How you handle these could affect your car and house insurance rates. Image from Flickr.

In a Michigan Supreme Court ruling yesterday, insurance companies were given the green light to use one’s credit score as a determining factor for insurance rates. The ruling does not change current insurance company practices. What the ruling does change, though, is the legality of the company pulling a credit report to determine rates.

The credit report insurance rate argument

The argument many insurance companies present to justify using a customer’s financial history to determine rates is simple. Insurance companies say that customers that can get the best personal loan rates also file fewer claims and cost the company less. By giving a good credit break on insurance rates, companies claim to be rewarding customers that cost them less.

The state regulator argument

In 2005, Michigan state regulators tried to ban the credit counseling approach to pricing insurance. The argument is that the practice is discriminatory, especially to customers in lower income brackets. The intent of the law was to create affordable insurance and equal opportunities for all customers.

Supreme Court ruling on credit reports

The Michigan Supreme Court, in the third ruling on this case, declared that the ban exceeded state authority. Michigan law, according to the Supreme Court’s 4-3 ruling, allows the practice of determining insurance rates on credit score. Writing for the majority, Justice Maura Corrigan wrote that “It is difficult to see how offering discounts to some insureds on the basis of good insurance scores is inconsistent with the general purpose of availability and affordability of insurance for all consumers.”

What this means for consumers

What this ruling means for Michigan insurance customers is higher rates for some people. These higher insurance rates are based on a credit score, which may give one more push for customers to explore credit repair. Though credit has not necessarily been shown to be a good indicator of behavior beyond the financial, credit reports are used practically everywhere. Job applications, insurance rates, cell phone plans, even prices on large purchases may be set by someone’s report.

Get professional credit repair help

Speak to a professional today and take proactive steps to repair your credit. For a FREE credit consultation, call 1-877-563-2076.

Google employees are given the option of running Linux, Mac or Chrome operating systems. Windows? Not available. Image from Flickr.

At the California Googleplex and around the world, concerns over security have led to Google officially giving Windows the boot. Partially a lead-up to the Google Chrome OS and partially a reaction to Windows security breaks, this move has attracted international attention. Google employees will no longer be allowed to use Windows, but they will still be offered an option of operating systems.

Google dumps Windows officially

The official policy of Google on Windows has been, until now, more flexible. Google employees were offered the option of Windows, Linux or Mac operating systems. Now, if Google employees want to keep Windows as an operating system, they have to get CIO approval. At the same time that Windows use has been officially limited, Google’s Chrome OS is being pushed as an alternative option. This move was hastened by the recent hacking of Google’s China channels.

Google cites Windows security concerns

About 80 percent of the computers in use today use the Windows operating system — everything from offices to credit counseling offices. This homogeneity across the system makes Windows an easy target for hackers and computer viruses. At Google, the security concerns surrounding Windows have been the reason for a general move to Mac and Linux computer systems. Because Google’s dedicated developers design programs for wide use, they are able to avoid many of the downfalls of Windows security holes.

Google banning Windows a publicity stunt?

Some wonder whether Google’s banning of Windows is more of a publicity stunt than a security move. Google has been working on Chrome OS, a competitor to Windows. Chrome OS will be based on the Google Chrome web browser. The Google Chrome OS is an open-source operating system — an operating system that can be edited and improved by any user. People used to assume that open-source operating systems were less secure, but experience with Linux and other large open-source projects have proved this theory incorrect. Yes, Google will be introducing a competitor to the Windows operating system — but that is not the only reason Windows has been banned from the Google corporate operating system.

Elena Kagan, supreme court nominee, is the solicitor general but has never been a judge: good or bad depending on which party you belong to. Flickr photo.

Elena Kagan, Supreme Court nominee to replace retiring justice John Paul Stevens, was announced Monday by President Barack Obama. Currently solicitor general, Elena Kagan as Supreme Court nominee is an interesting choice. Unlike every current member, if Kagan gets on the Supreme Court, she would be the only justice who has not been a judge. Preparing for a storm of objection from Republicans, the administration is saying that Kagan, Supreme Court nominee number two for Obama, was chosen in part because of her lack of judicial experience.

Elena Kagan, supreme court nominee

Elena Kagan on the supreme court is seen by many as a tremendous advantage for the administration in upcoming legal battles.  Future legal challenges to the recently passed health care reform bill and a financial reform bill that is under furious debate could very well end up before the supreme court. Kagan’s vote could sway rulings away from the those in favor of Wall Street and big business and toward supporting the health and financial future of average Americans undergoing credit counseling.

