This carnival of debt reduction is designed to highlight the plight we as a nation are in and hopefully make us aware that we cannot continue in our ways. I’ve decide to apply steps that we pf bloggers have always advocated to reduce debt and apply that to our nations debt situation.

1. Step 1 : Let’s figure out how much debt we have? – Well, I guess that is the first step we take, which is to figure out exactly how much debt we have. At present, the Federal Government has about $12 trillion in debt. And that excludes future obligations like social security and medicare. Furthermore, we are starting with a one trillion dollar budget deficit this year.

2. Step 2: Calculate our debt statistics – I guess we could use a Debt To Income Ratio Calculator to calculate this number. But all we need is to pull out simple statistics and we have the figure. And here it is : ($12.4 trillion / $2.1 trillion) = 590% of income. Our debt is almost 6 times income tax receipts!. Financial advisors (or rather the common wisdom) is that one takes out a mortgage whereby the mortgage payment every month not exceed 30% of your gross income. Projected interested by (according to the CBO) is about $207 billion, which is about 10% of income tax receipts (still relatively manageable).

3. Figure out where to cut expenses – The biggest projected expense in the Federal Budget are defence, medicare and social security. But cutting the biggest expense of all appears to be so politically difficult. These are the biggest areas where any significant cuts have the biggest impact on our budget and projected debt going forward. But politicians cannot get elected if they ran on a platform of cutting social security and medicare. Hence, all the debt reduction programs in the world cannot help good old uncle Sam. There simply isn’t the political will to tell the citizens of the necessary cutbacks we have to face.

What can we do to force the federal government to face the music? – Recently, President Obama announced he will be cutting the budget by a couple of hundred billion on discretionary spending. It was symbolism really as it really amounted to nothing. Yet, he said he will not touch social security and medicare. When is he or any politician going to confront the truth? Perhaps one way is to actually look at how much interest you are paying daily!.

Or perhaps we need a US dollar crisis, where the world loses faith in our currency and dumps them for other assets, to wake us up. By then, interest rates would have soared, the housing market would have collapsed again and yet, oil and other imported goods will soar. Perhaps, there will even be hyperinflation if we do not stop printing money.

Is defaulting on our debt an option? – Consumers like us can default on our debt. So can countries. Russia and other South American countries have been defaulting and structured their debt. It is hard to imagine Uncle Sam doing this as most countries reserves is held in dollars. For individuals, if you cannot pay your interest payments or evenyour taxes, there are negative consequences. And the same goes for countries. Credit ratings will be slashed and access to capital markets will be hampered. Interest rates will rise and cost of credit will increase. But defaulting on our debt will almost mean the end to the US dollar as the world’s reserve currency. It will almost spell the end of our military reach, which is only possible because foreign creditors are lending us money despite us having negative savings and a budget deficit.

Will we be able to endure sacrifices? – At the end of the day, it really boils down to the sacrifices we as citizens are willing to make. Are we willing to tolerate a substantial period of tighter credit conditions? If you are federal government employee, are you willing to forgo wage cuts and perhaps a cut in your “pension plan” (which is all underfunded by the way). If you are a senior citizen, would you be willing to sacrifice and living with cuts in your social security benefits and medicare benefits? We probably would have to go through sacrifices not just in the near term, but also also for a substantial period because the key to reducing our federal debt is to be consistent in paying them off and not incurring any more expenses.

A couple of other scary thoughts – Failure to rein in federal spending will simply have the consequence of having interest payment as a large portion of our budget. Unlike a mortgage where there is an amortization schedule, all of our federal debt is issued as a plain vanilla bond. Also, because of the positive yield curve, the treasury has a temptation to borrow more short term debt rather than locking in long term debt at a fixed low rate. When the treasury pays interest payments, they have to pay interest on every single bond that they issue no matter what the interest rate. This is unlike the new C.A.R.D Act where interest payments are allocated to higher interest first

Fruits of taking the bitter medicine – Despite the scary prospect of cutting spending, having more recessions and not so great growth for a few years, by taking care of our budget deficit, reducing our debt load, we will come off better at the end. We may suffer deflation in asset prices, perhaps even our wages. Our standard of living may decline. But when we have much more manageable debt load, with less long term unfunded liabilities, a low cost structure, we will be able to better compete in the world markets, have an economy is that is less reliant on credit and consumer spending. We could become a much more viable economy is as little as perhaps five to seven years. The Asian countries suffered for about three years but turned their economy around after that. That is why the bank bailouts, stimulus packages pisses me off because we are simply delaying the day of reckoning!

I want to end off by urging everyone to read this piece by Charlie Munger (partner of Warren Buffet about this wonderful land called Basicland.

This carnival is dedicated to all personal finance bloggers out there for preaching sound money principals – chiefly to spend less than we earn. This, the federal government has failed to do for years. I do not care if you are a republican or democrat, the truth is that the US is headed for a massive meltdown if we cannot face our debt problems. For those who have, you know that sacrifice is important. But it looks like we do not have will to face our problems. No politician can ever be elected if he says we’ll cut medicare or social security. Changes will be forced upon us only when “the shitteth hath hitteth the fan”.

So here is a Q&A about our financially incompetent government.

When was the last time the United States had no debt?

Answer – Back in 1836. Between 1792 to 1834, the United States was slowly able to reduce the size of their debt relative to GDP from 35% to 0% in 1836. At that time Andrew Jackson was the president of the United States. Since then until today, we have racked up close to 12 trillion. Will we ever be debt free again?

I don’t know the question to that one, but a couple of folks here have just become debt free and had their Credit Card is paid off. Here is another get out of debt story.

When did the US federal deficit and spending really got out of control?

Answer – Can’t pinpoint an exact year. But since the early 70s, we as a nation have been spending like there is no tomorrow! Take a look at the chart below (yes, the data is from 1792). It is in billions! Our fore fathers must be tossing and turning in their graves. Perhaps the federal government (executive branch and congress) needs some tools. I’m not too sure if YNAB – You Need A Budget is of any help to the federal government! Maybe America just ain’t good with budgeting. Heck, even Microsoft Money decided to pull out of the market though there are many budgeting tools and software still available.

The 70s marked the end of the Brentton Woods Gold standard the the world had been operating on. In fact, for over 4 centuries, the world’s major superpowers and economies had more or less been running on gold standard. It was only since Nixon took us off the gold standard has the world been operating on floating currencies. The end of the gold standard also marked the era of modern day central bank press printing money, inflationary monetary policies, fooling us that we are wealthier than we think we are!

Why doesn’t the United States run a budget surplus and save, like every personal finance guru advocate?

The reason is that we are able to get away with it. How? Since we were the victors of World War 2, as part of the Brenton Woods agreement (aside from the gold standard), all international trade was to be denominated in US Dollars. Ever wondered why oil, gold, corn, orange juice or any commodity for that matter is traded in US Dollars? Look at it this way, when someone from say Italy wants to buy something in dollars, he or she has to have earned enough Lira (or Euros today) to convert them to US Dollars. Then he could buy them. But for us, we our currency. We do not have to convert them to anything. The folks who save (or rather have trade surplus – export more than import), have their savings in dollars because everyone trades in dollars. The only viable place to invest in US Government debt. Hence, that is the reason we are able to run persistent deficits (violating all personal finance rule #1 – spend less than you earn). If our currency is not the global currency, we would not have been able to get away with this. Perhaps this is the winners curse?

Can’t the Federal Government cut spending, we pf bloggers have lots of ideas for them!

Yeah, I know everyone has some ideas to cut spending. Maybe we should get officials to read the festival of frugality every week! But looks here, curbing your summer spending by 56%, going to college with less, go DIY and save money, cutting your TV bills, saving money on bank fees and other money saving tips ain’t going to put a dent in the federal deficit.

To do that, we probably need to do drastic things like make social security not pay as you go. And drastically cut back on medicare spending and entitlement. So in fact, if you are voting on drastically reducing the federal deficits, you are talking about massive entitlement reform (and potentially screwing your parents!). Politicians cannot get elected because older folks vote in greater numbers because they have more at stake.

Here is a pie chart for the Federal Budget for 2009 (courtesy of wikipedia) – Medicare, Social Security and Defence forms the largest components. Medicare expense is projected to grow the fastest!

