Trying to repay credit card debt can be devastating, especially when the debt amount is so high that you never get in front of it when making the minimum payments.

Growing up, I always heard you should have one credit card in case of emergency.  My parents were talking about having them if you were on a trip and your radiator went out, for example.  Unfortunately with the economy today, paying the power bill to keep the house full of kids warm during the winter has become the new emergency.

As a result, more and more people are suffocating under credit card debt and the relentless collection companies calling sometimes a dozen times a day to collect.  It’s no wonder that people keep it a secret and many people do, according to CNN Money.com,

Hidden debt is a common and insidious problem. “It’s a form of cheating so subtle you don’t even know you’re doing it,” said Bonnie Eaker Weil, a relationship expert and author of the book Financial Infidelity. “It’s a power struggle that can be more harmful to a relationship than adultery.”

I’ve reached the point in my own life that when I get an envelope in the mail promising me a silver, platinum or gold card with no interest payment for a year, I just put it in the shredder.  Sometimes enough is enough.

Photo by squeaky marmot via flickr creative commons.

Photo from here… the world’s largest igloo!

When people lose their homes, the dark times in their lives can eventually be overcome.  By hard work, attention to bills, and saving when possible, a good credit score can be rebuilt.  However, what people are only now realizing is a bad credit score doesn’t just prevent you from buying a home.  Now low scores can prevent affordable purchases, dictate that you’ll live somewhere bad, and even stop you from getting a job.

Let’s say you need a car to get back and forth to work.  A low score doesn’t necessarily mean you CAN’T buy one, it means that you’ll pay out the nose on your higher interest rate.

A low credit score and foreclosure will also be found if you’re renting an apartment or house.  Savvy landlords check your payment history because they don’t want to become another statistic on your list of nonpayments.

What’s even worse - in my opinion - is that now employers check those scores, too.  MSNBC.com reports that bad credit can become a barrier to finding a job,

There are no hard numbers on how often poor credit reports thwart someone’s effort to find a new job. Many applicants will never know; employers aren’t required to explain why a candidate was turned down for a job.

But a recent survey by the Society of Human Resource Management found that many employers use credit checks to screen job candidates. Of the roughly 350 employers who responded, 60 percent said they checked credit histories for some or all job applicants. That’s up from 43 percent in 2004 and just 25 percent in 1998.

A friend of mine just lost out on a job because of her credit score.  She has worked for me in the past so I know from personal experience that she is smart, dedicated, and relentless in getting the job done.  I’m sorry she won’t have the chance to prove this to the other would-be employer.

Mortgage companies may be breathing a sigh of relief right now because fewer homeowners were delinquent in their mortgage payments this past quarter than the one before.  According to CNN.com, this could mean that the mortgage market is starting to heal,

This figure is significant because it shows a reduction — even if just slight — in the volume of loans heading toward the foreclosure process. This has not happened since 2006.

Always being an optimist, I hope the healing has begun.  However until I stop hearing about friends who’ve just received their formal foreclosure notice, I’m not buying into this sunny outlook quite yet.

My husband loves these silly e*trade baby commercials.  Generally we don’t watch any commercials on TV (that’s what DVR, video tape, and remote control is for, right?), but now not only does my husband watch the babies, he also calls “Kathy! Watch!” forcing me to sit through them too.  But they are pretty funny.  Enjoy the weekend!

There are thousands of homeowners huddled in their houses today, hiding in the giant shadow of looming foreclosure.  I talked with one earlier today and our conversation turned to the phenomenon of Deed in Lieu of Foreclosure.

Sometimes mortgage companies will agree to work with homeowners, but only if they can prove their ability to pay future house payments if a loan modification is granted.  Other times, it’s simply better for the homeowner to cut his/her losses and walk.

Before you take that drastic action, however, it’s ALWAYS better to stay in contact with the lender.  See if they can help.  In most cases, people have confided in me that the mortgage company won’t do anything until they’ve missed X number of payments.  After this has happened, they are told they won’t help until they get caught up.  O.o

Every now and then, however, a mortgage company will realize it’s more sensible to work with a homeowner and accept a deed in lieu of foreclosure. The company will tell a homeowner they can remain in the property for a certain amount of time, but will need to vacate by a specific date. The homeowner has the opportunity to find another place to live (and is sometimes paid so they don’t destroy the property), while the mortgage company saves on the massive cost of performing an actual foreclosure.

I just asked a local lender about the possibilities of a Deed in Lieu Of from his company. He advised homeowners to contact the Loss Mitigation Department, but overall that they would allow the Deed in Lieu Of was very rare.

Read more about other options other than foreclosure here at Being Frugal.

