For most people, the thing that launches them into credit trouble in the first place is an unexpected financial emergency. Individuals who pay their bills on time, people who use credit cards wisely and people who always keep up with their mortgages can suddenly be thrown into a complete financial crisis when a surprise strikes them. Here are ten ways that you can prepare for and handle financial emergencies.

1 - Plan ahead in order to make a difference.

Start a savings and make provisions for whatever may occur. You should put a portion of every pay check into a savings account.

2 - Expect the unexpected so that you may plan and prepare accordingly.

You should be prepared for every scenario. Plan for the worst, so that you can handle anything that may come your way.

3 - Pay yourself first rather than waiting until the end of the month to put money into your savings.

Putting the money into savings now will ensure you do not spend it easily through out the month. Otherwise, you may not be able to save when the time comes.

4 - Increase your income if you are having trouble paying your expenses.

This may entail finding a better job, or supplanting your income through another job. You may also be entitled to a raise at your current job.

5 - Sell off some assets to accrue extra income if you are having trouble paying your expenses.

This can be as small as a garage sale or as large as selling one of two cars. Having stuff is pointless if you are unable to pay for rent or utilities.

6 - Borrow against your home if you absolutely have to, so that you can pay off emergency expenses without allowing them to overwhelm you and put you further into debt.

The equity in your home should be used as a last resort, as you are putting your home at risk. It is your largest asset, however, so it can be helpful for a tight spot.

7 - Call on friends and relatives to see if you can get some financial assistance in your time of need.

Those close to you can provide the assistance you need. Everyone is connected and those close to you would help you; you would help them if the situation were reversed.

8 - Defer your retirement contributions, funneling the money toward a more important cause such as an emergency expense instead.

If you are unable to proceed in the now, planning for the future is worthless.

9 - Seek professional help if you cannot find any other way to deal with the emergency expense without putting yourself into debt.

There are experts out there who are specially trained just for this purpose. Do not ignore this important resource.

10 - Declare bankruptcy if there is no other option available for you to overcome the obstacles created by a financial emergency.

Bankruptcy is a government provided way to get out of debt and start anew, although it carries with it a stigma which will be hard to shake off of your credit report.

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Yesterday, the Fed lowered the federal funds rate rate to near zero in an attempt to bolster the sagging economy. The federal funds rate is an overnight lending rate that banks use to set rates for a variety of loans such as adjustable rate mortgages, credit cards, and home equity lines.

For many consumers with variable rate loans, they should see a monthly savings. For example, a family with a prime indexed home equity line of credit would see their interest rate lowered from 4.00% to 3.25%. On a $50,000 draw, their minimum monthly payment would decrease  from$167 to $135.  The same types of saving could be seen in variable rate credit cards however the effect may not be as pronounced since credit card rates have a higher prime plus index.

For the consumers who wonder if this is a good time to refinance their homes, the answer is not so clear. While the goals of the Fed is to lower long term interest rates, their recent moves only lowers short term interest rates. 30 year fixed mortgage rates are consider long term interest rates and often indexed to the 10 year treasury. While the rates on the 10 year treasury are also at historic lows, the credit credit crunch has more lenders charging higher premiums eroding the value of the historically low rates.

So what should you do in this environment to save money? Here are some tips:

If you have a home equity line of credit, consolidate your bills. If you have good credit and an open HELOC, consider consolidating your credit card bills and other expenses. With a prime rate of 3.25%, you will rarely get another opportunity to get such a low priced loan. The caveat is that rates may rise in the future so make sure you have flexibility to move debt around. You are also using your home at collateral so be careful.

Shop for credit card rates. Not all credit card interest rates are variable. If you have a fixed rate credit card from when prime was 6% or 7%, this could be a good time to look into a new card with a lower rate.

Stay on top of this market and interest rates. We are at an historically low interest rate period. As the Fed looks to unfreeze the credit markets, there could be unprecedented opportunities to refinance or purchase a home assuming you have good credit. This period won’t last forever so be savvy, stay on top of the market, and look for your opportunity to save.

