Consumers whack debt back

Like a suburban homeowner attacking a growing plot of weeds, American consumers weed-whacked their debt by a record 21.6 billion with a “b” dollars in July, according to the Federal Reserve.  The good news is that we’ve whacked back the debt, maybe even learning to live within our means and save for that rainy day.  The bad news, consumer spending accounts for nearly 70% of economic activity.  It might mean a slow recovery.  Fewer weeds sure, but no flowers blooming for a while.

Get started whacking with these articles on credit card debt relief.

What looms for the baby boomers?

Today’s Washington Post business section carries a revealing piece by Nancy Trejos called “Seniors Leaning on Credit” (free registration required, I think) with great reporting and real insights into the issues of aging and debt.  Of course, I’m pleased because InCharge Debt Solutions and nonprofit credit counseling get good mentions.  The physical paper’s accompanying graphic is equally compelling, with a line drawing of an oldster (is that word OK?) leaning on a walker and the front of the walker is a giant credit card.  Fixed-income investments are down for many, home values are diving under water around the country and many people are saying out loud that real estate may no longer be “an investment” for us, but more like art, buy because you like it, not for appreciation.  If you are a baby boomer today, this story is a head’s up to make sure you don’t entire retirement deep in debt.  If you are already in too far (in retirement and debt) there are options.

The 8th Wonder of the World: Compound Interest

Wow, I’ve been falling down on the job and haven’t given you any financial food for thought.  Here’s a morsel that could become a meal — for life.  Details.com has another good piece for the young among you that details illustrates the power of saving early in life and compound interest.  A 22-year-old saving $3000/year for only ten years will will have more money than a 32-year-old doing the same until age 65.  Read that again and do the math, 10 years vs. 33 years.  $30,000 vs.

Frugalstan vs. Richistan

A couple years back Robert Frank of The Wall Street Journal penned “Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich.”  Other characterizations followed and we’ve added phrases such as Bobo (bourgeois bohemians) and poorgeoisie.  Now black, platinum and preferred credit card ostentation is flying low if not off the map.  “Frugal is very in,” according to behavioral psychologist Matt Wallaert of Gen Y budgeting site justthrive.com.  Doubtful we’ll be saving tin foil or making hash (not what you’re thinking) out of leftovers like my depression-era mother, but maybe a bad economy will help us to think twice about what is important in life and whether we want to live in Frugalstan or Richistan.

Debt loss vs. weight loss scams

Sandra Block of USA Today has a clear, highly informative and, I think, unbiased article comparing the scams we hear about in the world of debt reduction vs. weight reduction.  Perfect.  Aren’t these both the areas we want to “shed” or “trim” the most — and do it as quickly and effortlessly as possible?

Obama pushing debt settlement? Ah, no.

True story. I’m watching ESPN2 at lunch with “the fam” Saturday in our favorite wings place in Orlando (Hurricane). Suddenly I notice a press conference with Obama and a screen scroll about a new (government) plan helping people with more than $10,000 in debt and relief of up to 40%. I jump out of my seat to see what is going on. 

Can we live without money?

OK, maybe this is way, way out there for most of us, but Daniel Suelo lives in a cave outside Moab, Utah, and has since 2000 without a cent to his name.  Granted he is dumpster diving and living on the good graces (a word he interprets in interesting ways) of friends and family, but his anti-consumption lifestyle might just have some lessons for us all.   “When I lived with money I was always lacking. 

Debt settlement firms roosting on K Street

Thanks to TheHill.com for this scoop on debt settlement firms hiring K Street lobbyists in Washington, DC.  If you don’t know DC, K Street is THE street in the North West section, not far from the White House, where many old, large and expensive law firms and lobbyists  ply their trade.  Patton Boggs has more than 600 lawyers and non-lawyer specialists according to their web site.  In short, big guns.

Credit card debt — the way forward?

Not enough consumers are aware that creditors are actually working with consumers with too much credit card debt to find a more affordable payment, while still sticking to guidelines of 5 years or less for repayment.

Credit counseling vs. debt settlement

As I said in my welcome, it is a “debt solutions jungle out there.”  As this helpful piece from the Associated Press (via the Buffalo News) attests, debt settlement is part of that jungle.

For consumers the real problem is the “noise on the line.”  What’s free, what’s a come-on or outright fraud, what can I do on my own vs. needing help, are their alternatives to bankruptcy, how do various solutions impact my credit score, etc., etc., etc.

Nonprofit credit counseling hasn’t been immune from problems and it is not a cure all, but look here for a glimpse of how a free credit counseling session works.