“She believes, as I do, that exposure to a wide array of perspectives is the foundation not just for a sound legal education but a successful life in the law,” the president said at a ceremony in the East Room of the White House. He said Kagan understands “people’s lives that might be changed by the law.”

Elena Kagan and supreme court swing votes

Elena Kagan as supreme court nominee is an attempt by Obama to select a persuasive consensus-builder, according to the New York Times. She is known for having won over liberal and conservative faculty at the difficult-to-unite Harvard Law School, where she served as dean for nearly six years. Kagan clerked for Thurgood Marshall, worked for Bill Clinton, and built a stellar reputation as a student, teacher and manager of the elite academic world. Kagan, on the supreme court, could influence the swing vote of Justice Anthony M. Kennedy and soften the hard right slant of the court under George W. Bush appointee Chief Justice John G. Roberts Jr.

Solicitor General Elena Kagan

Elena Kagan on the Supreme Court would be no surprise to those aware of her accomplishments. MSNBC reports that Kagan was the first woman to be dean of Harvard Law School and the first woman to be solicitor general of the United States, the top Supreme Court lawyer in a Presidential administration. If Kagan gets on the Supreme Court, it would be the first time in history three women justices would be serving at the same time.  If confirmed, she would, at 50, be the youngest justice and a lasting legacy on the court for Obama. Retiring justice Stevens is 90 years old.

As solicitor general, Elena Kagan represents the U.S. government and defends acts of Congress before the Supreme Court. If Elena Kagan were on the supreme court, she would be the first justice without judicial experience in almost 40 years. The last two were William H. Rehnquist and Lewis F. Powell Jr., whose nominations were approved by Congress in 1972.

Kagan,  supreme court front runner

Elena Kagan’s supreme court nomination has been fueling a debate about her experience ever since her name surfaced as a contender last month. The New York Times reports that some Republicans will argue that her resume as an academic, a government official and, for one year, the federal government’s chief advocate before the Supreme Court as solicitor general does not qualify her to be a Supreme Court justice. But Solicitor general Elena Kagan’s lack of judicial experience may help her confirmation prospects by denying Republicans a record of court decisions filled with ammunition for attacks.

Kagan, supreme court runner up

Elena Kagan, now the supreme court nominee, was a runner-up last year when Obama nominated Sonia Sotomayor. When justice Stevens announced his retirement last month, Kagan was considered the front runner. As solicitor general, Kagan impressed Obama with her performance. She also worked for Vice President Joe Biden when he was a senator. At 50, she is the youngest candidate and would have the longest tenure if confirmed. Another advantage is that solicitor general Elena Kagan was confirmed by the Senate last year, which could make it hard for Republicans who voted for her then to vote against her now.

A few bloggers and techies have gotten a chance to get their hands on Dell Streak samples. Image from Flickr.

The Dell Streak has been the computer with whispers in back hallways and teasing amounts of information handed geek-to-geek for the last few months. So today, when an internal Dell announcement of both a 7 and 10 inch Dell Slate was leaked, gasps of joy were heard across every I.T. office and credit counseling office across the nation.

Dell Streak slate lineup

The Dell Streak has been talked about for the last few months. In fact, on March 9, Dell did release a specifications sheet for the Mini 5 – the five-inch Dell Streak. With no ship date and no price, though, it was still just a teaser. This morning, though, came confirmation that the Dell Streak slate computer lineup will also include a 7-inch and 10-inch Streak.

Dell Streak features

The Dell Streak is being designed as a full-fledged multipurpose slate computer. The Dell Streak 5 is rumored to have a SIM slot and dialer device, meaning it will be capable of functioning as a telephone as well. All Dell Streak slate computers will come with an Amazon content partnership. This means that the Dell Streak will include a Kindle reader app, MP3 and video streaming from Amazon and a wide rainbow of color choices. The Dell Streak computers will also have a VGA camera for video chat, 30-pin docking connector, 5 megapixel (or more!) camera and touch display.

Dell Streak operating system

Though the Dell Streak operating system has not yet been released to the public, most rumors are that it will run on a Windows or Windows-style operating system. That means that anyone who is or would like to hire dedicated programmers can create applications and programs to run on the Dell Streak.

When will the Dell Streak be available?

There is information we don’t yet have about the Dell Streak. There is no price on any of the devices yet, and ship dates for the Dell Streak 7 and 10 inch devices are still not available. While some techies may have already gotten a payday cash loan just on the rumor of the Dell Slate, most will probably have to wait until at least the end of the year. If you are really jonesing for new tech, the Dell Streak 5 will be released in “late 2010.” The Dell Streak 7 and Dell Streak 10 should also be available in “early 2011.” WePad, iPad and iPhone watch out!