According to prominent bank analyst Meredith Whitney that the US credit card industry may reduce credit lines by over $2 trillion dollars over the next 18 months on fears of a worsening economy and regulatory changes. If this were to be true, it could mean that credit card limits could be reduced by as much as 45%. Regardless of the actual amount and severity of the credit line pull back, most credit card companies are more cautious about new customers and existing customers alike.

While you many not think this affects you cause your credit cards are not maxed out, there may be other repercussions. Most notably if you carry a balance and your credit limit is lowered, your credit card utilization (credit card balance/credit limit) may increase. Higher credit card utilization could then lower your credit score which could then increase your interest rate or lower your limit again. It is a vicious cycle and can be very unfair. Here are a few tips to avoid the trap.

Keep an eye on your credit cards limits. Your credit card company should notify of any impending changes. But with all the junk mail it can be easy to miss. Almost most people take their credit limit as a constant and only look at balances.

Try to lower your credit card debt. This is easier said than done but this should be a goal at all times to improve your credit.

Have several credit cards. Having a 3-6 credit cards gives you options should one of your issuers lower your limit or increase your interest rate. If you are looking for a card, these are some of the best credit cards for each credit range.

Keep your balances on any given card low. High credit card utilization on any single card can be a sign of future risk so make sure that your credit card utilization is lower than 35% on any single card.

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When natural disasters strike, one of the furthest things from people’s minds is the state of their bank account. Most focus on getting out and it is not until the storm moves on and they are faced with the aftermath and damage that thoughts turn to financial matters. It is difficult to bounce back from a tragic event, and this is worsened if your home is suddenly no longer there.

Stressful times make managing money more difficult, and this can lead to bad decisions. It is best to work out a plan ahead of time, before disaster strikes, to ensure that you will be prepared no matter what may lie ahead. By taking the time to put together a game plan now, you’ll be able to easily follow it in the event that your area is hit by a natural disaster.

1. Put together an emergency fund.

Every household needs to have an emergency fund and easy access to enough cash to tide them over if a natural disaster strikes. A good emergency fund is usually three times your monthly income, but just having a little reserve is better than none. You may also want to consider keeping some cash in your home safe so that if you need it quickly, it is right there.

2. Get an insurance policy for storm damage.

Keep in mind that your general homeowner policy may not cover the damage caused by some natural disasters. Read through your policy documents to see what isn’t covered and then make strategic decisions on the type of insurance you may need. For example, if you live in a flood plain or somewhere in the path of a potential hurricane, flood insurance is vital.

3. Put together a list of trusted contractors.

In the event that your home is damaged or destroyed, it is very helpful to have a list of contractors that you can trust. Many homeowners are taken advantage of by con artists in the aftermath of a disaster and you can end up losing even more money. By taking the time to put that list together now, you’ll know exactly who to call – and trust – when disaster strikes.

4. Keep your papers safe.

Any financial records and documents that you need should be copied and placed in a safety deposit box. Just keeping them in a file in your home is not safe. You may need these documents in the future, especially if they contain an insurance policy or something that you will need to prove value of what you have lost. Keep everything in a second location where it will not be affected by a natural disaster.

By taking the time to get all of these factors figured out ahead of time, you will be able to weather any storm financially and you’ll have less to worry about if disaster does strike. No one likes to think about losing everything they own, but if you’re prepared, you’ll be in a much better position than those who are not.

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As loans from traditional banks become harder to get, more consumers are looking into credit unions in hopes of getting the loans that they need. There are a few pluses and minuses that come with joining a credit union and it is important to know what you are getting into before you sign up. Let’s take a look at credit unions and see what you can expect.

1. Loans are easier to get.

This is probably the main reason that many people do decide to become members of a credit union. As the name implies, their main purpose is to offer credit to their members. If you have reasonably good credit, or have only made a few mistakes and your credit score is still decent, you should not have any difficulty getting a loan from a credit union. If this is a high priority for you, then joining would be a good idea.

