October 10th, 2008
How Bad is the Credit Crunch – Really?
If you are paying attention to the news about the credit crunch, it is all too easy to get caught up in the whirlwind of bank failures, rising interest rates and the prospect of doom and gloom everywhere you turn. While there is no denying that we are in economic trouble at the moment, there is a lot of controversy over just how bad it really is. If you’re trying to find your balance economically, it pays to find out just how the credit crunch will affect you.
There are specific areas that are being hit the hardest right now. By focusing on fixing these in your personal finances, you can gain the upper hand and weather the credit crunch with aplomb. Let’s take a look at a few tips that will help you get on firm ground and help you take a good and honest look at the credit crunch – free of hype.
1. Credit Card Debt –
This is hitting many people hard right now. As the cost of living goes up, many are turning to their cards to get by. This is creating a vicious cycle for many as interest rates climb and it gets harder to make that monthly payment. If you’re struggling to pay your monthly payments it is definitely time to think about getting a consolidation loan before you credit score is dragged down by late payments and high balances.
2. Housing –
For those that have ARM mortgages, this is certainly a tough time. Interest rates have changed dramatically and a mortgage that was affordable last year may be reaching critical mass right now. Selling is not an option for many thanks to falling home values and a lack of buyers. If you are stuck with a rising interest rate, start finding new ways to save money. By cutting back on non essentials, you can free up the extra money you need to make your mortgage payments.
3. Investments –
After the stock market had its biggest one day fall since the 1980’s on September 29th many casual investors started thinking about just how much risk they are currently facing. While some investments are riskier than others right now, the general consensus from analysts is that it is best not to panic. Things will turn around. However, if you are not diversified, this is a good time to think about doing that before it is too late.
4. Pensions –
Pension funds that rely on the stock market are taking a bad hit right now. However, pulling your funds out may not be the best solution at this time, and may only compound the issue. Speak with a financial advisor and let them help you create a plan to keep your pension safe.
Hiring a financial advisor is a great idea right now, given the state of the credit crunch. They will be able to look at your finances in detail and help you create a plan that will make your income recession proof, or at least close to it.
Photo Credit: 1