Sources:
Engadget
CNET news

Business owners can find out about the new federal HIRE Act with a new Web page hosted by Paychex. (Photo: ThinkStock)

Paychex, Inc., a payroll, HR and employer benefits outsourcing firm that has been serving small- to medium-sized businesses since 1971, is now hosting a dedicated Web page that will enable business owners to learn about how the new federal HIRE Act works and receive credit counseling regarding applicable tax credits. Owners will also be able to calculate just how much they might be able to save as a result of the new tax laws, reports MarketWatch.

Paychex says HIRE Act works for employers and employees

In addition to general info on the HIRE Act, Paychex has configured the Web page’s interactive calculator to aid business owners in figuring their tax savings. By inputting an employee’s hire month; pay type (by the hour or by salary); annual pay; and hours per week, the Paychex calculator tells employers how much they could save in Social Security and business tax credit. Hiring new workers and keeping those workers on the payroll for more than one year are both benefits employers want during this recession, and the HIRE Act can provide them. It’s also a boon for the unemployed. As Paychex Senior VP of Sales Del Humenik wrote in a press release, “The Act is good news for the unemployed, because now organizations have additional incentives to hire them.”

No limits on hiring, Paychex claims

Those worried that the HIRE Act imposes a hiring ceiling needn’t, claims Paychex. There is apparently no imposed hiring cap and employers cannot fire payday loan-using employees in order to make room for new ones that would enable them to take advantage of the HIRE Act. Here are two major tax incentives of the HIRE Act for employers:

1. Businesses save 6.2 percent per new employee on the Social Security tax, provided the employee is hired after February 3, 2010, and before January 1, 2011. That amounts to as much as $6,622.00 per new qualified employee, depending upon pay. Wages earned from March 19, 2010 to December 31, 2010 qualify.
2. After 12 months of employment, each new employee still employed earns the company a tax credit of up to $1,000. To claim this credit, any wages paid to the qualified employees over the past 26 weeks must be equal to or greater than 80 percent of employees’ wages from their first 26 weeks of work with the company.

For more information, visit www.paychex.com/hireact.

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Opponents of the California marijuana legalization measure would prefer that crops such as this were not legal. Image from Flickr.

California’s Secretary of State has certified that the Regulate, Control and Tax Cannabis act in California has received enough voter signatures to be considered on the ballot in November. To see a full rundown of the voter initiative and arguments for marijuana legalization, see The California Regulate, Control and Tax Cannabis Act: Part 1. While polls show a 59 percent majority of California voters have decided do support the marijuana legalization measure, there are detractors of the voter initiative that say the tax pay day is not worth the problems the act will create. These opponents fall into two major camps – those who believe the Regulate, Control and Tax Cannabis will cause medical or crime problems, and those who believe it will hurt the quality of marijuana.

The medical argument against legalizing cannabis

While the medical uses of marijuana are under debate, many doctors agree there are some medical uses for the drug. However, the legalization of recreational use could lead to many negative health effects.

Marijuana is mainly ingested through smoking, and the smoking of any substance, especially long-term, can seriously damage a person’s lungs. It has also been shown that frequent heavy use of marijuana can permanently impair short-term memory and reaction time. These opponents argue that legalized recreational marijuana would increase the use of marijuana, which would be a danger to public health.

The crime argument against marijuana legalization

The California Peace Officers Association, among many others, has spoken out against the initiative intended to legalize marijuana. John Lovell, who lobbies for the association went on record against the bill, saying “We have enough problems with alcohol and abuse of pharmaceutical products. Do we really need to add yet another mind-altering substance to the array?”

Detractors also point out that, no matter what California voters pass, marijuana remains a Schedule I illegal substance, federally. Federal law enforcement officials have not been prosecuting small medical marijuana dispensaries or users, but large-scale production and distribution still remains a serious federal crime. If marijuana were to be legalized in California, it could draw organized crime and drug cartels to the state.

The quality argument against legalizing pot

While many marijuana smokers and growers usually stand at odds against those who want to keep marijuana illegal, a small coalition is emerging. In Humboldt County, many growers and distributors of gray or black market marijuana fear that legalized pot could be economically and socially damaging. Economically, growers fear that legalized marijuana would significantly reduce the sales price of their cash crop. This would put their livelihood and the economic base of much of Humboldt county at risk, sending many of them to credit counseling. Additionally, many growers are concerned that if marijuana does become legal, large corporations would move into the market. Like many other small-scale growers in America, the growers would be forced to compete against agribusinesses, which could drive up the cost while driving down the price of their crops.