Maybe Drastic Cuts in Spending are not the way, maybe we need a plan for debt reduction over the long haul?

With 12 trillion in debt, how long does it take? Not too sure if a bankrate calculator can help on this. Dave Ramsey’s has his baby step method, you know, the tortoise and the hare method. But to be honest, I’m not sure we we will ever be getting out of debt at that rate! In the government bond market, snow flaking simply does not work. You have to redeem debt with the nearest maturities and they are the ones with the lowest interest rates, and with the most issuance. So whatever snowball or snowflake methods can be thrown out of the window!

Why do other countries have sovereign wealth funds and we do not?

Because we do not save, that’s why. How can we save if we have been constantly running a budget deficit? China exports more than it imports. The middle east have surplus revenues from oil. All Asian countries who went through the Asian crisis have saved and have huge foreign reserves. We have nothing! Nada! Zip! but just future social security and medicare obligations! In the personal finance world, there is always a debate about how much of our savings should be used for debt reduction versus emergency fund savings. The federal government does not save and hence this is an irrelevant question. The United States has no savings – check out the list of largest sovereign funds according to pioinline.com

Why do we have to borrow from countries like China?

Because just as our federal government does not save, we as the voter, people, consumers do not save enough as well. Japan has an even large debt problem than us (ie debt to GDP). The reason the never had a problem funding their national debt is because the are a nation of savers. The government can borrow from their own people. We can’t even borrow from ourselves first because we as a people do not save enough! Federal borrowing exceeds personal savings. There is only so much treasuries a PIMCO total return fund can buy!

Why are we still able to borrow money relatively cheaply?

Reason is probably because our federal debt is rated triple A by Moodys and S&P and Fitch (although they did rate a lot of sub prime mortgage CDOs triple A at one stage too). The US government is perceived to the the safe investment in the world with the least risk of default. An emerging country may have its debt rated triple B and it will command a risk premium over US treasuries. In the 1800s when the US was an emerging economy, there were periods when our debt was trading at 6% (low yield for an emerging economy) but was 3% higher than the then “safer British debt”. Hence, a triple A rating from the rating agencies plus a perceived “safest asset” perception ensures we can borrow at low rates (just like how your fico score can also impact your borrowing cost). On a personal level, your credit score can also affect your career.

How if countries lose confidence in the US ability to run a sustainable budget, all bets are off. Countries that saw a massive devaluation in their currencies saw domestic interest rates rise to as high as 20% can you imagine what that sort of mortgage rate will do to your home value?

Is there a chance of the US government ever defaulting on its debt?

There is always a chance. But like consumers and individuals, sovereign nation states have other options. They can print money and devalue their currency (perhaps that’s the route that we are headed for – FDIC insurance will mean nothing if your currency can’t buy anything!). Typically, sovereign states can negotiate with their creditors (without having to go to a chapter 13 hearing!) to take a hair cut and exchange their debt for new terms.

Sovereign states do not need helpful debt settlement hints. They speak to investment bankers. Unlike most debt settlement companies that fail their clients, investment bankers are most of the time able to reissue and exchange debt on their behalf.

What if the world decides not to use the US dollar as the international currency?

The world already does not want to use the US dollar but it has no choice because there is no other real viable alternatives. It’s been close to 40 years since we left the gold standard that no modern central banker knows how to operate one even if we went to sound money rather than fiat money. But the fact that China has made arrangements with Brazil to trade in their own currencies are already debt warning signs that this might happen in the long haul. If the world were to suddenly not trade in US dollars, then there would be a flood of US dollars on the market because nobody wants them and nobody needs them if you have to buy goods in other currencies. Because of the massive supply, we will face massive inflation (in dollar terms) and also devaluation as there is no reason to hold a non-international currency. Interest rates will rise massively because bondholders will demand a risk premium, mortgage rates will go up, housing prices reprice again and banks have to mark down more assets again. You might want to consider having some inflation protected investments for yourself.

Can’t politicians come up with a plan to reduce our debt once and for all?

We certainly need them to be talking about it. Just as it would be nice to clear your personal debt and have a calm life, it would be great if we were a creditor nation again. Imagine that you pay off your mortgage, how can you do with that extra money in hand. But just imagine if you had just taken on a mortgage, the thought of having to pay someone for another 30 years is just too much for me. Imagine if you had to pay less taxes!

With the federal debt situation, it’s more like your grandchildren may have to pay for their mortgage too. Having said that, I hold up little hope for now. Our constitution is designed to be a gridlock system. Unless there is a crisis, like the US dollar losing its international currency status, little will change. We will probably pass a health care bill even if we cannot afford it! Yes, the system is broken and needs repair. But hey, when you are broke, you drive your 15 year car unless it reaches 250,000 miles or it dies on you. The federal government just doesn’t take advice like how to survive a recession. Their answer is to keep printing money and spend. And also borrow!

Many of us seem to be able to stop using credit cards irresponsibly, but not the federal government. The sad thing is that debt and credit are so much part of our lives today

Frugality is one personal finance issue that crosses the border between the rich and the poor – the successful and the unsuccessful. Anyone can be frugal, and live smartly.

So, I wondered, who are some famously frugal people? Which public figures regularly show that having money does not mean blowing money? Let’s take a look:

Beyonce

“I haven’t bought a car since I was 16 or diamonds since I was 17,” she told the British publication ‘The Mirror’. “I have a lot of property. I’ve invested my money and don’t have to make any more, thank God, because I’m set. I’m now able really to be free and just do things that make me happy.”

Ok, so “not buying diamonds” isn’t exactly the first thing I think of when frugality comes to mind, but if I was Beyonce, it might be…

The articles below are my editor’s picks for this edition of the Festival of Frugality, don’t miss them!

Tobey Maguire

After he made the first Spiderman movie, Tobey Maguire chose not to increase his regular spending, even though his income had drastically increased. He is quoted as saying:

He told Parade magazine:

“When I first started being successful at this, financially speaking, I was very conservative with my money. That was definitely a product of my upbringing. You know those Lotto winners who win big and then blow all the money? That would never happen to me.”

The 33-year-old star believes his frugal spending means he will never be forced to “keep making movie after movie” to maintain a lavish lifestyle.

Let’s hope he learns to invest, too….

• Budgets are Sexy presents “I Will Teach You To Be Rich” – Review and Giveaway!
• Debt-Free Scholar presents Giveaway: Free TurboTax Online Premier Tax E-Filing.
• Destroy Debt presents How to Break the Cycle of Debt.
• My Dollar Plan presents 12 Ways to Generate Extra Income.
• Make It From Scratch presents Natural Dye for Eggs.
• Prime Time Money presents Spend Less at the Airport.
• The Dough Roller presents 10 Tips to Declutter Your Finances.
• The Digerati Life presents The Dave Ramsey Budget: Budgeting Tips For Successful Savers.
• Learn Financial Planning presents Being Frugal is Just the First Step.
• The Happy Rock presents How Can I Lower My Health Insurance Costs?.
• Wise Bread presents Eco Hack: Produce Bags for Pennies.
• Greener Pastures presents Is it Weight Gain or Weight Loss This Recession? Plus 7 Tips to Avoid Weight Gain..
• Poorer Than You presents Reducing the Costs of College.
• Monroe on a Budget presents Easter is relatively frugal in comparison to other holidays.
• Dealsupermarket presents Frugality Unplugged: Time to Play Van Helsing!.
• Personal Finance Analyst presents Cheap Caffeination: Saving Money on Coffee.
• Brandi Yates presents New Internet Dollar Store.
• Passion For Value presents Tracking your spending with Mint.com.
• Personal Investment Management presents Most Individual Investors Are Poor Personal Portfolio Managers.
• Family Balance Sheet presents Keep your eyes and ears open for FREE family activities..
• Financial Independence in Your 20s presents Foolish Mistakes College Students Are Making For This Summer.

Halle Berry

Halle Berry is frugal and smart – she’s not counting on future successes before they happen. As she puts it:

“I’m not someone who has to have 10 cars and lots of diamonds. I’m pretty frugal.

“I save a lot because I’m always worried about when this trip is going to stop.”