2. No businesses allowed.

Credit unions are typically only for consumers. There may be a few exceptions to the rule, but generally, if you have a business, you’ll have to set up a separate account for it somewhere else. This isn’t that big of a hassle, but if you like to keep your money in one bank, it can be annoying. The primary purpose of a credit union is to serve consumers individually, not as companies. In addition, getting a business loan from a credit union is next to impossible, even if you are applying as an individual.

3. Loan amounts will be small.

Credit unions typically only lend out on smaller loans, usually in the $10k range. You may find a few that are willing to go over that, but this is a general guide to the type of funding that you can expect. That basically means that while they may be good for a small personal loan or a used car loan, anything over that will be tough to finance through a credit union. These loans are definitely not suited for home purchases.

4. One on one help.

Credit unions typically limit their members and they do offer additional services to those that they accept. For example, many will offer free credit counseling or other services that can help you find your financial footing, or keep it on solid ground. For those that are looking for a little extra attention and help with their money, a credit union can be a very good choice.

5. Limited membership.

The downside to credit unions is that they do have limited memberships available. Some may only accept specific kinds of people, such as fireman, military members or similar professions. If you are applying to join a credit union, make sure that their charter is broad so that you have a better chance of being accepted.

At the end of the day, the choice to join a credit union can be beneficial, especially for consumers that need easy access to loans and financial advice.

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Retail stores have databases compromised and online retailers have personal information hacked into on a fairly regular basis these days. 9.3 million people fell victim to identity theft in 2004 alone, which is an indicator that above all else, we absolutely need to learn ways to avoid identity theft and protect the integrity of our credit and credit scores. Here are ten ways that you can better protect yourself against having your identity stolen, ensuring that your credit is safe and protected.

1 - Take your bills and statements online rather than opting for paper versions.

Even with shredding machines, determined individuals will still be able to retrieve enough information to steal your identity.

2 - Scrutinize your bank statements and bills every month.

Identifying identity theft early is the best chance to ensure that the minimum amount of damage occurs to your accounts and credit score.

3 - Use your passwords responsibility.

Don’t give them out freely or write them down where others will find them. Be sure to choose hard to guess passwords, avoiding simple phrases or whole words.

4 - Be careful how you use your social security number and shield it whenever possible.

This number alone is all someone needs to steal your identity. Do not give it out to someone you don’t trust implicitly.

5 - Read every piece of mail you get rather than throwing it away.

You do not know if the piece of mail contains your personal information, a pre-approved credit offer, or anything else needed to steal your identity.

6 - Keep credit card offers at bay as effectively as you possibly can.

Sign up for anti-junk mail services and request to be removed from pre-approved offer lists from all of the banks and distributors from which you get the offers.

7 - Lock up your mailbox to keep people from stealing your mail.

If you have a box in front of your home, get the kind that allows you to keep the mail behind a locked panel. Also, make sure not to put outbound mail until right before the mailman arrives.

8 - Know where your mail is all the time, even when you are out of town or out on vacation.

Have a friend pick up the mail for you and keep it safe, or request for the post office to hold the mail, which will do it for up to a month.

9 - Defend your credit card numbers from strangers who may be listening.

Do not give you card out readily on the phone, unless you are in a private place, and only if you have to. Instead of giving the number, ask if the other company can send a bill, or has an online, secure web page.

10 - Shred whatever evidence is going to be thrown away before you let it leave the safety of your home.

Shredding is a deterrent that stops the vast majority of identity thieves. Determined individuals will still find the information, but shredding the documents is a minimum amount to ensure that you identity remains safe.

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There are a lot of things that you need to educate your children about as they grow. Teaching them about money, and more importantly, the value of their credit score, is an important part of preparing them for their adult life. This is one of the most important lessons that we could ever pass on to our children, yet it is a lesson that is often neglected. If we teach our children about credit and money, we can help them to build responsible habits and behaviors for spending that will last them a lifetime and keep them from falling into debt before they ever have a chance to build a good credit history. Here are five tips for educating children on the importance of credit scores, credit reports and good spending habits.