There are many arguments both for and against the passage of California’s Regulate, Control, and Tax Cannabis act. The debate about legalization has been raging for over a hundred years, and when California voters go to the polls in November, the result will be closely watched and hotly debated for a long time to come.

Sources:

Business Week
Seattle Times
Time Magazine
CNN
California NORML

Sometimes, asking a complete stranger, such as Dear Abby for advice can be the best thing to do. Image from Flickr.

In 1956, when Pauline Phillips started the Dear Abby column, she answered questions on etiquette, manners, money and tough situations with a combination of common sense and gentle humor. Dear Abby quickly became a nationally known column, and Pauline Phillips was syndicated for newspapers across the country. While she was writing Dear Abby, Pauline had twin daughters – Jeanne Phillips and Eppie Lederer. Jeanne eventually took over Dear Abby, while Eppie started her own advice column, Ask Ann Landers. These two are no longer the only names in the advice column business, however. Now you can get advice specific to just about anything from relationships to credit counseling. So who are five advice columnists you may want to check out, other than Dear Abby?

1- Dear Prudence

Written by Emily Yoffe, Dear Prudence takes the idea of an advice column and gives it a bit of a real-world update. Prudence, like Dear Abby, is known for not putting up with a lot of “nonsense,” and every once in a while gets quite worked up over tough situations – up to and including family secrets and bad toupees.

Dear Prudence, much like Dear Abby, does tend to come down on the side of settling family differences and seems to be of the “fake it ’till you make it” camp. With her combination of humor and real-world examples, Dear Prudence is a good every-once-in-a-while read.

2- Miss Manners

Miss Manners is one of those columns that has been around forever. Perhaps it’s a bit old-fashioned, but reading Miss Manners is like chatting with Dear Abby’s grandmother. Always a fan of thank-you notes and proper etiquette she has the kind of sly wit that leaves you wondering if you were really just schooled that badly by a grandmother. Miss Manners will unfailingly teach you how to have the best etiquette, but sometimes she can be a bit short on real-world common sense.

3- Amy Alkon / Advice Goddess

A favorite of weekly alternative newspapers across the country, Amy Alkon is just about the opposite of Dear Abby. She is unfailingly down-to-earth and sometimes even a bit harsh. One of her recent columns included telling a woman that “while men like curves, they don’t like folds.” It’s sometimes tough to read, but Amy Alkon just says the things that advice columnists like Dear Abby tend to dance around.

4- Savage Love

One of the few guys to make it in the advice-column world, Dan Savage, author of Savage Love, answers questions that advice columnists like Dear Abby would round-file before they got halfway through. Not always safe for work, and sure to make you blush at some point, this sex-and-relationships column got its start in Seattle’s Stranger newspaper, and it lives up to that rough-around-the-edges history. Beyond the shock factor, though, Savage Love usually offers advice as good as guaranteed loans — telling people to get out of bad relationships, stay true to themselves and generally be good people.

5- The Green Lantern

While it’s not a traditional advice column, The Green Lantern is one of those columns that unfailingly comes up when someone needs advice about environmental matters. Like Dear Abby, this column makes it a point to cover everything from child rearing to relationships — plus several topics Dear Abby wouldn’t touch with a 10-foot pole. Solidly based in both science and common sense, The Green Lantern can give you a guiding star on remaining friendly to others around you and the environment at the same time.

Building on Dear Abby’s example

Dear Abby definitely started the modern advice-column movement, and reading her words of wisdom can still be helpful when you’re in a tough situation. Dear Abby isn’t the only advice column on the block anymore, though, and checking out a few other advice columnists can give a good counterpoint to Dear Abby’s long-appreciated work.

Today, larger cities in India reflect greater freedom for women, but old beliefs die hard. According to India One, the Women Reservation Bill guarantees that 33 percent of seats in Indian Parliament will be filled by women. Various sources consider this to be either a triumph for feminism in the country or an errant method of forcing the old guard to change without giving them the chance to discover the error of their ways. Some would credit counseling the old to a reasonable political process, while others see it as a show for violent force.

Women Reservation Bill: Driving in the thorn, rather than removing it?

That’s what one blogger says of the Indian Parliament situation. “A thorn in the foot” should be plucked, he argues – not driven deeper. While the Women Reservation Bill’s stated goal is to correct historical wrongs, his argument is that it only serves to raise the animosity between men and women. He asks whether it is true that only women can “represent the needs of women the best” and asserts that Parliament is “not intended as a demographic mirror of society.”

While he does not appear to be against the principle of women’s rights in India, the writer does suggest that reservation fails to address the need for “new mechanisms for the social, political and economic advancement of women.” He does not address whether these new mechanisms would include access to same day loans.