• One Caveman’s Financial Journey presents Declutter and Donate and Reap the Tax Rewards.
• True Adventures in Money Hacking presents Deal: Free Easy Bakeware, nonstick, no fuss baking.
• It’s Frugal Being Green presents Organizing Recipes
• My Frugal Adventures…. presents Tips for finding deals/coupons beyond the grocery store.
• Jeff Rose from Good Financial Cents presents The Cheapest and Most Simplest Chicken Pasta Recipe You’ve Ever Seen.
• Len Penzo presents Essential Tips for Lowering Your Grocery Bill (Part 2).
• Free Money Finance presents Consumers Start to See the Light on Store Brands.
• Punch Debt In The Face presents Would you pay $10MM for a Hanger?.
• The Smarter Wallet presents Control Household Debt With 5 Smart Saving Strategies and Budgeting Ideas.
• Homesteaderbelle’s Blog presents Pecan Tarts
• Cash Money Life presents How to File a Tax Extension.
• Money Saving Deals presents Download TurboTax Business Free.
• Modern Gal presents Aligning Financial Goals.
• 2009 Taxes presents Commons Mistakes that Delay a Tax Return.
• FamilyThinking.com presents Recession Depression? Maybe You Suffer from Hyperopia, Like Me.
• Bank Champ presents Bank Promotions Are Taxed.
• Debt Goal presents Subscriptions When in Debt.
• Everyday Finance presents Mortgage Rate Record Again – How to Get the Best Deal.
• Harvesting Dollars presents I’m Getting A Decent Tax Refund.

Teri Hatcher

Teri Hatcher makes the list, at least, until we vet her. She’s been known to drive her cars into the ground rather than buying a new one. Terri prioritizes her money instead, saying that she would rather “Go on the trip of a lifetime than buy a new car.”

Do any true frugalists want to step up and tell Ms. Hatcher that regular car maintenance is still frugal? And that there is really no need to ever “drive a vehicle into the ground”? Still though, it’s a nice contrast to Jay Leno’s car collection. Obsessions are never frugal.

• Suburban Dollar presents Vampire Power is Sucking Your Wallet Dry.
• Save Few Bucks presents Work At Home: Home Day Care Business.
• My Life ROI presents How to get Ahead of the Game: Three Tips for Students.
• The Greenest Dollar presents How To Barter.
• Money Beagle presents Expenses For Maternity Clothes Haven?t Been Too Bad.
• Frugal Homemaker Plus presents Use It Up.
• Cash to Spend presents Legitimate Paid Surveys
• Savings not Shoes presents Was being frugal making me fat??!
• Personal Financeology presents Checking Accounts
• The Paycheck Chronicles presents Five Tricks Retailers Use.
• Recession Depression Therapy presents How to Never Again Pay Full Price for Groceries–Ever.
• Frugal Upstate presents Easter on a Budget.
• FruGal presents Are you giving more to charity since the recession?
• Almost Frugal presents Back to the Frugal Basics: Building a Budget.
• Chief Family Officer presents Minimizing the cost of printable coupons.
• Counting My Pennies presents Retirement – I need opinions.
• Everything Finance presents Health Savings Accounts explained.
• Value For Your Life presents 5 Free Ways To Monitor Your Senior Pet.
• The Sun’s Financial Diary presents 2009 Roth IRA, Traditional IRA And 401(k) Contribution Limits.

That concludes this week’s edition of the Festival of Frugality. Thanks to everyone for their excellent submissions.

Most of us are familiar with the basic debt reduction techniques, debt snowballs, etc. But what should you do if you are really in a bind, and you need to reduce your debt quickly? These tips can help you make a big dent in your overall debt as fast as possible. The articles that are highlighted with them can give you even more information on frugality, debt reduction, and financial education.

We had some really excellent submissions for this carnival, and I am excited to share them with you. My editor’s picks are first up below. Enjoy!

Emergency Debt Reduction Step #1: It’s not going to go away overnight…

Yes, you need to reduce debt quickly – but the first step to debt reduction is understanding one simple principle: You didn’t amass the amount of debt you have overnight (at least I hope not..) and it’s not going to go away overnight either. Debt reduction takes time, and work. The more time and work you put into it, the quicker it will go away.

If you truly want to get rid of your debt, then you have to decide to do it no matter what: No matter how long it takes me to get rid of my debt, I am going to stick with it, and do whatever it takes. That’s it, that’s the first most important step: Be completely committed.

The articles below are my editor’s picks for this carnival, I loved reading them, and I hope you will too!

Editor’s Picks:

• Free From Broke presents No Job Is Below You.
• The Dough Roller presents 10 Tips to Declutter Your Finances
• Billeater presents 5 Money Saving Secrets Grocery Stores Don’t Want You to Know.

Emergency Debt Reduction Step #2: Get Help

If you are deep in debt, and you have no idea what to do about it, get help. There are a number of agencies out there (some free, some paid) that are qualified to help you get out of debt.

My favorite recommendation for people with a large amount of debt is to go through a debt negotiation process. Debt negotiation involves allowing a professional to negotiate your credit accounts for you. The pro we work with here on Ask Mr. Credit Card is Sam Sky. Companies like Sam’s specialize in reducing your current credit card interest rates, lowering your monthly payments, and removing all the fees on your credit accounts.

Using a professional also helps you to negotiate reduced, lump-sum payments on your debt. Instead of paying down that $10,000 on your card, a debt negotiator can set it up so that the credit card company will accept a one-time payment of $6,000 instead.

Debt negotiation is a quick way to reduce your debt by 1/4 to 1/2 of it’s current total. It’s also relatively stress free, and requires very little work. All around an excellent emergency technique.

It is important to stress that this is an emergency technique – Debt negotiation involves closing your credit accounts which damages your credit score. It’s not something you want to do if you don’t need to reduce your debt fast – but if you do need help, it’s the best place to start.

• E-Trades presents Day Trading Tips From The Pros – Time To Cash In!
• Almost Frugal presents Saving or Spending? What Do You With Windfalls?
• Cash Money Life presents How Do You Improve Your Credit Score When Credit Card Companies Close Your Account?
• The Canadian Finance Blog submitted a post called Reduce Your Credit Card Interest Rate.
• The Sun’s Financial Diary presents What Happens to Your Car Warranty if GM or Chrysler Goes Bankrupt?

Emergency Debt Reduction Step #3: Do It Yourself

What if you need to reduce your debt, but don’t want all of your credit accounts closed out? You can call your lenders on your own and negotiate. You’ll probably never be able to reduce your debt by half this way, but you can certainly knock it down a bit just by spending some time on the phone.

Here’s the key strategy:

Make a list of everyone you owe money to, and the amounts you owe. Note any fees that you have paid on those accounts: Membership fees, late fees, over-limit fees, annual fees, etc.

Start calling you lenders one by one and ask them to remove the fees. While you have them on the phone, ask them to lower your interest rates. Most credit card companies will lower your interest rates if you tell them that you are planning to balance transfer your debt unless they negotiate with you. (Do not threaten to close your account, “balance transfer” is the magic word.)

Every penny that you can have “taken off the top” of your debt is a penny that you do not have to pay back. It makes eliminating your debt faster, and easier. It really is as simple as making a phone call. If the general customer service rep can’t help you, ask to speak to the retention department, or a manager.

• Man Vs. Debt submitted a post called How I Saved $175 On My Verizon Bill
• Personal Finance Analyst submitted a post called Packing a Little Extra Snow on Your Snowball
• The Smarter Wallet submitted a post called Budget Your Money and Control Your Spending Using This Simple System
• The Happy Rock presents The Simple Dollar’s New Financed Car
• Learn Financial Planning presents Being Frugal is Just the First Step.

Emergency Debt Reduction Step #4: Is that really necessary?

Sometimes I think we have our priorities seriously out of whack. If you have a lot of debt, sit down with your family and ask yourself if the following things are really necessary (at lest, until your debt is paid down):

Cable TV
Netflix
Gym Memberships
Club Memberships
New clothes / shoes / makeup etc.
Designer coffees and foods

You get the idea here. If you’re living above what your income can afford, make the cuts where you can, and make them fast. If you talk to your family, and set priorities for what you are going to keep, and what you are going to sacrifice there will be less wailing and gnashing of teeth. Everyone participates, and everyone agrees they are going to work together to get out of debt.