Nevertheless, good luck!

When I read the article at CNN Money, I felt pretty good about it:  “No More Retroactive Credit-Card Rate Hikes” … sounds great, right?!  New rules for these companies that squeeze every drop of blood out of those of us who are foolish enough to use the cards (Yes, me. Probably you, too).

Then I read it again.  RETROACTIVE credit card rate hikes?  Say what?  Credit card companies were able to retroactively change your rates for purchases already made?  This is outrageous!  I guess it’s good news, then, that the practice is being put to a stop.

Also changing are random billing dates - they will now have to be billed at the same time every month.  In addition, the due date TIMES will conform to one time.  For example, one bill could be due at 1:00 p.m. EST on the 15th of the month, while another could cut it off at 2:33 p.m.  Ignorance on my part is not bliss… I had always been under the assumption that as long as something was postmarked by the day it was due, you were in the clear.

Personal finance editor Gerri Willis writes,

And although 45-days notice is required before making any changes under the new law, your card can still be closed or your limit lowered without your input.

Also watch out for fees! With credit-card companies trying to replace lost revenue, fees are everywhere. There are NO restrictions on the types of fees that credit-card issuers can charge, from dormancy fees to annual fees, and even fees to receive a paper statement.

She is right - READ EVERYTHING you get from your credit card company.

A couple of years ago a friend of mine became the loan manager at a local bank.  She called to tell me the incentive for opening a new account was $100 and if I referred anyone, I’d get a $50 referral fee.  I signed myself and one other person up.   My goal was to deposit money in that account that would be used for my daughter’s baton classes, coaches, and other fees.

Unfortunately, the market dried up so the account at there for nine months with $70 in it.  I finally screwed up my courage - she was a friend after all - and asked if she’d be insulted if I just closed the account (I need the $70 for groceries at that point… sad but true.)

It was hard to break up with the bank, but I’m not the only one doing it.  In fact, CNN Money says more and more people are closing their accounts as a way to show their displeasure over the growing fees banks charge and the resentment over them taking bailout money and then paying big bonuses to executives.

Barry J., who detailed his switch from Bank of America to Southeastern lender Regions in an email, said he had just become fed up with the $8.95 monthly maintenance fees on each of his three accounts.

“When I was closing my accounts, [Bank of America] would call me with a survey to see if it was the fault of any their customer service people or tellers or bank managers,” he wrote. “They never asked if it was the additional fees they were charging.”

We don’t like the nickel and diming, folks.  Further I’d much rather pay fees to a local company that reinvests in my own area.

About 20 years ago, buyers were told to consider their future income when they purchased a house.  For example, if they qualified for a $100,000 loan (a lot of money back then), but wanted to keep the purchase price around $85,000, they were encouraged to go ahead and spent the full $100,000 based on anticipated raises.

Yes, my first Realtor told me that.

However today I advise buyers of the exact opposite.  So how can really tell how much home you can afford?  My advise is you could anticipate what your monthly mortgage payment would be on the house you think you’d eventually like to buy.  Pay your regular rent, but pay yourself the different in a savings account of what that future house payment will be.

You will be able to save ahead for down payment and closing costs this way, while getting a solid reality check on whether you can afford that mortgage payment.

Another rule of thumb… make sure your house payment doesn’t exceed 25 percent of your income.  Okay, perhaps up to 32 percent might be okay but anything above that could be dangerous to your financial health.

Approach your ability to pay with plenty of skepticism, save ahead in case of emergencies, and don’t forget to plan for other expenses that go along with home ownership.  If you’ve already done this, consider buying now so you can take advantage of the $8000 tax credit being offered by the feds.  You must have a home under contract by April 30th and close by June 30th to qualify.

Home maintenance is so much more than changing your furnace filters every month, mowing the lawn, and closing your crawl space vents in the winter and opening them in the summer.  You also need to keep your refrigerator coils clean, clean around the dryer vents, get your chimney inspected, and much more.  CNN Money provides a great article with year-round maintenance tips, including:

Inspect your roof. Grab some binoculars and look for loose shingles, mold, mildew, or cracked chimney mortar. Catch problems early and you may avoid spending $2,000 to $12,000 (and up) for a roof replacement.

Check your attic for holes or thin spots in the insulation, and make sure the caulking around doors and windows doesn’t leak. Keep in mind that your attic should be only 5° to 10° warmer than the outside air; any hotter and you could develop ice dams on your roof, which can cause water leak.

There are dozens of great ideas in this article and if you have tens of thousands of dollars (or hundreds of thousands) invested in your home mortgage, pay attention and do what needs to be done to preserve your asset!

Photo by Collin Anderson via Flickr Creative Commons.