www.wisebread.com/is-your-credit-score-suffering-without-your-knowledge <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/is-your-credit-score-suffering-without-your-knowledge" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/A spoonful of credit crunch....jpg" alt="Credit crunch" title="Credit crunch" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>The warning signs were there as early as <a href="/your-interest-rates-are-about-to-go-up">July</a>. Even if your <a title="Guide to Using Credit Cards Wisely" href="http://www.wisebread.com/credit-card-guide">credit card interest rates</a> aren't going up, your <a href="http://online.wsj.com/article/SB122446082980748593.html?mod=googlenews_wsj">credit limit might be going down</a>. If you're like me, and you tend to shread your credit card statements as soon as you receive them, you might want to open them up and ascertain that your credit card company hasn't suddenly <a href="http://online.wsj.com/article/SB122273798697188787.html?mod=googlenews_wsj">lowered your limit</a>.</p> <p><em>It's not just your portfolio that may be shrinking lately. The spending limit on your credit card may be heading south as well. Credit-card issuers have been decreasing credit limits.</em></p> <p><em>&quot;Most banks are cutting their credit limits,&quot; says Carol Kaplan, spokeswoman for the American Bankers Association. &quot;They're doing it to everyone.&quot;</em></p> <p>According to <a href="http://blogs.wsj.com/wallet/2008/10/13/are-shrinking-credit-limits-silently-hurting-your-credit-score/?mod=googlenews_wsj">John Ulzheimer</a>, president of <a href="http://www.credit.com/"><font color="#0253b7">Credit.com</font></a> Educational Services:</p> <p><em>To maintain a good score, Ulzheimer recommends that consumers use only 10 percent of their available credit. For example, someone with a credit limit of $100,000 should never carry a balance over $10,000. But in today&rsquo;s climate, however, that $100,000 limit could be cut to $50,000, meaning that the $10,000 balance now represents 20 percent of your credit limit, and thus your credit score is dinged. Your score could go down even if you regularly pay off your minimum balance and your loans.</em></p> <p>With <a href="http://online.wsj.com/article/SB122446082980748593.html?mod=googlenews_wsj">delinquencies mounting by the day</a>, credit card companies are going to try to limit consumer lending, not just in new loans and lines of credit, but with existing ones. Companies are looking at your salary, current debt, job, and locale to figure out if you are a riskier investment than you were, say, six months ago.</p> <p>If you haven't gotten your free credit score this year, you might want to consider doing so. Keep an eye on your credit card limits, too, to see if they have shifted. It's not against the law for a credit card company to suddenly lower your credit score <a href="http://www.npr.org/templates/story/story.php?storyId=95611244">below the amount you currently owe</a>, thereby inducing a whole boatload of over-limit penalties. Remember, when it comes to debt, credit card companies can do pretty much whatever they want.</p> <p>Want to protect yourself?</p> <ul> <li>Pay down as much of your debt as you possibly can.</li> <li>Haggle with your credit card company to keep your credit limit at its current level.</li> <li>Keep an eye out for any mail from your bank or credit card company - don't just shred them!&nbsp;</li> <li>Know your <a href="/get-free-credit-score-monitoring-with-credit-karma">credit score</a>&nbsp;(click to read about a way to get your score for free).</li> </ul> <p>I hate facing debt when I know I have a lot of it, but let's face it, folks, this problem isn't going away anytime soon.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-karim">Andrea Karim</a> of <a href="http://www.wisebread.com/is-your-credit-score-suffering-without-your-knowledge">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score">How to Use Credit Cards to Improve Your Credit Score</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-build-credit-without-using-credit-cards">How to Build Credit Without Using Credit Cards</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-rebuild-your-credit-in-8-simple-steps">How to Rebuild Your Credit in 8 Simple Steps</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-what-the-successful-use-of-secured-credit-cards-looks-like">Here&#039;s What the Successful Use of Secured Credit Cards Looks Like</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/surprising-things-that-can-kill-your-credit">Surprising Things That Can Kill Your Credit</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards building credit credit card credit crisis credit score limits loans mortgage Tue, 21 Oct 2008 21:33:08 +0000 Andrea Karim 2537 at http://www.wisebread.com