This is a common sense step, but sadly, I think it’s the number one step people in debt don’t take.

We all love the style of life we are accustomed to, but if that lifestyle is getting you into debt, things have to go – cut them fast and don’t look back. Living without debt is much more enjoyable than those little amenities, I promise.

• Out of Debt – Christian Finances and Debt Help presents Top Ways to Waste Money on Your Home.
• Personal Investment Management submitted a post called Most Individual Investors Are Poor Personal Portfolio Managers.
• Bank Savings Review presents Four Banks Give Back TARP Already
• MyMoneyMinute submitted a post called A Few Details Once You Pay Off Your Car Loan.
• Low Cost Index Funds presents Just Buy Index Funds Directly.
• Fine-Tuned Finances presents Why Young People Will Benefit Greatly from the Recession.
• Finance Tips 101 presents Tips On How To Apply For A Scholarship.

Emergency Debt Reduction Step #5: Raise Your Income

If you’re sitting in debt, get to work! Take on an additional part time job, or find a way to work part time from home. Anything and everything you can do to bring in additional income will wipe away your debt that much faster.

On another note, if you have stuff sitting around that you can sell, get rid of it. We’ve all made bad purchase decisions. Your old, unused iPod could bring in much-needed debt money. Use EBay, local re-sellers, everything you can. Your home will be more peaceful too, without all that stuff sitting around.

I view it this way: every unused item I own that is worth money could be reducing my debt and my stress level in one go. Trading your old stuff in for peace of mind is a very, very good deal.

• The Digerati Life submitted a post called ING Direct Orange Savings Account Review: Online Bank Features
• Savings Toolbox presents Consignment Shops Help You Save and Make Money.
• Recession Depression Therapy presents the French Toast Club.
• Studenomics presents 10 Places to Find Startup Funding for Your Business.
• Investing School presents Beginning Options Trading.
• Save Few Bucks presents Work From Home Call Center Jobs.
• My Financial Success submitted a post called Top 5 Financial Secrets you must Use.
• The Low Cost Auto Insurance Guru presents 14 Auto Insurance Secrets – They Don’t Want You to Know – Part-4.
• Bankling presents The Ultimate Guide to Free Samples: 50+ Ways to Get Free Product Samples.

Emergency Debt Reduction Step #6: Get Educated!

Finances are a learned skill, not an innate ability. No one is born knowing how to manage debt, use credit properly, invest wisely, etc., etc. These things are learned, all of them. If you have a significant amount debt that’s a signal that you should brush up on your financial knowledge. Articles like the ones listed here are a great place to start, but you can check out popular books on the topic too.

Consider reading books by authors like Dave Ramsey, Robert Kiyosaki, Suze Orman, etc. Every time you increase your knowledge, you will make your financial situation better. Every single time.

• Debt Freedom presents How To Become Debt Free.
• ifvat presents Investing in the Stock Market.
• Everything Finance presents Health Savings Accounts Explained.
• Christian Personal Finance submitted a post called How I make a living from my blog.
• No Debt Plan submitted a post called Cut Monthly Costs by Asking for a Discount.
• Debt Free Scholar presents Giveaway: Free TurboTax Online Premier Tax E-Filing.
• Dollar Frugal presents Norton Let Me Cancel!
• ETFDB presents How to Build a Simple and Effective All-ETF Portfolio.

Emergency Debt Reduction Step #7: Talk to your kids about your debt

For some reason, many of us keep our children completely in the dark about our financial situations. This is the last thing you should be doing. Remember when we said finances are a learned ability? Well, it’s a learned ability for your child too. If you are in debt, it’s an excellent time to teach your children what they should do to either avoid being in debt, or to fix it if they are.

You do not want to scare your child, but you do want them to understand that getting into debt is a process, and getting out of debt is a process. If you get them on your side, and help them to understand, they will be more willing to help you make budget cuts. Even the young ones can be shown that they need to save for toys instead of buying on Mom or Dad’s credit card. Older children can work through a basic budget with you, and you can discuss the pro’s and con’s of different approaches to repayment.

Money management is not taught in schools – if you don’t take the time to give your child these tools, they will have to find them on their own, usually much later in life, after they are deep in debt. By being open with your child about your debt, you can teach them about what money management really means.

• Debt Goal presents Quickfire Challenge: Debt Problems versus Debt Solutions
• My Dollar Plan presents The Final Decision on Downsizing
• Harvesting Dollars presents Invest For Retirement Or Pay Off House Early?
• Automatic Finances submitted a post called Do You Know Where Your Money is Going?
• Darwin’s Finance presents Is it Ethical to Re-Lock your Mortgage When Rates Drop?
• RateNerd submitted a post called Debt Reduction FAQ’s.
• Budgets Are Sexy presents New Credit Card? Don’t forget to update all your accounts!

That’s it for this week’s edition of the Carnival of Debt Reduction. Thank you all for your excellent submissions!

Welcome to the April Fool’s Day edition of the Money Hacks Carnival here at Ask Mr. Credit Card.com!

If this is your first time visiting us, please grab our free RSS feed and take a look around – we’re glad you’re here.

Since it’s April Fool’s day, I thought it would be fun to take a look at some famous April Fool’s Jokes throughout history.

There are the jesters, the jokesters, and the tricksters that brought their own quirky brand of entertainment to the public.

So sit back, grab a cup of coffee, and enjoy!

The “Taco” Liberty Bell

In 1996 Taco Bell announced that it had purchased the Liberty Bell. They were going to re-name it the “Taco Liberty Bell!” Hundreds of outraged citizens called to complain before Taco Bell announced a few hours later that it was all a joke.

The best part of the entire incident though, is actually credited to White House press secretary Mike McCurry. When asked about the Liberty Bell incident, he quipped, “We’ve also sold the Lincoln Memorial. It will now be called the Ford Lincoln Mercury Memorial!”

• VC presents The Penny Daily: Why You Need To Invest Now posted at The Penny Daily.
• Fine-Tuned Finances presents Five Ways to Get Cheap and Free Microsoft Software posted at Fine-Tuned Finances.
• Ray presents Investment Club-Learning About Investing posted at Financial Highway.
• Sharyce Arciaga presents How To Use Blog Sites To Increase Traffic To Your Blog posted at Internet Marketing Articles.

• Lisa Spinelli presents Ford CEO Takes Compensation Cut. But are the Vehicles Better? | Greener Pastures: Personal Finance posted at Greener Pastures.
• Nate Desmond presents 7 Ways to Save Money on College Transportation posted at Clever Dude.
• Jorge presents How to Build Your Emergency Fund Fast posted at Independent Minded.
• FIRE Finance presents FREE TaxACT Software Download posted at FIRE Finance.

• Ishanbansal presents Does it really makes sense to buy a Hybrid Car? posted at Save Few Bucks.
• Verna Morris presents Top 25 ETF Tweeples Worth a Follow on Twitter posted at ETFdb.
• Michael Haltman presents Pop The Economic Pimple While The Cancer Runs Wild posted at The Political and Financial Markets Commentator.
• Investing School presents Realized and Unrealized Gains and Losses posted at Investing School.
• WC Porter presents Should The AIG Bonuses Be Taken Away Or Not? posted at WiseBread.

• Manshu presents Greater Fool Theory and Keynes Beauty Contest | OneMint posted at OneMint.
• Kelly Sonora presents Day Trading.Edu: 50 Free Open Courseware Classes for Investors and Day Traders posted at Forex.Edu.
• D4L presents Early Warning Signs of a Dividend Cut posted at Dividends Value.
• Jay Green presents Remote Computer Maintenance: RCM posted at Remote Computer Maintenance.
• JC presents Saving Money on Food in College posted at 6Bubbles – Grad School, Money, Life.

Nixon for President?

In 1992 comedian Rich Little went on NPR and impersonated Richard Nixon. He announced his intent to campaign for the presidency. His campaign slogan was “I didn’t do anything wrong, and I won’t do it again!”