And you don’t think women if Parliament could lead the way there? Really?

The blogger then sides with a merit-based system for Parliament, rather than simply a candidate’s sex or something else comparatively superficial. That’s one of the few things he has to say that I agree with, something that American politics frequently gets wrong because voters get stuck on images television and popular media have cemented in their minds.

But who is to say that the women who come into Parliament as a result of the Women Reservation Bill will not be qualified? Yes, the reservation sets seats aside for women, but it is possible to ensure that the right women make the post. The blogger calls for “a culture of respect for an individual, irrespective of gender,” but perhaps sometimes you should break some eggs and throw them in the obstinate faces of the establishment. In a land where women have been oppressed for far too long, it could be the only way to make a cake.

“Fighting injustice with injustice”

Combating the root of the beliefs that subjugated Indian women is an ideal path, but old mules can be hard to teach. What the blogger writes off as mere political maneuvering could actually make a difference. It could also throw the country into turmoil, as he suggests. It will be interesting to see if the time has come for certain old ideas to die – but should they die a natural death, rather than at the end of a Women Reservation Bill’s sword?

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Toyota recall… Honda recall… GM recall… Nissan recall… will Ford be next?

Who can say, but they all do seem to be falling like dominoes lately. The most immediate safety concern covered by the Nissan recall involves a brake-pin that can “partially come loose and cause a loss of normal braking ability,” The Street reports. The following vehicles from the years 2008 through 2010 fall under the scope of the Nissan recall:

• Nissan Titan pickups
• Infiniti QX56
• Nissan Armada SUV
• Nissan Quest minivans

According to Nissan, no injuries or accidents have been reported that related directly to this most recent Nissan recall.

Are we out of gas or what?

A faulty fuel gauge could certainly be inconvenient, but in most cases it would not place a driver in physical danger. While specific information regarding the exact problem with certain Nissan fuel gauges has not been made specific, it is known that Nissan plans to fix the problem. Vehicles in the Nissan recall with fuel gauge issues include the following cars from 2005 through 2008:

• Nissan Titan
• Nissan Armada
• Infiniti QX56
• Some Nissan Frontier pickups
• Some Nissan Pathfinder and Xterra SUVs

According to The Street, “Nissan shares were shedding 14 cents or 0.9 percent, to $15.86 in recent trading.” That is certainly not a welcome sight for the automaker, but it could definitely be worse. It is unclear whether the automaker is currently in need of credit counseling along the lines of GM, the bailout king of American carmakers.

What should you do if your Nissan or Infiniti is affected by the Nissan recall?

Contact Nissan Consumer Affairs via their Web site or call (800) NISSAN-1, or (800) 647-7261. If for some reason you need the department’s mailing address it is P.O. Box 685003, Franklin TN 37068-5003.

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http://www.youtube.com/watch?v=AnWsTY-8L0E

Best overall vehicle

Despite Toyota’s recent recall disasters, the influential magazine has named the Toyota Lexus 460L best overall vehicle. With gas mileage of 24 on the highway and 16 in the city, the full-size luxury sedan scored 99 on Consumer Report’s 100-point scale. The $70,925 price tag means that you’ll probably need a loan to buy one of these cars, even if you have plenty of cash now for a down payment.

Best family sedan

Top honors in the family sedan category went to the Nissan Altima which may be good news if your payday cash doesn’t always flow like wine . The Altima carries a manageable price tag, somewhere in the range of $19,900 $29,600, and gets reasonable gas mileage, too (32 hwy, 23 city).

Best small sedan

The Hyundai Elantra SE took the award for best small sedan. Priced at a mere $17,845 that plenty of people could finance with just a small loan, the Elantra gets decent gas mileage (34 hwy, 26 city) and comes equipped with electronic stability control, a proven life-saving feature not available on many other small cars.

Best sporty car

The Volkswagen GTI, a turbocharged version of the VW Golf hatchback was named best sporty car. Without completely sacrificing gas mileage (31 Hwy, 21 City) and without a price so high that you need your own personal money lender ($23,465-$24,070), the four-cylinder engine offers 200-horsepower and performance –oriented suspension.

Best small SUV

The Subaru Forester came out on top in this category, with fairly impressive fuel economy (27 hwy, 20 city) and a moderate price range of $20,295 – $28,495. Consumer Reports temporarily suspended its recommendation for the Toyota Rav4 as its top choice in this category following the manufacturer’s recall and stop-sale order, but it’s back now and affordable with the help of a good loan company.

Best family SUV

With its roomy interior, easy ride and responsive handling, the Chevrolet Traverse took the prize for best family SUV. With a fairly steep price range of $29,224 to $39,985, the Traverse offers less-than-optimum gas mileage (24 hwy, 17 city) and may not be the best automobile choice for if you already need money now.

