2/10/2009

House Values, Jobs and the Economy

There is so much negativity in the news so I'd like to suggest you focus on what isn't negative for today. You'll sleep better.

House values have plummeted, yes, but if you aren't planning on selling your house soon, or need a home equity loan, that's somewhat irrelevant. It's the same with any asset...you only have a gain or loss when you dispose of it, so don't dwell on their value as of today if you don't need to. Deal with reality, not "what if" scenerios. You'll sleep better.

Jobs are being lost and unemployment is high, but even at 10% unemployment there are 90% who are employed. Look beyond the negative numbers. You'll sleep better.

The economy is in turmoil, but American ingenuity is amazing and the spirit of the American people has always been strong in the face of adversity. Think about all that we've faced and overcome in the past. You'll sleep better.

And if you know someone who has fallen on hard times, reach out a hand of friendship. That can make all the difference in someone's life, to know people care. And you'll sleep better.

4 comments:

Loganet said...

Hi Mary,
Wow! You were one of the first to call out the rate increases in credit cards back in November? of 2008. Today, FrugalDad.com just posted how his rate was increased from 6% to 28%. He has good FICO and no late payments. The CC companies are just raising rates across the board.

Mary said...

Actually I began to post on a Forum (before I started this blog) about this back in June 2008:

First HELOC's, now Credit Card Limits are getting reduced! Watch your FICO scores DROP!
Posted on: Sun, 06/29/2008 - 10:53

Posts: 636
Joined: 03/05/2008

Well, now that people are getting their HELOC's rescinded (heard a horror story from my friend of a woman who was in the middle of a full kitchen remodel; totally torn down to studs then found her HELOC was yanked!)

The same friend was telling me that American Express just lowered his credit limit from $25,000 to $8,500! He's had it for 7 years, never been late, always paid it off in full. He called and tried to get it reinstated and they refused.

Just saw an article on it and here's a quote - the bigger (??) issue is what all of this does to your credit score, so take heed:

"Here's how that happens: Let's say a cardholder has a credit limit of $10,000 and a balance on the card of $4,000. The card company worries that large balance may increase the prospects for default, so it lowers the credit line to $5,000.

But in doing that, it completely changes what is known as the credit utilization rate, raising it from 40 percent to 80 percent. That is then factored into the calculation of one's so-called FICO credit score, which measures creditworthiness, according to Craig Watts, a spokesman for FICO-creator Fair Isaac Corp. "

Here's the link to the full article:
http://channels.isp.netscape.com/pf/story.jsp?flok=FF-APO-1310&idq=/ff/s...

Mary said...

And later that day:

Posted on: Sun, 06/29/2008 - 11:26

Forgot to mention…I found it interesting that one of the banks that are doing this is Washington Mutual, already known to be pulling HELOC’s. Also Wells Fargo, which was a surprise to me and a warning as I bank there and have all of my business accounts (outside of our main business which is with a small community bank back east) with them…all having credit cards and one with a LOC.

This situation is troubling on a number of levels. It seems like a fast-moving downward spiral that is going to have far, far reaching effects. e.g., I’m OK with holding my own right now, even holding non-cash flowing properties. But take away any of my credit and I could be in a very bad situation.

And I don’t want to think what our main business bank will say to us in November when we “renew” our six-figure LOC if any of our personal credit has been reduced, thereby reducing our FICO scores. Again, in the current economy we’re not doing great, but we’re holding our own. But change anything in the current mix and we could be in a tight situation.

Anyone interested in adding to the discussion of where all of this may lead, head over to the “Crystal Ball” Forum topic!

BTW, another friend got her $100,000 HELOC “rescinded” by National City Mortgage last week. She’s sick about it, mainly because she knew I had suggested taking it all out in putting it in an interest bearing account, just in case, but she didn’t act. She had another smaller one that she immediately took and put away.

Mary said...

And then in August 2008:

Posted on: Sat, 08/16/2008 - 16:08

Well, it's beginning...I just got a letter from a Platinum credit card that I've had since 1991 (I'm listed as a "charter member" on the front of it!) - they reduced my credit line, get this, by $1,240.00! Probably would have been more, but that's all I had available on the credit line. This is a card I've never paid late.

I use a service to tell me anytime my FICO score changes, but nothing has, and we have a good score.

Just like with HELOC's - if you NEED the credit line you may want to cash advance your credit card and tuck the money in an interest bearing account...that's what I'll be doing with another card I have with $12,000 available credit on it. College tuition will be due in another month and they don't take credit cards anyway, so I'll just take it all now so I've got a buffer. What's next????