The hoax was revealed in the second half of the radio show, but not before they received call after call from listeners expressing their outrage.

• The Investor presents How stop loss investing can save you money posted at Monevator.
• Bank Champ presents High Yield Reward Checking Accounts posted at Bank Champ.
• J. Money presents Can’t use a competitor’s coupon? (Don’t tell my mom.) posted at Budgets are Sexy..

• Jeff Rose presents 5 Tests To Claim a Dependent On Your Tax Return posted at Jeff Rose.
• TNB presents Investing In Certificate Of Deposits posted at Understanding Certificate of Deposits.
• ifvat presents Junk Silver Coins – How to Purchase Silver Bullion Under Spot | ifvat.com posted at ifvat.
• Megan presents Baby, that’s a big emergency fund you’ve got there posted at Counting My Pennies.
• Retirehappy presents Earning $20,000 Equals Half Million Dollar Nest Egg posted at My Retirement Blog.

• Kim Staudenraus presents The Default Clause posted at Tranquility Financial Visioning.
• Dan presents Is it Ethical to Re-Lock your Mortgage Deal when Rates Drop? posted at Darwin’s Finance.
• bp presents Are you above the golden arches? posted at www.OneChanceToLive.com.
• Leave Debt Behind presents Working with a Non Profit Debt Consolidation Company posted at Leave Debt Behind.
• MoneyNing presents Inheriting Generations of Frugal Living posted at Personal Finance Blog by Money Ning.

• Nicki presents Reintroducing Bartering posted at Domestic Cents.
• The Hoss presents AIG Retention Bonus Scandal posted at Hoss Cents Free Financial Money Magazine.
• Asgreen presents A Busy Life posted at Always the Planner.
• Abigail presents Are we too optimistic? posted at i pick up pennies.
• Mark Foo presents Personal Development Blog | A Practical System to Managing Your Money – The Big Dreamer posted at The Big Dreamer.

A Whopper In Each Hand?

In 1998 Burger King announced that it would be releasing a special “Left Handed” Whopper, in an attempt to market to the 32 million left-handed Americans.

The Left-Handed Whopper included all the same things that the standard Right-Handed Whopper featured. However, the condiments were rotated 180 degrees for the benefit of eating with your left hand.

The next day Burger King revealed the hoax. According to their report, thousands of customers requested a left-handed whopper, while still more began requesting right-handed Whoppers too!

• Wren Caulfield presents Tweet for Cash? posted at True Adventures in Money Hacking.
• ChristianPF presents Dave Ramsey on saving money for college posted at Money in the Bible | Christian Personal Finance Blog.
• Jeremy presents Credit cards: Downfall or savior of NYC cabbies? posted at Taking Charge.
• Aryn presents How to Set up a Garden Share Day posted at Sound Money Matters.
• Peter presents Accountability: Sometimes You Need Someone To Slap You On The Back Of Your Head posted at Bible Money Matters.

• Steve Faber presents Cheap Car Insurance for a Young Driver – How to Get It posted at How to Get Cheap Car Insurance.
• Nicholas Powiull presents Conscious Flex: How to Live Your Passion (How I Became a Fulltime Blogger) posted at Conscious Flex.
• Steve presents How to Invest with Lending Club posted at Personal Finance Start-Up Blog.
• etrades presents Why Buy Silver Bullion? posted at eTrades.
• The Financial Blogger presents Man, I Think we Failed as Financial Advisers! posted at The Financial Blogger.

• John Hunter presents California Unemployment Rate Climbs to 10.5 Percent posted at Curious Cat Investing and Economics Blog.
• vh presents Staying solvent in penury posted at Funny about Money.
• Jeff@StretchyDollar presents Jury Duty and You posted at StretchyDollar.
• Shaun Connell presents 5 Financial Tips for Right Now posted at Free Financial Advice.

• LAL presents 50% Cut in budget? posted at LivingAlmostLarge.
• Silicon Valley Blogger presents FNBO Direct: Best Online Savings Account, ETrade Bank Interest Rate Below 3% APY posted at The Digerati Life.
• Alvaro Fernandez presents Change Your Environment, Change Yourself posted at SharpBrains: Your Window into the Brain Fitness Revolution.
• Jordan presents Use Twitter To Make Money For Yourself/Business posted at Jordan’s Internet Marketing Guide.
• FFB presents What Is A Ponzi Scheme – In Simple Terms posted at Free From Broke.

An Anti-Gravity April Fool’s Joke

In 1976 astronomer Patrick Moore publicly announced that there would be a once-in a lifetime astronomical event. Apparently, the planet Pluto would pass behind Jupiter for a few moments, and create a gravitational anomaly here on Earth. Moore told people that if they jumped in the air at exactly the right moment, they would experience the effects of reduced gravity.

The feedback was tremendous. Hundreds of people called the BBC and reported feelings of weightlessness, and one woman even claimed that she and her friends flew around the room!

• George presents Consistent Cash Creators with High Normalized Earnings Yield posted at Fat Pitch Financials.
• The Smarter Wallet presents Investing In The Stock Market? Rules To Help You Sleep At Night posted at The Smarter Wallet.
• pfincome presents Recession in America – Long Distant Families posted at Passive Family Income.
• MBR presents Is Your Certificate of Deposit Safe? posted at Monitor Bank Rates.
• RC presents From the Economic Stimulus Plan- 529 Funds Can be Used for Computers, Software, and Peripherals posted at Think Your Way to Wealth.

• Madison presents ShareBuilder $70 – $90 Sign Up Bonus for Costco Members posted at My Dollar Plan.
• Jason presents Identify Your Underwater Financial Volcanoes posted at MyMoneyMinute.
• Barry Wright III presents Fashion Mathematics: The Value of Mixing and Matching posted at 3stylelife.
• Jorge presents Book Review: Designing Your Child?s Financial Future (Part 1) posted at Independent Minded.
• Lisa Spinelli presents How Have Your Retirement Plans Changed? posted at Greener Pastures: Personal Finance.

• Little People Wealth presents Ten Money Saving Tips for Gardeners! posted at Little People Wealth.
• Sun presents Lending Club Introduces Self-Directed IRA in Peer-to-Peer Lending posted at Earn More Invest Wisely at The Sun’s Financial Diary.
• Kate Kashman presents How to Opt-Out posted at The Paycheck Chronicles.
• Miss Thrifty presents Cath Kidston Wallpaper – The Thrifty Version! posted at Miss Thrifty.
• PT presents Borrowing from the 401K: The Best of a Bad Situation posted at Prime Time Money.

• nickel presents How to Save Money on Groceries – Reduce Your Grocery Bill posted at fivecentnickel.com.
• Miss M presents Lending Club – Funding My First Loans posted at M is for Money.
• Money Tipper presents File Taxes Early to Save on Filing Fees posted at Money Tipper.
• DR presents Debt Cures by Kevin Trudeau–Do his “secrets” really work? posted at The Dough Roller.
• Andum presents Buying Glasses Online – PD & Fitting Height posted at Wealth Itself.

A Virgin UFO In London

In 1989 thousands of motorists in London looked up to see a a UFO hovering above them! The UFO finally landed just outside of London and the police were called to the scene. When the responding policeman approached the craft it opened up, and a silver figure climbed out. When the policeman saw the figure, he ran from the scene!

It was later revealed that the craft was actually a weather balloon, custom designed to look like a UFO. Who was the silver figure? It turned out to be Richard Branson, the chairman of Virgin Records.

• kathryn presents Budget Money with Irregular Paychecks posted at Out of Debt – Christian Finances and Debt Help.
• Homemaker Barbi (Danelle Ice) presents 5 Surefire Ways to Recession Proof Your Job posted at Homemaker Barbi.
• Wenchypoo presents Omnibus Obama Tax Avoidance Tip Sheet and Small Loophole Collection posted at Wisdom From Wenchypoo’s Mental Wastebasket.
• Hank presents Buying Only American Goods Costs You Money – Buy The Best! posted at Own The Dollar.
• Dividend Tree presents Positioning for Index-Based Investments posted at Dividend Tree.