Best green car

Not surprisingly, for the seventh year in a row the Toyota Prius took the prize in the green car category. The price of the new redesigned version remains reasonable $21,400 – $28,070 and at 48 hwy, 51 city its gas mileage is hard to beat. Described by the magazine as safe, reliable, and easy to handle, sales of the Prius were not interrupted by the recent recall, allowing it to remain on the Consumer Reports top-10 list.  It shouldn’t take credit counseling to figure out that this car makes good financial sense.

Best sports sedan

The Nissan Infiniti G took the title in the sports sedan category the fourth year in a row. Priced between $33,250 and $40,400, the Infiniti G offers agility and luxury with plenty of power and gas mileage of 27 hwy/19 city.  Not a bad choice, especially if you qualify for low interest loans.

Best family hauler

Yes, “family hauler” really is the name given to this category, and the winner is a microvan, the Mazda5. With gas mileage of 28 on the highway and 22 in the city, this small and maneuverable family hauler (I just really like saying that again) is economically priced between $17,995 and $23,005.  If you’re already a candidate for cheap payday loans and need to buy a car, this is a model to consider.

Best pickup

Stripped down at $20,850 or souped up at $41,775 20, the Chevrolet Silverado offers the fuel inefficiency typical of even less worthy pickups (20 hwy, 15 city), plus optional interior comforts and a measure of dependability. If you’re in the market for a pickup but find yourself short of cash today, a basic version of the Silverado may be just the ticket to debt survival.

Many people don’t know that consumer credit counseling can work as a substitute to filing bankruptcy. Expert credit counselors can educate you on various financial topics and offer debt counseling services after thoroughly assessing your financial condition.

Once you sign up for the services of a consumer credit counseling agency, your debt level would be evaluated by a professional credit counselor. Subsequently, a repayment plan is worked out on the basis of your income and debt level. They would negotiate with your creditors to reduce your interest rates and establish a debt management plan that would help you get out of debt.

How does consumer credit counseling work?

While setting up a debt management plan, your financial situation is comprehensively assessed by the credit counselors. Given below are the factors that are primarily taken into consideration:

• Number of credit accounts you have
• The outstanding balances of those accounts
• The interest rates
• Minimum monthly payments
• Delinquent accounts (if any)

The credit counselor also takes into account how much you earn each month and how much you spend. Taking all these factors into consideration, a debt management plan (DMP) is created to pay off your bills. Every one of your creditors receives this suggested plan for acceptance purposes.

As soon as they agree to the suggested debt management plan, you need to start making payments to the consumer credit counseling agency. As per the DMP, this payment is allocated to your creditors. When you enter a DMP, your credit accounts are usually frozen so that you don’t run up new balances.

Fees of consumer credit counseling services

A host of credit counseling agencies maintain that they’re nonprofit in nature. Even though an agency declares themselves to be nonprofit, you shouldn’t by any means assume that their services are free of cost. More often than not, their services are available to you against a fee. The initial payment made by you might be used to compensate for the fees. On the other hand, some debt management companies might ask for a flat fee which is deducted from your monthly payment.

Do you really need counseling?

You can also get the benefits of counseling even if you don’t go for the services of an agency. You can do on your own what a counselor can do for you. Nevertheless, there are many individuals that prefer to go for their services.

When you don’t know how to negotiate a repayment plan with your creditors, then consumer credit counseling can help you. Some counseling professionals are skilled to work with creditors and can get you better terms than you can without anyone’s help.

If you understand that you wouldn’t be adequately disciplined to make multiple payments to your creditors each month, then you should seek the services of a counselor. In this manner, you become responsible for making just one payment to pay off all your credit card bills. The rest is done by the counselor.

What next?

If you’ve decided to go for consumer credit counseling as a debt solution, you should always look for a trustworthy agency that would help you come out of debt. You must avoid companies that are not transparent regarding their fees and services.

Credit counseling and a debt management plan can lead to greater peace of mind for consumers in a bind, but proper education is needed first. (Photo: picasaweb.google.com)

When a consumer enters into credit counseling, a common element of any program is what’s called the debt management plan (or DMP). In a DMP, the consumer agrees to make a set monthly payment to their credit counseling agency. Those funds are in turn used by the credit counseling agency to repay the debtor’s bills, loans and other debts according to a schedule made with the creditors. The presence of the credit counseling agency in the transaction may persuade the creditors to be amenable to lowering interest rates or waiving fees, not to mention staunching the flow of credit collection calls the consumer had been receiving. Provided that something more than free counseling but less than bankruptcy filing is needed, a DMP can be a useful tool in protecting a consumer’s financial interests and helping them to move forward and repair credit.