1 - Start small by teaching young children about money management through their interactions with you.

Teach them by utilizing daily errand activities as small impromptu lessons about money and budgeting. Give your children pretend money, encouraging them to play store games. There are also numerous books that you can buy that are designed to teach children about money very early.

2 - Give a weekly allowance as a way to teach your children about spending responsibly and budgeting.

Pick a reasonable amount of money and give it to them in small denominations like $1 and $5 bills rather than a $20 dollar bill. Encourage your children to save a portion of their allowance every week by calculating the amount that could be saved in a month or in a year. Older children can benefit from opening a savings account which will educate them about deposits and withdrawals.

3 - Explain the difference to your children between wants and needs.

Encouraging your children to save and earn for something that they really want is a good way to teach healthy spending based on delayed gratification. Help your child keep accurate track of their money by giving them a chart and piggy bank incentives like $5 for every $20 that they save.

4 - When your child grows into a teen, you may consider giving them a prepaid credit card or access to a parent’s credit card.

This is a convenient way for you to introduce them to credit, but it might end up leading to startling monthly bills if your teenager is not careful. You should sit down with your teenager every month and show them how their spending is affecting your credit score so that they will understand how theirs would be affected.

5 - Students who have credit cards in college can find it difficult to handle their money because of the pressure that they have to spend on a limited income.

You need to teach your children early about responsible credit card use, debt and late payments and fines. Check their balances with them to help make sure that they stay on budget and take the time to go over their credit score and reports often to help them stay on track at all times even while away at college.

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Have you ever been told to “always look your best”? The same should be true for your credit. You should work to make sure that your credit always looks its best as well. Here are ten ways that you can approve the appearance of your credit.

1 - Pay down your debt.

This is one of the fastest ways to improve your credit by decreasing your credit available to credit used ratio, paying down the balances on the higher interest credit accounts first. If you are using more than 50% of your credit, then you are using too much and need to start paying some of it off for better results.

2 - Use secured cards to make an entrance into the world of credit.

Most banks and credit unions offer secured credit cards, which are excellent for helping you build credit even if you don’t have much to speak of just yet.

3 - Apply for a passbook loan.

These are month to month loans that use your savings account as a means of collateral, which is a great way to show lenders that you are capable of paying off the loan even if your credit is less than ideal. Some banks don’t report passbook loans to the credit bureaus so check with yours.

4 - Utilize retail store credit cards wisely.

These cards are relatively easy to get and can help to build your credit appeal. You can use these cards for purchases that you can pay off right away and build credit in the process.

5 - Keep old accounts open.

Closing an old account is something that you will regret, so even if you are not using the account, leave it open or it could have a negative effect on your credit.

6 - Properly utilize the 100-word Statement.

Under the Fair Credit Reporting Act, you are allowed to add 100 words to your credit bureau file, and this can be utilized to improve your credit image. Just keep in mind many lenders will just review the credit score and ignore any statement.

7 - Perform occasional checkups on your credit report.

By reviewing your credit report from time to time, you will be better able to keep track of changes to prevent negative things from showing up.

8 - Protect yourself from identity thieves.

Identity thieves can wreak havoc on your credit, so it is vital that you take steps to prevent your identity from being stolen if you want your credit to be appealing to lenders.

9 - Maintain good record keeping habits.

This is going to mean attending to your checkbook as often as possible, devising a bill paying system that works for you, and above all else, always paying your bills off on time, every time.

10 - Get professional help, if all else fails.

The two primary sources of help are your attorney, and a legitimate credit counseling company. If you cannot make your credit more attractive on your own, these two sources of help could be just what you need.

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The financial turmoil that our economy is currently experiencing is regarded as an unprecedented level of turmoil. According to a United States Historian named Steph Friesier, “The time of wielding wealth is over.” What many people do not realize is that there is a lot that consumers can take away from this bank crisis that may someday improve how we relate to money and how we operate within the economy. The Wall Street bubble burst suddenly, and everything seemed to go completely insane, but that does not mean we cannot treat this time of financial crisis as a learning experience.