• mortgager presents Second Hand Endowment Policies posted at Endowment Life Insurance Policy �.
• Independent Beginnings presents How I Made Selling on Ebay Work posted at IndependentBeginnings.com.
• Tiffany Colter presents We are tired of talk posted at The Balanced Life.
• Sam Carterson presents Checking Accounts posted at Personal Finance.
• My Life ROI presents How Are People Tricked by These MLM/Ponzi Schemes? posted at My Life ROI, Getting the Best Return On Life.

• TStrump presents Executive Compensation posted at The Strump – Financial Blog.
• Matthew Paulson presents Personal Finance Tips from the Bible posted at Fine-Tuned Finances.
• Diego Cervantes presents The Mutual Fund Toolbox: Top 50 Blogs, Portfolio Tools, and More posted at Bankling.
• ifvat presents The Beginner’s Guide to Stock Market Investing Risk Tolerance posted at ifvat.
• vsocorp presents Step 1 For Creation Profitable Busines: Determine The Kind Of Business by VSO posted at VSO Corp: Business Success, Business Strategy, Logica Uspeha.

• Winson Yeung presents Fastest Way To Build A Huge Targeted Opt-In List – Free Giveaway posted at Best Online Affiliate Marketing Blog.
• Baker presents Reader Question: Quick Ways To Raise Credit posted at Man Vs. Debt.
• The David presents Are Savers Dooming the Economy? No!!! posted at Pimp Your Finances.
• Kelsey presents Legitimate Paid Surveys posted at Cash To Spend – Online Paid Surveys.
• etrades presents Basic Guidelines On Investing In Penny Stock That Matters posted at eTrades.

The Loch Ness Monster Is Real!

In 1972 a huge unidentified carcass was discovered in the Loch. Supposedly it weighed a ton and a half! Scientists quickly went to the Loch and retrieved the corpse for study. Early reports called it the “Son of Nessie”

Things took a wrong turn though, when police chased down the scientist’s van and confiscated the carcass. They then took it to a nearby research facility for study.

It was eventually revealed that it was the body of an elephant seal, and not in fact, Nessie’s baby. But how did it get there?

It turns out that John Shields, a Flamingo Park employee, was responsible. The elephant seal died a week before the incident. Shields padded it’s cheeks, shaved it’s whiskers, froze it for a week, and them dumped it in the Loch. He intended it as an April Fool’s joke on his scientist friends, but the entire incident was blown far, far out of proportion. It was even picked up by some mainstream media that reported the Loch Ness Monster had indeed been found.

• Dana presents The Economics Behind Work | Investoralist posted at Investoralist.
• Jim DeSantis presents Free eBook – Credit Rescue! posted at Emotions and Credit at On Line Tribune.
• Zachary Scheidt presents Credit Card Investments – Still Substantial Risk posted at ZachStocks.
• Wojciech Kulicki presents Book Review: The Skinny on Credit Cards by Jim Randel posted at Fiscal Fizzle.

• CreditCardAssist.com presents Building Good Credit With Secured Credit Cards posted at CreditCardAssist.com.
• Debt Freedom Fighter presents Why Do I Only Qualify for Low Limit Credit Cards? posted at Discover Debt Freedom.
• Credit Shout presents Cabelas CLUB Visa Card Review posted at CreditShout.
• Credit Card Addict presents Amex Offering Double Membership Rewards Points posted at Credit Card Addict.

We are featuring some excellent articles today, so grab a cup of coffee and relax while you check them out! I’ve included some quick quotes from the articles that I’ve chosen as my Editor’s Picks.

Enjoy!
Mr. CC

• **Editor’s Choice: I pick up pennies has a wonderful article on How to deal with debt collectors.
  

  “These days, it seems like “debt collection” doesn’t have the same gravitas as when I was younger. Perhaps it’s nostalgia, where some things loom larger than life.

  Perhaps it speaks to my comfortably middle-class upbringing — not paying one’s debts was simply unthinkable — or maybe people were already too comfortable with living above their means, even before the current economic crisis.

  Whatever the reason, the term that used to seem ominous has apparently become rather commonplace. It’s lost its power.”

• Sun presents Recession Survival Guide posted at The Sun’s Financial Diary.
• The Financial Blogger presents Definition of a Credit Score posted at The Credit Tool Box.
• Laura tells us how she’s Throwing a snowball at my debt on her site No More Spending.
• MoneyNing has a great article that discusses Counter Intuitive Way of Lowering Your Spending posted at Personal Finance Blog by Money Ning.
• Christian Debt Help wrote a thought provoking post called Faith-Based Investing

• **Editor’s Choice: Beginner Investing gives some very sage advice in their post: The First Investment a Beginner Should Make.
  

  “Get ready, because this advice is the only sure thing you will ever find in the investment world. It’s a guaranteed can’t lose investment that will earn you between 12-25% return on your money. Plus, it’s an investment that’s available to almost anyone.

  Ready to hear it already?

  PAY OFF YOUR CREDIT CARD DEBT

  It’s that simple.”

• My Dollar Plan gives us the lowdown on the $8,000 First Time Home Buyer Tax Credit.
• M is for Money submitted a post called Deliverance from Debt: Keeping Focused.
• The Smarter Wallet presents Student Loan Programs To Pay For My College Tuition Costs posted at The Smarter Wallet.
• The Paycheck Chronicles wonders if you have Written a Budget Yet?
• Pimp Your Finances submitted a post called Get Out of Debt – January Update!
• David presents Do It Yourself Debt Reduction. posted at My Two Dollars.
• Aetius Romulous presents Meltdown: or How I learned To Stop Worrying and Embrace the Debt « ScreamBucket posted at ScreamBucket.

• **Editor’s Choice: Out of Debt – Christian Finances and Debt Help helps us all out with this post: Get Your Taxes Done for Free!
  

  “Right now the secret shopping firm Market Force is looking for people to have their taxes done for free as part of a mystery shop. Not only will all of your fees be reimbursed by Market Force, but you will make $70 getting your taxes done.”

• Silicon Valley Blogger presents Experian Credit Score and Report Dropped From myFICO: One Less FICO Score posted at The Digerati Life.
• Tushar Mathur presents Zecco: Free stock Trades ? posted at Everything Finance.
• Personal Finance Analyst wrote a post called Packing a Little Extra Snow on Your Snowball.
• Debt Advice wrote a post about debt: What’s the Difference Between Good Debt and Bad Debt?
• DebtGoal wrote an interesting article, Don’t Believe These 7 Credit Card Myths:
• Tom Tessin presents Signs You Need To File For Bankruptcy posted at FSC Blog.
• rcbutler presents 5 Amazingly Simple No-To-Low Budget Marketing Strategies.

• **Editor’s Choice: Credit Card Addict issued a timely warning with this article: Experian Credit Scores to Go Dark.
  

  “If you want to see your Experian credit score, you’d better hurry. Fair Isaac, the company that created the FICO score, will not be allowed to sell credit scores based on Experian’s data beyond February 14th, 2009. In the past, you’ve been able to check your FICO scores based on data from all three credit bureaus via myFICO.com.

  For their part, Experian plans to continue selling their own proprietary credit scores to directly to lenders. In other words, lenders will be able to check your Experian score, but you won’t be able to check it yourself.”

• Raily Arena gives some timely Tips That Will Get Your Home Sold Quicker posted at How to Sell Your Own Home.
• Scott Crawford gives a great guide on how to Create Your Own Bailout Plan posted at DebtGoal.
• Destroy Debt has some More Grocery Shopping Saving Tips posted at Destroy Debt.
• Deposit Accounts tells you how to Get the Most Out of Your Tax Refund posted at Deposit Accounts.
• Debt Help and Advice wonders: What Are the Root Causes of Debt?
  
• Lance Cooper presents Obama’s Stimulus Plan Is A Complete Joke posted at Recession Thoughts.
• Peter talks about $1000 To Start An Emergency Fund posted at Bible Money Matters.
• Ryan Healy discloses his Outstanding Debt as of Feb 2009 posted at Debt Reduction Formula.

• **Editor’s Choice: Penny Jobs.com featured this article: Understanding The Economy: Part 4: The Global Financial Crisis and Collapse of the Dollar.
  

  “The other day I saw an interview with Dick Cheney and when asked about the market collapse, he said “No one saw this coming” – a classic political response, but not true.