Benefitting the Consumer

A 2008 study entitled “Completing Debt Management Plans in Credit Counseling: An Application of the Theory of Planned Behavior” by Jing Jian Xiao of the University of Rhode Island and Jiayun Wu of the University of Arizona tenders that the most ideal arrangement for a DMP would be one in which consumers were fully informed of their options and chose the most appropriate course of financial action. At the same time, creditors and credit counseling services alike would deal with the consumer in an ethical, professional manner.

While circumstances surrounding a consumer’s financial troubles rarely fall into place like clockwork, numerous recent studies have shown that consumers who participate in DMPs show ” a significantly lower incidence of bankruptcy over the two years following counseling” (Staten & Barron from 2006). Overall, consumer financial well-being has been observed to improve.

Xiao and Wu Study the Link between Attitude and Behavior

In other words, they apply the theory of planned behavior. Consumers’ attitudes toward credit counseling (and the DMP in particular) are important, as the theory hypothesizes that these attitudes will accurately predict future credit behavior. Xiao and Wu study survey and plan completion information from DMP-enrolled consumers in order to go where studies in the field have never been before. While previous studies have attempted to shed some light on the desires and behaviors of consumers who participate in credit counseling, they relied almost solely upon survey data. Xiao and Wu’s use of the theory of planned behavior to identify factors associated with completing the debt management plan is entirely new in the field, according to the study authors.

Positive Attitude, Intention and Results

The authors begin with the survey data from clients of a national credit counseling agency, and then they apply the theory of planned behavior and other methods from literature on the concept of consumer satisfaction. Their goal is to find the link between a consumer’s intent and their actual behavior when completing their DMP. Their discovery is that observed behaviors consistent with the theory of planned behavior had positive effect on consumer’s intentions, post-credit counseling.

Their Findings Have Implications for Credit Counseling Services

DMPs are understandably a significant monetary resource for credit counseling agencies. Predicting how likely consumers are to complete their DMP would hence be useful to the financial stability of such companies. Positive attitude toward completing a DMP plays a very important rule in a consumer’s future intent. It’s much more significant to ask someone “What do you think about completing the debt management plan?” versus “What do you think about the debt management plan?” Thus, the way in which credit counseling agencies approach the matter with their clients can definitely steer them toward more likely completion, which in turn could foster positive attitudes that reflect in how such credit counseling agencies are perceived by consumers.

Help Clients Feel They’re in Control of Debt Management

By providing clients with the necessary information to make informed decisions and periodically updating their progress, credit counseling services can help empower consumers. If said consumers feel as if they’re in greater control of their debt via a well-executed DMP, their instance of intent to complete the DMP is found by the authors to be higher. Greater client satisfaction is central to credit counseling success, which would indicate that if the agencies consistently treated clients with respect, there would tend to be positive result. Meeting consumer need and even exceeding expectations – a good recipe for any business transaction – leads to a greater likelihood of DMP completion. This is beneficial to all parties involved, from the client to the credit counseling agency to creditors.

What Can Educators Take From Xiao and Wu’s Study?

Determining a credit counseling client’s behavioral intention comes down to two factors, say the authors: “Attitude toward the behavior and perceived behavioral control.” When developing programs to promote positive behavior development, educators should consider directing subject attention to attitude toward the desired behavior as well as the method used to promote behavior (in this case, the DMP). Clear benefits and consequences of DMP completion should thus be made available to credit counseling clients. If such information is made available as a part of a financial education curriculum, the authors feel that consumers could possibly have a more favorable attitude toward DMPs should they ever have the need. Possible psychological barriers could be lessened.

Knowledge: the Key to Positive Attitude and Intent

Xiao and Wu findings suggest that if a consumer in credit counseling finds a DMP that best suits their needs, satisfaction levels can be significantly high. Education as to what the programs entail is most important. In order for consumers to have the optimal attitudes toward DMP usage, they also need to be aware of other options available within the credit counseling industry. Knowledge leads to well-informed choices and greater satisfaction, per the authors’ findings. It should be noted that another important part of a consumer’s financial education should include how to avoid marketing scams, as some segments of society view credit counseling and debt management plans with negative or exploitative. There are many reputable credit counseling agencies that would benefit from heightened consumer awareness.

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Are you financially illiterate? (Photo from creativecommons.org)

If you’re like a lot of people today, you may be looking for credit repair services now that the economy seems to be bottoming-out. Statistics show that in 2006 approximately 1.5 million consumers sought assistance in the management of their finances from the National Foundation for Credit Counseling (NFCC). By 2008, the number of customers seeking aid from the nonprofit organization more than doubled to 3.2 million.