A few months before the Lehman Brothers company went bankrupt, an executive director within the company which once flourished put his luxury home on sale for a surprising $325 million dollars. Many business tycoons began to sell their luxury yachts and other properties, selling the apples of their eyes. Before this happened, no doubt had been raised about the United States superpower in consumption, as the U.S. had been acting as the engine in the entire world economy, its powerful consumption determining the United States’ role in the global economy as a bellwether. Should the United States consumption diminish in any way, the driving force propelling the economy of the entire world would be knocked from its axis.

What consumers can learn from the bank crisis has a lot to do with tracing the causes to this financial storm. There are numerous different ideas floating around as different nations try to make sense of what has occurred and why it has so easily crippled the economy of major nations around the globe. How can one nation have such a powerful impact on the economies of all other nations across the map? There is an uncommon consensus among economists hailing from different nations, and no one is able to unanimously pinpoint the true influence that the consumption concept imposed itself upon. What snapped the credit links? What created the fall in Wall Street?

Once the balance of consumption collapsed, the new balance would not come into creation quickly enough, causing the world’s economy to seek a brand new bolstering point in order to keep some semblance of balance in place. The ongoing process of dealing with the banking crisis is a process in itself that is being used to seek a new point of economic growth as well as an all new driving force for the world’s economy. Not only is the economy falling in the United States, but like the chaos effect it is driving changes in other nations and drastically shifting the balance of power, at least as far as economics are concerned.

What consumers can learn from the bank crisis, above all else is that the world’s economy is a fragile thing that can easily lose its balance when things go awry. As the United States grapples with its issues regarding lending and credit, other countries and continents are seeing intense changes in the way their economies function.

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EU leaders have recently endorsed a Euro 1.7 trillion dollar ($2.3 trillion) continent-wide emergency bailout plan for the banking industry during summit talks that occurred on Wednesday, then turned their debate to other measures that would prevent global financial crisis from completely stalling the entire continent’s economy. Numerous EU officials and diplomats including Polish Finance Minister Jacek Rostowski confirmed that this plan has been endorsed by leaders of the EU.

The agreement will most certainly pave the way for all 27 nations in the EU to shore up national banks along with other similar financial institutions. Under the broad principles of this bailout plan, individual countries would be coming together to put up a total of $2.3 trillion dollars or 1.7 trillion euros in guarantees and emergency aid in order to help the banks.

This deal is coming after Britain along with 15 other countries utilizing the Euro passed the plan on Sunday. This deal is designed to reassure financial markets and investors that are still feeling shaky that everything possible is currently being done to stop the financial meltdown from becoming any worse. This plan is going to give each of the individual nations a greater amount of flexibility so that they may choose from a wide range of different measures that may solve their individual problems. This may include buying shares in banks, or even guaranteeing loans from savings and interbank institutions.

The European moves are modeled on the Euro 60 billion or $88 billion dollar plan from Britain in order to partly nationalize major banking institutions. The British Prime Minister, named Gordon Brown, has also made a personal promise to guarantee billions of euros worth of interbank loans in order to restore confidence of consumers in the financial sector as a whole. This joint action, coupled with United States plans which are broadly similar and involve taking stakes in large banks, have really helped to turn around many of the severe declines that the world’s stock markets have been experiencing in recent months.

However, many credit markets remain to be in distress because banks are fearful and are only willing as a result to lend to each other at rates which are abnormally high, making credit even harder for businesses and consumers to obtain. EU Lenders have also been debating a call by Brown to hold global wide talks among the top economies in the world, including India, China and the United States among others so that the world’s financial systems may be reformed.

According to Brown, a global summit may be held as early as in November or December, aiming to once again launch stalled global talks of trade in the process. In a document that was passed to leaders, Brown said that banks should rethink how they are addressing risk. He also called for a strengthening of rules covering many issues like how many reserves banks need to hold to make sure that potential losses are covered and that transparency be improved in financial markets as well.

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