Personal finance blog “FiveCentNickel” asks their readers to imagine a world where cash is king in a recent post titled “Is It Possible to Live Without Credit Cards?”
The notion may seem unrealistic to some, especially in this uncertain economic environment where thousands of Americans are unemployed or under-employed and rely on their plastic to get them through each month.
It might be rare these days, but if you have a little extra money left over at the end of the month, what should you do with it — pay debt, invest it, or boost your savings?
This is a question we hear a lot, and it just so happens that personal finance experts Ken and Daria Dolan posted a video on their Twitter page this morning that helps to answer that exact question.
Along with their diplomas, many college students are graduating with debt. According to a study by Sallie Mae, the nation’s largest provider of student loans, the average amount of credit-card debt among graduating seniors rose to $4,100 last year from $2,900 in 2004. The study also found that nearly 85% of students have at least one credit card.
Why target college students? College-age students represent a credit-card company’s dream come true:
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For any consumer out there who hasn’t visited financial experts Ken and Daria Dolan’s website — www.Dolans.com — you’re missing out. Just today we found out that Fair Issac, the company which developed the FICO score, has changed the formula for how your credit score is calculated.
Dubbed “FICO 08,” the new formula, which ranges from 300-850 points, is designed to do a better job at detecting future defaults. Here are some ways the new FICO formula will affect you:
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Earlier this week we asked how you plan on spending your tax refund. If you’re still undecided, financial experts Ken and Daria Dolan have offered 10 smart suggestions for the best ways to spend it. Here are just a few:
1. Treat Yourself To A Little Something: With the key word being “little,” by paying cash and treating yourself to something you’ve worked hard all year for, will not only make you feel better about yourself, the economy will certainly benefit as well.
According to a recent Associated Press-GfK poll, 37% of those surveyed said they plan on spending this year’s tax refund on paying down their debt, as opposed to only 24% who said the same last year.
The president hopes that, out of the over $300 billion in refund checks the IRS will pay out this year, a portion will be spent on stimulating the economy:
In previous years, tax refunds have helped increase retail sales in March, April and May by 12 percent to 20 percent over sales in February, Internal Revenue Service Commissioner Doug Shulman said Monday.
Just yesterday we heard that complaints over rising credit-card rates and fees have grown so onerous that a federal committee has launch a probe in order to investigate lending practices at federally-supported institutions.
Today we hear that banks are more than willing to help struggling credit card customers, even going as far as forgiving a portion of their balance.
The Federal Reserve reported this week that credit-card debt fell significantly in February. In their monthly release the Fed reported that revolving credit, a commonly-used gauge of credit card debt, fell by 9.7%.
This dramatic decrease suggests that either two scenarios occurred in February. While it’s common during a recession that cash-strapped consumers rely on credit cards to get by, the Fed’s report suggests that consumers may have begun to hunker down with their finances. Instead of depending on plastic, Americans are saving more and spending less.
