My Personal Finance Blog

Consumer debt relief protection act came as a blessing for the consumers. Because of the recession, the consumers suffered a lot. They lost their jobs and found that they failed to repay their debts to the creditors. The consumers were left with no other option expect for bankruptcy filing. They filed for bankruptcy even after knowing that they will face immense financial troubles in the future. Because of the sudden increase in the number of bankruptcy filing, the Federal government modified the bankruptcy laws and also brought new laws which made bankruptcy filing quite difficult. The consumers then shifted to debt settlement but again there was a problem.

With the path of bankruptcy being blocked, the demand for debt settlement increased steeply and this gave an opportunity to the fraudulent firms to make money out of the situation by cheating the consumers. They made false and fake promises and attracted the consumers and when the consumers were trapped, they took advance payments from the consumers and never helped them. This way the consumers lost faith in debt settlement industry and did not even trust the legit settlement firms. The consumer debt relief protection act came to rescue the consumers. According to this act, the credit card companies are not allowed to increase the interest rate without intimating the consumers well in advance so the consumers get a chance to make necessary adjustments to their budgets. Also the credit card companies will not be allowed to make any changes to the terms and conditions especially those related to interest charges before the consumer uses the card for one year. This definitely reduced the debt burden by a fraction.

Again as far as the settlement industry is concerned, the FTC announced that the firms will no longer be allowed to ask for advance fees from the consumers. They can only ask for a fee after they have actually settled the debts of the consumers and only after the consumers get back their financial stability. The consumers have the right to report to the FTC if a firm asks for advance fee. With these laws, the consumers are now able to trust the settlement firms and they can get out of their credit card debts easily! So, if you are a consumer in debt deciding for a debt settlement, look for any changes in the interest rates applied to your card without notification and also see if the settlement firms are asking for advance fees or not. If so, report it to the authorities and save yourself from unnecessary troubles.

Personal wealth building is more about how you handle the financial challenges in your life than about how you handle prosperity. If you look at the people who became wealthy after the Great Depression, you’ll find that all of them leveraged the sudden boost in the economy which came after the depression. These were the same people who continued to work and to plan with the understanding that prosperity WOULD return.

In fact, during the years of the Depression JD Rockefeller said: “Prosperity will return, it always has and it always will.” This is a far cry from the mindset of the average person who thinks: “I’ve just got to make it through this.” or worse, the fear as to whether things are even going to get better at all. It’s this distinction which makes the difference in whether someone becomes wealth off of a recession or merely survives it.

The Value of a Recession

A season of economic scarcity is a time to sow and to continue to invest in your plans for creating wealth. You know what happens when you’re sowing seeds? Try it someone time, plant a seed in the ground, water it every day and check on your progress. What you’ll find is that for many days, you’ll see NO results at all….so why not just give up?

Because you have an understanding that if you continue to take care of that seed that it WILL break ground and that it will grow. However, even after it does, it will take a whole lot more care before it bears fruit. This means weeks of pruning, watering, fertilizing and waiting. However, if you don’t give up and if you continue to invest effort and patience, the harvest will come.

What Does This Mean for Your Personal Wealth Building?

Do you have a plan for managing your cashflow (even when it’s just a trickle) and for investing in your personal wealth building? If not, then you’re not planting any seeds. You’re simply relying on prosperity to return again and praying that it does soon. However, a written plan gives you something to tend to and to invest in when it really matters: when things are tough.

Think about this: the time to repair the roof is when the sun is shining, but you do need a blueprint. This is why the four bucket system is one of the most important parts of your plan for increasing personal wealth and for achieving financial security. It gives you a simple blueprint for keeping committed to your wealth building plans. When you have this, even the toughest economic times become an opportunity to grow your success.

If you have seen on TV and other news media that the USA is coming out of the recession, then why will no bank offer you a decent, no balance transfer fee offer with zero percent interest for 12 months, zero interest on purchases for six months, and a generous 5% money back on purchases rolled in one card?

Well the answer is quite simple. The banks are really not too sure that the recession is over, and their lending standards reflect that. However, there is one way you can get a top, high cash back credit card in 2010 and 2011. The way to do it is to reduce your debt level, increase your FICO score, and then apply for a best cash back credit card you can find.

So what is the best cash back credit card for 2011?

Once you have established a high FICO score by reducing your debt, preferably to less than 25% of the credit limit on each of your cards, banks will compete for your attention with high cash rewards card offers. You will probably start getting attractive pre-approved offers in the mail again! Which will be the best credit card for you will depend on where you spend the most money. Let’s see a few possibilities:

If you carry a credit card balance

Maybe in this case you should not even focus on getting your money back as much but rather on developing methods of getting out of credit card debt as soon as possible. Look for a balance transfer card with the longest intro rate possible. And look for cash back debit cards in addition.

If you have high weekly grocery and gasoline expenses

Maybe you are taking care of a large family and spend significant amount of money on groceries and for the cost of transportation, that is gas? In that case, the best credit card for 2011 will give you as much as 5% off on all gasoline purchases and some grocery purchases. Likely, you will get the highest 5% money back by pumping gas at a single brand station such as BP.

If you travel much

When you travel across the globe or within the USA, you could benefit most from a no-limits miles card. You will receive multiple miles, up to 5, for purchases of airline tickets, and lower amount of miles on all other purchases. Combining frequent flyer miles with the miles earned through purchases, your rewards will come quickly and will be easy to redeem.