  Many people saw the housing bubble forming, just like they saw the tech bubble forming in 2000, but no one wanted to listen to them. The politicians rely on relationships with other leaders that agree with their ideas and squeeze out all naysayers, which put them in a position of missing very obvious market bubbles. “

• Debt Free Destiny tells you how to Make Your Job Resistant to the Recession posted at Debt Free Destiny.
• Dan Melson has A Good Proposal For Dealing With The Mortgage Problem at Searchlight Crusade.
• Savings Toolbox wonders if you are Finding Yourself unable to Make Your Mortgage Payments? posted at Savings Toolbox.
• Debt Freedom Fighter presents How Does the Debt Collection Process Work? posted at Discover Debt Freedom.
• Personal Finance Ology tells you how to Create Your Dream Home And Put Money In Your Pocket
• Chris discusses House-hunting expenses and how to minimize them (part 2) posted at Home I Own.
• Kelly from Almost Frugal presents The other side of the card posted at Almost Frugal- a frugal blog.
• Finance Tips 101 gives some great information about Scholarship And Grant Information For Interested High School Graduates posted at Finance Tips 101.

• **Editor’s Choice: Living Almost Large takes on a reader’s question with: Can you be too frugal?
  

  A reader (maclover), asked me to ask others if he was being too harsh on his wife for spending money on clothes. I am about to lay out all the details of the spending and earning power of this lovely couple and see what others think.

  Maclover makes a great living. His wife is currently in residency and has a large earning power as well. So what is the fight about? Whether or not spending $500/month on clothes is outrageous? Maclover would like his wife to cut back on her clothes shopping. However, she refuses. Yet he is unsure if he is being cheap or frugal.

• FFB hits home with 9 Excuses Why You Haven’t Started A Budget Yet posted at Free From Broke.
• FIRE Finance takes a new angle with: Smart Refrigeration Lowers Electricity Bill posted at FIRE Finance.
• The always entertaining J. Money presents Ohhh how I love me some Taxes!!! Just got ‘em back… posted at Budgets are Sexy..
• Save Money presents Frugal Frauds Revealed posted at How I Save Money.net.
• Noel Roberts reminds us that An investment in knowledge, is the BEST investment posted at The Official Blog of RKOTB.
• KCLau has a Money Tips Group Writing Project posted at KCLau’s Money Tips.

That’s it for this edition of The Carnival of Debt Reduction! Thank you for your submission, I enjoyed reading them!

Credit Card Company Goes After Dead Woman’s Family, Blames Her For The Financial Crisis

The only thing that the current financial crisis is missing is an innocent scagegoat. This weekend, I was reading none other than one of my favorite political blogs, Talking Points Memo, when I cam across this story. Now, I don’t want to think about what I would do if one of my parents past away, but the last thing I would be concerned about is their credit card companies. Unfortunately, it appears that Bank of America is actually going after the families of deceased cardholders. They are using their standard bag of tricks including deception and even guilt. It is truly despicable.

Even weirder, is their claim that people like the deceased are responsible for the credit crisis!

Chase Acquires WaMu, Changes Your Automatic Payment Preferences To Encourage You To Pay The Minimum Payment.

WaMu fails and is acquired by Chase. You get a friendly letter welcoming you to the Chase Family or some similar nonsense. Yet, buried in the fine print is the following statement:

“If you are enrolled in automatic payments to your credit card with a fixed payment amount (e.g. $300 monthly), effective March 6, 2009, your automatic payment will be changed to your monthly minimum payment due.”

This according to a post in today’s Consumerist. As we all know, paying the minimum balance is probably one of the most self destructive practices in all of consumer finance. You could probably stop paying, default, declare bankruptcy, and rebuild your credit in less time than it would take to pay off a debt at the minimum balance. Even if you did pay it off, you would almost certainly spend more money on interest than on the original purchase.

For Chase to change people’s settings, and encourage people to pay the minimum payment, is a terribly consumer hostile action. If only they were the exception today.

Next, American Express Cancels Their Fan And Loyal Customer

Over at the nicely named blog: Diary of a Fab Black Woman, there is a post that is making the rounds about a traveler who has always relied on her American Express card. Only when she is traveling overseas and needs it most, does she discover that Amex had in fact canceled her account two days earlier!

Unfortunately, this woman has been a user and a fan of American Express since the old days of the Karl Malden’s “Don’t leave home without it” commercials.

Note to Amex, you will not be profitable by canceling all of your best customers.

And by the way, I still haven’t received a response to my letter about my bizarre “financial review”. Long story short, I passed, they failed.

Finally, Credit Bureaus Offer To Sell You Bogus Credit Scores

As if the whole credit scoring process wasn’t confusing enough and filled with scams to monitor your credit and provide you with your credit scores, it seems that the credit agencies now want to get down in the mud themselves.

Over at Consumer Reports, there is an article about credit scores that has an interesting, if bizarre and appalling footnote:

FICO is not the only credit score you can buy. VantageScore, available from Experian for $5.95 and TransUnion for $7.95, is touted as more consistent and simpler than FICO scores. But VantageScore carries this disclaimer: “Your credit score may be different from the score used by a lender.”

Experian also sells its proprietary PLUS scores along with its credit reports. The company says your score helps “lenders, landlords, and employers quickly gauge your credit history and decide what kind of risk they are taking if they approve your application.” But Experian’s terms of service tell a different story: “The PLUS Score is not currently sold to lenders and is not an endorsement or guarantee of your credit worthiness as seen by lenders.”

CR’s take. These credit scores probably aren’t worth your money.

So basically, these companies will sell you a worthless credit score that is not really a credit score that any lender actually uses. Great!

In other news, I will be happy to announce the sale of my new PowerScore. This credit score, while not actually used by any lenders, will be chosen at random by a team of monkeys in my basement. You can use it to impress your friends, family, lenders, and drinking buddies.

Best of all, it is free. To obtain this score, please send me your name and contact information as the return address attached to a brand new, 70″ Sony BRAVIA XBR LCD Flat Panel HDTV with Full HD 1080p, Motionflow 120Hz, BRAVIA Engine 2 PRO, 10-bit panel with 10-bit processor, ACE circuit, DMex capable, Live Color Creation technology, and piano gloss black finish.

We all know that carrying debt financially is a bad thing. Some types of debts are better than others, but all debt is money owed! So, I hope that you enjoy these simple tips than can immediately help you to reduce your debt.

Just Say No To Credit Card Fees

The biggest secret in the credit industry is deceptively simple. All you have to do to get your late, over the limit, membership or application fees removed is just ask a manager. If you are carrying a balance on any of your credit cards, and there are fees within that balance, don’t pay them. Get them removed instead.

The easiest way to reduce your debt is to call your credit card companies (or anyone that you owe for that matter!) and ask them to remove any fees that they have placed on your account. It’s simple, easy, and could literally save you hundreds of dollars with a single phone call.

For more on how to do this, you can check out our article “Should You Pay Your Credit Card Bill Late? The Answer May Surprise You“.

• Money Theory features “Getting out of credit card debt. My story.” Good for you MT!
• Credit Card Assist talks about How To Tell Your Credit Card Company You Can’t Pay. Many people do not realize that the first thing they should do if they need to miss a payment is to contact their credit card company. This can help you avoid fees, as well as late payment marks on your credit report.

Repair Your Credit

If you have a poor credit score, your options are limited. Taking the time to dispute items on your credit report, and getting on a regular payment schedule will raise your credit rating. The higher your credit rating is, the more refinancing options, or balance transfer options are available to you. Investing a little time in repairing your credit can sometimes save you hundreds of thousands of dollars in interest over your lifetime.

For quick and easy ways to raise your credit score, you can read “How to Raise Your Credit Score In 7 Easy Steps“.

• Free Money Finance gives us The Benefits of Debit Cards. I couldn’t agree more! *Editor’s Pick
• Discover Debt Freedom offers “Tips For Choosing A Debt Counselor.” Credit Counselors can be a huge help – just be sure that yours is qualified. If they aren’t, they could end up doing real damage to your credit score.

Debt Snowflake, or Snowball?