Spokeswoman for the NFCC Gail Cunningham said, “One of the most astounding statistics is that people who came to us had six credit cards with unsecured debt totaling 62% of their total household income…To put this into perspective, realize that this debt does not include their house or vehicle payment, but strictly represents credit card debt.”

A startling 244% increase

The NFCC has nearly 3,000 credit counselors who help consumers with household budgets, provide debt counseling, housing counseling, (from purchase planning to foreclosure prevention), and bankruptcy counseling, (both pre-filing counseling and pre-discharge instruction). Cunningham verified that the agency’s largest area of growth was the housing-counseling division, which increased by 244% from 2006 to 2008.

Financial literacy survey

An NFCC survey, entitled the Financial Literacy Survey, provided some startling results. First, nearly one-third of Americans have no savings other than their retirement accounts. Second, during the last recessionary year, another third put no money at all towards their retirement.

Willing to give themselves failing grades

About 28% of those surveyed were unaware of the terms or interest rates of their mortgage loans, car loans, or personal loans.  If that isn’t frightening enough, another 41% were willing to admit to their financial illteracy in general, and gave themselves grades of C, D, or F concerning their knowledge of personal finance.  Cunningham stated, “To me, this strongly suggests that there is considerable room for improvement.”

Bringing financial ignorance into the light

The survey was telling of our society as a whole. One thing the recession brought about was an awareness that we are uninformed and uneducated when it comes to finances. This lack of information leaves people in difficult situations when, for example, credit card companies raise their interest rates. Our financial ignorance was brought into a glaring light as the recession wreaked havoc on the average household.

Education and awareness may bring change

“Having survived the recession,” added Cunningham, “people are now looking for credit repair options. That’s our job—to educate them on what to do and not do in the future. Our goal is to empower our clients, not just to get them out of their current financial situations.”

Education is the key to managing finances and avoiding bigger problems in the future. As a society we need to make a concerted effort to understand our financial positions. We need to know what it costs to live the way we do, and how to live within our means.  We also need to keep stay aware of changes in the finance industry.

Is the end in sight?

People are hoping the end to the recession is at hand. The economy is showing small signs of recovery, and consumers are starting to regroup and assess their finances. With organizations like the NFCC offering credit repair services, people should take advantage of the learning opportunity. Cunningham summed up our need for increased financial awareness when she said:

One of the things we want to convey to our customers is that you don’t know what the future holds. There could be another recession coming or there could still be a heavy burden to carry until the economy returns to normal. Everyone needs to be able to look at their 401(k)s and understand the terms. They need to know how to read their credit card agreements. They need to understand the value of a low-interest rate on loans….this is where the NFCC comes in. Hopefully if we are doing our job right we’ll create a new customer base of financially responsible and educated citizens.

Get professional credit repair help

Speak to a professional today and take proactive steps to repair your credit. For a FREE credit consultation, call 1-877-563-2076.

People younger than 21 can no longer get credit cards on their own.

When a new piece of legislation takes effect in February, anyone younger than 21 will need a cosigner older than 21 to get a credit card. I believe this is a very positive step that will keep a lot of people from getting deep into debt.

If I hadn’t gotten a credit card when I was 18, I know I’d be a lot better off. I racked up so much debt on my credit card by the time I was 21 it seemed it was already too late to get out. Years later, I am still paying off purchases I made while I was in college.

Start of a credit catastrophe

It’s this type of mentality that keeps people going deeper and deeper into debt. I figured I already owed thousands of dollars on my card, what’s a few hundred more? Many college students and graduates feel the same way, so they keep their cards maxed out and eventually need credit counseling to figure out how they will ever overcome their debt.

I think if I’d had a few years after I moved out of my parents house to learn to live without a credit card, it would have been much easier to go without one or to use one responsibly. But alas, an 18-year-old with a credit card who is on her own for the first time is a dangerous thing with possibly lifelong implications. I am glad legislators see this and passed the new law.

Implications to credit card industry

If my prediction that not allowing people to get credit cards until they are 21 will cause a lot less debt and much more responsible use of credit in general, it could have huge implications for credit card companies. Personally, if I had not been allowed to get a credit card until I was 21 I might have never gotten one at all.

I think and I hope that this will be the case for many young people, who will realize they can survive without using credit and spending thousands on interest alone. I think this new law could greatly reduce the use of credit cards, which is great news for society but could potentially bankrupt the credit card industry.

I guess creditors should start looking for new jobs now.

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