For everyone else…

For everyone else, getting cash back on most purchases makes the most sense. While there are no cards that will give you high, as much as 5% cash back on all purchases, you could go ahead and get two or three different cards that will have high cash back of 5% at different times of the year. Thus, by rotating your cards, you could earn 5% on many purchases throughout the year. Of course, shuffling credit cards like that requires quite a sophisticated tracking system.

The game played by politicians is to take an idea from their own agenda and then frame it in a way that sells it to the other side. When the politicians meet in the middle, bipartisan solutions to problems emerge. This reflects the fact there is no monopoly on good ideas, only simple good solutions to difficult problems. In the healthcare debate, one of the solutions proposed by the GOP was to allow people to buy their insurance across state lines. This sounds a good idea. As the law stands, every state regulates the sale of insurance within its own borders. This limits the size of the market. If insurers had to compete with each other on a regional or national level, the premium rates would fall and every citizen would get a better deal. Well, let’s look a little more closely at how it would actually work.

At present, every state has a Department of Insurance to regulate the insurance companies licensed to sell policies. This is a reasonably effective system for consumer protection. But if regional or national insurers could sell policies into many states, it would break the regulatory system. It would no longer be local supervision of local companies. Insurers would decide where to establish and would, of course, choose the states which had the weakest consumer protection regulations, i.e. where they could make the most profit. Think banks and finance companies. These companies broke the US economy and produced the recession because their sales of subprime mortgages and associated derivatives were unregulated. Now apply the same thing to interstate insurance. As a final thought on this issue, remember all US states have different laws and one state cannot enforce another’s laws. That is sovereignty for you. So the state where an insurer is based cannot protect consumers under another state’s laws.

Secondly, opening the market across state lines allows insurers to cherry pick the best people to insure. Without regulations to limit the right to discriminate against people for pre-existing conditions and to increase premiums as people get older and fall ill more often, insurers will just take their profit from all the healthy people and forget about the rest. Thus, instead of increasing consumer choice, it would have the reverse effect. Most insurance companies would close their branches in individual states. Those that remained would keep all the aging and less healthy people. As their claims rise, the companies will make a loss and close. Without a law to mandate regional or national companies to offer some health coverage, it is likely the number of uninsured people would rise.

When you add all this up, it is a good thing the GOP’s proposal was rejected. Health insurance plans are complicated enough without having to change a whole mass of federal and state laws to allow interstate sales. This is not to say that consumers might benefit if there was more competition in the insurance market generally. With a real free market, properly regulated, consumers would get a better deal both in the terms of coverage and in the premium rates they pay. As it is, you must get multiple health insurance quotes. Anticipating their profits will take a hit following this reform, insurers have been raising their premium rates. You must shop around to find the most affordable policy.

There’s a strange contradiction about insurance. It’s an annoying burden every month when the time to pay the premium comes around but, if the worst should happen, it’s a wonderful thing to have had that insurance policy in place. With the family budgets really tight as the recession shows little sign of going away, the monthly bank statement shows the insurance instalments disappearing. You look at your own health. That’s great. You have never had a day of serious illness in your life. It’s the same for your partner. You cannot avoid feeling a little resentful. All those dollars, every month. And then there’s an accident or one of you does unexpectedly fall ill. It’s then you discover whether that plan you have been paying into is actually worth the money.

The market for health plans is divided in a slightly complicated way. It’s really to ensure the insurance companies make a profit as the cost of treatment keeps on rising way faster than inflation. So it reflects a balancing act between allowing the patients some say, and denying them any real control, over access to treatment. The plan most popular with the insurance industry is Managed Care. This requires you to get the insurer’s permission before you attempt to access treatment. The first contact doctor must be from an approved list, and he or she must refer you on for further diagnostic tests or treatment. Failure to get this referral usually means the insurer will refuse to pay. The second option is a Fee For Service Plan where you pay a lump sum at the beginning of each year, followed by monthly instalments. This covers you for the medical services listed in your policy. Basic plans only cover consults with your doctor and a simple set of tests. More expensive plans have a better range of coverage but there are usually co-payments.

Health Maintenance Organizations (HMOs) are networks of healthcare professions. If you stay within the network, your medical needs are covered although, in most plans, co-payments will be required. The next step up is a Point of Service Plan (POS). This is a variation on the HMO and allows a networked doctor to refer you to an outside expert. Finally, there are Preferred Provider Organizations (PPOs) which offer more choice than an HMO or POS both in the doctors you can access and the treatments you can have, e.g. usually include preventative medicine.

Because the service offered by this site is free, you can get as many health insurance quotes as you like for each of the main types of plan. This gives you more information on which to make your decision. But it’s fair to say the decision is not an easy one unless you read the detail of each plan with some care. With all the health insurance quotes available, you are often forced to balance coverage against cost, i.e. you buy the amount of coverage you can afford. This makes the choices something of a gamble. Do you pick emergency care in the event of an accident or focus on a list of the most common diseases or disorders? Do you include long-term care against the possibility you might be more permanently disabled by whatever happens? There is no right or wrong answer to these questions. In the end, it all comes down to what you can afford and what helps you to sleep best at night.