Whether you buy into Dave Ramesy’s “debt snowball” method or not – the important thing is paying down your debt! If you are planning to refinance anything, or get a loan in the next few years, you may want to consider an alternate approach.

If you have revolving debt (on credit cards) consider paying down the credit card with the balance that is closest to the limit – instead of the one with the highest interest rate, or the smallest balance. Doing this will maximize the impact to your credit score, and put you in a better position to finance things in the future.

For more on how your credit score is calculated, check out our article “The FICO� Score Breakdown“.

• Blueprint For Financial Prosperity thinks “Dave Ramsey Is Brilliant.” Check out the reader comments on this one! *Editor’s Pick
• Personal Finance Analyst says “Dave Ramsey’s Debt Snowball – Bad Math, Great Results“. I agree about the bad math, and the great results. Use what works for you. The important thing is that your debt is gone!
• Think Your Way To Wealth has a wonderful article on “Debt Reduction by the Overwhelming Force Method“. I love this article. If you make debt reduction your primary focus, your debt will disappear quickly.

Give Your Mortgage A Checkup

Whether you choose to pay down your debt via a consolidation loan, or you simply refinance your existing mortgage, owning your home gives you lots of options. Be careful, and check out all of the fine print for any new loans. Make sure that the deal relly does benefit you after all of the fees and interest are factored in.

• Five Cent Nickel is Checking Out Current Mortgage Refinance Rates.Now might be a good time to consider refinancing.
• Accumulating Money talks about “Refinance Loans – Using Your Home to Pay Off Your Debt“. This can be a risky, but very effective strategy. Just like the debt snowball, I would say – use what gets results for you!

Sweat The Small Stuff

Are you paying too much for car insurance? More than you have to for groceries? The easiest way to pay down your debt quickly is to trim up your monthly budget. This will give you more money to put towards your debt, and you will get things paid down faster. Once your debt is paid down, you can consider living on the trimmed budget, and investing the excess.

• The Digerati Life has 21 Deal Sites and Online Tools To Help You Save Money. *Editor’s Pick!
• Christian PF takes a look at Kiplinger’s 6 best budgeting websites… I hadn’t seen many of these!
• Mighty Bargain Hunter discusses “Patching up shortfalls can mean postponing retirement savings.” If you have to pull money from your 401(k), or not contribute because of your debt, then it will reduce your retirement savings. Personally, I would try every other strategy first.
• Budgets Are Sexy wonders,”Am i slow, or did gas just plummet like a mother this month?“. It sure has been nice on the budget, eh?
• The Smarter Wallet talks about “One Effect of the Economic Recession? Frugality is Back in Fashion“. Boy is this ever true. I loved this article. Especially the line “Check your budget with Sherlock Holmes’ magnifying glass!”
• The Personal Financier talks about risk assessment with “Is This the Opportunity of a Lifetime?” Don’t miss this article. Especially if you are investing while you have debt. The potential gains could outweigh the interest you are being charged – but you’ll need a good understanding of risk and market conditions.

Editor’s Picks:

Holiday Wrap-Up and Getting Ready For The New Year

• What to Do if You Received Gift Cards for the Holidays @ Free Money Finance
• New Year’s Resolution Workshop #1: Get Started with Retirement @ The Simple Dollar
• Things your cell phone company won’t tell you @ The Smart Spending Blog
• Turning Attention to Christmas Bills @ Frugal Dad

Save Money, Simplify Your Life, Get Free Things!

• Tips To Reduce Your Bills During A Recession @ Prime Time Money
• Free Offers @ My Dollar Plan
• Check out the Total Money Makeover book giveaway @ Blunt Money – Don’t forget to enter!
• Free MP3 Credits from Amazon.com @ Money Saving Methods
• Waste Not Want Not:Turning Waste Into Savings @ Wise Bread
• Value Added Tax Refund (VAT) for Vacation Shopping @ Money Ning
• Personal Finance 101: How to Pay Your Utility Bills @ Get Rich Slowly

Carnivals, Festivals and Celebrations

We were featured in the following carnivals this week – thank you everyone for hosting!

• The Carnival of Personal Finance #184: From the Land Down Under @ Saving to Invest
• December 22nd Edition of The Holiday Spirit @ Systems Overload
• The 157th Festival of Frugality: The Queen’s Speech Edition @ Miss Thrifty
• The Carnival of Money Stories Edition #90 – Happy Holidays Edition @ The Personal Financier
• The Carnival of financial planning @ The Skilled Investor’s Blog

My family and I are going to stick to our regular budget. We’ve had the same budget for the last four years, and it’s working well for us.

We know how much we need to save before Christmas, and we don’t end up in debt after Christmas – even though we have a large number of family members that we have to buy for. So, the economy can do what it will, but we are sticking to our plan.

How about you guys? Has the economy had an impact on your Christmas spending? Are you putting more or less on credit than usual? Tell me about it in the comments section – I’d love to know!

The articles below were my very favorite articles of the week. They all made me smile, or made me think, so I saved them to share with you. I hope you enjoy them!

Holiday Cheer:

• My favorite article of the week was from Clever Dude. It’s a short little video of the Cartoon Network float. If you haven’t seen it, definitely check it out!
• Frugal Dad showcases the One Dollar Give Project – I definitely support this one. A dollar really does make a difference when enough people give.
• My Two Dollars has 5 Golden Rules To Follow During The Holiday Season. Personal homemade gifts, and rethinking the amount of stuff you buy your children. There is some very down-to-earth advice here.

Keeping it Real:

• Donna at the Smart Spending Blog turned 51, and wrote a beautiful article about age, maturity and life. Happy Birthday Donna!
• Money Crashers talks about Protecting You and Your Family From Financial Ruin In A Recession. Having enough insurance, and working to eliminate your debt are discussed. Excellent article.
• Prime Time Money discusses Collecting Aluminum Cans for Cash. It’s good for the environment, and your wallet. What could be greener than that?
• Get Rich Slowly gives us 10 Essential Steps to Take Before You’re Laid Off. Yep. No one likes to think of that as a possibility, but it’s always better to be prepared.
• No Credit Needed really put some thought into his article: 10 Steps To Escaping The Paycheck To Paycheck Cycle. I love this blog. If you’ve never been there, definitely check it out!
• Taking Charge talks about digitizing your child’s allowance with Paypal. Wow! What a thought!
• SquawkFox wonders: “Are you being overcharged at the grocery register?“. I know that I am frequently overcharged. Especially if an item is on sale and it won’t ring up that way.
• Blunt Money gives several great tips on How to recognize a scam. This is a must read article. A few of them are common sense, but the rest….it’s good to be on the lookout.

Freebies, Deals and Giveaways:

• One of our readers, Randy @ Fiscal Zen left a comment about a great new site: DealLinker.com. They compile some of the best deals from all the top sites and list them all in one place. Thanks Randy!
• My Dollar Plan highlights VistaPrint’s Holiday Card Deals. Get your holiday cards for free, or up to 50% off depending on the item.< /li>
• Money Saving Methods had several great deals this week! Including: Up to $12 Free Lip Product – Bath and Body Works, and a Chance to win a $5 Chevron Gas Card.
• Finance for a Freelance Life has 3 New Year’s Worksheets that you can download for free. These are budgeting and freelance spreadsheets and they are invaluable if you don’t have something like it.
• The Happy Rock tells us how to Free Christian Audio Book Each Month (MP3 Format). This was really neat! I am definitely doing it. Thanks HR!
• The Sun’s Financial Diary takes a look at Amazon’s subscription service. It looks like this might be a way to save some money as long as Amazon has the lowest price.

Carnivals:

We participated in several carnivals this week. Thanks to everyone who took the time to host them!

• Carnival of Personal Finance, Cyber Monday 2008 Edition @ Mighty Bargain Hunter.
• 154th Festival of Frugality @ Living Almost Large
• 87th edition of carnival of money stories! @ The Financial Wellness Project.
• Carnival of Money Hawks- 2nd Edition @ Good Financial
• Carnival of Financial Planning – December 06 2008 Edition @ The Skilled Investor.
• Rich Life Carnival #22 @ Rich Life Carnival

That’s it for this weekend’s link roundup. I hope you are having a wonderful weekend!

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